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AMITY INTERNATIONAL BUSINESS SCHOOL A Term Paper Report On Singapore Airlines Marketing Strategy Analysis Submitted by: Kanika Arora A1808711021 MBA 3C(2011-2013)

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Page 1: Singapore Airlines

AMITY INTERNATIONAL BUSINESS SCHOOL

A Term Paper Report

On

Singapore Airlines Marketing Strategy Analysis

Submitted by:Kanika Arora

A1808711021MBA 3C(2011-2013)

Page 2: Singapore Airlines

ACKNOWLEDGEMENT

As part of our course curriculum dissertation in our specialization has helped us in

gaining deep knowledge into the field of marketing. Any accomplishment requires the effort of

many people and a project of this nature requires intellectual nourishment, professional help

and encouragement at various stages.

I bear to imprint of my people who have given me their precious ideas and time to enable me to

do this research.

I owe much to Ms Latha Chakravarthi who has been my mentor and my guide all through.

At last but not the least I also thank to all persons interviewed for their kind cooperation. I’m

indebted to all those who have been helpful throughout the process of writing this report but as

the cliche goes, I’m solely responsible for any remaining errors of fact or judgement.

Kanika Arora A1808711021 AIBS Noida

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TABLE OF CONTENTS  

CHAPTER CONTENTS PAGE NO.

1. EXECUTIVE SUMMARY

1.1 TITLE1.2 INTRODUCTION ON THE TITLE1.3 OBJECTIVE1.4 SCOPE OF STUDY1.5 LIMITATION OF STUDY1.6 OVERVIEW OF ORGANIZATION,PRODUCT AND BRAND

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2. LITERATURE REVIEW2.1 RESEARCH PAPER2.2 SUCCESS OF SIA

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3. ANALYSIS3.1 PEST ANALYSIS3.2 SWOT ANALYSIS3.3 MARKETING MIX

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4. MARKETING STRATEGY EVALUATION4.1 SEGMENTATION4.2 TARGETING4.3 POSTIONING4.4 MARKETING CHANNEL

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5. RECOMMENDATIONS 27

6. CONCLUSION 30

7. REFERENCES 31

 

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CHAPTER 1:

EXECUTIVE SUMMARY

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EXECUTIVE SUMMARY

TITLE:

SINGAPORE AIRLINES MARKETING STRATEGY ANALYSIS

This report is commissioned to do a study on the inter-relationship of the marketing strategies of Singapore Airlines (SIA), its prestige brand and its performance.We draw attention to Singapore Airlines since 1972; the introduction of Singapore Girl has become one of the leading icons for the SIA and this has developed a brand differentiation among other major airlines and established itself as the “Most Profitable Airlines in the world.”

Over the past few years, although SIA has generally maintained its market share, the profits decreased significantly, and with further analysis, using PESTEL, it notably affirmed that SIA faces a challenging and unpredictable operating environment with instability in economic climate and tough competition which it has little control over. According to the business time (dated 12 Sept 11), SIA fuel cost accounted for more than half of its operating cost which eroded its profit margin.

Using SWOT, we have discovered that SIA tends to focus on the product enhancement rather than seeking what customers actually want, its latest product “class beyond first class suites” has demonstrated the lack of consultation. Its poor adoption of new internet marketing concepts demonstrated on the poorly revamped website portal of SIA which has ignited anger and frustration of their customers.

With external factors like deregulation of the airline industries resulted in the low barriers of entry and poor understanding of budget airline economy allowing the budget airlines to seize the market shares of the budget-conscious travellers with their ever increasing of new fleets of the new aircrafts boosting better safety and fuel efficiency

The report evaluates and concludes that launching their new advertisement campaign, refocused its “Singapore girls” image to differentiate itself and also launching a new brand “SIA-X”, to serve the medium and long haul sectors to tap on this budget segment of the market. This will offer an alternative option for consumers compared to Air Asia and Jetstar. This differentiates the low price budget segment from its economy class segment, thereby possibly reducing the pricing pressure. It is also evident that SIA needs to address the basic of marketing concept that is to understand the needs and wants of its customers.

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SCOPE AND LIMITATIONS :

The scope of the study is to know and analyse the marketing strategy of the Singapore Airlines, which is credited as the No.1 airlines of Singapore by collecting the data from various sources. While the limitation of this study is that only the secondary data was available as primary could not be gathered due to cultural contraints and the time limitation. The validity of the data is also not very long.

BACKGROUND:

The birth of Singapore Airlines Limited (SIA) was established since 1972 after the split from Malaysian Airlines. In the same year, the icon of the Singapore Girl was formed to create a common symbol to facilitate the airline marketing and advertising campaign.

“Singapore Airlines was in a different position than most other airlines at the time. There were no domestic routes to serve it was forced to immediately start competing with international airlines for routes, getting access to airports, securing flight slots and landing rights, and attracting a new customer base.” (Matin-Roll-Business & Brand Strategist)

Even since then, SIA has evolved itself to be one of the most reputable brands around the world, differentiated through it young aircraft fleets spreading its wings over five continents. SIA spread its wings from a regional airline to the present world airline leader and also to be the first company to launch the “super jumbo” Airbus A380. (Singapore Airline official website)

SIA has fought bravely through countless of economic challenges and uncertain operating environment and has emerged itself as the leading airline in terms of innovation, safety and maintaining consistent profitability despite the volatility fuel prices, economic challenges and tight competition.

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CHAPTER 2:

LITERATURE REVIEW

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RESEARCH PAPER

Singapore Airlines Case Study

The report provides an overview of the company and its environment. The paper identifies

various resources and capabilities available to the company. The various strategies that

Singapore Airlines utilise and how they affect the airlines performance.

Visit Website

Executive Summary

The report provides an overview of the company and its environment. The paper identifies

various resources and capabilities available to the company. The various strategies that

Singapore Airlines utilise and how they affect the airlines performance.Key issues have been

identified that threaten Singapore Airlines current market. The often complicated Government

regulations and global laws that affect the airline industry have been defined and

explained.Current industry issues and trends that affect Singapore Airlines have been

researched, a number of recommendations have been provided, as a possible solution.

Overview of Singapore Airlines

Singapore Airlines (SIA) first flights began in 1947 partnered with Malaysian Airlines, each

funded by there governments. The two airlines mainly serviced South East Asia.Singapore

separated from Malaysia in 1965 to become the republic of Singapore. The two governments

therefore decided to go there own ways and set up there own airlines. In 1972 Singapore

Airlines was launched.

The domestic market was basically non existent due to Singapore being a small country

geographically. Singapore Airlines had to immediately pursue an international presence and

started planning flight routes, airport resources,

and government acceptance into foreign destinations etc. SIA also had to establish themselves

as a genuine competitor and market the airline internationally to potential customers and future

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stakeholders.Today, SIA has more than 10,000 employees and 95 aircrafts. The airline now

serves 89 destinations around the world including Asia, Europe, North America, Middle East,

Australasia, and Africa. ( www.airlines.priceline.com)SIA is situated at Changi Airport along with

subsidiaries Silkair and Tiger Airlines. ‘In 2004, Changi Airport received a record 30,400,000

passengers, a year-on-year growth of 23.1% in passenger traffic. Similarly, a record 1,780,000

tonnes of cargo was moved, representing a year-on-year increase of 10.2% in airfreight

volume’. (http://en.wikipedia.org). Changi Airport is classed as “the hub of Asia”, Changi

provides stopovers, refuelling, and passenger exchange for all the international airlines

travelling from one side of the world to the other. Changi Airport is also expanding to

accommodate for there cut price airline and new Airbuses arriving in 2006.

Analysis of Singapore Airlines Environment

In analysing the environment, the important external influences that effect performance and

decisions of Singapore airlines have been detailed in this section.The airline industry has been

strongly controlled by agreements and policies. Airlines couldn’t just fly to any destination or

country without appropriate authorisation.Most countries have there own national airline that are

generally government backed and hold a big influence on there operation. The governments

also implement policies and regulations to control foreign airline access to there airports.Some

countries now have deregulated there national airline industry to reduce the amount of

government control, and make access to airports/services more open for negotiation. Countries

that have employed this action are the United States, Australia, European Union and Japan.

The deregulation of the Airline industry opens doors for more entrants to the market and

increased competition. Singapore Airlines is still owned by the Singapore government and is still

affected by such controls.The Singapore government has signed an agreement with the United

States called “Open Skies” that gives both countries unrestricted flight access to each others

countries. The open skies phenomenon is gathering momentum and more and more countries

are signing up. Singapore Airlines is currently in negotiations with Australia, to reach an

agreement regarding open skies access down under. Basically the countries that gain open

skies agreements are able to expand on existing business. The airline industry is highly

competitive industry and the rival airlines are always taking advantage of any opportunity to gain

more destinations.Statistics show Asia’s population is steadily increasing every year and this

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contributes to the increase in flights. Asia is recognised as the hotspot for air travel at present

and into the future. Asia-Pacific intercontinental flights are up 7% and there has been growth of

8% intra-regional services (www.oag.com). This interest in the area has seen new cut price

airlines emerge to cater for the demand. SIA has established its own low price airline Tiger

Airlines to satisfy demand.

Other environmental factors influencing SIA and the airline industry are rising fuel prices. The

price rise in fuel causes a cost increase in the running of flights, therefore a rise in ticket prices.

SIA have just passed a decision to put a US$10 surcharge on ticket prices to accommodate the

fuel rise.Terrorism has caused massive economic losses for airline industry and also

bankruptcy. Terrorism strikes happen at any time without warning and destinations around the

world that are directly affected by terrorism attacks see a dramatic stop in airline flights. The

airlines cannot predict these attacks from happening and have to build such occurrences into

there risk management policies.

Review of the Industry Structure

In analysing the industry structure this report uses Porters 5 Forces. The five forces look at the

Threat of New Entrants, Power of Suppliers, Power of Buyers, Availability of Substitutes, and

Competitive Rivalry.

Threat of New Entrants: The international airline industry has high barriers to entry for a number

of reasons, firstly there are quite high costs involved in setting up an industry. As mentioned

previously, gaining flight access to foreign countries and obtaining airport space is another

hurdle that stands in the way of new entrants. The current airlines dominating the industry are

constantly working on maximising cost efficiency, and performance to discourage any new

entrants and to try force out existing poor operators.The Domestic industry is more attractive to

new entrants as it doesn’t have as much complications as the international side and lower

barriers to entry.

Power of Suppliers: The aircraft suppliers of the airline industry are dominated by two suppliers

Boeing and Airbus. The aircrafts engines are standardised so both aircraft manufacturers have

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similar engines. Boeing and Airbus both outsource there parts for there planes and generally

use the same suppliers. The body frames and interiors is where the two manufacturers can

differentiate there product. Due to the standardisation of engines the switching costs of

suppliers is reduced and airlines. (De Melo, 2000)

Power of Buyers: The power of buyers is low in the airline industry as switching costs are high.

Most airlines are similar inside; it’s more the service that sets them apart. Most airlines follow

each other on prices and cause buyers to pay there price, on the other hand new entrants my

cause price competition and therefore a buyers market. (www.fool.com).

Availability of Substitutes: The substitutes that could threaten the airline are cars, boats and

trains. These substitutes are not that much of a threat to aeroplane travel. Airlines are generally

is used to cover large distances in a short period of time, and was establish to fill a demand that

the other forms of travel couldn’t accommodate as effectively. Alternate measures of transport

are more of a personal choice not a direct parallel substitute. (www.fool.com).Competitive

Rivalry: The airline industry is highly competitive and price wars are a common occurrence.

There is constant fighting for territory and expansion. Major players in the industry concentrate

on lowering there costs and improving service to deter new entrants.

What Key resources available to Singapore Airlines?

Singapore Airlines is a well establish international airline with strong profitable track record. The

company has a government ownership and also private stakeholders. The airline has always

been profitable and the funds reinvested back into the company, to build on capital. The table

below shows that last 3 years financials and even in the case of the S.A.R.S breakout in 2004

they still posted a profit.

Aside from just financial capital, Singapore Airlines has many other resources listed below:

• Changi airport the home of Singapore Airlines is one of the largest freight handling facilities in

the world, and is the most popular hub in Asia.• Singapore has a resource of about 95 aircrafts

that now are brought internally and not leased; the aircrafts are generally replaced every 4-5

years.• Singapore Airlines has built a mass of 89 international flight destinations.• The airline

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has built a human resource training facility.• Changi Airport hosts SIA state of art engineering

company that services there planes and other international airlines. SIA also has one of the

largest flight kitchens in the world situated at Changi. SIA belongs to the Star Alliance where

other airlines join resources together to increase coverage around the world. Star alliance

covers 790 airports in 138 countries. Finally the brand attribute, is probably there most powerful

resource. “Singapore Girl you’re a great way to fly” Has been strongly nurtured over the last 32

years to be the most recognised brand and icon in the airline industry,

Singapore Airline has many capabilities that support there resources, these are:

• Latest technological and communication products linking there global network.• Huge

investment in human resources, this provides highly skilled workers and management.•

Expansive destination coverage due to Star Alliance.• State of the art freight facilities that link

with the port shipping authority

What it takes to be successful in the Airline Industry and What strategies are used by Singapore Airlines?

Singapore Airlines is basically the trend setter of the airline industry. SIA has employed many

innovative strategies since it began. These strategies have been supported and strengthen over

the years, and have led to the success, the company enjoys today. To be successful in the

airline industry you have to employ superior efficiency, quality, innovation and customer

responsiveness.

SIA has exercised a quality/service differentiation strategy to become one of the leaders in the

passenger airline industry.‘Singapore Airlines has carefully built a financial and fixed cost

infrastructure which allows them to continue investing to support the brand while challenging the

competition on costs’.(www.venturerepublic.com) More recently Singapore Airlines became a

member with the star alliance, which helps the company maintain economies of scale by code

sharing, where SIA can offer services on another airline under its own flight codes and offer

more destinations.By building solid capital the airline now enables them to purchase aircrafts

and equipment internally without the need for leases and interest. This has enable SIA to have

the latest aircrafts and renew them every 5 years. By having a new fleet the company is able to

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be more efficient with regards to fuel economy, maintenance, and have less downtime.

(www.venturerepublic.com).Another benefit of owning aircrafts outright gives flexibility if there is

a dramatic decline in the economy, SIA has the freedom of not being locked into long leases

and aircrafts can be disposed of, if need be. Therefore they can handle the ups and downs of

the economy, more so than competitors. (www.venturerepublic.com).Singapore Airlines have

always concentrated on being innovative, as mentioned above they replace there airlines every

4-5 years taking advantage of new technology. The company has always the first to introduce

new innovative ideas for example hot meals, free alcoholic and non-alcoholic drinks, Hot towels,

personal entertainment systems, and video on demand. SIA will also be the first to own the new

Airbus Super jumbo A-380 in 2006. (www.allaboutbranding.com)SIA is committed to providing a

world class quality and service, the airline allocates a substantial amount of time and money

into there staff training and education. The company has 4 training facilities with various

programs that exercise classroom, work experience and simulation strategies.

(www.trainersdirect.com) SIA has more concentration on staff training than any other airline.

Singapore Airlines employees have to complete a 4 month training course before they are even

allowed to serve a customer. On average in 1997 Singapore Airlines spent $5600 per staff per

year on training. The emphasis on staff training is so they can provide the best quality service.

(www.trainersdirect.com)

The branding of SIA is based on quality. SIA have the strongest brand name in the airline

industry. “Singapore girl you’re a great way to fly” has been there brand of quality for the last 32

years. ‘The icon has become so strong that Madame Tussaud’s Museum in London started to

display the Singapore Girl in 1994 as the first commercial figure ever’.

(www.venturerepublic.com). The airline provides the best on flight cuisine including fine wines,

and cocktails. Complimentary gifts are received on each level of passenger class. SIA have

maintained a policy that once a passenger pays for there ticket there is no more to pay.

(www.venturerepublic.com). Some airlines in tough economic times have started to charge for

in-flight drinks and entertainment where SIA haven’t. This commitment to quality has won the

airline numerous international awards and differentiated themselves from other airlines.

Some issues facing Singapore Airlines

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The Airline has purchased a number of the new Airbus Super jumbo A-380, which could be a bit

premature due to the fact they are still in negotiations with the Australian government over open

skies. The Australian government holds the key to Singapore gaining open skies agreements, if

an agreement is reached Singapore will be able expand and benefit from long haul flights

between Australia and United States. On the flip side the introduction of the new airbuses into

the industry will cause less demand on Singapore as a stop-over, refuelling hub. Airlines that

adopt the new airbuses will be able to bypass previous stopovers and enjoy cost savings.As

explained earlier there has been a dramatic increase in demand for inter-Asia flights. Rival

players have noticed the increase in demand and have implemented there own low cost

airlines. E.g. Australia’s Jet Star.

Recommendations and Justifications

Singapore Airlines conduct a very professional business they have a strong brand, strong

human resources and management, advanced facilities and a proven track record as being one

of the top airlines for the last 20 years.I recommend:• The airline pursue “open skies”

agreements to expand there destinations.• Establish the long haul routes with the new Airbus

technology before rival airlines purchase the aircrafts.• Keep strong emphasis on the brand

name and quality of service.• Utilise some of the success factor from SIA on the new low-cost

airline to compete with new rival competitors establishing themselves in the Asian market.•

Promote Changi Airports engineering and freight facilities to the new inter-Asian airlines as long

haul flights maybe bypassing Singapore’s Changi Airport in the future.• Stay with the

competitive advantage outlined above, using the differentiation strategy.• Maintain the

innovation and complimentary products.• Help support the Star Alliance to improve customer

satisfaction.

It is very hard to recommend a lot of strategies for Singapore airlines to undertake, as they have

been leaders in the industry for so long and have developed award winning strategies that have

made them very successful. This report has been constructed from a wide array of research that

has complemented Singapore Airlines various approaches to conducting business.

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References

Summers, Smith, 2001. Communication Skills, Revised Edition Wiley & Sons Australia.Venture

Republic, Singapore Airlines – An Excellent Asian Brand, (Viewed

20/10/2005),http://www.venturerepublic.com/resources/Singapore_Airlines_-

_An_Excellent_Asian_Brand.asp .

Priceline, Singapore Airlines, (Viewed 20/10/2005),

http://airlines.priceline.com/airlines/singapore-airlines.html

Oag, Asia-Pacific Air Transport Growth Rates Accelerating (Viewed 10/10/2005),

http://www.oag.com/oag/website/com/en/Home/Press+Room/Press+Releases/Asia-

Pacific+Air+Transport+Growth+Rates+Accelerating.

Wikipedia, Singapore Changi Airport. (Viewed 10/10/2005)

http://en.wikipedia.org/wiki/Singapore_Changi_Airport#Expansions

De Melo, Jaime. 2000,Notes on the Boeing-Airbus Rivalry, (Viewed 10/10/2005)

http://www.unige.ch/ses/ecopo/demelo/Commerce/Lectures/Boair.pdf

Del Vecchio, 2000. Analyzing Industries, (Viewed, 10/10/2005)

http://www.fool.com/research/2000/features000309.htm

Shibuimarkets, Singapore Airlines, (Viewed 10/10/2005),

http://www.shibuimarkets.com/company/singapore_airlines.html

Kaufman, Ron, How Does Singapore Airlines Fly So High? (Viewed 10/10/2005)

http://www.trainersdirect.com/resources/articles/BusinessManagement

/HowDoesSingaporeAirlinesFlySoHigh.htm

Chan, Daniel, The story of Singapore Airlines and the Singapore Girl, (Viewed 10/10/2005)

http://www.apmforum.com/strategy/siabranding.pdf

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SUCCESS OF SINGAPORE AIRLINES

Since its official formation dating back to 1947, Singapore Airlines have founded its business on world-class service quality in the airline industry. Such a reputation is built on core aspects of the airlines service delivery which includes features like the friendly service, prompt flights and in-flight entertainment system. As consumers, we only see these final outcomes and therefore, often forget that these qualities are a product of much planning, trial and of course - teamwork. The efficient, continuous use of teams throughout the business is a fundamental tool in which Singapore airlines is able to deliver `quality' to its customers. More specifically it is the way that the team operates and the values instilled within those teams that make them so effective. By designing and training these teams to be highly motivated, creative, able to communicate and equipped with comprehensive decision making skills, Singapore Airlines are able to achieve high performance.

Team Design First and foremost let's examine how SIA's team is designed. Firstly, the issue of task interdependence can be applied. Task interdependence is the degree which a task requires employees to share common inputs or outcomes, or requires them to interact in the process of executing their work. In relation to how SIA operates we can certainly see a high level of interdependence. For example, when customers arrive at the airport they have to check-in through the counter. If there are delays at this stage, personnel in customs and onboard the plane may have to deal with agitated customers and subsequently run into difficulties. The check-in staff sets the foundation for the service provision to begin and therefore employees from that point onwards are dependant on its efficiency. It is also important to note that Singapore airlines staff have aligned goals of providing top quality customer service. Such an outcome is made possible by the utislisation of various training centers within the company which unifies employee direction and motivation (Cabin Crew, Flight Operations, Commercial and Management Development). Team Size and Composition is also relevant. IN terms of team size SIA is able to achieve efficiency by appropriately building `right' size teams. What this implies is that the team size is optimal for efficiency in that they are large enough to perform the necessary tasks and small enough to maintain efficient coordination. An example of this is the 15-20 onboard hosts/hostesses who are onboard the B777-200 aircraft. This allocated team size is appropriate for the environment in that it allows for the employees to be able to communicate with each other effectively and also perform all the tasks needed. Singapore Airlines also promotes team diversity. One of their most notable team design characteristics is how they effectively use both homogenous and heterogeneous teams. For example, heterogeneous teams are utilised in their Product Innovation Department which requires more complex decision making whereas homogenous teams are used more on the operational level (onboard) as they tend to be more effective in the response time and emergency problems.

COMMUNICATION Singapore Airlines attaches a very high priority to the concept of communication in their operating activities. This stance predominates because they view their employees, contractors and agents as critical components of their success. The application of communication in regards to this company can be broken into two parts, external and internal. External communication refers to the airlines ability to influence its reputation and its portrayal to customers. It also refers to improving customer relations with innovations in physical communication.

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External communication has been as integral to Singapore Airlines success, if not more, than internal communication. Singapore Airlines prioritised in consistent brand image to the public. This strategy has been used by the company in all its communication vehicles to the public. They achieved this through the iconic `Singapore Girl'. The primary message "Singapore Airlines - A Great Way to Fly" has been consistently conveyed in exclusive print media and also in selected TV-commercials of very high production value to underline the quality aspirations of brand. But all these messages are featured through the iconic Singapore Girl in different themes and settings. The result of this is reduced information overload. By simplifying their message, and introducing non-verbal cues like the smiling Singapore girl, the message has less chance to be affected by noise, and becomes universal, transcending cultures. Everyone understands a smile. The Girl is the personification of the great service, and is the brand identity.

The Airline also makes a concerted effort to stay in touch with customers through in-flight surveys, customer focus groups and rapid replies to every compliment or complaint they receive. The company then consolidates this input with other key data to create a quarterly `Service Performance Index' that is very closely watched throughout the airline. This increased communication with the passenger's increases relation, in the sense that passengers identify more with the company. Frequent flyers are also distributed, connected with special messages, attractive offers and publications sent regularly to Priority Passenger Service members. Overall, the airline makes an effort to always communicate with passengers, to ensure the right message is conveyed, and that any feedback received is clearly understood and worked on.

Internal communication refers to Singapore Airlines ability to facilitate effective feedback and integration between employees and management. They do this by exploring various channels and mediums in which to communicate, and making an effort to raise stakeholder's awareness of the workings of the company.

The company itself, subsidiaries included, is a large organization, with more than 28,000 staff located around the world. To facilitate communication between employees, regular dialogue sessions between management and staff keeps communication flowing. They rely on both verbal and non-verbal communication. These sessions take the form of regular meetings and briefings. They also actively encourage the use of intranet to communicate regularly. The company holds semi-annual business meetings, as well as end of year meetings. This means that situations concerning rich medium, non-routine, ambiguous information can be transmitted and discussed through the regular meetings, whereas the routine, clear information can be sent as documents through email. Employees have direct access to management through the intranet, making it easier for information to circulate around the organisation. The intranet also erases the social status of employees relative to management, which has the effect of empowering them. Management also seems very responsive and attentive to issues relating to employees, becoming in effect, very active listeners. This ensures that whatever message is being debated between persons is clarified and understood, minimising conflicts and negative issues. Of the things discussed between management and employees include sharing and evaluating results in sales, marketing, yields and customer satisfaction levels.

The company also initiates a program called `Staff Ideas in Action'. This scheme ensures that new suggestions for improvement are constantly put forward by employees, for management to review. Singapore Airlines recognises that its employees are the `sensors' of the organisation, and that they are the ones who are on the ground floor who know how things work, and how to improve it. The company pays a particular interest in maintaining effective internal management because they recognise that it is a key organisational concept, integral for success.

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DECISION MAKING Effective decision-making is integral in achieving organisational success. Singapore Airlines demonstrates how a coherent team environment fosters innovation and ultimately maximises the effectiveness of decision-making. The key to SIA's success is their high level of employee involvement despite the size of the organisation. Employee involvement in decision-making is beneficial in that it enables better problem identification, diverse choice generation, increases probability of selecting the best alternative and increases commitment to the decision.

SIA has also acknowledged that decision commitment is improved by participation. Accordingly, they encourage employee participation through corporate newsletters, regular staff meetings and recognising staff members who have actively contributed in decision-making processes. Employee involvement also reduces the risk of conflict over a decision made. A common issue that arises in organisations is that employee goals conflict with organisational goals. SIA have worked to ensure that this is not a risk factor within their organisation as they constantly strive to align employees with the organisation as a whole. This can be seen in the values underpinning SIA's mission statement whereby staff are described as valuable and there is a focus on providing them with fulfilling careers, there is also an emphasis on viewing the organisation as a `worldwide team'. Such a corporate culture reduces the likelihood of conflict when decisions are made.

Another factor in achieving a creative work environment is providing intrinsically motivating work. The `team concept' was developed in order to achieve this. The concept is concerned with viewing each cabin crew as a team unit in order to develop camaraderie between members. This also enables more individual evaluation and means good performance can be rewarded with ease. The concept aims to increase empowerment and a sense of belonging to the organisation. SIA also encourages informal pressure, which has resulted in increased levels of discussion between various levels within the organisation leading to new ways of approaching problems and ideas. Evidently, Singapore Airlines is a prime example of how the encouragement of a team environment facilitates decision-making within an organisation. Employee involvement in decision-making has been a major contributing factor in SIA's success. Additionally, such involvement also serves to foster innovation and divergent thinking thus enabling SIA to continuously meet and exceed consumer expectations and maintain a competitive advantage.

CREATIVITY Singapore airline is successful in Asian's fiercely competitive airplane service industry because it relies on creativity for innovative new services. Creativity is the development of original ideas that make a socially recognized contribution. Such a concept is integrated into the company through its Product Innovation Department which focuses on anticipating needs consumers didn't even know they had.

Singapore Airlines recognizes that each innovation has a relatively short life span. Once other airlines adopt it, it is no longer considered "innovative". Therefore, the airline continues to invest heavily in R&D, innovation and technology as an integrated part of the business strategy to further differentiate itself.

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MOTIVATION Based on MARS model, motivation is one of the four important elements that contribute or influence individual behavior. Motivation is the cognitive, decision making process through which goal-directed behavior is initiated, energized and maintained. It will determine direction, intensity as well as persistence. How SIA staffs can achieve such a high motivation? These can be explained by a number of motivation theories. If we look at historical approaches, SIA does not follow the traditional approach such as scientific management which only emphasizes on wage incentive and management control. Instead, it uses the human relation approach in motivating its staffs. It believes that fulfillment of individual's needs and making them feel useful and important are more important than giving out monetary incentive. It belief, the illusion of involvement and importance will motivate its staffs more in performing their jobs. In SIA, staffs are regularly appraised for their performance and potential. Furthermore, high- flyers are identified and given opportunity to learn and grow. This make them to feel valued, thus, motivated to work harder. Basically, theory of motivation can be divided into two parts. First, the content theories of motivation which identify the motives for our behavior and second is the process theories of motivation which explain the reasons why we are motivated to act in certain way. For the content theories of motivation, by referring to the four drive theory, SIA staffs are motivated to join SIA, to perform their job very well and to achieve the company goals due to their drive to acquire, drive to learn and drive to bond. SIA lets its staffs to deal with customers on a one-to-one basis. By dealing with different type of customers in different circumstances, they will be able to gain a lot of experiences, thus, meet their drive to acquire. They will also be able to satisfy their drive to learn in SIA since in SIA, training is not a `one time affair'. In meeting customers increasing expectation, SIA provides four training centers within the organization. These centers offer a wide range of educational programs whether in classroom, on the job or through full scale simulations. On top of that, SIA also could meet ones drive to bond that is form relationship and social commitment. SIA is a large company with more than 28000 staffs which located all over the world and comes from different background. This enables its staffs to mix around and work together in giving their best service to customers. All these drive motivate them to remain in SIA and perform well. For the process theories of motivation, expectancy theory can be applied in SIA context in explaining the reason why its staffs are motivated to do their job very well. This theory says that motivation depends on how much you like or want something and how likely you think you are able to get it. In SIA, its staffs believe their efforts will increase their performance which then will be recognized and rewarded by SIA. And most of the rewards are valued and liked by these staffs which include increased pay, increased position and the annual `Deputy Chairman's Award'. Therefore, they are always motivated to work towards SIA goal. Apart from that, referring to goal-setting theory, specific goal lead to higher level of motivation and performance. SIA fundamental mission or goal is clear to its entire staff which is to provide high quality service to their customers. This is why its staffs are always on the right track. Apart from that, SIA also motivate its staffs through job design. According to Herzberg's motivator-hygiene theory, job design can affect staffs' satisfaction or dissatisfaction and in turn affect their motivation. SIA does job rotation whereby there is frequent rotation amongst top positions in the organization. As a result, there is management team with great and shared understanding of the `big picture' of the organization and with the commitment to do what is best for customers and the business as a whole. It also uses the job enrichment strategy where it establishes client relationship and put the staffs in direct contact with clients. Last but not least, SIA motivates its staffs through training and investment. For example, SIA undertakes a teamwork project. The objective of this project is to develop specific skills associated with effective cross-functional working across the airline's Flight Operation, Cabin Crew, Engineering and Airport Management department and to avoid `silo' mentality within the organization which personnel in one department take little consideration for the requirement of other departments.

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CHAPTER 3:

ANALYSIS

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SINGAPORE AIRLINE’S PESTEL ANALYSIS

SINGAPORE Airlines Ltd operates in the global environment with continuous expose to risk and uncertainty. To better assess how the micro-environment influence and affect SIA, PESTEL analysis is used as a method of environment scanning to provide an overview to better address the future directive the company.

PESTEL ANALYSIS

a.Politics/Legal

i. Increase in recurring safety lapses and terrorist threats led to tightening of aviation regulations resulting in higher compliance cost. ii. The deregulation of airline industry led to lower barriers of entry. This resulted in emerging low frills budget airlines competition and differentiation in pricing models. iii. Changes in the international political landscape has aroused political tension among the state-owned airlines which compete for growth and market share. In some cases a restriction in no sky policy.

b. Economic

iv. Bargaining power of buyers increased as more substitutes are available. v. Competitive in pricing strategies due to stiff competition. vi. Changes in Air tariffs and taxes coupled with high fuel cost affected the performance of airline industry. vii. Uncertainty in economic climate and weakening of major currencies against the strengthening of Singapore dollars resulted in high operating cost and lower margins.

c. Social/Environment

viii. Changes in propensity to spend based on wages and cultures. ix. Emerging markets from the new rich “China and India” x. Demography shift to more younger and well-travelled travellers who have more disposable income to spend on luxury travels.

d. Technology

xi. The adoption of bigger and more sophisticated energy aircrafts such as A380, Boeing 787 by major airlines resulted in stiff competition. xii. There are better in-flight technology enhancements to address customers’ needs. xiii. The advancement of IT technology leads to 24/7 e-commerce services which better serve the customers efficiently. xiv. Availability of other mode of transports such as the high speed rail created alternatives for travelers.

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SWOT ANALYSIS

e. Strength

xv. SIA offers premier flying experiences providing world class customer service.xvi. SIA provides efficient in-flight services through constant enhancement in technology.xvii. Creation of “Singapore girls” as a sustainable xviii. SIA has won the World’s Best Airline award from Condé Nast Traveler 21 out of the 22 times. ( SIA Official website )xix. Attractiveness to premium customers for its young fleet aircrafts, maintaining a very young fleet of aircrafts

f. Weakness

xx. SIA focused fully on mainstream advertisement unlike Air Asia which taps on the Online Advertising.xxi. The national carrier tends to focus on the product enhancement rather seeking what customers actually want.xxii. SIA is relatively slow to change in adopting new concepts.xxiii. The national carrier is not responsive to customer’s feedback.

g. Opportunities

xxiv. There is a booming market for travel industry.xxv. Differentiated itself using the strong brand image. xxvi. Sophisticated air freight services and good maintenance team on its airplanes increase credibility.xxvii. Travelers are more concerns in relation to safety in choosing public traveling methods. (US terrorist / Russia air crash)xxviii. SIA adopts new Technology and constantly seeks alternate energy thus living up to its a social responsibility

h. Threats

xxix. Fluctuations in foreign currencies and rising oil price and unpredictable weather climate have impacted the performance of the organization. xxx. Economic stability across the regions has affected the profitability of SIA. xxxi. There are other cost effective alternative transportation means such as train, coach, budget airlines etc.xxxii. Deregulation of the airline industries resulted in the low barriers of entry xxxiii. IT Technology such as online/phone conference calls, to certain degree, possibly reduce the needs of business travelers to physically fly out.

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MAJOR MARKETING MIX AFFECTING SIA

To address whether the needs of the customers and company objectives are met, the crucial marketing mix are addressed. i. Product – Singapore airline is a service industry that does product differentiation from others through its 2 to 4 classes (Suite, First Class, Business and Economy classes) with its Krisflyer loyalty membership, in flight entertainment, fast check in and limousine services and lounge usage services.However, SIA failed to engage what customers actually want and seek their feedback before enhancing their products.

j. Promotion – Singapore Airlines promotes itself through mainly mainstream media like television ads for awareness and major newspapers for its promotions, as it believe that its targeted audiences are mostly less social online savvy.SIA will lose in touch with the younger generations who are mostly IT savvy. k. Pricing – Singapore airlines provides pricing discrimination for its different class of passengers, with the economy class paying a very small price as compare to the First Class pricing through justification based on its premium services, specialised passenger perks and treatment. This will result in complex pricing models suitable for different classes of targeted segments.

Extended marketing mix for Service industry

l.People – One of the strong points of Singapore Airline is their world famous hospitality service by its aircrews especially strong branding with its “Singapore girls” image. SIA needs to constantly provide excellent service in order to live up to its brand image.

m. Physical Evidence- The brand emerged even strongly especially backed by strong endorsement and recognition from leading travel industries and magazines for it excellent service. This raises the service level expectations from its customers.

n. Process- The SIA excellent delivery of service process on-board translates customers’ payment into value and utility through ensuring safety and comfort of its customers at all times. SIA constantly needs to enhance its processes to meet the rising expectations of its customers.

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MARKETING STRATEGY OF SINGAPORE AIRLINES

SEGMENTATION

This segmentation is to identify the groups of customers that are relevant to Singapore Airlines to ensure the product or service serve their needs.With continuous globalization coupled with growing of international trades and blooming tourism, the world has become smaller and the pace of lives has quickened. Time-efficient transportation has become in huge demand, that’s where air travel business comes in and play a critical role to fulfill the demanding needs to travel across the globe in a shortest time possible.Singapore Airlines attempts to segment the market mainly by adopting the base of psychographic, behavioral and demographic segmentation. By using psychographic, demographic and behavioral segmentation filters, especially consumers’ concern level of socio economic status, lifestyle and benefits, loyalty status, to divide the whole air travel market into segments.

TARGET SEGMENT OF SINGAPORE AIRLINESDividing the market into different segmentations, Singapore airlines then decided to brand itself as a premier flight carrier who puts its focus on corporate business, premium travelers who are socioeconomic status concerned.Not only aiming for high end of market, Singapore airlines never forget to cater the leisure travelers who are willing to pay higher price for better in-flight service and safety, or who simply enjoy associated with the premier and glamorous brand name – Singapore Airlines. By adapting a differentiated segmentation approach, SIA keeps both its premium and economy travelers satisfied. This gives Singapore Airline a more complete market coverage.

POSITIONING

Based on the above segmentation, Singapore Airlines will emphasis on their competitive advantages and position itself as a * premium priced carrier * with good in-flight service and * innovative with many “first time” services * high emphasis on flight safety.

This can be seen from their taglines and slogans like “With in-flight service that even other airlines talk about”, “The Singapore Girl, a great way to fly” “A Class Beyond First”

Within this main positioning Singapore Airlines then positions itself to cater for the differentiated segmentation that exists in this market and its diverse customer base

For premium travelers Singapore Airlines has introduced a host of perks that appeal to this category of customers who are willing to pay to travel in comfort and class. This includes the * Sky suites – bedroom concepts positioned beyond first class * Fully reclining business class seats * Special check in concierge for first and beyond classesFor its vital economy (coach) class travelers Singapore Airlines watches closely to ensure this segment of more price sensitive travelers are kept happy as well by

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* Larger leg rooms in economy * Quality on-demand in-flight entertainment that other airlines talk about * Enticing Krisflyer programme, offering more perks as you fly more often and jump the tiers by flying with Singapore Airlines more and more

For its corporate business travelers – Business and Economy * It appeals to companies by granting volume pricing for high volume corporate travel to meet corporate needs for competitive pricing and priority booking. * Attract employees of these corporate customers by frequent flyer cards.

BRAND LOYALTY

Due to the very good positioning and “first in market innovations” and excellent in-flight services Singapore Airlines has cultivated a brand loyalty that very few other airlines can enjoy. This is witnessed by the numerous awards given by many organisations to Singapore Airlines. (Singapore Airlines annual report 2011, 2011) This has been its strength. However it has been increasingly hard to maintain this brand loyalty due to accelerating expectation from its customers.

MARKETING CHANNELSThrough positioning and cultivated brand loyalty, Singapore Airlines will carry out its marketing strategy for the various targeted segments via different marketing channels which is shown below.

Print media - news papers / mass appeal Print media - specialty magazines / targeted On Air - TV & Radio Direct emailing Direct contact B to B Frequent flyer programme database Travel agents Internet - SQ website Internet - Social networking (You tube and Facebook) Internet advertisements on websites

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CHAPTER 4:

RECOMMENDATIONS

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RECOMMENDATION TO ENHANCE POSITIONING APPROACH

The above marketing approach is not without risks as evidenced from the PEST and SWOT analysis.Singapore Airlines faces challenges from different areas constantly, not only from the intense competition of rivals, but the challenge of enhancing its tangible and intangible product and services. In addition it faces challenges in the external environment as well. 1) In the lucrative premium priced traveler segment where Singapore Airlines is entrenched, more and more 4 – 5 star airlines are trying to gain bigger market share. Singapore Airlines has led this segment in many ways, with many “first to market” ideas. However this edge is continually eroded. Competitor airlines like Emirates have now over taken Singapore Airlines by flying more A380s; Turkish Airlines exceeded Singapore Airlines by having the widest business class bed; Oman Airlines exceeded Singapore Airlines by having the longest. (Shashank Nigam, 2011). To overcome this, Singapore Airlines has to continually differentiate itself by “out innovating” its followers. Innovations needed to be carefully thought through and the airline needs to shake off its well known “aloof image” and listen to what its customers are saying. It needs to take into account of the needs and wants of the customers to minimize “marketing / product” failures.The “beyond first” suites concept has demonstrated the lack of consultation. (Shashank Nigam, 2009). In another recent case there has been widespread anger and frustration at the revamped website portal of Singapore Airlines, with internet discussion groups full of angry loyal customers, some of whom moving to other airlines (Mark Caswel, July 2011, Business traveler website). Singapore Airlines also recognized that there was also a necessity to reinforce the “Singapore Girl” image which it identified as its core “sustainable brand differentiation” icon. (Shashank Nigam, 2011).

2) Budget travel – the other end of the market. Globalization is an unstoppable trend and the demand of air travel has increased tremendously with it. Budget airlines has been a common norm in Europe and America for many years but has never reached the shores of Singapore to be a threat to Singapore Airlines. With the opening of “free skies” came the birth of successful Asian budget airlines like Air Asia and Jetstar. Along with this came competition. This first started as an “insignificant threat”, serving a segment Singapore Airlines had no interest in and was not positioned to serve. Times have changed the budget airlines have grown and more importantly their services are “not so budget anymore”. Some of the planes they fly are now newer than those in Singapore airlines fleet – meaning safety and fuel efficiency. By keeping a budget fare, with good “not-so-budget” services, budget airlines have become a very attractive value proposition competing for full service carrier’s customers. One significant example of the effect of this is seen in the Malaysian airline scene where Air Asia has totally eroded away Malaysian Airline System market. Singapore Airlines has recognized this threat to its economy segment, albeit it slowly. It has now come out with a new brand “SIA-X”, announced on 25 May 2011 to serve the medium and long haul sectors to tap this budget segment of the market. This will offer an alternative option for consumers compared to Air Asia and Jetstar. This also differentiates the low price budget segment from its economy class segment, thereby possibly reducing the pricing pressure on its

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economy class. SIA needs to consistently maintains its service level and explore other brand extension if possible.

Budget PricingPremier PricingLow perceived quality/serviceHigh perceived quality/serviceSIA-X

Brand Re-positioning Strategies3) Singapore Airlines has invested their resources to make more profitable product rather than creating rapport with their customers. Failure to create that bonding especially with their existing customers will derail them from value added information which will be crucial in their marketing strategy. (Brandconsultantasia’s Blog)

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CHAPTER 5:

CONCLUSION

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CONCLUSION

This report evaluates and concludes that Singapore Airlines as the leading airline in the world has the cutting edge to reinvent itself by developing into unchartered skies, especially the lucrative budget segments of the market and also to command a significant premium through its “Singapore Girl” quality services and embracing new mediums like social networks to sustain its brand equities premium differentiate from other competitive rivals by understanding the needs and wants of its loyal customers and reminding them, Singapore Airlines is “a great way to fly”.

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REFERENCES

1. http://www.referenceforbusiness.com/history2/38/Singapore-Airlines-Ltd.html 2. http://www.staralliance.com/en/about/airlines/singapore-airlines/ 3. http://www.econlib.org/library/Enc/AirlineDeregulation.html 4. http://www.flyertalk.com/the-gate/blog/5483-the-end-of-an-era-at-singapore-airlines.html 5. http://www.iata.org/pressroom/airlines-international/december-2009/pages/04.aspx 6. http://www.singaporeair.com/en_UK/about-us/sia-history/sia-awards/ 7. http://boeing.com/news/releases/2008/q2/080403a_nr.html 8. http://www.staralliance.com/en/about/airlines/singapore-airlines

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