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Song Airlines Strategy Analysis
The song is the budget arm of Delta Airlines, whose target audience is middle-class women. The airlines strategy is to provide exceptional service at an affordable price for a specific audience. When analyzing the companys strategy, the first thing to talk about is a competitive advantage. The company uses a dual competitive advantage strategy. This is achieved when the company reduces supplier opportunity costs through a better supply chain and inventory management while increasing customer willingness to pay by providing unmatched value-added services. Song provides services at a lower cost through tailored flight path selection. In this way, they have reduced costs for the company itself. They have operated in the low-cost segment of the airline industry. In addition, the staff who work for Song are paid comparatively less than the staff of the central Delta line. However, they can work a more significant number of hours. In this way, staff can earn the same or higher wages than in the mainline while reducing costs.
The second component of the dual competitive advantage strategy is the provision of exceptional service, the quality of which will be an order of magnitude higher than existing offerings in the segment. To achieve this, Song has introduced several improvements. For example, the size of the legroom has been increased by one inch compared to the size of this space on competing carriers. In addition, the seats have been fitted with more advanced multimedia systems, and the aircrafts interior and exterior have been improved.
Regarding the scope, the Song Line has a position in the regional sector and has a relatively narrow scope. The regional presence is indicated by the fact that the airline mainly carries passengers on routes near Florida. A target audience is middle-class women who book flights for tourism purposes. According to the company, women are much more likely to book travel, and their needs are very different from those of men (Rivkin & Therivel, 2004). The company has mapped out the image of its female customer Discount Diva, a successful woman of forty-five with a household income of about $75,000. The interior and exterior concept was also designed to suit the Diva. Namely, it was changed to be more stylish and modern. Special attention was given to the training of the staff.
The concept behind the Song line is a more relaxed and casual attitude. Staff was trained for three days to sell and prepare drinks, load luggage onto hand luggage racks, and communicate with customers. To maintain a relaxed atmosphere, rules for staff were also set out to be more informal than for Deltas mainline. Another feature Song planned to capture the target audience with was onboard catering. Meals were developed under the guidance of a renowned chef. The menu includes conventional and healthy dishes, a significant factor in the choice for Diva.
The value chain refers to value-adding activities in which a good or service passes through all the stages: planning, design, production, marketing, and sale. The value of a good or service increases at each stage of the chain. In this case, the value chain is tailored and has a positive interaction type. This means that each activity in the value chain helps to reduce costs for the company and increase demand for its services. In addition, each link in the chain is connected and does not interrupt or cancel out the activities of another link. One of the main links in the Song value chain is human resources. This means training the airlines personnel in its operating philosophy and concept and various training courses, such as safety training, luggage training, and beverage training (Rivkin & Therivel, 2004). In addition, the company has also engaged in specific training for analysts who have been unwinding the lines strategy.
The second essential component of creating a value chain is technical support for the product. This includes setting up a website where bookings can be made and creating timetables and flight itineraries. In addition, this also includes creating a separate check-in counter for the Song line, distinct from the main Delta line counter. As part of this component, market research was also conducted. Directly, an image of Diva, the target customer, was created. Once the image was created, a strategy was devised to meet all the needs of such a customer, from the aircrafts interior to a convenient ticket booking program. Although the website indicates that Song is a Delta line, it introduces a very different service philosophy aimed at a specific audience. This activity sets Song apart from similar firms in the market.
To determine how comforting the Song strategy is, it is necessary to conduct consistency tests. External consistency is the companys ability to respond to threats and opportunities from the market. Among the most likely threats to Song, the danger of entering the market of competitive companies of the same segment and politics, the intensification of competition, and the threat of substitutes are highlighted. The first threat is that the market is quite broad, and the segment is not filled with suppliers of relevant services. In addition, the provision of low-cost air transportation with proper planning is quite a profitable business, so the probability of competitors appearing in the segment is quite large. The second threat is closely related to the first since with the arrival of competitors on the market, competition inevitably intensifies.
The third threat is that in this segment, customers have a relatively low switching cost. This is due to the presence of analog companies on the market. However, the company can neutralize all these threats by offering its target audience conditions specifically focused on it and exceptional service at an affordable price. After analyzing the macro-environment, one can also highlight the companys capabilities. Firstly, due to the general crisis against the background of the COVID-19 pandemic, people have become more appreciative of budget airlines, especially those that offer good service. Secondly, since most people booking tourist flights are women, the company has a greater advantage over competitors due to its marketing orientation. From all the above, I can conclude that the company successfully passes the consistency test.
To assess internal consistency, the value chain must be interconnected. Each activity supports the effect of the other. The companys strategy has excellent internal consistency and positive interaction between the value chain links. For example, the introduction of an exceptional interior and exterior of aircraft, aimed at meeting the aesthetic needs of the target audience, is supported by the introduction of a healthy menu. This way, customers see that the company takes care of their special needs throughout the flight. Each of the activities is aimed at the target audience and directly increases its WTP.
The dynamic consistency of the Song strategy is also successful. First, the activities of the price chain cannot simply be imitated by competitors. For example, to expand the legroom or introduce more technological multimedia systems, substitute companies will need to spend a lot of money. Secondly, during the development of the Songline, the company primarily focused on the most critical aspects of the value chain human resources and technical support. Thirdly, the hub decisions were made at the very beginning of the development of the line. For example, an image of the target customer was developed. From all of the above, it follows that the Songline strategy is successful.
Reference
Rivkin, J. W., & Therivel, L. (2004). Delta airlines (B): The launch of Song. Harvard College Press.
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