Case Analysis on Airline Industry

Case Analysis on the Article, ÐŽ§Competitive

Turbulence in the Airline IndustryЎЁ

(Segmentation, Targeting

and Positioning)

EXECUTIVE SUMMARY

Airline industry has 4 sectors identified:

Full-service, Budget, Limited-service, Premium-service

Segmentation and Targeting:

Psychographic, Behavioral, Geographic and Demographic

Positioning:

Value proposition matrix (more for more, less for less, etc.)

Conclusion and Recommendations:

„« SIA in marginal value proposition position, needs to boost promotions and sales pitch.

„« Low-cost carriers have good customer attraction value, must boost customer retention through loyalty programmes.

„« SIA must have clear positioning, i.e., ÐŽ§The Best Airline in SEAЎЁ

TABLE OF CONTENTS

page

Title page ÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽK. 1

Executive Summary ÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽK... 2

Table of Contents ÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽK... 3

Introduction ÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽK.. 4

Product Analysis ÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽK. 9

Positioning strategy ÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽK 9

Segmentation and Targeting of Customer groups ÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽK 12

Conclusions ÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽK. 17

Recommendations ÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽK.. 19

Summary ÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽK.. 21

Bibliography ÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽKÐŽK. 22

INTRODUCTION

As technology rapidly develops in the 21st century, so are goods and services in the competitive market. The airline industry in Asia is one of those undergoing ÐŽ§a tidal wave of changesЎЁ, causing a drastic alteration in the business landscape. Some of these changes were not heard of before, such as nonstop air travel from Singapore to USA, and even the kinds of entertainment systems provided onboard the plane.

Moreover, the grueling battle between prolific companies to compete for customer attraction and in the end, loyalty, resulted to further segmentation of the airline industry. Apart from the established full-service airlines (i.e., Singapore Airlines), three other market positions budded. They are: budget airlines, limited-service airlines, and premium-service airlines.

In 1972, Singapore Airlines (SIA) was created from the divergence of Malaysian-Singapore Airlines Ltd. A year later, it came to be a full-service airline with destinations as far as Australia and London. It has remained competitive by being always on the money when it comes to equipment acquisition and the latest in aircraft technologies, as well as the interior aesthetics of the plane and good entertainment of the riding passengers.

However, the dynamics of the airline business has always been fast. And the people behind the works get smarter. Can Singapore Airlines stay at the height of its glory by giving exactly what customers really expect to get?

The cultural and social impact due to the rapid changes of the means of moving about followed the trend of the airline industry, being the fastest way to reach a certain place at an agreeable cost. People nowadays can easily go to 3000 kilometers in just one day. This is due to the fact that as airlines got competitive, lowering the price is one of the easiest means to capturing new customers and keeping current ones. The budding budget airline did just that.

Unbelievably low prices are tagged to domestic and regional flights by Air Asia, a budget airline based in Malaysia. The carrier managed to reduce greatly on its price by means of no-frills policy. This means no free meals, snacks and drinks; no free excess baggage, no refunds. In general, no luxuries in any form whatsoever, unlike the full-service airlines. The customer pays the ridiculously low price, hops aboard for 2 or more hours, and reaches his destination quickly without hassle and complications.

Another budding airline sector in Asia is the limited-service airlines, started by Mr. Tony Fernandes with its carrier, Valuair. This category emphasizes that low cost does not necessarily mean no-frills. After all, passengers are customers and that each has at least a single demand, such as meals and drinks, that need to be satisfied.

Premium-service airlines, on the other hand, follow the ÐŽ§first-class frillsЎЁ model. Prospective passengers pay very high prices and in return experience only the best in air travel ÐŽV champagnes, leather seats, spacious legroom, no more dreaded middle seat. One example of a premium-service airline is the Midwest Express Airline in the United States.

In this case analysis, the four airline categories are discussed with depth based on their segmentation,

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