Porters Five Forces

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Team Apex Ryan Boykin Ashley Fiorini Lance
Tanaka Matt Webb
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Background

• New Air founded by David Neeleman in February
  1999 as an LCC with 130M
• Began business providing short haul point to
  point flights between few locations
• Became popular due to the onboard luxuries on
  time arrivals
• New Air Became JetBlue in April 2000 and
  continued to grow despite external forces
• Cost Efficiencies (Lease vs. Purchase/Live
  TV/Gate Time)
• IPO listing on NASDAQ in 2002
• Overall very successful with their point to point
  service

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Porter Five Forces

• Threat of Entry
• Capital Requirements
• Learning Curve
• Brand Identity
• Economies of Scale
• Government Regulations

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Porter Five Forces

• Threat of Rivalry
• Threat of Substitutes
• Highway, transit, rail, and water all fulfill the
  same needs of a customer in a different manner

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Porter Five Forces

• Threat of Suppliers
• High
• Employees
• Airplane Manufacturers
• Fuel Suppliers
• Threat of Buyers
• Standard product and services
• Intangible
• Products and services sold constitute the
  majority of a flyers final cost
• Low economic profits

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Market Positioning
Position Map
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VRIO Framework

• The question of
• Value David Neeleman founded JetBlue on the
  grounds that low cost airline carriers provided
  their customers with a no-frills flight
  (environmental opportunity).
• Rarity JetBlues differentiated flight experience
  allows rarity to be a source of competitive
  advantage.
• Imitability It is costly for direct competitors
  to replicate JetBlues strategic innovations.
• Organization JetBlues far-reaching growth
  demonstrates the firms ability to effectively
  systematize

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Problems and Issues

• Issue 1
• Recently competitors have been acquiring more
  market share
• Southwest and Alaska
• Problem effects entire industry
• Issue 2
• Lack of brand awareness
• Consumers are not aware of what JetBlue offers
• Current Advertisement

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Strategic Options

• Product Differentiation Strategy
• To Create New Advertising
• Focus on unique product features
• Free Television
• Free XM Radio
• Comfortable Seats
• Reward Points System
• Cost Leadership Strategy
• Eliminate or charge for product feature
• Cutting features to provide lower price airfares

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Trade-Offs

• Product Differentiation
• Cons
• Costly Implementation
• Create new advertising
• Have to eliminate old advertising
• Pros
• Quick Implementation
• Brand Awareness
• Brand Identity

• Cost Leadership
• Cons
• Could Alienate Current Loyal Customers
• Advertisements Could Still Be Needed
• Pros
• Cost Leadership
• Better Position on Travel Sites
• Customers Could Personalize the Experience

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Recommendations
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Managerial Implications

• Problems are not always apparent
• Innovation is key in a niche market
• Need to have unsurpassed products and services to
  maintain competitive advantage
• Strong marketing and brand awareness need to work
  simultaneously to achieve optimal success

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Thank You for Flying with JetBlue