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Jet Blue Advertising Campaign


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I recently graduated from Penn State University with a degree in Advertising and a minor in Business. I worked with four students during the Fall semester of my senior year in completing an Advertising campaign for JetBlue Airlines.

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Jet Blue Advertising Campaign

  1. 1. Table of Contents Page # I. Situation Analysis Product/Service ................................................................................... 2-5 History and Product Description........................................................ 3-4 Product Image and Position................................................................ 4-5 Product Lifecycle ................................................................................ 5 Strategic Implications ......................................................................... 5 Product Class ...................................................................................... 6-11 Market Share................................................................................. 7-8 Geographic Distribution ............................................................... 8-9 Price Effects................................................................................... 9-10 Seasonal Effects ............................................................................. 10-11 Competition......................................................................................... 12-26 Industry ............................................................................................... 12-13 Industry Competition.......................................................................... 13-15 Direct Competitors ........................................................................ 15-18 Indirect Competitors ..................................................................... 18-20 Competitors Advertising ............................................................... 21-24 The Consumer/Target Group ............................................................. 27-28 Environment........................................................................................ 29-32 II. S.W.O.T. Analysis ..................................................................................... 33-38 III. Advertising and Marketing Communications Objectives ....................... 38-39 IV. Campaign Timeline................................................................................... 40 V. Multi-Attribute Model (MAM) ................................................................ 41-43 Survey ............................................................................................................. 44-46 References............................................................................................................. 47-48 2 Jet Blue
  2. 2. I. Situation Analysis Product History and Product Description CEO and founder David Neeleman under the name “New Air” introduced jet Blue in February of 1999. Neeleman, a former Southwest Airlines employee and co-founder of a low fare airline called Morris Air, began the concept for Jet Blue in 1993. David Neeleman’s intentions were to follow Southwest’s ideals, offering low cost travel, while focusing mainly on the customer’s needs and comforts. Jet Blue seeks large metropolitan areas which mainly offer high air travel fares, and in turn offer low fares to customers. Jet Blue is based out of John F. Kennedy International Airport, while their secondary locations include Los Angeles, Boston and Washington D.C. (Jet Blue, 2007). On February 11th, 2000, Jet Blue launched its inaugural flight between John F. Kennedy Airport in New York City and Fort Lauderdale, Florida. By December 2000, Jet Blue flew over 1 million passengers and reported $100 million in flown revenue for 2000. Many companies suffered large financial losses due to the post 9/11 terrorist attacks. Jet Blue on the other hand remained one of the few American airlines to continue to net profits. With these profits Jet Blue was able to finance many new aircrafts and expand their highly rated employment. In order to finance Jet Blue, Neeleman took the company public in 2002. Immedialtey David Neeleman ordered 25 brand new A320 aircrafts and set his sights on the option of another 50 A320 aircrafts. (Jet Blue, 2007). With the newfound success of Jet Blue, the company began to focus most of their attention on customer service. Only having two different types of aircrafts, the Airbus A320 and the Embraer 190, has given Jet Blue the opportunity to lower travel costs with the ease of maintaining the aircrafts. Both the A320 and the Ebraer 190 are equipped with 34 inches of leg room, in which Jet Blue prides itself having the most leg room based on average fleet-wide seat pitch for U.S. airlines. To help enhance customer service both aircrafts are equipped with 6.8 inch televisions embedded in every seat, offering 36 channels of DIRECTV, and Fox in Flight movies. Added entertainment also includes XM SATELITE RADIO in every seat and free wireless internet access at New York’s JFK 3 Jet Blue
  3. 3. and California’s Long Beach airports. All of these amenities were added over time in order to enhance the pleasure of the flying experience for all different types of individuals. (Jet Blue, 2007) Currently Jet Blue serves over 55 destinations in 22 states, including Puerto Rico, Aruba, Mexico, and most of the major cities in the United States. Expanding fuel costs caused Jet Blue to acquire a net loss of $20 million in 2005 and a $1 million loss in 2006. In May of 2007 Jet Blue appointed a new CEO, Dave Barger, while David Neeleman became non-executive Chairman of the Board. Following the yearly losses Jet Blue employed new tactics in order to burn less fuel and to become more efficient, which in turn will help to gain profits for Jet Blue while keeping customer costs to a minimum. (Jet Blue, 2007) Product Image and Position Jet Blue seeks to offer low fares as a result of low costs. Low fares will enable Jet Blue to stimulate demand in the market for their service and to increase passenger traffic. While focusing on the customer’s wants and needs, Jet Blue is able to offer lower fares due to efficient scheduling and low operating costs of their aircrafts. With affordable point to point, one- class services, Jet Blue offers a high quality product equipped with many luxuries including leather seats, steadfast operating performance, DIRECTV, movies, snacks, and more. With online booking, ticketless travel (electronic ticketing), and an award winning website, it makes it much easier for customers to travel with Jet Blue. Jet Blue is able to serve smaller markets with the E190 aircrafts, which seat 100 and are more mobile for smaller destinations than the A320’s. With limited types of aircrafts, it has become more economical for Jet Blue to maintain and produce its aircrafts, thus providing low operating and distribution costs (Hoovers). Commitment to customer service, efficient scheduling, and distribution and operating costs have become the backbone of Jet Blue. When bad weather caused Jet Blue to cancel several flights in 2007, Jet Blue retaliated with a “Customer Bill of Rights”. The bill of rights was 4 Jet Blue
  4. 4. implemented in order to try and restore humanity to air travel. With the bill of rights Jet Blue will reimburse those whose flights have been cancelled or delayed for a certain amount of time Jet Blue was the first and only company to employ this tactic stating “Unfortunately, there are times when things do not go as planned. If you’re inconvenienced as a result, we think it is important that you know exactly what you can expect from us”- David Neeleman. (Jet Blue, 2007) Product Life Cycle Jet Blue is a very young company when it comes to other airlines in the industry. With many of their competitors being in the airline service since the early 1990’s, Jet Blue has only been around for less than 10 years. Jet Blue has moved from the introductory stage, implementing new flight destinations, increasing market share, increasing employment, and steadily integrating new aircrafts. (Jet Blue, 2007) Jet Blue has continuously sought out new flight destinations adding several since 2004 including its first international flight to the Dominican Republic, and later Puerto Rico, the Bahamas (Aruba), and the Bermudas. Since 2002 Jet Blue has almost tripled its employment going from 4,011 in 2002 to 10,625 employees at the year’s end 2006. With a fleet of 121 aircrafts (98 Airbus A320’s and 23 Embraer 190’s), Jet Blue’s fleet has also doubled since 2002, and continues to grow with 6 Airbus A320’s and 4 Embraer 190’s on order for 2007. (Jet Blue, 2007) Strategic Implication In the future Jet Blue looks to increase productivity out of New York’s JFK airport, to execute more flights in destinations they currently serve, and to seek out new destinations in which they do not already provide. As a low-fare airline, Jet Blue’s campaign will show their dedication to their customers, providing many of the “little things” that other airlines fail to supply. With new destinations, Jet Blue will be able to broaden their consumer base by offering flights to more direct and diverse locations. 5 Jet Blue
  5. 5. Product Class Jet Blue Airways Corporation is a passenger airline providing high levels of customer service and amenities at a low cost, focusing on serving markets that have had high average fares in the past. This carrier offers one-class service with leather seats, satellite TV (with programming from DIRECT TV, satellite radio (from XM) and movies (from FOX InFlight). The airline’s fleet of about 130 aircraft consists of Airbus A320s and Embraer 190s. Based on revenue passenger miles, Jet Blue Airways was the 8th largest passenger carrier in the United States during 2006. As of February 14, 2007, Jet Blue served more than 50 destinations throughout 21 states, Puerto Rico, Mexico and the Caribbean, and operated a total of 502 daily flights. Of these flights, 98% operated with departure or arrival being in one of four major cities: New York (JFK), Los Angeles (Long Beach/Burbank), Boston, or Washington D.C. Currently, Jet Blue provides low-fare air travel to and from the following alphabetically-listed cities (those listed in bold are considered to be “Key Cities” for this airline): Aguadilla, Cancun, Mexico Hyannis, MA Newark, NJ Pittsburgh, Sacramento, Seattle, OR Puerto Rico PA CA Aruba, AW Charlotte, NC Jacksonville, Newburgh, Ponce, Puerto Salt Lake St. Maarten, FL NY Rico City, UT AN Austin, TX Chicago/O’Hare, Las Vegas, New Orleans, Portland, ME San Diego, Syracuse, NY IL NV LA CA Bermuda Columbus, OH Portland, OR San Tampa, FL Long Beach, New York, (Hamilton) Francisco, CA NY (JFK) and (LGA) CA Denver, CO Martha’s Puerto Plata, San Jose, CA Tucson, AZ Boston, MA Oakland, Vineyard, DR CA MA Buffalo, NY Nantucket, Ontario, CA Raleigh- San Juan, PR Ft. Lauderdale, Washington MA Durham, NC FL D.C. Burbank, CA Ft. Myers, FL Nashville, TN Orlando, FL Richmond, Santiago, DR West Palm VA Beach, FL Burlington, Houston, TX Nassau, Phoenix, AZ Rochester, Sarasota, FL White Plains, VT Bahamas NY NY 6 Jet Blue
  6. 6. Market Share According to the Bureau of Transportation Statistics, Jet Blue Airways was the 8th leading passenger airline in the past year, with 4.1% of the market share for domestic airlines, based on revenue passenger miles from June 2006 through May 2007. In terms of market share, Jet Blue was ranked behind American (15.2%), United (12.1%), Southwest (12.0%), Delta (11.1%), Continental (7.8%), Northwest (7.0%), and US Airways (4.7%). Strategic Implication Through looking at market shares of Jet Blue and its competitors, we are aware of the carriers that we must compete with in order to increase Jet Blue’s overall domestic market share. This will help the campaign team to position Jet Blue 7 Jet Blue
  7. 7. against main market share competitors by highlighting product/service attributes that Jet Blue possesses, that competitors do not. Geographic Distribution The following map shows the geographic distribution of current airports served by Jet Blue and the carrier’s “key cities” (shown in gold). 98% of Jet Blue’s flights depart from or arrive in New York, Boston, LA, or Washington D.C. On February 14, 2007, Jet Blue announced that they had entered a code-share agreement with Cape Air. With this agreement, Jet Blue was able to offer connecting service to Nantucket, Martha’s Vineyard, Provincetown and Hyannis, from Boston’s Logan Airport. The agreement made it possible for customers on Jet Blue and Cape Air to purchase seats on both airlines under one reservation. 8 Jet Blue
  8. 8. In the future, Jet Blue has plans to increase capacity at its base airport, New York’s JFK, and will announce additional flights between currently served cities. Jet Blue also plans to enter new markets in which there is the demand for lower fares. Destinations in Canada, Mexico, and the Caribbean are considered to have high fares in general, and Jet Blue sees these as potential growth areas. Strategic Implication The cities that have been identified by Jet Blue as “key cities” are markets that must be heavily focused on in the media plan for this campaign. As the top four markets in terms of number of departures for Jet Blue are New York, Los Angeles, Boston and Washington D.C., the campaign must work to keep consumers flying to and from these markets on Jet Blue, as the sales of the company are so heavily reliant on these particular geographic areas. Price Effects As a low-fare airline, Jet Blue is at risk when environmental factors force the price of airline tickets upwards. As prices rise, Jet Blue loses its position as a low-cost airline, and consumers may be driven to seek an alternative form of transportation. It is likely that if environmental factors cause prices to increase for consumers to fly Jet Blue, the prices will have increased on alternative airlines as well. There is the potential that as a low-cost airline, consumers may not find cheaper airfare compared to that of Jet Blue, even if their prices have increased drastically. This leads to the possibility of consumers turning to indirect competitors, such as Amtrak, Greyhound, and even car-travel. By eliminating amenities such as airport lounges and full meal service, Jet Blue manages to keep costs down. Jet Blue also does so by relying on electronic ticketing and beginning to operate more than one type of aircraft, as the airline believes it can more efficiently serve smaller markets and cut costs with E190s, which have approximately 100 seats, as opposed to the 150 seats on the A320s. 9 Jet Blue
  9. 9. In terms of dealing with rising fuel costs, Jet Blue has been less successful than some other low-fare airlines, such as Southwest. This environmental factor led to consecutive losses for Jet Blue in the fourth quarter of 2005, and the first quarter of 2006, causing the airline to raise fares on some routes. Jet Blue was forced to keep expenses down and slow certain expansion plans in order to keep prices low for consumers, and to prevent them from turning to Jet Blue’s direct competitors, or indirect competitors mentioned previously. Seasonal effects March 2007, Jet Blue announced that they would be making additions to the current flight schedule in order to take full advantage of the sales opportunities during what they consider to be the “peak summer season” between May 1 and October 31. With their announcement, they state that during Summer 2007, they would “offer more flights to the Caribbean/Atlantic region than any other low-fare airline, with nearly 200 weekly flights from Boston, New York’s JFK, and Orlando.” (“Press release, The Carribean…” ) With a major expansion of service to Jet Blue customer’s favorite island destinations, Jet Blue launched nonstop service between Santo Domingo, Dominican Republic and New York’s JFK Airport on May 24, as well as nonstop service between Boston and Bermuda beginning May 1, and Orlando and Ponce, Puerto Rico beginning May 24. Additionally, Jet Blue added additional flights to existing routes for the peak summer season. Routes with added flights for the season include service between New York’s JFK and Aruba; New York’s JFK and Santiago, Dominican Republic; and Orlando and San Juan, Puerto Rico. Strategic Implication Jet Blue’s marketing must be aimed towards positioning the additional flights to the Caribbean/Atlantic region during the peak summer season as the reason why consumers should choose Jet Blue as opposed to other low-fare airlines. As Jet Blue will offer more flights to this region during the peak season than any other low-fare carrier, this expansion will be highlighted to entice 10 Jet Blue
  10. 10. consumers who already do their greatest proportion of traveling during the summer to do it by flying Jet Blue. When creating the media schedule, Jet Blue will take these peak travel months in to account when establishing GRP distribution. By increasing GRPs during the period between May and October, Jet Blue will increase the frequency of exposure among current consumers in the target market. 11 Jet Blue
  11. 11. Competition Industry The United States passenger airline industry has traditionally been dominated by the largest airlines, defined by the DOT as airlines with annual revenues over $1 billion dollars. The seven largest airlines include American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines, Southwest Airlines, United Air Lines and US Airways. Currently, there are 16 major passenger airlines which offer scheduled flights to most large cities within the United States and abroad as well as many smaller cities. The largest major U.S. airlines, excluding Southwest, have adopted the traditional ‘‘hub and spoke’’ network route system which operates most of the airline’s operations at a select number of hub cities. They serve the majority of other destinations in the system with a one-stop or connecting service through the hub. There are currently five regional major U.S. airlines. Regional airlines usually operate smaller aircraft on lower volume routes than traditional network airlines. Unlike low-cost airlines, regional airlines do not necessarily try to establish an independent route system. They usually enter into relationships with one or more traditional network airlines. The regional airlines agree to use their smaller aircraft to carry passengers booked and ticketed by the traditional network airline between their hubs and a smaller outlying city. Low-cost airlines developed in the aftermath of deregulation of the U.S. airline industry in 1978. The new low-cost airlines created competition on many routes for the first time. Following the September 11th terrorist attacks, low-cost airlines were able to fill in the capacity space that traditional network airlines had to cut out. The lower fares and growing capacity for low cost airlines damaged the profitability of traditional network airlines. Since 2001, most of the traditional network airlines have experienced considerable financial restructurings in bankruptcies, mergers and consolidations. These 12 Jet Blue
  12. 12. financial changes caused traditional airlines to cut labor costs, restructure their debts, and eliminate pension plans. They had to reduce cost structures, increase workforce flexibility and provide innovative offerings that would be comparable to the low-cost airlines. At the same time, traditional airlines could maintain their expansive route networks, alliances and frequent flier programs. Ultimately, the gap between low-cost airlines and traditional network airlines has decreased. Industry Competition The airline industry is highly competitive. Jet Blue’s competitors and potential competitors, traditional, low-cost, regional and new entrant airlines, pose significant threats to the company’s profitability. Jet Blue’s three major competitors include AMR Corporation/American Airlines, UAL Corporation/United Airlines, and Southwest Airlines. Some of the competitive factors in the airline industry include routes served, fare pricing, customer service, flight schedules, aircraft types, safety record, reputation, code- sharing relationships, capacity, in-flight entertainment systems and frequent flyer programs. The airline industry is sensitive to even minor changes in fuel costs, fare levels and passenger demand. Low-cost airlines developed in the aftermath of deregulation of the U.S. airline industry in 1978. The development led to competition on many routes for the first time. The growth of fare-conscious travelers has caused traditional airlines with deteriorating market shares to undergo cost cutting and re-evaluation of their basic business models. During 2007, Southwest Airlines offered buyouts to some 8,700 employees in order to cut costs. Relatively small changes in pricing and passenger traffic can potentially threaten the balance of an airline’s operating and financial results. Rivalry between airlines has become even more intense as most airlines now engage in the same advanced technologies such as ticket less travel, laptop computers in the cockpit and website bookings. Since 2001, most of the traditional network airlines 13 Jet Blue
  13. 13. have experienced considerable financial restructurings with bankruptcies, mergers and consolidations. Northwest and Delta Airlines recently filed for Chapter 11 bankruptcy and currently operate at a loss. In the highly competitive airline industry, Jet Blue works to differentiate themselves from competitors in offering a low-cost, low-price airline service as well as their unique formation of the “Jet Blue Experience”. Jet Blue strives to outweigh competition with a variety of amenities and personalized customer service, but in some cases, the legendary and more brand recognizable airlines take the upper hand. Within the industry, seven of the other major U.S. airlines are generally larger, have greater financial resources and serve more routes than Jet Blue. Two of their main competitors, American and United Airlines are legendary in air travel. American and United rank second and third consecutively, in terms of total operating revenues. Jet Blue’s three main competitors participate in marketing alliances, which generally provide for code-sharing, frequent flyer programs, and coordinated flight schedules for convenient connections and other joint marketing activities. These alliances permit the airlines to market flights operated by other alliance airlines as their own. During 2007, Southwest increased their international capacity by 8% in their partnership with ATA. Jet Blue does not currently participate in any marketing alliances or joint fares with other airlines, but the idea has been delegated a great opportunity in the near future. Direct Competitors AMR Corporation/American Airlines AMR is the parent company of both American Airlines, Inc. and American Eagle Airlines, Inc. AMR has a number of businesses and key facilities within its corporate structure that are all overseen from their corporate headquarters in Fort Worth, Texas. The AMR Corporation is one of the founding members of Oneworld, a global marketing alliance. About 65% of AA’s employees are represented by one of three labor unions: Allied Pilots Association, Association of Professional Flight Attendants, and Transport Workers Union. 14 Jet Blue
  14. 14. American Airlines is the largest airline in the world in terms of total passengers- miles transported and fleet size and the second-largest airline in the world in terms of total operating revenues. American Airlines contributes more than $150 billion per year to the U.S. economy. American and its regional airline affiliates, American Eagle and the American Connection airlines make more than 4,000 daily flights serving 250 cities in over 40 countries including the Americas, Europe, and the Asia/Pacific region ( Among domestic U.S. airlines, American’s 2006 market share was 17.8% ( Their entire fleet is over 1,000 aircraft including American Airline’s use of about 675 jets. Unlike peers such as UAL, Delta, Northwest, and US Airways, American Airlines was able to stay above the airline industry crisis on September 11, 2001 without going bankrupt. Although the aftermath of 9/11 caused American Airlines to reduce its capacity, its fleet, and its workforce, they were able to remain profitable compared to competitors. The AMR parent company lost money for five straight years and fell into debt before posting a profit in 2006. Controlling costs continues to be an important focus for the AMR Corp. Increased competition following the 1978 Airline Deregulation Act prompted a special loyalty fare which American Airlines modified and expanded to offer complimentary first class tickets and upgrades. Membership was developed by searching AA's SABRE computer reservations system for repeat phone numbers. The frequent flyers program name was selected by AA's advertising agency and follows along with other American Airlines programs featuring the AA in the name and logo. UAL/United Airlines Upon deregulation of the airline industry, United attempted to diversify its business, stabilize its finances and make its labor costs competitive with other airlines. UAL’s main subsidiary, United Airlines is the world's second ranked carrier. UAL operates as a low-fare carrier, Ted and provides regional service in the US via United 15 Jet Blue
  15. 15. Express. United's largest hub is located at O'Hare International Airport which serves 650 daily departures. The United Airline serves more than 200 destinations in approximately 30 countries worldwide from hubs in Chicago, Denver, Los Angeles, San Francisco, and Washington, DC. Its mainline fleet includes about 460 jets and offers international coverage through their Star Alliance, a global marketing and code-sharing partnership. In December of 2002, UAL and 26 of its subsidiaries filed for Chapter 11 bankruptcy and didn’t emerge until February 1, 2006. The airline takes advantage of its extensive global network along with the well-known United brand. In July 2006, United announced plans to add routes from the US to the Asia/Pacific region, and a year later the airline gained a desirable US-China flight. The UAL Company constantly works at reducing its operating costs. As of July 31, 2006, United is the world's second-largest airline by revenue-passenger-miles, third-largest by total operating and fourth-largest by total passengers transported. Southwest Airlines Southwest maintains a low-cost, no-frills, no-reserved-seats approach to air travel throughout the US, serving some 65 cities in more than 30 states. In competition with the other leading US airlines, Southwest stands as a legendary inspiration for new low-fare airline new comers around the world. Southwest has remained profitable for the past 34 years despite the constant ups and downs of the airline industry. Simplicity is essential to Southwest’s success with flights being limited to less than two hours and use of small rather than large hub airports. Southwest Airlines uses about 480 aircrafts specifically from the Boeing 737 type which allows for less training and maintenance costs. The airline also insinuates simplicity with pre-assigned seating. Passengers are boarded in three tiers, those with boarding cards A first, followed by B, followed by C, so it pays to check-in early. This unique policy helps the carrier achieve quick turnaround rates at airports and allows the airline to stick to their schedules. 16 Jet Blue
  16. 16. In 2007, the company decided to adjust their boarding process by assigning passengers numbers within their boarding groups. The new process successfully eliminated the formation of lines hours before takeoff in the passengers’ effort to secure preferred spots. Along with simplicity, Southwest’s unionized workforce emphasizes customer service with a fun and friendly atmosphere. The carrier serves additional destinations via a code-sharing agreement with ATA Airlines. The first code-share for Southwest allows the carrier to sell tickets on ATA flights to Hawaii, as well as to close-in airports in New York (LaGuardia) and Washington, DC (Reagan National). During 2007, Southwest planned to take delivery of enough new jets to increase capacity by about 8%. In July 2007, along with adjusting its growth plans, Southwest offered buyouts to some 8,700 employees, a quarter of its workforce. The idea was to replace those who accept the buyout package with lower-paid workers in order to cut costs. Indirect Competitors Greyhound Greyhound Lines is the only US bus company with a regular nationwide intercity schedule that carries some 21 million passengers yearly to about 1,700 destinations throughout the US. Some destinations are served through partnerships with regional bus lines. The company's fleet includes about 1,500 buses. Along with its intercity passenger service, Greyhound offers express package delivery as well as charter bus services. Affiliates operate under the Greyhound brand in Canada and Mexico. The company is a subsidiary of Laidlaw International, which has been acquired by FirstGroup, a leading school bus operator in the US. Greyhound focuses on its passenger transportation business, which primarily markets to low- to middle-income travelers. It faces competition from airlines on many of 17 Jet Blue
  17. 17. its intercity routes. Greyhound is able to compete with airlines not only on price but also by serving more destinations. The company considers its main competition to be automobile travel. Greyhound has simplified its route structure to focus on short and medium haul transportation. In 2006, Greyhound worked to eliminate unprofitable routes and low-demand stops. Amtrak The National Railroad Passenger Corporation carries more than 24 million passengers a year in 46 states excluding Wyoming, South Dakota, Alaska, and Hawaii. Amtrak is a combination of the words American and track. Amtrak provides intercity passenger train service in the United States. quot;Amtrakquot; is a portmanteau of the words quot;Americanquot; and quot;trackquot;. The company uses about 21,000 route miles, most of which are owned by freight railroads. Amtrak is a for-profit company that has never been profitable. The rail carrier is almost wholly owned by the US Department of Transportation and depends on subsidies from the federal government to maintain its operations ( Some government officials have requested for Amtrak to be self-sufficient while the railroad has requested federal money. Both issues have been the subject of considerable debate in Congress. Amtrak employs nearly 19,000 people. It operates passenger service on 21,000 miles (33,800 km) of track primarily owned by other railroads connecting 500 destinations in 46 states and some routes also provide service for Canada. In fiscal year 2006, Amtrak served 24.3 million passengers, a company record. According to estimates for fiscal year 2007, Amtrak has served over the 25 million passengers which is a 6% increase from last year ( Automobiles The Automobile Industry produces automobiles along with other gasoline- powered vehicles including: buses, trucks, and motorcycles. The automobile industry is one of the most essential industries in the world in affecting the economy as well as the cultures of the world. It provides the basis for many related service and support industries. Automobiles revolutionized transportation in the 20th century which forever changed the way people live, travel, and do business. 18 Jet Blue
  18. 18. The automobile has enabled people to travel and transport goods farther and faster. It has opened wider market areas for business and commerce. The auto industry has also lowered the overall cost of transportation with mass production, mass marketing, and globalization of production. From 1886 to 1898, about 300 automobiles were built without having an established industry. A century later, with automakers and auto buyers expanding globally, auto making became the world's largest manufacturing activity as 58 million new vehicles are built each year worldwide. As a result of easier and faster transportation, the United States and world economies have become dependent on the mobility that automobiles, trucks, and buses provide. Competitor’s Advertising American Additionally, the airline industry competes in their advertising and promotional campaigns. Throughout the years, American Airlines has changed their slogans and logos to represent their status and personal connection with their customers. During 2007, American Airlines launched their newest campaign with the tagline, quot;We know why you fly.quot; The campaign spans local and national television, national newspapers and magazines, with both English and Spanish-language ads and accounts for about 70 percent of the airlines advertising budget with 15 percent allocated to online advertising. United Airlines United Airlines has changed its image over the years based on its personal relationships with customers. In the past, United had received bad media publicity and reacted with an advertisement expressing the airline’s concern and promised a change for their customers. At the U.S. advertising and marketing effectiveness competition, United Airlines received two gold EFFIE Awards, and one silver award for demonstrating that its marketing and advertising campaigns are the airline industry's most effective at 19 Jet Blue
  19. 19. delivering business results. Also in 2002 United launched its BrandEd program, using seminars and a site on the company’s intranet to educate hundreds of United employees, communications agencies, and vendors on the basics of the United brand. Southwest Airlines Advertising has been an important part of Southwest Airline’s history since 1971. The airline spends $25 million annually on broadcast TV ads alone. “Nuts about Southwest” is a new online blog developed for the Employees, Customers, airplanes, and airports. Southwest led the way with the first airline web page,, the first direct link to customer’s computer desktops. In 2003, Southwest Airlines also announced its partnership with the A&E Television Network to film a real-life, behind the scenes look at the drama surrounding commercial air travel. Strategic Implication Overall, Jet Blue faces an incredible amount of competition within the airline industry. Investigative research and knowledge of the competitive market is incredibly vital to the marketing strategy and decision-making. Knowing the competitors, and all of their aspects, gives decision makers the chance to recognize exactly what they are competing against and an initiative to make their airline better. Jet Blue must differentiate its messages from its competitor’s message in order to stand out in their market. 20 Jet Blue
  20. 20. Jet Blue AMR Corp. Southwest UAL Airlines Annual Sales ($ mil.) 2,363.00 22,563.00 9,086.00 19,340.00 Employees 10,624 86,600.00 32,664 55,000 Market Cap ($ mil.) 1,654.50 5,954.00 10,709.00 5,740.50 Profitability Jet Blue AMR Corp. Southwest UAL Industry Market Airlines Gross Profit Margin 30.30% 27.20% 29.40% 16.80% 23.70% 51.80% Pre-Tax Profit Margin 1.10% 1.90% 8.20% 2.00% 3.10% 6.30% Net Profit Margin 0.60% 1.90% 5.10% 1.30% 2.90% 4.90% Valuation Jet Blue AMR Corp. Southwest UAL Industry Market Airlines Price/Sales Ratio 0.64 0.26 1.14 0.29 0.41 2.04 Price/Earnings Ratio 91.9 13.73 23.11 0.24 16.8 18.37 Price/Book Ratio 1.67 9.81 1.67 2.39 1.67 2 Price/Cash Flow Ratio 4.54 2.89 7.54 2.65 4.98 12.33 Growth Jet Blue AMR Corp. Southwest UAL Industry Market Airlines 12-Month Revenue 29.90% 2.60% 11.30% 3.90% 8.30% 11.80% Growth 12-Month Net Income 0.00% 0.00% -32.70% -93.80% 15.90% 13.80% Growth 36-Month Revenue 126.90% 23.00% 49.90% 27.30% 58.90% 36.70% Growth 36-Month Net Income -81.20% 0.00% 53.10% 0.00% 60.80% 43.60% Growth 21 Jet Blue
  21. 21. Amtrak Plane Auto Time (1) NY - Boston downtown - downtown 4:15 2:50 3:553 215 mi. Cost 1: 36 25 19 (cents/passenger mile) 2: 18 Safety (deaths/ billion passenger miles) .88 .87 11.7 Dartmouth Safety 8.6 .4 (deaths/ billion passenger miles) Dollar figures in millions. (5) NTSB 1994 Airline 2007 2006 Change Deaths/yr 128 42,000 AMR $175 $15 1067% billion passenger miles/yr. (2000) 5.5 (2) 516 4,390 Efficiency Jet Blue $23 $0 NA 83 38 20-120 (passenger mi./ gallon) Southwest $162 $48 238% Pollution 3 174 10 UAL $334 $190 76% (oz./passenger mile) Govt Subsidies $1 B $16 B $32 B Miles per gallon Average no. of Miles traveled per Passenger-miles per Vehicle Passengers gallon gallon Automobile 2.3 28.4 65.3 Bus 23.2 6.2 143.8 Jetliner 89.6 0.34 30.5 1 Train 20.5 2.6 53.3 22 Jet Blue
  22. 22. The Consumer/Target Group Profiles Jet Blue Consumer Profile As a leading low-cost airline with numerous luxury aspects, Jet Blue has developed a consistent consumer base. Using Simmons Choices 3 data, demographic, psychographic, and perception information has been gathered that draws a line towards two distinctive target groups. The data is summarized at the end of this section and the full cross tabulation can be found in the appendix. Table: Used Jet Blue on Last Trip Total Sample Size (000) Index 1,575 155 Females: Age 18-24 1,575 197 Males: Age 35-44 1,575 136 Asian/Pacific Islander Table: DMAs Females Age 18-24 Females: Age 18-24 12,863 Total Sample Size (000) 131 DMA: Los Angeles Index 131 DMA: Miami Index Table: DMAs Males Age 35-44 Males: Age 35-44 21,098 Total Sample Size (000) 120 DMA: Miami Index 159 DMA: San Francisco Index Primary Target Groups Among travelers that used Jet Blue on the last trip they took, adults age 18-24 and age 35-44 represented the largest number of flyers. Further data shows that females age 18-24 are 55 percent more likely than average to have flown Jet Blue on their last trip, while males age 35-44 are 97 percent more likely than average to have flown Jet Blue on their last trip. Thus, the suggested primary target groups for this campaign should be: 23 Jet Blue
  23. 23. 1) females age 18-24; 2) males age 35-44. Both target groups demonstrate a tendency to depart from coastal airports such as Miami, Los Angeles, and San Francisco. Simmons data shows that both target groups are highly educated and the campaign should reflect this. The females age 18-24 are 552 percent more likely than average to be a full-time college student. These females tend to be single and most likely travel for leisure reasons outside of the United States. This high level of education is also demonstrated in the employment areas of those who fly Jet Blue. As can be seen in the Simmons data, flyers of Jet Blue, especially the males age 35-44, are mostly employed in business areas such as: wholesale & retail trade, real estate, educational services, and professional, scientific, and technical services. Secondary Target Group In addition to the primary target groups for Jet Blue, there is a secondary target group that should be included in the campaign – Asians and Pacific Islanders, who are 36 percent more likely than average to have flown Jet Blue on their last trip. Simmons research data shows that Asians and Pacific Islanders share many of the same demographic and psychographic characteristics as the primary target groups. The Asian and Pacific Islander target group also demonstrates a high level of academic education, with large numbers completing graduate school with a degree. The secondary target group also has a high rate of departure from coastal airports as well. The main difference between the secondary target group and the primary target groups is that Asians and Pacific Islanders have much higher index numbers for credit card and airline affiliation than the primary target group. Table: Asian/Pacific Islander Asian/Pacific Islander 8,404 Total Sample Size (000) 296 Graduate Degree Index 159 DMA: Boston Index 287 DMA: Los Angeles Index 652 DMA: San Francisco Index 289 DMA: Washington, DC Index 197 American Express: Airline Affil. Index 24 Jet Blue
  24. 24. 229 MasterCard: Airline Affil. Index 142 Visa: Airline Affil. Index Environment Being in the Airline industry itself poses many problems out of the control of the Jet Blue company itself. There are many political, economic, legal and cultural problems that face Jet Blue. Over the past year of 2007, Jet Blue has been scrutinized for certain weather conditions that made flying unfavorable, and were out of the control of the company. That has deterred some passengers from flying with Jet Blue and has put our company in a social bind in the mind of our customers. Along with the recent flight delays and cancellations, there are still other problems that faze the company, such as crashes and loss of maintenance and crew members. The airline industry is always cautious about what would happen if the unfortunate event of one of our aircrafts crashing occurs. This problem would be one that is an unfortunate event and would cause many legal, political, and social problems for our company. If events such as these occur, we must have a plan how to deal with the event. Customer Service Jet Blue prides itself on its award winning customer service and amenities. With a friendly, efficient staff, we have been able to win many awards over the past few years for our outstanding performance in the realm of customer service. However, if our maintenance crews, flight staff, or customer service attendants decide to leave our company, it could hurt our reputation. We will continue to provide our staff with desirable work conditions (such as working from home for booking attendants, which allows for a more flexible schedule), to keep our staff, as well as our consumers happy. Banning Liquids Since the 9/11 attacks and other recent terrorist attempts, airlines have been banning liquids aboard airlines. Terrorists may be fashioning bombs that can be set off with the mixing of liquids. With this increased security, Jet Blue will be a part of the 25 Jet Blue
  25. 25. nationwide ban on liquids. Passengers will go through the security at the main check points, as well as at the boarding gates where they will be screened a second time. Fuel Costs Our $21 million loss over the last two years ($20 million in 2005 and $1 million in 2006), due to high fuel costs, has prompted us to introduce initiatives to reduce fuel consumption. In 2006, these initiatives reduced fuel consumption through more fuel- efficient operating practices, renewing our focus on low-cost carrier spending habits and implemented more efficient staffing in all aspects of our business (Jet Blue Annual Report, 2006). Flight cancellations and delays In the event that multiple flights would be cancelled or delayed for a period of time due to unfavorable weather conditions, such as those which occurred on February 14, 2007, our company would begin by publicly addressing the situation. Holding a press conference to show the customers that we care about their safety and that the company is working in the best interest of our passengers would be the first and most important step. The aftermath of the snowstorm in February that grounded many of our planes resulted in a lot of negative press and negative customer perception. In order to deal with these negativities, we have decided to create a Customer Bill of Rights, and also plan to spend $20 million to $30 million in an effort to appease thousands of angry customers (John Springer, 2007). All other customers whose flights were cancelled by Jet Blue will, at the customer’s option, receive a full refund or accommodation on a future Jet Blue flight at no additional charge or fare. If Jet Blue cancels a flight within 12 hours of a scheduled departure and the cancellation is due to a Controllable Irregularity, Jet Blue will also provide the customer with a voucher valid for future travel on Jet Blue in the amount paid by the customer for the roundtrip (or one-way trip, doubled)( Jet Blue Customer Bill of 26 Jet Blue
  26. 26. Rights, 2007). More information about the Customer Bill of Rights can be found in the appendix. War/Terrorism Though the war on terror has been raging for many years now, the airline industry is still facing the rippled effects from 9/11. According to the Americas Publishing Group, airlines and flights have been on the decline since 2001 after 9/11 and some have dropped 5.6% in 2003 (James Broida, 2003). The industry is still building up and airlines are offering passengers more coupons and savings for destinations to try and build the economy to its former glory as well as get people flying again. Plane Crash In the event of a plane crash, we will address the situation promptly. All advertising for Jet Blue across all mediums will be halted for 4-6 days. We will also change the content of our advertisements to reflect safety rather than low price. There will be investigations conducted to find out the source of the crash and what exactly occurred. Families will be notified of the incident and they will have access to all of the information from the investigation as we receive it. In the event that Jet Blue is at fault for the incident, there will be lawyers involved in determining the damages and costs rendered to families. Internet Travel Usage The Internet is at its peak usage lately and consumers can find just about anything online, including cheap flights. According to the Travel Industry Association of America among the 143.3 million U.S. travelers today, 67 percent use the Internet, and among those travelers, 39.0 million book travel plans online (Travel Industry Association, 2004). This kind of data is very important to Jet Blue because this is where they get a lot of their booking sales. Through promotions and discounts to travelers through these booking sites, their flight reservations have spiked. Market Changes 27 Jet Blue
  27. 27. Since 9/11 there have been many efforts to increase both domestic and international flights. The effects have hit Jet Blue as well. According to the Bureau of Transportation Statistics, relatively inexpensive air fares have contributed to the increase in passenger travel. For example, the Air Travel Price Index (ATPI), which tracks changes in prices paid for airline tickets, showed in the first quarter of 2005 the lowest fare index of any January-to-March period since 1999 (Bureau of Transportation Statistics, 2007). Since those statistics from 2005, low fare airlines continue to make up a significant percentage of the flight distributions. 28 Jet Blue
  28. 28. Air Travel Price Index Index: 1995 Q1 = 100 Year Quarter U.S. Origin ATPI 1999 1 102.20 1999 2 102.06 1999 3 100.44 1999 4 101.73 2000 1 106.13 2000 2 108.18 2000 3 108.98 2000 4 111.56 2001 1 116.94 2001 2 111.77 2001 3 106.05 2001 4 102.86 2002 1 108.18 2002 2 106.39 2002 3 103.39 2002 4 104.73 2003 1 107.98 2003 2 105.79 2003 3 105.53 2003 4 106.56 2004 1 108.59 2004 2 106.24 2004 3 102.63 2004 4 102.24 2005 1 103.90 Source: U.S. Department of Transportation, Research and Innovative Technology Administration, Bureau of Transportation Statistics, Nov. 21, 2005. II. S.W.O.T Analysis Introduction 29 Jet Blue
  29. 29. The S.W.O.T. Analysis is used here to weigh the strengths, weaknesses, opportunities and threats related to Jet Blue. Understanding the various factors that will affect the public’s perception and opinion of Jet Blue is important when determining a plan for the company’s advertising campaign. Strengths and weaknesses are considered to be internal issues, which can be generally controlled and modified through Jet Blue itself, while opportunities and threats often arise due to external factors, which are often outside of Jet Blue’s realm of control. Through using the priority tool, survey tool, and discussing the most important issues facing the industry, we were able to focus in on specific strengths, weaknesses, opportunities and threats for the Jet Blue campaign, as well as a broader list of positive and negative factors to be considered. Highlighted strengths for Jet Blue include the special amenities the company offers, high quality of customer service, and low fares. Jet Blue is known for providing customers with an enjoyable flying experience for a low cost, and this is important to emphasize in the campaign in order to maintain this reputation. We found through the Multi-Attribute Model (MAM) that consumers are most concerned with amenities, customer service and price when choosing an airline, and therefore felt that because these attributes are some of Jet Blue’s greatest strengths, we must point them out in our advertising. Among the most important weaknesses to consider are that Jet Blue is a young airline, and that the company has recently received negative media attention. While many airlines that are ahead of Jet Blue in terms of market share have been around since the 1920s, Jet Blue is less than ten years old. This means that Jet Blue has had far less time to develop a strong consumer base, and has had less time to establish itself as a major competitor in the airline industry. Additionally, less time in the marketplace often means less top of mind awareness among consumers, which can certainly serve as a weakness for the company. On top of this, negative media attention surrounding Jet Blue after an incident in which passengers were stranded on the tarmac for an extended amount of time die to an ice storm took a toll on Jet Blue’s young image. As a newer company, it was probably harder for the airline to bounce back than it might have been for a more strongly established company. 30 Jet Blue
  30. 30. The list of opportunities that Jet Blue may benefit from includes the recent bankruptcy of Delta and Northwest, two of Jet Blue’s major competitors. As a newer company trailing behind seven major competitors in terms of sales and market share, any problem for a larger airline could become an opportunity for Jet Blue. As competitors suffer, Jet Blue has the opportunity to gain customers that could potentially become loyal to Jet Blue if expectations are met or exceeded by the company. Threats to the campaign include the changes in regulation of the airline industry, as well as congestion in the airports. Changes in government regulations which would impose additional requirements and restrictions on operations, or the U.S. Government ceasing to provide adequate war risk insurance could increase Jet Blue’s operating costs and result in service delays and disruptions. Service delays and disruptions could be further imposed due to the fact that Jet Blue flies out of some of the most congested airports in the country, and this could be damaging to the company’s brand image. In addition to the aforementioned strengths, weaknesses, threats and opportunities, a more complete list of all possible factors affecting Jet Blue is provided below: Strengths • Leather seats throughout all Jet Blue aircraft • Extra 2” of legroom, most legroom in coach based on the average fleet-wide seat pitch in the U.S. • Jet Blue and Bliss Spa partnership: Shut-eye Service on all overnight flights from the west coast to the east coast • Free snacks (Dunkin Donuts, Terra Blue Chips) • Entertainment: o DirecTV programming in every seat o XM Satellite Radio in every seat o Times on Air in every seat ! Introducing “Times on Air,” which is sponsored by The New York Times, an in-flight video magazine that features content from the newspaper’s Times Talks events 31 Jet Blue
  31. 31. • Awards for “Best Value for Cost” • Awards for “Best Staff” • Online check-in available • When a customer calls to book a flight on Jet Blue, he/she will be transferred to someone working from his or her own home. This contributes to the already outstanding Jet Blue customer service success through offering employees flexible schedules, employee education, and individual initiative Not only does this keep Jet Blue employees happy, but also saves the corporation money by eliminating the need for large and expensive call centers • Growing business o The traditional “low-cost” airline would simply offer low fares while eliminating most traditional passenger services. Jet Blue offers many amenities to customer without raising fares. o Jet Blue has recently added more airports to their list of destinations served, including Westchester Airport in White Plains, NY o Jet Blue is in the process of adding 80 new Airbus A320 aircrafts to their fleet, as well as 78 Embraer 190 aircrafts by 2014 • Largest airline at JFK Airport in New York City o This is considered to be a strength because JFK is one the top airports in the U.S., so by having a strong presence in the airport creates increased brand awareness for Jet Blue • Two types of aircraft used o Only two types of aircraft have to be maintained and serviced, and spare parts only have two be purchased for two aircraft models • Customer service o Jet Blue was ranked number one in customer satisfaction according to Consumer Reports’ National Research Center Survey. They scored an 87 percent out of 100. o Excellent safety record o All seats are pre-assigned 32 Jet Blue
  32. 32. o All travel is ticketless, electronic ticketing implemented o Policy to not overbook flights o Fares based on one-way travel o No Saturday night stay required, and change fees are only $30 per passenger ($25 if done through Jet Blue website) compared with $50 to $100 normally charged by other major U.S. airlines o Jet Blue has created a “Customer Bill of Rights” Weaknesses • Loss of $21 million in the past 2 years • Lesser number of destinations compared to competitors • As a young company, Jet Blue’s competitors have more T.O.M.A. Additionally, travel routes previously established by other airlines may prevent Jet Blue from implementing those routes • Competitive complications in switching markets • 72.9% on-time performance is low for the industry. This may be attributed to the fact that Jet Blue most commonly flies out of 4 of the most congested airports in the U.S. Opportunities • Northwest and Delta airlines claim bankruptcy • Marketing alliances: These alliances generally allow for code-sharing, frequent flyer program reciprocity, coordinated flight schedules that lead to convenient flight connections, and other joint marketing activities. Such alliances also permit an airline to market flights operated by other alliance airlines. The benefits of broad networks offered to customers could attract more consumers to these networks. • Taking routes that Delta covered before going bankrupt: Bankrupt Delta Air Lines plans to slash flights on many routes where its Song unit competes with Jet Blue Airways 33 Jet Blue
  33. 33. • Increasing international presence Threats • Possibility of terrorism o Since 9/11/2001, airlines have continued to make flying more friendly for customers and make them feel safer, but the number of people taking flights is still not anywhere near the amount that existed prior to 2001 o As a result of the threats of war and terrorism, many airlines are coming up with packages, deals and coupons for their flights in order to entice more people to start flying again • Weather/climate o After ice storms delayed and cancelled numerous flights in February 2007, Jet Blue is attempting to bounce back from this customer service disaster. The company received much negative press after passengers on planes sat on the tarmac for over 8 hours o Due to these weather-related events, Jet Blue’s stock shares went from a record high of $17.02 per share, to almost $8.50 per share • Loss of personnel o If Jet Blue is unable to attracts and retain qualified personnel or fail to maintain their company’s culture, business could be significantly harmed • Aircraft malfunction/crashes • Congestion at major airports o As Jet Blue flies out of some of the most congested major airports in the U.S., congestion and delayed flights could become a threat to Jet Blue’s brand image • Price and availability of fuel • Increase of competitor presence in market • Media attention (negative) • Stronger presence and greater number of years in market for established airlines • Economy 34 Jet Blue
  34. 34. • Changes in government regulations imposing additional requirements and restrictions on operations, or the U.S. Government ceasing to provide adequate war risk insurance could increase Jet Blue’s operating costs and result in service delays and disruptions • Strict bankruptcy law: The situation in the airline industry is near dire. Major airlines like American, Delta, United, and Continental have all considered or are pursuing bankruptcy as a way to avoid a total collapse. Since deregulation, the only alternative for major airlines has been to file for bankruptcy. The events of 9/11/2001 are thought to be the reason the airline industry is in such financial trouble. 35 Jet Blue
  35. 35. III. Advertising and Marketing Communications Objectives For our campaign we decided it would be important for us to increase our share of the airline industry market. Right now we are currently at 4.1% of the market share, with the top competitors holding over 10% each, of the market. Considering that we are a relatively new company compared to the rest of our competitors (some of which who have been around for over 50 years), we decided to increase our market share from 4.1% to 4.3% by the end of our campaign. Our next highest competitor is U.S. Airways, with a market share of 4.7%. Ideally, over the next 2-3 years, we would like to see Jet Blue’s market share surpass U.S. Airways’ 4.7% and move up another spot in the market. If our market share grows too rapidly or too slowly, we will have to change our advertising strategies and possibly pull some advertisements on certain media outlets. Increased sales for Jet Blue would help out our company significantly. Over the last two years we have lost over a total of $21 million. These losses can be accounted for in fuel prices, as well as pricey lawsuits and bad PR. Our last year’s sales were a total of $2.363billion, which seems like a lot of money; however, we ended up having a net loss of $1million last year. If we increased sales by a margin of almost $0.05billion each quarter, and ended up at $2.6 billion we should be able to cover the fuel costs each year. We do everything we can to prevent mis-haps from happening, but if they do incur, and reduce our net income, we have contingency plans in place. We also have contingency plans in place for our sales. If sales grow too rapidly or too slow, we will have to change our advertising strategies and possibly pull some advertisements on certain media outlets. Our advertising objectives include maintaining of a 3.7 frequency throughout the campaign. By using the Ostrow model, we have determined that the frequency for Jet Blue should be a 3.7. In order to keep this frequency throughout the campaign we will have to watch where we place our GRP’s and adjust them accordingly throughout in order to maintain our goal of 3.7. (See Ostrow model Chart on next page) Our other Advertising objective is to increase our Top Of Mind Awareness from 9.55% to 9.75%. Out of our competitors we have the highest top of mind awareness by almost 2%. By increasing our awareness and brand preference we would be able to maintain a strong presence in the airline industry. However, if we fall below, or too far above our target, we will have to adjust our GRP’s to coincide with our campaign plan. 36 Jet Blue
  36. 36. Simmons Data for brand preference FEMALE MALE AGE: 18- AGE: 35- ASIAN/PACIFIC elements 24 44 ISLANDER Total Sample (000) 211,889 8,557 14,788 5,880 Vertical 100% 100% 100% 100% Horizontal 100% 4.04% 6.98% 2.77% Index 100 100 100 100 AIRLINES USED- ANY TRIP: JET BLUE (000) 2,346 194 356 126 Vertical 1.11% 2.27% 2.41% 2.15% Horizontal 100% 8.27% 15% 5.38% Index 100 205 217 194 AIRLINES USED ANY TRIP: SOUTHWEST (000) 13,151 872 1,425 788 Vertical 6.21% 10% 9.64% 13% Horizontal 100% 6.63% 11% 6.00% Index 100 164 155 216 AIRLINES USED ANY TRIP: AMERICAN (000) 12,217 773 1,315 717 Vertical 5.77% 9.04% 8.89% 12% Horizontal 100% 6.33% 11% 5.87% Index 100 157 154 212 AIRLINES USED ANY TRIP: US AIRWAYS (000) 8,920 486 893 325 Vertical 4.21% 5.68% 6.04% 5.53% Horizontal 100% 5.45% 10% 3.65% Index 100 135 143 131 AIRLINES USED ANY TRIP: NORTHWEST (000) 7,801 353 990 408 Vertical 3.68% 4.12% 6.70% 6.94% Horizontal 100% 4.52% 13% 5.23% Index 100 112 182 189 37 Jet Blue
  37. 37. Ostrow Model Marketing Factors That Affect Frequency -.1 +.1 +.2 -.2 Established New brands brands -.1 -.2 +.1 High market +.2 Low market share share .-2 -.1 +.2 Dominant +.1 Smaller, less brand in known brand market -.2 -.1 +.2 High brand +.1 Low brand loyalty loyalty -.1 -.2 +.1 Long purchase +.2 Short purchase cycle cycle, high volume -.1 +.1 +.2 Product used -.2 Product used daily occasionally +.1 +.2 Need to beat competition +.2 +.1 Adv. to older consumers/children Copy Factors That Affect Frequency -.2 -.1 +.2 +.1 Simple Copy Complex Copy -.1 +.1 +.2 -.2 Copy more Copy less unique than unique than competition competition -.2 -.1 +.1 +.2 Continuing New copy (old) campaign campaign -.1 -.2 +.2 Product sell +.1 Image type copy copy +.1 -.2 +.2 Single kind of -.1 More difficult message kinds of messages -.1 +.1 +.2 -.2 To avoid wear Older messages out: new messages -.2 -.1 +.2 +.1 Larger ad units Small ad units Media Factors That Affect Frequency -.2 -.1 +.2 +.1 Lower ad clutter Higher ad in media mix clutter in media mix -.1 +.1 +.2 -.2 Compatible Non-compatible editorial environment environment -.1 +.1 +.2 Attentiveness (to -.2 Attentiveness (to media) high media) low -.2 -.1 +.1 +.2 Continuous Pulsed or schedule flighted campaign campaign -.2 -.1 +.2 +.1 Few media used Many media in media mix used -.2 -.1 +.2 +.1 Opportunities Fewer for media opportunities repetition *Ostrow Model taken from Media Flight Plan Frequency Goal = 3.7 38 Jet Blue
  38. 38. IV. Timeline For our campaign we decided to run our campaign beginning in the fiscal 4th quarter of October to December. This is peak flying time for airlines due to the fact that the holidays are coming up in December. With that in mind, we decided what areas of our campaign we wanted to focus on for our timeline. Our first objecting is our market objective. From there we continue to our other market objective of sales. Our advertising objectives include brand awareness, and increased frequency for media. The budget that we came up with is $46.75 million for the campaign to run and an $8.25 million contingency budget. We begin with our market objective, which deals with the Market Share. Currently we hold 4.1% of the airline industry market share putting us in 8th position against all of the other airlines. This number is good for us because we are a fairly new company compared to some of the other companies that have been around since the 1920’s. Our closest competitor is U.S. Airways with a market share of 4.7%. Our goal is to reach a market share of 4.3% by the end of our campaign. For our second quarter we want to raise our market share to 4.2%. By raising our company sales we should be able to achieve a higher market share as compared to the rest of the industry. Our cutoffs for each quarter are (+/-) 5%. We have included contingencies to deal with our campaign if the share gets too high or too low. If the share gets too high then we will have to pull out on some of our advertising and pull different medias to accommodate the rise in sales. If our market share gets too low then we will have to add extra advertising outlets and media by using our $8.25 million contingency budget. Our plan is to hold a constant 4.2% market share for both the second and third quarters and finish our campaign with a 4.3% market share. Because the airline industry gets millions of passengers a year, the sales are very high. The industry also has a lot of extra costs that subtract from the sales. Currently, our sales are at $2.363 billion a year; our goal is to raise our sales to $2.6 billion a year. Our closest competitor above us, U.S. Airways, has an estimated annual sale of $11.5 billion in sales per year. Our goals are on a smaller scale because we are trying to raise our market share by 0.5%. For quarter 1 our projected sale will increase to $2.45 billion with 39 Jet Blue
  39. 39. a cut off of 5% (min. $2.327 billion, max $2.572 billion). Our contingencies for this objective deal with the advertising strategy. By pulling out of some media that expose more people to advertisements such as prime time television or print advertising, we will be able to keep to our set goals. Our goals for the rest of the quarters are as follows: quarter 2 increase sales to $2.5 billion, quarter 3 increase sales to $2.55 billion and our overall goal is to reach $2.6 billion in sales for the year. With our contingency budget we will be able to adjust our advertising strategy accordingly, whether it is by increasing advertising outlets or by pulling advertising media for periods of time. Jet Blue is a relatively new competitor in the airline industry so we are trying to increase our brand awareness and brand usage for the category. Through Simmons data and surveying our target audience, we found that currently we hold 9.55% brand preference. We would like to increase that preference during our campaign by emphasizing our performance and quality. From surveying our audience we found that the 3 most important areas in determining which airline to fly are customer service, amenities and price. Through our campaign we are determined to show our audience that we rank very highly among our competitors in those three areas. With those three media in mind, we created a creative campaign that will target and accentuate our excellence in those areas. Through different media selections our campaign will resonate throughout the country and increase both awareness and usage. For our first quarter we will raise preference to 9.6% with a max and min cut off of 0.8%. In the second quarter we will raise our brand preference to 9.65% and increase our brand preference further in quarter 3 to 9.7%. By the end of our campaign we hope to raise our brand preference to 9.75% if our brand preference is too high or too low for our campaign standards, we will have to adjust our media GRPs. By moving around our media we will be able to raise our standards, or lower them. If awareness is much higher we may want to reduce GRPs in order to keep the market calm and our service at prime performance. If our awareness is too low then we will want to increase our GRPs in order to stand out in the industry. Our final advertising objective deals with frequency in the market. Currently our frequency in the market is at 3.7; our goal is to maintain this frequency throughout the campaign. We feel that 3.7 is a good frequency to have and by maintaining that frequency throughout the campaign we will still be in a good position with our competition. Since our sales increase is the same for each quarter ($0.05 billion) we feel 40 Jet Blue
  40. 40. maintaining a frequency of 3.7 is concurrent with the rest of the campaign. If our frequency falls below or rises above, we would have to adjust the allocation of our media GRPs in order to maintain a 3.7. We would have to reallocate GRPs from high frequency media such as billboards and prime time television. 41 Jet Blue
  41. 41. 42 Jet Blue
  42. 42. VI. Multi-Attribute Model To begin collecting MAM data, each member of the team sent an open-ended question to five members in the target groups that asked the question: “When buying airline tickets what attributes and features are most important to you when making your purchasing decision?” Once all the answers were received, they showed that the top five attributes are, in no particular order – Price, Seating Space, Customer Service, Amenities, and On Time Performance. Using these five attributes a survey was developed that was also sent to 25 members of the target groups. The survey asked for responses rating each attribute in importance, against each airline, and against the responder’s “ideal” airline. The responses for each were averaged, giving an average rating for each attribute per respective airline. By multiplying the attribute ratings times the importance ratings for each airline in a Brand Positioning Tool, a judgment rating is provided. After analyzing this tool, Jet Blue has the highest judgment rating and is ahead or equal to its competitors on all attributes except on time performance, where it falls behind its closest competitor Southwest Airlines. This on time performance rating is most likely an accurate representation of the public perception, especially when considering the delay that occurred in February 2007. Southwest Jet American US Northwest Attribute Importance Ideal Airlines Blue Airlines Airways Airways 9 9 Price 8 8 6 7 7 Seating 6 8 7 8 7 7 6 Space Customer 8 8 7 7 7 6 7 Service 6 8 Amenities 6 8 7 6 7 On Time 9 10 8 7 7 7 7 Performance The attribute ratings for each airline were then placed into another Brand Positioning Tool and compared against the attribute ratings for the “ideal” airline. Jet 43 Jet Blue
  43. 43. Blue again is ahead of or equal to its competitors in all attributes except on time performance, where it again falls short to Southwest Airlines. The “ideal” airline however, exceeds Jet Blue in all areas except seating space and amenities – the two areas where Jet Blue and the “ideal” airline are equal. None of the airlines meet the “ideal” airline rating in on time performance – a ten; the closest is Southwest Airlines. Jet Blue and Southwest Airlines are equally rated in price and customer service, but again both do not compare to the “ideal” airline’s ratings. Creatively this campaign should first address the issue of on time performance. Jet Blue is second to its closest competitor, Southwest Airlines, and does not meet the “ideal” airline ratings. The delay in February 2007 had a strong impact on the public perception of Jet Blue’s performance in this area. A recommendation for how to address the situation creatively would be to take emphasis off of the on time performance and place it on the amenities and the seating space, where Jet Blue is the only airline that meets the expectations for the “ideal” airline. An example of how to convey this would be through advertising that sends a message to consumers that says: “We apologize for any delay, but we are going to do everything in our power to keep you as comfortable as possible while you wait.” This creative strategy could also be used to speak to the price and customer service attributes. The message could include customer service as a comfort aspect in addition to the amenities and seating space. Finally, dealing with price, the campaign can send the underlying message that “Jet Blue does a little bit more” or “Jet Blue goes the extra mile.” So although the rating may not meet the ideal on price, consumers will feel as though they get what they pay for – the comfort of Jet Blue. 44 Jet Blue
  44. 44. Jet Southwest American US Northwest Attributes Importance Blue Airlines Airlines Airways Airways IJB ISA IAA IUSA INA (JB) (SA) (AA) (USA) (NA) Price 9 8 8 6 7 7 72 72 54 63 63 Seating 6 8 7 7 7 6 48 42 42 42 36 Space Customer 8 7 7 7 6 7 56 56 56 48 56 Service Amenities 6 8 6 7 6 7 48 36 42 36 42 On Time 9 7 8 7 7 7 63 72 63 63 63 Performance TOTAL 287 278 257 252 260 Legend I = “Ideal” A = Southwest Airlines B = Jet Blue C = American Airlines D = US Airways E = Northwest Airways 45 Jet Blue
  45. 45. VII. Message Designs and Creative Executions Image and Positioning Strategy The image and position strategy is shaped based upon the Multi-Attribute Model (MAM). The target market consists of male business travelers ages 35-44, and women business travelers ages 18-24. The target group has low brand loyalty and tends to purchase products or services with the lower cost. Our target group is most influenced by price when determining a purchase possibility. Since our target has low brand loyalty, their purchase behavior is based on low cost products and services. It is essential to convey a message of low cost in order to attract consumers and initiate trial purchase. Secondly, customer service and on-time performance is another important characteristic when positioning towards our target audience. The delay on February 2007 had a strong impact on the public perception of Jet Blue’s on time performance, in which they are second to their closest competitor, Southwest Airlines. Customers should know that Jet Blue is here to help and assist with any questions or concerns they may have. By drafting a “Passenger Bill of Rights”, Jet Blue has stated that they are “bringing the humanity back to air travel”. In addition to the low cost benefit, we recommend that Jet Blue position their company based on the secondary benefits, including customer service and on-time performance. Creative Brief Business Objective The goal for this campaign is to raise Jet blue top of mind awareness. The goal is to aware consumers of the low fare service Jet blue provides, and to raise usage of our point-to-point service. In addition Jet Blue will increase awareness of their award winning customer service, on time performance and amenities offered. 46 Jet Blue
  46. 46. Target Consumer The campaign targets male business travelers ages 35-44, and women business travelers ages 18-24. The income levels for men are roughly $60,000 to $100,000, while women’s income ranges around $5,000 to $15,000 respectively. Both target groups are highly educated and typically employed in business areas such as: wholesale and retail, real estate, educational services, and professional, scientific, and technical services, in which these professions tend to have high travel levels. The target groups demonstrate a tendency to depart from coastal airports such as Miami, Los Angeles, New York, and San Francisco. According to Simmons data, the media most often used by this target group consist of television and radio spots and high Internet usage. Key Competitors Jet Blue’s competitors consist of low cost, point-to-point airlines including Southwest Airlines, United Airlines, and American Airlines. Southwest’s low fare and point-to-point service makes Southwest, Jet Blue’s chief competitor. Consumers Brand Connection Jet Blue offers low cost travel, high quality customer service and on time performance for business and leisure travel. Consumer Benefit Consumers will benefit by saving both time and money when flying Jet Blue. Jet Blue’s trained staff will make customers feel comfortable during their travels by providing top quality customer service. Jet Blues “Passenger Bill of Rights” guarantees to provide on-time flights, or compensation for flights that may be delayed or canceled. Brand Opportunity By providing a “Passenger Bill of Rights”, Jet Blue is making a statement that they care immensely for their customers. No other airline offers the promise of refunds to those whose flights have been delayed. By taking the “risk” of giving back to its 47 Jet Blue
  47. 47. customers, Jet Blue has separated itself from other competitors. This provides an opportunity for Jet Blue to market its airline as a “caring” and “devoted” company, fully committed to its customers needs and wants. Bottom line With the information provided we recommend using television spots, radio spots, newspaper and Internet advertising due to the fact that our acquired target audience utilizes these traditional media and Internet over all others. In order to gain consumer awareness, we must stress the advantage of low fare ticketing when flying Jet Blue, with secondary concerns of on-time performance, customer service, and amenities offered. Media Strategies Television The television advertisements consist of 30-second spots that are humor based. The use of humor will attract our customers and raise top of mind awareness. Within the advertisement we will incorporate the target market in order to gain consumer brand connection. National television will run continuous, yearlong campaigns while spot television will run from October 1st through December 31st and from April 1st through June 31st. Radio The radio advertisements will also consist of 30-second spots and incorporate humor in order to attain the attention of listeners and gain top of mind awareness. The advertisement will provide feedback about prices, schedules, and customer service, including amenities on hand when flying Jet Blue. Nation radio will run continuous, yearlong campaigns while spot radio will also run from October 1st- December 31st and April 1st-June 31st. Print Print will consist of 4C full-page ads in magazines, BW half page newspapers, and similar layout for outdoor and transit advertising. The goal of the print ads is to raise 48 Jet Blue
  48. 48. top of mind awareness and brand preference. Print advertisements will run a continuous schedule for the entire year. 49 Jet Blue
  49. 49. Surveys Airline Industry Survey When buying airline tickets, what attributes or features are most important to you in making your purchasing decision? Attribute/Belief Survey The purpose of this survey is to collect information and statistics about domestic airlines. The information gathered will be used to conduct an advertising campaign for Communications 424. Please answer the following questions to the best of your knowledge: Please rate each attribute in importance when selecting an airline. (1= not important, 5= average importance, 10= very important). 1. Price Not Important Average Very Important 1 2 3 4 5 6 7 8 9 10 2. Seating Space Not Important Average Very Important 1 2 3 4 5 6 7 8 9 10 3. Customer Service Not Important Average Very Important 1 2 3 4 5 6 7 8 9 10 4. Amenities Not Important Average Very Important 1 2 3 4 5 6 7 8 9 10 5. On time performance Not Important Average Very Important 1 2 3 4 5 6 7 8 9 10 50 Jet Blue
  50. 50. Rate the following questions according to how well you feel the following airlines perform in the given categories on a scale from 1-10 (1= lowest, 5= average, and 10= great) 1. How well does Southwest Airlines perform in the following areas? POOR AVERAGE GOOD Price 1 2 3 4 5 6 7 8 9 10 Seating Space 1 2 3 4 5 6 7 8 9 10 Customer Service 1 2 3 4 5 6 7 8 9 10 Amenities 1 2 3 4 5 6 7 8 9 10 On time performance 1 2 3 4 5 6 7 8 9 10 2. How well does Jet Blue Airlines perform in the following areas? POOR AVERAGE GOOD Price 1 2 3 4 5 6 7 8 9 10 Seating Space 1 2 3 4 5 6 7 8 9 10 Customer Service 1 2 3 4 5 6 7 8 9 10 Amenities 1 2 3 4 5 6 7 8 9 10 On time performance 1 2 3 4 5 6 7 8 9 10 3. How well does American Airlines perform in the following areas? POOR AVERAGE GOOD Price 1 2 3 4 5 6 7 8 9 10 Seating Space 1 2 3 4 5 6 7 8 9 10 Customer Service 1 2 3 4 5 6 7 8 9 10 Amenities 1 2 3 4 5 6 7 8 9 10 On time performance 1 2 3 4 5 6 7 8 9 10 4. How well does US Airways perform in the following areas? POOR AVERAGE GOOD Price 1 2 3 4 5 6 7 8 9 10 Seating Space 1 2 3 4 5 6 7 8 9 10 Customer Service 1 2 3 4 5 6 7 8 9 10 Amenities 1 2 3 4 5 6 7 8 9 10 On time performance 1 2 3 4 5 6 7 8 9 10 51 Jet Blue