Sales and Marketing in Airline Industry

In the airline industry, sales and marketing play crucial roles in attracting customers, driving
revenue, and building brand loyalty. Sales typically involve direct interactions with travel
agencies, corporate clients, and online booking platforms to sell tickets and secure contracts.
Marketing strategies focus on promoting the airline's services through various channels such as
digital advertising, social media, email campaigns, and partnerships with other businesses to
increase brand awareness and drive customer engagement. Key objectives include filling seats,
maximizing revenue per passenger, and differentiating the airline's offerings from competitors.
Additionally, loyalty programs and customer relationship management (CRM) systems are
commonly used to retain existing customers and incentivize repeat business.

Company Profile of Vietnam Airlines

Vietnam Airlines is the national flag carrier of Vietnam, founded in 1956. It operates domestic
and international flights to destinations across Asia, Europe, and Oceania. With its main hub at
Noi Bai International Airport in Hanoi and Tan Son Nhat International Airport in Ho Chi Minh
City, Vietnam Airlines offers a wide range of services, including passenger and cargo
transportation. The airline is known for its modern fleet, comprising various Airbus and Boeing
aircraft, and its commitment to safety and quality service. Vietnam Airlines is a member of the
SkyTeam alliance, which allows it to offer passengers access to a global network of destinations
and seamless travel experiences through codeshare agreements with partner airlines.

STP Model of Vietnam Airlines

The STP model in marketing stands for Segmentation, Targeting, and Positioning. Here's how it
might apply to Vietnam Airlines:

1. Segmentation: Vietnam Airlines likely segments its market based on various factors such as
demographics (age, income, occupation), psychographics (lifestyle, values), and behavior (travel
frequency, purpose of travel). They might target different segments such as business travelers,
leisure travelers, families, etc.

2. Targeting: Once segments are identified, Vietnam Airlines would target specific segments that
are most profitable or strategic for the airline. For example, they might focus on business
travelers who value convenience and flexibility, or leisure travelers seeking affordable vacation
options.

3. Positioning: Vietnam Airlines would position itself in the minds of consumers relative to
competitors. This could involve emphasizing factors such as safety, reliability, customer service,
routes/network, or unique features like cultural experience or premium services. The positioning
aims to create a distinctive image and value proposition that resonates with the target market.

Overall, Vietnam Airlines likely employs the STP model to effectively identify and serve the
needs of different customer segments while maintaining a competitive position in the airline
industry.

Marketing Mix of 7Ps

1. Product:

- Core product: Vietnam Airlines provides air transportation services for passengers and cargo.

- Additional services: In-flight amenities such as meals, entertainment, and seating options.
Loyalty programs, lounge access, and special assistance services.

2. Price:

- Pricing strategy: Vietnam Airlines offers various fare classes (economy, premium economy,
business, first class) with corresponding pricing tiers based on factors like demand, route, and
time of booking. They also implement discounts, promotions, and sales strategies to attract
customers.

3. Place:

- Distribution channels: Vietnam Airlines sells tickets through multiple channels including their
website, mobile app, travel agencies, and online travel agencies (OTAs).

- Route network: Vietnam Airlines operates flights to domestic and international destinations,
serving major cities and tourist hubs worldwide.

4. Promotion:
 - Advertising: Vietnam Airlines promotes its services through various advertising channels
including television, print media, online advertising, and social media platforms.

- Sales promotions: The airline runs sales promotions, contests, and giveaways to incentivize
bookings and increase brand visibility.

- Public relations: Vietnam Airlines engages in public relations activities to manage its
reputation, communicate with stakeholders, and enhance brand image.

5. People:

- Employees: Vietnam Airlines' employees, including customer service agents, flight

attendants, pilots, and ground staff, play a crucial role in delivering excellent service and
ensuring customer satisfaction.

- Training and development: The airline invests in training and development programs to equip
its staff with the necessary skills and knowledge to provide exceptional service.

6. Process:

- Booking process: Vietnam Airlines offers an efficient online booking system and reservation
management process to make it easy for customers to book flights.

- Check-in process: Both online check-in and airport check-in procedures are streamlined to
enhance convenience for passengers.

- Boarding process: Vietnam Airlines implements efficient boarding procedures to ensure

timely departures and a smooth boarding experience for passengers.

7. Physical Evidence:

- Aircraft: Vietnam Airlines maintains a fleet of well-maintained aircraft to ensure safety,

comfort, and reliability for passengers.

- Airport facilities: The airline ensures that airport facilities, including lounges, signage, and
cleanliness, reflect its brand image and provide a positive experience for travelers.

- Branding: Vietnam Airlines' branding elements such as uniforms, aircraft livery, and
promotional materials contribute to building brand recognition and loyalty among customers.
By carefully managing these elements of the marketing mix, Vietnam Airlines aims to attract
customers, differentiate itself from competitors, and drive business success in the airline industry.

Porter Five Forces Analysis

Porter's Five Forces analysis is a framework used to assess the competitive intensity and
attractiveness of an industry. Here's how it applies to Vietnam Airlines:

1. Threat of New Entrants:

- The airline industry typically has high barriers to entry due to significant capital requirements
for aircraft, infrastructure, and regulatory approvals.

- However, the threat of new entrants can arise from changes in regulations, technological
advancements, or government policies that may lower barriers to entry.

- Overall, the threat of new entrants to Vietnam Airlines is moderate, considering the capital-
intensive nature of the airline industry and existing regulatory frameworks.

2. Bargaining Power of Suppliers:

- Aircraft manufacturers such as Airbus and Boeing are the primary suppliers to airlines like
Vietnam Airlines. The bargaining power of these suppliers is relatively high due to the limited
number of suppliers and the high cost of switching.

- Additionally, suppliers of fuel, aircraft maintenance services, and other key inputs also hold
some bargaining power, especially if they have few substitutes or if they provide specialized
services.

- Vietnam Airlines may negotiate long-term contracts or form strategic partnerships to mitigate
the impact of supplier bargaining power.

3. Bargaining Power of Buyers:

- The bargaining power of buyers in the airline industry can vary depending on factors such as
the availability of alternative transportation options, customer loyalty, and price sensitivity.
 - In markets where there is intense competition among airlines and abundant flight options,
buyers may have higher bargaining power as they can easily switch between airlines based on
price, schedule, and service quality.

- Vietnam Airlines may employ strategies such as loyalty programs, differentiated services, and
targeted marketing to retain customers and reduce their bargaining power.

4. Threat of Substitutes:

- Substitutes to air travel include other modes of transportation such as trains, buses, and cars,
particularly for short-haul routes or travel within a specific region.

- Advances in technology, such as teleconferencing and virtual meetings, may also pose a
threat by reducing the need for business travel.

- However, for long-haul and international travel, air transportation remains the preferred
choice due to its speed and efficiency, reducing the overall threat of substitutes for Vietnam
Airlines.

5. Competitive Rivalry:

- The airline industry is highly competitive, with numerous airlines competing for market
share, routes, and passengers.

- In Vietnam, Vietnam Airlines faces competition from both domestic carriers such as VietJet
Air and international airlines operating in the region.

- Competitive rivalry is influenced by factors such as pricing strategies, route networks, service
quality, and brand reputation.

- Vietnam Airlines may differentiate itself through superior service, route expansion, alliances,
and partnerships to maintain a competitive edge in the market.

Overall, Vietnam Airlines operates in an industry characterized by moderate to high competitive

intensity and various external factors that influence its profitability and long-term success. A
thorough understanding of Porter's Five Forces can help the airline make informed strategic
decisions and navigate market dynamics effectively.

SWOT analysis of Vietnam Airlines:

Strengths:

1. Strong market presence: Vietnam Airlines is the national flag carrier of Vietnam, enjoying a
prominent position in the country's aviation industry.

2. Extensive route network: The airline operates flights to numerous domestic and international
destinations, offering passengers a wide range of travel options.

3. Modern fleet: Vietnam Airlines maintains a fleet of modern aircraft, which enhances safety,
reliability, and passenger comfort.

4. Alliance membership: As a member of the SkyTeam alliance, Vietnam Airlines benefits from
access to a global network of destinations and code-share agreements with partner airlines.

5. Brand reputation: Vietnam Airlines has built a strong brand reputation for quality service,
safety, and reliability, which contributes to customer loyalty and trust.

Weaknesses:

1. Dependence on tourism: Vietnam Airlines' revenue is significantly affected by fluctuations in

tourism demand, making the airline vulnerable to economic downturns and travel disruptions.

2. Operational challenges: Like many airlines, Vietnam Airlines faces operational challenges
such as fuel price volatility, regulatory constraints, and labor issues, which can impact
profitability and efficiency.

3. Limited innovation: The airline may lag behind competitors in terms of innovation and
technological advancements, affecting its ability to offer cutting-edge services and experiences to
customers.

4. Over-reliance on government support: As a state-owned enterprise, Vietnam Airlines may face

constraints in decision-making and efficiency compared to privately owned competitors.

5. Environmental impact: The aviation industry's carbon footprint is a growing concern, and
Vietnam Airlines may face pressure to adopt more sustainable practices to mitigate its
environmental impact.

Opportunities:
1. Growth in tourism: Vietnam's growing tourism industry presents opportunities for Vietnam
Airlines to expand its route network, attract more passengers, and increase revenue.

2. Expansion of international routes: Vietnam Airlines can capitalize on increasing demand for
air travel by expanding its international route network to new markets and destinations.

3. Technological advancements: Embracing technology such as digital booking platforms, data

analytics, and fuel-efficient aircraft can enhance operational efficiency and customer experience.

4. Strategic partnerships: Forming alliances and partnerships with other airlines, travel agencies,
and tourism operators can help Vietnam Airlines access new markets and attract more customers.

5. Emerging markets: Vietnam Airlines can explore opportunities in emerging markets within
Asia and beyond, tapping into growing demand for air travel and tourism services.

Threats:

1. Intense competition: Vietnam Airlines faces competition from both domestic and international
airlines operating in the region, which may exert downward pressure on fares and profitability.

2. Economic volatility: Economic downturns, currency fluctuations, and geopolitical tensions

can impact travel demand and consumer spending, affecting Vietnam Airlines' financial
performance.

3. Regulatory challenges: Changes in regulations, taxation, and government policies can affect
the airline industry's operating environment and profitability.

4. Security and safety concerns: Security threats, natural disasters, and public health crises such
as pandemics can disrupt air travel and pose risks to passenger safety and confidence.

5. Rising operating costs: Increasing fuel prices, labor costs, and infrastructure expenses can
erode profit margins and financial sustainability for Vietnam Airlines.

Overall, Vietnam Airlines faces a mix of internal strengths and weaknesses, as well as external
opportunities and threats. By leveraging its strengths, addressing weaknesses, and capitalizing on
opportunities while mitigating threats, Vietnam Airlines can navigate market challenges and
maintain its competitive position in the aviation industry.

Suggestions and Recommendations for Vietnam Airlines to bring bigger / faster ROI
To enhance ROI (Return on Investment), Vietnam Airlines can consider the following
suggestions:

1. Focus on revenue optimization:

- Implement dynamic pricing strategies to maximize revenue on each flight segment,

considering factors such as demand, seasonality, and competitor pricing.

- Offer ancillary services such as seat upgrades, priority boarding, and in-flight amenities to
generate additional revenue per passenger.

- Explore partnerships with hotels, car rental companies, and travel agencies to offer bundled
packages and generate incremental revenue.

2. Improve operational efficiency:

- Invest in technology and automation to streamline operational processes, reduce costs, and
improve productivity.

- Enhance aircraft utilization by optimizing flight schedules and reducing turnaround times at
airports.

- Implement fuel-saving measures and green initiatives to reduce operating expenses and
minimize environmental impact.

3. Enhance customer experience:

- Invest in training and development programs to empower employees to deliver exceptional

service and exceed customer expectations.

- Leverage data analytics to gain insights into customer preferences and behaviors, enabling
personalized marketing campaigns and targeted promotions.

- Improve digital platforms and mobile apps to streamline the booking process, enhance
communication with passengers, and provide a seamless travel experience.

4. Expand market presence:

- Explore opportunities to expand route networks, particularly in high-growth markets and

underserved regions.
 - Strengthen partnerships with other airlines, alliances, and travel agencies to increase market
reach and access new customer segments.

- Invest in marketing and promotional activities to raise brand awareness and attract more
passengers, especially in key source markets for tourism and business travel.

5. Enhance loyalty and retention:

- Enhance the loyalty program to reward frequent flyers and encourage repeat business.

- Implement customer relationship management (CRM) systems to track customer interactions,

preferences, and feedback, enabling personalized communication and targeted marketing
initiatives.

- Continuously monitor and improve service quality across all touchpoints to build customer
loyalty and advocacy.

6. Diversify revenue streams:

- Explore opportunities in ancillary businesses such as cargo transportation, maintenance,

repair, and overhaul (MRO) services, and ground handling operations to diversify revenue
streams and reduce reliance on passenger traffic.

- Invest in non-airline ventures such as hospitality, travel services, and digital platforms to
capitalize on synergies and unlock new sources of revenue.

By implementing these recommendations, Vietnam Airlines can optimize its operations, enhance
customer satisfaction, expand market presence, and diversify revenue streams, ultimately leading
to bigger and faster ROI.

Conclusion (Vietnam Airlines Today and its Future)

As of my last update in January 2022, Vietnam Airlines, like many airlines globally, faced
significant challenges due to the COVID-19 pandemic. Travel restrictions, border closures, and
reduced passenger demand resulted in operational disruptions and financial losses for the airline.
To mitigate the impact, Vietnam Airlines implemented cost-saving measures, including fleet
reductions, route adjustments, and workforce restructuring.

Looking ahead, the future of Vietnam Airlines depends on several factors:

1. Recovery of the travel industry: The pace of recovery in air travel demand will significantly
influence Vietnam Airlines' future performance. Factors such as vaccine distribution, easing of
travel restrictions, and consumer confidence will determine the timeline and extent of the
recovery.

2. Adaptation to new market dynamics: Vietnam Airlines will need to adapt its business model to
the evolving needs and preferences of travelers. This may involve exploring new routes,
adjusting service offerings, and enhancing digital capabilities to meet changing demand patterns.

3. Competition and market positioning: Vietnam Airlines faces competition from both domestic
and international carriers operating in the region. To maintain a competitive edge, the airline will
need to differentiate its services, optimize its route network, and strengthen customer loyalty
programs.

4. Sustainability and environmental responsibility: As environmental concerns grow, Vietnam

Airlines will need to prioritize sustainability initiatives and adopt greener practices to reduce its
carbon footprint and meet regulatory requirements.

5. Government support and industry collaboration: Government support and industry

collaboration will be crucial for Vietnam Airlines' recovery and long-term viability. Continued
financial assistance, regulatory flexibility, and collaboration with stakeholders will help navigate
challenges and seize opportunities in the post-pandemic landscape.

Overall, the future of Vietnam Airlines hinges on its ability to navigate the current challenges,
adapt to changing market dynamics, and capitalize on opportunities for growth and innovation in
the aviation industry.