Singapore Airline is one of leading airlines companies in the industry for several decades. Its dual strategy of providing excellent services and keeping cost-effective has helped it to earn substantially profitability and enlarge its market continuously. This essay will firstly discuss the external and internal environment of Singapore Airlines through several aspects, such as company description, social economics data, strength, weakness, opportunities, and threats, product and services etc. Following this, it will explain market target and channel relations of the organization, such as the target customers, branding, channel relationships, relation building, market growth and strategies, etc.
External and Internal Environment
Company description, structure, reputation and history
Singapore Airlines Limited (SIA), which is emerged from 1972, is the national airline company of Singapore that operates major routes globally, with a strong market at Southeast Asia, South Asia, East Asia, and "Kangaroo Route." The history of SIA could be dated back to 1947 when it began operating airlines by Malayan Airways Limited (MAL). Then, because of a series of political influences, MAL firstly transferred to Malaysia Airway Limited, and then changed to Malaysia-Singapore Airlines (MSA). Eventually, in 1972, MSA ceased operation and Singapore Airlines started to run its own business.
With the rapidly development in recent years, SIA has diversified into related industries, such as ground handling, aircraft leasing, air catering, and tour operation. Till 2011, SIA has over 20 subsidiaries, mainly including SIA Cargo, SIA Engineering Company, Silk Air and Trade Winds Tours and Travel (Singapore Airlines, 2011).
SIA has established a strong reputation in the industry for its continuous innovation, safety, and consistent profitability in spite of un-optimistic situation, such as the rising fuel prices, pressure in global financial market, complicated secure issues, and the increasingly international competition.
2.2 Describe the markets, products, value, customers & socio economic data for this firm
During the 2010-2011 financial year, the total revenue of the SIA Group is 14,525 million dollars, 14.3% increased than the previous year while the total expenditure is 13,254 million dollars, 4.8% increased. The total value added is 5419 million dollars.
During the year, Singapore Airlines carries 16,647,000 passengers while SIA Cargo carries 1,156 million kg products. The overall load for Singapore Airlines and SIA Cargo is 15173 million tonne-km. The average number of employees in the Group is 21,997, decreasing for 33.8% compared to the previous year while the revenue per employee contributes to the Group is 660,308 dollars, 39.6% increased than the previous financial year. What is more, the value added by per employee has enhanced 54.8% in 2010-2011-year (Singapore Airlines, 2010).
2.3 Opportunities and Threats
a. SIA could continue to seek new markets to expand its services to more cities, attract new customers.
b. SIA could research and develop new technology, and then implement them to improve its services and customer experience.
a. SIA could develop more low-cost airline market, increasing its market share by attracting customers in some countries that has large market demand, such as China, Middle East, and India etc.
b. SIA could exert more effort in R&D,
a. New entrants
b. Economic stability and political situation in other countries will affect SIA's operation and profitability.
a. Low-cost Airlines
b. Research carefully before setting up a new airline in foreign countries
4. Strengths and weaknesses
a. Aircraft Fleet: larger passenger, more fuel efficient technology, brand new
b. In-flight services: technological improvements and innovation, best services for customers
c. Communication: face-to-face interaction, conducting surveys to know needs and wants of the customers
Since SIA is a large organization and has too broadly businesses, there will be weakness if these extra businesses are not managed and controlled effectively.
5. Review of the products and services
Singapore Airlines is esteemed as a high quality carrier with excellent levels of service (Heracleous & Wirtz, 2009). There are three main products and services in SIA: KrisFlyer and PPS Club, Ground Services, and In-flight Services (Singapore Airlines, 2010).
KrisFlyer is Singapore Airlines' frequent flyer programme that provides a series of promotions and latest news to customers through KrisFlyer Membership Card, and Priority Passenger Service (PPS) Club is Singapore Airlines' exclusive recognition programme that only serves to its members who accumulates $25,000 worth of PPS Value in a consecutive 12 months. These two products not only provide local offers and privileges, but also offer kinds of global promotions on selected airlines throughout the year in return for consumer loyalty to the airline (Lacar, 2009). In the financial year of 2010-2011, the list of partner airlines increased to 29, thus, members could enjoy more flexibility in reduction of their miles. Furthermore, there are more ways for members to earn flights miles from over 120 global non-airline partners (Singapore Airlines, 2010).
The ground service was initially set up in 1973 by Singapore Airport Terminal Services Ltd., one subsidiary of SIA, to delivery better services to its customers (Chan, 2000a). SIA introduces the Passenger Reconciliation System (PRS) for its flights at Singapore Changi Airport to simplify and streamline the check-in experience.
Another crucial services provided by SIA is In-flight services, including services in different cabin, cuisine services, In-flight entertainment system and communication. Recent enhancement includes the TV Box Sets under the Red EYE Collection for customers enjoying the television series, Until Classical for fans of classical music to hit the high note (Singapore Airlines, 2010).
6. Review internal systems and evaluate internal efficiency and effectiveness
SIA makes up a strategy of related diversification at the corporate level while it successfully combines the differentiation strategy (market positioning and quality offering), with the low-cost strategy (internal operational costs to reach superior results. (Wirtz & Heracleous, 2008)
At a corporate level, Singapore Airlines Group has more than 20 subsidiaries and associated companies (Singapore Airlines, 2010). The main subsidiaries of the Group are SIA Cargo, SIA Engineering Company, SilkAir and Tradewinds Tours and Travel (Singapore Airlines, 2010). At a business level, Singapore Airlines Group always keeps a mind to deliver quality service to demanding customers to achieve differentiation, and tries to keep low cost to ensure organizational profitability (Heracleous & Wirtz, 2009).
According to Heracleous & Wirtz (2009), there are five pillars that SIA conduct the activities in the internal system to make the system efficient and effective: rigorous service design and development, total innovation, profit consciousness ingrained in all employees, achieving strategic synergies, and developing staff holistically. To be more specific, SIA recognizes that if an organization wants to sustain its differentiation, it must maintain continuous improvement by constantly service design and development. SIA also concerns about cost-effectiveness, thus total innovation is used to make innovation in everything to make sure a bit better of its services and products than its competitors. The consciousness of profit in all employees ensures the managers and staffs SIA being aware of the need for profit and cost-effectiveness.
II. Target Market and Channel Relations
1. Identify the target customers. Is there more than one type of target customer? What a segmentation base does the company use to identify its customers? Positioning? Branding
SIA's consumers or customers are located globally with different needs and varying wants or behaviors. Chew Choon Seng, the CEO of Singapore Airlines, tells that "we intend to play in all segments that SIA services for the high end, Silk Air for the middle class, and the Tiger Airways for the low end." (Doganis, 2006). It is obvious that Singapore Airline's subsidiaries which own 100% ownership of regional carrier Silk Air, 49% ownership of budget carrier Tiger Airways, and 49% ownership of Virgin Atlantic cover the key or critical customer segments within the industry.
Organizations, which are eager to determine marketing strategies and realistic marketing objectives, should firstly understand customer trends and buyer behaviors by market segmentation (Lacar, 2009). Through market segmentation, the organization could group customers and characterize them in rational manner to make sure that the product or service is served to right customers.
There are several bases for segmentation that SIA takes to conduct market segmentation. They are geographic, demographic, psychographic, and behavioral bases. For geographic base, SIA attempts to exploit the different needs and wants among global customers by providing global airline services to 65 major cities in 35 countries in the world (Lacar, 2009). For demographic base, SIA focuses on the basis of customer characteristics such as age, gender, and income while uses multiple approaches to keep complete consumer profile. For psychographic base, SIA tries to capture the customer's behavior drive such as values, lifestyles, by providing variations of cabin classes to meet different needs of consumers. For behavioral base, SIA uses Frequent Flyer program to capture consumers with highly frequency of consumption and commitment.
After segmenting the market and targeting the consumers, SIA could position a product or service that could let its customers perceive its product or services compared to its competitors. The positioning should be very clear. Singapore Girl, a well-know and successful branding of SIA, is positioned clearly and breaks the traditional airline branding image (Chan, 2000b). The customers…