Tune Group: Strategic Review

TUNE GROUP: STRATEGIC REVIEW

Submitted by: Raymund Mark O. Escalona

The Tune Group (TG) portfolio consists of 6 different entities that serve 6 unique industries. TG began with the Tune Air entity that consists of 2 companies namely Air Asia and Air Asia X. Air Asia focused on serving the rising middle class of Asia by offering low and affordable prices while keeping consistent service quality. The founders believed that the people of Asia should have the opportunity to fly to different destinations without worrying about very high costs. Air Asia X on the other hand offers international flights for the current customer base of Air Asia. The ‘X‘ offer consisted only of the seat price and additional services such as pre-allocated seats, in-flight entertainment, in-flight food and beverages had to be purchased separately. Air Asia X offered customers the opportunity to choose what they want included to the seat price that they could afford. At this point, Air Asia and Air Asia X catered to both the local and international market without compromising on service quality as to what they advertise. By 2007, TG ventured to the hotel industry through Tune Hotels. Tune Hotels' concept is to give Air Asia travellers and other customers "5 star beds at 1 star prices." The hotel chain offers a pay-as-you-use policy on amenities such as air conditioner time of use, toiletries, TV and internet access. It serves as a limited service hotel that budget travellers are favourable to. In the same year, TG launched Tune Money which offered insurance, payment and loyalty products at an affordable price. This company helps middle to lower income groups (the same target market of Air Asia) to manage their money properly through Tune Money. Air Asia customers purchase flight and travel insurance through Tune Money and even purchase airfare through its credit facilities. TG also introduced the Tune Card which is a prepaid card that earns ‘Biggie' points that can be used for different TG rewards with all its companies. Now, TG has its own loyalty program. The next year, Tune Talk is launched which offers lower rates than most competitors. This company targets the same customer base of Air Asia and successfully integrates with TG's loyalty program. For example, for every 100th Tune Talk subscribers that would fly Air Asia that person would get a free Blackberry. The year after, TG launched Tune Sport but this was already active by 2005. This entity partnered up with different sports organizations such as PGMO, Manchester United, Lotus and also co-founded the ASEAN Basketball League (ABL). This served as the main marketing tool of TG and made the Tune Group name global. It helped create credibility and trust with the consumers that it already has and will have. Lastly, TG launched Tune Tones mainly for helping out local