International Marketing Management Air Asia in the Digital Era

Question :

Brief analysis based on the case study “Air Asia in the Digital Era”. A case summary has been provided and the analysis has been presented. The aim of this report is to determine the strong and weak points of the company by deriving a SWOT analysis from the case study, to identify the major problems faced by Air Asia and recommend remedies for those problems.   

Answer :

Air Asia in the Digital Era-Case Summary

Malaysia is an upper middle income country which is still developing. It aims to become a fully digitized economy by employing three strategic shifts, First step would be the shift from a supply to demand focused economy, second step would be the shift from consumption to production based behaviour and the third step would to increase knowledge (Kotler, Kartajaya, & Hooi, 2019). New digitized marketing strategies are being designed for service sectors such as the aviation industry. Established in 1993. Air Asia, one of the world’s best low-cost airlines is based in Malaysia and to keep up with the country’s digital transformation storm, it has taken up various strategies to manage customer engagement and loyalty through modern technology. There are five factors in Air Asia which helps them determine customer satisfaction, namely, ticket purchase, check-in counter service, flight attendant, aircraft conditions and food services (Kotler, Kartajaya, & Hooi, 2019). 

It’s fully automated flight ticket services include benefits such as online portals for booking tickets, automated check-in machines, and mobile applications for android and iOS users has benefitted customers as they are able to save a lot of time. The company believes that happy employees mean happy customers. That is a simple strategy they follow for their flight attendants. Compared to its competitors customer loyalty programs are recent developments in Air Asia. A collaboration with Tune Money has enabled them to launch Air Asia BIG which helps customers earn loyalty points. The company has ample plans to go fully digital in all its services with the aim to increase its ancillary revenue per passenger from USD 10.75 to USD 13.50. It also has a vision of going cashless for all its services including in-flight services (Kotler, Kartajaya, & Hooi, 2019). They have added personalization features to its website for better customer experience. Services such as BIG Duty Free, BIG Pay, MyCorporate and Touristly are examples of the company’s digitization endeavours to attract a variety of customers (Balqis, 2017). It has also come up with digital insurance for customers in collaboration with Tune Protect. In terms of competition demand and supply both are on the rise as the number of flyers are increasing and competition intensifying. The company’s early capture of the Asian market through low-cost airfares and its strategic location are among the many catalysts of its success.  Maintaining an unmoved focus on developing digital strategies would help Air Asia deal with future challenges as well.  

1 SWOT Analysis

Air Asia’s SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis can be derived from the case study which would serve as a mode of evaluation for its digitization strategies. While strengths and weaknesses denote internal factors, threats and opportunities are external parameters. 

STRENGTHS- As it is evident from the case study, Air Asia has a strong internal management. It could be noted that some of the most influential airline industry leaders are executive members of Air Asia. Besides its strong co-operative relationship with the government has helped it to seamlessly go forward with its digitization implementation plans. The company has a strong presence in Asia and a broad customer base. Hence, this factor gives them the benefit to successfully use social media to increase business. It has already proved to be effective during its campaign “Mind Blowing Fare”. It has a strong brand name which gives it a strategic advantage over its competitors. It goes beyond “low-cost” strategies to attract customers. It is well-acquainted with social media marketing techniques and sales promotion (Suntharam, 2020). High productivity and cost-efficiency are Air Asia’s added strengths.     

WEAKNESSES- One of the primary weaknesses of Air Asia is that it doesn’t pay heed to the growing competition. It has an extremely committed attitude towards formulation of own strategies but little attention is given to competitor analysis which could prove to be harmful in the long-run. Also, excessive focus on digitization would reduce the importance of human interaction which might repel customers as the company is operating in the service industry. The company also needs better content management to use digital platforms in order to deliver engaging contents to the existing and prospecting customers. Customer complaints due to flight delays is a major weakness of the company. Although digitization would keep the customers pre-informed about such delays yet the root problem must be solved to increase customer retention.

OPPORTUNITIES- The collaboration with Touristly would provide a sea of opportunities for Air Asia as it would help unleash the 60 million customer base potential through social media, web and in-flight promotions. It is committed to the South-east Asia region as it comprises of the maximum routes of Air Asia. This collaboration would help the company gain ancillary revenues and also provide satisfaction to the customers through a novel experience that goes beyond a flight journey and helps them explore new touch points. Probable opportunities also include business expansion in China and India through MABHackathon challenge as these are extremely potent airlines market. From the competitor’s perspective, reduced fare services by the rival airlines would increase their costs and compromise revenues. Whereas, Air Asia has been able to cushion its operating cost and is aiming to improve revenue through ancillary measures. Air Asia has the opportunity to further exploit digital media to generate new customers and retain old customers. Future expansion opportunities for Air Asia include tapping into various markets in ASEAN and it already has a planned operation expansion in Cambodia and a joint venture in Vietnam. 

THREATS- Air Asia is undoubtedly the most popular airline service provider in Indonesia, Malaysia and Thailand. However, airlines service sector is an extremely potent market which is increasing the number of new competition. Air Asia needs to consider this threat as it is a major concern. Airlines such as Firefly, Lion Air, Malindo Air, Scoot and JetStar are successful players in their home markets and they are aiming at regional expansion. The Malaysia airlines has been a major competitor in the home market due to its aggressive pricing and improved load factor. Malindo Air’s expansion is no lesser threat for Air Asia as the company is treading on Air Asia’s attractiveness measures.  Also, on the consumers’ front, digital platforms offer an array of opportunities to cater to the short attention span of customers and it is becoming tougher as the choice of selection of information to view lies solely in the hand of customers.  

2 Issues Faced by Air Asia and the Probable Solutions

From the case study the following issues can be identified and the probable remedies for the same are mentioned here:

2.1 Growing Competition

Problem Description

Both local and international players are expanding business in Malaysia and other emerging markets. These competitors are already quite successful in their existing markets which means that they have their market strategies in place. 

Remedies

Air Asia needs to take a very systematic approach to combat the growing competition. It should begin with the identification of the top five competitors and thereafter analyse their strategies using tools such as Porter’s Five Forces, Strategic Group Analysis and Growth Share Analysis (Fleisher, Bensoussan, & Prentice, 2003). A detailed study of the competitor’s strategy is required beside the focus on evolving own strategies. 

2.2 Content Marketing on Social Media

Problem Description

There is no dearth of engaging content on the social media nowadays. The customers have a lot to choose from the available content. Lack of time and excessive data causes information overload which limits the customers’ attention span to a few seconds. A customer would only continue viewing the information if the first few seconds are engaging enough.

Remedies

Air Asia need to invest in Research and Development for content marketing. Social media provides the maximum opportunity for promotions and customer engagement. One of the effective tools to solve this issue could be creating shorter video contents which would be no longer than ten seconds but would be extremely informative. 

2.3 Customer Interactions

Problem Description

As mentioned earlier too much focus on digitization would compromise human interactions. The company is operating in the service sectors and of course the primary goal is to provide best-in-class services to the customers but the focus here is on service-oriented digitization, whereas it should also have the human interaction factors. Customers do enjoy the smooth services and privileges but without regular interactions they would end up feeling that their needs are not being heard. 

Remedies

While the dependence is on automation of services, human interactions could be built by duly assisting the customers at the airport, especially the elderly and the invalid. Regular intimation and interactions with regular customers to make them aware of their services and to encourage customer feedback would prove to be effective. 

3 Conclusion

The analysis reveals that Air Asia’s success mainly depends on its competitive strategies and effective collaborations. Customers are of prime importance to the company but it also needs to consider better marketing strategies and competition analysis to benefit future expansions. 

4 References

Balqis, L. (2017, August 14). Malaysia airlines moves to a step ahead in digital aviation. Retrieved from New Straits Times: http://www.nst.com.my/lifestyle/bots/2017/08/267642/malaysia-airlines-moves-step-ahead-digital-aviation

Fleisher, C., Bensoussan, B., & Prentice. (2003). Strategic and Competitive Analysis: Methods and Techniques for Analyzing Business Competition. 

Kotler, P., Kartajaya, H., & Hooi, D. (2019). Air Asia in the Digital Era. Asian Competitors: Marketing for Competitiveness in the Age of Digital Consumers. 

Suntharam, H. (2020). POSITIVE IMPACT OF SOCIAL MEDIA ON AIRLINE INDUSTRY, AIRASIA.