10 Step Marketing Plan Cebu Pacific

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This is my 10 Step Marketing Plan for Cebu Pacific Air.

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10 Step Marketing Plan Cebu Pacific

  1. 1. 10 STEP Marketing Plan for CEBU PACIFIC AIR<br />Louie Mark Quizon<br />June 2011<br />1<br />http://louiemarkquizon.blogspot.com<br />
  2. 2. This 10 Step Marketing Plan is part of the mandatory requirements of Prof. Remigio Joseph De Ungria’s AGSB marketing management class.<br />The data included in this report are based on publicly available data such as those on internet websites, news, package declarations, public reports.<br />When appropriate, data are “masked” so as not to create unexpected conflicts.<br />The reports are posted and linked on slideshare, blogs and facebook so that there is easier sharing among students from different marketing classes.<br />Disclaimer<br />http://louiemarkquizon.blogspot.com<br />
  3. 3. Cebu Pacific’s PTM are the business and leisure travelers<br />Who want to be fulfilled by a low cost, no frills, and fun airline service<br />Can choose PAL and other local LCCs<br />Gap is a low cost carrier who can offer many routes, has the youngest fleet, and can give a “Fun Flight” experience<br />The market size is Php 40.41 Billion. Cebu Pacific Air’s market share is Php 19.48 Billion<br />Steps 1 to 5Reaching out to every “Juan”<br />http://louiemarkquizon.blogspot.com<br />
  4. 4. Cebu Pacific is a low cost carrier that offers fun in the skies <br />Is priced 51% lower than PAL and 11% and 21% higher than AirPhil and Zest Air<br />Uses sales promotion, word of mouth, advertising, public relations, and events and experiences <br />Flights are mainly booked online <br />Uses low cost approach to win<br />Steps 6 to 10A fun flight at a low cost<br />http://louiemarkquizon.blogspot.com<br />
  5. 5. 1. Cebu Pacific Air’s Primary Target Market (PTM) are the business and leisure travelers that want an affordable, fun, and no-frills service…<br />Ages 21-55, male and female, social class BCD, single and married<br />Price conscious internet and technology savvy professionals and leisure tourists who want/love to travel (mostly domestic)<br />Business and leisure travelers who travel frequently, or during vacation/holidays, and demand an affordable, fun, and “no frills” airline service <br />http://louiemarkquizon.blogspot.com<br />
  6. 6. PTM needs to travel by air at a low cost…<br />I am fulfilled when I can travel by air at a low cost<br />I want to experience luxury so I can achieve status<br />Reference: Maslow’s Hierarcy of Needs Marketing Management, 11th ed, Philip Kotler<br />6<br />http://louiemarkquizon.blogspot.com<br />
  7. 7. 2. PTM’s needs, wants & demands <br />Professionals and tourists need to experience luxury, to achieve status and recognition, gain self-esteem, and to be fulfilled to attain self-actualization<br />Professionals and tourists choose Cebu Pacific over other airlines because of price, service, safety, extensive distribution coverage, on-time flights, brand promise of a “Fun Flight” experience<br />Professionals and tourists demand low cost with no-frills service, safe travel, easy booking, fun travelling experience, feeling of fulfillment<br />http://louiemarkquizon.blogspot.com<br />
  8. 8. 3a. Direct competitors in the domestic and international markets<br />Domestic<br />Philippine Airlines<br />AirPhil Express<br />Zest Air<br />Seair<br />International<br />Cathay Pacific Airways<br />Philippine Airlines<br />Singapore Airlines<br />Asiana Airlines<br />Others1<br />Note:<br />(1) Others include DragonAir, Hong Kong Express, Air Asia, Eva Air, etc.<br />http://louiemarkquizon.blogspot.com<br />
  9. 9. 3a. Cebu Pacific’s Indirect Competitors<br />Indirect Competitors<br />Bus Lines (Land)<br />Shipping companies (Water)<br />http://louiemarkquizon.blogspot.com<br />
  10. 10. 3a. Variables that affect the choice of airline<br />Variables<br />Price<br />Routes served<br />Safety Record<br />Service and amenities<br />Distribution coverage<br />Brand promise of “Fun Flight”<br />http://louiemarkquizon.blogspot.com<br />
  11. 11. Price vs Route Matrix of Key Domestic Carriers in the Top 5 Largest Domestic Routes (based on lowest fares offered)<br />Market share as of 2009<br />http://louiemarkquizon.blogspot.com<br />
  12. 12. Cebu Pacific dominates the domestic market and is priced lower than Philippine Airlines, its main competitor<br />Market share as of 2009<br />http://louiemarkquizon.blogspot.com<br />
  13. 13. Benefit Positioning vs Brand Matrix of key domestic carriers<br />as of 2011<br />http://louiemarkquizon.blogspot.com<br />
  14. 14. Cebu Pacific’s key differentiators are the most routes per day, youngest fleet age and the “Fun Flight” experience<br />as of 2011<br />http://louiemarkquizon.blogspot.com<br />
  15. 15. 4. Cebu Pacific is strongly positioned as the country’s premium “Low Cost Carrier (LCC)”<br />All airlines except PAL are adopting the “low cost carrier” business model<br />Cebu Pacific is the onlylow cost carrier that:<br />Offers the most routes per day<br />Has the youngest fleet age<br />Guarantees a “Fun Flight” experience<br />http://louiemarkquizon.blogspot.com<br />
  16. 16. 4. Cebu Pacific is strongly positioned as the country’s premium “Low Cost Carrier”<br />Traditional business model is the “network carrier”, wherein airlines:<br />Typically pursue a service differentiation strategy<br />Fares are more expensive<br />http://louiemarkquizon.blogspot.com<br />
  17. 17. 4. “Positioning”: brand identity from the maker<br />“It’s time everyone flies”<br />Or occasionally modified with humorous intent as:<br />“It’s time ever Juan flies”<br />Source: Cebu Pacific Air Website<br />http://louiemarkquizon.blogspot.com<br />
  18. 18. 5a. Based on PAL’s quarterly revenues, market size is Php 45.54 Billion<br />2010 Passenger revenue is Php 59.32 Billion1<br />Civil Aeronautics Board reveals PAL average market share of 32.3% for 2010<br />Revenue contribution for the domestic market is 24.8%2<br />Market size is (0.248 x 59.32)/0.323 = Php 45.54 Billion<br />http://louiemarkquizon.blogspot.com<br />
  19. 19. 5a. Based on PAL’s quarterly revenues, market size is Php 45.54 Billion<br />References<br />Philippine Airlines Annual and Quarterly Reports 2010 http://www.pse.com.ph/<br />Philippine Airlines Annual Report 2010 http://www.pse.com.ph/<br />http://louiemarkquizon.blogspot.com<br />
  20. 20. 5b. Based on Cebu Pacific’s claimed market share, market size is Php 40.41 Billion<br />Cebu Pacific’s claimed passenger domestic market share is 48.2% for 2010<br />Passenger revenue for 2010 is Php 24.656 Billion<br />Domestic capacity share is 79%<br />Market size is 0.79(24.656 Billion/0.482) = Php 40.41 Billion<br />http://louiemarkquizon.blogspot.com<br />
  21. 21. 5c. Customer data reveals a market size of Php 41.9 Billion<br />Total domestic passengers for 2010: 16,539,0001<br />Average fare of Cebu Pacific<br />1999 = Php 23542<br />2010 = Php 2468.8 (Jan-June 2010) <br />CAGR = 0.48% Growth<br />Average domestic airline fares in 1999 = Php 25213<br />Applying CAGR: 2521x1.048 = Php 2533.34<br />Total domestic passengers x Average airline fare<br />16,539,000 x 2533.34 = Php 41.9 Billion<br />http://louiemarkquizon.blogspot.com<br />
  22. 22. 5c. Customer data reveals a market size of Php 41.9 Billion<br />References<br />Cebu Air, Inc 1Q2011 Results of Operations sourcing Civil Aeronautics Board, Company Filings<br />Competition in the Domestic Air Transport Industry: Can it be sustained without competition policy?, Myrna S. Austria, August 2001, Table 4. Average fare by airline per sector, 1997-1999 (PhP), Average of Cebu Pacific Air<br />Competition in the Domestic Air Transport Industry: Can it be sustained without competition policy?, Myrna S. Austria, August 2001, Table 4. Average fare by airline per sector, 1997-1999 (PhP), Average of PAL, Cebu Pacific Air, Air Philippines<br />http://louiemarkquizon.blogspot.com<br />
  23. 23. 5. Annual market size for the domestic passenger market is Php 40.41 Billion<br />Competitor data= Php 45.54 Billion<br />Company data = Php 40.41 Billion<br />Customer Usage data = Php 41.9 Billion<br />http://louiemarkquizon.blogspot.com<br />
  24. 24. 6a. Cebu Pacific Air’s e-commerce website<br />http://louiemarkquizon.blogspot.com<br />
  25. 25. 6a. Philippine Airlines’ e-commerce website<br />http://louiemarkquizon.blogspot.com<br />
  26. 26. 6a. Airphil Express’s e-commerce website<br />http://louiemarkquizon.blogspot.com<br />
  27. 27. 6a. Zest Air’s e-commerce website<br />http://louiemarkquizon.blogspot.com<br />
  28. 28. 6a. Seair’s e-commerce website<br />http://louiemarkquizon.blogspot.com<br />
  29. 29. 6a. SuperFerry’s e-commerce website<br />http://louiemarkquizon.blogspot.com<br />
  30. 30. 6a. Montenegro Shipping Lines’ website<br />http://louiemarkquizon.blogspot.com<br />
  31. 31. 6b. Cebu Pacific has the youngest fleet in the Philippines and continues to differentiate itself from other LCCs<br />CEB operates a fleet of 25 Airbus (10 A319 and 15 A320) and 8 ATR 72-500 aircraft, the youngest fleet in the Philippines<br />CEB offers the lowest year round Lite Fares for its destinations<br />CEB remains to be the pioneer in creative pricing strategies as it manages to offer the lowest fare in every route it operates<br />From Cebu Pacific Air website<br />http://louiemarkquizon.blogspot.com<br />
  32. 32. 6b. Cebu Pacific’s innovation is key to its domestic market dominance<br />CEB is the first local airline to introduce e-ticketing, prepaid excess baggage and seat selection in the Philippines<br />The only domestic carrier that offers fun in the skies with its games on board popularly known as Fun Flights, together with its entertaining inflight magazine – Smile<br />From Cebu Pacific Air website<br />http://louiemarkquizon.blogspot.com<br />
  33. 33. 6b. All Fares are now “Lite Fares”<br />Customers don’t have to pay for:<br />Newspapers, lounges, free meals<br />Paper tickets, frequent flyer programs<br />Lite Fares have two variants:<br />Year-round fares<br />Promo fares<br />From Cebu Pacific Air website<br />http://louiemarkquizon.blogspot.com<br />
  34. 34. 7. Cebu Pacific is priced lower than PAL but is generally higher than the other LCCs<br />http://louiemarkquizon.blogspot.com<br />
  35. 35. 7. Cebu Pacific is 51% lower than PAL but 11% and 21% higher than AirPhil and Zest Air respectively<br />http://louiemarkquizon.blogspot.com<br />
  36. 36. 8a. Cebu Pacific Air uses Sales Promotion, Word of Mouth, Advertising, Public Relations, and Events and Experiences<br />1<br />3<br />4<br />2<br />5<br />http://louiemarkquizon.blogspot.com<br />
  37. 37. 8a. Cebu Pacific’s website is the most visited e-commerce travel website from 2008- June 2010 according to Alexa Top Sites<br />http://louiemarkquizon.blogspot.com<br />
  38. 38. 8a. Cebu Pacific leverages on their strong internet presence to advertise sales promotions<br />http://louiemarkquizon.blogspot.com<br />
  39. 39. 8a. They also use social network sites to promote sales…<br />http://louiemarkquizon.blogspot.com<br />
  40. 40. 8a. The use of social networking sites is also a form of Word of Mouth Marketing<br />http://louiemarkquizon.blogspot.com<br />
  41. 41. 8a. Cebu Pacific’s safety demo dance even went viral…<br />http://louiemarkquizon.blogspot.com<br />
  42. 42. 8a. Cebu Pacific also uses print and TV advertising, supported by radio and outdoor advertising<br />http://louiemarkquizon.blogspot.com<br />
  43. 43. 8a. The company uses various PR campaigns such as press releases, annual reports, and their company magazine - Smile<br />http://louiemarkquizon.blogspot.com<br />
  44. 44. 8a. Marketing communication through Events and Experiences<br />http://louiemarkquizon.blogspot.com<br />
  45. 45. 8b. Philippine Airlines’ internet special offers and promotions<br />http://louiemarkquizon.blogspot.com<br />
  46. 46. 8b. Philippine Airlines’ Facebook and Twitter pages<br />http://louiemarkquizon.blogspot.com<br />
  47. 47. 8b. Philippine Airlines’ print and TV advertisements<br />http://louiemarkquizon.blogspot.com<br />
  48. 48. 8b. AirPhil Express’s internet promotions<br />http://louiemarkquizon.blogspot.com<br />
  49. 49. 8b. AirPhil Express’s Facebook page<br />http://louiemarkquizon.blogspot.com<br />
  50. 50. 8b. Zest Air not only markets its promotions on their website but also their events<br />http://louiemarkquizon.blogspot.com<br />
  51. 51. 8b. Zest Air also communicates through Facebook and Twitter. They also use celebrity endorsers<br />http://louiemarkquizon.blogspot.com<br />
  52. 52. 8b. They even have a radio commercial…<br />http://louiemarkquizon.blogspot.com<br />
  53. 53. 8b. Seair’s internet promotions<br />http://louiemarkquizon.blogspot.com<br />
  54. 54. 8b. Seair’s Facebook and Flickr pages<br />http://louiemarkquizon.blogspot.com<br />
  55. 55. 8b. Seair, like Cebu Pacific, also has a PR campaign through its company magazine<br />http://louiemarkquizon.blogspot.com<br />
  56. 56. 8b. To grow online brand recognition, Cebu Pacific leverages on its strong e-commerce website<br />Airlines now rely heavily on e-commerce and e-marketing<br />Cebu Pacific’s main strength is their e-commerce website<br />Most visited e-commerce travel website (2008-June 2010)<br />Reinforces this by joining social networking sites<br />Facebook<br />Twitter<br />http://louiemarkquizon.blogspot.com<br />
  57. 57. 8b. Cebu Pacific’s focus is on e-commerce and e-marketing<br />E-commerce and e-marketing are cost effective<br />Some promotions are exclusive online<br />Lower distribution costs<br />Successful internet bookings<br />Accounted for the highest portion of total direct sales for 2010<br />http://louiemarkquizon.blogspot.com<br />
  58. 58. 9. Cebu Pacific’s main distribution channel is the internet<br />Three principal distribution channels:<br />Internet<br />Booking sales office, call centres, client accounts<br />Third-party sales outlet<br />Distributors<br />General Sales Agents<br />Wholesalers and Preferred sales agents<br />http://louiemarkquizon.blogspot.com<br />
  59. 59. 10. Cebu Pacific’s generic winning strategy is Low Cost Producer<br />Low Cost Producer<br />Supply and Distribution Leverage<br />Differentiation<br />Niche<br />http://louiemarkquizon.blogspot.com<br />
  60. 60. 10. The premium “Low Cost Carrier”<br />Priced lower than its main competitor which is a “Network Carrier”<br />Differentiates brand with other LCCs<br />End result – No. 1 domestic carrier<br />http://louiemarkquizon.blogspot.com<br />
  61. 61. References<br />Marketing plan outline for Southwest Airlines: http://www.grabers.com/library/imc/archives/2005/03/a_marketing_pla.php<br />http://wiki.answers.com/Q/What_is_the_present_social_status_of_the_Philippines<br />Cebu Pacific Air Prospectus October 8, 2010<br />Cebu Pacific Air Annual Report for year ended Dec 31, 2010<br />Cebu Air, Inc. 1Q2011 Results of Operations Investors’ and Analysts’ Briefing<br />http://louiemarkquizon.blogspot.com<br />
  62. 62. References<br />Philippine Airlines Annual Report for the year ended Mar 31, 2010<br />Philippine Airlines Quarterly Reports for the periods ended Sept 30, June 30, Dec 31, 2010<br />Competition in the Domestic Air Transport Industry: Can it be sustained without competition policy?, Myrna S. Austria, Aug 2001<br />The State of Competition and Market Structure of the Philippine Air Transport Industry, Myrna S. Austria, Nov 2000<br />http://louiemarkquizon.blogspot.com<br />
  63. 63. References<br />The Evolution of the Philippine Airline Industry, Wilfred Manuela, <br />The Airline Customer Loyalty Model, Master Thesis by Judith Benner, Copenhagen Business School, April 17, 2009<br />Philippine Aircraft, Passenger, and Cargo Statistics 2001-2010, Civil Aviation Authority of the Philippines http://www.caap.gov.ph/web/downloads.htm<br />V53 10 Step Marketing Plan for Cebu Pacific, Lenilynne Go, Feb 2011<br />http://louiemarkquizon.blogspot.com<br />
  64. 64. 64<br />SUMMARY<br />http://louiemarkquizon.blogspot.com<br />
  65. 65. Cebu Pacific’s PTM are the business and leisure travelers<br />Who want to be fulfilled by a low cost, no frills, and fun airline service<br />Can choose PAL and other local LCCs<br />Gap is a low cost carrier who offers many routes, has a young fleet, and can give a “Fun Flight” experience<br />The market size is Php 40.41 Billion. Cebu Pacific Air’s market share is Php 19.48 Billion<br />Steps 1 to 5Reaching out to every “Juan”<br />http://louiemarkquizon.blogspot.com<br />
  66. 66. Cebu Pacific is a low cost carrier that offers fun in the skies <br />Is priced 51% lower than PAL and 11% and 21% higher than AirPhil and Zest Air<br />Uses sales promotion, word of mouth, advertising, public relations, and events and experiences <br />Flights are mainly booked online <br />Uses low cost approach to win<br />Steps 6 to 10A fun flight at a low cost<br />http://louiemarkquizon.blogspot.com<br />
  67. 67. 10 STEP Marketing Plan for CEBU PACIFIC AIR<br />Louie Mark Quizon<br />June 2011<br />67<br />http://louiemarkquizon.blogspot.com<br />

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