By
Birendra Khadka
Satish Rauniyar
Saurav Ghimire
Sujan Chokhal
Abstract
The purpose of this
report was to learn and analyze on the subject Introduction to marketing, we
have chosen Buddha air as our analyzing company, and we have done Literature
review, Methodology, Micro environment and Macro environment analysis to
understand all about marketing factors.
Acknowledgement
We express our warm thanks to Mr. Rajan Thapa for giving much more information, providing
knowledge about this marketing, making us understand analyze Micro and macro
environment, other analysis and gladly for teaching us. We thanked all our
group members who were always happy to work with each other, share opinion and
thought to each other, secondly we would like to thank Mr. Rupesh Jhosi
(marketing manager of Buddha Air), Mrs. Binda Thapa, Mr. Rupak Thapa and whole
Buddha air family and lastly we would like to thank to islington business,
school all islington family for giving us the great opportunity and guiding us.
Contents
1. Introduction
Buddha Air is a privately operated largest carrier in
Nepal. It came into operation on 11 October, 1997 with one brand new Beech
1900D aircraft following liberalization of the aviation sector after
restoration of democracy in 1990. At that time it was conducting flights to
five destinations.
Headquartered in Jawalakhel, Lalitpur of Nepal, Buddha
Air’s flight network covers a dozen domestic destinations and international
destinations including Varanasi of India and Paro of Bhutan (chartered only).
It now owns nine aircrafts.
Year of operation 11/10/1997 executive chairman Surendra
Bahadur Basnet
Managing Director Birendra Bahadur Basnet
Type of Business intl. /Domestic | Schedule flight
operator type of aircrafts Beech 1900D | atr 42-320 | atr 72-500 no. of aircrafts
nine [3 aircrafts of each category]
On 11 October 1997, Captain RK Sharma and German pilot
Captain Kevin ST flew Buddha Air’s first batch of 16 passengers on flight BHA
100 on board the Beech craft 1900 D. With the call sign 9N-AEE from Kathmandu’s
domestic airport, flight BHA 100 took its hour long flight to Mt Everest and
back – an achievement no airlines had done in its maiden flight. This helped to
set confidence in Buddha Air in motion.
Image source - (Air, 2015)
2. Literary review
By
(Shresth, 2008)
Buddha Air Private Limited is a growing private airline
company with annual sales of almost Rs. 300 million and a startup investment of
over Rs.600 million. It has around 350 employees. Despite strong competition
with two main competitors and several small ones, Buddha Air has captured 43
percent of the Nepali airline industry’s market.
Although Buddha Air offers the same products/services as
the other airlines do, it is different in that it fleets Beech 1400D and Beech
1400Cs aircrafts which are particularly well suited for the geographic
conditions of Nepal. Because of its small planes, it achieves high occupancy
rates. It strongly emphasizes customer service, it is reliable, it offers the
best prices in the industry, and it has a strong emphasis on safety.
Advertisements and promotions include a frequent flyer program. It sends pilots
periodically to training programs, and its employees understand that Buddha Air
stands for quality and superior service and they work hard to accomplish these
goals. It also emphasizes internal efficiency. Consequently, it has a strong
brand image and is the market leader in Nepal. It is the airline of choice in
Nepal because of its reliability, punctuality, and safety. Officers of UN are
strictly advised to fly Buddha Air.
Buddha Air does not seem to have a formal process to
formulate and communicate strategies. Everything is done in a top-down manner
by the Managing Director of the company. It does not have any formal strategic
planning system nor does it emphasize the formal strategic management. It is a
family owned business where the Managing Director and the Chairman exercise
almost all the decision making power. The Managing Director is the only person
in the company who can bring about change.
The Managing Director constantly watches the competition,
finds unfulfilled niche markets, and aggressively pursues them. The marketing
department is charged with achieving product/service differentiation and has
the greatest number of employees. The HR and R&D departments exist, but are
not strong. The Airline Management Information System (AMIS) is used for
paperless ticketing.
There are no written strategic plans or statements of
vision, mission, objectives, or strategies. Buddha Air works on yearly planning
basis. They evaluate past achievements and set targets for the next
Strategic management in Nepal …14
Year. They do not do their own research on industry
trends and practices but instead use an external research company. The Managing
Director is in regular contact with the Department of Civil Aviation and is
informed of any changes in government policies.
Despite the lack of formal vision, mission, objectives,
or strategies, the company has been quite successful for the past eight
years. Buddha Air stands as the leader
in most of its markets. Initiatives are made to defend their market share and
capture additional market opportunities whenever competitors challenge them.
The AMIS system that Buddha Air has provided information regarding competitors’
flights, operating costs etc. Under these circumstances, Buddha Air can easily
access opportunities and move into new markets.
3. Methodology
3.1 Primary
By Mrs. Binda Thapa
(HR manager of Buddha air) (Thapa, 2015)
Many types of fare - Normal fare and another type of
fares targeting low income customers like apex, bravo, Charlie, delta, eco fare
and is provided on first come first service basis. If there are many seats left
then those tickets are also available on low fare. Only for Nepali and Indian fare have
different fare service other passengers paying fares on dollar should pay same
amount for all types of seat. 2 flights
a week to Banaras as international flight and Bhutan on charter basis. More flow of passengers during festive
seasons.
By. Rupesh Jhoshi
(Marketing manager of Buddha Air) (Joshi, 2015)
Promotion- many types of passengers 1. Nepali and Indian
2.dollar customers 3. Rest fare passengers. For Nepali totally media promotions.
For dollar customers different visit to different country. For rest fare door to door promotion. Places:
Sales counter throughout country. Main office and training center in airport
hangar. Physical environment- depend on foreign tourist and due to strike there
will be less flow of tourist which affects the company’s work difficult. And
due to political instability no movement of Nepalese people also. More Nepali
passengers compared to foreign passengers 70:30 ratio. And market share of the
airline in domestic market is 65%. Major competitor Yeti airlines quite
competitive required however there is strategic tie-up and they do cooperative
matters together. The major principle of Buddha air is to give their customers
timely and safely journey. No other company can compete on their plane sizes.
Many Nepali customer’s only want cheap fare. The reason why the airline is
working because the company provides cheap fare but with proper timings of
flights. On festive seasons the flight from Kathmandu to other destinations are
expensive and immediately after festive seasons flights to Kathmandu are more
fare. The fare rate are not stable as they might change by huge margins within
days. This mainly depends on demand and Supply. The Company uses social network
for customers’ feedback. The company recognizes their main customers. They
provide with customers card like royal card and silver card and soon to come
diamond card. Total fleet size of the company is Eight. The major customer
target is every type of customers who uses plane as the transportation. Future
vision of the airways is to increase international destinations like Delhi and
others. Total staffs 700 proving top salary among other organizations in Nepal.
Very less leaving of staffs. More than half facilities compared to yeti to
staffs. The major strength is its brand name being a 17 years old company.
Increase in technological side from time to time as Airline Company mainly
works on technological factors. People are frightened to use plane due to many
accidents of planes. To maintain the market share is their major vision also.
There are mainly effects to the company due to worse airport system of
Kathmandu. It is the 7th worse airport in Nepal. The technology used
in Kathmandu airport are outdated in late 90’s.
No night flights. Because of no demand. Only on 3 destinations there are
night flights. The operations started in 1997. Only from last year the airline
has not increased its fleet size. No affect to company’s operation due to Ebola
but was slightly affected due to swine-flu. Also due to climate change there
cannot be forecasting of weather. Sometimes it leads to loss sometimes to
profit. Company cannot depend on weather forecast websites or applications. No
compensation to customers if flights are cancelled due to any reason. Counters
are closed 15 minutes before the flight time and the company have strict policy
regarding the same. People don’t come late for checking in Kathmandu but in
other places people normally come late. There is no e- checking system in
country but online booking and payment is possible nowadays. People do use
credit card system in Nepal nowadays.
3.2 Secondary
Buddha
Air envisions itself as the safest, most reliable and comfortable means of
transportation. From the moment any passenger books our tickets, we ensure that
our passengers get the best service.
All
passengers are backed by third party, passenger baggage legal liability
insurance including bodily injury/ property damage claim of up to US$ 60
million for Beech 1900, US$ 100 million for ATR42-320 and US$ 150 million for
ATR 72-500. In case of passengers travelling in Buddha Air, we offer a
provision of insurance claim of up to US$ 20,000 per passenger. Our aircraft
are backed by Pratt & Whitney’s complete fleet maintenance and manpower
plan, which includes 100% quality maintenance.
The
insurance of Buddha Air is handled by the leading insurance broker in the
Lloyds market, K.M. Dastur and has the leading insurance underwriter of the
world, GIC-India.
Ø Buddha Air provides flights to
thirteen destinations within Nepal and has its headquarters in Jawalakhel,
Lalitpur.
Ø We have comfortable buses that
transport you from the terminal to the aircraft.
Ø In case of flight cancellation due
to bad weather conditions we provide immediate refund on demand.
Ø Wheelchairs or portable oxygen
cylinders can be arranged for passengers with special needs. In case passengers
need emergency medical services we can arrange for ambulances upon arrival at
the destination.
Ø Underage children traveling
unaccompanied are especially looked after by the airport staff in the terminal
and by the flight steward while in the aircraft.
Ø All flights serve nonalcoholic
drinks as well as the latest edition of national dailies and Yatra.
Ø Passengers can join frequent flyer
program with the Royal Club and earn points. Royal Club offers several benefits
to our valued clients. Click here to know more about Royal Club.
Ø We also provide cargo services which
are handled by the cargo division. Click here to view our
cargo rate sheet.
Ø Buddha Holidays is our very own
travel and tour management company dedicated to our clients, which can assist
you in planning and organizing your holiday trip in Nepal, Bhutan and Tibet.
Buddha Holidays also offers some exciting tour packages within Nepal, Bhutan
and Tibet.
4. Micro Environment
4.1 Marketing
mix 7p’s
Product
Ø The company (Buddha Air) provides their passengers with
various national and international flight (only Banaras) facilities.
Ø They also provide their employees with various national
and international training. The national trainings are generally held in Buddha
air hangar located in Tribhuvan International Airport, Kathmandu whereas
international trainings are generally held in countries like USA, Singapore and
France.
Ø They also provide courier service throughout the country.
Place
Ø Buddha air covers not just only almost every domestic
airports of the country but also one international destination, Banaras and
also Bhutan on charter basis.
Ø It has got sales agents and sales counter throughout the
country for ticket sales for customers.
Ø Training center and main office located in Tribhuvan
International airport hangar.
Price
Ø The airline service company provides various discount and
offers various facilities to its regular customers.
Ø On festive seasons the flights from Kathmandu to other
destinations are expensive and immediately after festive season ends flights to
Kathmandu are expensive.
Promotion
Ø The company uses promotion materials like print and other
types of media for Nepalese and Indian customers, international visits for
foreigners and door to door for people from other countries working in Nepal.
Ø They also use social media like Facebook for taking
customers feedback regarding their services.
People
Ø They have very low ratio of employees leaving the
organization. And if any employee leaves the company they have other intentions
but join other airline company in Nepal.
Ø They also have very good reputation on giving salaries to
the employees according to the company’s HR manager, the pay scale of the
company’s employee are 50% more than their competitors in market.
Process
Ø Buddha air have now started online booking and payment
service to provide their customers with more ease to secure their seats in the
flights.
Ø They also facilitate their customers with airport baggage
checking and flight information system.
Physical Environment
Ø The airline company’s planes have comfortable seats and
enough leg space for passengers which is comparatively better than their
competitor’s.
Ø Many of the company’s customer give positive feedback to
their services. They usually rate it as excellent service.
4.2 Porter’s
five forces
Bargaining power of
customers: High
Ø Standard products and services
Ø Customers have many options to choose from
Ø Customer can compare easily other alternatives using the
internet
Bargaining power of suppliers:
High
Ø Buddha airline has prescheduled flights and require
certain amount of fuel. Fuel is one of the most important cost factor.
Threat from
substitute: High
Ø Numerous other Airlines
Ø Switching costs among other airlines are low
Ø Other means of Transportations
Threat of entrance:
low
Ø Very high capital required for entry
Ø Low profit margin
Ø Dominated by famous airlines
Competitive rivalry:
High
Ø Numerous competitors like Yeti, Simrik, Agni and others
Ø Fierce price competition
4.3 Value Chain
analysis
In
Nepal’s domestic airline industry the close competitor to Buddha air is Yeti
airlines as they have market share of 63.26% and 31.65% respectively. There
while comparing we have mainly focused on Yeti airline as other airlines can’t
give tough competition to Buddha airline and Yeti airline is the only airline
company which give close competition to Buddha airline.
The
fleet size of Buddha airlines is 8 and have two different types of airplanes
other hand Buddha airline have 7 fleet size and have only one type of airplanes
Yeti airlines also operates in STOL (short takeoff and landing) whereas Buddha
air doesn’t operate on those types of airports. The cargo service provided by
Buddha air lines are comparatively more expensive then the cargo service
provided by Yeti airlines. Though Buddha airlines is just one yeas older than
the Yeti airline (Buddha started its operation in 1997, Yeti airline started
its operation in 1998) but has been able to maintain their brand name
throughout the year. According to Buddha airlines HR manger Mrs. Binda Thapa
the pay scale of the company is 50% higher than Yeti airlines and is amongst
the highest payscale of whole country.
5. Macro Environment
5.1 PEST
ANALYSIS
Political
Ø Instable Political conditions
Ø Government getting serious about development of aviation
industry
Economical
Ø Radical increase in fuel price
Ø Unsatisfactory economic growth of the country
Social
Ø According to the census in 2011, over 57% of the
population falls into the 15- 59 age group category. Which means if marketed
properly there is a huge chance of the organization to grow within the country.
Ø In FY 2012/2013, Nepal saw an influx of 803,142 tourists,
an increase of 20.6% compared to FY 2011/2012. This also can help the
organization to grow.
Technological
Ø In recent years, there has been significant improvement
in telecommunication services in Nepal with a growing number of users and
adoption of new technology. Which benefits the aviation service to communicate
with air traffic controllers properly and avoid unwanted accidents.
6. SWOT
6.1 ANALYSIS
Strength
Ø Institutional aim to improve
Ø Experienced airline company
Ø Brand Image
Ø Seventeen year of trusted flying
Weakness
Ø Shortage of minimum facilities in airports
Ø Limited fleet size
Ø Limited operation capacity
Opportunities
Ø Growing demand for adventure travels
Ø Low competitor
Ø Nepali people is steadily accepting and using air
transport more often
Threats
Ø Existing road ways
Ø Feeling of risk about Nepali air transport
Ø Social and political instability
Ø Slow economic progress of the country
6.2 Strategy Development
Weakness to Strength
Ø Create own airports facilities to build more brand image.
Ø Improve Quality if Fleet.
Ø Turn limited operations so unique to grab more customers.
Threats to
Opportunity
Ø Make them feel airways are faster and better than
roadways.
Ø Make good advisement to views there is no risk Nepali air
transport.
Strength to
Opportunity
Ø Show improvements to the customers see the difference of
their service.
Ø Make experience as Excellency.
Ø Utilize their Brand Image in CSR (Corporate Social
Responsibility).
7. Recommendation
Ø Buddha air must introduce to tourism packaging for
multiple known destination to the travelers, mostly for tourist.
Ø They should compensate with passenger rather then returning
their money and fixing the air ticket with other possible airline company
Ø Competitors are providing snacks, Buddha air must come up
with effective methods rather than giving toffee and chocolate.
Ø They must inform the passenger half an hour before who
are late for flight by messaging.
Ø They must give token to their customers like key rings, calendar’s,
magazines, etc. It will help as advertisement and will be always in mind of
costumers.
8.
Conclusion
After our primary and secondary research about Buddha air
we have been able to prepare this report. While doing our group research we
came across various factors that are related with the company and affect the
operations of the company. Buddha air is more than 17 years old and has a good
brand image. It is without any doubt the most popular name in domestic airline
service in Nepal. We had a chance to meet the company’s HR manager and
Marketing manager and ask them our queries directly which also gave us more
boost to make our research paper better.
We analyzed Buddha air’s various analysis methods like
SWOT analysis, PEST analysis, Marketing mix and porter’s five forces to
understand micro and macro environment of the organization. This research actually helped us to
understand more about airline industry and also make ourselves understand more
about the practical world.
9. References
@airbuddha, 2015. Marketing, Kathmandu:
Twitter.
@buddhaairnepal,
2015. Costumer review , Kathmandu: Instagram.
Air,
B., 2015. https://www.facebook.com. [Online]
Available at: https://www.facebook.com/buddhaair
[Accessed 3 April 2015].
Available at: https://www.facebook.com/buddhaair
[Accessed 3 April 2015].
Blythe
Jim, 2005. Marketing. In: Third, ed. Essinentials of Marketing. Harlow:
British Library.
Buddha
Air, 2015. https://www.buddhaair.com/. [Online]
Available at: https://www.buddhaair.com/
[Accessed 1 April 2015].
Available at: https://www.buddhaair.com/
[Accessed 1 April 2015].
Joshi,
M. R., 2015. Marketing - Buddha Air [Interview] (9 April 2015).
Mecgh
KC, s. t., 2015. Sales of buddha air [Interview] (1 April 2015).
Michael,
B. W. a., 2008. Marketing. In: Thirteenth, ed. Concepts and Cases. New
Dheli: Third repprint.
Shresth,
D. R. G. a. B. K., 2008. Kathmandu University School of Management Occasional
Paper. Strategic Management in Nepal, 3(4), pp. 13-14.
Thapa,
M. B., 2015. Marketing - Buddha Air [Interview] (9 April 2015).
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