Air Lounge

Air Lounge Corporation

1 Bernard Baruch Way

New York, NY. 10010-5585

718-963-0900

718-438-6384

mkt9703@googlegroups.com


1.     Executive Summary....................................................................................................... 1

2.     Situation Analysis.......................................................................................................... 1

2.1.   Market Summary. ....................................................................................................... 2

2.1.1. Market Needs... ........................................................................................................ 4

2.1.2. Market Trends........................................................................................................... 4

2.1.3. Market Growth.......................................................................................................... 5

2.2.    SWOT Analysis......................................................................................................... 6

2.2.1 Strengths......................................................................................................................6

2.2.2.  Weaknesses.............................................................................................................. 7

2.2.3. Opportunities............................................................................................................. 7

2.2.4.Threats....................................................................................................................... 7

2.3. Competition.................................................................................................................. 8

2.4. Product Offering........................................................................................................... 8

2.5. Keys to Success........................................................................................................... 9

2.6. Critical Issues............................................................................................................... 9

3.0 Marketing Strategy........................................................................................................ 9

3.1 Mission....................................................................................................................... 10

3.2. Marketing Objectives................................................................................................. 10

3.3. Financial Objectives.................................................................................................... 11

3.4. Target Marketing........................................................................................................ 11

3.5.  Positioning................................................................................................................. 11

3.6. Strategy Pyramids...................................................................................................... 12

3.7. Marketing Mix........................................................................................................... 12

3.7.1. Services and Service Marketing............................................................................... 13

3.7.2. Web Plan Summary................................................................................................. 13

3.7.3. Pricing..................................................................................................................... 14

3.7.4. Promotion................................................................................................................ 15

.3.7.5 Advertising................................................................................................................ 15

3.7.6 Incentive Programs................................................................................................... 16

.3.7.7  Sales Plan................................................................................................................ 16  

3.7.8. Sales Strategy.......................................................................................................... 17..

.3.7.9. Sales Process………………………..……………………………….................…17  

3.8.0   Marketing Research................................................................................................ 17.

4.0     Financials, Budgets, and Forecasts.. ....................................................................... 18

4.1.  Break-even Analysis................................................................................................. 18

4.2.   Sales Forecast......................................................................................................... 19

4.3.   Expense Forecast..................................................................................................... 21

4.4. Contribution Margin................................................................................................... 22

5.    Controls.................................................................................................................... 23

5.1. Implementation Milestones......................................................................................... 24

5.2. Contingency Planning................................................................................................. 24


1. Executive Summary

The goal of this marketing plan is to outline the strategies, tactics, and programs that will make the sales goals outlined in the Air Lounge business plan a reality in the year 2007.

Air Lounge, unlike a typical airport waiting area, provides a unique forum for simple relaxation; exercise, communications and entertainment through the medium of the Internet or cable and satellite based audio and visual programming. Air Lounge is the answer to an increasing demand. The public wants: (1) a quiet and comfortable place to stay whether they are waiting for their scheduled plane flight or if they are waiting out a flight delay. Air Lounge will provide a place that is comfortable, quiet and affordable. (2) Access to the methods of communication and volumes of information now available on the Internet, and (3) a place to lounge around, eat a meal, take a shower, exercise or even take a nap.

Marketing will play a vital role in the success of Air Lounge. Air Lounge must build a brand around the services it offers by heavily promoting itself through local television, radio, and print advertising. Marketing efforts are just beginning by the time a potential customer enters Air Lounge for the first time. A strong emphasis will be placed on keeping customers and building brand loyalty through programs focused on staffing, experience, and customer satisfaction.

Our target markets include:

·         All passenger terminal pedestrian traffic within proximity to the Air Lounge Facility.

·         This includes all business and recreational travelers no matter what their wealth or      social status is:

·         Students and Senior citizens are also a sought after group as well.

2. Situation Analysis

Air Lounge is about to open its doors for business in a few months. The market is there the demand is there. Some findings from the US congress, which support our business model, are quoted below.

Aviation congestion is reaching crisis proportions.  Last year was the worst on record for airline delays.  This summer is likely to be as bad, if not worse.  Federal Aviation Administration (FAA) data show that delays in 2000 were up by 20 percent from 1999 and they are estimated to have cost airlines $6.5 billion.  (Exhibit A Pg 26)

This unprecedented usage has pushed our nation’s air traffic control system and over-crowded airports to the brink of gridlock.  FAA data shows that in 2000, delays were up 20 percent over 1999, to a total of 1,234 per day.  During the first nine months of 2000 alone, one of every four flights was delayed, canceled or diverted, affecting 119 million passengers.  Initial analysis indicates that delays in 2000 cost the airlines an estimated $6.5 billion, up from $5.4 billion in 1999.  (Exhibit A Pg 27)

The photo below is characteristic of the scene at many airports around the USA today. Air terminals filled with frustrated stranded airline passengers with no place to stay are becoming the norm and not the exception.

We need to focus our efforts on implementing the strategies, programs, and tactics outlined in the original business plan, of which they key factor was differentiation.

Differentiating ourselves from other more traditional lounges or restaurants by offering a mix of activities including sound proof napping areas has given us the ability to effectively compete against the other lounges, which for the most part only offer places to sit down, eat, drink, or watch TV. At Air Lounge one can do all of that plus much more.

The Internet services side of the business is an aside to our core business, which we consider essential to capture the business traveler as a customer. In many companies today the Internet and/or IT infra structure are an essential cornerstone of the business model.

Because Air Lounge is available on a pay as you go basis there are no long-term contracts or memberships involved. Which to many customers is a deterrent. To capture and retain customers we will implement a loyalty program. Offering product discounts and points for returning customers who carry the Air Lounge Coupon Card. We realize not everyone needs to use the Internet and to that end we offer lounge areas, a restaurant, gym, massage pod, and gift shop too.

2.1 Market Summary

Air Lounge is faced with the exciting opportunity of being the first-mover in the local airport lounge market by offering unique services at a unique facility. The increasing amount of flight delays and missed connections combined with the general lack of places to sleep for tired and disgruntled passengers is creating a demand for the services offered by Air Lounge. Places like this exist in Asia and offer a similar concept, but none exist at present in the domestic USA market.

We chose the International airline passenger as our primary target market because those trips usually require connecting flights. The more conections, the more opportunity there are for delays.   

Target Market Growth:

With the continued Globalization of the economy Air Travel is on the continued upswing. See the table below from the Web Site of the Bereau of Transportation Statistics at: http://www.transtats.bts.gov/

As can be seen from the above table the Chcago to New York Route is the most traveled in the USA . This is because Chicago is a a major Mid West hub that receives passengers from the smaller population centers in the Mid West. A large percentage of these passengers get on planes to connect to an International flight leaving form New York. In the upper right column it can be seen that only 80% of all flights in the US depart on time. This includes International Departures too.

2.1.1 Market Needs

         As can be seen from the table JFK Airport has one othe highest passenger volumes in the USA , with over 2 million enplanements so far this year. This is an increase over last year which spells out demend for the services of Air Lounge.

       2.1.2 Market Trends

        As can be seen from the table below the number of flights leaving JFK has increased by more than 500 planes since last year.

<Data Table>

2.1.3 Market Growth

“Aviation congestion is reaching crisis proportions.  Last year was the worst on record for airline delays.  This summer could be as bad, if not worse.  Due to the complex schedules and hub-and-spoke operations of U.S. airlines, adding just a few minutes of delay to each airline flight in the U.S. can create gridlock in our aviation system, with dramatic negative impacts on the economy.  According to FAA data, 27 majors airports in the U.S. are considered seriously congested.  If improvements are not made, that number will grow to 31 by 2007. The market for the services of Air Lounge is growing with no end in sight.

                              Quoted From:  71–966 PS 2001

CONGESTION IN THE U.S. TRANSPORTATION SYSTEM (107–10)

HEARING BEFORE THE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTH CONGRESS FIRST SESSION

                              http://www.house.gov/transportation/fullchearings/04-04-01/04-04-01memo.html

2.2.  SWOT Analysis

The SWOT analysis provides us with an opportunity to examine the strengths, weaknesses, opportunities, and threats of operating Air Lounge.

Air Lounge has much strength to give it an advantage over the competition. These strengths include: a multi-lingual and friendly staff, comfortable facilities, and the availability to all passengers regardless of what class they are traveling in. At the same time, Air Lounge has several weaknesses to consider. Including limited space availability and high maintenance costs.

In addition to exploring the strengths and weaknesses, Air Lounge also must consider possible opportunities and inevitable threats. Opportunities include customer loyalty and future expansion, while threats refer to competition moving in next-door or possible effects from increased security levels.

2.2.1.                      Strengths

1.  Multi-lingual and friendly staff. As Air Lounge is located within the international terminal, our staff will be consisting of those fluent in the major languages including, but not limited to, Spanish, French, German, Russian, Chinese, and Japanese.

2.  Comfortable Facilities. Part of the Air Lounge experience includes access to comfortable chairs with massage functions, plasma TV screens, shower facilities, gym usage, as well as napping rooms. These napping rooms will be equipped by the Metro Naps system.

3.  Open to all passengers regardless of class. Unlike other VIP lounges that cater only to those holding Business of First Class Boarding Passes, Air Lounge will be one that is open to all passengers, no matter what class they are traveling in. 

2.2.2.                      Weaknesses

1.  Limited Space Availability. Air Lounge rents approximately 4,000 square feet at JFK Airport, International Terminal. Should there be a long delay on all flights, people can stay here for a rather long time. This would stop Air Lounge from admitting new customers, as there are a maximum number of people that can occupy the same space at the same time.

2.   Cost factor associated with maintaining the equipment used in various sections of Air Lounge. There is a considerable cost factor to be concerned with in maintaining the calm and relaxing atmosphere of Air Lounge. If any of the chairs, TV’s, or gym machines break down, Air Lounge would assume all costs of getting them fixed, regardless of whether or not the customer was at fault.

2.2.3.                      Opportunities

1.  Customer Loyalty Program. As people travel more often we can start to offer loyalty programs to ensure that customers come back and recommend the Lounge to other travelers.

2.  Expansion to other terminals/airports. As we are able to collect some basic data from customers checking in, we can start thinking about expanding to the different terminals within JFK or even to other terminals across the globe. Preferably one that has a similar percentage of delayed flights and international departures/arrivals/transfers.

3.  Compile database of customer demographics. As people check into Air Lounge, they will be required to fill out some sort of form that can later be manually entered into a database. This database can then be analyzed to determine whom the best target market is as and marketing will be done accordingly.

2.2.4.                      Threats

1.  Possibility of other lounge opening in same terminal. If a competitor decides that the international terminal has a lot business, they may consider opening a lounge of themselves.

2.  Shut down if security level increases. Air Lounge is dedicated to serve those customers who already have their boarding pass and has passed by the security area. If the security level at JFK is raised than Air Lounge runs the risk of being shut down if it is thought of as a security risk.

2.3.    Competition

The competition for Air Lounge can be separated into two primary categories. There are the lounges located within the same terminal as Air Lounge and the other areas of rest located outside of the terminal. The places located outside the terminal are typically nearby hotels.

Competition within the same terminal

- chairs located outside the gates of departing/arriving flights. As far as we can tell there is no other dedicated lounge located within the same terminal as Air Lounge.

Competition outside the terminal (includes at JFK and outside JFK)

-  Priority Pass Members – Priority Pass is the world’s largest airport lounge program. A membership gives individuals access to over 500 VIP lounges, covering 275 cities worldwide. Standard membership is $99 a year with each visit costing $24, with unlimited time access. At JFK, Priority Pass is accepted at the Kal Lounge in Terminal 1 and at the United Red Carpet Club in Terminal 7.

-  Hotels located near JFK. There are several hotels located within 2 miles of JFK, and   many of which offer a shuttle service between JFK and the hotel.

Hotel Name

Distance

Average Price / Night

Ramada Plaza Hotel JFK

0.5 miles

$147

Holiday Inn New York JFK

1.0 miles

$154

Courtyard by Marriott JFK

2.0 miles

$222

Crowne Plaza Hotel JFK

0.25 miles

$175

Holiday Inn Express JFK

1.7 miles

$148

Days Inn JFK

0.25 miles

$126

Hilton Garden Inn

0.5 miles

$187

2.4.  Product Offering

Air Lounge will provide its customers not only a place to relax and enjoy before boarding your place but also a place that allows you to work your mind and body. Including the following, but not limited to:

·  Napping facilities equipped by Metro Naps

·  Full gym available for customer use

·  Shower facilities for a small additional fee of $5. This will include individual sized toiletries and fresh towels

·  Complimentary coffee, tea, and various soft drinks

·  Little café for those that are hungry. Offerings include: muffins, danishes,sandwiches, etc.

·  Wireless internet connectivity or you can sign onto one of our standing computer terminals to quickly check e-mail and other news

·  Children friendly areas – as to not disturb the quiet atmosphere that other customers come for

By providing all these services, Air Lounge customers can now look forward to traveling by knowing that their time at the airport will not be spent in a hard plastic chair. Complimentary beverages, different facilities including a gym and showers will allow customers to refresh and stretch out prior to boarding a plane.

2.5  Keys to Success

The keys to the success for Air Lounge are:

·       The creation of a quiet, comfortable, relaxing atmosphere that is reasonably priced and available to airport passengers of all flying classes.

·       The establishment of Air Lounge as a haven for relaxation and entertainment.

·       The creation of an environment that is not restricted to first-class and business-class airport passengers. Air Lounge will position itself as a haven for individuals wishing to escape the discomfort and pandemonium of the airport while waiting to board the airplane.

·       Great lounge chairs and other amenities such as refreshments, flight information monitor, internet, newspapers and magazines, telephone, plasma screen television, WiFi, showers and hairdryers

2.6  Critical Issues

The risks involved for Air Lounge are:

·       Will there be a continuing demand for the services offered by Air Lounge?

·       Will airport security and airlines become so efficient that delays are diminished leaving the need for airport lounges to dissipate?

·       Will individuals be willing to pay for the services Air Lounge offers?

·       Will business and first-class lounges expand their market to include all economy-class travelers?

3        Marketing Strategy

Air Lounge has three main strategies. The first strategy focuses on attracting airport travelers held up by delays. By providing a leisure environment, Air Lounge hopes to provide comfort and convenience to weary travelers that will become loyal users of Air Lounge.

The second and most important strategy focuses on pulling in international travelers. International flyers are more susceptible to security delays and are required to check in up to three hours prior to boarding. According to the University of Wisconsin Business services, because of recent laws and procedures implemented for national security, international travelers experience significant delays in both departing from and arriving in the United States and countries abroad[1]. This group of customers also serves as an important function because their overall percentage of travel is increasing while the percentage of travel for domestic travelers is decreasing. The Bureau of Transportation Statistics has reported that the number of domestic passengers declined 1.4 percent in August from a year earlier while international passengers increased 6.5 percent. Additional reporting has showed that domestic fights were down 4.5 percent from the previous year while international flights were up 2.8 percent[2].

Most airport lounges are available to only business-class, first-class and/or frequent flyers who are members of some elite travel club such as: Priority Pass, Admiral’s Club, Crown Room Club and Red Carpet Club. Air Lounge’s third strategy focuses on targeting economy-class, travelers who feel that annual fees does not warrant their joining a club and who want to experience the comfort of an airport lounge before taking a long haul flight. Moreover, Air Lounge’s non-membership policy will be based on a pay-as-you-go concept. Customers will simply pay for lounge use as and when they use it.

3.1  Mission

Air Lounge provides travelers with the ability to relax and escape the stress of the airport, enjoy complimentary refreshments, and rejuvenate in a comfortable environment.

Air Lounge’s marketing will consistently build on this mission. Everything we do, from the pricing structure for our services to the ambiance we create, must be done with this mission in mind. We cater to international, economy-class airport travelers. Our ambiance and our services are designed for this clientele and our marketing efforts are focused on capturing this market.

3.2  Marketing Objectives

Air Lounge’s marketing objectives for the first three years of operation include:

·       To introduce new concept                     

·       Maintain a staff of enthusiastic employees excited to respond to customers’ needs.

·       To build customer awareness of services

·       To build Air Lounge’s brand

·       To generate revenue

3.3  Financial Objectives

The goal of this marketing plan is to outline the marketing strategies, tactics, and programs that will make the vision outlined in the Air Lounge business plan a reality in the year 2007. The business plan forecasts sales of roughly $1.6 million in the first year of operations.

3.4  Target Marketing

Air Lounge intends to cater to travelers who have arrived at the airport hours prior to their flight departure and need to alleviate the boredom and dreariness of the airport. Furthermore, Air Lounge will be an attraction for travelers who have layovers between connection flights and need to relax and rejuvenate. These travelers will use Air Lounge’s shower rooms and take advantage of the complimentary refreshments available. Air Lounge’s target market covers a wide range of travelers: from people traveling alone or as a couple or as a family. Air Lounge will have games and other entertainment available for children.

Our primary target markets include:

·     The layover traveler. Travelers delayed for several different reasons will become an important part of Air Lounge customer base. An increasing number of travelers experience delayed flights, missed connections, and other unforeseen events that causes hours-long layovers in airport terminals. Complimentary refreshments, Washrooms and the tranquil environment will attract this demographic.

·         The early arriver.  Because airports have become increasingly crowded and security procedures take up more time, travelers, particularly international travelers, are required to arrive at the airport hours before their plane departs.  Air Lounge will provide a perfect place for leisure for single travelers as well as people traveling as a family. It will allow travelers to be entertained with Internet access; television and kids’ play area.

      3.5 Positioning

      Air Lounge will position itself as a contemporary lounge and beguilement area. Travelers facing layovers, delays or early arrivals will use Air Lounge as a place to relax, rejuvenate, and kill time.  Frustrated travelers will have an opportunity to calm down and take their mind of the stress of delayed flights. Flight screens will be strategically placed to allow them to access real-time flight schedules and information without having to leave the comfort of the lounge.  They will also have access to complimentary refreshments such as coffee, tea, juice and soda, as well as crackers, cookies and sandwiches to revive before continuing their long travel.  Washrooms will be equipped with soap, shampoo, towels and blow dryers to accommodate travelers who have faced a long travel and want to freshen up. Plasma-screened televisions, WiFi, and a fun room will be available to travelers with leisure time.

3.6 Strategy Pyramids

The following are the three key strategies Air Lounge will focus on:

Air Lounge first strategy focuses on attracting airport travelers held up by delays. Air Lounge plans on attracting these customers by:

·         Providing a leisure environment. Air Lounge will be equipped with amenities that satisfy customers’ needs.

·         A Customer Service desk will always be staffed. If a customer has any type of question or concern, an Air Lounge employee will always be available to assist.

Air Lounge’s second strategy will be focused on attracting weary international travelers who will provide an important function at Air Lounge. Air Lounge plans on attracting this type of customer by:

·         Providing comfortable lounge chairs.

·         Providing a quite environment

·         Providing multinational staff.

·         Providing a European-style atmosphere.

Air Lounge’s third strategy focuses on the average traveler, which includes travelers who feel that annual fees does not warrant their joining a club, but want to experience the comfort of an airport lounge before taking a long haul flight. This group also includes people who don’t fly often enough to take advantage of frequent flyer miles. Air Lounge’s non-membership policy will be based on a pay-as-you-go concept. Customers will simply pay for lounge use as and when they use it.

3.7. Marketing Mix

The objective of the Air Lounge marketing mix is to ensure that core-marketing strategy is implemented, and communicate properly Air Lounge’s value proposition to the potential customers.  Hence Air Lounge Service Marketing is founded on two notions:

1)      Differentiation is the primary basis for establishing a competitive advantage for Air Lounge operations.

2)      This competitive advantage can be enhanced by a process-driven and market-focused infrastructure.

After detailed comparative analysis of the existing ventures such as various airport VIP Lounges, and Priority Pass Lounge system we came to the conclusion that there are a few marketing tactics we can implement successfully in order to differentiate ourselves from competitors:

1)      More flexible way for customers to obtain services. ‘PAYGO’ methods assume that no one should think in advance to make reservation at the lounge.

2)      More aggressive advertising campaign inside selected Terminals as well as outside the airport (through in-flights magazines and Web). We also intend to investigate whether publicity actions (free coffee cups, pillows distributed among delayed travelers) inside airport Terminals will generate additional revenue and create more service awareness.

3)      Establish competitive pricing mechanism. Price differentiation (see below) along with flexible discounting should be implemented.

3.7.1 Services and Service Marketing

Our business goal is providing premium quality service, not only the physical equipment but also qualified staff. We will listen to every customer’s suggestion as well as complain; try our best to offer the most comfortable environment and the best service. We focus on the following:

l       Staff that have a strong customer-service ethic.

l       Well educated staff that provide professional suggestion and service quality

l       We will have experts who are responsible for: developing customer satisfaction programs, monitoring happiness levels, responding to customer concerns, and the general well being of every customer.

l       Personal recognition of our frequent travelers who return time and again.

l       Luxurious rooms that offer a sense of doing business from 'home.

l       Spa / Gym / Treatment Room, etc that offer the best quality to release pressure.

Air Lounge provides following services:

Air Conditioning 

Complimentary Refreshments (Soft Drinks) 

Fax service for a nominal fee and complimentary photocopies

FedEx service is available at vendor rates 

Flight Information Monitor 

Internet. Provided by T-Mobile

Morning newspapers, periodicals and magazines

Telephones with free local calls and data jacks with power outlets for your laptop computer

Television.  

Free WiFi service for members and guests

Showers and Hairdryers

Mini Gym.

Air Lounge team is very well aware of the devastating effects of sleep deprivation among passengers on heavily delayed flights. In busy international airports such as JFK the demand for sleep-related capacities has grown significantly.  One of the key services Air Lounge will feature is the unique napping area equipped with special napping chairs provided by Metro naps. Metro Naps offers a needed service to its customers and a remarkable business opportunity to its owners.  Air Lounge is going to franchise the equipment from Metro Naps.  

3.7.2 Web Plan Summary

The primary AirLounge.com strategy is to build an impressive destination website. The marketing of the site will be built around the core values and services that Air Lounge will offer. To our advantage our competition has not built any considerable Internet presence. Web award companies will review the Air Lounge.com site as a great destination on the Internet. We will build the revenue and market share partially around this traffic by providing annual membership subscriptions and building strategic partnerships with Web air ticket sellers.

3.7.3 Pricing and Price Discovery

Comparative analysis of the existing airport lounges brought us to the conclusion that Air Lounge will have significant advantages over the competitors: no affiliation with any particular airline, no membership required, for all class passengers, and extended hours of staying. Even though Priority Pass membership means that you don’t have to book JFK airport lounges in advance or even pay at the time of arrival, clients have to pay an annual membership fee + $24.00 per visit or be a frequent flyer. Moreover, lounges associated with Priority Pass have a dress code i.e. no baseball hats or jerseys. With Air Lounge you don't have to pay any annual fees. Our concept is "pay-as-you-go". Air Lounge has no dress code.

The table below represents the service comparison between Air Lounge and for some of the most popular airport lounges in US.

 

Guest Fee

Membership

Hours of Operations

Air Lounge

$30. "Pay as you go"

No Membership

5:00 am - 12:00 pm. Open on weekends and Holidays. Usually the busiest time of the year.

United Airlines Red Carpet Club. Priority Pass

Membership required

$300+

5:00 am - 9:00 pm

Delta Air Lines Crown Room Club® and Business elite® Lounges

$25, should be purchased in advance

$125+

6:30a-10p Closed on weekends

American Airlines Admirals Club

Guests should be accompanied by members

$300+. Sometimes expensive renewal

5:30 am - 11:00 pm. Closed on weekends

Northwest Airlines World Clubs

$45

$400+

Vary by locations. Closed on Holidays

Continental Airlines Presidents Club

$45, should be accompanied by member

$ 275+

Vary by locations

British Airways Lounge

$N/A. should be accompanied by member

Info is N/A

2:30 pm - 6:00 pm closed on weekends

Sources are:
www.prioritypass.com http://www.continental.com/web/en-US/content/company/alliance/delta.aspx http://www.aa.com/content/travelInformation/airportAmenities/AdmiralsClub.jhtml http://www.nwa.com/services/bustrav/worldclubs/memru.shtml http://www.continental.com/web/en-US/content/travel/airport/lounge/default.aspx http://www.britishairways.com/travel/ecbenftlnge/public/en_gb

Our price schedule will be as follows: 

$30.00 for adults and kids 3 to 18;  

$15.25 for kids 3 to 11, and senior citizens;

Free for infants newborn to 2.

Taking into account all of the services offered, one of the major goals for Air Lounge should be to shape the customer’s perceptions and opinions of the Air Lounge service as being “So much value, for so little”. One of our advantages we have is that we don’t intend to hire any additional employees at least in the early stages of business development. Thus we can save significant amount of the budget on salaries and can compete on the basis of price with our competitors.as  “So much, for so little”.

One of our advantages is that we don’t intend to hire any additional employees at least at the earlier stage of development. Thus we can save significant amount of the budget on salaries and can compete on the basis of price with our competitors.

Price Discovery

Air Lounge will conduct close surveillance of the competitor’s business practice in order to estimate costs and cost’s role in forming price policy. Hence we can build more effective pricing strategy for ourselves.

Customer satisfaction surveys

We take advantage of survey provided by Zoomerang Company to understand what customer want, how we can improve service and customer satisfaction.

The cost of survey is $599/per year

http://info.zoomerang.com/index.htm

3. 7. 4 Promotion

Primary promotion will mainly focus on:

First: Advertising via in-flight magazine, billboard, local newspapers and internet. Through Mass communication advertisement, our business culture and customers awareness will be built. The goal is to get all travelers’ attention as many as possible.

Second: Offering discount, coupons as the main strategy during the starting of business, the strategy will continue to use depending on customer reaction.

Third, the customer source will heavily rely on personal selling from customers to customers. Thus establishing a long term relationship with customers is important. Through satisfaction survey, we can constantly chase customer preference.

3.7.5 Advertising

3.7.5.1 In-flight magazine          

Meal Tray Cards:

In-flight TV

Internet: Yahoo- ads

     PS: here I use “Sponsored Search”, you can find more detail by below link.

     http://searchmarketing.yahoo.com/?cmp=Yahoo&ctv=fp_footer

     Basically, we can define our “key words” to decide the price of per bid, in fact,

     the higher price per bid, the more chances people will click our advertisement.

     Airport Billboard:

     http://www.billboardsource.com/products.php

 

Quantity

budget

   

Inflight magazine

Magazine changed per month

$9,820 per month

   

Mear Tray Cards

200,000 per month

$19,000 per month

   

In-flight TV

Monthly; separate programs for inbound/outbound flights

60 spot-$6300

   

Yahoo

(Google charges in similar way)

Each account requires a non-refundable $5 initial deposit, which applies towards click-charges. There is a minimum bid requirement of $0.10 per click-through.

$0.1/per bid

   

Billboard

Space: Package Avg. $25,000/mo. for 20 displays
High demand displays priced seperately.

$25,000/mo. for 20 displays

   

3.7.6 Incentive Programs:

Discount:

1.                We offer 10% off discount during the first month for whole guests.

2.                Guest who can use our facilities for free on his or her birthday.

3.                Each customer will have an accumulated point card, every ten points will have an extra free entrance.

Coupon:

Coupons will be offered randomly through the internet or magazines

They will also be offered to departing guests to award them discounts on their next visit.

3.7.7 Sales Plan

Our sales plan is the combination of our sales strategies and sales process. As long as we follow the plans laid below we should be in good shape.

3.7.8 Sales Strategy

    The main sales strategy is to build customer loyalty, by offering premium customer service, establishing strong customer relationship and providing competitive price. Our business culture and reputation can easily be distributed from customer to customer. The man strategies include:

l       Display our company’s image as: Professional / Qualified / Comfortable / Homey

l       Focusing on personal marketing, treat customers as family.

l       Use various promotions to stimulate their willingness of becoming a member.

l       Offering high quality with easy price.

3.7.9 Sales process

l       Personal recognition of our frequent travelers who return time and again.

l       All staff wear uniform to shape our business culture

l       Sending email monthly to members to tell about latest news or discount/coupon information. Also, sending birthday card, etc at any special day.

l       Report to every member about any suggestion and complain as well as our current schedule to improve ourselves. 

l       Encourage members to invite their friends to enjoy at our lounge. We’ll have personal service to help understand more about us.

l       We offer all kinds of facilities, including computer, fax machine,

3.8 Marketing research

   By researching current competitors’ pros and cons, we can figure out the differentiation; and how to provide service that others don’t have, thus to create the competitive advantage.

Competitor: Priority PassThe biggest competitor. Having lounges in 90 countries and over 275 cities. Its price lists below:

 

Annual Fee

Member Visit Fee

Guest Visit Fee

Standard Membership

US$99

US$24

US$24

Standard Plus Membership

US$249

10 Visits FREE
then US$24

US$24

Prestige Membership

US$299

All Visits Free

US$24

Priority Pass offers:

l       Free drinks

l       Free magazines and newspapers

l       Meeting room

l       Shower space

3.4  Financial Objectives

The goal of this marketing plan is to outline the marketing strategies, tactics, and programs that will make the vision outlined in the Air Lounge business plan a reality in the year 2007. The business plan forecasts sales of roughly $1.6 million in the first year of operations.

4. Financials, Budgets, and Forecasts

The marketing plan is built on these truths:

1.      The marketing budget is based on a percentage of sales value. Currently, that value is set at around 31%.

2.      Building a strong brand and brand loyalty is critical to the success of Air Lounge.

3.      Marketing is a critical component of the company’s business plan. Therefore, the amount of funds allocated to marketing activities is the second largest in our master budget.

4.      We plan to spend 31% of our sales on marketing in the first three years. However, we will consider spending more on marketing efforts if necessary.

4.1   Break-even Analysis

Air Lounge variable costs in relationship to per-unit revenues are very low. Fixed costs, on the other hand, are very high. Our fixed costs include: payment of debt, facility lease costs, equipment costs, advertising and marketing costs, employees’ wages and other costs the company must maintain on a monthly basis. These costs are fixed and are not impacted by an increase or a decrease in sales.

Currently, Air Lounge will break even at a yearly sales point of $1,606,061.95. At this sales level, Air Lounge will not be making any profits..

Break-even Analysis

 
   

Annual Units Break-even

 53,536

Annual Revenue Break-even

 $1,606,061.95

Price Per-Unit

 $30.00

   

The following graph shows Air Lounge’s breakeven point when profits equal $0. At this point the company will have generated just enough revenue all its costs. Any dollar earned after this pint will go directly to net income.


The company estimates that in its first year in business, revenues will barely be enough to cover costs.

4.2    Sales Forecast

Air Lounge is expected to serve roughly 53,500 customers in the first year in business generating approximately $1.6 million in revenue. Sales are expected to increase from 12%annually as Air Lounge starts building relationships with frequent flyers and becomes more attractive to new clientele.

The next table details how Air Lounge sales were forecasted for the first 3 years of operation. The first column lists the number of international passengers as shown in the JFK Traffic report for the respective months. The next column shows the number of stranded passengers due to delayed departures. The Air Travel Consumer Report states that 75.40% of flights depart from JFK on time, while 24.60% of departures are delayed. In the first year, Air Lounge estimates to capture about 1.14% of those passengers with delayed flights. 

           Sales Forecast Table

<sales Forcast table>

The following graph illustrates sales revenue fluctuations during the first year. Air Lounge is to generate higher revenues during the summer when airport traffic is at its highest levels.

4.3  Expense Forecast

The marketing budget will consist of approximately 32% of sales. One of our strongest strengths is our marketing and brand building capabilities, and the aggressive marketing budget is a reflection of the importance we attribute to our marketing activities.

Currently, the marketing budget beyond year one remains set at 31% of sales, which represents the second largest expense in our budget. Below is a detailed graph of monthly budgeted expenses for Air Lounge.

<Monthly Budget>

Explanation of Major Marketing Expenses

·       In-Flight Magazines and Meal Tray Cards... Print materials always require a significant budget. They include: flyers, literature distributed internally, novelties for customers, coupons, and anything else we can squeeze into this budget. In this case, Air Lounge will be using in-flight magazines and Meal Tray Cards as an innovative and inexpensive way to increase brand recognition and revenue. We have allocated $118,000 to spent on print materials.

·       In-Flight TV…Through in-flight programming, we will be able to present its services to a large in-flight audience.

·       Internet... By making use of this media, we will promote AirLounge  and connect with customers who are searching for the services we offer.

·        Billboards... These capture the attention of passengers throughout their entire airport visit from gate check-in to baggage claim. Air Lounge has planned to spend roughly $150,000 on billboards display at JFK.

Annual Marketing Expense Budget

<Annual Budget>

This pie chart details Air Lounge’s marketing expenses on a monthly basis.

 


4.4 Income

The net income chart presents a modest outlook for Air Lounge’s first year of operations.

1.    Sales fluctuate considerably throughout the year. Summer season produces the highest revenues and much needed profits after suffering losses in the first quarter.

2.    Net income is close to 2% of sales in the first year. However, forecasts suggest that subsequent years will give more satisfactory results.

3.    The marketing budget is consistently based on 31% of total revenue.

4.    A strong focus on print material is apparent in the expense breakdown.

5.    The marketing budget is spread evenly throughout the year.

<Income Projections>

For more details on Air Lounge’s operation, see the company’s Monthly and Annual Financial Statements at the end of this report.

5.1 Business Model.

The site is intended to increase brand equity and awareness; we are building for high traffic.  In addition our business model is also based on the sales of our coupons and memberships to visit Air Lounge.

5.2 Website Marketing Strategy

Once the design phase is complete and the website is operational, it will be registered with various search engines like Google, Yahoo, and MSN. It will also be cross-linked to various air ticket sale sites such as Orbitz, Travelocity, PriceLine and etc. In a future company website will be advertised with foreign language search engines, since Air Lounge target audience is mostly international travelers.

5.3 Development Requirements

The development needs to match the overall business strategy as explained in the rest of the plan involve both front-end and back-end strategies, as explained in the following topics.

 5.3.1 Front End

Because Air Lounge.com's target customers are all air travel passengers in the International Departures Terminal, we will use the latest technologies to impress the visitors with excellent design and innovation throughout our facility. 

 5.3.2 Back End

The AirLounge.com e-commerce web site will be built on a three-tier structure. Driven by SQLTM servers and an IISTM Web server backed with plenty of bandwidth, the site will be coded mostly in ColdFusion Web Server and ASP Dot Net. We will be taking our registration databases live to be able to email updates on services and promotions to customers. We will offer customers the option to take themselves out of the E Mail list if they choose to do so.



[1] http://www.bussvc.wisc.edu/acct/travel/foreign.html

[2] http://www.bts.gov/press_releases/2006/bts054_06/html/bts054_06.html