Qantas Premium Service - Assignment Example

 Table of contents 1.0 Introduction ……………………………………………………………...3 2.0 Situational analysis: ……………………………………………………...3 3.0 SWOT Analysis: ………………………………………………………….7 4.0 Market segmentation: ……………………………………………………9 5.0 Marketing mix: ……………………………………………………………10 6.0 Budget………………………………………………………………………12 7.0 Implementation…………………………………………………………….12 References……………………………………………………………………..14 Qantas Premium Service 1.0 Introduction The company I have chosen to offer my product is Qantas airline Australia. The product in the form of premium services to travelers and especially tourists to Australian tourist destinations. The product will also be offered to travelers in other regions of Asia-Pacific and not only Australia. The region is growing very fast in terms of economic development. I believe there is a growing stable market for premium airline services to travelers with a high disposable income. Qantas was founded in 1920 and since then has grown to become a leading airline in long overhaul air travel in the world. This has been largely due to a reputation of excellence in safety, operational reliability, engineering and maintenance and customer service. The company operates under two brand names; Qantas, Jetstar. The company also operates under subsidiary business and specialist markets such as holiday, travel and in-flight catering (Qantas, 2013). The company employs 35, 700 people 93% of them being in Australia only and flies over 140 destinations across the world. The company posted $ 95 million profit before tax from its operations. Within the same period the company had increased its revenues by 6% to $15.7 billion (Qantas, 2012). Considering the challenging environment of the air travel industry in the world characterized by increased fuel prices and poorly performing economies around the world, then it can be concluded the company strategy to make profit for its shareholders is yielding positive results (Qantas, 2013). 2.0 Situational analysis: Political Politics affect business in every sphere of the economy. The airline industry is a closely monitored sector especially since the threat of terrorism became so much a headache in the 21 century. The rise of terrorism has led to increased security measures especially for airlines operating direct flight to US and other European countries. The strict barriers in the airline industries around the world are easing and being replaced by regulatory frameworks that seek to open up the skies for airlines to operate freely (Hitt & Ireland, 2010). However, crucial alliances like one-world which Qantas is a member are still vital in ensuring access to global markets. Prolonged EU politics regarding the future of the Euro Zone have had an effect on Qantas Airline long haul flights to the region. Australia being a stable democracy means Quantas is not in any way threatened by political instability from its main market. Economical The airline industry is closely attached to the performance of world economies, as world economies plunge and so does the demand for air transport as businesses experience low growth and thus little movement of people doing business (Delfmann, 2005). Qantas Airline long haul program has been hit hard by the Euro zone economic downturn. Much of the company’s revenue is eaten up by the high cost of fuel followed by staff expenses. Economically, it can be seen the company is struggling with high costs of operation and a competitive domestic market that are having a toll on its profitability. Sociological Qantas airline has been able to position itself as the long haul airline of choice for travelers to and from the Australia. The Asia-Pacific region is experiencing an economic boom resulting in people with high disposable incomes; and can thus provide a good clientele for the airline if it markets it brand effectively (Graham & Papatheodorou, 2012). The premium market can provide an alternative for the company to differentiate its services and at the same time incur less cost by flying less and generating higher revenues by serving the premium market that is willing to pay high prices for travel services. Technology Qantas airline has taken advantage of information technology and internet growth around the world and in Australia to improve customers experience as customers can book online for flight, change flight plans to upgrade or get into other cheaper plans. One can also book hotel rooms in Australia and other selected regions through the airlines website. The airline also offers support for customers through the website (Qantas, 2013). Environmental Some of the environment issues facing the airline industry is the amount of pollution the air transports impacts on the environment. According to the European aviation safety agency website (easa.europa.eu, 2013) global air traffic is growing at an average of 5%. This presents a challenge of reducing the environmental impact left by the air travel. The agency proposes technological and operational improvements to lower the level of impact on the environment by airline operators. Noise and carbon emission remain to be the greatest concern for environmentalists and the global community at large. If Qantas Airline is not compliant with measures to reduce climate change it can face difficulty attracting customers in the near future especially in Europe and North America. Legal Operating at international level means Qantas Airline will have to comply with various regulatory issues such as safety and security features for all oneworld members. Threat posed by terrorism means the company has had to have tighter policies to comply with international airlines requirements (Graham & Papatheodorou, 2012). Qantas Airline is not currently into any legal problems as regards its industry conduct. In fact the airline is considered the safest airline in the world today. However, the company must adhere to industry regulations on safety and security standards, air traffic regulations and treatment of disabled travelers. Competitor analysis Qantas is facing a stiff competition from global airline brands such as Emirates, Virgin airline and Malaysia airline. The Australian market attracts a lot of tourists mostly from Europe and North America. Many of the tourists are shared among the major airlines operating the route and thus reduce the market share for the airline. The Gulf airlines have strong financial backing from their states and as such don’t incur a lot of fuel related expenses and thus pose great competition to Qantas since the market is very open to competition (Graham & Papatheodorou, 2012). It will be suicidal for any company to leverage on price differentiation as a competition strategy. Instead service differentiation may make the difference for any company wishing to dominate the Asia-Pacific route. Customer analysis Following the gloomy economic situation in many economies around the major travel markets, several Low cost carriers have made considerable gains offering their services to the price sensitive travelers. However the cost of sustaining such a plan is very high due to fuel prices and low travel traffic (Graham & Papatheodorou, 2012). It therefore necessitates another strategy all together for Qantas airline where by it can offer premium travel services to the growing market of wealthy Asian-Pacific population with a high level of disposable income. Such a consumer values differentiated high quality in-flight service which may not be too costly for the company to offer (Joyner, 2009). The travelers have a taste for quality above average treatment in flight arrangements and customer support through information systems and well trained Flight attendants. 3.0 SWOT Analysis: Strengths Extensive experience in flight operations and customer service in air travel industry A member of oneworld alliance meaning the company has a wide market to source for travelers in the premium travelers segment. Oneworld has members in major travel destinations including most developed countries in Europe, North America and Asia-Pacific (Graham & Papatheodorou, 2012). A reputation of offering safe travels to its clients through flight operations and emphasis on quality servicing of the fleet A wide Australian market which considers the airline their choice to other world destinations. The company has operated in Australia for almost one century making it a part of the Australian history and heritage. Weaknesses Rising fuel costs that are reducing the profit margin being made by the company. Even though this is a common problem to airlines all over the world, the company ought to explore practices that will reduce the impact of fluctuating fuel prices on its profitability. The airline does not cater for the premium travel segment that is quite lucrative due to the minimal costs it incurs and the high revenues it can generate Opportunities The company can take advantage of the strategic position it has to serve the Asia-Pacific region which is currently enjoying an upward growth trajectory in terms of economic productivity. This region has a wide premium travelers segment from the region and also from around the world with business or travel interests (Graham & Papatheodorou, 2012). If the company takes advantage of this market, then it can realize high profitability from its operations. The company may use its Oneworld alliance and globalization to position itself as a global brand through advertising and promotional activities to increase brand awareness and as a result high travelers’ numbers. Threats There is stiff competition in the market as airlines seek to extend their market share in the region. This is threatening to reduce the company’s market share and result in low profitability which will stifle growth of the company. Terrorism and flight accidents is a major threat to profitability in the airline industry, Qantas is not excluded meaning there exists the threat of losing market share if any terrorism incident occurs in one of the airline’s flights. The vision of Qantas is to be one of Australia’s great businesses and among the world’s greatest airlines (Qantas, 2013). This means the company will have to employ a great deal of commitment towards developing strategy that will serve to ensure its stakeholders are pleased with the performance of the company. Essentially the company has to continue posting healthy profits for the sake of its shareholders and also offer quality services and products to its customers through innovation and service development. The product I am offering to the company is in line with this vision of the company as it seeks to increase the profitability of the company and at the same time position the company in a position to counter the threat of competition and actually transform the threat into an opportunity. Premium travel services will ensure the highest standards of service and safety the airline is known for. This service is also going to improve the profitability of the company as there is a growing market for the product and as such the company will encounter minimal competition from major carriers like Emirates. The objectives of the marketing plan fro this product will be to: Capture at least 20% of Australia’s premium travelers market Reduce operating costs by 5 percent Increase the company’s profitability by 1% through premium services for the next financial year The overall marketing strategy for this product will be to offer a differentiated product from the travel options being offered by airlines in the market today. The company will seek to offer a diversified range of products by offering a differentiated premium service which offers an opportunity for the company to compete on a non-price based platform reducing the risk of reducing profitability through low revenues. 4.0 Market segmentation: Demographic This product is intended for high income earners with average income of $ 380, 000 per annum. These people have a high level of disposable income and will thus be able to afford travel prices offered above the average prices of travel prices in the destinations they want to travel for as long as the service is highly differentiated (Joyner, 2009). The target market comprises of all the age groups in the Australian and international market. However the average age of the group we are targeting maybe at 30 years since at this age many people have stable and improved incomes Psychographic The product is targeting people with a lifestyle of preferring high quality exclusive services and expensive authentic products. This is the target market that will be attracted by highly differentiated exclusive premium air travel product that we will be offering (Delfmann , 2005). Behavioral The target market expects to derive benefits such as spending less time in airports waiting to clear personal luggage, excellent in-flight services, Excellent customer support from booking to hotel services upon arrival to their destinations. From these characteristics of the target market we plan to position the product as premium high quality service only offered to a few of our customers who are willing to incur the extra cost. This idea fits well with the expectations of the target market as we will highly differentiate the product through service and technology application to make it highly differentiated from the other services being offered currently. 5.0 Marketing mix: Product The product we are offering is a premium differentiated air travel service. This product comes with a special kind of treatment to the premium travelers such as having to schedule their flight in short notice, special in-flight service, hotel and related service at destinations, extensive support from customer service. Price The product is priced at above the average travel price for the destinations chosen. Accordning to (Joyner, 2009) Such a strategy will work since the service is highly differentiated and the target market is more than willing to pay for the differentiated service. This pricing strategy will ensure the company attracts high value customers making it have a competitive edge over its competitors. Promotion An integrated marketing communication plan will be adopted to promote the product through online and offline means. This will first be to create brand awareness and then to accelerate and sustain passenger numbers. The target market is mainly composed of busy people and as such television advertising may achieve good results coupled with public media advertising within the airports and also through personal selling whereby the services of travel agencies will be much utilized. Distribution The product will be available in all airports that Qantas operates in. Qantas is a member of Oneworld alliance meaning it has a wide network of airports it can access so the service will be well distributed around the world to ensure our premium travelers get the service they need from us no matter the destination they are travelling to. Qantas has been in the business for long and as such its network is also very large and the company boasts of traveling over 140 destinations meaning the service is available in most of this destinations. 6.0 Budget The development and implementation of this product will cost the company an estimated $ 50 million. The money will towards recruiting and training of flight attendants who will specifically cater for the premium segment at a cost of $ 1 million. The company will also put up a support service for the segment at a cost of $ 2million. The company will also start by converting five jets and acquiring two more to cater for this market segment within the Asia-Pacific region and the rest of the world at a cost of $40 million. The interiors of the jets will be customized to suit the design expectations by the market segment at a cost of $ 3 million. 7.0 Implementation The product development and implementation will take a minimum of one and half years to be operational. The first five months will be to recruit and train staff that will be part of the service delivery. The next seven months will be used to develop infrastructure such as IT systems that will cater for the target market. The jets should arrive by the end of one and a half years and ready to fly the first customers of the premium service. After one year the product performance will be analyzed against the objectives set put in this marketing plan. If the objectives will not have been achieved then the management will embark on identifying the problems with the product delivery and promotion to boost its sales. If the performance will be good then all measure s will be taken to ensure the product is developed and improved to attract even more passengers. References Delfmann , W 2005, ‘Strategic Management in the Aviation Industry ,Ashgate Publishing Ltd., pp 229-230. European Aviation and Safety Agency. (2013, April 2). Aviation's environment challenges. Retrieved May 9, 2013, from European Aviation and Safety Agency: http://www.easa.europa.eu/environment/environmental-challenges.php Graham, A., & Papatheodorou, A. 2012, Aviation and tourism: Implications for leisure travel Hitt, M., & Ireland, D. (2010). Strategic management: Competitiveness and Globalization, Concepts, Cengage Learning Joyner, M. (2009). Integrating Marketing: How small businesses become big businesses and big businesses become empires. John Wiley and Sons. Qantas. (2013). About Qantas. Retrieved May 9, 2013, from Qantas: http://www.qantas.com.au/travel/airlines/about-qantas/global/en Qantas. (2012, june 1). Investors full year results - 2012. Retrieved April 9, 2013, from Qantas: http://www.qantas.com.au/travel/airlines/investors-full-year-results-2012/global/en Qantas. (2013). Subsidiaries. Retrieved May 9, 2013, from Qantas: http://www.qantas.com.au/travel/airlines/subsidiaries/global/en Read More