STRATEGIC GLOBAL MARKETING

STRATEGIC GLOBAL MARKETING

10/18/2012SCHOOL OF BUSINESS AND LAW

Abstract:The purpose of this study is to discuss the global marketing strategies of Air Asia. This study starts with the brief background of Air Asia. The main aim of this study is to evaluating the marketing strategies of Air Asia. To evaluate overall marketing strategies, the author discussed about Air Asia’s marketing mix and expansion strategy, the pros and cons of these strategies of Air Asia. To find out the effectiveness of Air Asia’s global marketing strategies, the author compared air Asia’s marketing strategies with its main competitor Malaysian airline’s marketing strategies. After finding the result from the discussion, the author tried to find out the new market for air Asia and proposed a marketing plan. At the end of the study, the author had given some recommendations for Air Asia to improve the strategies to go internationally.

Nowshad M Shawon Page 1

Table of Contents1. Introduction:..................................................................................................................................3

1.1 Background of the company:.................................................................................................3

1.1.1 Vision of Air Asia:...........................................................................................................3

1.1.2 Mission of Air Asia:........................................................................................................3

2. Evaluating the Strategies of Air Asia:.............................................................................................4

2.1 Marketing Strategies:.............................................................................................................4

2.1.1 Marketing Strategies which are taken by Air Asia:.........................................................4

2.1.2 Marketing Mix:...............................................................................................................5

2.1.3 Marketing Mix of Air Asia:..............................................................................................5

2.1.4 Pros of Air Asia’s marketing strategies:..........................................................................5

2.1.5 Cons of Air Asia’s Marketing strategies:.........................................................................6

2.2 Globally Expansion Strategy of Air Asia:................................................................................6

2.2.1 Pros of Expansion Strategy:...........................................................................................6

2.2.2 Cons of Expansion Strategy:...........................................................................................7

3. Actions & Decisions would make, if author were appointed as the CEO of Air Asia:.........................7

4. Competitors of Air Asia..................................................................................................................8

4.1 Porters Five forces analysis....................................................................................................8

4.1.1 Barging Power of Suppliers:...........................................................................................8

4.1.2 Barging Power of Buyers:...............................................................................................9

4.1.3 Threat of New Entry:......................................................................................................9

4.1.4 Threat of Substitute:......................................................................................................9

4.1.5 Competitive revelry:......................................................................................................9

4.2 Malaysia Airlines:...................................................................................................................9

4.2.1 Marketing Strategies of Malaysia Airlines:.....................................................................9

4.3 Compare & Contrast of Air Asia’s strategies with Malaysia Airlines Strategies:..................10

5. Possible New Market...................................................................................................................11

5.1European Market:.......................................................................................................................11

5.2 American Market:......................................................................................................................11

5.3 New Marketing Plan..................................................................................................................11

6. Conclusion...................................................................................................................................12

6.1 Recommendations:....................................................................................................................12

7. References...................................................................................................................................13


1. Introduction:

Airlines industry is one of the biggest industries in the world. The marketing competition within the airlines industry is increasing day by day. Many airlines are coming in the market with innovative ideas of marketing to make a best place in the competition. Lots of marketing materials are related with airlines industry. The airlines that are using those materials innovatively are getting success in the market.

Air Asia is one of the up growing airlines in the world. Air Asia came in the airlines industry with some innovative ideas which leaded them to get a good market. In this study, the author analysed global marketing strategies adopted by air Asia with the help of a case study on Air Asia researched by Professor Thomas Lawton and Jonathon Doh in 2010.

In this study, the author discussed and critically analyzed about the present marketing strategies which are taken by Air Asia. The author also talked about the action and decision should be made in present strategies. After analyzing those marketing strategies the author discussed about competitors of air Asia in market and compared Air Asia’s strategy with main competitor’s airline’s marketing strategy. To full fill the aim of this study, the author tried to identify the new market for air Asia.

1.1 Background of the company: Air Asia is a best low cost airline in the world. Air Asia established in 2001 with the vision to be the largest low cost airlines and to serving people who are underserved because of high fare. Currently air Asia is serving in 20 countries. Air Asia made low cost fare possible with innovative solutions. Air Asia has five associate company, they are: Thai air Asia, air Asia X, Indonesia air Asia, air Asia Japan and Philippines air Asia (Air Asia , 2012).

1.1.1 Vision of Air Asia: To be the largest low-cost airline in Asia and serving the three billion people who are presently underserved by high fares and poor connectivity (Air Asia , 2012).

1.1.2 Mission of Air Asia:

To be the finest company to work for whereby employees are taken as part of a large family,

To make a internationally recognized ASEAN brand, To achieve the lowest cost so that everybody can fly with Air Asia, Maintain the maximum class product, implementation of technology to cut cost and

improve service levels (Air Asia , 2012).


2. Evaluating the Strategies of Air Asia:

2.1 Marketing Strategies: Ferrell et al (2002, p.1) indicates that ‘Marketing strategy means different things to different business organization. Every business organization needs effective marketing plane and a marketing strategy which focused onto achieves its goals and objectives and fulfilling customer’s needs and wants.’ Marketing strategy means applying research plans which should involve a series of examined steps and all of the steps should be used which are given by research on marketing (proctor, 2003).

2.1.1 Marketing Strategies which are taken by Air Asia: Air Asia is adopting an effect marketing strategies. Air Asia is providing low fare facilities for customers. From case study of Lawton & Dos (2010) the author found some marketing strategies which leaded air Asia to the success. The marketing strategies of Air Asia are discussed below:

1. Low Fare: Air Asia’s main marketing strategy is making available low cost ticket for travellers. This is very effective strategy taken by air Asia. This strategy helps air Asia to get a huge market. The cost of ticket of air Asia is sometimes lower than other transport cost. According to Lawton & Dos (2008) Air Asia was able to get cost per available seat kilometre. Air was world’s best low cost airlines in 2007, 2009, 2011 & 2012 (Air Asia , 2012). Air Asia is providing ticket to the traveller in very lowest cost within short distance journey, the price is sometimes half than travelling by car or other transport.

2. Internet Booking: Technology one of the effective marketing element. Air Asia is using this element perfectly. Air Asia allowed ticketless travel through internet booking to maintain its simplicity. Through this strategy air Asia is also reducing the distribution cost (Lawton & Doh, 2010). On the other hand, this strategy helps travellers to avoid the hassle of getting ticket from distribution centre, as a result, customers are getting low cost ticket due to low expense of air Asia’s distribution.

3. Initially Focused on domestic market: Air Asia initially focused on domestic market to get the strong market. To compete with the strong competitors such as Malaysian airlines, air Asia started to offer customer low cost air ticket. Lawton & Doh (2010) state that- at the starting of air Asia, customers were offered very low cost ticket from Kuala lumpur to Penang. The cost was about 39 ringgits where bus travel cost 40 ringgits and by car about 80 ringgits, as a result, travelling by air increased that time. People travelled by air more than other transport. It was effective strategy for air Asia to attract customer initially.

4. Increasing number of fleet: The fleet increasing level of Air Asia is amazing. Air Asia first started with 2 aircrafts in 2001, by 2007 air Asia managed to have 54 aircraft. In 2010 air Asia had more than 70 planes. Air Asia is planning to have about 180 aircraft by 2014 (Goldman sachs as collected from Lawton & Doh, 2010). This statistic shows


that, air Asia is investing their most of the money on aircraft and the hidden plan of air Asia is to be the biggest airline in the world.

2.1.2 Marketing Mix:The marketing Mix is the set of convenient, strategic marketing tools that the business

organization mix together to create the preferred response in the target market. The tools can

be accumulated into four groups. The groups of variables are: Product, Price, Place and

Promotion (Kotler & Armstrong, 2006).

2.1.3 Marketing Mix of Air Asia:

Source: (Lawton and Doh, 2010)

2.1.4 Pros of Air Asia’s marketing strategies:After discussing the marketing strategies of Air Asia, the author of this study found some pros of air Asia’s marketing strategy. They are given bellow:

Effective Low fare strategy: Low fare strategy of air Asia was really very effective. Air Asia became best low cost airlines in 2009, 2010, 2011 and 2012. This strategy helped air Asia to attract customer.

Made strong marketing base: Through the low fare marketing strategy, air Asia made a strong base of marketing.

Customer Loyalty: Air Asia focused more on customer loyalty and air Asia is successful in this case because they are getting many permanent customers. Air Asia


ProductsAirAsia is serving

passenger and cargo air to the customers

PricePrice of tickets is

lowest (35 ringget)

PromotionSponsoring sports

team, loyalty programme

PlaceInternet booking,

reservation and serving in over 20 countries.

also has a loyalty programme called BIG. In every transaction with air Asia, travellers get points and it influences them to travel with air Asia (Air Asia , 2012).

Going to be the biggest airlines: One of the most important strategies of air Asia is to increase number of aircraft. By 2014, air Asia is planning to get over 140 aircraft in their fleet. It is helping air Asia to be the biggest airline in the world.

Reduce expenses: Air Asia is providing online booking facilities, this strategy helps customer to save money and avoid hassle. For air Asia, this strategy is helping to reduce the operational cost.

2.1.5 Cons of Air Asia’s Marketing strategies: Low profit: As air Asia is offering very low cost ticket, they are losing the profits.

Domestic air ticket is sometimes less than bus and car transport cost, as a result air Asia is getting very low profit which is not a very good for an business organization.

Large amount of risk: Air Asia is not serving in the most of the countries in the world as renowned airlines do. Although air Asia started its international journey in 2004 but they has lots of aircraft in the fleet. From study of Lawton & Doh (2008), the author found that, by 2014 air Asia is going to increase its fleet to 140. This is a big risk of investment, as air Asia still not serving enough countries.

Difficult to maintain standard: Air Asia is earning very low profit compare to the services. If they continue to serve low cost ticket and gain low profit, it will be difficult for air Asia to maintain the good standard.

2.2 Globally Expansion Strategy of Air Asia: To expand sales, acquire resources and minimize the risks are three factors which may encourage an organization to expand the business (Daniel et al, 2004). Expansion strategies of Air Asia are shown below:

1. Cross Border Market: Air Asia is adopting a creative way to expand its market by cross border strategy. Air Asia has targeted mainly the neighbour countries in this case.

2. Going International: Although, air Asia started its international journey after few years of establishing but the trend of going international is good (Lawton & Doh, 2008).

3. Joint Venture: Air Asia went to joint venture with some relative countries airlines, such as: Indonesia air Asia, Thai air Asia, air Asia X.

2.2.1 Pros of Expansion Strategy:1. Cross border strategy helped Air Asia to star business in international market.2. The joint venture strength the capability and mutual relation with associate airlines.3. To maximize the profit, joint venture was the perfect strategic step for Air Asia.


2.2.2 Cons of Expansion Strategy: 1. Sometimes it is difficult to maintain the relationship in joint venture.2. Joint venture is a big hinders to make quick strategic decisions.3. In joint venture, a party need to take maximum responsibilities, which can be burden

for one side.

3. Actions & Decisions would make, if author were appointed as the CEO of Air Asia: As a CEO of air Asia, the author would take some action on air Asia’s marketing strategies. The changes and reasons of proposed changes are given below:

1. Increase international destinations: The first changes the author would do as a CEO of air Asia in increasing the number of international destination. From the case study, we came to know that, air Asia is in very strong position in domestic market. On the other hand, air Asia is not serving enough international destinations in compare with its ability. Air Asia has more than enough aircraft in their fleet to cover highest international destination, so the author think that Air Asia should increase its destinations to American, African and European countries.

2. Join with any alliances: Air alliance is an agreement among airlines which is meant to do business and share business facilities together. The purpose of air alliance are to share the business operational cost through sharing distribution centre, check in staff, boarding staff and most importantly codes sharing facilities (Kleymann & Seristo, 2004). There are lots of facilities of alliances. Alliances can help an airline to go internationally through different facilities. As every airline main aim should be go internationally, air Asia should joint any alliances. There are three largest alliances in the world, they are: Star alliance, one world alliance and sky team alliance. As a CEO, the author would prefer to join with star alliance as it is the biggest air alliance in the world; Star alliance has 27 prospective members and serving in 193 countries (Star alliance, 2012). On the other hand, one world has only 12 member airlines and serving 150 countries (One World, 2012) and Sky team has got only 18 member airlines (SkyTeam, 2012). There are some benefits of joining the biggest alliance. If air Asia joins to star alliance they will get help to go international easily.

3. Internet facilities for Travellers: Technological uses in business help to attract more customers (Mills & Law, 2004). As a CEO of air Asia, the author would recommend to provide customer’s mobile application, online booking and other activities online to help travellers to know current situation of ticket and other related information. It will help the customer to be with air Asia.

4. Advertise Internationally: Air Asia is very successful domestically, as it was offering low cost ticket to the customer. But if air Asia wants to get a good international market, beside low cost air Asia will need to focus on advertisement. In this case, air


Asia can use YouTube, facebook, twitter and other social site, as web is very effective for international advertisement (Tuten, 2008).

5. Increase Quality Of Customer Service: Good Customer service is the key factor of getting and keeping customer with the business (Blacharski, 2006). As air Asia is an up growing airline and they are going internationally, as a CEO of air Asia, the author would like to increase the quality of customer service which will help to keep customers coming to the air Asia.

4.Competitors of Air Asia Lawton and Doh (2010) talked about the competitors of Air Asia in some different aspect. Such as, Japan airlines and All Nippon airways as low fare airlines in Japan, Malaysian airline as a low cost airline in Malaysia, Singapore airlines, jet airlines, Thai airways, Nok air, etc. According to Lawton and Doh (2010) the main competitor of air Asia is air Malaysia.

4.1 Porters Five forces analysis

Source: (Thompson & Strickland, 2007)

4.1.1 Barging Power of Suppliers: Fuel and aircraft companies are main suppliers of airlines industry. The aircraft and fuel

companies are doing completion among themselves; as a result the barging power of

suppliers is low in this case (Lawton & Doh, 2010).


Bargaining power of supplier(Low)

Bargaining power of Buyers(High)

Threat new Entry(High)

substitute product(Low)

C o m p e ti ti v e r e v e l r y ( H i g h )

4.1.2 Barging Power of Buyers: As there are lots of low fare airlines are in the market, travellers are looking for better service and they can change the choice of airlines without any hesitation. So barging power of buyers is high for Air Asia (Lawton & Doh, 2010).

4.1.3 Threat of New Entry: Low fare strategy is very successful in the airlines market. Most of the airlines are now adopting this strategy. Many new companies are interested to the airlines business as people are travelling frequently in airlines instead of other transport because of low fare. So, threat of new entry in this industry is high (Lawton & Doh, 2010).

4.1.4 Threat of Substitute: Threat of substitute is low for Air Asia, as travelling by car for long distance is expensive than airline ticket. Even the cost of travelling by other transportations for same distance is same (Lawton & Doh, 2010).

4.1.5 Competitive revelry: Competition in airlines industry is very high, if we can see closer that, if an airline low its ticket price other airlines also do the same things, even for sales promotion and discount same attitude have seen.

4.2 Malaysia Airlines: Malaysia airlines started in the golden age of travel. Malaysia airlines came through a joint proposal of ocean Steamship Company, imperial airways and straits steamship of Singapore. They proposed to the colonial straits government to start an air service between Singapore and Penang and the result became incorporation of Malayan airways in 1937. Malaysia is serving over 35,000 passengers in a single day to more than 80 destinations (Malaysia airlines, n.d.).

4.2.1 Marketing Strategies of Malaysia Airlines:1. Low Fare Airlines: According to Lawton and Doh (2010) as air Asia introduced low cost

air in Malaysia; suddenly Malaysian airlines consider this business model and gave low fare air ticket to the travellers.

2. Sales Promotion: Malaysian airlines focus more on sales promotion rather than advertising (Malaysia Airlines , 2011). According to Lawton and Doh (2010) Malaysian airlines started giving discount on limited seat when air Asia was giving low cost fare to the travellers.

3. Alliance: Malaysia airline is going to join one world, one of the largest alliances of the world. Through this step, Malaysia airlines with get benefits of huge network, increasing traffic via combined network and infrastructure. Moreover, through the alliance Malaysia air will get respective geographical strength (Malaysia Airlines , 2011). On the other hand, alliance will do advertising on behalf of Malaysia Air which is the greatest benefits for Malaysia air.


4. Branded Customer Experience: According to Malaysia airlines (2011) customers are Malaysia air’s main priority. Malaysia Air will increase customer’s satisfactions through their pre flight, during flight and post flight. Moreover, Malaysia airlines will invest more money on new tools and process to keep brand promise.

4.3 Compare & Contrast of Air Asia’s strategies with Malaysia Airlines Strategies:

Air Asia and Malaysia air are Malaysian based airlines. Malaysia Airline is the national and senior airlines of Malaysia but compare to Malaysia airlines; air Asia became more successful in market. If we compare the marketing strategies of both airlines, we can find some similarity and dissimilarity of strategies which are taken by air Asia and Malaysia air.

The author found some similarity in low cost fare strategies. The low cost strategies were first taken by air Asia in domestic flight and following this model Malaysia air also committed low fare policy, although Malaysia air gave it in difference way. They gave discount on ticket. Overall, the strategy was more successful in case of air Asia as it helped air Asia to make good place in competitive market.

Alliance is the way to go internationally easily and for global marketing. Air Asia is not with any alliance, on the other hand, Malaysian airline is joining with one world alliance one of the biggest air alliance of the world. Alliance helps an airline to promote its name globally. Although air Asia has a strong domestic and some international market but Malaysian airline is successful to manage global market.

Customer satisfaction is one of the key subjects in marketing. All marketing activities happen for customer satisfaction. Organizations take many strategies to satisfy their customers. Air Asia and Malaysia air are taking lots of strategies to make customer happy. Air Asia has very big strategy which is low fare for all but to make low ticket cost air Asia had to face many difficulties and ultimately it affects on customer satisfaction. So it is clear that, air Asia’s strategy to make customer happy did not always work right. On the other hand, at the starting of competition with air Asia, Malaysian airline was not able to satisfy its customers but gradually Malaysia air overcame this situation.


5.Possible New Market Air Asia has the great possibility to be the biggest airlines in the market. Initially air Asia concentrated on domestic market and was successful. After that, air Asia focused on relative countries such as, Thailand, Singapore, India, china etc. But still air Asia could not make a huge market, some important countries are missing. Below the author showed some new market for air Asia:

5.1European Market: Europe is the biggest market for airlines. Lots of travellers are visiting Europe every year and the number is increasing day by day. On the other hand, huge numbers of travellers in every year are visiting Asia from Europe. Air Asia should use this opportunity properly. All of the destinations of air Asia are based on Asia and Australia. No country in Europe is served by air Asia. To get a good market with low fare, air Asia should target UK, France, Germany, Italy and Spain initially.

5.2 American Market: America can be possible good market for air Asia. The number of travellers is very good in America. The low fare strategy would be successful in these continents. Initially, air Asia can target USA, Canada, Mexico, Brazil and Portugal. The economical condition and the amount of population in those countries are good. It would be very wise decision for air Asia to start doing flight in those countries.

5.3 New Marketing PlanAfter study on air Asia’s marketing strategies, the author would like to propose a new marketing plan for air Asia which can be beneficial for air Asia to go internationally.

By 2013, air Asia need to join any alliances, the author would recommend star, sky team or one world in the selection. By joining any alliance, air Asia will get a global network and it will helps in advertising the brand and expanding globally.

By 2014, air Asia should join in new market, initially air Asia has to take UK, Spain, Italy, USA and Canada in accounts.

By 2015, Air Asia should focus on other countries in Europe and America. Customer satisfaction is very important in airlines industry, in this case customer’s

pre flight, during flight and post flight service should be quality service. Air Asia already made a good domestic market with low fare strategy, now it’s time

to give quality service to the customer rather than low fare ticket. In upcoming years, air Asia need to increase sales promotion rather than low price

ticket, such as discount for regular customer or get three for two etc.


6.Conclusion Air Asia is a possible biggest airline in future. It has a great possibility to enjoy a profitable international market. Air Asia is mainly an Asia continent based airline. It established its market through low fare strategy. This strategy is very successful domestically and internationally.

In this study, the author discussed about Air Asia’s marketing strategy according to the case study which is researched by Lawton and Doh (2010) and other resources. The author found some marketing strategies which are adopted by Air Asia. As a CEO of Air Asia the author tried to make some decision on Air Asia’s marketing strategies. The author discussed Air Asia’s competitors and found that Malaysia Airlines is the main competitor of air Asia and compare the strategies between two airlines. To full fill the requirements of the study the author proposed a new marketing plan for air Asia which can help Air Asia to explore international market.

6.1 Recommendations:After discussion on Air Asia’s marketing strategies, the author found some strength and weakness of air Asia’s marketing strategies. If air Asia can fix it weakness in marketing strategies than it would be easy for air Asia to make a good position in global market. The author would like give some recommendation on Air Asia’s overall marketing strategies which can help Air Asia to overcome the weakness of air Asia’s marketing strategies.

Air Asia should join any alliance as soon as possible because joining any air alliances will help air Asia to go internationally. Firstly, alliance will help Air Asia to enjoy a global network, partnership with other airlines through alliance can helps to make new market in Europe and America. Secondly, alliance can help Air Asia to do advertisement globally, the alliances always represent its member airlines name, and so in this process air Asia can get the opportunity to do advertising globally. Thirdly, through sharing distribution centre, check in, boarding staff and computer system Air Asia can reduce the operational cost. Last but not least, code sharing is the main facilities of alliances. Through code sharing, Air Asia can reduce the risk of lose in total.

Air Asia should focus more on service standard rather than low fare strategy. We have to agree that, low fare strategy gave Air Asia a strong marketing base but to go internationally air Asia should increase the quality of services.

Air Asia is covering mainly Asia Continent, to have a international market Air Asia has to look for the new markets. In this case, Air Asia should firstly concentrate on Europe and America.


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16. Tuten, T.L (2008) Advertising 2.0: Social Media Marketing in a Web 2.0 World. Westport : Greenwood Phublication.


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