Singapore Airlines (SIA) has been ranked as one of the top leading airlines in the world. Singapore Airlines began with three flights per week, and today their route network’s span is 99 destinations in 39 countries worldwide. Singapore Airlines Limited split from Malaysian Airways in 1972 and is the national airline of Singapore operating on global major routes. As stated in its website, the company is geared towards “providing air transportation services of the highest quality and to maximizing returns for the benefit of its shareholders and employees.”. It has constantly outperformed compared to many other competitive airlines and reported superior annual returns on profits.
As airline is known as a mistake-free industry, Singapore Airlines has been proven its outstanding performance through its excellence services as well as being a pioneer in business strategies. Hundreds of industry awards are received by Singapore Airlines for its service quality. This report will outline in detail the fundamental issues in marketing of Singapore Airlines such as marketplace and customer needs, highlight the significant issues regarding the organization’s competitive environment as well as suggest possible enhancements for the organization.
1. Customers’ needs, wants, demand, product and market identified for Singapore Airlines. i. Customers’ needs, wants and demand. Amstrong and Kotler (2011) defined needs as states of felt deprivation. They explained human needs comprise basic physical needs as food, clothing, warmth and safety, as well as social needs for belonging, affection, fun and relaxation. There are also esteem needs for prestige, recognition and fame, and individual needs for knowledge and self-expression.. On the other hand, wants are another sort of human needs that are influenced by culture and individual personality. Western people like Americans or Europeans would want breads for their daily meals, while eastern people from China or Vietnam would prefer rice, though they all have the same need of food. People’s wants expand throughout times. In the previous days, they might just simply want a transporting way to reach a destination.
Later days they wanted a fast and safe transport. Today they also want comfort and entertainment while they are transporting. Organizations should be able to see and foresee the undiminishing wants of its customers to develop their products and services. Nevertheless, human wants are boundless, but not resources. What a person wants and what he can afford are two different matters. As described by Amstrong and Kotler, wants that are backed with buying power are called demand. For example, everyone wants to fly with a business or first class, but not all are willing to pay for those exclusive prices, thus some of the demand will go for the economy class instead. Singapore Airlines has identified there is a need of travelling, relaxation and prestige from its customers, as well as wants and demand for the aviation service and facilities. As so, Singapore Airlines offers best services in order to satisfy its customers accordingly
. ii. Singapore Airlines’ products and market.
Singapore Airlines mostly targets at businessmen and wealthy folds who are willing to pay a premium flight fares for a guarantee high quality service. The product line of Singapore Airlines is divided into three classes of travel: First, Raffles (Business) and Economy. First class accounted for 5% of passengers, Raffles class for 10% and economy class for 85%. The expectations of these particular customers were constantly rising and their needs and wants keep on changing over years. Other than that, Singapore Airlines also offer many in-flight facilities and entertainment, such as free headsets, choice of meals, satellite-based inflight telephones, inflight meals from the International Culinary Panel, offer audio and video on demand capabilities on KrisWorld in all classes. They also have different luxurious lounges for different class of passengers.
2. Singapore Airlines’ market orientation.
i. Market orientation
According to Kohli and Jaworski (1990), the marketing concept is a business philosophy, whereas the term market orientation refers to the actual implementation of the marketing concept. Marketing management’s objective is to build profitable relationship with the target customers by designing strategies which following a certain business philosophy that the organization has chosen. There are five of them, including production concept, product concept, selling concept, marketing concept and societal marketing concepts. The newest business philosophy that has commonly been adopted by most of the large organizations nowadays, including Singapore Airlines, is the societal marketing concept. Kotler, et al. (2010:19) state that, “the societal marketing concept holds that the organization should determine the needs, wants, and interests of target markets and deliver the desired satisfactions more effectively and efficiently than competitors in a way that maintains or improves the consumer’s and society’s well-being”.
In brief, this concept is all about balancing three aspects of an organization’s marketing approach: company’s profitability, customer satisfaction and society’s welfare. Bhasin H. (2010) stated that the marketing concept alone sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare, yet some firms and industries are criticized for satisfying consumer wants at society’s expense. This has been a reason for the societal marketing concept to be formed, which could be seen as an enlargement of the marketing concept itself. Singapore Airlines’ official website publishes that, “Singapore Airlines firmly believes that supporting programmes that benefit the communities we serve throughout the world is an essential part of being a good corporate citizen”.
Singapore Airlines has been contributing to the community in arts, sports, community welfare, and education. It supports a wide range of local and overseas community groups and charity organizations. Some of the highlighted are providing air travel for Australian social workers to Dhaka in Bangladesh for a project to prevent hearing loss in textile workers, rebated air tickets to the newly established Singapore Sports School to nurture emerging sporting talents, helping to fly the nation’s flag high in the sporting arena as the Official Airline for the inaugural Youth Olympic Games held in Singapore, etc. By practicing this societal marketing concept, Singapore Airlines has shown their customers that profitability is not their number one and only concern, but also to be a responsible and contributive corporate citizen. By doing so, Singapore Airlines has gained respectable reputation and favor from the customers, and boosted to a notable sales and profits.
ii. Product life cycle
Singapore Airlines’ product set is in a mature life cycle. The airline has done an outstanding job of differentiating itself through customer service available through any of its commercial aviation products. In this stage of the product life, Singapore Airlines must reinvent itself every few years to remain competitive in the industry and to prolong the stage period not to reach the decline stage. Singapore Airlines is constantly examining other service industries to see how they respond to customer needs and then adjusts its products accordingly. Through this strategy, Singapore Airlines generally leads the industry in innovative customer service products and initiatives. As airline is a service industry, its products are intangible, yet Singapore Airline’s commitment to its service strategy is visible in every aspect of its operations.
3. Major competitive issues facing Singapore Airlines
i. Singapore Airlines’ competitive advantages
Ever since the separation from Malaysian Airways, Singapore Airlines has no domestic routes to serve, hence the company has been forced to rely on the international flights and compete with other major airlines. There are three core aspects that Singapore Airlines has gained competitive advantages over other players within the industry. These comprise of the excellent service, the continuity innovation, and the technology superiority. Firstly, as explained by Roll (2004), the airlines have begun its branding strategy on it in-flight service. The company engaged French haute-couture designer Pierre Balmain in 1972 to design a special version of the Malay Sarong Kebaya as the airline stewardess uniform and then is branded as “Singapore Girls” for providing excellent in-flight hospitality. This later becomes one of the most recognized signatures of the airline, and is one of the critical reasons why Singapore Airlines always ranked at top for the customer satisfaction survey about in-flight service observed by various sources such as independent institutions or online social networking sites.
The second aspect that supports the Singapore Airlines’ success is their effort to always be innovative – particularly about the in-flight services. Additionally justified by Roll, Singapore Airlines has pioneered many in-flight experiential and entertainment innovations, and strived to be best in class. It was the first to introduce hot meals, free alcoholic and non-alcoholic beverages, hot towels with a unique and patented scent, personal entertainment systems, and video-on-demand in all cabins. The company keeps driving innovation as an important part of the brand, and the cabin ambience and combined experience are key factors of its success. Lastly, on the technology side, Roll also evaluated that Singapore Airlines still maintains the youngest fleet of aircraft among all major air carriers, and keeps to the stringent policy of replacing older aircrafts for newer, better models.
It has always been first in line to take delivery of new aircraft types like Boeing 747 jumbo jets, Boeing 777, and it will become the first airline to fly the Airbus super jumbo A-380 in 2006. Even the aircrafts are sub-branded like 747-Megatop and 777-Jubilee to further distinguish SIA and its brand from competitors. Singapore Airlines also flew Concorde between Singapore and London in the late seventies in collaboration with British Airways (BA). The aircraft was painted with SIA’s colors and logos on one side, and BA’s on the other, and it carried crew from both airlines.
ii. Porter’s five forces analysis of Singapore Airlines a) Suppliers power
Suppliers’ power is consistently high in airlines industry. This hence will have a great impact in the company’s product and service costs, prices and
profitability. However, Singapore Airlines is financially strong and has its own ground service such as baggage handling and in-flight food and beverages supply. Aircraft maintenance and servicing is also carried out by SIA Engineers. Thus the main supply for Singapore Airline is basically the aircraft manufacturers. Since the firm has been known as an airline with youngest aircraft usage, Singapore Airlines has been a significant customers and has bargaining power over the suppliers.
b) Buyers power
The buyer bargaining power is indeed high for Singapore Airlines. Singapore Airlines’ targets mostly on businessmen and people who are affordable for premiums flight fares. These types of passengers are not too sensitive to prices, but concentrating more on the flight time that is flexible for them, and also the comfortability of the provided service. However, regardless of which type of passengers, all of them might just switch to other airlines without hesitation if time and service match their demand better. Since customers are willing to pay for their enjoyment and flexibility, Singapore Airlines’ target market has a strong level of buying power.
Singapore Airlines generally has medium to low threat on substitution of its services. As mentioned above, Singapore Airlines’ target passengers are not cost-conscious travelers, they can afford high fares in return for their comfort and time efficiency. Hence with excellence both in ground and in-flight service quality and updated high-tech facilities, Singapore Airlines easily retain customers’ loyalty. Other substitute transport mode would not be a big threat especially for long flights or long distance travel.
d) Competitive rivalry
The level of rivalry is medium for Singapore Airlines. Although there are not many airlines can compete against SIA, these airlines in the entire industry share the very similar market. Most of the carriers are using differentiated strategy that focus on both booking and in-flight services. SIA with outstanding and uniqueness service offerings has helped the firm to have lesser pressure on competition. However, Singapore Airlines has to continue on innovation and maintain and improve service quality if they do not wish to lose out.
e) New entries
Threat of new entrance is consider low in airline industry, since the capital investment for the industry is massive. According to Calingo (1997) it would require a lot of logistic works, highly skilled personal such as pilots, aircraft technicians and specialize managerial personnel which are often limited in resources in the industry. Limited access to airport and route are also another difficulty post to new entrant.
4. Segmenting, targeting and positioning of Singapore Airlines. i. Segmenting
According to Kotler et al. (2010:199), marketing segmentation is defined as dividing a market into distinct groups who might require separate products and/or marketing mixes. The objective is to help determine marketing strategies and realistic marketing objectives by understanding customer trends and buyer behaviors. Singapore Airlines segments its market based on geographic, demographics, psychographic and behavioral. For geographic segmentation, Singapore Airlines customers are located globally with varying wants and needs thus the firm attempts to exploit this by providing airline services to major cities or routes. Evidence given is Singapore Airlines operates flights to over 90 destinations in more than 39 countries over 5 continents.
Its strong presence is however still the Southeast Asia region. Demographic segment works on the basis of customer factual characteristics such as age, gender, family lifecycle, social-culture, occupation, education and income that can influence purchasing decisions. Singapore Airlines, for example, demographically segment their customers from their choice of the service class. Suite class and First class passengers are dominantly traveling on business purpose and mostly are male between 25 to 45 years old. Passengers in business class are split evenly between traveling for business and leisure. Mostly are male with average age 32. Economy class passengers are a much broader group, traveling mainly for leisure and evenly spread across most socio-economic groups and age ranges.
Another approach to segmentation is psychographic, which is an attempt to capture what is driving the customer’s behavior, such as values, personalities, attitudes, opinion, interest and lifestyle aspirations. For instance, Singapore Airlines provides variations of cabin classes (First, Business and Economy) to meet the product demand of people. Singapore Airlines employs tier membership to provide status preferences to customers. The last segment approach is behavioral which is based on observable issues on consumer behavior when purchasing the products. Characteristics include frequency of consumption, buyer readiness and commitment. The corporate market tends to be a frequent flyer that could gain benefits from Singapore Airline’s Frequent Flyer program, in return for customers’ loyalty to the airlines. Some people are “brand loyal”, they tend to stick with their preferred or familiar brands even when a competing one is on sale.
Market targeting, explained by Kotler et al. (2010:199), is the process of evaluating each segment’s attractiveness and selecting one or more of the market segments. Singapore Airlines uses differentiated market targeting, which refers to where firm target several segments and develops distinct products/services with separate marketing mix strategies aimed at various group approach, where they target in accordance to consumers’ needs and to their occupation. Singapore Airlines has two target markets.
The first aimed at people who mostly have a high income with a high class lifestyle and prefer to seek comfort with excellent services rather than to get a cheaper price but do not get the as good facilities and services. The other target market is customary passengers who mostly just want to travel and not too demanding about the services and the facilities. For this market, Singapore Airlines owns a budget airline as well to compete, which is Tiger Airways, to meet the market needs.
Kotler et al also described market positioning is developing competitive positioning for the product and an appropriate marketing mix. Added by them, a product’s position is the way the product is defined by consumers on important attributes – the place the product occupies in consumers’ minds relative to competing product. In this specific circumstance, is how the passengers perceive Singapore Airlines’ service compared to other major carriers, such as British Airways or Cathay Pacific. There are many different general strategies for positioning products. Attribute or benefit, quality and price, use or application, competition, high-tech and high-touch can achieve desired positioning.
Market positioning is about how Singaspore Airlines wants its customers to perceive their products and services in relation to their competitors. Singapore Airlines positioning strategy is using Singapore Girl as a central ingredient in marketing its image. Personified through the girls, customers will have a sensory and emotional experience when travelling with Singapore Airlines, with its commitment to service and quality excellence. Since the traditional marketing communication has often been focus on cabin design, food, comfort and pricing, this strategy of Singapore Girl has successfully gain a positive market positioning in the customers’ heart.
There are concrete substantiations why Singapore Airlines has grown from a regional airline into one of the world’s top leading carriers. This paper has analyzed some of the vital marketing issues concerning the strategic way that Singapore Airlines operates to reach their upward achievement nowadays. They have always been setting their customers’ needs and wants as the first priority in order to understand and provide excellent quality service to match the growing demand of the passengers. Only with the clear comprehending and effective implementation of the organization’s selected societal marketing concept, precise identification of the competitive concerns as well as the market segmenting, targeting and positioning, Singapore Airlines has been able to successfully differentiate its brand image and endorsed its prestige status to the whole world.
Performing the SWOT analysis would help Singapore Airlines to identify the key issues for enhancements in its operational strategies. Singapore Airlines needs to keep its superiority and stay on the top of the competition in the international market, by understanding the plans that being pursued by other major players such as British Airways, Cathay Pacific, Virgin Atlantic, etc. Singapore Airlines should continue to differentiate itself and keep on provide up scaling service quality to the customers.
It is recommended for Singapore Airlines to regularly renovate its facilities as well as install new technological features. Improvement and installation of in-flight entertainment system such as latest technology electronics and DVDs, access provision to the CD music and interconnected network games with the passengers inside of the aircraft, ability to send and receive email and internet surfing on selected content, Satellite telephones can be some of the suggestions. Nevertheless, Singapore Airlines should carry on contributing more in its social responsibilities to the community well-being to remain an ethical and trust worthy corporate citizen.
V. References and Bibliography
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Roll, M. (2004). Singapore Airlines flying tiger. From Brandchannel. Retrieved August 6th, 2012, from http://www.brandchannel.com/features_profile.asp?pr_id=209 Roll, Martin. Undated. Singapore Airlines – An Excellent Asian Brand. Venture Republic Retrieved August 4th, 2012, from http://www.venturerepublic.com/resources/singapore_airlines_-_an_excellent_asian_brand.asp
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