Strategic Marketing Plan for Qantas Airline - Case Study Example

Strategic marketing plan – Qantas airline Executive summary It is an apparent fact that the right approach in the marketing strategy of any firm is imperative in attaining and maintaining competitive advantage in the market. This is applicable in the case of Qantas airline which is confronted by immense competition, both in the domestic and international markets. Towards this end, this analysis will explore the mission of this airline, the SMART objectives in this company as well as the hierarchy of strategies at Qantas airline. Additionally, this paper will provide a summative analysis of the Australian aviation industry supported by Porter’s five competitive forces which influence the operations of Qantas in Australia. This will be coupled with the strategic fit of this company in terms of two core strategies namely defender and analyzer strategies as well as both micro and macro level analyses of the Australian aviation industry. Moreover, this paper will explore the applicable market research at Qantas airline coupled with the product/price/place/promotion policies. Lastly, it will investigate the segmentation and targeting strategies of Qantas as well as the differentiation and positioning approach of this airline. Table of Contents Executive summary 1 Strategic marketing plan – Qantas airline 3 Industry overview 4 Strategic fit 5 Micro and macro level analyses 6 Market research 6 Product/price/place/promotion policies 7 Segmentation and targeting 8 Differentiation and positioning 9 Conclusion 11 References 12 Strategic marketing plan – Qantas airline In a generic overview, Qantas airline was founded in 1920. Over the years, Qantas has grown into becoming the largest international as well as domestic airline in Australia. In this extensive period, this airline has built a robust reputation founded on safety, consumer service, engineering and maintenance as well as reliability of operations. Qantas offers a wide alley of services but the primary service which will be explored in this analysis is the transportation of consumers. This can be perceived as the main service offered by this airline which is undertaken using two complementary airline brands namely Qantas and Jetstar (Qantas Airline Website, 2013). In regard to the mission, this company seeks to meet the expectations of its consumers every time they fly and dedicated towards continued investment in the business aimed at the provision of exceptional services to its consumers (Qantas Airline Website, 2013). This mission is relevant in the sense that it based on the high competition in the Australian aviation industry, the company is committed towards meeting the dynamic consumer needs. Additionally, it reflects the social values of quality services and customer care. Lastly, Qantas airline has four main strategies which are intertwined in a robust hierarchy. At the corporate level, there is the strategy of protecting and enhancing the revenues as well as optimization of leverage and financial performance. At the business hierarchy, there is the strategy of costs control while at the functional level Qantas has the strategy of improving productivity and operating efficiency (Qantas Airline Website, 2013). All these are linked to the SMART objectives (specific, measurable, attainable/achievable, relevant and time bound) in terms of expanding the market share as well as the profitability the airline based on the core business of transportation of consumers. Industry overview As noted in the preceding section, the aviation industry in Australia is characterized by extensive competition. In relation to Qantas airline, the Porter’s five competitive forces can be perceived to influence the operations of this airline. In regard to the threat of new entrants, the entry of low cost airlines in the market has put extreme pressure on the operations of Qantas. This fact is fortified by Porter (2008) who revealed that new entrants in an industry introduce the desire to capture increased market share which in turn puts extreme pressure on prices and costs required to compete. In regard to the bargaining power of consumers, the instigation of these low cost airlines drastically increased the consumers’ bargaining power in the sense that they can opt to travel using airlines which offer the lowest travel rates and with high quality services. This can be perceived as a development which forced Qantas to introduce Jetstar which is a low cost airline affiliated to Qantas. On the other hand, this also elevated the bargaining power of suppliers, for instance, suppliers of labor who were endowed with new ventures where they can supply their services. Additionally, Qantas has been subjected to the threat of substitutes, mostly with the expansion of other transportation infrastructure in Australia, for instance, road and rail. This has had ripple effects on the attractiveness and profitability in the aviation industry, a fact which is also revealed by Porter (2008). Lastly, increased competition from other airlines, for instance, Virgin Blue which entered the Australian market in 2000 and proceeded to capture an impressive 25% of the total market share can be perceived as a key threat to the profitability of Qantas. Strategic fit It is imperative to note that Qantas is in the mature stage of its operations. In this case, the company has two core strategies namely defender and analyzer strategies. In regard to the defender strategy, Isoherranen and Kess (2011) noted that this is often typical in companies which are endowed with a stable set of services and their competition is solely founded on service, quality and price. This is apparent in Qantas whereby with the entrance of low cost airlines in the Australian market, the move to instigate Jetstar (low cost) can be perceived as a defender strategy which aims at retaining consumers who seek lower travel prices and high quality services at the same time. On the other hand, Qantas can be viewed to assume an analyzer strategy which is basically founded on the efforts to strike a balance between stable and dynamic domains (Isoherranen & Kess, 2011). This is whereby the operations at Qantas seek to take advantage of the already stable market share among the high class consumers while at the same time instigating measures to counter the market dynamics caused by the introduction of low cost travel rates. Micro and macro level analyses At the micro level, the Australian aviation market can be perceived to be affected by different factors. These include but not limited to new entrants in the industry which challenge the dominance of the traditional companies like Qantas, government regulations, for instance, taxation, reduction of barriers of entry with market liberalization as well as increased technological use. All these have the effect of eroding of the market share and thus profitability, increasing the operating costs as well as enhancing the bargaining power of the consumers. At the macro level, liberalization of the international airline industry has been key in increasing the level of competition in the Australian market. This is best epitomized by the entry of international airlines like Emirates and Etihad airlines among others in the Australian market. Additionally, the recent global financial crisis is another macro factor which negatively affected the Australian aviation industry. In Qantas, this situation culminated in 1,750 job losses while Virgin blue announced 400 job losses (Harvey & Turnbull, 2009). Both of the above levels of analysis provide a robust framework which can be used in assessing the factors which are central in addressing the strategic challenges confronting Qantas airline. Market research It is an apparent fact that market research forms a strong basis for strategic decision making. At Qantas, market research is mostly appropriate in the initial stages prior to the launching of new services. In this case, buyer decision making process research will be conducted aimed at determining the motivation behind the consumers choosing the services by a particular airline. The applicability of the above method which is founded on qualitative studies is key in illuminating and understanding complex psychosocial issues and thus highly useful in answering humanistic ‘how’ and ‘why’ questions (Marshall, 1996). In this case, questions on preferred prices of the introduced service, the in-flight services as well as the preferred flight times would be asked. All these are central in tailoring the specific service to be introduced to perfectly fit the consumer needs in the market. Additionally, the employees at the airline who form an integral part of the stakeholders might be asked questions regarding the consumer trends in the consumption of past services as well as the feedback from consumers. Product/price/place/promotion policies These policies can be perceived to be founded on the marketing mix which according to Riaz and Tanveer (2012) is a set of tools which are put into utility in marketing. These can be subjected to significant controls and utilized by specific firms towards producing the desired response among the target consumers. In regard to the product, the services offered at Qantas ought to be tailored to suit the particular consumer needs. This is in terms of quality whereby the consumers ought to be assured that they are getting value for their money and ensuring that their needs are being met. In regard to the price, this ought to reflect the specific needs of the consumers as well as the prices being offered by other competing firms. In this case, Qantas 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 based the idea that having the absolute low price in the market transmits negative signals of possible low quality of the services which can adversely affect its reception in the market (Ehmke, Fulton & Lusk, 2010). In regard to promotion, Qantas airline ought to choose the most ideal media which has high consumption among the target market. For instance, it ought to develop a policy which will gradually elevate the presence of this airline in the internet. This is founded on the inference by Yannopoulo (2011) that the internet has an enormous 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. Lastly, the place where new operations of this company are located ought to be accessible to the consumers. This is mostly with the efforts to expand into new markets, both domestically as well as internationally. In this case, the locations ought to be near to supporting infrastructure like road network and accommodation among others. Segmentation and targeting According to Goyat (2011), segmentation entails the division of the market into small groups of consumers who portray unique needs, behaviors or characteristics which might necessitate the utility of distinct marketing mixes or products. In this case, Qantas ought to segment its market in order to meet the needs of each specific group. This is best epitomized whereby with the young consumers being in greater need of low cost services which influences their purchasing behavior, Qantas ought to ensure that this need is catered for without necessarily compromising the quality of its services. On the other hand, the segmentation process will also culminate in a situation whereby the needs of the older and more financially stable consumers are met. This is in terms of convenience of the flights and the overall quality of the services which are central in influencing their purchasing behavior. In regard to targeting, Qantas ought to ensure that the services are tailored to meet the needs of specific target groups. For instance, specific services ought to be tailored targeting the needs of the middle class while others target the upper class. This act of targeting is fundamental in ensuring that the needs of each particular consumer in the overall market share are met and thus greater consumer loyalty and retention. Differentiation and positioning In a generic sense, differentiation can be perceived as the outcome of efforts aimed at making a particular brand or service outstanding as being central in the provision of distinct value to the consumers when compared with the competitors. In this case, Manhas (2010) determined that the target markets as well as the perceived differentiation from the competitors in the market are core concepts of brand positioning. Elevated differentiation is an integral source of competitive advantage in the market. This is whereby the consumers perceive the differentiated product as being distinct or superior and being ideal in satisfying their specific needs. Additionally, differentiating a service in the market is core in ensuring that the company gains the first mover advantage in the market. This is mostly evident in situations whereby a company offers a service which is hard to imitate totally distinct from what the other competitors in the market are offering. In regard to positioning, this can be perceived as the development of the image of a particular product against those produced by the competitors or other others produced by the company (Karadeniz, 2009). This is done through the creating of an image from a particular service based on the audience which it is intended for. In the case of Qantas, the services ought to be positioned as meeting the specific needs of the target consumers while at the same time offering maximum value for their money. This will make the service brands from Qantas to achieve a favorable niche in the market despite the elevated competition. This is best epitomized whereby in case of an audience among the young people, the services from Qantas ought to be positioned to reflect low prices which are favorable among this audience. At the same time, the services ought to positioned in a manner which reflect the preference among this audience, for instance, quality in-flight entertainment. This is further exhibited in the following perceptual map. High price Qantas airline Virgin blue High quality Low quality Jetstar Low price Conclusion From the above preceding, Qantas mission is highly customer oriented. In the recent past, aviation industry has witnessed a stiff competition and Qantas has not been spared. The porter’s five competitive forces have influenced the daily operation of this organization. Analyzer and defender strategies are the two main strategies Qantas employs. The company has been affected by different factors both in micro and macro level. Qantas appreciates the important factor that market research play in order to gain market advantage and it has been using this tool on all of its new services. Additionally, the organization appreciates the marketing mix in order to offer services that meet customers’ needs. This paper has also shown that differentiating a service in the market is core in ensuring that the company gains the first mover advantage in the market including aviation industry. References Ehmke, C., Fulton, J & Lusk, J., (2010). Marketing’s Four P’s: First Steps for New Entrepreneurs. Retrieved August 02, 2013 from http://www.ces.purdue.edu/extmedia/ec/ec-730.pdf Goyat, S., (2011). The basis of market segmentation: a critical review of literature. European Journal of Business and Management, 3(9), 45-54. Harvey, G., & Turnbull, P., (2009). Sectoral coverage of the global economic crisis: The impact of the financial crisis on labour in the civil aviation industry. Working Paper, ILO, Geneva. Isoherranen, V., & Kess, P., (2011). Analysis of Strategy by Strategy Typology and Orientation Framework. Modern Economy, 2 (1), 575-583 Karadeniz, M., (2009). Product positioning strategy in marketing management. Journal of Naval Science and Engineering, 5(2), 98-110. Marshall, M. N., (1996). Sampling for qualitative research. Family Practice, 13, 522-525. Manhas, P.S., (2010). Strategic brand Positioning Analysis through comparison of cognitive and conative Perceptions. Journal of Economics, Finance and Administrative Science, 15(29), 15-33. Porter, M., (2008). The five competitive forces that shape strategy. Harvard Business Review, 78-93. Qantas Airline Website (2013). Retrieved August 02, 2013 from http://www.qantas.com.au Riaz, W. & Tanveer, A., (2012). Marketing Mix, Not Branding. Asian Journal of Business and Management Sciences, 1(11), 43-52. Yannopoulo, P., (2011). Impact of the Internet on Marketing Strategy Formulation. International Journal of Business and Social Science, 2(18), 1-7. Read More