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Turkish Airlines Marketing Strategy Essay Sample

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Turkish Airlines Marketing Strategy Essay Sample

1. Airline Overview
Turkish Airlines, Turkey’s national flag carrier, was founded in Ankara on 20 May 1933 as “State Airlines Administration,” under the direction of the Ministry of Defence. In 1955, it was restructured into “Turkish Airlines”. 25% of the company was sold via an SPO under a privatisation programme in 2005. Today 50.9% of the company shares are public, while the rest remain state-owned. In 2008, Turkish Airlines has kept its position ranked as one of the fastest-growing airlines among European Carriers in terms of capacity and traffic growth. When considering the economical crisis affecting many European Carriers and leading them to decrease their operations; Turkish Airlines has increased its annual passenger and the Available Seat Kilometer (ASK) by 15% and 11,3% respectively.

With its fleet of 127 aircraft, in 2009 Turkish Airlines carried 22,5 million passengers and the number of transit passengers have increased by 41,3 % across a network comprised of 145 International and 36 domestic destinations From Istanbul, Turkish Airlines operate various onward connections throughout the Middle East and Central Asia. Turkish Airlines also have an extensive network of domestic flights, with the shuttle service between Istanbul and the Turkish capital Ankara being particularly well used. Since April 2008, Turkish Airlines became a Star Alliance member enabling the company to offer even more destination through the code share flights of its partners.

2. Existing Market
Turkish Airlines is one of the major operators connecting directly UK with Turkey (and beyond) from London – Heathrow through its major hub in Istanbul – Ataturk Airport. Despite there are other airlines servicing London – Istanbul route, such as Pegasus Airlines, Turkish Airlines main competitor remains British Airways. Although Turkish Airlines compete with a very strong positioned and well known operator as BA, the company remains very stable and its market share is estimated to be 54% of the total market (Reuters 09). Another advantage of Turkish Airlines is that the company serve the route to Istanbul through regional airports in the UK, as Manchester (the 2nd largest airport after Heathrow) and Birmingham. Never the less, it also operates flights to Istanbul from other airports such as London Gatwick and London Stansted.

2.1. Competitors Overview and Situation analysis

Turkish Airlines competes with two main airlines on the route London – Istanbul. These are: British Airways that execute flights from London Heathrow to Istanbul Ataturk (2-3 flights daily), Pegasus Airlines serving London Stansted – Istanbul Sabiha Gokcen (1 flight daily). Based on the above information, Turkish Airlines main competitor is British Airways – as a full service airline providing connection from main-to-main airport, whilst Pegasus Airlines is LCC executing flights from secondary airports to Istanbul Sabiha Gokcen – airport located further away from Istanbul in the Asian side. Turkish Airlines is the only company serving airports as London Gatwick, London Stansted, Manchester and Birmingham in addition to its main London Heathrow base.

2.2. The Competitors

Competitors for Turkish Airlines are classified as direct and non-direct threat. Although BA is a direct threat to Turkish Airlines, the latter possess the advantage of servicing different airports around UK, targeting local communities and businesses on a wider spectrum.

2.2.1. British Airways
British Airways is the main competitor of Turkish Airlines on the route LHR – IST. It is a full service airline – the national carrier of Great Britain. Its strong position in the UK market is well defined. BA serves more than 680 destinations around the world some of which on code share bases with One World partner airlines. 2.2.2. Pegasus Airlines

Pegasus Airlines is a LCC servicing London Stansted – Istanbul Sabiha Gokcen Airport. The airline is not classified as a main threat to Turkish Airlines services as it operates from secondary airports and its product has a low value compared to the full service of Turkish Airlines. One advantage of this carrier is the fact that it has extensive route connections in regional Turkey.

2.3. Competitive advantage of Turkish Airlines.
The most important factor separating Turkish Airlines from its competitors is its success in maintaining reliability, speed and timeliness without compromising service quality. Flying Turkish Airlines is an experience of its own, always associated with the Turkish hospitality – experience of comfort, quality pre-boarding and onboard services and great customer service. Turkish Airlines competitive advantage in UK is based on its flight operations from three London airports and two regional operations – Manchester and Birmingham, enabling the company to increase its market share and passenger network. Flights frequencies are another advantage that boosts passengers flying the airline to increase enormously. Regional connections from its main hub in Istanbul, as well as more than 145 onward connections to the Middle and Far East and Asian countries (and further 940 destinations with its code share partners), enables Turkish Airlines to be one of the most desirable airlines. The onboard product combining economy service focused to the leisure passengers, together with the unique business passengers’ product, providing services, such as dedicated check-in points, exclusive security gates and effortless passport control at low fares assign the airline as one of the most preferred among different group of passengers.

3. Strategic Marketing Focus
The strategic marketing plan is focusing on promoting Turkish Airlines as the most favourable airline in the UK by empowering its brand name and creating better awareness of the airline website and its products amongst the British public, local Turkish communities and businesses. 3.1. Mission

To become a preferred leading European air carrier with global network coverage, thanks to its strict compliance with flight safety, reliability, product line, service quality and competitiveness while maintaining its identity of the flag carrier of the Republic of Turkey. 3.2. Goals and Objectives

Turkish Airlines main goal is to become the most preferred operator on flights to Turkey (and beyond) for both leisure and business travellers. Another major goal for the company is to be the bridge between the Asia and European markets through their Istanbul hub. This goal will be achieved by strong focus on transit passengers. The main objective of the marketing plan for Turkish Airlines is to increase the generated revenue in the business segment in order to secure the financial sustainability and future growth of the company and its premium product in the UK market. This will primarily be achieved in three stages; firstly by defining the market to narrow the market focus to consumers and businesses that are qualified to or are already users of business class air travel, secondly by further identifying the available market from London and the rest of UK to Istanbul and finally targeting the potential market for additional leisure and business travel on the route. Each segment of the market will be targeted to increase Turkish Airlines sales and improve the airlines load factors. 4. Marketing Plan

4.1. Target Market
Market segmentation will allow Turkish Airlines to concentrate its resources in markets where its competitive advantage is at its greatest and hence its returns are highest. The market segmentations strategy will focus on attracting three different types of passengers although the overall product offering in each case will be virtually identical on service, they will vary on price. Distinct marketing techniques will be used to create a competitively distinctive place for the product and the Turkish Airlines brand in the minds of the targeted consumers. The primary target market for the airline is corporate business air travel. The main need of this type of customers is the corporate discount available in return for volume. The company product will be positioned to these customers to provide significant cost savings over competitors. Both London and Istanbul are cities with many multinational companies and businesses, which create a vast market for corporate travel.

Corporate travellers that Turkish Airlines should be targeting include, Deutsche bank, PwC, Delloit, Shell and several other prominent corporations with links in Istanbul and London who fly business class and has significant volume of business travel between the pair cities. The secondary target market for the airline is the small business and independent business travellers who typically fly from Heathrow to Istanbul but also from the industrial cities – Manchester and Birmingham. The product will be positioned for these customers by providing a FFP and a business class fare that is significantly lower than most traditional fares (the two main needs of business travellers according to surveys). The product will also be positioned to this target market as the one with the highest levels of service on board the aircraft, significantly higher levels of comfort offered by the seats and a higher degree of luxury compared to the competition. The final target market for the airline is the luxury travel market that exists from London and Manchester to Istanbul. The product will be marketed and positioned to these customers as a „first class service at business class fares’. These customers are generally uninterested in the frequency demanded by business travellers. 4.1.1. Market Share Estimates by Class

The leisure passengers are the main income generator for Turkish Airlines, whilst business passengers remain at a lower level. The following table represents the market share estimates by passenger’s class for flights from London (3 airports), Manchester and Birmingham (in total). 4.1.2. Turkish Tourism and Business segments

Istanbul as Turkey’s cultural and financial centre, extends both on the European (Thrace) and on the Asian (Anatolia) side of the Bosphorus and is thereby the only metropolis in the world which is situated on two continents. The city has always been the centre of the country’s economic life because of its location as an international junction of land and sea trade routes. The opening of specific markets in the city during the 1980s further strengthened the city’s economic status. Istanbul is also Turkey’s largest industrial centre. It employs approximately 20% of Turkey’s industrial labour and contributes 38% of Turkey’s industrial workspace. It is one of the most important tourism centres in Turkey. There are thousands of hotels and other tourist oriented businesses in the city, catering to both vacationers and visiting professionals.

In 2009 a total of 23.1 million tourists visited Turkey (TurkStat), most of whom entered the country through the airports and seaports of Istanbuland Antalya. It is also one of the world’s major conference destinations and is an increasingly popular choice for the world’s leading international associations. The city is becoming increasingly colourful in terms of its rich social, cultural, and commercial activities. While world famous pop stars fill stadiums, activities like opera, ballet and theatre continue throughout the year. During seasonal festivals, world famous orchestras, chorale ensembles, concerts and jazz legends can be found often playing to a full house. The Istanbul International Film Festival is one of the most important film festivals in Europe, while the Istanbul Biennial is another major event of fine arts.

Istanbul have been selected to be the European capital of culture for 2010, which gives further opportunities for Turkish Airlines as the flag carrier and official ambassador of the city as a travel destination. Istanbul generates 55% of Turkey’s trade and 45% of the country’s wholesale trade, and generates 21.2% of Turkey’s gross national product. In 2008 companies based in Istanbul made exports worth $41.4 billion and imports worth $69.8 billion; which corresponded to 56.6% and 60.2% of Turkey’s exports and imports in that year (TurkStat). Further to that, many multinational companies have branches, which brings in and out a lot of business traffic. The city is very familiar to expats that have chosen it for their new home. 4.2. Intended Strategies

The marketing strategy serves as a foundation for the marketing plan and sets out the strategic approach that the plan will apply in reaching the marketing objectives set. Promotions like companion free offers, advanced in-flight technology and world class cuisine are all marketing strategies that Turkish Airlines competitors embrace to capture premium travellers. The airline marketing strategy therefore has to be designed to promote the airlines superior service and product at a price lower than the competitors‟ inferior product to attract consumers. Once the airline, via its unique product, has established a relationship with the consumer its goal is to retain those customers by enhancing their experience through increased customer service and higher level of quality offered, as a single bad experience on Turkish Airlines will drive customers back to British Airways (and other airlines). 4.2.1. Market Penetration (Improving In-flight services)

Improving in-flight services is a major move that could separate Turkish Airlines from its competitors. Providing a different in-flight product, such as catering that influence the Turkish tradition (cuisine) and hospitality, and specific product tailored for the business travellers focusing on their needs and wants, would attract more passengers looking for enjoyable and influential travel experience. Entertainment and communication in-flight systems are major advantage of Turkish Airlines. 4.2.2. Market Development (Extending new routes)

A great opportunity for Turkish Airlines, as the largest carrier for Turkey in the UK market is to expand its presence and extend the route network into Scotland. This will enable the company to draw huge amount of traffic, knowing that the Scottish travel market is a lucrative opportunity. 4.2.3. Product Development (First class private suite)

Turkish Airlines is one of the very few airlines in the world that implemented private suite on its long haul fleet. This is a unique product focused towards the needs of superior customers and awareness of this product in the UK market will increase the passenger demand for the onward flights of Turkish Airlines from Istanbul. 4.2.4. Cost reductions

Cost reductions can be achieved by reducing the office premises and ground staff the airline use. Focusing on online bookings, e-customer services and e-technology will be a major objective in achieving cost cuts. Thus, the benefit would be given to consumers in the way of cheaper tickets or special discounts.

4.3. Marketing programmes
Turkish Airlines marketing promotions will be designed to enable the airline to exceed its marketing objectives by increasing interest in the product and the willingness of consumers to buy it. This section of the report proposes several marketing promotions for the airline to increase their sales, brand awareness, and loyalty from existing customers beyond that which can be provided by advertising alone. * Advanced Booking Price Promotions

The main aim of the price promotions will be to reduce the number of empty seats on the aircraft and hence to maximise revenue. Assuming that the existing target load factors are sufficient to generate significant profit additional seats which otherwise would be empty could be sold at significantly reduced prices, however they must still yield a profit for the service provided. Turkish Airlines price promotion will provide significantly low prices for customers who are able to book an anytime seat over one calendar month in advance. This promotion will be targeted at leisure travellers as it is assumed that a majority of business travellers book their seats close to the required date of departure as they are required to leave on short notice. * Three for Two

The main aim of this promotion is to generate additional revenue while not overbooking the aircraft or undermining the passengers who have not utilised this promotion, which would most likely be the case if a buy one get one free promotion were offered. This promotion is based on a consumer or group of consumers purchasing two full fare return tickets and receiving a third one free. This promotion could enable three consumers to travel at once for the price of two, general trends of leisure travellers, or enable a single consumer who purchases two tickets within a month, general trend of a business class consumer, to be offered the third one free. The free ticket will be restricted and must be used within a period of one month. This promotion will be designed to run in May, June, July and August when target load factors are less than 60%. * Promotional Items for On-line Bookings

All consumers who book flights in August through to December directly through www.thy.com will be offered free Istanbul sightseeing tour cards or similar organised tours. This is designed to increase load factors above target load factors for these months but also to reduce distribution costs of tickets. For all business passengers on onward flights from Istanbul, 1 or 2 free nights at luxury hotels will be offered. * Turkish Airlines Triple Points Frequent Flyer Program

Miles&Smiles is already a rewarding and generous scheme where passengers can redeem rewards and take advantage of many benefits. In April, June and Oct, the airline will offer triple points on all bookings made on-line.

4.3.1. Product
Turkish Airlines product is providing economy and business class travel between London, Manchester, Birmingham and Istanbul. The airline method of providing its services is what differentiates its product and allows it to offer vast benefits, such as space, seats, comfort and in-flight services, as well as genuine gestures such as Istanbul sightseeing cards and chauffeur services to the existing economy and business class passengers. Turkish Airlines product must be positioned to the target market as one that meets and exceeds the needs of both leisure and business class travellers, who would normally fly with LCC like Pegasus (leisure passengers) or British Airways (business passengers), through increased product innovation and quality. The product focused towards business travellers allows them to hold in flight meetings in comfort and order meals and services to suit their timetable and specific needs. Although business class travel is not a new product, Turkish Airlines product has improved to the highest level possible, to compete with its major competitors mainly based on price differentiation. 4.3.2. Price

The main pricing strategy of the company is to maintain price leadership. While Turkish Airlines pricing allows the company to achieve its financial goals, i.e. make a profit, it undercuts the realities of the marketplace for the product and service offered by its competitor operating out of London Heathrow. Based on competitor pricing customers would be willing to buy at Turkish Airlines prices. Turkish Airlines pricing strategies support the products positioning, as the low price does not act as a substitute for lack of product quality, and are consistent with the other variables in the marketing mix. The type of promotions and advertising used will affect the price, however in order to keep prices low, the product will not be supported by extensive marketing campaigns such as T.V. adverts, which can cost up to £130,000 for a single advert in a prime time slot. Pricing is influenced by the distribution channels used particularly in selling to corporate customers. However, through negotiations the airline can achieve great results with its corporate clients. 4.3.3. Promotion

Turkish Airlines promotional strategy will be carried out with the target customer in mind preventing the waste of time and money on ineffective promotional activities such as TV ads. Other methods of creating awareness of the airline product will include sales promotions and presence at business trade shows, promoting the airlines directly to the target audiences, as well as social websites like Facebook, Twitter, etc. 4.3.4. Place

A Multi-level marketing strategy will be employed to distribute the product. That is a combination of direct sales and indirect sales through the internet, Business trade shows and corporate travel agencies.

* Business Trade Shows
Turkish Airlines will have a comprehensive premier presence at Business Travel Trade at Excel, London. Prior to the event the trade show will provide significant media exposure that will feature Turkish Airlines brand. The trade show will provide the airline with on site marketing and promotional exposure. * Internet

In order to attract UK leisure and business travellers, Turkish Airlines will market and make direct sales via its web site. This allows for cheap and efficient distribution costs and reaches a wide consumer base. The website allows customers to make reservations for flights and provides purchase and payment capabilities, as well as comprehensive information on offers. Social websites like Facebook and Twitter could create brand awareness and can be used as a marketing tool for promotions of the airline. * Direct Sales to Corporations

In order to attract large corporations and medium sized businesses, Turkish Airlines will directly contact the travel departments of corporations and businesses in UK with links in Turkey. To do this, the airline will manage a team who will build relations with corporations. These direct sales will allow for a greater degree of product differentiation to be established in the minds of corporations and allow Turkish Airlines to demonstrate and highlight the benefits of its products compared to its competitors. Also direct sales and product recommendation to corporations which currently fly with British Airways will increase the airline share out of the total market share. * Direct Sales to Secretaries and PA’s

Often PA’s and secretaries are required to book flights for managers. Turkish Airlines must target these secretaries with direct mail so that they are aware of the Turkish Airlines product. The first class service will appeal to small to medium business managers who can afford to fly with British Airways. * Corporate Travel Agents

This has the advantage of offering customers a distribution channel they may prefer in making their reservation. * Business and Travel Magazines, Outdoor Adverts
Important part of Turkish Airlines marketing strategy will be focused on advertising with leading corporate and travel magazines, as well as outdoor advertising, such as billboards, bus and underground posters.

4.3.5. Customer Service
Building substantial customer relationship will be the primary objective of Turkish Airlines. That will be achieved through extensive communication with its current customers, special discounts and incentives for regular passengers, etc. Customer care prior and after travelling with Turkish Airlines will be another focus that will enable the airline to become very customer orientated and friendly. 5. Conclusion

Turkish Airlines market presence will be achieved by relying on the strategy of identifying and serving well both leisure and business market. Reservations will be centralised and cost effective, by popularising the official website of the airline. Marketing will be media generated to the business and corporate accounts with combined media and direct sales focused to the leisure market. The marketing programs section of this report highlights the set of co-ordinated actions that will be implemented to meet the airlines marketing objectives and to attract existing business class travellers from competitors. The advantage of a local and highly identifiable market is that media selections can be limited in scope. The most effective media is expected to be outdoor billboards and posters on buses and underground, as they have acted as a key generator of sales for other airlines. Presence in the popular social websites would be beneficial in order to increase brand awareness and can be used as powerful marketing tool for advertising promotions, etc. Based on all these actions, Turkish Airlines can meet its challenges and act in order to achieve its set goals and objectives, as well as to maintain its leadership position in the UK market.

References:

Textbooks:
Shaw S. (2004), “Airline Marketing and Management”, 5th edition, Ashgate Publishing Ltd., UK Web sites:
Turkish Airlines: www.turkishairlines.com
Pegasus Airlines: www.flypgs.com
Istanbul – Ataturk Airport: www.ataturkairport.com
Turkey Tourism Authority: www.tourismturkey.org
Turkey Visitors site: www.goturkey
European Culture Capital: www.en.istanbul2010.org
Turk Statistic Institute: www.turkstat.gov.tr

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