A Research On Vietjet Air’s Marketing Strategy.pdf

Since its establishment in December 2011, it has become the second private airline to provide domestic services in Vietnam after Mekong Airlines and the second in addition to Indochina..

Subject: Principle of Marketing

A RESEARCH ON

VIETJET AIR’S

MARKETING STRATEGY

Teacher: Đoàn Thị Thanh Hương

IB1606 GROUP 2

Bùi Thanh Thùy Nguyễn Phương Trang

Vi Đức Huy Nguyễn Hà Anh Trần Hoàng Anh

Vũ Đình Tùng

TABLE OF CONTENT

I. Executive Summary

II Vietjet Air information

1 Company description

2 Mission

3 Main business activities

4.Organization structure

III Situation analysis

1 Company SWOT analysis

2 Product/ service SWOT analysis

3 Competitive analysis

4 Customer analysis

IV Marketing analysis

1 Marketing and target customer

2.Differential/ competitive advantage

3.Marketing objectives

4.Overall marketing strategy ( the sale plan )

5.Product strategy and description

6.Pricing strategy

7.Promotion strategy

8.Place/ distribution strategy

V Recommendation

V References

I EXECUTIVE SUMMARY

Considering the facts from the market overview and the current supply chain value creation as well as the rise of e-commerce in Viet Nam, our group has identified that VietJet Air

is an ambitious trademark in the Vietnam market.

In this century, the need of moving domestic or abroad residents is increasing day by day On the other hand, other methods of moving have many limits like: infrastructure, equipment, time consuming etc in recent days, VietJet Air is rising to grow strong Down here is Group 2’s analysis about VietJet Air’s marketing plan.

II VIETJET AIRLINES INFORMATION

1 Company description

The airline’s headquarters is located at the Vạn Phúc diplomatic mission in

Ba Đình, Hanoi It is the first private airline to be established in Vietnam Since its establishment in December 2011, it has become the second private airline to provide domestic services in Vietnam (after Mekong Airlines) and the second in addition to Indochina Five airlines, following Vietnam Airlines, Jetstar Pacific Airlines, Mekong Airlines, and Vietnam Air Services Corporation (VASCO), ceased operations in November 2009 to provide civil domestic flights In the initial plan, the Hanoi-based airline expressed its intention to provide flights to Ho Chi Minh City and Da Nang, gradually expanding its network to other Asian destinations, such as Hong Kong, Bangkok, Singapore and cities in southern China The airline's president and chief executive officer was Nguyen Thi Phuong Thao in December 2011

As of February 2011, it is said that VietJet Air had "completed the final stage" before launching its operating license in June In March, AirAsia reportedly stated that if the airline fails to resolve its brand issues before the June deadline, it may withdraw its funding for VietJet In October 2011, AirAsia announced the cancellation of its plan to establish a joint venture with Vietjet

on the grounds that it "failed to obtain approval from the Vietnamese regulatory authorities", including the license to use the AirAsia brand in the airline's commercial operations Despite the closure of the AirAsia joint venture, VietJet Air announced in November that its launch plan would continue

On 28 February 2017, Vietjet completed its public listing and officially became a fully listed entity on the Ho Chi Minh City Stock Exchange (HOSE), making it the first airline in Vietnam to be listed on the bourse With its public listing, Vietjet became the first Vietnamese firm to have completed

an IPO that meets Securities Act of 1933 standards and practices

-To continuously expand our flight network globally, so we can create more and more flight opportunities for people all over the world

-To make a breakthrough in terms of the innovative services that an airline offers through the adoption of e-commerce platforms

- To make air travel the most popular form of transportation for the Vietnamese people and all citizens around the world

- To bring happiness and satisfaction to our customers by offering

outstanding services, always with a friendly smile

- To maximize the benefits that our customers, shareholders and employees receive

3 Focus:

Air transport

· Domestic and international passenger, cargo transportation

· Promotion, tourism

Ancillary services

· Seat selection

· Pre-ordered food

· Baggage cargo transportation

· Duty-free shopping

· Travel insurance

· Shuttle bus between airport and central city

Direct supporting services to air transport

· Ground operation services

· Technical support

· Routine and non-routine maintenance, overhaul

· Spare parts supply services

· Fuel provision

Aviation education and training

· For pilots

· For cabin crews

· For technicians and others

Aircraft trading

· Buy and sell aircraft

· Lease and leaseback

· Aircraft transfer

VietJet is a low-cost airline; their strategies focus on customers from middle-income class or first-time experience flying They are usually found young and dynamic, and especially expert in utilizing technological equipment such

as smartphones, laptops, etc

And Vietjet also focuses on improving our organizational structure,

increasing savings, creating productive work schedule, refreshing the fleet, strengthening every aspect of their business to prepare for the leap after the pandemic, etc

4.Organization structure

The head of the organization is the Board of directors, next is the Board of management with supervisory board After the Board of management, it will

be divided into two small parts: Auditing & internal control and safety, security and quality assurance (SSQA) Then divided into 10 small parts: -Training center

-Flight operation division

Manage flight crew- cabin crew(FCD,CCD)

Flight operation engineering(FOE)

Operation management center(OMC)and rostering

-Technical division

Engineering

Maintenance

Supply & store

-Ground operation division

Manage ground services

Standards & training & SS

Customer service

-Engineering

-Commercial division

Domestic & international sales and distribution

Marketing & advertising

Planning & system

-Customer service

-Finance-accounting division

-Back official

CEO office

Project & business development

Procurement

Contracts & insurance Fleet planning ICT

-Vietjet aviation academy

III.SITUATION ANALYSIS

I Company SWOT analysis

Strengths

The first strength of the company is the rapid growth of market share year by year Newly put into operation at the end of 2011, Vietjet has become the largest domestic airline with 42% market share The company has reported profits continuously since 2013

Vietjet's second strength is having the lowest cost per product unit in Asia as well as in the world Revenue from in-flight services is an important factor in the success of most low-cost airlines This is also a factor that has helped the company quickly become profitable Currently, this source contributes more than 23% of the company's revenue

Vietjet's brand is famous for its strong marketing activities, hitting the right psychology of target customers The nationwide distribution system is also one of the strengths not to be missed by this low-cost airline

Weaknesses

The company's weakness is that it does not have a joint venture partner Next

is to compete in markets that already have famous airlines, especially in the Thai market

The next weakness to mention is that most of VietJet's profit comes from sale and leaseback activities, but in the long term, the airline will have to pay higher costs than the average rental price when the life of the aircraft increases

Opportunities

Vietnam is emerging as a popular tourist destination, the number of visitors surpassed 10 million in 2016, an increase of 26% compared to the previous year In the first 9 months of 2017, the number continued to increase by 30% compared to the same period last year This trend is expected to continue This is an opportunity for VietJet

Currently, the airline has regular flights to Korea, Taiwan, Malaysia, Thailand and Cambodia China is the largest source of tourists and the fastest growing Moreover, Vietnam's geographical location is very convenient for transporting passengers from Southeast Asia to Northeast Asia

Vietnam is a developing country, so low-cost airlines are chosen by many people and are more willing to pay This is also the reason why the market

share of Vietjet Air, a latecomer, has surpassed Vietnam Airlines in the past 2 years

Threats

The competitive environment of the aviation industry is increasingly fierce Leading Southeast Asian airlines such as AirAsia and Lion are both planning

to set up joint ventures in Vietnam Many low-cost airlines also see the potential of our country's market and are eager to jump in

After growing 20% - 30% in the period 2012-2016, Vietnam's aviation market will decelerate Slowing growth in the domestic market will put pressure on VietJet to rely more on the international market, which is not easy Besides, the growth of domestic tourism demand is currently 4-5 times higher than GDP growth, which is an unsustainable rate

Airport overload makes it difficult to open more routes as well as flight frequency

II Competitive analysis

1 VietJet Air

is a low-cost airline that caters to all subjects in society and brings people closer together when sitting together, in the same class on the flights Along with promotions on ticket discounts, reverse auctions, special promotions… have contributed to bringing air travel closer to the people of Vietnam

2 Reduce the risk of new services

• 100% refund of fare if canceled, 50% of fare if delayed for more than 30 minutes

• Commitment to 100% refund if the service (including price, distribution, promotion, etc.) does not meet the commitment

• Committed to handling ticket-related issues within 12 hours Problems related to Check-in in 30 minutes

• Insurance for each passenger up to 50,000 USD/person/case

• Guaranteed by Insurance Company ACE Life

III Customer analysis

VietJet Air caters to everyone, but the communication strategy focuses on a segment of customers that we call:

Young - minded

Young - minded consumers are aged from 18 to 30 They are educated, experienced and often use technology devices They believe that technology can enrich their lives by making them feel deeply connected to others and the world around them And they look for brands that open them up to new possibilities,

new experiences

By RFM analysis techniques and specific requirements, customers are classified into the following groups:

- Priority group 1: Young-minded group Having used VietJet Air's services more than 6 times or the total amount paid by customers to VietJet Air over: VND 6 million

- Priority group 2: Young-minded group Have used VietJet Air service from

1 to 6 times

- Priority group 3: Belonging to the Young-minded group but have never used VietJet Air's services - The remaining customers are not in the media category this time

IV.MARKETING ANALYSIS

1 Market and target customer

Market: According to data of the Civil Aviation Authority of Vietnam, the market is being operated by four Vietnamese airlines, including Vietnam Airlines, Jetstar Pacific, Vietjet Air and Bamboo Airways In addition, there are more than 70 foreign airlines from 28 countries/territories in the world VietJet Air debuted just as Vietnam was about to enter a period of

unprecedented economic expansion Since VietJet's introduction, Vietnam's GDP has increased by at least 5% per year, with 6%-plus growth in 2015 and 2016

Air travel is now accessible to a much larger proportion of Vietnam's 96 million residents, thanks to rising income levels and the growth of the middle class Demand has been boosted further by the reduction of air fares, which were already low, to levels that are now comparable to bus or train fares on most domestic trunk routes

Long bus and rail travels have naturally been replaced by domestic flights by the Vietnamese population, which is youthful and urbanizing Because Vietnam is such a long and narrow nation with limited roadway and rail infrastructure, travel between most cities is long and laborious

Since VietJet's start, Vietnam has become one of Asia's – and the world's – fastest-growing markets The domestic market has increased from 12 million passengers in 2012 to 28 million passengers in 2016, a stunning annual growth rate of more than 30%

From 25 million passengers in 2012 to 52 million passengers in 2016, the overall Vietnamese aviation market (including foreign traffic) has more than doubled in size Vietnam's Civil Aviation Authority reported a 20 percent increase in passenger traffic to 30.3 million in the first half of 2017

VietJet flew as many domestic passengers as Vietnam Airlines in just five years In the same time frame it took Cebu Pacific more than a decade to overtake Philippine Airlines VietJet is starting to focus more on international expansion and could eventually overtake Vietnam Airlines

From 2020 until now, the outbreak of the Covid-19 epidemic worldwide has pushed airlines into countless difficulties It is estimated that the number of passengers of the airline in general decreased by 70%, however, not giving

up, Vietjet has a flexible strategy, shifting to increasing the transportation of goods, medical equipment, and medicines men to frontline areas to fight the epidemic, supporting medical staff and doctors on duty Cargo transportation

is quickly becoming a major activity during the Covid-19 pandemic, creating

a significant source of revenue for the airline

Target customers:

Because Vietjet air is a low- cost airline; their strategy focuses on customers from middle income class or first-time experience flying They are usually found young, knowledgeable, dynamic and especially expert in utilizing technological equipment such as smartphones, laptops Have a hobby of traveling, exploring or often have to travel by air services at a reasonable cost This group of customers loves innovation, creativity and dynamism Enjoy community activities and connections Vietjet’s report presentation on September 2018 shown that customers from 20 to 35 accounted for 25,9%, the main consumers of VietJet Air

2 Competitive advantage

2.1 Using digital technologies to provide better customer service

While other full-service airlines rely on travel agents or sales offices to sell tickets, Vietjet Air concentrates on sales via the internet, SMS, and credit card It is straightforward and cost-effective to book and sell tickets over the phone Vietjet Air also offers online check-in, allowing travelers to book their flights with any devices that can connect to the Internet and access to its website

Important: These are the primary channels with the fastest growth rates and the highest revenue share among Vietjet's sales channels

Rare: a large number of airlines use the same tool

Hard to duplicate: Creating an online system will require a significant investment and a long period of time