STRATEGIC GLOBAL

MARKETING

SCHOOL OF BUSINESS AND LAW

Abstract:
The purpose of this study is to discuss the global marketing strategies of Air Asia.
This study starts with the brief background of Air Asia. The main aim of this study
is to evaluating the marketing strategies of Air Asia. To evaluate overall
marketing strategies, the author discussed about Air Asias marketing mix and
expansion strategy, the pros and cons of these strategies of Air Asia. To find out
the effectiveness of Air Asias global marketing strategies, the author compared
air Asias marketing strategies with its main competitor Malaysian airlines
marketing strategies. After finding the result from the discussion, the author
tried to find out the new market for air Asia and proposed a marketing plan. At
the end of the study, the author had given some recommendations for Air Asia to
improve the strategies to go internationally.

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Table of Contents
1.

Introduction:.................................................................................................... 3
1.1

2.

Background of the company:....................................................................3

1.1.1

Vision of Air Asia:................................................................................3

1.1.2

Mission of Air Asia:..............................................................................3

Evaluating the Strategies of Air Asia:..............................................................4

2.1

Marketing Strategies:................................................................................4

2.1.1

Marketing Strategies which are taken by Air Asia:..............................4

2.1.2

Marketing Mix:.................................................................................... 5

2.1.3

Marketing Mix of Air Asia:...................................................................5

2.1.4

Pros of Air Asias marketing strategies:..............................................5

2.1.5

Cons of Air Asias Marketing strategies:..............................................6

2.2

Globally Expansion Strategy of Air Asia:...................................................6

2.2.1

Pros of Expansion Strategy:................................................................6

2.2.2

Cons of Expansion Strategy:...............................................................7

3. Actions & Decisions would make, if author were appointed as the CEO of Air
Asia:....................................................................................................................... 7
4.

Competitors of Air Asia.................................................................................... 8

4.1

Porters Five forces analysis.......................................................................8

4.1.1

Barging Power of Suppliers:................................................................8

4.1.2

Barging Power of Buyers:....................................................................9

4.1.3

Threat of New Entry:...........................................................................9

4.1.4

Threat of Substitute:...........................................................................9

4.1.5

Competitive revelry:............................................................................9

4.2

Malaysia Airlines:...................................................................................... 9

4.2.1

Marketing Strategies of Malaysia Airlines:..........................................9

4.3 Compare & Contrast of Air Asias strategies with Malaysia Airlines
Strategies:........................................................................................................ 10
5.

Possible New Market...................................................................................... 11

5.1European Market:........................................................................................ 11
5.2 American Market:....................................................................................... 11
5.3 New Marketing Plan.................................................................................... 11

6.

Conclusion..................................................................................................... 12
6.1 Recommendations:..................................................................................... 12

7.

References..................................................................................................... 13

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1. Introduction:
Airlines industry is one of the biggest industries in the world. The
marketing competition within the airlines industry is increasing day by
day. Many airlines are coming in the market with innovative ideas of
marketing to make a best place in the competition. Lots of marketing
materials are related with airlines industry. The airlines that are using
those materials innovatively are getting success in the market.
Air Asia is one of the up growing airlines in the world. Air Asia came in the
airlines industry with some innovative ideas which leaded them to get a
good market. In this study, the author analysed global marketing
strategies adopted by air Asia with the help of a case study on Air Asia
researched by Professor Thomas Lawton and Jonathon Doh in 2010.
In this study, the author discussed and critically analyzed about the
present marketing strategies which are taken by Air Asia. The author also
talked about the action and decision should be made in present strategies.
After analyzing those marketing strategies the author discussed about
competitors of air Asia in market and compared Air Asias strategy with
main competitors airlines marketing strategy. To full fill the aim of this
study, the author tried to identify the new market for air Asia.

1.1 Background of the company:

Air Asia is a best low cost airline in the world. Air Asia established in 2001
with the vision to be the largest low cost airlines and to serving people
who are underserved because of high fare. Currently air Asia is serving in
20 countries. Air Asia made low cost fare possible with innovative
solutions. Air Asia has five associate company, they are: Thai air Asia, air
Asia X, Indonesia air Asia, air Asia Japan and Philippines air Asia (Air Asia ,
2012).
1.1.1

Vision of Air Asia:

To be the largest low-cost airline in Asia and serving the three billion
people who are presently underserved by high fares and poor connectivity
(Air Asia , 2012).
1.1.2

Mission of Air Asia:

To be the finest company to work for whereby employees are taken

as part of a large family,

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To make a internationally recognized ASEAN brand,

To achieve the lowest cost so that everybody can fly with Air Asia,

Maintain the maximum class product, implementation of technology

to cut cost and improve service levels (Air Asia , 2012).

2. Evaluating the Strategies of Air

Asia:
2.1 Marketing Strategies:
Ferrell et al (2002, p.1) indicates that Marketing strategy means different
things to different business organization. Every business organization
needs effective marketing plane and a marketing strategy which focused
onto achieves its goals and objectives and fulfilling customers needs and
wants. Marketing strategy means applying research plans which should
involve a series of examined steps and all of the steps should be used
which are given by research on marketing (proctor, 2003).

2.1.1
Marketing Strategies which are taken by Air
Asia:
Air Asia is adopting an effect marketing strategies. Air Asia is providing
low fare facilities for customers. From case study of Lawton & Dos (2010)
the author found some marketing strategies which leaded air Asia to the
success. The marketing strategies of Air Asia are discussed below:
1. Low Fare: Air Asias main marketing strategy is making available
low cost ticket for travellers. This is very effective strategy taken by
air Asia. This strategy helps air Asia to get a huge market. The cost
of ticket of air Asia is sometimes lower than other transport cost.
According to Lawton & Dos (2008) Air Asia was able to get cost per
available seat kilometre. Air was worlds best low cost airlines in
2007, 2009, 2011 & 2012 (Air Asia , 2012). Air Asia is providing
ticket to the traveller in very lowest cost within short distance
journey, the price is sometimes half than travelling by car or other
transport.
2. Internet Booking: Technology one of the effective marketing
element. Air Asia is using this element perfectly. Air Asia allowed
ticketless travel through internet booking to maintain its simplicity.
Through this strategy air Asia is also reducing the distribution cost
(Lawton & Doh, 2010). On the other hand, this strategy helps
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travellers to avoid the hassle of getting ticket from distribution

centre, as a result, customers are getting low cost ticket due to low
expense of air Asias distribution.
3. Initially Focused on domestic market: Air Asia initially focused
on domestic market to get the strong market. To compete with the
strong competitors such as Malaysian airlines, air Asia started to
offer customer low cost air ticket. Lawton & Doh (2010) state thatat the starting of air Asia, customers were offered very low cost
ticket from Kuala lumpur to Penang. The cost was about 39 ringgits
where bus travel cost 40 ringgits and by car about 80 ringgits, as a
result, travelling by air increased that time. People travelled by air
more than other transport. It was effective strategy for air Asia to
attract customer initially.
4. Increasing number of fleet: The fleet increasing level of Air Asia
is amazing. Air Asia first started with 2 aircrafts in 2001, by 2007 air
Asia managed to have 54 aircraft. In 2010 air Asia had more than 70
planes. Air Asia is planning to have about 180 aircraft by 2014
(Goldman sachs as collected from Lawton & Doh, 2010). This
statistic shows that, air Asia is investing their most of the money on
aircraft and the hidden plan of air Asia is to be the biggest airline in
the world.

2.1.2

Marketing Mix:

The marketing Mix is the set of convenient, strategic marketing tools that the business
organization mix together to create the preferred response in the target market. The tools can
be accumulated into four groups. The groups of variables are: Product, Price, Place and
Promotion (Kotler & Armstrong, 2006).

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2.1.3

Marketing Mix of Air Asia:

P
r
l
o
i
a
d
c
m
u
e
o
c
t
t
i
s
o
n

Source: (Lawton and Doh, 2010)

2.1.4

Pros of Air Asias marketing strategies:

After discussing the marketing strategies of Air Asia, the author of this
study found some pros of air Asias marketing strategy. They are given
bellow:

Effective Low fare strategy: Low fare strategy of air Asia was
really very effective. Air Asia became best low cost airlines in 2009,
2010, 2011 and 2012. This strategy helped air Asia to attract
customer.
Made strong marketing base: Through the low fare marketing
strategy, air Asia made a strong base of marketing.
Customer Loyalty: Air Asia focused more on customer loyalty and
air Asia is successful in this case because they are getting many
permanent customers. Air Asia also has a loyalty programme called
BIG. In every transaction with air Asia, travellers get points and it
influences them to travel with air Asia (Air Asia , 2012).
Going to be the biggest airlines: One of the most important
strategies of air Asia is to increase number of aircraft. By 2014, air
Asia is planning to get over 140 aircraft in their fleet. It is helping air
Asia to be the biggest airline in the world.
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 Reduce expenses: Air Asia is providing online booking facilities,

this strategy helps customer to save money and avoid hassle. For
air Asia, this strategy is helping to reduce the operational cost.

2.1.5

Cons of Air Asias Marketing strategies:

Low profit: As air Asia is offering very low cost ticket, they are
losing the profits. Domestic air ticket is sometimes less than bus and
car transport cost, as a result air Asia is getting very low profit which
is not a very good for an business organization.
Large amount of risk: Air Asia is not serving in the most of the
countries in the world as renowned airlines do. Although air Asia
started its international journey in 2004 but they has lots of aircraft
in the fleet. From study of Lawton & Doh (2008), the author found
that, by 2014 air Asia is going to increase its fleet to 140. This is a
big risk of investment, as air Asia still not serving enough countries.
Difficult to maintain standard: Air Asia is earning very low profit
compare to the services. If they continue to serve low cost ticket
and gain low profit, it will be difficult for air Asia to maintain the
good standard.

2.2 Globally Expansion Strategy of Air Asia:

To expand sales, acquire resources and minimize the risks are three
factors which may encourage an organization to expand the business
(Daniel et al, 2004). Expansion strategies of Air Asia are shown below:
1. Cross Border Market: Air Asia is adopting a creative way to
expand its market by cross border strategy. Air Asia has targeted
mainly the neighbour countries in this case.
2. Going International: Although, air Asia started its international
journey after few years of establishing but the trend of going
international is good (Lawton & Doh, 2008).
3. Joint Venture: Air Asia went to joint venture with some relative
countries airlines, such as: Indonesia air Asia, Thai air Asia, air Asia
X.

2.2.1

Pros of Expansion Strategy:

1. Cross border strategy helped Air Asia to star business in

international market.
2. The joint venture strength the capability and mutual relation with
associate airlines.
3. To maximize the profit, joint venture was the perfect strategic step
for Air Asia.

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2.2.2

Cons of Expansion Strategy:

1. Sometimes it is difficult to maintain the relationship in joint venture.

2. Joint venture is a big hinders to make quick strategic decisions.
3. In joint venture, a party need to take maximum responsibilities,
which can be burden for one side.

3. Actions & Decisions would make, if

author were appointed as the CEO of Air
Asia:
As a CEO of air Asia, the author would take some action on air Asias
marketing strategies. The changes and reasons of proposed changes are
given below:
1. Increase international destinations: The first changes the
author would do as a CEO of air Asia in increasing the number of
international destination. From the case study, we came to know
that, air Asia is in very strong position in domestic market. On the
other hand, air Asia is not serving enough international destinations
in compare with its ability. Air Asia has more than enough aircraft in
their fleet to cover highest international destination, so the author
think that Air Asia should increase its destinations to American,
African and European countries.
2. Join with any alliances: Air alliance is an agreement among
airlines which is meant to do business and share business facilities
together. The purpose of air alliance are to share the business
operational cost through sharing distribution centre, check in staff,
boarding staff and most importantly codes sharing facilities
(Kleymann & Seristo, 2004). There are lots of facilities of alliances.
Alliances can help an airline to go internationally through different
facilities. As every airline main aim should be go internationally, air
Asia should joint any alliances. There are three largest alliances in
the world, they are: Star alliance, one world alliance and sky team
alliance. As a CEO, the author would prefer to join with star alliance
as it is the biggest air alliance in the world; Star alliance has 27
prospective members and serving in 193 countries (Star alliance,
2012). On the other hand, one world has only 12 member airlines
and serving 150 countries (One World, 2012) and Sky team has got
only 18 member airlines (SkyTeam, 2012). There are some benefits
of joining the biggest alliance. If air Asia joins to star alliance they
will get help to go international easily.
3. Internet facilities for Travellers: Technological uses in business
help to attract more customers (Mills & Law, 2004). As a CEO of air
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Asia, the author would recommend to provide customers mobile

application, online booking and other activities online to help
travellers to know current situation of ticket and other related
information. It will help the customer to be with air Asia.
4. Advertise Internationally: Air Asia is very successful
domestically, as it was offering low cost ticket to the customer. But
if air Asia wants to get a good international market, beside low cost
air Asia will need to focus on advertisement. In this case, air Asia
can use YouTube, facebook, twitter and other social site, as web is
very effective for international advertisement (Tuten, 2008).
5. Increase Quality Of Customer Service: Good Customer service
is the key factor of getting and keeping customer with the business
(Blacharski, 2006). As air Asia is an up growing airline and they are
going internationally, as a CEO of air Asia, the author would like to
increase the quality of customer service which will help to keep
customers coming to the air Asia.

4.

Competitors of Air Asia

Lawton and Doh (2010) talked about the competitors of Air Asia in some
different aspect. Such as, Japan airlines and All Nippon airways as low fare
airlines in Japan, Malaysian airline as a low cost airline in Malaysia,
Singapore airlines, jet airlines, Thai airways, Nok air, etc. According to
Lawton and Doh (2010) the main competitor of air Asia is air Malaysia.

4.1 Porters Five forces analysis

CB
m
p
t
v
r
v
l
(B
i
h

ao

e
i

e
e
e
r

y
a

g
)

Source: (Thompson & Strickland, 2007)

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4.1.1
Barging Power of Suppliers:
Fuel and aircraft companies are main suppliers of airlines industry. The
aircraft and fuel companies are doing completion among themselves; as a
result the barging power of suppliers is low in this case (Lawton & Doh,
2010).
4.1.2
Barging Power of Buyers:
As there are lots of low fare airlines are in the market, travellers are
looking for better service and they can change the choice of airlines
without any hesitation. So barging power of buyers is high for Air Asia
(Lawton & Doh, 2010).
4.1.3
Threat of New Entry:
Low fare strategy is very successful in the airlines market. Most of the
airlines are now adopting this strategy. Many new companies are
interested to the airlines business as people are travelling frequently in
airlines instead of other transport because of low fare. So, threat of new
entry in this industry is high (Lawton & Doh, 2010).
4.1.4
Threat of Substitute:
Threat of substitute is low for Air Asia, as travelling by car for long
distance is expensive than airline ticket. Even the cost of travelling by
other transportations for same distance is same (Lawton & Doh, 2010).
4.1.5
Competitive revelry:
Competition in airlines industry is very high, if we can see closer that, if an
airline low its ticket price other airlines also do the same things, even for
sales promotion and discount same attitude have seen.

4.2 Malaysia Airlines:

Malaysia airlines started in the golden age of travel. Malaysia airlines
came through a joint proposal of ocean Steamship Company, imperial
airways and straits steamship of Singapore. They proposed to the colonial
straits government to start an air service between Singapore and Penang
and the result became incorporation of Malayan airways in 1937. Malaysia
is serving over 35,000 passengers in a single day to more than 80
destinations (Malaysia airlines, n.d.).

4.2.1

Marketing Strategies of Malaysia Airlines:

1. Low Fare Airlines: According to Lawton and Doh (2010) as air Asia
introduced low cost air in Malaysia; suddenly Malaysian airlines

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consider this business model and gave low fare air ticket to the
travellers.
2. Sales Promotion: Malaysian airlines focus more on sales promotion
rather than advertising (Malaysia Airlines , 2011). According to Lawton
and Doh (2010) Malaysian airlines started giving discount on limited
seat when air Asia was giving low cost fare to the travellers.
3. Alliance: Malaysia airline is going to join one world, one of the largest
alliances of the world. Through this step, Malaysia airlines with get
benefits of huge network, increasing traffic via combined network and
infrastructure. Moreover, through the alliance Malaysia air will get
respective geographical strength (Malaysia Airlines , 2011). On the
other hand, alliance will do advertising on behalf of Malaysia Air which
is the greatest benefits for Malaysia air.
4. Branded Customer Experience: According to Malaysia airlines
(2011) customers are Malaysia airs main priority. Malaysia Air will
increase customers satisfactions through their pre flight, during flight
and post flight. Moreover, Malaysia airlines will invest more money on
new tools and process to keep brand promise.

4.3 Compare & Contrast of Air Asias strategies

with Malaysia Airlines Strategies:
Air Asia and Malaysia air are Malaysian based airlines. Malaysia Airline is
the national and senior airlines of Malaysia but compare to Malaysia
airlines; air Asia became more successful in market. If we compare the
marketing strategies of both airlines, we can find some similarity and
dissimilarity of strategies which are taken by air Asia and Malaysia air.
The author found some similarity in low cost fare strategies. The low cost
strategies were first taken by air Asia in domestic flight and following this
model Malaysia air also committed low fare policy, although Malaysia air
gave it in difference way. They gave discount on ticket. Overall, the
strategy was more successful in case of air Asia as it helped air Asia to
make good place in competitive market.
Alliance is the way to go internationally easily and for global marketing.
Air Asia is not with any alliance, on the other hand, Malaysian airline is
joining with one world alliance one of the biggest air alliance of the world.
Alliance helps an airline to promote its name globally. Although air Asia
has a strong domestic and some international market but Malaysian airline
is successful to manage global market.

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Customer satisfaction is one of the key subjects in marketing. All

marketing activities happen for customer satisfaction. Organizations take
many strategies to satisfy their customers. Air Asia and Malaysia air are
taking lots of strategies to make customer happy. Air Asia has very big
strategy which is low fare for all but to make low ticket cost air Asia had to
face many difficulties and ultimately it affects on customer satisfaction. So
it is clear that, air Asias strategy to make customer happy did not always
work right. On the other hand, at the starting of competition with air Asia,
Malaysian airline was not able to satisfy its customers but gradually
Malaysia air overcame this situation.

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5. Possible New Market

Air Asia has the great possibility to be the biggest airlines in the market.
Initially air Asia concentrated on domestic market and was successful.
After that, air Asia focused on relative countries such as, Thailand,
Singapore, India, china etc. But still air Asia could not make a huge
market, some important countries are missing. Below the author showed
some new market for air Asia:

5.1European Market:

Europe is the biggest market for airlines.

Lots of travellers are visiting Europe every year and the number is
increasing day by day. On the other hand, huge numbers of travellers in
every year are visiting Asia from Europe. Air Asia should use this
opportunity properly. All of the destinations of air Asia are based on Asia
and Australia. No country in Europe is served by air Asia. To get a good
market with low fare, air Asia should target UK, France, Germany, Italy and
Spain initially.

5.2 American Market: America can be possible good market for

air Asia. The number of travellers is very good in America. The low fare
strategy would be successful in these continents. Initially, air Asia can
target USA, Canada, Mexico, Brazil and Portugal. The economical condition
and the amount of population in those countries are good. It would be
very wise decision for air Asia to start doing flight in those countries.

5.3 New Marketing Plan

After study on air Asias marketing strategies, the author would like to
propose a new marketing plan for air Asia which can be beneficial for air
Asia to go internationally.

By 2013, air Asia need to join any alliances, the author would
recommend star, sky team or one world in the selection. By joining
any alliance, air Asia will get a global network and it will helps in
advertising the brand and expanding globally.
By 2014, air Asia should join in new market, initially air Asia has to
take UK, Spain, Italy, USA and Canada in accounts.
By 2015, Air Asia should focus on other countries in Europe and
America.
Customer satisfaction is very important in airlines industry, in this
case customers pre flight, during flight and post flight service
should be quality service.

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Air Asia already made a good domestic market with low fare
strategy, now its time to give quality service to the customer
rather than low fare ticket.
In upcoming years, air Asia need to increase sales promotion rather
than low price ticket, such as discount for regular customer or get
three for two etc.

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6. Conclusion
Air Asia is a possible biggest airline in future. It has a great possibility to
enjoy a profitable international market. Air Asia is mainly an Asia continent
based airline. It established its market through low fare strategy. This
strategy is very successful domestically and internationally.
In this study, the author discussed about Air Asias marketing strategy
according to the case study which is researched by Lawton and Doh
(2010) and other resources. The author found some marketing strategies
which are adopted by Air Asia. As a CEO of Air Asia the author tried to
make some decision on Air Asias marketing strategies. The author
discussed Air Asias competitors and found that Malaysia Airlines is the
main competitor of air Asia and compare the strategies between two
airlines. To full fill the requirements of the study the author proposed a
new marketing plan for air Asia which can help Air Asia to explore
international market.

6.1 Recommendations:
After discussion on Air Asias marketing strategies, the author found some
strength and weakness of air Asias marketing strategies. If air Asia can fix
it weakness in marketing strategies than it would be easy for air Asia to
make a good position in global market. The author would like give some
recommendation on Air Asias overall marketing strategies which can help
Air Asia to overcome the weakness of air Asias marketing strategies.

Air Asia should join any alliance as soon as possible because joining
any air alliances will help air Asia to go internationally. Firstly,
alliance will help Air Asia to enjoy a global network, partnership with
other airlines through alliance can helps to make new market in
Europe and America. Secondly, alliance can help Air Asia to do
advertisement globally, the alliances always represent its member
airlines name, and so in this process air Asia can get the opportunity
to do advertising globally. Thirdly, through sharing distribution
centre, check in, boarding staff and computer system Air Asia can
reduce the operational cost. Last but not least, code sharing is the
main facilities of alliances. Through code sharing, Air Asia can
reduce the risk of lose in total.
Air Asia should focus more on service standard rather than low fare
strategy. We have to agree that, low fare strategy gave Air Asia a

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strong marketing base but to go internationally air Asia should

increase the quality of services.
Air Asia is covering mainly Asia Continent, to have a international
market Air Asia has to look for the new markets. In this case, Air
Asia should firstly concentrate on Europe and America.

7. References
1. Air Asia (2012) Corporate Profile. [Online] Available at:
http://www.airasia.com/ot/en/corporate/corporateprofile.page?
[Accessed 9 Oct 2012].
2. Blacharski, D (2006) Superior Customer Service. Florida: Atlantic
Phublisher.
3. Daniels, J. D., Radebaugh, L. H. & Sullivan, D. P. (2004) International
Business. 10th ed. New Jersey: Pearson Prentice Hall.
4. ferrell, O., Hartline, M. & Lucas, G (2002) Marketing Strategy. 2nd ed.
London: Thomson Learning.
5. Kleymann, B. & Seristo, H (2004) Managing Strategic Airline
Alliances. Hampshire: Ashgate Publishing.
6. Kotler, P. & Armstrong, G. (2006) Principles of Marketing. 12th ed.
New Jersey: Pearson.
7. Lawton, T. & Doh, J (2010) The Ascendance of Air Asia: Building a
successfull budget airline in Asia. Ontario: Richerd Ivey School of
Business Foundation.
8. Malaysia Airlines (2011) Business Plan: Our Way Forward. [Online]
Available at:
http://www.malaysiaairlines.com/content/dam/mas/master/en/pdf/cor
porate-info/Malaysia%20Airlines%20Business%20Plan.pdf [Accessed
11 Oct 2012].
9. Malaysia airlines, n.d. Our Story. [Online] Available at:
http://www.malaysiaairlines.com/uk/en/corporate-info/our-story.html
[Accessed 11 Oct 2012].
10. Mills, J.E. & Law, R., eds (2004) Handbook of Consumer Behavior,
Tourism, and the Internet. New York : Haworth.

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11. One World (2012) Member Airlines. [Online] Available at:

http://www.oneworld.com/member-airlines/ [Accessed 10 Oct 2012].
12. proctor, T (2003) Essential of Marketing Research. 3rd ed. UK:
Pearson.
13. SkyTeam (2012) SkyTeam Members. [Online] Available at:
http://www.skyteam.com/en/About-us/Our-members/ [Accessed 10
Oct 2012].
14. Star alliance (2012) Travel the world with star alliance. [Online]
Available at: http://www.staralliance.com/en/about/member_airlines/
[Accessed 10 Oct 2012].
15. Thompson, A. A. & Strickland A. J. (2007) Strategic Management:
Concepts and case. 13th ed. New Delhi: Tata McGraw-Hill.

16. Tuten, T.L (2008) Advertising 2.0: Social Media Marketing in a Web
2.0 World. Westport : Greenwood Phublication.

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