British Air Ways - the Current Marketing Relationship and Activity - Assignment Example

Name Tutor Course Date Part one: British air ways-the current marketing relationship and activity In an effort to ascertain the relationship between the marketing strategy and the level of activity at the British air ways company, the following aspects are examined: the type of service offered by the company, a critical evaluation of the company’s current level of activity, ways in which the company can improve alongside the benefits inherent on choosing to change in line with the current relationship between the marketing strategy and the then type of operation that the company should adopt. Type of service offered by the company British airline is solely involved with the provision of both regional and international flight carrier services. In line to this, the airline offers charter services to passenger and cargo that may entail mails and a number of other ancillary services .The airline currently operates from two major airports in the United Kingdom. These two airports include Gatwick and Heathrow. This airline thus coordinates its services in a number of destinations around the world. It is thought that the British airline operates in a total of seventy five countries around the globe (Heidi 234). The international schedule seems to take precedence over the regional schedule. The airline thus covers a total of a hundred and forty eight destinations in all the seventy five countries within which it operates. The services of this airline are offered through the use of a number of modern aircrafts including the Boeing 747 where the company owns a total of 57 aircrafts, the Boeing 777 thought to be a collection of 47 planes, alongside both the Boeing 767 and the Boeing 757 where the company is thought to be owning a total of 47 and 13 planes respectively. Other aircrafts owned by the airline include a number of air buses and a few Avro RJ. Price determination Since the year 2007, British air ways has established a very ideal pricing strategy for its users. This came after the price fixation suit in which the airline was implicated in fraudulent acts. This was in the quest to earn a competitive advantage over its close rival, the virgin Atlantic air line. The top management of the airline attributed the act to the surcharges in fuel prices. According to the top officials, this was a strategy geared at recovering the heavy cost implicated in fuel purchases (Heidi 234). This saw the company laying aside a total of $300 million to cater for price fixation. The company The British airline is said to have emerged from the merging of a number of small British airlines in the year 1924. The airline thus came in to operation in the year 1935 under private ownership. During the post war period, this airline had been merged with the imperial airline and thus operated as the British over seas air Ways Corporation. Under this title ship the British over seas air ways became the very first airline to operate a number of jet services. The very first plane in this category later became problematic. This saw the line of service delivery being marred with lots of accidents and a number of technical problems. The company resolved to the replacement of the Comet 1 with yet another jet liner service called the comet 4. The British air line title was thus coined in the year 1972 with the emergence of a boom in the flight provision service industry. Privatization of the company came with the chairmanship of John King (Heidi 234). He is credited for greatly transforming the airline from lose making. The British air ways at the moment thus became one of the most profitable ventures in the world aviation industry. His tenure led to the over haul of the British air ways fleet and routes. To boost the entire image of the airline, John king initiated the recruitment of effective personnel to serve in various capacities. This move saw a number of new experts flocking in to the airline. A total of twenty three thousand new vacancies were created and offered in the start of the year 1980. John king is known to have been at the fore front of inducing employees. This was done the expense of the payment of taxes. This is an aspect that later benefited the privatization of the airline. . In 1987 the airline was privatized and at the same time introduced in to the London stock market. The move was made by the conservative government. The initial public offer at the time of privatization was estimated to be at eleven times higher than the real value. The growth of the British airline was later boosted by the acquisition of the British second leading airline the Caledonian. Battling with stiff competition With the upcoming of the virgin Atlantic air line, British air ways was feared for losing a number of its most profitable routes and clients. This came as a result of the intense publication of the latter’s move to penetrate in to new markets including the Middle East. John king thus resolved to dirty tricks to overcome the challenge. This later saw the airline being sued by the director of the virgin Atlantic airline for fraud in pricing. Emerging trends in performance and service delivery With the ideal marketing slogan “the world’s favorite airline” British airline managed to effectively pick up and earn lots of profits. The acquisition of yet another airline the delta air is an aspect that greatly contributed to the increased profitability. This was later sold in the year 2003. With the enormous profits, the airline proposed to relocate its head quarters to Harmondsworth Moor in 1993. At this very time, Sir John king was replaced by his one time deputy Colin Marshal. Marshal served as both the chief executive officer and the chairman of the airline. He later managed to nominate Bob Ayling as his chief executive officer as sir john king took up the as president of the air line. This role was initiated by lord king himself. In the year 1995, the headquarters of the air line shifted to Heathrow airport. The company kept on with the acquisition of a number of properties and in same year of relocation, British airline managed to acquire a subsidiary Asian air line. This move was geared at expanding its operation and marketability to Asia. With the politics that surrounded the penetration in to the Asian market, the airline operated under a Chinese title. The leadership of Ayling is credited for positively transforming the profit trends of the airline. The airline managed to accrue a total saving of $750 million in costs. This was accompanied by the setting up of yet another subsidiary airline. This later airline that was given the name Go was a relatively cost friendlier flight service that was geared at effectively competing with a number of similar service providers. After being thought to have earned the airline enough returns, this subsidiary airline was laid off. The move was geared at venturing in to a broader operation. This lay off enabled the British airline to expand its marketability further with the merging in to the Easy jet .To help maintain and enhance the quality of customer care and overall service provision, the British airline reduced the capacity of a number of its Boeing planes (Darwin 67). This move was geared at making proper use of the available space on the air bus line of aircrafts. Marketing The airline has successfully managed to make itself known to the rest of the world. This is implicated in its slogan “the world favorite airline” that was coined in 1989.To keep on top of the competition; the airline had to drop the slogan to a more realistic approach. This was done in 2001 on being beaten by the Lufthansa. The later seemed to have managed to lure a number of prospective clients in the aviation industry towards itself (Heidi 234). The British airline interpreted this as a major challenge in the business. In 2007 the airline adopted yet another slogan to help win the competition” Upgrade to British Airways”. To help establish itself in the competitive aviation industry, the British air line sought to have the services of a renowned advertising agency called the Saatchi and Saatchi. This agency has been credited for enhancing the marketability of the British airline through the creation of highly competent adverts. The British airline has equally managed to adopt the latest technology in marketing its brand. The internet for instance has effectively been used by the air line in making known a number of its services. In an effort to market itself further, the airline has resolved to the promotion of a wide range of global activities. It is currently the sole sponsor of the Wimbledon championship in tennis and has partnered with the upcoming summer Olympics in the year 2012. The travel and tourism sector forms a large share of the market for this airline (Darwin 67). It is believed that in the wake of terrorism and the war in Iraq, the airline lost enormous profits as a number of travel bans were send around some destinations in the world. The marketability of the airline was greatly slowed with the hijacking of its planes for the September 11 attack. The airline was ever since forced to limit itself to only a small number of destinations and routes. The figure below illustrates a drop in the marketability of the airline since the year 1997 This implies that the marketability of the airline seemed to have dropped even before the terrorism attack in 2001. The market index of the airline has not been promising especially with the drop in the value of its shares. This is an aspect that has seen the airline loosing a number of its potential investors to its close competitors. It is alarming for the airline to have tremendously lost the value of its share to a staggering 42 percent from the initial sixty percent. The price target seemed to have been reduced to half the value by a number of analysts. The marketability of the airline has greatly been affected by the drop in its market value from the initial value to some where below the budgetary estimation. Emerging threats on the marketability of the airline It is feared that the British airline may not effectively recover from the wrangles facing its marketability. This is related to the emerging recession in the tourism and travel industry. Studies indicate a massive decline in the number of booking as early as in the year 19997. This was further enhanced with the terrorism attack in 2001. An aspect that might have contributed to the decline in the customer confidence in the airline is thought to be the low demand for the seats on the aircrafts on the airline. The two mainly affected segments of the airline include the business travel and the transatlantic travel. The company is thought to have largely concentrated on these two services. Even with the former international status where the airline boosted heavily of being the best in international carriage, the limelight seems to be diminishing at a very rapid rate. This is an aspect that is attributed to the uncontrollable deterioration of its close partner the American airline. A number of flights that used to link up with the British airline from America are no longer in operation. It is feared that the marketability of the British airline is at stake owing to is heavy reliance on a fat cash inflow (Danforth 234). Emerging burdens in the marketability of the British airline The air line is at a further risk of the increasing costs implicated in the purchase of fuel and the maintenance of aircrafts. Bearing in mind that the airline was implicated in the September 11 attack, the cost of the fuel is far much likely to be influenced by the US response to the terrorism attacks. The tourism and travel industry is bound to shy away from the use of the British airline owing to the costs implicated with such inability to meet the cost of adequate security on its planes. This is related to the fact that the airline owns several planes and the cost of providing ideal security on all of the planes may be too costly for the airline Activities deigned to maintain the market relationship of the airline In an effort to reframe the marketability of the airline, British airways have resolved to change management. This is thought to be a strategy that will enable the airline to win back its competitive advantage in the aviation industry. It is geared at effectively satisfying the needs of the customer. This is a typical representation of the relationship marketing theory. The air line is planning to lay off a number of its staff and at the same time enhance the quality of service provision by concentrating on only a handful number of airlines. Majority of the acquisitions are thus bound to be sold in an effort to recover the costs and further invest in the most profiting sectors like in travel and tourism. There is need to effectively cut on costs and address the respective needs of the customer. This should be the realization that the airline should be working on (Davidson 256). The marketability of the airline can equally be boosted with the shift from the staff oriented culture to a culture where the customer is the one that matters most. The employees in the air line are to be recruited on the basis of their ability to satisfy the demands of the customer. The retention and acquisition of customers is thus bound to take priority over other closely related aspects. How the above strategy can help the company With the implementation of the above, the air line will be in a position to effectively compete and at the same time satisfy the respective demands of its customers. The changes if adopted will enable the airline to be more oriented towards its customers. It is at the same time a strategy that will see the company concentrate on the recruitment of employees that are more competent at meeting the needs of the customer through good employee customer -relations. This is the aspect implicated in any form of relationship marketing theory. Laying off a number of costly acquisitions will enable the airline to channel the recovered costs in to more competitive sectors in the aviation industry. A number of these strategies rely on the efficiency of the human resource whose efforts towards the competitive advantage of the airline should be at the very top. Recommendations for the British air line It is evident that lack of proper management of change has been the major challenge facing the airline. This problem is also associated to the lack of ideal know how on the management of a number of systems. There is need for the company to adopt and enhance strategic management in which the objectives, policies and plans are specified in line with the available resources. Such a strategy provides an ideal direction to the entire enterprise. It is simply a laid out or formulated theory that elaborates on the aspects implicated in the performance of a particular organization. This is a tool that can be very effective at helping the managers and top officials in both planning and implementation (Axelrod 45). . Part two: Marketing relationship Theory Marketing relationship theory is a strategy in marketing derived from a very influential marketing campaign. This strategy is based on the retention of customers and the utmost satisfaction of their needs. It is a diversion from the basis of the point of sale type of transactions. This strategy is very distinct in the sense that it is based on the retention of potential customers for over a long period of time. It is unlike the direct venture or intrusion into the market whose basis lie in the attaining of new customers by simply focusing on the demographics. Such demographics are usually based on a number of prospective customer lists (Kelleher 89). This approach is based on a well established mutual encounter with both the customer and the provider of the good or service focused on the goal of attaining a very satisfying type of trade. The approach aims at providing a trading exchange process in which the customer is allowed to come up with a realistic encounter. It is a type of personalized encounter in purchasing where the experience is used to establish a strong relationship. This is best applied in very competitive fields of business. It is an appealing strategy for the case of the British airline above since the aviation industry has a lot of service providers for customers to make choices from (Friedman 267). It can alternatively be termed as defensive marketing since the aim implicated here is geared at creating and at the same time fostering the loyalty of the customer to a particular product or service. It is contrary to offensive marketing that is geared at getting new customers and at the same time fostering a relatively high purchasing power. Relationship marketing is based on relatively minimizing the dissatisfaction of the respective customers unlike the former that is geared at liberating a number of customers that seem not to be satisfied and creating new ones. Relationship marketing is thus geared at enhancing the absolute satisfaction of the customer. This type of marketing has for ages been enhanced by the emergency of several customer relationship management strategies and soft wares. With reference to the development of soft wares, the customers are tracked and their preferences and complaints elucidated. With the advent of web applications; the buying trends of the customer are published as a profile on the website. With such a profile, it becomes very possible to ascertain the customer’s other needs and preferences (Harvey 245). The scope of relationship marketing theory This theory has severally been enhanced by the concept of reengineering. With respect to this concept, entrepreneurs are expected to be oriented in accordance to complete responsibilities unlike functions. The teams responsible are thus supposed to take full responsibility of the marketing encounter from the birth of the idea to the selling of the item. This type of marketing is perceived to be cross functional (Aino 236). This is because the marketing strategy revolves around processes that cover all the relevant aspects of the type of business venture. This explains why the theory is some times referred to as relationship management. This is probably because the theory covers a lot of a number of management aspects that are related to marketing (Darwin 67). This theory unlike any other has the capability to foster quality management, excellent customer service provision alongside the marketability of the business. With regard to this type of marketing, all the aspects or variables of the entire organization are represented such that all the employees are conversant with the marketing strategy (Holloway 456). The approaches to relationship marketing This theory is based on the knowledge of the needs of the customer that is established through a type of communication between the service provider and the respective customer. There is thus provision for a one on one encounter between the service provider and the targeted customer (Egan 125). With such a customer satisfying strategy, the price and the overall quality of the services or goods to be sold represent the type of customer care. This is thought to greatly influence the overall value of sales with respect to close rivals. Unlike in direct marketing, the accuracy of the type of communication with this theory is relatively high. This is irrespective of the large scope of the market (Martyn 345). The benefits of this type of marketing theory This theory is basically geared at retaining customers. This is fostered through a culture that seeks to fully satisfy all the needs of the customer. It is a strategy that can offer a competitive advantage over close rivals (Lambert 234). It is a way of making enormous profits. A number of companies operating in relatively competitive business ventures have opted to invest heavily in this type of marketing. A number of factors are attributed to increased profitability with the use of this type of marketing theory. The factors are as follows: i. The fact that the cost of the encounter with the customer emerges only at the very first time. This implies that for a prolonged relationship, the cost is relatively reduced. ii. It is established that the implicated costs on maintenance reduce in line with the total costs. iii. Loyal customers are not bound to deviate their tastes and preferences to products and services offered by competitors. It also emerges that such customers are less likely to be sensitive to price changes. iv. A number of such customers are most likely to buy a number of auxiliary products and services offered by the same provider. This is an aspect that will definitely increase the profit margin for not only the products or services being marketed but also for other products and services whose marketability may not be well established. v. With such a theory it becomes relatively difficult for long term customers to deviate to rival service providers. This is an aspect that makes it difficult for such rivals to penetrate similar margins hence the provider is left to enjoy the full benefit of the competitive advantage. vi. It also emerges that regular and long-term clients are relatively cheap to cater for in the sense that they already know much about the product or service. This implies that such customers may need very minimal or no education on the service or product. . vii. The retention of customers is bound to make the service provider work with a lot of ease and at the same time with convenience. With the use of this type of theory, it becomes possible for the service providers to categorize their prospective customers according to their buying patterns. This also goes hand in hand with the implicated preferences and tastes of the customers. This strategy is geared at enabling customers to successfully ascend in their buying patterns. It is evident that the retention of customers occurs along the following considerations; i. Customer valuation. The description and categorization of customers in relation to their purchasing powers helps the companies in deciding over which customers or demographic regions need more investment and which ones need to be terminated. ii. Measurement of customer retention. With this type of marketing strategy it becomes possible for the users preferably the service providers to establish implicated rates at which customers are retained. This value is a representation of the number of customers retained at the start of a particular year and the number of the same at the end of the same year. This value is vital at predicting the marketability trend with reference to the customers (Payne 53). This type of theory is equally effective at predicting reasons as to why customers may defect. This approach if effectively used will help elucidate the real effects with their causes. Such aspects can emerge when probing a number of long term customers. It also possible to develop and initiate ideal business plans with this type of theory. Such a corrective planning can help elucidate the type of action to take when there is need to improve or examine the conduct of employees. Through the use of this theory it becomes possible to identify best practices that may emerge among employees. The application of the relationship marketing theory With relation to this theory, the internal marketing within an organization is further enhanced. The internal marketing within an organization refers to the use of a particular marketing strategy within a certain enterprise (Tap 123). With the retention of loyal customers, it becomes possible to predict the opinion of the customers regarding the type of goods or services provided. This type of strategy helps to communicate the expected marketing skills to all the employees within that particular organization (Kenneth 345). Limitations of the relationship marketing theory This marketing strategy is feared for generating relatively low types of goods and services. It is also evident that this type of marketing is very inappropriate in the event of consumer type of products. For generic products, this type of marketing is also misfitting. A number of customers are bound to show little or no interest owing to the great preference to transactions that cover only a single encounter (Buttle 254). This type of strategy also fosters very minimal involvement of the customer in the transaction. Conclusion The use of this type of marketing strategy is mainly geared at fully satisfying and retaining customers. A strong customer base is bound to emerge with the adoption of this type of marketing strategy. This is majorly the key aspect in the implementation of both relationship marketing and management. There is need for entrepreneurs to critically understand this theory before it is implemented. 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