Distribution: Move from selective distribution to intensive distribution. The strategic plan of a company will indicate where the organization is going and how different functions fit into the plan. Tactics are the smaller scale actions that are taken to realize the objectives of the strategy.
Gaining 40 percent market share for a product in order to boost profits is a strategy. Lowering the price of that product for a time in order to stimulate sales is a tactic.
The Internet provides the most cost — effective distribution channel available. In order for AirAsia to maintain its profitability and ensure its stays in line with cost leadership business model, AirAsia has to offer more routes and products in its portfolio.
More routes and fleets mean more customers and potential ancillary income, in ancillary income per guest is RM 44 AirAsia AirAsia Online Marketing Social media is a very powerful tool, in a recent survey by TNS, Malaysians have the most number of friends in social networking websites and spends 9 hours a weekly. The Star, Nielsen, AirAsia should continue to carry its promotions and focus even more on online marketing and selling. However, AirAsia should also be mindful as negative comments and bad customer experience will also be posted on the same platform and it is visible to everybody.
AirAsia has to be tactful in handling these situations. Increase Product Offering By partnering with Expedia, AirAsia adds value to its services by easing travellers to book accommodation and ground arrangements. AirAsia should work with more partners to obtain a better price so that its customer will be able to get better deals. Agoda, Booking. As for tour packages and ground arrangements, AirAsia should form collaboration with local partners, for example Reliance and Berjaya Holidays.
Income indicates the capability of the consumer to travel with AirAsia as consumers from different income groups are attracted to different airlines. This is because low-income and middle- income earners generally have lesser disposable income than high-income earners, hence are unlikely to be capable of purchasing airline tickets from FSCs such as MAS as their tickets are more expensive.
For low-income and middle-income earners, their main need of an airline ticket is simply to travel from one destination to another. Therefore, the pricing of airline tickets is a vital factor that influences purchasing behaviours. Statistics have indicated that consumers have increased their expenditure in air travel due to the availability of more affordable domestic and regional flights from LCCs Consumer Lifestyles — Malaysia, Social Class AirAsia may have segmented their market into lower, middle and upper social classes on the basis of this variable because different social classes tend to have different purchasing behaviours, brand preferences and expectations Schiffman et al.
Moreover, upper social class consumers would tend to have a negative perception about the image of LCCs as a provider of less comfortable services.
Usage Rate Usage rate is one of the variables under the user-related segmentation which AirAsia can use to segment their market and is divided into low, moderate and high usage rates Schiffman et al. For example, consumers [Segment 4] who travel frequently for business meetings would have a high usage rate of air travel as they are required to travel to different destinations frequently.
Consumers with low usage rates are mostly from the low-income category who can only afford to travel at most twice a year depending on the destination. This is because they have less disposable income compared to high-income earners. However, if price levels are affordable, then low-income earners [Segment 1] would be able to travel more often with LCCs.
Time As for the user-situation base, AirAsia is able to use time as one of their variables to divide the market Schiffman et al. The time variable is categorized into leisure and business. Consumers with different purposes of travelling have different priorities.
Travellers on business trips meanwhile would probably have to pay higher prices because they may need to purchase airline tickets in advance. Value-for-money Value-for-money is one of the benefits sought variables which AirAsia can likely use to segment their market Schiffman et al.
The level of importance of value-for- money can be divided into low, moderate and high whereby consumers with lower income levels tend to place high emphasis on value-for-money products and services. For example, consumers from Segment 4 place high emphasis on value-for-money because these consumers are working for corporations that are currently affected by the economic recession happening, thus they are required to reduce their expenses as much as possible AirAsia, d.
There are three different target markets which AirAsia are targeted. These segments are categorised as Segment 1, Segment 2 and Segment 4 as indicated in Table 2.
Segment 2 is defined as middle social class consumers who travel moderately for leisure and place high emphasis on value-for-money. This is because the current economic climate has caused consumers to be more price-sensitive and often search for the best value AirAsia, e. However, this has not dampened but instead increased the frequency of consumers to travel domestically or internationally on LCCs Airline Passenger Traffic — Malaysia, ; Airline Passenger Traffic — Asia Pacific, Consumers these days who travel for leisure or business want to pay as little as possible to secure a seat on a flight Driver, Efficiency creates savings which are then passed on to consumers in order to make affordable air travel a reality.
AirAsia has sparked a revolution in air travel with more and more people around the region choosing AirAsia as their preferred airline AirAsia, b. Local Airlines would have easy access to certain information that could aid them; therefore, AirAsia needs to be on constant market audit, market researches and control to keep up with such competition.
Owning to the facts that most organization are struggling for survival, major players may enter targeted market segment. Alternatively, Market segment's growth could attract major competition. Competitions AirAsia is an international company, and going global invites a lot of competition. AirAsia has to deal with the competition of local companies in the same field- Airline services. As they indulge into the use of modern technology such as the public domain would invite competition on the global scale.
It is owned by the government. They received support and could pose as a threat to AirAsia growth. Constraints AirAsia would encounter numerous constraints, as an international enterprise, AirAsia would have to deal with government policies and airport pricing that are inherent in the local markets they serve not excluding their cultural differences and values of the community.
There are three key factors to target market selection4: Segment size and growth Segment structural attractiveness Businesses objectives and resources For AirAsia that started in , it was not too difficult for the Airline to identify its target market. Fernandez, he knew there are a lot workers or low pay salaries earners who would like to travel often to meet their families especially during special occasions but due to how expensive it was that time, their desire are not fulfilled.
By introducing a low fare will give all those people opportunity to travel if not more than once in a year. This enables them to identify their target market. AirAsia is encouraging a new [market] segment to be formed and therefore is creating a larger base for domestic demand. Philanthropy contributes both toward your branding efforts and toward your company's internal well-being. AirAsia embark on this to build and attract more customers. The airline said that was its way of celebrating the completion of three years of successful flying and of saying thank you to the people for their support.
AirAsia has extended its services to different part of the world. AirAsia was initially a local company but it has become international with its extension of its services to different part of the world to meet up with their market.
AirAsia get feedback from their customers or potential target market, and they designed new services to meet their needs, this practice is ensuring a demand for their products in the future. They reduced their price to suit their class of customers.
AirAsia saw a need for a lot of low pay salary citizens who could not afford the money 5 n. With the introduction of their services of low fares, most people can travel home and most people that can only afford to travel once could travel up to three times with their cheaper fares.
This Limited time sales encourage customers to act. You likely have customers intending to buy but have not "gotten around to it". Holding a reduced price sale will give them incentive to purchase.
Group Discounts and Offers. AirAsia operates through its official website that offers several privileges and services to help its passengers. It uploads important information on its website and sends related information via SMS to its passengers on mobile informing them about the status of their tickets. AirAsia offers facilities such as web check-in, mobile check-in and kiosk check-in to its passengers.
The company offers several payment options to suit individual needs like the debit card, credit card, online payment, cash payment or payment through the mobile app. The airline tickets can easily be purchased via its sales office owned and managed by the company and it is sales centres that are handled by authorized agents. It also has tie- ups with other ticket agents and e-platforms from where it is easy to buy a ticket.
The company posted its revenues and net income for the first three quarters in the fiscal year at RM 5. Air Asia has maintained its position of no-frills airline and has targeted lower-middle and middle-class section of society as its target customers.
It faces stiff competition in airline sector and has decided to adopt a competitive pricing policy that will keep its product prices at reasonable and affordable rates.
It will also help in dealing with rival airlines as its prices are less compared to other airlines and moreover it offers more benefits. AirAsia has decided to adopt anchor pricing policy that creates a base price for every operation under its umbrella.
They have achieved effective targeting to this segment by making their brand synonymous with low-cost services. This has been possible through excellent brand positioning. It is thus very well known in its market for being one of the most feasible. Through its efficient STP, AirAsia has been able to successfully develop its marketing strategy and make a name for itself in the market. But of course, there exist many competitors that require constant evaluation of strategies.
AirAsia has been a successful part of the airline industry for over a decade. They have been a major player in the low-fare airline industry and have connected over 88 countries together. This comes with a lot of competition. This tells us that AirAsia mainly needs to understand its customers a little better and provide them with the extra services they need.
AirAsia is already trying to achieve that by expanding their facilities to hotel bookings, tour packages, etc to try and gain some competitive edge along with diversifying their product portfolio. Some more of these improvement areas can be found through its SWOT analysis. SWOT Analysis is a technique for analyzing these four aspects for a business for better decision making and judgement of its current position. Air Asia is smartly using its social media in building a direct relationship with its customers.
They have official handles on all major platforms but for the purposes of this segment, we shall take a look at the main 3, which are Instagram, Twitter, and Facebook.
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