marketing strategies of star alliance: an in-depth...
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Proceedings of the International Conference on Tourism, Hospitality &
Sustainable Development (IC17Dubai Conference) ISBN: 978-1-943579-18-1
Dubai - UAE. 6-8, October 2017. Paper ID: DT745
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Marketing Strategies of Star Alliance:
An In-depth Analysis of Asian based Airline Members
Chayapoj Lee-Anant,
Graduate School of Tourism Management,
National Institute of Development Administration, Thailand.
E-mail: [email protected]
Worarak Sucher,
Graduate School of Tourism Management,
National Institute of Development Administration, Thailand.
E-mail: [email protected]
_________________________________________________________________________
Abstract
Nowadays, it is very common for everyone, when travelling, they fly. This has resulted in the
more intense competitiveness in the airline business around the world particularly Asia. Even
though airline business is rapidly growing, the business still needs adaptation to match the
rapid economic changes and strategies to survive. One of the approaches the airliners have
employed for the regarded purposes is the strategic airline alliance strategy namely Oneworld,
Skyteam and Star Alliance. Under the airline formation, the airlines have launched many
marketing strategies differently to influence purchasing intention. Some are successful and
some are not among the Asia-based star alliance airline members. The Star Alliance, which is
the focus of this paper, has 28 airline members worldwide and only 9 airlines are based in Asia.
It is interesting to study about how they do for their marketing strategies. The purpose of the
paper is therefore aimed at 1) analyzing and discussing the marketing strategies employed by
Asia-based airline members of the Star alliance 2) finding the common marketing strategies
practiced by the Asia-based airline members of the Star alliance. The discussion of this paper
is based on literature review with a support of the vast examples of marketing strategies of
Asia-based Star Alliance airline members. It is found that there are 13 marketing strategies,
currently employed to increase the purchasing intention by the Asia-based Star Alliance airline
members. Those are Strategic Alliance Strategy, Social Marketing Strategy, Quick Response
Strategy, Competitive Differentiation Strategy, Product Diversification Strategy, Product
Diversification Strategy, Pricing Strategy, Airline Branding Strategy, Customer Retention
Strategy, Cost Leadership Strategy, Customized and Personalized Strategy, Market Positioning
Strategy and Product Distribution & Digital Marketing Strategy. And among them, only 6
marketing strategies are similarly used, which are Strategic Alliance Strategy, Quick Response
Strategy, Pricing Strategy, Customer Retention Strategy, Product Differentiation Strategy, and
Product Distribution and Digital Marketing Strategy. This paper is composed of three parts.
The first part of this paper explains the current situation of airline business and then the second
part discusses the marketing strategies employed for increasing purchasing intention among
the 9 Asia-based Star alliance airline members. The last part demonstrates the common
marketing strategies.
___________________________________________________________________________
Key Words: Marketing strategy, Star alliance, Asian based airline member, Strategic Airline
Alliance, Airline industry
JEL Classification: C 19, G13, G 14
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Sustainable Development (IC17Dubai Conference) ISBN: 978-1-943579-18-1
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1. Introduction
In the past two decades, air transportation has been changed rapidly due to globalization,
global dynamics, science and technological advancement. These factors have eased global
transportation to be more convenient, leading the increasingly higher demand in air travelling.
(Wensveen, 2015; Belobaba, Odoni, and Barnhart, 2015). Air transportation businesses have
expanded compared to the past years. Although the global airline industry is continually
growing, the profitability of each airline is hardly found. (IATA, 2016). The International Air
Transportation Association (2016) declared that the airline industry has double projected
revenue from only US$746 billion in 2004 to US$746 billion in 2014. Mainly, the growth
numbers mainly come from low-cost carriers (LCCs) which contributes about 25 percent of the
worldwide market. These percentages tend to increase yearly especially from the expansion of
low-cost carriers in Asia continent. Because of the popularity of low-cost carriers, full service
airlines are struggling hard to survive in the high competitive industry. (Morrison and Winston,
2010). Not only because of the high competitiveness, the airline business is also vulnerable to
uncontrollable events, such as infectious diseases, security issues, natural disaster and etc.
(Borenstein and Rose, 1995; Tavakolian 1995). With these vulnerable concerns, the airlines
need to concentrate on increasing revenue margins as well as improving product quality in order
to outstandingly perform in the competitive industry.
Presently, there are three global airline alliances which are Star Alliance, Skyteam and
Oneworld. By considering the size, Star Alliance is the largest global airline alliance, including
27 airlines, serving more than 1,000 airports in 194 countries and carrying 637.6 million
passengers per year on more than 18,000 daily departure flights (Star Alliance, 2016). IATA
(2016) shows that Star Alliance covers 23% of total scheduled flights, while Skyteam comes
second with 20.4% and Oneworld comes third with 17.8%, leaving 28.8% for minor airline
alliances.
Star Alliance had been founded in 1997 with the formation of airlines on three continents
including Lufthansa, United Airlines, SAS, Air Canada and Thai Airways (Mitchell, 1998). At
the early stage, it primarily focused on code sharing and common frequent flyer benefits. Years
after, the Star Alliance network becomes stronger with more airline members, covering broader
routes, sharing airline facilities such as check-in counter and ground handling service (Vinod,
2005; Vaara, Kleymann and Seristo, 2004).
The star alliance is considered as the first and the largest airline alliance in the world. There
are currently 27 airline members in alliance portfolio under slogan ‘the way the earth connects’.
As of October 2016, the airline partners in the portfolio are Adria, Aegean, Air Canada, Air
China, Air India, Air New Zealand, ANA, Asiana Airlines, Austrian, Avianca, Brussels
Airlines, Copa Airlines, Croatia Airlines, Egypt Air, Ethiopian, EVA Air, Lot Polish Airlines,
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Lufthansa, SAS, Shenzhen Airlines, Singapore Airlines, South African Airways, Swiss Air,
Tap Portugal, Thai Airways, Turkish Airlines, and United. The Star Alliance is principally
focused on marketing and cost reducing for its airline partners. The founding members in 1997
were Lufthansa, SAS, Thai International and United Airlines. Among 27 airlines, there are 9
airlines operating in Asia, which are Air China, Air India, All Nippon Airways, Asiana Airlines,
EVA Air, Shenzhen Airlines, Singapore Airlines, Turkish Airlines and Thai Airways.
Although each Asia-based star alliance airline studied operates under the same alliance, they
employ different marketing strategies in driving its business. This causes a visibly
disconnection between airlines in terms of alliance brand image, especially under the same
airline alliance. In relevant to passengers’ perception, they usually expect similar service
operational standards when flying with airlines under the same alliance (Weber, 2005).
From the above discussion, it is possible to say here that the competitiveness of airline
industry creates the strategic alliance marketing in airline business. Therefore, the purpose of
the paper is aimed at 1) analyzing and discussing the marketing strategies employed by Asia-
based airline members of the Star alliance 2) finding the common marketing strategies practiced
by the Asia-based airline members of the Star alliance. This paper is beneficial for the marketers
to improve the service operational effectiveness and purchasing intention via the common
marketing strategies in Star Alliance airline members. Additionally, this paper is useful for
airline students who would like to further study in strategic airline alliance.
2. Marketing strategies used in Asia-based Star Alliance Members
Given the large marketing share within the industry, airline business has dynamic marketing
strategies to gain profitable market share as much as possible (Shaw, 2011). As a result, each
airline comes with different or similar marketing strategies to influence more passengers to fly
with as well as maintain its existing passengers (Terblanche, 2015). The airline alliance is
actually considered as the major marketing tool for airlines within the umbrella to promote the
wider network of travel. In airline business, it is believed that branding is the most important
for each airline to differently position itself from the competitors and convey the airline
personality to passenger retention. Park, Robertson and Wu (2006) state that airline marketing
is difficult because it is considered as a service provider. The service perception by customers
is also varied relying on the quality of service the passenger received. Nonetheless, the
expansion of low cost carriers (LLCs) gradually changes passengers’ perception that full
service airline is wasteful and over than passengers’ requirements. This is in accordance with
Hapsari, Clemes and Dean (2016), Namukasa (2013), and Mun (2011) that the characteristics
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of passengers in 21st century are more value-conscious, low loyalty, but high empowered, more
demanding in flexibility, and service excellence.
Although the alliance is the key marketing tool used by a particular airline alliance in Asia,
each airline is still required to work on its own marketing strategies to promote as well as uplift
its brand recognition (Gayle and Le, 2013). Each airline employs similar or different marketing
strategies depending on the brand position the airline is situated. The airline may include more
than two marketing strategies depending on the airline executives to set the directions.
Additionally, the airlines need to pay attention to the target market they have as well as the
behavior of the passengers. However, it has been found out as Gayle and le (2013)
demonstrating that the marketing strategies the airlines launch have created more intense
competitiveness, as a result, the airlines have to launch new marketing to complete with each
other to increase the market share. Su and Tsang (2015) insert that whatever marketing
strategies the airlines employ, pricing strategy seems to be prominent. However, doing so may
lead to the downgrade of airlines’ image and positioning. The reviews of Asia-based Star
Alliance members, there are thirteen key marketing strategies that airlines employ in their
marketing plan namely strategic alliance strategy, product diversification strategy, product
integration strategy, quick response strategy, competitive differentiation strategy, customer
retention strategy, customized and personalized strategy, market positioning strategy, pricing
strategy, cost leadership strategy, product distribution and online marketing strategy, social
marketing strategy, and airline branding strategy as shown in Table 1 below.
Table 1: Airline marketing strategies employed by the Asia-based Star Alliance members
The Table shows that among Asia-based star alliance airlines, the strategic alliance strategy,
quick response strategy, competitive differentiation strategy, pricing strategy, customer
retention strategy, and product distribution and digital marketing strategy have been employed
by all airlines while social marketing strategy has been practiced by 5 airlines namely Air
NO. AIRLINE MARKETING STRATEGIES
ASIA-BASED STAR ALLIANCE AIRLINE MEMBERS
Air China
(CA)
Air India
(AI)
ANA
(NH)
Asiana
Airlines
(OZ)
EVA Air
(BR)
Thai
Airways
(TG)
Turkish
Airlines
(TK)
Shenzhen
Airlines
(ZH)
Singapore
Airlines
(SQ)
1 Strategic Alliance Strategy
2 Social Marketing Strategy
3 Quick Response Strategy
4 Competitive Differentiation Strategy
5 Product Diversification Strategy
6 Product Integration Strategy
7 Pricing Strategy
8 Airline Branding Strategy
9 Customer Retention Strategy
10 Cost Leadership Strategy
11 Customized and Personalized Strategy
12 Market Positioning Strategy
13 Product Distribution and Digital Marketing Strategy
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China, ANA, Asiana, Thai Airways, and Shenzhen airlines. It is interesting to point out that
only 3 airlines employed product diversification strategy namely EVA, Thai Airways and
Singapore Airlines while only Thai Airways and Shenzhen Airlines launched product
integration strategy. Furthermore, ANA is the only airline that has not employed airline
branding strategy. Regarding the cost leadership strategy, there are only 3 airlines seeing its
importance namely Air China, Air India and EVA while customized and personalized strategy
has been employed by 3 airlines namely Thai Airways, Turkish Airlines and Singapore
Airlines. It is noticeable that there are only 3 airlines namely Asiana Airlines, Shenzhen Airlines
and Singapore Airlines, paying attention to market positioning strategy. The analyses of the 13
marketing strategies the Asia-based star alliance members have employed are detailed below.
3. Product Diversification Strategy
It has been defined by Su and Tsang (2015) and Czinkota and Ronkainen (2013) that product
diversification is a useful strategy to enhance the business opportunities using an existing
product to penetrate new potential markets. The product diversification strategy can be a
product extension under the same brand umbrella (Su and Tsang, 2015; Shaw, 2011). Su and
Tsang (2015) summed that the product diversification strategy aims at building the new
customer base and expand the marketing potential of original product. The analyses signify that
the approach that the studied airlines have employed for product diversification strategy is
firstly to have subsidiary airlines to target at different market. For example, Singapore airlines
has four subsidiary airlines to target different market segmentations, Singapore airlines
positioned as a premium airline while tiger and scoot airlines are budget airlines, targeting at
budget travelers. Silk air is playing a role as a regional full service airline, targeting Asia-pacific
based passengers. (Singapore Airlines, 2015). This increases market shares for Singapore
airline while broadens its customer segments. Thai Airways has diversified its business units
namely ‘Thai Airways’ offering air tickets, ‘Royal Orchid Holiday’ having package tours as a
product and ‘Puff and Pie’ targeting at passengers who like bakery products served on board.
(Thai Airways, 2015). Lastly, Singapore and EVA Airlines have diversified a more variety
classes on board, economy, premium economy, business and first class. (Singapore, 2015;
EVA, 2015).
4. Product Integration Strategy
The product integration always comes up with product placement strategy to expand the
customers using new copious media channels. Lu, Wang, Hung and Lu (2012) differentiate the
product integration strategy from product placement strategy that the product integration
significantly involves the integration of the product into the script of any form of advertisement.
It is believed by Shaw (2011) that the purpose of product integration strategy is to orderly
manage the tools of marketing communications in order to ensure that the delivered messages
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go through advertising, sales promotion, social media, public relations and personal selling.
The product integration strategy requires extensive knowledge of target audience and strong
experience in media and marketing communications. (Gillen and Morrison, 2003). Lovelock
(2011) further describes that the product integration strategy also refers to a certain company
with has different business units to gain more profitability and reputation. Take Thai Airways
international as an example. Thai Airways has promoted a Royal orchid holiday program to
convince the customers to purchase a Thai airways ticket but also get accommodation and tour
services concurrently. (Thai Airways, 2015). The Shenzhen airlines has highlighted a cargo
service as a core product while the business passengers can get ticket to fly the destination for
meeting and visiting. (Shenzhen Airlines, 2015).
5. Customized and Personalized Strategy
Admitted by Kotler, Burton, Deans, Brown and Armstrong (2015), the customized and
personalized strategy is widely employed to build the relationship with niche customers. The
marketers require to understand the needs and desires a particular customer group and later
tailor the products and services based on individual customers’ preferences. Product adaptation
and improvement are necessary to keep it stylish and up-to-date. Kajtax et al. (2015) discover
that customized and personalized strategy is steadily growing because the customers have
different factors selecting products and services based on personal income, taste, education,
perception, style of living. Therefore, it is a practical path for marketers to customize and
personalize products and services serving at the precise customer group and individual. Baines,
Fill and Page (2013) note that besides creating the personal impression, the customized and
personalized also bond the relationship between the brand and customers. However, Kotler et.
Al (2015) describe the disadvantage of customized and personalized strategy that it may
increase cost operation and production costs which only aim at very niche group and individual.
The literature reviews show that Turkish Airlines and Thai Airways have chef that cater the
demand of requested meal cooked on board while Singapore airlines has addressed the name
of passengers who are elite member and flying business class. (Turkish Airlines, 2015;
Singapore Airlines, 2015; Thai Airways, 2015).
6. Market Positioning Strategy
The marketing positioning strategy is a long-term effort to differentiate and balance the
brand from competitors. In marketing, the businesses should indicate the customers’ perception
of brand while establish the positive image and identity of brands, products and service.
(Narangajavana, Garrigod-Simon, Garcia, Forgas-Coll, 2014). The theory of marketing
positioning strategy focuses on the way to pull an attention from customers and how to set a
distinct characteristic apart from the competitors. Correspondingly, the challenging matter of
this strategy is how to influence the audience to perceive the set characteristic for brand, product
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and service. In order to run this strategy, the business data is necessarily required to balance
concepts of differentiation, distinction and similarity for the brand-narrative. Heracleous and
Wirtz (2012) and Czinkota and Ronkainen (2013) agree that the market positioning strategy
helps simplifying the product image and identity as well as changing the perceptions of
customers on the liability of brand.
The studies present that Asiana Airlines employs K-Pop marketing to target at teenagers
who passionate in K-pop singers (Asiana Airlines, 2015). Also, Shenzhen Airlines has targeted
at business and corporate passengers working in imports and exports business (Shenzhen
Airlines, 2015). Singapore Airlines has targeted at passengers who would like to travel to
Australia and New Zealand by using a special offer to convince the decision making (Singapore,
2015).
7. Cost Leadership Strategy
Kotler et al. (2015) and Baines, Fill and Page (2013) describe the cost leadership strategy as
the minimum cost of operation in the industry, allowing company to present a competitive
advantage. Though using least costs in operating the business, the products and services should
also be standardized. It is described by Banker, Mashruwala and Tripathy (2014), Sengupta and
Wiggings (2014), Baines, Fill and Page (2013) that the cost leadership is useful for some
companies while sometimes difficult to employ. It means that the company needs to source the
lowest costs for goods and services before passing these savings to the customers. Therefore,
the goods and services have to well standardized with the minimum costs spent. Kotler et al.
(2015) state that the outcomes are more necessary in this strategy as it is the factor creating a
repurchasing attention. To sum up, cost leadership strategy is suitable for marketers targeting
budgeted customers and effective in calling attention from wide audiences. (Kotler et al., 2015;
Baines, Fill and Page, 2013). To compare the fare ticket among the studied airlines, it is found
that Air India has set the ticket fare at the lowest rates compared to the other airlines (Air India,
2015).
8. Social Marketing Strategy
It is believed that the principle of social marketing strategy is to convince to change
customers’ behavior using any approach. The marketers must know how to change customers’
behavior in order to indirectly convince them to purchase the products and services. Kotler et
al. (2015) and Tuten and Solomon (2014) agree that the significant difficulty in social marketing
strategy is the path to create awareness and interest to the products and services. Marketers
require to convey the message to the targeted audiences, which the message needs to make
sense for their daily life as well. Usually, the effective message literally motivates audience to
change their behavior, from attitude to intention. It should make the audiences feel that this
message is sensible and encourage them to comply. To sum up, Grant (2016) and Kotler et al.
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(2015) state that marketers must be able to target the right audiences, and later personally design
the effective messages to call attention. This will finally change customers’ attention into
action.
The social marketing strategy is found to be employed in all Asia-based Star alliance
members under the concept of corporate social responsibility (CSR) or environmental corporate
social responsibility (ECSR) with their main purposes to create the friendly brand image of the
airlines. The social marketing strategy has been in the form of CSR activities in majority. For
examples, Asiana Airlines has initiated student sponsorship program to provide travelling
opportunity for Korean students to learn outside the country while Shenzhen Airlines sees
environmental social governance as a concept for constructing logistic park. (Asiana, 2015;
Shenzhen Airline, 2015). Another outstanding example goes to Thai Airways, operating flight
by biodiesel. (Thai Airways, 2015). Air India has put corporate social responsibility as a key
concept in airline business operation to strengthen the brand. As well, All Nippon Airways has
vividly announced in its annual report that CSR is regarded as a marketing strategy to shorten
the distance between airline and its customers by indicating that they need to reduce to carbon
footprint. (ANA, 2016).
9. Branding Strategy
Branding strategy is defined as a long-time marketing strategy setting the characteristics,
preferences and expectations to the target customers (Kotler et al., 2015; Baines, Fill and Page;
2013). The branding strategy normally contains creativity and moral steps to create customer
while maintain existing customers (Balmer, Stuart and Greyser, 2009; Lim, Mohamed and
Ariffin, 2009; Thurlow and Aiello, 2007). Basically, the branding strategy mainly focuses on
the customers because customers are the key important in driving the business. Therefore, an
efficient branding strategy should provide value added to position the brands higher than
competitors (Duncan, 2012). Most companies position themselves based on the vision, missions
and core values which later uplift these to be a brand identity. Kotler et al. (2015) and
Rothaermel (2015) sum that the branding strategy is a crucial tool to distinguish the companies
from the competitors while help driving customer recognition in products and services.
From the analysis of annual report of the studied airlines, it is found that the airlines studied
have projected the brand image similarly. ANA, “To be the world leading airline group”, Thai
Airways, “The First Choice Carrier with Touches of Thai”, Air China, “A professional, trusted
airline with world-class standards and a unique Chinese Flair”, Air India, “To be the leader in
Indian aviation and India’s Ambassador to the world”, Turkish Airlines, “To become the
preferred leading European air carrier with a global network of coverage thanks to its strict
compliance with flight safety, reliability, product line, service quality and competitiveness,
whilst maintaining its identity as the flag carrier of the Republic of Turkey in the civil air
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transportation industry”, Asiana Airlines, “A beautiful corporation that creates the best values
in the industry”, Singapore Airlines, “To position the airline for continued growth in a
globalizing industry while maintaining the airline’s loss free record”, and EVA Air, “To
promote safe and punctual flights, friendly and professional services and innovative, efficient
operations”, and Shenzhen Airlines, “To become the most welcome and valuable airlines in the
world, promote the national aviation industry to be the world's preferred choice. These
statements concluded that each airline employs different brand strategy, nonetheless every
airline aims to be the leader in the market, portraying through the country-based national and
cultural image. (ANA, 2016; Thai Airways; 2015; Air China; 2015; Air India, 2015; Turkish
Airlines, 2015; Asiana Airlines, 2015; Singapore Airlines, 2015; EVA Airlines, 2015;
Shenzhen Airlines, 2015).
10. Common Marketing Strategies Employed by Star Alliance Airline
Members Strategic Alliance Strategy
Kalligiannis Latrou and Mason (2006) simply defined the strategic alliance strategy as the
business partnership between two or more, temporarily, permanently or periodically. The
strategy aims at sharing resources such as products and services, distribution channels, project
funding, knowledge and expertise and etc. (Lin and Tsui, 2016; Burton and Hanlon, 1994).
Chen and Chen (2003) explains that the strategic alliance is a cooperation which aims for the
synergy in order to share benefits that are greater than those from individual. There are far more
partnership models in strategic alliance strategy such as outsourcing relationships,
infrastructure and facility relationships, distributional relationships. Liou (2012) gives benefits
of strategic alliance strategy as a tool to overcome the restrictions of market penetration by
sharing business power. The analysis of the eight airlines annual reports shows that every airline
of Asia-based Star alliance members employ strategic alliance strategy in several
characteristics. First, allying themselves into Star alliance to create the airline image in order to
attract the customers to use the services. Secondly, every airline has run airline businesses in
the form of networking. Take Air China, Singapore Airlines, and ANA as examples. Air China
has put an emphasis on creating co-regional hub in many important cities, both within and
outside China by under the slogan, ‘One belt, One road, Go global’. (Air China, 2015).
Singapore Airlines has undertaken a strategic alliance to have multi hubs under a multi-hub
strategy in Singapore, India, and Thailand to provide more choices of Singapore airlines routes
to grab the opportunity growth in these countries. (Singapore Airlines, 2015). ANA has vividly
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shown the partnership approach in the annual report 2015 that they have built up partnership
working system. (ANA, 2015).
11. Quick Response Strategy
According to Bernstein, Desai and Vernik (2012), Rust, Lemon and Zeithaml (2004), a
quick response strategy primarily relates to customer satisfaction because customers always
expect fast and accuracy service. Besides demanding the customer satisfaction, quick response
strategy also refers to the effectiveness of managing unexpected circumstances and adaptation
in high competitive market. (Benstein, Desai and Vernik, 2012). Professional management
approach is required when dealing with troubles in a timely manner. Not only a strategy using
in daily business operation, the quick response strategy also being used in marketing term to
place a strict time limit on the offer in the published advertisements. (Hadjiconstantinou, 2012).
The quick response strategy of the studied airlines is found in many forms of contact center
where the airlines have outsourced for its operation such as Thai contact center of Thai Airways,
ANA mileage club service center, Air China Hotlines, EVA web service center and etc. In
addition, the quick response strategy can be seen through the information online service of the
airline. Many airlines have created websites to provide feedback and response generated by the
customer. Asiana Airlines has a special communication system regarded as as mutual
communication methods to customers through Tweeter, Facebook, Instagram and other
channels. Additionally, Asiana has a service quality inspection program regarded as a quick
response channel for the customers to show their views on service quality provided. Under this
program, service quality committee is set-up to inspect on-board and on-ground for service
quality and take passenger views on service for improvement. (Asiana, 2015). Also, EVA Air
has launched a mobile application aggregating EVA flight information system from all
information sources under the program named EVA flight information mobility. (EVA, 2015).
12. Competitive Differentiation Strategy
Rothaermel (2015) and Homsonbat, Lei and Fu (2014) define the competitive differentiation
strategy as the strategic positioning approach to differentiate its products, services and brands
from the surrounding competitors. Depending on the tactics, the company may offer unique
benefits, and qualities that make the customers feel superior when purchase goods and services,
comparing to the competitors in similar offerings. To differentiate, company can offer
customers through outstanding packaging, marketing activities, prompt product support, or
targeting a niche market to avoid high competition in a mass environment. It is also suggested
by Lovelock (2011) and Heracleous and Wirtz (2012) that competitive differentiation strategy
requires company to set up a positioning statement as a guideline to run the business, defining
a brand position, advantages in similar products or services offering. The analyses show the
studied airlines have different approaches in differentiating their airline products as follows.
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Thai Airways is the only airline that serves meal on-bard in Thai traditional costume besides
having a uniform onboard. Sky chef on-board is one of the techniques that shows different on-
board services, practiced by Turkish Airline and Thai Airways. (Thai Airways, 2015; Turkish
Airlines, 2015). Another approach that shows different products provided by the studied airlines
is central tool providing modern and comfortable airline facilities, such as Turkish Airline has
used a bigger head set to feel the real authenticity of music. On the other hand, All Nippon
Airways has launched the five languages spoken crew member program to cater the demand of
passengers in different language communication and increase the high technological self-
check-in at the airport. Product value adding is another technique that the studied airlines have
employed. Take EVA as an example, EVA Air has done a high investment in developing in-
flight entertainment services with a belief that it can create more values added to the ticket
bought. (EVA, 2015).
Furthermore, it is found that the way that the studied airlines have been doing in creating
service difference is to focus on the aircraft and seat configurations. Take Air China as an
example for aircraft configuration. Air China has launched a wider body aircraft to attract
customers to use the service while other airlines such as Thai Airways, Singapore Airlines,
Asiana have promoted A-380. (Air China, 2015; Thai Airways, 2015; Singapore Airlines, 2015;
Asiana Airlines, 2015). Singapore Airlines is one of the airline, attempting to show the
outstanding characteristic of the seat configuration by advertising ‘Premium economy class’
with wider seats. Asiana Airlines has launched the program called the ‘Magic boarding pass’
to urge the market to fly with them and after flying, the passengers can use the boarding pass
for shopping with agreed business partners. (Asiana Airlines, 2015). Lastly, competitive
product differentiation strategy which aims to differentiate the product always focuses on
tangible and intangible products while using the service but Turkish Airlines has manifested
the program called chauffeur-driven transfer before and after service. (Turkish, 2015).
13. Pricing Strategy
There are two kinds of pricing strategies found practiced in airline marketing, which are
premium pricing strategy and competitive pricing strategy. The premium pricing strategy has
been defined as the practice of retaining the price of product or service higher than competitors
to inspire and create customer’s perception that the product or service offered represents
exceptional quality and distinction (Grant, 2016; Mumbower, Garrow and Newman, 2015);
while Rothaermel (2015) and Sengupta and Wiggings (2014) believe that customers buy more
expensive product and service because they expect a superior quality. The premium pricing
strategy is suitable for the businesses that would like to sell the value and experience. (Grant,
2016; Sengupta and Wiggins, 2014). Although the products may be similar to the competitors,
the business can add extra costs of experience and value to its goods and services. The data
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analysis shows that all studied airlines have practiced premium pricing strategy particularly
during the high season. However, price differs from different market positioning. In the same
travelling seasons, prices of each airline vary according to different target market. To the same
destination, Singapore Airlines would have higher price compared with Air India (Singapore
Airlines, 2015; Air India, 2015).
The competitive pricing strategy defined as the dynamic pricing based on how the
competitors are setting the selling price. (Grant, 2016; Narangajavana et al, 2014). Gayle and
Le (2013) focuses that competitive pricing strategy requires the knowledge of the product life
cycle; therefore, marketers must understand which stage of cycle the product is falling in.
Sengupta and Wiggins (2014) suggests that pricing above the competitors require the features
adding or improvement on the products that is a reason for price increase. It can be extra
warranty and special after sales service. While Hernandez and Wiggins (2014) and McGrath
(2013) suggest that pricing below competitors can exercise when the businesses can minimize
the production costs which they can reduce selling price afterwards. However, it is significant
to monitor the profit margins, not to sell too low which also later causes market inconsistency
(Banker, Mashruwala and Tripathy, 2014). For this strategy, it has been found that every airline
has timely ticket promotion in different seasons. For the studied airlines, they have different
period of time offering promotional tickets depending on the demand calendar, especially
during low season period.
14. Customer Retention Strategy
Wang and Fong (2016) explains the customer retention strategy as the marketing approach
to maintain existing customers, aiming to create repurchasing intention. There are numerous
factors to retain customers, nonetheless, the only important key for any factor is ‘creating a
personal relationship’ between company and customers. (Wang and Fong, 2016). A good
example of customer retention tool is a frequent flyer program in airline business which entices
airline passengers to stick to the airline for the better benefits such as more luggage weight and
priority boarding for airline frequent elite members. (Terblanche, 2015; Vlachos and Lin, 2014;
Forgas, Moliner, Sanchez and Palau, 2010). Regarding customer retention strategy, every
airline has been practicing it in the form of mileage accumulation programs, namely, Phoenix
Miles by Air China and Shenzhen Airlines, Flying Returns by Air India, Mileage Club by ANA,
Asiana Club by Asiana, Infinity MileageLands by EVA, Royal Orchid Plus by Thai Airways,
Miles and Smiles by Turkish Airlines and KrisFlyer by Singapore Airlines.
15. Online Marketing and Product Distribution Strategy
The crucial channel at the present is the online marketing strategy. Known as a digital
marketing, a web marketing and an internet marketing, the online marketing is considered as
the most influencing strategy in the globalization era. (Tuten and Solomon, 2014; Czinkota and
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Ronkainen, 2013). Kotler et al. (2015), and McGrath (2013), Rust, Lemon and Zeithaml (2004),
term the online marketing strategy as the influencing tools and methodologies that promote
products and services through the online resources. Kotler et al. (2015) and Roberts and Zahay
(2012) list the benefits of online marketing including the customer service improvement,
effective communication, competitive advantage, minimizing expenses and efficient marketing
control. Importantly, the efficient online marketing strategy creates an effective tool for
customer analysis and customer relationship management for products and services
development. (Roberts and Zahay, 2012). Due to the fact that online marketing has become a
must for airline marketing at present, it is found that every airline in Star Alliance has brutal
competition via social media channels and websites. Every airline has their own system to
support the passengers to buy tickets online. In addition, they provide necessary information to
convince the purchasing intention.
It is possible to say here that online marketing has been widely used among the studied
airlines for the past five years. However, the purpose of online marketing strategy is not only
to make the customers know the product but also provide the ability for the passengers to buy
online. Air China has built a new product system and added more values on the product and
placed all products on their own website (Air China, 2015). As well, Asiana Airlines has built
up SNS communication system to be a mutual communication method to customers. They have
done the digital marketing through Twitter, Facebook, Instagram to communicate airline’s
information and all marketing activities (Asiana Airlines, 2015).
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Figure 1: Conceptual Framework on Asia-based Star Alliance Marketing Strategies under
Airline Business Competitiveness `
The above figure explains the factors creating the airline competitiveness which the obvious
factors are an expansion of low cost carriers, an economic downturn, infectious diseases, a
natural disaster, a political instability and uncontrollable factors such as the fluctuation of fuel
price, safety and security issues etc. In order survive in the competitive aviation market, the
strategic airline alliance has been initially formed by Star Alliance. The airlines seek the
corporation between the airlines, aim to share routes, facilities and expand the targets.
Nowadays, there are 3 preeminent airline alliance which are Sky Team, One World and Star
Alliance. For this paper, we focus on the 9 Asia-based Star Alliance airline members, include
Air China, Air India, All Nippon Airways, Asiana Airlines, EVA Air, Shenzhen airlines,
Singapore Airlines, Turkish Airlines and Thai Airways. The extensive reviews show that the
airlines generally apply 13 marketing strategies which are 1.) Strategic Alliance Strategy 2.)
Social Marketing Strategy 3.) Quick Response Strategy 4.) Competitive Differentiation
`
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Strategy 5.) Product Diversification Strategy 6.) Product Integration Strategy 7.) Pricing
Strategy 8.) Airline Branding Strategy 9.) Customer Retention Strategy 10.) Cost Leadership
Strategy 11.) Customized and Personalized Strategy 12.) Marketing Positioning Strategy and
13.) Product Distribution and Digital Marketing Strategy. However, merely 6 common
marketing strategies are employed by Asia-based Star Alliance airline members, containing 1.)
Strategic Alliance Strategy 2.) Quick Response Strategy 3.) Pricing Strategy 4.) Customer
Retention Strategy 5.) Product Differentiation Strategy and 6.) Product Distribution and Digital
Marketing Strategy.
16. Conclusions and Recommendations
The 6 common marketing strategies and 7 different marketing strategies employed in the
Asia-based star alliance airline members, as discussed above, may have relationship to
purchasing intension of customers. However, the success in influencing the clients to have more
intention in purchasing the ticket to fly may also lie on other issues that the airlines need to pay
attention to. This article may be useful for Asia-based Star Alliance airlines’ performance
enhancement. Also, the data may be used for effective alliance branding creation of Asia-based
Star Alliance airline members. In terms of theoretical contribution, this article would encourage
researchers to undertake related research in airline alliance field, leading to higher numbers of
research. Furthermore, this article can be a great case study for airline students who are
interested in airline alliance field. For future research, it is possible to advise here that the topic
of marketing strategies that influence purchasing intention could be broaden to the whole
members of Star Alliance not just the Asia-based ones. Additionally, the further research should
focus on the other airline alliances namely One World and Sky team.
Acknowledgement
This paper is part of the Master of Management Program in Integrated Tourism and Hospitality
Management, National Institute of Development Administration, under the thesis titled, “Enhancing
Purchasing Intention via Strategic Airline Alliances Marketing Strategies and Service Operational
Effectiveness in Star Alliance Airline Members”.
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