PC-DE0310: Comprehensive Marketing Strategy and Plan for AirAsia

This report presents a detailed analysis of AirAsia's marketing strategy and plan. It begins with an executive summary and an introduction to the company, followed by a thorough SWOT analysis that identifies the airline's strengths, weaknesses, opportunities, and threats. The report then delves into the macro-environmental factors affecting AirAsia, utilizing PESTEL analysis to examine political, economic, social-cultural, and technological influences. Furthermore, it applies Porter's Five Forces model to assess the competitive landscape of the aviation industry. The report also explores AirAsia's unique selling proposition and suggests potential strategies to enhance its market position and profitability. The analysis provides valuable insights into AirAsia's operations, competitive advantages, and strategic approach within the low-cost airline sector.

Running Head: Marketing Strategy and Plan
AIRASIA
Marketing Strategy and Plan
PC-DE0310
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Marketing Strategy and Plan
Contents
Executive Summary...............................................................................................................................2
INTRODUCTION.....................................................................................................................................2
SWOT analysis of Air Asia......................................................................................................................3
Strengths in the SWOT analysis of Air Asia.....................................................................................3
Weaknesses in the SWOT analysis of Air Asia.................................................................................4
Opportunities in the SWOT analysis of Air Asia...............................................................................5
Threats in the SWOT analysis of Air Asia.........................................................................................5
MACRO-ENVIRONMENTAL ANALYSIS....................................................................................................6
PESTEL.............................................................................................................................................6
Porter ’s Five Forces Industry Analysis...................................................................................................7
Section 2..............................................................................................................................................10
Conclusion...........................................................................................................................................12
References...........................................................................................................................................14
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Marketing Strategy and Plan
Executive Summary
The AirAsia in the field of aviation is one of the major companies that have become the
market frontrunner of the industry. “Air Asia” is recognised by its promise of providing the
lowest fares of the customers. The slogan of the company is recognised by people and also
helps them in branding their image among the competitors.
Air Asia to deliver its mission and vision educates its employee and staff by providing them
with the necessary training and skills required. The organisation structure followed by the
organisation encourages its employees to work as a team as there is no limitation of
departments (Thestar, 2016).
The analysis of the internal and external factors of Air Asia is conducted that indicates that
they are not affected by both factors. The analysis indicates a positive outcome for the
company strategy for the business in future.
Swot analysis is conducted to get to the deep insight of the company situation to critically
develop plans which AirAsia need to apply to maximise profits. Few strategies are suggested
for AirAsia which can be linked to the company’s operations.
INTRODUCTION
The company AirAsia came into existence in 1993 and the operation activities started in 18
November 1996. It was started by a government of Malaysia and was named as DRB-Hicom.
Later DRB-Hicom was acquired by Tony Fernandes, he curved the business model of the
company and reduced the fares of Air Asia by 1 RM. It has won multiple awards and
recognition for the services provided. AirAsia has 72 aeroplanes all Airbus A320-200.
AirAsia tagline is “Now Everyone Can Fly” as they are offering lowest fares among
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Marketing Strategy and Plan
competitors. The operational activity of AirAsia deals in 51 countrywide and worldwide
terminuses that works on 400 journeys on regular basis with 108 routes from various
locations from Malaysia, Thailand and Indonesia. In the records of AirAsia it is mentioned
that till date it has provided airline service to fifty-one million consumers (AirAsia, 2019).
In the year 2016 the profit of the organisation shows a huge increase nearly 3.7 times which
was nearly RM2.04 billion from RM541.28 million which was much higher from last year.
The company gets its revenue from a different location which is Malaysia, Philippine and
Indonesia the distribution of share are 49%, 11% and 8% correspondingly (AirAsia, n.d.).
As organisations has their own competitors in their field of business, there are some major
competitor of Air Asia named as Firefly, Jetstar, Tigerair, Berjaya Air which operates in the
same ASEANregion. On the other hand, Airasia is the biggest carrier fleet in Malaysia,
compared to the choice and destination by the passengers as the low-cost carrier (LCC) when
compared to opponents, on the other hand number of customers are increased by 6% from
year 2015 (Airasiainsure, 2016).
Pestel and Porter’s Five Forces models are used of conduct the research. SWOT analysis is
used for the critical analysis of internal and external factors of the organisation.
SWOT analysis of Air Asia
Air Asia provides low-cost flights to the customer, the headquarter is based in Kuala
Lumpur, Malaysia. Air Asia is known to best provide best in class facility to its employee in
terms of training and development, it can also be stated that it is employee centric company.
When compared with its competitors Air Asia is the only company proving the lowest
operation cost, that has a unit cost of US$0.023 per seat kilometre (ASK) with 52% of
breakeven factor (Amiruddin, 2013).
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Marketing Strategy and Plan
Air Asia operates domestically and internationally and has flights to 165 destinations having
92 aeroplanes in their warehouse. There are four holdings of AirAsia which are Air Asia X,
Indonesia Air Asia X, Indonesia Air Asia and Thai Air Asia (BBC, 2017).
Strengths in the SWOT analysis of Air Asia (Bhasin, n.d.).
Strengths of the company are the characteristics of business in which it has a hold on, that
works as an upper hand in the market. The strengths of Air Asia are described as follows:
1. Steady and Consistent positioning: It has positioned itself through providing low-
cost airline. Air Asia is following this low-cost strategy from a long time by keeping
its low operating cost and gain benefit from the volume of sales.
2. Weekly flights: From the data gathered by the company research, Air Asia notices the
travelling pattern of some customer which was from Trichy to Chennai connecting to
Kuala Lumpur, Singapore, and Bangkok creating additional costs for the company.
The company implemented the changes in the flight schedule and create a new
weekly flight to Kuala Lumpur in Rs 12000 for round trip which was earlier Rs
21,000 (Bloomberg, 2019).
3. Extensive coverage in India: the company is always looking for the potential market
in which they can operate, they notice a prospect in the Indian market and move into
the region. Air Asia now has 120 operational flights to India which are connected to
different travel location and ensures that the customers are getting the lowest price
available in the market.
4. Innovation in service: Air Asia uses Cutting-edge technology for innovation.
Examples of innovation implemented by Air Asia are buying and checking tickets
online. Company is reducing its cost by minimising the human effort by
implementing technology in most of the process.
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Marketing Strategy and Plan
5. Successful cost-cutting: Air Asia to remain low-cost airline has taken various
measures to cut down the cost of the company. The airline has implemented the
strategy by using technology customer do most of the work.
Weaknesses of Air Asia (Bhasin, n.d.).
Weaknesses indicate the section or part in which company need to focus to apply strategy in
the weak section. Some of the key weaknesses of are:
1. Sustaining costs: As it provides low cost flights to the consumer, it faces many
challenges while do the same, as on daily basis the prices of fuel are increasing and
government increases service tax, company has to find an alternate in every
fluctuations to provide low cost flights. This is one of the major challenging aspects
for the company.
2. Low Profits: Air Asia to sustain in market at a low-cost carrier faces many issues and
is totally rely on the volumes of sales for their profit, which have resulted in low
revenues and profit of the company.
3. Challenges in balancing service quality with pricing: Air Asia unique selling
proposition is their low cost flights, even though the customer wants no compromise
on the quality basis on the low fares. The satisfaction of customer is based on the
service provided by the company, this situation is challenging for Air Asia as they
have to balance quality with price.
Opportunities in the SWOT analysis of Air Asia (Bhasin, n.d.).
Opportunities are the potential aspects available for growing and improving business. The
opportunity available for Air Asia is described in the text given below:
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Marketing Strategy and Plan
1. ASEAN population: The population in the region is growing rapidly which will add
new customers in the markets. This is an opportunity for airlines such as AirAsia as
they are the lowest rate service provider in the region.
Threats in the SWOT analysis of Air Asia (Bhasin, n.d.).
These factors are the weak point of the business for any organisation. The threats for Air Asia
are explained in the next passage:
1. Competition: there are various other brands which are proving similar airfare to the
customer which can reduce the profit of the company.
2. Management of costs: Managing price to the lowest is the biggest issue which
company is facing as in the global market there are regular fluctuations in the jet fuel
price.
The Unique selling proposition (USP) of the company AirAsia is as follows:
AirAsia is recognised as the low-cost flight service provider and it works as USP for the
company. It promises its customer to deliver the lowest flights rate with the best service in
the class. The tag line of the company ‘Now Everyone can fly’ it works as the USP which is
successfully branding the company among the competitors.
Apart from proving low-cost flights AirAsia management is also recognised for educating
their employees by providing them necessary training and equipping them with the necessary
skills required so that employees can meet the mission and vision of the company. Air Asia
follows a Flat organisation structure that encourages employees to work together as a team
despite the departments. The examination of internal and external factors of Air Asia is
conducted that indicates that they are not affected by both factors. The analysis indicates a
positive outcome for the company strategy for the business in future. Swot analysis is
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Marketing Strategy and Plan
conducted to get to the deep insight of the company situation to develop new methods to
maximise their profit of the company. Few strategies are suggested for AirAsia which can be
linked to the company’s operations.
Using PESTEL and Porter’s Five Forces model analysis of external factors is conducted.
MACRO-ENVIRONMENTAL ANALYSIS
PESTEL
a) Political Factors: Governing authority policy are important for the growth and
development of aviation industry, as the policy restricts or broadens the migration policy
which increases or decreases the number of tourists (Yashodha, 2012). Thailand
administration has implemented various policy and facility which people can get so as to
boost tourism such as waiving temporary visa fees (AirAsia, 2016). On the other hand, the
Malaysian government has implied various taxes on domestic and international flights, this
impacted largely as the number of service providers was reduced (Matta, 2016).
b) Economical Factors: Fluctuation Various economic fluctuations has its impact on
business as in case of Air Asia they are deemed to provide LCCs to the customer whether the
fuel prices increases or decrease, in order to main the LCCs it in reduces the other costs to a
level so that they can maintain a reserve portion for the fuel price (Merkert, 2015). The
expansion of the aviation industry is directly linked with the expansion of GDP of the
country. For example, GDP and aviation industry are directly related to each other as it is
noticed that if Aviation industry is running in profits, the GDP will also boom and vice-versa
(Centre for Aviation, 2016). When there is a decline in the regional currency as compared to
US dollar in the past few years, it has increased the flow of tourist to ASEAN countries
which earlier used to choose European countries (AirAsia, 2016).
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Marketing Strategy and Plan
c) Social-Cultural Factor: In ASEAN region nearly 50% of world lives which is a huge
potential for the company operating in this region. The perception people have about the low
cost carrier is the same as they think they such service provider will lack some safety
standard (Welford, 2010). To tap into the potential market, the companies have to build
customer trust and satisfaction. As in the aviation industry, it is noticed that the major
revenue is gained from the returning customers which is nearly about 50% of the revenue
(Welford, 2010). Due to the culture of family bonding in the ASEAN regions, the family
frequently uses flights more frequent (AirAsia Berhad, Annual Report 2009).
d) Technological Factor: Technology reduces human effort helps an organisation to reduce
its workforce and the technology helps in check in and checks out process which saves the
additional cost bearded by the company and develops additional income (AirAsia Berhad,
Annual Report, 2009). It also benefits indirectly as technology helps in avoiding the spread of
various disease that can be transmitted by airlines, various new technology are developed and
implemented to reduce such things (United States GAO, 2015). Apart from airports
technology can also be adopted in the aeroplanes the new model Airbus 320 aircraft which
has ‘sharklet wing tips’ that helps in reducing wind drag and increase the fuel efficiency
(Vazquez, 2015).
e) Environmental/Ecological Factors: The “No Frills Service” method is used by airports
and airlines mutually the motive is to reduce unnecessary cost occurring (Yashodha, 2012).
The Aviation industry has taken various steps to reduce energy consumption. By monitoring
carbon footprint, air contaminations are reduced (Airasia Annual Report, 2016). Natural
disasters also affect the aviation industry as during that particular period various viral
infections are spread across the nation (AirAsia Annual Report 2015).
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Marketing Strategy and Plan
f) Legal Factors: Rules and regulations directly affect business by putting limitation related
to various aspects (Teresa, 2014). The examination is air carriers is conducted by Department
of Civil Aviation Malaysia (DCAM) in Malaysia to check whether the service provider is
meeting the standard set by them and their actions plans in any incident occur (AirAsia,
2016).
Porter Five Forces Industry Analysis
a) Threat of New Entrants: Setting up new airline required enormous assets, that is spend
on buying aeroplanes or hiring employees to get the process started (ECA watch, 2015). The
analysis conducted by KPMG shows the growth of the aviation industry in India where 62000
peoples were employed in 2011 and now it has 117000 peoples in 2017 (Centre for Aviation,
2017). Government has created strict rules and relegations which have made the process of
getting an aircraft operating licenses. This is done to standardise the safety level in the
aviation industry. As a result, the danger for new competitors to carriers businesses is low.
b) Bargaining Power of Buyers: The fierce competition among the airlines to provide
affordable flights which are growing on day to day basis as airlines are expanding their route
networks. This has altered the negotiating influence of consumers from low to reasonable
(Yashodha, 2012). Apart from it, consumers switch from one brand to another as they are
basically looking for the low budget airline and are not worried about the brand providing the
lowest price(Yashodha, 2012). Buyers prefer comparing flights through various online
platforms available such as Expedia and Cheap flights that have increased customer
negotiating aspect.
c) Bargaining Power of Suppliers: Monopoly was created in the aircraft development sector
by Boeing and Airbus (Yashodha, 2012). Airlines have to depend on the supply of jet fuel as
there is only a few suppliers of it. There is various other suppliers that are associated with the
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Marketing Strategy and Plan
airline industry such has food supplier who has to provide food at low cost in order to
continue long term business corporation with the industry. Apart from it, the switching price
is one of the major factors in the supply of aeroplanes; petroleum and adequate labour force
are relevant to the carrier business increased dealers negotiating power.
d) Threat of Substitutes: In the ASEAN industry there are various other sources of
transportation which are preferred by the people such as Railway and landed transport that
provides an economic travelling option as compared to aviation industry (Yashodha, 2012).
Airlines have upper hand in transportation as it is the fastest medium through which one can
travel from one place to another. While travelling from Malaysia to Singapore buyers usually
prefer railways rather than bus service as it provides an economical price. This indicates that
the threat of alternatives is modest for AirAsia.
e) Rivalry among Competitors: Higher the request the higher will be the supply this is
directly related to aviation industry due to globalisation the demand has increased which has
created a situation of rivalry among the airline supplier to develop new LCCs to provide low
airfare (Yashodha, 2012). In addition, the industry has high exit barriers, the LCCs service
provider are providing various additional services to buyers such as hotel reservation, taxis
and other sets of deals. For that reason, the competition between competitors is high.
AirAsia aim is to provide dependable, highly receptive, highly reliable, considerably tangible
and empathetic in the direction of its consumers. Creating consumer value and equity is an
essential component for companies. Multiple consumer value models are present in academic
books, to be precise, value components models, means-ends models and utilitarian or
benefits/costs ratio models (Ryu, Lee and Kim, 2012).
By using benefits/ costs ratio models, we can access the value perceived by the customer. The
difference between cost and benefits occurred is the value given to the customer. Benefits
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Marketing Strategy and Plan
received by the customer can be in the form of tangible and intangible (Landroguez, et al.,
2013). Time and effort are the part of the cost which is occurred to the customer in terms of
monetary and non-monetary factors. The costs that occur to the customer includes monetary
and non-monetary factors such as time and effort. Cost-benefits principles are applied by
customer to assess the purchase made.
The apparent expense of the consumers of AirAsia includes things such as transport cost,
purchasing price, facilities delayed and insecure air travel. The benefits given to the customer
must include human interference, luggage treatment, timely arrival and departure, positive
behaviour of employees (Akamavi, Mohamed, Pellmann, & Xu, 2015).
A consumer value mechanism includes less cost, product quality and facilities with effective
receptiveness. The corporation keeps an eye on a model by concentrating on providing low
cost flights to the consumer which has enables the company to sustain the low prices and
have increased the market share consequently. The sale of tickets is made by a common
ticketing platform to the consumers directly. The company has reduced its employee’s
workforce which has helped them to reduce the overhead cost occurred and the investment
made for the same (AirAsia, 2011). AirAsia is fulfilling customer needs and wants, it also
provides safe travelling conditions while travelling. The packages provided by the airlines are
vastly accepted by the customers as they are economical (AirAsia, 2011).
The consumers have an expectation with the carrier that the departure and arrival to be done
on time. The services provided by the airlines at airports and during the air-time should be
done effectively. The expectation in terms food and beverage are most important for the
customer and quality should be kept in mind while proving the same. When the behaviour of
staff in the flights comes to the part of human interference is one of the major affecting while
delivering value to the customer. Hygiene also plays a crucial factor, the seats should be
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