Introduction:

AirAsia Berhad is a Malaysian low-cost airline headquartered near Kuala Lumpur,

Malaysia. It is the largest airline in Malaysia and the largest low-cost airline in the
Southeast Asia. Air Asia established in 1993 with commenced operations in 1996.
AirAsia was established in 2001 offering a new image with the idea ‘Now everyone
can fly’. AirAsia’s first and main base is the Low Cost Carrier Terminal (LCCT) at
Kuala Lumpur International Airport.

Vision:

To be the largest low cost airline in Asia and serving the 3 billion people who are
currently underserved with poor connectivity and high fares. (AirAsia Berhad ，2016)

Mission:

-To be the best company to work for whereby employees are treated as part of a big
family

-Create a globally recognized ASEAN brand

-To reach the lowest cost so that everyone can fly with AirAsia

-Maintain the highest quality product, improving technology to reduce cost and rise
service levels (AirAsia Berhad ，2016)

Services include:

• On board

AirAsia offers food and drinks for purchase on board. Air Asia does not serve alcohol
or pork because AirAsia have according with Shariah law. However, this applies only
to the regional AirAsia group flights, and not to the AirAsia X flights, which do sell
wine and beer on board.

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• On board luggage

On-board baggage is limited to a single piece of luggage that is less than 7 kg plus a
small personal item. Checked baggage is 100% fee based (no free checked baggage,
including on international flights). Checked baggage fees are the lowest when
purchased during booking, and are more expensive when purchased during check-in
at the airport.

• Frequent-flyer program

AirAsia had launched its own frequent-flyer programme. AirAsia had launched a
programme called ‘BIG’ .The airline has signed an agreement to start combine
venture with financial services firm Tune Money .Under this programme it will issue
loyalty points to AirAsia customers and third-party merchants. Points can then be
used to resume AirAsia flights

Brand:

AirAsia Bhd group CEO Tan Sri Tony Fernandes was given special recognition as
Brand Builder of the Year for his outstanding work in building the low-cost airline
brand at the recent 2014 World Branding Awards.

AirAsia was also named Brand of the Year in the airline category. The airline was the
only regional winner, having scored the highest for a low-cost airline in Malaysia,
Singapore, the Philippines, Indonesia and Thailand.

AirAsia, the world’s best low cost airline for four consecutive years (2009, 2010,
2011 and 2012) has been listed as one of Malaysia’s Most Valuable Brands (MMVB).
The airline was ranked 12th among 30 local brands at the recent MMVB 2012 award
ceremony held in Kuala Lumpur. (AirAsia Berhad ，2016)

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Competitor: Malaysia Airline

Malaysia Airlines System Berhad is also known as MAS.MAS is founded in1947 as

Malayan Airways, but it has change its name as Malaysian Airline System in1
October 1972. MAS is the flag carrier which is own by government of Malaysia.
MAS headquarters is situated at Sultan Abdul Aziz Shah Airport in Subang, Selangor.
MAS operates flights at its first base in Kuala Lumpur International Airport, and
secondary base in Kota Kinabalu. From a small air service, Malaysia airlines have
grown to become award-winning airline with more than 1000 aircraft, servicing more
than 110 destinationsacross six continents.The slogan for Malaysia Airlines is “Going
Beyond Expectations’’. The primary objectives of MAS were to furnish the people of
Malaysia with a proficient and profitable air transport system which would enhance
the placing of the country in the world.

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 Market Segmentation

AirAsia can make use of segment bases such as demographic, socio-cultural, user-
related, and user-situation segmentation to segment in their market, as explanation in
the Table 1.

Table 1

Segment

Segment 1 Segment 2 Segment 3 Segment 4

Segment Base

Demographics RM0- RM40,001- RM40,001- RM60,001 and

RM40,000 RM60,000 RM60,000 over above
Income
(Year) (Year) (Year) (Year)

Socio-cultural Lower Class Middle Class Middle Class Upper Class

Social Class

Used-related Low Moderate High High

Usage rate

Used-situation Leisure Leisure Business Leisure

Time

Benefits Sought High High High Low

Value-for-money

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Income

According to demographics, income is one of the variables that can be used to

segment their market. Income indicates the ability of consumers to travel with
AirAsia as consumers from different income groups are fascinate to different airlines.
For instance, low income (RM0-RM40, 000 Year) and middle income (RM40, 001-
RM60, 000Year) earners more sensitive to prices than high income (RM60, 001 and
over Year) earners, therefore they would be more fascinate to toward LCCs such as
AirAsia. This is because low-income and middle-income earners generally have lesser
disposable income than high-income earners, hence are unlikely to purchasing airline
tickets such as MAS as their airline tickets are more expensive than AirAsia. For low-
income and middle-income earners, their main needs to an airline tickets is simply
travelling from one destination to another place (Nurush Shah, 2016). Thence, the
airline ticket pricing is an important factor affecting buying behaviour. Statistically,
they have indicated that consumers have increased their expense in air travel due to
the availability of more affordable domestic and regional flights from LCCs.

Social Class

AirAsia may have to enter the lower segments of the market, middle and upper social
classes on the basis of this variable because of the different sectors of society often
have different purchase behaviours, brand preferences and expectations. A consumer's
social class is correlative with the income level that the consumer is earning. For
example, if the consumer is classified as low-income earners the consumers will be in
the lower social classes. In addition, consumers upper social class tend to have a
negative perception about the image of LCCs as uncomfortable provide services
(Nurush Shah, 2016).

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Usage Rate

Usage is associated with the division in which the user can be used to divide AirAsia
one of the variables under their markets, and it is divided into low, medium and high
usage rate. Based on the amount of disposable income and consumer preferences,
consumers will have different usage. For example, consumers (segment 4) who travel
frequently of business meetings have a high usage rate of air travel as they need to
travel frequently to different destinations. Mostly from low-income consumers who
can afford to travel up to twice a year depending on the destination of low usage. This
is because they have less disposable income contrast to high-income earners.
However, if the price level is affordable, then low-income earners (Segment 1) can be
travel more often with LCCs (Nurush Shah, 2016).

Time

As for the user-situation base, AirAsia able to use their time as one of the variables to
divide the market. Time variables into both leisure and business. Different uses travel
consumers have different priorities. For example, low-income earners who are
planning to go on a leisure holiday would have the ability to continuously monitor
airline ticket to ensure that they are able to get the cheapest price. Travellers on
business trips meanwhile would perhaps have to pay higher prices because they may
need to buy the airline tickets in advance (Nurush Shah, 2016).

Value-for-money

One of the benefits of value-for-money sought variables which AirAsia may be able
to use market segments. The level of importance of value-for-money can be divided
into low, moderate and high whereby consumers with lower income levels tend to
place high emphasis on value-for-money products and services (Nurush Shah, 2016).
For example, consumers from Segment 4 place high emphasis on value-for-money
because these consumers are working for company that are currently affected by the
economic recession happening, thus they are required to reduce their expenses as
much as possible.

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Target Strategy

After segmented the market, organization can evaluate, analysis and prioritize the
target strategy of market. AirAsia had been targeted 4 different types of market.
Those segments had categorized into segment 1, segment2, segment3, and segment4.

Segment 1

Income: Low income level (MYR0 – MYR40, 000 yearly)

Social class: Lower social class

Usage Rate: Low

Time: Leisure

Value for money: High

Segment 2

Income: Middle income level (MYR40, 001 – MYR60, 000 yearly)

Social class: Middle social class

Usage Rate: Moderate

Time: Leisure

Value for money: High

Segment 3

Income: Middle income level (MYR40, 001 – MYR60, 000 yearly)

Social class: Middle social class

Usage Rate: High

Time: Business

Value for money: High

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 Segment 4

Income: High income level (MYR60, 000 and over above yearly)

Social class: Upper social class

Usage Rate: High

Time: Leisure

Value for money: Low

Segment 1 is defined as the lower social class who the consumers are traveling
at most twice a year because of their low-income. Low-income earners will planning
and travelling leisure holiday and have high value for money. (Amiruddin,2013) For
instance, they can attain and enjoy the cheaper air ticket.

Segment 2 is referred as the middle income level consumers who travel

moderately for leisure. These consumers have high tend to emphasis on the value for
money which means the products and services. For instance, reservations services by
the air hostess, and have the maximum of 40kg luggage for boarding. (Amiruddin,
2013)

Segment 3 is classified as middle income level consumers who travel

frequently for business purposes. Travelers of business may need to purchase the
higher prices tickets in advance. Afterwards, because of their income levels, usage
rate of travel to different destination are highly and frequently to them. Moreover,
these consumers are high underline the value for money because of they are corporate
with the company which are currently affected by the economic depression and they
required to reduce their spending as much as they can control. (Sukati, Tan &
Isnurhadi, 2015)

Segment 4 is defined as high income level consumer who will travel

frequently depends on their leisure time. Besides that, high income earners will
choose and the more high class and comfortable air ticket whether need to purchase
expensive air tickets. These consumers are less tend to the value for money because of
their income is higher and ability to bear the expenses.

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Position Strategies

AirAsia slogan as “Now everyone can fly” and the company achieve it with
committed to low fares, low prices (Ireland, RD, Hoskission, RE & Hitt, MA 2009) to
accomplish high passenger loads, market share and profitability by eliminating
provision of costly in-flight services and reduce number of labor, facilities and
overhead costs. Nowadays, the cost, quality or speed are very focus by the passenger
to choose the brand of airlines. However, the low costs is using of information
technology. It can saved cost of issuing physical ticket, there are more people using
AirAsia’s website to online booking and reservation. AirAsia made its tickets
available via post office and specify bank teller (ATM) machines for gaining more
market and make customers more convenience. AirAsia have strong branding and
marketing (Singh, K, Pangarkar, N & Heracleous, L 2010) to promote the brand
awareness promotion like customers booking the air ticket earlier will get the
promotion price. This low cost flight promotion will attract a lot of customer. AirAsia
also managed to enhance its current offerings and profitability from additional
services such as provide in-flight food and beverages in breakfast combo, holiday
reservations and travel insurances. It consists of valuable resources and capabilities.
AirAsia is a great value and amazing quality airlines. AirAsia such as a greater airline,
their staff are very polite and quick service when customer have any request. Different
segment of customer will buy different class of flight ticket, example as Segment 4
customers have higher income and they will buy the upper class flight ticket, the seat
will more comfortable.

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Differentiate between its competitors

AirAsia only served to Asia and Australia, it doesn’t cover to Africa, Europe and
North America, but Malaysia Airlines have served to Africa, Europe, North America,
Asia and Australia. The number of AirAsia destination is 120+ country, it is less than
Malaysia Airlines was 128+ country. However, the seat width of AirAsia is 18.00
inches and the Malaysia Airlines is 17.22 inches. Then, vegetarian food will not
provide in AirAsia but Malaysia Airlines will provided vegetarian food for their
passengers. The baby buggies, prams, strollers and other devices can be checked in
for free in AirAsia. Since storage space is limited in the aircraft cabin, the acceptance
of baby prams, stroller as cabin item will be on first come-first served basic in
Malaysia airlines.

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Evaluation of existing marketing mix strategies AirAsia

Promotion

AirAsia had organized more promotion to attract more people know about the
reputation of AirAsia. Then, more customers are willing to choose the AirAsia for
travel or go to any destination. For example, booking early can get more surprise form
AirAsia. AirAsia carry out the new promotion for 300 million guests flown now still
have 3 million seats on sale! Fly from Kuala Lumper to Langkawi, Yogyakarta,
Pattaya, Taipei and many more! The base fare from RM 3!! Book before 16 Aug
2015 and the travel date are from 15 Feb to 31 Aug 2016.

Product

AirAsia Product good and services to their customers. AirAsia had training their
employees when facing their customers. For example, the stewardess must smile and
polite talk with their customers. Employee must to wear very formal and maintain a
good image .AirAsia also increase more new product to improve the marketing
performance. Therefore, the customers have more products to choose. Furthermore,
AirAsia has been changed the current method that are using flight ticket to ticketless
flight for customer convenience. As a result, customer would like to choose AirAsia
to fly. For example, AirAsia provide new product about food and beverage on the
airplane when flight another distance. AirAsia provide the breakfast combo and free
T&CO Coffee or T&CO the Tarik from RM 10 per set

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Price

AirAsia was the first airline in South-East Asia to available a low cost carrier (LCC).
In this business method, they do not provide free food and beverage in the airplane
but there have a lot of passengers prefer that not having food during the flight too.
(AirAsia Berhad ， 2016) Furthermore, they has been provided assigned seat,
ticketless airline and also online check in. Customers are not offer to refunds for
missed flight. Somehow, AirAsia believe that if they can safety send their passenger
to the destination on the time, at the lowest cost and make sure they are satisfying and
enjoying the flight then the costumer will fly with their airline.

Place

AirAsia increase their place at many airports in the internal or external. This is
because, AirAsia need to let the customer know, and if you choose AirAsia you can
save the time and money. This is because AirAsia has improve their place distribution.
Customers can use the internet to booing their ticket online at anytime, anywhere and
early booking ticket can get cheaper price. Customers can login the website
<http://www.airasia.com/th/en/home.page> to booking the ticket and check the price.

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Proposal and justification of marketing mix strategies AirAsia

Promotion

Company can change the menu every month and promo another country food. For
example, another country food is Korean food, Chinese food, Thai food, Japanese
meal and etc. Product many type of sandwiches and change the fruit every day. All of
the foods are confirm health and delicious. Company can learn for Firefly, this is
because Firefly have free same food and beverage for the customer during flying
another place. For example, a piece of cake, a small pack groundnut, soya, coffer and
etc.

Product

Company can product the new promotion with the buy one get one and support to free
the food & beverage. For example, if the customer buy more than 2 airline ticket were
get the buy one get one promo. Furthermore, company need to improve their
employee’s services. Company can open some training class for all employee to
increase their services and improve more knowledge to facing their customers.

Price

Not the same ticket will be difference price. Some tickets have the promotion so can
attract more customer. Company can low down the price for children and elderly.
Many elderly never travel to another country and never know foreign scenery and
customs. If the price low down the common economic family can support all family
number to travel.

Place

Company are open the own hotel in the airport. It is open with customer on the plane
for a long time. Usually, customer will go directly to the outside hotel but some of the
customers are very tired so they are choice the hotel in the airport.

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Reference

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us/airasia-mission-vision-values.page>[Accessed 27July2016]

AirAsia- history, background, main service Available at :<

https://en.wikipedia.org/wiki/AirAsia>[Accessed 27July 2016]

AirAsia-brand Available at :< http://www.airasia.com/tw/en/press-releases/airasia-

most-valuable-brands.page>[Accessed 29July2016]

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https://www.scribd.com/doc/72688233/Backgroud-of-Malaysia-Airlines>[Accessed
29July2016]

AirAsia marketing strategies Available at :<

http://www.academia.edu/9150463/Air_asia_marketing_strategies> [Accessed
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Inda, Tan, Isnurhadi 2015, Customer Satisfaction Level. Available at :<

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