Air Asia Strategic Marketing Plan - Research Paper Example

Air Asia also operates in a market where there is considerable price sensitivity, which limits the scope of its ability to alter service to include more service options without losing customers drawn to its current low price model.
Air Asia is currently going through the preliminary merger processes with Malaysian Airlines and Air Asia X, as the business attempts to diversify its competitive advantages. Air Asia X is currently a low-performing carrier in its operating market and the intent of this merger is to consolidate technological and maintenance expertise to achieve short-run cost savings synergies. The Malaysian scenario, in its early stages, is a strategic alliance that will be providing Air Asia with shared resources, including staff and fleet, that will expand its brand presence in new markets for a new customer base that is intended to ultimately be a full-fledged merger with this competitor. The synergies achieved through the Air Asia X and Malaysian Airlines merger should save the firm 165 million Euros by consolidating maintenance (Mukim, 10).
Air Asia, the world’s lowest-cost airline company, is currently operating in an oligopolistic market. This one is characterized by the presence of few firms and where there is heavy reliance on branding and promotion to sustain competitive advantage. The few firms in this market, such as Cathay Pacific and Singapore Airlines, continuously scan the external competitive market to determine what strategies competition is using in advertising which leads to competitive brand repositioning or more investment in promotion. This highly competitive market is driven by intensive efforts to create innovative lifestyle connections with target market consumers.
Furthermore, since 2001, Air Asia has found considerable cost savings and competitive analysis in its market by offering no-frills, low-cost dynamic pricing structures that provide customers with low ticket prices and are modeled against a lean philosophy of supply and labor. However, in recent years, market entry barriers have been breaking down which is providing more competitive risks for new companies that are modeling their business models against a low-cost, no-frills concept. Feng Chia University (2010) describes one of Porter’s Five Forces as the potential risks of high bargaining power of suppliers. In the case of Air Asia, Boeing company, its main supplier of airline fleet power, has very low switching costs due to the oligopoly and can therefore provide high procurement prices and determine deadlines with Air Asia having little influence or authority in this process. This leads to high prices in the supply chain for fleet procurement.
Post-merger, Air Asia needs to alter its promotional philosophy to become more competitive. It will now have shared resources with Air Asia X and Malaysia.