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Product - Singapore Airlines In-flight services.

Extracts from this essay...

Introduction

'Principles of Marketing' Group Coursework Product: Singapore Airlines In-flight services Part1. Brief background of the firm: Singapore Airlines was created in October 1972 following the split of Malaysia - Singapore Airlines. The split happened due to the difference between the business objectives: Singapore branch had an objective to service more international routes, whereas Malaysian branch concentrated more on regional services. When it was first launched, Singapore Airlines had quite a modest fleet comprising 10 aircrafts, a staff of 6,000 and a route network of 22 cities in 18 countries. In addition to that, Singapore Airlines already had 25 years of experience under their belt and unlimited ambition to become truly global. Immediately after the launch, Singapore Airlines went through very extensive expansion and modernization of its fleet. Longer-term strategy of investment and product innovation followed, which helped the company to build strong brand and profitability. As the result, in thirty years time, the hard-working little airline from remote Asian island became a widely recognized global player. Today, Singapore International Airlines (SIA) is among the ten biggest airlines in the world, with more than 20 subsidiaries. The overall excellence of SIA is repeatedly recognized with the highest international awards, such as 'Best International Route Airline', 'Best Airline in the World' and 'Best Trans-Pacific Airline'. SIA is a leading airline in terms of innovation and modernization: it operates on one of the world's youngest fleets, which is renewed every 4.75 years (figure 4). It leads in product and services innovation, offers wide range of in-flight entertainment, exceptional cuisine and a level of services unmatched by any other airline. Singapore Airline's product: Kotler defines service as 'activity or benefit that one party can offer another, which is essentially intangible and does not result in the ownership'1. Airline service has four characteristics: intangibility, heterogeneity, variability, and perishability. Applicability of these four points to SIA can be described as follows: airline service is largely intangible and highly dependent upon its quality and presentation.

Middle

maintaining high profits, and b) continuous development, innovation and improvement of its outstanding level of service. Targeting SIA segments its customers using the Activities-Interests-Opinions-Demographics framework. A customer audit identified that SIA's most profitable customers, in good and bad times, are business and first class passengers on transcontinental routes. SIA's response was to enhance services to these passengers by introducing more capacity on long-haul flights and by up-scaling its services. Recent $300 million revamp, the biggest in SIA history, was the answer. Further than that, the revamp involves upgrading economy class as well, since economy passengers comprise the largest chunk of SIA customers. Positioning against competitors SIA had positioned itself to execute a strategy of differentiation, offering its passages a level of service that was seldom. SIA is the first airline to have attained a 'top quality service' position in the market and a 'top quality service' image in customers minds. SIA's focus is on continuous enhancement of quality of service, not on reducing costs. And as such, SIA consistently delivers its service promise. For example, SIA operates its catering subsidiary that comprise the world's largest flight kitchen and prepares 45, 000 meals a day, following the passengers menu pre-orders. SIA's luggage delivery subsidiary promises to deliver passengers' luggage within 10 minutes of arrival. As above, outsourcing of non-inflight services to SIA's subsidiaries helps to maintain the highest level of service across the board. Increasing competition in in-flight service from international carriers such as Thai Airline, Cathay Pacific, Malaysian, etc gave increasing pressure to distinguish SIA from the others. Additionally, the tragedy of 9/11 has put greater pressure in the air travel market. Alliance is the only reasonable way of solving problems. SIA joined the 'Star Alliance' as a means of growth in overseas market, Europe and the United States. However, there are some concerns about the ability of the other partners to offer the same service quality as SIA do.

Conclusion

SIA's customer segmentation strategy reflects different types of their target customers. Not all customers share similar lifestyle or have the same income, which is why SIA embarked on a journey of segment marketing, aiming its services at specific income-, lifestyle-, and preference-led customers. For example in order to cater for its business clients, SIA introduced a 'SpaceBed' - a seat that transforms into a lie-flat bed, which will become a standard on every aircraft of the new Business Class. SIA is also planning to launch 'CyberCabins', which offers a wide range of high-tech features such as internet and network gaming for those who always want to stay in touch. SIA is planning to gradually install 'CyberCabins' in all classes. Another future targeting strategy is to have a much wider choice of meals, spirits, and wines, especially for the connoisseurs. Positioning Singapore airline's market positioning for the future is also changing. Its aim is to develop a marketing mix and product that would fit the customers' needs and be established in the market. Despite the immense success of its marketing icon ('Singapore Girl'), SIA is planning to alter its campaign and gradually develop a different positioning technique in each type of market. SIA has continued and will continue to raise their standards with regular product innovations, new features and their world-renowned impeccable service. The results show that operating profit has increased by 12,8% (post-tax by 4,7%) in the first half of 2002 compared to the same period last year. This means that more and more people are choosing to fly Singapore airlines. The fact that SIA has won an outstanding number of world awards (inc. 'Best Airline In The World', 'Best First Class', 'Best Business Class', 'Best Economy Class', and 'Best Scheduled Airline') means that the Singapore Girl has succeeded again in gaining customers' trust. As for the future, things are looking favourable as more new products are introduced to cater for customer needs, so that SIA will be able to attract more new flyers. Appendix. Table1. Market Value to Sales ratio among major Asian airlines Table 2.

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