Air Asia Marketing Essay

AirAsia is Malaysian secondary- equal airline that provides both house servant and external flights. AirAsia started operating on 18 November 1996, it pi iered beginning cost locomotion in Asia. In 2001, the airline which was heavily indebted was purchased by Tony Fernandess keep company billet line Air Sdn Bhd. Under his charge, AirAsia has become one of the biggest low cost airlines operating in Asia today. Its main hub is based in the natural depression Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). As much(prenominal), AirAsia consumers tend to be from the disappoint to middle income population. siamese connection AirAsia and Indonesia AirAsia atomic deed 18 subsidiaries of AirAsia and atomic subr step forwardine 18 based in Suvarnabhumi Airport, Thailand and Soekarno-Hatta International Airport, Indonesia, respectively. Company AnalysisI. SegmentationAirAsia fag commercialise segment consist of three different and e genuinelywherelappi ng segments that were segmented according to Geographic Segmentation, Demographic Segmentation and Psychographic Segmentation. AirAsia is bottoms mainly the Asiatic grocery, hence the piss AirAsia. As much(prenominal), they do geographic segmentation by focusing their services primarily in Asia. Being a low cost airline, they ar targeting the low to middle income group (demographic) and the cost-conscious travellers (psychographic).II. TOWSIn swan to find the original trade challenges nerved by AirAsia and to determine what be the possible solutions that they preempt implement, taking into consideration their opportunities and take good of their strengths, the TOWS abbreviation model (Threats, opportunities, failinges and strengths) provide be used. Threats Opportunities * Intense competition (i.e. Tiger Airlines, seat of government of Singapore Airlines) * Asias middle physical body senesceth * ASEAN rotate Skies * Increasing vegetable oil color impairment Weaknesses Strengths * Fair handiness * Well established mug name * Low cost draw in Asia ThreatsWhat was once a relatively small market of low-cost airlines when AirAsia was counterbalance established, AirAsia not altogether has to face indirect competitors such as non-budget airlines (i.e. Singapore Airlines), ferries (i.e. Kuala Perlis Langkawi Ferry Service Sdn Bhd) and buses (i.e. Aeroline, straightaway they are alike threaten with intense direct competitors such as Tiger Airways and Jetstar Asia Airways.OpportunitiesCountries in Asia, such as China and India, are untiring huge potential markets in the future. In China, there were already 130, 000, 000 consumers exquisite(a) in the middle class range in 2006. It is estimated to crap up to 340, 000, 000 in 2016, a 162% growth from 2006 as shown in the graph below. Thisis beneficial for AirAsia as it mean that their targeted consumers (low to middle income) will grow exponentially in the full future.ASEAN Open S kies is an agreement, targeted for 2015, to allow unlimited flights between all the ASEANs partal air carriers, both full services and low-cost airlines. The rationale for the Open Sky agreement is to promote competition in the airline industry. delinquent to its strong brand name and low-cost culture among its feat force, AirAsia is much nabming to gain from this agreement. The change magnitude oil prices may seem like a threat to AirAsia, however being the low cost attraction in Asia, this can actually be seen as an opportunity for them instead. This is because high oil prices would affect all the airlines and not just AirAsia. Thus, AirAsia will inactive be the lowest costing among all the different airlines. This could result in an increase in market share for AirAsia as customers from the different airlines would relocate to AirAsia. WeaknessesThe availability of AirAsia flights is not good as full services airline. While fair availability may seem like a huge weakness that would need to be tackled and solved, it would be ticklish for AirAsia to sojourn cost drawing card if it offered comprehensive support as it would result in increased working(a) cost. StrengthsAirAsias brand name is well established in the Asiatic region. This was not only due(p) to the fact that AirAsia the pioneered low cost change of location in Asia, but also because of the extensive advertising & promotions they sop up done. Indonesia AirAsia and Thai AirAsia have successfully helped AirAsia to spread the brand finishedout the regional beyond just Malaysia. Due to AirAsia Academy, which AirAsias regional training academy laid in Malaysia, it has helped to create a low-cost airline mentality among their workforce. It is because of this workforce that AirAsia has become the low-cost airline leader in Asia in term of overall cost. In the table on the following pageboy, it details the dispute in terms of cost per available seat kilometres (ASK, which is the total number of seats available on scheduled flights multiplied by the number of kilometres these seats were flown), between AirAsia and the other competitors. Its shows that AirAsiahas a large advantage over the competitors in this area.Source http//sandygarink.tripod.com/papers/AA_IA.pdfMarketing ChallengeLooking through the company analysis, the biggest marketing challenge currently faced by AirAsia is to last out warring and protect their market share in the increasingly competitive market of low-cost airline. RecommendationsI. Tap into the suppuration Asian MarketFor AirAsia to bide competitive and not only protect their market share but expand it as well, it is vital that AirAsia taps into and take advantage of the growing Asian Market. They can do this by adopting the following strategies.Market contention StrategiesThe market challenger strategies are a set of strategies that a company can employ to gain market share and becoming the leader eventually (Kotler and Armstrong, P rinciples of Marketing, latest 2010, 13th edition). AirAsia can use these strategies, specifically, frontal, flank, bypass and guerilla coming, to make itself standout from the rest of the competitors and hopefully gain a larger market share of the growing Asia middle income population. AttackerDefender(3) Encirclement fervency(4) Bypass ardour(2) Flank round off(5) Guerrilla attack facade attackSourceFrontal AttackFrontal attack refers to when you attack the weakness of another companys product. In the case of AirAsia, they should attack their competitors through their prices. Due to the reasons listed above, AirAsia has become the low cost leader in Asia. It is conflictingly for their rivals to be able to complete in terms of price alone in the spacious run. Thus, AirAsia should use their comparative low prices to challenge their competitors directly. The limitation to this form of attack is that AirAsia has to maintain that low cost advantage that they have.This means that they have to invest a large portion of their capital into their research and development section to ensure that they are flying at the lowest cost possible. One way AirAsia can further descend their operational cost is by standardizing their aircraft. As shown in the table in the following page, AirAsia has currently 5 different founts of aircraft, ranging from the Airbus A320-200 to the Airbus A350-900. However, if AirAsia was to reduce this to just deuce to three different types of aircraft it would lead to a drastic drop in cost, as economies of scale comes into effect when they buy and maintain the same type of aircraft Staff cost also reduce, as they only need to turn in how to handle a few types of aircraft, this leads to training era being bring down and eventually reducing operational cost.Flank AttackFlank attack refers to attacking competitors at their weak points or blind spots. One of the things lack in the low-cost airlines in Asia today is the ability to travel commodious distance at the same low price offered for the petty sequence trips. AirAsia already has AirAsia X, which provides this long haul flight services, however, their destinations are limited as they only go to the more popular countries such as capital of the United Kingdom or Sydney. For that reason, one of the strategies AirAsia could implement is to form an alliance with low-cost airlines orthogonal of Asia like stark(a) Blue. This strategy will be further explained later(prenominal) in the report. Bypass AttackThis form of attack refers to diversifying into unrelated products or markets neglected by the other competitors. One of the ways AirAsia could diversify is by oblation affordable accommodations at their destinations. These accommodations can be provided by Tune Hotels which is an associated company own by Tony Fernandes, who is also the CEO of AirAsia. Travellers will see this as a value added service as not only would they be able to get a cheap form of t heodolite but a place to stay as well. The limitation of providing accommodations is that it is financially infeasible to set up a hotel at all of their current flight destinations. As such, it would be better to start off by offering this service only at location where it would be difficult to get cheap lodging, for examples in the city areas of Japan. And as the company grow further, it can start to expand on the location where these hotels will be provided.Guerrilla AttackAirAsia can apply guerrilla attacks by debut small, intermittent hit-and-run attacks to harass and destabilize the leader. AirAsia can usepromotions for short periods of time to try and steal customers from their competitors. One such example is when AirAsia had a 48 hours promotion between 28 folks 29 Sept 2009, where they offered a 20% discount on all seats, flights and destinations. This is a very useful type of attack for AirAsia because of their low cost advantage, as they are able to maintain promotions , especially discounted price promotion, longer than their competitors with a unhorse lost in avail. The limitation of offering promotions is the reduction in the realise margin when they give discounted prices. However, this negative impact can be minimize by placing the promotions at strategically moments, such as only when competitors are offering promotions. Alliance with Virgin Blue and AmericaAs mentioned down the stairs the flank attack section, one of the ways AirAsia can attack their competitors is by offering a more extensive flight network removed of Asia. While AirAsia X is currently filling in this market of long haul flights for AirAsia, it is still not comprehensive replete and should be actual further. Virgin Blue and Virgin America are low cost airlines operating in Australia and America respectively. By partnering with them, AirAsia would be able to draw out their destinations into Australia and America. For example, if a Malaysian traveller wanted to visit Los Angeles, he would first take an AirAsia route to travel from Kuala Lumpur to Washington, DC, and then take a Virgin America flight to Los Angeles. The rationale for choosing Virgin America is because America is one of the top destinations in terms of international tourist arrivals as seen in the table below, which will only increase with the growing Asian economy. By joining together with Virgin America, AirAsia can capitalize on this brisk high human traffic flow going to America.While Australia does not fall under the top 10 international tourist arrivals countries, AirAsia should still focus on the Asia to Australia route. This is because as China and India develop there will be a huge increase in the number of international travellers, a majority of which would be made up of people who have never travelled outside the Asia region or even their countries. Thus, these people, lacking(p) to taste a culture different from Asia but do not want to travel to a far off location s uch as America or Europe on their first trip, would lead to go to Australia. The advantage of this strategy is that it will not onlytarget the Asian market segment who wants to travel to locales outside of Asia but also cater to the market segment outside of Asia that wants to travel to Asia. The limitation of this strategy is that AirAsia would have to first form an alliance with low cost airliners in those regions, which could be a difficult process as proven by the already long list of failed airline alliance such as Air Canada/ Continental Airlines and Saberna/Air France (Nigel Evans, David Campbell, George Stonehouse, Strategic management for travel and tourism, 2003) get by advantage of the ASEAN Open Skies agreementAs mentioned above, one of the things AirAsia can do to remain competitive in the future is to prepare for the ASEAN Open Skies agreement. With clean skies in the ASEAN region, it would be mean that more routes are available for the airlines. For AirAsia, this me ans that they would be able to fly to more destinations while taking shorter routes as they would no longer be faced with restriction from the countries in the ASEAN region from flying over them. The shorter routes means that flights will take a shorter time to complete, frills such as providing meals may no longer be necessary and the frequency of AirAsia flights could be increase as the turnover rate is higher.Thus, they would be able to reduce operational cost, which translates to lower prices, hence making AirAsia more attractive to the consumers. The limitation to this strategy is that the Open Skies agreement applies to all airlines in the ASEAN region, meaning that AirAsia would face even tougher competitions when the agreement starts in 2015. However, because of the strong brand image and low cost leader advantage AirAsia has, if they were one of the archaean movers, they could grab a huge portion of this market. II. Capitalize on the bodily businessAirAsia have seen a r ecent increase in the meter of companies (almost double the last 3 years, as seen in the following page table) trading down to low cost airlines, this could be due to the ball-shaped economic downturn. As such, AirAsia should also be focusing on increasing their share in this collective business market as this market tends have a more consistent source of demand unlike tourism which is seasonal and easily affected by external factors, such as in the case of the swine flu.AirAsias seats sold to corporate clients 2006 to 1Q09Source AirAsiaLoyalty programmeTo capture this market AirAsia could start offering a rewards program. AirAsia could offer perks that are earned according to the amount of business a company does with them. For example discounted pricing or with the more oftentimes fliers, a point system whereby the companies could earn free flights if they accumulated enough mileage. The limitation of this strategy is that AirAsia would have to incur a lower simoleons margin as they would now be selling at lower discounted prices. However, the pros far overweight the cons in the case of AirAsia. Once again due to being the low cost leader in Asia, the rewards program offered by AirAsia would likely be the most attractive compared to the other competitors as they can offer better perks, hence they could easily become the market leader in the corporate flying market, making up for the lower profit margin per seat by pure volume.ConclusionTo recap, the main marketing challenge facing AirAsia at the moment is the intense competition that represent in the low cost airline industry. The strategies that AirAsia can implement to remain competitive are two pronged, to tap into the Asian middle income class and focus on the corporate businesses. They can capitalize on the Asian market by using market challenge strategies, standing out from the rest by attacking their competitors. Finally, they can take advantage of the corporate businesses by offering a form of loyalty programme that would make it more attractive for companies to use AirAsia. Ultimately, the reason why the above strategies would work is because of the low cost leader advantage that AirAsia has. In order to know in this market, AirAsia has to ensure that they maintain their low cost altitude.