Back in the 1900’s Thai National Airlines was the only airline that could fly in the main routes of Bangkok – Chiang Mai with non-stop flights. But in 1993, Air Asia was established to finally connect Asia like no other airline company. Today it is one of the most reputed Asia-based airline companies.
They have a vast network of operations around the world, flying domestically and internationally. Their 5 main operational hubs are Singapore, Indonesia, Japan, Malaysia, and Thailand.
In the AirAsia case study, we shall decode AirAsia’s marketing strategy, marketing mix, SWOT analysis, social media presence, and also analyze its competitors. Before we get started, let’s get to know the company a little more.
About Air Asia
AirAsia is headquartered in Malaysia and provides transportation services to its passengers along with cargo and courier services. It was named as the “Best Low-Cost Airline Company” in the world for 9 consecutive years at the Skytrax World Airline Awards. It offered a new definition of affordable traveling with its Tagline – “Now Everyone Can Fly”.
Air Asia started with only 2 Boeing 737 – 300 series and started their first point-to-point flights. Today, it connects domestic and international flights to more than 165 destinations within 25 countries. The company is constantly using innovative solutions to provide low-cost transportation. Over the years Air Asia has broken the travel norms for Asian countries and is known as the ‘pioneer’ of low-cost travel in Asia. Let’s get into discussing their marketing efforts, starting with their marketing mix.
Marketing Mix of AirAsia
The Marketing mix refers to the set of actions and tactics which a company uses to promote its brand. A Marketing mix mainly focuses on the 4ps of an organization, which are Product, Place, Price, and Promotion. Let’s take a look at AirAsia’s marketing mix.
AirAsia Product Strategy
AirAsia is one of Asia’s most successful low-cost carriers. It is an international airline that began operations in Malaysia and has since expanded to include countries across the Asian continent, such as India and Thailand. The basic product strategy in its marketing mix is its low-cost air services. AirAsia focuses on providing guests with comfort through competent facilities that meet industry standards, as well as regular flights and secure point-to-point connectivity.
AirAsia Place Strategy
AirAsia is a global airline with operations in more than 160 destinations in 25 countries. Its routes include both domestic and international flights. Multiple ticket distribution networks exist, including internet booking, exclusive reservations, sales offices, and company-approved agents. Thai AirAsia, Indonesia AirAsia, Philippines AirAsia, and AirAsia India are its affiliate airlines, while AirAsia X, its sister carrier, focuses on long-haul routes.
AirAsia Pricing Strategy
AirAsia is known for its low fares and no-frills policy. It employs an anchor pricing policy, which establishes a baseline for pricing all AirAsia-operated flights. AirAsia uses anchor pricing to offer incredibly low rates on its services and fares, enticing consumers to consider traveling with the airline. In addition, rates are determined by the class of flight, airline load factors, travel dates and days, and competitor pricing in the airline industry.
AirAsia Promotion Strategy
When it comes to promotions, AirAsia has made a name for itself as a company that focuses on increasing consumer satisfaction. The AirAsia Big Loyalty Program is one of the company’s most popular campaigns, in which affluent customers win BIG points for any purchase they make and redeem those points for free airline tickets.
AirAsia focuses on delivering accessible promotions, in which customers are aware of new product offers with minimal company intervention through simple tools such as emails. AirAsia participates in a lot of price-based promotions. In order to build buzz, cheap flight tickets are given out based on demand in the form of promotional schemes. Apart from that, AirAsia engages in popular promotions such as social media advertising, print advertisements, and simple but efficient billboard advertising.
That was AirAsia’s 4Ps mix, detailing each strategy and its purpose. Let us now get into its marketing strategy.
Marketing Strategy of AirAsia
In this section of the blog, we shall understand AirAsia’s marketing with the help of its STP (segmentation, targeting, and positioning) strategy.
AirAsia segments its market on the basis of three distinct, but overlapping factors:
- Geographic segmentation- AirAsia caters to mainly the Asian market, hence the name Air Asia. They hence practice geographic segmentation by focusing their services primarily in Asia
- Demographic segmentation- Being a low-cost airline, they cater to people in the low to medium income group
- Psychographic segmentation- Their main customer is the cost-conscious traveler
AirAsia’s entire branding makes their target market quite self-explanatory. Their target audience is- travelers looking for inexpensive flights. These are people ranging from those who could not afford to fly previously, to corporate business employees whose employers are looking to fly them while cutting costs.
Simply put, AirAsia’s target market is the people whose purchasing motivations are price and simplicity. They have achieved effective targeting to this segment by making their brand synonymous with low-cost services. This has been possible through excellent brand positioning.
AirAsia’s positioning is very clear in being low-cost. This has been possible due to the company’s relentless communication through various marketing channels. Their slogan “Now Everyone Can Fly” itself sets the tone for the brand. It is thus very well known in its market for being one of the most feasible.
Through its efficient STP, AirAsia has been able to successfully develop its marketing strategy and make a name for itself in the market. But of course, there exist many competitors that require constant evaluation of strategies. Let’s understand AirAsia’s competitors better with analysis.
AirAsia Competitors Analysis
AirAsia has been a successful part of the airline industry for over a decade. They have been a major player in the low-fare airline industry and have connected over 88 countries together.
This comes with a lot of competition. The biggest competitors of AirAsia though, are Malaysian Airlines and JetStar Airways. Let’s see how they compare amongst a few key indicators.
- AirAsia provides service packages to its customers at a very reasonable charge that is affordable to the customers in comparison to JetStar Airlines
- JetStar is providing more payment options or gateways to its customers
- AirAsia provides services to 130 destinations as compared to JetStar which provides services only to 80 destinations
- Malaysia Airlines generates 113% of AirAsia’s revenue
- Malaysia Airlines also has fewer employees, at 7,159 compared to AirAsia’s 20,000
This tells us that AirAsia mainly needs to understand its customers a little better and provide them with the extra services they need. AirAsia is already trying to achieve that by expanding their facilities to hotel bookings, tour packages, etc to try and gain some competitive edge along with diversifying their product portfolio. Some more of these improvement areas can be found through its SWOT analysis.
AirAsia SWOT Analysis
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT Analysis is a technique for analyzing these four aspects for a business for better decision making and judgement of its current position.
Following is the SWOT analysis of AirAsia:
- AirAsia is the low-cost airline leader in the Asian market
- The company has subsidiaries in Indonesia, Thailand, the Philippines, and Japan
- It boasts a fleet of nearly 300 aircrafts
- AirAsia’s positioning is steady and consistent in being a low-cost airline. It constantly delivers on this promise of affordability
- It is extremely difficult to keep costs as low as possible due to fluctuations in fuel prices and increases in service costs
- AirAsia does not have its own MRO facility
- Cut-throat competition in its sector. As compared to industry leaders, they don’t operate on as many routes
- Merging with other low-cost airline companies
- They can introduce more flights for popular and busy destinations
- The increasing traffic from India as Indians prefer budget airlines. And thus Indians meet their target requirements perfectly
- Government charges and costs that are not in the control of the company may lead to severe losses in the future
- With dynamic management and other operational costs, it becomes difficult to manage low-cost flights
- The rise in fuel prices
Lastly, let’s take a look at AirAsia’s social media marketing presence as digital marketing is also a very important part of any company’s marketing strategy.
AirAsia Social Media Presence
Air Asia is smartly using its social media in building a direct relationship with its customers. They have official handles on all major platforms but for the purposes of this segment, we shall take a look at the main 3, which are Instagram, Twitter, and Facebook. Following is an analysis of AirAsia’s social media presence:
- AirAsia has 223K followers on Instagram, 3.2 million followers on Twitter, and 12M likes on Facebook
- They post regularly on their pages, at least a couple of times a week, and maintain this consistency
- They post a variety of content that aims at staying relevant in the minds of the customers
- Their main strategy seems to be posting about exotic travel destinations with Call-to-Action, encouraging customers to avail their services in exploring these locations
- The company also posts environmentally friendly content to echo the ethos of its brand. For example, they had a #responsibletraveller campaign on Instagram. Under which they asked customers to take a pledge to be conscious of not wasting paper and thus carrying all their travel documents digitally
- Festive marketing is also practised by AirAsia whereby they wish their customers on various festivals and also sometimes provide exclusive offers
- On its Instagram, the company has an ongoing #HumansofAirAsia campaign that gives us insights into their employees’ lives and day-to-day activities on their jobs
- On the company’s Twitter handle, a lot of information regarding travel guidelines, advisories and other details are shared for the customers’ knowledge
Overall AirAsia has a pretty good social media presence that communicates its services and engages with the customers.
AirAsia’s marketing strategy has worked wonders for the company in communicating exactly what they wanted to the customers. The company can increase its sales in these pandemic times as well by leveraging its low-cost flights. Given the current situation, in-flight experience, especially hygiene matters a lot to customers so AirAsia should heavily market its hospitality and put customers at ease in availing their services.
In order to stay ahead of the competition, the company needs to constantly invest in improving the additional facilities that make a difference to customers in today’s times such as disposable in-flight meals, complimentary WiFi, entertainment facilities, and varied seat options. Along with these improvements, if AirAsia continues to deliver to its target market effectively, it will surely maintain its differentiated position in the industry.
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