Marketing plan for Malaysian airlines

1.0 Executive summary

In Malaysian airlines marketing plan, we have highlighted its key areas by examining its strength and weaknesses. According to Mr. Datuk Mohamed Nor Yusof “MAS is the national flag carrier”. Hence we have tried to identify the opportunities that are their in MAS’s way to success. In this process we had to look at the threats faced by them and give appropriate suggestions. We have also discussed about the airlines short term and long term objectives and various improvement plans. In this report we have discussed about the competition faced by them. The internal audit covers the organizational factors (7ps) and SWOT analysis. For the external audit analysation of STEP analysis is also done. By doing this we have come across various action plans and tactics to over come its weakness and meet the defined objectives.

In recent times their have been massive growth in e-marketing , its contribution has been discussed.

2.0Introduction

The history of Malaysian Airline System Berhad can be traced back in May 1947, when a charter service was started from Singapore to Kuala Lumpur. Malayan airways ltd, was founded by the former British Overseas Airways Corporation (BOAC), Ocean Steamship Co. In 1957, Malaya became an independent county and airline was then restructured into public limited company in 1958, owned by the federation of Malaya and Singapore, Borneo Airways, BOCA and Qantas. In 1963, the airline was renamed Malaysian Airways ltd. After two year Borneo Airways merged with MAL, by increasing both carrier’s fleet and network. In 1967, MAL was renamed Malaysia -Singapore Airline (MSA). In the same year they expanded its international network to Manila, Perth, Sydney and Taipei.

MAS was incorporated in April 1971 as Malaysia national carrier after a split in MSA with authorized capital of RM 100 million. It took to the sky on 1st October 1972, with a network comprising of 34 domestic and 6 international destinations. MAS was installed as a member of Orient Airlines Association (OAA) at the 13th Presidential assembly of OAA held in Sydney in 1972. It was renamed in November 1972 as Malaysian Airways System Berhad.

The trend amongst international airlines in 1980’s and Malaysian government own inclinations to privatization lead the partial privatization of MAS in1985. The initial public issue was a big success. In 1994, the company called Nalrui bought 29 % stake in MAS. In order to prepare itself for the future, the company has now developed an e-Enterprise Model structure for the company. In 1990, it added new international destination, namely Hochi Min city, Vienna, Nagoya, Darwin, Brisbane and Adelaide. It also joined the International Air Transport Association (IATA) as an active member in the same year. In October 30, 1994, through code sharing arrangement the following cities came online- Belfast, Glasgow, Edinburgh, Leeds and Teeside in the UK.

The company increased its services to 110 destinations by the end of 1995.

3.0Situation Analysis

In this we have covered MAS internal and external audit. Internal audit consist of organizational factor that are 7ps and SWOT analysis. In external audit we have covered STEP analysis and its completion.

3.1Internal audit

Product

This means the products (or service’s) quality, functions, features, and the level of service the organization has to offer.

*It is south East Asia’s largest passenger carrier which flies over 114 destinations across six continents.

*Malaysian airlines have a modern fleet of more than 100 aircrafts, including the B777s and B747-400s.

*It is the first airline in the world to offer a Business centre in the sky, a fully equipped working environment for its esteemed travelers, first and golden club class passengers.

*In June 2000, Malaysian airline was chosen as among the world’s top five airlines for their product and service. This survey was carried out by In-flight Research services and covered 150 airlines around the globe.

*MLA is the first airline in the world to offer a 10.4 inch in-seat touch screen in the first and golden club class.

*One can even order a bouquet of flowers, to be delivered to your loved ones while traveling on the new B747-400 and the B777.

*Their marketing theme has been to portray MAS as having a very high standard in all its service areas. ‘MAS’ means gold in the Malay language hence their priority is to have golden smile, golden service and golden lounge.

*It has won numerous awards in the in-flight service.

Price

It refers to the price paid by the end user of the product in exchange for the services offered. It is a complex term and is concerned with discounts, type of customers etc.

*It is possible to have different prices for the same route depending upon time, class of travel, and when and where the ticket had been purchased.

*There is a certain amount of price discrimination enjoyed by the airlines for the type of passenger traveling. Prices may very for businessman, student, child etc.

*Fares range from �0 to �0 on economy class depending upon the time of the year and other factors.

*Fares have declined more than 35 percent since deregulation in 1978. Their has been an increase in competition which has given way to discount fares.

Place

Place means where and when the customer buys and consumes the product or service.

It is sometimes refers to as the marketing channels, physical distribution and location.

*Malaysian airlines have established efficient customer care centers in metropolitan cities of the countries they operate, and joined IATA as an active member.

*They have done utilization of e-ticketing through electronic distribution. MAS provide airline tickets which are charged through credit card over the internet. For travel on domestic sectors and for travel between Malaysia and Singapore, one can make use of Malaysia Airlines Electronic Ticketing (MASET) facility

*The reservations can be done through call centers which are situated in countries like Argentina, Australia, Belgium, Canada, Germany and many more.

Promotion

It means the promotions mix or the communications mix. This includes advertising, sales promotions, publicity, and even word of mouth.

*Malaysian airline advertisements appear regularly on major television channels, magazines and dailies. They have fair amount of billboards in major places around the world. their current marketing them ‘Going Beyond Expectations’ is being popularized.

*In-flight shopping has been reintroduced with a refreshed look and feel .the concept provides the customers with the excitement of a ‘shopping avenue in air’.

*They offer stop over packages for their passengers, which gives them best travel option at reasonable prices. This includes hotel accommodation, transfer from the airport etc.

*Malaysian airline has introduced special incentives packages in their promotional offer. They have put together an attractive incentive program for outstanding achievers. It offers them the exclusivity and recognition.

When one books an incentive program for a group of 40 or more, it includes the following services and facilities:

In flight services

*Group seating – arrangements can be made to have your group seated together.

*Personalized headrest covers with your company logo printed on.

*Personalized menu cards with your company logo printed on.

*Special welcome aboard announcement.

*Special give-always.

*Screening of corporate videos.

Ground services

*Group check-in facility.

*Special incentive baggage labels, giving them that extra recognition.

*Where possible, off airport check-in at suitable venues, to add that extra touch.

*Special arrangements can be made for immigration clearance.

*Special privileges have been introduced for government and student traveler which come under the following categories

*The government officials, federal government, government companies and government corporations.

*The semi-government officials

*Members of societies under government ministries.

*Students of Government or private learning institution.

*Members of student associations, clubs or societies.

*Parents who have children studying abroad.

*The frequent flier program which reward the repeat customer with free tickets and other benefits is the best and the most popular.

*To promote Malaysia Airlines as a world class airline they sponsored several high profile international events in selected key markets. In sports, Malaysia Airlines sponsored events such as the Hong Kong

Golf Open, Le Tour de Langkawi, Asian X games tour and the English cricket board tour.

People

In a service oriented organization the people or staff members are the most important element of marketing mix. They form the backbone and are the ambassadors of their organization. They are trained and recruited under personal supervision. Since they hold immense importance, the organizations job is to keep them happy in return.

*Intensive training of the staff members is done in which customer satisfaction is of prime importance. In Malay language ‘mas’ means gold. Their marketing theme covers golden smile, golden service and golden lounge.

*The crew is recruited from various countries across the globe to boost service quality. The need for Japanese, Korean, Spanish, south African speaking crew has been identified as a priority to improve in-flight service.

*In May 2002, Malaysian airlines were given the ‘best cabin staff 2002’ award in a survey conducted by skytrax research of London, U.K. they accessed the cabin staff on the following qualities;

*Staff efficiency

*Staff cabin presence

*Service attentiveness

*Consistency among staff

*Attitude and consistency of staff

Physical evidence

In the service sector physical evidence holds great importance for its customers, since they want a proof of the quality of intangible service provided to them. This is visible in the form of buildings, uniform of the staff, logos and other visible assets.

*Their offices and customer care departments are situated in prime business locations which are easily accessible. They have similar interiors in all which are pleasing for the customers.

*Through television and magazine commercials they have popularized their logo of the flying kite which describes their existence.

*Malaysian airlines counters at the airports have friendly and well dressed staff with their trademark uniform.

Process

It refers to the internal transactions and communications that are required to run a business.

*Following the Bali bombing tragedy, in Oct 2002 promotional fares and packages were introduced to encourage travel demand to the destination. This proved successful and the desired results were achieved. This shows that through internal communication process the Malaysian airlines gained customer confidence during difficult times.

*Malaysian airlines, showed significant recovery in 2002 overcoming weakened demand caused by global economic slowdown in 2001 and the September 11 incident in the United States.

Strengths

*Malaysian airlines technical crew is trained to meet the highest international standards and cabin crew is courteous and trained to attend to the passengers every need, Malaysia Airlines provides an unmatched service.

*It is an award-winning airline with a fleet of more than 100 aircraft, servicing more than 114 destinations across six continents. In 1997, Malaysia Airlines took delivery of the Boeing 777 providing travelers more comfort in the air.

*Malaysia Airlines flies daily from Amsterdam to Kuala Lumpur with direct connections to more than 40 major cities in Asia.

*The airline has excellent in-flight services, reliable ground support and excellent infrastructure which have made world records.

Weaknesses

*The biggest weakness of the company is its poor financial performance. Poor cash generation in the company has led to their overdependence on borrowings.

*Malaysian airlines lack in strong marketing schemes. The targeted market generally does not come to know about latest schemes and promotional offers.

*Their website is poorly constructed and is not user friendly. This has an adverse affect on sales.

*Their growth in terms of increase in destinations is almost stagnant. They need to update in this field.

*They have a superb airline network in Asia, Europe and Australia. They need to intensify in other countries like America.

Opportunities

*There is massive growth in the tourism industry in south east Asian region which can be profitably cashed on.

*The new Kuala Lumpur airport has been rated one of the best in the world, which is attracting many tourists and prospective investors to the country.

*Malaysian airlines have prospects of expanding its network in the trans-Atlantic and U.S region.

Threats

*There has been an increase in competition in the airline industry which has led to greater expectations, hence new schemes has to be introduced on regular intervals.

*Post September 11 attack and the Bali bombing tragedy there has been uncertainty in the airline business. It has resulted in fear in the minds of travelers around the world.

3.2.0 External audit

Social:

Technological

A successful organization needs to update their resources on regular intervals. They have to adapt to the technological changes around them. A latest innovation that affects the business and the whole market has to be introduced, so that they remain at par with their competitors.

*Malaysia Airlines took delivery of one B747-400 in April 2002, two B777-200 in April and June2002. The two A330-200 delivered recently are planned to be utilized for expansion into Asia.

*They have done utilization of e-ticketing through electronic distribution. MAS provide airline tickets which are charged through credit card over the internet.

Economical

*High positive correlation between Malaysia’s economic performance and the expansion of the Malaysian airline industry.

*Tension between Malaysia and foreign country may dampen foreign investment and support.

*Unpredicted fluctuation in exchanged rate can result in a change of the airlines future operations.

*The September 11th attacks on U.S.A lead to the downturn in the world economy. This had an impact on international travel.

Political

A business gets affected by the legislation and regulations of the government.

*Leadership turnover will Impact the direction and pace of economic expansion for Malaysian airlines.

*Government support for consolidation and deregulation of Malaysian aviation industry will affect MAS’s profitability and success in future years.

*In 2001, Malaysian government approved the airlines request for a fare increase for services within peninsular Malaysia which contributed to a 10.4% increase in revenue.

Competitors

There is unprecedented competition and scope of growth in the airline industry. Malaysian airline has cut-throat competition with Singapore airline, Thai Airways and Cathy Pacific.

*Singapore Airline

Fleet of 98 aircraft

Serves 88 cities worldwide

Plans of expansion in Trans-Atlantic cities and upgrading of fleet

Has a considerable growth in the service offerings in middle eastern region

*Thai Airways

Fleet of 81 aircraft

Serves 72 destination worldwide

Part of one world alliance

Business has declined because of poor customer service and customer satisfaction

*Cathay Pacific Airways

Fleet of 96 aircrafts

Serves 112 destination worldwide

Part of one world strategic alliances

Great customer satisfaction and service

4.0 Objectives

4.1 Short term objectives

To achieve consistently high level of service from ground to air, encompassing flight reservations, check in staff, catering and in-flight service.

Ensuring safety and security throughout all operations

Focusing on employees by enhancing the human capital of the airline. This is keeping in mind happy employee = happy customer= happy shareholder

Adopting a customer obsessed culture to achieve customer satisfaction through excellent hospitality and reliability.

To sell un-utilized tickets under various schemes and hence try to maintain full aircraft to minimize losses

Keeping in touch with the tourism department of many government and organizing stop over packages

4.2 Long term objectives

Amplification of MAS presence and growth through strategic and aggressive expansion to areas with strong market potential and profitability in order to build fortify and develop competitive advantage

Maintenance of good financial by achieving and sustaining profitability

Using technology as a key stratergic business enabler

To increase return on investment

Increasing goodwill of the company in long run by concentrating more in the personal relationship department

Acquiring the latest airplanes to add to the existing fleet, so as to be at par with the competitors

Strategies

Malaysian airlines main concern is to improve its financial position. It has won awards in many fields but still has scope for improvement because of so much competition. The various strategic plans for the airlines are as follows:

*To modernize and update the fleet of aircrafts to meet the competition level.

*In pursuit of its network growth strategy the restructuring of Malaysian airlines routes should continue with great focus on increasing frequency and capacity to Asia and other regions.

*For corporate account development strategy, more units have to be set up targeting local, regional and corporate accounts.

* Promotion of Malaysian airline as world class airline should be done by concentrating on the major events taking place around the world.

*Malaysian airline needs to upgrade food and beverage service which has been suffering losses lately.

*To bring in-flight service to higher levels of customer satisfaction.

*Incorporation and repositioning of Grads, the privilege card for students.

*Increasing customer satisfaction and convenience level by making the ticket booking hassle free, pre departure check time tension free and by providing convenience to people requiring special assistance (old and disabled).

Tactics

*The catering business of MAS has been suffering losses lately. They should improve in this area or completely dispose it off.

*Recently MAS has acquired one B747-400 and two B777-200 and leased two A-330-200. They should continue to acquire the latest aircrafts to compete with others in the aviation industry.

*Expansion of air services to newer destinations in Australia, Philippines and indo china should be done.

*The company’s mission is to emerge as the premier carrier in the Asian region, code sharing arrangements and other regional cooperation initiatives should remain a priority.

Action plan

*The two A-330-200 delivered recently are planned to be utilized for expansion into Asia.

*Together with the ministry of transport Malaysian airlines should work in tandem and secure additional traffic rights required penetrate new growth markets in Australia, Indochina and Philippines.

*To develop and strengthen arrangements with partner airlines to form code sharing alliance.

*High profile international events in the field of art and sports should be sponsored jointly with Malaysia Tourism promotion board (MTPB). Special discounted packages for the passengers should be introduced who want to participate in such events.

* Introducing new ideas which gain customers confidence like new version of in-flight announcement text and other enhancements for e.g. video and audio programmes with monthly programme change and jukebox functionality.

*The food and beverage department should be completely disposed off or many new ideas should be introduced like introduction of noodle service, light supper, extended beverage list and multi cuisine menu.

Contribution of e-Marketing

With majority of population now online, the internet has become one of the most powerful marketing tool available for business of all sizes. As in the case of MAS ,it 85% of business comes from travel agent,50% comes though the CRSs therefore it incurs an average cost of US$ 3.80 and rest comes through MAS’s own network(KOMMAS).

With e-marketing MASs can provide airline tickects through credit card over the internet and the customer will be offered insurance through dedicated independent Financial advisors.