AirAsia's marketing strategies
| ✅ Paper Type: Free Essay | ✅ Subject: Marketing |
| ✅ Wordcount: 4062 words | ✅ Published: 8th Mar 2017 |
Vikram(2010) believe that marketing is all about providing and handing the right product at the right time for the customers. This process able the firm to build good relationship with the customers in order to get most of the value from the customer. In order to get the most value out from the customers, businesses marketing did not just specify in an area. As Holberd and Brue (1996) stated that the movements are from local to regional, regional to national, national to international and international to global. By understanding the market, it can affect the customers’ value by integration of some activities that affect both return-on-investment and profitability (Fojt, 2005).
According to Cateora and Graham, (2002) when a flow of company’s goods and services able to reaches the customers in more than one nation for profits, this performance of business activities is call ‘International Marketing’. The difference of domestic marketing and international marketing is that the marketing is not just base on one country which is the only difference between these two terms (Ghauri and Cateora, 2011).
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AirAsia Airlines does have a very strong segmentation, which the airline is focusing more on low cost delivery to the customers. It has been voted the World’s Best Low Cost Airline by World Airline Survey by Skytrax for five consecutive years from 2009 to 2013 (AirAsia, 2014a). AirAsia have segmentation such as demographics, social-culture, user-related and benefits-sought segmentation to segment their market.
Under demographic, income may be the variables of segmenting market for AirAsia (Schiffman, et. al., 2008). Income is the main indicator for the consumers to travel with AirAsia from a different variety of others airlines to choose from as AirAsia have one of the cheapest costs to fly with. According to Kristof (2012) who refers to the economist states that Africa is now the world growing region where six of the top 10 fastest-growing economies between 2001 and 2010. In 2014, Nigeria has over taken South Africa as Africa’s biggest economy with $510 Billion in economy (Faul, 2014). Although the economy over takes South Africa but the income per capita $2,688 is still far away from South Africa’s $7,336(Faul, 2014). This mean that the economy booming in Africa able to attraction more investor to invest in the region and with the increasing spending power of the people, which able to create a big opportunity for AirAsia to enter a newly developed market.
In aim of this essay is to presenting the background of the AirAsia Airline and the differences culture of the country that chosen (Nigeria) to expand the market by AirAsia Airline with the used of the international marketing mix that contain either standardisation or adaptation. Grankvist, at el. (2004) states that standardise strategy mostly effective on industrial product, whereas buyer’s products and services are likely to adopt an adapted programme. Every company had to have a deep knowledge of the new markets on the culture and religion, language, and Aesthetics. With the company able to make good use of all these knowledge, Carrigan et al. (2005) believe that it helps to reduce the perceived risk of the international operations and increase the efficiency of information flows between the firm and the target market. Which also support by Stock and Lambert (2001) state that is important to the company that wanted to enter to a new market have knowledge of the foreign market culture. Marketing mix element with the influence of the local culture will have a big impact on the product or services and management in the country that the company wanted to entry.
AirAsia airlines is a major player in the low cost air flight industry connecting over 88 routes in Asia and have 5 hub such as the main based in Malaysia, Thailand, Indonesia, Singapore and japan(AirAsia, 2014c). . It is owned by a private investor – Tony Fernandez the CEO of the Tune Air Sdn.Bhd with the vision of wanted to be the largest low cost airline in Asia and serving 3 billion people who are currently connectivity is poor and high fares (AirAsia, 2014b). With the company belief, “Now Everyone Can Fly”, it going to take low-cost flying to an all new high and the in the world of flying industry (AirAsia, 2014b). Due to the saturated market in Asia, AirAsia is finding new route to extend the market and Africa is one of them as Nigeria have beaten South Africa to become the largest economic force in Africa but the income per capital still haven meet the level in South Africa which might be an opportunity for an low cost airline to get into the country with the supported speech by Tony Fernandes said in 2011 (Rahim, 2011):
“AirAsia is always looking to find new market opportunities and this includes other parts of the world as well,” (2011,para.5)
According to Patil and Sonawane (2010), in the international marketing product and services are important factors where it is experience by the consumers on the purchased value and the experience after using the product or services that offered by the company. Therefore, external forces such as any opportunities or threats to the business have to be analysis carefully before the company enter into a new market. For example, AirAsia ended the flights to Europe because of the high fuel prices and weak demand where there are two main competitors such as Ryanair and Easy jet which created high competition (BBC, 2012).
The external environment can be classified in to macro environment and micro environment with both will influence the decision and out comes on the company performance. PESTAL framework on the Marco-environment needs to be operated in order to have knowledge on the new market, especially African market as the company know very little in it (Johnson et. al., 2008). PESTAL framework is important because it able to help the airline to analyse the external environment of the new market and able to affect the strategy made by the airline that may have a big impact on the businesses.
In PESTLE, the political factors is one of the major issue in the external factor that able to affect the airlines operation as the government regulation might be different country to country. The government might justify barrier to entry by referring to the national security and economy security. One specific case for AirAsia airline is that the problem that the airline had been facing when the airline trying to enter into India flight industry recently. The airline has joint venture with Tata Sons Ltd and Telestra Tradeplace Pvt. Ltd two local company which try to adopt into the culture faster and changes the operation name to AirAsia India (Sanjai, 2014). According to Sanjai (2014), one of the reasons is that the Directorate General of Civil Aviation (DGCA) which is the India authority civil aviation regulator has to sought feedback from the public because there are some objectives on the entering of the flight company. Another factors is because the whole domestic India airlines has joint forces to prevent the entry of AirAsia airlinies in to the India flight industry, the pressure even invervent by the Federation of Indian Airlines (FIA) that urged Prime Minister Manmohan Singh to stall the entry of the low-cost airline in India (Mishra, 2014).
Another factors might be the economic crisis that always facing by the low cost airlines which are the instability of the fuel price and the environment factors (such as global recession, Virus and natural disasters) which have created a bad competition environment within the industry. According to Vasign et al. (2008) believes that the firm should consider the landing fees and extra use of fuel as the aircraft circles while these are the cost for the firm that have to transfer to the customers. It support by a report post by The Filipino Global Community (2011) said that AirAsia will charge a 10 ringgit (3.3 U.S. dollars) check-in fee for flights booked to counter rising jet fuel prices (Philstar.com, 2011) . In order to counter the fuel prices, the airlines should consider obtaining a long term agreement with oil supplier to avoid the fluctuating prices. In 2002, the SARS virus is everywhere and many flight unwilling to flight to the heavily affected area but still AirAsia even flight to the destination with one passenger on board which lead to the AirAsia added an aircraft and three destinations during the quarter when others airlines is blaming the virus for the bad finance year (Mok and Justine, 2005). In the global recession years and more developing countries is raising in the world, the spending power is increasing but still most of the public is middle class or lower class. This is where AirAsia airline should consider the target market which it focus on the growing middle class and the specific opportunity.
Social-culture environment would be taken to be consideration such as the country is developing and the disposal income of the people in Nigeria (Faul, 2014). Not only Nigeria, but countries around it such as Ghana, Ethiopia, Rwanda and Mozambique are experiencing a boom report from the International Monetary Fund and the World Bank (Akwagyiram, 2013). This mean the people would have more disposal income to spend on services for traveling around either for business purpose or holiday. In the other hand, increased in trade and tourism within Asia, demand for air travel increased with AirAsia providing customer services or operation as full service airline with low fare(Zhu, 2014). This include competitive advantage such as in-flight food and drinks; online sales of hotel, car, and holiday reservations, and travel insurance (Zhu, 2014). It able to further increasing brand awareness and value for customers in the premise of not increasing the operation cost when producing value added services (Zhu, 2014).
With the help of the analyses of Pestle, macro and micro environment that the airline being knowledgeable of the risk that might affecting the airlines industry and able to maximise the growth for the future. The problem is that the choice between standardise and adaptation to chosen for the firm to decide is very complicated as some authors argue that the internationalisation choice of corporation have to include combination both adaptation and standardisation (Akaah, 1991; Douglas, 1987).
Hofstede (2001) defines culture as the collective programming of the mind that distinguishes the members of one group or category of people from other. Any firm have to know some basic knowledge about the specific culture of the host country in order to entre to the market. King (2014) believe different countries there are different habits, different ways of life, which any frim wanted to entry to the new market have to do research on the culture. Lee and Ulgado (1997) the different culture can be such as language, belief system, education, religion and aesthetics. AirAsia have many example of culture adaptation when come to expending the market into a new market, which trying to include people from differences backgrounds participating in the sharing of the culture and their perspectives. For example, the meal of the airline will be depends on the route of the countries and beware of the sensitive food such as beef in India and pork in Muslim world as most of the eating behaviours are affect by the religion (Czinkota, M.R and Ronkainen, I.A., 2010).
Furthermore, Ghauri, and Cateora (2010) believe the role and level of education in particular market will influence the marketing strategy and techniques used. Most of the area flight by AirAsia is developing country and the company make it easy for the people in that area by the tickets that have been booked online can be printed by the customers or the customers can just remember the booking code and show their identity card for checking-in that make it easy for without need to wait for the boarding pass (Ong, 2011).
Marketing mix such as price; place; promotion; product; people; process and physical environment (7’s P) by Mudie and Pirrie (2006) believe the firm have to implement into the marketing strategy to achieve the objective. In a services sector People are an essential ingredient. The firm have to recruiting and training the right staff is required to create a competitive advantage. Airline services have both tangible and intangible element. Tangible such as the food and the quality of the aircraft and intangible is the services such as reliability of punctual departure or arrival and the staff services. It supported by Pride and Ferrel (2012) stated that the tangible services able to improve the value of the services providing to the customers. For example the flight did not include the meal and the passenger able to buy if wanted to eat and some meal is always sold out fast. In order to sort the problem, the airlines provide a pre-booking meal before flying to grantee the passenger. Zeithaml and Bitner (2009) believe the services delivery process is the elements for the passengers to evaluate the quality and satisfactory toward the airlines. All these services taken by AirAsia airline is trying to make the passenger to have a nice trip as possible because the of the saturated and intensive rivalry environment in the industry, the differences of the airline from the services will improve the airlines perceived value.
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