Market Structure and Trends

Ethiopian Airlines is the largest and the most profitable air carriers in the African continent with its hub at Bole International Airport located in Addis Ababa. It was founded in December 1945 and has been on a growth trajectory ever since. Ethiopian airlines is an active member of African airlines association (AFRAA) and International air transport association (Clark, 2014). It is also member of Star Alliances since December 2011. Star Alliance is world’s largest global airline alliances.

Under the leadership of CEO Tewolde Gebremariam, the airlines has put in tremendous efforts to improvise its service and enhance its connectivity (Ayalew, 2015). At present, the air carrier flies to a total of 113 passenger destinations (Abebe, 2017). This is the most destinations covered by any airlines in Africa. The company’s growth has been unwavering since its inception and today it is the largest Air carrier in Africa. In the year 2010, it was named the most profitable airline in Africa.

Market Structure and trends

African Airline market

African continent consists of 54 countries and an approximate population of over 1.1 billion. The diversity of the continent is marked by the use of over 2000 languages and varied cultures across countries. The airline market has crucial significance as the vast area has neither appropriate road nor rail services (Solomon, 2015). This is the reason that airlines are considered the most efficient modes of transportation for the purpose of leisure, freight, business or tourism.

The continent experiences a wide variation across countries in terms of their citizen’s propensity to utilize the air network to travel. And the countries’ GDP plays a vital role in defining this inclination. It has been observed that despite being a home to 15% of the world population, the 230 airlines functioning in Africa commute only 5.5% of the world’s commercial passengers and freighters (Abeyratne, 2014). Since the liberalization in the year of 2011, the area has seen a massive increase in their intra and intercontinental air traffic across countries. Reduction in travel costs and improvisation in air services ever since has also been able to engage customers (Njoya, 2016).

Marketing strategies used by Ethiopian Airlines

Africa First: Dream Liner Aircraft

Ethiopian airlines is the first carrier outside of Japan to operate the ultra-modern Dreamliner aircraft. In a brilliant advertising move, they named the flight ‘Africa First’ to signify the presence of this lavish and elite service in Africa. Newspapers and magazines covered it with the tagline ‘Ethiopian dares to dream’. In this campaign, there were various billboards were placed across different countries of Africa with ‘Africa first’ highlighted.

Coffee

Africa is a land of coffee. It is the largest producer and exporter of coffee. Ethiopian airlines came up with a brilliant strategy to market the air carrier with coffee images. The ad showcased different names for coffee across various countries of Africa. These names took the shape of an Ethiopian Airlines flight as shown in the image below. The ad also depicted, Africa’s map covered with coffee beans. This advertising accomplished two goals. Firstly, it successfully displayed the countries covered in the air route of Ethiopian airlines. Secondly, it efficiently and subtly marketed the coffee production of the continent.

Marketing Strategies Used by Ethiopian Airlines

YouTube

Ethiopian airlines has also been posting videos on YouTube where customers share their experience. All the inflight services are explained in the video uploaded. The videos in detail throw light on the number of seats in both economy as well as business class. It demonstrates the traditional attire worn by in flight attendants. The seats have entertainment screens which lets the flyer select from a sundry range of movies to watch. And every seat has a pillow and blanket.

Improvement recommended: It has been noticed that Ethiopian airlines do not have a specific page on YouTube. Most of the videos uploaded are done by customers. Video quality is not optimum. Search engine optimization and search engine marketing need to be strongly done. The videos have very few likes which indicates that customers are not viewing the videos often. Other airlines have done a great job at YouTube marketing as it is a great way to reach out to a large set of customers by providing them with details about the inflight services explicitly.

Social Media Marketing 

Ethiopian airlines has tied up with Radonic Rodgers strategy firm to handle its Social media marketing. Ethiopian has since won various customers due to its social media presence. The firm has creatively used the platform of social media to engage customers and seeking feedback on the same. Their social media is a tool to gain customer interaction and spread brand awareness (Tutin, 2014).

Segmentation Targeting and Positioning

STP is one of the most important analysis that needs to be done by any firm in order to find the right market for its product. For Ethiopian airlines, the structure is as below:

Segmentation

Segmentation refers to the grouping and profiling the market by a range of variables (Armstrong, 2015). The biggest segment that Ethiopian airlines caters to is Businessmen and traders to travel frequently across and outside the continent.

Targeting

Once the market has been divided in groups, the firm must decide the targeted audience for its products from among the selected segment (Hollensen, 2015). Ethiopian airlines target the middle and upper middle class income groups of the society.

Positioning

Positioning refers to the image that the customers hold about the product (McDonald, 2016). Ethiopian airlines has positioned itself as a value for money airline that has connected the most remote countries in Africa from the rest of the world.

Competitor analysis

Competition analysis is extremely crucial and significant for the growth of any firm (Winer, 2016). The competitor chosen here is Egypt Airlines. This air carrier is based out of Cairo in Egypt. It is also a member of the Star alliance and is one of the oldest air carrier in Africa.

Marketing Strategy of Egypt Airlines

Egypt airlines has adopted the following strategies to attract customers and create a better value for their brand.

1. Attracting premium customers by operating to and fro connections on a daily basis.
2. Reducing connecting time to the minimum and saving time of customers
3. Offering quality discounts to frequent flyers
4. Enhancing inflight services: The new carrier is planned to have helium beds for customers to sleep in long distance flights.
5. Increase frequency to five important destinations: London, Heathrow, Paris, Amsterdam and Istanbul.
6. Working closely with other Star alliance members to ensure frequent flies to connecting destinations.

In order to fight the competition, Egypt Airlines offers various discounts. It works on economies of scale specifically for it economy class which targets lower and middle income groups.

Improvement Recommended

However, in order to cover its costs, the airline offers exclusively brilliant inflight services to business class at a higher price. For example, for longer duration flights, business class customers are offered helium beds, their babies are taken care of and the food offered has sundry variety.

Innovative idea for airline marketing

Innovation is an imperative part of the marketing of any product. New product developments, new channels and promotional strategies for existing products and reviewing prices is a crucial aspect for any organization to sustain competition (Lee, 2016).

For Ethiopian airlines, a new innovative idea is a marketing campaign to increase customer engagement and attract more customers. The campaign has made use of the widespread and increasing usage of twitter as a social media tool among customers. The details of the campaign are as below.

Campaign: #giftmyfriend

During this campaign, anyone on twitter can tag their friends and gift them Ethiopian airline voucher of 10% off on their next travel booking. The voucher would be emailed to the friend who is tagged in the tweet.

Time: This should be done in the month of August and February for three days each as people celebrate Friendship’s day and Valentine’s Day during these months.

Promotions: Creative advertisements to promote the campaign must be shown on television and published in newspapers. Even though the campaign runs on twitter, other social media platforms like Facebook and Instagram should also be used to promote the same. And once the friends have received the email, they should be asked to tweet back with their picture describing their experience.

Outcomes: The campaign has various benefits as below:

1. Higher customer engagement as people would be actively tweeting related to Ethiopian Airlines for those three days.
2. Increased customer interaction. This will be achieved as people who are making travel plans during that time, will prefer to receive 10% off and hence they will ask their friends to tweet.
3. Improved feedback and enhanced goodwill. This is because upon receiving the voucher, customers would be asked to tweet and share their experience. This would provide a feedback to the airlines and also increase goodwill in the market and enhance brand value.
4. Cost: One of the advantages here is cost. Months of February and August are peak seasons and flights are charged at a premium. Hence offering a 10% discount will not make much difference to the airlines.
5. Competitive advantage: This level of customer engagement and social media marketing has not been done by any other airline yet. Doing this will give Ethiopian airlines a competitive advantage.
6. Customer loyalty: Once the customer has a voucher of 10%, even if they wish to travel in other months, they would prefer to utilize that voucher. Psychologically, it is possible that if they have a 10% voucher, they will make travel plans even if they don’t have any.
7. Customer relationships will also improve as when people would be gifting the voucher to their friends, they would also develop a sense of ownership for Ethiopian airlines. This in turn would increase loyal customers.
8. Emotions: Friendship is an emotional subject. And when the airline promotes itself in such a manner, people start noticing the emotions behind the product rather than its augmented details. This connects better with consumers and hence increases brand value and goodwill.
9. Increased traffic: Lastly, all these benefits would lead to increased air traffic.

Conclusion

Ethiopian airlines is one the oldest and the largest airline services in Africa. It connects a large number of remote African countries to the rest of the world. Its efficient marketing and optimum distribution channels have made it the most profitable airlines in the whole of Africa. Ethiopian airlines have used social media marketing, innovative advertisements, Television advertisement, newspapers and YouTube as successful and efficient means to market their product.

The airlines is an active member of Star Alliance just like one of its biggest competitors Egypt Airways. Egypt airways is also a very old air carrier with a solid brand that supports its existence. African airline marketing has shown tremendous growth in the last decade. This is a great sign as for the first time, Africa seems more connected to the rest of the world. However, there is still a long way to go but the pace with which the market is growing is surely a strong evidence of tremendous growth in the future.

References:

Abebe, G., 2017. Determinants of Aviation Profitability: The case of Ethiopian Airlines (Doctoral dissertation, Addis Ababa University).

Abeyratne, R., 2014. Ethiopian airlines hijacking-the international perspective. Journal of Transportation Security, 7(2), pp.191-198.

Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.

Ayalew, W.F., 2015. The relationship between transformational leadership and competitive advantage gaining in Ethiopian Airlines (Doctoral dissertation, Jimma University).

Clark, O., 2014. The heart of Africa: Ethiopian Airlines’ chief executive Tewolde Gebremariam is passionate about the continent his carrier serves–but Middle Eastern operators have also seen the potential of Africa’s emerging markets, and Gebremariam has no illusions about the challenges his carrier will have to overcome to maintain its position and ambitious expansion plans. Airline Business, 30(6).

Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.

Lee, K.H., Lee, K.H., Hyun, S.S. and Hyun, S.S., 2016. An extended model of employees’ service innovation behaviour in the airline industry. International Journal of Contemporary Hospitality Management, 28(8), pp.1622-1648.

McDonald, M. and Wilson, H., 2016. Marketing Plans: How to prepare them, how to profit from them. John Wiley & Sons.

Njoya, E.T., 2016. Africa’s single aviation market: The progress so far. Journal of Transport Geography, 50, pp.4-11.

Solomon, K., 2015. Determinants of Profitability of Ethiopian Airlines (Doctoral dissertation, Addis Ababa University).

Tuten, T.L. and Solomon, M.R., 2014. Social media marketing. Sage.

Winer, R. and Dhar, R., 2013. Marketing Management: Pearson New International Edition. Pearson Higher Ed.