Marketing Individual Case Analysis Report

Singapore Airlines:
Premium Goes Multi-Brand

9880528 – Ronald Jeza Edward

Singapore Airlines: Premium Goes Multi-Brand

EXECUTIVE SUMMARY
Since its establishment in 1972, Singapore Airlines (SIA) has become one of the most successful airlines
in the world. The company has expanded into SIA Group, which included a portfolio of four airlines that
were all based in Singapore: Singapore Airlines, Silk Air, Tiger Air and Scoot. SIA CEO is currently
reviewing their brand portfolio and considering which brands should SIA offer in its future strategy.
Marketing environment analysis shows that SIA’s current micro and macro-environment is challenging
especially with the high industry rivalry in the airline market, the growing Low Cost Carrier (LCC) market
and the increased bargaining power of customers. However, SIA is in good position because of the high
bargaining power over suppliers, Singapore’s stable political environment and growing economy in Asia.
Internal environment analysis reveals that SIA’s strengths outweigh its weaknesses. The main strengths
are its healthy financial position, well-known brand, strong culture and multi-brand portfolio model. On
the other hand, its weaknesses include limited growth in domestic market and past unsuccessful
experience with associate airlines.
Product and brand portfolio analysis using the BCG matrix shows that each brand has different
characteristics that are important for SIA Group’s future strategy. SIA needs to maintain those brands
while pursuing synergies among them. SIA Group can implement market penetration strategy to
improve existing business by gaining more market share with its current brands.
In terms of brand positioning, SIA actually has already implemented a good strategy which covered the
entire market segment. Each brand has distinct features that cater to specific market segment based on
geographic and behavioural (benefits sought). This enables SIA to implement full market coverage in the
airline industry as its targeting approach. However, since out of all the brands, only Singapore Airlines
that have established a strong brand in the customer mind, SIA still needs to develop the three other
brands into strong distinctive brands. SIA should maintain the synergy between those brands by having a
common theme (e.g. “Hospitality” or “friendly”) that offer a competitive advantage over competitors
and integrate all the brands in the recently launched Customer Experience Management (CEM) system.
Finally, SIA must assess the risks attached in implementing that strategy which includes:
 Dilution of Singapore Airlines brand
 Market cannibalization
 Reduced market share
 Low market growth
 Decreasing profit margin
Based on all of the analysis above, SIA Group management should develop its future strategy which
revolves in maintaining the four brands and employing a brand portfolio management which focused on
synergy of all the brands.

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Singapore Airlines: Premium Goes Multi-Brand

TABLE OF CONTENTS
EXECUTIVE SUMMARY ................................................................................................................................. 1
1. BACKGROUND .......................................................................................................................................... 4
1.1 SINGAPORE AIRLINES .......................................................................................................................... 4
1.2 AIRLINES INDUSTRY SNAPSHOT .......................................................................................................... 4
1.3 SINGAPORE AIRLINES’ KEY ISSUE......................................................................................................... 4
2. SIA MARKETING ENVIRONMENT ANALYSIS ............................................................................................ 5
2.1 MICRO-ENVIRONMENT ANALYSIS ....................................................................................................... 5
2.2 MACRO-ENVIRONMENT ANALYSIS...................................................................................................... 5
2.3 INTERNAL ENVIRONMENT ANALYSIS (STRENGTHS AND WEAKNESSES) ............................................. 6
3. SIA PRODUCT AND BRAND PORTFOLIO ANALYSIS .................................................................................. 7
4. SEGMENTING, TARGETING AND POSITIONING OF SIA BRANDS ............................................................ 9
5. RISK ASSESMENT OF SIA ........................................................................................................................ 11
REFERENCES ................................................................................................................................................ 12

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Singapore Airlines: Premium Goes Multi-Brand

LIST OF TABLES
Table 1 Strengths and Weaknesses of Singapore Airlines Group ................................................................. 6
Table 2 Risk Assessment of Singapore Airlines Group ................................................................................ 11

LIST OF FIGURES
Figure 1 The BCG Matrix for Singapore Airlines Group Brands .................................................................... 7
Figure 2 The Ansoff Matrix for Singapore Airlines Group ............................................................................. 8
Figure 3 Current Singapore Airlines Brands Positioning .............................................................................. 9

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Singapore Airlines: Premium Goes Multi-Brand

1. BACKGROUND

1.1 SINGAPORE AIRLINES

Singapore Airlines (SIA) was founded in 1972. Initially it was 100% owned by the Singaporean
government before it went public on the Singapore Stock Exchange in 1985. The corporate headquarters
were located at Changi airport in Singapore. Since its establishment, SIA had become one of the most
successful and profitable airlines in the world. The company then expanded into a large group, SIA
Group, which included various airline-related businesses over the years like aircraft maintenance (SIA
Engineering Company) and air cargo (SIA Cargo).
The main core business of the Group remained in the airline industry. SIA Group had a portfolio of four
airlines that were all based in Singapore catering to all market segments. Those four airlines were:
 Singapore Airlines, which operated passenger services to more than 60 cities in over 30 countries
 Silk Air, which connected passengers through Singapore to over 49 cities in 13 Asian-Pacific countries
 Tiger Air, which operated flights to 37 destinations across 12 countries in Asia
 Scoot, which flew to 13 destinations in 7 countries within a radius of a five-to-nine-hour flight time out
of Singapore
In 2016, the SIA Group had a total workforce of over 24,574, of which 14,046 worked for Singapore
Airlines and the remainder for the various subsidiaries. The Group was Singapore’s largest private sector
employer.

1.2 AIRLINES INDUSTRY SNAPSHOT

Airline yields had fallen since the 1950s. In the last decade the industry as a whole had recovered in
terms of revenue, however profit margins were being squeezed, prompting airlines to cut costs and find
new streams of revenues. The largest expense for airlines was jet fuel. Business class passengers made
up 40% of the revenue and are five to 10 times more profitable than economy class passengers on a
long-haul route.
In the last decade, competition in the airlines industry had increased with the emergence of new carriers,
especially from the Gulf, which included Emirates, Etihad Airways and Qatar Airways. Those carriers
were expanding aggressively in the market. They had benefited from government subsidies and their
geographic positioning that enabled them to maximize their efficiency in serving more parts of the world.
Low-cost carriers (LCCs) also made its way to Asian market in the 2000s with Air Asia as the major player,
which enhanced the competition even further.

1.3 SINGAPORE AIRLINES’ KEY ISSUE

The faster growth rate of low-cost segment than the premium segment signalled challenging times
ahead for SIA. SIA CEO, Goh Choon Phong, is reviewing their current brand portfolio and wondering
whether it still make sense to maintain four distinct brands that offer some overlapping routes based in
a limited market. One question lingering in his mind is “which brands should SIA offer?” that will
determine SIA’s future strategy.

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Singapore Airlines: Premium Goes Multi-Brand

2. SIA MARKETING ENVIRONMENT ANALYSIS

In order to find the answer to that question, SIA needs to analyse the current external forces that
directly or indirectly influence its ability to satisfy the customers, in other words its marketing
environment (Dibb et al., 2012). It should look at the surrounding micro and macro-environment also
identifies their current strengths and weaknesses so it can face the challenges of those environments.
2.1 MICRO-ENVIRONMENT ANALYSIS
One way to analyse SIA Group’s current micro-environment is by using Porter’s 5 Forces Model which
consists of industry rivalry, threat of new entrants, threat of substitutes, the power of buyers, and the
power of suppliers (Porter, 2008).
 Industry rivalry in the airline market is high especially with the presence of the Gulf carriers and the
growth of LCC market. Since SIA Group has brands for every market segments, the market is packed
with SIA’s competitors. In each of those segments, SIA brands have a strong presence but not the
market leader.
 The airline industry has been growing in the past decade especially in the Asia-Pacific region, which is
spurred by the explosion of LCCs. This growth is expected to continue with the increasing middle class
in Southeast Asia and the change in customers’ travel patterns. This will surely attract new carriers to
enter the market particularly the LCC segment, however data in 2014 showed how tough the segment
was with only five out of the 22 LCCs operating in Southeast Asia were profitable.
 Nowadays, air travel has become the main mode of transport because of the increasing needs of time
and comfort when travelling. With no new technology to replace it, the threat of substitutes remains
low.
 The increasing number of airlines options, the higher expectation of service, and the greater price
sensitivity has given the customers more bargaining power than before. This made even the
established airlines cannot afford to be complacent.
 SIA has its own subsidiary for various airline-related businesses, hence the main suppliers of SIA only
aircraft manufacturers. With relatively weak demand for aircraft and SIA’s policy to continuously
renewing their fleet, SIA is an important customer and enjoys high bargaining power.
2.2 MACRO-ENVIRONMENT ANALYSIS
Analysing SIA Group’s macro-environment using the PEST (Political, Economic, Sociocultural, and
Technological) shows that:
 SIA Group is based in Singapore which has a stable political environment. The government maintains
good diplomatic relationship with various countries and adopts a liberal aviation policy. Even though
the government is the majority shareholder, it never gives special protection to SIA. On the other
hand, it also never interferes with any SIA’s business decision.
 In terms of economic condition, Singapore is the 3rd richest country in the world (Tasch, 2016) and
the highest per-capita income in East Asia. The growing economy in Asia has also seen rising middle-
income class especially in Southeast Asia, where SIA is based.
 Singapore is a multiracial country that have a very diversify culture. The people are highly literate,
motivated, competitive, and hardworking.

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Singapore Airlines: Premium Goes Multi-Brand

 The advancement in technology has resulted in the usage of gadgets as a necessity, which will be
carried along during travelling. The definition of entertainment has also been evolving with electronic
devices getting more portable that can be loaded with personalised music, game, photo and video.
2.3 INTERNAL ENVIRONMENT ANALYSIS (STRENGTHS AND WEAKNESSES)
Considering the micro and macro-environment, analysis of SIA’s internal environment can identify its
current strengths and weaknesses. SIA’s strengths and weaknesses are presented in Table 1.

Strengths Weaknesses
Strong financial position which consistently profitable Heavy reliance on international traffic passing through
Singapore
Top airline brands known for its excellent customer Limited growth opportunities in almost matured
service and supreme hospitality domestic market
Satisfied customer base Past unsuccessful experience with associate airlines
and acquisitions
Based on the strategic Singapore Changi hub that Low presence in American routes
enables geographical diversification
Strong company culture and human resource
management with competence staffs
Known for innovation and first movers in several
products with strong design team
Multi-brand portfolio model with whole ownership in
all brands
Major player in Europe-Asia-Australia routes

Table 1 Strengths and Weaknesses of Singapore Airlines Group

Identification of SIA’s strengths and weaknesses will be beneficial in preparing the company’s strategy
for challenges ahead.

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Singapore Airlines: Premium Goes Multi-Brand

3. SIA PRODUCT AND BRAND PORTFOLIO ANALYSIS

In determining its future strategy, SIA should analyse its current product and brand portfolio because
managing this portfolio will be the key to the success of a multi-brand strategy such as the one
implemented by SIA.
SIA Group currently has a portfolio of four airlines which contains: Singapore Airlines, Silk Air, Tiger Air,
and Scoot. Those brands can be mapped using the Boston Consulting Group (BCG) Matrix which
classifies the brands based on market growth and market share. The matrix is designed to help a
business in considering growth opportunities by reviewing its portfolio and developing long-term
strategic planning (Hanlon, 2013). The BCG Matrix for SIA brands is presented in Figure 1.

Figure 1 The BCG Matrix for Singapore Airlines Group Brands

The result of the BCG Matrix for SIA brands:

 Cash Cow: Singapore Airlines is the cash cow in SIA’s portfolio with low growth rate and high market
share. Singapore Airlines is a strong brand that has positive customer based brand equity (Keller,
Aperia and Georgson, 2012) which consumers identify with excellent service and hospitality.
 Stars: The star in SIA’s portfolio is Tiger Air with 2nd largest market share in the highly growing
Southeast Asia LCC market. Now that Tiger Air has finally achieved full-year profitability, SIA should
focus on increasing or maintaining its market share so that it can become next cash cow and ensure
future cash generation.
 Question Mark: Scoot is the question mark in SIA’s portfolio. Scoot has low market share, but it is
growing at high rate in the increasing LCC market. SIA should analyse Scoot carefully because question
mark requires lots of investment. If question mark becomes a success, it will become star of future.

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Singapore Airlines: Premium Goes Multi-Brand

 Dog: The dog in SIA’s portfolio is Silk Air that has a low market share in lower growth full-service
market. Dog can be a big drain on management time and resources. However Silk Air’s recent
enhances integration with SIA has proven to be an important component in fending off competition
from Gulf carriers.
The BCG matrix shows that each brand has different characteristics that are important for SIA Group’s
future strategy. SIA needs to maintain those brands while pursuing synergies among them. SIA should
also review opportunities for improving existing business. Based on the Ansoff Matrix in Figure 2, SIA
Group can implement market penetration strategy to gain more market share with its current brands
(Kotler et al., 2016). Cross-selling within the portfolio in order to widen the network offering is one way
to do it.

Figure 2 The Ansoff Matrix for Singapore Airlines Group

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Singapore Airlines: Premium Goes Multi-Brand

4. SEGMENTING, TARGETING AND POSITIONING OF SIA BRANDS

SIA actually has already implemented a good brand positioning strategy right now. Each brand has
distinct features that cater to specific market segment.

SIA based its current segmentation on geographic and behavioural (benefits sought). Geographic
segmentation ranges from Regional to Long Distance while behavioural segmentation ranges from
Economy to Full Service. Each brand occupies different market segment:
 Singapore Airlines serves long distance for full serviced customers
 Silk Air caters regional area for full serviced customers
 Tiger Air accommodates regional area for economy customers
 Scoot attends long distance for economy customers
This segmentation enables SIA to implement full market coverage in the airline industry as its targeting
approach.

Current SIA brands positioning as seen in Figure 3 has covered the entire market segment. Positioning is
the act of designing the brand’s market offering and image to occupy a distinctive place in the minds of
the customers (Kotler et al., 2016). However out of all the brands, only Singapore Airlines with the
tagline “A Great Way to Fly” that have established a strong brand in the customer mindset. Even though
Silk Air has won several awards, but its brand and slogan “A Joy to Fly” have not really settled in
customer mind. Scoot with its “Scootitude” culture and “Get Outta Here!” slogan actually has an
interesting brand proposition, but its unique selling proposition still needs to be maximised to develop a
strong brand. As for Tiger Air, SIA need to enhance the brand image, maybe with a catchy slogan such as
the one used by its main competitor Air Asia “Now Everyone Can Fly”, because right now customer only
recognise it as another budget airlines.

Figure 3 Current Singapore Airlines Brands Positioning (Source: SIA company documents)

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Singapore Airlines: Premium Goes Multi-Brand

If SIA successfully manage to develop the three other brands into strong distinctive brands, it will also
minimise the risk of diluting the already reputable Singapore Airlines brand.

One keyword for SIA in maintaining those brands is “synergy”. Although those brands should be unique
and independent, there should be a common theme that connects all those brands and offer a
competitive advantage over competitors. “Hospitality” or “friendly” can be the theme since SIA’s culture
and training program already focused on that. SIA should also integrate all the brands in the recently
launched Customer Experience Management (CEM) system to provide the best experience to all
customers and build a longer-term, more intimate bond between them and their customers. This
strategy is also known as relationship marketing (Kotler et al., 2016).

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Singapore Airlines: Premium Goes Multi-Brand

5. RISK ASSESMENT OF SIA

Based on all of the analysis above, SIA Group management should be able to develop its future strategy
which revolves in maintaining the four brands and employing a brand portfolio management which
focused on synergy of all the brands.

Finally, SIA must also assess the risks attached in implementing that strategy. SIA should identify,
analyse and mitigate the risks to achieve its marketing and financial objectives. Risk assessment of SIA
Group is shown in Table 2.

RISK IDENTIFICATION RISK SOURCE
PROBABILITY IMPACT
- Negative customer
perception on other SIA
Dilution of Singapore brands
Airlines brand
- Unable to meet increasing
customer expectations
RISK ANALYSIS
RISK MITIGATION
Low Medium Implementation of resource
integration using Customer Experience
Management (CEM) system that
Low Medium incorporates all SIA brands

Optimisation of SIA high-level

Market Unbalanced realisation of
Medium
cannibalization the portfolio strategy
- Increasing competition
from other airlines
- Inability to acquire new
Reduced market share
customers
- Unable to maintain
existing customers
- Limited capacity of
Singapore Changi hub
Low market growth
- Low demand of air travel
in SIA traditional routes
- Increasing investment cost
Medium
to develop brands
Decreasing profit
margin
- Increasing operational cost
for employee training
Table 2 Risk Assessment of Singapore Airlines Group
committee together with intensive
Low
communication and coordination of the
group network
Develop strong brands with unique
High Low selling proposition and synergy
between those brands
Leverage the strong design team in
Low Low building innovative marketing and
sales strategy
Maintain high quality of customer
Low Medium service and offer loyalty programs
based on CEM system database
Establish hubs outside of Singapore by
Low Low entering into a joint venture
agreement with local airlines
Optimisation of global airlines network
and expansion to other non traditional
Low Medium
routes (e.g China, India, North
America)
In-depth analysis on current business
portfolio and allocate larger portion of
Medium
investment budget to the most
potential brand
Allocate efficiency from other cost
Low Low centers, such as jet fuel cost (due to
lower oil price), to training budget

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REFERENCES
 Dibb S, Simkin L, Pride WM and Ferrell, OC (2012). Marketing: Concepts and Strategies (6th ed.).
London: Cengage.
 Porter, ME (2008). The Five Competitive Forces That Shape Strategy. Harvard Business Review, 86(1),
pp. 78-93.
 Tasch, B (2016). The 25 Richest Countries, Ranked. Available at: http://uk.businessinsider.com/the-
richest-countries-in-the-world-2016-3/#25-france--gdp-per-capita-41396-28749-1 [Accessed 15 Dec.
2016]
 Hanlon, A (2013). How to Use the BCG Matrix Model. Available at:
http://www.smartinsights.com/marketing-planning/marketing-models/use-bcg-matrix/ [Accessed 15
Dec. 2016]
 Keller KL, Aperia T and Georgson M (2012). Strategic Brand Management: A European Perspective
(2nd edition). Prentice Hall.
 Kotler P, Keller KL, Brady M, Goodman M and Hansen T (2016). Marketing Management (3rd edition).
Harlow: Pearson.

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