Qantas Marketing - Case Study Example

MARKETING: A CASE STUDY OF QUANTUS AIRWAYS Introduction The contemporary has seen a rise in the way the Airliner’s globally have been operating both in their international and domestic business. The Qantas in this segment had been the second oldest of all global Airliners and is the largest of all operating Airliner group in the Australia. 65% of all Australian passengers along with 18.7% of all International clients in and out of Australia had been a recorded bulk of the business that this brand is currently doing. However, the recent day’s speculations had been that the operating cost due to various speculations have reduced the revenue earnings of the brand due to a very competitive market along with long and short term financing those the other groups could manage from international sources. Qantas have an National Career status for the Australian domestic market that have a effect on the financing that the business receives making the business look for legislative changes to suites it equity generation needs from International Private players to continue with the multitude of services and prices it offers to the consumers (BBC News, 2014). The role of marketing and its role in developing the Qantas and its domestic operational wing of low cost carrier JetStar would thus be critically evaluated to do the business SWOT, PEST, BCG Matrix and Porter’s 5 Force analysis tool to measure the Business or perform a business audit in a business management international context. The Micro-macro environmental analysis for the understanding of the strategic approaches adopted by the business along with what else that the Business might add to its market assessment intelligence and adoption processes in a marketing and promotion point of view. Business Audit for Qantas SWOT: The tool for the marketing managers to develop a strategic approach towards the business needs the SWOT analysis where the Strengths, weaknesses, Opportunity and threats that the business faces from the external market determinants are assessed here. Strengths that Qantas have are base in the belongingness of the Australian origin as approved by the government that identifies it as the National Carrier in that market. Nevertheless, the monopoly is there to some extend theirs with 65% of all domestic traveller’s preferred choice while 18.7% of all Australian international passengers choosing their services. The quality of service along with the fleet size and competence and experience in terms of market knowledge is very high for the airliner with a 20 plus destinations from where the services can be availed by the consumers. Furthermore, the cost of advertisements and promotions the brand spends is quiet high thus the Consumer’s knowledge about the product is higher too in this case (Mickhail, n.d.). Weaknesses can be derived from the Airliners concentration of the Domestic market and this have some funding source problems too due to the Australian Qantas Sales Act as passed by the national government making it a national carrier. The funding that its nearest competitor Virgin could manage international funding from the English and other international markets due to its investment patterns and regulations aiding no bar for this private player to pump in funds needed to enhance the business performance. However Qantas have this limit and so it is seeking the legislative changes to be globally competent and thus fund its operations via global investors in the Australian market which the law bars. Opportunities: The Qantas is majorly the only single largest player in their domestic market therefore the pseudo-monopoly can be maintained by the brand by keeping the outputs as good as expected by the investors and other stakeholders. Again, increasing operations in populated Asian destinations has made the opportunities gain more out of such international tie ups. Threats: The threats the management faces for the brand is the labour pressure of its maintenance and service staffs along with increasing fuel process in the international markets. Further, the threats of internationally renounced services like Virgin, Singapore and New Zealand Airways that the business face, needs to be addressed to upkeep the progresses in the market they operates in. The PEST or the Political, Economical, Social and Technical importance of the business to develop better business strategies and stay significant for Qantas shows the following. Political effect is the previously described law that makes the international funding restricted for the brand where it can only generate and generate equity from Government and Public of Australia sources via equity distribution. Economically the fuel prices have increased the way the operations work for the business so a slash down to the employee’s number especially in the Services and maintenance departments where outsourcing is soothing that the business has brought in to safeguard its revenue and income to sustain the business. Socially the Qantas have a very wide and upbeat space in the hearts and minds of the Australian population being one mode that has served the nation to connect largely with the offered excellence in the services. Technological factors those comes to forefront for Qantas are the ones those helps the business to achieve the economy of scale due to latest technical application adoption from services to operations in the segment which have given it an edge over others in the similar market. Porter’s 5 Force model reviews the businesses elements those makes the business assess its potential in accordance to the alibi components those makes the business. The bargaining power of Suppliers in this case is that the Qantas is one industry where the critical inputs in terms of technology and other components are determined by few thus the suppliers bargaining power is high due to lower concentration of the suppliers. The Consumers bargaining power is lower in the Domestic Australian market while the internationally its high for consumers due to the extensive services by other major players available to them to choose from on prices and service quality competency grounds. The Rivalry in the market is higher so far as the International destination flight services of the brand goes for the size of the industry globally. The threats to substitutes are those that the Qantas projects to its rivals with superior service quality, performance, destination selection or flight fleet in numbers in Domestic market that has made the brand effective threats to its substitutes at least in the domestic market. Threats to new Competitors or entrants are difficult in the market of Australia specifically in Domestic market due to the service and network the brand has build over the period. However, for International market the threat is bigger and encompasses more competitive threats where the entry and distribution barriers are high and have a higher switching cost for the consumer which makes the threat larger for the new entrants to afflict competitive threats to competitors and new entrants in the sector (Oneworld.com, 2014). BCG Matrix (Boston Consulting Group matrix) for Qantas Airlines would help the business of Qantas to develop its abilities of Market Penetration, Market development, positioning and diversification in any market chosen. Also called as Growth Share matrix the BCG is a 2/2 matrix that denotes 4 different quarter as Cash Cows, Dogs, Question Marks and stars. The Matrix on X axis is ascending market growth to Relative market share on Y axis. The higher the growth in market share and growth rate the bigger is the chance the business to be a star in its score while the opposite to this quadrant would be the Dog matrix that would have lower market positioning and lower growth in a specific market therefore the exit is the better option for the business from such market before it’s too late. Thus using this Qantas may develop new markets and decide where in the present market they need to stay or exit and not make losses by maintaining a market position that tends to a Dog Quadrant. The Micro and Macro Environmental Analysis for Qantas The Micro and macro environmental issues are those issues that affect the business environment in a manner which the strategy formulation teams need to consider while building the strategies for both domestic and international business planning (Nykiel, 2003). The PEST analysis and SWOT like business tools helps the business to understand and thus develop plans to counter the threats possessed by the alternatives available to the consumers or the procedural within to resolve them and stay prominent in the chosen market. For Qantas the Micro environmental issues would encompass its domestic market operations along with its domestic wing of low cost airlines JetStar where the micro environmental costs like domestic competitor’s threats, service quality, procedural, employee problems, training and development cost of operations to revenue generated cost are all taken into considerations. The employee reduction especially in 2013-14 FYI (Financial year) from the flight maintenance and services are been reduced to counter the huge employee cost of the business. This is a micro effect while the continuous training and development is the other part that has helped the business to service procedures and technological inputs to make the airliner a luxurious experience for all who travels. The Macro on the other hand would consider the Qantas Sales Act that restricts the collection of funds from international markets to foster the business due to the National Carrier status provided by the Legislation of Australia. Again the macro environmental threats that the Airliner feels in its international operations from Singapore, Air Asia, New Zealand Airlines makes the macro environmental analysis and information for optimal potential growth and sustainability (OSullivan, 2014). Market Positioning and Market Planning: Market and Consumer Strategies Market positioning and planning is dependent upon the way the market and consumers behave towards the services and products. Therefore the brand of Qantas that is operational since 1920s has seen various inputs in terms of market intelligence and data gathering and processing to make strategic marketing business decisions. The group offers a 144 plus destinations across 44 different nations to give it a Global positioning of number 11th in the Revenue Passenger Kilometre scale of International Air transport Association’s calculations (IATA) in 2009. However, the group is still in within its profits where as many giants are falling into revenue deficits including the JetStar Asia Operations from Singapore. Strategically the JetStar and Qantas association had been great since its inception making it a profitable low cost airliner to suite its future growth. The strategic application of such decisions to merge and acquire other companies from the same segment depends upon the strategic value those mergers and acquisitions or strategic partnership those relationships brings with itself (Qantas.com.au, 2013). The strategic decision that the business took was majorly dependent upon its internal strengths and confidence in the marketing intelligences that the management has gathered along with its efficient analysis to come to a strategic decision to run the business. The growing population along with a huge middle class section looking for cheap but efficient ways to transport between two destinations by air also got increased in the Asian Continent. The Australian brand wished to exploit this feature which made the low cost destination reaching services of JetStar Asia as the alternative mode of transport, the model that most of the airliner in Asia with their look east policy. Nykiel (2003) observed that the airliner industry has shown the decreasing return on investment since 1978 globally has seen a decline due to subtle changes in global economy and political conditions. The government policies since have opened the doors for FDI (Foreign Direct Investment) in the airliners performance. The price wars and entry barrier has served as a threat to the sector with increase in international players in the International and Domestic markets. For Qantas the positioning was such that has made the sustainability good for the business to make itself the major player in the domestic market. However, the Australian markets too were open to international investment in the similar sector therefore the English Airliner Virgin could come into the market of Australia. This airliner with its funds could fight the entry barriers in such a cost intensive sector and make a market share in the Australian market. Again, Baron (2010) suggests that the executive class travel with Virgin were preferred over the Qantas’s offerings in terms of service standards and made the regular Business Class flyer make the airliner a better option to choose. The opportunity cost that Virgin like international brand could pull in to the Australian market has made the business more efficient and preferred by 35% around Australian market. Therefore it is evident that the business of Qantas has 2 distinct roll to play where the Consumer’s perspective and the Market’s perspectives were to be kept open for information gathering and taking planned and informed choices while making the strategic solutions. The look east policy strategic market orientation, the acquisition and strategic alliances planning was formulated by the Qantas management. Market capturing and in terms of getting the bigger and continuous flow of passengers from those uncharted but strategically aligned markets. The Strategic alliances in the Asian Continent were made with Chinese Southern, Eastern airliner and Singaporean Airliners to swap consumers among the alliance partners in 2013 (Quotes.wsj.com, 2014). Other than that the Australia Europe route (Kangaroo route) was also another portion of the market that was explored by the Qantas Marketing team as Cathay pacific group gave a serious challenge to the brands positioning. To take up the JetStar services in the Chinese markets at Hong Kong and Singapore as bases the business choose to make a serious impact in the Chinese market as well. This trend came to the strategic planning phase as the surveys has shown that the mainland Chinese passengers prefers to travel between China and Australia via these two routes. Thus the strategic planning was to attract the most of the Consumers of such services in the Chinese market be attracted towards themselves and have a higher and maintained RPK over Cathey Pacific. However, till now the Chinese approval for the Low cost JetStar services in the Chinese market awaits approval to give the brand the best of strategic benefits. Nevertheless, TheConversation (2013) observed that the Cathay pacific has always maintained a huge influence over the Hong Kong market even after 1997 merger where the Dragon Air too had limited destination choices to and from Hong Kong with the Cathay Pacific could attain due to their strategic long term influence over the local authorities. Therefore the socio-political factors and its APEC Policy supported the most liberal environmental procedures since 2011 in the Australia Singapore region. Nevertheless, the option for the investors from foreign markets can have a 100% cap over the sector while 49% of the Cap on capital mandatorily depends upon the Domestic market due to its Australian national status (International Labor Law Reports, 1997). Projecting upon the various demographic factors the market and consumer projections for strategic approach needs are based upon various segmentation elements those Qantas identifies. The study suggests the demographics those the Qantas has made for itself for a strategic future business approach are discussed as follows: Geographical Demographics: The local Australian market is insufficient for the brand to keep up with the challenges that the Virgin is producing in the local Australian market so the brand has developed a Look-east policy with one of the major economies of Asia like China which have a strong economy with a bigger population those suites the Qantas strategies. The strategic alliance with Chinese and Singaporean counterparts along with JetStar like brand for low cost carrier potential with the Qantas operations to fit into the domestic demographics of Chinese market. Psychographics: The consumer behaviour that the brand of Qantas has identified has made it make itself a brand of choice for the consumers for both the High and Middle class flyers. The Psychographics is the choice of the consumers and how the consumers view the brand to be like. The Qantas have great CRM strategies (Consumer relationship Management) which have made the reforms possible, the way the brand has built itself to be projected to the audience. The comfort of services of Qantas while low cost flying between destinations are the two wings that is letting business of Qantas fly that encompass both the ends of passenger’s demographics to attract the psychograph of the audience to establish themselves as a strong international player to match the attitudes and aspirations of the people that the brand aspires to serve. Buyers Demography: The consumer for the Australian domestic airliner choices to its international operations is vastly different as the economy and positioning that the brand has in those economy. The Frequent Flyer Membership for Qantas is been established to give the best of benefits for Domestic travellers in Qantas for their loyalty while the pricing is done internationally to fit the middle class of the Asian market to use the services of the brand along with its customer care, services, reliability like service factors (Laws, 1999). Market Planning and Auditing: Evaluation of Strategic Applications The steps undertaken by the brand to evaluate the various aspects of the strategic formulations in the Qantas brands application strategies are evaluated here. The relationship between the auditing, planning and corporate strategy is evaluated in a scale of efficiency in delivery that the brand may project with maximum outputs from the strategies planned (Fifield, 2007). The marketing Audit is based upon the characteristics of its comprehensive approach which has enough strength within to identify the trouble spots, in a disciplined systematic approach land model that best suites the purpose and job objectivity that business focus upon (Rust et al. 1996). Nevertheless, the frequency of the audit is also something that gives the success perspective with time gaps and thus avoid crisis before the threat actually takes the shape. The pre and post Audit objectives set for the period fixed in this context is also of importance considering the objectivity of the plans and success measurements. Therefore, the marketing team based upon the audit would perform the strategies for the market which would be implemented in consideration and in line with the corporate objectives. The corporate objectives are those objectives that the business and its stakeholders considers prior to market planning in achieving them (Young, 2011). Again, Fifield (2007) argues that the corporate objectives and strategies are aligned to see that the business utilizes all its resources towards achievement of a corporate objective as set by the management team. Thus the Strategic influences of business objectives on market planning are immense and are fully aligned. However, the audit produces the resultant of the objective’s focus to judge what has worked and what haven’t for the marketing as per the planned strategies. The Qantas strategies to align its objective to have a market share of 65% and above would be one in the Micro Business environment while internationally in the macro environment that objective of the business to have a bigger market presence in the outbound passengers of 18.7% and above as of 2013 also is the objective setting. Conclusions The Qantas airlines operating out of the Australian market in its international venture has overtaken the JatStar for its Asia based Low cost Domestic and International services that is concentrated upon the strategic business decisions that the brand made. The Australian market share is high for the business which a pseudo-monopoly in Australian mainland is predominant with its services. However, the rising fuel prices and increasing competition in the market that has let the business few decisions those are aimed at concentrating the business out of Australian market for a bigger better global presence with strategic acquisitions and partnership developments. However the change in legislation is also one that is due for the business to undertake a major equity generation from the international investors and letting the business grow and sustain at par with the international careers those are competing the brand. References Baron, S. (2010). Service marketing. London: SAGE. BBC News, (2014). Australias Qantas to cut 5,000 jobs. [online] Available at: http://www.bbc.com/news/business-26362322 [Accessed 22 Jan. 2015]. Brand Quarterly, (2013). Shape Your Marketing Strategy With A Marketing Audit - Brand Quarterly. [online] Available at: http://www.brandquarterly.com/shape-marketing-strategy-marketing-audit/ [Accessed 22 Jan. 2015]. Fifield, P. (2007). Marketing strategy. Amsterdam: Elsevier/Butterworth-Heinemann. International Labour Law Reports, E. (1997). AUSTRALIA. International Labour Law Reports Online, 18(1), pp.130-149. Laws, E. (1991). Tourism marketing. Cheltenham: Thornes. Mickhail, G. (n.d.). Qantas the Limping Kangaroo. SSRN Journal. Nykiel, R. (2003). Marketing your business. New York: Best Business Books. Oneworld.com, (2014). Qantas - oneworld. [online] Available at: http://www.oneworld.com/member-airlines/qantas [Accessed 21 Jan. 2015]. OSullivan, M. (2014). Qantas faces competition on Australia-Japan routes from All Nippon Airways. [online] The Sydney Morning Herald. Available at: http://www.smh.com.au/business/aviation/qantas-faces-competition-on-australiajapan-routes-from-all-nippon-airways-20141231-12fuvj.html [Accessed 22 Jan. 2015]. Qantas.com.au, (2013). Qantas | All inclusive airfares on Australia Pacific’s Best Airline. [online] Available at: http://www.qantas.com.au/travel/airlines/home/au/en [Accessed 21 Jan. 2015]. Quotes.wsj.com, (2014). QAN.AU Stock Price & News - Qantas Airways Ltd. - Wall Street Journal. [online] Available at: http://quotes.wsj.com/AU/QAN [Accessed 22 Jan. 2015]. Rust, R., Zahorik, A. and Keiningham, T. (1996). Service marketing. New York: HarperCollins College Publishers. The Conversation, (2013). Asia should shine brighter for blinkered Qantas. [online] Available at: http://theconversation.com/asia-should-shine-brighter-for-blinkered-qantas-21269 [Accessed 21 Jan. 2015]. Young, L. (2011). The marketers handbook. Chichester, West Sussex, U.K: Wiley. Read More