SIIB

DISSERTATION PROJECT
Can Brand Image be transferred among Industries? Kingfisher Airlines

Himanshu 10020241087

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History of Kingfisher Airlines

Kingfisher Airlines is an airline group based in India. Its head office is Kingfisher House in Vile Parle (East), Mumbai. Kingfisher Airlines, through its parent company United Breweries Group, has a 50% stake in low-cost carrier Kingfisher Red. The airline has been facing financial issues for many years. Kingfisher Airlines is one of the only seven airlines awarded 5-star rating by Skytrax along with Cathay Pacific, Qatar Airways, Asiana Airlines, Malaysia Airlines, Singapore Airlines, and Hainan Airlines Kingfisher operates more than 375 daily flights to 71 destinations, with regional and longhaul international services. In May 2009, Kingfisher Airlines carried more than 1 million passengers, giving it the highest market share among airlines in India. Kingfisher also owns the skytrax award for Indias best airliner of the year 2011. Kingfisher Airlines is also the sponsor of F1 racing outfit, Force India, which Vijay Mallya also owns. Air Deccan: A wholly owned subsidiary of Deccan Aviation, Air Deccan, is Indias first low cost carrier. It has a vision to enable every Indian to fly and has adopted the mascot of the common man of cartoonist Laxman. The common man represents the airlines simple and no frills approach. Air Deccan is the nano of Aviation industry; what nano plans to do to the automobile industry (converting two wheelers into four wheelers) Air Deccan has done to Aviation industry (shifting people from rail travel to travel by air). The prices of air ticket have down drastically as low price offerings were initiated by Air Deccan. Now focus is towards customers. Today there is a new segment of travelers; the leisure customers. Yet another segment is introduced and that is the first time travelers. Merger: Air Deccan airlines merged with Kingfisher Airlines and decided to operate as a single entity from April, 2008. It would be known by a different name-Kingfisher Aviation. The merger is based on recommendations of Accenture, the global consulting firm. KPMG was asked to do the valuation and the swap ratio was decided accordingly. The merger came through on as Vijay Mallya from Kingfisher airlines bought 26% of the stake in Air Deccan. The unification of the two carriers had to be sanctioned not only by the two panels, but also by the institutional investors, independent directors, and other shareholders. Air Deccan had four independent directors-which included prominent persons like IIM Prof Thiru Naraya, Tennis player Vijay Amritraj, and A K Ganguly, Former MD Nabisco Malaysia. After the merger, the company has a combined fleet of 71 aircrafts, connects 70 destinations and operates 550 flights in a day. The combined entity has a market share of 33%. Gopinath would continue as the Executive Chairman and Malay would take charge as Vice Chairman. The charter service of the respective airlines would be hived off and operate as a separate entity. Post merger, Kingfisher would operate as a single largest (private) airline in the sub-continent. Besides, operational synergies (engineering, inventory management and ground handling services, maintenance and overhaul), the management and staff of both the airlines would be integrated. They would be stronger vis-a-vise lesser, aircraft manufacturers (Airbus in this case), and will also spend less on training and employees.

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Costs would also reduce which is associated with maintenance of aircraft. The savings in cost would be lower by about 4-5% (Rs 300Crores) which is a large sum. It would result in a saving of 3 billion in the first year itself through the sharing of aircraft and workers. (Business Standard, June 13, 2007, p13) Further, by devising a more optimal routing strategy it could help in rationalizing the fares. Before the merger Air Deccan recorded a net loss of Rs 213.17 Cr on revenue of Rs 437.82 Cr for 2006-07. The company had also raised Rs 400 Cr through an IPO in May 2006. The merger will create a more competitive business in scale and scope to emerge as market leader. Air Deccan began its operations with one aircraft and with one flight but after the alignment with Kingfisher Airlines, has a total fleet of seventy one aircrafts-41 Airbus and 30 ATR aircraft (Business Standard, June 7, 2007, p-8). It operates 537 flights (Business Standard, June 3, 2007, p-4) and covers 70 destinations. It offers point to point service.

Issues & Challenges

Classification of Indian Aviation Industry The players in aviation industry can be broadly categorized in three groups: * Public players * Private players * Start up players

There are three public players in Aviation industry: Air India, Indian Airlines and Alliance Air. The private players include Jet Airways, Air Sahara, Kingfisher Airlines, Spice Jet, Air Deccan and many more. Those who are planning to enter the markets are starts up players. Some of them are Omega Air, Magic Air, Premier Star Air and MDLR Airlines Trends in Aviation Industry 1. Consolidation in aviation sector: In aviation industries the rise in the number of alliances will help in promote the growth of aviation sector in India. Example of the Jet-Sahara merger is just the beginning. Indian aviation industry is looking forward to more consolidations. 2. The number of passengers travellers by air is on the rise: By 2025 passenger boarding expected to double and by the same time aircraft operations are expected to triple, the number of passengers travellers by air is on rise. 3. For the travellers public, price is paramount in choosing a carrier: Airfares are fully transparent to the public and travellers are choosing the lowest price option because of the Internet and roundthe-clock search facility. Even business travellers, who have been less price-sensitive, are resisting

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fare increases. Travellers are not giving preference to brand but the only premiums they are willing to pay for are time-of day and direct flights. 4. Capacity is growing without much constraint: The new aircraft have been ordered by Indian carriers for delivery in the coming period, without clear plans to retire older planes. Significant numbers of regional jets are also adding by them. Kingfisher Airlines has already ordered 5 Airbus A380 aircrafts that will operate on international routes 5. Cost structures will continue to handicap legacy carriers as they compete with newer airlines, as well as with overseas carriers: Great threats are being posed by the low cost carriers to legacy carriers, as a result of which they are reshuffle, their pricing policies. Apart from this, they are also facing competition from overseas players. 6. Oil prices are not expected to fall: Aviation Turbine Fuel (ATF) prices have been increased by 3.5 per cent, in line with the rise in international oil prices. Because of this there is a marginal increase in airfares. 7. Outsourcing: Private airlines are famous to hire foreign pilots, get expatriates or retired personnel from the Air Force or PSU airlines, in senior management positions. Airlines are also famous to take on contract employees such as cabin crew, ticketing and check-in agents.

Aviation Sector Boom

Reason for Boom in Aviation Industry: 1. Foreign equity allowed: Without any Government approval, foreign equity up to 49 per cent and NRI (Non-Resident Indian) investment up to 100 per cent is allowable in domestic airlines. 2. Low entry barriers: Nowadays, to launch an airline venture capital of $10 million or less is enough. Private airlines are hiring foreign pilots, get expatriates or retired personnel from the Air Force or PSU airlines in senior management positions. 3. Attraction of foreign shores: Many private players like Jet and Sahara have gone international by starting operations, first to SAARC countries, and then to South-East Asia, the UK, and the US and many more domestic airlines too will be entitled to fly overseas by using unutilized bilateral entitlements to Indian carriers. 4. Rising income levels and demographic profile: As compared to the developed country standards, Indias GDP (per capita) at $3,100 is still very low but as India is shining, at least in metro cities and urban centres, where IT and BPO industries have made the young generation prosperous. Demographically, In India people in age group of 20-50 among its 50 million strong middle class, has the highest percentage with high earning potential. It contributes the boost in domestic air travel, particularly from a low base of 18 million passengers. 5. Untapped potential of Indias tourism: Presently India attracts 3.2 million tourists every year, while China gets 10 times the number. Due to the open sky policy Tourist arrivals in India are expected to grow exponentially.

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Literature Review
Brands are an important part of all cultures across the planet, as well as in the business world. Brands help people make decisions, small ones, as well as big ones. They enable you to trust the Bordeaux you drink, the Mercedes you drive, and the GE Jet Engine that lifts the plane you count on to take you places. Brands are the ideas, perceptions, expectations and beliefs that are in the mind of consumers, your potential customers or any individual who can effect your enterprise. We live in an interconnected world, made more transparent by the proliferation of new communications technologies. Today, a person, a company, a brand, even a nation, is increasingly accessible and exposed to the observation of the citizens of the world. Strong brands go far beyond just creating awareness; they accurately expose the corporate soul and brand promise for all to see. I believe consumer understanding dominates everything in the business world. Today, consumers have greater access and control over the information from which their perceptions about a brand are created. The ideas and impressions we might hope the consumer to have about our brands are subject to the competing ideas, which are available for consumer perception. This is a new age of consumerism, one that has evolved into a higher order of brand relationship and accountability. It is a business world where examples like Enron have resulted in greater consumer mistrust of the information coming from brands and companies. It is a business environment I call ecologies where a brand, a company or its leaders cannot hide behind inaccurate pretences. The truth about your company will always be discovered. It is simply no longer an option to be silent about exposing what your company values, mission or relevancy is. While there are only local consumers, the accessibility of information, this transparency, makes all brands globally susceptible to scrutiny.

The best brands consistently win two crucial moments of truth. The first moment occurs when customers choose, select or sign the contract to buy after having evaluated all other offerings of the competition. The second moment occurs at the customers homes, offices or production sites when they use the brand, when they experience it and are satisfied or not satisfied. Brands that consistently win these moments of truth earn a special place in the customers minds and hearts. These brands are remembered and the re-buy occurs more readily and more profitably. The value of trust earned between the brand promise and the brand experience realized has always been the simple foundation in any sustainable commercial endeavour. Brand Decisions Branding is a major issue in product strategy. On the one hand, developing a branded product requires a huge long-term investment, especially for advertising, promotion, and packaging. However, it need not entail actual production: Many brand-oriented companies such as Sarah Lee subcontract manufacturing to other companies. On the other hand, manufacturers eventually learn that market power comes from building their own brands. The Japanese firms Sony and Toyota, for example, have spent liberally to build their brand names globally. Even when companies can no longer afford to manufacture their products in their homelands, strong brand names continue to command customer loyalty.

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What Is a Brand? Perhaps the most distinctive skill of professional marketers is their ability to create, maintain, protect, and enhance brands. The American Marketing Association defines a brand as a name, term, sign, symbol, or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. In essence, a brand identifies the seller or maker. Whether it is a name, trademark, logo, or another symbol, a brand is essentially a sellers promise to deliver a specific set of features, benefits, and services consistently to the buyers. The best brands convey a warranty of quality. The branding challenge is to develop a deep set of positive associations for the brand. Marketers must decide at which level(s) to anchor the brands identity. One mistake would be to promote only attributes. First, buyers are not as interested in attributes as they are in benefits. Second, competitors can easily copy attributes. Third, todays attributes may become less desirable tomorrow. Ultimately, a brands most enduring meanings are its values, culture, and personality, which define the brands essence. Smart firms therefore craft strategies that do not dilute the brand values and personality built up over the years. Brands and Image As a basis to start on, one must understand that image is a perception and need, not necessarily a fact. Buyers cannot know in a factual sense all there is to know about a company. What they do not know they may assume or expect with or without any objective evidence. The so-formed perceptions are influential to the buyer, just as real factors based on harder evidence are, and may well determine the purchasing decision. Usually a company has several different identities: the communicated, actual, conceived, desired, and ideal identity. The brand identity consists of a unique set of brand associations that represents that the brand stands for and promises to customers. At first, you need to know where you actually are (actual identity) in order to find a way to your desired brand identity. Ideally the desired identity is also the ideal identity. However, what youre communicating and how people conceive it can be two very different things. Now you may wonder what the difference is between brand identity and brand image. Well, the latter is more a tactical asset that can change from time to time while brand identity a long-lasting strategic asset that represents the timeless values of the brand. As weve already mentioned before, there can be no great brand without great products or services. To specify this in marketing terms: You should have a USP. It is simply a special feature that provides additional value to your customers and cannot be easily copied or imitated by competitors. A USP does not necessarily need to lie in the product or service itself; it can be a special production or delivery process, extraordinary services, or industrial design. A company may not be picked as a supplier because of a negative (and in an objective sense, erroneous) image. It is often not understood that potential customers who have never had any contact with a supplier may nevertheless hold a strong image of that company. Far away from being determined by a purchasing experience, image may decide whether a supplier is used at all. Many B2B companies falsely construe that they know exactly whats on their prospects minds. Since this knowledge is quite often based only on the reports of sales people it simply does not reflect the truth in most cases. In order to really get to know where a company and its brands are perceived in customers minds they have to do thorough research.

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One of the most important things in B2B brand management is to reduce complexity. This means less is more. Nobody and no company can be all things to all people. It is essential to reflect upon whats essentially important. Brand Equity Brands vary in the amount of power and value they have in the marketplace. At one extreme are brands that are not known by most buyers. Then there are brands for which buyers have a fairly high degree of brand awareness. Beyond this are brands with a high degree of brand acceptability. Next are brands that enjoy a high degree of brand preference. Finally there are brands that command a high degree of brand loyalty. Classic definition of positioning Positioning is one of the most fundamental concepts in marketing, and this is the classic definition of positioning. Its the process by which you are basically managing the impressions that people have about your value proposition. Youre not doing this in isolation, obviously; youre doing it in the context of other competitive brands out in the market. Category positioning map And so one of the tools that most marketers use in thinking about how to position a product is something that we generally call a category positioning map. And it generally looks something like this. Its basically the idea that you can take any category and you can figure out what attributes consumers care about. This is simplified because its only two dimensions, so usually therell be three, or four, or five dimensions. But the idea is that you can literally plot different brands in this space and figure out where consumers perceive different brands to be in this space. And positioning becomes this process by which you're jockeying for position within the context of this kind of map. And the goal in this is to own a particular position, to dominate one of these positions on the map. Classic approach to positioning And the way that we do this conventionally is we segment the market. We take a market and divide it into a bunch of segments. We identify our target segment. We do some market research so that we get to know our target segment, and we market our value proposition. This is what we teach in first-year marketing. And this is the classic approach to positioning Marlboro In 2005, there are not many American males walking around herding cattle. Nor are there many people out there that aspire to quit their jobs and go work on a ranch. There really arent that many people. And yet what this brand positioning does, again, is it creates a mythology about what it means to be an American male. That mythology resonates with people and it becomes a magnet. It becomes a brand magnet. Playboy Heres another example. In the 1970s, Hugh Hefner created this image of the playboy, this James Bond-like international jet-setter that would fly around with the Playboy magazine and hang out at playboy clubs. My guess is that, if you took a hidden camera and you put it in a 7-Eleven, and you videotaped the types of people that were buying Playboy, they would

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bear absolutely no resemblance to this mythological character. Again, its a situation where the brand positioning is completely out of alignment with the demographic and behavioural reality of the customer base, which makes no sense from a classical marketing standpoint, but makes a lot of sense, actually, if you think about whats happening here. The airline industry Heres another example. In the airline industry, it used to be that, if you flew a major carrier, you had certain expectations about what that carrier should give you. These were just standard expectations. For example, if you choose a major carrier, they should take you to one of the major airports. If you chose a major carrier and you bought a roundtrip ticket, that roundtrip ticket should be cheaper than a one-way ticket. That was just an expectation. If you fly on a long flight, theyre going to feed you. And if you want to pay more, you can get a better seat. These are just standard expectations that you had of any major carrier that you flew. Summary This chapter provides a review about the major research and theories regarding the consumer purchasing behavior. Brands are so important that they are regarded as the equity to a firm. Brand equity can be divided into four dimensions, including brand awareness, perceived quality, brand loyalty and brand associations. All of them have significant contribution to the brand as equity to the firm. Nowadays, consumers seem to be more aware of the products they buy, and at the same time, products are developed in an unprecedented way. Only by understanding the consumer behavior can the products or brands be developed in a right way. In this dissertation, whether the brand image would affect the consumers purchase decision across industries is studied. It is hoped that by finding out the relationships of brand awareness, perceived quality, brand loyalty and brand association with the consumer purchasing behavior that will provide useful insights for the development of Umbrella Branding.

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Methodology & Tools

The goal for this chapter is to introduce the methodology that has been used in this report. The steps have been arranged in a chronological manner. Introduction The purpose of this masters thesis is to answer the following research questions Q 1: Can brand image be transferred among industries? Q 2: Can umbrella branding be successful in Aviation Industry?

The work with this thesis started with a precision of the purpose and the goals with the thesis. Initially the goal was to evaluate a brand Kingfisher and identify a conclusion whether if this was feasible or not. To enable an answer regarding these question it was needed to create a picture of the current situation of the aviation industry and the advantages and disadvantages with the current setup with a using a same brand name Kingfisher. When the purpose and the goals of the thesis had been decided, the next step is the planning the research approach of the thesis. There are two different kinds of approaches to use when conducting a research, inductive or deductive. A deductive approach is when using already existing theory as basis for the prediction of a new specific case (ibid). In other words, a deductive approach goes from the broader perspective towards a more narrow specific observation. Inductive studies are on the other hand, the contradiction to deductive studies, where detailed information are studied and moved towards a generalization (ibid). Theory is therefore created as a result of empirical studies. The research approach in this masters thesis was mainly chosen as a deductive approach in which theory of Branding and Brand Image evaluation measurement were used to create a specific knowledge about Kingfisher. The deductive approach was also chosen due to the existence of previous studies in this area which have contributed to a generalized knowledge of how an evaluation of a brand image could be carried out. Already existing theories regarding umbrella branding were a valuable asset in the thesis and the authors used this as guidance especially in the second research question. There exist several research strategies for investigating a specific problem. Yin (1994) mentions five strategies: case studies, experiments, surveys, histories and archival analysis. The research approach selected for this thesis is a case study since the goal aims to create a deeper knowledge of a specific area, in this masters thesis.

Literature search Brand Management Brand Equity Brand Positioning Brand Identity Brand Image

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Brand Extension Brand Extension Strategies

The scientific databases used to find the literature were Kotler, Elsevier Science Direct, and Google Scholar.

This literature search resulted in a theoretical frame of references which thereafter were used as guidance when collecting the empirical data and when performing the analysis. The validity in the theoretical frame of references is attempted to be assured by the use of multiple sources and what the authors consider a broad literature review. When the literature study had been performed and the theoretical frame of references had been laid out, the collection of primary and secondary data were planned with the purpose to complement information that not sufficiently was described in the literature. Models Used One model has been used for the Thesis. CBBE Model Note: The findings based on the above model will be incorporated in the report during the second phase of the Thesis. Data Collection Primary and Secondary data has been collected for the thesis. Primary data have been collected using Interview with student who travel in Kingfisher airlines. Questionnaires Secondary data have been collected using Case studies Research articles. Internet Please Note: I am still in the phase of collecting data. Since most of the data is being taken from the search engine and journals, it is taking time more than expected.

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