Secondly, AirAsia is dividing the market by using demographic segmentation. AirAsia is actually targeting for low to middle income group. CEO of AirAsia, Mr Fernandez aware that there are a lot of workers or low pay salaries earner would like to travel back to meet their family especially during special occasions (Onwutalobi, Anthony.C, 2008). However, they are not affordable to pay for the high price for air plane. Hence, AirAsia is offering a low fare airplane ticket to meet with the demand of the people.
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Thirdly, AirAsia separates the market by using psychographic segmentation (AirAsia marketing, n.d.). Cost-conscious travelers are becoming the target market AirAsia because they are similar in terms of attitudes and values. For example, AirAsia predicted those cost-conscious customers are willing to give up anything in order to buy the airplane ticket for low price. Thus, AirAsia come out with a package of “Low fare, No Frills” (“Annual report 2007 of AirAsia Berhad,” 2007). On the other words, the guests are not provided with frills such as meal in exchange for the lower fares which is no compromising for the quality and service. However, guest still have their own choice to buy for the exclusive prepared meals, snacks and drinks from in-flight service at an affordable price.
2.0 Sales forecast
Table 1.0 at below shows the revenue generated by AirAsia from 2010 to 2017. By comparing the revenue, we can know that revenue of AirAsia in 2011 and 2012 was increased for 12.04% and 11.68% respectively. Assume that the revenue generated by AirAsia is going to increase by 12% since the year of 2012 onwards, the revenue for AirAsia from 2013 until 2017 is being estimated about RM5596,000, RM6268,000, RM7020,000, RM7862,000, and RM8805,000 respectively. The revenue of AirAsia is expected to rise due to the marketing mix strategy that the company applied which had been discussed in earlier part.
Increase in percentage (%)
The sign * indicated that it is estimation/prediction
Graph 1.0 is a graph which consists of combination of sales, operating profit, net income, net margin and operating margin of AirAsia from 2007 to 2016, and it is extracted from http://www.4-traders.com/AIRASIA-BERHAD-144742/financials/. By looking at the sales’ trend in Graph 1.0, the expected revenue from 2013 to 2015 is quite similar with table 1.0. However, the graph is showing that economists are expecting the revenue for AirAsia to decrease slightly for the year of 2016. This is most probably because of presence of strong competitors. Presence of strong competitor will give impact on the business of AirAsia by giving consumer another alternative on choosing airline. This will further reduce the revenue generated by AirAsia.
*extracted from http://www.4-traders.com/AIRASIA-BERHAD-144742/financials/
3.0 Marketing Budget of Air Asia
Research and Development
Sales support – printed material
Event – booth
Total marketing budget
There are many ways to market the services of AirAsia. For example, AirAsia may spend RM300,000 in the field of research and development. The purpose of research and development is including research on fuel consumption because a lower fuel consumption of AirAsia’ air planes can reduce the expenditure spent by AirAsia on fuel and this can further increase the net profit of the company.
Besides, AirAsia may spend RM50,000 on tools for the purpose of supporting the sales. For example, AirAsia can use the money to print for the material such as brochure.
Furthermore, advertising is very important is marketing. This is due to advertising can reach a large audience efficiently. Hence, AirAsia should consider placing more budgets in advertising.
In additional, sponsorship is also one of the important aspects in marketing activities. For example, AirAsia’s Group commercial Head, Kathleen Tan said that they were delighted to extend their sponsorship on English premier League football club, Queen’s Park Rangers (QPR) (Mark.E, 2012). This is due to the sponsorship will AirAsia to reach the maximum exposure on the worldwide football audience which keeps growing continuously from time to time.
Last but not least, AirAsia may place some part of their budget on event. For example, AirAsia can open a booth event on a shopping mall which has big crowds all the time. Through this way, it can successfully position the brand of AirAsia within customers.
As summary, all this marketing activities is very important in brand positioning. The total marketing budget of AirAsia is estimated cost for RM555,000.
Annual report 2007 of AirAsia Berhad. (2007). Retrieved March 12, 2013, from http://announcements.bursamalaysia.com/EDMS/subweb.nsf/7f04516f8098680348256c6f0017a6bf/079c899457cda15b482573840012782f/$FILE/AIRASIA-Contents%20to%20Page%2032%20(2.6MB).pdf
AirAsia marketing. (n.d.). Retrieved March 12, 2013, from http://www.bignerds.com/papers/67560/Air-Asia-Marketing
Onwutalobi, Anthony-Claret, (2008). Understanding Marketing Mix in Air Asia Airline Bhd. Retrieved March 12, 2013, from http://publications.codewit.com/administrator/components/com_jresearch/files/publications/Understanding_Marketing_Mix_%20in_Air_Asia_Airline_Bhd.pdf
Mark.E, (2012). AirAsia extends QPR sponsorship. Retrieved March 12, 2013, from http://www.traveldailymedia.com/125827/airasia-extends-qpr-sponsorship
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