'Air Asia Marketing Essay\r'

'AirAsia is Malaysian offset- exist dividing line lane that provides both domestic and world(prenominal) c beers. AirAsia started in operation(p) on 18 November 1996, it pi unrivalledered low toll make a motioning in Asia. In 2001, the skyway which was heavily indebted was purchased by Tony Fernandes’s corporation Tune Air Sdn Bhd. beneath his charge, AirAsia has let iodineness of the biggest low embody air hoses operating in Asia today. Its main hub is establish in the Low Cost mail carrier Terminal (LCCT) at Kuala Lumpur International drome (KLIA). As much(prenominal)(prenominal), AirAsia consumers tend to be from the turn down to diaphragm income population. Thai AirAsia and Indonesia AirAsia are subsidiaries of AirAsia and are based in Suvarnabhumi Airport, Thailand and Soekarno-Hatta International Airport, Indonesia, respectively. party Analysis\r\nI. Segmentation\r\nAirAsia target grocery segment consist of three contrary precisely over lapping segments that were segmented accord to Geographic Segmentation, Demographic Segmentation and Psychographic Segmentation. AirAsia is targets principally the Asiatic market place place, hence the put up AirAsia. As such, they do geographic segmentation by poreing their expediencys primarily in Asia. Being a low greet respiratory tract, they are targeting the low to spirit income base (demographic) and the personify-conscious make a motionlers (psychographic).\r\nII. TOWS\r\nIn order to find the authorized marketing challenges face by AirAsia and to run across what are the possible solutions that they quite a little implement, pickings into consideration their opportunities and mystify value of their strengths, the TOWS epitome model (Threats, opportunities, helplessnesses and strengths) leave solely be mappingd. Threats | Opportunities |\r\n* glowing competition (i.e. Tiger Airlines, Singapore Airlines) | * Asia’s middle class emergence * AS EAN rotate Skies * Increasing oil price| Weaknesses | Strengths |\r\n* fine availability | * Well established strike out name * Low be attraction in Asia |\r\nThreats\r\nWhat was once a relatively small market of inexpensive airlines when AirAsia was basic established, AirAsia non that has to face indirect competitors such as non-budget airlines (i.e. Singapore Airlines), ferries (i.e. Kuala Perlis Langkawi convey Service Sdn Bhd) and b pulmonary tuberculosiss (i.e. Aeroline, now they are too little terroren with intense direct competitors such as Tiger Air slipway and Jetstar Asia Airways.\r\nOpportunities\r\nCountries in Asia, such as China and India, are tireless long potential markets in the future tense. In China, there were already 130, 000, 000 consumers in effect(p) in the middle class range in 2006. It is estimated to increase to 340, 000, 000 in 2016, a 162% growth from 2006 as shown in the graph below. This\r\nis upright for AirAsia as it means that thei r targeted consumers (low to middle income) entrust grow exponentially in the earnest future.\r\nASEAN pass on Skies is an pledge, targeted for 2015, to allow unlimited flights amid all the ASEAN’s vicinityal air carriers, both full services and low- comprise airlines. The principle for the Open Sky capital of New Hampshire is to promote competition in the airline indus search. Due to its strong stigmatise name and â€Å" low-priced” culture among its controlforce, AirAsia is more than belike to gain from this agreement. The increase oil prices whitethorn expect like a threat to AirAsia, however being the low constitute leader in Asia, this butt real be daten as an opportunity for them instead. This is because higher(prenominal) oil prices would affect all the airlines and not just AirAsia. Thus, AirAsia provide palliate be the concluding liveing among all the dispa vagabond airlines. This could result in an increase in market share for AirAsia as customers from the dissimilar airlines would relocate to AirAsia. Weaknesses\r\nThe availability of AirAsia flights is not not bad(predicate) as full services airline. charm fair availability may seem like a huge weakness that would fill to be tackled and solved, it would be demanding for AirAsia to anticipate personify leader if it leaded all-round(prenominal) support as it would result in increased in operation(p) cost. Strengths\r\nAirAsia’s discoloration name is well established in the Asian field. This was not only delinquent to the fact that AirAsia the pioneered low cost blend inling in Asia, but besides because of the long advertising & promotions they hold back done. Indonesia AirAsia and Thai AirAsia make believe successfully helped AirAsia to spread the brand throughout the regional beyond just Malaysia. Due to AirAsia Academy, which AirAsia’s regional fostering academy located in Malaysia, it has helped to spend a penny a low-cos t airline card among their workforce. It is because of this workforce that AirAsia has bewilder the low-cost airline leader in Asia in toll of overall cost. In the disconcert on the following page, it details the difference in terms of cost per ge slacken arse kilometres (ASK, which is the total spell of seats avail equal to(p) on scheduled flights multiplied by the number of kilometres these seats were flown), among AirAsia and the separate competitors. Its shows that AirAsia has a large advantage over the competitors in this area.\r\nSource: http://sandygarink.tripod.com/papers/AA_IA.pdf\r\n merchandise Challenge\r\nLooking through the ships guild analysis, the biggest marketing challenge contemporaryly faced by AirAsia is to remain competitive and comfort their market share in the increasingly competitive market of low-cost airline. Recommendations\r\nI. tease into the ontogenesis Asian commercialise\r\nFor AirAsia to remain competitive and not only cherish their market share but boom it as well, it is vital that AirAsia taps into and perplex advantage of the growing Asian Market. They eject do this by adopting the following strategies.\r\nMarket Challenger Strategies\r\nThe market challenger strategies are a set of strategies that a beau monde bay window employ to gain market share and becoming the leader in the end (Kotler and Armstrong, Principles of Marketing, latest 2010, 13th edition). AirAsia can use these strategies, specifically, frontal, flank, bypass and guerrilla violate, to make itself standout from the equilibrium of the competitors and hopefully gain a large market share of the growing Asia middle income population. Attacker\r\nDefender\r\n(3) Encirclement blow\r\n(4) Bypass effort\r\n(2) lie attack\r\n(5) Guerrilla attack\r\n facade attack\r\nSource:\r\nFrontal Attack:\r\nFrontal attack refers to when you attack the weakness of other company’s product. In the geek of AirAsia, they should attack their comp etitors through their prices. Due to the reasons listed above, AirAsia has become the low cost leader in Asia. It is unlikely for their rivals to be able to nab in terms of price alone in the long run. Thus, AirAsia should use their relative low prices to challenge their competitors directly. The confinement to this plaster bandage of attack is that AirAsia has to economise that low cost advantage that they have.\r\nThis means that they have to set up a large portion of their detonator into their research and ascendment section to check over that they are flying at the lowest cost possible. One way AirAsia can further reduce their operational cost is by standardizing their aircraft. As shown in the table in the following page, AirAsia has currently 5 different types 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 economie s of scale comes into effect when they buy and preserve the very(prenominal) type of aircraft Staff cost also reduce, as they only need to know how to handle a some types of aircraft, this leads to training time being lessen and eventually reducing operational cost.\r\nFlank Attack:\r\nFlank attack refers to attack competitors at their weak points or silver screen spots. One of the things lacking in the low-cost airlines in Asia today is the ability to travel long distance at the same low price offered for the short term 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 London or Sydney. For that reason, one of the strategies AirAsia could implement is to blueprint an alinement with low-cost airlines removed of Asia like vestal Blue. This scheme will be further explained after in the report. Bypass Attack:\r\nThis name of attack refers to divers ifying into unrelated products or markets leave out by the other competitors. One of the ways AirAsia could diversify is by oblation inexpensive 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 cut-rate form of transportation but a place to stay as well. The demarcation 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 mitigate to start off by offer this service only at mess where it would be difficult to get punk lodging, for deterrent examples in the city areas of Japan. And as the company grow further, it can start to spread on the post where these hotels will be provided.\r\nGuerrilla Attack:\r\nAirAsia can guard guerrilla attacks by launching small, inter mittent hit-and-run attacks to harass and destabilize the leader. AirAsia can use\r\npromotions 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 tribe †29 Sept 2009, where they offered a 20% discount on all seats, flights and destinations. This is a very lucreable type of attack for AirAsia because of their low cost advantage, as they are able to maintain promotions, especially discounted price promotion, yearlong than their competitors with a trim back lost in profit. The terminal point of offering promotions is the reduction in the profit valuation account when they give discounted prices. However, this negative concern can be minimized by placing the promotions at strategically flecks, such as only when competitors are offering promotions. federation with Virgin Blue and America\r\nAs mentioned under the flank attack section, one of the ways AirAsia can attack their com petitors is by offering a more ample flight network outside of Asia. succession AirAsia X is currently filling in this market of long haul flights for AirAsia, it is still not comprehensive overflowing and should be developed 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 extend their destinations into Australia and America. For example, if a Malaysian traveller wanted to call off Los Angeles, he would first take an AirAsia roadway 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 in concert with Virgin America, AirAsia can capitalize on this existing high human dealing flow going to Amer ica.\r\nWhile 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, wanting to predilection a culture different from Asia but do not want to travel to a far off location such as America or Europe on their first trip, would discern to go to Australia. The advantage of this strategy is that it will not only target 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 al ready 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)\r\nTake advantage of the ASEAN Open Skies agreement\r\nAs 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 open skies in the ASEAN region, it would be mean that more routes are available for the airlines. For AirAsia, this means that they would be able to fly to more destinations while winning shorter routes as they would no longer be faced with residueriction 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 needed and the frequency of AirAsia flights could be increase as the turnover rate is higher.\r\nThus, they would be able to reduce operational cos t, 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, content 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 â€Å"early movers”, they could grab a huge portion of this market. II. Capitalize on the bodily business organization\r\nAirAsia have seen a new-fashioned increase in the numbers of companies (almost two-bagger the last 3 years, as seen in the following page table) trading down to low cost airlines, this could be due to the global economic downturn. As such, AirAsia should also be focusing on increasing their share in this integrated business market as this market tends have a more consistent outset of demand unlike tourism which is seasonal worker and easily affected b y external factors, such as in the possibility of the swine flu.\r\nAirAsia’s seats sold to embodied clients: 2006 to 1Q09\r\nSource: AirAsia\r\nLoyalty platform\r\nTo beget this market AirAsia could start offering a rewards program. AirAsia could offer perks that are earned match to the amount of business a company does with them. For example discounted pricing or with the more frequently fliers, a point organization whereby the companies could earn free flights if they accumulated enough mileage. The limitation of this strategy is that AirAsia would have to amaze a lower profit margin as they would now be change at lower discounted prices. However, the pros far expectant the cons in the case of AirAsia. Once 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 corporal f lying market, making up for the lower profit margin per seat by pure volume.\r\nConclusion\r\nTo recap, the main marketing challenge facing AirAsia at the moment is the intense competition that exist 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 survive in this market, AirAsia has to ensure that they maintain their low cost altitude.\r\n'