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Qantas Airways Marketing Strategy.....
Qantas Airways Marketing Strategy.....
Introduction:
Marketing especially in a business to business setting,
involves a much wider range of activities than those typically taking place in
the sales or marketing department. These functional areas make an important
contribution, frequently providing specialist services such as market research,
competitive analysis and business planning services. However, in an effective
company, the whole of the organization is market focused. Ansoff, H. I.
(1984), all of its capabilities are
focused on the market.
These capabilities include internal processes such as
research and development and operations management. They also include external
processes such as supply chain management, customer development and the
management of strategic alliances with suppliers and competitors along with
their stakeholders. Effective companies manage this alignment more are also
capable of modifying and developing new ways of meeting market needs to
maintain superior market positions. Bennett, R. (1998)
No organization exists in a vacuum. Marketing strategy must
therefore develop detailed understanding of the environment. In the case of
Qantas the planner must:
·
Know what to look for
·
Know how to look
·
Understand what he sees
·
Develop the strategy and plan that takes account
of this knowledge and understanding
PEST and SWOT
The starting point of this Qantas case is the general audit
of environmental influences. The purpose is to identify the types of
environmental factors that have influenced the organization’s development and
previous performance, and to arrive at an initial conclusion of the likely
important influences in the future.
Marketing decisions are typically affected in a variety of
ways by development in the political and legal environments. This part of
environment is composed of laws, pressure groups and government agencies, all
of which exert some sort of influences and constraint on organization and
individual and society. With regard to the legislative framework, it involves
recognizing the amount of legislation that affects Qantas and JetStar . Bennett,
R. (1998),
Qantas must be aware of the legislative framework of every
country they are currently operating and by the ways it is likely to develop,
the direction of legislation of other countries differs, and this might provide
opportunities and constraints. In a broader sense, Qantas also need to monitor
how public interest groups are likely to develop and subsequently, influence
market practice.
Macroenvironment
Airlines companies are typically in the position of
responding to the state of economy of the countries they are operating. Having
said this, Qantas should view the economic environment in a rather different
way by shifting investment and marketing patterns from one market to another
and from Johnson , G. and Scholes, H.K. (2004) one part of the world to another
by capitalizing most fully on the global opportunities that exists. There
is a need for Qantas to understand how the economic environment is likely to
affect performance and profits. More specifically, Qantas should sorts out
change that are currently taking place
in the economic environment they are operating such as an increase in real
income growth, the continuing inflationary pressures, changes in the
savings/debt ratio, concern over levels of Third World Debt and the different
consumer expenditure patterns.
The significance of changes should be viewed against the
background of changes in the political/economic balances of power like the rise
and then the relative decline of Japan over the past 40 years, the
opportunities today in Central and Eastern Europe, the economic development in
China and the major changes in the physical environment. Concern with the
physical environment has increased dramatically over the past few years that
draw attention to the possibly irrevocably being done to the planet and the
possibility that we could exhaust the world’s resources.
It should be apparent from what has been discussed that the
broad perspective needs to be adopted in looking at the economic environment.
Analysis of short term and long term pattern is of vital importance. In doing this,
arguably the most useful and indeed logical starting point is that of
demographic since not only demographic change is readily identifiable, but it
is the size, structure and trends of population that ultimately exert the
greatest influence on demand. There are several reasons for this, the two most
significant of which are, first, that there is a strong relationship between
population and economic growth and second, that it is the absolute size of the
population that acts as the boundary condition determining potential or primary
demand. A detailed understanding of the size, structure, composition and trend
s of population is therefore of fundamental importance to the marketing planner
of Qantas.
There is a growth of the number of people willing to commute
long distances to work, and an upsurge in the opportunities for telecommuting
whereby people can book plane reservations through online. These changes have
led to a shift from a small number of mass- markets to an infinitely larger
number of micro-markets differentiated by age, sex, lifestyle and
education. Each of these groups differs
in terms of its preferences and characteristics, and as a consequence requires
different, more flexible and more precise approaches that no longer take for
granted by Qantas strategists.
Seen by many people as the single most dramatic force
shaping our lives, technological advances needs is a force for the development
of new products or concepts. The creation of Airbus and Boeing destroyed the
market for propeller type plane, the one first used by Qantas when they started
in 1920 to 1950. Technology does, therefore, provide both opportunities and
threats, some of which are direct while others are less direct in their impact.
Guitinan, J.P. and Paul G.W (1988)
The marketing strategists of Qantas should pay attention to:
·
The accelerating pace of technological change.
An ever greater number of ideas are being developed, and the time period
between their development and implementation is shortening. Qantas should
therefore accelerate thrust in the exploitation, diffusion and acceptance of
new technologies.
·
Unlimited innovational opportunities, with major
advances in the areas of solid state electronics.
·
A concentration of effort on product improvement
and services.
·
A greater emphasis upon the regulation of
technological change. Safety and health regulations are most evident in
foodstuffs and in flight services.
·
The explosive and accelerating power of
information and communication technologies
·
The globalization of markets, patterns of
competition and innovation.
·
The accelerated decoupling of the “real global
economy from the “virtual economy of financial transactions.
·
The emergence of unprecedented new forms of
business organization, both within and between firms.
Although SWOT analysis is potentially useful input to the
strategic marketing planning process, in practice its own limitations. Piercy principal
criticisms of SWOT is that having conducted the analysis, managers frequently fail
to come to terms with the strategic choices that the outcomes demand.
In the case of Qantas, the TOWS matrix while making use of
the same inputs. Threats, Opportunities, Weaknesses and Strengths, reorganize
them and integrate them more fully into strategic planning process.
Microenvironment
Internal Strengths:
1.
Cash position of Qantas is solid and is still making profits
2.
Luxury image among passengers all over the
world.
3.
Safe and
technological entertainment on board.
4.
There are 182 destinations in 44 countries.
Internal Weaknesses
1.
High fare costs
2.
Long cycle for new model development
3.
Relatively weak position in Asian and Middle
East countries which dominates the airlines industry such as Singapore Airlines,
Emirates and Etihad.
External Opportunities
1.
Travelers demand for luxury air flight
2.
Increased Travelers in Eastern Europe especially
in Germany and eastern Europe.
3.
Electronic Technology
S-O
Strategy
1.
Acquire new airbus (using high tech) and charge
premium prices
2.
Use financial capability for training and
development among the employees.
W-O strategy
1.
Reduce cost to level up with the key
competitors.
2.
Reorganizations
External Threats
S-T Strategy
1.
Aggressive Communications Campaign
2.
Develop marketing strategy that will compete
especially in Asian and Middle East Countries
W-T
strategy
1.
Retrench in Asian Countries and Europe to coup
with the expenses.
2.
Form strategic alliance with airlines in the
Middle East and Asian countries.
The macro-environment consists
of rather broader set of forces that have a bearing upon the company. These environments
refer to as non-controllable elements, Anandarajan, A. and Christopher, M. G.
(2003) and Qantas may well adopt a highly proactive stance in attempt to alter
the nature and impact of environment. The oil crisis was without doubt a
significant environment upset, its impact was obviously felt far more directly
in all airlines. For Qantas, the major
areas of concern are likely to be government relations, sphere of influence and
various political complexions throughout the world. The more directly
environmental influence are likely customer tastes and behavior, issues of
technological development and speed of obsolescence. The lesson to be learned
in either case is straightforward in that it points to the need for Qantas to
engage in careful, Guitinan, J.P. and Paul G.W (1988) continuous and
fundamental monitoring of the environment with a view to identifying potential
threats before they become actual threats and opportunities before they are
missed.
The arguments for continuous
environmental monitoring in order to identify strategic issues and market
signals in advance of their impact upon the company is strong one. There is an
obvious need for Qantas to develop an effective information system that collects
analyses and then disseminates information both from within and outside the
company. Qantas should develop internally the seven principal pay-offs designed
by Diffenbach (1983)
1.
An increased general awareness by management of
environmental changes
2.
Better Planning and strategic decision making
3.
Greater effectiveness in government matters
4.
Better industry and market analysis
5.
Better results in foreign business
6.
Improvements in diversification and resource
allocation.
7.
Better energy planning
Market Research and
Business Research
It should be apparent from what has been said so farm for
Qantas to become a market leader and – perhaps more importantly-retain its
leadership position over anything other than the short term, Qantas needs to
develop a clear view of what the future will or can be. As part of this, it is typically argued that there needs to be
strong focus upon the customer and that
the organization must (Hayhurst and Wills, 2011), of necessity be customer led:
indeed, this is a fundamental element . Qantas should rely upon the results of
customer research when developing its current market.
Obtaining information typically proves to be more difficult
in some instances than in others. Airlines rarely have the same wealth of
available data that is commonly available in consumer markets. This , however,
should not be used as an excuse for not collecting the information, but rather
emphasizes the need for clearly developed competitive information system that
channels information under a wide variety of headings to a central point. This
information needs to be analyzed and disseminated as a prelude to being fed
into strategy process. Guitinan, J.P. and Paul G.W (1988)
Customer information can be gained in several ways, although
periodically a firm may find it of value to conduct primary research among
customers and suppliers to arrive at a profile of competitors within the
market. For example, it may be the relative cost position of Singapore Airlines
or British Airways and ability to compete on price are the most important
factors for competitive success within this sector, with technological skills,
advertising effectiveness and customer service being relatively important.
Segmentation
The majority of markets can be segmented in a variety of
ways. For Marketing strategist of Qantas the process of identifying the
potentially most effective way begins with an initial examination of the market
with a view to identifying whether “natural segments” already exists. In
essence, however, this involves deciding between a priori and post ad hoc
method. An a priori approach is based on the notion that Qantas Marketing
planner decides in advance of any research basis for segmentation he or she
intends to use. Thus typically Qantas marketing strategists will categorize buyers
on the basis of their travel frequency, demographic characteristics (age, sex
and income or psychographic profiles (lifestyle and personality). Having
decided this, Ansoff, H.I
(1968) the planner then goes on
to conduct a program of research in order to identify the size location and
potential of each segment as a prelude to deciding on which of the segments the
marketing effort to be concentrated.
Post - hoc segmentation, by contrast involves segmenting the
market on the basis of research findings. Thus, Bennett, R. (1998) research
might highlight particular attitudes, attributes or benefits with which
particular groups of customer are concerned. This information can then be used
as the basis for deciding how best to divide the market.
Demographic segmentation, probably the most frequently used
, rest on the assumption that market can be subdivided into groups on the basis
of one or more demographic variables such as age, sex, income, education,
occupation, religion , race, nationality, family size and stage in the family cycle. Here, Qantas should
concentrate on just three variables: age, and family cycle, income and
occupation and sex.
An undoubted attraction of demographic segmentation is the
wide availability, Anandarajan, A. and Christopher, M. G. (2003) and easy
interpretation of the data, and it is this- together with the fact that not
only can most consumer markets generally be divided relatively easily along
these lines, but also that purchase behavior often correlates highly with
demographic segmentation-that have combined to make it such convenient, easily
understood and frequently used approach. The idea of family life cycle have
occurred since then to the pattern through which the family passes that was
developed by Wells and Gubar,(1996) is still the one to which reference is made
most frequently The potential strategic value of the FLC can be applied to
Qantas Marketing Strategy in which it highlights the different and changing
financial situation and priorities of the family as it moves through the nine
stages. By recognizing and taking account of these differences, Qantas
strategists should be more easily able to develop a marketing program that
satisfies the specific rather than the general demands of target groups.
The model is simply a summary demographic variable that
combines the effects of age, marital status, career status (income) or absence
of children. “There is a distinctive life time pattern to saving and spending when
we are in our twenties and thirties –getting married, buying houses, having
children, traveling and having a vacation- we borrow and spend. When we are old
and retired, we dissave and spend. In middle age, therefore, we have to save
like blazes to repay debts and build up capital for our old age.
In the majority of industries specifically in airlines there
is one firm, Rothman, L.J. (2006) that is generally recognized to be a leader.
It typically has the largest market share and, by virtue of its pricing,
advertising, intensity, network operations, technological advance and rate of
new services introduced, it determines the nature, pace and bases of
competition. It is this dominance that typically will provide the benchmark for
Qantas. However, it needs to be emphasized that market leadership, although
often associated with size, is in reality a more complex concept and should
instead be seen in terms of an organization ability to determine the nature and
bases of commands competition within the market.
Market Position
Although a position of market leadership has undoubted
attractions, both in terms of the scope that often exists to influence others
and a possibly higher return of investment, leaders have all too often in the
past proved to be vulnerable in the face of an attack from a challenger or when
need for a major technological change. Qantas needs to pay attention on the
following: Saunders, J. A, Saker, J.M. and Smith, I.G (2002
1.
How best to expand the total market
2.
How to protect the airline’s current share of
the market
3.
How to increase market share.
It is an expansion of the overall market from which leader
typically stands to gain the most. It follows that Qantas strategists need to
search for new travelers, those who want to switch airlines and those that
frequently travel. Those family travelers were seen enormous untapped
potential. Qantas unlocked this by developing a range of economical package
price and offering additional freebies which they can back with a series of
advertising campaigns giving emphasis to their convenience and style, Simmonds,
K. (1995). Targeting middle aged executive market that is supported by
advertising campaign giving emphasis to the re-creation of youthful values when
flying with Qantas.
Buyer Behavior
However, Qantas must ensure that it behaves in such a way
that it does not allow itself to areas of weaknesses, something that for many
airlines means keeping the cost down and ensuring that its prices reflect the
value customers see Qantas. Johnson , G. and Scholes, H.K. (2004)
The differences that exists between the new consumer and the
old are even more apparent –and more extreme- in the case of the younger
travelers (aged 4-19) , Rothman, L.J. (2006)
in that this segment , when compared with other travelers groups is
typically:
ü
Far more media literate
ü
Infinitely more advertising literate
ü
Much more brand literate, brand sophisticated
and brand discriminating
ü
Far more technologically literate.
To a large extent, these higher levels of media advertising,
brand and technological literacy can be seen to be direct result of having been
exposed to a far greater variety of media than any previous generation.
Included within this are 24 hour television, satellite broadcasting, internet,
and a huge upsurge in the numbers of newspapers and magazines. Barrett, T.F.
(1990), the combined effect of this is the emergence of a very different and
often much more unpredictable patterns of young travelers. Qantas should
aggressively set its advertising campaign to this age group.
In many ways, the emergence of this new type of travelers is
it in the teen market or those aged 20-55, represents one of the biggest
challenges for Qantas, since their expectations of the organizations and the
nature that they demand are very different from anything previously. Qantas
should recognize this, if it fails to come in terms of this development, the
implications for Qantas performance and marketing planning is significant.
The marketing strategists of Qantas must consider that the
mix of culture, social, personal and psychological factors that influence
behavior is uncontrollable. Because of
the influence they exert upon patterns of buying, it is essential that as much
effort as possible is put into understanding how they interact and ultimately,
how they influence purchase behavior.
Marketing Planning and Auditing
Planning requires effective communications, Ames, B.C. (2008) which improves the functional coordination of
efforts throughout the organization. It also motivates by showing what is
expected of each member of the organization, and if plans have been agreed
between superiors and subordinates in an appropriate way, there should be a
high degree of the commitment among Qantas to their attainment.
Suggestions have been made (Hayhurst and Wills, 2011) that
changing organizational needs may lead to the disintegration of a corporate
marketing organization. This could be achieved by the separation of operational
activities on the other hand. It is clear that an increasingly competitive
environment in which marketing is undertaken has created recognition that
organizational flexibility is a necessary element in marketing. Qantas marketing
plans fail because the planner did not consider the fact that the organization
was not capable of implementing the plan.
There is thus interdependence between strategy and structure,
and this warrants our considering the issue of organizational structures in marketing.
For example, organizing marketing around Qantas Airlines or its markets- rather
than around functional tasks-can give an important source of competitive
advantage. (Levitt, 1980). Apart from serving as a means of linking
organization to its environment , thereby ensuring that the outputs and
activities are compatible with the external milieu in which Qantas is operating
, planning also serves as a means of integrating the goal striving activities
of Qantas into a coordinated whole.
Qantas need to balance strategy with suitable structure, an
emphasis given to organizational design of the marketing organization as an
information processing structure within uncertain environment. There is a clear
need for control structure to be coordinated with the organization planning
system if desired behavior is to be achieved. Anandarajan, A. and Christopher,
M. G. (2003)
In assessing the
adequacy of results it would be too limiting that Qantas should rely solely on
traditional measures such as costs, profits and return on investment, since
these are partial on one hand and emphasize a relatively short term orientation
on the other. It is better that Qantas should relate short term measures to
strategic performance measures, including market shares, changes in growth and
changes in competitive position.
Conclusion:
Marketing Strategists of Qantas must know that expert
knowledge is a vital requirement in managing the airlines. It follows that
recruiting suitable technocrats is a key mechanism for controlling the organization.
Amit, R. (1998), technically qualified
individuals are selectively recruited and if the organization gives such
individuals the appropriate discretion to do what needs to be done within the
framework of basic policies and administrative guidelines. Amit, R. (1998),
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