services marketing analyse marketing mix 7ps strategy of vietnam airlines in vietnam market

- Direct support services for air transportation.- Manufacturing of measuring, testing, navigating, and controlling equipment, such asspare parts, supplies, technical equipment and other

MINISTER OF FINANCE UNIVERSITY OF FINANCE – MARKETING

- �

-GROUP ASSIGNMENT SECOND SEMESTER, 2022

Ho Chi Minh City – 4, 2022

MINISTER OF FINANCE UNIVERSITY OF FINANCE – MARKETING

- �

-GROUP ASSIGNMENT SECOND SEMESTER, 2022

Instructor: Mr Dang Huynh Phuong

Student name: Le Dinh Phuong Khanh

Luong Ai Lien

Vo Dao Phuong Mai Nguyen Nhu Ngoc Lam Gia Phu

Ho Chi Minh City – 4, 2022

TABLE OF CONTENT

IMAGE LIST

Image 1.1 – Logo of Vietnam Airliness 7

Image 1.2 – Vietnam Airlines’ aircraft 8

Image 3.1 – Pyramid of Vietnam’s social class 16

Image 3.2 – Positioning Map 19

Image 4.1 – Vietnam Airlines’s route network in Vietnam 22

Image 4.2 – Distribution channel 25

Image 4.3 – Vietnam Airline’s route network 27

Image 4.4 – Vietnam Domestic Fare Rules of Economy 29

Image 4.5 – Vietnam Domestic Fare Rules of Premium Economy 30

Image 4.6 – Vietnam Domestic Fare Rules of Business 31

Image 4.7 – Vietnam Airlines’ domestic flight ticket price 2022 32

Image 4.8 – Vietnam Airlines’ epatriation flight during the COVID-19 38

Image 4.9 – Vietnam Airlines’ booking procedure 41

Image 4.10 – Online Check-in Procedure 41

Image 4.11 - Kiosk Check-in Procedure 42

Image 4.12 – Infographic of connecting Vietnam domestic flight 43

Image 4.13 – Change/refund ticket prices of Business 44

Image 4.14 – Change/refund ticket prices of Premium Economy 44

Image 4.15 – Change/refund ticket prices of Economy 44

Image 4.16 - Vietnam Airlines’ aircraft maintenance area 45

Image 4.17 – Vietnam Airlines’s staff uniform 48

Image 4.18 – BELIEVE Model 49

Image 4.19 – Vietnam Airlines organize training to deal with emergency situations 50

Image 4.20 – Vietnam Airlines’ Organization Structure 2019 51

TABLE LIST Table 3.1 – Compare the difference of each income level 15

Table 3.2 – Comparision table of Conservative lifestyle and Modern lifestyle 17

Table 3.3 – Comparision of Work-related needs and Personal needs 17

Table 4.1 – Vietnam Airlines’ Fair type 22

LIST OF ABBREVIATIONS

COVID – 19 Coronavirus disease 2019

VASCO Vietnam Air Services Company

APEX Airline Passenger Experience Association

VASCO Vietnam Air Services Company

AFI KLM E&M Air France Industries KLM Engineering &

Maintenance

VIP Very Important Person

CHAPTER 1 INTRODUCTION

1.1 About Business

Name in Vietnamese: Tổng Công ty Hàng không Việt Nam - CTCP

Name in English: Vietnam Airliness JSC

Name in short: Vietnam Airliness

Date of establishment: May 27th, 1995

Address: No 200 Nguyen Son, Bo De Ward, Long Bien District, Hanoi

Telephone number: (+84.24) 3827 2289 | Fax: (+84.24) 3872 2375

Website: www.vietnamairlines.com

Email: nhadautu@vietnamairlines.com

Field of activities: Aviation & Finance

Image 1.1 – Logo of Vietnam Airliness

- Direct support services for air transportation.

- Manufacturing of measuring, testing, navigating, and controlling equipment, such asspare parts, supplies, technical equipment and other aviation industry components,provision of technical services and spare parts to domestic and international airlines

1.3 Establishment & Development History

The history of Vietnam Airliness began in January 1956, when the Civil AviationAdministration was established by the Government that marked the birth of the civilaviation industry in Vietnam At that time, the fleet was very small, with 5 propelleraircraft: IL 14, AN 2, Aero 45, etc The first domestic flight was opened in September

1956

April 1993, Vietnam Airlines was officially established as a large-scale business unit ofthe state (then called Vietnam Airliness) On May 27th, 1995, Vietnam AirlinessCorporation was incorporated - following Decision No 328/TTg by the Prime Ministerand merging 20 enterprises in the aviation industry with Vietnam Airlines as the coreentity Throughout 20 years of development, Vietnam Airliness Corporation has made animportant contribution to the development of Vietnam's civil aviation industry as well asmade a great contribution to economic development, society, industrialization, andmodernization of the country (Appendix 1 contains Vietnam Airliness’ developmenthistory of each milestone)

Image 1.2 – Vietnam Airlines’ aircraft

1.4 Vision & Mission

- Uphold the No 1 position as Vietnam’s aviation group leader

- Vietnam Airlines to become a leading Asian airline of customer’s choice and be themain force transportation of Vietnam as a flag carrier

- Provide diverse and high-quality air transport up to customers’ expectations

- Create a civilized and professional working environment with various opportunitiesfor career development for employees

- Run effective business operation, ensure sustainable benefits for shareholders

« Toward the future: A modern carrier with an internationally recognizable brand

characterized by Vietnamese traditional culture Throughout 20 years ofdevelopment at a double-digit annual growth rate, Vietnam Airliness hasspearheaded Vietnam's aviation market - one of the fastest-growing domesticmarkets in the world As a modern airline with a brand widely known for its distinctcultural identity, Vietnam Airlines aims to achieve 5-star status and become a majorairline in Asia

1.5 Hightlight Achievement

« 2016: Ranked as one of the World's Most Improved Airlines by Skytrax

« 2016: Asia's Leading Cultural Airline and Asia's Leading Airline - Economy Class

by World Travel Awards 2016

« Top 4 largest carriers South East Asia in terms of passengers transported

« 20 years of safety record - no fatal accidents since 1997

« 2017: CAPA Asia Pacific Airline of the Year

« 2017: Skytrax ranked Vietnam Airliness as a 4-star airline for the second year in arow

« 2018: one of winners of the 2018 TripAdvisor Travelers’ Choice awards for Airlinesfor Asia

« 2018: Skytrax ranked Vietnam Airliness as a 4-star airline for the third year in a row

« 2018: APEX (Airline Passenger Experience Association) awarded Vietnam Airlinesswith Four-Star Official Airline Ratings

« 2018: Vietnam Airliness and Jetstar Pacific are awarded the highest seven-starsafety rating from the world’s only safety and product rating agencyAirlineRatings.com

« 2018: World's Leading Cultural Airline and World's Leading Airline - PremiumEconomy Class by World Travel Awards 2018

CHAPTER 2 MARKET & COMPETITOR ANALYSIS

2.1.2 Composition

Since March 15, Vietnam has removed many barriers and restrictions for internationalvisitors to enter, creating favorable conditions for international visitors to travel,contributing to increasing the volume of international visitors to Vietnam Before thedevelopment of the COVID-19 pandemic, the international and domestic aviation marketwas still affected by the epidemic, with the efforts of airlines, the Government, theMinistry of Transport, the Civil Aviation Authority of Vietnam, and other managementagencies, etc Vietnam's aviation market has been gradually recovering, with goodchanges in 2022 The number of visitors mainly has come from domestic andinternational tourists In early 2022, the total number of international visitors to Vietnamreached 7,358, domestic tourists reached 17.6 million

2.1.3 Location

Vietnam has now reopened flights to 20 countries and territories, including Cambodia,Hong Kong, Japan, Korea, Malaysia, Philippines, Qatar, Singapore, Taiwan, Thailand,Turkey, United Arab Emirates, Laos, China, France, Germany, UK, Australia, Russia, andAmerica

Currently, there are 6 airlines, including Vietnam Airliness, Vietjet Air, Pacific Airlines,Bamboo Airways, Vietravel Airlines, and VASCO; exploiting 56 domestic routes with atotal frequency of 2,570 flights/week/way, equivalent to 367 flights/way/day, reducingrespectively 2 routes and 217 flights/week/way, equivalent to 31 flights/way /daycompared to the 2019 winter flight schedule.

2.1.4 Trends

Statistics from the Civil Aviation Administration of Vietnam shows that the demand forpassengers traveling on the Ho Chi Minh City - Hanoi route and from Ho Chi Minh Cityto/from the Tay Nguyen, Central and Northern provinces during this period increasedsharply with the seat utilization ratio is over 70%

During the 2022 Lunar New Year period, the frequency of operation on domestic routes isabout 14,000 flights with about 2.7 million seats Besides the above routes, the number ofother routes with the number of bookings has not increased significantly, such as: from

Ho Chi Minh City to Da Nang, Tuy Hoa, Da Lat; Hanoi to Dong Hoi, Tuy Hoa, Can Tho;etc

- The slogan "More than just a flight" is highly appreciated when it conveys the

common goal of the business when trying to perfect the experience without simplyaiming for the basic purpose: satisfying the mobility needs of customers

- Punctuality as well as time flexibility for “night flights” and other added servicessuch as Bamboo Eco ticket - for customers who do not need to check-in baggageand fly less than 2 hours domestically; flexibility in serving specific customerneeds, etc

 Weaknesses:

- The company's current communication strategy has not been very effective for thetarget audience because of its sensational and misleading communication style thateasily receives mixed opinions

- Heavily dependent on large financial funds to finance their operations

- Few international airports in Vietnam (especially in Qui Nhon) to port BambooAirways large aircraft

2.2.2 Vietjet Air

A brand-oriented as a low-cost airline, impressing customers with the dynamism and youthfulness of its staff, attracting customers with attractive promotions

 Strengths:

- The "low-cost" communication strategy, which mainly focuses on consumers'

price awareness, is suitable for a wide range of customers The message “Dream

of flying for all Vietnamese people - Giấc mơ bay cho mọi người dân Việt Nam”

that Vietjet evokes is a beautiful dream in a market with a rapidly growing middleclass like Vietnam

- VietJet's brand awareness in Vietnam is relatively high

- Young, professional, and enthusiastic staff

 Weaknesses:

- Using the "offensive" communication method, associated with the name "BikiniAirline" This is not in line with the national media culture, receiving a lot ofmixed opinions

- There are often problems in the service that make passengers unsatisfied:overcrowded and often delayed flights

CHAPTER 3 STP ANALYSIS

3.1 Segmentation

3.1.1 Income

Table 3.1 – Compare the difference of each income level

The low-income and middle-income earners have high price sensitivity They are lesslikely to choose air services They conceive that airline service is still a type of luxuryand expensive service, not suitable for their income

The high-income earners have lower price sensitivity They prioritize using airlineservices because of the benefits they seek related to convenience, reputation, quality of

goods/services, airline services as a tool to help them assert their status However, theyhave high standards and expectations about the goods/services they experience.

3.1.2 Social Class

Social class in Vietnam, in addition to income, is also divided by occupation, position,and position in work It is formed as a pyramid with the top part occupying the highestposition, arranged in order from top to bottom, including leaders, managers,entrepreneurs, and highly qualified experts On the next floor is staff, workers, smalltraders, handicrafts And finally, there are the unskilled workers and the farmers.According to the top-down order of the pyramid, the demand and requirements for usingair services are decreasing and inversely proportional to the price sensitivity

Image 3.3 – Pyramid of Vietnam’s social class

3.1.3 Lifestyle

Table 3.2 – Comparision table of Conservative lifestyle and Modern lifestyle

Conservative lifestyle: People are often not willing to try new products/services They

spend a lot of time researching before making a consumption decision However, they arevery opinionated and not affected by exogenous factors In addition, their brand loyalty isalso very high

Modern lifestyle: The complete opposite of the conservative lifestyle, they value

experience and are always ready to discover new things They tend to follow trends andthe crowd However, building brand loyalty in them is also relatively hard

3.1.4 Needs

Table 3.3 – Comparision of Work-related needs and Personal needs

Work-related needs: In some professions and fields, fast traveling over long distances is

in high demand Especially for business people, the use of air services is almostinevitable and regular

Personal needs: other purposes such as travel, study abroad, repatriation, etc will use air

services when traveling relatively long distances, they still undergo screening,comparative evaluation before making a consumption decision

3.2 Targeting

As the face of Vietnam's air services, Vietnam Airlines has used the concentratedsegmentation strategy - to concentrate all of its resources on building and consolidating apremium airline brand in Vietnam Specifically, Vietnam Airlines focuses on customers,who have a middle and high income, are usually merchants and entrepreneurs with acertain status in the social class, and often have to use airline services for many differentpurposes. The main business is air transportation services on the international scale.

3.3 Positioning

3.3.1 Positioning A Premium Airline

Since its establishment, Vietnam Airlines has always held the number one position in theVietnamese market Compared to other competitors in the market, Vietnam Airlines has adistinct advantage when being called with the name "Vietnam's national airline" Withthis name, it easily positioned the brand, attracting a number of customers who believed

in the national branded service even though the fares are much higher than other airlines

In Vietnam, the trust in "national" businesses is very large As the national airline ofVietnam, it is compulsory that Vietnam Airlines strictly comply with regulations and itsinitial promise is to provide services of high quality

Image 3.4 – Positioning Map

According to the positioning diagram, Vietnam Airlines has clarified that their customers,who have a good financial status, want to receive perfect services when using its services.Nowadays, Vietnam Airlines is the only traditional airline in Vietnam with differentiateddomestic products (Business class, frequent flyer program - GLP) The airline's numberone position in Vietnam is also shown in its extensive domestic network through allregions of the country, heavy operating frequency, convenient connecting schedules, theairline's punctuality index, and accompanying service - these are all superior to theiropponents

3.3.2 Service Positioning Strategy

Vietnam Airlines also designs products that create Vietnamese cultural identity inservices, distinctly different from domestic competitors Specifically, Vietnam Airlines’sproducts meet quality, the international 4-star international standard, and aim to achieve5-star standards (80% of Vietnam Airlines’s criteria are rated 5 stars by Skytrax, VietnamAirlines has been awarded the 4-star airline certificate by Skytrax)

3.3.3 Communication Positioning Strategy

Building a brand image with national identity: modern, creative, friendly, dynamic,efficient, and socially responsible The slogan "Reach Further" emphasizes the nationalspirit, the determination to rise strongly of a country Besides that, it also conveys a desire

to reach the success of passengers and Vietnam Airlines on each flight It is anaffirmation: the development path of Vietnam Airlines always focuses on customerexperience Bringing passengers not only a flight but also the feeling of a journey ofexperiencing 5-star-oriented services according to international standards, luxury, andclass Six-petal golden lotus, which is a special symbol of Vietnam Airlines, contains thesoul of the Vietnamese nation It has become very familiar to many Vietnamese peopleand is used for many products such as Bowls/Plates/Spoons/Knives/Forks and isconsidered a symbol of high-quality products

3.3.4 Compare With Competitors

Compared to domestic competitors, Vietnam Airlines has the advantage of a widenetwork, its high-quality products but not too high prices Vietnam Airlines's positioningstrategies are also different from competitors like Vietjet and Bamboo While Vietjettends to young/dynamic communication (advertising images in the media by hot models,who play the role of flight attendants), Vietnam Airlines tends to cautiously and discreetlyway through emphasize Vietnamese culture such as flight attendant’s Ao Dai) BambooAirways has a sensational and misleading communication style - The first airline to flydirectly to the US In fact, Vietnam Airlines has had many direct flights to the US manytimes before, and the first airline of Vietnam owns a B787 Vietnam Airlines tends tocautiously communication

of the national branded airline, along with the quality of flight safety and service, helpingcustomers feel secure and satisfied when participating in Vietnam Airlines flights.

CHAPTER 4 MARKETING MIX (7Ps)

4.1 Product

4.1.1 Core Product: Services of transporting goods and people by air

domestically and internationally Vietnam Airlines has up to 33 direct shipping locations across 3 continents of Asia, Europe, and Australia

Image 4.5 – Vietnam Airlines’s route network in Vietnam

- Domestic Market: By 2020, operating up to 64 domestic routes and 22 airports in

regions

- International Market: Currently, Vietnam Airlines has operated 64 routes to 18

countries, including 33 destinations By the end of March 3/2021 due to the impact

of COVID - 19 disease, most flight routes were suspended

Table 4.4 – Vietnam Airlines’ Fair type

4.1.2 Supplementary Services:

 Information: Vietnam Airlines provides flight itineraries, prices, vouchers, and

how to apply vouchers Even information about hotels in customer destinationscan also refer to the Website and App (Cooperate to Booking.com) Not only that,but Vietnam Airlines also brings information like how to complete the procedures,ticket information has been put and the status of active flights to help ourcustomers' relatives track throughout the flight

 Order - Taking:

o Applications:

- Vietnam Airlines also designed the application so that users can easilyaccess to book tickets online, pay online, hunt for cheap airfare deals, andredeem vouchers to receive gifts more easily

- Vietnam Airlines after-sales service for customers is quite good throughproviding regular customer service, providing a number of serviceincentives on Vietnam Airlines flights, or even other members of the samemembers in Sky Teams

- Besides, customers are members, when flying will be accumulatedequivalent to flight miles and converted into bonus points, then used tochange valuable rewards such as upgrade fare, upgrade checked baggage,

use the business class lounge, etc Besides, there are countless attractiveafter-sales services for customer gratitude

o Order Entry:

- Online flight booking service

- The online check-in service to somewhat limit the gathering at the check-incounter during the COVID-19 epidemic has not shown any signs ofstopping

o Reservations and Check-in:

- Services connected with means of transport: assigning member units to pick

up and drop off passengers from the gathering location to the airport orvice versa Besides, customers can also hire 4 - 7-seater cars toconveniently for moving after service

- Links with hotel booking apps, to serve customers who travel or work faraway to find accommodation Typically collaborating with Booking.com

 Billing: Customers can get information about fares of different classes easily

through the App or website of Vietnam Airlines On the media channels, fares thatare often publicized, run attractive discount deals Besides, Vietnam Airlines stillhas direct fare counters at the airport, where ticket prices are also provided beforepurchasing Fares are also sold via the call center and here customers can also getspecific ticket prices and related information

 Payment: Many customers want fast payment, and understanding this, Vietnam

Airlines has actively linked with different payment methods to create convenience

 Consultation: Vietnam Airlines officially develops ticket booking service through

the customer care call center and card payment In addition, Vietnam Airlines has acustomer consulting service that always accepts inquiries and is ready to adviseany customer who has questions about Vietnam Airlines's services, via:

- Contacts Center for calls within Vietnam (24/7): 1900 1100

- For Lotusmiles members: 1900 1800

- For calls from outside Vietnam (24/7): +84 24 3820320

- Email: Telesales@vietnamairlines.com

 Hospitality: The quality of Vietnam Airlines service is usually highly appreciated.

Facilities are usually guaranteed as well as the attitude of the attendants isextremely standard The delay time of Vietnam Airlines is often assessed to be lessthan that of competitors The waiting room is also extremely luxurious withcomfortable and clean seats and chairs If the customer buys the business ticket,the more exciting privileges are worth mentioning such as serving food, drinkingwater, the lounge is much more luxurious Moreover, passengers will be served awelcome drink in either premium economy or business class Depending on theclass of seats that customers own, Vietnam Airlines also provides differentservices

 Safekeeping: Vietnam Airlines customers can rest assured to enjoy their flight

service because Vietnam Airlines will ensure the safest flight with a team of highlyqualified pilots who have practiced and practiced through many hours of flight.The experienced flight attendants constantly remind customers to ensure safetyduring the flight Besides, Vietnam Airlines also provides a comprehensive travelinsurance service for customers on domestic and international flights - TripCARE

4.2 Place

Image 4.6 – Distribution channel

4.2.1 Information and Promotion Flow

Through partners such as Traveloka, Booking, Agoda, etc., social networking platforms such as Tik Tok, Instagram, Facebook and on its own website, fanpage, Vietnam

Airlines builds its information and promotion flow to help customers reach it in the most effective way In addition, the promotion flow of Vietnam Airliness also includes out-of-home advertising to serve outside promotion strategies

4.2.2 Negotiation Flow

In order to ensure the quality of their services, Vietnam Airlines’s distribution facilitiesand members of the distribution channel are subject to strict control on product quality,price, quality of service, etc which are clearly specified in the contract terms However,agents and partners can still be creative in terms of the structure or layout of the airport to

4.2.3 Product Flow

 Core Service

In Vietnam, Vietnam Airlines which has 5 affiliate units and 25 branches is operating in

21 provinces and cities Despite such a large air route network, Vietnam Airlines uses anexclusive distribution strategy to build its distribution channel to ensure its ability tomaintain the value of the national airline brand

Image 4.7 – Vietnam Airline’s route network

 Supplementary Service

Vietnam Airlines also focuses on digital transformation, implementing the "digitization"

of its distribution channel For instance, in projects such as improving websiteinfrastructure, mobile application platforms, and especially automating the customer carecycle VN promotes the "digitization" of its ancillary services to help customers alwayshave the best, safest, and most convenient experience

Vietnam Airlines’s information or flights is not only updated at ticket offices and airports,but also on the website, fanpage, and app in a specific and clear way to help customersupdate information easily The procedures for booking tickets, buying tickets, insurancepolicies, etc are also optimized by Vietnam Airlines on its website Especially, VietnamAirlines also cooperates with famous travel sites such as Traveloka, Booking, Agoda, etc

both to help customers access their flights more easily and to support the online paymentand online booking process.

In general, Vietnam Airlines has been promoting the automation cycle and opening thedistribution channel for ancillary services as well as expanding the diversity of coreproduct distribution channels More and more different booking locations are openingboth online and offline

4.3 Price

4.3.1 Customer-Driven Pricing

Vietnam Airlines prices its services according to the needs of customers, dividing prices

by fare type for each group of customers:

According to different fair types, including 3 main types: Business, Premium Economyand Economy Vietnam Airlines offers different prices corresponding to accompanyingservices to ensure satisfaction according to each desire and need of each selectedcustomer

Image 4.8 – Vietnam Domestic Fare Rules of Economy

Image 4.9 – Vietnam Domestic Fare Rules of Premium Economy