Amadeus, the Spanish company that provides the technology behind airline flight bookings, is set to report results in stark contrast to the airlines it serves, as it benefits from a 40 per cent share of a growing air travel market. On Friday, the group’s full-year results are expected to show the effect of its expansion from flights into hotel reservations and the growth of its IT solutions business. Its share price has been charting a sustained upward trajectory for much of the past five years, hitting an all-time high on Monday this week, for a market capitalisation of €16bn. Amadeus makes most of its money through its global flight distribution system, which manages transactions between customers and about 400 of the world’s airlines, many of which take place on online price comparison websites. Its growth is therefore linked directly to an increase in global air traffic. But despite Amadeus being recognised by Bloomberg as the 11th largest software company in the world, and second in Europe, Luis Maroto, group chief executive, struck a cautious tone when asked about his company’s future prospects. “It’s nothing new,” he said. “Travel is very much linked to economy?.?.?.?This is coming more from Asia due to the size of the populations there.” Analysts suggest that much of Amadeus’s value lies in what it can glean from the billions of transactions it processes: a perspective on the purchasing habits of consumers. Improved personalisation – from the interrogation of “big data” – enables airlines to tailor their products and services to the personal whims of individual consumers. Amadeus has already begun to sell aggregated user information to airlines, revealing customers’ search habits. It provides a growing revenue stream for the company. Mr Maroto has said this will form part of the business model in future. The company, however, faces certain challenges. It competes mainly with other global distribution services, including US group Sabre and UK-based Travelport, both of which listed last year. “Sabre and Travelport are trying to gain market share,” noted Gonzalo Sanz, an analyst at Mirabaud Securities. Airline companies have also attempted to provide their own IT infrastructure, which threatens to cut Amadeus out of the loop and reduce the number of transactions flowing through its system. On this front, though, analysts have suggested that the tide might be turning in Amadeus’s favour. Last summer, Ryanair, which had previously refused to place itself on global distribution platforms, relented and announced a partnership with the company.
TASK: Answer All questions in this section
QUESTION 1 (25 Mark)
With reference to the article, evaluate Amadeus’s positioning strategy in the global airline industry.
QUESTION 2 (25 Marks)
South Africa has a vast array of social issues; different preferences and challenges in urban towns and rural townships. In lieu of this, make recommendations to Amadeus’s marketing team with regards to the key factors and dynamics impacting on the marketing initiatives that contribute to the creation of successful long-term growth in South Africa.
QUESTION 3 (25 Marks)
Accessing growth opportunities according to Kotler and Keller (2012:64) involves planning for new businesses and downsizing or terminating old businesses. Amadeus strategically partnered with Ryanair. With this in mind, advise the CEO of Amadeus about the various Marketing Opportunity Analysis tools the company can use to maximise the company’s strategic planning.
QUESTION 4 (25 Marks)
According to the article: “The company, however, faces certain challenges. It competes mainly with other global distribution services, including US group Sabre and UK-based Travelport, both of which listed last year. “Sabre and Travelport are trying to gain market share,” noted Gonzalo Sanz, an analyst at Mirabaud Securities. Airline companies have also attempted to provide their own IT infrastructure, which threatens to cut Amadeus out of the loop and reduce the number of transactions flowing through its system.” Against this backdrop propose a marketing communications strategy for Amadeus. In your answer substantiate why your proposed marketing communications mix is most suitable.
Answers to Above Questions on Strategic Marketing Management
Answer 1: Positioning strategy of an organisation is defined as the marketing approach that is utilised with the objective of creating a distinct image or perception about a product in the minds of the target customer. It is all about playing with the mind of the customer, and creating a perception about their product in the minds of their customer. In the given case study of Amadeus, the specific brand positioning strategy utilized by the company is comparative positioning strategy. In this particular strategy, there is a comparison performed with respect to multiple products or brands in order to create a competitive advantage. Amadeus also provides a technological platform that can compare the airline fares and perform a booking of their travel requirements.
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