Qantas Airlines - Efficient Marketing towards Maintaining Comparative Advantage - Case Study Example

Qantas Airlines; Efficient marketing towards maintaining comparative advantage Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission Abstract It is an apparent fact that the correct approach in any firm’s marketing strategy is imperative in attaining and maintaining a favorable niche in the market. This is more so when the particular firm is confronted my immense competition and dynamism in the consumer demand which threaten to affect both its short and long-term viability. In this regard, the application of an ideal market mix is fundamental in identification of the market opportunities, coping with real and prospective competitors as well as instigation of new products in the market. This is supported by Anderson (1982, p. 6) who determined that the role of marketing in strategic planning involves the identification of the most suitable long-term positions for the firm which stresses the necessity for proper identification of the opportunities in the current and future market. This reality evidences the paramount role that marketing will play in determining the success of Qantas Airlines in maintaining its market share among members of the Australian populations and also on the international scale. Against this background, this paper will identify and evaluate and evaluate the market opportunities, the necessary changes in terms of pricing that can be introduced in the consumer services aimed at the maintenance of the high quality reputation of the airline among the consumers as well as assessing the demographic and trait characteristics that will be evident among the new consumer base. In addition, this paper will be a profound reflection on most prudent marketing mix that is bound to work for Qantas airlines which will culminate in conducting a comprehensive SWOT analysis. Keywords: Market opportunities, comparative advantage, marketing mix Table of Contents Abstract 2 Table of Contents 3 Qantas Airlines; Efficient marketing towards maintaining comparative advantage 4 Executive summary 4 Identification of opportunities 6 Opportunities and change evaluation 7 Marketing mix 8 Promotion 10 Product 11 Place 12 People 12 SWOT analysis 13 Conclusion 15 References 16 Qantas Airlines; Efficient marketing towards maintaining comparative advantage According to Ostertag et. al. (2007, p. 6), marketing is often perceived as the delivery of consumer satisfaction at a profit. In this regard, marketing can be viewed as a philosophy that results to an ideal process through which institutions, collectives and individuals are endowed with the chance to obtain what they need which is made possible through value identification, providing it, communicating it and the eventual process of delivering it to others. In this regard, the central tenets that determine the success of strategic marketing have for long been pointed as the needs, values and wants of the consumers, exchange, communications, products and relationships. Executive summary The year 2000 saw the entry of Virgin blue into the Australian airlines scene and this firm has moved in a swift speed to capture close to 25% of the market share, a consumer base which is projected to expand if urgent measure are not formulated and implemented aimed at curtailing this trend. The success of Virgin blue has been founded on the pricing strategy that this firm has put into utility whereby it has opted to offer cheap airfare and still managed to maintain its profitability. This situation is worsened by the fact that Singapore Airlines which is considered as the premier airline in the larger South East Asia region has decided to venture into the business of providing low cost services to the consumers through the instigation of a new venture referred to as Tiger Airways which despite slow start, it is endowed with the capacity of capturing a substantial share of the Qantas airlines consumer base. The unfortunate situation is whereby Qantas Airlines cannot compete with both of the above airlines in providing cheap airfare without posing detrimental impacts on its feasibility, a fact which is founded on two factors. Firstly, Qantas has established a reputation of offering exemplary services which can be damaged through price reduction. Secondly, this firm has engaged massive long-term investments in terms of employees as well as capital investment which make price reduction unviable for the company. Nonetheless, it is evident that the company is obliged to establish a new cost airline if at all current and future survival is to be guaranteed. This will entail strategic approach in tenets like deciding the name of the new venture as well as profound consideration of other factors that have direct correlation with the eventual success of this new venture. This is explored in the subsequent analysis. Identification of opportunities According to Urwyler (2006, 19), people often discover opportunities as a result of idiosyncratic knowledge and specific cognitive properties. Thus, it is important for Qantas airlines to engage in-depth knowledge in identifying the opportunities in the market. The airline is endowed with diverse opportunities in the current and future market in both Australian and international airlines industry. One of the chief opportunities is due to its already embedded share in the market. In this regard, the airline has already established itself in the market as a dependable provider of airline services in terms of quality. Therefore, the instigation of a new, lower price airline will find an already established market which is ready to embrace these new price dynamics. Secondly, there is high market segmentation in Australia whereby the consumers are differentiated in terms of class, age, occupation, values and behaviors. This is parallel to the inference by Thomas (2007, p. 4) who cited that segmentation can define opportunities for new products targeted to each psychographic segment. In this regard, based on the fact that the market is highly segmented will mean that Qantas airlines will be empowered to maintain the consumers for its relatively high price services as well as capturing new consumers who are price sensitive, thereby expanding its consumer base. Lastly, the radically changing consumer demand in preference of low price services, mostly among the young population will mean that the instigation of the new low price airline by Qantas (Jet Star) will meet a new, relatively exploited market that is ready to exploit this new service which is being offered by an a firm which has a traditional reputation of quality services. Opportunities and change evaluation Pickens (2007, p. 4) defined an opportunity in the market as a perceived means of generating economic value (profit) that has not been previously exploited by a firm or is currently being under-exploited by others. The above opportunities that have been explored in the above segmentation need to be evaluated in order to ensure success in forging a strategic approach in embracing them. Based on the fact that Qantas Airlines has an already established market gives it an opportunity of expanding this consumer base. Nonetheless, this opportunity is bound to affect the current consumers in the sense that the launching of new cheap services might cause the consumers, mostly the young people to abandon the present quality but highly services. However, this dynamism is bound to be limited among the older consumers who would continue to prefer the traditional services in disregard of the price. Against this background, the company will be endowed with a great chance of serving both age-groups and still maintain its profitability. This will mean that the firm will be in a position to take up the new opportunity and still maintain its current consumer base. On the other hand, the positioning of the new low cost airline adjacent to the old airline will give a perception of alternatives by the consumers. This aspect of positioning will be key in ensuring that the consumers have a feeling that they have options in terms of alternative price for relatively similar services. Demographically, the new consumer base will constitute the younger members of the population as well as people from the low and medium income classes. Their basic trait will be preference of low price and presumed high quality. In this regard, Qantas Airline need to make necessary innovations aimed at embracing the diverse preference of this group of new consumers in terms of reception, time schedules, music, sitting positions and advertisement of the new services. The marketing slogan for the new services ought to reflect the new pricing model and still maintain the reputation of superior service of the airline. According to McKnight and Paugh (1999, 7), slogans can appear on products, propel marketing and an advertising operation and or assist in identity change. This will key in influencing the perception of both the old and new consumers. For instance, a marketing slogan like ‘You can still fly with Jet Star at a lower cost, at Qantas the home of quality’ will capture both the reduced prices but the maintenance of the high quality services. This will be principle in ensuring that the new cost airline will not pose diabolical impacts on the high quality image of Qantas. Lastly, some consumer service processes ought to be changed geared towards catering for the new preferences in a cost-effective way. In this regard, some aspects like onboard refreshments can be minimized in order to cover for the reduced cost. Most of the consumers will not be affected by the fact that they will receive fewer refreshments at a lower cost. In addition, the advertising strategies for the new lower cost services ought to capture the perception that the instigation of Jet Star is a response to consumer demands rather than a counter-competition strategy. In this regard, Qantas can embrace another marketing slogan like ‘Your Listening and Caring Partner’ to capture the consumer sensitivity tenet of its services. Marketing mix This analysis will center on the 5Ps of marketing which are pricing, promotion, product, place and people. Pricing The new low price airline (Jet Star) ought to divorce itself from the assumption that it is offering the lowest prices in order to gain a competitive advantage over other competitors but rather as a response to changing consumers’ demands, for instance, recovery from the recent global financial slump. This is because the idea that having the absolute low price in the market sends a negative signal of possible low quality of the services which can adversely affect its reception in the market (Ehmke, Fulton & Lusk, 2010, 2 ). The pricing strategies should put into consideration the prices from the competitors as well as the retained high quality. HBS Consulting (2008, 3) determined that a comprehensively understanding the price of competing products and the subsequent sales models and tactics which are being currently put into utility by the competition is core to any pricing strategy. Against this background, Qantas Airline ought to integrate different pricing strategies in the efforts of coming up with the most ideal services as outline below. Competitive: This is founded on the range of prices being offered by other competitors. For instance, it will be lower than the price offered by Tiger Airways or Virgin Blue for the same travel destinations. This will make it achieve a competitive niche in the market. Discount: This is founded on the reduction of the advertised price. This will include things reduced prices during public holidays and weekends. Value-based pricing: A central tenet of value based pricing is that the firm ought to communicate to the prospective consumers of the value and benefits they receive (Smith, Hogan & Nagle, 2004, p. 2). This is founded on the perception of the consumers in regard to the value as opposed to the cost of the product. This perception is determined by all the features of the product which include those not related to price, for instance, prestige and quality. This will make the buyers willing to pay for the product. This combination will ensure that the consumers will be assured of quality and value for their money which will allude cost sensitivity to consumer needs. However, it is paramount to be cognizant of the fact that majority of the promotion should be directed towards the target market which constitute the low income members of the populations and thus the choice of the promotional channels should consider the channels that are easily accessible and more affordable by this group, for instance, more promotion on the radio than the newspapers. Promotion Bruch (2006, p.3) perceived promotion as the act of furthering the growth or development of something. This entails the mechanisms that Qantas Airlines will utilize to inform the consumers what type of services that it have in regard to quality, price, outlets, quality, merits above other airlines among other aspects. In regard to media plan, Qantas Airlines will exploit channels like radio, television, print, internet among other channels. For instance, Yannopoulo (2011) inferred that the internet has a massive influence on the pricing strategy of a firm in regard to increased awareness, research in pricing, provision of more information to consumers among other merits. The chief media which will be used in promotion include internet, television, radio, printed materials and word of mouth. This will ensure that the consumers are aware of the different services that are being offered at the new airline and the prices for the services to different destinations. Towards this end, the company will send sales person to the target market to sensitize them about the available services in the new airline. Afterwards, the company will collect feedback from them which will be used to improve the services in the long-term. This exercise will be regular to ensure that the quality of the services will be reviewed from time to time in order to meet changing consumer demands. This is supported by Rosen, Schoroeder and Purinton (1998, p. 3) who inferred that it is imperative to be cognizant of the need to clearly identify and profile a target market, and bear in mind that the profile of the target market will change overtime. Product According to the Queensland Government (2011, p.1), the product can be perceived as referring to all of the features, advantages and benefits that the consumers is bound to enjoy for buying your goods and services. The marketing efforts of Qantas Airlines should thus have a clear message in regard to the diverse advantages and merits that the consumers will enjoy after choosing to travel in the new airline in regard to lower airfare, top quality, regular flight schedules and diversity in destinations. This will be key in informing their eventual choice of the new airline in the sense that they will be endowed with adequate information regarding the firm as well as being assured of the various promotions and privileges that they will enjoy after opting for Jet Star as their flight of choice. In addition, the consumers will be informed about the diversity of services whereby they will be at liberty of choosing either between the traditional Qantas Airlines services which have a relatively higher price or the new services by Jet Star which is relatively cheaper. This will entail enhanced infrastructural developments like provisions for online booking for either model of services. Place In a generic sense, this refers to getting the services to the consumers which entail where the services are made, sold and distributed. Strategic placing is fundamental for any new venture in the sense that it determines the level of accessibility of the services. In this regard, the new airline will be located just adjacent to the old airline which will ensure that all the consumers are catered for in terms of prices in one specific locality. This will be integral in ensuring that consumers from all walks of life regardless of income margins are taken care of in a singular location. The place ought to be accessible to the target consumers, a place where they can reach within the shortest time and with the cheapest means. People This is the last P in the 5Ps of marketing mix in any new business and it involves the customer care staff, disputes resolution and the sales person in the new airline. Jet Star ought to conduct extensive personnel recruitment and training aimed at familiarizing them with the diverse logistics of the new business like the characters and preferences of the new class of consumers as well as the challenges that are bound to surface in the new venture. This will be key in molding an efficient organizational culture in the new organization and thus chief in the eventual reputational growth of the venture. This is supported by Queensland Government (2011, p. 1) who revealed that providing exceptional consumers service is fundamental in the creation of a positive consumers experience and the eventual marketing of one’s brand to them. Subsequently, the existing consumers will play a principle role in spreading the word about the exemplary services at Jet Star, winning referrals in return which is closely linked to promotion. This tenet will be more applicable among the consumers of the new airline who as previously mentioned constitute people from low and medium income social classes. SWOT analysis SWOT analysis can be perceived as the process through which decision makers in any given firm gradually develop their awareness of the organizational environments with the sole goal of influencing the performance in the present and in the future ( (Naryanan & Nath,1993, p. 197). Al-Rousan and Qawasme (2009, 1) determined that an explicit relationship exists between dimensions of competitive advantage and SWOT (Strength, Weakness, Opportunity and Threat) analysis. In instigating Jet Star, Qantas Airlines is endowed by diverse strengths and weaknesses as well as opportunity and threat. The prior category is chiefly internal to the firm while the latter category is connected to the external environment. The most embedded strength that is possessed by Qantas Airlines is that the firm has an already established market share and has a robust reputation of high quality services among its consumers. This reputation is bound to spill over to the new venture is at all the promotional strategy will focus more on profound efforts towards consumer satisfaction rather than as a response to heightened competition in the industry. In addition, the firm is endowed with concrete financial, information and human capital which will play a great role in determining the eventual success of the new venture. The financial capital will be paramount in the infrastructural development of the new airline while the human resource will be chief in running the day to day operations of the airline. On the other hand, the strength in information capital is founded on the fact that Qantas Airlines has been in the industry for a long time and thus well versed with the consumers’ dynamics and preferences. This will come in handy in molding the various services, travel schedules and structuring of the wider airport in terms of facilities. Nonetheless, the firm is confronted by a major weakness in regard to probable perception that the new services which have a lower price are of cheap and poor quality. This can be detrimental in the market response to the new services which calls for adequate and well though promotion strategy as previously mentioned. Moreover, the immense investment in the human resource might be affected by the potential reduction of the profit margins in the new venture. In this regard, any future dynamics which can result in remuneration reduction for the staff might result in massive human resource migration to other competing firms which can pose grave corollaries to the human resource competitive advantage at both Qantas Airlines and the new venture. On the other hand, this venture is under constant threat of competition from other airlines offering similar services. Against this background, the response by Qantas Airlines to shrinking market share through developing another airline offering low prices can lead the other firms like Virgin Blue and Tiger Airways further lowering their prices which can have detrimental impacts on the viability of the new venture. Another threat is the dynamics in technological knowhow which have shifted the consumer demands and the necessity to acquire and embrace more modern technology can be a major threat to the new venture. Lastly, the effects of the 2008 slump are still prevalent and further financial instability can pose major impacts in the feasibility of the new venture. Nonetheless, despite the mentioned weaknesses and threats confronting Jet Star and the wider Qantas Airlines, there are so much opportunities that are apparent as previously analyzed which if adequately tapped can result in increased competitive advantage and the firm regaining a favorable niche in the market. Conclusion From the above discourse, it is evident that despite the elevated level of pricing competition in the Australian industry, there are still diverse opportunities which can be exploited and result in the retaining the current market share as well as acquiring a new consumer base by Qantas Airlines. Nonetheless, this will require a comprehensive marketing mix which will not only ensure that the prospective consumers are endowed with adequate information about the available services in the new airline but also ensure that the exceptional services reputation at Qantas Airlines is still maintained. This will entail efficient application of the 5Ps of marketing as analyzed in the preceding section. It is imperative to be cognizant of the fact that there are some strengths, weaknesses, opportunities and threats that confront the new venture and interventions ought to be formulated and implemented aimed at maximizing the strengths and opportunities and at the same time minimize the effects of the weaknesses and threats. References Al-Rousan, M. & Qawasme, F 2009, The Impact of SWOT Analysis on Achieving a Competitive Advantage: Evidence from Jordanian Banking Industry, International Bulletin of Business Administration, vol. 243, no. 6, pp. 82-92. Anderson, P.F 1982, ‘Marketing, strategic planning and the theory of the firm’. Journal of Marketing, vol. 46, no. 1, pp. 15–26. Bruch, ML., 2006, ‘Promotion Strategies’, Retrieved 13 May 2012, < http://cpa.utk.edu/pptpresentations/adverpromotions_mb_7-06.pdf>. Ehmke, C., Fulton, J & Lusk, J., 2010, ‘Marketing’s Four P’s:First Steps for New Entrepreneurs’, . (13 May 2012). 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