Flydubai Network Expansion: Entrepreneurial Marketing

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Executive Summary

This paper explores the marketing strategies of Flydubai’s strategic network expansion department. The paper analyses the marketing activities that are apply to Flydubai’s network expansion campaign. The report begins by evaluating and analyzing Flydubai’s current market position. Flydubai is a new comer in United Arab Emirates (UAE) aviation industry and it is important for the airline to pursue a number of entrepreneurial marketing strategies before the organization can cement its place in the global aviation industry.

The first part of the paper covers Flydubai’s background information including its current position in the industry, immediate competition, and an overall look into the market. The second part of the paper analyses the company’s entrepreneurial marketing strategies. This analysis covers various marketing activities by Flydubai in regards to the company’s proposed network expansion. Some of these factors include market segmentation, marketing mix, and development of new services, product rollouts, and customer engagement among others. The paper ends by offering recommendations for Flydubai’s network expansion strategy.

Background Information

Flydubai is a commercial airline that was started in 2009 with its main base being Dubai, United Arab Emirates. The company’s initial strategy was to provide its clients with low cost but high quality services. Flydubai has achieved a popular product through its custom Economy Class tickets and low-cost destinations. The airline’s products are also flexible because it is possible for customers to pay for any service-extras of their choice.

The airline has a fleet that includes both small and large aircrafts such as Boeing Jet liners. In the course of its operations, Flydubai has managed an impressive network expansion, which has seen the company operate in over 90 destinations, and in more than 5 continents. In a report that highlighted its operations within the first 75 months, the airline had managed to “to grow its fleet to 50 aircraft, all of them 737-800s and since then it has started over 110 routes from Dubai’s main airport and last year the carrier transported over 7.2 million passengers” (Morrison & Mason 2016, p. 58). Since its inception, Flydubai has enjoyed a significant rate of growth over the years, save for 2014, when airport maintenance slowed down its operations for a few months.

UAE’s aviation industry has been vibrant since 1985 starting with the formation of the Emirates Airlines with its main base being Dubai (Hafeez, Nguyen, & Parahoo 2016). Currently, UAE’s aviation industry includes a number of independent airlines including Etihad, Air Arabia, and the Emirates.

The standout factor of Flydubai is its low-cost, but quality passenger services across the world. The airline industry in the UAE has grown to include more than 500 commercial aircrafts, a market capitalization of about $400 billion and a growth rate of about 25%. The main objective of Flydubai’s network expansion department is to match the airline’s demand with subsequent route expansions. This network expansion is also set to put Flydubai on a competitive path with other leading competitors in the region such as Etihad and Emirates.

Market Segmentation, Targeting, and Positioning

Flydubai’s market segmentation is mostly informed by prices and quality of products. Most other airlines are unable to segment these two factors like in the case of Flydubai. For example, the economy-class target market for Flydubai is different from the economy class objectives of top-tier airlines such as Emirates and Etihad airlines. Flydubai’s entrepreneurial strategy as a low cost carrier differs from that of its main competitors because its positioning is different.

For example, all other competing airlines are positioned in a manner that prioritizes quality over everything else. On the other hand, Flydubai is positioned in a manner that attracts seekers of low-cost carriers, especially across Asia, Africa, and the Middle East. This strategic positioning has been effective because it exempts the airline from direct competition with UAE’s industry leaders Etihad and Emirates. Flydubai’s network expansion strategy takes into account that its existing market targeting and segmentation strategies does not put it on a competitive path with market leaders any time soon. In the course of its operations, Flydubai has only had to compete with Air Arabia, previously the most dominant low-cost carrier in the Arab Peninsula. Flydubai is primary base is in the UAE thereby making it possible for the expansion plan to be based on a singular expansion point.

The Marketing Mix: Environmental Analysis

Opportunities

The airline’s main opportunity is that it lacks price competition within the UAE market. Most of the competing airlines within the UAE are relatively high-priced. Consequently, it is possible for a UAE-based low-cost airline to pursue external expansion because of its stability within the local market. In the course of its planned network expansion, Flydubai has the potential to get customers from its whole region of operation.

Most of the low-cost airlines in the GCC only operate within their locality and they often shun flying to popular global destinations. Currently, Flydubai has started to expand to popular international destinations and this gives the airline an environmental advantage. Another advantage that serves as a strength for the airline is that it stands to gain network expansion leverage through its existing contracts with executives and corporations.

Threats

The airline’s marketing mix reveals that it stands to incur additional costs during its planned network expansion. For example, additional routes come with more technological costs, a higher demand for value-added services, and increased labor costs. Another threat to Flydubai’s SBU lies in expected shortage of skilled labor. This shortage of labor also takes into account the fact that leading airlines within the UAE and the rest of the world tend to ‘hoard’ skilled labor.

Expansion of existing networks also adds negative effects on the environment. Expanding its network will lead Flydubai to contribute to greenhouse gases and carbon emissions. It is also important to consider the threat of a drop in prices within the low-cost airlines segment. This drop in prices has happened to related industries such as oil and real estate. Flydubai will also have to contend with increasing competition as the UAE government continues with its efforts to attract foreign investments.

Strengths

The airline enjoys considerable support and patronage from the UAE government and this translates to a main strength for the company. Therefore, the company can expect government assistance during the planned network expansion in the course of the next five years. Although the airline mainly operates as a low-cost airline, it has a diversified range of airplanes in its fleet. Consequently, the airline is not expected to encounter any problems when it enters foreign industries because its fleet is state of the art. Brand image is an important strength during network expansion. Currently, Flydubai is recognized worldwide as an attractive brand.

Weaknesses

The analysis of the airline reveals a number of weaknesses that could factor into the company’s network expansion strategy. One aspect of weakness for the company is that it is mainly bases in the UAE, thereby limiting its customer acquisition strategies in foreign countries. There is a high employee turnover within the UAE and this weakness might affect the company’s expansion strategy. For example, most of the employees who work in UAE’s leading airlines such as Etihad and Emirates are outsourced from different countries around the world. The company requires to improve its human resource management strategies in order to match its network expansion strategy.

Marketing Mix

Product

The signature Flydubai product is the low-cost flights, which includes chartered flights to various destinations. This product is not difficult to integrate into a network expansion strategy. However, the company should be open to other product innovations to match the needs of its extended networks.

Price

Price is an important aspect of Flydubai’s marketing strategy because the airline is known for its low costs. However, the company’s financial results reveal that the company has a cost-plus pricing strategy, which could be sustained in the course of an extended network.

Promotion

Flydubai has many approaches to promotion. However, the company mainly relies on customer loyalty during its promotion exercises. In the event of the planned expansion, customer loyalty alone cannot sustain promotions. Therefore, the company should be prepared to follow in the footsteps of Emirates Airlines, which has an impressive promotional reach around the world.

Place

The aviation company mainly operates from Dubai, UAE. Its presence is mainly felt within the UAE and neighboring GCC countries. It is upon the network expansion strategists to see how they can incorporate this initial success to the subsequent growth attempts.

Selecting, Developing, and Evaluating New Products and Services

In the course of selecting new product, Flydubai should consider retaining the products that have made it a successful company. However, the success of new products and services depends on the type of competition that is encountered during a network-expansion. Market development is a concept that could be difficult to a company of Flydubai’s status. Market development works for big companies that have a strong presence in the ground. New products and services for Flydubai can only work best if they are first tested within the UAE, which is considered a less hostile market environment for the company. In the context of the network expansion, Flydubai’s new products should accommodate diversification and market penetration.

Entrepreneurial Pricing Decisions

The entrepreneurial pricing decisions that apply to Flydubai’s network expansion strategy involve a consideration of whether the company can deliver similar products to the market at a lower cost. Consequently, it is important for the company to incorporate one of its core strengths into the planned expansion. Furthermore, it remains to be seen whether the company can be able to sustain its low costs of operation in unfamiliar markets. The head of the expansion team can consider utilizing the resource-based approach to pricing. This approach can “help a business to gain competitive advantage by working on its Value Chain and implementing value-added principals” (Stokes 2012, p. 4).

Public Relations and Publicity

The company enjoys a good public relations portfolio in its area of operation. However, the expansion strategy requires higher levels of public relations and publicity. One method of achieving this goal involves using extensive advertising techniques with the view of rapidly penetrating foreign markets and creating high demand for its low-cost services. In the past, the company has relied on Dubai’s tourism attraction to enhance its publicity and public relations outreach. However, further network expansion requires additional public relations strategies.

Entrepreneurial Distribution Channel Decisions

Flydubai’s entrepreneurial distribution channels decisions are mostly influenced by the company’s market penetration strategy. Distribution of products and services is expected to increase the company’s market share both at home and abroad. Using the brand image in the course of distribution allows the company to meet current levels of demand and create new supply avenues at the same time (Bjerke & Hultman 2014). Good entrepreneurial distribution channel decisions are also likely to increase the company’s overall efficiency. On the other hand, miscalculations in respect to Flydubai’s distribution channels are set to increase the company’s expenditure without delivering results.

Entrepreneurial Sales Management and Product/Service Rollout

Entrepreneurial sales management involves having the expansion team identify target markets and carry out market research in relation to new networks. Therefore, market research should identify other areas where customers might be interested in low-cost carriers. This move should be followed by the airline’s quest for creating brand awareness in targeted markets. Use of internet as a form of sales has become a standard procedure for most airlines across the world. Therefore, this area of sales management should be enhanced before embarking on an expansion drive. A product rollout should align with the company’s entrepreneurial sales management and consider network expansions in places like China where variety and low-cost products are popular.

Customer Engagement, Promotion, and guerilla Marketing

When the company was launched in 2009, it utilized several methods of customer engagement including market-penetration campaigns. Currently, the company has the advantage of creating a solid public portfolio that includes reliable customer service. This image should be at the centre of the brand’s network expansion strategy. Relying on Dubai’s tourism connection as a guerilla marketing strategy is still effective in the course of the company’s network expansion. However, this marketing strategy can be enhanced through social media incursion through avenues such as YouTube and Facebook.

Recommendations

There are several tactics that can improve Flydubai’s strategic network expansion ventures. It is important to realize that the company’s success within the UAE and other GCC countries might not be enough in the push for further expansion. Consequently, the company should adopt soft-expansion strategies including using its connection with the UAE government when creating further oversees engagements.

Another recommendation is to have the company conduct extensive market research prior to any product development or rollouts. It would also be prudent for the company to extend the reach of its internet advertising and promotion networks by using Social media platforms. The airline has enjoyed a fertile domestic environment, but this single fact cannot be used as a basis for network expansion (Teigeler 2015). Nevertheless, the company should be on the lookout for emerging local competition because such a development could destabilize the company’s expansion strategies. The low-cost but efficient carrier strategy remains the best tool in Flydubai’s network expansion quest, even in areas where competition is high.

Reference List

Bjerke, B & Hultman, C 2014, Entrepreneurial marketing: The growth of small firms in the new economic era, Edward Elgar Publishing, London.

Hafeez, K, Nguyen, B & Parahoo, SK 2016, ‘The role of place branding and image in the development of sectoral clusters: The case of Dubai’, Journal of Brand Management, vol. 23, no. 4, pp. 383-402.

Morrison, W & Mason, K 2016, ‘Low cost carriers in the Middle East and North Africa: Prospects and strategies’, Research in Transportation Business & Management, vol. 21, no. 1, pp. 54-67.

Stokes, D 2012, ‘Putting entrepreneurship into marketing: the processes of entrepreneurial marketing’, Journal of Research in Marketing and Entrepreneurship, vol. 2, no. 1, pp. 1-16.

Teigeler, J 2015, Arabic airlines in the European market: Strategies, consequences and international market changes and challenges, Master’s Thesis, Essen University of Applied Sciences. Web.

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