Professional Documents
Culture Documents
CARRERA DE MARKETING
Members:
❖ Selene Carrizales
❖ Brando Cuya
❖ Angie Atocsa
❖ Bianca Rueda
❖ Leonardo Luján
2019-1
SUMMARY
1. Hypothesis…………………………………………………………….
2. Group Of Facts………………………………………………………..
2.1. Company Summary……………………………………………….
2.2. Philosophy Of The Founder………………………………………
2.3 Mission…………………………………………………………….
2.4 Vision………………………………………………………………
2.5 Values………………………………………………………………
2.6. Mcc……………………………………………………………….
2.6.1 Market …………………………………………………...
2.6.2 Competition ……………………………………………...
2.7 STP…………………………………………………………………
2.7.1 Segmentation……………………………………………..
2.7.2 Targeting ...........................................................................
2.7.3 Positioning………………………………………………..
2.8. Branding…………………………………………………………...
2.9 Marketing Mix…………………………………………………….
2.9.1 Product ………………………………………………….
2.9.2 Price …………………………………………………….
2.9.3 Place/Distribution………………………………………..
2.9.4. Promotion……………………………………………...
2.10 Human Resources……………………………………………….
3.10.1 Market Research…………………………………..…..
2.11. Stakeholders……………………………………………………..
2.12 Sales……………………………………………………………..
2.13 Innovative Technology…………………………………………..
2.14 Finance…………………………………………………………..
2.15 Production……………………………………………………….
4. Identifying The Problem…………………………………………………..
4.1 SWOT Analysis
5. Alternatives Solutions …………………………………………………….
6. Analysis Of Alternatives Solutions ……………………………………….
7. Recommendations………………………………………………………...
8. conclusion………………………………………………………………...
1. Hypothesis
What we should do in this case is to check if the strategy carried out by Lucky Airlines
According to the reading, we can say that they are a company that in China has a
consumers, and we must analyze if this sale will be sustainable over time.
Backed by China's Hainan Airlines, Yunnan Airlines was founded in 2004 as one of
the most profitable national airlines operating from its center in Kunming, in Yunnan
Province. The limited route license was added to the airline's competitive advantage
and maintained its monopoly within the region. Its main competitors include Air China
and China Southern Airlines among others. As Yunnan is one of the most attractive
tourist destinations in southern China, the airline attracted many customers and
started producing profits in only three years since its inception. This great success was
the result of a viable strategy of the company that included only one type of aircraft.
The executive team of Lucky Air must take into account many factors. A poorly
designed or poorly implemented marketing plan would not only hinder the growth of
the company, but would also result in the loss of the advantage they have over the
other companies. The four cost components of the airline industry: fuel, landing fees,
aircraft leasing and taxes, have made the operation of Lucky Air a productive way a
constant challenge. Although the company has a high competitive advantage linked
to Hainan Airlines, it still needed to update its commercial strategy on a regular basis
to ensure the maintenance of the leadership they had over the other airlines. The
company, like all its counterparts, faces a large number of restrictions that include
heavily regulated government laws, limitations on price reduction, a low potential for
rapid expansion due to government restrictions and heavy taxes. Lucky Air is new to
the field and operates in a small geographic area and has to bear many costs. The
restriction to the expansion of the company makes it necessary for airlines to rent
aircraft at a high cost and taxes ranging from 2% to 10% make it a challenge to manage
their finances. The monopoly of "civil aviation oil" for fuel and the "National
the budget of the airlines, since they can dictate the terms of their services as best
they can.
So to solve this in 2008, Lucky Air, a low-cost domestic airline, modeled after
Southwest Airlines in the United States, was looking for new competitive advantages
was considered as a growth strategy giving greater opportunities and varieties at a low
price having a great impact. The goal of learning is to explore how businesses and
2.2. Philosophy
The business philosophy from the beginning has been to “retain satisfied customers
and happy employees, and create maximum value for shareholders and society.”
ahead and loving to fly that’s what the company want for their clients and when they
travel, they feel a very good sensation and this at the same time becomes a constant
2.4. Vision
Cutting edge technology and security, keeping prices within reach of our clients,
providing good services, achieving constant growth, helping our employees to pursue
Lucky Air aims to be the first choice of customers and the favorite airlines of
employees. It will continue based in China, focus on Asia and connect the world, while
offering sustainable economic values with global impact and will become the best
2.5 Values
Sincere service, convenient travel experience, and substantial tickets and packed
products are all the core brand essence; besides, Yunnan area feature is also its
2.6 MCC
2.6.1 Market
The company was focused on the young public, which was focused on leisure
travelers, businesses and people looking for a low-cost solution with direct
flights.
This had the benefit of a 15% growth of flights each year this benefited the
market and was taken advantage of with Yunnan when making their entry
strategies.
On the other hand, the Market Size was intrinsically affectionate with the
company and this is why following the expansion of Lucky Air began to exist
It can be said that the competition began to review Lucky's proposal and sought
Analysis:
in the future. At present it means 20% of the movement of tourists and the level
The concept of youth tourism is defined today as a matter of style rather than
age. A way to live the trip, more independent, closer, adventurous, but not risky.
That is why the average age of these young tourists rises year after year.
The company had a good market study and thanks to it a more youthful
approach, since this public is growing and the characteristics it presents are
that they look for a good, cheap and attractive service, since their economy is
What explains the case is that during the first years of 2000 began to emerge
more and more competitors in China, thus growing the airline market, we can
say that directly gave the creation with a similar approach to Lucky's, which was
to attract passengers by offering a low cost strategy and to provide the loyalty
With the passing of time more companies studied what Yunnan offered and
According to what was explained in the case, it can be said that in order for the
competition not to reduce the Market share obtained, it is necessary for the
Analysis:
The discounted products serve to attract the customer and encourage him to
demand product that acts as a demand tractor for the rest of the portfolio.
This low cost trend is what has put the Chinese company at the forefront and
has become a differentiating strategy that its main competitors try to imitate.
2.7 STP
2.7.1 Segmentation
Lucky air Demographic Characteristic from age factor is more significant than
the gender issue as the number of passengers by both genders is almost the
same. The passengers cover a broad range of age groups from 19 to 54, while
older people who aged above 55 are more likely to prefer full-service airlines.
Within the industry, there are also age differences between companies. While
There we have the ones that get leisure travel, business travelling all of them
have a relation with price which is the also engage with the behavioral and
Then is crucial to find effective ways to counterstrike domestic threats one way
could be e-commerce which is the key to change. Lucky air currently offers
many flights, which is a good start to expanding and catering to global demands.
passengers – given that China is rapidly rising. Lucky air has much to gain from
Air China must also expand its target segment to Chinese passengers. Tapping
into this market is a huge untapped opportunity. However, the growth of China
has also brought rise to discount carriers, which have increased passenger.
Lucky air must find a way to maintain excellent service and quality, while
flight prices.
Analysis:
The segmentation that Lucky Air has is crucial in its business, and that is based
destinations in English, promotions, etc. other segments of the side, since the
Lucky air is low cost airline which market themselves mainly to leisure
passengers and price sensitive passengers. Low cost airline are target
perspective. A good and effective marketing strategy of low cost airline plays
an important role to position their product to the public and to gain competitive
advantage as well. Low cost airline will have a short haul which fly from point
to point with high frequency. Moreover, low cost airline would likely to become
Analysis:
more than 80% of airline tickets sold since 2012 to date correspond to low cost
flights, which places these sales seven points above the companies standard
air.
Of this 80%, most tickets were sold by the leading low cost airlines in Europe:
easyJet and Ryanair. Thus, this revolutionary business has been echoed
around the world and more and more low-cost airlines are emerging.
2.7.3 Positioning
So, for all this, the positioning of the brand: to be a professional and reliable
airline with world class standards, with low-cost and high-efficiency airline price
complexity. It offered only one seat class and simple one-way pricing. There
costs. So that's why Lucky air gain this positioning for their clients and its known
in this way.
Analysis:
The company must be careful and not have to do with the objective and
2.8 Branding
Lucky Air had positioned itself as a low-cost, high-efficiency airline and adopted most
of the key components of the Southwest Airlines model. By using a single type of
aircraft it reduced maintenance and operational complexity. It offered only one seat
class – coach – and simple one-way pricing. There were no seat assignments or in-
flight entertainment. Most of its routes were short haul and point-to-point to increase
2.9.1 Product
Lucky Air is an airline based in Yunnan, which provides flight service in China.
The company has models: Airbus A319-100, Airbus A320-200, Boeing 737-
costs.
2.9.2 Price
Customers could buy and refund tickets online, paying 5% to 20% less than
anywhere else. They could also validate their tickets online, a service formerly
available only through TravelSky, and obtain flight information, news updates
Yunnan.
2.9.3 Place/Distribution
Lucky Air started with its headquarters in Yunnan where they offered domestic
flights from Dali to Kunming and Xishuangbanna, later Lucky Air has expanded
its network quickly. For now, it covers 51 national cities, 8 foreign cities and 2
regional cities.
- Vietnam
- Malaysia
- Indonesia
- Philippines
- Rusia
- Taiwan
- Brunei
- Tailandia
Analysis: They wanted to expand their travel distances in order to increase
2.9.4. Promotion
to 20% cheaper than anywhere else, the site provided a home for a LuckyAir
although information on why they chose or enjoyed Lucky Air was lacking.
Lucky Air offered bonus points for returning customers, which they could
Analysis: We believe that this can benefit in a way that Yunnan customers can
interact with the company and with the same frequent customers about the
Analyzing the issue of human capital present in Lucky air, it is observed that the
company has taken an orientation to systematize the operations, in such a way that
customer service workers, sales and other areas that have direct contact with the client
practically disappear. All this is due to the decision to encourage the use of your
website as the largest and only point of contact with the company before taking the
service, in order to reduce costs, be more effective, and provide a better experience
In this way we can affirm that Lucky air has changed its own human capital for an
"external" human capital or as it is required in the reading "Customer Self-Service";
giving the user an important role in the process by making the consumer self-care.
Analysis:
Based on the analysis of human capital, Lucky Air opted for a systematization of
operations so that employees would not have problems when contacting the direct
client. With the purpose of being able to increase their sales through their web page
and to reduce their costs and improve the shopping experiences by consumers. In
which, what the company was looking for was to be able to make the customer feel
With regard to the development and research that Lucky air is carrying out, we can
appreciate that like all companies, it must innovate, in this way it is looking to develop
new features in its services, new services, and better attributes that can increase its
competitive advantage , since, with time, the incorporation of new Low-cost airlines
Likewise, the development is not only in the level or characteristics of the service, they
also carried out CRM initiatives, in order to develop better experiences for their clients,
specifically when purchasing the tickets, using their own virtual platforms, with online
decision making and purchase by the client and lower costs for the company. Fulfilling
Based on the research, it is analyzed that Lucky Air seeks to develop new services
that can satisfy consumers and at the same time obtain benefits for the company and
thus be prepared for any strategy on the part of its competitors. Likewise, they not only
focused on looking for developments for their services, but also took into account the
development of interacting directly with customers, for which they analyzed the CRM
and thus be able to obtain their own virtual platforms in order to obtain benefits.
2.11. Stakeholders
E-commerce is still not the norm of the business sector as there is a constant threat
of fraud and errors in online buying, along with the high process being charged by the
banks for using their services for payments. The executive team needs to take this
factor into consideration and formulate a plan that would help keep Lucky Air exploit
Analysis:
Based on the analysis, it is considered that even the e-commerce is not a completely
stable to strengthen trade platform, since there are still many threats to develop
effective fomra, while taking into account the high payments processes of banks . By
which, is that these factors is that the development of trade is not constant.
2.12 Sales
In 2006, it carried roughly 500,000 passengers for 5,746 total flight hours with a
load factor of 74.7%. On the other hand, in 2007, it carried roughly 1.2 million
passengers for 17,875 total flight hours with a load factor of 81.4%. Over the same
period Lucky Air more than tripled its operating revenue, from US$31.2 million
to US$104.3 million, and achieved profitability just three years after it was founded.
On the other hand, Some airlines opted to expand beyond offering flights alone.
within China and had achieved US$72 million in revenue and US$4.3 million in
Also,Lucky Air sold about 80% of its tickets through agents, paying them a 2%
commission, and the rest through its own website. Among tickets sold on its website,
95% were bought by reseller agents who turned around and resold the tickets to
consumers on luckyair.net.
Analysis:
Based on the analysis of sales, the growth potential attracted many new entrants and
ticket prices, however, the abundance of low-cost carriers pushed each one to lower
Likewise, Lucky Air managed to sell 80% of its tickets through its agents, when in
general it was not a positive thing for the company, since they were looking for growth
in market penetration on the internet but only obtained 1% of the total of your tickets.
telephone, kiosk, Email, or Internet without human help. So it means that customers
did not need any middleman to get to Lucky air, they did it directly by these means.
People perceived it as simple and efficient since it was not necessary to wait so long
and have a response from third parties without buying them themselves in a Lucky air
commerce really took off in China, Lucky Air could take advantage of it by establishing
itself as the leader in online travel. In the beginning there was a low internet penetration
and inadequate payment methods which hindered the development of the online travel
business, but the situation changed as the Internet penetrated deeper and deeper into
all thanks to the investment in the bet of e-commerce generating great rewards.
Analysis:
The analysis of the factor focuses on the development that Lucky Air had over time, in
which it explains that each time customers made their purchases without the need of
someone else, which was beneficial for the company because of the experience it
offered to its customers. Consumers helped the clients to have a positive vision when
living the experience as something quick and easy to perform. But as is known, to
reach this benefit, the company at the beginning had to go through a process of low
internet penetration.
2.14 Finance
Lucky Air’s four largest cost components – fuel, landing fees, aircraft leasing, and
taxes – comprised about 70% of its operating cost, in the case of FUEL, a small airline
like Lucky Air had to pay for its fuel in advance until it proved itself as an established
airline, adding to the firm’s financial burdens. Fuel price also differed from region to
region and Yunnan happened to have a higher price than the national average.
Furthermore, carriers in China were not allowed to hedge oil price risk through financial
instruments. Route optimization, another way to reduce the fuel expense, was also
As you can see, the cost of fuel is a big variable that weighs on the company because
it generates a lot of money and investment, what it could do is ally with outside financial
companies that give it facilities or opt for other options. They could also offer other
services on the trip such as selling jewelry online catalog in which they earn
2.15 Production
Lucky Air’s four largest cost components – fuel, landing fees, aircraft leasing, and
taxes – comprised about 70% of its operating cost, in the case of FUEL, a small airline
like Lucky Air had to pay for its fuel in advance until it proved itself as an established
airline, adding to the firm’s financial burdens. Fuel price also differed from region to
region and Yunnan happened to have a higher price than the national average.
Furthermore, carriers in China were not allowed to hedge oil price risk through financial
instruments. Route optimization, another way to reduce the fuel expense, was also
Analysis: Lucky Air’s four largest cost components – fuel, landing fees, aircraft leasing,
and taxes – comprised about 70% of its operating cost, in the case of FUEL, a small
airline like Lucky Air had to pay for its fuel in advance until it proved itself as an
established airline, adding to the firm’s financial burdens. Fuel price also differed from
region to region and Yunnan happened to have a higher price than the national
average. Furthermore, carriers in China were not allowed to hedge oil price risk
through financial instruments. Route optimization, another way to reduce the fuel
The problem that we consider to be the most important in this report is that, although
the approach taken by Yunnan Lucky Air is correct and differentiating, as the same
case indicates, one cannot simply expect that the Low Cost strategy will be sufficient
Strengths
Weaknesses
Opportunities
Threats
good company to fly, they have a good service and their cost is accessible for
everyone, but, what company should know is that competitors are always appearing
in market so they need to improve their service and increase their promotions to
5. Alternatives Solutions
1. Consumer loyalty
2. expand routes
"star alliance" to jointly offer a value proposition that is attractive to the segment
advantage. Providing them with better attention, preferential rates and seats,
2. After a feasibility study, Lucky could incorporate new routes, to have a greater
market.
3. Add upgrade options to your services without losing your low-cost approach.
These new elective attributes for the client will have an additional fee but will
help improve the customer experience on the flights and the value proposition
of Lucky. In this way obtain a differentiating advantage with respect to other
low-cost airlines.
4. Become a travel wholesaler, segmenting your market in b2b and b2c. Through
which you can develop different pricing strategies, communication, service, etc;
depending on which segments you are targeting. Even within the b2b segments
7. Recommendations
Invest more in marketing to publicize the new proposals and strategies of the flights,
another serious recommendation evaluates the offers that your competition offers, to
attract the customers of the competition so that you obtain for your company.
It is also recommended that for more than the company proposes strategy, you must
provide training to your staff so that everyone is focused on the same goal and know
the procedures to provide a good quality of care, should retain their employees
because the more identified they feel with the largest company will be the level of
8. Conclusion
Yunnan Lucky Air will increase its competitive advantage if you use these specific
strategies to make the airline more efficient. Making the airline more profitable will
attract those who travel by plane, in addition to obtaining more benefits for the
company. The use of the company's website and the direct purchase of your flights
will keep the rates low when making a direct transaction between the client and the
airlines, as well as creating a more solid use for electronic commerce. These factors
will make the company grow in general and will make Lucky Air have more total
income. The expansion of flight routes could increase problems in the short term, but
in the long term it will overcome these small problems because of the additional benefit
obtained. Addressing those traveling on business trips will increase the demand for
seats and give the airline a steady customer base. In that way, companies will want to
partner with the company to transport those traveling on business. In general, Lucky
Air will gain a competitive advantage over the competing airlines in China through the