Marketing Management: Case Study of Singapore Airlines

Executive summary:

The current study reflects the case of Singapore Airlines (SIA) along with the required measurements for probable new promotional activities. The overall study has been structured into four segments discussing the segmentation strategy, required adopters for innovative promotion, market research strategy and loyalty schemes for successful promotion. At the outset, the study investigates the accuracy of the segmentation strategy followed by the organisation. SIA operates across five different continents covering more than 65 destinations. Although all type of demography avails the services of SIA, majority of the customers have turned out to be working professionals who are either consultant or senior management staffs who travel for business purpose. The adopter categories proposed by Everett Rogers have been considered for supporting the promotion process and it is assumed that SIA needs to identify appropriate adopters for relevant phases during developing promotional policies. Accordingly, a six step marketing research process is recommended to SIA that can be initiated prior to the promotion policy so that the communication activities can be made successful. The report ends with showcasing some of the loyalty schemes that can be followed to ensure desired loyalty from the customers.

Introduction:

The effectiveness of marketing management tactics is crucial behind the success of the contemporary businesses. When it comes to the aviation industry, the accuracy of the adopted marketing strategies would significantly influence the critical success factor of the organisations. In the context of the above scenario the current study has been developed focusing on the case of Singapore Airlines (SIA). SIA is well renowned for its product innovation and service quality that ultimately triggers customers’ satisfaction and loyalty. The study would attempt to focus on the segmentation strategy, promotion strategy, communication campaign and customer relations strategy so that the organisation could further enhance the already popular service quality.

1.0 Segmentation strategy concerning SIA:

SIA follows a rigorous customer segmentation strategy in order to fit in a wide range of customers within the service range provided. Considering the words of Forsyth (2005), the inclusion of more customer groups within the organisational segmentation strategy would help generating increased revenue while ensuring enhanced brand image. The overall segmentation strategy followed by SIA can be classified into five segments that incorporate geographic, age, gender, occupation and purpose of customers.

Geographic segmentation:

Due to the widespread business of SIA, customers of SIA are spread across different geographic locations. SIA service range is distributed to near about 65 international destinations across 35 countries and over 5 different continents. The brand has targeted five major continents to target a large customer base and joint venture with the subsidiary SilkAir being the core of the business operating from Singapore. The capturing of major international routes including Kangaroo route and some in the Asia Pacific regions have helped acquiring more number of customers from the Asia continent (Iata.org, 2014).

Gender segmentation:

In reference to the findings from the recently published report by the organisation, SIA accounts more number of male passengers that female. The report promotes the fact that at least 64.8% of the total passengers are male while 35.2% of the passengers are female. Clearly SIA focuses more on targeting the male passengers particularly the male working professional who travels frequently for work purpose. Wardell (2002) believe that business organisations need to balance the male and female customers so that greater brand image can be promoted.

Age group segmentation:

Majority of the customers (33.8%) of SIA are aging between 36 years to 50 years. The percentage of customers aging 35 and below is found to be approximately 33.8% while the customers aging above 50 account 26.7% of the overall travelling passengers. It seems SIA has been focusing on the mid aged segment specially the working professionals when it comes to demography targeting. Kärcher (2006) acknowledged that although targeting the mid aged segment might optimise the sales volume but in order to remain competitive, aviation industry needs to focus on different age group sections and the respective perceptions as well.   

Occupation wise segmentation:

Focusing on the customers of SIA, it can be found that majority of the customers are working professionals. The recent passenger profile publicly disclosed by the organisation highlights that almost 21.3% customers are professionals/consultants while roughly 20% are middle management professionals and 19% are senior management professionals (Limited, 2014). Majority of these professionals are being targeted with superior services that are offered in business classes while the remaining 40% of the total customers are students, families or non working professionals.  

Purpose based segmentation:

The purpose of the customers remains a significant factor behind SIA’s segmentation strategy. As opined by Yan and Tseng (2012), organisations can develop a specific segmentation strategy based on the purpose of the customers as it would encourage the customers’ visit. A recent statistics promoted by the organisation depicts the fact that leisure, business and a combination of both are the major purposes for the customers. Almost 44.9% of the customers avail the flight services for leisure while 34.3% for business purposes and 8.8% avail the services for both business and leisure. Adding to that, approximately 12% of the customers have other purposes for travelling via air and booking the services of SIA (Iata.org, 2014).    

1.1 Critical success factor behind the segmentation strategy of SIA:

The segmentation policy followed by SIA is believed to be the result of an intense market research activity. Singapore is referred as the gateway between East and West of the world and therefore has served significantly behind the success of SIA. SIA has utilised the effective brand image of SilkAir to boost the globalisation strategy. People across different geographic regions are tempted to avail the series of the SIA due to the positive word of mouth mechanism. As mentioned by Payne and Frow (2006), a positive word of mount is the most effective way of enhancing the organisational brand image.

Apart from the successful geographic segmentation, SIA is quite successful in identifying the most contributing demography. Majority of the customers of SIA are found to be top working professional who are either consultants or senior management staffs of renowned business organisations. SIA targets these kind of professionals and try developing service quality based on the respective perceptions. As a consequence, the brand has managed to experience enhanced customer satisfaction and loyalty over the years.

Although majority of the customers are mid aged working professionals, the organisation makes sure of equal treatment to every single customers in order to promote an effective brand image. Borenstein and Rose (2007) argued that unequal treatment to the customers would promote a negative brand image and can affect the customer satisfaction index. The training module developed for the crew members of SIA ensures the staffs prioritise equal treatment philosophy whether the customer is a working professional or a child or a senior citizen. The crew members are also involved in role playing activities in which the staffs need to visit to places to learn how to serve old personnel as well as tackling infants. Considering all these aspects, it is assumed that the segmentation strategy followed by SIA is quite relevant and has turned out to be a success. The relevant training mechanism is a complementary to the segmentation strategy that ensures continuous customer satisfaction being achieved.

2.0 The work of Everett Rogers in relation to product adopter categories:

Everett Rogers came up with the idea of five adopter categories in the book “Diffusion of Innovations” which can be useful in implementing innovation within a specific work culture. The five factors are supposed to be innovator, early adopters, early majority, late majority and finally laggards. Everett Rogers suggested that the product innovation process can be represented using a S-shaped curve with the new adopters have a tendency to rise till the halfway line and after that the numbers generally decreases (refer to exhibit 1 in appendix).

Innovators:

Everett Rogers proposed that the initial 2.5% of the adopters can be referred as ‘innovators’ that are personnel who are venturesome possess required education to drive innovation (Driver, 2009). The candidates understand and appreciate the concept of innovation and can act as change agents to complement the change management process. Adding to that, innovators possess effective problem solving abilities that can be useful to tackle preliminary problems so that the new product development strategies can be initiated.  

Early adopters:

The next 13.5% of the adopters are referred as the ‘early adopters’ who are supposed to be quite popular and are the social leaders. Larson (2007) cited that early adopters are visionaries who would look for breakthrough ideas so that a competitive advantage can be achieved. The early adopters are generally encouraged by the high reward and high risk factors who aims to adopt new technologies to thrive for competitive advantage.

Early majority:

The immediate next 34% of the adopters are considered as the ‘early majority’. These type of adopters are found to be deliberate and the knowledge of rigorous social contacts complements the product innovation process. The early majority adopters focus more on the evolutionary changes rather than the productivity enhancement of the business firms (Shon et al. 2011).  

Late majority:

The next 34% of the adopters are called as the ‘late majority’ with the lower socio economic status. The adopters are generally a bit traditional and often turn out to be a bit sceptical over a possible change management. Being price sensitive, the late majority would only rely on the proven solutions and would only buy technology from a vendor with reputation.

Laggards:

The final 16% of the adopters are referred as the ‘laggards’ who are unsure of the fact whether technology could improve the organisational productivity. In the words of Morrish and Hamilton (2010), laggards would try blocking the emergence of possible new technologies and would rely on existing mechanism to maintain the status quo.

2.1 Possible promotional strategy that SIA can undertake to target different adopter categories:

Since SIA has been pondering on a new promotional strategy, focusing on the adopters mentioned by Everett Rogers is crucial so that the change management strategy can be successfully implemented while maintaining a certain degree of innovation. The promotional strategy can be comprised of five stages incorporating idea generation, market research, implementation, verification and monitoring.

Idea generation:

The promotion strategy would start with the idea generation stage. In this context, SIA can select the personnel with venturesome attitude from with the organisation who have the capability to enhance the quality of the existing promotional policies with innovative ideas. For instance, SIA provides Kris World entertainment facilities to the customers. Innovators can generate new ideas so that the Kris World facility can further be improved and more customers can be lured to avail the service. 

Market research:

After a new idea being generated, SIA can conduct a rigorous market research activity engaging the employees who have the attitude of early adopters. As mentioned by Anderson (2003), early adopters possess superior knowledge regarding the market happenings and can present rigorous market research reports. By conducting a successful market research activity, SIA would be able to assess the strategies to be competitive in the market.

Implementation:

The responsibility of the implementation process can be given to the personnel who fit the criteria of early majority adopters. Early majority adopters are well aware of the appropriate time, suitable vendor and the target market for implementing the idea (Li and Petrick, 2008). Therefore SIA needs to identify employees with an attitude similar to early majority adopters so that the implementation of the promotional strategy can be made successful.  

Verification:

Once the implementation process is being initiated, a verification process can be conducted in order to make sure required quality standards are being check listed. SIA can identify personnel from within the organisation who have the attitude of late majority so that the bulletproof solutions can be undertaken in troublesome scenarios. As per Sheth and Uslay (2007), late majority adopters are a bit reluctant regarding pricing policy and rely on proven mechanism. By relying on the late majority adopters during verification of the promotional strategies, SIA can expect cross checking the errors so that efficacy of the promotional strategies can be dictated.  

Monitoring:

Deploying the laggards during the monitoring stage would be a viable approach for SIA as the personnel would focus on stability of the adopted promotional strategy. Considering the words of Pakdil and Aydin (2007), laggards are not convinced of frequent organisational change and would rely on the efficacy of the existing mechanism. Therefore SIA needs to identify the laggards from the marketing and public relations departments and engage the personnel in the monitoring of promotional processes so that a certain degree of stability can be achieved during product promotion.  

3.0 Marketing research approaches for SIA regarding launching of a new marketing communication campaign:

Prior to the launch of a new marketing communication campaign, the conduction of an effective marketing research program is recommended to SIA so that the new communication strategy can be made a success. Rust and Chung (2005) criticised that a significant amount of business organisations experience failed promotional strategies due to the absence of an effective market research activity prior to the product promotion process. Considering the current context, SIA can follow a 6-step market research activity as depicted below so that the market needs can be assessed and the promotional strategy can be developed accordingly.

Figure 1: Market research process

 

 

 

 

 

 

 

 

 

 

 

 

(Source: Created by author)

Step 1: Assessing problem statement

At the outset, a specific problem statement is needed to be analysed by the marketing department of SIA or to be precise a specific opportunity is needed to be measured that is yet to be ventured. In the words of Buhalis and Licata (2003), determining an innovative concept is the most significant challenge for marketing professionals as based on the significance of the idea, the success of the market research process could be determined. SIA is already well known for its quality of services. However, the organisation can stress more on the offers and discount oriented schemes in order to retain the loyal customers and at the same time acquiring new customer base.

Step 2: Evaluating research design

Once the research objective is determined, the SIA officials need to ponder over specific approaches and strategies that would be required to conduct the marketing research. Considering the current context, an exploratory research design would be beneficial for SIA as it would help the organisation assessing the recent trend in the world aviation industry. As mentioned by Aschenbaum (2003), exploratory research design would help exploring unknown knowledge and would therefore influence innovation. SIA officials could follow a survey mechanism engaging some of the existing customers. Approximately 100 customers could be considered as sample population and can be engaged in the survey mechanism. The feedback gathered from the customers would then help assessing the customer perception.  

Step 3: Preparation of research instruments

In order to conduct a survey including the customers, SIA would need to develop a questionnaire form that can be distributed to the participants. The questions are needed to be developed keeping in mind the objective of the promotional activity. For instance, if SIA would require to enhance the customer satisfaction through various offers and discounts, questions can be asked to the customers whether such initiatives would be appreciated by the customers. Rust and Chung (2005) believe that a pilot study can be conducted before actually initiating the survey process as it would help gauging the accuracy of the questionnaire fore. The specific analysis tools are also needed to be evaluated by the officials. Software such as spreadsheet package or SPSS tool can be used to interpret the responses of the customers.

Step 4: Sampling mechanism and data collection

During the data collection process following a survey questionnaire mechanism, SIA officials need to focus on the sampling mechanism as it could influence the outcome of the data analysis. Wardell (2002) acknowledged that proper emphasis is needed to be given on the sampling mechanism as it would determine the relevancy and accuracy of the data analysis. Since 100 is the chosen population for the survey questionnaire, following a simple random probability sampling mechanism would be effective. Simple random sampling process is suitable for providing equal opportunities to the respondents. Each of the participants can be provided with a questionnaire each. The options can be included in following a Likert scale format and the candidates would be encouraged to choose from multiple choice questions. The filled up questionnaires would then promote the required data for marketing research.   

Step 5: Data analysis

The collected data can be processed using various scientific tools such as the MS Excel software or the SPSS software. These type of tools would help converting the responses into numerical data and ultimately the graphical representation can be achieved for presentation. As per Kärcher (2006), graphical representation of data is easy to understand and useful in evaluating particular scenarios. The options accounting majority of responses would be treated as the average response and the actual scenarios can be granted on the basis of the majority responses.

Step 6: Interpretation of findings

Once the collected data have been analysed, the final phase of the marketing research can be conducted that is interpretation of the findings. Since SIA is focusing on a new marketing communication strategy, the outcomes could help assessing whether the new idea would be appreciated by the customers. Considering the proposition of Das and William (2004), the findings from market research would help analysing the future scenarios by means of the reactions of the customers if a new marketing strategy is being initiated. If SIA is focusing on a new communication strategy focusing on the improved customer satisfaction and loyalty, the brand could get an overview whether the policy would be successful through following a market research process.

4.0 Probable initiatives for SIA to maintain loyalty during intense competition:

Ever since the first flight from Kallang Airport, SIA have soared considerable heights in airlines industry as a result of stellar performance and several effective customer loyalty mechanisms. Achrol and Stern (2008) pointed a common factor among the several customer loyalty schemes of SIA have been the practise of innovation and creativity. From its investment in R&D to remain distinct, by promoting a culture of service excellence and to become a  trend setter in offering qualitative customer acre and services, SIA have strive to positively impact the loyalty decision making of its customers. Some of the loyalty programs offered by SIA for customer satisfaction are:

  • Availability of KrisFlyer membership
  • Offering PPS Club memberships for guaranteed personalised and service attention
  • Access to several lounges operated by noted airline partners’ at London, Hong King and few other airports.
  • In-flight dinning systems with the introduction of World Gourmet Cuisine.
  • Follow rigorous recruitment and training process to ensure service excellence and fulfil customer’s high expectations and personal approach (Anon, 2014).

Although SIA’s reputation has developed high customer expectations, the brand might face issues while identifying the real value of customers and in building relationships. Barkin and Hertzell (2011) mentioned that rigid loyalty programs are not enough as several customers might not register in frequent flyer schemes. Furthermore, decreasing switching costs in the airlines industry could threaten SIA to develop long term customer relationships in cost effective processes. The periodical improvement process that SIA involves into is required to satisfy the demands of the flight passengers. In other words, if current product or service improvements undertaken by SIA are not separately targeted for customer class types, the company might not be able to attain desired operational benefit. Strategic alterations in the current loyalty programs of SIA should be maintained along undertaking strategic alterations in the same.

Considering the fact that SIA faces stiff competition from several other airlines brand of the country,  it is required to remain updated with the several loyalty program being current practised by them. Here are some of the loyalty programs that are yet not a part of the company’s strategy but could be considered to drive the loyalty mechanism of its customers:

Frequent flier programs:

SIA can resume services of offering frequent flyer program that could reward the loyalty of SIA’s passengers with various travel and lifestyle benefits. Blue, silver or Gold loyalty schemes could be offered to its passengers depending on the distance travelled. Bell (2007) suggested that depending on the nature of card holder travel privileges such as:  hassle-free-check-in to excess baggage allowance or access to noted business lounges. The Gold card holders could be guaranteed reservations on full flights, networking chances along with access to private clubs, resorts and spas. Also, in order to advance the loyalty mechanisms of the teenagers, SIA could tailor special packages and leisure deals that would advance their motivation level.

Club card systems:

Besides the latter club card system, SIA could even offer additional facilities for its frequent flyers. Frequent Flyer programs such as: Enrich Miles and Elite Miles could be incorporated to advance the loyalty proposition of the frequent passengers. Enrich Miles can be utilised to redeem flights on SIA and in other world-class airlines. However, the Elite Miles can be redeemed by allowing the flyers to fly to over 1000 destinations in over 150 counties. The frequent flyers would thus be urged to avail the opportunity and remain loyal to the brand (Brown, 2006). The proposition to switch over can thus be reduced.

Partnership deals:

SIA even partner with other fleets, hotels or car hiring companies. The miles that are earned during travel can be redeemed by checking into some international hotels or avail discounts by hiring cars from some specific places. These opportunities are sure to motivate travel experience among the flyers and urge them to remain not switch over to any other brands (Das and William, 2004).

Additional benefits for customers:

In order to advance the loyalty propositions, SIA could offer additional befits such as: 24 hour access to Flying Club Account Online, email updates with entire latest news, offers and competitors, 7% (approx) off Singapore Holidays and other exclusive offers from SIA and their partners. Such facilities would only be an addition to the already robust loyalty services that SIA offers to its customers. The several benefits would motivate the travellers to travel by SIA and remain loyal. However, the proposed loyalty schemes would even impact the perception of the flyers preferring competitive airlines to switch over to SIA (Gilbert and Wong, 2003).

Vocational activities:

Flyers would develop a positive perception towards the brand if it involves in several vocational activities. Like Virgin Atlantic could increase its customer base by sending 240 cargos carrying ‘newborn kits’ and other essential, SIA could even be a part of developmental activities. It would serve as a great opportunity for SIA to develop a positive perception in the mind of the customers (flyers) such that they would feel that the airline is maintaining its responsibility towards the society as well.

Infrastructure development:

The loyalty factor of the travellers of SIA can be advanced designing its aircraft (both interior and exterior) in an attractive manner. Often flyers prefer travelling by aircraft having attractive exteriors yet cosy interiors (Hirschman, 2008).  The current strategy would add a unique feature to the airline and help in motivating the current and potential flyers to experience the services of SIA.

Use of virtual media:

The virtual media could even be effectively utilised to stay in close with current and potential flyers. Besides providing details regarding the current or advancement made to loyalty facilities, SIA could try to promote its USP features and compare itself with other brands. By showcasing that SIA is much ahead of its competitors (from all round perspective), the loyalty decisions of its current and potential travellers can be positively influenced. However, the demerits of using the virtual media as a promotional channel should even be taken care of (Harrison et al. 2005).

Competition and contest:

SIA could conduct competitions or contests for its flyers. The winners could earn points or other rewards that could be redeemed by several modes. The competition strategy could act as an added incentive for the travellers to prefer SIA and remain loyal to the same.

The current and the addition customer satisfaction centric loyalty strategies mentioned above would help SIA to efficiently face international competition.

Conclusion:

The study concludes that SIA has been quite successful in maintaining the quality standards over the years and therefore the brand experiences an overall satisfied customer base across different geographic region. The segmentation strategy followed by the organisations has turned out to be successful. SIA prioritise the business class and its customers and therefore the majority customers have turned out to be working professionals. However, innovation is the way forward and therefore the brand is recommended to consider the theory of Everett Rogers. SIA has been recommended to follow a promotional strategy in which the suitable adopters are needed to be included in the relevant activities. A six step market research activity can be conducted engaging the customers so that the recent trend in the aviation industry can be tracked and promotion strategy can be developed accordingly. Finally, loyalty schemes like club cards, enhancement of the Kris World, packaged tour etc have been proposed so that better loyalty can be expected from the customers.

 

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