1

18

Part

Two i

Understanding the Marketplace and Consumers

VIDEO CASC
TOMS Shoes
This sounds like a mandate f rom a nonprofit volunteer organization. But

"Get involved: Changing a life begins with a single step."

rs

on how TOMS executes its strategy within the constar'

ing marketing environment. After viewing the video featuring TOMS Shoes, ans\'.: lowing questions about the marketing environment:

in fact, this

the motto of a for-profit shoe company located

in

Santa Monica, California. ln 2006, Tom Mycoskie founded TOMS Shoes because he wanted to do something different. He wanted to run a company that would make a profit while at the same tlme helping the needy of the world. Specifically, for every pair of shoes that TOMS sells, it gives a pair of shoes to a needy child somewhere in the world. So far, the company has given away tens of thousands of pairs of shoes and is on track to give away hundreds of thousands. Can TOMS succeed and thrive based on this idealistic concept? That all depends

1. What trends in the marketing environment have co...

to the success of TOMS Shoes?

2.

Did TOMS Shoes first scan the marketing environme.creating its strategy, or did it create its strategy and'.strategy to the environment? Does this matter?
ls TOMS' strategy more about serving needy childrer : about creating value for customers? Explain.

3.

COMPANYCASC AirAsia: The Sky's the Limit

Low-cost carriers (LCCs) provide an alternative for price-sensitive business and leisure travelers to maintain their travel plans at lower costs. AirAsia, AsiaS leading airline, was established with the dream of making air travel possible for everyone and it is now one of the world's best low-cost airlines. AirAsia was the first airline in Asia to introduce the budget, nofrills airline concept. lt was founded in 2001 by CEO Tony Fernandes and his three partners when their company, Tune Asia Sdn Bhd, bought the fledgling AirAsia, a Malaysian government-linked airline. Since then, the growth of this LCC has been the envy of many. lt started with two old Boeing 737s serving the domestic market in Malaysia. Today it is a publicly listed company boasting a large fleet of aircrafts flying to over 61 domestic and international destinations. It flies 108 routes and operates over 4OO flights daily from hubs located in Malaysia, Thailand, and lndonesia. AirAsia is widely known as the " Ryanair" of the Far East as it focuses on providing convenient and affordable air travel for the mass middle-class market. ln 2001, the domestic market was dominated by the national carrier, Malaysia Airline System (MAS), whose high prices created a pent-up demand for low-cost air travel. AirAsia offered savings of up to 60 percent compared to MAS' prices, and indeed, the compa ny s tagline, " Now everyone can f ly, " tru ly ref lects the company's
promise to its customers.

corporate culture, encouraging pilots to cook breakfast ' ,r'l neers each quarter to thank them for looking after thet' : As CEO, Fernandes ensures that he is accessible to all hrs , giving them his mobile telephone number. Air travel in Asia is heavily regulated, but Fernandes ha. : a crucial role in lobbying for its deregulation. ln mid-2003, :. des engaged the support of the former prime minister of l'.'. Tun Dr. Mahathir Mohamad, to network with neighborir : tries in an effort to develop an open-skies agreement. Sir':=' ., Indonesia, lndia, Thailand, and Singapore have qranteci .rights to AirAsia. Although it has limited resources, AirAsia has been able:_ its customers' needs by collaborating with partners. For ins..' appoints authorized travel aqents to cater to travelers who ."- .' comfortable with making their bookings over the Internet. l', . ,,r without credit cards can also pay for their tickets by cash di :- *, liance Bank branch in Malaysia. With the right partners and a strong marketing strategy fc: llr on the promise of low fares and good brand experience, Airi. . ,l evolved from an ailing company into one that netted a p-:-' :ltf $14.4 million by its third year of operation.
.

MANAGING COST IN A COMPETITIVE

ENVIRONMENT
The globalfinancial crisis that started in mid-2008 affected n .dustrjes, including the aviation industry. Fewer business anci =.
.

The airline launched during a turbulent period when people were hesitant to travel due to the aftermath of the 2OO1 terrorist attacks. People concerned about long-distance travel started to look for holidays in nearby countries. The timing worked to the advantage of AirAsia when it started to fly regional routes. Asians were enjoying the benefits of rising incomes and good economic growth and although many could not afford long-distance holidays, they were open to the idea of traveling to nearby countries. ln addition, increased media coverage on LCCs helped con-

,,+

sumers understand the no-f rills concept. The lnternet also provided AirAsia with the opportunity to reach more customers
through online booking.
Fernandes is a strong believer in leading by example. He is of-

ten seen working alongside his team as a crew member or baggage handler. This allows him to get to know his staff better and to listen to customers' feedback. He jnsists on a cooperative

travelers were flying due to the economic recession. Corpo..and government agencies issued orders, as part of an au::. -r drive, for less travel or, when absolutely necessary for their..' employees, for economy-class travel. This became an oppoa, -r for LCCs such as AirAsia to grow their market share. Indeec : number of passengers choosing AirAsia grew by over 2'l perc=-' the first quarter of 2009, and by 201 0 the company was able t: -. -, over a core operating profit margin of 23.2 percent. The cornerstone of AirAsiassuccess is itsconstant drive to costs. lndeed, AirAsia has the world's lowest unit costs of 2 : cents per ASK (Available Seat Kilometer). AirAsia rnakes pTo' :, keeping costs low while maintaining a high rate of aircraft util za. . quick turnarounds, low distribution costs using online bookinc : ancillary income such as its "Supersize" charge for excess bagg.:.
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rr

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To keep costs down and ensure a quick aircraft turnarour:

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