Berjaya Air Malaysia by solehin251

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									Berjaya Air is operating in a niche market. Discuss why Berjaya Air has chosen the niche strategy for its company. How could Berjaya Air take advantage of this niche strategy?


According to Greg Ehrlich (2007) in his book Marketing Strategy: The Foundation to Building a Successful Law Practice, niche market can be defines as a very specific market segment within a broader segment. As Berjaya Air ventures to the business of airline services, the company ventures into niche market has seen not only successfully involved with specialist goods or services with relatively few or no competitors but also exclusiveness or some other differentiating factor such as specifically targeted customer or needs. Therefore Berjaya Air strategy in niche markets is set to produce specialized goods and services for “not ordinary” passenger.

The Berjaya Air airline fleets has based its business and marketing strategies on achieving high, and profitable, load factors through absorption of unmet demand in three key air-traffic categories: unserved and under-served routes on which high unmet demand currently exists or can be readily developed; serving key niche markets where demand is either unmet or poorly served; and meeting peak traffic demands on certain key regional, seasonal, and variable routes where very high load factors can be predicted despite existing but lowerquality competition (MAS and Air Asia), or where competition cannot meet the demand.

In addition, Berjaya Air business strategies are designed around, and operated utilizing, the most up-to-date electronic, informational, and aviation technologies to ensure low operating and marketing costs, maximum efficiency in deployment of its resources, and a high level of customer service and convenience.

And it is this final element through dedicating the airline, its staff, and its organization to providing a high level of customer service and convenience, and efficiently meeting the needs, wants, comfort, and safety of the passenger, that will assure the proposed airline's rapid acceptance in the market place and its long-term growth and success.


Aligned with its mission statement, Berjaya Air Sdn’s business strategy is centered on differentiation focus. In Porter’s generic strategies, Berjaya Air Sdn’s business strategy can be categorized into focused differentiation market as its business strategy targets specific niche markets.

Lower Cost 1. Cost Leadership Differentiation 2. Differentiation


Broad Target

Narrow Target

3A. Cost Focus

3B. Differentiation focus

Figure 1 - Porter’s Generic Strategies Source: Porter, 1985, p.12

Berjaya Air builds and sustains its competitive advantage by providing services at specific market type with a considerable price. Specific tourist destination, operation effectiveness and outstanding efficiency are three main characteristics of niche businesses including Berjaya Air. The central objective is to achieve bigger niche advantages than the rivals by continuously searching areas to cater great tourist destinations with additional tourism services. In the niche market industry, differentiation and variety of specific destinations is the competitive priority and it determines market position. Environmental scanning can be performed to assess the attractiveness of niche market industry specifically in Southeast Asia. Macro-environmental scanning will be conducted by analyzing significant macro factors affecting the industry while Porter’s five forces will be utilized to assess the micro-environment surrounding the industry.


a) Macro-Environment The major macro-environmental factors suggest a very conductive environment for the growth of niche market in Malaysia and Southeast Asia. According to Sachs (1997), “demographic fundamentals of large populations, rising middle classes with increasing leisure time and disposable incomes, combined with the lack of competitive forms of transportation, paint an extremely encouraging demand picture in the long run”.

Furthermore, air travel market is bound to continue to grow due to a rapidly increasing urbanization trends. Archipelago geographical structure of Southeast Asia countries is also contributable to the importance of air transportation. For example, there is no other viable and efficient mode of transportation between East and West Malaysia other than by air. While the impact of terrorism, current economic slowdown and latest flu epidemic, The Influenza A can be negative for the growth of airlines services specially Berjaya Air, but the long run forecast continues to be very positive.

b) Micro-Environment Porter’s five forces are utilized to perform the micro-environmental analysis specific to niche airline industry in Southeast Asia. However, the archipelago geographical structure of Southeast Asia has made tourism by air travel the viable, efficient, and convenient mode of relaxing. Threat of new entry is moderate; high capital requirement and government barrier such as air service agreement can act as barriers to entry. However, the deregulation of aviation industry in Asia Pacific region has resulted in more competitors such as lease services of private aircraft operators entering the market. In order to sustain its competitive advantage, Berjaya Air’s needs to leverage its competency in creating more advantages across multiple value chains of destination to specific tourist, domestic and foreign guests and air travelers.


As Berjaya Air’s main business activity is providing excellence services to their customers, they works base on their second vision which is safety. The management will never compromise when it comes to safety matters. They practice their responsibility by ensuring the security to both their staff and guests. Berjaya Air also complies with every regulation and at the same time putting much effort in maintaining highest safety standards.

Berjaya Air is seen focusing on their guests’ needs. As we all know, air fares are usually very expensive and not everyone is affordable to pay the price. But by playing in the niche market, Berjaya Air has managed to come out with a solution by stimulates the demand by offering special fares to certain tourist destination compare to other airlines. Besides they also build up a comprehensive distribution channel and develop various products and services while maintaining simplicity. Although Berjaya Air provides specific airlines service with a considerate rates, this does not mean that they neglect the service quality. They claims to provide a unique Berjaya Air’s experience which states that special services with affordable fares do not mean low in quality and services.

The six key characteristics leading to the success and profitability of this Berjaya Air are:

1. Provision of high-quality service on routes and in markets that currently are either unserved, poorly served, or under-subscribed by existing carriers, thereby setting both a new trend and a new pace in air service to and within the Malaysia and ASEAN region, ensuring a friendly, cooperative, enjoyable, yet highly professional face to the customer. 2. Employment of cost-effective, up-to-date regional and short range aircrafts such as DeHavilland Dash 7 are sized right for the market and the route, leading to higher load factors, reduced costs, improved efficiency and flexibility, greater passenger comfort and satisfaction, and higher net profits. Outfitting these aircraft with the latest


aviation technologies and navigational equipment will help ensure the highest level of reliability, punctuality, safety, and customer satisfaction. By setting the company operation base hub and maintenance facility within Kuala Lumpur, at the Sultan Abdul Aziz Shah Airport in Subang, Berjaya Air has managed utilizing the route advantage to designated travels destination with easy access and smart location compared to MAS and Air Asia hub link which operated in KLIA.

3. Utilization of the latest electronic and informational technologies in sales and marketing; reservations, ticketing and check-in; scheduling and resource planning; cargo tracking; and operational oversight. In 2005, Berjaya Air has also embarked on an exercise to secure an online booking and e-ticketing system which enables the company to reduce overhead costs and to provide booking flexibility to support its growing business requirements. The move will also prepare Berjaya Air to assimilate its ticketing system with global standards and also meet the December 2007 deadline set by the International Air Transport Association for the deployment of a paperless ticketing system. Such techniques as internet marketing, reservations, and sales; electronic ticketing and check-in; online quality control, resource planning, operational oversight, cargo and baggage tracking, and customer service, all will reduce staffing requirements while offering ease-of-use and greatly enhanced access by, and convenience to, the customer.

4. Recognition that not everyone is geared for the electronic world, leading the proposed airline to provide a high level of non-electronic service as well, particularly to the many newer, less-experienced travelers but future loyal customers and travelers found in the region. Small airline companies such as Berjaya Air have managed to excel at providing a specific niche product and services.


5. Development and implementation of cooperation, associations, and partnerships with other larger, more established, and highly regarded airlines both within and beyond the region such as Thailand to provide an extensive range of connections, through fares, frequent-flyer mileage sharing, and other passenger and client advantages through interline arrangements, code shares, common hubbing. For example, Berjaya Air’s “Great Holiday Escapes” online do-it-yourself holiday packages have been well received since its inception on 15 February 2005. The “Great Holiday Escapes” promotion captured a larger segment of tourists travelling by air to popular destinations such as Koh Samui in Thailand, in addition to favorites such as the islands of Tioman, Redang and Pangkor.

As conclusion, Berjaya Air Sdn Bhd (Berjaya Air), despite their small size, can fend off consolidation based on the stability of her niche strategies. Through intelligently analyze the market and the competitive environment, the company has successfully understood and exploited the potential offered by the market. Berjaya Air could never have achieved such results without creating a unique and clearly articulated business strategy in niche market.


The proposed strategies for Berjaya Air intend to cut out new territory as it goes about marketing itself. While it will clearly serve the target markets not only Malaysia but also the neighboring country and ASEAN regions. It will just as clearly be a different kind of player on the field, and will seek to be known not only as a niche oriented airline, but at the cutting edge of the aviation business in ASEAN region.

The Berjaya Air’s emphasis on the latest information and electronic technology, and its stress on comfort, convenience, safety and customer service, will be cornerstones on which the marketing strategy will be built. The airline will utilize a combination of methods to achieve the recognition that it both desires and needs. A fairly large advertising budget is planned to buy the space and time to get its name and message in front of the largest possible group of potential customers that it can. Given the crowded field of regional airlines operates in Malaysia sky, it is better to come on like a lion than a lamb, or you may be lost in the herd.

The Berjaya Air next plan will also utilize public relations to good advantage to extend and supplement its advertising budget. The airline is opening up new markets, and it also is transcending the technological barrier with the latest technology in the airline business, or anywhere. It has big ambitions, but knows that it needs to serve the customer first to realize them. And it wants to know and serve its markets better than anyone else. Everything about this airline, from its name to its colors, from the look of its planes to its airport kiosks, from its smart but informal crew uniforms to its advertisements and literature should set it apart. And it costs little more to do things freshly and smartly than the more ordinary way of doing things. An organization is new only once in its life, so the airline should grab that opportunity and get all the attention it can at the outset. And it needs to have both an adequate budget, as well as an outwardly directed management, to achieve that end.


The overall concept and design of the airline sets the stage for its promotion. Marketing and promotion will stress the unique qualities of the airline and the points that set it apart. Strong public relations combined with well-placed, well-designed, distinctive advertising appealing directly to people who are the airline's prospective customers will help get the word out.

Special effort must be made to develop and operate a highly functional, fast, rock-solid, and user-friendly website for online information, reservations, and e-ticketing. Internet marketing, combined with conventional non-Web marketing, will steer people to the website. The more customers use the website, the easier and more pleasant the experience will be for them, and the more economical and efficient, and predictable, will be the process for the airline.

While in general, special promotional fares and the like will be limited, the Berjaya Air may consider launching with a special promotion simply to get known and to "get off the ground" with planes that are not mostly empty. Overall, management and the sales and marketing department will coordinate closely and will employ outside consultants as need be to assure the most positive possible launch.

In descending order of importance, the five critical keys to success for alternative strategies for Berjaya Air:

a) Human resource Employing an experienced, highly professional management team that combines vision; realism; financial ability; solid knowledge of the aviation business; familiarity with, and belief


in, the utilization and benefits of the latest aviation, electronic, and informational technologies; on-the-ground knowledge of the region and markets to be served; realization of the crucial importance of an organization's personnel to its success; and a total familiarity with, and commitment to, the overall future mission and goals of the Berjaya Air.

b) Marketing approaches Intelligent, progressive, and aggressive marketing that identifies the Berjaya Air as a different kind of player, one that is sharper and smarter, and with a higher level of professionalism and operational standard than is the norm in the target region. Concentration on safety, with highly trained, dedicated, and professional personnel, caring for the passenger and the passenger's needs and wants, the advantages offered by advanced technology, and straightforward, understandable, highly competitive tariffs and fares pricing, all will form key pillars of the marketing strategy.

c) Identify and expanding new routes Identification, through careful market research, of unserved or under-served routes and city pairs in the target market area with sufficient passenger demand to enable high load factors and profitable operations utilizing the category of aircraft envisaged.

d) Upgrading the fleets Berjaya Air success in business depends on the strength and weakness of its fleets assets. The company must consider replacing the existing DeHavilland Dash 7 fleets with modern airplanes such as smaller regional aircraft models from Airbus and Boeing. The use of an alljet fleet of newer, modern, Western-built regional aircraft can that offer better seating, a high level of comfort, safety, and fuel and operational efficiency and flexibility, which meet all


normal aviation standards, and which offer sufficient, but not excessive, passenger and cargo capacity on the envisaged routes.

e) Investment in ICT Use of advanced electronic and information technology to reduce staffing and other operational costs; expand the potential market base; readily capture sales opportunities; simplify and speed passenger, baggage, and cargo handling; and enhance customer convenience and satisfaction.

Additional important, though less critical, keys to assuring the Berjaya Air continuous success and profitability include the following:

1. Identifying, negotiating, and entering into, in the pre-operational stage and early on, beneficial associations, cooperation, and partnerships with larger, more established, highly regarded carriers both within and beyond the target market region (i.e. ASEAN) to offer interline arrangements, through fares, frequent-flyer mileage sharing, and convenient hubbing and long-distance onward connections to passengers. Successful execution of this plan is crucial to the overall success and growth of the airline, and must be kept in mind in the organizational plan and structuring of the Berjaya Air.

2. Establishing a high level of operational oversight and quality control that will ensure that the Berjaya Air always lives up to its marketing commitments and fulfills the promise of a high level of service, customer satisfaction, convenience, and safety, at a reasonable, highly competitive fare.


3. Avoiding the temptation to go head-to-head with established carriers on routes that already are well-served, unless solid evidence exists of additional, significant pent-up demand, or widespread customer dissatisfaction with existing services.

4. Maintaining flexibility that enables the Berjaya Air to always respond and adapt to changing market conditions and opportunities, without being erratic, and employing equipment, scheduling, and staffing on a basis that is sufficient to get the job done properly, efficiently, and at a high rate of return, without "overkill" or fielding costly excess capacity or, conversely, unduly cancelling scheduled flight operations.

5. Identifying, developing, and quickly and cost-effectively exploiting opportunities for new markets, new market concepts, and expanded sales potential.

6. Supplementing regularly scheduled passenger service with both regularly scheduled and also special cargo services when and where sufficient demand exists, and also with seasonal, peak-period, and other intermittent passenger services on certain key regional, seasonal, and variable routes where very high load factors can be predicted despite existing but lower-quality competition, or where competition cannot meet the demand. Larger, longer-range, or specialized aircraft may be employed on a charter or wet-lease basis to provide these supplemental, but potentially highly profitable, passenger and cargo services.

7. Looking to combine the core aviation business with ancillary marketing concepts and activities and ground-based operations that support, supplement, and complement the aviation elements of the business, including such activities as package, group, and charter-travel program offerings; value-added sales and customer services, both land- and Internet-based; construction and operation of enhanced passenger,


baggage, and cargo-handling facilities and services; and other logical business pursuits both within and outside the immediate aviation business.

8. Avoiding growth for growth's sake, and instead looking for solid niche-enlargement opportunities that will allow incremental, but always profitable, expansion.

The Berjaya Air’s alternative strategist consist of indentifying and to cater target unserved and under-served markets, seek out niches and unmet demand, and offer a higher level of service and a higher standard than the competition. By utilizing modern technology to reduce costs, Berjaya Air can now able to offer better service and greater convenience to its passenger.


What if one of the Berjaya Air planes crashed? What responsibility would the CEO carry? It is very basic to say that every airline must have an effective emergency plan. For emergency such as plane crash and any other air disaster, the CEO and the management of Berjaya Air can established a team of specific employees to handle this crisis incident.

During the crisis, the team must be in charged and given full authority to plan and execute with contingency planning and emergency management. At the peace time, the team has the responsibility of keeping the plan up to date, teaching the plan to other employees including refresher instruction as well as teaching new employee or those with a significant job reassignment and exercising the plan.

This is an ongoing process. This is an assignment for a team of professionals who understand preparedness and management. Disaster response must be planned activity within overall response and not an impromptu program designed by the airline after disaster has struck.

The Berjaya Air Crash Emergency Plan as any other airline emergency plan must be coordinated with airport authority, fire, police force, medical specialist and other authorities involved in possible responses. But the overall goal of Berjaya Air is service resumption. Diverting crash response efforts as soon as possible to separate communication and handling channel does this. In other word, Berjaya Air must not only have a plan for emergency responses, it must also have a plan for business continuity.

Another action can be taken by Berjaya Air is by setting up emergency telephone number. From the airline’s perspective, one of the reasons an emergency telephone number is circulated is this effort to free the ordinary airline number for routine business inquires.


This is much more pressing at the headquarters or hub airfield where as airline has numerous flights scheduled, as opposed to an out station where the next schedule flight after a crash may well more than a day in offing, from the public perspective, a special telephone number gives people a clear address where they can ask question about family and friends who might be involved in the crash.

Bandura, A. (1997). Self Efficacy: The Exercise of Control. New York: W.H.Freeman. Berjaya Cooperation Bhd (2008) Annual Report 2008. Available at Retrieved on 2 June 2009 Doganis, Rigas. 2001. The Airline Business in the 21st Century. London: Routledge. Greg Ehrlich (2007) Marketing Strategy: The Foundation to Building a Successful Law Practice. New York: Routledge Porter, M.E. (1985). Competitive Strategy: Creating and Sustaining Superior Performance. New York: The Free Press. Sachs, G. (1997). “Asia Airlines” Asia Research, October 17.


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