Blue Ocean Strategic Sequencing for Delta Airlines
The fourth principle of the Blue Ocean Marketing Strategy is to get the Strategic Sequence of the Blue Ocean Strategy correct. The sequence has four steps which are utility, price, cost, and adoption. The company that I have been studying is Delta Air Lines.
- Utility. Delta’s flight experience unlocks exceptional utility. While in flight, travelers have many entertainment options such as music, new release movies, and video games. When customers are travelling to a far destination they can also enjoy meals and snacks while enjoying their entertainment. Another benefit that comes with using Delta is that the first bag checked in is free. If someone is only travelling with one piece of luggage, they do not have to pay any extra for luggage. Delta’s amenities give customers reasons to keep choosing their airline for their travelling needs.
- Price. Delta strives to provide the lowest prices to its customers. In 2008, Delta began to offer a program called “Best Fare Guarantee.” With this program, they guaranteed that customers would get the best price if they purchased tickets at Delta.com. If customers found a better price with another airline, Delta guaranteed to refund the full ticket price or the difference in price between Delta’s ticket and their competitor’s ticket.
- Cost. In 2011, jet fuel prices began to rise. Jet fuel prices rose over fifty percent higher than the prices in 2010. “Every penny increase in the cost of jet fuel makes a $175 million difference to those carriers' bottom line, according to John Heimlich, chief economist for the U.S. airline industry group, the Air Transport Association. So when the jet fuel price rises by $1, as it has done over the past year, it adds $17.5 billion to the carriers' costs.” (Lavelle, 2011, para. 8) Delta as well as other airlines had to find ways to cut costs so that they can continue to make a profit. In 2011, Delta decided to cut the number of aircraft and seats that it was using in order to cut costs. Delta also had to temporarily raise prices in order to prevent severe revenue damage due to the high fuel costs. In May 2012, Delta came up with a better idea to cut costs. They decided to purchase an oil refinery. This purchase will allow Delta to save about $300 million per year on fuel costs. (O'Toole, 2012) By lowering costs, Delta will also be able to lower its ticket prices which will cause consumers and business to use their airline more. More customers will bring Delta more revenue.
- Adoption. Delta adopted an approach that benefits their customers, shareholders, and employees. They use investment and innovation as a means of continuously improving their airline so that everyone will be happy with the company. (Delta Shareholders Elect Board, n.d., para. 7) They care of their shareholders making money, customers saving money, and their employees working in a good environment that they are proud of.