Low-cost Carrier and Air Asia Essay

Custom Student Mr. Teacher ENG 1001-04 27 October 2016

Low-cost Carrier and Air Asia

Marketing is defined as the process which companies create value for customers and build strong customer relationships. (Kotler & Armstrong, 2010). Nowadays, the competition among airline industries is very challenging as more low-cost airlines were blooming. Besides that, they were also facing the challenges from those well-known airlines such as MAS. Therefore, a research regarding AirAsia- World’s best low-cost airline was conducted in order to investigate the company.

The main objective for this assignment is to evaluate the effectiveness of existing market mix which were being employed on the target segments of the business and followed by some useful suggestions to solve those obstacles. In order to accomplish the objective stated above, we made an effort by investigating the company’s background so that we know more about the company which will help us in our further research. Besides that, a SWOT (Strength, Weakness, Opportunities and Threats) , the target market and the 4Ps (Product, Price, promotions and place )for the particular company was investigated .

Based on those finding ,appropriate suggestions were made to overcome problems that occur in order to increase the company’s standard as well as the branding. Background AirAsia is one of the award winning and largest low fare airlines in the Asia expanding rapidly since 2001. With a fleet of 72 aircrafts, AirAsia flies to over 61 domestic and international destinations with 108 routes, and operates over 400 flights daily from hubs located in Malaysia, Thailand, and Indonesia. (Wong Pui Man Cary, March 2009). Air Asia has their own associate companies as well for instance, Air Asia Thai Air Asia and also Indonesia Air Asia.

For your information, Air Asia X actually focuses more on the low cost and long haul segment. They offer X-citing low fares, X-emplary levels of safety and care and an X-traordinary in-flight and service experience to all the guests. They own a slogan which is “Now Everyone Can Fly” (Air Asia, 2011). Air Asia have their own vision which is to be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares (AirAsia,2011). This means the air tickets fee will be cheaper compare to the other airlines.

Besides, they even aim for billions passenger to travel with their flights. If there is a vision there must also have their company missions too. The first mission is to be the best company to work for whereby employees are treated as part of a big family (Air Asia, 2011). By having such mission; every co-worker will be treated friendly like a big harmony family. Secondly, Air Asia wanted to create a globally recognized ASEAN brand which they actually achieve it already. Thirdly, to attain the lowest cost so that everyone can fly with Air Asia.

Lastly, to maintain the highest quality product, embracing technology to reduce cost and enhance service levels (Air Asia, 2011). This point means they wanted the best for the customers. Air Asia has good achievements by getting lots of rewards almost every year since 2003-2010 years. For instance, during last year Air Asia was being rewarded by the Skytrax for the world’s Best Low Cost Airline (Air Asia, 2011). SWOT’S analysis SWOT analysis is a tool that helps identify business strengths, weaknesses, opportunities and threats.

It can assists in the marketing planning process particularly with the marketing audit. The internal characteristics are the strengths and weaknesses while the external are the opportunities and threats (Levens, 2010). The strength of Air Asia is a low cost leader in Asia. With the help of AirAsia Academy, AirAsia has successfully created a “low-cost airline mentality” among their workforce. The workforce is very flexible and high committed and very critical in making AirAsia the lowest cost airline in Asia (Kulothunkan, July2008).

They provides everything in low cost operations. For instance, the flight schedules were so reliable and frequent which was so convenient for the guests. Air Asia flights at most short haul, point-to-point routes and often to secondary airports (Wong Pui Man Cary, March 2009). However, there are few weaknesses in Air Asia flight. They receives quite number of complaints from the guest for their services. For instance, there are no blankets or pillow provided for those who fly to the overseas. Changes should be made within 48 hours after the tickets were purchased.

Besides that, limited human resources because the services could not be handle regularly (Wong Pui Man Cary, March 2009). To cut down the cost; the company have so limited permanent staffs. In addition, they receive a lot of complaints about fight delay (Kulothunkan, july2008). External Environment? Market segmentation/ target market In order to implement the marketing strategies, we need to categorize customers into different category. The market can be segmented into demographic, psychographic, values, behavioral, and needs segmentation.

Demographic segmentation divides the market into groups, based on criteria such as age, gender, family size, family life circle, income, occupation, education, religion, ethnicity, generation, and sexual orientation. For examples, Air Asia Company has using their slogan “everyone can fly “to allow the low income citizens go travel with family. Differences in price between the child and adult are a trade mark of Air Asia as other companies don’t have this kind of price. Psychographic segmentation assigns buyers into different groups, based on lifestyle, class, or personality characteristics.

For example, 18 to 24 year old males represent a wide range of life styles that can dramatically influence the likelihood whether they will select one type of product or service over another. Values segmentation considers what customers prefer and what motivates customer response to marketing activities. For examples, Air Asia Company has always open several new travel destination according to customer ideal and this attract their customer to continuously using Air Asia as a travel airlines.

Behavioral segmentation allocates consumers into groups, based on their knowledge, attitudes, and users, responses to a product or service. For example, in the airlines industry, consumers can be segregated into organizational consumers. Moreover, Air Asia company is the only company that having promotion or in the other way is benefit when it comes to company trip. Target market is a specific group of consumers at which a company aims its products and services. Target customers are those who are most likely to buy from you.

Resist the temptation to be too general in the hopes of getting a larger slice of the market. That’s like firing 10 bullets in random directions instead of aiming just one dead centre of the mark–expensive and dangerous. The target market of Air Asia consists of different ways based on income, age, cultures, and generation. The Air Asia Company is a low cost airlines company. These give the opportunities to the low income people. For example, people that their salary is less than rm2000 is consider as a low income people.

The promotion that had been made by Air Asia is an opportunities for them to go travel to their Ideal destination. This situation can hit the market of the sales of Air Asia companies. Air Asia company have a different prices in term of differences of age. For examples, the price of the flight for child is different from the adult. This resulted that more and more family will go travel and choose Air Asia as their airlines company. This seems will increase Air Asia’s revenue. Different of culture also is a market target for Air Asia companies.

The main market for Air Asia is around the countries in Asia which have different festive. Their will have a promotion when it’s come to one particular festival. For examples, Zero Fare flight promotion for Chinese New Year festival where a lot of people from different sector willing to go travel. Marketing Mix Product Air Asia sells their product as service, which means they get profit by providing services to customers. Air Asia is using Navitaire’s Open Skies System as their online booking system. In addition, the booking system of Air Asia is point to point system. It is simple to use for the end-user.

For an example, end user can book their seat by picking and paying, they no need go to many process just can book a flight or a seat. All teenagers can easy know how to run the Navitaire’s Open Skies System that is being use by Air Asia Airline . (http://www. webintravel. com/news/airasia-moves-to-new-booking-system-in-a-year-of-innovation_130) For an example, the booking systems of other airlines such as Malaysia Airline is more complicated compare with Air Asia Airlines. This is because Malaysia Airline provides different class such as economic class and first class .

So; this will make their system more complicated. By using online system, end-user can make reservation and manage their ticketing more facilitate and faster compare to purchasing ticket at ticket counter. End-user has successful achieve the time is gold concept because they use a limit time to book a flight in the house. Not only that, they also save up the cost of petrol because they save up their transportation fees to book a flight. Air Asia provides several booking method such as mobile booking, group booking, corporate booking, travel agent booking and government travel agent booking.

Moreover, Air Asia is the first company to provide the mobile booking in this industry. The customer care service of Air Asia allows end-user achieve their necessities. They provide quick guide for customer about the booking method and specific information to them. The operation time of Air Asia customer service department is 24 hours, which mean customer can call any time if they need more information. On the other hand, customer can choose the services for booking flight. For example, they can have selection of hotel, flight, car or flight and hotel of their destination.

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