Princely Jets (Pvt. ) Ltd. – The Air Ambulance| Written Analysis of a Case| Mariam Soomro, Sharmain Malik, Syed Zainul Islam & Farooq Tirmizi| Introduction This paper will be referring to the case study “Princely Jets (Pvt. ) Ltd. – The Air Ambulance”. It will discuss at length the issues brought out in the case which concern the new Air Ambulance service that Akbar Group of Companies is planning to launch. This paper asserts that Akbar Group should go ahead with the launch of the new service at the proposed price US$ 750 monthly membership and an hourly rate of usage of US$2500.
The paper will attempt to justify the pricing strategy and discuss the mix of promotion tools that they should make use of. Overview The Akbar Group has a diverse group of companies with their operations being divided into two major categories: the aviation division and the commercial division. They started operations in Pakistan in 2005 with Princely Jets (Pvt. ) Limited with their first private charter jet services. They offered private jet services on an adhoc as well as on a scheduled flight basis with an objective of making the private jet charter experience simple, comfortable, enjoyable and unique.
They launched in Karachi and later on expanded their services to Islamabad in 2006. By 2008 they had a fleet of 6 aircrafts. They had an average growth rate of 15% and a return on investment of 3%. Their aviation division also included being the General Sales Agents for twelve international airlines; they were representatives of Amadeus; and they offered travel agency services under the name Princely Travels and Citilink. Their commercial division included allied businesses such as the distribution of Nike and United Parcel Services (UPS). They also had exclusive distribution of travel insurance for the American Insurance Group.
Akbar Group also introduced many global businesses in Pakistan such as McDonalds, The Princeton Review and LMVH Watches and Jewelry. Market Situation and Competitive Scenario Pakistan suffers from a host of problems such as political and social unrest. The rate of political protests, traffic accidents, criminal assaults and terrorist attacks has increased significantly. There is a constant need for transportation of victims for emergency needs. There have been many instances where the patient never makes it to the medical facility in time because of traffic jams.
There are a sufficient number of medical rescue teams that provide ambulance services such as Askari Aviation, Edhi Foundation and Chhipa Ambulances, but none that provided specialized air ambulance services. The Akbar Group identified this gap in the market and decided to offer an Air Ambulance service to cater to this unmet need. It was easy for them to cater to this need as it would be a natural extension of their aviation services that they provided through Princely Jets. They had an existing clientele from their Princely Jet services who they could target for the same specialized air ambulance services.
Segmentation and Target Market The Akbar Group chose to segment the market using two techniques: Psychographic and Demographic. Psychographic: They wanted to target affluent customers who would be “willing to provide insurance for this value added medical facility not only for their personal use but also for the use of company employees”. Demographic: The target market identified for the air ambulance service included corporate entities such as multinational and large national companies, banks, embassies, governmental agencies and some high net worth individuals.
Marketing Mix Product/ Service The Akbar Group proposed the following with their Air Ambulance Services: * Transportation of physicians and specialists to remote areas * Inter-hospital transfer of patients requiring specialist’s treatment and immediate attention * Quick transportation of blood and human vital organs * Medical and other assistance to companies and organizations in remote areas of the country. They wished to start off their operations with a pilot project in Karachi and later on proceed to other parts of the country.
In the Karachi region they planned to provide their services within a radius of 125 nautical miles (225 land miles). The justification behind this radius was that they wanted to transport the patient to the nearest medical facility within a maximum of 90 minutes. They planned to offer air ambulance services with two fully equipment helicopters with multiple seating and at least two patient beds. They would have on board a fully trained paramedic team including a doctor, state-of-the-art medical equipment, life saving and emergency medicines, oxygen and blood transfusion capabilities.
The air ambulance aimed to offer a smooth transition of the patient from the helicopter to the emergency room. Financially Viability As seen from the expected revenue above, after the first year this project will generate a profit stream which will make this a viable project. The Air Ambulance project is suitable for a country like Pakistan where one sees in Exhibit 9A and Exhibit 9B that there is a high requirement for such services. To support this one should also look at Exhibit 12 to see the number of people that are in need of such services and have no other alternative. Pricing
The two pronged strategy that is being offered by Mr. Ghouse is feasible since targeted market segment pays little importance to prices. They consider the value of the services. Therefore, as they are willing to pay these prices for business purposes; then they will be more than willing to pay for medical services. The prices suggested will be divided into 3 categories for three different customer divisions as the following: Corporate customer- These are the companies mentioned in Exhibit 3. They will be offered a yearly package that will contain 37 hours that they can use at any hour.
It can be used by any member of the corporation with the approval of HR. * Private Customer- These will be those individuals who are operating private companies that have steady cash flow. They will be familiar with Princely Jets (PVT) LTD. services; hence it will be relatively easy to convince them to utilize The Air Ambulance services for themselves. * Hospitals- A yearly contract will be signed with hospitals as mentioned in Exhibit 11B; this will provide an additional service which can be provided by leading medical institutions, which will have customers who are willing to avail on a one off basis.
The cost that is charged by the hospital will be left to its discretion. Pricing Method The pricing strategy will differ from segment to segment. The private customer will be charged a slightly higher price as he will be less likely to require services on a regular basis. Whereas corporate customers and hospitals will be charged a slightly lower price since they will be purchasing bulk services and are more likely to want greater flight hours. Therefore, higher revenue can be generated from these institutes through variable costs.
The above methodology is simply a proposal. However, this project is definitely viable. If we consider the pricing that Princely Jets is exploring; the following comes to mind: Premium Pricing Princely Jets is going to be fulfilling the needs of a niche market. As stated earlier, pricing is not an influencing factor in the decision to purchase. For these high profile consumers, the ambience, the service environment and the quality will be perceived as of worth. It is about how vital the customer is made to feel during the entire journey.
It is the flexibility offered, the uniqueness in treatment and of course, the fact that each flight is personalized for the client. They will be willing to pay for a superior air solution over others which are designed to give greater benefits. It is these intangibles that justify the premium pricing strategy. Also as it is the pioneer in its category, it can enjoy the benefit of being a price setter in the industry. Specialized Service Air ambulance services have high operational costs. The specialized nature of these air rescue services limits the ability to compete on the basis of cost.
Therefore, marketing is directed towards high net individuals, corporations and governmental agencies that prefer other factors. Customized Air Solution Princely Jets is going to fabricate each flight with accordance to the needs of the client. From the point of destination to the point of food being catered; every small aspect will be planned in order to serve the punter in question. Heritage Akbar Group of Companies is bringing this premium service in and has over 100 years of experience in the aviation industry.
This facet can be utilized to position Princely Jets air ambulance services in the consumer’s mind and be used to build brand equity. Placement Princely Jets launched from Karachi in 2005 and had expanded to Islamabad by 2006. It designed a 4000 square yard hangar with a high tech maintenance workshop for supportive services. Also to add benefits and value to their service, Princely Jets had its own airport lounge in Karachi. It was dedicated to Princely Jets customers. Promotion Viral Marketing This strategy played well for the luxurious travel Princely Jets offered.
It appeared to be promising for air ambulance services as well. Within the narrowed boundaries of this niche market, if the trend of air ambulance services spreads like wildfire, targeted customers will be drawn into its usage. Word of mouth Word of mouth communication remains to be the most effective and popular marketing tool. As it is recommended from person to person, a level of trust is involved. That by itself will build to service credibility and reliance. Relationship marketing Given the infrequent nature of this service, Princely Jets will have to be persistent in building and sustain its clientele.
It should focus on the longevity of end user relationships and continue to remain in touch with them. They will likely own personal, intricate consumer information such as birthdays, anniversaries etc and can perform diminutive gestures such as sending a birthday card across to remind the consumer that Princely Jets remembers them and is thinking of them. That will add to value in terms of positioning in the customer’s mind. Direct Marketing This may prove to be a successful strategy for the air ambulance sector. Sending brochures, flyers, personalized posters to the consumers would build a personal connection.
An even better alternative is to send customized letters to them on a monthly or biweekly basis to build brand recall and to make Princely Jets the preferred carrier. Another way to differentiate itself is to offer to show the helicopter to exclusive clientele. These strategies are recommended to Mr. Ghouse as they will prove to be the most effectual and valuable. However, an aggressive online marketing campaign to compliment the above tactics will be better. Mr. Ghouse should draw up an integrated marketing communication plan that has the consistent message of safety, security and comfort and is conveyed accurately.
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