Marketing Strategy of Singapore Airlines

C H A P T E R 01

INTRODUCTION

1.1

INTRODUCTION

A business deals with a wide variety of data. Many occupations are not almost exclusively concerned with the handling, processing, provision or transmission of information. Travel, retailing relies on a greater provision of information than at any time in the past. The increasing ownership of computers and the phenomenal growth in the use of the internet and the World Wide Web has accompanied a much greater participation of businesses in the processing of information. The purpose of this is to provide a general understanding of the marketing strategy of the Singapore Airlines, how they operate their business, current situation of their business and future.

More information can now be provided more quickly and cheaply than before. Access to information and to information system has, particularly with the development of the internet, become far easier. On the demand side, the complexity and volatility of market forces means that businesses require more targeted and more current information to gain a competitive advantage and survive. Externally, they need to be up to date with market preferences, competitors' prices, and the supply and cost of finance. Internally, pressures to maintain profitability or efficiency require instant information to monitor and control the continuing functioning of the organization.

This assignment illustrates how Singapore Airlines emphasizes proper management of the critical success factors pertaining to marketing system and strategy to enable the airline to provide better service to their customers and to compete more efficiently. Proper management of marketing strategy does contribute significantly to SIA achieving the status as one of the best, if not the best, airline in the world by ensuring that systems serve business needs and continue to do so despite changing environment. The goal is to gain competitive advantage in the marketplace and reap r eap the benefits of first mover advantage. The objective is to unpack the business model used by Singapore Airlines, a most successful airline company from an Asian country.

1.2

SCOPE & OBJECTIVES OF THE STUDY

The scope of the study is to know and analyze the marketing strategy of the Singapore Airlines, which is credited as the No.1 airlines of Singapore by collecting the data from various sources. It would help me in understanding the business culture in Singapore. It

DEPARTMENT OF INTERNATIONAL INTERNATIONAL BUSINESS | GLOBAL MARKETING MARKETING

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will help me to understand the work culture that Singapore follows. It would also help me to understand the people, their purchasing methods and their requirements in Singapore and by Singapore. It would also help me understand people and their culture as every company makes strategy according to the people of that region and their behavior.

Singapore Airlines began with the incorporation of Malayan Airlines (MAL) on 1 May 1947, by the Ocean Steamship Company of Liverpool, the Straits Steamship Company of Singapore and Imperial Airways. The airline's first flight was a chartered flight from the British Straits Settlement of Singapore to Kuala Lumpur on 2 April 1947 using an Airspeed Consul twin-engine airplane. Regular weekly scheduled flights quickly followed from Singapore to Kuala Lumpur, Ipoh and Penang from 1 May 1947 with the same aircraft type. The airline continued to expand during the rest of the 1940s and 1950s, as other British Commonwealth airlines (such as BOAC and Qantas Empire Airways) provided technical assistance, as well as assistance in joining IATA. IAT A. By 1955, Malayan Airways' fleet had grown to include a large number of Douglas DC-3s, and went public in 1957.

1.3

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The primary objective is to know the business approach of Singapore Airlines.

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Find out the scope and strategy of doing business in Singapore.

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Know the competitors of Singapore Airlines in Singapore.

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Crm and marketing strategy of Singapore Airlines Air lines worldwide.

METHODOLOGY OF THE STUDY

As I mentioned earlier, that the prime source for the term research paper content is the secondary source called internet. It is really not easy to find the ultimate information from internet. The searching criteria must be different. There are various types of PDF and document files which contain only the text I have typed in the search box but the rest of the file is totally useless for the term research paper. The search for Power Point Slides also helps to understand the main points and probable information which I need to present on the term research paper. The PowerPoint also helps to get the graphs and statistics in an easy way.

DEPARTMENT OF INTERNATIONAL BUSINESS | GLOBAL MARKETING MARKETING

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1.4

LIMITATION OF THE STUDY

There were many limitations in preparing the term research paper. The PDF files, websites, PowerPoint presentation, various document files are gathered from the foremost s ource, Internet. The time limitation was the big issue. The final examinations of the semester were there that it impeded the arrangement of the term research paper information in various ways. Study took almost all portion of time that’s why the term research paper

was made in significantly short time.


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C H A P T E R 02


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2.1

COMPANY PROFILE

Singapore Airlines (SIA) was created in 1972 and was fully state owned. The company expanded rapidly, and with a strategy of concentrating on customer needs by providing exceptional in-flight service, the airline quickly became a noteworthy competitor in the market. During its formative period in the 1970s, SIA developed all the hallmarks that made it one of the most successful and consistently profitable airlines in the world. Through a constant investment in personnel skills and other sources, the company has achieved a sustainable competitive advantage, as well as a reputation for classy elegance. This paper reveals the strategies that have been used by SIA, with backgrounds on their sustainability and sources of advantage, the way these strategies changed over the years and how to continue.

Figure 1: Singapore Airlines Logo

“Quality service service to customers is a fundamental objective and aspiration of SIA”

–SIA, 2007–

Over the last two decades, Singapore Airlines has grown from a regional airline into one of the world’s leading passenger and cargo carriers (SIA, 2007). In an attempt to survive,

many of the companies which are operating in the same industry tried to examine and investigate the approaches or tactics which are using by Singapore Airlines (SIA, 2007). Finally it became clear and understandable that SIA are more competitive because of its DEPARTMENT OF INTERNATIONAL INTERNATIONAL BUSINESS | GLOBAL MARKETING MARKETING

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operations strategy; that is, all the resources in Singapore Airlines are specifically designing in order to directly support SIA’s overall strategic plan which is “ Compete on Service” (R.

Johnson, S. Chambers, C. Harland, A. Harrison, and N. Slack, 2007). Here as a consultant, would like to describe the plans and decisions which are taken by SIA in order to uphold its long-range plan (which is stated above) as well as compete in the market. In short, it is the best airline because 

First Class includes own cabin with actual mattress and bed, king size

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Business class includes bed



Best food ever on the airplanes

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A lot have WI-FI in first and business class

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Enables all DirecTV channels without pay (3/28 might not have all channels)

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Usually never delayed due of lateness

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One of the fastest food services in any airplane

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Includes a bar in first class cabins, but you need to pay some money such 1.00

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Supposedly the best economy in the air, but I thought it was okay.

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Very Expensive but Definitely WORTH IT!

2.2

GLOBAL MARKETING STRATEGIES

Although some would stem the foreign invasion through protective legislation, protectionism in the long run only raises living costs and protects inefficient domestic firms (national controls). The right answer is that companies must learn how to enter foreign markets and increase their global competitiveness. Firms that do venture abroad find the international marketplace far different from the domestic one. Market sizes, buyer behavior and marketing practices all vary, meaning that international marketers must carefully evaluate all market segments in which they expect to compete. Whether to compete globally is a strategic decision (strategic intent) that will fundamentally affect the firm, including its operations and its management. For many companies, the decision to DEPARTMENT OF INTERNATIONAL BUSINESS | GLOBAL MARKETING MARKETING

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globalize remains an important and difficult one (global strategy and action). Typically, there are many issues behind a company`s decision to begin to compete in foreign markets. For some firms, going abroad is the result of a deliberate policy decision (exploiting market potential and growth); for others, it is a reaction to a specific business opportunity (global financial turmoil, etc.) or a competitive challenge (pressuring competitors). But, a decision of this magnitude is always a strategic proactive decision rather than simply a reaction (learning how to business abroad). Reasons for global expansion are mentioned below: a) Opportunistic global market development (diversifying markets) b) Following customers abroad (customer satisfaction) c) Pursuing geographic diversification (climate, topography, space, etc.) d) Exploiting different economic growth rates (gaining scale and scope) e) Exploiting product life cycle differences (technology) f) Pursuing potential abroad g) Globalizing for defensive reasons h) Pursuing a global logic or imperative (new markets and profits) Moreover, there can be several reasons to be mentioned including comparative advantage, economic trends, demographic conditions, competition at home and the stage in the product life cycle, tax structures and peace. To succeed in global marketing companies need to look carefully at their geographic expansion. To some extent, a firm makes a conscious decision about its extent of globalization by choosing a posture that may range from entirely domestic without any international involvement (domestic focus) to a global reach where the company devotes its entire marketing strategy to global competition. In the development of an international marketing strategy, the firm may decide to be domestic-only, home-country, host-country or regional/global-oriented. Each level of globalization will profoundly change the way a company competes and will require different strategies with respect to marketing programs, planning, organization and control of the international marketing effort. An industry in which firm competes is also important in applying different strategies. For example, when a firm which is competes in the pharmaceutical industry and heavily globalized, has to set its own strategies to deal with global competitors (Constant Innovation).


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A global marketing strategy that totally globalizes all marketing activities is not always achievable or desirable (differentiated globalization). In the early phases of development, global marketing strategies were assumed to be of one type only, offering the same marketing strategy across the globe. As marketers gained more experience, many other types of global marketing strategies became apparent. Some of those were much less complicated and exposed a smaller aspect of a marketing strategy to globalization. A more common approach is for a company to globalize its product strategy (product lines, product designs and brand names) and localize distribution and marketing communication.

2.3

INTEGRATED GLOBAL MARKETING STRATEGY

When a company pursues an integrated global marketing strategy, most elements of the marketing strategy have been globalized. Globalization includes not only the product but also the communications strategy, pricing and distribution as well as such strategic elements as segmentation and positioning. Such a strategy may be advisable for companies that face completely globalized customers along the lines. It also assumes that the way a given industry works is highly similar everywhere, thus allowing a company to unfold its strategy along similar paths in country by country. One company that fits the description of an integrated global marketing strategy to a large degree is C ocaCola. That company has achieved a coherent, consistent and integrated global marketing strategy that covers almost all elements of its marketing program from segmentation to positioning, branding, distribution, bottling, advertising and more. Reality tells us that completely integrated global marketing strategies will continue to be the exception. However, there are many other types of partially globalized marketing strategies; each may be tailored to specific industry and competitive circumstances.


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2.3.1

GLOBAL PRODUCT CATEGORY STRATEGY

Possibly the least integrated type of global marketing strategy is the global product category strategy. Leverage is gained from competing in the same category country after country and may come in the form of product technology or development costs. Selecting the form of global product category implies that the company while staying within that category will consider targeting different segments in each category or varying the product, advertising and branding according to local market requirements. Companies competing in the multi-domestic mode are frequently applying the global category strategy and leveraging knowledge across markets without pursuing standardization. That strategy works best if there are significant differences across markets and when few segments are present in market after market. Several traditional multinational players who had for decades pursued a multi-domestic marketing approach tailoring marketing strategies to local market conditions and assigning management to local management teams- have been moving toward the global category strategy. Among them are Nestle, Unilever and Procter & Gamble, three large international consumer goods companies doing business in food and household goods.

2.3.2

GLOBAL SEGMENT STRATEGY

A company that decides to target the same segment in many countries is following a global segment strategy. The company may develop an understanding of its customer base and leverage that experience around the world. In both consumer and industrial industries significant knowledge is accumulated when a company gains in-depth understanding of a niche or segment. A pure global segment strategy will even allow for different products, brands or advertising although some standardization is expected. The choices may consist of competing always in the upper or middle segment of a g iven consumer market or for a particular technical application in an industrial segment. Segment strategies are relatively new to global marketing.


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2.3.3

GLOBAL MARKETING MIX ELEMENT STRATEGIES

These strategies pursue globalization along individual marketing mix elements such as pricing, distribution, place, promotion, communications or product. They are partially globalized strategies that allow a company that customize other aspects of its marketing strategy. Although various types of strategies may apply, the most important ones are global product strategies, global advertising strategies and global branding strategies. Typically companies globalize those marketing mix elements that are subject to particularly strong global logic forces. A company facing strong global purchasing logic may globalize its account management practices or its pricing strategy. Another firm facing strong global information logic will find it important to globalize its communications strategy.

2.3.4

GLOBAL PRODUCT STRATEGY

Pursuing a global product strategy implies that a company has largely globalized its product offering. Although the product may not need to be completely standardized worldwide, key aspects or modules may in fact be globalized. Global product strategies require that product use conditions, expected features and required product functions be largely identical so that few variations or changes are needed. Companies pursuing a global product strategy are interested in leveraging the fact that all investments for producing and developing a given product have already been made. Global strategies will yield more volume, which will make the original investment easier to justify.

2.3.5

GLOBAL BRANDING STRATEGIES

Global branding strategies consist of using the same brand name or logo worldwide. Companies want to leverage the creation of such brand names across many markets, because the launching of new brands requires a considerable marketing investment. Global branding strategies tend to be advisable if the target customers travel across


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country borders and will be exposed to products elsewhere. Global branding strategies also become important if target customers are exposed to advertising worldwide. This is often the case for industrial marketing customers who may read industry and trade journals from other countries. Increasingly, global g lobal branding has become important also for consumer products where cross-border advertising through international TV channels has become common. Even in some markets such as Eastern Europe, many consumers had become aware of brands offered in Western Europe before the liberalization of the economies in the early 1990s. Global branding allows a company to take advantage of such existing goodwill. Companies pursuing global branding strategies may include luxury product marketers who typically face a large fixed investment for the worldwide promotion of a product.

2.3.6

GLOBAL ADVERTISING STRATEGY

Globalized advertising is generally associated with the use of the same brand name across the world. However, a company may want to use different brand names partly for historic purposes. Many global firms have made acquisitions in other countries resulting in a number of local brands. These local brands have their own distinctive market and a company may find it counterproductive to change those names. Instead, the company may want to leverage a certain theme or advertising approach that may have been developed as a result of some global customer research. Global advertising themes are most advisable when a firm may market to customers seeking similar benefits across the world. Once the purchasing reason has been determined as similar, a common theme may be created to address it.

2.3.7

COMPOSITE GLOBAL MARKETING STRATEGY

The above descriptions of the various global marketing models give the distinct impression that companies might be using one or the other generic strategy exclusively. Reality shows, however, that few companies consistently adhere to only one single


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strategy. More often companies adopt several generic global strategies and run them in parallel. A company might for one part of its business follow a global brand strategy while at the same time running local brands in other parts. Many firms are a mixture of different approaches, thus the term composite.

2.4

MARKETING STRATEGY FOR AIRLINE COMPANY

1. Identify the target market or target audience. 2. Promote what your consumers want to buy. 3. Make yourself a trusted resource to prospects and customers. 4. Set up professional profiles on social media. 5. Print up flyers and brochures. 6. Create a website and publicize it. 7. Don't be too quick to get discouraged. 8. Never stop marketing your airline. 9. In order to get attention from the consumers in the first place, get your prices lower than your competitors.

2.5

MARKETING STRATEGY OF SIA

2.5.1

DISTRIBUTION CHANNEL

In the years leading up to 2001, the Internet was integrated by the airlines into their distribution channels. The result was the proliferation of means for customers to gather information and prices and book air travel: through travel agents who connected to a customer reservation system (CRS), through Internet sites which connected customers directly to a CRS, or through airline specific booking sites.


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2.5.2

ABACUS : Asian Customer Reservation System

In 1988, SIA and Cathay Pacific created ABACUS, an Asian CRS headquartered in Singapore, to broaden and control its distribution channels. Cathay and SIA were soon joined by 9 other Asian Pacific airlines in ABACUS International Holdings, which collectively held 65% of the CRS, and later SABRE, the American Airlines CRS, took a 35% equity stake. In 1999 ABACUS launched the Alliance Manager product. The product, to be used by both Star and one world, was designed specifically to meet the requirements of airline alliances, and to provide a service for travel agent subscribers that gave them fast and simple access to information about routes operated by members of the alliances. The product provided city pair availability and schedules of all flights operated by alliance carriers. Travel agents keyed in simple entries into the system to obtain alliance-specific displays. The product ensured that alliance partners’ products were easily recognized, booke d and serviced as well as differentiated from others’ products to promote brand loyalty and maximize their

screen presence to travel agents. Mr. Per Wehlander, Star Alliance CRS Harmonization project manager: The Star Alliance exists to make the consumer travel experience seamless to any of our 720 destinations in more than 112 countries. The ABACUS Alliance Manager gives us the visibility we need to ensure we meet our goal of delivering convenient and rewarding global travel access. ABACUS provided travel services from 316 airlines, 52,000 hotel properties and 50 car rental companies. Abacus connected about 10 percent as many computer terminals at travel agencies as SABRE, the American CRS CR S and customer reservation system pioneer.

2.5.3

Kriscom and Krismax II

Bookings made by travel agents went through ABACUS, or other CRSs, which in turn, linked up with Kriscom, SIA’s in -house system, which also handled yield management for

SIA. In 2001, SIA invested S$20 million in Krismax II, a new yield management and forecasting system, planned to go live in 2002. The system was designed to help SIA match


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seat capacity with customer demand by wait listing customers in one market while seats allocated to other markets remain unsold.

2.5.4

TRAVEL EXCHANGE ASIA

In 2000/01, ABACUS introduced a new Internet travel service, Travel Exchange Asia, which enabled customers to make bookings directly over the Internet, without the assistance of a travel agent.

2.6

MARKETING MIX

2.6.1

SEGMENTATION

Market segmentation is the grouping of customers and characterizing them in a relevant manner to ensure that the product or service is aimed at the right consumer (or customer). The objective is to help determine marketing strategies and realistic marketing objectives by understanding customer trends and buyer behaviors. Bases for segmentation with Singapore Airlines: Geographic SIA’s customers are located globally with varying wants and needs or behaviors and the

organization attempts to exploit this by providing airline services to major cities/ routes evidenced by SIA flying to 65 destinations in more than 35 countries on 5 continents . SIA’s

strong presence in the Southeast Asian region, with its subsidiary Silk Air, connects Singapore to many international destinations in the region. The percentage of Singapore originating passengers varies from route to route, but on average there’s a 60:40 bias to Singapore. Demographics Segmenting on the basis of customer factual characteristics such as age, gender, family, lifecycle, social-culture, occupation, education and Income that can influence purchasing decisions. SIA could build on from this by looking at them in terms of the other major


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segmentation variables using multiple approaches to achieve a more complete consumer profile. Social-Culture: People from western region (like India) on the average prefer vegetarian meal whereas people from east prefer non-vegetarian meal. Suite class and First class passengers are dominantly traveling on business and are male, 25 to 45years old and earning $ 50,000+ per annum. Passengers in Business class are split evenly between traveling for business or leisure. Mostly are male with average age 32.Economy class passengers are a much broader group. Traveling mainly for leisure and evenly spread across most socio-economic groups and age ranges. Psychographic Attempts to capture what is driving the customer’s behavior, such as values, personalities,

attitudes, opinion, interest and lifestyle aspirations of each segment. For example, SIA provides variations of cabin classes (First, Business and Executive Economy) to meet the product needs and wants of people. SIA employs tiered membership to provide status preference to customers. In addition, the Low-cost Airlines have attracted a market that have a simple need to reach their destination without the “extras”. SIA have positioned to be part of this target market with their stake in the carrier, Tiger Airways. Behavioral Segmenting the market based on observable issues on consumer behavior when consuming the products. Characteristics include frequency of consumption, buyer readiness and commitment. The corporate market tends to be a frequent flyer that could gain benefits from SIA’s Frequent Flyer program (KrisFlyer and PPS Club) in return for

consumer loyalty to the airline. Some consumers are "brand loyal”, like they tend to stick with their preferred brands even when a competing one is on sale.

2.6.2

TARGETING

Targeting is when a firm chooses one or more market segments as a specific target markets. There are 3 types of market segmentation:


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Standardized Market Targeting It is refers to Mass marketing and this target segment concentrate on the mass market as a whole on what the majority consumers in the market needs and wants. Concentrated Market Targeting Refers to where organization concentrates its market effort on one particular segment. Differentiated Market Targeting Refers to where firm target several segments and develops distinct products/ services with separate marketing mix strategies aimed at various group.

Singapore Airlines is a company that considers every customer to be important and thus offers individualized services to customers. SIA use the differentiated Market Targeting , where they target in accordance to consumers’ needs and to their occupation.

For example, those who owe a higher position in the company and is on a business trip would prefer travelling in either first or business class where more personal space is given. However, those who are normal travelers would feel that economy class is good enough as they do not need to have enjoyed premium services as they are only away for holiday. Finally youngster who do not earn as table income and feel that budget is concerned would prefer in travelling by budget airline.

SIA has two target markets: The first aimed at people who mostly have a high income with a high-class lifestyle and prefer to seek comfort with excellent services rather than to get a cheaper price but do not get the facilities and services as good as SIA. The other target market is normal passengers who mostly just want to travel and not too concern about the services and the facilities as long as it’s good enough. For this market, SIA owns budget

airlines as well, Tiger Airways to meet the market needs.


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Figure 2: Showcase of Singapore Airlines


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2.6.3

POSITIONING

other products in terms of product attributes and benefits that the bran d does or does not offer. There are many different general strategies for positioning products. Attribute or benefit, quality and price, use or application, competition, high-tech and high-touch can achieve desired positioning. Market positioning is about how SIA wants consumers to perceive their products and services in relation to their competitors. SIA’s positioning

strategy uses Singapore Girl as a central ingredient in marketing its image. Personified through the girls, customers got a sensory/emotionalexperience of air travel with SIA’s commitment to service and quality excellence, the more senses the brand

appeals to, the stronger the message will be perceived.

2.7

TYPE OF COMMUNICATION STRATEGY

2.7.1

PULL MARKETING

Pull marketing is where you develop advertising and promotional strategies that are meant to entice the prospect to buy your product or service. Some classic examples are "half off!" or "bring in this coupon to save 25%" or "buy one get one free", etc. With pull marketing, you are trying to create a sense of increased, time limited value so that the customer will come into your store to buy. Pull strategies tend to be emphasized: 

For consumer goods.

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When distribution channels are long.

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When sufficient print and electronic media are available to carry the marketing message.


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2.7.2

PUSH MARKETING

Push marketing is where you develop advertising and promotional strategies geared toward your marketing and distribution channels to entice them in promoting your product. This type of marketing is directed to the distributors. It might include wholesale discounts, kickbacks, bonuses, and other types of support. It's all designed to have the retailer promote your product to the end users over a different product. Push strategies tend to be emphasized: e mphasized: 

For industrial products and/or complex new products.

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When distribution channels are short.

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When few print or electronic media are available.

Just one strategy will not give a very good return. It is necessary to balance both strategies to create good marketing mix that powerfully entice the customer. Some customer reacts only to one or other strategies. Singapore Airlines combines both the strategies in order to entice the customer. They Th ey sell tickets through travel agents and they also sell ticket directly from their website or from their office. Singapore Airlines advertising their product through the print and electronic media as we can see their advertisement on TV, banner, brochure, even their own website. Moreover, they form cooperation with a bank in a program for loyal customer, the program is KrisFlyer, they cooperate with the American Express.

2.8

2.8.1

IMPLEMENT TRIANGLE COMMUNICATIO COMMUNICATION N STRATEGY

INTERNAL MARKETING (COMPANY-EMPLOY (COMPANY-EMPLOYEE) EE)

The relation between the company and employee included in internal communication. SIA is a large organization, with more than 28,000 staff located around the world. People from different cultures work together to produce a seamless and consistently positive customer


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experience. To keep everyone on the same wavelength, SIA publishes a variety of department newsletters, websites and a monthly company-wide magazine. Regular dialogue sessions between management and staff keep communications flowing. A program called “Staff Ideas in Action” ensures that new suggestions for improvement are constantly put forward. Semi-annual business meetings provide another forum for sharing and evaluating results in sales, marketing, yields and customer satisfaction levels. Staff Training SIA understands that daily customer contact can be draining and that customer expectations are always on the rise. To meet this challenge, SIA has a US$ 50 million training center, designed to drill all employees in the fine art of serving customers. As reported

in

the

Straits

Times,

Singapore’s

leading

newspaper, everyone-

from the floor sweeper to the deputy managing director-would receive this training. Motivating through Rewards and Recognition In SIA, the “CEO’s Transforming Customer Service Award” is given annually to teams andindividuals who respond to unique customer situations with exceptionally positive, innovative or selfless acts of service. This award carries no financial benefit, but it is the most revered accolade in the airline. Winners and their families are flown to Singapore for a special dinner celebration, the story of their th eir efforts is published in the monthly magazine, and their personal status as a “Managing Director’s Award Winner” remains a badge

of distinction for life.

Career Development SIA staffs are regularly appraised for performance and potential. High flyers are identified early and early and given every opportunity to learn and grow. Senior managers are effectively developed with frequent rotation through top positions in the company. This leads to a management team with great breadth and depth, with a shared understanding of “the big picture”, and with a commitment to do what’s best for the customers and the

business, not just for one department or another.


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2.8.2

EXTERNAL MARKETING

(COMPANY-CUSTOMERS) (COMPANY-CUSTOM ERS)

External communication through advertising (using both printed and electronic media; brochure, banner, online promoting through their websites), public relations, sales promotion and direct marketing helps Singapore Airlines build a corporate image to differentiate them from other airlines competitors in an increasingly crowded market place. SIA has spent 2% of its budget for advertising and promotion. The Singapore Girl is o ne. The aim of the strategy was the key element in the company’s ads strategy since day one.

to impart a feeling romance and luxury service and so it was dominated by image of sarong-clad women against exotically backdrops. The purpose of the modernization campaign was to give another strong message to the market that SIA was leader in aircraft technology. Whether SIA advertisement is about new destinations, new airplanes, onboard cuisine, or new seats and entertainment services, the legendary ‘SIA Girl’ is always featured. Like mos t carries, SIA depended heavily on independent agents to

sell its service. Since 2000 SIA use Abacus a computer reservation program with extended array of services including airline and hotel, reservation, ground arrangements and regional travel news.

2.8.3

INTERACTIVE MARKETING (EMPLOYE (EMPLOYEE-CUSTOMERS) E-CUSTOMERS)

The interactive communication is a dynamic, two-way flow of information, usually through the personal selling and customer service. SIA’s employee creates a connection with the customers and makes an effort to stay in touch with customers through in-flight surveys, customer focus groups and often replies to every compliment or complaint they receive. Frequent flyers are kept well-connected with special messages, attractive offers and publications sent regularly to Priority Passenger Service (PPS) members. Every frequent flyer achieves an elite Solitaire status with a wide range of valuable privileges: most convenient check-in, additional baggage allowance, priority seating and wait listing, and many more.


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2.9

APPROACH

FOR

INTEGRATING

SERVICE

MARKETING

COMMUNICATION

2.9.1

MANAGE SERVICE PROMISES

Singapore Airlines is among the top companies globally that is truly able to control the brand through every interaction and experience. SIA has become a hugely rewarded innovator and industry leader : “A great way to fly.” Singapore Airlines has been as consistent in its communication vehicles as in its brand strategy. The primary message “Singapore Airlines- A Great Way to Fly ” has been consistently conveyed in exclusive print media and also in selected TV-commercials of very high

production

value

to

underline

the

quality

aspirations

of brand. All communication messages are featured through the iconic Singapore Girl in different themes and settings. Interestingly, Singapore Airlines has chosen to focus on one aspect of the experiential brand strategy -in-flight hospitality and warmth featured by the Singapore Girl - rather than trying to communicate the entire brand benefits through its messages. A dangerous trap, which many other brands often fall into in their efforts to communicate all at once. This has led to a focused and consistent message for SIA during the last 32 years. This in itself is a great achievement for any brand. The Singapore Girl has contributed immensely to the success of Singapore Airlines brand strategy and its entire positioning around customer and service excellence.

2.9.2

MANAGE CUSTOMER EXPECTATIONS

“Customers, investors, partners, and staff -everyone expects excellence of us” that is the

slogan of Singapore Airlines. All SIA employees have to be as flexible as possible in their dealing with customers even it takes more time and effort. Some passengers want to eat as soon as they are boarding, others preferred to wait. Customers often change their minds. They might come on board intending to sleep and then decide to watch a movie


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after all. On long- hours flight, flexibility is important. Most passengers have individuals’ habits that correspond to their travel agendas, which could include sleeping at the beginning and working later or v.v. Singapore airline operates a frequent flyer program, KrisFlyer, to encourage loyalty in its customers. In addition to offering miles that can be exchanged for free flights and other rewards, KrisFlyer members are offered other support services and many benefits. SIA also utilize an extensive customer database to further their marketing needs.

2.9.3

IMPROVE CUSTOMER EDUCATION

Singapore Airlines provide an easier way to purchase the tickets, customers in the US; Singapore; and five other Asia Pacific countries and territories can now pay for their flights with PayPal on www.singaporeair.com. This facility will be available to the airline’s customers in up to 17 countries, making this the largest collaboration between PayPal and an Asian carrier until now. After booking the flights online, travelers can now pay tickets using their PayPal account in a few clicks and without the need to retype their credit card or financial details. PayPal is the faster, safer way to pay and get paid online. The service allows members to send money without sharing financial information, with the flexibility to pay using their account balances, bank accounts, debit cards and credit cards in various markets. Besides using their online balance, PayPal users can pay for their Singapore Airlines flights from their bank accounts, credit cards or debit cards that are linked to their PayPal account.

In addition, PayPal never shares its users financial information, it increase the security of the online transaction and protecting the privacy of its users. Their Th eir collaboration is another way to deliver choice, convenience and value to consumers across Asia Pacific and the world.


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2.9.4

MANAGE INTERNAL MARKETING COMMUNICATIO COMMUNICATION N

A good relationship between the employees is also needed because it is needed to improve the teamwork when they are doing their job. Internal communication enables SIA to consistently deliver on its brand promise to become the world’s most successful

international airline. The whole members are involved in all meetings and training sessions because their involvement helps to break down walls between unions and management and inculcate a sense of ownership. At SIA, those are really useful to improve and maintain the excellent services from the whole employees to reach the goals, which is to deliver the services and the products equally or even greater than the promises.

2.10

SINGAPORE AIRLINE’S OPERATIONS STRATEGY

“Excellence in customer and in -flight service has been integral to SIA’s success”

–SIA, 2007–

From the earliest days, SIA has developed a reputation for being an industry trend-setter as well as doing things differently than its competitors who are in the same industry line (SIA, 2007). For example: – SIA was the first airline which puts into practice free drinks, a choice of meals which prepared by gourmet chefs and complimentary headsets for its passengers in 1970s to magnetize travelers’ attention and interest on SIA (R. Johnson, S.

Chambers, C. Harland, A. Harrison, and N. Slack, 2007). On the other h and, SIA was the first airline which developed a plan, idea, or strategy to implement in-flight entertainment system in its selected aircrafts. Accordingly, SIA was wasted a few millions in the 1990s in order to install KrisWorld movies, KrisWorld television with a choice of twelve channels (includes comedy, drama, music & arts, sports, young Ones, international, lifestyle, business, documentary), KrisWorld music from jazz to classic with a choice of twelve channels, KrisWorld games and applications (such as Bejeweled 2, Sudoku, Bookworm, Zuma, Think Tanks, Luxor, Timon & Pumbaa’ s, Burper, Water Pipes, Dynomite, and Seven

Seas), KrisWorld Pc to enable the travelers to work on their business documents,


25

KrisWorld entertainment devices (such as headphones, screens, and headsets), as well as KrisWorld communication or satellite-based in-flight telephones to make flying more enjoyable for its passengers, pull in more travelers especially kids, and also to stand out from the competitors (SIA, 2007). Moreover, SIA is the first inventor and performer of the most innovative live teletext news service (KrisNews) and also for an interactive in-flight shopping service for its aircrafts (SIA, 2007). These creative and innovative developments by SIA, ultimately won numerous awards for “The best airline”

Figure 3: Business Class at Singapore Airlines

On the contrary, SIA was the first airline which bought over a group of best chefs to serve superlative in-flight cuisine for its passengers (R. Johnson, S. Chambers, C. Harland, A. Harrison, and N. Slack, 2007) as well as it was the earliest airline which tried to fulfill the needs of individual customers by introduce the special meal service with lighter and healthier options plus the unique in-flight meal service which is specially introduced for young flyers and enabled them to choose their desired meals up to 24 hours before the flight departure (Maps of world, 2007). Besides that, SIA started to update its menus monthly and even weekly to create an impression among its frequent travelers and also to keep track of flyers tastes (R. Johnson, S. Chambers, C. Harland, A. Harrison, and N. Slack, 2007). These were the main line of attack for SIA to compete among its competitors in the market and also to shore up its business strategy.


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Rather than developing in-flight services, SIA also puts in countless efforts to improve the facilities and service at Changi airport with innovative technologies. For example: – SIA was the first airline which applied the leading-edge wireless gatelink technology within the airport in order to share data successfully with aircraft, passenger terminals, maintenance operations, baggage handling, ground-support equipment and so on (Boieng, 2007). At the end of the day, it increases SIA’s operational efficiency and improved SIA’s on -time

performance (Boieng, 2007). In contrast, SIA introduced four training centers (Cabin Crew, Flight Operations, Commercial and Management Development) within the company in order continuously motivate the employees to improve and update their performance as well as SIA started to apprise their employees for performance (Altoviya, 2004).

Therefore employees in SIA are taking special care to learn what’s best for the customers

and business, and gained the good name for their superior customer service. Additionally, SIA starts to publish a variety of department newsletters and a monthly company-wide magazine in order to keep their employees (who are functioning in the different countries and cultures) in the correct track (Altoviya, 2004). Besides, a “staff ideas in a ction” scheme

was implemented by SIA in order to gather continues suggestions from their employees for the further developments and improvements and SIA decided to provide “The Deputy Chairman’s Award” for the employees who have the innovative thoughts and

performance (Altoviya, 2004). These is one of the supporting plan by SIA in order to achievement effectively its business strategy.

2.11

ANALYZING THE STRATEGIC ROLE OF SINGAPORE AIRLINE

Despite the slowdown in growth, SIA is one of the world's most profitable airlines. It is therefore not surprising that SIA was voted 'Asia's most Admired Company' in the 1997 survey of 250 companies conducted by Hong Kong based (Asian magazine 2008).


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2.11.1

THE MISSION OF SINGAPORE AIRLINE

Singapore Airline emphasis on its quality of services is evident from its mission statement: Singapore Airlines is engaged in air transportation and related businesses. It operates worldwide as the flag carrier of the republic of Singapore, aiming to provide service of the highest quality at reasonable prices for customers and a profit for the organization.

2.11.2

STRATEGIC ANALYSIS OF SINGAPORE AIRLINE

Singapore Airlines is positioned as a premium carrier with high levels of innovation and excellent levels of service, and has h as made a strategic choice of giving priority to profitability over size. The organizational practices are continuous people development and rigorous service designs are key aspects of operationalizing and sustaining this positioning and strategic choice. At the corporate level, SIA follows a strategy of related diversification. The Singapore Airline Group has 36 direct subsidiaries and associated companies (Singapore Airlines, 2008). Use of information technology is an essential feature of SIA's strategy both in enhancing customer service as well as increasing efficiency. SIA's website is one of the most advanced and user friendly in the industry, where customers can check schedules, buy tickets, check into a flight, manage their frequent flyer (Doganis 2006) Effective use of IT can significantly reduce costs and enhance service levels. T he sustained drive for efficiency as well as quality has enabled SIA to increase the spread between breakdown load factor and actual load factor. Singapore airline has consistently outperformed its competitors. It has never posted a loss on an annual basis; it has achieved substantial and superior return compared to other airline industry like British Airways. It has received hundreds of industry awards for its service quality. SIA has achieved this outstanding performance by implementing a dual strategy which is:


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Differentiation, through service excellence and innovation, together with simultaneous cost leadership in its peer group. Such a strategy was deemed by Michael Porter (1985) who held that differentiation and cost leadership must be mutually exclusive since they require different kinds of investments across the value chain. SIA's strategic alignment can be outline using a vertical alignment framework alignment among environment, strategy, core competencies and organization. With regard to business level strategy, Singapore airline has h as managed to deliver premium service to demanding customers achieving differentiation at a level of cost that approach those of a budget carrier. This achievement challenges porter's suggestions that differentiation and cost leadership through the core competency of cost effective service excellence, enshrined in a unique, self-reinforcing system of organizational processes and activities. The four components of a business strategy are depicted below, they include the core strategy, and the strategic resources, customer interface and the value network done by (Hamel, 2002) the four components are linked by three bridges: customer benefits, configuration and company boundaries. The concept of hamel's model will be used to explain how SIA's business fit into the mode. Core Strategy: The first component of a business concept is the core strategy (Hamel, 2002). Essentially, the core strategy delineates the way firm has chosen to compete. The three elements that make up the core strategy are the business mission, product/market scope and basis for differentiation. SIA top management has been able to communicate in other ways to its employees about the company's mission, and that a written mission is necessary. There is no doubt that SIA's implicit mission is to meet the needs of customers beyond their dreams. This is evident from the accolades and awards that SIA has received from aviation bodies. By 1979, SIA became the ninth largest airline in the world, up from the 57th position prior to its strategy achieved due to a continuous average annual growth rate of 46% over its initial seven year period (Chan, 2000).


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Strategic Resources Core Competencies: SIA core competencies include the skills of its top management at planning marketing strategies and the interpersonal skills of its flight attendants. Making flights as comfortable as possible is what they do best. Core Competencies SIA's core competencies include the skills of is top management at planning marketing strategies and the interpersonal skills of its flights attendants. Making flights as comfortable as possible is what they do best. Strategic Assets Singapore Airlines was in a different position than most other airlines at the time. There were no domestic routes to serve it was forced to immediately start competing with international airlines for routes, getting access to airports, securing flight slots and landing rights, and attracting a new customer base. Unlike most state-owned entities, Singapore Airlines was subject to heavy competition from the onset and this tough start created a driving spirit to compete and also a dedication to branding, especially in the boardroom. These factors have prevailed within the organization, since and served the airline. Core Processes Serving customers on the airplane is SIA's core process, which translate customers' payment into value and utility. In flight service includes serving customers with food and drink, providing them with information on anything asked, providing customers with blankets, assisting them with luggage's, and a host of other assistance. Ground services include ticket sale, seat reservation, checking in, baggage handling. (Singapore Airlines, 2008). The third component of the strategic role is customer interface, which are: fulfilment and support, information and insight, relationship dynamics and pricing structure (Hamel 2002) Configuration Linking the core strategies and the strategic resources is call configuration, which is how assets and core competencies, assets and processes are combined and interrelated in support of a particular strategy. SIA uses the 'Singapore Girl' as its icon of great service to customers (Hamel 2002)


30

Customer Interface: The third component of the business concept, customer interface has: Fulfilment and support, information and insight, relationship dynamics and pricing structure (Hamel 2002)

2.12 FULFILLMENT AND SUPPORT

This refers to the manner SIA competes, the way it reaches out to customers its choice of channels, the kind of customer support it offers and what level of service it provides. To support its service excellence strategy, SIA adopts a rigorous quality control system and process for staff recruitment and selection, and a rigorous training and service policy (Chan 2000). SIA has one flight attendant for every 22 seats, which is the best in the world. In 1997 SIA introduced electronic Ticketing for flights from Singapore to Kuala Lumpur and Penang. In the same year, it launched innovative in-flight entertainment offering passengers viewing and listening options. (Chan 2000). Information and Insight: SIA does collect information from its passengers. For example, in 1998, it conducted a survey on 4,000 passengers from all classes to determine their needs and preferences. The passengers were from a cross section of flights, including those of London, New York and Hong Kong (Chan 2000). The survey found that people wanted comfort, privacy and the experience that SIA offered. Relationship Dynamics: This element deals with the nature of interaction between the company and customers. In SIA's case, this interaction is face to face between cabin staff and passengers. Pricing Structure: Fares on Singapore Airlines display the usual pricing structure very expensive for First Class and Business Class, and quiet affordable for Economy.


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2.13

VALUE NETWORK

The fourth component of Hamel concept relating to SIA strategic role is the value network which complements and amplifies the firm's own resources (Hamel 2002). They include suppliers, partners and coalitions. a. Suppliers: SIA's major suppliers are the two leading commercial aircraft manufacturers, namely, Airbus, and Boeing. b. Partners: SIA partners are world top hotels, car rental, credit card companies and Telecommunications Company. Passengers can stay miles away, call or make purchases from any of its partners worldwide. Singapore Airline Product: According to (Kotler 1994) Service is essentially intangible and does not result in the ownership of anything. Thus, whilst the provision of airline service does at some point involve some element of tangibility in the form of food presentation and quality, and environmental factors, it is largely an intangible and heavily reliant upon the quality of the service as perceived by the customer, as a distinguishing factor. In addition, the inseparability of consumption from production leads to its perishable nature; and the heterogeneity of the service experience (Berry, Parasuraman & Ziethaml 2003). In the commercial airline industry, this means that any unfilled seat on a regularly scheduled flight represents an opportunity cost to the operator. As for the quality of the in-flight service, as with all services, because inter-personal interactions between customer and service providers are required for the creation of that service, a great deal of variability is involved. Actual quality of service, in this case, may not be as important as the customer perception of the quality of that service (Berry, et al 2003). Classification of Products in Singapore Airlines:

SIA's product offering is divided into three main lines. The First Class seat represents the ultimate in air-borne luxury with corresponding prices. SIA allocates no more than 5% of its seats to this class due to its limited market. The next category is the Business class seat. Passengers in this category enjoy fully reclining seats, excellent food served on custom designed. Business class passengers enjoy the use of a personal colour television for a


32

choice of in-flight entertainment. The allocation for this class makes up approximately 10% of the average load. SIA's major product is air travel. Since it has no domestic routes to monopolize, SIA had to target the global market and compete with more experienced players. In 1973, SIA set up its subsidiary Singapore Airport terminal Services Ltd (SATS) to provide ground services. In 1977, together with British Airways, it introduced the Supersonic Concorde on the London Bahrain Singapore route. This service had to be terminated in 1980. SIA geographical area of operations includes East Asia, Europe and West pacific. (Singapore airlines 2008) Service Differentiation from Other Airlines Company The airline industry is a service industry. Service is provided by people; hence the basis for differentiation in the airline industry is the way the company's employees treat customers. SIA employees are dressed in an elegantly crafted Malay Sarong Kebaya, designed by famous fashion house, Pierre Balmain (Chan, 2002). Passengers are treated to excellent food served with lots of smiles, warm towels, and attention to details. The airline provides all passengers, regardless of class, with Cocktails, fine wines, and in-flight movies at no extra charge. SIA pioneered all these which were followed by other airlines of the Middle East Singapore Airlines (SIA) has also introduced the innovative new business class SpaceBed. Singapore Airlines decided on a fully branded product/service differentiation strategy from the very beginning. Innovation, best technology, genuine quality and excellent customer service are the major drivers of the brand. Throughout the course of their 32-year history, Singapore Airlines has remained true to their brand attributes. The company keeps driving innovation as an important part of the brand, and the cabin ambience and combined experience are key factors of their success. Singapore Airlines recognizes that each innovation has a relatively short life span. Once other airlines adopt it, it is no longer considered innovative. Therefore, the airline continues to invest heavily in R&D, innovation and technology as an integrated part of the business strategy to further differentiate itself.


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2.14

BRAND EQUITY – THE SUCCESS OF SINGAPORE AIRLINES

The brand, Singapore Airlines, resonates with luxury, comfort, extraordinary service and the quintessential Singapore Girl. It is the standard for all other international airlines and everybody may b elieve this to be true. Singapore Airlines always tries to impress it’s all types of customers, regular and new both. Its healthy brand equity has really added value to Singapore Airlines and has arisen from the marketing strategies it has adopted. The Singapore Airlines brand is widely recognized by most people around the world. It has good brand awareness. Singapore Airlines frequently communicates the value of its product through print media, television commercials, sponsorships (such as Sydney’s

City2Surf race, the Singapore Youth Olympics Games and the Giant Panda Collaborative Programmed) and publicity. It adopts the tag-line, “Singapore Airlines – A Great Way to Fly”, in all its promotions to convey the quality of the Singapore Airlines brand. It also

occasionally uses “A standard of service that even other airlines talk about” . For example, Singapore Airlines has generated much brand awareness and increased the perceived value of its products and services through its experimentation of new services from the time of its inception in 1972. It was the first to introduce hot towels, hot gourmet meals, video-on-demand, and complimentary beverages and headsets. I t was the first to introduce the inflight telephone services with its KrisFone in the 1990s. It was also the first, in 1998, to introduce a panel of internationally-renowned chefs such as Matthew Moran and Gordon Ramsay to develop inflight meals. It was also the first to provide inflight email services, email check-in and text message flight f light alerts.


34

Figure 4: Economic Class of Singapore Airlines

The entertainment system (which now features a plethora of recent movies, documentaries, TV series, games, weather, news etc.) has become so advanced that it is now a feature which Singapore Airlines uses to differentiate itself from its competitors – it’s almost a like whole new product line, Krisworld. The suites on its A380s which have set

a new standard of inflight luxury, space and comfort, the revamped business class with the widest leather seats and large LCD television screens are all features that have increased the perceived value of the Singapore Airlines brand. Very recently, Singapore Airlines was the first to introduce all business class flights between Singapore and New York/Los Angeles on its A340-500. Through innovation, Singapore Airlines has achieved quality customer service.

Figure 5: Personal Suite of Singapore Airlines


35

Singapore Airlines is also heavily increasing its brand awareness and increasing the perceived value of its brand through being the first to use new aircrafts. It was the first to fly the new Airbus A380 in 2007. This certainly was a marketing tool which Singapore Airlines used to increase its brand equity. Singapore Airlines was also one of the first to fly the Boeing 747 and Boeing 777. It went so far as to name sub-brand its aircraft – 747Megatop and 777-Jubilee to further differentiate itself from its competitors. Singapore Airlines also has one of the youngest fleet of aircrafts in the world (average age of each plane is 74 months compared to 160 months for other airlines). The constant investment in new aircrafts such as the larger, quieter first double-decker A380 and the more fuel-efficient B787 (Dreamliner) has allowed to save on costs such as fuel (15-20%) and maintenance, placing it in a sustainable competitive advantage. Its airlines spend less time in the hangar allowing them to spend more time in the air (13 hours per day compared to an industry average of 11.3 hours) and thus generate more revenue. The cost per available seat kilometer is just 4.58 cents compared to other airlines which range from 516 cents. Singapore Airlines also has little debt and has never posted an annual loss, which are strengths of the company. Singapore Airlines has even developed a personality for its brand through the Singapore Girl, which is at the heart of its all advertising and its product – it is now a trademark and brand for Singapore Airlines. The iconic Malay sarong kebaya (that can be blue, green, red or burgundy depending on the rank) encapsulates the Asian hospitality and for me is associated with the luxury, quality and comfort of Singapore Airlines. Whenever someone board a Singapore Airlines flight, it is guaranteed that he/she will be greeted almost incessantly with warm smiles by the well-dressed, elegant, courteous Singapore Girls with their hair tied neatly in a bun or in French Twists, their nails painted red and their eye shadows painted blue to match their uniforms. The T he attention to detail is just amazing – all flight attendants must bring a spare kebaya for all flights in case of spillage, tear etc. Singapore Airlines’ exceptional inflight service is rooted in its vigorous training of cabin

crews for four months, which is double the industry average. The prestige of the job helps build up the Singapore Airlines brand. Potential cabin crew are chosen from China, Taiwan, Indonesia, Hong Kong, Singapore, India, Japan, Malaysia and South Korea so that language barriers are minimized. They are interviewed and only 20% pass through to the training


36

stage which includes deportment, wine appreciation and etiquette courses. Once they graduate from the ‘finishing school’, their performance inflight is reviewed by an inflight -

supervisor for 6 months. All cabin crew undergo un dergo further training annually. It is no surprise therefore that Singapore Airlines won the 2010 World’s Best Cabin Staff Award (Skytrax). Another factor feeding into Singapore Airline’s healthy brand equity is its large proportion

of brand loyal consumers. It has the Krisflyer program which rewards passengers for flying on Singapore Airlines and its Star Alliance partners, spending on partnered credit cards and hotels with miles that can be redeemed for flights and vouchers. Higher-tiered Krisflyer members can also enjoy priority check-in, boarding, baggage handling, extra check-in baggage allowance, and complimentary access to first class lounges and even Star Alliance lounges. Singapore Airlines is receptive to all consumer feedback and constantly strives to satisfy its passengers. Singapore Airlines, in effect, was trying to minimize the postpurchase dissonance.

Overall, Singapore Airlines’ success has been partly driven by its robust brand equity. Its

pursuit of excellence, customer-oriented decisions, innovation in service and technology, and value for its staff has helped differentiate it from its competitors.


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C H A P T E R 03

FINDINGS & ANALYSIS


38

3.1

FINDINGS

After the whole study on the approach of Singapore Airlines Worldwide, I have known that Singapore Airlines is a very renowned organization in the field of Aviation Industry. From the very first day of the formation of this organization they all have tried to give Itthere best and reach the heights of success. Airlines has always tried to satisfy their customers to give comfort and assured safety. This company totally believes in customer retention and always tries new innovative ideas for the Customer Relationship Management.

3.2

ANALYSIS

3.2.1 SWOT ANALYSIS ANALYSIS OF SINGAPORE AIRLINES

SWOT analysis (Strengths, Weakness, Opportunities, and Threats) is an attempt to translate company specific factors from the company audit into company strengths and weaknesses plus external environmental factors from PEST analysis, a nalysis, no attempt should be made to justify. General, a business unit has to monitor key macro environment forces (demographiceconomic,

technological,

political-legal,

and

social-cultural)

and

significant

microenvironment actors (customers, competitors, distributors, suppliers) that affect its ability to earn profits. The business unit should set up a marketing intelligence system to track trends and important developments. For each trend or development, management needs to identify the associated opportunities and threats. Strengths and weaknesses are internal aspects and (Kotler 1994) suggests that these should cover the four areas of marketing, financial, manufacturing and organizational. Opportunities and threats look at the main environmental issues such as the economic situation, social changes such as the population getting older and technological developments including the internet.


39

Strengths Singapore airlines competitive strengths are the effective contribute to increasing shareholders value. The high quality of its customer service is one of the strengths of SIA and its brand image of 'Singapore Girl' is one which is highly recognizable by global customers. Of concern however is that maintaining quality of service at profitable levels has become increasingly difficult bearing in mind the threats faced by SIA in both macro and micro environmental contexts SIA is based on service and the image of Singapore Girl is a key part of this brand image. The Singapore Girl stands for friendly customer orientated staff delivering superior customer service. This has become the most important competitive advantage for SIA. Staff training and development programs have helped SIA retain and improve its customer service level through measures such as language courses and attitudinal programs to ensure professional service amongst employees. As a result the awareness of the Singapore Girl image among global customers is high. This is beneficial given the argument that companies who are able to attract customers are those who are with better customer service (Chan 2000). 

Strong, experienced marketing team



High brand recognition



Well established consumer testing panel

Opportunities An opportunity is an area of buyer need or potential interest in which a company can perform profitably. Opportunities can take many forms and marketers have to be good at spotting them. Investment in technology such as the development of an e-ticket system enhanced its strength in terms of cost effective sales and billing systems. These developments have been supported by skilled management and governance procedures which have generally resulted in SIA enjoying a strong financial framework benefiting from previous successful operations. It is reasonable to say that the effective marketing strategy helped SIA reduce cost pressures in competing in the airline industry through value adding targeted market segmentation. The use of Singapore Girl as an icon for SIA has enhanced its competitive position in the industry, (Chan, 2000). Changing consumer


40

behavior though has shaped airline companies' strategies particularly in considering terrorist linked attacks. 

Growth of the internet leading to an increase in the number of consumers willing to buy tickets online



New emerging market



Deliver product and service faster

Weaknesses Business does not have to correct all its weaknesses, nor should it gloat about all its strengths. The question here is whether the business should limit itself to those opportunities where it possesses the required strengths or whether it should consider better opportunities where it might have to acquire or develop certain s trengths. Customers use safety as an important criterion in choosing travel methods with substitutes such as trains generating threats to airline companies in particular markets. New entrants or existing rivals who positioned themselves as safe airlines such as Jet blue have exploited this opportunity to increase market share yet repositioning SIA's brand image from quality orientated to safety may prove difficult and costly. However given the broader political and legal contexts it is arguably a necessity for SIA to pursue this strategy. (Chan, 2000) Prices perceived to be too high which is the weakness that customers would have to pay tickets for cheaper airlines. Threats Of concern however is that maintaining quality of service at profitable levels has become increasingly difficult bearing in mind the threats faced by SIA in both macro and micro environmental contexts. In considering these threats, factors of relevance to SIA are competitive capabilities and profitability. Examples of these threats include the fact that fuel prices have consistently increased and will do so in the future while price wars between airline companies have become ever more intensive due to increased competitive levels in the industry. This is due to existing rivalries as well as new entrants within the discount airline market segment. In contrast to its rivals


41

SIA has preferred policies of adding extra value through customer service rather than ones of pure discounts on prices, (Thompson, 2002). Similarly investment in technology such as the development of an e-ticket system enhanced its strength in terms of cost effective sales and billing systems. These developments have been supported by skilled management and governance procedures which have generally resulted in SIA enjoying a strong financial framework benefiting from previous successful operations. 

New affordable luxury airline entrants to the market threatening to take share from premium brands.



Major competitor planning to integrate vertically and sell direct ticket to customers



The development and production functions need to be properly managed in order to enable smooth daily business operations, the concept of critical success factors (CSF) helps to ensure that due attention is paid to the development and production functions.



The critical Success factors are the limited number of areas in which results will ensure successful competitive performance for the organization. The areas where things must go right in order for the business to flourish.

3.2.2 PESTEL ANALYSIS OF SINGAPORE AIRLINES

Politics/Legal i. Increase in recurring safety lapses and terrorist threats led to tightening of aviation regulations resulting in higher compliance cost. ii. The deregulation of airline industry led to lower barriers of entry. This resulted in emerging low frills budget airlines competition and differentiation in pricing models. iii. Changes in the international political landscape has aroused political tension among the state-owned airlines which compete for growth and market share. In some cases a restriction in no sky policy. Economic iv. Bargaining power of buyers increased as more substitutes are available.


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v. Competitive in pricing strategies due to stiff competition. vi. Changes in Air tariffs and taxes coupled with high fuel cost affected the performance of airline industry. vii. Uncertainty in economic climate and weakening of major currencies against the strengthening of Singapore dollars resulted in high operating cost and lower margins.

Social/Environment viii. Changes in propensity to spend based on wages and cultures. ix. Emerging markets from the new rich rich “China and India”

x. Demography shift to more younger and well-travelled travellers travellers who have more disposable income to spend on luxury travels.

Technology xi. The adoption adoption of bigger and more sophisticated energy aircrafts such as A380, Boeing 787 by major airlines resulted in stiff competition. xii. There are better in- flight technology enhancements to address customers’ needs. xiii. The advancement of IT technology leads to 24/7 e-commerce services which better serve the customers efficiently. xiv. Availability of other mode of transports such as the high speed rail created alternatives for travelers.


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C H A P T E R 04

RECOMMENDATIONS & CONCLUSIONS


44

4.1

RECOMMENDATIONS

In accordance with the research, Singapore Airlines is doing very good in the market if weigh against to its competitors (SIA, 2007). However, continues improvements and changes are necessity for Singapore Airlines in order to survive in our fast changing as well as challenging world. Here as a consultant, would like to recommend a number of suggestions for Singapore Airlines as a stepping-stone for its future developments. Firstly, Singapore Airlines should keep an eye on the external environment carefully in order to identify the opportunities and threats in the business, remain competitive, as well as to react and make decisions quickly and appropriately towards the unpredictable and changing environment. To achieve this, Singapore Airline should select and arrange good quality managers into various departments in order to deal with the various forces in the business environment (Jennifer M.George 2000, pp 73-92) 73 -92) For example:

legal and public relations department is responsible for examining and overseeing the changes in laws and regulations



The finance and accounting department is responsible for investigating and evaluating the regional economy of SIA



Research and development department is responsible for monitoring and studying the changes in technology



Social and cultural relations department is responsible for scanning s canning and identifying the pressures in the social structure of a society and the national culture

On the other hand, chief executive officer in Singapore Airlines must employ a group of researchers whose only task is scanning journals, articles, magazines, newspapers, publications, bulletins, reviews, forums, online information and so on (Jennifer M.George 2000, pp 73-92). By scanning, SIA may perhaps become aware of the countless unseen information and it will be very useful and helpful for managers in order to understand and make appropriate decisions for the future functioning or operations. On the contrary, SIA should dismiss or set aside the number of motiveless or ineffective managers and employees (James A. F. Stoner and R.Edward Freeman 1992, pp.74-80). By


45

doing this, SIA be able to offer its full attentions as well as additional motivations, encouragements, and inspirations for the remaining good quality managers and employees. This can eve ntually improve SIA’s on time performance and also can keep away from spending money and wasting time for the worthless managers and employees. Besides that, Singapore Airlines must work together with external organizations, individuals, or groups in order to gather valuable and helpful information for the further improvements and developments in the future (Jennifer M.George 2000, pp 73-92). This can be done by exchanging communications and sharing data with the external organizations. For example:- Singapore Airlines should act as a team with Southwest Airlines in order to understand, examine, and identify the exclusive business, operations, marketing, and finance strategy of Southwest Airline. By do this, Singapore Airlines be able to develop their plans to compete in the market, as well as can make better SIA’s decision making towards its functional strategies. In addition, price is become more sensitive matter in this growing world and most of the customers are turning to be price conscious although the product they wanting is with high quality and excellent services. In view of that, SIA is charging higher price than its competitors for its airline tickets due to the ongoing innovative and creative improvements and developments in their services (SIA, 2007). This may reduce the number of passengers or flyers in the Singapore Airlines and also customers may perhaps choose its competitors for economical journey. As a result, SIA should fix a reasonable price for its tickets with redesign or develop its services with a less expensive cost in order to target a wide segment markets. Besides that, a number of rules and regulations in SIA should change to be more complexity in order to prevent loses in the profit of the company. For example: – SIA should charge a few amount on the passengers who are give up their seats at the last minutes. By doing this, SIA can put a stop to the customers who are canceling their flights tickets at the last minutes. On the other hand, a number of rules and regulations should change to be trouble-free in order to magnetize more passengers and also draw in customers attentions. For example: – money should be return to the customers who are giving up their seats minimum one week earlier than the fixed traveling date. By doing this, SIA can attract passengers who are book their tickets without conformation as well as flyers who cancel the tickets for the urgent matters.


46

Finally, advertisements are playing an important role in very single organization. For example: – advertisements are helps to reduce sales resistance, develop a readiness to accept a product, as well as create desires or demand for the commodity (Adrian, 2007). According, SIA can be develop more in the society with giving continues and special attentions to the advertising segment. Innovative and creative advertisements regarding the services of Singapore Airlines will always impress the memory of people as well as its very fast can catch the attentions of more people.

4.2

CONCLUSION

SIA is a proven company that delivers great service reflecting their frequent international awards

for

innovation,

flight

experience

and

quality

service.

Many

companies aspire to the status that SIA has earned itself, but SIA earned this through their commitment towards their mission statement of delivering quality world class service to their customers as their prime objective. Like the glory days of aviation when flying was an exclusive experience, SIA have continued to deliver to their customers the sense that flying is glamorous and is matched with quality customer service. Although their company slogan “A great way to fly” instills this, SIA must continue to seek ways of improvement in

order to maintain their track record whilst retaining the loyalty of their customers and attracting new ones.


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REFERENCES

1. http://www.referenceforbusiness.com/history2/38/Singapore-Airlines-L http://www.referenceforbusiness.com/history2/38/Singapore-Airlines-Ltd.html td.html 2. http://www.staralliance.com/en/about http://www.staralliance.com/en/about/airlines/singapore-airlines/ /airlines/singapore-airlines/ 3. http://www.econlib.org/library/Enc/AirlineDeregulation.htm http://www.econlib.org/library/Enc/AirlineDeregulation.htmll 4.http://www.flyertalk.com/the-gate/blog/5483-the-end-of-an-era-at-singaporeairlines.html 5. http://www.iata.org/pressroom/airlines-international/dece http://www.iata.org/pressroom/airlines-international/december-2009/pages/04.aspx mber-2009/pages/04.aspx 6. http://www.singaporeair.com/en_UK/about-us/sia-history/sia-a http://www.singaporeair.com/en_UK/about-us/sia-history/sia-awards/ wards/ 7. http://boeing.com/news/releases/2008/q2/080403a_nr.htm http://boeing.com/news/releases/2008/q2/080403a_nr.htmll 8. http://www.staralliance.com http://www.staralliance.com/en/about/airlines/singapore-airlines /en/about/airlines/singapore-airlines


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Marketing Strategy of Singapore Airlines

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