Case Study: Singapore Airlines – Developing Competitive Marketing strategies Int
ID: 328193 • Letter: C
Question
Case Study: Singapore Airlines – Developing Competitive Marketing strategies
Introduction
Premium brands capture the public imagination when they stand out from the rest. One premium brand that is widely respected is Singapore Airlines (SIA) which is particularly well known for the quality of its product offering and excellence of service standards. Singapore Airlines’ customer service standards are symbolized by the distinctive uniform of its flight stewardess, a sarong kebaya in batik material designed by Parisian couturier Pierre Balmain, reflecting its Asian heritage.
In the modern service economy, it is frequently customer service that differentiates one product from another. A prime example is the airline business, where passengers may be travelling for many hours. During these periods people want to relax in comfort, knowing that their individual needs are being catered for. SIA aims to provide the best product for its passengers, plus the best customer service available.
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After operating as Malaysian Airways and then as Malaysia-Singapore Airlines, SIA was officially launched in 1972. Today SIA’s network reaches out to 93 destinations in 42 countries, serving Asia, Europe, North America, the Middle East, the South West Pacific and Africa. Its regional airline subsidiary SilkAir serves 21 destinations in 8 countries. SIA has also created a number of strategic alliances with other major world airlines to serve other markets jointly.
Strengths, Weaknesses, Opportunities and Threats
SIA’s key strength lies in the location of Singapore as an important crossroad of the world. Singapore is a relatively small country which has been one of the economic success stories of the last 25 years. As with other South-East Asian economies Singapore’s success lies in the strong trading links that the country has developed in the global economy. As a former British colony which gained independence in 1965, it had to market its services globally to be successful.
In its early days the airline was much smaller than its rivals. This was a major internal weakness. SIA, as the national airline, was faced with an intensely competitive global market in which the big players like British Airways operated on many routes with large fleets of aircraft. Until recently many countries have restricted access to air routes and airports in order to protect their national airlines against foreign competition.
Today all this is changing, as, along with many other areas of international trade, there is strong pressure to open up markets and allow greater competition. However, in the early years SIA had to work very hard to secure the right of access to many important countries and airports. It took many years of struggle to achieve landing rights at Heathrow, followed by Manchester. Most recently SIA is seeking access to transatlantic routes from the UK.
The main opportunity facing SIA was the rapid growth in air transport for both passenger and cargo. Today the globe is a much smaller place, people can move rapidly from one continent to another in a matter of hours and more people have the disposable income to afford this. However, there are threats to an airline like SIA from the major national carriers of much larger countries, and restrictive regulation of air routes.
The SIA Group is Singapore’s largest private sector employer with a 28,000 strong workforce. The airline is committed to the development of its human resources. The airline has been able to develop its distinctive competitive edge in customer service through its people. From an early date SIA recognised the importance of customer service in gaining and retaining customer loyalty. SIA has always placed great emphasis on quality training for staff, which has established its cabin crew as the 'hallmark' of efficiency and customer service. This has led to greater competitive advantage.
Developing new strategies
Product innovation and service excellence form the pillars of SIA’s operational philosophy. SIA strives to continually 'raise the bar', by setting new product and service quality standards for the aviation industry. In the 1940s in-flight refreshments comprised a thermos flask of iced water; this was later extended to sandwiches and cold drinks; today customers expect a lot more.
As the industry is so competitive, standards are continually improving. SIA has been at the forefront of developing new initiatives over the years including:
In the 1970s: first to offer free headsets, a choice of meals and free drinks in Economy class.
In 1991: first with satellite-based in-flight telephones.
In 1995: the introduction of Kris World, a state-of-the-art in-flight entertainment and communications system across all three classes (First Class, Raffles Class and Economy Class)
Initial training for SIA cabin crew lasts for three months. It is designed to support staff in learning to anticipate and meet the needs of all passengers, e.g. during the course trainees are encouraged to visit old people’s homes and to work with children while they are undergoing training.
The main emphasis is on top quality customer service and attention to detail. Language training is important and staff will be able to speak a number of international languages including English. Training encourages team spirit and staff understand that they are ambassadors for Singapore. For many visitors SIA staff will be their first glimpse of Singapore, so it is vital to create a positive impression. By continually pushing up the level of service SIA is creating a standard which others find difficult to follow.
Investment in leading-edge technology has seen SIA achieve an industry leadership position in the field of in-flight entertainment. With KrisWorld, customers have access to 22 video channels, 12 audio channels, 10 popular video games, real-time news, information on popular SIA destinations and a personal in-seat telephone. SIA has taken in-flight dining to new heights with the formation of its International Culinary Panel (ICP) and the introduction of World Gourmet Cuisine. SIA has also created unbeatable packages in each Class (students can view the interiors of SIA planes by following a virtual tour on the Singapore Airlines website).
Conclusion
SIA provides an excellent example of continuous improvement in the face of extensive global competition. Staying ahead of the field means that a company can never afford to stand still. This case study has shown how SIA is always seeking to improve the service it provides to customers and how it is constantly striving to improve customer service. By steadily improving the quality of products by using the world’s best designers and chefs, SIA is able to create the synergistic benefits that stem from working with the best employees in the world. While passengers are invariably delighted with SIA, they can be sure that SIA is working to make their next flight even better.
Read the above case study and answer the following questions:
1. Investigate how the micro environment and the macro environment have an effect on its marketing and business.
2. Analyze the STP (Segmentation, Targeting and Positioning) strategies of the organization. Evaluate its marketing mix which leads to achievement of consumer satisfaction and organizational goals.
3. Develop strategies that could result in the organization taking better marketing decisions.
Explanation / Answer
1. Investigate how the micro environment and the macro environment have an effect on its marketing and business.
Micro & Macro Environment Analysis (PESTEL Analysis):
a. Political- legal factors- These factors affect their strategy to expand globally. Although they get lot of support from Government of Singapore in terms of tax and fuel as they are also the main shareholders in the airlines but for other countries also its important that the politicl and legal factors to be in their favor.
b. Economic Factors- The main economic factors affecting airlines are interest rates, oil price, taxation changes, economic growth, inflation and tariff. Progress in economic development in country is resulting in more customers opting for flights and being able to afford the fares.
c. Social Factors- Catering to customers needs and demands, caring for their opinions and lifestyle creates a positive image of the airlines and makes it most preferable option to fly with. it is very important to have a good social image of the brand otherwise it may create hesitation in customer's mind while looking for options.
d. Technological Factors; As Technology is advancing at a very fast pace, it is very important to be updated and provide unique features to customers to distinguish yourself from others. Singapore airlines provide micro power system in flight and they constantly try to improve their servicing systems.
e. Environmental Factors- Airline has to contribute in saving environment like other airlines such as reducing noise pollution, decreasing contribution to global warming etc.
2. Analyze the STP (Segmentation, Targeting and Positioning) strategies of the organization. Evaluate its marketing mix which leads to achievement of consumer satisfaction and organizational goals.
Segmentation: It is tthe technique of ensuring that the product or service is targeted at the right customer by grouping and identifying in a certain manner.
SIA’s customers have global presence with various types of needs and behaviour.They make use of this opportunity by providing airline services to major cities/ routes SIA provide services 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.
Segmenting on the basis of demographics such as customer's age, gender, family, profession, education and Income that can influence purchasing decisions. SIA provides services as per different customer preferances like proving veg meal in a particular region where most of the people are vegetarians. 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.
Targeting:
Targeting means choosing one or more market segments as a specific target market. SIA use the differentiated Market Targeting where they target various market segments and develop different product/services with separate marketng mix to target various customer groups according to their needs and profession.
SIA has two target markets: The first one is to target people having luxurious lifestyle and like to have comfort with great services . The other target market is middle class flyers or the ones who just want to travel and do not care much 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.
Positioning:
It refers to setting up brand image in customer's mind. in compariosn other similar products and services available in market. SIA’s positioning strategy uses Singapore Girl as a central ingredient in marketing its image which gives an emotional appeal of air travel with SIA’s commitment to service and quality excellence.
3. Develop strategies that could result in the organization taking better marketing decisions.