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Marketing Management 2016
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Air Asia’s Marketing Management.
NAME: SHAHLINI A/P K. RAJNDRAN
IC NO. : 911124-04-5006
STUDENT ID: 0186NEANEA1016
GROUP:45
MODULE: MARKETING MANAGEMENT
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TABLE OF CONTENT
Executive Summary
1.0 Introduction ...............................................................................................................................4
2.0 Question 1 ..................................................................................................................................5
2.1 Swot Analysis ............................................................................................................................5
2.1.1 Strength......................................................................................................................................5
2.1.2 Weakness ..................................................................................................................................5
2.1.3 Opportunity................................................................................................................................6
2.1.4 Threat.........................................................................................................................................6
2.2 External And Internal Market Environment ...........................................................................6-7
3.0 Question 2..................................................................................................................................7
3.1 Marketing Segment.................................................................................................................7-8
3.2 Target Market.......................................................................................................................9-10-11
3.3 Positioning................................................................................................................................11
3.4 Recommendation .....................................................................................................................12
4.0 Question 3 ................................................................................................................................12
4.1 Pestel Analysis ......................................................................................................................12-13
4.2 Demographic Market Segmentation/Buying Behaviour And Environmental Factor ......... 13-14
4.3 Recommendation To Take Proactive Step’s In Meeting Changes In Buying Behaviour .......14
5.0 Question 4..................................................................................................................................15
5.1 Product Life Cycle Plc...............................................................................................................15
5.2 Air Asia’s Product Life Cycle.................................................................................................15-16
5.3 The Product Mix Of Air Asia 7p ..............................................................................................16
6.0 Question 5..................................................................................................................................17
6.1 AnsofMatrix...........................................................................................................................17-20
6.2 Risk Assessment ........................................................................................................................20
7.0 Question 6................................................................................................................................20-21
7.1 Digital Marketing Plan ..............................................................................................................21
7.2 Digital Marketing Plan For Air Asia To Improve Customer Loyalty And Experience............21
7.3 Direct Contact With Existing Customer Through Digital Marketing ......................................21-22
7.4 Customer Loyalty ......................................................................................................................22
8.0 Conclusion .................................................................................................................................23
9.0 References ................................................................................................................................23-24
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LIST OF ABBERVIATION
IT: INFORMATION TECHNOLOGY
MRO: MAINTAIN, REPAIR AND OVERHAUL FACILITY
PLC: PRODUCT LIFE CYCLE
CRM: CUSTOMER RELATIONSHIP MANAGEMENT
SWOT: STRENGTH, WEAKNESS, OPPORTUNITY, THREAT
7P: PLACE, PRICE, PROMOTION, PHYSICAL EVIDENCE, POLITICS, PUBLIC
RELATION, PRODUCT
LCCT: LOW COST CARIEER TERMINAL
LIST OF TABLE
TABLE 1: MARKETING SEGMENTATION
TABLE 2: TARGET MARKET SEGMENTATION
TABLE 3: MARKETING PENETRATION
TABLE 4: RISK ASSESSMENT
LIST OF FIGURE
FIGURE 1: POSITIONING
FIGURE 2: PRODUCT LIFE CYCLE
FIGURE 3: ANSOFF MATRIX
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Executive Summary
Objective of this marketing report is to address the changes and needs of Air Asia’s current
marketing changes. The conclusion and findings are presented throughout the report. This
begins with understanding the current marketing strategy and behaviour of Air Asia. In the
form of SWOT analysis Air Asia’s internal and external marketing environment has been
discussed in details. Air Asia’s marketing segmentation; target marketing and competitive
positions have been stated with the necessary recommendation. Ansoff Matrix has been use
as a framework, to understand more of the targeted marketing performance of Air Asia. A
product life cycle analysis has been undertaken know the product adoption process by Air
Asia. A digital marketing plan has been developed to improve the customer loyalty.
1.0 Introduction
In Malaysia, Air Asia is a well known low-cost airline which has the headquartered in Kuala
Lumpur. Air Asia is expanding rapidly since 2001, and it is an award winning airlines.
Located in Malaysia, Indonesia and Thailand and owning more than 72 aircrafts, it flies to
more than domestic and 61 international destination using more than 108 routes. Air Asia
was established to make peoples dream of flying possible to everyone. From 2010, the travel
norm has been broken by Air Asia and has been raised to become one of the best in the world
(Shuk, 2010). Air Asia has a network span through 20 countries, and it continues to offer
low-cost flight services by creating innovative and efficient process to approach business. Air
Asia is known to take low cost flying to a different and higher level with their Motto, “Now
everyone can fly”. Its vision is “to keep on providing low cost flights and to be the largest
low cost airlines in the world”. By implementing key strategy it is possible for Air Asia to
create customer values and low fare model (Terrence, 2016). Customer’s have the chance to
choose and customize their service without compromising with the service or quality (Air
Asia, 2015).
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2.0 Question 1
2.1 Swot Analysis
2.1.1 Strength
a) Management Team
A strong marketing and management team is the main strength of Air Asia, as they have links
with airline and government leaders. Air Asia Executive Management is basically from
strong background and experienced people whom come from top government and industrial
professionals. Many proven strategies have been adopted from other Airlines (Janssen, 2014).
Air Asia has followed the Branding Strategy of Easyjet (Linking with many more services
provides like car rental and also hotel).
b) Utilization of the Information Technology (IT).
The progress of Air Asia over the past years has been contributed by the Information
Technology. Promotion activities included in these contribution made by the information
technology (desk top widgets and email alerts), by implementing direct ticket purchasing
through online information technology results in saving the agents fee (Janssen, 2014).
2.1.2 Weakness
a) MRO (Maintain, repair and overhaul facility)
Past years the maintenance cost of air craft has been surging. As for Air Asia, it doesn’t have
(MRO) facility. When they first started, may be it has been a good strategy. Having Malaysia
as the hub and few planes to maintain, but today having Indonesia and also Thailand, Air
Asia has to make sure maintenance should keep low. Not owning its own (MRO) facility is a
competitive disadvantage.(Yashodha, 2012).
b) Good customer service is critical.
Air Asia has been receiving many complaints regarding its service from its customers.
Examples of the complaints are being charged for many things, not able to get refund and
flight delays. A very good customer relationship and service is important and critical when its
competition is getting intense.
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2.1.3 Opportunities
a) Increased fuel price
At the firs glance the increasing oil price may pose disadvantage to the airlines business. But
for Air Asia it is not so. Because Air Asia is a low cost leader, it is good for the business
because the cost will still be the lowest among the other regional flights. Thus that’s why Air
Asia has huge opportunity to obtain customers from other low cost airlines (Yashodha, 2012).
b) Asean Open Skies
Since 2008 (December), the “Asean Open Skies” is allowing unlimited flights from regional
air carriers. The liberalization to Asean capital routes are let by this. Moreover Air Asia with
its advantages in management, strategy execution and formulation in workforce is viewing as
more opportunity than threat.
2.1.4 Threats
a) Air port charges
All the extra charges, by the authorities which includes landing charges, security charges and
airport departure are no in the control by the Air Asia airline operators. All the airlines sell’s
throughout by the imposed charges because the airlines are trying to keep the cost lower and
affordable (Sornia, 2012).
b) Competition
Air Asia for now is getting a profit margin of more than 30% and because of these it is
attracting many competitors. All the other airlines are also planning to create a low subsidiary
as competition. As an example Tiger Airways is Singapore airlines low cost carner.
2.2 External and Internal Market Environment
To evaluate the internal and external environmental factors of Air Asia’s business aspect an
SWOT analysis is performed. It highly involves knowing the objective of the business to
identify external and internal factor’s which might be unfavourable or favourable to achieve
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vision and mission set by Air Asia (Sornia, 2012). The external factors are the opportunity
and threat where the internal factors are the weakness and strength.
3.0 Question 2
3.1 Market Segmentation
The largest market of Air Asia consists of three segmentations which are
Psychographic, Demographic and Geographic segmentations. Air Asia’s main targeted
customers are Asian community (Button, 2012).
3.1.1Geographic Segmentation of Air Asia
Air Asia’s main targets are Asians and that’s how it got its name. Air Asia’s development all
around Asia is the main proof that the customers are mainly from Asia. But, however the
increasing demand has made them to respond towards it. Because Air Asia is too concern
about their subsidiary Air Asia X, the market targeted is not the same when they try to attract
people from Europe, Middle East and Australia whom wants to come to Asian Countries
(Berendien Lubbe, 2013). Air Asia only concerns on retaining the current target market and
focus to the countries they fly.
3.1.2 Demographic Segmentation of Air Asia
Air Asia is not very keen on targeting a specific demographic group. Mostly it is about the
budget and the status of its customers. Low paid salary earners and workers are the main
target of Air Asia. Air Asia also targets students because normally they don’t have much
money. According to the demographic segmentation, Air Asia has developed its services for
those people’s income around 20,000 ringgits annually in Malaysia (Arimond, 2008). That’s
another reason Air Asia uses it’s cheap and low pricing strategy to compare with its
competitor’s.
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3.1.3 Psychographic Segmentation of Air Asia
People targeted by Air Asia are those whom choose to travel for business purposes or leisure.
The simplicity for buying, checking-in and pricing are the main purchasing motivation of
Asia. Air Asia is targeting family members whom can’t meet up for occasion, due to
expensive travelling fare and desire not fulfilled. Because Air Asia provides low fare tickets,
these people have the opportunity to travel more often for family reunion and occasion. This
is more towards the purchasing and buying behaviour of people affected by the social
segmentation. For an example, upper lower incomes in social class are those people targeted
by Air Asia
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Table 1 :Air Asia’s Marketing Segmentation
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3.2 Market Targeting
When the segmentation for the target market has been decided, the company can prioritize,
analyze and evaluate which segmentation to pursue. There are three target market targeted by
Air Asia, which are categorized in the table below.
Table 2 : Market Targeting Segmentation
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The segment 1 above refers’ to the Lower Social Class customers whom travel for leisure at
least two times yearly, and it’s very important for them to have value for money. The
segment2 describes middle social class customers whom for leisure travel moderately and
also high emphasis to value for money in Segment 3, upper middle social class consumers are
classified as customers whom travel frequently regarding business purpose, but they also
have high importance for value-for-money. The current economic has caused a dramatic
change in customer buying behaviour, and they are more sensitive in searching for the best
price. This has increased the number of the time customers travel internationally and
domestically.
3.3 Positioning
Price
High
SIA
MAS
Virgin Blue
Quality of Services
Low High
Jestar
Expected Future Positioning Of Air Asia.
Air Asia
Tiger Airways
Firefly Low
Figure 1: Positioning
Air Asia is already being positioned as the leading and largest LCC in the whole Asia, with
the slogan of “Now Everyone Can Fly”. Air Asia believes in hassle free, low fare and no
frills conceptual business and trust’s in by keeping cost cheap, high efficiency level is
required in order to make air travel a reality, customers have to make savings efficiently.
With many customers’ preferring Air Asia as their most favourable airline a revolution in air
travel has been sparked. The figure above states the positioning of Air Asia and its
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competitors. Even being biggest and LCC’s leader Air Asia service quality lack behind
JetStar Airlines. Air Asia for now hopes to remain its status as the leader and to provide
better future services (Button, 2012).
3.4 Recommendation
As for the Air Asia’s market segmentation, it consist 3 segmentation which are
Psychographic, Demographic and Geographic. For now, Air Asia is mainly focusing to the
Asian regional and low income customers (Berendien Lubbe, 2013). In future Air Asia
should focus more globally to worldwide customers. Even tough, Air Asia tries hard to
response towards domestic demand but for the moment they fail to do so. Air Asia also
should start to focus toward supper class customers and different social class to grow from a
low-cost carrier to a globally recognized airline. As for now, Air Asia is in the mead and the
largest LCC in Asia but it has to improve its service quality and own its own (MRO) to stay
on its current position, because for the growth and high competition from other LCC (Ling,
2014). Air Asia need to have strategy partnership with other existing and new market place to
grab the opportunities to go more globally rather than focusing just in Asian countries. Air
Asia also should concentrate to the economic and living standard of the country it is
approaching before targeting a certain group of social class. Once the proper target is know
then it will be easier for Air Asia to get more customers.
4.0 Question 3
4.1 PESTEL Analysis
4.1.1 Political
As Government, political factor is very high though to be faced as flying outside Malaysia is
not that easy. The parking charges and landing charges is expensive. The people also have
insecurity feeling to fly to the countries where terrorism attack has happened before. The
political is stable in the countries which is not affected by wars and strikes, where the
customers are free to make their own travelling plans.
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4.1.2 Economic
Malaysia Airlines are giving high competition to Air Asia, so lower ticket pricing and
promotion is offered by Air Asia to compete in current Asian economy. Flying has been
enjoyed by the increasing middle class Asian population with much cheaper rate which has
boost up the brand image and rise to the economic.
4.1.3 Social
Huge awareness has been created among the customers to travel with a limited budget is also
possible. “Now everyone can fly” has created a total different environment and culture. The
fear most of the customer has to fly abroad has been reduced with Air Asia’s promise and
commitment to “Safety First”.
4.1.4 Technology
The Art of IT has been performed by Air Asia thru offering e-commerce. SMS booking has
been introduced by Air Asia, being the first airlines to do so. Air Asia’s website can be
reviewed in six languages. Boeing 737 was replaced by A320 which the aircraft has lower
maintenance, bigger overhead bin, fuel efficiency and extra seats.
4.1.5 Environment
The A320 has very good fuel consumption which burn very less fuel and it also lighter body
weight 1% to 2% is proven efficiency level gained by this new engine. Pilot training is very
frequently done in Air Asia under the training & development.
4.1.6 Legal
In Malaysia, it is the government policy that the entire government involved business trip
should be engaged with Malaysia Airlines. Air Asia has many legal actions taken by the
customer for failing to disclose full pricing amount to certain location.
4.2 Demographic Market Segmentation / Buying Behaviour & Environmental Factors
Income falls under demographic segmentation and it is one of the variables used by Air Asia
for their marketing segmentation (Kremer, 2015). As customers from different class group
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have the capability to travel with Air Asia based on their income level & category for people
with lower income and middle income their need for a ticket is just to travel and they are
more concern about the value for money. As for the customer, their buying behaviour is
highly influenced by the pricing of the airline tickets. Due to availability to afford domestic
and regional flights, it is proven that the customer’s expenditure has increased in air travel.
Different social class have differences buying behaviour, expectation and also brand
preferences (Mason, 2013). A person’s income level is highly associated with social class
they belong to. For an example, upper social class customers might have negative image of
LCC because the service provided is less comfortable. Depending on the disposable income
and their preferences usage rate of the customer’s will be different (Mason, 2013).
Customer’s with lower usage rate normally belongs to low income earners. As for the user-
situation, the time is also one of the variables in the market (Kremer, 2015). Customers with
different purpose of travelling may have different priorities. For an example, it is different
between a high-income customer when whom wants to travel on a business trip would
probably pay higher for the tickets compared to a low income and middle income customer
whom wants to get a cheaper ticket price to go on a leisure holiday. The time factor because
customer whom wants to get cheaper ticket price will want for the right time to buy the
tickets eg. Promotion period. But customer whom wants to go on a business trip would
probably just pay higher to purchase the tickets in advance (Terrence, 2016).
4.3 Recommendation to take proactive steps in meeting changes in buying behaviour
Air Asia is not targeting a specific demographic group. Air Asia’s marketing segmentation is
basically based on the average budget or the social status of the customer. Air Asia also
targets people with low salaries and students who are not earning depending for money from
other sources. Rather than just focusing on the one social class people Air Asia showed focus
on other social class also.
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5.0 Question 4
Figure 2
5.1 Product life cycle (PLC)
Product and also living organism both have life cycle. In one of 3 ways product enters the
market. Improvement on an existing product will be the first, because there is already
customer base. Competition to the existing product will be the second as in which case there
is existence of customer but their loyalty many lie somewhere else the third one will be the
new product where a new customer base need to be build (Johnston, 2005).
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5.2 Air Asia’s Product Life Cycle
Air Asia is now identified to be in the Growth phase position in the (PLC) stage. The
Company’s growth phase is identified when the customer’s loyalty has been built up.
Normally it is taken up by the customer base to achieve rapid growth quickly (Johnston,
2005). In the past year’s Air Asia has been tremendous growth in the countries their service is
available. During the phase of growth the product will start to recover the development
process. During Air Asia’s growth stage many competition’s with the same service, enters the
market and the competition increased (Duore, 2012). In these phase is to gain market share
rather than to promote trial and create awareness as the objective. When Air Asia begins to
gain higher market share it begin to make contribution to the profitability. The development
cost is paid off by the revenue (Todd, 2014). Due to this the competitor will face problem. As
long as Air Asia is in the growing phase its revenue will increase higher.
The marketing mix during the growth phase of Air Asia is as follows.
5.3 The relevant Product Mix of Air Asia 7ps
5.3.1 Place
The main concern of Air Asia is the availability and services needed by the target market and
prospective. As for now Air Asia is focusing more towards e-booking and e-ticketing in
which the customers can perform all their necessary needs. For now Air Asia is extending its
services all over Asia. Air Asia’s online services is one of the best among other airlines
business as, it is very easy and customer friendly.
5.3.2 Product
This refers to the services or product offered by the company. Air Asia is about its services
for low cost airlines so they have to review the changes in customer behaviour and
expectation constantly.
5.3.3 Price
Air Asia pricing are very competitively set, and they guarantee to provide low price.
5.3.4 Promotion
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The most effective way of communication targeted for various groups to create brand
awareness, patronage and interest is good for the business. TV advertisement, billboard
advertisement and also internet marketing is also few of the way’s Air Asia does it’s
advertisement.
6.0 Question 5
Figure 3 Ansoff Matrix
6.1 Ansoff Matrix
It is suggested by Ansoff Matrix that a business can able to sell its product or services to the
new market and the existing market with a many different approaches or where the firm or
organization can produce diversification after risk is assessed (Todd, 2014).
6.1.1 Market Penetration
Market penetration is defined, as an organization’s strategy to grow where it consistently sells
the existing services or products into the existing market. Penetration happens when business
organization or a firm penetrates deeper into the market, thus increase the strategy
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capabilities and market share. From attracting the competitor’s customer the group has
penetrated air travel markets. As this is a very important strategy for air Asia as it is less
cheaply risky to attract existing customer than new ones. The segmentations usage rate will
be based on the product development.
The marketing penetration for 2016 - 2017
The marketing penetration for 2017 - 2018
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The marketing penetration for 2018 - 2019
Table 3 Marketing Penetration for 3 years,
6.1.2 Product development.
This is an introduction phase of modifying product or a new product to the existing market.
Air Asia need to be more aware on the risk they might face of the capacities of new strategy
before they might be able to implement it. Profit and revenue maximization is the main
concern, but seating revenue is not sufficient enough so air Asia introduced ancillary products
to boost up the growth of the business (Duore, 2012).
6.1.3 Market development.
It offers the existing product or service to the new target market segmentation. Air Asia stays
in its current business model, so it had maintained its growth and profitability in the regional
even though it faces limited financial and operations resources (Duore, 2012). In Malaysia air
Asia has used its expertise and capacity in the aviation industry and created new market in
counties like Vietnam, Thailand and Indonesia.
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6.1.4 Diversification
This is a strategy defined as the approach an organization approaches to gain essential
strategy to the new market from the older ones, by introducing its current service or product
to the new market. And to overcome its weakness as it’s already stated in the swot analysis,
air Asia should seriously consider to set up its own MRO (operation, maintenance, repairs)
opening up its new possible routes and training centre.
6.2 Risk assessment.
Table 4
7.0 Question 6
7.1 Digital marketing plan.
Social media has very high influence towards the people, this is proven by many surveys
done, and an average of 9 hours is spent by every individual in Malaysia weekly. Many
Malaysian and Asians use social networking sites for shopping guidelines and others share
their opinion and experience of the product. Almost all the business in the world is focusing
on their digital marketing plan so get in more and new customer base. Customer loyalty and
trust is always very important in sustaining a business.
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7.2 Digital marketing plan for Air Asia to improve customer loyalty and experience.
Air Asia should always continue to carry out its promotion and advertisement on online
marketing and selling. For now, advertising in social media is free and air Asia should focus
on this platform to stay in its competitive market. It’s an advantage as feedback can be
collected directly from the customer (Rowly, 2011). But at the same time air Asia should be
aware of the negative comments and also bad customer experience share online which might
impact the customers view on the services provided by air Asia.
They have to be more tactful in handling this kind of situation. The product offering can be
increase by air Asia partnering with ‘Expedia’ and it add value to air Asia’s services by
making their customers accommodation and ground work easier. Air Asia should be consider
working with more partners like booking.com, Agoda.com,Orbitz and Wotif are the few other
options for air Asia to work with. With this kind of arrangement with local travel agencies
will benefit Air Asia more. Air Asia’s should establish their own community rather than to
stay corporate. To accomplish this, Air Asia should use social media channel wisely to
interact with their fans and customer example chatting and talking. Air Asia is already doing
marketing via email but now as the competition is getting higher it should concentrate more
marketing via email because of its course effectiveness (Rowly, 2011).
7.3 Direct contact with existing customer through digital marketing
When Air Asia was still in its infancy stage few years ago, they were selling tickets through
agencies. But now as the firm is growing air Asia’s decided to sell its ticket online where the
customer can buy the tickets directly from the official portal. Air Asia was one of the few
companies whom started to embark e-commerce and the internet way before others; this is
one of the advantages Air Asia went through in its growth stage(Smith, 2011). A lot of effort
financial and resource are put in place to push their online marketing. Air Asia’s online
website and portal are easy to access and navigate so that great customer experience will be
gained and customer’s expectation will be fulfilled. Recently Air Asia is focusing more to its
marketing team with collaborating with social media such as Facebook. This step is to be
more socially engaged and to perform more effectively on its promotional marketing and
brand awareness (Saad, 2015). Air Asia created a Facebook app that would give change for a
lucky winner to fly to Australia along with 302 of their Facebook friends with no charge.
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Even their trip to Austria with accommodation is fully sponsored by Air Asia. Air Asia’s
website and portal are made easier to access by their entire online customer.
7.4 Customer loyalty
To achieve customer loyalty and satisfaction air assai need to remain a sustainable
relationship with their customer. A systematic data is provided by the customer relationship
management to get the valuable information to execute a good customer satisfaction.
Customers loyalty will be increase if air Asia is able to provide constantly provide service
and product above customer satisfaction(Shaffey, 2010). Air Asia should hold two major
principals who are customer acquire and retention. Air Asia should create integrated
marketing strategy and information technology to have long term profitability and excellent
relationship with the customers(Souls, 2011).
8.0 Conclusion
Air Asia’s vision is to keep on providing low cost flights and to be the largest low cost
airlines in the world. By implementing key strategy it is possible for Air Asia to create
customer values and low fare model. Customer’s have the chance to choose and customize
their service without compromising with the service or quality. The largest market of Air
Asia’s segmentation consists of three segmentations which are Psychographic, Demographic
and Geographic segmentations. Air Asia’s main targeted customers are Asian community.
Air Asia has a very strong customer loyalty and trust but it need to keep up with its service
because the competition are getting tougher.
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9.0 References
Air Asia, 2015. Jump Start Asia. [Online]
Available at: http://www.airasia.com/common/pdf/JusmStart-Malaysia.pdf
[Accessed 1 november 2016].
Arimond, G., 2008. An innovative approach to the tourism market.. Journal of hospitality
and leisure, Volume 1.
Berendien Lubbe, A. D. L. W. a. I. F.-R., 2013. Frequent-Flier Programs as a Determinant in
the Selection of Preferred Airlines by Corporations. Transportation journal, 52(3), pp. 344-
364.
Button, K., 2012. Low-Cost Airlines: A Failed Business Model?. Transportation Journal,
51(2), pp. 197-219.
Duore, A., 2012. "You Are Invisible": Marketing Professional in the Technology Era.
Journal of Sports Media, 7(2), pp. 1-21.
Janssen, U., 2014. AirAsia Berhad (AIRASIA) : Company Profile and SWOT Analysis.
Research and Marketers, p. 41.
Johnston, S., 2005. Marketing Heritage: Archaeology and the Consumption of the Past.
Anthropological Quarterly, Volume 78, pp. 279-281.
Kremer, P., 2015. Mass timber construction as an alternative to concrete and steel in the
Australia building industry: a PESTEL evaluation of the potential. International Wood
Products Journal.
Ling, J. K. a. K. H., 2014. Labour Market Segmentation in Malaysian Services.
Transportation Jjournal.
Mason, J., 2013. A Marketing Director's Perspective. Literature Association Quarterly,
Volume 28, pp. 142-143.
Rollins, J., 2010. Introduction : Marketing. Women's Studies Quarterly, 38(3), pp. 11-13.
Rowly, J., 2011. Understanding digital content marketing. marketing manangement.
Saad, N. M., 2015. Revisiting the relationship between internal marketing and external
marketing: The role of customer orientation. The Journal of Developing Areas, 49(3), pp.
249-262.
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Shaffey, D., 2010. Applying organisational capability models to assess the maturity of
digital-marketing governance. Marketing Manangement.
Shuk, T., 2010. The lowest of low-cost carriers: the case of AirAsia. Taylor & Francis
Online, pp. 197-219.
Smith, K. T., 2011. Digital marketing strategies that Millennials find appealing, motivating,
or just annoying. strategy marketing.
Sornia, J., 2012. Air Asia. p. 25.
Souls, A., 2011. The Principles of Marketing and Relationship Management. Libraries and
the Academy, 1(3), pp. 339-350.
Terrence, 2016. Historical Research in Marketing: Literature, Knowledge, and Disciplinary
Status. A Journal of History, Volume 51, pp. 399-418.
Todd, A. M., 2014. The Aesthetic Turn in Green Marketing: Environmental Consumer Ethics
of Natural Personal Care Products. Ethics & the Environment, 9(2).
Yashodha, Y., 2012. AirAsia Berhad: Strategic analysis of a leading low cost carrier in the
Asian. Elixir International Journal, p. 112.

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MARKETING MANAGEMENT (Shahlini Rajndran)

  • 1. Marketing Management 2016 1 | P a g e Air Asia’s Marketing Management. NAME: SHAHLINI A/P K. RAJNDRAN IC NO. : 911124-04-5006 STUDENT ID: 0186NEANEA1016 GROUP:45 MODULE: MARKETING MANAGEMENT
  • 2. Marketing Management 2016 2 | P a g e TABLE OF CONTENT Executive Summary 1.0 Introduction ...............................................................................................................................4 2.0 Question 1 ..................................................................................................................................5 2.1 Swot Analysis ............................................................................................................................5 2.1.1 Strength......................................................................................................................................5 2.1.2 Weakness ..................................................................................................................................5 2.1.3 Opportunity................................................................................................................................6 2.1.4 Threat.........................................................................................................................................6 2.2 External And Internal Market Environment ...........................................................................6-7 3.0 Question 2..................................................................................................................................7 3.1 Marketing Segment.................................................................................................................7-8 3.2 Target Market.......................................................................................................................9-10-11 3.3 Positioning................................................................................................................................11 3.4 Recommendation .....................................................................................................................12 4.0 Question 3 ................................................................................................................................12 4.1 Pestel Analysis ......................................................................................................................12-13 4.2 Demographic Market Segmentation/Buying Behaviour And Environmental Factor ......... 13-14 4.3 Recommendation To Take Proactive Step’s In Meeting Changes In Buying Behaviour .......14 5.0 Question 4..................................................................................................................................15 5.1 Product Life Cycle Plc...............................................................................................................15 5.2 Air Asia’s Product Life Cycle.................................................................................................15-16 5.3 The Product Mix Of Air Asia 7p ..............................................................................................16 6.0 Question 5..................................................................................................................................17 6.1 AnsofMatrix...........................................................................................................................17-20 6.2 Risk Assessment ........................................................................................................................20 7.0 Question 6................................................................................................................................20-21 7.1 Digital Marketing Plan ..............................................................................................................21 7.2 Digital Marketing Plan For Air Asia To Improve Customer Loyalty And Experience............21 7.3 Direct Contact With Existing Customer Through Digital Marketing ......................................21-22 7.4 Customer Loyalty ......................................................................................................................22 8.0 Conclusion .................................................................................................................................23 9.0 References ................................................................................................................................23-24
  • 3. Marketing Management 2016 3 | P a g e LIST OF ABBERVIATION IT: INFORMATION TECHNOLOGY MRO: MAINTAIN, REPAIR AND OVERHAUL FACILITY PLC: PRODUCT LIFE CYCLE CRM: CUSTOMER RELATIONSHIP MANAGEMENT SWOT: STRENGTH, WEAKNESS, OPPORTUNITY, THREAT 7P: PLACE, PRICE, PROMOTION, PHYSICAL EVIDENCE, POLITICS, PUBLIC RELATION, PRODUCT LCCT: LOW COST CARIEER TERMINAL LIST OF TABLE TABLE 1: MARKETING SEGMENTATION TABLE 2: TARGET MARKET SEGMENTATION TABLE 3: MARKETING PENETRATION TABLE 4: RISK ASSESSMENT LIST OF FIGURE FIGURE 1: POSITIONING FIGURE 2: PRODUCT LIFE CYCLE FIGURE 3: ANSOFF MATRIX
  • 4. Marketing Management 2016 4 | P a g e Executive Summary Objective of this marketing report is to address the changes and needs of Air Asia’s current marketing changes. The conclusion and findings are presented throughout the report. This begins with understanding the current marketing strategy and behaviour of Air Asia. In the form of SWOT analysis Air Asia’s internal and external marketing environment has been discussed in details. Air Asia’s marketing segmentation; target marketing and competitive positions have been stated with the necessary recommendation. Ansoff Matrix has been use as a framework, to understand more of the targeted marketing performance of Air Asia. A product life cycle analysis has been undertaken know the product adoption process by Air Asia. A digital marketing plan has been developed to improve the customer loyalty. 1.0 Introduction In Malaysia, Air Asia is a well known low-cost airline which has the headquartered in Kuala Lumpur. Air Asia is expanding rapidly since 2001, and it is an award winning airlines. Located in Malaysia, Indonesia and Thailand and owning more than 72 aircrafts, it flies to more than domestic and 61 international destination using more than 108 routes. Air Asia was established to make peoples dream of flying possible to everyone. From 2010, the travel norm has been broken by Air Asia and has been raised to become one of the best in the world (Shuk, 2010). Air Asia has a network span through 20 countries, and it continues to offer low-cost flight services by creating innovative and efficient process to approach business. Air Asia is known to take low cost flying to a different and higher level with their Motto, “Now everyone can fly”. Its vision is “to keep on providing low cost flights and to be the largest low cost airlines in the world”. By implementing key strategy it is possible for Air Asia to create customer values and low fare model (Terrence, 2016). Customer’s have the chance to choose and customize their service without compromising with the service or quality (Air Asia, 2015).
  • 5. Marketing Management 2016 5 | P a g e 2.0 Question 1 2.1 Swot Analysis 2.1.1 Strength a) Management Team A strong marketing and management team is the main strength of Air Asia, as they have links with airline and government leaders. Air Asia Executive Management is basically from strong background and experienced people whom come from top government and industrial professionals. Many proven strategies have been adopted from other Airlines (Janssen, 2014). Air Asia has followed the Branding Strategy of Easyjet (Linking with many more services provides like car rental and also hotel). b) Utilization of the Information Technology (IT). The progress of Air Asia over the past years has been contributed by the Information Technology. Promotion activities included in these contribution made by the information technology (desk top widgets and email alerts), by implementing direct ticket purchasing through online information technology results in saving the agents fee (Janssen, 2014). 2.1.2 Weakness a) MRO (Maintain, repair and overhaul facility) Past years the maintenance cost of air craft has been surging. As for Air Asia, it doesn’t have (MRO) facility. When they first started, may be it has been a good strategy. Having Malaysia as the hub and few planes to maintain, but today having Indonesia and also Thailand, Air Asia has to make sure maintenance should keep low. Not owning its own (MRO) facility is a competitive disadvantage.(Yashodha, 2012). b) Good customer service is critical. Air Asia has been receiving many complaints regarding its service from its customers. Examples of the complaints are being charged for many things, not able to get refund and flight delays. A very good customer relationship and service is important and critical when its competition is getting intense.
  • 6. Marketing Management 2016 6 | P a g e 2.1.3 Opportunities a) Increased fuel price At the firs glance the increasing oil price may pose disadvantage to the airlines business. But for Air Asia it is not so. Because Air Asia is a low cost leader, it is good for the business because the cost will still be the lowest among the other regional flights. Thus that’s why Air Asia has huge opportunity to obtain customers from other low cost airlines (Yashodha, 2012). b) Asean Open Skies Since 2008 (December), the “Asean Open Skies” is allowing unlimited flights from regional air carriers. The liberalization to Asean capital routes are let by this. Moreover Air Asia with its advantages in management, strategy execution and formulation in workforce is viewing as more opportunity than threat. 2.1.4 Threats a) Air port charges All the extra charges, by the authorities which includes landing charges, security charges and airport departure are no in the control by the Air Asia airline operators. All the airlines sell’s throughout by the imposed charges because the airlines are trying to keep the cost lower and affordable (Sornia, 2012). b) Competition Air Asia for now is getting a profit margin of more than 30% and because of these it is attracting many competitors. All the other airlines are also planning to create a low subsidiary as competition. As an example Tiger Airways is Singapore airlines low cost carner. 2.2 External and Internal Market Environment To evaluate the internal and external environmental factors of Air Asia’s business aspect an SWOT analysis is performed. It highly involves knowing the objective of the business to identify external and internal factor’s which might be unfavourable or favourable to achieve
  • 7. Marketing Management 2016 7 | P a g e vision and mission set by Air Asia (Sornia, 2012). The external factors are the opportunity and threat where the internal factors are the weakness and strength. 3.0 Question 2 3.1 Market Segmentation The largest market of Air Asia consists of three segmentations which are Psychographic, Demographic and Geographic segmentations. Air Asia’s main targeted customers are Asian community (Button, 2012). 3.1.1Geographic Segmentation of Air Asia Air Asia’s main targets are Asians and that’s how it got its name. Air Asia’s development all around Asia is the main proof that the customers are mainly from Asia. But, however the increasing demand has made them to respond towards it. Because Air Asia is too concern about their subsidiary Air Asia X, the market targeted is not the same when they try to attract people from Europe, Middle East and Australia whom wants to come to Asian Countries (Berendien Lubbe, 2013). Air Asia only concerns on retaining the current target market and focus to the countries they fly. 3.1.2 Demographic Segmentation of Air Asia Air Asia is not very keen on targeting a specific demographic group. Mostly it is about the budget and the status of its customers. Low paid salary earners and workers are the main target of Air Asia. Air Asia also targets students because normally they don’t have much money. According to the demographic segmentation, Air Asia has developed its services for those people’s income around 20,000 ringgits annually in Malaysia (Arimond, 2008). That’s another reason Air Asia uses it’s cheap and low pricing strategy to compare with its competitor’s.
  • 8. Marketing Management 2016 8 | P a g e 3.1.3 Psychographic Segmentation of Air Asia People targeted by Air Asia are those whom choose to travel for business purposes or leisure. The simplicity for buying, checking-in and pricing are the main purchasing motivation of Asia. Air Asia is targeting family members whom can’t meet up for occasion, due to expensive travelling fare and desire not fulfilled. Because Air Asia provides low fare tickets, these people have the opportunity to travel more often for family reunion and occasion. This is more towards the purchasing and buying behaviour of people affected by the social segmentation. For an example, upper lower incomes in social class are those people targeted by Air Asia
  • 9. Marketing Management 2016 9 | P a g e Table 1 :Air Asia’s Marketing Segmentation
  • 10. Marketing Management 2016 10 | P a g e 3.2 Market Targeting When the segmentation for the target market has been decided, the company can prioritize, analyze and evaluate which segmentation to pursue. There are three target market targeted by Air Asia, which are categorized in the table below. Table 2 : Market Targeting Segmentation
  • 11. Marketing Management 2016 11 | P a g e The segment 1 above refers’ to the Lower Social Class customers whom travel for leisure at least two times yearly, and it’s very important for them to have value for money. The segment2 describes middle social class customers whom for leisure travel moderately and also high emphasis to value for money in Segment 3, upper middle social class consumers are classified as customers whom travel frequently regarding business purpose, but they also have high importance for value-for-money. The current economic has caused a dramatic change in customer buying behaviour, and they are more sensitive in searching for the best price. This has increased the number of the time customers travel internationally and domestically. 3.3 Positioning Price High SIA MAS Virgin Blue Quality of Services Low High Jestar Expected Future Positioning Of Air Asia. Air Asia Tiger Airways Firefly Low Figure 1: Positioning Air Asia is already being positioned as the leading and largest LCC in the whole Asia, with the slogan of “Now Everyone Can Fly”. Air Asia believes in hassle free, low fare and no frills conceptual business and trust’s in by keeping cost cheap, high efficiency level is required in order to make air travel a reality, customers have to make savings efficiently. With many customers’ preferring Air Asia as their most favourable airline a revolution in air travel has been sparked. The figure above states the positioning of Air Asia and its
  • 12. Marketing Management 2016 12 | P a g e competitors. Even being biggest and LCC’s leader Air Asia service quality lack behind JetStar Airlines. Air Asia for now hopes to remain its status as the leader and to provide better future services (Button, 2012). 3.4 Recommendation As for the Air Asia’s market segmentation, it consist 3 segmentation which are Psychographic, Demographic and Geographic. For now, Air Asia is mainly focusing to the Asian regional and low income customers (Berendien Lubbe, 2013). In future Air Asia should focus more globally to worldwide customers. Even tough, Air Asia tries hard to response towards domestic demand but for the moment they fail to do so. Air Asia also should start to focus toward supper class customers and different social class to grow from a low-cost carrier to a globally recognized airline. As for now, Air Asia is in the mead and the largest LCC in Asia but it has to improve its service quality and own its own (MRO) to stay on its current position, because for the growth and high competition from other LCC (Ling, 2014). Air Asia need to have strategy partnership with other existing and new market place to grab the opportunities to go more globally rather than focusing just in Asian countries. Air Asia also should concentrate to the economic and living standard of the country it is approaching before targeting a certain group of social class. Once the proper target is know then it will be easier for Air Asia to get more customers. 4.0 Question 3 4.1 PESTEL Analysis 4.1.1 Political As Government, political factor is very high though to be faced as flying outside Malaysia is not that easy. The parking charges and landing charges is expensive. The people also have insecurity feeling to fly to the countries where terrorism attack has happened before. The political is stable in the countries which is not affected by wars and strikes, where the customers are free to make their own travelling plans.
  • 13. Marketing Management 2016 13 | P a g e 4.1.2 Economic Malaysia Airlines are giving high competition to Air Asia, so lower ticket pricing and promotion is offered by Air Asia to compete in current Asian economy. Flying has been enjoyed by the increasing middle class Asian population with much cheaper rate which has boost up the brand image and rise to the economic. 4.1.3 Social Huge awareness has been created among the customers to travel with a limited budget is also possible. “Now everyone can fly” has created a total different environment and culture. The fear most of the customer has to fly abroad has been reduced with Air Asia’s promise and commitment to “Safety First”. 4.1.4 Technology The Art of IT has been performed by Air Asia thru offering e-commerce. SMS booking has been introduced by Air Asia, being the first airlines to do so. Air Asia’s website can be reviewed in six languages. Boeing 737 was replaced by A320 which the aircraft has lower maintenance, bigger overhead bin, fuel efficiency and extra seats. 4.1.5 Environment The A320 has very good fuel consumption which burn very less fuel and it also lighter body weight 1% to 2% is proven efficiency level gained by this new engine. Pilot training is very frequently done in Air Asia under the training & development. 4.1.6 Legal In Malaysia, it is the government policy that the entire government involved business trip should be engaged with Malaysia Airlines. Air Asia has many legal actions taken by the customer for failing to disclose full pricing amount to certain location. 4.2 Demographic Market Segmentation / Buying Behaviour & Environmental Factors Income falls under demographic segmentation and it is one of the variables used by Air Asia for their marketing segmentation (Kremer, 2015). As customers from different class group
  • 14. Marketing Management 2016 14 | P a g e have the capability to travel with Air Asia based on their income level & category for people with lower income and middle income their need for a ticket is just to travel and they are more concern about the value for money. As for the customer, their buying behaviour is highly influenced by the pricing of the airline tickets. Due to availability to afford domestic and regional flights, it is proven that the customer’s expenditure has increased in air travel. Different social class have differences buying behaviour, expectation and also brand preferences (Mason, 2013). A person’s income level is highly associated with social class they belong to. For an example, upper social class customers might have negative image of LCC because the service provided is less comfortable. Depending on the disposable income and their preferences usage rate of the customer’s will be different (Mason, 2013). Customer’s with lower usage rate normally belongs to low income earners. As for the user- situation, the time is also one of the variables in the market (Kremer, 2015). Customers with different purpose of travelling may have different priorities. For an example, it is different between a high-income customer when whom wants to travel on a business trip would probably pay higher for the tickets compared to a low income and middle income customer whom wants to get a cheaper ticket price to go on a leisure holiday. The time factor because customer whom wants to get cheaper ticket price will want for the right time to buy the tickets eg. Promotion period. But customer whom wants to go on a business trip would probably just pay higher to purchase the tickets in advance (Terrence, 2016). 4.3 Recommendation to take proactive steps in meeting changes in buying behaviour Air Asia is not targeting a specific demographic group. Air Asia’s marketing segmentation is basically based on the average budget or the social status of the customer. Air Asia also targets people with low salaries and students who are not earning depending for money from other sources. Rather than just focusing on the one social class people Air Asia showed focus on other social class also.
  • 15. Marketing Management 2016 15 | P a g e 5.0 Question 4 Figure 2 5.1 Product life cycle (PLC) Product and also living organism both have life cycle. In one of 3 ways product enters the market. Improvement on an existing product will be the first, because there is already customer base. Competition to the existing product will be the second as in which case there is existence of customer but their loyalty many lie somewhere else the third one will be the new product where a new customer base need to be build (Johnston, 2005).
  • 16. Marketing Management 2016 16 | P a g e 5.2 Air Asia’s Product Life Cycle Air Asia is now identified to be in the Growth phase position in the (PLC) stage. The Company’s growth phase is identified when the customer’s loyalty has been built up. Normally it is taken up by the customer base to achieve rapid growth quickly (Johnston, 2005). In the past year’s Air Asia has been tremendous growth in the countries their service is available. During the phase of growth the product will start to recover the development process. During Air Asia’s growth stage many competition’s with the same service, enters the market and the competition increased (Duore, 2012). In these phase is to gain market share rather than to promote trial and create awareness as the objective. When Air Asia begins to gain higher market share it begin to make contribution to the profitability. The development cost is paid off by the revenue (Todd, 2014). Due to this the competitor will face problem. As long as Air Asia is in the growing phase its revenue will increase higher. The marketing mix during the growth phase of Air Asia is as follows. 5.3 The relevant Product Mix of Air Asia 7ps 5.3.1 Place The main concern of Air Asia is the availability and services needed by the target market and prospective. As for now Air Asia is focusing more towards e-booking and e-ticketing in which the customers can perform all their necessary needs. For now Air Asia is extending its services all over Asia. Air Asia’s online services is one of the best among other airlines business as, it is very easy and customer friendly. 5.3.2 Product This refers to the services or product offered by the company. Air Asia is about its services for low cost airlines so they have to review the changes in customer behaviour and expectation constantly. 5.3.3 Price Air Asia pricing are very competitively set, and they guarantee to provide low price. 5.3.4 Promotion
  • 17. Marketing Management 2016 17 | P a g e The most effective way of communication targeted for various groups to create brand awareness, patronage and interest is good for the business. TV advertisement, billboard advertisement and also internet marketing is also few of the way’s Air Asia does it’s advertisement. 6.0 Question 5 Figure 3 Ansoff Matrix 6.1 Ansoff Matrix It is suggested by Ansoff Matrix that a business can able to sell its product or services to the new market and the existing market with a many different approaches or where the firm or organization can produce diversification after risk is assessed (Todd, 2014). 6.1.1 Market Penetration Market penetration is defined, as an organization’s strategy to grow where it consistently sells the existing services or products into the existing market. Penetration happens when business organization or a firm penetrates deeper into the market, thus increase the strategy
  • 18. Marketing Management 2016 18 | P a g e capabilities and market share. From attracting the competitor’s customer the group has penetrated air travel markets. As this is a very important strategy for air Asia as it is less cheaply risky to attract existing customer than new ones. The segmentations usage rate will be based on the product development. The marketing penetration for 2016 - 2017 The marketing penetration for 2017 - 2018
  • 19. Marketing Management 2016 19 | P a g e The marketing penetration for 2018 - 2019 Table 3 Marketing Penetration for 3 years, 6.1.2 Product development. This is an introduction phase of modifying product or a new product to the existing market. Air Asia need to be more aware on the risk they might face of the capacities of new strategy before they might be able to implement it. Profit and revenue maximization is the main concern, but seating revenue is not sufficient enough so air Asia introduced ancillary products to boost up the growth of the business (Duore, 2012). 6.1.3 Market development. It offers the existing product or service to the new target market segmentation. Air Asia stays in its current business model, so it had maintained its growth and profitability in the regional even though it faces limited financial and operations resources (Duore, 2012). In Malaysia air Asia has used its expertise and capacity in the aviation industry and created new market in counties like Vietnam, Thailand and Indonesia.
  • 20. Marketing Management 2016 20 | P a g e 6.1.4 Diversification This is a strategy defined as the approach an organization approaches to gain essential strategy to the new market from the older ones, by introducing its current service or product to the new market. And to overcome its weakness as it’s already stated in the swot analysis, air Asia should seriously consider to set up its own MRO (operation, maintenance, repairs) opening up its new possible routes and training centre. 6.2 Risk assessment. Table 4 7.0 Question 6 7.1 Digital marketing plan. Social media has very high influence towards the people, this is proven by many surveys done, and an average of 9 hours is spent by every individual in Malaysia weekly. Many Malaysian and Asians use social networking sites for shopping guidelines and others share their opinion and experience of the product. Almost all the business in the world is focusing on their digital marketing plan so get in more and new customer base. Customer loyalty and trust is always very important in sustaining a business.
  • 21. Marketing Management 2016 21 | P a g e 7.2 Digital marketing plan for Air Asia to improve customer loyalty and experience. Air Asia should always continue to carry out its promotion and advertisement on online marketing and selling. For now, advertising in social media is free and air Asia should focus on this platform to stay in its competitive market. It’s an advantage as feedback can be collected directly from the customer (Rowly, 2011). But at the same time air Asia should be aware of the negative comments and also bad customer experience share online which might impact the customers view on the services provided by air Asia. They have to be more tactful in handling this kind of situation. The product offering can be increase by air Asia partnering with ‘Expedia’ and it add value to air Asia’s services by making their customers accommodation and ground work easier. Air Asia should be consider working with more partners like booking.com, Agoda.com,Orbitz and Wotif are the few other options for air Asia to work with. With this kind of arrangement with local travel agencies will benefit Air Asia more. Air Asia’s should establish their own community rather than to stay corporate. To accomplish this, Air Asia should use social media channel wisely to interact with their fans and customer example chatting and talking. Air Asia is already doing marketing via email but now as the competition is getting higher it should concentrate more marketing via email because of its course effectiveness (Rowly, 2011). 7.3 Direct contact with existing customer through digital marketing When Air Asia was still in its infancy stage few years ago, they were selling tickets through agencies. But now as the firm is growing air Asia’s decided to sell its ticket online where the customer can buy the tickets directly from the official portal. Air Asia was one of the few companies whom started to embark e-commerce and the internet way before others; this is one of the advantages Air Asia went through in its growth stage(Smith, 2011). A lot of effort financial and resource are put in place to push their online marketing. Air Asia’s online website and portal are easy to access and navigate so that great customer experience will be gained and customer’s expectation will be fulfilled. Recently Air Asia is focusing more to its marketing team with collaborating with social media such as Facebook. This step is to be more socially engaged and to perform more effectively on its promotional marketing and brand awareness (Saad, 2015). Air Asia created a Facebook app that would give change for a lucky winner to fly to Australia along with 302 of their Facebook friends with no charge.
  • 22. Marketing Management 2016 22 | P a g e Even their trip to Austria with accommodation is fully sponsored by Air Asia. Air Asia’s website and portal are made easier to access by their entire online customer. 7.4 Customer loyalty To achieve customer loyalty and satisfaction air assai need to remain a sustainable relationship with their customer. A systematic data is provided by the customer relationship management to get the valuable information to execute a good customer satisfaction. Customers loyalty will be increase if air Asia is able to provide constantly provide service and product above customer satisfaction(Shaffey, 2010). Air Asia should hold two major principals who are customer acquire and retention. Air Asia should create integrated marketing strategy and information technology to have long term profitability and excellent relationship with the customers(Souls, 2011). 8.0 Conclusion Air Asia’s vision is to keep on providing low cost flights and to be the largest low cost airlines in the world. By implementing key strategy it is possible for Air Asia to create customer values and low fare model. Customer’s have the chance to choose and customize their service without compromising with the service or quality. The largest market of Air Asia’s segmentation consists of three segmentations which are Psychographic, Demographic and Geographic segmentations. Air Asia’s main targeted customers are Asian community. Air Asia has a very strong customer loyalty and trust but it need to keep up with its service because the competition are getting tougher.
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