MARKETING STRATEGY FOR VIETNAM AIRLINES

TABLE OF CONTENTS
1. Executive Summary
2.. Business summary

Nowadays, we cannot imagine the world without the airline industry, because
of its fast services and huge benefits, which offers for many other industries
and societies. Also, its role is critical in term of the creation of the new global
economy. According to the U.S. department of transport, this industry is
divided into four categories:
1. International: Airlines which provide services from continent to
another.
2. National: within a country
3. Regional: within the geographical region. They focus on short
hauls flights.
4. Cargo: airlines that provides goods transportation
Today, airline industry is one of the most important industries, because it is
supporting the internationalization and globalization objectives for many
industries and businesses around the globe. This need creates big pressure of
this industry by increasing investments and driving invention and innovation
forward in order to create the competitive advantages. I have chosen Vietnam
airlines, because it is a major competitor for many global companies.
- Vietnam Airlines (Vietnamese: Hãng Hàng không Quốc gia Việt Nam) is
the flag carrier of Vietnam. The airline was founded in 1956 and later
established as a state-owned enterprise in April 1989.

- Headquarters: Long Bien District, Ha Noi capital

- Hubs: Noi Bai International Airports and Tan Son Nhat International
Airports.

- History:

- Mission Statement: As the airline industry is especially increasing and

highly competritors so, there are many market shares in the industry.
Moreover, the airline industry is affected by the environmental (e.g. political,
economics and etc.) that decreasing the number of passengers. At this point,
there are many reasons, which have an effect on the airline industry to
compete among industry; so many airline companies have developed their
strategies to become more efficient in order to lead the market arena.
Today there are large number of Airline companies growing in the market,
which are looking for stealing a market share. In this point, there are more and
more choices for the customer to be able to chose the airline at which they
want to travel with and yet still looking for the one which can serve their need
also.
- Symbol of company: October 20, 2002 VNA held a ceremony to
introduce the new symbol "Golden Lotus". “The Lotus” has a very special
meaning for Vietnamese people. Hoa Sen expressed the enlightenment and
perfection; medium life is both noble and sacred; both charming, soft, but
equally sturdy, poised. Those are valuable qualities of Lotus and the reason
for VNA to choose Lotus as their new symbol. The yellow color of Lotus
symbolizes quality and perfection.
- Business objective: Vietnam airlines is the only one of airlines in Viet
Nam which get 4-star was acknowledged by Skytrax. Vietnam airlines tend to
a higher target to get 5-star in the future. VNA will expand more the direct
destination both domestic and international. Moreover, VNA will focus on
buying many modern aircrafts, especially new version of Boeing that have a
lagre capacity.
- Marketing objective:
VNA has flights to Southeast Asia, East Asia, Europe and Oceania,
currently operates 49 regular routes to 21 domestic points and 28
international destinations with a total of more than 360 flights each. day.
Head office is located at Noi Bai International Airport - Hanoi. Like most
large corporations, the airline must focus on a variety of goals and objectives
both for short-term and long-term survival in the competitive global market.
On June 10, 2010, the airline officially joined the SkyTeam alliance,
becoming Southeast Asia's first airline to join the alliance.
Because VNA belongs to government that have the ratio of state capital at
Vietnam Airlines is 86.16%, to represent for Viet Nam country so they always
follow to a certain post, and compete with other airlines a fair way. Some of
elements which are decided VNA lead to Vietnam market:

1. Positioning themselve as a high-class airline (Product)

Compared to its biggest competitor in the market, Vietjet Air, Vietnam

Airlines has a better advantage when it is called the "Vietnam national
airline". This is a great advantage in attracting customers to their services, it
positioning itself as a national brand, along with being accompanied by high
quality.
Moreover, as a high-class airline, building the image of Vietnam Airlines is
also different than other low-cost airlines. Vietnam Airlines and women wear
long dresses (Ao Dai) and men wear gile with yellow-blue tones with elegant
colors, creating sympathy with customers even with foreigners when looking
at it also see something "very Vietnamese" . Doing so shows that Vietnam
Airlines' marketing strategy has a vision when positioning itself as a high-end
company. This is the advantage that VNA has to compete in the context of the
aviation industry being a "hot" industry in Vietnam.

2. Distribution agents nationwide

As of December 2016, Vietnam Airlines' PSA and BSP agents are 10,240
ticket offices. In addition, Vietnam Airlines' distribution channel also focuses
on applying the technology to its ticketing process to provide the best
experience to its customers. The company has opened sales on the Website
with the interface and the easiest way to buy tickets for customers.
Furthermore, it also links well-known travel websites with millions of users
like Traveloka or Booking ... to make it easy for customers to access their
flights, as well as to buy tickets easily.

3. Communication, PR build "clean" image (Brand)

Newspaper advertising is a tangible advertising medium aimed at

the segment of business travelers, often using big newspapers with a
nationwide distribution such as Labor, Youth ...
In addition, overseas VNA uses large newspapers in key markets: Ashahi,
Goodweeken, Travel Trade ... Advertising on television is to make short
commercials to introduce images of the company.

Advertising via the Internet plays an important role in the overall strategy of
VNA today. Through its official website, in addition to the purpose of
introducing products, it also helps provide customers with information about
the entire process of using the service, steps to implement and regulations.

As an official carrier, VNA sponsors national, cultural, social, educational,

sports events and community support. With national events, VNA participates
in sponsoring most major national events such as the APEC Summit,
Women's Summit, Vietnamese cultural days abroad such as Japan, Malaysia,
England, Belgium, Korea, Luxembourg ..., supporting the overseas
Vietnamese community ... In addition, VNA has strengthened coordination in
promoting VNA tourism in coordination with the Vietnam National
Administration of Tourism to build a TV show. "Hidden beauty", "SVietnam"
aims to introduce the features and highlights of Vietnamese culture, society,
country and people.

3.. Current situational analysis

3.1. Macro-environment:
 3.1.1 Political:
As the expensive transportation requiring the high security and safety,
Vietnam Airlines must abide to civil aviation law not only in Vietnam but also
international rules. It requires a complex combination about huge political
documents, human resources, safe machinary systems, which is very costly.
3.1.2 Economical:

Vietnam inflation peaked in July and since slowed

Vietnam unployment rate is relatively low.

Vietnam airlines is known as Vietnam national airline and is directly

impacted on inflation and unemployment rate The annual inflation rate in
Vietnam edged down to a seven-month low of 3.46 percent in November 2018
from 3.89 percent in the previous month. However, the unemployment rate is
low in recent years and inflation rate is not remarkable, it is a good signal for
developing this expensive and fast transportation. Because with stable
economic situation, residents are easily willing to pay more.

3.1.3 Social:
Vietnam people have a trend to choose a good service, Vietnam airline is
always the first priority choice for high income people. However, because
Vietnam is a small country, travel by cars is commonly chosen for local
people, which is also a big challenge for airplane sector in domestic market.
3.1.4 Technology:
Airplane is an important sector which endless require technology
innovation. Recently, Vietnam airlines and FPT had signed agreement that
FPT will provide Vietnam airlines with its best IT products, services and
solution meeting Vietnam airlines’ requirement. In 2018, Vietnam Airlines
upgrade new airplane group with 20 new airplane module A321.

2. Micro-environment:
2.1 External:
 Supplier: Boeing and Airbus are big suppliers providing airplanes for
Vietnam Airlines. Airbus always tries to use the new technology as their
competitive advantages, meanwhile, Boeing pursues to high productivity such
as material saving, reducing maintenance cost,…
Food and drink in Vietnam Airlines is monopolical provided by Noibai
Catering with the avarage selling price is 62.350 VND per meal.

 Competiors: In local market, Vietjet is the biggest competitor for

Vietnam Airlines because they offer the affordable price. Besides, we also
have Jetstar is
 Customers: Due to offering a higher price with better services compared
to their competitors in local market, customers of Vietnam airlines are usually
high income people who are willing to pay more to get good services.

3. Target market:

In local market, there are two main groups. Firstly, Vietnam Airlines develops
the brand as the only one 4 stars airlines in Vietnam providing good services
for customers with high requirements. Sedconly, conducting dual-brand
between VNA and Jetstar Pacific offers for every customer segmentations,
which hepls VNA groups( including VNA, Jetstar Pacific and Vasco) hold
around 60% market share in 2020.

4. SWOT

1. Strength of Vietnam Airlines:

- Vietnam Airlines has many wide bodies, the carrier is adding narrow
bodies to strengthen its network in China, India and Myanmar and many other
countries in Asia.
- As a national airline, it has strong brand name in domestic and regional
CLMV (Cambodia, Laos, Myanmar and Vietnam). Leading on the straight
routes: Vietnam-Europe, Vietnam-CLM and domestic. Route network extends
nationwide and worldwide with combination of government.
- Domestic products are differentiated (Class C, GLP program).
- Service system is synchronized, various and less dependent on suppliers.
- The fleet is continued to innovate, increase competitive advantages and
leading development trend of technology compared with competitors.
2. Weakness of Vietnam Airlines:
- The main weakness of Vietnam airlines is the miss management. The
management of Vietnam could never worked independently since the
government owned type of organization with having inevitable government
influence in almost enact and every corporate aspects of this organization and
always there was pressure from outside to entertain personal interest.
- Even from the very initial period Vietnam could not be able to recruit or
deploy the right professional person for the right place to achieve it is desired
objectives. This unavoidable government influence .As a consequence Vietnam
Airlines has reached at this measurable stage with aging fleet and burden of
debts.
- At the same time considering the global standard of International Airlines,
Vietnam Airlines is lagging behind. The staffs are not provided with modern
technologies like Computer, internet facilities etc. Therefore, information
flows, faster customer services are not ensured from the part of employees.
- Average revenue in international routes is still low due to the proportion of
people who have high income is low. Quality service is still low compared
with large firms in the region. Competitive ability is not high on international
market. Fixed cost remain high and financial capacity is limited.
3. Opportunity of Vietnam Airlines:
- The market is based on labor traffic, retuning residents, business travelers,
medical purpose and tourists. The cargo market based on RMG, leather goods,
medicine, perishables. In terms of cargo, the perishables are mostly dependent
on Airline services and also demanded for the RMG.
- In 2013, Vietnam Airlines joined in Skyteam - air alliance, so the
international route network to be broader.
- Vietnam has advantageous geographic location. Located between North
East Asia, Southeast Asia, Europe, South Pacific and China so it is gateway of
the regions.
- The growth of tourism industry is increasing quickly.
- Vietnam is an attractive investment location (in 2012, Vietnam is ranked
11th in the world).
- High population level and GDP is forecasted to continue to grow with an
increase of over 5% / year.
- Guests to / from Vietnam continue to grow at an average rate of 10% / year
(as predicted by IATA).
4. Threats for Vietnam Airlines:
- In the nations which are destination of Vietnam Airlines, politic and
economic situation are volatile. (Thailand, France...)
- The macroeconomic risks still exist such as high inflation, local currency
devaluation and high fuel costs.
- Fierce competition from traditional airlines and the world's largest LCC,
especially in the domestic, regional and Europe market.
- Airport infrastructure does not keep pace with the development
requirements of aviation; the number of aircraft parking at the airport grounds
HAN, SGN is limited.
- Specialized Aviation Labor scarcity, especially pilots, technicians.

5. Marketing objectives
6. Target market(s) and Positioning strategy

6.1 Segmentation :

Geographic : Vietnam airline will segment in domestic and internation

route . Locally , the VNA concentrates on 3 major of air route from the 3 major
hubs : Ha Noi , Da Nang , Ho Chi Minh because these are big cities and make
up the large number of passengers.

Besides , VNA also has a variety of international routes : Asia , Europe ,

America and Australia when VNA focuses on planning transit airports through
in the gateways of Ho Chi Minh City and Hanoi and compete with large
transport hubs like : Bangkok, Hong Kong , Singapore.
 Demographic : VNA is full services carrier with high ticket’s price for
domestic routes and is low-cost carrier with affordable price for
international routes

6.2 Target market :

Mass market ( focus on economy class ) : For all customers who have no
high requirements on the flight . The price of economy class is lower than
business class so the majority tend to choose this kind of class for travelling .
They just want to travel by plane just simply because of time-saving , not for
enjoying the vip perks . Therefore , the percentage of selling economy class is
higher than that of business class as always .

Selective market ( business class ) : VNA meet the high demand of

Government , businesswoman – businessman with high income . They have
high requirement and need luxyrious flight in order to ensure that they are
ready to work after the flights . Therefore, business class offer those customers
more services such as : meal , separate check-in gate and private lounge that
they can dress up , relax , comfortable and spacious chairs on the plane that can
recline into bed .
 Niche market ( concentrate on the monopoly of flight : VASCO
airline ) : With the right of monopoly , VNA can maintain the higher price for
domestic flight without other competitions.

6.3. Positioning

Domestic position: VNA are the operator of the most extensive route
network in Vietnam. The three main competitors in the domestic market are
Vietnam Airlines, Jetstar Pacific and Vietjet Air and now Bamboo Airways is a
new airlines which joined in domestic market in 2019. Besides, Jetstar is our
subsidiary which operates under low cost carrier model. Therefore, it should be
able to tap growth from the low yield passenger segment by operating in
domestic and regional routes. In 2018, the market share of Vietnam Airlines and
Jetstar Pacific held an overwhelming majority of the domestic market,
accounting for 56% of total passenger volume (including VASCO 2%).

High Quality

High Price

Internal position: 68 foreign airlines and 3 Vietnamese airlines (including

Vietnam Airlines, Jetstar Pacific and Vietjet) are operating nearly 130
international routes between Hanoi, Ho Chi Minh City, Da Nang, Nha Trang
and Phu Quoc, Hai Phong to 28 countries and territories. According to internal
market research, we flew 31% of Vietnam international passenger volume.
Competitors such as Thai Airways and Singapore Airlines accounted for 3.8%
to 3.6% of the market share and Vietjet is 12% of internal market share in 2018.