Bargaining Power of Buyers

Bargaining power of buyers

No significant product differentiation. The only difference Airasia’s product with others airlines is the holiday packages offered. Most of the low cost airlines concentrate on providing flight services only to customers. There is some offers hotel booking at the city that the airline flies to. However, Airasia makes the difference by providing holiday packages like example 3 days and 2 nights to Bali at RM800 per pax includes flight ticket, accommodation and travel guides. For customers who do not want to follow the travel agencies and enjoys freedom, they will look for Airasia’s packages, but the customer’s portion of this type is small. Thus the bargaining power of buyers is strong as the main thing they look for is to fly to destinations.

Low switching costs. Cost of switching to other airlines is low, so bargaining power of buyers is strong. Airasia is not the only airlines operates in Asia. Other than that the price offered by other competitors are not much different. The customer choice is subject to their convenience and flight schedule that fit them best.

Portion of buyers expenditure on airline is moderate. This factor depends on portions of income an individual earns. The higher the portion, the more the customer look for cheaper price and thus, the stronger the bargaining power of buyers. E.g. when a student without earning any income, will look for the cheapest price available as the portion of his expenditure will be very substantial.

Customers have access to market information. The IT world had emerged since 20th century. Many big and success companies in the world uses IT and e-commerce to operate. Without IT, the business had boundaries and international business will be prohibited. With worldwide web, information can be gathered on one click. Customer’s access to the current airline market information is easy and available all the time. The airline companies