Marketing Analysis And Competitor Comparison Of AirAsia

PESTLE Analysis

AirAsia is one of the leading low fare Airlines that has been growing on a rapid pace since 2001. It has won award related to low cost carrier in Asia. This airline was founded by a government- owned conglomerate DRB-Hicom in 1993. Air Asia was in huge debt and at that time Tony Fernandez brought it. Fernandez converted the whole situation and turned the losses into profits in 2002 and introduced some new routes from Kuala Lumpur International Airport. Airs Asia always believed in providing low fare tariffs and no frills business idea. It always feels that keeping low costs always leads in high efficiency of the business. Efficiency results in generation of savings that are passes on to the customers in order to make inexpensive air travel can become a reality. AirAsia is known for a revolution in air travel by which more people have travelled in their choice of transport. Their idea was ‘Now Everyone can fly’. The quality of services of AirAsia is also very good and it always tries to provide a better experience to its customers. ‘AirAsia’ always looks for new market opportunities that can make them more efficient and effective in its operations.

In this report, a marketing analysis of AirAsia has been done by assessing its internal as well as external environmental factors. There are some marketing strategies that can be taken into consideration for the future growth of the organization. AirAsia uses Customer Relationship Management for its performance measurement. It basically related to the satisfaction of customers. It includes various strategies that help in retaining, acquiring and partnering the customers for creating value for the customers. There is a lot of information given on the official website of AirAsia related to the hospitality it provides to the customers (Jones, 2017).

1. Political- Due to Globalization, a trend has been started related to privatization as well as deregulation of governments all over the world that has been resulted in the consolidation of airline industry. Government plays a very important role in the airline industry in Asia. Most of the airlines like East and Southern Asian Countries have a full state ownership, control and management (Hitt, 2011).

Opportunities- Privatization and deregulation related to opportunities declared by the government for airport deals and initiation of new routes through open- skies agreements between different countries (Etzel, Walker & Stanton, 2007). It helps in getting an opportunity to access domestic routes. It leads in the trial of long flights those results in penetration of undeveloped market share (Seefeld, 2015).

Threats- There is a possibility of affecting customer confidence due to the prevailing globalization as there are increased chances of accidents, disasters and terrorist attacks. Due to the losing of customer’s confidence, AirAsia can face a situation of losses. As it was mentioned earlier, AirAsia always focused on its low fare strategy, it is related to aviation regulations, government restraints and policies. Comparatively there are high amount of threats than opportunities (“THE MARKETING MIX: A REVIEW”, 2014). There is high government interference on compensations and airport deals, so AirAsia can only try to minimize the negative effects by selecting some favorable routes.

1. Economic- There is many economic factors that create an impact on AirAsia and its operations. Some factors can be converted into threats and some can become opportunities.

Opportunities- There is many economic downturns that results in downgrade of any industry. It can be considered as an opportunity for AirAsia because there can be a cost reduction due to that there is a decrease in the level of competition. AirAsia can continue to sell its tickets on low rates in such circumstances (David & David, 2016). Due to current recession, there is a high impact on aviation industry but people enjoy the cheap tickets.

Competitor’s Analysis

Threats- There is a variation in the fuel prices that can create an impact in the operation costs when the prices of fuel become high. In such cases, profitability of AirAsia goes down. These are the events that are unavoidable and opportunities are higher than the threats so I this scenario, AirAsia can expand its operations in economic downturns. There are some travelers like corporate and leisure travelers that are very much budget conscious so demand for low fare would increase (Ha, Oh & Jo, 2013).

1. Social- some social as well as cultural factors with opportunities and threats are

Opportunities- There is a high economic growth in the recent years that resulted in increasing AirAsia’s population. This also leads in increasing trade and tourism within Asia as well as demand for travel was increased (Van?k, Mikoláš & Žváková, 2012). People became eager to spend on travelling instead of food and other services. Low fares usually attract customers and it makes a high profit for AirAsia. It clearly shows that there are high opportunities with AirAsia to differentiate from the other strong competitors by creating better services for the customers and providing low fares. They provide food, drinks and online sales to its travelers that result in increasing brand awareness in front of the customers (Mamula, 2012). There is an increasing world’s population that includes educated people that helps in the growth of the industry.

Threats- AirAsia is not very successful in implementation of its differentiation strategy so it leads in increase in operation cost in order to produce some value- added services. In case of social and cultural aspects, there are more opportunities in comparison to threats with AirAsia until and unless in unnecessarily increase its cost related to operations for providing value added services.

1. Technological- Technological factors for AirAsia are

Opportunities- AirAsia has grown a lot due to the advanced technological aspects. It was the first airline that started e- ticketing in Southeast Asia. It helped AirAsia in reducing the cost of creating physical tickets and contributed in removal of expensive bookings and commissions of the agents (Pathak, 2017). It has also introduced GO Holiday packages and this enables the customers to book holiday packages online.

Threats- There should be a proper maintenance if operations have dependency of technological aspects. AirAsia has a risk of system disruption that can be considered as a threat if AirAsia’s systems are not backed up in a proper way (SALONER, 2018).

1. Environmental/Legal- Environment/Legal factors are the factors that are not controllable and create a heavy impact on the operations of an organization (Pearson & Merkert, 2014).

Opportunities- AirAsia is an airline that consists of the youngest fleet in Asia and it has its new Airbus that provides improved fuel efficiency. AirAsia has competitive advantage due to the legal and environmental factors as their overhead cost reduced to very low.

Threats- There is a possibility of disaster that can impact the operations of the airlines for some hours or days. Such disasters may lead to huge losses for airlines as well as decrease the efficiency as well.

There are many competitors of AirAsia and one of them is Jetstar Airways. It is an Australia airline that provides very low fare to its passengers. It currently operates domestic as well as international network. It has also adopted a low cost strategy like AirAsia that attracts middle class customers. It always tries to provide the best customer experience to all the customers. Jetstar airways are considered as one of the top three service providers. It has started various programs to fulfill the needs of the customers like customer guarantee and price guarantee. It has a very good brand reputation in the market and high loyal customers because it provides low prices. It has also a tag of ‘Safest Carrier in the world’.

There are some issues like it has high overhead expenses because they are not successful in utilization of resources as well as employees. Employees of these airlines are also not happy due to low wages and they did so many strikes due to the same reason. It has a high competition from different competitors that can become a threat and fuel prices are also increasing at a higher pace that would result in low profit. It has created different strategies to maximize profits even after providing low fare tickets to the passenger (Lindgreen & Anthony Di Benedetto, 2018).

Below is the data that can shows a clear growth picture of Air Asia 

Opportunities and threats of AirAsia-

Opportunities:

1. Increase in oil price- There is an increase in the prices of oil and it can be an opportunity for AirAsia as it is a low cost carrier. It has adopted very good costing strategy that can always make it a low cost carrier even after increase in fuel prices. With the help of low prices, it can get some more customers.
2. Partnership- AirAsia can enter into partnership with the other low cost operators and get advantage of their existing strengths like brand image and landing slots.
3. Population- There is an increase in the Asian middle class population that creates a very good opportunity for the entire low cost carrier.
4. New destinations- AirAsia operates in most of the Asian region. As of now, it can start operations in the remaining areas in Asia in order to expand the operations (Schefczyk, 1993).

Threats:

1. Uncontrollable costs- There are some costs like security charges, landing charges and departure charges that are uncontrollable and is a threat to all the airlines basically low cost airlines and try to maintain low cost as much as possible.
2. New entrants- AirAsia have a high profit margin that attracts many competitors. There are many airlines entering into the market and can give a very strong competition to AirAsia.
3. Terrorism- Terrorism is considered as a very important factor that can be a threat to airlines. There are many terrorist attacks that happened in many countries. Such event breaches the safety of the passengers as well as the plane (Verma, 2010).
4. Negative perceptions- Sometimes passengers create a negative perception about all the low cost carriers and they avoid traveling in such airlines. So this is also a big threat for AirAsia (Kim & Eastin, 2015).

Marketing Capabilities:

Air Asia can increase its capabilities by enhancing and concentrating on existing policies. There are different methodologies for enhancing the management, advertising and selling capabilities of the airlines.  There is a high experienced management team that helps in the implementation of strategies to deploy the assets in order to create competitive advantage.

Dynamic Marketing Capabilities:

There is a changing market and new technology has been adopted to sustain in the competitive environment. It is important to create new resources to comply with the market changes. Air Asia needs to maintain a very strong relationship with its customers so that they can blindly trust on the services of the airlines. It can target another market segment for future growth.

The three strategies from the above four strategies that I want to choose for the growth of Air Asia are SO, ST and WT. These strategies can fulfill the basic requirements to sustain in the competition by making good profits.

There are different marketing strategies for AirAsia that can help in facing the strong market competition. These strategies have been created by analyzing internal as well as external environmental factors and different market competitions (Hunter, 2006). AirAsia is known for its specialized strategies related to low fare ricing but it is difficult to maintain sometimes due to rise in uncontrollable costs (Renzaho, 2007).

The three strategies for marketing plan are-

1. Pull and Profile Strategy- AirAsia can adopted a Pull strategy to make low fare campaign successful and to deliver all the information directly to the end user. It is important to convey correct and accurate information to the customers because it helps in increasing awareness related to the campaign. It also results in customer’s encouragement and involvement to change perception of the customer’s (GRZESIAK, 2015).They will attract towards the product and willing to buy the same. AirAsia used this strategy to attract the customers and make them purchase via their own website channel. This is how it can deliver accurate messages with the help of its website or social media by providing low fare tickets to the customers (Armstrong, Kotler & Opresnik, 2016).

AirAsia can also use Profile strategy by using separate messages by targeting all the stakeholders that are related to each other. AirAsia has different stakeholders like employees, customers, local communities and regulators (Kaleka & Morgan, 2017).This strategy also includes pull selling that basically requires high promotional activities to attract more customers and push strategy that force the organization to increase the demand of the customers. With the help of this strategy, AirAsia can use different marketing communication tools to deliver different type of messages. It can also promote its low fare campaign by using marketing tools.

1. Unique selling Propositions- AirAsia has its unique selling proposition and it is the strategy that is used by AirAsia by creating it as a low cost carrier and it helped the airlines a lot. AirAsia made its vision of becoming the largest airline that provides low fare and complete dream of average income people to make fly happen (Fisher & Freudenburg, 2004). It has a slogan that actually means a lot “Now everyone can fly” and it means low fare tactics that can enables customers to travel in flights. AirAsia can use different strategies that can help in making its low fare strategy successful.  Various strategies were adopted by AirAsia for the maintenance of their airplanes. First strategy was Safety First Strategy in which the organization replicates the other airline operations safety strategy and entering into partnership with the world’s recognized repairing and maintenance manufacturer. The second strategy is increasing productivity in which AirAsia applies High Aircraft Utilization to make sure that the cost is comparatively lower and at the same time productivity is high. The third strategy is simplicity, by which AirAsia is able to maintain low fare and maintain quality. The fourth and last strategy is diversification of distribution channels, thus, enabling customer to have real time information with a high degree of flexibility regarding booking information and the flight schedule information (Campling, 2008).
2. Diversification – AirAsia had developed activities in such a manner by which there is a high degree of diversification, and as a result, increasing effectiveness and efficiency. The first is Horizontal Diversification in which the company developed activities which are complimentary to company’s present activities. AirAsia has partnered with Awair, which is an Indonesian Airline. It enabled AirAsia to understand the conditions of local market of Indonesia, thus ensuring its growth and survival there. The second is Vertical diversification, i.e. directly undertaking its tickets selling activities without the intervention of an intermediary, through its own website and call center. The third is Conglomeration, in which AirAsia is having a back-up in case the airline industry falls down, thus enabling it to be above the water. But, for implementing the same AirAsia would be requiring a strong management as well as financial ability to make the business successful. If the strategy got failed then it can create some bad circumstances that lead to loss of money and resources.

In all the three strategies, according to me pull and profile strategy will be most suitable for Air Asia because customer satisfaction matters a lot for an organization. Sometimes organization is unable to understand the needs and requirements of the customers and they become failed to provide the required services to them (David & David, 2016). Air Asia is involved in direct sales so it can easily interact with the customers with its own official website and can know the feedbacks and reviews of the same. Pull and profile strategy can help the airlines to successfully convey their messages to the customers without any filter. It can help the customers by attracting them towards the organization and make them purchase low fare air tickets. Profile strategy is also considered very helpful because it mainly provides separate messages to its entire stakeholder and helps in increasing the demand of their products. There are different marketing communication tools that have different impacts. Air Asia can use all of them differently and utilize them in the best possible way (Johnsen, 2015).

Conclusion

Air Asia have to use different strategies related to market development and market penetration in future to face market competition. There are many strong competitors that can directly harm the market share. Air Asia has to focus in increasing the brand image and acquiring a high number of the customers. It can enhance the brand by promoting low prices, safe travelling and on time travelling experience. There are some negative perceptions among people regarding low cost campaign so it is necessary to change such perceptions. Air Asia has a very strong position in the Asian markets so it can be partners with some other strong airlines in order to expand the business in Asia as well as in the other parts of the world. As we have already discussed, Air Asia has a very strong management team that provides effective support to carry on business activities. It also provides the best guidelines to expand the operations. Air Asia also possesses some weaknesses that can be very harmful. There is a rise in fuel price that can create in impact to the low price campaign of Air Asia as well as other operators in the industry. This increase in the operational cost leads to fewer profit margins. But Air Asia can expand its operations in the other routes for specially India and China as there are middle income earners that needs low fare tickers to travel. Air Asia is an airline that has adopted direct sales with the help of website and call center. It has to become very careful while providing such facilities to the customers as internet possess a threat that can damage the business.

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