strategic marketing report part 5,6,7, ONLY

Political-Legal Factors

In January 2005, Indonesian authorities informed Civil Aviation Authority of Singapore (CAAS) that foreign LCCs will not be granted access to bigger cities but only to smaller Indonesian cities (Choo & Koh 2016).

In addition, the Ministry of Transportation of Indonesia made an impact on airline tariffs by passing new legislation in 2016 (Euromonitor International 2016). In order to protect the consumers, the new legislation involves decreasing the minimum and maximum tariffs by 5% in response to lower jet fuel prices.

The Open Skies agreement (aka ASEAN Single Aviation Market), which allows carriers from all 10 member nations (of ASEAN) to fly freely within the region. The agreement will boost travel around the region, help increase trade between the nations (Giridharadas 2016).

Furthermore, in 2017, TA Australia was forced to cease flights between Australia and Bali as there were conflicts with the Indonesian authorities (Ironside 2017). In addition, the solution would take about six months and it will compromise TA Australia’s ability to provide a low-cost air transportation to passengers (ABC News 2017). Therefore, TA made the decision of suspending the route permanently.

New ruling by the International Civil Aviation Organisation to replace Tokyo Convention with Montreal Protocol. Under current law, Singapore can only act towards unruly passengers if only he/she arrives on Singapore carriers. To overcome such issue, Montreal Protocol will be replacing Tokyo Convention. Singapore will also toughen its own regulations to deter against unruly behaviour.

The new laws will ensure safe and secure air hubs and seamless service by airlines.

Economic Factors

It is expected in 2016 that 1% of the world Gross Domestic Product (GDP) will be contributed in air transport which amounted to $740 billion (IATA 2016).

In addition, fuel prices are also being predicted an increment of $129 billion in 2017 and this will lead to an increment in operating costs on average by 18.7%. There will also be a rise in labour costs in the airline industry (Bachman 2017).

With Singapore having a slower economic growth rate ahead, LCCs are able to benefit from it with its affordable offering as consumers are more price conscious (Chia 2017).

Furthermore, the U.S. interest rate hike has caused many Asian countries’ exchange rates to be affected thus causing its citizens to be more frugal. (Chia 2017).

Socio-Cultural Factors

There is a high demand for passenger travel as it is estimated to rise by 6.9%, with 3.8 billion passengers to travel in 2016 (MarketLine 2016). With this, Tiger Airways may broaden its geographic boundary.

Moreover, there is psychographic and behavioural change in consumers in the airline industry. Initially, before the rising trend of low-cost carries, those ‘high-paying business travellers’ were more willing to pay for any price but, after the trend, they became more price-sensitive towards the idea of paying more to travel (Teichert, Shehu & von Wartburg 2008).

In addition, due to Singapore being a small country and densely populated, citizens constantly feel a need to have a getaway and travel overseas for holidays (Lim 2016). Furthermore, there are two factors that will affect the Perception of Quality by local and foreign passengers for Budget Airlines (CSISG 2016). They are the cabin’s cleanliness and choices of food and beverage.  

Technological Factors

Artificial intelligence could serve as digital assistant in the front-line operation for the airline. Using AI, airline can create a seamless travel experience and will be able to eliminate any human errors (BBC News 2017). More developed AI, however, will be able to provide more usage such as market intelligence, revenue management and many more that can bring competitive advantage to the airline. It can improve efficiency, drive down costs, increase customer satisfaction and potentially elevate revenue.

The use of virtual reality is not unheard of in the airline industry. Qantas have tested VR as an in-flight entertainment and using a VR app for marketing purposes such as providing immersive videos of Australian destinations (CNBC 2017).

Augmented reality can assist in wayfinding, entertainment and provide AR billboards that displays information. In 2016, Emirates offered the first interactive amenity kits in the industry (Emirates 2017). Implementing AR technology, Emirates customers can enjoy digital entertainment on their mobile devices.

Both VR and AR has a lot of growth in the airline industry. It main usage is largely focus on the added-value towards customer experiences.

Environmental Factors

As Airlines account for 2% of man-made global carbon emission, United Nation has proposed a voluntary scheme that aim to cap the aviation industry’s carbon footprint and Singapore has joined to be part of the scheme (Kaur 2017).

From 2021, all Singapore carriers must neutralise their carbon dioxide emission. Extra cost incurred will be borne by airlines and therefore, raising the overall price of air-travel. This can impact TA and reduce their attractiveness due to price hike.

Increase Power (+)

Decrease Power (-)

· N/A

· High barrier of Entry

· Players are willing and able to contest new entry

· Industry outlook is risky

The strict government regulations in the airline industry and the high capital needed to set up an airline decrease the attractiveness of this market. Within the LCC industry in Asia, there are also many established competitors that have cost advantages and reputable brand image that provide them competitive advantages. The LCC industry is a highly price sensitive market and extremely competitive therefore, actions (price war) will be taken if there’s a new entrant.

Increase Power (+)

Decrease Power (-)

· Few suppliers for aircraft manufacturing in the airline industry

· No substitutes for jet fuel

· High switching costs for aircraft suppliers

· Jet fuel is a commodity

· Substitutes for maintenance, staff and food providers

· Airline companies are the major customers of suppliers (jet fuel and aircraft manufacturing)

Large capital and intellectual property is required for aircraft manufacturing thus it is hard to backward integrate. For large aircrafts, there are only Boeing and Airbus, the two major companies for huge aircraft manufacturing, while larger but limited number of suppliers for small aircraft manufacturing. Therefore, there is high switching costs for aircraft suppliers. Moreover, there is no substitutes for jet fuel but it is a commodity hence it weakens the bargaining power of suppliers. There are also substitutes for maintenance, staff and food providers (such as SATS Food, Gate Gourmet and Flying Food Group). Suppliers also include airports (e.g. Changi Airport) as they provide infrastructure (such as parking and runway), and SATS which provides baggage solution. However, there is no doubt that the airline companies are the major customers of suppliers for aircraft manufacturing and jet fuel as they are for a long-term basis.

Increase Power (+)

Decrease Power (-)

· Mostly Standardized

· Low Cost of Switching

· Buyers are price sensitive

· Well-informed

· Cannot integrate backwards

· Buyers are small

The LCC services are mostly standardized, providing low cost fares and similar routes. Therefore, passenger have more options to choose from. Due to the highly competition and price sensitive market in LCC industry, there is little cost of switching beside the frequent flyer program. With today’s technology, buyers are more well-informed regarding the airline prices and level of services and able to find better deals.

However, the buyers in the market are numerous and lack financial muscle to integrate backwards. Bargaining power of customer is considered high due to the factors above.

Increase Power (+)

Decrease Power (-)

· N/A

· Lack of reliable substitute transport

· High cost in switching

Main factor in determining threat of substitute is the length of the distance. Short haul routes towards nearby cities or island such as Johor Bahru and Batam can normally use substitute such as land or water transport. While longer distance routes such as China and Taiwan, air-travel are best use for access.

Despite having a train routes from Singapore towards countries such as Thailand, Vietnam and China, it requires transit and take more time, therefore translating to a higher cost.

Overall, the price of substitute is rather low compared to air-travel, however, the quality and performance are incomparable, thus the threat level is low.

Increase Power (+)

Decrease Power (-)

· Buyer costs to switch brand are low

· Weakly Differentiated

· Highly perishable goods

· High exit barrier

· Numerous Competitors

· High buyer demand

The weakly differentiated offerings by LCC and the price sensitivity market allows buyers to switch brand based on the price factor. This results in price competition in the market to convince consumers to switch.

Rivalry increased as the services provided by airline is highly perishable coupled by the high fixed cost (aircraft fuel, manpower etc.) This will force price wars to ensure seats are fill to cut down on costs.

Within the LCC industry, there are many competitors (Scoot, TA, AirAsia, JetStar etc.), therefore rivalry will intensify when one try to gain market shares which can result in price war.

High barrier of exit also increase the level of rivalry as industry become overcrowded or firm cutting price to overcome financial trouble. Some example of exit barrier is difficulty in selling off used aircraft, cost associated with termination payment to workers, costs for contract violations and costs of abandoning valuable slots (IATA 2012).

Company

Tigerair

Singapore (Singapore Airlines 2016)

AirAsia Group

(2016)

JetStar Asia Airways

(2015)

Lion Air, Thai Lion Air (n.d)

Scoot (Singapore Airlines 2016)

AirAsia X

Group (2016)

JetStar Airways, Pacific,

Japan (2015)

Revenue passenger-km

9,551.1

Million SGD

68,434 Million MYR (Approximately: 22,075 Million SGD)

-

-

8,673.9

Million SGD

29,343 Million MYR

(Approximately: 9,465 Million SGD)

-

Number of Passengers carried

5.128 Million

56.59

Million

-

-

2.412

Million

4,866

Million

-

Fleet Size

23

172

18

138

12

30

105

Destinations

40

Destinations

Over 100

Destinations

22

Destinations

56

Destinations

18 Destinations

23

Destinations

Over 50

Destinations

Market

Short Haul

Short Haul

Short Haul

Short, Medium Haul

Medium, Long Haul

Long Haul

Short, Medium, Long haul

Freight/ Cargo Service

✘

✔

✔

✔

✔

✔

✘

LCC Consumer Segments

Segment 1:

Leisure Travellers

Segment 2:

Business Travellers

· Targeted a broad age group from 19 to 54. Older people aged above 55 most likely prefer full-service airlines (Mintel 2005).

· More price-sensitive due to low income. Value-oriented

· Mostly for short trip holiday

· Sees LCC as a mean for transportation only

· Favourite activities while travelling in Asia Pacific: 1st Wi-Fi, 2nd Meal, 3rd In-Flight Entertainment (Statista 2016).

· Targeting PMET (SME, Corporate)

· Price-sensitive due to market conditions.

· Look for frequency of flight and degree of flexibility in changing booking (Garcia, Rosell & Coenders 2011)

· Prefers Wi-Fi, convenience flight times, direct flights and comfortable seats (Singapore Tourism Board 2015)

· “Time is Money” mindset

· Bleisure: Travel for business and leisure

· India and Indonesia businessman more willing to travel in LCC

Firm Infrastructure

HR Management

Technology Department

Procurement

Supply-Chain Management

Operations

Distribution

Sales and Marketing

Service

· Fuel Procurement

· Route Selection

· Yield Management Service

· Aircraft Acquisition

(AIRBUS)

· Food and Beverage (SATS)

· Ticket Counters

· Gate Operations

· Aircraft Operation

· In-Flight Service

· Baggage Handling

· Flight Connections

· Car-rental/Hotel reservation.

· Booking channels

· Promotions

· Advertising

· Group Sales

· Customer Service

· Feedback Channels

· Lost/ damage Baggage Services

· Advantage Program

Inbound Logistic

· TA have a good relationship with Airbus. Both entity have signed long term agreement regarding the purchase of more fuel-efficient aircrafts. Coupled with the current fuel cost, this will help TA to cut down on fuel costs in the long run. Total fleet size of TA is 23.

· Through actively reviewing Asia route networks, non-performing route like Guilin have been suspended by TA and added frequencies towards selective routes and new destinations (Ipoh, Quanzhou, Lucknow) that are more profitable. Currently, the airline flies over 40 destinations across 12 countries in Asia.

Operations

· With Web Check-in and Direct-to-Gate services introduced by TA, customers can be move to their flights quicker, ensuring punctuality and improve flight turnovers.

· TA had signed a contract with Airbus for fleet technical management and inventory technical management for its A320ceo aircraft. The agreement will allow the airline to save US$20million on aircraft maintenance.

· TA SG in-flight services includes tiger bites and a magazine. While TA Australia operates on a ‘bring your own device’ basis and provide tigertainment through the passengers’ own devices. This allows them to remain less costly.

Distribution

· TA uses 3 distribution channels to sell their tickets. The firm utilise direct selling through its website and its mobile app. They also utilised travel agents through Amadeus and lastly, through ticket counters. Their multi-channel strategy allows the firm to expose to more customers and provide value such as convenience, albeit at a higher cost.

· TA also provide car rental, hotel reservation and holiday bundles to give their customers more value, allowing them to have a seamless booking experience. They also provide airport transfer services.

Marketing and Sales

· TA utilised mainly social media (Facebook, Instagram, twitter) for marketing purposes. This will help TA to minimise cost but lower exposure to other segment which don’t use social media.

· Multiple awards received by TA reflects its strong leading position in the industry.

Services

· Through its hotline and website, TA provides special booking, feedback and complain channels for customer. They also provide lost baggage services.

· CSISG (2016) reported that compared with other low cost carrier, the satisfaction score of TA (68.6%) overall services are lower than its competitors, AirAsia (69.9%) and JetStar (70.3%).

· Through SIA, TA has been incorporated into the Kris Flyer programme. This allow members to gain and redeem miles when traveling. Through the prestige of the programme, TA can differentiate from its competitors.

· Only LCC that offers extensive boarding pass privileges such as exclusive deals with local merchants (Hong Kong, Malaysia, Singapore, Taiwan). Such added value service allows TA to offer consumers more value and cost saving.

Firm Infrastructure

· The firm quality management of the aircraft is considered a weakness. In January 2017, a burning smell caused by a faulty fan in the ventilation system caused the flight to divert to Ho Chi Minh City. While in 2016, a fault in the braking system caused the passengers to switch aircraft, subsequently, the substitute plane was also experiencing engine problems. The incident caused a 5 hours’ delay. This will incur cost to the airline operation.

· Currently, SIA control over 90 per cent of issued share capital of TA. The organisation structure also included several veteran SIA executives to assist in planning, sales and marketing. Majority of SIA nominees had taken up most of the directorships on TA’ Board. Combined with the wealth of experience and resources SIA brought in, TA began to recover.

HR Management

· TA had encountered many issues arise from bad HR management. In 2010, TA Singapore cancelled several flights due to resignation of pilots due to remuneration problems. The airline’s Australia franchise was also suspended due to pilot proficiency.

· In the 2015 annual report, TA acknowledged the high turnover rate due to the uncertainty future of the firm and aim to attract, retain talents and manage attrition through salaries review, provide job mobility, career development opportunities and strengthen employee engagement. A bad HR management will incur higher cost in the long run.

Technology Department

· With product innovation like Tigerholidays, TA provide a seamless whole package travel experience for passengers on the internet. The airline will also focus on mobile engagement (TA App) and data analytics to communicate and understand passengers better.

· Both TA and Scoot utilized the same computer reservations system, with the integration into the SIA family, the two airlines had integrated their system to allow convenience when booking either airlines.

Procurement

· Tiger Airway Singapore entered an agreement with Airbus and Pratt & Whitney for the order of 37 fuel-efficient Airbus A320neo aircraft with Pratt & Whiney PW1100G-JM engines. The new aircrafts coupled with the new engine will deliver 15% greater fuel efficiency which translate to S$40 million in savings annually.

· Tiger Airway Singapore has also signed a decade long contract with Airbus for fleet technical management and inventory technical management for its A320ceo aircraft. It will cover the planning and management of aircraft maintenance. This agreement will help Tiger Airway to save up to US$20million.

Value Alliance (Strategic Alliance)

(TA Scoot, Cebu Pacific, Jeju Air, Vanilla Air, Nok Air, NokScoot & TA Australia)

Opportunity to Enhance Value & Market Access

· Over 160 destinations across Asia

· Allow consumers to book tickets and addition services in a single itinerary.

· Increase accessibility and convenience.

· Alliance allows member to reach beyond their own home market and reduce costs on distribution channel through leveraging partners existing means.

· Allow the alliance to challenge bigger players (JetStar and AirAsia).

Airbus (Strategic Supplier)

Competitive Strategy

· By outsourcing maintenance services on its aircraft, TA can save on labour and equipment costs.

SIA & Scoot (Internal Partnership)

Opportunity to Enhance Value + Skill and Resource Gap

· Kris Flyer programme from SIA allows TA to enhance value towards consumers and differentiate from competitors.

· Integration between Scoot and TA will benefit both and fulfil any skill and resources gaps, improving their operational and commercial synergies.

· With SIA as the parent company, TA will benefit from its experience, capabilities, resources and brand image.

SATS (Strategic Supplier)

Competitive Strategy

· TA need to keep its cost low to have a competitive advantage in the LCC industry. Collaborating with SATS on outsourcing food and ground services, it allows the firm to maintain its low cost.

NTUC (Strategic Partnership)

Opportunity to Enhance Value

· Partnership with NTUC by offering travel benefits (Boardmefirst, $5 off upsize luggage) to NTUC members.

· Benefit both entities as TA will gain potential customers while NTUC add value to their members.

Cebu Pacific (Strategic Alliance)

Opportunity to Enhance Value + Resources Gap

· Allow TA and Cebu Pacific to expand their network by leverage each established network in South East Asia, India, Philippines and North Asia.

· Provide greater connectivity to travellers and value.

Valuable

Rare

Inimitable

Non-substitutable

Customer Service

No

No

Yes

No

Destination

Yes

No

Yes

No

Food Variety

Yes

No

Yes

No

Food Quality

Yes

No

Yes

No

Seat Comfort (leg space)

No

No

Yes

No

Flight Punctuality

Yes

No

Yes

No

Additional Services

Yes

No

Yes

No

Special Needs

(allow guide dogs on-flight)

Yes

No

Yes

No

Internal Strength

Integration with Scoot

Integration between the 2 airlines allow economic of scale and the expansion of routes, therefore opening more opportunities.

Experienced Management

The management team are experienced and capable ex SIA veterans. Their experience will benefit TA and allow improvement in their management.

Strategic Partnership

The value alliance allows TA to open out its network and able to resist strong competition in the industry.

Strategic alliance with Cebu Pacific allow TA to expand its network even bigger and providing more value to customers.

Partnering with Kris Flyer, a prestige loyalty program by SIA allows TA to better differentiate from its competitors.

SIA

With SIA as the parent company, TA can leverage on its resources and brand image.  

Boarding Pass Privilege

TA is the only airline with an extensive boarding pass privilege that offers better deal from local merchant. This can attract consumers who are more price conscious.

Strong Market Position and Brand Identity

TA has a strong position in the LCC industry and have won several awards in the past year. The awards are a testament of TA leading position which can be used for promotion means to attract customer.

Internal Weakness

Customer Service

TA compared to its competitors (JetStar, Air Asia) score lower satisfaction score according to CSISG (2016). As airline is a service operation, it is essential to deliver satisfaction to customer beside having low price.

Lack of Management Depth

There is a management problem as there have been issues on quality management and HR management. Such problems will incur higher cost for TA.

Lack of Differentiation

TA and its competitors are offering standardised services. There is no clear differentiation between them which increases the rivalry and bargaining power of buyer. Compared to other airlines, TA also provide lesser offerings to business traveller segment.

Asia Network

TA focus on only short haul flights in Asia. Therefore, the limited operations make it vulnerable to the political and economic risk in this area.

In-flight Entertainment

Compared to the other LCC. TA do not provide any in-flight entertainment add-on beside a magazine. TA also do not provide Wi-Fi which is an important factor for both leisure and business segment.

External Opportunities

Increase in Global Demand / Tourism Industry Bloom

Positive outlook in global airline traffic as Asia-Pacific will see an extra 1.8 billion annual passengers by 2035.

China and India will be the growth engine of LCC market.

This will increase demand for air travel.

New Technology

VR and AR

Economic Downturn

TA can benefit as consumers will be more price conscious.

Business Traveller

Business Traveller market in Asia will become the biggest market globally. Provide higher revenue than leisure traveller. Especially in China and India.

ASEAN Open Skies

Allow LCCs to fly freely within SEA. Past restrictions are lifted, clearing path for expansion and more routes.

Cargo Services

TA don’t offer cargo services currently, therefore, it is an opportunity to expand into cargo.

External Threat

UN Scheme

TA will be affected by the UN Scheme as cost incurred will pass on to consumers.

Intense Competition

· Many competitors

· Low switching cost

· Lack of differentiation

Increase of Buyer Power

Due to the standardized offerings, price sensitive market, variety of competitors and ease of collecting information, consumers can select which LCC to patronise, therefore, TA need to minimise pressure from buyer.

Fuel Cost Rising

It is expected for fuel cost to rise in the upcoming years, which will impact TA overall expenses.

TOWS Analysis

Internal Strength

1. Integration with Scoot

2. SIA veteran management

3. Strong Market Position and Identity

4. Strategic Partnership

5. SIA

6. Boarding Pass Privilege

Internal Weakness

1. Inflight Entertainment

2. Customer Service

3. Lack of Management Depth

4. Only focus on Asia network

5. Lack of Differentiation

External Opportunities

1. Increase in Global Demand/Tourism

2. New Technology

3. Economic Downturn

4. Business Travellers

5. ASEAN Open Skies

6. Cargo Services

Strategies that use strengths to maximize opportunities

· Merging with Scoot to increase capacity, network and operation synergies to capture the growing market (China and India)

· Increase the benefits of pass privileges in more countries.

· Leveraging on SIA and Scoot expertise and experience on business travellers to create better regional route offering.

· Increase routes in SEA and access more airports.

· TA can partner with SIA cargo to provide cargo services in the region.

Strategies that minimize weaknesses by taking advantage of opportunities.

· Targeting the business traveller segment with better offerings to compensate for lack of differentiation.

· Research on routes that will increase in demand and focus on it.

· Using technology to serve as front line operation to increase efficiency.

· Developing AR in mobile app for a variety of functions (way-finding, information)

· Expand to Asia-Pacific through Scoot and Alliances.

External Threats

1. UN Scheme

2. Intense Competitions

3. Buyer Power

4. Fuel Cost

Strategies that use strengths to minimize threats

· Following its parent company, TA can hedge fuel while the cost is low.

· Leveraging on SIA and Scoot reputation and expertise, TA can differentiate itself.

Strategies that minimize weaknesses and avoid threats

· Differentiate the offerings (Ultra low cost (Spirit) vs Differentiated (Southwest)Model)

· Merging with Scoot

· Finding partnership in big and emerging market such as India and China.

Pursuit of Excellence

· Highest professional standards

Safety

· Highest standard in Safety

Customer First

· Going extra mile to exceed their expectations

Concern for Staff

· Provide training and development

· Care for well-being

Integrity

· Strive for fairness

Teamwork

· Working together with pride

Portfolio Strategy

(SIA, Silk Air, Scoot & TA)

Portfolio of both full-service and low-cost airline provides short, medium and long-haul. A comprehensive coverage on the air travel segment, allowing market extension.

Multi-Hub

(Vistara &NokScoot)

Expansion via joint venture into India and Thailand to create new growth in key markets.

Strengthening Premium Positioning

Strengthening through service excellence, product leadership and network connectivity. This can enhance differentiation.

New Business Ventures

Airbus Asia Training Centre, joint venture between SIA and Airbus

Main Offering

Singapore Airlines

Providing full service airline + Long haul

Subsidiaries

Horizontal Integration

Silk Air

Providing full service airline + Regional

Budget Aviation Holdings (TA & Scoot)

Providing low cost + Long haul+ Regional

SIA Cargo

Cargo delivery

Backward Integration

SIA Engineering

Maintenance, repair services etc.

Related Diversification

· Current corporate strategy employed by SIA is related diversification.  This can be inferred from their current strategies and past acquisition.

· Related diversification is when a business expands its activities into product lines that are like those it currently offers.

· In this case, SIA diversify using its subsidiaries into different air transportation market.

· Underlying reasons for SIA to diversify are to capture lucrative market (Joint venture), expand its offerings to appeal to different market (Full-service & Low-Cost) and to reduce competitive pressure in the full-service airline industry (risk spreading).

· By employing related diversification, SIA enjoys increase profits, resources sharing, economic of scales between its subsidiaries and create synergy effect (TA & Scoot).

· SIA can also expand its network further into China and India through its diversification as these 2 have the biggest growth.

Human Resource Management Strategy

Currently, Tiger Airways is focusing on a low-cost strategy. Customers of Tiger Airways tend to have lower expectations for the quality of service from cabin crew as they are paying for low fare tickets (Wittman 2014). Hence, the recruiting requirements for cabin crew are not strict (Tigerair 2017).

However, cabin crew should still possess with good communications skill and have passion for customer service such as attending to customer’s needs on-flight. They can also join the company with or without experience.

Marketing Strategy

Tiger Airways aims to gain its market share in the low-cost airline industry. By adopting its current business strategy - low-cost, it tries to stimulate demand by offering cheap travel deals to the customers through the formation of Value Alliance and the integration of Scoot. This, in return, is to aid in achieving their objective.

Furthermore, it is currently using the pull strategy to create brand awareness as it advertises their products and services through its website, mobile application and social media (such as Facebook, Twitter and Instagram). It also partners with Indonesia’s Ministry of Tourism to allow customers to have discounts using promotional codes when booking flights to Jakarta and Surabaya (Tigerair 2017).  

Strategic Option 1: Frontal Attack

Opportunity Identified

· Lack of differentiation hence no brand loyalty

· SIA customer service reputation

· SIA resources (promotion strength)

· Basic customer service across competitors

· Competitors have lower operating cost than TA

· Integration with Scoot enhance TA overall resources and capabilities

Advantages

· Illustrate differentiation and better services over competitors

· Best competitive strategy in the current market condition

· Can win over higher value customers and grow shares

Disadvantages

· Lengthy retaliation from Competitors with low prices or similar model – High cost

Financial Implication

· High due to long sustain marketing activities to show customer the new differences and position

Strategic Option 2: Guerrilla Attack

Opportunity Identified

· Growing business traveller segment in Asia

· Higher profit margin from Business segment

· Untapped market for TA

· India, growing market + India businesses willing to take LCC

· Experienced in business traveller market (SIA, Silkair, Scoot)

· Aligned with SIA corporate strategy

· Competitors have established business segment and is satisfying them

Advantages

· Attract a share of customers from existing segment served by competitors

· Prevent retaliation thus saving resources

Disadvantages

· Not a prolong solution

· Must lower prices which will incur higher cost in the short-run

· Cannot take too many shares if not will be caught

Financial Implication

· Moderate to High

· Lower profits and higher marketing cost due to sales promotion and local marketing activities

Situation Assessment

Current market offers basic level of customer services which provide little differentiation and lack of customer loyalty. Therefore, there is opportunity for TA to take advantage of by providing high level of customer services and unique culture to garner loyalty. Through differentiation analyser strategy, TA will be able to gain competitive advantage and defend its share.

Target Market

Leisure travellers – Price Conscious but willing to pay slightly higher prices for better services

Marketing Objectives

· Build brand awareness (differentiation)

· Increase sales

· Grow market shares

· Enhance customer relationship and loyalty

Targeting and Positioning Strategies

· Position TA as the carrier that provide high customer services at low cost.

Incorporating Marketing Mix Components

Product:

· Improve TA product through increase level of service quality.

· Service quality improvements through recruitment of employees with TA’s personality, better work incentives that reward based on customer services and having customer centric policies (flexible cancellation)

· Building a strong and unique brand personality.

Price:

· Low Cost Pricing + Competitive Pricing

· Price maintain low in the short run to allow customers to experience the new services and build perception.

· Long run – Apply competitive pricing and price slightly higher than competitors to reflect quality.

Place:

Internet based selling

Promotion: High Level of Promotion

· Main promotion message is to show the difference in the level of services provided between competitors and how TA differentiate from other LCC.

· Long marketing campaign to change target audience perception.

· Using both traditional (Newspaper, TV and Radio) and new (Social Media) advertisement to spread the message.

· Having special discount to gain short-term sales to let customers experience and build WOM.

· Increase the interactivity between customer and TA

Situation Assessment

Currently, TA do not offer any business class offering.

Research shows that business travellers are willing to pay more and provide a higher profit margin than leisure travellers. The business travellers market is also the highest globally therefore, it is a profitable market.

Asian businesses travellers are becoming more cost conscious and prefer to fly on airlines which offer bundle deals (E.g. inflight meal(s), priority check ins). They also have a different set of preferences. However, out of all the Asian business travellers, Indian business travellers are one of the most willing to fly with LCCs (McKinsey&Company 2015). However, a criterion is the airline having to offer digital services such as inflight Wi-Fi (McKinsey&Company 2015).

The integration of the new offering will provide TA with higher revenue.

Target Market

Price conscious business clients in India

Marketing Objectives

· To gain shares in the business segment by “stealing” from major competitors

· To increase brand awareness

· To cultivate loyalty

· Establish in the India Market

Targeting and Positioning Strategies

· Position as a low-cost business class with high customer service than competitors

Incorporating Marketing Mix Components

Product:

· New business class offerings with additional services such as Wi-Fi, comfortable seat, leg space, in-flight entertainment, direct boarding and flexible booking changes. Provide Kris Flyer program and lounge services (Singapore).

Price:

· Low Cost and Competitive Pricing

Place:

· Through online selling

· GDS

Promotion: Low-Moderate Localised Marketing

· Sales promotion to attract new buyers, allowing them to try the new service and induce WOM

· Localised marketing effort in India to induce brand awareness and growth of shares

· Comparative promotion to show differentiation in offerings