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TABLE OF CONTENTS
ACKNOWLEDGEMENT III
LIST OF ABBREVIATIONS IV
LIST OF CHARTS AND TABLES V
INTRODUCTION VI
CHAPTER 1: AN OVERVIEW OF AIR SERVICE MARKETING 1
1.1. WHAT IS AIR SERVICE MARKETING? 1
1.1.1. Special features of air service 1
1.1.1.1. Intangibility 1
1.1.1.2. Inseparability 2
1.1.1.3. Heterogeneity 2
1.1.1.4. Perishability 3
1.1.1.5. Lack of ownership 3
1.1.2. Service and Marketing service 3
1.1.3. Marketing in air service 4
1.2. PROCEDURES OF DOING AIR SERVICE MARKETING. 5
1.2.1. SWOT analysis 5
1.2.1.1. Strengths 5
1.2.1.2. Weaknesses 5
1.2.1.3. Opportunities 6
1.2.1.4. Threats 6
1.2.2. Doing market research 7
1.2.2.1. Finding out customers needs and wants 7
1.2.2.2. Segmenting markets 8
1.2.2.2.1. What is market segmentation? 8
1.2.2.2.2. Benefits of Segmentation 8
1.2.2.2.3. The process of Segmentation 9
1.2.2.3. Targeting market 10
1.2.3. Working out marketing mix strategies 11
1.2.3.1. Product Strategy 11
1.2.3.2. Price Strategy 13
1.2.3.3. Place Strategy 13
1.2.3.4. Promotion Strategy 14
1.2.3.5. People Strategy 16
1.2.3.6. Physical Evidence Strategy 18
1.2.3.7. Process Strategy 19
CHAPTER 2: ASSESSMENT OF THE APPLICATION OF MARKETING IN AIR SERVICE OF VIETNAM AIRLINES 20
2.1. AN OVERVIEW OF VIETNAM AIRLINES 20
2.1.1. Vietnam Airlines’ history 20
2.1.2. The status of Vietnam Airlines in the Region 23
2.2. THE APPLICATION OF “MARKETING IN AIR SERVICE” OF VIETNAM AIRLINES 26
2.2.1. Studying Marketing environments 26
2.2.2. SWOT analysis 28
2.2.2.1. Strength 28
2.2.2.2. Weaknesses 29
2.2.2.3. Opportunities 30
2.2.2.4. Threats 32
2.2.3. Doing market research 34
2.2.3.1. How does Vietnam Airlines find out the customers’ needs and wants? 34
2.2.3.2. Market Segmentation 35
2.2.3.2.1. Broad Segmentation 35
2.2.3.2.2. Needs-based segmentations and segment identifications 36
2.2.4. Targeting Markets of Vietnam Airlines 38
2.2.5. Marketing Mix Strategies 39
2.2.5.1. Product Strategy 39
2.2.5.2. Price Strategy 44
2.2.5.3. Place Strategy (Distribution Network) 45
2.2.5.4. Promotion Strategy 47
2.2.5.5. People Strategy 51
2.2.5.6. Process Strategy 52
2.2.5.7. Physical Evidence strategy 53
2.2.6. Evaluation 53
2.2.6.1. Achievements 54
2.2.6.2. Drawbacks 55
CHAPTER 3: MARKETING SOLUTIONS TO IMPROVING VIETNAM AIRLINES’ SERVICE 58
3.1. MARKETING SOLUTIONS 58
3.1.1. Diversification and improvement of the quality of Vietnam airlines 58
3.1.2. Enhancement of air service marketing and promotion activities 59
3.2. RECOMMENDATIONS 60
3.2.1. For the Government 60
3.2.2. For Vietnam Airlines 62
Company interview (Directly) 63
Questionnaire 64
CONCLUSION 69
APPENDIX 74
Acknowledgement
This thesis would not have been made possible without the Giúp from many wonderful people who gave their supports in different ways. To them I would like to express my deepest gratitude and sincere appreciation.
First of all, I am deeply indebted to my supervisor Asso. Prof., Dr Do Thi Loan, a senior lecturer and the Dean of the Post Graduate Studies Faculty of Hanoi Foreign Trade University, for her valuable instruction, corrections, comments, suggestions and enthusiasm during the development of my graduation thesis. Her guidance and encouragement have been invaluable to me and she will always be remembered as the key factor that influenced my career towards this path.
Second, I am especially grateful to the lecturers of the English Faculty who provided me with a basic knowledge that is absolutely important in writing the thesis.
I would also like to extend warmest thanks to all staff of the Vietnam Airlines and the Civil Aviation Administration of Vietnam (CVVA) who supplied me with valuable data.
Third, throughout my hard working days, I was blessed with a great deal of support from my family. I am forever thankful to my admired parents for their love, understanding, and endless patience and for supporting me in all my endeavors.
Finally, my last thanks go to all my classmates and former BBE graduates of the Foreign Trade University, for their encouragement and support whilst I was working on the completion of this work.
List of abbreviations
SWOT : Strength, weakness, opportunity, threat
ATL : Above the line
BTL : Below the line
CAAV : Civil Association Administration of Vietnam
VNA : Vietnam Airlines
WTO : World Trade Organization
SARS : Serve Acute Respiratory Syndrome
HCMC : Ho Chi Minh City
AVOD : Audio/Video on demand
RTW : Round the world
VFF : Vietnam Football Federation
7ps : Price, Place, Promotion, Product, People, Physical Evidence, Process
UK : United Kingdom
USa : The United Stated of America
PEST : Political, Economic, Socio-cultural and Technological
ICAO : International Civil Aviation Organization
IATA : International Aviation Transport Association
CRS : Computer Reservation System
GPS : Global Distribution System
List of Charts and tables
Table 2 . 1: Vietnam Airlines' competitors 23
Table 2 . 2: Market Share of Vietnam Airlines 29
Table 2 . 3: Key competitors and competitive strategies 33
Table 2 . 4: Roundtrip prices 37
Table 2 . 5: Evaluating passengers' taste Source: Vietnam Airlines market survey 42
Table 3 . 1: Action plan for 2006 60
Chart 3.1: Good aspects of Vietnam Airlines’ service. 65
Chart 3.2: Aspects which VNA needs improving. 66
Chart 3.3: Passengers’ Favorite Airlines. 68
Introduction
1. Why I choose this topic
The sixth Party Congress marked a turning point in the process of economic development of our nation. The country’s reform that began in the late 1986s and started generating results in the early 1990s created breakthrough changes in attitudes towards economy and what constitutes a modern state. What Vietnam has gained from the Doi Moi process is practically immeasurable. More important than any other things, however, is that the most significant achievement over the last 20 years was that Vietnam has successfully changed from its centrally planned economy into a socialist-oriented market economy.
Thanks to the renovation process and the open door policies of recent years, Vietnam’s tourism and civil aviation industries have grown rapidly and recorded encouraging successes. Tourism development has helped the air industry to grow, and the development of the air industry ensures an important means of transport for tourism. The number of foreign visitors to Vietnam in the past few years has continued to increase, and those arriving by air account for well over 50 percent of them.
At present, the concept of marketing has been widely applied in manufacturing sector in Vietnam. Nevertheless, the concept of marketing service in general and marketing air service in particular are quite new. In fact, many services industries such as airlines have traditionally applied marketing to their operations less than manufacturing firms. It cannot be denied that marketing is an important activity for any business that wishes to become and remain competitive and successful. This is certainly the case in the rapid changing airlines industry, especially Vietnam Airlines. However, there remains much room to improve in the application of marketing to air service of Vietnam Airlines. This is the reason why I choose this topic for my graduation thesis in the hope of making some recommendations to improve the efficiency of Vietnam Airlines.
2. Research Methodology
- Collecting data primary from doing field research, direct interviews and surveys in Vietnam Airlines and secondary data from text books and reference books concerned.
- Using different methods for study, comprising of analysis, comparison and generalization.
- Analyzing based on the marketing rules, processing and summarizing the collected data.
- Using online survey via email.
3. Focus of the study
The focus of the thesis is on theoretical framework of marketing service and marketing air service and the assessment of the application of marketing air service strategy of Vietnam Airlines.
4. Structure of the thesis
Apart from the introduction and conclusion, the thesis is divided into three chapters:
Chapter 1: An overview of air service marketing.
Chapter 2: Assessment of the applications of marketing in air service of Vietnam Airlines.
Chapter 3: Marketing solutions to improving services of Vietnam Airlines.
CHAPTER 1
An overview of air service marketing
Since 1980s, in the UK more people are employed in the service sector than in all other sectors of the economy put together. It is the same in the USA and in most Western economies. In Britain, income from services contributes more than any other sectors to the Gross National Product, and income from selling services overseas, called ‘invisible earnings’ plays an increasingly important role in the balance of trade. Since that time, service has grown considerably and has received much attention. There are a number of factors which make services different from physical goods. Marketing applied in service including has developed accordingly.
1.1. WHAT IS AIR SERVICE MARKETING?
1.1.1. Special features of air service
Unlike goods, services in general and air service in particular cannot be seen, touched, smelt, tasted, tried on for size or stored on a shelf. They are intangible. Services own some special features that often have a significant effect on marketing strategies. These features of services result in marketing mix decisions that are substantially different from those relating to the marketing of goods. It must be concerned with factors such as intangibility, inseparability, perish ability, heterogeneity and ownership when implementing marketing strategy.
1.1.1.1. Intangibility
Air services are intangible, that means services cannot be seen, tasted, felt, heard or smelt before the purchase decision. Some marketing authors even say that the basic difference between goods and services is the intangibility. Air services do not have real, physical presence as a product does. For instance, prior to boarding an airplane, airline passengers have nothing but an airline ticket and the promise of safe transportation to their
Conclusion
As with the rapid growing economy and its integration to the world economy, Vietnam Airlines has been growing fast in the past years. However, to meet the needs of integration when Vietnam joins WTO, marketing measures must be given enough attention and consideration to sustain the growth of Vietnam Airlines and achieve a competitive advantage. Strong growth of Vietnam Airlines is not only important to the company but also to Vietnam because the well-being of the airline will contribute measurably to the economic growth and the country’s infrastructure as well as enhance the image of the nation. This is the reason for the topic “The application of marketing in air service of Vietnam Airlines” to be chosen as graduation thesis. The thesis consists of 3 chapters.
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TABLE OF CONTENTS
ACKNOWLEDGEMENT III
LIST OF ABBREVIATIONS IV
LIST OF CHARTS AND TABLES V
INTRODUCTION VI
CHAPTER 1: AN OVERVIEW OF AIR SERVICE MARKETING 1
1.1. WHAT IS AIR SERVICE MARKETING? 1
1.1.1. Special features of air service 1
1.1.1.1. Intangibility 1
1.1.1.2. Inseparability 2
1.1.1.3. Heterogeneity 2
1.1.1.4. Perishability 3
1.1.1.5. Lack of ownership 3
1.1.2. Service and Marketing service 3
1.1.3. Marketing in air service 4
1.2. PROCEDURES OF DOING AIR SERVICE MARKETING. 5
1.2.1. SWOT analysis 5
1.2.1.1. Strengths 5
1.2.1.2. Weaknesses 5
1.2.1.3. Opportunities 6
1.2.1.4. Threats 6
1.2.2. Doing market research 7
1.2.2.1. Finding out customers needs and wants 7
1.2.2.2. Segmenting markets 8
1.2.2.2.1. What is market segmentation? 8
1.2.2.2.2. Benefits of Segmentation 8
1.2.2.2.3. The process of Segmentation 9
1.2.2.3. Targeting market 10
1.2.3. Working out marketing mix strategies 11
1.2.3.1. Product Strategy 11
1.2.3.2. Price Strategy 13
1.2.3.3. Place Strategy 13
1.2.3.4. Promotion Strategy 14
1.2.3.5. People Strategy 16
1.2.3.6. Physical Evidence Strategy 18
1.2.3.7. Process Strategy 19
CHAPTER 2: ASSESSMENT OF THE APPLICATION OF MARKETING IN AIR SERVICE OF VIETNAM AIRLINES 20
2.1. AN OVERVIEW OF VIETNAM AIRLINES 20
2.1.1. Vietnam Airlines’ history 20
2.1.2. The status of Vietnam Airlines in the Region 23
2.2. THE APPLICATION OF “MARKETING IN AIR SERVICE” OF VIETNAM AIRLINES 26
2.2.1. Studying Marketing environments 26
2.2.2. SWOT analysis 28
2.2.2.1. Strength 28
2.2.2.2. Weaknesses 29
2.2.2.3. Opportunities 30
2.2.2.4. Threats 32
2.2.3. Doing market research 34
2.2.3.1. How does Vietnam Airlines find out the customers’ needs and wants? 34
2.2.3.2. Market Segmentation 35
2.2.3.2.1. Broad Segmentation 35
2.2.3.2.2. Needs-based segmentations and segment identifications 36
2.2.4. Targeting Markets of Vietnam Airlines 38
2.2.5. Marketing Mix Strategies 39
2.2.5.1. Product Strategy 39
2.2.5.2. Price Strategy 44
2.2.5.3. Place Strategy (Distribution Network) 45
2.2.5.4. Promotion Strategy 47
2.2.5.5. People Strategy 51
2.2.5.6. Process Strategy 52
2.2.5.7. Physical Evidence strategy 53
2.2.6. Evaluation 53
2.2.6.1. Achievements 54
2.2.6.2. Drawbacks 55
CHAPTER 3: MARKETING SOLUTIONS TO IMPROVING VIETNAM AIRLINES’ SERVICE 58
3.1. MARKETING SOLUTIONS 58
3.1.1. Diversification and improvement of the quality of Vietnam airlines 58
3.1.2. Enhancement of air service marketing and promotion activities 59
3.2. RECOMMENDATIONS 60
3.2.1. For the Government 60
3.2.2. For Vietnam Airlines 62
Company interview (Directly) 63
Questionnaire 64
CONCLUSION 69
APPENDIX 74
Acknowledgement
This thesis would not have been made possible without the Giúp from many wonderful people who gave their supports in different ways. To them I would like to express my deepest gratitude and sincere appreciation.
First of all, I am deeply indebted to my supervisor Asso. Prof., Dr Do Thi Loan, a senior lecturer and the Dean of the Post Graduate Studies Faculty of Hanoi Foreign Trade University, for her valuable instruction, corrections, comments, suggestions and enthusiasm during the development of my graduation thesis. Her guidance and encouragement have been invaluable to me and she will always be remembered as the key factor that influenced my career towards this path.
Second, I am especially grateful to the lecturers of the English Faculty who provided me with a basic knowledge that is absolutely important in writing the thesis.
I would also like to extend warmest thanks to all staff of the Vietnam Airlines and the Civil Aviation Administration of Vietnam (CVVA) who supplied me with valuable data.
Third, throughout my hard working days, I was blessed with a great deal of support from my family. I am forever thankful to my admired parents for their love, understanding, and endless patience and for supporting me in all my endeavors.
Finally, my last thanks go to all my classmates and former BBE graduates of the Foreign Trade University, for their encouragement and support whilst I was working on the completion of this work.
List of abbreviations
SWOT : Strength, weakness, opportunity, threat
ATL : Above the line
BTL : Below the line
CAAV : Civil Association Administration of Vietnam
VNA : Vietnam Airlines
WTO : World Trade Organization
SARS : Serve Acute Respiratory Syndrome
HCMC : Ho Chi Minh City
AVOD : Audio/Video on demand
RTW : Round the world
VFF : Vietnam Football Federation
7ps : Price, Place, Promotion, Product, People, Physical Evidence, Process
UK : United Kingdom
USa : The United Stated of America
PEST : Political, Economic, Socio-cultural and Technological
ICAO : International Civil Aviation Organization
IATA : International Aviation Transport Association
CRS : Computer Reservation System
GPS : Global Distribution System
List of Charts and tables
Table 2 . 1: Vietnam Airlines' competitors 23
Table 2 . 2: Market Share of Vietnam Airlines 29
Table 2 . 3: Key competitors and competitive strategies 33
Table 2 . 4: Roundtrip prices 37
Table 2 . 5: Evaluating passengers' taste Source: Vietnam Airlines market survey 42
Table 3 . 1: Action plan for 2006 60
Chart 3.1: Good aspects of Vietnam Airlines’ service. 65
Chart 3.2: Aspects which VNA needs improving. 66
Chart 3.3: Passengers’ Favorite Airlines. 68
Introduction
1. Why I choose this topic
The sixth Party Congress marked a turning point in the process of economic development of our nation. The country’s reform that began in the late 1986s and started generating results in the early 1990s created breakthrough changes in attitudes towards economy and what constitutes a modern state. What Vietnam has gained from the Doi Moi process is practically immeasurable. More important than any other things, however, is that the most significant achievement over the last 20 years was that Vietnam has successfully changed from its centrally planned economy into a socialist-oriented market economy.
Thanks to the renovation process and the open door policies of recent years, Vietnam’s tourism and civil aviation industries have grown rapidly and recorded encouraging successes. Tourism development has helped the air industry to grow, and the development of the air industry ensures an important means of transport for tourism. The number of foreign visitors to Vietnam in the past few years has continued to increase, and those arriving by air account for well over 50 percent of them.
At present, the concept of marketing has been widely applied in manufacturing sector in Vietnam. Nevertheless, the concept of marketing service in general and marketing air service in particular are quite new. In fact, many services industries such as airlines have traditionally applied marketing to their operations less than manufacturing firms. It cannot be denied that marketing is an important activity for any business that wishes to become and remain competitive and successful. This is certainly the case in the rapid changing airlines industry, especially Vietnam Airlines. However, there remains much room to improve in the application of marketing to air service of Vietnam Airlines. This is the reason why I choose this topic for my graduation thesis in the hope of making some recommendations to improve the efficiency of Vietnam Airlines.
2. Research Methodology
- Collecting data primary from doing field research, direct interviews and surveys in Vietnam Airlines and secondary data from text books and reference books concerned.
- Using different methods for study, comprising of analysis, comparison and generalization.
- Analyzing based on the marketing rules, processing and summarizing the collected data.
- Using online survey via email.
3. Focus of the study
The focus of the thesis is on theoretical framework of marketing service and marketing air service and the assessment of the application of marketing air service strategy of Vietnam Airlines.
4. Structure of the thesis
Apart from the introduction and conclusion, the thesis is divided into three chapters:
Chapter 1: An overview of air service marketing.
Chapter 2: Assessment of the applications of marketing in air service of Vietnam Airlines.
Chapter 3: Marketing solutions to improving services of Vietnam Airlines.
CHAPTER 1
An overview of air service marketing
Since 1980s, in the UK more people are employed in the service sector than in all other sectors of the economy put together. It is the same in the USA and in most Western economies. In Britain, income from services contributes more than any other sectors to the Gross National Product, and income from selling services overseas, called ‘invisible earnings’ plays an increasingly important role in the balance of trade. Since that time, service has grown considerably and has received much attention. There are a number of factors which make services different from physical goods. Marketing applied in service including has developed accordingly.
1.1. WHAT IS AIR SERVICE MARKETING?
1.1.1. Special features of air service
Unlike goods, services in general and air service in particular cannot be seen, touched, smelt, tasted, tried on for size or stored on a shelf. They are intangible. Services own some special features that often have a significant effect on marketing strategies. These features of services result in marketing mix decisions that are substantially different from those relating to the marketing of goods. It must be concerned with factors such as intangibility, inseparability, perish ability, heterogeneity and ownership when implementing marketing strategy.
1.1.1.1. Intangibility
Air services are intangible, that means services cannot be seen, tasted, felt, heard or smelt before the purchase decision. Some marketing authors even say that the basic difference between goods and services is the intangibility. Air services do not have real, physical presence as a product does. For instance, prior to boarding an airplane, airline passengers have nothing but an airline ticket and the promise of safe transportation to their
Conclusion
As with the rapid growing economy and its integration to the world economy, Vietnam Airlines has been growing fast in the past years. However, to meet the needs of integration when Vietnam joins WTO, marketing measures must be given enough attention and consideration to sustain the growth of Vietnam Airlines and achieve a competitive advantage. Strong growth of Vietnam Airlines is not only important to the company but also to Vietnam because the well-being of the airline will contribute measurably to the economic growth and the country’s infrastructure as well as enhance the image of the nation. This is the reason for the topic “The application of marketing in air service of Vietnam Airlines” to be chosen as graduation thesis. The thesis consists of 3 chapters.
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