1.

0 INTRODUCTION (8 MARKS)

According to Euromonitor International (2018:55), Air Asia Berhad is an established in

1993 with commenced operations in 1996. In 2001, Tune Air Sdn Bhd Tony Fernandes’s
company purchased this airline from DRB-Hicom. Air Asia never look back after that. Air
Asia’s first and main base is the Low Cost Carrier Terminal (LCCT) at Kuala Lumpur
International Airport, while its secondary hubs are at Kota Kinabalu International Airport, Senai
International Airport and Penang International Airport (Euromonitor International, 2018:55).

Air Asia is well known as Malaysian low cost airline and even Asia’s largest low fare, no
frills airline (Euromonitor International, 2018:55). The airlines claims ‘No Admin Fee’, but has
some fees for services which are free on other airlines. Air Asia slogan is ‘Now Everyone Can
Fly’. Being the home of Air Asia, the LCCT is the budget terminal in KLIA, opened on 23
March 2006. LCCT is said to be carried about 10 million passengers a year (Euromonitor
International, 2018:55).

The Air Asia subsidiaries are the likes of Thai Air Asia, Indonesia Air Asia, Viet Jet Air
Asia and Air Asia Red Tax. Meanwhile, Air Asia associate companies are Air Asia X, Tune
Hotel and Tune Money. 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 (Euromonitor International,
2018:55).

AirAsia Berhad is an airlines organization that gives aircrafts benefits locally as well as
globally. Inside Malaysia, AirAsia has focused on a customer market that comprises of youthful
grown-ups, working grown-ups and also middle income groups (Euromonitor International,
2018:55).

The distributions of AirAsia's administration service for Malaysia and as well as for
different nations are through its official site, www.airasia.com and travel organizations which are
scattered around Malaysia (Euromonitor International, 2018:55). Through an analysis of the
inside and outside condition of AirAsia, it shows that AirAsia appreciates critical qualities in its

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ease benefits, its successful and centered administration and its basic plan of action (Euromonitor
International, 2018:55). Meanwhile their weaknesses are restricted administration assets because
of ease, constrained HR and in addition its overwhelming reliance on outsourcing. AirAsia faces
a solid outer condition highlighted with the minimal effort tickets that could be purchased by all
levels of society (Euromonitor International, 2018:55).

The AirAsia marketing objectives are, “to be the lowest cost short haul airline in every
market that they serve, to continuously launch new routes under AirAsia (Euromonitor
International, 2018:55). One of the objectives of AirAsia is carry 70 million passengers a year
within 6 years starting from 2014. They also plans to introduce more routes, add frequencies and
develop the existing ones. AirAsia turn their low-cost carrier terminal at KL International Airport
(KLIA2) into the regional hug for budget travel to achieve their philosophy of “Now Everyone
Can Fly” (Euromonitor International, 2018:55).

In order to accomplish its goals, AirAsia will lead its marketing activities toward the
following strategies (Barney, 2015:49):

Target Market Strategy: AirAsia will continue to target its existing customer’s while
expanding its routes to more developing and developed countries (Barney, 2015:49).

Positioning Strategy: AirAsia will continue to position its brand as the lowest cost
airline by giving away incentives in order to attract customers from other airlines services
(Barney, 2015:49).

Product Strategy: AirAsia will maintain its efficiency in providing services which are
convenient to customers as well as increasing its flight frequency to maximize its profits
(Barney, 2015:49).

Pricing Strategy: AirAsia maintains its fares to be as low as possible and exercises its
‘pay only for what you want’ philosophy amongst its customers (Barney, 2015:49).

Promotion Strategy: AirAsia aims at generating positive customer feedback by giving

away tickets for free as well as venturing into hotel lines and endless promotional fares and
holiday packages to gain constant attention from its customers (Barney, 2015:49).

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 Place Strategy: AirAsia moves away from the traditional way of services placement. It
launches mobile facilities, call centres and much more to facilitate customers (Barney, 2015:49).

The mission statement of AirAsia is to: “Be the Asia’s leading low fare no frills
airline and first to introduce “ticketless" travelling, Air Asia will be unveiling more
incentives in the future to encourage more air travel among Malaysians.” (Brickley et. al.
2012:78). The organization structure of AirAsia is quite a large one since it includes AirAsia
Indonesia as well as AirAsia Thailand. (AirAsia Berhad Annual Report, 2015) However, the
main personnel are as below:
CEO of AirAsia, Dato’ Sri Dr. Tony Fernandes leads AirAsia. He is responsible forever
looking the entire operations of AirAsia. Deputy CEO and co-founder of AirAsia, Dato’
Kamarudin Meranun helps by being involved in the development of the company and its other
ventures (Brickley et. al. 2012:78). AirAsia has developed a brand that is accessible to everyone.
The driving force underneath their brand is the unique and friendly AirAsia experience.
This conducive AirAsia culture is everywhere in their operations including the
management, guests services, ground and flight operations. To fulfil their mission by providing
the lowest cost flights to customers in order to be the leading low-cost carrier, their positive,
warm and welcoming service has in turn won many long term customers for AirAsia (Brickley
et. al. 2012:78).

AirAsia faces a few different levels of competition. Among its direct competitions are
companies that also provide airline services in Malaysia as well as other country’s low cost
carriers, such as (Brickley et. al. 2012:78):
 MAS (Malaysian Airlines)
 Firefly (Subsidiary of Malaysian Airlines)
 Malindo airlines
 Rejent airways

AirAsia faces trouble with the Indonesian culture of as they do not prefer to fly with light
and minimum baggage (Camarinha et. al. 2015:36). This opens up opportunities for other airlines
that are able to provide value added extras although at a relatively higher cost. AirAsia faces
problems with its cheap flights as fuel prices are on the rise (Camarinha et. al. 2015:36).

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 AirAsia was set up in Malaysia, a developing country, where the industries, standards of
living as well as the utilization of technology are inclining (Camarinha et. al. 2015:36). Like
many other developing countries, Malaysia is made up of more practical middle class society
who usually works very hard to raise the standards of their lives. Parallel to the society in
Malaysia, Air Asia’s low cost concept is well accepted since the society is always searching
for cheaper alternatives when it comes to travelling via air (Camarinha et. al. 2015:36).

AirAsia also therefore sets up its main hubs at other developing neighbouring countries
such as Thailand and Indonesia (Carpenter & Sanders, 2017:50). Starting off and setting up
AirAsia in developing countries has helped AirAsia as it is their target market as well as
obtaining skilled labour forces are much easier and cheaper. The economic environment of
AirAsia also includes its recent introduction to AirAsia X, which flies long haul routes. Amongst
its routes are the developing countries such as United Kingdom, Japan and many more
(Carpenter & Sanders, 2017:50).

Developing countries have given AirAsia the opportunity of gaining more market
potential for its services (Chandler, 2012:89). It also helps AirAsia to be internationally
recognized. Apart from these, AirAsia’s economic environment also involves a good economic
infrastructure to its growth .AirAsia‘s rapid growth sees the government of Malaysia building a
new hub to house its aircrafts. The Low Cost Carrier Terminal (LCCT) which handles almost 22
million passengers a year has provided AirAsia with a better opportunity of growth (Chandler,
2012:89).

AirAsia relies heavily on technology in conducting their business (Chandler, 2013:62).

The technology usage by AirAsia has enhanced its business greatly because all of their ticket
bookings are done online as they are well known for the ‘ticketless’ service that they offer. It
also enables customers to check flight information, allows them to do online shopping as well as
gives opportunity to customers to book hotel rooms in their Tune Hotel services and so on
(Chandler, 2013:62).

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 Apart from their main website, AirAsia also has created a blog in which it gives valuable
insights about their company, their cultures and much more (Collins, 2015:118). The blog also
enables customers to give their feedback, regardless of whether it’s positive or negative. Through
the blog, customers not only get more information on AirAsia but also help AirAsia improve its
quality of services. The use of technology in AirAsia is also utilized maximally as it also serves
as a portal that carries AirAsia’s brand name (Collins, 2015:118).

Safety measures in an airline company are the most important element (Davidow &
Malone, 2012:87). Hence, even to start the airlines, AirAsia has obtained an AOC which is the
Air Operator Certificate issued by the Civil Aviation Authorities. Their pilots too, have all
obtained flying license from the Civil Aviation Authority (Davidow & Malone, 2012:87). As for
their main hub in Kuala Lumpur, the Low Cost Carrier Terminal (LCCT), the Malaysian Airport
Holdings Berhad regularly inspects the management, operation as well as maintenance of it.
They also ensure that the operations are carried out efficiently as well as the safety and security
of passengers is heeded. The political and legal environment at AirAsia also sees it successfully
obtaining open skies agreement with neighbouring countries such as Thailand, Singapore and
Indonesia (Davidow & Malone, 2012:87).

The sociocultural environment of AirAsia sees it taking many things into account while
serving its customers (Dess et. al. 2008:150). The demographics of AirAsia sees it appealing to a
wide selection of income groups. AirAsia not only targets the medium income groups but also
the low ones. It is designed in such a way that customers can customize their flying experience
matching to their income. Customers who can afford paying extra can opt for variety add-ons
such as food and beverages, sleeping kit and so on. However, those who can’t can disregard
these add-ons and continue flying with AirAsia (Dess et. al. 2008:150).

AirAsia also pays much attention to the mores of people in Malaysia as well as its
neighbouring countries (Dess et. al. 2008:150). Since the majorities are Muslims, AirAsia avoids
all its food on air from pork products as well as other ‘non halal’ items such as alcohol and so on.
In order to cater its international customers, AirAsia provides alcoholic beverages on air which is

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only restricted under the AirAsia X service. Apart from that, AirAsia also overcomes the barriers
of language almost efficiently in its website (Dess et. al. 2008:150).

AirAsia’s official website that handles all the booking and sales of tickets provides
customers with a range of languages to choose from (Martin, 2000:110). At the moment, Air
Asia’s website can be visited under languages such as Thai, Mandarin, Japanese, Indonesian
Language, Tieng Viet (Vietnam language) as well as Bahasa Malaysia and English. (Now
Everyone Can Fly, 2007) By offering its website in many languages, AirAsia not only makes it
website user-friendly but also is able to advertise its services effectively (Martin, 2000:110).

2.0 PRODUCT / SERVICES (8 MARKS)

The term "product" refers to tangible, physical products as well as services. It also means
defining the characteristics of your product or service to meet the customers' needs (Eng,
2013:43). Marketing strategies used in relation to product / services element of the
marketing mix to develop the local brand to make it a global brand are AirAsia’s philosophy
is girded by the fact that they have been seen as a small airline competitor for many years (Eng,
2013:43). Therefore, in order to win more customers and return customers, they need to ensure
that their primary products and services are up to par and meet the defining needs of customers
(Eng, 2013:43).

AirAsia believes in providing convenient service to make traveling easier and more
affordable for its guests (Eng, 2013:43). Guests can make bookings through a combination of
ways. In August 2003, AirAsia became the first airline in the world to introduce SMS booking
where guests can now book their seats, check flight schedules and obtain latest updates on
AirAsia promotions from the convenience of their mobile phones (Eng, 2013:43).

AirAsia also recently introduced GO Holiday, the airline’s online programme where
guests can book holiday packages online in real time. AirAsia is all about convenience and
efficiency (Flouris & Walker, 2015:73). Their aim is to allow customers to travel for as low as

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possible without losing profit for the airlines. Hence, the buzz is to create as many products and
services that are circled around efficiency and convenience, such as, online bookings, check-ins,
pre-ordered food, kiosks, mobile detailing. And alongside, their strategy, they’ve also created
convenience in the form of holiday packages and tours (Flouris & Walker, 2015:73).
AirAsia’s high frequency service ensures guest convenience is met (Flouris & Walker,
2015:73). The airline practices a quick turnaround of 25 minutes, which is the fastest in the
region, resulting in high aircraft utilization, lower costs and greater airline and staff productivity.
In order to maximize profits, the airlines must be able to transport passengers (Flouris & Walker,
2015:73). The more they transport, they more they profit. Therefore, AirAsia practices higher
frequency in certain “high traffic” routes. This also serves the convenience of customers who fly
frequently in and out of certain areas (Flouris & Walker, 2015:73).

Launched in April 2002, AirAsia’s Nationwide call centre in Kelana Square is now fully
equipped with 180 telephone lines providing convenient telephone booking services to guests
(Flouris & Walker, 2015:73). The call centre now takes an average of 6,000 calls daily. AirAsia
has launched booking services via mobile phone or landlines in order to provide customer
efficiency when it comes to ticket booking and check-ins. The less steps and troubles a
customer’s goes through, the faster profit is generated and consumers are satisfied (Flouris &
Walker, 2015:73).

Launched on 18 April 2002, the concept of ticketless booking complements AirAsia’s

internet booking and call centre service by providing a low cost alternative to issuing printed
tickets. Guests no longer need to go through the hassle of collecting tickets! (Flouris & Walker,
2015:73)

In line with its “Easy to Book, Easy to Pay & Easy to Fly” approach, on 1 March 2002
AirAsia became Malaysia’s first airline to enable their guests to pay for their telephone bookings
by credit card or by cash at any Alliance Bank branches (Flouris & Walker, 2015:73). With the
huge structural change in banking dynamics, AirAsia became the first airlines to launch services
that enable customers to pay for tickets via Credit Cards over the telephone or cash at

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Alliance Bank outlets. This is also on top of their online transactions which only require a few
steps and verifications (Flouris & Walker, 2015:73).

3.0 PRICE (8 MARKS)

Price refers to the value or worth of a product that attracts the buyer to exchange
money or something of value for it (Galbraith, 2007:343). Marketing strategies used in
relation to price element of the marketing mix to develop the local brand to make it a
global brand is AirAsia’s fares are significantly lower than those of other operators. This
service targets the guests who will do without the frills of meals, frequent flyer miles or
airport lounges in exchange for fares up to 80% lower than those currently offered with
equivalent convenience (Galbraith, 2007:343). No complimentary drinks or meals are
offered. Instead, AirAsia recently introduce 'Snack Attack', a range of delicious snacks
and drinks available on board at very affordable prices and prepared exclusively for
AirAsia’s guests. Guests now have the choice of purchasing food and drinks on board
(Galbraith, 2007:343).

The history of the AirAsia low cost airline is unique because it has transformed itself
from a regional operator that incurred heavy loses to a profitable low cost airline (Galbraith,
2007:343). Since 2001, it has been expanding drastically. AirAsia equipped with a fleet of 72
aircrafts, flies to over 61 domestic and international destinations with 108 routes and it
operates over 400 flights daily from hubs located in Malaysia, Indonesia and Thailand
(Galbraith, 2007:343). AirAsia has flown over 55 million guests across the region and
continues to spread its wings to create more extensive route networks through its associate
companies, Thai AirAsia and Indonesia AirAsia (Galbraith, 2007:343).

For the first six years, AirAsia has not only developed dramatically in the airline
market but also recorded an excellence financial performance (Galbraith, 2009:44). During a
five year period, its revenue has increased more than 300% from RM330mil to RM1603 mil.

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The number of passenger has increased nearly 90% compared to the year 2003 and 2007 and
the profit has also increased significantly by 98% from RM3.5mil to RM 278mil compared to
year 2003 and 2007. As for the Earnings before Interest, Taxes, Depreciation and
Amortization (EBITDA) it has indicated a dramatically increased by 80% from 95 mil to
490mil (Galbraith, 2009:44).

Overall, AirAsia has managed to achieve an upward trend of financial performance

(Graham & Vowles, 2016:105). However, the growth momentum did not persist forever, as
in the year 2009, AirAsia experienced the lowest sales growth. It is believed that this
scenario occurred due to the increased competition from other low cost carriers, the
uncertainty of crude oil prices and the spillover effects from the global recession (Graham &
Vowles, 2016:105). These factors have leaded AirAsia’s net profit for the second quarter
which ended June 30 (2008) plunged 95% to RM9.42million from RM185million. Moreover,
the weakened ringgit has the significant causal effect on the translation loss (Graham &
Vowles, 2016:105).

AirAsia’s product is travel; a service that is highly competitive by its very nature
(Graham & Vowles, 2016:105). Customers have many choices not only in their mode of
travelling such as cars and public transportation but also in their own choice of air carriers.
Financial performance of the airline has given the signal that reflects the elasticity of the
demand, it demonstrates that the low cost airlines faced stiff competition in the duopoly
market structure (Graham & Vowles, 2016:105).

AirAsia’s pricing is designed to penetrate the market in order to capture volume (Graham
& Vowles, 2016:105). Hence, with lots of cost cutting exercises, they are able to bring the fares
for as low as possible with the knowledge that consumers will be getting what they want for
what they are paying for (Graham & Vowles, 2016:105). The “low fare, no frills” concept is
designed to basically just transport customers. Of course, with that in mind, AirAsia has also
diversified its in-flight products by providing services that are “on-site” for the customers’
conveniences (Graham & Vowles, 2016:105).

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 To gain competitive advantage, Air Asia is using cost leadership strategies. According to
Greenberg (2011:289), Air Asia would need to remain using the cost leadership strategy in order
to satisfy customers as their top expectation on low cost airline is price. (Oliver, 1997). By using
this cost leadership strategies, Air Asia can effectively gain a lots of customer to grab their
service (Greenberg, 2011:289). Besides that, differentiation has become a necessity ever since
low-cost airlines entered the market requiring airlines to improve the experience, because if the
passenger only made his decision based on price, low-cost airlines with the lowest fares would
always be chosen (Greenberg, 2011:289). 

Air Asia using Low cost airlines’ pricing strategy for market stimulation is issuing free
tickets and competing in ticket prices setting. According to Greiner & Metes (2015:49), Air Asia
want to show that it delivers its promise, so it conducts regular campaigns that offer free or very
low cost seats. These free seats are actually offered on availability since aircrafts still have to
depart even if there is only one passenger, so this promotion does not affect the company
financially (Greiner & Metes, 2015:49).

On an average, free seats offered to the public accounted for only one percent of total
passenger load while the remaining 99 percent are paid passengers (Greiner & Metes, 2015:49).
The campaigns, not only provide publicity for Air Asia, but it adds to its credibility for making
good its brand promise by enabling everyone to fly (Greiner & Metes, 2015:49). This strategy is
effective because most of the passengers are price sensitive people, so that they might consider
purchasing the flight ticket.

4.0 PROMOTION (8 MARKS)

In the context of the marketing mix, promotion represents the various aspects of
marketing communication, that is, the communication of information about the product with the
goal of generating a positive customer response (Hall & Tolbert, 2018:77).

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 Marketing strategies used in relation to promotion element of the marketing mix to
develop the local brand to make it a global brand (Hall & Tolbert, 2018:77) is AirAsia’s
promotional strategy is deployed in such a manner in order to generate positive consumer
feedback via its efficient and cost-effective options (Hall & Tolbert, 2018:77). Even in the
instance of giving away free seats and tickets, the promotional strategy is aimed at generating
attention rather than purely sales. Once the set numbers of free tickets are given away, there is
still much buzz about the remaining packages and other alternative offers (Hall & Tolbert,
2018:77).
AirAsia pushes its strategy in terms of generating tremendous amounts of publicity with
their endless strings of promotional offers (Hall & Tolbert, 2018:77). And with the generous
amount of diversification in their hotel chain, alternative cost-reduction options, and publicity
stunts, consumers were more than willing to give AirAsia the attention it wanted. And being a
low-cost carrier alternative, AirAsia was able to capture a fair share of the current local market
(Hall & Tolbert, 2018:77).

AirAsia's overall business and marketing strategy started here (Hanan & Freeman,
2014:149). Taking the success stories of Ryanair and Easyjet back in Europe as their vision,
AirAsia team convinced that the low cost airline is the way forward. They decided to focus and
roll in Asia. They believe they can change and disrupt the entire airline industry (Hanan &
Freeman, 2014:149).

They truly believed that this business model is going to work wonders to their benefits
and advantage in Malaysia and Asia (Hilty et. al. 2015:34). The reasoning is very simple. They
believe that Asian people love to travel. Not just love, they are crazy about traveling actually.
The only thing that is blocking these traveler wannabe from going full steam ahead is because of
the cost of the airline ticket which is too unreasonable at that time (Hilty et. al. 2015:34). So,
with the no-frills airline business model, it will not only complement and solve the existing
travelers’ problem on costs, but also complement the marketing agendas by making it easy (Hilty
et. al. 2015:34).

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 Once AirAsia identified their target markets and problems to be solved, the marketing
and branding parts are going to be easy (Hilty et. al. 2015:34). Then what they do is they decided
on the name of AirAsia. With this AirAsia name, indirectly they were announcing to the world
that they are going after the Asia airline market. They want to conquer Asia. The name itself
explains everything. That is why the right name is extremely important for a business (Hilty et.
al. 2015:34).

AirAsia needs another statement to support the AirAsia brand name, so that the people
can understand everything about them without having to explain further or again and again
(Kirkman et. al. 2014:175). Now Everyone Can Fly, was chosen as AirAsia's tagline to support
the brand. To me, their chosen tagline is brilliant. Without having to opt for long winded and
complex chosen of words, they just came up with just a simple yet meaningful tagline (Kirkman
et. al. 2014:175). Despite just one simple sentence, it clearly says to me that I can travel
anywhere I want, safely, without hassle and just have to pay a reasonably amount of money for
it. If you want to know whether a tagline or logo is effective or otherwise, just ask a 10-year old
kid. They can tell you and can easily spell out what AirAsia's tagline right now (Kirkman et. al.
2014:175). 

Today, ticketing agents are no longer relevant. People, like me, prefer to purchase tickets
online (Kirkman et. al. 2014:175). AirAsia already embarking the internet and eCommerce way
of doing things before any other companies. They realised early that internet and eCommerce are
truly a game changer tools that can't be ignored. Look at them today, look at how you check the
prices today, look at how buy your tickets today and look at how you do your check-in today
(Kirkman et. al. 2014:175).

AirAsia put a lot of efforts and resources, including financials, to push their marketing
online (Kirkman et. al. 2014:175). Their website and portal are easy to navigate, great user
experience and expectation as well as mobile-ready too. Unlike some of their competitions who
do not pursue the online marketing efforts with their hearts, AirAsia just marching ahead of
them. Today, AirAsia has become the benchmark of the industry and the rest are trying to copy
them (Kirkman et. al. 2014:175).

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 While the rest of the organisations out there wants to stay 'corporate' and utilising social
media without any purpose, AirAsia do it differently (Kirkman et. al. 2014:175). They want to be
remained as human. So what they do is they established and grow their very own community.
Social media channels are being used wisely, to collect feedbacks (Kirkman et. al. 2014:175). By
staying human, direct interactions with their own community who also their fans and customers
are made easy. Talking and chatting over social media is encouraged. Even Tan Sri Tony
Fernandes and Datuk Kamarudin Meranun are avid users of social media. They interact with
their friends, staffs and even customers directly. They make red-tapes history (Kirkman et. al.
2014:175).

Why are they encouraging their staffs to interact socially over social media (Kirkman et.
al. 2014:175)? Simple, they want to convert an online friendships into a closer trustworthy real-
life friendships. When this happens, this network of new friends of their staffs will trust AirAsia
and make AirAsia part of their traveling plan (Kirkman et. al. 2014:175). 

AirAsia realises that these social media channels are regularly changing their algorithm
from time to time (Kuprenas, 2013:51). Today, it is no longer easy and cheap to do online
marketing over social media as before. That is why they are growing their community and make
it as big as possible (Kuprenas, 2013:51). Once the community is huge, they will no longer
depend on social media to grow their community. What they just do is that, they will only utilise
email marketing or newsletter and blast out any announcement or promotions directly to each
and every customers directly (Kuprenas, 2013:51). 

They know that they can control only the content and community elements of it, but not
social media (Kuprenas, 2013:51). In the future, when social media marketing is getting
ridiculously expensive, they will just abandon it. It is time for you to understand the foundation
elements of AirAsia online marketing secrets. As you can see, it is not just marketing part of it
only that they are do it creatively, but also the core of their very own business as well (Kuprenas,
2013:51). 

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5.0 PLACEMENT / DISTRIBUTION (8 MARKS)

According to Levary (2014:22), distribution is about getting the products to the

customer, looking at location and where a service is delivered – or whether they need to
collect it or will you deliver it yourself. Marketing strategies used in relation to placement
or distribution element of the marketing mix to develop the local brand to make it a
global brand are currently, AirAsia flies to 12 destinations in Malaysia, using a fleet of
seven Boeing 737-300s (Levary, 2014:22). By the end of the next fiscal year, it will have
added four or five new domestic destinations, and increased the frequency of flights to
existing ones. More interestingly, it will have started flying to secondary airports near
Bangkok, Manila, Jakarta, and Hong Kong (Levary, 2014:22).

Ultimately, the goal is to increase the fleet to 18 by June 2004, equivalent to the
delivery of one aircraft a month beginning in September (Levary, 2014:22). Already, AirAsia
is looking to make Kota Kinabalu airport its base for flights to the Philippines and Hong
Kong, and Senai airport in Johor Bahru for flights to Thailand and Indonesia (Levary,
2014:22).

Air Asia has designed its strategy in such a way that enables itself to move away from
traditional placement of services (Likert, 2017:21). The strategy being deployed is in order to
bring placement services to the customer, rather than inconvenience the customer. Hence, the
primary designs of mobility and telephony services that empower the customer to retrieve
services wherever they are and for whatever it may be when it comes to the airlines (Likert,
2017:21).

According to Lipnack and Stamps (2017:45), in the international marketing product and
services are important factors where it is experience by the consumers on the purchased value
and the experience after using the product or services that offered by the company. Therefore,
external forces such as any opportunities or threats to the business have to be analysis carefully
before the company enter into a new market. For example, AirAsia ended the flights to Europe

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because of the high fuel prices and weak demand where there are two main competitors such as
Ryanair and Easy jet which created high competition (Lipnack and Stamps, 2017:45).

Direct marketing is an interactive system that can helps the organization to personalized
communications between them and the customers (Lipnack and Stamps, 2017:45). With the help
of computer and internet development nowadays, the organization is able to run two way
communications for their products and services (Lipnack and Stamps, 2017:45).

In order to increase the awareness of the organization to the customers (Lipnack and
Stamps, 2017:45), Airasia is using direct marketing in order to encourage the interactions
between organizations and allow users to be more understanding on the brand. One of the direct
marketing tool that used by Airasia is the Yahoo Mobile. Airasia is promoting and sending the
messages to the customers by using other website (Lipnack and Stamps, 2017:45).

Airasia has corporate with Yahoo Mobile whereby the organization allows Airasia
mobile website to put the banner advertisement on the Yahoo mobile homepage, yahoo mail and
yahoo search (AirAsia, 2017:101). The mobile users just need to access to the Yahoo Mobile and
click to the Airasia banner, the link will automatically connect to the Airasia Website (AirAsia,
2017:101).

By this, the customers can book the flight tickets, checking the ticket booking status and
access to the promoting campaign (AirAsia, 2017:101). These services and information
assessment through mobile technology has led to the increasing in awareness of the organization
and campaign promotion. Moreover, this direct marketing method had led to the good responses
from the users whereby the total click to the website is 108,405 clicks and the rate is 1.78 percent
after 28days launching (AirAsia, 2017:101).

In order to communicate with the target audience, Airasia is using advertising as a tool in
introducing the products and services (AirAsia, 2017:101). One of the important advertising
media that frequently used is the social media. The advantages of using social media are the

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internet enable the interactive capabilities, high selectivity by the users and the cost is low
(AirAsia, 2017:101).

In AirAsia, the organization strongly agrees that social media is playing an important role
in order for the organization to do advertising and build a consumer group that contributing trust
to brand and value (Lunenberg, 2012:88). Nowadays, the internet had made the people able to
connect with the whole world people easily and more time is spending for online. By using
social media, the messages of the products and services can be reaching out and able to share out
the content of message effectively (Lunenberg, 2012:88).

Besides that, the social media is able to provide a channel of communication for the
organization to run the activity such as low fare promotions, new product launching and news
announcement (Lunenberg, 2012:88). Moreover, the social media able to create a
communication platform for the Airasia to connect with the people and enable the people to have
more understanding on the organization. (Lunenberg, 2012:88).

Airasia had started the corporate blog (www.blog.airasia.com) in 2008 and Facebook
(www.facebook.com/AirAsia) in 2009. The effectiveness and efficiencies of the social media
enable Airasia to reach the number of fans and creating a strong relation community. For the
community, they are able to get the latest information about the campaign that launched by
Airasia through the social media (Lunenberg, 2012:88).

Another method of Airasia to run the advertising is using the Airspace advertising
whereby the unique and effective way of advertising can be done to reach all the customers who
take the flight (Maznah & Rosli, 2012:126). With the new approach of advertising and more cost
saving, the messages can be reaching to large coverage of passengers.  This allows the messages
of the campaign directly communicate with the passenger and can across effectively whether on
the ground or in the sky (Maznah & Rosli, 2012:126). The advertisements of the campaign can
be placed in the auto boarding pass, the information counter, sales office and on the passenger’s
seats. (Maznah & Rosli, 2012:126).

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 Besides that, Airasia use newspaper as advertising media (Maznah & Rosli, 2012:126).
By using the newspaper, the messages of the campaign can be more flexible to access to the
different coverage of markets and the target audiences are different. The newspaper medias that
used by Airasia in Malaysia are Star, Sin Chew Daily, China Press, Berita Harian and others
(Maznah & Rosli, 2012:126).

6.0 INTERNATIONAL MARKET PENETRATION (12 MARKS)

Maznah & Rosli (2012:126), believe that marketing is all about providing and handing
the right product at the right time for the customers. This process able the firm to build good
relationship with the customers in order to get most of the value from the customer. In order to
get the most value out from the customers, businesses marketing did not just specify in an area.
As Maznah & Rosli (2012:126) stated that the movements are from local to regional, regional to
national, national to international and international to global. By understanding the market, it can
affect the customers’ value by integration of some activities that affect both return-on-investment
and profitability (Maznah & Rosli, 2012:126).

According to Miles et. al. (2013:83) when a flow of company’s goods and services able
to reaches the customers in more than one nation for profits, this performance of business
activities is call ‘International Marketing’. The difference of domestic marketing and
international marketing is that the marketing is not just base on one country which is the only
difference between these two terms (Miles et. al. 2013:83).

AirAsia Airlines does have a very strong segmentation, which the airline is focusing
more on low cost delivery to the customers (Miles et. al. 2013:83). It has been voted the World’s
Best Low Cost Airline by World Airline Survey by Skytrax for five consecutive years from 2009
to 2013 (AirAsia, 2014a). AirAsia have segmentation such as demographics, social-culture, user-
related and benefits-sought segmentation to segment their market (Miles et. al. 2013:83).

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 Under demographic, income may be the variables of segmenting market for AirAsia
(Sandberg, 2018:67). Income is the main indicator for the consumers to travel with AirAsia from
a different variety of others airlines to choose from as AirAsia have one of the cheapest costs to
fly with. According to Sandberg (2018:67), who refers to the economist states that Africa is now
the world growing region where six of the top 10 fastest-growing economies between 2001 and
2010. In 2014, Nigeria has over taken South Africa as Africa’s biggest economy with $510
Billion in economy (Sandberg, 2018:67). Although the economy over takes South Africa but the
income per capita $2,688 is still far away from South Africa’s $7,336 (Sandberg, 2018:67). This
mean that the economy booming in Africa able to attraction more investor to invest in the region
and with the increasing spending power of the people, which able to create a big opportunity for
AirAsia to enter a newly developed market (Sandberg, 2018:67).

In aim of this assignment is to discuss on mode of entry suggested to be used by AirAsia

to penetrate the international market and to expand the market by AirAsia Airline with the used
of the international marketing mix that contain either standardization or adaptation (Murray,
2018:39). Nelson & Quick (2011:77), states that standardize strategy mostly effective on
industrial product, whereas buyer’s products and services are likely to adopt an adapted
programme. Every company had to have a deep knowledge of the new markets on the culture
and religion, language, and Aesthetics (Nelson & Quick, 2011:77). With the company able to
make good use of all these knowledge, Nelson & Quick (2011:77) believe that it helps to reduce
the perceived risk of the international operations and increase the efficiency of information flows
between the firm and the target market. Which also support by Oliveira and Takahashi
(2012:116) state that is important to the company that wanted to enter to a new market have
knowledge of the foreign market culture. Marketing mix element with the influence of the local
culture will have a big impact on the product or services and management in the country that the
company wanted to entry (Oliveira and Takahashi, 2012:116).

AirAsia airlines is a major player in the low cost air flight industry connecting over 88
routes in Asia and have 5 hub such as the main based in Malaysia, Thailand, Indonesia,
Singapore and Japan (Pang, 2011:42). . It is owned by a private investor – Tony Fernandez the
CEO of the Tune Air Sdn.Bhd with the vision of wanted to be the largest low cost airline in Asia

Page 18 of 25
and serving 3 billion people who are currently connectivity is poor and high fares (Pang,
2011:42). With the company belief, “Now Everyone Can Fly”, it going to take low-cost flying to
an all new high and the in the world of flying industry (Oliveira and Takahashi, 2012:116).

Due to the saturated market in Asia, AirAsia is finding new route to extend the market
and Africa is one of them as Nigeria have beaten South Africa to become the largest economic
force in Africa (Pang, 2011:42) but the income per capital still haven meet the level in South
Africa which might be an opportunity for an low cost airline to get into the country with the
supported speech by Tony Fernandes said in 2011 (Pang, 2011:42):“AirAsia is always looking to
find new market opportunities and this includes other parts of the world as well,” (Pang,
2011:42).

According to Porter (2016:61), in the international marketing product and services are
important factors where it is experience by the consumers on the purchased value and the
experience after using the product or services that offered by the company. Therefore, external
forces such as any opportunities or threats to the business have to be analysis carefully before the
company enter into a new market (Porter, 2016:61). For example, AirAsia ended the flights to
Europe because of the high fuel prices and weak demand where there are two main competitors
such as Ryanair and Easy jet which created high competition (Porter, 2016:61).

Another factors might be the economic crisis that always facing by the low cost airlines
which are the instability of the fuel price (Porter, 2016:61) and the environment factors (such as
global recession, Virus and natural disasters) which have created a bad competition environment
within the industry (Porter, 2016:61). According to Shameem (2016:71) believes that the firm
should consider the landing fees and extra use of fuel as the aircraft circles while these are the
cost for the firm that have to transfer to the customers (Porter, 2016:61). It support by a report
post by Shari (2013:89) said that AirAsia will charge a 10 ringgit (3.3 U.S. dollars) check-in fee
for flights booked to counter rising jet fuel prices (Shari, 2013:89).

In order to counter the fuel prices, the airlines should consider obtaining a long term
agreement with oil supplier to avoid the fluctuating prices (Trent, 2011:61). In 2002, the SARS

Page 19 of 25
virus is everywhere and many flight unwilling to flight to the heavily affected area but still
AirAsia even flight to the destination with one passenger on board which lead to the AirAsia
added an aircraft and three destinations during the quarter when others airlines is blaming the
virus for the bad finance year (Trent, 2011:61). In the global recession years and more
developing countries is raising in the world, the spending power is increasing but still most of the
public is middle class or lower class. This is where AirAsia airline should consider the target
market which it focus on the growing middle class and the specific opportunity (Trent, 2011:61).

Social-culture environment would be taken to be consideration such as the country is

developing and the disposal income of the people in Nigeria (Teece et. al. 2017:59). Not only
Nigeria, but countries around it such as Ghana, Ethiopia, Rwanda and Mozambique are
experiencing a boom report from the International Monetary Fund and the World Bank (Teece
et. al. 2017:59). This mean the people would have more disposal income to spend on services for
traveling around either for business purpose or holiday. In the other hand, increased in trade and
tourism within Asia, demand for air travel increased with AirAsia providing customer services or
operation as full service airline with low fare (Teece et. al. 2017:59). This include competitive
advantage such as in-flight food and drinks; online sales of hotel, car, and holiday reservations,
and travel insurance (Teece et. al. 2017:59). It able to further increasing brand awareness and
value for customers in the premise of not increasing the operation cost when producing value
added services (Teece et. al. 2017:59).

With the help of the analyses of Pestle, macro and micro environment that the airline
being knowledgeable of the risk that might affecting the airlines industry and able to maximise
the growth for the future (Vakola & Wilson 2014:112). The problem is that the choice between
standardise and adaptation to chosen for the firm to decide is very complicated as some authors
argue that the internationalisation choice of corporation have to include combination both
adaptation and standardisation (Vakola & Wilson 2014:112).

According to Vakola & Wilson (2014:112), marketing mix such as price; place;
promotion; product; people; process and physical environment (7’s P) believe the firm have to
implement into the marketing strategy to achieve the objective. In a services sector People are an

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essential ingredient (Vakola & Wilson, 2014:112). The firm have to recruiting and training the
right staff is required to create a competitive advantage. Airline services have both tangible and
intangible element. Tangible such as the food and the quality of the aircraft and intangible is the
services such as reliability of punctual departure or arrival and the staff services (Vakola &
Wilson, 2014:112).

It supported by Alden (2012:116), stated that the tangible services able to improve the
value of the services providing to the customers. For example the flight did not include the meal
and the passenger able to buy if wanted to eat and some meal is always sold out fast (Barney,
2015:49). In order to sort the problem, the airlines provide a pre-booking meal before flying to
grantee the passenger. Brickley et. al. (2012:78), believe the services delivery process is the
elements for the passengers to evaluate the quality and satisfactory toward the airlines. All these
services taken by AirAsia airline is trying to make the passenger to have a nice trip as possible
because the of the saturated and intensive rivalry environment in the industry, the differences of
the airline from the services will improve the airlines perceived value (Camarinha et. al.
2015:36).

7.0 SUMMARY (8 MARKS)

"Now Everyone Can Fly", it is Air Asia slogan. Many customers first choice almost will
be Air Asia. Air Asia believes in the no-frills, hassle-free, low fare business concept and feels
that keeping costs low requires high efficiency in every part of the business (Carpenter &
Sanders, 2017:50). It gives everyone a mind-set that Air Asia is a very low fare airline and
becomes a good choice for everyone. Besides that, Air Asia does their advertising through mass
media such as television and newspaper. Air Asia had expanded its company to global and well-
known in global nowadays (Chandler, 2013:62).

In additional, Air Asia also trains their staff to give a friendly service to customer, it
provided an in-flight magazine to customer so that their customer would not feel bored (Collins,
2015:118). The good service is an important business strategy to make Air Asia become very

Page 21 of 25
successful. And, Air Asia also free seats promotion for flight to some place (Dess et. al.
2008:150). In conclusion, Air Asia is one of the award winning and largest low fare airlines, so it
is the most successful cheap airfare airline in Malaysia (Davidow & Malone, 2012:87).

AirAsia business model has been analyzed in conjunction with the marketing mix that
is employed to identify its target market (Martin, 2000:110). They build their brand name
with their tagline ‘now everyone can fly', AirAsia’s philosophy of low fares is aimed to make
flying affordable for everyone. AirAsia also aims at making travel easy, convenient and fun
for its guests. Their philosophy is vital in shaping AirAsia marketing mix (Eng, 2013:43).

Their services and their pricing work together to identify their target market,
however, their promotional activities and their distributional channel is aggressive developed,
planned, and executed to target both foreigners and locals alike (Flouris & Walker, 2015:73).
Moreover, more advertising model should be developed and AirAsia need to identify more
suitable areas for distribution as more and more loss potential target could be captured which
will at end generate huge revenue for AirAsia (Galbraith, 2007:343).

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