The Internal and External Factors Which Affected Airasia’s

2024 Words Aug 4th, 2010 9 Pages
1. Describe and assess the internal and external factors which affected AirAsia’s pricing strategy.

Internal factors affecting pricing include the company’s marketing objectives, marketing mix strategy, costs, and organization considerations. Marketing objectives before setting a price, the company must decide on its strategy for the product. If the company has selected its target market and positioning carefully, then its marketing mix strategy, including price, will be fairly straightforward. AirAsia is introduced as Asia’s first low-fare, no-frills airline in 2002, according to its tagline “ now everyone can fly”, this positioning required charging a low price.

Besides, marketing mix strategy which is price is only one of
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They can choose between two broad strategies which is market-skimming pricing and market-penetration pricing.

As mention in case study, we can see that AirAsia employ a market-penetration pricing as a type of new product pricing strategy. Market-penetration pricing can be define as setting a low price for a new product in order to attract a large number of buyers and a large market share. The high sales volume results in falling costs, allowing the company to cut its price even further.

Several conditions must be met for this low-price strategy to work. First, the market must be highly price sensitive so that a low price produces more market growth. Second, production and distribution costs must fall as sales volume increases. Finally, the low price must help keep out the competition and the penetration pricer must maintain its low-price position.

AirAsia was launched as Asia’s first low-fare, no-frills airline with the mission to make travel so affordable. It carried 3.1 million passengers, many of whom had never flown before. AirAsia’s prices have led to a shakeup in the regional aviation industry. For example, the cost of a Singapore to Bali round-trip ticket on AirAsia is S$123 that’s including bus fare to and from Singapore to Senai in Johor.

AirAsia periodically runs price promotions. For example, it set aside 100,000 seats for sale on the Internet, charging

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