ANALYSE MARKETING MIX 7p’s STRATEGY OF VIETNAM AIRLINES IN VIETNAM MARKET

200 Nguyen Son, Bo De Ward, Long Bien District, Hanoi Telephone number: +84.24 3827 2289 | Fax: +84.24 3872 2375 Website: www.vietnamairlines.com Email: nhadautu@vietnamairlines.com Fiel

MINISTER OF FINANCE UNIVERSITY OF FINANCE – MARKETING

- �

-GROUP ASSIGNMENT FIRST SEMESTER, 2022

Ho Chi Minh City – 2022

MINISTER OF FINANCE UNIVERSITY OF FINANCE – MARKETING

- �

-GROUP ASSIGNMENT FIRST SEMESTER, 2022

Ho Chi Minh City – 2022

MỤC LỤC

DANH MỤC HÌNH

CHỮ VIẾT TẮT

COVID – 19 Coronavirus disease 2019

CHAPTER 1 INTRODUCTION

Name in Vietnamese: Tổng Công ty Hàng không Việt Nam - CTCP

Name in English: Vietnam Airliness JSC

Name in short: Vietnam Airliness

Date of establishment: May 27th, 1995

Address: No 200 Nguyen Son, Bo De Ward, Long Bien District, Hanoi

Telephone number: (+84.24) 3827 2289 | Fax: (+84.24) 3872 2375

Website: www.vietnamairlines.com

Email: nhadautu@vietnamairlines.com

Field of activities: Aviation & Finance

Image 1.1 Logo of Vietnam Airliness

- Air passenger transportation (air transport services for passengers), air cargotransportation (transportation of luggage, cargo, parcels, postal items, mails)

- Management consulting (investment, capital management of direct investment

in production and business; foreign investment; business

purchase and sale; capital contribution to purchase shares or capital

transfer)

- Direct support services for air transportation

- Manufacturing of measuring, testing, navigating, and controlling equipment,such as spare parts, supplies, technical equipment and other aviation industrycomponents, provision of technical services and spare parts to domestic and internationalairlines

1.3 Establishment & Development History

The history of Vietnam Airliness began in January 1956, when the Civil AviationAdministration was established by the Government that marked the birth of thecivil aviation industry in Vietnam At that time, the fleet was very small, with 5propeller aircraft: IL 14, AN 2, Aero 45, etc The first domestic flight was opened inSeptember 1956

April 1993, Vietnam Airlines was officially established as a large-scale businessunit of the state (then called Vietnam Airliness) On May 27th, 1995, VietnamAirliness Corporation was incorporated - following Decision No 328/TTg by thePrime Minister and merging 20 enterprises in the aviation industry with VietnamAirlines as the core entity Throughout 20 years of development, Vietnam AirlinessCorporation has made an important contribution to the development of Vietnam'scivil aviation industry as well as made a great contribution to economicdevelopment, society, industrialization, and modernization of the country.(Appendix 1 contains Vietnam Airliness’ development history of each milestone)

1.4 Vision & Mission

- Uphold the No 1 position as Vietnam’s aviation group leader

- Vietnam Airlines to become a leading Asian airline of customer’s choice and be the main force transportation of Vietnam as a flag carrier

- Provide diverse and high-quality air transport up to customers’ expectations.

- Create a civilized and professional working environment with various

opportunities for career development for employees

- Run effective business operation, ensure sustainable benefits for shareholders

« Toward the future: A modern carrier with an internationally recognizable brand

characterized by Vietnamese traditional culture Throughout 20 years of development at adouble-digit annual growth rate, Vietnam Airliness has spearheaded Vietnam's aviationmarket - one of the fastest-growing domestic markets in the world As a modern airlinewith a brand widely known for its distinct cultural identity, Vietnam Airlines aims to achieve5-star status and become a major airline in Asia

1.5 Hightlight Achievement

« 2016: Ranked as one of the World's Most Improved Airlines by Skytrax

« 2016: Asia's Leading Cultural Airline and Asia's Leading Airline - Economy Class

by World Travel Awards 2016

« Top 4 largest carriers South East Asia in terms of passengers transported

« 20 years of safety record - no fatal accidents since 1997

« 2017: CAPA Asia Pacific Airline of the Year

« 2017: Skytrax ranked Vietnam Airliness as a 4-star airline for the second year in

« 2018: APEX (Airline Passenger Experience Association) awarded Vietnam Airliness with Four-Star Official Airline Ratings

« 2018: Vietnam Airliness and Jetstar Pacific are awarded the highest seven-starsafety rating from the world’s only safety and product rating agency AirlineRatings.com

« 2018: World's Leading Cultural Airline and World's Leading Airline - Premium Economy Class by World Travel Awards 2018

CHAPTER 2 MARKET & COMPETITOR ANALYSIS 2.1 Market Analysiss

2.1.1 Size

According to statistics from the Civil Aviation Authority of Vietnam, the number ofpassengers through airports in February 2022 reached 6.16 million (up 57.8%compared to February 2021) In which, international visitors have begun to exceedthe milestone of more than 100,000 visitors (up 350% compared to February2021) The number of passengers transported by domestic airlines reached 3million passengers (up 56.8%) and 39,400 international arrivals (equivalent to3,009% over the same period in 2021)

2.1.3 Location

Vietnam has now reopened flights to 20 countries and territories, includingCambodia, Hong Kong, Japan, Korea, Malaysia, Philippines, Qatar, Singapore,

Taiwan, Thailand, Turkey, United Arab Emirates, Laos, China, France, Germany,

UK, Australia, Russia, and America

Currently, there are 6 airlines, including Vietnam Airliness, Vietjet Air, PacificAirlines, Bamboo Airways, Vietravel Airlines, and VASCO; exploiting 56 domesticroutes with a total frequency of 2,570 flights/week/way, equivalent to 367flights/way/day, reducing respectively 2 routes and 217 flights/week/way,equivalent to 31 flights/way /day compared to the 2019 winter flight schedule

2.1.4 Trends

Statistics from the Civil Aviation Administration of Vietnam shows that the demandfor passengers traveling on the Ho Chi Minh City - Hanoi route and from Ho ChiMinh City to/from the Tay Nguyen, Central and Northern provinces during thisperiod increased sharply with the seat utilization ratio is over 70%

During the 2022 Lunar New Year period, the frequency of operation on domesticroutes is about 14,000 flights with about 2.7 million seats Besides the aboveroutes, the number of other routes with the number of bookings has not increasedsignificantly, such as: from Ho Chi Minh City to Da Nang, Tuy Hoa, Da Lat; Hanoi

to Dong Hoi, Tuy Hoa, Can Tho; etc

2.2 Competitor Analysis

Currently, Vietjet Air and Bamboo Airways are two competitors that Vietnam

Airlines is facing directly

2.2.1 Bamboo Airways

Bamboo Airways is positioned to become Vietnam's first Hybrid airline, combiningtraditional and low-cost airlines 5-star-oriented services according to internationalstandards, luxury, and class with the following criteria: Hospitality, kindness,dedication, and responsibility

Strengths

- The slogan "More than just a flight" is highly appreciated when it conveys the

common goal of the business when trying to perfect the experience without simply aimingfor the basic purpose: satisfying the mobility needs of customers

- Punctuality as well as time flexibility for “night flights” and other added servicessuch as Bamboo Eco ticket - for customers who do not need to check-in baggage and flyless than 2 hours domestically; flexibility in serving specific customer needs, etc

Weaknesses:

- The company's current communication strategy has not been very effective forthe target audience because of its sensational and misleading communication style thateasily receives mixed opinions

- Heavily dependent on large financial funds to finance their operations

- Few international airports in Vietnam (especially in Qui Nhon) to port Bamboo Airways large aircraft

2.2.2 Vietjet Air

A brand-oriented as a low-cost airline, impressing customers with the dynamism and youthfulness of its staff, attracting customers with attractive promotions

Strengths:

- The "low-cost" communication strategy, which mainly focuses on consumers'

price awareness, is suitable for a wide range of customers The message “Dream of

flying for all Vietnamese people - Giấc mơ bay cho mọi người dân Việt Nam” that

Vietjet evokes is a beautiful dream in a market with a rapidly growing middle class like

Vietnam

- VietJet's brand awareness in Vietnam is relatively high

- Young, professional, and enthusiastic staff.

Weaknesses:

- Using the "offensive" communication method, associated with the name "BikiniAirline" This is not in line with the national media culture, receiving a lot of mixedopinions

- There are often problems in the service that make passengers unsatisfied: overcrowded and often delayed flights

-CHAPTER 3 STP ANALYSIS 3.1 Segmentation

3.1.1 Income

Image 3.2 Income of

The low-income and middle-income earners have high price sensitivity They areless likely to choose air services They conceive that airline service is still a type ofluxury and expensive service, not suitable for their income

The high-income earners have lower price sensitivity They prioritize using airlineservices because of the benefits they seek related to convenience, reputation,

quality of goods/services, airline services as a tool to help them assert their status.However, they have high standards and expectations about the goods/servicesthey experience.

3.1.2 Social Class

Social class in Vietnam, in addition to income, is also divided by occupation,position, and position in work It is formed as a pyramid with the top part occupyingthe highest position, arranged in order from top to bottom, including leaders,managers, entrepreneurs, and highly qualified experts On the next floor is staff,workers, small traders, handicrafts And finally, there are the unskilled workers, thesimple workers, and the farmers According to the top-down order of the pyramid,the demand and requirements for using air services are decreasing and inverselyproportional to the price sensitivity

3.1.3 Psychographic

Image 3.3

Acrophobia - is an extreme fear or phobia of heights, especially in people ofnormal height It causes a lot of psychological obstacles when consumers makepurchasing decisions and reduces their confidence

Accompanying the above syndrome is the fear of taking risks when taking a flight.Consumers are always very aware of participating in service experiences -

which means they put their lives on the line for the pilots, so that fear is inevitable,especially for first-time customers.

The view of airline service is a luxury service When airline service first appeared

in the world, it was positioned as a service for aristocrats or rich people - the upperclass This leads to an increase in the value of the service that stimulates thedemand to experience it at least once, especially for those with low-middleincome

The view of superior transportation service The luxury, as well as convenience ofairline service, compared to other services, so some people have come to believethat this is the best transportation service with high-quality experience andoutstanding speed

3.1.4 Lifestyle

Image 3.4

Conservative lifestyle: People are often not willing to try new products/services.

They spend a lot of time researching before making a consumption decision.However, they are very opinionated and not affected by exogenous factors Inaddition, their brand loyalty is also very high

Modern lifestyle: The complete opposite of the conservative lifestyle, they value

experience and are always ready to discover new things They tend to followtrends and the crowd However, building brand loyalty in them is also relativelyhard

3.1.5 Need

Image 3.5

Work-related needs: In some professions and fields, fast traveling over long

distances is in high demand Especially for business people, the use of airservices is almost inevitable and regular

Personal needs: other purposes such as travel, study abroad, repatriation, etc.

will use air services when traveling relatively long distances, they still undergoscreening, comparative evaluation before making a consumption decision

3.2 Targeting

As the face of Vietnam's air services, Vietnam Airlines has used the concentratedsegmentation strategy - to concentrate all of its resources on building andconsolidating a premium airline brand in Vietnam Specifically, Vietnam Airlinesfocuses on customers, who have a middle and high income, are usually

merchants and entrepreneurs with a certain status in the social class, and often have to use airline services for many different purposes.

3.3 Positioning

3.3.1 Positioning A Premium Airline

Since its establishment, Vietnam Airlines has always held the number one position

in the Vietnamese market Compared to other competitors in the market, VietnamAirlines has a distinct advantage when being called with the name "Vietnam'snational airline" With this name, it easily positioned the brand, attracting a number

of customers who believed in the national branded service even though the faresare much higher than other airlines

In Vietnam, the trust in "national" businesses is very large As the national airline

of Vietnam, it is compulsory that Vietnam Airlines strictly comply with regulationsand its initial promise is to provide services of high quality

According to the positioning diagram, Vietnam Airlines has clarified that theircustomers, who have a good financial status, want to receive perfect serviceswhen using its services.

Nowadays, Vietnam Airlines is the only traditional airline in Vietnam withdifferentiated domestic products (Business class, frequent flyer program - GLP).The airline's number one position in Vietnam is also shown in its extensivedomestic network through all regions of the country, heavy operating frequency,convenient connecting schedules, the airline's punctuality index, andaccompanying service - these are all superior to their opponents

3.3.2 Service Positioning Strategy

Vietnam Airlines also designs products that create Vietnamese cultural identity inservices, distinctly different from domestic competitors Specifically, VietnamAirlines’s products meet quality, the international 4-star international standard, andaim to achieve 5-star standards (80% of Vietnam Airlines’s criteria are rated 5stars by Skytrax, Vietnam Airlines has been awarded the 4-star airline certificate

by Skytrax)

3.3.3 Communication Positioning Strategy

Building a brand image with national identity: modern, creative, friendly, dynamic,efficient, and socially responsible The slogan "Reach Further" emphasizes thenational spirit, the determination to rise strongly of a country Besides that, it alsoconveys a desire to reach the success of passengers and Vietnam Airlines oneach flight It is an affirmation: the development path of Vietnam Airlines alwaysfocuses on customer experience Bringing passengers not only a flight but also thefeeling of a journey of experiencing 5-star-oriented services according tointernational standards, luxury, and class Six-petal golden lotus, which is aspecial symbol of Vietnam Airlines, contains the soul of the Vietnamese nation Ithas become very familiar to many Vietnamese people and is used for many

- The slogan "More than just a flight" is highly appreciated when it

conveys the common goal of the business when trying to perfect the experience without simply aiming for the basic purpose: satisfying the mobility needs of customers.

- Punctuality as well as time flexibility for “night flights” and other added services such as Bamboo Eco ticket - for customers who do not need to check-in baggage and fly less than 2 hours domestically; flexibility in serving specific customer needs, etc.

Bamboo Airways large aircraft.

rapidly growing middle class like Vietnam.

- VietJet's brand awareness in Vietnam is relatively high.

- Young, professional, and enthusiastic staff.

Weaknesses:

- Using the "offensive" communication method, associated with the name

"Bikini Airline" This is not in line with the national media culture, receiving a lot of mixed opinions.

- There are often problems in the service that make passengers unsatisfied: overcrowded and often delayed flights.

of luxury and expensive service, not suitable for their income.

The high-income earners have lower price sensitivity They prioritize using airline services because of the benefits they seek related to convenience, reputation,