switching behavior
A Study on Brand-Switching Behavior and Promotional Strategies for High-End Airline Flight Services
Mihir Dash* and Jacob Alexander**
This study analyzes the impact of different promotional programs on the brand-switching behavior of students with respect to premium flight services to determine the ‘optimal promotional mix’ that service providers should offer. This study uses the Markov brand-switching model in combination with game theoretic techniques to find the optimal promotional mixes of the two service providers, based on the data collected by a sample survey of customers. The results suggest that both the service providers should adopt a combination of promotional offers, and indicate an asymmetric behavior in response to promotional schemes of the providers. Sensitivity analysis showed that the strategies were quite robust. The study provides marketers with a systematic method for planning promotional mixes by taking competitors’ strategies into account. A possible approach would be to estimate switching rates periodically and to update the optimal promotion mix with the current data. In this way, the estimates would be more accurate and any changes could be detected and incorporated into the analysis. This would result in a more dynamic, reactive strategy.
Introduction
The Indian aviation industry has witnessed major changes in the recent years.
Air Deccan’s low-cost-carrier revolution of 2003 created a buzz by bringing air travel to the reach of the Indian middle-class masses. The growth of the Indian aviation industry has not been very rosy, however, especially with the global meltdown. The industry is now in a consolidation phase with Jet-Sahara merger and Kingfisher Airlines’ acquisition of
Deccan Aviation. More recently, the global aviation industry has been going through a bad phase, and the Indian aviation industry is no exception to this, with several problems blocking its growth. In particular, year 2009 has been
Mihir Dash* and Jacob Alexander**
This study analyzes the impact of different promotional programs on the brand-switching behavior of students with respect to premium flight services to determine the ‘optimal promotional mix’ that service providers should offer. This study uses the Markov brand-switching model in combination with game theoretic techniques to find the optimal promotional mixes of the two service providers, based on the data collected by a sample survey of customers. The results suggest that both the service providers should adopt a combination of promotional offers, and indicate an asymmetric behavior in response to promotional schemes of the providers. Sensitivity analysis showed that the strategies were quite robust. The study provides marketers with a systematic method for planning promotional mixes by taking competitors’ strategies into account. A possible approach would be to estimate switching rates periodically and to update the optimal promotion mix with the current data. In this way, the estimates would be more accurate and any changes could be detected and incorporated into the analysis. This would result in a more dynamic, reactive strategy.
Introduction
The Indian aviation industry has witnessed major changes in the recent years.
Air Deccan’s low-cost-carrier revolution of 2003 created a buzz by bringing air travel to the reach of the Indian middle-class masses. The growth of the Indian aviation industry has not been very rosy, however, especially with the global meltdown. The industry is now in a consolidation phase with Jet-Sahara merger and Kingfisher Airlines’ acquisition of
Deccan Aviation. More recently, the global aviation industry has been going through a bad phase, and the Indian aviation industry is no exception to this, with several problems blocking its growth. In particular, year 2009 has been
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