United Airlines Marketing Plan

MKT 3300.007
MacKenna Abbott, Victoria Cheng, Vivek Kotikalapudi, Saara Raja, Pooja Reddy

April 30, 2016

Table of Contents
Company Description....3
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Core Values...3
Mission Statement.3
Organizational Culture..3
Industry Analysis...4
Competitor Analysis..5
Overview......5
Additional Value...5
Cost...5
Company Analysis.....6
Strengths.6
Weaknesses.........7
Opportunities...8
Threats.....9
Customer Analysis.....9
Consumer Classification.....9
Why Consumers choose United..10
Market-Product Focus.11
Segmenting.....11
Targeting.12
Positioning..12
Product Strategy....... 13
Price Strategy...13
Channel/Distribution/Place Strategy.15
Distribution Channels.16
Place Strategy......17
Advertising and Promotion Strategy.17
Advertising Strategy...17
Promotion Strategy.19
References.....20

Company Description

Background:
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Headquartered and founded in 1934, United Airlines is a major American airline that offers

passenger and cargo air transportation services. It is the worlds largest airline based on the wide variety

of destinations that are served. Ranked third in schedule passenger miles and fleet size, United follows

behind American Airlines and Delta Airline,

Core Values: Its how we fly

Focused on making United a great airline, a favorable place to work at, and a corporate company that is

gives back to the community, United emphasizes on providing great customer service, treating everyone

with dignity and respect, and being a responsible corporate citizen. The big focus is to make United the

flyer-friendly airline that treats everyone in a favorable manner.

Mission Statement: Diversity Flies with United

The root of success is based upon the employees are United themselves. Through diversity and

inclusion in the work environment, the drive toward success for United is high and enables United to

operate more productively and efficiently.

Organizational Culture:

Diversity and Inclusion are heavily enforced. By seeing every employee as a unique individual

and making them feel included, employees have more of an incentive to contribute to the success of

United and expand on business opportunities. Being at United should empower employees to achieve

their fullest potential as dignity and respect is what makes up the work environment.

Industry Analysis

United Airlines is part of the airline industry, a subset of the overarching transportation

industry. With a major global presence, United is able to offer flights to over 650 airports
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worldwide due to its presence in the Star Alliance of airlines. The Star Alliance encompasses 27

airline companies including Scandinavian Airlines, TAP Portugal, Brussels Airlines, and

Singapore Airlines. This partnership ensures that flight booked through any of the participating

airlines increases Uniteds market share.

Through the Star Alliance, United mainly competes with two other airline alliances:

SkyTeam and OneWorld. The grouping of all major airlines within just three alliances keeps

competition strategically low, allowing United to enjoy a projected long maturity phase. United

Airlines has a high 15.1% market share, just behind Southwest Airlines and Delta Airlines. Its

growth rate has been decreasing as of recent years, thus making it a cash cow. United offers

flights to all customers who want to travel either domestically within the US or internationally.

United has options for both price sensitive and price insensitive customers with different pricing

schemes for seat types and lower prices for customers who plan ahead.

Uniteds rise as a major global airline company is in part due to the Airline Deregulation

Act of 1978. Prior to this law being passed, the US government dictated which routes airlines

could take, prices of tickets, and whether they could fly domestically or internationally. After

the law passed under President Jimmy Carter, the airline industry evolved into a more capitalist

model, allowing previous airline underdogs to expand and kill their competition. Many formerly

elite airlines, such as Pan Am, went bankrupt due to inability to compete in this new unregulated

market. Airlines such as United were able to alter their business strategies and rise to their

current status.

Competitor Analysis

United has many competitors in their industry, however their main ones are Southwest
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Airlines and American Airlines. United Airlines wants to be the airlines people want to fly, have

a workplace employees enjoy, and have a company shareholders want to invest in. They are a

modern fleet which is the most fuel efficient among network carriers in the U.S. And they also

fly out of optimal hub locations including the 4 largest cities in America. American Airlines

focuses mainly on being a people oriented airline. They have excellent customer service and

truly believe the customer is always right. Southwest believes they connect people to whats

important in their lives through friendly, reliable, and low cost travel. They pride themselves

through their local presence, they want to be the #1 domestic airline. Which is why they dont

focus much on international travel.

United is the most fuel-efficient among network carriers in the United States with its

modern fleet. They offer more premium flat bed cabin seats, legroom, and economy class seating

than any other airline in North America. Whereas American Airlines are mostly focused on their

excellent customer service in which results in them having trouble less flights. Southwest

believes in cheap fares and no extra fees. They have an exceptional domestic airline reputation

and plan to make it even better.

When it comes to cost, United is pricier than both Southwest and American however also

has the highest quality. Uniteds tickets can be relatively cheap if bought early however can be

very overpriced if bought too late. American Airlines usually has tickets in the same price range

as United, however their prices fluctuate more. While Uniteds ticket prices always stay in the

same range, American Airlines tickets can have prices way outside their range. Southwest

always has low fares at all time. They believe in having no extra fees for baggage, beverages, or

snacks.

United has a strong mileage program available. All the miles add up on the customers
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Mileage Plus credit card and gives them more miles to buy flight tickets with. United flies to

more locations than any other airline, having flights in multiple hub locations. They also have 45

clubs around the country which are available to United members. American Airlines has a

rewards program as well, but it is not as strong as Uniteds. Their excellent customer service is

the biggest benefit they have along with the fact that seventy-one percent of their flights are on

time. Southwest offers extremely cheap fares as well as the first two check in bags for free which

is really rare among airlines nowadays.

Company Analysis

Strengths:

United Airlines is one of the largest airlines in the world. With that being said,

United caters to a much broader destination range than most other airlines.

Comparing it to just American Airlines, United Airlines serves all of the

continents excluding Antarctica, while AA does not fly to Australia or Africa.

United has 336 airport destinations served while AA has around 180 destinations

for its passengers.

United Airlines is also known widely for offering its passengers a larger legroom

space than competing airlines which adds on to the customers increased comfort.

Stopovers are usually not allowed on other airlines such as Delta and American

Airways, but United permits one stopover for an international roundtrip flight.

United is a founding member and also a significant advocate of the Star Alliance

which makes earning miles through trips easier and faster. These miles add on
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even when you use other Star Alliance airlines as well which stack up pretty fast

since Star Alliance is one of the biggest airline partnership.

Very strong workforce staff of 86,000 employees worldwide with majority

residing in the United States.

Hubs in the 4 largest cities in the United States, Chicago OHare, Denver

International, Houston Intercontinental, and LA International.

Weaknesses:

Has vegan options but no dietary or diabetic restrictions.

Much more expensive flights than other airlines.

Fees are much greater; $100 for 2nd bag, $200 for 3rd bag compared to AA

having a free 2nd bag and $100 for the 3rd bag.

High price for check in bags and oversized bags.

Very competitive market.

Company incurred a net loss of $5.3 billion in 2008 compared to only a net profit

of $403 million in 2007. Burdened under loans, filed for bankruptcy in 2002 and

slowly recovering.

Inefficient cost management.

Heavy third party dependence.

Employees are in strong unions to which United can only comply with. The job of

these unions is to facilitate pay increases and job securities. One strike from these

unions can result in millions of dollars of loss for United, making this a very big

issue.

Opportunities:
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United Airlines claims to be committed to be taking actions that shape an

environmentally stable future while complying with laws and regulations.

Through new technology and innovation, United aims to improve fuel efficiency

and reduce fuel consumption in any means possible.

United achieves to advance and utilize environmentally responsible and cost-

efficient alternative fuels.

By reducing waste products and cleaning up after themselves, United can help

keep the world a more cleaner place to live on. They strive to achieve their goals

by working with their stakeholders to not only appease their business goals, but

also to protect the environment.

United Airlines can adopt these environmental-friendly policies to revolutionize

or attract more customers towards its services since everyone would want to be

loyal to an airline service that cares for the environment. By addressing this

incentive option, United is not only caring for the planet, but also treating its

customers to a safe environment.

Threats:

United Airlines has experienced severe losses the past decade and the increasing

costs of raw materials is only adding on to decreasing profits. If United seizes

opportunities to switch cost-efficiently towards environmentally friendly and cost

beneficial alternative sources of energy, it can avoid having to pay for the rising

prices of natural gas and petroleum.

Government regulation plays a crucial role in determining how an airlines

company should run its service. Governments have been imposing tighter and
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tighter security restrictions, the Federal Aviation Administration is in charge of

regulating the construction, sale, maintenance, and resale of commercial aircraft,

and traffic control restricts airlines to fly wherever they choose.

As mentioned before in United Airlines weaknesses, United is rather more

expensive than competing airlines. Adding on to this weakness is the threat that

these other competitive airlines are reducing their prices furthermore while United

is continuing its loss making it harder and harder for it to keep up.

Customer Analysis

When consumers look at all the airlines available to them, they need to find an airline that

they feel comfortable with and that will best provide them their needs. United Airlines must

appeal to consumers across the world to maintain a successful business and marketing strategy.

Some of the needs and wants that consumers desire from an airline is price, locations, and dates

that they need to fly. United Airlines stands out among other airlines by offering flights that are

consistently affordable and available to all consumers.

The consumers that airlines go after include business travelers and consumers looking to

travel for vacations and trips. These two classifications of consumers have different needs that

need to be met. The business traveler needs to go to very specific locations as they have work

that needs to be done there. These travelers also may want a more luxurious experience in

business class and price may not be as big an issue. As stated on Uniteds website, they offer

United Business and Business First to Asia and Europe among other international locations

(United Airlines). Some of the amenities included in these seats include beverage and meal
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services, satellite television, and very spacious seating. These seats offer a premium, comfortable

experience to consumers who desire it.

United is well aware that not everybody can afford or need the premium and offer options

for consumers who have price on their mind. This is where Uniteds unique pricing strategy

comes into play. United is famous for their low domestic airfare prices. Between their already

competitive prices, they regularly hold online sales on their domestic and international flights.

This is perfect for consumers taking a family on vacation or for single flyers who want to visit

different parts of the country. Coupled with their low fares, they also travel to hundreds of cities

across the world every day which gives consumers a peace of mind that they can use United

Airlines no matter where and when they want to go.

Ultimately, consumers are literally putting their lives into United Airlines hands as they

hurtle through air at hundreds of miles per hour. Consumers need to be able to trust United to not

only deliver them a comfortable, affordable experience, but also a safe one. In this day and age

however, air travel is considered to be very safe so trust not only includes safety, but consumers

want to be able to trust that they will be treated well and taken care of in all aspects. If United

can achieve mutual trust, consumers will keep coming back to fly with United. Consumers may

shop around on different travel websites, but it should be Uniteds goal to have the consumer go

straight to their website where they will see destinations and promotions right away and will be

more likely to fly United.

United Airlines has a goal to reach out to consumers and to get them to fly United.

Consumers need have their flights be affordable, and available for when and where they need to

travel. United airlines is meeting this goal by putting the consumer first and by being conscious
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of their needs. If United does not keep their consumers in mind, they will fly with other airlines

and not think twice.

Market-Product Focus

Segmentation

The market is segmented into four different groups: frequent flyers, vacationers,

schedule-oriented flyers, and price-sensitive flyers. Frequent flyers, such as business

professionals, are those that accumulate miles and are more prone to build loyalty to United.

Vacationers (families, couples, individuals) are those that are searching for an overall satisfying

flight experience, schedule-oriented flyers are restricted to a schedule and have a desire to be

punctual, and as for the price-sensitive flyers, they are seeking a low-cost and good experience

all in one.

Targeting:

The market being targeted includes everyday individuals, business professionals,

families/couples, and price-sensitive flyers. The competitive position for this market varies as

there are other airlines that are more willing to accommodate the needs of the segments based on

the type of loyalty programs, destinations, refreshments, and airfare.

Positioning:

In order to attract each segment, there must be an offering that will meet the needs of the

segments. For the frequent flyers (business professionals), a rewards program must be

established in order to gain loyalty and be an incentive to always fly with United. As for the

vacationers, customer service must be notable for this segments, accommodations and
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refreshments are winners. In terms of value proposition, the airlines must have accommodations

and refreshments that are popular to their guests. To serve those that follow a schedule, United

should maintain a record of being reliable and efficient procedures to ensure that the flight will

leave on time creates loyalty. The unique benefit that needs to communicated to this segment is

proving that the airlines will remain efficient regardless of the complication, such as weather

delays. Last, for the price-sensitive flyers should offer satisfactory service that stands out in

comparison to other airlines. The value proposition of this service is that stability in the price

range remains the same, letting the flyers know that they can always fly with United Airlines that

is in their budget.

Product Strategy

United Airlines is in the maturity stage of its product life cycle, with the majority of its

flights being fully booked by customers. United faces strategically low competition due to the

presence of airline alliances. This allows for each airline to have a long maturity stage because

each airline within the same alliance shares the customers and security of the other partners.

Uniteds marketing mix involves both domestic and international flights. Flight tickets

can be purchased on Uniteds website or any other ticket booking website. Tickets can also be

purchased through travel agents, who typically offer lower rates for their services. Uniteds

pricing strategy varies by seat type and time of ticket purchase. Despite relatively higher ticket

prices than its competitors, United maintains a loyal customer base by offering benefits and

rewards to members. Some of these benefits include quicker boarding, free checked-in bags, and

free drinks. Membership is divided into levels of Silver, Gold, Platinum, and 1K. Each level
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requires a certain number of miles to earn, which encourages customers to choose United every

time rather than searching for the lowest prices.

Price Strategy

United airlines pricing strategy is yield management. While buying an airplane ticket,

customers check multiple airline to see the various prices and pick the best one. United airlines

prices their tickets in a way to appeal to the customers and make them choose United as their

preferred way of flying. Their tickets are priced low when they are first put out, and increase in

price as the time before the flight gets shorter. United airlines is more sales oriented, therefore

they would rather have all their seats sold than make a profit. Which is why once there is not

much time before the flight and seats are still available, they reduce the price of the seat greatly

so a customer is more inclined to buy it. If it looks like United is a popular airline and all the

seats get sold, then the quality of each seat will rise.

Economic pricing is for low quality and low price seats. These seats are made to entice

the middle class. Customers who want to save money usually look for tickets early so they get

them for cheaper. This pricing is also meant for families. Having a whole family fly can get quite

expensive, and to get tickets for reasonable price and seats together they have to get tickets early.

Families also usually fly during vacation times so they need to get tickets before they are all sold

out. The price when the destination is not a common one, or the flight time is not a popular time.

These flights are usually to locations where large airplanes are not necessary. There are few seats

in the airplane because not many people fly to these locations. This pricing is sales oriented.

Penetration pricing is priced low but for high quality. The ideal price for a ticket. When a

customer buys the ticket a reasonable amount of time before. The price is set reasonably low
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initially to get the seats booked and the plane full. The price will also be this low if seats need to

be filled in the plane and there is not much time left before the flight. This pricing is also sales

oriented. These are the economy plus seats, still cheap but with a little extra benefit. The

customer gets a little bit more legroom or gets to sit next to the front to leave the airplane faster

and earlier than other people. This is not much benefit, however it cost only a little bit more than

regular economy seats so customers feel that it is worth it.

Skimming pricing is directed towards customers who procrastinate in planning vacations

and buying tickets. Customers buy their tickets relatively late, and are usually in dire need for the

ticket therefore the ticket is priced higher than normal. Because the customer is desperate they

are willing to pay how much ever they need to for the ticket. This pricing is profit oriented. The

customers who buy these tickets are usually ones who had a sudden emergency come up, or have

very unstable schedules.

Premium priced tickets are high quality and high priced. The price of these tickets are

higher than competing airlines because they are valuable to the customers. They could be more

expensive because they are closer to when the actual flight is, or the flight could be to a popular

destination at a popular time such as holidays. This pricing is profit oriented. These tickets are

directed towards late-booking business travelers. These customers do not care about the price as

long as they get the seat to the destination they need to go to. They prefer business and first class,

because their firms can afford these high priced seats.

United Airlines can predict how much customers are willing to pay for different tickets

by checking trends. Late-booking business travelers, then, get stuck with the high fares, while

leisure passengers pay less. They have analysts who check how much the average customer will

purchase a ticket for, which tickets bring in the most profit, and which tickets are bought the
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most often. All of these factors help United Airlines price their tickets accordingly.

Channel Structure/Distribution Channel/Place Strategy

United Airlines two main airplane manufacturers that it relies on are Boeing and EADS

Airbus. For a Boeing 747-8, the price to manufacture one is around $347 million dollars. This is

primarily due to all of the hundreds of different part companies that Boeing orders separate parts

from as each part cannot be manufactured by Boeing itself. Both Boeing and Airbus, the largest

airplane manufacturing companies, compete with each other by providing numerous (and almost

all) airlines companies with airplanes.

For example, the Boeing 737 is made up of 367,000 individual parts that Boeing cannot

manufacture all but itself. Therefore, Boeings job is to assemble the airplane in the state of

Washington through all of the parts it acquires through agents it hires to create each individual

part. The airplane costs so much due to all of the numerous agents who have to be hired to create

a specific part for the airplane. Even though Boeing is headquartered in the United States, it

supplies international airline carriers which means that it would be cost efficient for Boeing to

hire manufacturing companies across the world. Some of these suppliers include Chinas Xian

Aircraft Co. which makes the vertical fins for the Boeing 737, and Japans Mitsubishi Heavy

Industry which provides the airplane wings inboard flaps. However, even though it has many

part suppliers across the planet, Boeing acknowledges the importance of having its headquarters

in the United States. Through all of these suppliers, Boeing has the capacity to deliver 372

Boeing 737s in 1 year, while Airbus delivers 402 A320s in the same time period.

From these manufacturers, United Airlines receives its airplanes and the rest falls into its

consumer satisfaction category. United, and most other airlines, decide what parts it needs for
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their airplanes, but most importantly, offer other incentives to its customers to make sure they are

satisfied. This ranges from the level of quality service by United staff, ease of accessibility when

purchasing tickets, cheaper prices, safety of travel, comfort of travel, easiness and happiness of

traveling with the airlines. By focusing on these factors, United Airlines hopes to make its

service sector stand out than competing airline companies.

Place Strategy

Being an airlines company, the locations of where the company can operate and interact

with its customers is limited. However, United Airlines operates and maintains hubs in the major

airports and largest cities in the United States as well as other countries as well. In the United

States, United has a hub each in four very large cities, Chicago OHare, Los Angeles

International, Denver International, and Houston George Bush Intercontinental Airports. Outside

of the country, it also has a hub in the Narita International Airport in Tokyo, Japan. United serves

336 airports, with 211 being domestic and 125 being international airports along with serving 55

countries around the globe. In 2015 alone, United had 140 million passengers and on average has

4,564 flight departures on the daily.

Advertising and Promotional Strategies

Similar to all businesses, United Airlines uses advertising and promotions to get their

name out and to persuade consumers to fly United over other airlines. In this industry, consumers

are looking for two things. Price of their airfare, and a reputable brand name. It is United

Airlines responsibility to appeal to the majority of consumers to continue being a successful

airline.
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Airlines are different from virtually every other industry. The major components that set

the airline industry apart are the vast selection of substitutes and that airlines operate almost

exclusively remotely from the consumers until the day of their flight. They operate almost as a

mixture of an online retailer and a service oriented company. Consumers do not go to a physical

store to purchase their tickets for their flight. They go to a specific airlines website, or an

aggregator like Google Flights. On aggregator sites, consumers are able to see every single flight

at their destinations meaning that this is where United Airlines needs to set themselves apart

from their competition.

Before the consumer even gets to their computer, United Airlines goal is to make sure

their name is positively recognized. This is where United Airlines will focus their advertising

campaign. They want the consumers to think United Airlines is a safe, comfortable, and good

choice to fly with. In recent times, they relaunched a massive advertising campaign to convey

this message after their merger with Continental Airlines. On their website, United Airlines

claims, Our first full campaign since the merger launched in September 2013, and it showcases

the true brand identity of the new United. Our iconic "Fly the Friendly Skies" tagline has been

reinvented to reflect what's most important to our customers, as well as all that the word

"friendly" encompasses in todays technology-driven world (United Airlines, Advertising).

Their use of the word friendly is the focus of the campaign because it is a word which reflects

how United Airlines will interact with their customers. When the consumer sits down to book a

flight, United Airlines wants them to think of the tagline, and choose to fly United based on

name recognition.

It is no secret that it can be very expensive to fly on an aircraft. Name recognition will

persuade some of the consumers, but the price of the airline tickets can easily speak louder than
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an advertising campaign. United Airlines is well aware of this; price is a primary factor in every

industry. They will regularly offer promotions, bundles, and special pricing to make price

sensitive consumers see United Airlines as the best option. For example, they have a website

page dedicated to their promotions. According to United Airlines Deals and Offers, they have

last minute Getaway pricing which fills seats on flights leaving very soon. They have a loyalty

program which rewards consumers in airline miles, and bundle pricing which includes vacation

packages and car rentals. These promotions allow United Airlines to stay in the low to middle

tier pricing while making consumers feel like they are being taken care of and that the airline is

working for them.

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Apr. 2016.

"Premier Status Qualification Requirements." Reach MileagePlus Premier Status. N.p., n.d.

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Ranson, Lori. "United Uses Dynamic Pricing to Shore up Economy Plus Revenue - Runway

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"U.S. Domestic Market Share of Leading Airlines 2015 | Statistic."Statista. N.p., n.d. Web. 27

Apr. 2016.