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Analysis of Business Strategy: the case of Kulula.com

Updated on June 16, 2014
Introduction

Exploration of a business strategy is documented to be critical towards the determination of a company’s strategic position. It also helps in the identification of strategic choices that are available for a company to undertake and implement (Geiger & Guenzi, 2009). In addition, this exploration will assist in determination of sustainability of strategic actions that a firm could undertake without exposing itself to risks and uncertainties (Lengnick-Hall, M.L. & Lengnick-Hall, C.A., 2003). Further, an analysis of a business strategy offers a foundation for determining critical strategic issues that a company may face. It also offers opportunities for identifying company strategic capabilities from the perspective of capacity of company to leverage or exploits value of its strategic capabilities in order to achieve a sustainable competitive advantage and capacity to determine company strategic directions that are built on the strategic capabilities that are observed (Mayo & Brown, 1999).

The aim and objective of this paper is to evaluate the quality practices and methodologies and which has propelled the company to its present level. Further, the analysis will also assess the quality management system used by kulula.com that are focused at meeting their client’s needs as well as practices that assist in building a culture that is customer focused alongside the techniques used to enhance design of work processes, process improvement and control. The author will also discuss the techniques, which the company uses in its service production. The author had worked in this company in 2007-2008 as a secretary to an human resource manager and therefore and therefore will apply the experiences in this analysis.

Background of Kulula.com

Kulula.com which is also known as kulula, is a South African based airline that mainly operate in the countries’ major domestic routes from Lanseria International Airport and Tambo International Airport both of which are found in Johannesburg. The headquarter of the airline is based at Bonaero Park, Ekurhuleni, Kempton Park and Gauteng. This airline was founded in the middle of 2001 and began operation as a low cost carrier in August the same year. The main objective of the company is to position kulula.com as not only one of the airline brands in South Africa but also to involve bookings and making the overall travel experience a less costly affair in comparison to other main air transport service providers in the country (Jowell, 2002).

Kulula.com however, is not an entity on its own but a trading name for Comair Limited, which undertakes its operations as the British Airway’s franchise. Among the company’s destinations, include George Airport, Johannesburg, Cape Town, Durban, Lanseria International Airport, and OR Tambo International Airport (Fawkes, 2012).

The first entrance for (Comair) Comercial Air Services was in 1946 where it began operations as the first private airline in South Africa. Comair started to become a mainstream player in the country in 1996 and two years later, it was listed in South Africa’s stock exchange. In 1999, the company management saw the need in reducing prices owing to increased need of affordable air travel from the changing airline market in South Africa. This is the reason why kulula.com was formed in 2001 as a separate initiative of Comair (Jowell, 2002). Figure 1.1 shows the capacity of kulula.com from 2003-2010.

Source:anna, 2010

Quality Methodologies Used by Kulula.com in Aligning its Performance to Company Objectives

Direct online bookings

According to kulula.com, all airline services require to be safe. In addition, the services on booking have to be as convenient as possible and quick for clients who have no time to waste. Again, the travel experiences are based on client satisfaction for every flight relative to the paid price. In particular, the online booking services eliminate third party agents, costs related to administration and inconvenient collection of tickets (Kulula.com, 2013).

This booking method is advantageous to the company in that booking expenses have been reduced. These expenses emanates from hiring employees to do the bookings for the customers as well as designing of booking documents. This aspect has enabled the company to achieve competitive prices for its flights. Additional, this method has been effective in that they can acquire customers from many places who are now able to book for the flights at their convenience. Clients are given the opportunity to book for their flights at their offices, home and using any device that has the internet connection any time of the day. In essence, online bookings save both the customer and company some money. This is because as we have noted, travel agents who would also take commission from the clients are eliminated and there would be no service fees for telephone bookings (Delta, 2013).

Minimum frills

The preposition of kulula.com is based on no frills where the airline services are kept at low cost. The minimum frills preposition is grounded on the assumption that there are no other hidden costs other than those of the purchase price. For instance, administration or service fees and so on. The product offering by this company is highly minimized. For instance, free services that are common in other airlines such as food, drinks, snacks and so on, have to be bought by the client on board. Additionally, third parties with regard to bookings are eliminated since bookings are made online (Nthite, 2012).

Affordable Fares

Price strategy is another attribute associated with kulula.com. According to kulula.com, the low price strategy was initiated due to increased demand for clients who wanted airline services that were affordable for them. Indeed, the company has been able to realize this objective since they now have many clients wishing to travel at low cost. Although other airlines could claim that charging low cost is not sustainable, it could not be meaningful to charge high fees and have to travel with half full or empty aircraft. Similar to other markets, the low of demand and supply also works in the airline industry whereby, it becomes necessary to reduce prices to the level where they will get enough clients to buy the tickets.

Quality Management Systems that are Focused on Meeting Clients Needs

Essentially, the company is considered as the largest online retailer in the countries’ airline market. Market analysts have attributed this aspect to the quality management systems such as low price strategy, promotional strategy, and marketing employed by the firm plus the easy and convenient bookings done through the internet. According to Nthite, (2012), kulula.com and its rival Itime are having good time since they control more than 25% of the market share. It is believed that kulula has shown its ability in capturing a large market potion, owing to the fact that since it entered the market, the number of its clients are constantly rising. Communication and Promotion Strategy

All the aspect of kulula.com being a low frills airline company may appear unconventional to many, what is however peculiar is its very funky communication strategy used by the management which has also immensely contributed to its positive performance. The line of positioning for this company, “Now Anyone Can Fly, in South Africa” has real assisted in empowering the man in the streets who now see himself as a superhero since the airline has fulfilled most people’s wish in flying experience.

Although the company is facing limited resources in effectively competition with its major competitors, kulula’s advertising agency , morrisjones and company has really done a great job in promoting the company. The agency looked into every opportunity for the entity that can assist with its promotion, from how the airline should be made appealing, how the website could be felt, and making use of brochures and fliers. In-fact, the advertising agency was awarded an Orchid award for this campaign. It can therefore, be said that the advertising strategy for this company was quite effective. Since the launch of the promotion campaign, kulula.com has consistently grown to more than 40%. The “Expect More”” campaign by kulula.com was voted by consumers in South Africa as the campaign of the year 2004. Morrisjones and company, have been quite involved with kulula.com in designing the company’s strategy. For instance, they have helped them to select partners, price strategy and in many areas.

Marketing Strategy

Pricing

The management at Kulula.com Company has all along emphasized on passing on cost benefits to its clients. Additionally, at least 30% of any flight could be availed at the lowest advertised price, with no restrictions. This strategy was quite alien to competitors since, although they were some particular prices they could match, they could only avail a limited number of low priced fares. The company’s competitors were also noted for stipulating booking restrictions, for instance advanced-purchase requirements, requirement for weekend stop over and requirement for return booking. Kulula also made the pricing strategy to be simpler to present the value to clients as being more consistent and was in line with the brand notion of being a simple value to customers. This reason however, necessitated that discounting and price promotions be avoided. This gave an impression that kulula.com could not reduce costs further even if it wanted to.

Promotion Strategy

The management at kulula made a close relationship with its advertising agency, morrisjones and company who greatly assisted them to offer high service levels. The closer relationship in turn made the agency understand kulula.com as a brand and demonstrated its capability in taking kulula,com to another level using their unique advertising style. Owing to the experience and expertise of morrisjones and co during the airline’s launch, kulula.com had decided to keep them close and the relationship thrived for over a decade. The advertising agency had been excited for being given an opportunity to work at kulula.com. The entrepreneurial leadership of the brand and their challenging approach in marketing aligned themselves with those of its advertising agency, morrisjones and co.

It is a vital element for a client to collaborate with its agency instead of hiring a temporary one. The partnership translates that the client would want the agency to play a bigger role in the company’s development, to maximize the parties’ efforts and exchanging the data and results. In the case when an agency is hired, a client will merely give the agency the objectives plus the budget, and gives the agency the failings of the company at the end of each month. An agency –client partnership perspective as in the case of kulula.com and morrisjones and co is according to me, the best approach that can be used in the end.

Target Market

Kulula is notable for describing its target market as “any person who buys their ticket”. This is applicable to the elderly, young, women, businesspersons or any type of person. In other words, they do not categorize their clients under any group. This is the reason why there are no special seats or business class seats in their carriers. All clients sit on similar seats and given equal treatments by staff or management. This strategy enhances the communication and marketing aspects of the company. The airline is not concerned on gaining attention from a specific group of people and this becomes easier in communicating with all people in general.

Low Cost Strategy

The affordable price approaches have apparently boosted the company to the level they currently are. This is because in general, there are many clients who would prefer low cost airline services because they may not afford expensive ones. The company’s presumption have been confirmed since customers are now avoiding airline companies that appear expensive when compared to kulula.com and similar ones. According to kulula.com, the low price strategy was initiated due to increased demand of clients who wanted airline services that were affordable for their travelling (Anna, 2013). Although other airlines could claim that charging low cost for airline services is not sustainable, it could not be meaningful to charge high fees and have to travel with half full or empty aircraft. Similar to other markets, the low of demand and supply also works in the airline industry whereby, it becomes necessary to reduce prices to the level where they will get enough clients to buy the tickets. It is therefore, not interesting that the company boast of being profitable despite the low charges.

Kulula.com’s Technique in Service Provision

Although kulula.com has branded itself as a no frill or low cost airline, it has been keen on not falling into the trap of being labeled as a cheap airline. They have designed a strategy to ensure that their service provision is valuable to their customers. In essence, many airline may not risk entering into competition using the low price strategy, but kulula has managed to do so using the strategy of being a consisted, simple, customer centric and a convenient travelling airline. The service provision strategy is illustrated in table .1.1


Table 1.1 Kulula's strategy on Service Delivery


Strategy on Service Delivery



Low Cost



Convenient



Consisted


Simple


Customer Centric


QUALITY SERVICE DELIRY



The Way Forward for kulula’s promotional campaign

It would be vital for kulula.com to have an understanding that their competitors are not sleeping but are working out on how to outdo them through matching their prices. These they may do by duplicating their style of using new technologies that eliminates third parties and other extra costs. However, their campaign on promotion can be sustained by them not relenting on their advertisement strategy but go on advertising in a humorous manner to ensure that the brand is a culture of its own in the country. The management of this entity should also come to an understanding that most airlines are feeling the operating costs and expenses. The major factor here will therefore, be on how effective their products will be differentiated from those offered by their competitors. Just taking an example, a person can now buy a SAA air ticket at a rate that is now lower than those offered by kulula.com. This was an unlikely event at the time of kulula’s initial entry into the airline market. This therefore, necessitates the use of other management strategies such as enhanced promotional campaigns and differentiation of their products and services.

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