Question:
Describe about the AirAsia’s marketing strategy.
Sponsorship is the tried and the tested way to develop a company’s profile within a very short time. Even though sponsorship is comparatively an old concept but it has gained attention in the recent past. In the past few decades the business environment for almost every industry has turned to be highly competitive and hence it becomes extremely important for the business to develop a strong platform through which the company can expect high generation of traffic and increased brand loyalty. It is important to mention that there are numerous small scale companies who focus on developing their market through sponsorship (Teece, 2010). Sponsorship acts as a very good way of promotion which has been applied by bigger multinationals in order to make them aware of the company and its products. In the recent past the importance of sponsorship has increased rapidly attracting many companies to use this concept and create brand awareness among the consumers. The present study will be taking an opportunity to delve deep into the concept of sponsorship and discuss the different aspects of sponsorship and its impact on the business. Since sponsorship has become a way of marketing for a company it becomes an extremely important aspect for research. The present report will be completed by taking the case study of AirAsia (Maestas, 2009).
AirAsia has become one of the most renowned low cost airline services that is based out of Malaysia. The company has become a key player in the international low cost airline industry within a very short time. The company based in Kuala Lumpur the capital of Malaysia has gained a lot of confidence from its consumers as it has made flying really with its effective affordable flight packages. In the recent past the company has emerged as a very important entity in the Airline industry map (Du & Sen, 2010). Even though the company has been able to drive traffic but somehow its market share is not huge and the company has a huge room for improvement. Mere generation of revenue couldn’t be an attribute to compare the company with other low cost airlines like EasyJet or Southwest Airlines who have fair amount of market share. AirAsia has been chosen as the case study since it is an emerging brand and has been able to compete in the market after its inception within a very short time with the help of its effective marketing strategy but since it has not yet been able to utilise all the available resources and has failed to explore some cream parts of the world it could be suggested that the concept of sponsorship will help the company to reach these places and hence this justifies the choice of AirAsia as the case study company (Turco, 2009).
The company AirAsia was established in the year 1993 and started its operation in the year 1996. Initially it was a government owned conglomerate. The company was initially highly indebted and it was revived by the former Time Warner Executive Tony Fernandes’ company Tune Air Sdn Bhd. The company had around a debt of USD 11milion then and Tony Fernandes’ company was able to focus on developing the company and generate revenue. The company mainly focuses on providing low cost airline services that have resolved a lot of problems for people who are willing to fly but its steep price most of the times pull back consumers (Thomas et al., 2009). The company started its profit making in the 2002 when it started new routes from its hub Kuala Lumpur. The company slowly and steadily emerged as winners in the Malaysian Airline market and has been successful in completing its five years plan as revealed by its CEO Tony Fernandes. Since the company has expanded and its subsidiaries like Thai AirAsia, Indonesia AirAsia and Philippines AirAsia have all succeeded in developing a specific market for them (Westberg & Pope, 2014).
The company has developed substantial assets which has made them a strong contender in the airline market. It focuses on providing clean services within an affordable range of price which attracts consumers. Since it is a low cost airline the company doesn’t emphasise on providing exceptional in-flight services but focuses on providing the basic services in a better way which satisfies the consumers effectively. The company has earned overall (Nufer & Buhler, 2010) revenue of around 4.2 million USD which is exceptional for a new low cost airline company. The company has its flight services running all across the Asian continent which is another key aspect for the company. The AirAsia fleets run across countries like Malaysia, China, India, Australia, Japan, Indonesia, Singapore, Cambodia et cetera (Mangold & Faulds, 2009).
So far it has been able to target some parts of the New Zealand as well but the company has not been able to settle itself in the European market which still remains an area to be explored. It is extremely important that the company focuses on the European Audiences and accordingly focus on developing its market strategy which would help the company to develop a strong platform in the European market. The company has tried to bring in interesting initiatives in the flight through their services which have been so far appreciable. For instance the “snack attack” the in-flight food purchase offer has been effective since the quality of food served is good and this has been effective in satisfying the consumers. Its recent business performance has been good and companies with total revenue of around 50.6million USD revenue. Even though the company is behind EasyJet, Ryanair and Southwest Airlines but then these companies work all around the world. The Frequent Fly initiative is an effective program that will drive traffic towards the company effectively. Its luggage charges are also low as compared to other airlines when checked (Hing et al., 2013).
It is important to mention that luggage charge increase when it is confirmed during the check in. The competition of AirAsia mainly comes from the EasyJet airways and Ryanair. These companies have been seen to consistently affect the business of AirAsia in the Asian market. JetStar and Qantas Airlines have also found positive signal from the consumers as growing problems with AirAsia’s no refund policy which has created number of disputes for the company. Hence it could be said that the company will have to have a strong strategy to maneuver these hurdles and focus on exploring new markets which would help the company to grow and develop effectively. Since the company has faced steep challenge from different companies it is important that effective strategy is implemented to combat these challenges and is able to provide the best possible services to the consumers which will help to generate traffic and also help the company to gain competitive advantage in the market (Lee & Pedersen, 2011).
Marketing is a huge procedure and hence it has to be very assiduously handled. Since it is also an arduous task most of the marketing strategies focus on just creating an awareness of the company and then it doesn’t carry on with the awareness procedures. The marketing strategy of AirAsia has not been all effective as it has not been able to utilise the European market. The European market is an effective market and is wide open for the low cost airlines to operate and hence AirAsia could avail these markets effectively through effective marketing. But at times as seen that marketing doesn’t create that expected awareness which ultimately takes a company nowhere and this is where sponsorship comes into the picture. It is important to mention that with sponsorship number of marketing problems would be resolved and most importantly a company could create that much required awareness in a market through sponsorship easily (Filis & Spais, 2012). recently for AirAsia there has been problems in Australian market where Australian Competition and Consumer Commission has filed a legal lawsuit against AirAsia stating that the company is misleading the consumers to increase traffic which means there have been faulty marketing which has triggered this turbulence and hence there is a possibility that this might affect the consumer relationship of the company. Hence it could be said that the major problem that AirAsia has faced in the recent with its marketing is lack of awareness creation. Its marketing strategy has failed to create that required awareness which would help the company to develop a strong customer base anywhere in the world. It had to stop its flights in places like Paris, Mumbai, and Chennai as well as in London due to lack of awareness. Hence in this case Sponsorship program is the best way that the company can come back to these places and create effective brand awareness among the consumers (O’guinn et al., 2014).
Nowadays Sponsorship is the best possible way to gain exposure in the market and hence it is important that AirAsia uses this tool to gain attention of the consumers. Sponsorship is a way to become a financial support to a particular entity. Through sponsorship one can gain huge exposure in a particular market. It is important to mention that for AirAsia Sponsorship is an extremely important tool that could give them the much needed exposure in the airline market. There are numerous kinds of sponsorship programs but Sports Sponsorships and Charity and event sponsorship are the most common ways of gaining attention of the consumers. It is important to mention that there are number of different sports events taking place all around the world and without misleading consumers sports sponsorships could give exposure to AirAsia in the global market. It not only helps to create a platform to work all across the world but also creates loyal customer base and brand awareness (McAllister, 2010). Companies like Barclays Bank and Pepsi have been highly successful in developing a huge customer base and brand loyalty through Sponsorships. Recently companies like Gionee Smartphones and Waitrose have become a renowned name all through Sponsorships. Sponsorship itself works as a marketing strategy as since it is sponsoring a particular event the logo of the company can be seen all around and with simple mass media advertisement a wide dissemination of knowledge could be provided through them. This acts really effectively and the company will not get into any kind of legal problems and will not be blamed for misleading consumers. Sponsorships also reduce financial complications that are involved in marketing and also allow the company to plan strong promotional programs which would help the company (Jensen & Hsu, 2011).
AirAsia could implement both sport sponsorship and Charity sponsorship which would help the company to spread knowledge about its services effectively. There are major sporting events that take place around the world like the Olympics, Cricket and Football world cups et cetera. These major sporting events are widely followed and hence if AirAsia is able to act as a sponsor to them the company will be able to get huge exposure and many people will come to know about it and hence this will also increase its possibilities to increase its market (Yeoh & koronios, 2010). On the other hand Charity Sponsorship will show another side of the company that is corporate social responsibility and hence this will also help the company to come closer to its customers and develop a good bond with them. It can sponsor different charity event worldwide which could help the company to get known in the different places and since low cost carrier concept is an extremely important idea that has spread its wings in the aviation industry this will help the company effectively. Hence it could be said that these two recommended strategies will be highly effective for the company to begin with (Darnall et al., 2010).
Conclusion
To conclude it is important to mention that AirAsia’s marketing strategy has not been that effective and it has faced problems with different aspects and hence Sponsorship stands to be an important way through which the company can revive its market in some parts of the world. It is important to mention that Sports and Charity sponsorship will help it to get recognized which is highly important in this present scenario and hence it could be said that the company should frame a strategic sponsorship plan which will help to develop its market.
References
Darnall, N., Potoski, M., & Prakash, A. (2010). Sponsorship matters: Assessing business participation in government-and industry-sponsored voluntary environmental programs. Journal of Public Administration Research and Theory, 20(2), 283-307.
Du, S., Bhattacharya, C. B., & Sen, S. (2010). Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication.International Journal of Management Reviews, 12(1), 8-19.
Filis, G. N., & Spais, G. S. (2012). The effect of sport sponsorship programs of various sport events on stock price behavior during a sport event. Journal of Promotion Management, 18(1), 3-41.
Hing, N., Vitartas, P., & Lamont, M. (2013). Gambling sponsorship of sport: An exploratory study of links with gambling attitudes and intentions.International Gambling Studies, 13(3), 281-301.
Jensen, J. A., & Hsu, A. (2011). Does sponsorship pay off? An examination of the relationship between investment in sponsorship and business performance. International Journal of Sports Marketing and Sponsorship,12(4), 72-84.
Lee, S., & Pedersen, P. M. (2011). Measuring sponsorship effects in intercollegiate sport: An examination of Division I basketball. Journal of Sponsorship, 4(4).
Maestas, A. J. (2009). Guide to sponsorship return on investment. Journal of Sponsorship, 3(1).
Mangold, W. G., & Faulds, D. J. (2009). Social media: The new hybrid element of the promotion mix. Business horizons, 52(4), 357-365.
McAllister, M. P. (2010). Hypercommercialism, televisuality, and the changing nature of college sports sponsorship. American Behavioral Scientist.
Nufer, G., & Bühler, A. (2010). Establishing and maintaining win-win relationships in the sports sponsorship business. Journal of Sponsorship,3(2), 157-168.
O’guinn, T., Allen, C., Semenik, R. J., & Scheinbaum, A. C. (2014).Advertising and integrated brand promotion. Nelson Education.
Teece, D. J. (2010). Business models, business strategy and innovation.Long range planning, 43(2), 172-194.
Thomas, S. R., Pervan, S. J., & Nuttall, P. J. (2009). Marketing orientation and arts organisations: the case for business sponsorship. Marketing Intelligence & Planning, 27(6), 736-752.
Turco, D. M. (2015). The influence of sponsorship on product recall and image among sport spectators. In Proceedings of the 1995 World Marketing Congress (pp. 8-12). Springer International Publishing.
Westberg, K., & Pope, N. (2014). Building brand equity with cause-related marketing: A comparison with sponsorship and sales promotion. Journal of Marketing Communications, 20(6), 419-437.
Yeoh, W., & Koronios, A. (2010). Critical success factors for business intelligence systems. Journal of computer information systems, 50(3), 23-32.
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