Market analysis of cathay pacific airlines

Cathay Pacific is the universe ‘s 3rd most profitable ( by net net income ) air hose. It is registered and based in Hong Kong, and presently employs about 20,000 people. The study discusses some constructs of selling direction and applies them for analysing the selling scheme of Cathay Pacific.

Cleavage, market aiming and positioning are the of import procedures of marketing planning. Mass market is divided into smaller sections in which clients portion similar set of wants and demands. Sellers identify sections and select the most executable and profitable sections to aim. Cathay Pacific marks concern travellers by Preferred Account Program and MICE Promotions. Stressing the committedness to Hong Kong is a distinction positioning scheme of Cathay Pacific. Besides, Cathay Pacific places itself as an air hose offering quality services from bosom. “ Peoples and Services ” is the current trade name edifice run for beef uping this place.

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Cathay Pacific handles client ailments through multiple channels such as remark card, web site and frontline staff because figure of ailments is an index which can reflect client satisfaction indirectly. In add-on, Cathay Pacific continually carries out client satisfaction study proactively. The consequences of satisfaction indicated that client is satisfied with Cathay Pacific ‘s services. Satisfied clients lead to client trueness and, in bend, enhance trade name equity. But Cathay Pacific still manages two-tiered trueness plan to keep and heighten client trueness.

Besides Customer Relationship Management, Cathay Pacific has put much attempt on constructing long-run relationship with its spouses. Oneworld is a planetary air hose confederation initiated by Cathay Pacific. Through Oneworld, Cathay Pacific established a planetary web with 11 air hoses, sharing a larger base of clients. Recently, Cathay Pacific has signed a content understanding with Amadeus offering Amadeus agents entree to a comprehensive scope of Cathay Pacific and Dragonair menus, agendas and handiness because travel bureau is still a cardinal gross revenues channel for Cathay Pacific. Long-term relationship with distributer and travel bureau is critical for the success of Cathay Pacific.


1. Introduction

The intent of marketing direction is to productively make client value by pull offing selling activities efficaciously and expeditiously. Segmentation, aiming and positioning are of import selling schemes for assisting a house physique “ the right relationships with the right clients ” ( Kotler & A ; Armstrong, 2004 ) , so that its clients are satisfied and remain loyal to it, and the house ‘s trade name equity is enhanced. In this study, the writer will discourse the above mentioned selling constructs and critically analyse the selling activities and strategic implemented by Cathay Pacific by using these constructs.

Cathay Pacific ( afterlife as CX ) is a Hong Kong based air hose, offering scheduled rider and lading services to 141 finishs. CX has long history with Hong Kong since it was founded in Hong Kong in 1946. It has shown deep committedness to Hong Kong and invested well to develop Hong Kong as one of the universe ‘s prima planetary transit hubs ( Cathay Pacific, 2011a ) . Together with its subordinates, it employs about 20,000 people in Hong Kong in 2010 ( Cathay Pacific, 2010b ) . Despite the fact that air hose industry is intensively competitory ( Alamdari & A ; Mason, 2006 ) , CX ranks presently as the universe ‘s 3rd most profitable air hose by net net income and 4th by operating net income ( Cathay Pacific, 2011a ) . This reflects CX should hold done right in marketing direction. Analyzing CX ‘s selling schemes has academic significance to the apprehension of theoretical foundations of selling direction, and practical significance to the apprehension of the successful applications of marketing construct by CX.

The study contains subdivisions discoursing the three major stages of marketing direction: the planning stage affecting the determination of cleavage, aiming and placement ; the control and monitoring stage affecting the rating of client value, client satisfaction and trueness, and trade name equity ; the execution stage affecting the usage of marketing mix to implement relationship selling.


Cleavage, market aiming and placement ( STP ) are inter-connected stairss for be aftering selling scheme. Segmentation involves spliting the market into several smaller sections with comparatively homogenous client wants and demands. Targeting involves a house ‘s determination of choosing one or more mark sections to function. Positioning involves the planning of selling activities in order to place a trade name or a market offering in the head of clients ( Kotler & A ; Keller, 2009 ) . The constructs of cleavage, aiming and positioning are discussed. Then the constructs are applied to the context of air hose industry in which CX competes.

2.1 Cleavage

It is supposed that mass selling is one of the key to operational efficiency because it leads to lowest costs by making the largest possible market ( Kotler & A ; Keller, 2009 ) . John fords and Coca Cola had successfully practiced mass selling by offering merely one sort of market offering. Customer penchants are progressively diversified. Mass selling has been no longer effectual. For illustration, we can happen assorted sorts of Coke such as Classic, Diet, and Zero at assorted bundles at supermarkets.

Mass market consists of clients with heterogonous demands and wants. They can non be satisfied by a standardised merchandise or service. It should be divided into smaller section in which clients portion a similar set of demands and wants, so that market offerings are better designed to function these clients.

Research workers and sellers normally use two sets of features for sectioning markets: descriptive features and behavioural features. Descriptive features include geographic, demographic, and psychographic. Behavioral cleavage used behavioural variables such as occasions, benefits, user position, usage rate, buyer-readiness phase, trueness position, and attitude to section markets ( Kotler & A ; Keller, 2009 ) .

The pick of cleavage footing should turn to the different contexts of the industries under studied. Traditionally, air hoses use transit category to section their clients into concern and economic system riders. As a consequence, they design flexible merchandises and services for concern riders and low-cost for economic system riders. Another consideration in sectioning market is whether the cleavage strategy is utile. Five standards are used to measure the effectivity of the cleavage strategy: mensurable, significant, accessible, differentiable, and actionable.


The undertaking of sellers is to place the sections and make up one’s mind which section or sections to aim. A house may concentrate on a individual section ( single-segment concentration ) or choice several sections in which clients have similar demands ( market specialisation ) or served by a certain merchandise ( merchandise specialisation ) . Some houses may choose a figure of attractive and appropriate sections ( selective specialisation ) or serve all client groups ( full market coverage ) . In drumhead, there are five forms of mark market choice: single-segment concentration, selective specialisation, market specialisation, merchandise specialisation, and full market coverage ( Kotler & A ; Keller, 2009 ) .

Kotler and Keller ( 2009: 288 ) define placement as “ the act of planing the company ‘s offering and image to busy a typical topographic point in the head of the mark market ” . The actions require the sellers to make Point-of-difference ( PODs ) and Point-of para ( POPs ) with regard to the competitory frame of mention. PODs are strong, favorable and alone benefits or properties associated with a trade name. POPs are attributes that consumers view to essential within a certain merchandise or service class. Therefore, trade name positioning demands distinction while converting consumers it belongs to a merchandise or service class.


CX has four types of seating: first category, concern category ( chief deck ) , concern category ( upper deck ) , and economic system category. It seems to accommodate the traditional dichotomous business/economy cleavage. In add-on to the going ground, there are four sections identified ( Table 1 ) :

Business class/business ground

Business class/leisure ground

Economy class/business ground

Economy class/leisure ground

Table 1: Traditional Airline Cleavage

Traveling Reason



Seating Class


1. Business class/ Business ground

2. Business category / Leisure ground


3. Economy category / Business ground

4. Economy category / Leisure ground

However, Teichert, Shehu and Warburg ( 2008 ) argue that the cleavage does non adequately reflect the heterogeneousness in clients ‘ penchant forms. They suggest an alternate cleavage attack that is better suit the extremely competitory market and the altering client penchants. Five sections are identified harmonizing to penchants for different merchandise characteristics and profile the sections utilizing extra attitudinal and socio-demographic variables:



Monetary value


Catch all/flexibility

The merchandise attributes included in this survey are flight agenda, entire menu, flexibleness, frequent-flyer plan, promptness, catering, and land services.

However, CX seems to utilize behavioural variable, juncture, as its cleavage footing. There are three sections identified and targeted by CX: corporate concern travellers ; MICE ( meetings, incentive travel, conventions or exhibitions ) ; holiday travellers. Preferable Account Program ( PAP ) is the selling run for aiming the concern travellers supported by their company ( Cathay Pacific, 2011b ) . MICE Promotions is the selling run to run into the demands of MICE travellers ( Cathay Pacific, 2011c ) . Cathay Pacific Holidays is a strategic concern unit for functioning leisure travellers ( Cathay Pacific Holidays, 2011 ) . CX adopts the selective specialisation as its market aiming scheme. This multi-segment scheme has the advantage of diversifying the concern hazard of CX.

Surveies found that service quality is cardinal to the pick of air hoses for both concern and leisure travellers ( Aksoy, Atilgan & A ; Akinic, 2003 ; Chang & A ; Yeh, 2002 ; Gilbert & A ; Wong, 2003 ) . IATA carried out research in 1997 in North America, Europe and Asia, and found that riders favoured promptness and programming over monetary value ( Collis, 1998 ) . Therefore, Superior service quality could be regard as the POP for benchmarking rivals in air hose industry.

CX has differentiated itself from other air hoses by positioning CX as the Hong Kong based air hoses and its passionate staff. CX has ne’er given up any opportunity to repeat it is an international air hose registered and based in Hong Kong ( Cathay Pacific, 2010a ; 2010b ) . In 2004, CX launched a comprehensive integrated media program for a new stigmatization run called “ People & A ; Service ” ( Lloyd, 2005 ) . The run highlights CX ‘s go oning dedication to supplying all of its riders with outstanding service by concentrating on the personalities and doctrines of single members of staff ( Johnson, 2010 ) .


The selling benefits of STP scheme are client value, client satisfaction and trueness, and trade name equity. These constructs are discussed and CX ‘s public presentations in footings of these constructs are examined.


Customer value is the difference between the client ‘s rating of all the benefits and all the costs of an offering. Benefits include economic, functional and psychological benefits. Costss include pecuniary, clip, energy and psychic costs. Therefore, clients evaluate non merely the pecuniary costs incurred from utilizing air hose service when they are choosing air hoses. Although low-priced bearers have entered the air hose market and changed the competitory landscape, superior service quality is continually the major beginning of competitory advantage for viing in the industry. Gilbert and Wong ( 2003 ) found that on-time public presentation of flights and safety are the first precedence for riders. Airlines that fail to present promptness and safety assurance to riders will be travellers more than the fining cost well.

The ticketing costs of CX are non inexpensive. But riders are compensated by the superior service quality including on-time public presentations of flights, programming, antiphonal and gracious staff, and other benefits. The client values they received are higher than other air hoses.


Customer satisfaction is the comparing of client outlooks with perceptual experiences sing a service brush. Comparing client outlooks with their perceptual experiences is based on the anticipation disconfirmation theoretical account. When perceptual experiences exceed outlooks, clients are satisfied ; when perceptual experiences are less than outlooks, clients are dissatisfied ( Hoffman & A ; Bateson, 2006 ) .

Customer satisfaction can be measured straight by proactive aggregation of client satisfaction informations through client satisfaction studies. It can be measured indirectly by tracking client satisfaction through alterations in gross revenues, net incomes, and figure of client ailments registered.

Enhancing client satisfaction is one of CX ‘s cardinal aims. CX measures client satisfaction through ongoing Reflex Passenger Survey. They collect around 30,000 responses for both Cathay Pacific and Dragonair per month ( Cathay Pacific, 2010c ) . The intent of the study is to measure what riders think about the travel experience with CX. The 2009 consequences showed a important addition in most countries of client satisfaction associating to CX services.

Focus group treatments led by an independent party to obtain feedback from a sample of Marco Polo Club members ( our most frequent circulars ) is another step for supervising client satisfaction. CX has several channels such as remark cards, online ailment system, and frontline staff, for roll uping and managing Complaint. Any ailment received is investigated and a answer is made within 14 yearss.

A extremely satisfied client by and large stays loyal longer, communicates positive word-of-month about the company and its merchandises or services, pays less attending to viing trade names, is willing to pay premium monetary values, and costs less to function than new clients. The above benefits of satisfaction in bend are translated into the company ‘s profitableness ( Cronin, Brady & A ; Hult, 2000 ; Zeithaml, Berry & A ; Parasuraman, 1996 ) . The fact that CX is the universe ‘s 3rd most profitable air hose reflects its degree of client satisfaction indirectly.

Loyalty is the consequence of extremely satisfied clients. It is a profoundly held committedness to re-buy or re-patronize a preferable merchandise or service. Besides, loyal clients have less switching behaviour ( Cronin et al. , 2000 ) . Loyalty is important to a house ‘s profitableness because retaining loyal client costs less than pulling new clients ( Zeithaml et al. , 1996 ) . To make and keep client trueness, CX has two trueness plans: The Marco Polo Club and Asia Miles.

The Marco Polo Club is a trueness plan that that offers a scope of privileges to CX most frequent circulars. The privileges include 24 hours toll-free service line and precedence check-in and embarkation. Asia Miles is a frequent circular wages plan which becomes a necessity for all air hoses. But Asia Miles has been named as the “ Best Frequent Flyer Program ” in the 2009 and has accordingly won this award for five old ages. There were approximately 3.6 million Asia Miles members and 500,000 Marco Polo members in 2010 ( Wikipedia, 2011 ) .

About all air hoses run a Frequent Flyer plan and it can go fiscal load. CX manages a more efficient Frequent Flyer plan by developing a tired plan. Asia Miles offer frequent-flier stat mis for every riders including the occasional travellers. Membership of the Marco Polo Club is awarded to the top clients. Even the rank is divided into four grades, Green ( entry degree ) , Silver, Gold and Diamond, based on the member ‘s past travel. Each tier enjoy different sets of benefits.


Brand equity is the added value endowed to merchandises and services. It is of import intangible plus that has psychological and fiscal value to a house ( Kotler & A ; Keller, 2009 ) . Brand equity can be viewed from client ‘s position. It can be viewed as the differential consequence that trade name cognition has on client response to the selling of that trade name. There are a figure of trade name equity theoretical accounts such as trade name plus appraiser, AAKER theoretical account, BRANDZ, and trade name resonance pyramid. For illustration, BRANDZ theoretical account suggests trade name edifice involves a consecutive series of stairss:

Presence. Do I cognize it?

Relevance. Does it offer me something?

Performance. Can it present?

Advantage. Does it offer something better than others?

Bonding. Nothing else beats it.

If you use this theoretical account to measure CX clients ‘ perceptual experience of its trade name equity, most of them may be found at the 4th degree ( Advantage ) .

4. Building Long-run RELATIONSHIPS

Long-run relationships with concern spouses can be beginnings of competitory advantage. The policy that CX builds long-run relationships with its channels, traders and bureaus is examined in this subdivision.


Customer Relationship Management ( CRM ) is “ the procedure of pull offing elaborate information about single clients and carefully pull offing all client touch points to maximise client trueness ” ( Kotler & A ; Keller, 2009: 144 ) . Besides loyal clients, many companies have discovered they need strategic spouses if they want to be effectual. Partnership Relationship Management is the procedure of intensifying the partnering agreements with cardinal providers and channel members, believing them non as clients but as spouses in presenting value to concluding clients ( Kotler & A ; Keller, 2009 ) .


Internet is a common distribution channel for air hoses. Individual clients can book their flights online. However, travel bureau is still cardinal gross revenues channel for air hoses. Alliance with other air hoses is another manner to better an air hose ‘s burden factor.

CX is the founding member of Oneworld. Oneworld is a planetary air hose confederation with 11 members, offering a wider scope of confederation menu and gross revenues merchandises. With Oneworld, riders can be after their trip more flexibly because the members can offer a broad scope of agendas, paths and finishs. On the other manus, the partnerships portion a larger client base.

CX needs to portion menus, agendas and handiness to go bureaus so that they can sell its merchandises and services to concluding clients. In 2009, CX introduced a new, more sophisticated Internet engagement system with characteristics such as a menu calendar to all states in which CX operates ( Cathay Pacific, 2010a ) .

The understanding signed with Amadeus is another illustration of CX ‘s attempt to develop partnership with travel bureaus. Amadeus is a taking travel engineering spouse and dealing processor for the planetary travel and touristry industry. CX signed an extended long-run Content Agreement with Amadeus in 2010. The understanding offers Amadeus agents entree to a comprehensive scope of CX and Dragonair, its subordinate, menus, agendas and handiness. Amadeus as a distribution spouse of CX, with the new understanding, can administer CX ‘s content to more than 90,000 travel bureau points of gross revenues worldwide. The long-run relationship could be reciprocally benefited ( Amadeus, 2010 ) .

5. Decision

CX places itself to be a Hong Kong based air hoses and is eager to offer superior service from bosom. It differentiates its trade name by passionate staff and services and offers publicities such as MICE and PAP to aim more profitable concern traveller section. With their first-class trueness plans, CX enhances its profitableness through satisfied and loyal clients. Deeply cultivating long-run relationships with spouses is another beginning of its competitory advantage.

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