CONTEXTUALIZATION OF MARKET ORIENTATION IN AIR TRANSPORT INDUSTRYIN INDONESIA

Prepared by: Ayuwandira Febriana Sadu T-Number : (920209T121)

Supervisor : Sofia MolanderCourse : SAMOTDate submitted : 2014-11-21

CONTEXTUALIZATION OF MARKET ORIENTATION IN AIR TRANSPORT INDUSTRY IN INDONESIA

Customers orientation in public service has been changed since decades ago especially in public transport, i.e. in air transport industry. Their preferences are not simply revolve around the affordability of ticket price. Customers nowadays are more likely to purchase the best quality of public transport services despite the high price. Therefore, it is important for public transport provider to be market oriented within the organizational system and the organizations approach in translating customers needs in the service delivery. According to Kohli and Jaworski (cited in Molander, et al. 2012, p 156), market orientation is defined as the generation and dissemination of market intelligence by organizations, as well as responses to it. To be able to be a market oriented organization, a company has to undergo these three stages:1. Intelligence generation can be interpreted of approaches to identify customers current and future needs and preferences and the influential factors behind those needs (Molander, et al. 2012). Intelligence in public transport services can be generated by conducting customer satisfaction surveys, forum group discussions, analysing published reports, experimentations, etc (Molander, et al. 2012). For instance: PT. Garuda Indonesia Tbk (GIA) as a notable airline company in Indonesia regularly conducts Customer Satisfaction Survey to measure the level of success its implemented programs by measuring the level of customer satisfaction. GIA also requires the customers to give them feedbacks in what area they lack of and in what way so that the customer will be satisfied (Garuda Indonesia 2014). The company conducts the survey through onboard survey via Inflight Magazine. Passengers are able to give their genuine evaluation on the airlines performance based on 28 Customer Touch Points (Garuda Indonesia 2014). However, there are several challenges that need to take into consideration in identifying customers needs, which are:1. Customers. Customers as the dynamic being can be influenced by their surrounding environment and their own state of mind. A surveys result can be varied depends on the customers current circumstance. E.g. a first class flyer might assess the satisfaction survey improperly because his business offer just got turned down by the shareholder. One form survey may insignificant to the overall result, yet it can affect the method of company in generating decisions. 2. Survey methods.The survey methods (questions, interviewer,etc). Most of the time, customers only give feedbacks or mainstream inputs to the company (Davoudi 2014). Therefore, in order to know the unspoken and hidden needs of customers, the survey questions and methods have to be precise and clear for the customers (e.g. Kano questionnaire).3. Companys willingness. It requires companys willingness to change to the better organization. It involves the participation of the entire organization to generate intelligence (Kohli and Jaworski 1990). Thus, company has to take the responsible risk by investing a great deal of money to fund customers survey, trainings, scientific conferences, and so on (Kohli and Jaworski 1990).

It is also important to identify factors that influence customers needs and preferences to generate market intelligence (Kohli and Jaworski 1990). Knowing these factors can assist the company to foresee customers future needs. As stated in Kohli and Jaworski (1990), customers needs can be influenced by several external factors, such as: technology, competitors, government regulations, and other environmental aspects. Besides, customers needs can be influenced by competitor actions (Kohli and Jaworski 1990). The challenge in identifying the influential factors of customers needs are as follows:a. Policy makers (i.e. regulator). For instance: Air Asias customers may have been affected by the changing regulation in ticket pricing. Ministry of Transportation obliged the airline to implement surcharge to domestic flights. (Air Asia 2014). In addition, Ministry of Transportation will assign a new regulation regarding the standardization of floor price to all airlines (Kompas.com 2014). b. Developing technology. Self-service check-in machine is considered as a new technology in airport. It may enhance efficiency for the customers. However, the company has to also consider the inexperienced customers (e.g elderly, illiterate, disabled, etc). c. Changing lifestyle trends. Travelling in a tight budget or backpacking has gotten popular in the last five years. A full service airline like GIA may not expected this lifestyle trend in five or ten years ago. This lifestyle affects customers preference in choosing the airline. Backpacking forces people to choose a low cost airline. Hence, it can reduce the number of passengers of GIA.

2. Intelligence dissemination can be defined as communicating the intelligence to relevant or all departments in an organization (Kohli and Jaworski 1990). As explained by Kohli and Jaworski (1990), an organization must adapt to market needs, hence, market intelligence has to disseminated not only to marketing department but also to other departments. However, in air transport industry (e.g. airport) where there are several actors involved during the service delivery, dissemination market intelligence might encounter a challenge, such as the lack of coordination between involved actors. As explained in Kohli and Jaworski (1990), the lower the interdepartmental connectedness, the lower the market orientation in an organization. For instance: PT. Angkasa Pura II (AP2) as an airport operator in western part of Indonesia disagree with GIAs action in buying aircraft fleets of Boeing 777-300ER due to the insufficient capacity of the runway to support the aircraft. Because of this event, GIA has to cancelled several new routes and causing companys loss (Merdeka.com 2013). This may not occurred if there is a better coordination between airport operator and airline operator.

3. Responsiveness is considered as the action in taking response to intelligence that already generated and disseminated (Kohli and Jaworski 1990). However, it might not be easy for a company to turn customers needs into realizations. There are several challenges that certainly needed to be encountered. For instance: customers demand an on-time performance from GIA. However, it can be difficult because the airline has to face the congestion of air traffic and the lack of airport infrastructure facilities. Besides, there are also obstacles that may impede companys way to a market oriented firm, such as: senior management factors, interdepartmental dynamics, and organizational systems (Kohli and Jaworski 1990). For instance: a reluctant manager toward change and responsible risk may hinder the betterment of the company. Or, conflicts between Research Department and Marketing Unit may cause the poor result of the ticket sales. In a broader view, a company under the influence of political behavior may trigger interdepartmental conflict (Kohli and Jaworski 1990). After implementing market orientation, the company are more likely to gain business profitability and satisfied customers. As stated in Kohli and Jaworski (1990), market orientation appears to provide a unifying focus for the efforts and projects of individuals and departments within the organizations, thereby leading to superior performance. To illustrate this: GIA benchmark their business against other international airlines and the emergence of new low cost carrier domestic airlines. GIA realizes that several new airlines offer good service with reasonable price and ultimately affect customers preference in choosing airline service. Therefore, the company enhance their dominance in market by establishing strategies as follows (Garuda Indonesia 2014): intensifying domestic marketing programs, expanding fleet and flight frequency, focusing marketing programs on First Class, etc. By enhancing their service, GIA received numerous awards, such as the Worlds Best Economy Class, and human resource development, and so on (Garuda Indonesia 2014).

LIST OF REFERENCES

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