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Batch Name Course Name Assignment Title Individual or Group Prepared by : GAPR11 : MANAGERIAL ECONOMICS : Indifference Curve / Marginal Utility / Analysis on Tiger Airways Vs Singapore Airlines : Individual : Name of the Student Vibhor Gandotra Roll Number GAPR11MM194 Division B

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: Vibhor Gandotra

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TIGER AIRWAYS V/S SINGAPORE AIRLINES

Tiger Airways and Singapore airlines are two leading airlines in the Singapore region and I would be analyzing the market strategies applied by these to attract the customers. The two parameter to be compared will be
1) Cost Vs Luxury C O S T IC 1 IC 2 O S T BB>AA A A BB<AA A C

BB Luxury SINGAPORE AIRLINES

B Luxury TIGER AIRWAYS

Customers are not willing to part with luxury despite decrease in cost. Tiger airways target the people who are travelling on limited budgets, primarily younger adults, students and low wagers. According to the website of Budget carrier Tiger Airways, they have promised the lowest airfares: At least 40 per cent less than the average lowest fare in Singapore. In exchange for the lower cost, the travelers have to sacrifice on comfortable seats and leg space. People are willing to give away greater luxury for travelling at lower cost. STRATEGY: A $1 online promotional airfare to Bangkok or Phuket for a limited period available less than one third of tickets, while more than two-thirds between $40 and $140 each way. Tiger airways relies highly on social media websites and on budget travel websites. Through this Tiger Airlines has created a segment of customers which would in near future also travel via airlines. People can now undertake journey via planes which they could not earlier contemplate of. RESULT: The public showed its desire for budget travel, flooding the carrier's reservation website and recording 4.5 million hits.

Frills Vs No frills F IC 1 R I L L
BB <AA A A

F R I L L
A A

IC 1
BB >AA

BB

NO FRILL TIGER AIRWAYS

NO FRILL SINGAPORE AIRLINES 2

Tiger Airways - Some customers are not willing to give away extra cash for on board frills like food & entertainment. They are willing to travel at low cost. Hence their indifference curve will be having steep slope. Singapore airlines - For some customers food, entertainment are of greater importance and hence would like to pay extra for these facilities. Hence their indifference curve will be flat. Strategy: Singapore Airlines introduced 180 degrees flat bed and they types of menus and wide variety of wines and drinks. Singapore Airlines offers premium flight fares targeted to businessmen and the price insensitive population, who are willing to pay a higher premium to travel in lieu of luxury. This type of customers rarely uses social media to gather travel deals. Instead, The Straits Times and The Business Times are their essential cup of coffee every day. As a result, it makes it more relevant for Singapore Airlines to advertise their flight fares and destinations on this print medium. Result: This kind of promotion induced a special craving in its business travelers segment and resulted in overbooking of its First class on all long hauls flights. Marginal utility Curve for customer flying in the preferred Airlines: SINGAPORE TIGER AIRWAYS AIRLINES Total Marginal Total Marginal Utility Utility Utility Utility Trip 1 100 100 Trip 1 50 50 Trip 2 190 90 Trip 2 85 35 Trip 3 280 90 Trip 3 110 25 Trip 4 360 80 Trip 4 125 15 Trip 5 420 60 Trip 5 135 10 Trip 6 450 30 Trip 6 140 5 Trip 7 475 25 Trip 7 143 3
120 100 80 60 40 20 0 0 2 4 6 8 SINGAPORE AIRLINES Marginal Utility TIGER AIRWAYS Marginal Utility

For customers of Singapore Airlines, Marginal utility derived from travelling in Singapore Airlines is higher and drops of slowly. But customers of Singapore Airlines derive lower marginal utility while travelling in Tiger Airways and drops of rapidly.