Singapore Airlines Marketing Plan: Strategy and Market Analysis

Introduction and Company Overview

Singapore Airlines (SIA) is one of the leading airline companies in the industry, having sustained that position for several decades. Its dual strategy of providing excellent services while maintaining cost-effectiveness has helped it achieve substantial profitability and continuously enlarge its market. This paper first discusses the external and internal environment of Singapore Airlines through several dimensions, including company description, socioeconomic data, strengths, weaknesses, opportunities, threats, and a review of products and services. It then examines the organization's target market and channel relationships, covering target customers, branding, channel relationships, relationship building, and market growth strategies.

External and Internal Environment Analysis

Company Description, Structure, Reputation, and History

Singapore Airlines Limited (SIA), which emerged in its current form in 1972, is the national airline of Singapore. It operates major routes globally, with a strong market presence in Southeast Asia, South Asia, East Asia, and the "Kangaroo Route." The history of SIA dates back to 1947, when airline operations began under Malayan Airways Limited (MAL). Due to a series of political influences, MAL was first transferred to Malaysia Airways Limited and then reorganized as Malaysia-Singapore Airlines (MSA). In 1972, MSA ceased operations and Singapore Airlines began running its own independent business.

With rapid development in recent years, SIA has diversified into related industries such as ground handling, aircraft leasing, air catering, and tour operations. As of 2011, SIA had over 20 subsidiaries, including SIA Cargo, SIA Engineering Company, SilkAir, and Tradewinds Tours and Travel (Singapore Airlines, 2011). SIA has established a strong reputation in the industry for its continuous innovation, safety record, and consistent profitability despite challenging conditions such as rising fuel prices, pressure in global financial markets, complex security issues, and increasingly intense international competition.

Markets, Products, Value, Customers, and Socioeconomic Data

During the 2010–2011 financial year, the total revenue of the SIA Group was $14,525 million, a 14.3% increase over the previous year, while total expenditure was $13,254 million, a 4.8% increase. Total value added was $5,419 million. During the year, Singapore Airlines carried 16,647,000 passengers while SIA Cargo transported 1,156 million kilograms of freight. The overall load for Singapore Airlines and SIA Cargo combined was 15,173 million tonne-kilometres.

The average number of employees in the Group was 21,997, a decrease of 33.8% compared to the previous year, while revenue per employee contributed $660,308 to the Group — a 39.6% increase over the previous financial year. Furthermore, value added per employee increased by 54.8% in the 2010–2011 period (Singapore Airlines, 2010).

Opportunities and Threats

SIA faces several strategic opportunities. First, the airline can continue seeking new markets to expand its services to more cities and attract new customers. Second, it can research and develop new technologies and implement them to improve services and the overall customer experience. In terms of active responses to these opportunities, SIA can develop a stronger presence in the low-cost airline market to increase its market share by attracting customers in high-demand regions such as China, the Middle East, and India. It can also invest more substantially in research and development.

On the threat side, new market entrants and the expansion of low-cost carriers represent ongoing competitive pressures. Additionally, economic instability and shifting political situations in other countries can affect SIA's operations and profitability. As defensive responses, SIA should research market conditions carefully before establishing new airline routes or subsidiaries in foreign countries.

Strengths and Weaknesses

SIA's key strengths include its aircraft fleet, which features larger, more fuel-efficient, and technologically advanced aircraft. Its in-flight services are distinguished by continuous technological improvements and a commitment to innovation, consistently ranked among the best in the industry. Communication is another strength, as SIA actively engages in face-to-face interaction with customers and conducts regular surveys to understand passenger needs and preferences.

A notable weakness stems from SIA's large organizational scale and its broadly diversified portfolio of businesses. If these additional businesses are not managed and controlled effectively, they can become sources of operational inefficiency and risk.

Products, Services, and Internal Efficiency

Review of Products and Services

Singapore Airlines is widely regarded as a high-quality carrier with excellent levels of service (Heracleous & Wirtz, 2009). There are three main product and service categories at SIA: KrisFlyer and PPS Club, Ground Services, and In-Flight Services (Singapore Airlines, 2010).

KrisFlyer is Singapore Airlines' frequent flyer programme, providing a series of promotions and the latest news to customers through the KrisFlyer Membership Card. The Priority Passenger Service (PPS) Club is Singapore Airlines' exclusive recognition programme, serving members who accumulate $25,000 worth of PPS Value within a consecutive 12-month period. Both programmes provide not only local offers and privileges but also a variety of global promotions on selected partner airlines throughout the year, in recognition of consumer loyalty to the airline (Lacar, 2009). In the 2010–2011 financial year, the list of partner airlines increased to 29, allowing members greater flexibility in redeeming their miles. Members can also earn flight miles from over 120 global non-airline partners (Singapore Airlines, 2010).

The ground service operation was initially established in 1973 by Singapore Airport Terminal Services Ltd., a subsidiary of SIA, with the aim of delivering superior services to customers (Chan, 2000a). SIA introduced the Passenger Reconciliation System (PRS) for its flights at Singapore Changi Airport to simplify and streamline the check-in experience.

In-flight services are another crucial offering, encompassing service differentiation across cabin classes, cuisine services, an in-flight entertainment system, and onboard communication options. Recent enhancements have included TV Box Sets under the Red Eye Collection, allowing customers to enjoy television series, and "Until Classical," a curated collection for fans of classical music (Singapore Airlines, 2010).

Internal Systems: Efficiency and Effectiveness

SIA employs a strategy of related diversification at the corporate level while successfully combining a differentiation strategy — built on market positioning and quality offering — with a low-cost strategy focused on internal operational efficiencies to reach superior results (Wirtz & Heracleous, 2008). At a corporate level, the Singapore Airlines Group has more than 20 subsidiaries and associated companies. The main subsidiaries are SIA Cargo, SIA Engineering Company, SilkAir, and Tradewinds Tours and Travel (Singapore Airlines, 2010).

At the business level, Singapore Airlines Group consistently focuses on delivering quality service to demanding customers to achieve differentiation, while simultaneously keeping costs low to ensure organizational profitability (Heracleous & Wirtz, 2009). According to Heracleous and Wirtz (2009), there are five pillars that guide SIA's internal activities to maintain efficiency and effectiveness: rigorous service design and development, total innovation, profit-consciousness ingrained in all employees, achieving strategic synergies, and developing staff holistically.

More specifically, SIA recognizes that sustaining differentiation requires continuous improvement through constant service design and development. Total innovation ensures that every element of its services and products is refined to remain at least marginally superior to those of competitors. Profit-consciousness embedded across all levels of the organization keeps managers and staff alike aware of the need for profitability and cost-effectiveness.