Question

Topic: Strategy

Marketing Of A Premium Product In A Price Sensitive Market.

Posted by Anonymous on 7/21/2004 at 10:18 AM ET 250 Points
I have been recently appointed by the general sales agent of one of the leading international airlines which flies to a huge number of destinations around the world. The product has got a very strong brand identity.

This airline does not operate from our station and therefore we need to use another carrier to take the passenger to another station and then from there onwards, we take them on our carrier. Now the main problem is that our market is extremely price sensitive and the main area of competition here is prices. We represent a premium product and therefore we cannot reduce our prices to match the other airlines. Besides prices, the other airlines also provide a lot of incentives to the travel agents to get sales whereas our management believes in providing benefit to the customer and not the agent.

Currently, all the sales that we are getting are from our frequent flyers and otherwise the passengers who need to go to places where only our airline operates or where we have unmatchable connections. Otherwise, the agents keep our product as the last option.

The GSA has a very limited budget so we cannot afford to launch huge promotional campaigns. Now, what I need is a cost effective plan to increase sales and gain the favor of the agents.

I tried a “weekend quiz” program to educate the agents and set a little prize for the winner. This turned out to be quite fruitful, but now I need something more.
People already know that our product is superior but it is the agents who are to be stimulated to sell us. I hope you get my point.
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RESPONSES

  • Posted by Mushfique Manzoor on 7/31/2004 at 6:07 AM Accepted
    Dear Khan

    I am sure you are an expert in airline/GSA business whereas i am a starter. Then again i try to relate what i have learnt so far in this regard.

    you market an Offline carrier on the basis of its certain benefits. There are certain destinations where online carriers and your offline carrier flies. for example to NewYork (JFK) any online carrier i.e. Emirates or British Airways will fly from your city. For this destination your offline carrier has to rely on other carriers and that means travel agents.

    usually with online carriers(to most frequented destinations), the total travel time is longer than combined carriers (your offline and teh online carrier that takes passengers to the place from where your offline is actually online). THIS is your selling point for the Offline carrier at your city and the target consumers can be the business people who want to be in NY as soon as possible, to whom the slight premium is not more important than being in destination at the earliest.

    regarding the agent management, agents will sell that carrier which gives more commission(both cash & non-cash). your combined carrier ticket commission to travel agents must at least match the amount currently online carriers are providing. If you can provide more commission then the agents will love you :-) As you have said you are the last option in agents list, is it because of your commission amount?? pls clarify that. if you give commission less than market rate then agents will not promote you, for sure.

    commission doesn't mean cash always, it can be free tickets for selling certain slabs of tickets mentioned by Jim and Vevolutions or Excellence Award mentioned by vikrant or a combination of other options. those are great ideas.

    Premium price always relegates you to niche markets. this also has its advantages. some ideas:

    - develop a cosumer database by listing the corporate executives, businessmen who have to fly a lot. find out which travel agents they use and tap them to sell your carrier. (this you can do by offering them some cash/non-cash incentives).

    - also develop a potential consumer of the same category database and contact them via email and tell them about services/product selling points. You send them brochures that depicts the services they will get when they fly your carrier.

    - You CAN also share this new potential database with some top travel agent who are currently selling you carrier. THese travel agents will contact them and sell (this has to be very closely monitored, mind you). This may be a win-win for both you and travel agents.

    hope this will help you. will get back if something new pops up. cheers !!

    Mushfique
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