Qantas is one of the oldest airlines in the travel industry established 1920 (Qantas. com. au, 2014) In this report we shall discover the main problems which are faced by the airline in terms of marketing and in competing with other airlines in the airline industry. This assignment will highlight the various micro and macro environmental factors operating in Qantas and how they may act as an opportunity or threat for the company. We will also discuss the various marketing strategies, planning and positioning process and discuss about the various segmentation techniques for better business opportunities.
The report concludes the main concerns of QANTAS and what actions are recommended for a better profitable future. Table of Contents: Introduction4 Qantas SWOT & PEST Analysis5 Qantas Macro environment9 Qantas Micro environment10 Marketing Research 11 Segmentation12 Positioning14 Buyer Behavior 15 Marketing Strategy & Planning 16 Conclusion19 Referencing20 Introduction Qantas (Queensland and Northern Territory Aerial Services Limited) is one of the largest domestic and international airlines founded in Australia 1920 and considered one of the strongest brands in Australia with 33,000
Qantas Marketing Essay Example
employees out of which 93% are based within Australia. (Qantas. com. au, 2014) The aim of this report is to identify, analyze & provide possible solutions with regards to the performance and declining market share of QANTAS. This report has taken place looking after QANTAS marketing audit (SWOT & PESTEL), we will take a closer look in identifying the major factors affecting the QANTAS MICRO /MACRO environment. We will also look into the major marketing tools is affecting QANTAS position for its customers and business markets providing potential solutions. 1. 0 QANTAS SWOT & PEST Analysis
SWOT analysis is a structured planning method used to evaluate the strengths, weaknesses, opportunities and Threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or a person. It involves specifying the objectives of the business venture of project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. (Wikipedia, 2014) Figure 1 (Creately. com, 2014) This report will discuss SWOT analysis and how it’s linked with QANTAS: Strengths: 1.
QANTAS covers a total of 184 destinations in 42 countries including 59 in Australia and 125 in other countries using their multi brand jet star QANTAS link (Qantas Airways Limited, 2011, p. 5) 2. Qantas and Emirates will service 14 flights per day between Australia and Dubai which will provide a one stop access to destinations across the middle east, Europe and Asia (Qantas. com. au, 2014) 3. With increasing number of fleet and orders more destinations can be served using new technologies including the new Airbus A380 which can accommodate high number of passengers with lower costs than other aircrafts.
4. Developing two different brands based on cost and budget would open doors for more business which is why the company had launched JESTAR as a budget subsidiary airline. Weaknesses 1. Large percentage of Australian based employees which results in high salaries vs. other markets which in turn will increase their employee costs. 2. With the increased competition in the international market (ETIHAD, Emirates, Qatar Airways) it becomes difficult for QANTAS to compete. Opportunities 1.
With the open international markets, trading has become a vital source of income and a large percentage of companies require freight services to compete globally. 2. The recent alliance which has taken place between QANTAS and Emirates will open doors for more customer base with lower costs. Threats 1. The increasing market with low cost carriers is pulling customers towards low budget travel as customers today are more focusing and shifting towards economical air travel. 2. Increasing Oil prices is a very serious and main obstacle towards business as it affects directly prices negatively and the overall operating costs of the company.
PEST A PEST analysis is a framework or tools used by marketers to analyze and monitor the macro-environmental (external marketing environment) factors that have an impact on an organization. The result of which is used to identify threats and weaknesses which is used in a SWOT analysis (Switch Digital, 2014) Figure 2 (Creately. com, 2014) PEST is the combination of external factors which could present an opportunity or threat to any organizations, This report examines the factors that could relate to QANTAS Political:
Qantas intends to cut over 1000 jobs over the next 12 months, impose pay reductions and make cuts across the board as it continues down the losses. The airline blames a range of factors it can’t control for its unflattering financial position including government regulations as by law, the iconic airline must be majority Australian-owned and controlled – limiting its ability to take on cashed-up foreign partners. However competitor Virgin Australia has structured itself so that it can access foreign capital from shareholders Air New Zealand, Etihad and Singapore Airlines.
Qantas also believes action should be taken against competitor Virgin Australia (Skynews. com. au, 2014) Economic The economic recession had a very serious negative impact on Qantas in 2009 where the demand for overseas flight dropped 5. 3 percent and total of 466,000 seats have been cut to foreign destinations. The strength of the business travel market had a severe drop during the early months of the recession in line with leisure travel which was dropping off at double the amount. Business travelers reduced due to economic conditions and moved to economy class travel (Peter Greenberg Travel Detective, 2009) Social
Qantas ensures to serve HALAL food on all flights, hence this is a plus positive point which matches the core beliefs and values for Muslim passengers which are persistent and are passed from parents to children. Hence this is a very valuable factor which would attract Muslims when requiring travel. Another example would relate to the overall social cultural changes which had created awareness to people about different countries and has made travel an inspiration to many people to travel across the world to educate themselves with new cultures.
Technological Technology was able to support & open markets for QANTAS with the introduction of the latest Airbus A380 which will have numerous advantages to the carrier including: larger number of passengers transported per flight hence resulting in cost reduction, less fuel consumption, enhanced passenger services such as online check in, self check in kiosks & mobile applications for convenient bookings which will all serve as a positive factor to passengers. 2. 0 QANTAS MACRO Environment
Macro environment consist of all external factors (highlighted in the below diagram) that are beyond company’s control & may have positive or negative influence on the performance of the company. Let’s now have a look at the major factors and challenges in the macro business of QANTAS Figure 3 (Strategicmanagementinsight. com, 2014) Government Regulations One of the major barriers & constraints lying the growth of QANTAS is government regulations limiting foreign ownership in the airline .
This is clearly demonstrated in the ongoing public battle between QANTAS and Virgin Australia over who is better off under the existing regulations governing airlines in Australia (ABC News, 2013) Economic Increased fuel prices is a continuous threat which will have a direct effect on airfares, with the increased competition in the travel market customers will easily opt for other alternatives. Technological Passengers will develop a good knowledge of the service and product to expect of each airline. For example, crew service standards, seat pitch, meals offered, drinks offered, in-flight entertainment (IFE) experience and so on.
With that knowledge and insight, they will make their choices accordingly. With extensive consumer knowledge of airlines’ relative merits will increasingly drive consumer behavior. Airlines delivering a sub-standard product and treating passengers with indifference will eventually go out of business. (Sita. aero, 2014) 3. 0 QANTAS MICRO environment The micro environment refers to the forces that are close to the company and affect its ability to serve its customers. It includes the company itself, its suppliers, marketing intermediaries, customer markets and publics (Wikipedia, 2014) Figure 4 (Learnmarketing.
net, 2014) Suppliers: Qantas business success is widely dependant and evaluated based on the network of suppliers they deal with to produce customer value. Qantas will maintain relationships with wide range of suppliers such as fuel, catering, electronics…etc. The type of internal policies and agreements between Qantas and those suppliers and the way they add value to the passengers will have a direct impact on the success of the business. Competitors Qantas needs to conduct a detailed analysis of its competitors and develop strategies on increased customer acquisition and retention.
In my opinion such analysis would include developing new routes, frequency of flights, departure and arrival timings, in flight entertainment. Qantas may need to consider it’s airport ground services, speed of formalities, airport lounges services. 4. 0 Market Research Marketing research is “the process or set of processes that links the consumers, customers, and end users to the marketer through information — information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.
(Wikipedia, 2014) Marketing research is further divided into two categories s i. e. Primary and Secondary. Primary Research: Information that comes directly from the source–that is, potential customers. You can compile this information yourself or hire someone else to gather it for you via surveys, focus groups and other methods (Entrepreneur, 2014). In other words it’s the research which is conducted by the company directly for a specific objective, the company would require conducting detailed analysis and digging for information for the research hence is considered a more complex activity.
Secondary research on the other hand would consist of all information that is . available in the external environment of the company. E. g. reports, statistics. Hence Secondary research is considered a cheaper and easier resource of information. A brief highlight of both segment features is highlighted below: Figure 5 (Successfulacquisitions. net, 2013) Marketing research is a vital important tool for any business for success, to name a few benefits: 1.
Identify business opportunities in the market and to highlight any weaknesses which they might have within the organization. 2. It gives an overview of competitors position on the market hence acts as an indicator to what strategies the company needs to adopt. 3. It provides a ranking to the company to where it stands and the overall performance of the company. Qantas needs to conduct a detailed market research for the company from different perspectives among which are the below most important: 1.
Identifying new markets: With the increasing competition in the airline industry and with top airlines dominating the airline business such as Emirates, Etihad and others QANATAS needs to conduct a research on most demanded routes and destinations not served by them. They may also increase their flights frequency to existing highly demanded destinations. It is important to note that the recent alliance with Emirates airlines would greatly support this kind of research, being a partner airline where they enjoy a well positioned hub in the Middle East at Dubai International Airport with very special privileges through Emirates.
2. Product Research : QANTAS may conduct a detailed research of it’s existing offerings and to what extent are they competitive market This would include in-flight entertainment, ground services including up to date lounges, services offered at global destinations, E-Service (online services, online check in…etc). With the increased technology consumers have really become very educated and can easily compare between airlines in terms of fares, services on board, airport facilities, loyalty programs and so on. 3.
Suppliers Research: Yet another research which QANTAS needs to conduct is to analyze alternate lower cost suppliers. They may consider partner airlines and other operating airlines in Australia. This includes all fixed and variable costs including but not limited to fuel supply, catering, engineering, ground services…etc. A well market research on determining the lowest possible costs without compromising on quality will have a positive impact on the overall performance of the airline. 5. 0 Market Segmentation
Segmentation refers to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Market segmentation enables companies to target different categories of consumers who perceive the full value of certain products and services differently from one another. (Investopedia, 2009) QANTAS has released the importance of segmenting the market in order to develop products and services to meet the need of their customer’s needs and wants & has adopted the below factors while segmenting the market: 1.
Demographics: Segmentation based on category of customer’s i. e. Premium customers (first & business class passengers), economy passengers or low cost budget passengers. 2. Geographic: Segmentation based on location; in this segment QANTAS needs to focus on which region are they targeting. The recent alliance with Emirates may be considered as an example of geographical segmentation as they have moved their hub and central operations from Singapore to Dubai to target a different and larger segment of consumers i. e Middle East, Europe and the Americas.
Figure 6 indicates that QANTAS is the preferred domestic airline among a substantial portion of Australian business travelers. It is apparent that domestic travel represents a large segment to QANATS which should continue to target as a prime segment. (Acaresearch. com. au, 2014) Figure 6 (Aca research, 2012) 6. 0 QANTAS Positioning: Positioning is an effort to influence consumer perception of a brand or product relative to the perception of a brand or product relative to the perception of a competing brand or product. Its objective is to occupy a clear, unique & advantageous position in the consumer’s mind (BusinessDictionary.
com, 2014) QANTAS had positioned itself differently by developing a marketing mix (using product, place, price & promotion) that sets it apart from other airlines & offers competitive value to its customers. Let’s see how QANTAS has tried to position itself differently in the airline industry: 1. Service : Qantas has launched a new brand positioning – “You’re the reason we fly” – as the airline sets out on what marketing boss Lewis Pullen today described as “the most multi-channel, multi-dimensional campaigns ever launched in Australia.
A Qantas A380 and a Boeing B737 will have the “Spirit of Australia” slogan changed to “Spirit of Australians”. Consumers will be asked to upload their names in the hope of having them appear as one of hundreds emblazoned on the planes. (mUmBRELLA, 2012) QANTAS is trying here to position itself as a carrier completely focused towards satisfaction of it’s customers with special attention to Australian citizens which is why the slogan is changing from “Spirit of Australia” to “Spirit of Australians” as they represent a major segment of their business growth . The promotion factor of the marketing mix was used for positing the brand name.
Figure 7 (mUmBRELLA, 2012) 2. Product: QANTAS is investing to ensure that the fleet that carries it’s passengers to all destination remains one of the most advanced in the world. Over the next 10 years, the Qantas Group has committed capital investment worth around US$17 billion* in more fuel efficient, next generation aircraft, such as the Airbus A380, Boeing 787 Dream liner and Airbus A320 neo. Fleet renewal will offer the greatest benefits to fuel efficiency in the long run by replacing older aircraft with new more fuel-efficient aircraft (BusinessDictionary.
com, 2014) 3. The airline company is trying here to position itself through focusing on the product in order to remain competitive in the market and gain competitive advantage Figure 8 (Centreforaviation. com, 2014) 7. 0 Buyer Behavior: Buyer Behavior understands the needs of customers, what motivates them to purchase, and how to influence the buying process to ensure that your products or services are on the list. Understanding customers will help to develop and distribute products, as well as getting the right price point and developing successful promotional activities.
(Cim. co. uk, 2014) Qantas could tailor its promotions based on the below buyer behavior patterns: 8. 0 Marketing Strategy and Planning: Marketing strategy and planning is the advertising and marketing efforts for the coming year; it includes a statement of the marketing situation, a discussion of target markets and company positioning and a description of the marketing mix you intend to use to reach your marketing goals (Entrepreneur, 2014) Marketing planning process consists of 7 steps which
include : understanding the corportate mission and objuectives, conducting a detailed marketing audit using the 4Ps,developing marketing objectives, deveoping marketijg strategies, preparing a marketing plan and integrating the plan with all other elements of the marketig plan. It is important to note that a marketing plan should be documented in order to compare outcomes year after yearI Qantas had indentified it’s strength,weaknesses,oppurtunities and threats based on which the company now is capable of solid corporate mission and objectives statement in order to have aclear vision of the company.
The company needs to focus on the core competencies to add customer value which will in turn reflect back to the shreholder. This as mentioned earlier requires professional planning of the marketing mix (4Ps) to meet customer needs. Porter’s Five Forces is a simple maketing tool which provides the threat forces towards distracting customers away from the business. Let’s analyze the possible forces which may relate to Qantas : Figure 9 (Harvard Business Review, 2014) 1.
Threat Of Substiutue Products : Qantas needs to analyze carefully the alternative competitior airlines in the market and analyze what might attract customers towards other airlines. They might need to focus on what lacks them in comparison with other airlines and what key elements does Qantas have that gives them competitive advantage. 2. Bargaining powers of Buyers : With the increasing technology custoemrs can now easily compare airlines and get easy access to various promotions to different airlines websites and get to know different prices, promotions and extra benefits.
The widely spread of airline forums such as airlinequality. net has opened wide doors for customers to speak loud and get feedback and advce from previous travellers regarding a particular airline. Qantas needs to ensure high lecvel of transparency in terms of their offerings for a positive word of mouth. 3. Threat of new entrants : Virgin Australia and Singapore Airlines are discussing more strategic alliances which could result in more flights to Australia that would, in turn, eat into Qantas declining market share, particularly in international operations (International Business Times, 2012) 4.
Bargaining powers of Suppliers: would reflect in the process of all supplies to QANTAS including but not limited to fuel, technology, catering, engineering…etc which represents a challenge in terms of increasing costs to the airline. Figure 10 (Sabreairlinesolutions. com, 2014) Conclusion: The airline industry is a fast changing industry with lots of increasing growing competition in the market due to introduction of new entrants, segmentation of the market towards high income and low income travel and changing travel trend.
Qantas a well established company in the airline market with very strong capabilities, people and fleet has all the potential to stand as a leading airline, however it has two major challenges which consist of strict government regulations with regards to foreign capital interference and decreased passengers share due to new local entrants to the market which are backed up by strong mergers with different carriers resulting in a stronger route network.
However, the recent alliance with Emirates Airlines is expected to improve the overall performance of the company by creating better opportunities for air travel to their customers by providing more flexible & increased routes to various destinations Qantas should maintain its current reputation as the spirit of Australians and should not by any means compromise on their product (ground and air services) and people (employees) as those are the key factors for their continuity and success.