Singapore Airlines: IntroductionSingapore Airlines Limited (SIA) is the national airline of Singapore. Singapore Airlines has evolved into one of the most respected travel brands around the world. They have one of the world's youngest fleet in the air, a network spanning five continents. SIA operates a hub at Singapore Changi Airport. SIA has diversified into airline-related businesses such as aircraft handling & ground handling, aircraft leasing, aviation engineering, air catering, and tour operations. The Singapore Airlines Group comprised 25 subsidiary companies, 32 associated companies, and two joint ventures. SIA has grown from a regional
airline into one of the worlds leading carriers and is the first operational customers of the super jumbo Airbus A380.Its wholly-owned subsidiary, Silk Air, manages regional flights to secondary cities with smaller capacity requirements. Subsidiary Singapore Airlines Cargo operates SIA's dedicated freighter fleet, and manages the cargo-hold capacity in SIA's passenger aircraft. Singapore Airlines Limited is the world's largest carrier by market capitalization. It ranks amongst the top 15 carriers worldwide in terms of revenue per passenger kilometers and ranked 6th in the world for international passengers carried. SIA was ranked 17th in Fortune's Worlds Most Admired Companies rankings in 2007 and has built up a strong brand name as a trendsetter in the aviation industry, particularly in terms of innovation, safety and service excellence, coupled with consistent profitability despite rising and volatile fuel prices, stress in global financial markets, heightened security issues, and increased market competition. SIA have a young and well trained staff focused on service
excellence and a top ranked hub in Singapore to serve their extensive global network. The airline has built a sustainable competitive advantage using strategies that differentiated it from other airlines based on superior customer service, both in-flight and on the ground. It has won numerousawards.
Airline Marketing, Auditing and PlanningAirlines are part of the transportation business. An airline sells seats to transport people from one place to another. Airlines not only compete with other modes of transport to attract passengers but also with other airlines. To be competitive airlines offer various services to the traveler to ensure the traveler choices their airlines as the mode of transport. Airlines dont market a product but services. These services are intangible i.e. the experience of travelling with the airline. This is the convenience that the passenger experiences while buying tickets, making bookings or reservations, check-in, the ground handling, luggage handling, and the flying experience which includes the seats, the in-flight entertainment and the dining.
Marketing audit is a fundamental part of the marketing planning process. It is conducted at the beginning of the planning process as well as during the implementation of the plan, to review the plan itself. Marketing auditing is a process that constantly scans the macro environment and micro environment to develop an accurate and objective view of the factors and issues that affect organizations like SIA and the trends and opportunities that may exist for such organizations.Page 1 of 13
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The marketing planning process is a series of activities that involves setting objectives and formulating strategies for achieving them. Marketing planning aims to ensure that in carrying out the matching process, that the organizations resources are used in the most efficient manner. SIA needs to undertake marketing planning for a number of reasons: Increased competitiveness in the airline industry and the complexity of markets. Increased speed of technological changes and the need to anticipate changes in customer wants and needs, and the way in which the organization provides for them. The need to identify sources of competitive advantage and customer value creation and To develop cohesion with non marketing function ensuring the plans are integrated and consistent across other (non-marketing) elements of the organization.
Marketing places special emphasis on the process of planning, based on researching and understanding the critical marketing environments and working to achieve organizational objectives. The link between
these is that in business planning which tries to predict, understand and forecast market demand, customer behavior and competitor actions, requires the development of a clear strategy. Marketing audits allow an understanding of the organizations position of where it is now? The corporate strategy considers the current and future position of the organization and identifying a plausible future for the organization. During strategic thinking, as much information about the organization and its environment that affects it is gathered from marketing auditing and it clarifies the question where do we need or want to be in the future? Marketing planning are the methods or processes that aims to document the strategic thinking into a road map (plan) for the future. It clarifies the question how can we get there? The marketing activities of auditing and planning are required to develop strategies for the organization. In strategy development, marketing exercises aim to clearly identify the issues that are critical to the organizations position (role, function and purpose), and define the path to an end so as to achieve the organizations purpose. The corporate strategic plans are focused on the whole organization and act as a guide for marketing plans, HR plans, technological plans, productions plans, financial budgets etc. The corporate strategic plan is the master plan that provides the guidance about the organizations future direction and objectives. The link between auditing, planning and corporate strategy is that by auditing, SIA can identify particular consumer wants and needs. Planning then involves devising strategies that meet or satisfy those needs with the organizations strengths and resources. SIA needs significant positive differentiation in the key success factors of the business if it is to sustain its competitive advantage. The Marketing Planning Process As per McDonald (1999:37 the steps involved in the marketing planning process are: 1. Understanding corporate mission and objectives: SIAs mission statement is SIA is a global company dedicated to providing air transportation services of the highest quality and maximizing returns for the benefit of its shareholders and employees.Page 2 of 13
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Conducting a marketing audit as part of SIAs overall management audit which includes Marketing Audit, Distribution Audit, Production Audit, Financial Audit and HR Audit. While conducting a marketing audit of SIA, analysis of the following is required to be done i.e. analyze the products, prices, promotion delivery, business and economic environments, completion etc. SIA shall have to conduct a marketing audit of SIAs macro and micro-environments and strategic business units (SBUs) using the various marketing business tools. Developing marketing objectives (statements of what the marketing plan intends to achieve in the future and the offers that they will make to those markets). Developing marketing strategies (statements of how the SIA will accomplish the marketing objectives) that assist the organization develop competitive advantage; Preparing a marketing plan that documents the outcomes of the previous steps in the marketing planning process. Integrating the plan with other elements of the corporate plans by ensuring that they are consistent across the organization. Measure, review and amend operating plans. This is conducted continuously throughout the planning cycle.
Marketing Auditing SIAs Marketing Environment Macro environment SIAs macro environment is the wider context in which the market/ airline industry exists. Because SIA operates in an international market, their operations involve more complexity and more risk. PESTEL Analysis is done as a method of environmental scanning and it provides a general awareness of the macro-environmental forces, the understanding of which allows SIA to predict change, better plan, better decision making and to decide where to invest, reallocate or diversify its resources. The macro-environment is where SIA has the least influence and control over, but the dynamics arising from the macro environment can have significant influences on both SIA and the micro-environment. Current global financial meltdown, Rising fuel costs and the deregulation of the airline industry introducing new entrants in the growing budget airline market are two examples of major trends having a major impact on existing players in the market. PESTEL ANALYSIS OF MACRO ENVIRONMENT: Environment Political Reasons for their importance more volatile when operations penetrates international markets determines competitiveness depending on regulations put in place . E.g. deregulation of airline industry has enabled other airlines to enter the market with lower barriers to entry as in the case of Low-Cost Airlines opportunity or threat?.The politics has become more stable among countries around the world. This gives Page 3 of 13
Airline industry a chance to enter into a new market and secures Airline business. However, this will increase considerably the competition that the monopoly will lose the benefit, for example, Singapore Airlines (SIA) can no longer be a sole airline in Singapore. Bilateral agreement is one of the obstacles in the way of truly pan-Asia budget carriers. Landing charges at so-called "gateway airports" and navigation charges are often prohibitively expensive, and in key destinations like Bangkok, Beijing, Hong Kong and Singapore there are no cheaper, secondary airports. The budget airline industry in south-east Asia has been underdeveloped because the aviation market is tightly regulated by bilateral air rights agreements. Threat of terrorism, people is afraid to fly after the September 11 terrorist attacks incident. The most significant political event however has been September 11. The events occurring on September had special significance for the airline industry since airplanes were involved. The immediate results were a huge drop in air traffic due to safety & security concerns of the people. o International airlines are greatly affected by trade relations that their country has with others. Unless governments of the two countries trade with each other, there could be restrictions of flying into particular area leading to a loss of
In the recent years, there has been an economic fluctuation and increased oil price around the world. The airlines have faced the difficulty to predict the demand and cost. This pressures Airlines industry to become more intense. Economic health
of countries determines viability of business operations importance of exchange rates, tariffs, tax legislation E.g. rising fuel costs are impacting airline operations profitability but strong demand from consumers for lower cost alternatives to transportation combined with a favorable movement in the US dollar has partially mitigated this increase in fuel costs21. Socio-Cultural considers peoples beliefs, values, attitudes, opinions and lifestyles higher propensity to spend based on higher wage rates and increased consumer power .SIAs global presence requires sensitivity to customer socio-cultural norms and values. The customers have become more sophisticated and demandedhigh value from airlines as they have many airline choices. This forces airlines to be aware of providing the best service at reasonable price. Additionally, there is an increasing trend of traveling and doing business abroad. This is a good sign for airline industry.
Technology, in recent years, has significantly improved and been continuously launched to the market. Airlines have to carefully choose the technology in order to create competitive advantage. Rapid adoption of relevant technology enables
improved services to customers opportunity? E.g. SIA was quick to trial and adopt the latest in-flight entertainment systems for its consumers. IT & telecomm technology have improved efficiency and business operations opportunity? Growth in e-business strategies opportunity? Information Systems have led to more efficient targeting of segments within market and customized marketing offers opportunity? Environment NatureEnvironmental issues have become more significant as people concern more about pollution and global warming. The airlines that can put environmental friendly Page 4 of 13
campaign tend to gain competitive advantage in the future. Airline industry often
under pressure to seek ways of decreasing contribution to global warming and noise pollution E.g. the new A380 is a cleaner and greener aircraft compared to the Boeing 747 on a per-seat basis13. LegalAs governments around the world rely more on the free trade, they often reduce the trade barriers. This gives airlines a good opportunity to enter into a new market. Moreover, new airlines are easily allowable. This makes existing airlines in particular markets face intense competition. Fair trading/ consumer law/ natural
environmental outlook etc. SIA needs to keep abreast of changes in the law to ensure their marketing strategies comply growing emphasis on passenger safety and carrier reliability
Marketing Planning The business tools used below are used to assist SIA undertake formal marketing auditing and planning by analysing the markets and their performance and assisting in setting strategic directions for the future. SWOT Analysis This tool, (results summarized below), is used as a guide for auditing an organization and its environment. It is the first stage of planning that assists marketers focus on key issues and for developing strategic summaries. This analysis highlighted that there are opportunities in growth areas such as low-cost airlines, technological, natural environmental and revenue opportunities to be gained from new aircraft fleets. SIA may want to address a particular issue further by conducting marketing research to collect and analyze formalized data for their formal marketing auditing.Positive STRENGTHS Aircraft Fleet SIA has adopted aircraft with larger passenger capacity & more fuel efficient technology In-flight Services SIA continues to be a leading innovator in in-flight services by adopting technological improvements Ground Services SIAs subsidiaries enable it to have more direct access to relevant ground services and potentially achieve greater operational efficiencies. Communication SIA maintains effective communication across all levels WEAKNESSES SIA is a large organisation concurrently operating independent Business Units such as Engineering, Cargo...