7P’s Of Marketing Mix (PIA) Pakistan International Airlines Marketing Project

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

Contents 1

Introduction: ........................................................................................................................... 2

2

Vision: ..................................................................................................................................... 3

3

Mission: ................................................................................................................................... 4

4

GOALS & OBJECTIVES: ..................................................................................................... 4

5

MARKETING MIX (7 P’s) .................................................................................................... 5 5.1

PRODUCT ....................................................................................................................... 5

5.1.1

PIA Cargo Service: .................................................................................................. 5

5.1.2

PIA Speedex Service: ............................................................................................... 5

5.1.3

PIA Businesses ......................................................................................................... 5

5.1.4

PIA Seat Services: .................................................................................................... 5

5.1.5

Characteristics of Services: ..................................................................................... 6

5.2

PRICE:............................................................................................................................. 7

5.2.1

DOMESTIC ROUTES:............................................................................................ 7

5.2.2

INTERNATIONAL ROUTES ................................................................................. 7

5.3

PLACE ............................................................................................................................. 8

5.3.1 5.4

LEVEL OF CHANNEL: ......................................................................................... 8

PROMOTION: ................................................................................................................ 9

5.4.1

BROCHURES: ......................................................................................................... 9

5.4.2

MAGAZINE ........................................................................................................... 13

5.5

PEOPLE: ....................................................................................................................... 13

5.6

PROCESS: ..................................................................................................................... 14

5.7

PHYSICAL EVIDENCE ............................................................................................... 14

Submitted By: Saad Bin Mehmood

MBA [B&F] IM Sciences

Page 1

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

1 Introduction: Air transport has probably never been more important to the development of a new nation than in the case of Pakistan. In June 1946, when Pakistan was still in the offing, Mr. Mohammad Ali Jinnah, the Founder of the upcoming nation, instructed Mr. M.A. Ispahani, a leading industrialist, to set up a national airline, on a priority basis. With his singular vision and foresight, Mr. Jinnah realized that with the formation of the two wings of Pakistan, separated by 1100 miles, a swift and efficient mode of transport was imperative. On 23rd October 1946, a new airline was born. Initially registered as a pilot project in Calcutta, Orient Airways Ltd. had at its helm Mr. M.A. Ispahani as Chairman and Air vice Marshal O.K. Carter as General Manager. The new carrier's base remained in Calcutta and an operating license was obtained in May 1947. Four Douglas DC-3s were purchased from Tempo of Texas in February 1947 and operations commenced on 4th June 1947. The designated route for Orient Airways was Calcutta-Akyab-Rangoon, which also happened to be the first post-war international sector to be flown by an airline registered in India. Within two months of Orient Airways' operational beginnings, Pakistan was born. The birth of a new nation generated one of the largest transfers of population in the history of mankind. Orient Airways, along with the help of BOAC aircraft which had been chartered by the Government of Pakistan, started relief operations and transportation of people between Delhi and Karachi, the two capitals. Subsequently, Orient Airways transferred its base to Pakistan and established a vital link between Karachi and Dacca, the two capitals of the two wings of Pakistan. With a skeleton fleet of just two DC-3s, three crew members, and twelve mechanics, Orient Airways launched its scheduled operations in a fairy-tale manner. The initial routes were Karachi-Lahore-Peshawar, Karachi-Quetta-Lahore and Karachi-Delhi Calcutta-Dacca. By the end of 1949, Orient Airways had acquired 10 DC-3s and 3 Convair 240s which were operated on these routes. In 1950, it had become increasingly apparent that additional capacity would have to be inducted to cater to the growing needs of the sub-continent. Orient Airways was a privately owned company, with limited capital and resources. It could not be expected to grow and expand independently. It was then that the Government of Pakistan decided to form a state-owned airline and invited Orient Airways to merge with it. The outcome of the merger was the birth of a new airline, through PIAC Ordinance 1955 on January 10, 1955. In addition to transport activities, Orient Airways had established the nucleus of overhaul and maintenance facilities and acquired trained pilots, engineers and technicians, measures which proved to be a great asset for PIA during its teething phase.

Submitted By: Saad Bin Mehmood

MBA [B&F] IM Sciences

Page 2

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

In 1956, orders were placed for two Super Constellations and five Viscounts which were to be delivered in 1959. At this juncture, PIA possessed a small fleet which comprised of Convairs, Viscounts, Super Constellations and DC-3s. While Mr. M.A. Ispahani was the first Chairman of the new dynamic airline; it was the first Managing Director of PIA, Mr. Zafar-ul-Ahsan, who in his 4 year tenure, got the ball truly rolling and set the shape of things to come. The PIA Head Office building at Karachi Airport, which houses all the major departments of the airline, was the brain-child of Mr. Zafar-ul- Ahsan. In fact, on his departure from the airline, the employees presented him with a silver replica of the building with the caption, "The House You Built". In 1959, the Government of Pakistan appointed Air Commodore Nur Khan as the Managing Director of PIA. With his visionary leadership, PIA 'took off' and within a short span of 6 years, gained the stature and status of one of the world's frontline carriers. In aviation circles, this period has often been referred to as the "golden years of PIA". Development, expansion, and growth were keywords that the new management was committed to. In March 1960, PIA launched its first Boeing 707 jet service on the LondonKarachi-Dacca, route which later proved to be very successful. This trail-blazing accomplishment resulted in PIA becoming the first Asian Airline to operate a jet aircraft, setting trends for the future. In 1961, the airline took on the mammoth task of initiating a cross-Atlantic service from Karachi to New York. By this time, PIA had placed orders for more new aircraft, which included Fokker F-27s, Boeing 720Bs and Sikorsky helicopters. Helicopter services in East Pakistan had gained momentum by 1962 and expanded to include Sylhet, Chittagong, Dacca, Comilla and Ishurdi. PIA's helicopter services carried over 70,000 passengers during the first year of operation. At the time, it was regarded as a stellar operation, equal to any other in the world. Unfortunately, due to two mishaps, the service was discontinued in 1966. PIA is the first airline to get certified (initial certification) on Safety Management System (SMS) by Civil Aviation Authority CAA - Pakistan. CAA Air Navigation Order (ANO 91.0032 issued in September 2008) binds all airlines operating in Pakistan to have SMS. Well before the issuance of this ANO, PIA initiated SMS awareness and implementation in July 2008. PIA awarded initial certification on SMS in 27th February 2009 by CAA.

2 Vision: “PIA’s vision is to be a World class airline, meeting customer expectations through excellent services, onetime performance, innovative products and absolute safety”

Submitted By: Saad Bin Mehmood

MBA [B&F] IM Sciences

Page 3

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

3 Mission: Employee team will contribute towards making PIA a global airline of choice through:    

Offering quality customer service & innovative product. Using state-of-the-Art Technologies Ensuring cost effective measures in procurement and operations Developing safety culture

4 GOALS & OBJECTIVES: According to PIAC Act 1956, following are the main objectives of PIA Corporation.  To provide and further develop safe, efficient, adequate, economical and properly coordinated domestic as well as international air transport system.  To operate any air transport service or any flight by aircraft for a commercial or other purpose, and to carry all forms of aerial work.  To acquire, own, run, manage or participate in the running management of, any hotel or business connected therewith.  To provide for the instruction and training in matters connected with aircraft or flight by aircraft of persons employed or desirous if being employed either by the corporation or by other person.  To promote any organization outside Pakistan for the purpose of engaging in any activity of a kind which the corporation has power to carry out.  To acquire, hold or dispose of any property, whether movable or immovable, or any transport undertaking.  To repair, overhaul, reconstruct assemble or recondition aircraft, vehicles or other machine parts, accessories owned by the corporation or by any other person.

Submitted By: Saad Bin Mehmood

MBA [B&F] IM Sciences

Page 4

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

5 MARKETING MIX (7 P’s) Marketing Mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. There are literally dozens of marketing mix tools. McCarthy popularized 7 factor classifications of these tools called 7 P’s: Product, Price, Place, Promotion, people, process and physical evidence. So these 7 P’s of PIA are discussed as follows:

5.1 PRODUCT A product is anything that can be offered to a market for alteration, acquisition, use, or consumption that might satisfy a want or need. Most products we think of are physical products, but it also includes services. PIAC is also providing services to the nation, which can be categorized as follows:     

PIA Cargo PIA Speedex PIA Businesses PIA Seat services PIA Engineering

5.1.1 PIA Cargo Service: PIA Cargo, the air freight division of Pakistan International Airlines, commenced freighter operations in 1974, with initial flights to the USA, Europe, and Hong Kong. Within a short timespan, PIA Cargo has built a reputation for timely deliveries, operational excellence, and a high standard of customer service. In addition to its country-wide, domestic network in Pakistan, PIA Cargo delivers cargo shipments to over 40 international destinations, while serving the rest of the world through interline carriage.

5.1.2 PIA Speedex Service: PIA's flagship courier service, Speedex, delivers documents and parcels of any size, at customer doorstep. With a vast domestic network, cutting-edge technology, and the highest standards of customer service, PIA Speedex is Pakistan's courier company of choice.

5.1.3 PIA Businesses For the customers or businesses who are supplier of goods or services, this section lists the various tenders, or needs, for the divisions of PIA and its subsidiaries.PIA focus on strengthening relationships with third-party service providers so that, together, they deliver excellent customer experiences.

5.1.4 PIA Seat Services: PIA also Provide Passenger services to its Customer categorized in three classes i-e Business class and Economy Plus class and Economy Class.

Submitted By: Saad Bin Mehmood

MBA [B&F] IM Sciences

Page 5

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

5.1.5 Characteristics of Services: The characteristics of the services provided by PIAC are depicted in the following lines.

5.1.5.1 INTANGIBLITY Services provided by PIA are intangible. Unlike physical product, they cannot be seen, tested, felt, heard or smelled before they are bought. Therefore, the buyer cannot see the result before the purchase. To reduce uncertainly, the buyers will look for signs and evidence of the service quality. They will draw interface about the quality of the service from place, people, equipment, communication material, symbols and price that they will see. Therefore, PIA’s task is to manage the evidence, to tangibles the intangibles.

5.1.5.2 INSEPARABILTY Services are typically produced and consumed at the same time. If the service is rendered by a person, then the person is a part of service. Since the client is also present as the service is being produced.

5.1.5.3 VARIABILITY Services are highly variable, as they depend on who provides them and when and where they are provided. Service firm can take two steps towards quality control. The first step is investing in good personnel selection and training. PIA spends substantial sums to train their employees in providing good service. Second step is monitoring customer satisfaction system and PIA also do not properly monitor customer satisfaction.

5.1.5.4 PERISHABLITY Services cannot be stored and they have no self life. When demand fluctuates, service firms have difficult problems, like PIA has to apply much more equipment because of peak period demand on a specific route than it would, if demand, was even throughout the year. PIA use following strategies for producing a better match between demand and supply.

5.1.5.4.1 On the demand side – Differential pricing to shift some demand from peak to off peak periods – Non peak demand can be cultivated – Reservation system is one way to manage the demand level, and PIA employ it extensively.

5.1.5.4.2 On the supply side – Peak time efficiency routines are introduced. Employees perform only essential tasks during peak periods – Shared services are developed by interline agreements.

Submitted By: Saad Bin Mehmood

MBA [B&F] IM Sciences

Page 6

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

5.2 PRICE: A profit organization faces the task of setting a price on their product / service. Price is the amount of money that customers have to pay for the service. How are prices set? PIA has to deal with pricing aspect in two types of situation. 1. Pricing of passenger tickets 2. Pricing of Cargo Airways Bill For two types of routes, domestic routes and international routes, different pricing policies are used by PIA.

5.2.1 DOMESTIC ROUTES: Prices for domestic routes are fixed by government of Pakistan for PIA. The cost plus method is used to set prices at domestic level. Management estimates the price by using following six steps procedure and sent to the government for final approval: 1. Selecting the price objective 2. Determining Demand 3. Estimating costs 4. Analyzing competitor’s prices & offers 5. Selecting a pricing method 6. Selecting the final price

5.2.2 INTERNATIONAL ROUTES The prices for international routes are set by International Air Travel Association (IATA). The IATA does not allow any discount on any international routes; ticket shows the full price for the route while airlines charge discounted fare by cutting their prescribed share of profit. However, PIA establishes the pricing strategies on different international routes keeping in view the following points: 1. Demand for seat, greater demand tends to no discount 2. Competitor’s price 3. Cost of operation 4. Type of Aircraft used On the other hand PIA has three categories of their pricing as below; they also vary by season to season and at peak time.  Higher prices  Shoulder prices  Low prices For example:

Submitted By: Saad Bin Mehmood

MBA [B&F] IM Sciences

Page 7

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

5.3 PLACE Marketing channels can be viewed as sets of independent organizations involved in the process of making a product or service available to use. A distribution system is a key resource. PIA has partially owned distribution system.

5.3.1 LEVEL OF CHANNEL: PIA uses two levels of channels, which are described as below:

5.3.1.1 ZERO LEVEL CHANNELS: It is also known as direct marketing channel. Here PIA sells the tickets directly to final users, through its ticket counters. In Lahore, PIA has ticket and booking office to sell directly to the customers. All such offices of PIA are computerized and directly linked with the head office at Karachi. Following are some PIA Booking Office Locations:

Submitted By: Saad Bin Mehmood

MBA [B&F] IM Sciences

Page 8

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

5.3.1.2 ONE LEVEL CHANNEL: Here travel agents, as intermediaries, are involved in selling of tickets to the customers. Many travel agents are provided with the auto ticketing and reservation system. There are two types of agents which are defined as follows:

5.3.1.2.1

IATA Agencies

There are 30 IATA approved travel agencies which deals with PIA. These agencies can also be stocked and sell the tickets of other airlines. Commission of these agents is as follows:  International sector = 9%  Domestic sector = 5%

5.3.1.2.2

DISTRICT SALES AGENTS

These are the agents who exclusively deal with PIA’s ticket and cannot deal in other airlines. Normally, these are located, where PIA does not have sales point. However, there is one in Lahore. The commission provided to General Sales Agents is:  International sector = 12 %  Domestic Sector = 5 %

5.4 PROMOTION: PIA is not investing much in this area. They just use brochures, newspapers, Internet and some TV commercial when peak season is not there. Agents play an important role in promotion as they convince traveler to travel through PIA. Some brochures are listed below:

5.4.1 BROCHURES: 5.4.1.1 UMRAH MADE EASIER: PIA offers more flights to Jeddah in May, June and July for Umrah. These additional flights will not only provide more travel options to Umrah Pilgrims but will also enable more people to perform the holy ritual. Pilgrims can now enjoy comfortable and luxurious journey in Boeing777s

Submitted By: Saad Bin Mehmood

MBA [B&F] IM Sciences

Page 9

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

5.4.1.2 PIA 'BUDGET FLIGHT' - ENJOY UP TO 39% DISCOUNT ON REGULAR FARES: PIA introduces Budget Flight between Karachi, Lahore, and Islamabad.    

Fly PIA's new ATR Up to 10kg hand baggage allowed No checked-in baggage Condition apply

5.4.1.3 PIA FLEXIBLE FARES - PLAN AHEAD & PAY LESS:  Book International or Domestic flights as early as possible because the earlier you buy, the cheaper you fly.  A variety of discounts in Business, Economy Plus, & Economy Classes.  The benefit of even lower fares in the lean travel period.  Flexible Fares are applicable on sectors where Revenue Management is implemented.  Conditions apply

Submitted By: Saad Bin Mehmood

MBA [B&F] IM Sciences

Page 10

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

5.4.1.4 FLY BUSINESS CLASS WITH A FREE TICKET:     

Buy three tickets and get one FREE Buy one ticket and pay ONLY 50% for your companion The offer is available on International routes only This offer is not available on UK, USA & Canada sectors This facility is only valid for the sectors where RM is not implemented

5.4.1.5 DISCOUNT TO STUDENTS ON INTERNATIONAL AND DOMESTIC SECTORS:  25% discount offered to students on Domestic routes.  10% discount on International routes is valid only on the routes where RM is not implemented  Offer can be availed exclusively from PIA Booking Offices or the PIA counters at the airport.  The offer is available only for Economy Class passengers

Submitted By: Saad Bin Mehmood

MBA [B&F] IM Sciences

Page 11

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

5.4.1.6 PIA SPEEDEX DELIVERS WITH SPEED, RELIABILITY, AND AFFORDABILITY:  PIA Speedex delivers documents and parcels to your doorstep, with a vast domestic network, cutting-edge technology, and the highest standards of customer service.  PIA Speedex offers a range of flexible delivery options to suit your budget and your needs.  Same Day Speed  Overnight Speed  Second Day Speed  Seasonal Products (New)

5.4.1.7 CLICK 'N' FLY WITH PIA WEB TICKETING:  Secure online credit card transaction  Convenient accessibility from home or office

Submitted By: Saad Bin Mehmood

MBA [B&F] IM Sciences

Page 12

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

5.4.1.8 FREE PICK & DROP SERVICE:  PIA now offers the free pick and drop service from your door to airport.  This offer will be offer only for Business class.

5.4.2

MAGAZINE

PIA will give advertisement in different magazines once after two month with a coupon of 15% off in the following magazines.  Times Magazines  Spider  Aurora

5.4.2.1 Newspaper Advertisement PIA will frequently give the advertisement in the most readable newspapers, mentioned as below:  Jung  Dawn  Business recorder We have planned to enlighten our future plans to our cherished customers in the upcoming month.

5.5 PEOPLE: An essential ingredient to any service provision is the use of appropriate staff and people. Essential if the organization wants to obtain a form of competitive advantage. Consumers make judgments and deliver perceptions of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, attitude, and service knowledge to provide the service that consumers are paying for. Many British organizations aim to apply for the Investors in People accreditation, which tells consumers that staff is take care by the company and they are trained to certain standards. There are total 20,595 employees working in Pakistan International Airport (PIA) which includes Board of Directors, Corporate secretary, Head of Internal Audit, Executive Management and Auditors under different departments. Submitted By: Saad Bin Mehmood

MBA [B&F] IM Sciences

Page 13

Pakistan International Airlines

7P’s Of Marketing Mix

Marketing Project

5.6 PROCESS: In PIA the process is time when the customers buy the tickets and the time of their landing to their destination. Ticketing offices are available for customers at all there near destination. In Pakistan PIA have airports in different cities. It’s up to the services receiver from where they want to fly. First the customer Reserve a seat, than purchase the ticket from his/her nearest PIA Ticketing Office than after having ticket the customer has to reach at airport at the time mentioned In the ticket as stated above that time is the point which decide the complete process of this Service so when customer reach to Airport at the time mentioned he/she can fly after some security clearance toward his desired destination with great comfort through PIA.

5.7 PHYSICAL EVIDENCE It is the material part of a service. Strictly speaking there are no physical attributes to a service, so a consumer tends to rely on material cues. There are many examples of physical evidence, including some of the following:          

Packaging. Internet/web pages. Paperwork (such as invoices, tickets and dispatch notes). Brochures. Furnishings. Signage (such as those on aircraft and vehicles). Uniforms. Business cards. The building itself (such as prestigious offices or scenic headquarters). Mailboxes and many others . . . . . .  The existence of aircraft’s, ticket offices, environment, air buses, air ports are the evidences for customers of PIA Following Figures shows the Physical Evidence of PIA:

Jinnah Terminal Karachi, Pakistan

Submitted By: Saad Bin Mehmood

Allama Iqbal International Airport,Lahore , Pakistan

MBA [B&F] IM Sciences

Page 14