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CONTEXTUALIZATION OF MARKET ORIENTATION

IN AIR TRANSPORT INDUSTRY


IN INDONESIA

Prepared by:
T-Number :

Ayuwandira Febriana Sadu


(920209T121)

Supervisor
Course
Date submitted

: Sofia Molander
: SAMOT
: 2014-11-21

CONTEXTUALIZATION OF MARKET ORIENTATION


IN AIR TRANSPORT INDUSTRY IN INDONESIA

Customers orientation in public service has been changed since decades ago especially in
public transport, i.e. in air transport industry. Their preferences are not simply revolve
around the affordability of ticket price. Customers nowadays are more likely to purchase the
best quality of public transport services despite the high price. Therefore, it is important for
public transport provider to be market oriented within the organizational system and the
organizations approach in translating customers needs in the service delivery. According to
Kohli and Jaworski (cited in Molander, et al. 2012, p 156), market orientation is defined as
the generation and dissemination of market intelligence by organizations, as well as responses
to it. To be able to be a market oriented organization, a company has to undergo these three
stages:
1. Intelligence generation can be interpreted of approaches to identify customers current
and future needs and preferences and the influential factors behind those needs
(Molander, et al. 2012). Intelligence in public transport services can be generated by
conducting customer satisfaction surveys, forum group discussions, analysing published
reports, experimentations, etc (Molander, et al. 2012). For instance: PT. Garuda Indonesia
Tbk (GIA) as a notable airline company in Indonesia regularly conducts Customer
Satisfaction Survey to measure the level of success its implemented programs by
measuring the level of customer satisfaction. GIA also requires the customers to give
them feedbacks in what area they lack of and in what way so that the customer will be
satisfied (Garuda Indonesia 2014). The company conducts the survey through onboard
survey via Inflight Magazine. Passengers are able to give their genuine evaluation on the
airlines performance based on 28 Customer Touch Points (Garuda Indonesia 2014).
However, there are several challenges that need to take into consideration in identifying
customers needs, which are:
1. Customers. Customers as the dynamic being can be influenced by their surrounding
environment and their own state of mind. A surveys result can be varied depends on
the customers current circumstance. E.g. a first class flyer might assess the
satisfaction survey improperly because his business offer just got turned down by the
shareholder. One form survey may insignificant to the overall result, yet it can affect
the method of company in generating decisions.
2. Survey methods.The survey methods (questions, interviewer,etc). Most of the time,
customers only give feedbacks or mainstream inputs to the company (Davoudi 2014).
Therefore, in order to know the unspoken and hidden needs of customers, the survey
questions and methods have to be precise and clear for the customers (e.g. Kano
questionnaire).
3. Companys willingness. It requires companys willingness to change to the better
organization. It involves the participation of the entire organization to generate
intelligence (Kohli and Jaworski 1990). Thus, company has to take the responsible

risk by investing a great deal of money to fund customers survey, trainings, scientific
conferences, and so on (Kohli and Jaworski 1990).
It is also important to identify factors that influence customers needs and preferences to
generate market intelligence (Kohli and Jaworski 1990). Knowing these factors can assist
the company to foresee customers future needs. As stated in Kohli and Jaworski (1990),
customers needs can be influenced by several external factors, such as: technology,
competitors, government regulations, and other environmental aspects. Besides,
customers needs can be influenced by competitor actions (Kohli and Jaworski 1990). The
challenge in identifying the influential factors of customers needs are as follows:
a. Policy makers (i.e. regulator). For instance: Air Asias customers may have been
affected by the changing regulation in ticket pricing. Ministry of Transportation
obliged the airline to implement surcharge to domestic flights. (Air Asia 2014). In
addition, Ministry of Transportation will assign a new regulation regarding the
standardization of floor price to all airlines (Kompas.com 2014).
b. Developing technology. Self-service check-in machine is considered as a new
technology in airport. It may enhance efficiency for the customers. However, the
company has to also consider the inexperienced customers (e.g elderly, illiterate,
disabled, etc).
c. Changing lifestyle trends. Travelling in a tight budget or backpacking has gotten
popular in the last five years. A full service airline like GIA may not expected this
lifestyle trend in five or ten years ago. This lifestyle affects customers preference in
choosing the airline. Backpacking forces people to choose a low cost airline. Hence, it
can reduce the number of passengers of GIA.
2. Intelligence dissemination can be defined as communicating the intelligence to relevant
or all departments in an organization (Kohli and Jaworski 1990). As explained by Kohli
and Jaworski (1990), an organization must adapt to market needs, hence, market
intelligence has to disseminated not only to marketing department but also to other
departments. However, in air transport industry (e.g. airport) where there are several
actors involved during the service delivery, dissemination market intelligence might
encounter a challenge, such as the lack of coordination between involved actors. As
explained in Kohli and Jaworski (1990), the lower the interdepartmental connectedness,
the lower the market orientation in an organization. For instance: PT. Angkasa Pura II
(AP2) as an airport operator in western part of Indonesia disagree with GIAs action in
buying aircraft fleets of Boeing 777-300ER due to the insufficient capacity of the runway
to support the aircraft. Because of this event, GIA has to cancelled several new routes and
causing companys loss (Merdeka.com 2013). This may not occurred if there is a better
coordination between airport operator and airline operator.
3. Responsiveness is considered as the action in taking response to intelligence that already
generated and disseminated (Kohli and Jaworski 1990). However, it might not be easy for
a company to turn customers needs into realizations. There are several challenges that
certainly needed to be encountered. For instance: customers demand an on-time

performance from GIA. However, it can be difficult because the airline has to face the
congestion of air traffic and the lack of airport infrastructure facilities.
Besides, there are also obstacles that may impede companys way to a market oriented firm,
such as: senior management factors, interdepartmental dynamics, and organizational systems
(Kohli and Jaworski 1990). For instance: a reluctant manager toward change and responsible
risk may hinder the betterment of the company. Or, conflicts between Research Department
and Marketing Unit may cause the poor result of the ticket sales. In a broader view, a
company under the influence of political behavior may trigger interdepartmental conflict
(Kohli and Jaworski 1990).
After implementing market orientation, the company are more likely to gain business
profitability and satisfied customers. As stated in Kohli and Jaworski (1990), market
orientation appears to provide a unifying focus for the efforts and projects of individuals and
departments within the organizations, thereby leading to superior performance. To illustrate
this: GIA benchmark their business against other international airlines and the emergence of
new low cost carrier domestic airlines. GIA realizes that several new airlines offer good
service with reasonable price and ultimately affect customers preference in choosing airline
service. Therefore, the company enhance their dominance in market by establishing strategies
as follows (Garuda Indonesia 2014): intensifying domestic marketing programs, expanding
fleet and flight frequency, focusing marketing programs on First Class, etc. By enhancing
their service, GIA received numerous awards, such as the Worlds Best Economy Class,
and human resource development, and so on (Garuda Indonesia 2014).

LIST OF REFERENCES
Air Asia. (2014). AirAsia Indonesia Implementasikan Peraturan Pemerintah Terkait
Surcharge Penerbangan Domestik. 02 26, 2014. http://www.airasia.com/id/id/latestnews/airasia-indonesia-implementasikan-surcharge-penerbangan-domestik.page
(accessed November 20, 2014).
Davoudi, Sara. (2014). Design for Quality [lecture], October 2014. Karlstad: Karlstad
University.
Garuda Indonesia. (2014). Annual Report 2013 Garuda Indonesia. Jakarta: Garuda Indonesia.
Kohli, Ajay K., and Bernard J. Jaworski. (1990). "Market Orientation: The Construct,
Research Propositions, and Managerial Implications." Journal of Marketing Vol.54,
p. 1-18.
Kompas.com. (2014). "Goodbye" Perang Tarif Murah Penerbangan. 25 September 2014.
http://bisniskeuangan.kompas.com/read/2014/09/25/082800626/.Goodbye.Perang.Tari
f.Murah.Penerbangan (accessed November 20, 2014).
Merdeka.com. (2014). Landasan bandara jadi masalah, bos AP II sindir Garuda Indonesia. 1
August 2013. http://www.merdeka.com/uang/landasan-bandara-jadi-masalah-bos-apii-sindir-garuda-indonesia.html (accessed November 20, 2014).
Molander, Sofia, Markus Fellesson, Margareta Friman, and Per Skalen. (2012). Market
Orientation in Public Transport Research - A Review. Transport Reviews : A
Transnational Transdisciplinary Journal 32:2, p. 155-180.

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