Marketing management help online on: Porter’s model analysis

1. IntroductionThis report takes into consideration the use of the Porter’s Five Forces Model while evaluating a new market for Jetstar Asia Airways. The new market where JetStar Asia Airways would expand its operations will be to China and open a regional office there. The evaluation of the new market i.e. China shall be done with the help of the marketing tool such as Porter’s five forces model. The five forces Porters Model has been discussed in detail in this report. The entire report defines as well as discusses the evaluation of the Chinese market with respect to the airlines industry.

1.1 Background

Jetstar Asia Airway Private Limited refers to a low cost airline headquartered in Singapore. Jetstar Asia airways have been referred to as an Asian offshoot of Qantas Airways. It operates amongst various destinations such as Japan, Southeast Asia, Australia, and China which commences from the Singaporean Airport (Jetstar, 2012).

Jetstar Asia came into existence in the year 2004 with a fair partnership with Qantas Airlines. Due to a belated entry within the airline market, Jetstar Asia airways followed various strategies which would help them to differentiate amongst the competitors. The major competitive advantage attained by the same is in regards to the radius with which it flies within a stipulated period of time (Jetstar, 2012).

The main mission of Jetstar Asia airways is to fly further with five hour radius from the point of origination. There are seven routes through which Jetstar Asia airways flies. They are Hong Kong, Jakarta, Shangai, Pattaya, Manila & Surabaya. These seven routes will help in order to provide better coverage as compared to the Asian rivals. In spite of facing various difficult situations, Jetstar Asia bought its fifth aircraft in the year 2005 & also got approvals for the new routes.

In the year 2008, the airlines announced that it has achieved an approximate increase in the levels of profit as compared to the previous year. The number of passengers traveling through this airline has also risen by 75 percent approximately. Jetstar Asia carried 2.7 million passengers in the previous year i.e. 2011 & the raw passenger kilometers have been increased by 39.7% (Jetstar, 2012). In case, of long flights such as from Singapore to Melbourne in Australia a different airbus such as A330 has been launched.

The main purpose of the airlines is to see the feasibility of JetStar Asia Airways to expand its operations into the new market, in this case to China. The five forces model would be referred to as one of the marketing tools which would help in the evaluation of the Chinese Airlines market.

2. Porter’s Five Forces ModelPorters Five forces model will help in order to focus upon the five forces which will help to determine the competitive intensity as well as the attractiveness of the industry. The Porter’s Five Forces Model would be quite helpful to have a detailed knowledge regarding the Chinese market with respect to the airlines industry. A fair idea regarding the Porter’s five forces model would help in order to have a detail study in order to evaluate the new market. This strategic management tool has been regarded as one of the measure which would help in order to understand the market position for a particular organisation.

This tool will help the JetsStar Asia Airways to have a detailed knowledge regarding the market position of the various other airlines applying in the Chinese market. This strategic management tool has been regarded as one of the measure which would help in order to understand the market position for a particular organisation.

Strategists use the Porter’s Five Forces model to have a fair idea about the new products & services available in the market. It will help the organisation to have a detailed view regarding the profitability of the organisation in the long run. By understanding the five different aspects will help to identify the various key areas of improvement, strengths as well as improve upon the weakness. Porter’s model for Jetstar Asia Airways has been performed as under. They are as under:

2.1 THREAT OF NEW ENTRANTS

The first factor to be taken in to consideration in 5 forces model would refer to the threat of new entrants (Kotler & Armstrong, 2010). It must be noted that, if the new companies would enter in to the market quite easily then the existing players have to seek cut throat competition from the new players (Poter, 2008). Factors which must be kept in mind in order to limit the entry (barriers to entry) in case of telecom industry would be as under:

Þ     High fixed costs

Þ     Sacristy of the resources available

Þ     Existing major brands in the telecom industry

Þ     High switching cost

Þ     Government restrictions or regulation

Þ     Incentives to use a particular brand

POWER OF SUPPLIERS:

The second factor which should be taken into consideration in the 5 forces model would be the bargaining power of the suppliers. This would pressurize the suppliers in the telecom industry. When one supplier has a full impact, this would affect the productivity, increase the margin & enhance the volume of the sector as well. The individual supplier would have a full impact or power (Kotler & Armstrong, 2010).

Some of the factors to be taken into consideration would be as under:Þ   No substitutes

Þ   Switching cost is low. The cost to switch to another brand is quite high

Þ   Few suppliers for a particular product

Þ   Product is very important in case of this sector

Þ   There is high profitability in case of supplying industry as compared to the buying industry

POWER OF BUYERS:

The third factor which must be taken into consideration in case of 5 forces model would be the bargaining power of the buyers. It must be noticed that, if there is only one buyer then the impact over the company could be seen with a rise in the volume of sales or margins (Kotler & Armstrong, 2010). In this case the buyer or the customer would have high levels of power. Some of the ways in which the buyer would have power would e as follows:

Þ     Less number of buyers

Þ     The buyer purchases large amount of volumes

Þ     Customers or the buyers would be price sensitive

Þ     In this case, the buyers are not considered about the product. They can compromise over the product for some point of time.

Þ     Switching cost is low

AVAILABILITY OF SUBSTITUTES:

Availability of Substitutes in case of telecom industry, should take into consideration as more substitutes means high levels of competition amongst the various brands. The cost of switching to another brand in this sector is quite low (Kotler & Armstrong, 2010). This also poses a serious problem as more people customers to shift their preference from one brand to another. Price refers to one of the most crucial factors which should be kept in mind (Lusch & Lusch, 2007).

COMPETITIVE RIVALRY:

Rivalry amongst the competitors in case of the telecom industry would describe the intensity of competition amongst the various brands. It should be seen that, telecom refers to one of the most competitive industries which would earn low returns due to high cost of competition. The telecom sector should take into consideration the following i.e.:

Þ   No dominance in the firm

Þ   Little differentiation amongst the product offerings

Þ   Try to attract competitors customers

3. Evaluation of the Chinese Market

The evaluation of the Porter’s five forces model has been discussed in this section of the report. This section defines how the evaluation of a new market i.e. China can be done with the help of Porter’s five forces in the airline industry (Jetstar Asia Airlines). The Porter’s Five Forces Model would be quite helpful to have a detailed knowledge regarding the new market. This concept will provide a fair view regarding the profitability of the airline industry in the Chinese market (Slater & Olson, 2002).

Strategists use the Porter’s Five Forces model to have a fair idea about the new products & services available in the market. It will help the organization to have a detailed view regarding the profitability of the same in the long run. By understanding the five different aspects will help to identify the various key areas of improvement, strengths as well as improve upon the weakness (Slater & Olson, 2002).

Þ     Supplier Power:

• Supplier concentration in few hands: The supplier concentration in case of the airline industry in the Chinese market consists of the following i.e. fuel supplier, aircraft supplier, food supplier, merchandise supplier, etc. There are quite a few numbers of suppliers in the Chinese market which deals with the material required by the airline industry (Porter, 1998). The supply demanded by the airline industry in China is totally depended upon the market condition. This means that, the Chinese airline industry would be one of the attractive markets for the JetStar Asia Airways. With large number of suppliers available in the Chinese airlines industry, JetStar Airways will be able to have a better decision power in their hands. Large number of suppliers will have an added advantage for JetStar as the suppliers will not be able to increase the prices at a higher price as it might lead to lose the business relationship with the airline industry.

Þ   Buyer Power:

• Access to the market information: With the ever changing use of technology, information technology (IT) has helped in order to have high levels of success within the airline industry. In case of the Chinese airlines industry, IT will play a crucial role in the expansion of JetStar Asia Airways. Without the use of information technology (IT), the boundaries of business will be prohibited. Therefore, use of IT in case of Jetstar Asia Airways within the Chinese airlines industry will have a positive effect over the entire airlines. The use of various IT mediums within the Chinese airline industry such as websites, online marketing, etc will help to flourish its business all over the globe (Porter, 1998).
• Buyer’s power concentration: It has been seen that, the bargaining power of the buyers is quite high in the Chinese Airline industry (Jetstar, 2012). With the high bargaining power of the buyers, the travelers travelling through JetStar Asia will be regarded as “The King”. It has been seen that, the travelers of Jetstar Asia Airways, are individual travelers. Therefore, they do not rely upon handful number of customers.
• Low switching cost: In case of the airline industry, choice of the visitor plays a crucial role. This means that, JetStar Asia Airways with generating high levels of revenues in the Singaporean economy will have the same impact in the Chinese economy. The cost of switching in case of Jetstar Asia Airways is quite low in case of Chinese airlines market. Jetstar Asia Airways will be regarded as the airline which will operate on a certain route where in the other airlines do not operate. This will provide JetStar Asia Airways an opportunity to have a sustainable advantage. The service provided by the other Chinese airlines would be of utmost quality, satisfying the travelers in the best possible manner. This will help the travelers to have a control over the same as well as get attracted towards this airline. This means that, the new market i.e. China would be referred to as the apt market for JetStar Asia Airlines.

Þ   Competitive Rivalry:

• High number of rivals: It has been seen that, there are approximately 59 low fare airlines are already applicable in the Chinese market. There is high number of rivals of Jetstar Asia Airways such as Boeing Airways, Air China, China Eastern Airlines, etc. In terms of rivalry, the Chinese market will not be quiet an attractive option.
• High fixed cost: The airline industry has been referred to an industry which incurs high levels of fixed cost. Some of the costs which have been incurred by the same are hiring cost, purchases, hiring of staff, finance cost. The airlines would be required to gain more market share in order to cover the fixed costs. In such type of airlines, the prices shall be decreased which would help in order to compete with the rivals as well (Porter, 1998).

Þ   Threat of Substitution:

• Performance of substitutes: Performance of substitutes present in the Chinese airlines market is quite similar to that of the Jetstar Asia Airways. There is no obvious product differentiation offered by the same. Being one of the newer airlines within the Chinese market, Jetstar Asia Airways shall perform a continuous review regarding the performance of the already existing airlines such as Deer Airlines, Boeing Airways, Air China, China Eastern Airlines, etc. This will help the JetStar Asia Airways to grow in the years to come within the Chinese airlines market (Porter, 1998).
• Relative Prices: The prices of the substitutes offered within the Chinese market shall be placed a little low as compared to the substitutes. There are various airlines which provide cheap tickets to the travelers in order to achieve long roads of success. Therefore, in case of JetStar Asia Airline the prices of the tickets shall be low as compared to the other well established airlines. Price would be referred to as one of the key areas which will lead to high levels of attractiveness. In order to be successful in this market, price shall be given due importance (Porter, 1998).

Þ   Threat of New Entry:

• Different products offered: The products offered by Jetstar Asia Airways are different as compared to its competitors such available in the new market i.e. Chinese market. Some of the airlines flying in the new market are Boeing Airways, Air China, China Eastern Airlines, Deer Airlines, etc. The services offered by Jetstar Asia Airline are quite different. The difference which would be caused by using the JetStar Airlines within the Chinese market would be in regards to the sale of the tickets, holiday packages, etc. The Jetstar Asia Airways will have good connections with different tours & travel companies available in the Chinese market & all across the globe. This will provide an added advantage to the same. Hence, Chinese market will be referred to as one of the most attractive markets for JetStar Asia Airways (Porter, 1998).
• Access to the distribution channel: The distribution means present in the Chinese market will provide Jetstar Asia Airways with full access to information & other added advantage. The first distribution means which shall be used within the Chinese Airlines market would refer to the use of attractive website, booking the tickets online (Porter, 1998).

4. RecommendationsHence, it can be recommended to JetStar Asia Airways that in order to operate in the Chinese Market the following factors should be taken into consideration. Based upon the evaluation of the Porter’s Five Forces Model, it can be seen that bargaining power of the supplier’s in the Chinese market is quite good. This means that, the Chinese airline industry would be one of the attractive markets for the JetStar Asia Airways. With large number of suppliers available in the Chinese airlines industry, JetStar Airways will be able to have a better decision power in their hands. Reduction in the levels of cost, high levels of innovation in order to surpass the levels of competition will help the airlines to adapt the ever changing business environment. Focus shall be on product innovation i.e. better than the competitors. This helps the customers to notice & try JetStar as compared to other airlines.

5. Conclusion

Hence, it can be concluded that Porter’s five forces model plays one of the crucial roles in deciding as well as evaluating a new market. Porters five forces model will be able to evaluate the new market by using the five forces such as bargaining power of buyers, bargaining power of suppliers, threat to rivalry, levels of competition & substitutes (Abell & Hmmond, 2009).

This theory or concept will help in order to focus upon the five forces which will help in order to determine the competitive intensity as well as the attractiveness of the same. The Porter’s Five Forces Model would be quite helpful to have a detailed knowledge regarding the new market. This concept will also have a fair understanding reading the strengths of the enterprise & to have a clear view regarding the competitive position of the same (Slater & Olson, 2002).Strategists use the Porter’s Five Forces model to have a fair idea about the new products & services available in the market. It will help the organization to have a detailed view regarding the profitability of the same in the long run. By understanding the five different aspects will help to identify the various key areas of improvement, strengths as well as improve upon the weakness (Ackoff, 2007).

If you wantMarketing management Assignment Help study samples to help you write professional custom essay’s and essay writing help.

Receive assured help from our talented and expert writers! Did you buy assignment and assignment writing services from our experts in a very affordable price.

To get more information, please contact us or visit www.myassignmenthelp.Com