Analysis of Marketing Mix - Research Paper Example

Analysis of Marketing Mix 1.0 Introduction Crafting and implementing strategies for a business entity is imperative to its success and even mere survival (Thomson 2002). A firm should be able to design and put in place a set of well crafted strategies in every functional area and activity in order to attain its goals. In fact, a company should back its objectives with the appropriate strategies. Marketing strategies are essential in maximizing the performance and profitability of a company. Philip Kotler (2001), regarded as one of the world’s marketing guru defined marketing strategy as “the marketing logic by which the business unit hopes to achieve its marketing objectives.” A marketing strategy significantly involves “specific strategies for target markets, positioning, the marketing mix and the marketing expenditure levels (Kotler 2001).” Each of the areas of the marketing strategy should be crafted so as to complement each other. The marketing strategy of a business organization is seen to be embedded in its marketing mix decisions. The marketing mix is a set of marketing tools that the firm uses to pursue its objectives in the target market. McCarthy classified these four broad groups that he called the four Ps of marketing: product, price, promotion, and place (Kotler 2003). This paper will be an investigation of two major business organizations in Australia—Qantas Airways Limited and Commonwealth Bank. A brief profile of each company will be given. Afterwards, this paper will look at how they tailor their marketing mix to serve their target markets. This paper will conclude with the comparisons between the firms’ strategies. 2.0 Qantas Airways Limited Qantas (acronym for Queensland and Northern Territory Aerial Services) is the world’s second oldest continuously running independent and Australia’s largest airline. The firm traces its roots in November 1920 when it operated air mail services subsidized by the Australian government. Through the years, the air line has significantly developed and evolved into an international carrier. With its fleet of 200 aircraft, Qantas flies to more than 80 destinations in about 40 countries and to some 20 cities in Australia (Qantas 2006). During the fiscal year ended June 2005, the company reported $9,632.1 million in total revenue representing double digit annual growth of 23.0%. Out of this huge revenue, profits realized $579.5 net profit. The airline currently employs 38,000 employees to man its various business operations. It should be noted that the number of employees have increased by 12.2% from the previous year. This significantly indicates Qantas’ aggressive expansion (Hoover 2006). Currently, Qantas continues to be one of the market leaders in the global air transportation industry. Its main international hubs are Sydney Kingsford-Smith airport and Melbourne International Airport, followed by Singapore Changi Airport. However, Qantas operates a significant amount of international flights into and out of Los Angeles International Airport, London Heathrow, Brisbane International Airport, Tokyo Narita Airport and Perth International Airport. Its domestic hubs are Sydney, Melbourne and Brisbane airports, but the company also has a strong presence in Perth, Adelaide, Cairns and Canberra Airports (Qantas 2006). 2.1.0 Marketing Mix of Qantas This impressive performance of Qantas, which makes it the world’s leading long distance airline and one of Australia’s strongest brands, can be directly attributed to its well-laid marketing strategy. Included in these are the crucial decisions on product, price, promotion, and place. 2.1.1. Product Qantas, as an airline, is primarily involved in offering passenger transportation and air freight to its market. However, we can see that the product portfolio of Qantas also includes other associated business operations like in-flight catering, and holiday and travel operations (Qantas website 2006). In order to fully identify all the products and services offered by the company, the following table will show and discuss the different brands operating under Qantas. The major products offered Qantas can be categorized into four segments: international transportation; domestic transportation; catering; and holidays. It should be noted that Qantas primarily offers a full service all economy international carrier which is focused on holiday and leisure destinations. However, intense competition from other airlines specifically Virgin Blue has created the low fare carrier Jetstar. Currently, Qantas focuses on its international business travel and premium leisure routes while Jestar accommodates other leisure destinations (Qantas website 2006). Brand Products and Servcies QantasLink is Qanta’s wholly owned regional airline. This wholly owned subsidiary is comprised of three different regional airlines namely AirLink, Eastern Australia, Sunstate Airlines. The operation of QantasLink is made possible by the 1,000 people located in the metropolitan and regional locations like Tamworth, Newcastle, Cairns, Mildura, Brisbane, Sydney, and Melbourne. QantaLink operates around 1,850 flights each week to 48 metropolitan and regional destinations across Australia. In its quest to provide customers with full satisfaction through sumptuous meals, Qantas also operate its own catering services. Qantas Flight Catering Holdings (QFCH) is divided into two catering business—Qantas Flight Catering Limited and Caterair Airport Services. Aside from catering solely to its catering business, QFCH also recognizes the lucrative market outside its core operations. Qantas Freight is considered one of the integral components of Qantas business. This brand operates three products namely, Cargo, Mail and Express Service which are all on international sectors of Qantas flights. Meanwhile, domestic freight is being carried by Australian Air Express Pty Ltd. Qantas transports freight using its aircrafts’ under floor space. Express Ground Handling is the segment which provides comprehensive ground handling services to other Qantas’ transportation services like Jetstar and QantasLink. Qantas Holidays is Australia's premier travel wholesaler. For over 30 years, Qantas Holidays has been providing customers with holiday options throughout Australia and around the world. Qantas Holidays caters to more than one million customers a year, offering an extensive range of competitively priced holiday options that can be pieced together to suit individual needs. Holiday options cover the Qantas network, including partner airlines and codeshare services. Jetstar is Australia's and Singapore's low fares airline for Australia and Asia-Pacific. Jetstar started flying within Australia on 25 May 2004, and within Asia just over six months later. Jetstar is launching international long haul flights from Australia to Asia in November 2006. Source: Qantas website, 2006 2.1.2. Price The pricing strategy employed by Qantas on its different products and services is based on image that it wants to impart in the market. It should be noted that the airline is recognized as one of the most aggressive players in the aviation industry. This is due to the cut-throat pricing strategy that it usually employs to drive off its competitors. It can be recalled that several domestic Australian airlines “have gone out of business amidst complaints of anti-competitive pricing by Qantas and exorbitant prices on new monopoly routes” (Qantas 2006). As stated above, Qantas is second to the oldest continuously running airline. Thus it capitalizes on the longevity of its existence in the airline industry to charge a much lower price should the competition heats up on major routes. On the other hand, it uses its power in charging high prices on new monopoly routes. These tactics has served Qantas well. Currently, Qantas still use this twofold pricing strategy. All the businesses operating under the brand name of Qantas which services business travel and transports in premium routes are priced relatively higher than its competitors to identify the quality of service offered. On the other hand, Jetstar, which focuses on transporting travelers on destinations like Bali, Honolulu, and even Rome, will be battling head on with the low price charged by competitors like Virgin Blue (Rochfort 2005). 2.1.3. Promotion Qantas is seen to heavily invest in its aggressive promotional efforts. The airline utilized the television and print media in order to inform customers of its offerings. The company published its own brochures featuring different worldwide destinations. Qantas is regarded to have most of the successful advertising campaigns. The company boasts of its recent advertisement featuring different breathtaking sceneries across Australia. Qantas also heavily rewards the loyalty of its customers through its frequent flyer program. The airline also sells gift vouchers to customers who want to give them as gifts. In order to offer full convenience, Qantas also offers event packages for various sporting and musical events in Australia which covers airfare, accommodation, and event tickets (Qantas website 2006). 2.1.4. Place Since Qantas’ operation encompasses a lot of countries and cultures around the world, its market scope is global. Being headquartered and originated in Australia, the company’s products and services can be most easily accessed by the Australian market. However, as a global carrier flying in major tourist destinations, Qantas can also be found on tourist populated cities in the world. The launch of Jetstar also signifies the companies’ quest in serving more of the Asian market where economy passengers are more likely to abound (Rochfort 2005). Qantas has also been keen on utilizing the resources presented by the advancement of technology to its business operations. The company’s launch of its virtual presence through its website presents a new place to transact business and attract customers. The company’s various offers and promotions, as well as online booking are now available with a mouse click. This further widens the scope served by the business organization. 3.0. Commonwealth Bank of Australia The Commonwealth Bank of Australia is recognized as the second largest bank in Australia and ranked number 41 in the world. The bank was founded in 1911 by the Australian government. Environmental forces led to the privatization of the financial institution in 1985. During the year ended June 2005, the Commonwealth Bank reports total revenue of $16,445.5 million which is an 8% improvement from the previous year’s figures. The net income is even more impressive totaling $2,715.8 leaping at a rate of 53.1% from 2004 (Hoover’s 2006). 3.1.0. Marketing Mix The marketing mix of Commonwealth Bank is specially designed to suite the wide range of financial services needed by its diverse market. It can be seen that the overall marketing strategy of this financial institution is to geared towards capturing the clients while they are still young and continuing the service until they grow old. 3.1.1. Product Commonwealth Bank is a provider of integrated financial services which include retail, business and institutional banking, fund management, superannuation, insurance, investment, and broking services. Together with the financial institution’s brand and scale, it considers this diversified business matrix as its core strategic strength (Commonwealth Bank’s website 2006). Based on the company’s clients, the company’s product portfolio is divided into three major product lines: personal banking which caters to households; business banking which caters to business organizations; and institutional banking which caters to other institutions. Commonwealth Bank’s personal center offers products transaction and savings account, credit cards, personal loans, home loans, investment accounts, and insurance products. To business organizations, the bank offers a wide array of products which include cash management accounts, loans, asset finance, insurance and investment. The financial institution also provides services like risk management, superannuation, and services which involves international transactions (Commonwealth Bank’s website 2006). 3.1.2. Price As a bank who capitalizes in its scale of operation, we would expect that Commonwealth Bank charge lower prices for its services. However, it should also be noted that banking institutions do not often compete on price but on the risk and convenience. As the operation of financial institutions are heavily regulated by the government and are subject to the same risks present in the economy, banks often follow the same interest rates offered by Treasury. 3.1.3. Promotion The products and services of Commonwealth Bank are being marketed through the use of different types of media like magazines and television. Aside from this, the company also has a website where customers can get significant information about the bank’s offerings. In creating a socially responsible image to the public, Commonwealth Bank established partnerships with non-governmental organizations to enhance societal well-being. The bank currently has a financial literacy program which makes the public more knowledgeable on their monetary decisions. It should be noted that this program is geared to the younger generation which is the bank’s primary target market. Currently, Commonwealth Bank supports the community through its involvement in medical research, arts, sports, community building, environment, and disaster relief (Commonwealth Bank’s website 2006). 3.1.4. Place Commonwealth Bank’s operation is concentrated on Australia and Asia. To date, the bank has more than 1,000 branches operating in Australia, Fiji, Hong Kong, Indonesia, Japan, New Zealand, Philippines, Singapore, the United Kingdom, the United States, and Vietnam (Hoover’s 2006). The bank is employing a click and mortar business model which uses the internet technology to reach and service clients. We can see that this is very appropriate taking into account the company’s quest of attracting young customers. Unlike other traditional business organizations, the Commonwealth Bank has impressively taken advantage of its electronic banking operation. In 2005, it is reported that 85% of its transactions are conducted online. Commonwealth Bank was also named Australia’s top Internet Stockbroker (Hoover’s 2006). 4.0. Conclusion The marketing mix of each business organization determines its overall marketing strategy. In the case of Qantas, we can see a marketing mix which complements the image that it wants to create in the customer’s mind. Commonwealth Bank does the same by targeting young individuals and using technology the technology appropriate to this market. Though this paper have shown significant differences on how they compete by the large discrepancies in their marketing mixes, it should be noted that the success of these companies in their respective industries proves that there is no definite marketing mix which can be used by all companies. The determinant of success is the company’s ability to tailor complementary marketing mixes which matches the need of its target market. References Commonwealth Bank of Australia, 2006, Hoovers, Inc. Retrieved 14 September 2006, from Hoover’s Database Commonwealth Bank of Australia website 2006, Retrieved 14 September 2006, from http://www.commbank.com.au/about/ Kotler, P. 2003. Marketing Management. 11th Edition. New Jersey: Prentice Hall Kotler, P. & Armstrong, G. 2001. Principles of Marketing. 9th Edition. New Jersey: Prentice Hall Qantas, 2006, Wikipedia, The Free Encyclopedia. Retrieved 14 September 2006, from http://en.wikipedia.org/wiki/Qantas Qantas Airways Limited, 2006, Hoovers, Inc. Retrieved 14 September 2006, from Hoover’s Database Qantas website 2006, Retrieved 14 September 2006, from www.qantas.com.au Rochfort, S. 2005, Qantas expand cut price strategy, Retrieved 14 September 006, from http://www.smh.com.au/news/business Thomson, A. and Strickland, A. 2003. Strategic Management Concepts and Cases. New York: McGraw-Hill Bibliography Gottliebsen, R. 2006, “Sky’s the Limit as Qantas Takes Off,” Weekend Australia, 26 August 2006 “Half-Year Results 2006 Commonwealth Bank of Australia Earnings Presentation—Final,” 2006, Fair Disclosure Wire (Quarterly Earnings Report), Thomson Financial, 14 February 2006 “Leverage Finance,” 2006, Euroweek; Issue 966, Special Section, pp 11-12 “Qantas Reports Full Year Profit of $671 Million,” 2006, M2 Presswire, Mt Communications Limited, 17 August 2006 Read More