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Singapore Airlines
Service Marketing Plan Introduction to Singapore Airlines One of few airlines to remain profitable during GFC
Credits success to 'budget airline operating costs' with business class service standards
Facing environmental issues beyond their control- primarily increased price in petrol and wages SIA made $851 mill in operating profit in 2010-11
Revenue increased 14.3% from cost cutting, however expenditure increasing average 5.8% every year despite staff cuts
Customers satisfaction at record high, however number of empty seats increasing Current Financial Position What is Singapore Airlines?
International and regional premium carrier
100% ownership of budget airline Silk Air
Subsidaries include 49% ownership Tiger Airways and 49% of Virgin Atlantic Company's Situational Analysis Positioned as an innovative premium airline with reputation for service
6.9% rise in costs in 2010-2011 due to fuel and staff wages
Despite positive feedback on service and pricing, 2.3% increase in empty seats.
Needs to focus on developing most profitable product to its target market- business and first class SWOT Analysis The airline has aggregate 21,534 staff members. Target Market Singapore Airlines most profitable market segment is business and first class customers, with higher incomes, an expectation of quality service, frequent flyers who values comfort over price
Economy Class passenger pays only 8.5% of the First Class fare, and 14% of Business fare, while Business Class fare is 60.7% of the First Class fare (Ayob, 2008 pg 1)
Full First and Business class sections would produce the greater return, however it is a high competitive and difficult market to win over competitors loyal customers in Business and First Class Market Segmentation Service Product Strategy Singapore Airlines business strategy has managed to deliver premium service to very demanding customers (achieving differentiation); at a costs close to budget carriers
Emirates and Qatar Airlines have also focused on the cultural and service difference in their brand strategy, it is essential for Singapore Airlines to create a significant point of difference in their service strategy if the company wishes to remain competitive without engaging in an unprofitable price war. Recommendations to Product Strategy Introduce new product which will provide a point of difference from competitors
Target Market value service and quality over price, so Singapore Airlines needs to ensure they are exceeding cust expectations and unused services available are utilised
Introducing Variable Opaque Products would satisfy exactly what customer needs Variable Opaque Products VOP is when passenger self-selects the travel product based on how much uncertainty she is prepared to accept in one or more product attributes.
For example, if they wish to fly economy class and pay extra for a pass the business class lounge, or offering First Class passengers tickets with complete flexibility where seats are available
An airline customer’s flexibility is related to their willingness to pay (WTP). Effect on Singapore Airlines Service Products “If a link can be established at an individual level between the need to fly and the willingness to pay for that travel solution, then this would offer airlines a range of marketing options not available to them previously.
[Booking data collected] can provide insights into individual need-to-fly and that a much better estimation of individual WTP can be established”- David Post, Journal of Revenue and Pricing Management (2010 pg 293).
Singapore Airlines can better utilise company resources to offer unique combinations of products
Will maximize products by finding out what customers are actually willing to pay, and creating point of difference Introducing a VOP approach to the airlines marketing would improve existing customers satisfaction evaluations, and could be used as a valuable marketing tool using the equity theory- the "comparison of the ratio of the buyer’s inputs (price, search effort, inconvenience) to outputs (perceived benefits) which shown to directly influence satisfaction levels"- Lovelock et al, 2011, pg 325). Service Placement Strategies Singapore airline product flow involves a network of local sites, for information-processing services such as internet banking, online ticket reservation, seat reservation undertaken via electronic channels.
Customers can also obtain information, consultation or make a booking from a travel agent by phone and by e-mail.
Utilizing the internet allows Singapore airlines to minimize costs, and can offer more flexible product options to passengers.
iPhone and Android phones have become pivotal in booking and check in process Analysis of Service Pricing Strategies Revenue and profit objectives
The revenue and profit objectives of the firm are to seek profit and cover costs. Singapore Airlines maximizes revenue from a fixed capacity by varying prices and target segments over time using revenue management systems.
Patronage and user based objectives
Introducing Variable Opaque Products for passengers making bookings will assist in increasing profit as customers will pay what they are willing to pay, as customers who previously didn’t purchase extras such as access to the business class lounge, or more for a business class ticket for greater flexibility.
Offering flexibility to customers where possible will assist in building demand and to build a user base as it encourages trial and adoption of a service. Integrated Marketing Communications (IMC) An Intergrated Marketing Channel (IMC) ties together and reinforces all communications to deliver a clear, strong brand identity.
Although sales promotion on economy class fares, and advertising appealing to business and first class customers will be emphasizing different features of Singapore Airlines, essential for different mediums to have the same look and feel.
Communications from the different media mediums approaches all become part of a single, overall message and service promise (Lovelock et al., 2011, pg 231). Figure 1. IMC Channels Current IMC Strategies Current IMC focuses on the airlines 'Singapore Girl' who has become so iconic her image alone represents the airlines service and culture
Airline slogan 'what a great way to fly' is so broad it is used in advertising to all target markets
Specialised campaigns used in print such as The Economist Magazine, Newsweek and The Financial Review promote images of luxury and their business class services
Economy class customers are targeted through pricing, booking agents, and non specific brand promotion such as the ad shown.
Television advertising has not been a priority for the company Fig 2. Example Singapore Airlines Print Ad Recommended IMC Strategies Need to provide a point of difference beyond culture between airline and their competitors
If VOP was introduced, advertising should focus on innovation since service quality is established in consumers minds
If the key message communicated through marketing is ‘Singapore Airlines service, now available at your convenience’, passengers would understand there has been a fundamental change in the airlines distribution, pricing and product.
Ads should continue to feature the iconic Singaporean Girl, as it is a familiar and instantly recognizable image, however the accompanying text should explain how customers now have a greater choice when travelling with Singapore Airlines. Analysis of Service Environment The service environment associated with the Singapore Airlines can be related to the services such as First-class check-in, SilverKris lounge, KrisFlyer Gold lounge, etc (Singapore Air, 2012).
The Airlines concentration has largely been on high-end passengers and business accounts, however economy class tourists traveling with Singapore Air understand the importance of service to the airline before they have flown, and have similar service expectations.
Benefits such as rewards on being a member of the airline, facilities on airport, lounges and holiday trips with discounts have been some attraction of Singapore Airlines in context to service environment. Conclusion and Recommendations Singapore Airlines needs to create a strong point of difference between itself and the competition beyond cultural differences in its marketing and product.
It is recommended Singapore Airlines introduce Variable Opaque Products into their marketing mix to appeal to a market segment which is currently sidelined, but has great potential to increase revenue and add value to customers experience.
Further research recommended into the price customers are willing to pay for new options available to customers, which should be reasonable enough for customers to increase the price of their ticket, without creating excess demand in areas such as the Business Class lounge.
The customers need to understand the key message that Singapore Airlines is adapting to their needs better, without compromising on service, meaning it is essential all marketing channels have an identifiable look and feel. Singapore Airlines Positioning Map
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