Singapore Airlines Limited

SIA is the flag carrier airline of Singapore with its hub at Singapore Changi Airport. The airline
uses the Singapore Girl as its central figure in corporate branding. It is ranked as the world's best
airline, since 2018, while winning the top spot in three other categories in the same year including
"Best First Class", "Best First Class Airline Seat", and "Best Airline in Asia".

The Singapore Airlines includes many airline-related subsidiaries. SIA Engineering

Company handles maintenance, repair, and overhaul (MRO) business across nine countries, with
a portfolio of 27 joint ventures, including with Boeing and Rolls-Royce. Singapore Airlines
Cargo operates SIA's freighter fleet and manages the cargo-hold capacity in SIA's passenger
aircraft. It has two subsidiaries: SilkAir operates regional flights to secondary cities,
while Scoot operates as a low-cost carrier. Let us analyse about international market strategy in
Hongkong.

SWOT Analysis
Strengths
 Singapore Airlines is a strong global airline brand with a strong backing from its

government. Based out of Singapore, it has a good access to Europe, Asia and Australasia.

 SIA has been one of the leaders of the multi-brand strategy trend which has emerged over
the last decade in the Asian airline sector. SIA was not the first full-service airline group
in Asia-Pacific to establish an LCC subsidiary but it was an early adapter, putting it in
position to benefit from the huge growth at the bottom end of the market in Southeast Asia.
 Singapore Airlines has a satisfied customer base and is a preferred airline of passengers
 Singapore Airlines is one of the top airline brands in terms of market capitalization and
number of passengers carried
 Known for its premium and excellent service and unparalleled customer service and
hospitality. Over 60 destinations in nearly 35 countries across the 6 continents
 Excellent branding and marketing has made Singapore Airlines one of the few airlines
having very high recall
 High brand visibility of Singapore Airlines through sponsorship of events.

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Weaknesses
 Relying Heavily on international traffic


 Increasing competition means market share growth is less for Singapore Airlines

Opportunities
 Singapore Airlines can tie-up with other airlines to increase its business and reach


 Brand New Fleet to improve customer confidence

 More international destinations to leverage on its high value brand image
 Growing high income class
 Recovery of FDI inflows
 Tourists attractions & big cities

Threats
 Rising Fuel Costs can affect margin of Singapore Airlines


 Government regulations can impact operations


 Increasing Competition can affect Singapore Airlines market share

SIA is operating in a very challenging environment as a result of uncertainty in global economy,
volatile oil prices, aggressive gulf airlines, overcapacity, and fluctuating global currency
movement. Being a leader in the airline industry’s full-service premium segment, to further
achieve sustainable growth, SIA first needs to identify future growth opportunities that can be
exploited and the threats that should be eliminated.

PESTLE Analysis
Political
 Every industry rests heavily on political and regulatory changes, so does airline industry.
Even though the airline industry has become deregulated but it’s still very regulated. Hence
we may still expect sometimes government policy plays a big role in the development of
the industry and may impact industry profitability and competition landscape. Therefore,
when the airline industry is embracing the market liberalization, each player in the industry
should be clearly aware of the governmental force or policy makers due to their continuous
lasting influence on this industry.

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  For instance, because of the oil price slump in past two years, airline industry has been
facing mounting pressure from government to unwind fuel surcharges. Another example is
ASEAN‘s recent move to open its air space to all its members, meaning airlines of
ASEAN’s member country will face new opportunity and freedom to fly within this region,
however, the competition level will increase.

Economic
 Economic environment affects airline industry to a great extent because airline industry is
closely linked to national, regional and international economic development. Gross
domestic product (GDP) growth, crude oil prices, interest rates, economic cycle’s peak and
trough, etc. always have significant impact to almost every industry, including airline
industry.
 A research conducted by the international Air Transport Association (or IATA) revealed
that disposable incomes growth which closely follows GDP growth, is the primary demand
driver for the travel by air. A forecast released by the International Monetary Fund (IMF)
suggests that world GDP will grow 3.4% (inflation-adjusted) in 2016, higher than the 3.1%
growth estimated for 2015. On top of that, IATA forecasts passenger travel demand will
continue to grow 6.9% in 2016 compared to 6.7% growth projected for 2015. As for the
long term forecast, IATA projected a 3.8% annual growth for global air passenger growth
till 2034, with China leading the five fastest-increasing markets in terms of additional
passenger per year (expected to add 230 million passenger journeys between 2014 and
2019) (IATA air passenger forecast, 26,Nov.2017)
 Although there are some uncertainties in global economic environment, for instance,
volatile fuel prices which may pose a threat to SIA, the positive air passenger forecast
provides good growth opportunity.

Social
 Social environment also has significant impact to airline industry. Because every consumer
is a social human being, whose behavior is influenced by social norms and tacit rules of a
certain group. Studies have suggested different demographic groups tend to have different
consumer behaviors.
 For example, millennial generation behaves quite differently from baby boomers. With
millennial generation entering their peak income stage, studying their travel preferences

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 will help airlines pinpoint their specific demand and develop appropriate product and
service for them. So categorizing different generations, studying demographic and
sociological attributes are of big significance for airlines. SIA needs proactively study
social environment as it may present future opportunities.

Technological
 Technological advancements could be a double-edge sword. On one hand, technology
advancement is a major driver in improving airline efficiency, lowering operation costs,
enhancing overall customer experience, personalizing customer service.
 On the other hand, technology could pose a threat to airlines which could change the way
how we live, work and interact with people. For example, skype web-meeting is becoming
prevalent now which could potentially lower the demand for face-to-face meeting, meaning
business travel demand could be subdued.

Legal
 Changes in the Hongkong region and global regulatory framework.
 Law suits in case of service deficiencies and pricing.

Environmental
 Strong Environmental Management System and green practices.
 Optimal usage of resources.
 Supports IATA’s four pillar strategy. (Infrastructure, Technology, Economic Instruments
and Operations)

Segmentation, Positioning and Target Market

Market Segmentation

Market segmentation is the grouping of customers and characterizing them in a relevant manner
to ensure that the product or service is aimed at the right consumer (or customer). The objective is
to help determine marketing strategies and realistic marketing objectives by understanding
customer trends and buyer behaviors. Once the market has been segmented, SIA can pursue all or
a number of segments with a different offer for each through differentiated/niche marketing that
creates and maintains value for the targeted segments.
Examples where SIA uses these types of segmentation are provided for each of the general
bases for segmentation summarized below.

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 After the organization has identified and selected its target market, the next stage for SIA
is to decide how it wants to position itself within that chosen segment.
Bases for segmentation with Singapore Airlines:
 Geographic – SIA’s customers are located globally with varying wants and needs or
behaviors and the organization attempts to exploit this by providing airline services to
major cities/ routes evidenced by SIA flying to 65 destinations in 35 countries on five
continents. SIA’s strong presence in the Southeast Asian region, with its subsidiary SilkAir,
connects Singapore to many international destinations in the region. The airline has also
established and captured major markets in its Kangaroo Route, flying international traffic
into and out of Australia and since 2005, frequent flights between HongKong and Tokyo.
SIA can segment geographically in an attempt to gain extended market share on
transpacific routes from Australia to the United States, as evidenced by its proposed hub in
North America through Vancouver from Hongkong.
 Demographics – segmenting on the basis of customer factual characteristics such as age,
gender, income etc. SIA could build on from this by looking at them in terms of the other
major segmentation variables using multiple approaches to achieve a more complete
consumer profile.
 Psychographic – attempts to capture what is driving the customer’s behavior, such as
values, personalities, attitudes and lifestyle aspirations of each segment. For example, SIA
provides variations of cabin classes (First, Business and Executive Economy) to meet the
product needs and wants of people. SIA employs tiered membership to provide status
preferences to consumers. In addition, the Low-Cost Airlines have attracted a market that
have a simple need to reach their destination without the “extras”. SIA have positioned to
be part of this target market with their stake in the carrier, Tiger Airways.
 Behavioral – is segmenting the market based on observable issues on consumer behavior
when consuming the products. Characteristics include frequency of consumption, buyer
readiness and commitment. The corporate market tends to be a frequent flyer that could
gain benefits from SIA’s Frequent Flyer program in return for consumer loyalty to the
airline.

Market Targeting

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 With the level of competitiveness in the airline industry, an understanding of buyer
behavior makes marketing strategy development and value creation easier. Consumer behavior is
however complex and dynamic because different products are bought differently and as a result of
different thinking. Factors that influence it include a mix of social, cultural, personal, lifestyle,
psychological, environmental, education, occupation, motivation and beliefs and attitudes.
 Complex buyer behavior – requires marketer to provide more information and
reassurance to a customer. This is probably more prevalent in B2B transactions with SIA.
 Dissonance-reducing buyer behavior – requires marketer not to provide any reason not
to buy the product and maintain consumer satisfaction. SIA maintains this through their
consistent delivery of quality service in all cabin classes leaving consumers with high
satisfaction levels. The frequent flyer program and lounge services further add value to
their level of satisfaction.
 Variety-seeking buyer behavior – requires marketers to provide a lot of options within
their range so it reduces the likelihood of the customer switching to another provider. For
example, SIA provides a variety of options in cabin classes, catering, in-flight
entertainment, flight destinations and even for budget-conscious customers, an option with
their Low-Cost Airline, Tiger Airways. These days, access to service providers via the
internet enables buying decisions that involve low risk to be compared more directly with
competitors.
 Habitual buying behavior – requires the marketer to encourage as many people as
possible to trial their products so as to be included in their habitual choice sets. SIA along
with SilkAir has established a strong presence in the Asian market, managing regional
flights to secondary cities with smaller capacity requirements. The corporate sector, as part
of their business needs, is perhaps the most consistent and habitual with flight bookings.
Upon a customer experiencing services from SIA, it is equally important to understand
how the customer is satisfied by the service and/or product offered. This provides
invaluable insight on how the service and/or product provided value for the customer as
well as how they chose it. Market research can be of assistance here.

Market Positioning

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 After segmenting a market and then targeting a consumer (based on an understanding of
their buying behavior), SIA can now position a product/service within that market. Market
positioning is about how SIA wants consumers to perceive their products and services in relation
to their competitors. An understanding of market positioning enables SIA to create positioning
strategies that result in an offer being seen by consumers as attractive, filling a gap in the market,
and providing the organization with some competitive advantage.

SIA’s options are to:

 Pursue the segment with an offer based on a current product, or
 Develop a new product offer that meets the needs of the segment.

SIA’s positioning strategy uses Singapore Girl as a central ingredient in marketing its
image. Singapore Girl broke that branding image of traditional marketing communications
focusing on cabin design, food, comfort and pricing. Personified through the girls, customers got
a sensory/emotional experience of air travel with SIA’s commitment to service and quality
excellence. The more senses the brand appeals to, the stronger the message will be perceived.

At the other spectrum of the market, Cathay Pacific in Hongkong market positioning is also very
clear – it is a pure low-cost carrier. It pursued a segment with a low-cost offer and positioned itself
close to existing competitors like JetStar, and Virgin Blue, so consumers can make a direct
comparison when they purchase.

Singapore International Airlines Activity System

The five pillars of activity of SIA are mentioned below:

 Rigorous Service Design

 Total Innovation
 Ingrained Profit Consciousness
 Strategic Synergies
 Holistic Staff Development

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Fig 1: Singapore Airlines’ organizational activity system supporting cost-effective service
excellence. Source: adapted from Heracleous et al. (2009)

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SIA Hongkong Market Strategy
Above these they follow Market Differentiation and Cost Leadership Strategies which are
discussed below:

Differentiation Cost Leadership

Positioning of service excellence & superior
quality, brand equity (marketing strategy).
Young fleet (fuel efficiency, lower
maintenance costs, effective fuel hedging,
paying cash for planes) Labor costs compared
to major competitors (16.6% vs. 30%);
continuous drive for productivity, cost
reduction programmes.

Developing the Singapore Girl (HR Related diversification through efficient

development policies) subsidiaries that contribute to bottom line

In-flight experience (young fleet, Cultural values: cost consciousness, obsession

entertainment system, gourmet cuisine –
operations strategy)
Cultural values and practice of constant
innovation and learning
with reducing wastage Innovations not only
increase differentiation but also efficiency
Hong Kong airport one of the most efficient
(related infrastructure).

Hong-Kong airport one of the world’s best

(related infrastructure)

Premium pricing in Singapore and in business

/ first class, and higher load factor as
differentiation indicators

Conclusion
SIA continuous to focus on its dual strategy through its customer relationship experience, service
excellence and innovation and giving customized as well as the standardized service offering to
the customers as per their preferences as goes for continuous efficiency. The SIA market Leader
in the Hongkong has entered into the region by adopting Regiocentric Approach by customizing
the offerings as per the region or the continents. Also, SIA has achieved its outstanding
performance and gained a sustainable competitive advantage over the competition in the market
by allowing those above dual strategy in its peer group.