Qantas Airways Marketing Strategies - Case Study Example

Executive Summary Qantas Airways is a renowned name in the airlines business and has been strengthening its brand image through its quality services. This report gives a complete picture how Qantas Airways has successfully developed its strategies based on its competitors. The internal analysis provides an insight of how the company has been able to optimize its strengths and deliver quality services on a continuous basis. Porters Five Force Model highlights the external factors affecting the business of Qantas Airways and how the organisation is dealing with the same. A complete internal and external analysis has helped Qantas to identify its targeted market and develop strategies accordingly to ensure higher returns and better services. The organisation has successfully adopted a competitive pricing model through a refined use of JIT model and management keep working on a continuous basis to develop new promotional techniques and selling tools to further expand its existing business and develop a larger customer base. The overall impact shows a positive trend and provides further opportunity for future growth and expansion. Table of Contents Introduction 3 Company Overview 3 External Analysis 4 Micro Analysis 5 Segmentation, Targeting & Positioning 7 4 P’s of Marketing 8 Conclusion 10 References 11 Introduction The basic purpose of this assignment is to make a complete analysis of an existing product or service and how an organisation has been able to deal with the same keeping in mind the internal and external factors affecting the same. The same is analyzed by making a complete study of marketing, targeting, positioning, segmentation and differential strategies adopted by the organisation in order to optimize its production and ensuring higher returns. The study thereby helps to determine the different paths and directions to be followed in future to achieve higher efficiency in an effective manner. The organisation selected for the above mentioned study is Qantas Airlines, which is of the oldest and leading Australian Airline connecting over 85 destinations over 40 countries round the globe. This is matched with the current targeted market of the organisation and the manner in which the organisation has developed its strategies and making a complete analysis of different aspects to gather information for future growth and better performance in an effective and efficient manner. Company Overview Qantas Airlines was founded on 16th November, 1920 in Queensland and has developed itself from of the Australia’s oldest to largest airline in the modern times. Qantas focuses itself on providing safety, reliability, engineering, maintenance and complete customer service. Travel service provided y the organisation has helped Australia to connect to over 40 countries (Qantas Airways Limited. 2010). Qantas Airlines has contributed immensely towards the Australian GDP, generating employment to over 33000 people. Financials of Qantas Airlines reflects its revenue to be over 15.7 billion Australian dollars with an operating income of over 3.02 billion Australian dollars and net assets over 21.15 billion Australian dollars. Primary objective of the organisation from its very onset has been providing quality services which has certainly helped the organisation to create a brand image of its own and further helped the organisation in building a larger market base. External Analysis The external analysis for Qantas Airlines has been studied through Porters Five Force Model which provides a tool in developing different strategies to successfully deal with the continuous changing environment. The same is discussed as under (Stephanie & Timothy, 2005) New entry threat: New entry threat is on a lower side owing to high initial setup cost, however opening up of new economies has attracted a large number of competitors giving new players a chance to enter into the existing business area. Quality service with low cost is indeed an effective tool to swipe away new entrants and cover a larger market area (Roger, Hartley, Barkowitz & Rudelius, 2006). Threat of Substitute Product: The threat of substitute varies as per distance travelling offered by the airline company. Long distance travel usually faces lower threat of substitutes apart from its competitors whereas domestic and shorter distance travelling faces competition from substitutes such as road, rail and sea airways available in the same route. Customer Bargaining Power: Customers usually accept the prices charged by the airline companies and have little or no bargaining power. However with new players entering into the market and increasing competition most airlines follow a competitive pricing strategy and fair prices are charged as per the services offered by the organization (Roger, Hartley, Barkowitz & Rudelius, 2006). Thus, we see bargaining power of customers are largely limited to considerable extent. Bargaining Power of Suppliers: Suppliers bargaining power is on a higher note due to few players supplying flights. However when it comes to catering services offered there is huge number of suppliers which lowers the bargaining power of suppliers (Roger, Hartley, Barkowitz & Rudelius, 2006). On an overall basis it can be concluded that bargaining power of suppliers is quite high. Degree of Rivalry among Competitors: Airlines business faces a high degree of rivalry among its competitors since most competitors offer the same products and services with similar degree of comfort and luxury. Thus, very little differentiation leads to higher degree of rivalry among its competitors. Micro Analysis Internal analysis helps in finding the existing loopholes and allows Qantas Airlines to develop its Value Chain and strategies accordingly to optimize its position and generate higher revenue to the organization. The Value Chain Analysis of the same is discussed as under: PRIMARY OBJECTIVES: Inbound Logistics: Qantas Airways has always developed its services as per the requirement of its domestic and international travelers. The organization has installed JIT technique which has helped the organization to achieve competitive pricing and to further determine its minimum level of inventory for smooth running of its daily operations. Operations: Qantas uses a dual technique of both outsourcing and in house mechanism to generate higher customer satisfaction. For instance, eatables within flight are outsourced whereas other crew member takes responsibility of other services within the aircraft (Mullins, Walker, Jr., & Boyd, 2008) Outbound Logistics: Carrier service plays an important role in the revenue growth of Qantas Airways which is created by way of outbound logistics and further helped in developing the freight courier services provided by the organization. Marketing & Sales: Marketing and sales play an important role in any organization and Qantas Airways is no exception to the same. It uses various promotional techniques like discounts, loyalty scheme, corporate fares etc to attract larger customers (Mullins, Walker, Jr., & Boyd, 2008). Various agents and portals have been created to channelize the sales of its services offered. In order to assist and achieve the primary objectives secondary objectives have been developed which are discussed as under: Infrastructure Facility: Qantas Airways has equipped itself with the best fleet of aircrafts and arranged many contracts with the Australian government and private companies to ensure smooth running of its business. Human Resource Management: Qantas has hired the desired number of best staffs to take care of its services and deliver complete customer satisfaction. Technology: Qantas in order to keep in pace with technological advancement has installed itself with JIT technique to ensure pricing and logistic strategy Segmentation, Targeting & Positioning Market segmentation is a process where an organization divides its market into smaller fragments or groups in order to focus on each individual group and design its marketing strategy accordingly to deliver maximum satisfaction to its customers. Segmentation strategy adopted by Qantas in this regard is a complex one as each customer is distinct and demand different services as per their requirement. Qantas Airways in order to deliver best services with individual customer satisfaction mainly uses behavioral or differentiated marketing strategy to convert its potential customers into real customers. The organization has differentiated it customers based on different purposes like business or leisure travelers and non-business class travelers (Senge, 2000). These broad categories are further subdivided to further focus on individual needs of the customers. For instance the business trips can be further divided into routine business, conferences/seminars and emergency trips. Thus, it is through this differentiated strategy which has helped Qantas to create a brand name of its own and deliver maximum satisfaction to its customers. Qantas Airways has always eyed upon delivering the best services and has targeted its potential customers in a correct way in the recent past. Differentiated strategy adopted by Qantas has indeed helped the organization to become a global leader in the field of airline business and the company has indeed followed the right path to achieve customer excellence and develop better marketing strategies as per the environmental needs and demand (Mullins, Walker, Jr., & Boyd, 2008). 4 P’s of Marketing To understand the marketing strategies adopted for increase in growth and product penetration of Qantas Airways the 4P’s of marketing has been discussed as under: Product Qantas in the past has expanded its business by providing numerous other services apart from its regular flight service like Qantas Couriers, Qantas Charter, Qantas Airlines. It uses a dual branding strategy where all its services are linked with the brand name “Qantas” followed with the allied services provided by it. Qantas for its aviation business uses a distinguishable logo of a Kangaroo with a caption “Spirit Of Australia” making its product easily recognized and creating an impression of the Australian land in the minds of its customers (Hoffman, 2010). Product life cycle for Qantas varies along with its different services provided while the organization is at maturity phase for its domestic airlines it lies in the growth phase for its international airline and courier services. Its recent strategy of Frequent Flyer Scheme was a mega hit and has enabled Qantas to accelerate its revenue at a rapid pace. Price Price is an economic variable guided by demand and supply forces, Qantas pricing policies are often governed with its competitors price and the organization always aim at charging fair prices as per the services offered by it. The airline industry is governed by a cartel which decides the pricing policy and Qantas is no exception to the same. Qantas policy of Just-In-Time technology enables Qantas to determine price based on time and seat availability (Smith, 2002). Qantas pricing strategies are also governed by promotional pricing where the company offers discounts and schemes during off-season to boost up its sales. Corporate prices offered by Qantas make it the most preferable airlines for corporate officers to travel for business trips with comfort and best price for its services offered. Promotion Qantas has been successful to create its brand equity however the organization still uses a variety of promotional techniques to expand its business and become market leader in the field of aviation industry. It uses different advertising techniques like print media, radio, magazines, newspapers, brochures and billboards to advertise its existing and new offerings (Smith, 2002). Promotional schemes like group travel policy, corporate fare, loyal fare etc further help in boosting up the revenue for organization. The company also relies on personal selling where the company has appointed many travel agents, online portals, corporate portals and government alliances to make its business grow and expand its customer base with ease and efficiency. Place Place refers to how an organization develops its strategy to make its products and services available to its ultimate end users. Qantas uses a dual channel of both direct and indirect to make its services available to its users. Direct sales are affected through its wholly owned outlets like Qantas Travel Centre and Qantas Holidays. It also provides service of telephone booking and direct airport ticket sale counters (James, 2004). Different intermediary travel agent offices had been appointed and customers can directly book their tickets online via its global registered websites. Selective distribution strategy has been adopted by the company to sell its services through a number of small retail outlets in its major destinations. This has certainly helped Qantas to make its presence felt in over 40 countries round the globe. Conclusion The report makes a complete analysis of how Qantas Airlines has grabbed the marketing opportunities and proper positioning has lead to expand Qantas its business at a global level. The organization has used different promotional and selling techniques to further expand its business. The overall impact has been positive and Qantas has ensured best use of its internal resources to deal with external factors. This thereby further ensures future growth opportunity and its chances of becoming a global leader in aviation industry with long term success of its business and services. References Hoffman, B. (2010). Qantas Announces 7 Million Frequent Flyer Members Milestone, Retrieved August 10, 2013, from http://biztravelguru.com/blogs/airline-hotel-news/archive/2010/04/28/qantas-announces-7-million-frequent-flyer-members-milestone.aspx James, D. (2004). The New Risk Imperative-An Enterprise Wide Approach. Handbook of Business Strategy. 5 (1), 29-34 Mullins, J. W., Walker, Jr., O. C., & Boyd, H. W. (2008). Marketing management: A strategic decision making approach (6h ed.). Boston: McGraw-Hill Irwin. Roger, A., Hartley, W., Barkowitz, N., Rudelius, W. (2006). Marketing, 8 edition. New York. New York: The McGraw-Hill Companies Stephanie, C. & Timothy, G. (2005). Customer Retention is Not enough. Journal of Consumer Marketing. 22 (2), 101-105 Senge, M. (2000). The Fifth Discipline. New York, New York. Bantam Doubleday Dell Publishing Group. Smith, J. (2002). Flying off course: The economics of international airlines. New York: Rigas Doganis Qantas Airways Limited. (2010). Qantas Fact File, Retrieved August 10, 2013, from http://www.qantas.com.au/infodetail/about/FactFiles.pdf Read More