Marketing Plan for British Airways Short Haul Flights - Coursework Example

Marketing plan for British airways short haul flights Table of Contents Marketing plan for British airways short haul flights 1 Table of Contents 1 Introduction 2 Market Analysis 2 Customer Analysis 3 Marketing Objectives 3 Marketing Strategies 4 Market Penetration 5 Product Development 5 Market Development 6 Diversification 6 Conclusion and Recommendations 6 References 7 Annexure 8 Introduction Airlines are considered to be one of the most vital aspects of business organizations and individuals alike. Airlines have drastically reduced the time required to transport goods and services over long distances. This implies large scale opportunities for participants of the airline industry. However, the flip side of the story also reveals large scale competition among the market players to sustain themselves in the market. This highlights the need for business organizations to induce greater efficiency in their business process. The present study would focus upon the marketing strategies of British Airways with regards to short haul flights. The choice of the topic assumes significance considering that short haul flights constitute an important part of the business areas for the organization. The following sections would conduct an analysis of the marketing strategies of the firm that would help it to achieve success in the particular business segment. Market Analysis The recent economic crisis had imposed a very crucial blow to the business prospects of the participants of the airline industry. The dip in the levels of disposable income coupled with cost cutting measures taken by business organizations had a heavy impact on the revenue and profit margins of the participants of the airline industry in UK. A report published by the House of Commons in UK states that an approximate 225 million individual passengers and 2 million tonnes worth of goods used the aerial route for transportation. The report also shows comeback signs for the industry as it expect the industry to grow by approximately twice its present market value by 2030. The report also foresees plans for expansion of airports including the construction of a third runway at London Heathrow airport. The report also states the domestic passengers in UK are increasingly resorting to air travel due to the falling fares of the airlines (House of Commons, 2010, p.3). Low cost airlines are also emerging as a threat to British airways by virtue of their competitive pricing strategy. Customer Analysis Customers are the most important stakeholders for an organization. This is particularly more evident for organizations like British Airways whose business market is flooded with competitors. This makes it essential to formulate strategies so as to gain market advantage. In case of airline industry the consumer purchase decision is based on aspects like pricing which is one of the most important aspects that are considered by customers for making a purchase decision. In addition to this some other factors to be considered by the customers include loyalty programs, effective schedule of timings, comfort and ambience, safety and security, type of aircraft etc (refer annexure 1 for details) (Williams, 2008, p.19). Low cost carriers have become a major market player for the short haul segment, which is mostly because of the low fares offered by the airlines. However the low cost carriers score low on their ability to efficiently handle the operations. This represents a gap in the product offering and customer desires which could be effectively tapped by full time carriers like British Airways to gain market advantage. Marketing Objectives The marketing strategy of British Airways for a three year period would be based on the following objectives. These objectives would encompass customers, employees, performance, partnerships and service excellence. The main objective of the firm would be to gain market share by providing extremely high levels of service quality and ensuring greater efficiency in operations. The focus of the firm with regards to short haul flights would be to offer a premium level of service which would be unmatched by any other player in the market. The firm also intends to capture to short haul market by rapidly expanding into new areas with increased focus on entering into partnership with strategic players like travel and tour operators. Excellence in service quality would be ensured so as to provide the customers with the best value for every unit of monetary resource spent with the company for availing its products and services (British Airways, 2010, p.27, 28). British Airways also plans to effectively tap on to the opportunities presented due to the Olympic Games which are scheduled to be held in the nation in 2012. The event would generate a large influx of tourists in the nation for which the firm plans to undertake effective programs to tap the needs of the global tourists and also to gain strategic advantage form the opportunities shown by the games. Marketing Strategies The marketing strategies of the firm could be formulated by taking the Ansoff model into consideration. The Ansoff model defines the future strategies of an organization with regards to the strategies of a firm in a market. The model proposes four basic strategies to be used by a firm to capitalise on a market potential. These four strategies are market penetration in the existing market using the existing product line of the company, product based development programmes in the existing market using a new product line, market development based strategies in which a firm enters a new market using a pre-existing product line and finally a strategy for entering the new markets using a entirely new product line (Luck, 2008, p.346). Figure 1: The Ansoff Matrix (Source: Meldrum & McDonald, 2007, p.126) Market Penetration Market penetration strategies involve a situation in which a firm tries to enter an existing market with the existing product offering. Market penetration strategy for British airways in case of short haul flights would include providing a better product offering by improving its service quality. In addition it could also undertake a review of its segmentation strategy to include more customer segments in the market. Product Development Product development for British airways could include inducing new service offerings such as loyalty programs, tie ups specific for corporate class passengers, new packages etc. Market Development This strategy would include entering into new areas which are presently not served by the airlines. These areas could be identified by undertaking a market survey which would provide an idea of the markets which can be included in the service map of the airline. Diversification Diversification is not a viable option for the airlines considering the fact that this strategy would require migration of supply chain and vertical integration which may not be feasible for the firm. Moreover adopting such a strategy would lead to loss of focus on the present business markets which would not be feasible for the firm. Conclusion and Recommendations The analysis of the market reveals considerable scope for the airlines to grow and expand in the future. However the present market scenario also represents a situation of large scale competition. This aspect has been further complicated by the advent of numerous low cost carriers who offer cost effective services for short haul routes. This assumes greater significance considering the fact that price is the most important factor that affects the purchase decision of the consumer for this specific service segment. Finally adopting a strategy that could serve to increase the market penetration and market development along with minor product modifications for specific consumer segments would help the firm to establish a strong foothold in the lucrative short haul segment of the UK market. However the main key to success lies in adopting greater efficiency and providing better customer service so as to establish an effective brand image that would provide long term sustainable competitive advantage to the organization. References British Airways. 2010. Our strategy and objectives. [Pdf]. Available at: http://www.britishairways.com/cms/global/microsites/ba_reports0910/pdfs/Strategy.pdf [Accessed on March 02, 2011]. House of Commons. 2010. The future of aviation. [Pdf]. Available at: http://www.publications.parliament.uk/pa/cm200910/cmselect/cmtran/125/125i.pdf [Accessed on March 02, 2011]. Luck, D. 2008. CIM Coursebook Assessing the Marketing Environment. Butterworth-Heinemann. Meldrum, M. & McDonald, M. 2007. Marketing in a nutshell: key concepts for non-specialists. Butterworth-Heinemann. MottMcDonald. 2011. State of the Aviation Industry. [Pdf]. Available at: http://www.airports.org/aci/aci/file/2009%20Events/ACI_Econ_Fin_Conf/Mott_MacDonald_presentation_Laurie_Price.pdf [Accessed on March 02, 2011]. Williams, G. 2008. Key Trends in the Airline Industry. [Pdf]. Available at: http://www.euromedtransport.org/fileadmin/download/Aviation/Workshops/Airline_Seminar/Presentations/1_Key_Trends.pdf [Accessed on March 02, 2011]. Annexure Annexure 1: Factors affecting the purchase decision of customers (Source: Williams, 2008, p.19) Annexure 2: Customer Recommendations for British Airways (Source: British Airways, 2010, p.32) Annexure 3: Operating margin of British airways over the years (Source: British Airways, 2010, p.32) Annexure 4: Punctuality Levels (Source: British Airways, 2010, p.32) Annexure 5: Annual Growth of UK Airports (Source: MottMcDonald, 2011, p.20) Annexure 6: Demand Forecast for South East England (Source: MottMcDonald, 2011, p.21) Annexure 7: Yield Decline Graph (Source: Williams, 2008, p.17) Read More