AIR BLUE

SUBMITTED TO:

MISS SHEHLA SOHAIL

SUBMITTED BY:
ZOHAIB ALI BUTT (091181)
WAQAS AHMAD (091175)
QUDSIA NASEEM (091167)
RANA RASHID ALI (091163)
 HISTORY

The airline with three new-generation aircraft has planned to fly

between Karachi and other major cities of the country from 2004. The
airline offers business and economy classes and it is the first airline in
private sector to have Pakistani pilots and engineering staff trained
according to international standards.

The company has been structured as a public limited company and its
sponsors are overseas Pakistanis. The project envisages an initial
investment of over Rs 500 million.
The company has started its operations based in Karachi with
corporate offices in both Karachi and Islamabad. The company started
its operations when the domestic aviation sector in Pakistan is
dominated by PIA with over 75 percent of the market share, while two
private airlines, Aero Asia and Shaheen also operate domestic flights.

MAJOR STAGES IN NEW PRODUCT DEVELOPMENT

Concept Marketing
Idea Idea development strategy
generation screening and testing development

Business Product Test

analysis development marketing Commercializatio
n
1. IDEA GENERATION

New product development starts with idea generation. AIR BLUE

company had many ideas to starts their new air line.

Internal Idea

The executives and the marketing managers joined their heads

with the manufacturing staff. Engineers found many ideas.

External Idea Source

As we know “Customer Is The King”, so the company analyzed

the complaints of their customers and customer of their competitors.
By doing this AIR BLUE found out many ideas how to make their
service better.

2. IDEA SCREENING

The first idea reducing stage is idea screening, in which a company

spots good ideas and drop bad ones. Keeping in view the internal and
external ideas source, the company screened out some bad ideas and
sported some good ideas.

After Analyzing The Ideas, The CEO Thought Of Some Questions

1. Will the service be good for the customer?

2. Will it be good for our company?
3. Do we have the people who can make this idea succeed?
4. Will it offer more value to the customer than do competitors?
5. Will it be easy to create customer equity?

3. CONCEPT DEVELOPMENT AND TESTING

Product Idea

The product idea of AIR BLUE is to facilitate the customers.

Product Concept

The product concept of AIR BLUE is to provide good facilities to

the domestic and international passengers in terms of the price of
tickets and introducing aircrafts in good condition to the domestic and
international passengers.

Product Image

The customer perceive value about AIR BLUE that it is an

economical airline with a good service and good condition of aircrafts
especially for domestic flights.

Concept Development

AIR BLUE airline developed some concepts

Concept 1

An airline service for all, having different classes according to

fares, giving good condition of aircrafts to customers and providing a
prestigious service.

Concept 2

An airline having high quality service but expensive and good

quality aircrafts.

Concept 3

An airline for the middle class giving them cheap fares but not
facilitating much.

Concept Testing

AIR BLUE airline exposed these concepts to the customers and

then asked questions which would they prefer.

The people strongly voted in favor of the Concept 1

4. MARKETING STRATEGY DEVELOPMENT

After finalizing the concept, they developed a marketing strategy that

how to introduce this service in the market.

The target market are the upper middle and upper classes through
aero plane domestically and internationally. These customers will be
businessmen, engineers, doctors.

This airline will be positioned as the airline with a good service and the
aircrafts are in good condition.

The company aimed to contribute 10% in the domestic market and

suffering with a minor loss in the first year.

The company aimed to contribute 20% in the domestic market and

earning some profit in the second year.

The service’s planned price was low as it was an introductory freight

charges to create customer equity. AIR BLUE fist started domestic
flights from three airports of PAKISTAN

LAHORE
KARACHI
ISLAMABAD

In third step of strategy development AIRBLUE intended to capture the

domestic market 30% and wanted to start the flight to Manchester and
create a customer equity. Fares will be raised in the 2nd and 3rd year if
competitors permit.

5. BUSINESS ANALYSIS

After making the marketing strategy and the concept

development, the executives reviewed the sales, costs and profit
projection for expanding their service. AIRBLUE assessed sales. They
estimated the expected cost and profit to move towards product
development stage.
6. PRODUCT DEVELOPMENT

The AIRBLUE airline asked their research and development

department to develop a new concept. The research and development
department called for a long jump in investment.

With the suggestions of research and development department the

board of directors decided to purchase 10 new aircrafts with an
investment of ONE BILLION DOLLARS back in 2007. Now these are
delivered to the AIRBLUE airline in 2009.

They thought of straight flights from Pakistan to Manchester which is a

nine hour flight with a fueling stop at Ankara.

7. Test marketing

Test marketing is of three types

1. Standard test marketing

2. Controlled test marketing
3. Simulated test marketing

AIR BLUE airline decided to adopt standard test marketing. There

were no single flight going to Manchester before, so their
representatives asked Pakistani community about the launch of a new
flight, there fares, facilities etc. Although they used standard test
marketing which is time consuming, but they didn’t waste any time

8. COMERCIALIZATION

After the test marketing the final decision of the chairman was to
launch the service. In the first year ONE MILION cost was incurred
alone for Investment with extra advertising and sales promotion cost.
The company decided to launch the service to Manchester from three
cities of Pakistan.
PRODUCT LIFE CYCLE STRATEGIES

Introduction

AIR BLUE had a slow sales growth at the time of launching a

new service. There were heavy expenses on advertisement and
purchase of planes and low fares.

GROWTH

Currently, AIR BLUE is in the stage of Growth. It has got rapid

market acceptance and increasing profit as now it contributes 49.28%
market growth for Pakistan.

The reasons are:

1. It has introduced e-ticketing for the convenience of the

customers. They give a discount of 7% on e-ticketing.

2. In case of early booking weeks before traveling, they give you

discount from 10% to 90%.

3. 11 domestic and 20 international flights are on the move daily.

Sales and
Profits

Sales

Profit

0 Time

Product
Development Introduction Growth Maturity Decline

Losses/
Investment