BM006-3-3 BCR Individual Assignment Asian Pacific University

TABLE OF CONTENTS
1.0 Introduction....................................................................................................... 2
PART A: Malaysian Airlines Situation Analysis.............................................................2
2.0 Competitive Analysis......................................................................................... 2
2.1 Target Market.................................................................................................... 4
2.3 SWOT Analysis...................................................................................................... 5
2.3.1 Strengths........................................................................................................ 5
2.3.2 Weaknesses................................................................................................... 6
2.3.3 OPPORTUNITIES.............................................................................................. 6
2.3.4 Threats........................................................................................................... 7
PART B: Relationship Marketing..................................................................................7
3.0 Innovation of relationship market practices: changing the market place.............7
3.1.1 Relationship Marketing: Customer Interface..................................................7
3.1.2. Relationship Marketing in Social Media.........................................................8
3.2 Mass Marketing to one-to-one Marketing Effectiveness........................................9
3.2.1 Differentiating each customer......................................................................10
3.2.2 Interacting with each customer....................................................................10
2.3 Customer Relationship Management Recommendations....................................10
4.0 Conclusion.......................................................................................................... 11
5.0 References.......................................................................................................... 11
4.0 Appendix............................................................................................................ 13

List of Tables
Table 1: Malaysian Airlines Competitors (Strengths and Weaknesses)......................3

List of Figures
Figure 1: Malaysian Airline Industry Market share......................................................3
Figure 2: Frequent Premium Travelers........................................................................4
Figure 3: Trend in Profitability ratios 2007-2011 (Malaysian Airlines).........................6
Figure 4: MHbuddy Application................................................................................... 8

List of Appendences
Appendix 1: Frequent Traveler by Country or Residence..........................................13

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1.0 INTRODUCTION
Malaysian Airlines System Berhad, also known as MAS in short was founded in 1947 as
Malaysian Airways. Malaysian Airlines is the flag carrier which is owned by the Malaysian
government. MAS operates flights at its first base in Kuala Lumpur International Airport, and
secondary base in Kota Kinabalu. Malaysian Airlines System Berhad is the holding company for
Malaysias national airlines carrier, one of the fastest growing airlines in Asia. Malaysia Airlines
has two airline subsidiaries, which is Firefly MA Swings. The main products offer by Malaysia
Airlines web-site is flight tickets. Besides, it also provides car rental, hotel booking, booking
railway ticket and holiday packages.

PART A: MALAYSIAN AIRLINES SITUATION ANALYSIS

2.0 COMPETITIVE ANALYSIS

The airline industry in Malaysia is very competitive with existing airlines having to compete
with each other as well as new entrants from time to time. Malaysian Airlines major existing
competitors are AirAsia and Singapore airlines (table 1). However, AirAsia is steadily being
threatening the dominance of Malaysia Airlines (Mok Kim Man and Jainruin Bin Justine, 2005).
Malaysian Airlines (MAS) is in an oligopolistic competition, where there are only a few number
of competitors in the local market.

From figure 1, Malaysian Airlines has the second largest local market share in Malaysia, with an
approximate of 31% of market share (Siang Foo Yong, 2013). Nevertheless, Air Asia holds the
majority of market share in Malaysia, with 32.8 %. Despite this, Air Asia is conquering the Asian
market slowly as it has established setting of its base in Indonesia, Thailand, Philippine, and
other ASEAN countries, which has assisted the company to maintain a better competitive
position in Asia (Chartian, 2014). Malaysian Airlines is considered to be a full0service airline,
while Air Asia is considered a low-cost airline (Mohammad S., and Rabiul I., 2013).

Figure 1: Malaysian Airline Industry Market share

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Source: (CAPA Center for Aviation, 2013)
Table 1: Malaysian Airlines Competitors (Strengths and Weaknesses)
COMPANY STRENGTHS
The airline has as a strong
backing from the Singaporean
government
Strong hub in Singapore
Known for its premium and
excellent service and
unparalleled customer service
and hospitality
Excellent branding and
marketing has made Singapore
Airlines one for the few airliners
having very high recall
AirAsias brand name is well
established in Asia Pacific
AirAsia is a low cost leader in
Asia
Has a very strong management
team with strong links with
governments and airline industry
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Asian Pacific University
WEAKNESSES
Relies heavily on
international traffic
Increasing competition
means market share growth
is less
Tickets are highly prices
compared to competitors
Heavy reliance on
outsourcing on its
maintenance, overhaul and
repairs
AirAsia receives numerous
complaints from customers
on their service
BM006-3-3 BCR Individual Assignment Asian Pacific University

2.1 TARGET MARKET

Market segmentation is to divide a market into smaller groups of buyers with distinct needs,
characteristics, or behaviors who might require separate products or marketing mixes (Shili Sun,
2009). Malaysian airlines centers its segmentation strategy on the premium service sector or full
service flights. This segment includes all domestic and international flights, short haul and long
haul.

The airlines primary target is corporate, businesses or business travelers, aged between 30-49
years old. Malaysian Airlines rely on business travelers as they are the most frequent buyer, most
loyal, and are willing to pay the extra month than the average traveler. The typical business
traveler derives from upper middle class, managerial-level pay grades, Directors and C- Level
(i.e. Chief Executive Officers, Chief Operations Officer, Chief Financial Officers). Malaysian
Airlines target market provides a competitive advantage, based on survey conducted by Accor
Asia-Pacific (2011), the report found the average business travel for executive (directors level
and above) were twenty (20) trips a year where the most frequent travelers by country are from
China, India and followed by Singapore (figure 1; Premium Frequent Traveler and Appendix 1;
Frequent Traveler by Country). Most of Malaysian Airlines travelers are travelling international
and dominate by men.

Figure 2: Frequent Premium Travelers

Source: (Accor, 2011)

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2.3 SWOT ANALYSIS

SWOT analysis is a method where a structured plan can be done by evaluating the four (4)
factors which are strengths, weaknesses, opportunities and threats. A SWOT analysis indicates a
framework for assisting researcher or planners to identify and prioritize business goals, and to
further identify the strategies to achieve them and is used to overview a companys strategic
situation (Ahmad O., 2011). Malaysian Airlines can use SWOT at their own benefits to
understand more about the external and internal environment.

2.3.1 STRENGTHS
Malaysian Airlines is a well-known brand name (also recognized by international airlines) which
has become a strength for the company to exploit. With over seventy (70) years of experiences in
the airline industry, this brand name has won the heart of the customers, where loyalty is
important to them. In addition, Malaysia Airlines has been supported by the Malaysian
government for years, which allows the company to depend on the government if they face any
financial problems or other difficulties which can benefit the company. The company has won
numerous prestigious awards in the past ten (10) years (Malaysian Airlines, 2016) and their
broad network of destination has additionally become a strength that has led the potential and
loyal customers to fly with Malaysian Airlines.

2.3.2 WEAKNESSES
Malaysian Airlines and its competitors are not excluded from organizational weaknesses.
Malaysian airline has a very weak financial performance for many years, the only year the airline
recorded positive results was in 2009 (figure 3) (Gilbert M., 2014). In addition, the airline
operation costs such as landing fees are high which affect the profit margin significantly. Being
in the full service segment has significant impact on the companys profit margins if the cost
structure is not looked intensively. Generally, when profit margins are limited, it impacts on the
overall market growth of the airline too. In addition, the price war with AirAsia has also affected
their target in controlling the local market. Since Malaysian income per capita is lower than other
countries, therefor Malaysian Airlines are now focusing more with the middle and upper class
customers.

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Figure 3: Trend in Profitability ratios 2007-2011 (Malaysian Airlines)

Source: (Gilbert M., 2014)

2.3.3 OPPORTUNITIES
Malaysian Airlines has analyzed its opportunities in the market. The International Air Transport
Association (2013) forecasts that airlines expect to see a 31% increase in passenger numbers in
2017. By 2017, total passenger numbers are expected to rise to 3.91 billion. By this, Malaysian
Airlines can take this opportunity to expand their services in other countries such as China and
Japan where individuals in the said countries always travel abroad. In addition, the increasing
numbers in the cargo industry have become a profitable sector for Malaysian Airlines. In 2010,
the increasing numbers of air cargo service had risen to 26.5% and as a result, Malaysian Airlines
managed to obtain a profit.

2.3.4 THREATS
Fuel price is a threat to Malaysian Airlines, let alone, any other airline. Inevitably, Malaysian
Airlines operating costs may also increase if the fuel prices increase, as Malaysia has recently
experienced a fuel hike, with increases of 5 cents per liter. Malaysian Airlines faces fierce
competition, not only from international airlines such as Singapore Airlines and Cathay Pacific
Airways but also from domestic airlines such as Air Asia. The threat of new entrants also poses a
threat for Malaysian Airlines, with airlines such as Malindo Air. Lower interest rate and credit
loan will allow new airlines to enter the industry. The more airlines enter the industry; the
likelihood that Malaysian Airlines will struggle in the business.

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PART B: RELATIONSHIP MARKETING

3.0 INNOVATION OF RELATIONSHIP MARKET

PRACTICES: CHANGING THE MARKET PLACE
Throughout the twenty-first century, the way that firms and companies do business has changed,
furthermore, it is readily apparent that such changes are attributable to the advent of the internet.
Overviews of the internet show that this phenomenon is not only a networking media, but also a
place for consumers to conduct their transactions on the global market (Goodarz D., Samin R.,
Muhammad R., 2012). E-marketing strategies involve existing utilities and combine them with
communications and also data networks to create a relationship with the firm and its customers.
One of the key factors of survival of any business system in modern business environment is
Relationship Marketing.

3.1.1 RELATIONSHIP MARKETING: CUSTOMER INTERFACE

Relationship marketing basically means continuous interaction with customers in order to
enhance relationship and to develop long term loyalty thereby earning profit (Branimir D., Jelena
S., 2013). Malaysian airlines have adopted many methods to keep their customers satisfied.
Malaysian Airlines customers are their top priority. There are various channels which include call
centers, sales offices, agents, airports counters and town center kiosk for the convenience of
walk-in customers.

Malaysian Airlines internet booking system was launched in August 2004. The internet booking
system not only enhanced customer relationship experience but also allowed MAS to reduce
airlines distribution cost significantly over the years. The website allows customer faster access
to information to their travelling needs and to look through its products and services offered. In
addition, the use of internet booking allows customer access to MAS inventory worldwide with
ease.

3.1.2. RELATIONSHIP MARKETING IN SOCIAL MEDIA

One of the most comprehensive testaments of Malaysian Airlines innovation in social media is
the introduction of MHbuddy to Malaysian Airlines Facebook page (figure 4), it is an

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application that allows users to book and check-in for lights, and share details of their trip with
their Facebook friends. This application is considered to be the most comprehensive for an
airline on the Facebook platform. This innovative strategy developed by MAS is an interesting
approach to leverage Facebook to book a flight.

Figure 4: MHbuddy Application

Source: (MHbuddy, 2016)

Malaysian Airlines have a key presence on both Twitter and Facebook as mentioned. Separate
tweets and pages for specific markets such as students, the expatriate community and several
foreign localities in their native languages have been formed in order to make it easy for
customers to access and use. An approach to develop customer relationship management. These
channels complement Malaysia Airlines existing consumer platforms, such as the sales offices
and call centers, and allow the company to interact with a different segment of the market and to
engage them in a different way.

3.2 MASS MARKETING TO ONE-TO-ONE MARKETING

EFFECTIVENESS
Traditionally, businesses pursued the policy of mass marketing which required serving several
customers with the same product (Hudson N., Annette J., 2007). The idea is to broadcast a

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message that will reach the largest number of people possible. On the other hand, one-to-one
marketing is a customer relationship management (CRM) strategy emphasizing personalized
interaction with customers (Diego K., and Jinxiang P.,2010). The on-to-one marketing of
interactions is thought to foster greater customer loyalty and better return on marketing
investment.

In responses to decades of marketing overload, consumers have adapted the way they absorb
information. For instance, todays consumer hears an operator on the phone or glances at a piece
of mail and decides in an instant whether it has value. Messages not immediately identifiable to
the individual are promptly cast off into a sea of irrelevant clutter.

As the customer has evolved, so must businesses. Companies have moved away from the
traditional mass marketing practice of blanketing everyone with the same message, and start
connecting with consumers on an individual basis. By embracing a one-to-one marketing
strategy, companies can enhance their brand position, improve return on investment, and increase
customer retention.

The effectiveness of one-to-one marketing or abbreviating as marketing 1:1 can be evident due to
customization, as customization creates a firms biggest competitive advantage. It only is
possible by integrating the production process with a firms customer feedback. Once an
individual has invested time and energy specifying his needs to affirm, he must first re-invent
this relationship to get an equivalent product from another vendor. This creates a barrier to exit
from the first firm. In addition, there is a risk that products from the next vendor might not be as
satisfying as products from the first.

3.2.1 DIFFERENTIATING EACH CUSTOMER

Identifying the most valuable customers, recognizing their unique preferences and needs, and
treating them differently is the essence of marketing 1:1. Customers have different needs from
the firm, and from each other. Moreover, they have different values to the organization. The
value of a customer determines how much time and investment should be allocated to that
customer, and a customers needs represent the key to keeping and to growing that customers
business (Dennis P., 1998). This applied both too individual consumers and industrial customers.

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3.2.2 INTERACTING WITH EACH CUSTOMER

Interacting with customers is another marketing 1:1 fundamental. Every contact with a customer
represent the opportunity to learn more about his/her needs and his/her value to the organization.
In comes cases, direct contact will be possible and considerable through should go into how
maximum learning can take place (Dennis P., 1998). Consumers will make choice and the firm
can infer customer preferences.

2.3 CUSTOMER RELATIONSHIP MANAGEMENT

RECOMMENDATIONS
As analyzed from the above information, it can be seen that MASs current marketing efforts
have been predominately focused on tactical sales promotion rather than brand building. In spite
of this approach, they have been able to generate low yields insufficient to cover an increasingly
uncompetitive cost structure. In order to win back its customers, Malaysian Airlines should
improve customer satisfaction at every touch point which is pre-flight, in-flight and post flight.
The company should focus on building its brand making sure it delivers on its brand promise
consistently. Malaysian Airlines needs to focus on Enriching loyalty Programmes, competitive
product roll out, enhanced advertising and promotion development and finally to focus on
branding revamp.

Website service can be considered as a pure service, in case the case of pure service as Malaysian
Airlines website quality is generally given a greater impact towards customers satisfaction.
Malaysian Airlines need to specifically concentrate on e0service quality dimensions (fulfilment,
site privacy and aesthetics, efficiency, customization, and system availability) having high
impact on perceived service satisfaction. Malaysian Airlines should delight their customers by
exceeding their expectation to enhance customers satisfaction. Such a principle should be
applied to all the above dimensions in their website service.

Lastly, Malaysian Airlines should apply the image of premium brand to the price sensitive
customers and attract them with low pricing service offerings and exploit the huge market
potential of low end segmented customers outside Malaysia. By creating a truly customer-centric
organization, based on a Malaysian Airlines understanding of customer value and need, and

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empowering employees with tools and knowledge to respond to the customer, the company can
establish a virtuous cycle that can lead to renewed economic success.

4.0 CONCLUSION
After careful analysis of MAS, we can come to a conclusion that the airline needs to take crucial measures in order
to recover from their current crisis. Based on the efficiency model and SWOT model its clear that if MAS
continues to follow their current business mode. Financials have been MASs greatest challenge faced
as a business; therefore, a fundamental and radical overhaul is required to put them back on the path to
profitability. This may mean bearing more expenditure in terms of getting new fleet but it would settle the cost in
the long run. In order to rebuild MAS as the preferred premium carrier which states their vision MAS will
harness the countrys geo-economic centricity in ASEAN, emphasize natural cost competitiveness as a hub,
expand their network, coordinate their commercial functions and synchronize operations with similarly
minded airline partners.

5.0 REFERENCES

Accor (2011) Asia Pacific Business Traveller Research, Singapore: Accor.

Ahmad Ommani (2011) 'Strengths, weaknesses, opportunities and threats (SWOT) analysis for
farming system businesses management: Case of wheat farmers of Shadervan District, Shoushtar
Township, Iran', African Journal of Business Management, 5(22), pp. 9448.

Chartian (2014) An analysis for the Aviation Industry, Available at: http://chartian.com/analysis-
for-aviation-industry/ (Accessed: 18 September 2016).

Dennis A. Pitta (1998) 'Marketing one-to-one and its dependence on knowledge discovery in
databases', JOURNAL OF CONSUMER MARKETING, 15(5), pp. 468-480.
Diego Klabjan and Jinxiang Pei (2010) 'In-store one-to-one marketing', Journal of Retailing and
Consumer Services, 5(1), pp. 1-3.

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Duki, Branimir; Stanii, Jelena; Stanii, Nenad (2013) 'CRM AS A KEY TO

BUSINESS SUCCESS OF E-COMMERCE', Interdisciplinary Management Research, 9(1), pp.
139-152.

Gilbert O'Neil Mushure (2014) 'Financial Analysis Report: Malaysia Airlines 2007-2011',
International Journal of Sciences: Basic and Applied Research, 14(2), pp. 148-153.

Goodarz Javadian Dehkordi, Samin Rezvani, Muhammad Sabbir Rahman and Firoozeh
Fouladivanda (2012) 'A Conceptual Study on E-marketing and Its Operation on Firm's
Promotion and Understanding Customer Response ', International Journal of Business and
Management, 7(9), pp. 114-120.

Hudson Nwakanma and Annette Singleton Jackson (2007) 'Relationship Marketing: An

Important Tool For Success In The Marketplace', Journal of Business & Economics Research,
5(2), pp. 55-58.

Malaysian Airlines (2016) Awards, Available at:

http://www.malaysiaairlines.com/us/en/corporate-info/awards.html (Accessed: 20 September
2016).

Mohammad SumannSarker and Rabiul Islam (2013) 'Competitive Market of Air Industry and
Competitive Advantages for Customer Satisfaction through Pricing Strategy of Air-Asia',
Journal of Applied Sciences Research, 9(4), pp. 2505-2512.

Mok Kim Man and Jainurin Bin Justine (2005) 'AirAsia In The Malaysian Domestic Airline
Market: Empirical Analysis Of Strategy', International Business & Economics Research
Journal , 4(12), pp. 53-61.

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Shili Sun (2009) 'An Analysis on the Conditions and Methods of Market Segmentation',
International Journal of Business and Management, 4(2), pp. 63-66.

Siang Foo Yong (2013) Malaysian Airlines, Available at:

http://econsandsiangfoo.blogspot.my/2013_10_01_archive.html (Accessed: 18 September 2016).

The International Air Transport Association (2013) Airlines Expect 31% Rise in Passenger
Demand by 2017, Available at: http://www.iata.org/pressroom/pr/Pages/2013-12-10-01.aspx
(Accessed: 25 September 2016).

4.0 APPENDIX

Appendix 1: Frequent Traveler by Country or Residence

Source: (Accor, 2011)

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