Case study: Tiger airways
Use the seven Ps frameworks to suggest ways that Tiger can improve its service but remain profitable:
Answer:The great services are the key to the success. No matter which industry is it but with the great services towards the customer satisfaction is quite important. The traditional 4 Ps are important for the tangible products but for the hospitality industry the three more Ps makes it to the 7 Ps of the service marketing mix. And they are product, price, place, promotion, people, process, physical evidence. Among these the people and physical evidences are very much important for the better services.
In the earlier time the air travel were taken as a luxury and it used to very much expensive. But, in the recent time the air ways have become one of the common ways of travelling. However, there are some specific reasons behind availing the air ways instead of other road ways and they are, saving time, under any emergency, luxury, comfortable journey etc. among all of these points the time saving is the major reason behind choosing the airways instead of other ways of travelling. The Low Cost Carriers (LCC) has become one of the new trends in the airlines business. Most of the airways are focusing on the low cost air service to have a bite of the huge South Asian and Asian market. The market it huge and it has got a great potential due to the increasing per capital income and the increase in the disposable income of the middle class people.
Tiger airways was launched in 2004 by Singapore Airlines (Doganis: 2006, 263) and it was basically for the middle class passengers who are eager to avail air ways if the price is reduced. However, Singapore Airlines must not forget that price reduction is not the primary key; rather the primary key is to satisfy the customer with the value pricing and to keep in mind that the customers are the primary assets of the Tiger Airways (Hax: 2009, 118).
According to the 7Ps the traditional 4 Ps are very important but in this case the major important factors within these 7 Ps are price, promotion, physical evidence, and people. The Tiger airways must understand the model of lower the price but double the sales volume without compromising over the quality. The service triangle is a model where it can be seen how the organization keep in touch with the employee and customer at the same time to understand the service factors and employee as well as the customer satisfaction. (Kuhnle: 2007, 9). Tiger must not forget that the physical evidence of the product is very important as they are selling hospitality products which don’t have direct effect over the customers while they are buying the product; rather it can be felt after experiencing the product, so, the physical evidence must provide the tangible satisfaction and that is only possible with value pricing and great customer services. The people involved in the process in this module are the faces of the company and they must know all the important factors to satisfy the customers.
Penetrating pricing may attract many new customers but could be the reason for bellow average services which would create great problem to retain the existing customers. The value pricing would be the best way to retain the customers as the customer would be happy to pay little more but they want better service. Some of the successful services related to the LCC are point to point operation. It means instead of keeping any break the journey of the flight should be straight from one point to another. No free food for short journey but timely landing and no late mark. And one of the most important factors is to keep the employees happy so no formation of unions would occur which might hamper the services (Belobaba, Odoni, and Barnhart: 2009, 123). In this way the Tiger Airways can apply the concept of 7Ps to be profitable even after adopting the low pricing but with the value attached with it. This way the Tiger Airways would be able to sustain their position in the market with the large returning and satisfied customer base.
How should Tiger have managed the service failure and subsequent recovery with the loss of the passengers’ pram?
LCC or the low cost carrier module is one of the modules that has created a history in the airlines industry. It has changed the total business module and created a different segment for a different target group. However, there are some demoralizing stories of the low cost carrier airlines like Compass 1 in 1990 and also some successful module like Virgin Blue 2 in 2000. However, the bottom line is value pricing with great business module that has specific target groups and specific services related to those groups. Tiger can be treated as the brainchild of the Singapore Airlines, which has got 32.9% share in the Tiger Airways (Investor relations: Tiger airways). But the Singapore Airlines did not make any brand extension to create the low faire segment instead it made a new brand called Tiger Airways. However, the Mother Company that is; Singapore Airlines has been tamed as the world’s best airlines for 19 times during the last 20 years (Suttle, and Vest: 2009, 51). It means the problem created with the customer’s pram in this case could have been solved easily if the focus towards the customer care could have imitated from the Singapore Airlines’ services. However, two different brands have two different policies. Tiger Airways has a great name in the low fair segment, but it has also got many complains related to the timing of the flight, lateness, and cleanliness and also sometimes loss of properties. In this case the focus is given on the loss of property. It is true that the responsibility of the movable properties like bags, prams etc must be taken care by the flight employees but it is also the responsibility of the traveler to read the policies, terms and condition before availing the services.
In this case Annika was very nice to the customer but it could have been a trick to keep him waits for more than 21 days so that he could file the loss of good claim after 21 days and the claim becomes void as per the rule. But the question is why a customer care executive would do that to lose a good customer for a simple pram? It could have been a simple mistake by Annika or she might be a new employee who was going through training process and got confused with the days require to claim the missing good and days require for returning the missing good to the customer. On in other hand she would have thought that the customer already knew about the policy of the claims and she was helping him to get back the pram without registering for the claim. However, from the customer prospective there have been many miscommunications and mistakes from the Airlines so, the Tiger must take this into a consideration and must reimburse the calculated amount for the loss of the pram to the particular customer. And the Tiger must take care of the disclosure of their policies in such a manner that every customer could know all the facts before availing the service and most important; each and every employee must be trained properly for understanding the system in diligent way.
- Compass: Compass was launched in Australia in 1990 as the low cost airways, but it collapsed after one or two years due to misinterpretation of the module.
- The Virgin Blue: Virgin Blue was launched by British company named Virgin in 2000 and it was a great success which took the market of the Ansett in 2002.
Belobaba P, Odoni A, and Barnhart C. The Global Airline Industry. New Jersey: John Wiley and Sons, 2009.
Doganis R. The airline business. London: Routledge, 2006.
Hax A C. The Delta Model: Reinventing Your Business Strategy. New York: Springer, 2009.
Kuhnle T. Customer Loyalty Program – Tourist Destination and Bonus Card System. Munich: GRIN Verlag 2007.
Suttle M, and Vest L J. Who’s Your Gladys?: How to Turn Even the Most Difficult Customer Into Your Biggest Fan. New York: AMACOM Div American Mgmt Assn, 2009.
N.d. Investor relations: Tiger airways. Available at: http://www.tigerairways.com/sg/en/about_us.php. (Accessed on 1st May 2011).