Porters Five Forces Analysis Essay Example

no refund. " Yet, in its drive to keep costs down, Kulula does not compromise on maintenance and safety, and it employs the best pilots and meets the highest safety standards.

Like all B2C companies, Kulula aims to create customer value by reducing overhead costs, including salaries, commissions, rent, and consumables such as paper and paper based documents. Furthermore, by cutting out the middleman such as travel agents Kulula is able to keep prices low and save customers the time and inconvenience of having to pick up tickets from travel agents. Instead, customers control the entire shopping experience. Kulula was the sole provider of low-cost flights in South Africa until early 2004, when One Time aunched a no-frills service to compete head-on with Kulula.

Due to the high price elasticity of demand within the industry, any lowering of price stimulates a high demand for flights. The increase in competition in the low- price end of the market has seen Kulula decrease fares by up to 20 percent white increasing passengers by over 40 percent. There, however, has been no brand switching. Kulula has grown in the market at the expense of others. Apart from its low-cost strategy, Kulula is successful because of its strong B2C business model.

As previously mentioned, 90 percent of its revenue is generated from direct sales. However, Kulula has recently ventured into the B2B market by collaborating with Computicket and a few travel agents, who can log on to the Kulula site from their company intranets. Kutula offers fares at substantial reductions to businesses that use it regularly. Furthermore, Kulula bases its success on three simple principles: Any

decision take must bring in additional revenue, save on costs, and/or enhance customer service. Technology contributes substantially to these three principles.

In its first year, Kulula used a locally developed reservation system, which soon rat out of functionality. The second-generation system was AirKiosk, which was developed in Boston for Kulula. The system change resulted in an improvement of functionality to passengers. For example, in 2003, Kulula ran a promotion during which tickets were sold at ridiculously low prices, and the system was overwhelmed. Furthermore, Kulula experienced a system crash that tasted a day and a half, which severely hampered sales and customer service.

As a result, year two saw a revamp in all technology: All the hardware was replaced, bandwidth was increased, new servers and database servers were installed and Web hosting was changed. ln short, the entire system was reptaced. According to l'Director Carl Scholtz, "Our success depends on infrastructural stability; our current system has an output that is four times better than the best our systems could ever produce. Kulula staff members are conscious of the security needs of customers and have invest in 128-bit encryption, giving customers peace of mind that their transactions and information are safe.

The success behind Kulula's systems ties in its branding-its strong identity in the marketplace, which includes its name and visual appeal. The term kulula means "easy, and Kulula's Web site has been designed with a simple, no-fuss, user-friendly interface. When visiting the Kulula site, you are immediately aware that an airline ticket can be purchased in three easy steps. The first step allows customers to choose destinations and dates. The second step

allows customers to choose the most convenient or cheapest flight based on their need.

Kulula also allows customers to book cars and accommodations in step two. Step three is the transaction stage, which allows customers to choose the most suitable payment method. The confirmation and ticket can be printed after payment have been settled. Kulula has not embraced mobile commerce yet, because the technology does not support the ability to allow customers to purchase a ticket in three easy steps. Unlike other e-commerce sites, Kulula is uncluttered and simple to understand, enhancing customer service.

Kulula is a fun brand - with offbeat advertising campaigns and bright green and blue corporate and aircraft colors-but behind the fun exterior is a group people who are serious about business. Kulula's future is extremely promising. Technology changes continually, and Kulula strives to have the best technology in place at all times. B2B e-commerce will continue to be a major focus of the company to develop additional distribution channels with little or no cost. In conjunction with bank partners, Kulula is developing additional methods payment to replace credit card payments, allowing more people the opportunity to fly.

These transactions will be free. Kulula is also involving customers in its marketing effort by obtaining their permission to promote special offers by e-mail and short message se vice to customers' cell phones. The Kulula Web site will soon serve as a ticketing port; where customers can also purchase British Airways tickets, in three easy steps. The company has many other developments in the pipeline that will enhance custom service. According to Scholtz, "We are not an online airline, just

an e-tailer that setts airline tickets. "