Business

Jet Blue Advertising Campaign

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I recently graduated from Penn State University with a degree in Advertising and a minor in Business. I worked with four students during the Fall semester of my senior year in completing an Advertising campaign for JetBlue Airlines.
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  • 1. Table of Contents Page # I. Situation Analysis Product/Service ................................................................................... 2-5 History and Product Description........................................................ 3-4 Product Image and Position................................................................ 4-5 Product Lifecycle ................................................................................ 5 Strategic Implications ......................................................................... 5 Product Class ...................................................................................... 6-11 Market Share................................................................................. 7-8 Geographic Distribution ............................................................... 8-9 Price Effects................................................................................... 9-10 Seasonal Effects ............................................................................. 10-11 Competition......................................................................................... 12-26 Industry ............................................................................................... 12-13 Industry Competition.......................................................................... 13-15 Direct Competitors ........................................................................ 15-18 Indirect Competitors ..................................................................... 18-20 Competitors Advertising ............................................................... 21-24 The Consumer/Target Group ............................................................. 27-28 Environment........................................................................................ 29-32 II. S.W.O.T. Analysis ..................................................................................... 33-38 III. Advertising and Marketing Communications Objectives ....................... 38-39 IV. Campaign Timeline................................................................................... 40 V. Multi-Attribute Model (MAM) ................................................................ 41-43 Survey ............................................................................................................. 44-46 References............................................................................................................. 47-48 2 Jet Blue
  • 2. I. Situation Analysis Product History and Product Description CEO and founder David Neeleman under the name “New Air” introduced jet Blue in February of 1999. Neeleman, a former Southwest Airlines employee and co-founder of a low fare airline called Morris Air, began the concept for Jet Blue in 1993. David Neeleman’s intentions were to follow Southwest’s ideals, offering low cost travel, while focusing mainly on the customer’s needs and comforts. Jet Blue seeks large metropolitan areas which mainly offer high air travel fares, and in turn offer low fares to customers. Jet Blue is based out of John F. Kennedy International Airport, while their secondary locations include Los Angeles, Boston and Washington D.C. (Jet Blue, 2007). On February 11th, 2000, Jet Blue launched its inaugural flight between John F. Kennedy Airport in New York City and Fort Lauderdale, Florida. By December 2000, Jet Blue flew over 1 million passengers and reported $100 million in flown revenue for 2000. Many companies suffered large financial losses due to the post 9/11 terrorist attacks. Jet Blue on the other hand remained one of the few American airlines to continue to net profits. With these profits Jet Blue was able to finance many new aircrafts and expand their highly rated employment. In order to finance Jet Blue, Neeleman took the company public in 2002. Immedialtey David Neeleman ordered 25 brand new A320 aircrafts and set his sights on the option of another 50 A320 aircrafts. (Jet Blue, 2007). With the newfound success of Jet Blue, the company began to focus most of their attention on customer service. Only having two different types of aircrafts, the Airbus A320 and the Embraer 190, has given Jet Blue the opportunity to lower travel costs with the ease of maintaining the aircrafts. Both the A320 and the Ebraer 190 are equipped with 34 inches of leg room, in which Jet Blue prides itself having the most leg room based on average fleet-wide seat pitch for U.S. airlines. To help enhance customer service both aircrafts are equipped with 6.8 inch televisions embedded in every seat, offering 36 channels of DIRECTV, and Fox in Flight movies. Added entertainment also includes XM SATELITE RADIO in every seat and free wireless internet access at New York’s JFK 3 Jet Blue
  • 3. and California’s Long Beach airports. All of these amenities were added over time in order to enhance the pleasure of the flying experience for all different types of individuals. (Jet Blue, 2007) Currently Jet Blue serves over 55 destinations in 22 states, including Puerto Rico, Aruba, Mexico, and most of the major cities in the United States. Expanding fuel costs caused Jet Blue to acquire a net loss of $20 million in 2005 and a $1 million loss in 2006. In May of 2007 Jet Blue appointed a new CEO, Dave Barger, while David Neeleman became non-executive Chairman of the Board. Following the yearly losses Jet Blue employed new tactics in order to burn less fuel and to become more efficient, which in turn will help to gain profits for Jet Blue while keeping customer costs to a minimum. (Jet Blue, 2007) Product Image and Position Jet Blue seeks to offer low fares as a result of low costs. Low fares will enable Jet Blue to stimulate demand in the market for their service and to increase passenger traffic. While focusing on the customer’s wants and needs, Jet Blue is able to offer lower fares due to efficient scheduling and low operating costs of their aircrafts. With affordable point to point, one- class services, Jet Blue offers a high quality product equipped with many luxuries including leather seats, steadfast operating performance, DIRECTV, movies, snacks, and more. With online booking, ticketless travel (electronic ticketing), and an award winning website, it makes it much easier for customers to travel with Jet Blue. Jet Blue is able to serve smaller markets with the E190 aircrafts, which seat 100 and are more mobile for smaller destinations than the A320’s. With limited types of aircrafts, it has become more economical for Jet Blue to maintain and produce its aircrafts, thus providing low operating and distribution costs (Hoovers). Commitment to customer service, efficient scheduling, and distribution and operating costs have become the backbone of Jet Blue. When bad weather caused Jet Blue to cancel several flights in 2007, Jet Blue retaliated with a “Customer Bill of Rights”. The bill of rights was 4 Jet Blue
  • 4. implemented in order to try and restore humanity to air travel. With the bill of rights Jet Blue will reimburse those whose flights have been cancelled or delayed for a certain amount of time Jet Blue was the first and only company to employ this tactic stating “Unfortunately, there are times when things do not go as planned. If you’re inconvenienced as a result, we think it is important that you know exactly what you can expect from us”- David Neeleman. (Jet Blue, 2007) Product Life Cycle Jet Blue is a very young company when it comes to other airlines in the industry. With many of their competitors being in the airline service since the early 1990’s, Jet Blue has only been around for less than 10 years. Jet Blue has moved from the introductory stage, implementing new flight destinations, increasing market share, increasing employment, and steadily integrating new aircrafts. (Jet Blue, 2007) Jet Blue has continuously sought out new flight destinations adding several since 2004 including its first international flight to the Dominican Republic, and later Puerto Rico, the Bahamas (Aruba), and the Bermudas. Since 2002 Jet Blue has almost tripled its employment going from 4,011 in 2002 to 10,625 employees at the year’s end 2006. With a fleet of 121 aircrafts (98 Airbus A320’s and 23 Embraer 190’s), Jet Blue’s fleet has also doubled since 2002, and continues to grow with 6 Airbus A320’s and 4 Embraer 190’s on order for 2007. (Jet Blue, 2007) Strategic Implication In the future Jet Blue looks to increase productivity out of New York’s JFK airport, to execute more flights in destinations they currently serve, and to seek out new destinations in which they do not already provide. As a low-fare airline, Jet Blue’s campaign will show their dedication to their customers, providing many of the “little things” that other airlines fail to supply. With new destinations, Jet Blue will be able to broaden their consumer base by offering flights to more direct and diverse locations. 5 Jet Blue
  • 5. Product Class Jet Blue Airways Corporation is a passenger airline providing high levels of customer service and amenities at a low cost, focusing on serving markets that have had high average fares in the past. This carrier offers one-class service with leather seats, satellite TV (with programming from DIRECT TV, satellite radio (from XM) and movies (from FOX InFlight). The airline’s fleet of about 130 aircraft consists of Airbus A320s and Embraer 190s. Based on revenue passenger miles, Jet Blue Airways was the 8th largest passenger carrier in the United States during 2006. As of February 14, 2007, Jet Blue served more than 50 destinations throughout 21 states, Puerto Rico, Mexico and the Caribbean, and operated a total of 502 daily flights. Of these flights, 98% operated with departure or arrival being in one of four major cities: New York (JFK), Los Angeles (Long Beach/Burbank), Boston, or Washington D.C. Currently, Jet Blue provides low-fare air travel to and from the following alphabetically-listed cities (those listed in bold are considered to be “Key Cities” for this airline): Aguadilla, Cancun, Mexico Hyannis, MA Newark, NJ Pittsburgh, Sacramento, Seattle, OR Puerto Rico PA CA Aruba, AW Charlotte, NC Jacksonville, Newburgh, Ponce, Puerto Salt Lake St. Maarten, FL NY Rico City, UT AN Austin, TX Chicago/O’Hare, Las Vegas, New Orleans, Portland, ME San Diego, Syracuse, NY IL NV LA CA Bermuda Columbus, OH Portland, OR San Tampa, FL Long Beach, New York, (Hamilton) Francisco, CA NY (JFK) and (LGA) CA Denver, CO Martha’s Puerto Plata, San Jose, CA Tucson, AZ Boston, MA Oakland, Vineyard, DR CA MA Buffalo, NY Nantucket, Ontario, CA Raleigh- San Juan, PR Ft. Lauderdale, Washington MA Durham, NC FL D.C. Burbank, CA Ft. Myers, FL Nashville, TN Orlando, FL Richmond, Santiago, DR West Palm VA Beach, FL Burlington, Houston, TX Nassau, Phoenix, AZ Rochester, Sarasota, FL White Plains, VT Bahamas NY NY 6 Jet Blue
  • 6. Market Share According to the Bureau of Transportation Statistics, Jet Blue Airways was the 8th leading passenger airline in the past year, with 4.1% of the market share for domestic airlines, based on revenue passenger miles from June 2006 through May 2007. In terms of market share, Jet Blue was ranked behind American (15.2%), United (12.1%), Southwest (12.0%), Delta (11.1%), Continental (7.8%), Northwest (7.0%), and US Airways (4.7%). Strategic Implication Through looking at market shares of Jet Blue and its competitors, we are aware of the carriers that we must compete with in order to increase Jet Blue’s overall domestic market share. This will help the campaign team to position Jet Blue 7 Jet Blue
  • 7. against main market share competitors by highlighting product/service attributes that Jet Blue possesses, that competitors do not. Geographic Distribution The following map shows the geographic distribution of current airports served by Jet Blue and the carrier’s “key cities” (shown in gold). 98% of Jet Blue’s flights depart from or arrive in New York, Boston, LA, or Washington D.C. On February 14, 2007, Jet Blue announced that they had entered a code-share agreement with Cape Air. With this agreement, Jet Blue was able to offer connecting service to Nantucket, Martha’s Vineyard, Provincetown and Hyannis, from Boston’s Logan Airport. The agreement made it possible for customers on Jet Blue and Cape Air to purchase seats on both airlines under one reservation. 8 Jet Blue
  • 8. In the future, Jet Blue has plans to increase capacity at its base airport, New York’s JFK, and will announce additional flights between currently served cities. Jet Blue also plans to enter new markets in which there is the demand for lower fares. Destinations in Canada, Mexico, and the Caribbean are considered to have high fares in general, and Jet Blue sees these as potential growth areas. Strategic Implication The cities that have been identified by Jet Blue as “key cities” are markets that must be heavily focused on in the media plan for this campaign. As the top four markets in terms of number of departures for Jet Blue are New York, Los Angeles, Boston and Washington D.C., the campaign must work to keep consumers flying to and from these markets on Jet Blue, as the sales of the company are so heavily reliant on these particular geographic areas. Price Effects As a low-fare airline, Jet Blue is at risk when environmental factors force the price of airline tickets upwards. As prices rise, Jet Blue loses its position as a low-cost airline, and consumers may be driven to seek an alternative form of transportation. It is likely that if environmental factors cause prices to increase for consumers to fly Jet Blue, the prices will have increased on alternative airlines as well. There is the potential that as a low-cost airline, consumers may not find cheaper airfare compared to that of Jet Blue, even if their prices have increased drastically. This leads to the possibility of consumers turning to indirect competitors, such as Amtrak, Greyhound, and even car-travel. By eliminating amenities such as airport lounges and full meal service, Jet Blue manages to keep costs down. Jet Blue also does so by relying on electronic ticketing and beginning to operate more than one type of aircraft, as the airline believes it can more efficiently serve smaller markets and cut costs with E190s, which have approximately 100 seats, as opposed to the 150 seats on the A320s. 9 Jet Blue
  • 9. In terms of dealing with rising fuel costs, Jet Blue has been less successful than some other low-fare airlines, such as Southwest. This environmental factor led to consecutive losses for Jet Blue in the fourth quarter of 2005, and the first quarter of 2006, causing the airline to raise fares on some routes. Jet Blue was forced to keep expenses down and slow certain expansion plans in order to keep prices low for consumers, and to prevent them from turning to Jet Blue’s direct competitors, or indirect competitors mentioned previously. Seasonal effects March 2007, Jet Blue announced that they would be making additions to the current flight schedule in order to take full advantage of the sales opportunities during what they consider to be the “peak summer season” between May 1 and October 31. With their announcement, they state that during Summer 2007, they would “offer more flights to the Caribbean/Atlantic region than any other low-fare airline, with nearly 200 weekly flights from Boston, New York’s JFK, and Orlando.” (“Press release, The Carribean…” ) With a major expansion of service to Jet Blue customer’s favorite island destinations, Jet Blue launched nonstop service between Santo Domingo, Dominican Republic and New York’s JFK Airport on May 24, as well as nonstop service between Boston and Bermuda beginning May 1, and Orlando and Ponce, Puerto Rico beginning May 24. Additionally, Jet Blue added additional flights to existing routes for the peak summer season. Routes with added flights for the season include service between New York’s JFK and Aruba; New York’s JFK and Santiago, Dominican Republic; and Orlando and San Juan, Puerto Rico. Strategic Implication Jet Blue’s marketing must be aimed towards positioning the additional flights to the Caribbean/Atlantic region during the peak summer season as the reason why consumers should choose Jet Blue as opposed to other low-fare airlines. As Jet Blue will offer more flights to this region during the peak season than any other low-fare carrier, this expansion will be highlighted to entice 10 Jet Blue
  • 10. consumers who already do their greatest proportion of traveling during the summer to do it by flying Jet Blue. When creating the media schedule, Jet Blue will take these peak travel months in to account when establishing GRP distribution. By increasing GRPs during the period between May and October, Jet Blue will increase the frequency of exposure among current consumers in the target market. 11 Jet Blue
  • 11. Competition Industry The United States passenger airline industry has traditionally been dominated by the largest airlines, defined by the DOT as airlines with annual revenues over $1 billion dollars. The seven largest airlines include American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines, Southwest Airlines, United Air Lines and US Airways. Currently, there are 16 major passenger airlines which offer scheduled flights to most large cities within the United States and abroad as well as many smaller cities. The largest major U.S. airlines, excluding Southwest, have adopted the traditional ‘‘hub and spoke’’ network route system which operates most of the airline’s operations at a select number of hub cities. They serve the majority of other destinations in the system with a one-stop or connecting service through the hub. There are currently five regional major U.S. airlines. Regional airlines usually operate smaller aircraft on lower volume routes than traditional network airlines. Unlike low-cost airlines, regional airlines do not necessarily try to establish an independent route system. They usually enter into relationships with one or more traditional network airlines. The regional airlines agree to use their smaller aircraft to carry passengers booked and ticketed by the traditional network airline between their hubs and a smaller outlying city. Low-cost airlines developed in the aftermath of deregulation of the U.S. airline industry in 1978. The new low-cost airlines created competition on many routes for the first time. Following the September 11th terrorist attacks, low-cost airlines were able to fill in the capacity space that traditional network airlines had to cut out. The lower fares and growing capacity for low cost airlines damaged the profitability of traditional network airlines. Since 2001, most of the traditional network airlines have experienced considerable financial restructurings in bankruptcies, mergers and consolidations. These 12 Jet Blue
  • 12. financial changes caused traditional airlines to cut labor costs, restructure their debts, and eliminate pension plans. They had to reduce cost structures, increase workforce flexibility and provide innovative offerings that would be comparable to the low-cost airlines. At the same time, traditional airlines could maintain their expansive route networks, alliances and frequent flier programs. Ultimately, the gap between low-cost airlines and traditional network airlines has decreased. Industry Competition The airline industry is highly competitive. Jet Blue’s competitors and potential competitors, traditional, low-cost, regional and new entrant airlines, pose significant threats to the company’s profitability. Jet Blue’s three major competitors include AMR Corporation/American Airlines, UAL Corporation/United Airlines, and Southwest Airlines. Some of the competitive factors in the airline industry include routes serve
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