Garuda Indonesia Airlines: International Marketing

Introduction

Garuda Indonesia Airlines is an international world class Indonesian airline that connects Indonesia to other parts of the world. The company has over the years positioned itself as one of the most competitive company in the air transport industry in Asia. The competition and global market are some of the challenges that not only necessitate paradigm shift in operation but also in its marketing strategies. Effective development of marketing strategies has become a major priority for all organizations of all sizes in different industries and markets. The reasons for this are certainly clear; effective marketing and development of strong brands are positively correlated with customer loyalty and profits. “If the product basically fits the different needs or segments of a market it may need an adjustment in marketing,” (Mario, 2004).

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However, the efficient management of brands can present challenges, especially in the case where managers are unable to accurately evaluate and assess their brands’ particular strengths and weaknesses objectively. One major limitation that has been presented in both academic and empirical literature is on how to deal with the multifaceted issue of marketing and products development. This report takes a critical and a comprehensive analysis of the Garuda Indonesia Company and plans to expand its operations in Indonesia. In addition the report points out some of the challenges the company faces and further suggests some of the practical solution to these problems.

Market Analysis

PEST – (Political, Economical, Social, and Technological) technique applies a comprehensive analysis of company based on the above mentioned aspects. The PEST analysis model presents a number of drivers that affect the normal operation of a company both positively and negatively; for instance, industries structure. PEST therefore gives an opportunity to analyze the level of impact each driver will have in the company and the industry as a whole. To begin with, political atmosphere in Indonesia has been stable for a considerable time. Stability of political environment is very important for business and investment. This has precipitated the need for expansion of airline services in the country and other parts of the world. Secondly, economic situation of a country is a great determinant of success of companies. In this regard, the company should capitalize on the stable economic situation in the Asian continent. However, the recent global economic problems posed immense challenges to the growth strategies as applied in Garuda Indonesia Airlines.

Social factors determine the rate and level of consumption of goods and services. Social fabric of Indonesia is enabling for business. This is because there is rule of law and respect of private property in the country that creates investor confidence. The need for cross cultural interaction and cultural diversity necessitates air travel; a feat that has created business for the airline. Lastly, in PEST analysis there is the technological factor. Effective completion and growth requires that the company embrace the modern technological advances in the air transport industry. This include e-ticketing among other technological progress. The company has embraced new technological progress in the industry and continues to look out for the best practices to enhance its competitive advantages.

Market and Marketing Strategies

“Marketing concept which strive to build a company a round a profitable satisfaction of customer needs and demands is the most critical key which has helped many companies and different brands to develop in parts of the world”(Sassatelli, 2007). However, the success of these strategies and brands should be pegged on well designed marketing strategies which not only ensures a high rate of product penetration but also ensure that the product is highly rated in the market. One marketing strategy that is applicable in Garuda Indonesia Airlines is Multi-channel Marketing Strategies. Multi-channel retailing has been defined as the opportunity presented to the same customer to obtain the same product from the same retailer by multiple purchase channels. “Those companies that obtain part of their sales from two different channels can be classified as having adopted the multi-channel approach as contrasted with the ones whose entire sales volume is generated from the pursuit of a single channel,” (Nicholson, Clarke and Blakemore, 2002).

“Many customers use multiple channels during the purchase process such as research, during the purchase process and while obtaining services” (Stone, Hobbs and Khaleeli, 2002). In this regard, it has been advised that where organizations decides to adopt a multi-channel strategy, then attention needs to focus on whether all the channels will be offering similar services or products range and whether they will have all the functional areas. Of paramount importance here is the need to define the role that the various channels are intended to perform and the associated interactions. This helps in the identification and facilitation of both use and preferences emphasis for the targeted market segments.

Several advantages of multi-channel strategies have been presented in literature. According to Lawson, (2001), “channels have different advantages depending on the type of interaction with the various customers”. This point has been buttressed by Hitt, Ireland and Hoskisson (2008) who say that it is practical to argue that most international companies can undertake measures to adjust to environment needs of business; for instance, opportunity created through open borders that make it easy to access overseas market. The researchers have broadly categorized these behaviors within three domains of retail emotion. The experience of purchasing performs a fundamental role, retail reason in which price is the overriding factor of the purchase and finally, retail convenience.

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According to Lawson (2001), “The critical factors for the accomplishment of a multi-channel strategy encompasses the complete integration of the brand, product position, inventory forecast, price, logistics and the expectations of the customers.” The application of multi-channel retailing ideals are fundamental in yielding growth to firms in terms of increasing sales volume, improving efficiency in operation, and reduction in production costs. Integrated channels in the opinions of Stone et.al (2002) also affects positively brand loyalty and customer’s life time values.

While several advantages of multi-channel integration have been advanced in literature, several disadvantages have also been presented. According to Stone et.al (2002), “many companies experience heavy investments in unconvincing multi-channel strategies and technologies that results in poor returns on investments”. Difficulties in reducing and abolishing organizational boundaries or problems in bringing together and standardizing data about customers or resulting interactions also abides. Indeed the complexities of multi-channel retailing strategies have been presented as derailing a lot of companies’ performance and development. The major issues that have been noted seems to aggregate towards decisions on what prices to sell at, which products to sell and on how to deliver the sold products. This will be more complicated in the case where an organization has to rely on professional retailers engaged in sale and distribution of competing products.

There are complexities of decisions in multi-channel retailing are eminent in business operation. These complexities have been categorized into a 3-format structure of decision making criteria; namely, which price to sell at, which products to sell and how to deliver the sold product. “The decisions on product policy are on the other hand related to the assortment and the type of product” (Zeithaml, 2002). “Companies should start with products of high turnover and first focus on the depth of the main category of products before enlarging them with complementary products, before finally, after attaining the critical mass, introduce differentiated products,” (Stone et.al, 2002). This procedure is aimed at negating the confusion that customers may be subjected to when choosing product type.

Another option is on products positioning in the market that should ideally be wholly strategic. As Stone et.al (2002) states that, “Companies that offer a variety of products may define different strategies to each category depending on the potential segment under consideration”. This is especially true when it is considered that some professional retailers may make customers access to some products more difficult and indeed expensive than others. The information flow and the logistics in multi-channel strategies is another perspective that is seen to curtail multi-channel branding initiatives.

Marketing Strategy for Garuda Indonesia Company in Indonesia

According to Kotler and Amstrong, (2007), “The marketing concept of building an organization around satisfaction of consumer needs has helped firms to achieve success in the high growth, moderately competitive market.” The expansion of Garuda Indonesia airline Company in Indonesia requires a strategic market plan which comprehensively addresses the following marketing needs; selection of target market, differentiation and positioning to offer what is in customer’s mind, marketing objectives, and a marketing mix for Garuda Indonesia airline Company. Selection of target market is crucial in a company’s operations. In this regard its selection should depict a thorough research to determine all the factor and market condition which may affect the airline products and services both positively and negatively. “Market is the most important in the business of selling or buying of any product,” (Lawson 2001) and (Proctor, 2000).

Marketing Objectives and Marketing Mix

The company should put down strong marketing objectives which defines the expected achievements over a given period of time. These objectives include:

  • To create market awareness about the new product of the airline company in Indonesia.
  • To penetrate both the local market and the international market
  • To achieve a market share; for instance, a 65% market share in the next six years.

Marketing mix operation ideals can be kept in check as long as the principles chosen can meet the wants of a given target group, (Kotler and Amstrong, 2007). Marketing decisions for the new product and expansion strategy fall under what is referred to as 4Ps. “The four P’s are the most important indicators that marketing managers use to control the decision made on both internal and external marketing environment,” (Lawson 2001).

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The first P refers to product; hence, a firm should lay focus on the physical outlook, offered services and packaging of products. The second P is price; which should be set in a way to reflect current market rates but still earn profit to an organization. Place also forms part of the 4Ps and it is a mechanism through which a firm studies its destination in a bid to offer cutting edge services. Finally, promotion decisions have to be made in order to lure clients to a firm’s products. Airlines’ travelling costs are high and any effort to offer promotion will significantly influence sales.

Product can be promoted through media, newspapers, music celebrity personality endorsements and direct sales promotions in Taiwan market. Market penetration strategy is applied when a company needs to take its products at the grass root level in a foreign environment. Since there is need for quick market penetration and expansion, the price of Garuda Indonesia Airlines Company should be set in such a way that it provides good discount for the customers. Promotion also plays a great role in the product awareness and market penetration for both local market and international market (Keller, 1993).

Ticket Sales Promotion Strategies

Push sales promotion strategy according to Keller, (1993), “involves convincing trade intermediary channel members to “push” the product through the distribution channels to the ultimate consumer via promotions and personal selling efforts.” This strategy will ensure quick product sales and promotion. In addition to Push strategy, a pull strategy will also yield a considerable good result. illustrate that, “A pull strategy attempts to get consumers to ‘pull’ the product from the manufacturer through the marketing channel,” (Kotler and Amstrong, 2007). To effectively achieve a pull strategy, a firm has to improve its channel of communication as it forms the foundation to understanding customer tastes and preferences. Garuda Indonesia Airlines Company should therefore employ latest development in the ICT sector to boost its communication system.

Possible Hindrances to the Expansion Plan

In this daunting task of expansion, there are three problems that pose a great challenge to the quick implementation of the plans and expansion marketing strategies. These problems include; global economic problem and stiff competition from well established foreign airlines. The other problem, as has already been mentioned in this paper is the collection of relevant market data given the complexity of market international needs.

Recommendation

The company should embrace new and modern technological advances in the industry. Proper use of opportunities created via ICT development can be very important in collecting relevant information on market needs. This will not only enhance its competitive advantage but also improve profits margins. Also, business diversity is a vital growth aspect that can be tapped; for instance, the airline can venture into offering accommodation and hotel facilities not only in Indonesia but also in other parts of the international market.

Conclusion

Marketing is one of the critical aspects in business and therefore should be emphasized and taken seriously. Towards this, the company’s growth and development is strongly pegged on effective marketing.

References

  1. Hitt, M, Ireland, R & Hoskisson, R (2008). Strategic management: competitiveness and globalization: concepts & cases. 8th ed. Washington, DC: Cengage Learning
  2. Keller, K.L. (1993). “Conceptualizing, measuring, and managing customer-based brand equity.” Journal of marketing. Cambridge, MA: Marketing Science Institute
  3. Kotlar, P. (2003). Marketing insights from A to Z: 80 concepts every manager needs to know. New York: John Wiley and Sons
  4. Kotler, P and Amstrong, P. (2007). Principles of marketing. New York: John Wiley and Sons
  5. Lawson, K. (2001). “Commercials that name competing brands.” Journal of advertising. New York: John Wiley and Sons
  6. Mario, O. (2004). The chain of effects from brand trust and brand affect to brand benefits and challenges. Journal of database management, 10 (1), 39-45.
  7. Nicholson, J. Clarke, G. and Blakemore, Y (2002). “Going to market: Distribution performance: The role of brand loyalty.” Journal of marketing, 65: 81-89.
  8. Proctor, T (2000). Strategic marketing: an introduction. Hove: Routledge
  9. Sassatelli, R. (2007). Learning consumer culture: history, theory and politics. New York, N Y: SAGE
  10. Stone, M., Hobbs, M and Khaleeli, M. (2002). Multi-channel customer management. The Systems for Industrial Products. Boston: Harvard Business School Press.
  11. Zeithaml, K. (2002). Brand loyalty programs: Are they sham? Marketing science, Hove: Routledge
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