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June 17, 2014

Marketing An Organization: Air Asia Case Study

Introduction
Considering the economical grounds and factors it is important to mention that the global economic meltdown has posed a serious threat to the progress and development of the global aviation industry and at the same time also manifested its adverse ramifications upon the manufacturing potentials of aircrafts. Due to the pinch of the financial turmoil airlines had to look towards different countries like China and Japan where airlines were readily making ground to welcome them through their cheap labor and expenditure cost. As a result of these changes that took place in the post-recession years many airlines had to put their social responsibility at stake by signing contracts with airlines of different countries that could provide them with the manufacturing services of their aircraft. One of such companies which will be assessed through various dimensions during the course of this discussion is Air Asia Airline.
Q. Explain the various elements of the marketing process
Elements of Marketing Process
Earning good profit is the basic and one of the most important goals of every business (Dwyer & Tanner, 2006). To achieve the targets it is necessary to build up some strategies apart from company’s contribution echelon. The marketing strategy should be able to reach the target audience. Only the product with this kind of strategy survives in the market (Bygrave and Zacharakis, 2009).  In order to maintain the consistency of standards, the marketing strategy of any organization plays the most pivotal part and it is the strategy part where the company has been able to acquire the greatest leverage in the financial mainstream.
In order to devise an enforcing and appealing market strategy for success and in order to catalyze this process, there are some core elements of marketing process which are as follows
In the different stages that comprise the development and formulation of an effective and sustainable business strategy, it is extremely important that the product being designed is able to deliver its message at the niche market segment it caters.  Choosing the right target market with greatest potential is a tedious task.
The process of segmentation has emerged as an immensely crucial aspect of marketing dynamics in modern day corporate culture. The phenomenon of segmentation involves the pooling of opinions from all different stakeholders of the company regarding the ways through which the product can undergo development. With the help of this process there are a number of advantages of varying nature that an organization can easily extract.
            First and foremost segmentation provides a sustainable outlook to the product and clarifies its position and presence in the market. Furthermore it also intends to act as a perfect medium through which an organization can connect with the different components that are integral for the development of the product. In addition to this the process also serves in the creation of a working environment in which customers can easily be attracted and retained at the same time.
The concept of positioning stems from the fact that consumers always have a certain perception of the products and brands on the market (Linneman & Stanton, 1991). Positioning the company to identify the product or brand in the consumer's mind, clearly indicating its difference over competitors. This is the place of the brand or outlet in the consumer's mind that is clearly different from its competitors and meets the expectations of the target.
In a competitive environment there are many influences and factors that need to be considered when planning the promotion of a product. First and foremost an important factor that comes into play is that the product that has been made caters to the need and requirements of the niche market for which it has been manufactured for. It is yet again important to mention here that promotion is an integral constituent of the promotional mix that is required for the marketing of a product (Sutherland & Sylvester, 2009). The promotion that is effective enough to communicate with its customer can help it in growing its business rapidly.
Q. Evaluate the benefits and costs of a marketing orientation for a selected organization

Marketing Orientation
Consumers typically choose products and services that give them the greatest value. The company must develop a way among others to see its market existing and / or potential. It requires, therefore, the adoption of various marketing orientations that are: production orientation, product orientation, sales orientation and market orientation.
·         Production Orientation: In this situation, the company focuses on the efficiency of production, distribution and costs, in order to attract customers to their product / service;
·         Product Orientation: The thought of this approach is that the customer buys the product / service for the satisfaction of his needs. Example, companies in the field of education, information etc;
·         Sales Orientation: Here the prevailing concept is that the customer will not buy as it is not persuaded by a positive method of sale. The focus is thus on sales techniques, rather than on the needs of the customer. Such as insurance companies and banks etc.;
·         Market Orientation: A company that adopts a market orientation is a marketing company that focuses on the needs of its clients. Prospects are radically different from those of production, product and selling. Such as travel companies, supermarkets etc.
The orientation of the business is a marketing strategy aimed at developing competitive advantage of the company seeks to add value to their product / service to satisfy the customer and make a profit (Fifield, 2007). The successful entrepreneur in the adoption of a marketing orientation of its business is able to reinvest its profits in its business and / or even invest in other companies that have an orientation different from his.

Other factors influencing Marketing decisions
Contemporary analysis of the aviation industry shows that major stakeholders are not threatened with competition, but it is basically the number of suitable alternatives available that serve as a key threat to their progress. Keeping this in mind we can now look at the case and challenges that AirAsia encounters in the planning of a counter culture market and advertising strategy. It is a low-fare airline, hence the mode of its marketing is restricted through the kind and nature of products that they deal with,
In these competitive times all organizations intend to introduce measures that can bring creativity in the way they market and advertise the products that they manufacture. In order to fulfill this objective the importance of exclusivity has enhanced phenomenally in contemporary business. One of the basic benefits that this element helps in obtaining is that such businesses are able to cater their own niche target market through the way they intend to advertise their market.
Secondly, it is the exclusive nature of the business and their market strategy that entices different demographic segments to know about the brand and its dynamics.
Third and most important is that such measures collectively help in increasing the revenues that are produced by the organization which is the most important in contributing to the success and development of the organization (Dwyer and John, 2006).
In contemporary corporate mainstream some of the novel media that have emerged to play pivotal role in the field of advertising is the social media and networking. Facebook, Twitter and MySpace have emerged as hot beds of advertising as well as for the effective conduction of promotional campaigns for any venture that the business is going through. With the help of these venues and frontiers a business can also easily track the traffic that is arriving at the website as Google provides this facility in the form of Google analytics. By means of the traffic that is arriving at the website and the place which is attracting massive attention the company can take subsequent steps in formulating their very own corporate strategy and hence can target their new designer’s bag at the correct niche market and as per their requirements (Paul, 1997).
It is necessary that the advertising media should reach but not overreach the present or desired market. From among the many media available, AirAsia chooses those that will provide the greatest return for the advertising dollar. Selection of the right combination of advertising media depends upon the type of business and its governing circumstances. In this particular case Television, Internet, magazines, billboards and newspapers are the most appropriate mediums for advertising.
Q. Propose segmentation criteria to be used for products in different markets

Segmentation Criteria
The question of purchasing power is a key issue for companies. It particularly impacts on the sensitivity of consumer prices and hence the intensity of the competition by the suppliers offering the lowest cost. In a situation where the purchasing power is declining, especially develops a request for an offer, the least expensive possible. Positioning a company as "low cost" literally cost low, then seems to be the key winning strategies, responding to concerns of consumers who are concerned about the "cost of living", combining profitability and social responsibility of the company.
Air Asia is one of the most profitable airlines in the world: 25% of net profitability, as well as Nintendo, Google, the luxury industry or the oil industry. Just fill it to 50% its aircraft to be profitable. Its employees are three times more productive than its competitors (Meghan, 2002). Seat / km costing 2-3 cents in Air Asia, 3-5 against its competitors in low-cost and 10 cents for traditional companies. Air Asia sells tickets below cost price of any of its competitors, to 4 cents per passenger kilometer, when its competitors have to charge at least 7 or 8 cents to be profitable.
Despite its concrete price (40 Euros for Chiang-Mai/Bangkok or € 250 a go / single Paris / Kuala Lumpur) Air Asia is continuously hiring hosts and hostesses to look young, beautiful, smiling and attentive to clients. Air Asia is known for its amazing punctuality as well as it is also the best low-cost airline in the world in 2009, 2010, 2011 and 2012. Enough to reassure customers.
Air Asia has 105 aircraft and has ordered 315 more. What company is confident enough to estimate that demand will be multiplied by 4 in a few years. It is as if EDF with its 60 nuclear decided to build 180 new; even Ryanair did not order as many planes. AirAsia ordered 200 A320 Neo list price: $18 billion. It probably negotiated a huge discount for this order, the largest in the history of aviation. But it did not talk about it, especially in Europe supporting the European industry. Not bad for a company establishing itself gradually in Europe. Aircraft ordered by AirAsia are 15% more fuel efficient. What to save and offer even lower prices, while reducing maintenance costs (one model, new aircraft), killing the ecological criticism in the bud (flight Greenest its class) while promoting its brand.
Q. Choose a targeting strategy for a selected product/service

Targeting Strategy
Before deciding upon the different ways through the help of which AirAsia can be promoted it is also important to have a thorough idea about the nature and quality of the service. It is basically the nature of the service that determines the target audience and niche market to which the service can cater and interest to. In order to filter the demographic segment of this target segment and make it more customized, it is important that the nature and type of Airline is being created and marketed is also worth considering that will ultimately determine the demographic and psychographic segments of the target population.
It is important to develop and incorporate features through the help of which the facility of interaction with customers can easily be promoted. In order to fulfill this objective it is important that the AirAsia do contain and encompass features through the help of which it can easily facilitate this practice. As AirAsia adopts cost differentiation policy, hence its target market is middle or lower class families.
Q. Demonstrate how buyer behavior affects marketing activities in different buying situations

Buyer Behaviour
Some of the reasons due to which AirAsia have gained immense popularity are because of two prime determinants in the design of their service. Firstly, an organization like AirAsia in order to cater its massive target audience that can appeal to a wide population of the country in terms of affordability and economic value. The prices of AirAsia are extremely affordable for customers all over the country (Bordenave,  Belis-Bergouignan & Lung, 2008).
Buyers of other similar economies are also looking for places and areas where they can easily find an airline at an affordable price, hence the pricing quality and strategy that the organization has been following will come in handy for AirAsia to establish its place and subsequently stabilize it, in similar economies, despite the presence of major competitors. Along with all this, there is yet another area where AirAsia on the whole have an added advantage over its competitors is also in the form of innovation that it has introduced in the region with its latest technologies.
It is among the few airlines that has explored the frontier of introducing air services that can be run and operated on the basis of using technology that is renewable and ecological friendly. At present no other airline is offering such innovative price and packages to their consumers. With the help of all these distinctive features and characteristics AirAsia has ample opportunity to establish its strong and stable base in the region which can be effective for the organization and all other related stakeholders in the long run.
Q. Propose new positioning for a selected product/service
The concept of positioning stems from the fact that consumers always have a certain perception of the products and brands on the market. Positioning the company to identify the product or brand in the consumer's mind, clearly indicating its difference over competitors. This is the place of the brand or outlet in the consumer's mind that he is clearly different from its competitors and meets the expectations of the target.
AirAsia has established its positioning strategy as cost differentiation policy and positioned the airline as a low cost airline which is very affordable to the middle class families. This positioning strategy provides a solid ground to AirAsia to fight against their customers in order to achieve the major market share.
Q. Explain how products are developed to sustain competitive advantage

How to sustain competitiveness?
Scholars are of the opinion that value and competitive advantage can be created either by reducing the cost of the product or differentiating the product from other similar products (Ceccagnoli, 2005). In order to sustain its competitiveness, AirAsia faces the constraint of presence in emerging markets, whose growth rate is high.
Homogenized in a market, AirAsia avails the benefits of high volume of customers. Such a configuration would allow a division of labor across the world to specialize areas of activities for which they offer comparative advantages and cross-flow generating assets and services in a liberalized world trade. This implies that the convergence of the request is made possible by the reduction of differences in development levels between countries, a relative homogenization of lifestyles (urbanization, highways) and shared cultural references. The heterogeneity of the world would be more than the specific resources.
Q. Explain how distribution is arranged to provide customer convenience

Distribution Strategy
For AirAsia, major investment in marketing is carried out and the distribution is done in a selective manner. AirAsia positioned itself exclusively in highly selective and demanding circuits and has dedicated specific ranges. Distribution networks thus seem well diversified geographically and adaptation is desired and achieved (Fitzgerald, 2008).
The distribution strategy can be improved by increasing the intensive distribution strategy, which increases the selling point through different outlets. The distribution can also be extended by co-branding and aligning of brands with different channels, which is also very good in globally standardizing brands.
Q. Explain how prices are set to reflect an organization’s objectives and market conditions

Pricing Strategy
AirAsia airline is introduced at much lower cost to attract persons of middle and lower income groups. The price would cover all marginal or incremental costs- that is, those costs specifically incurred to get the added business. In the long run, however, all overhead costs must be covered as well (Haynes, 1962). Customers typically choose products and services that give them the greatest value. Thus, AirAsia also wants to position itself on the key benefits that it offers relative to competing models. AirAsia, though, emphasizes on lower cost but also offers good quality, design and style.
Q. Illustrate how promotional activity is integrated to achieve marketing objectives

Promotional Strategy
In contemporary corporate mainstream some of the novel media that have emerged to play pivotal role in the field of advertising is the social media and networking. With the help of these venues and frontiers a business can also easily track the traffic that is arriving at the website and the place which is attracting massive attention the company can take subsequent steps in formulating their very own corporate strategy and hence can target their vehicles at the correct niche market and as per their requirements (Paul, 1997).
Q. Analyze the additional elements of the extended marketing mix

From among the many media available, AirAsia chooses those that will provide the greatest return for the advertising dollar. Selection of the right combination of advertising media depends upon the type of business and its governing circumstances. In this particular case Television, Internet, magazines, billboards and newspapers are the most appropriate mediums for advertising. It is necessary to plan the budget for adverting very wisely.
Q. Plan marketing mixes for two different segments in consumer markets

Marketing Strategy for other segments
The analysis of the trajectories and performance of airlines in the Twentieth century has updated two essential conditions for profitability. The first is the relevance of "profit strategy" to the "growth mode" countries in which the firm operates. The second is the construction of a "compromise of corporate governance" between key actors to implement means consistent with the profit strategy, in other words, to invent or adopt a "productive model" (Boyer et al, 2010).
For marketing for other segments, AirAsia will follow the innovation and flexibility strategy while targeting the middle and lower income people for whom the cost is most important (Anderson & Narus, 2010).
Q. Show how and why international marketing differs from domestic marketing

Local versus Foreign Markets
In this changing context, AirAsia is engaged in two possible internationalization scenarios, i.e. globalization at one hand and the regionalization on the other. However, the implementation of internationalization strategies reveals more complex configurations. The scenario of globalization involves homogenization of the global market, which tend to unite through the gradual convergence of services offered in different countries.
The success of a policy of internationalization depends primarily on the relevance of the strategy to profit of the firm with respect to growth patterns of new countries invested.  While entering into the new international market, AirAsia closely consider the cultural dimension of the market.
In order to remain active and progressive in the market AirAsia has to identify new routes and markets (Davies & Lam, 2001). Being a low-fare airlines, AirAsia has to identify such potential new routes and markets which have the following characteristics:
·         The area of the potential new market is large enough to introduce new profitable routes;
·         The demand of a low-fare airline is high among the local population;
·         The region is economically viable and new industries are emerging;
·         The region must have a large population;
·         Maintenance facilities are available
·         Cross cultural business is growing etc.



References
 Anderson, James, C. & Narus, James, A. (2010). Business Market Management: Understanding,
Creating, and Delivering Value. 3rd Edition, Prentice Hall
Boyer, R., Charron, E., Jurgens, U. & Tolliday, S. (2010). Between Imitation and Innovation.
The Transfer and Hybridization of Productive Models in the International Automobile Industry. Oxford University Press.
Bygrave,  D. & Zacharakis, William, A. (2009). The Portable MBA in Entrepreneurship. John

Wiley and Sons.

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