The Marketing Strategy of Qantas Airways - Case Study Example

Executive Summary This report analyzes the marketing strategy formulated by Qantas Airways with regard to different phases of the business and operation in new areas. The identification of the different strategies will bring about a change and transformation in carrying out the different activities. The present working style and trends based on the overall growth shows that Qantas Airlines will follow a strategy of a pioneer and work as a market leader. The product life cycle denotes a growth phase where the increasing demand for low cost airlines and better services has multiplied the opportunity to earn more and more. To ensure better services and to have a business model which follows its organizational structure Qantas Airlines is likely to follow a function form of organizational structure to facilitate quick decisions. This is followed by a strategy of objective audit so that overall effectiveness can be ensured and the organization is able to accomplish its objectives for both the short and long term. This is backed by the fact that Qantas Airlines aims at market expansion by moving into Asian markets and devising new innovation and development through which better productivity in services can be ensured. This will help to develop the required brand image and will improve the level of customer satisfaction. TABLE OF CONTENTS Introduction 3 About Qantas Airlines 3 Product life cycle 4 New market entry 6 Pioneer or follower strategy 7 Growth strategy 8 Shakeout, mature and decline strategy 9 New economy market 12 Organizational structure 12 Marketing plan 13 Marketing metrics 14 Marketing audit 15 Conclusion 15 References 16 Introduction This report analyzes the marketing strategy for Qantas Airlines which will help the airlines to formulate, implement and develop marketing strategies based on the needs of the market. This report will formulate and lay stress on different angels and aspects like the market entry strategy; product life cycle position of Qantas Airlines; strategies in relation to pioneer or follower so that growth can be witnessed; strategies for the different phases of business like shakeout, growth and decline; the organizational structure; marketing metrics and marketing audit. This will thereby help to improve productivity and gains from the best use of the resources leading to better market gains and brand recognition. The report has been designed with a motive of helping Qantas Airlines to increase it productivity, gain optimal benefits from its resources and ensure to develop superior quality and innovative performance for the company to emerge as a market leader and gain higher returns, profits and brand recognition. About Qantas Airways 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 organization 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 organization from its very onset has been providing quality services which has certainly helped the organization to create a brand image of its own and further helped the organization in building a larger market base. Mission and Vision of Qantas Airlines Qantas Airlines looks to provide quality services to its customers and aims at continuous innovation and development to ensure maximum customer satisfaction. This has helped Qantas Airlines to lay special stress and bring about a change in services so that customers experiences can be enhanced. Qantas Airlines has determined a vision of becoming a global leader in the airline industry. To achieve its vision Qantas Airlines has broken it into smaller missions and goals which are regularly evaluated and the progress of the organization is determined. To achieve the same Qantas Airlines has globalized and works in over 40 countries all around the globe. The use of latest technology and process has helped to ensure phenomenal growth rates and has provided an opportunity to create a brand name and a pool of loyal customers. The overall impact has helped Qantas Airlines to move from one place to another and has helped the business to grow over the entire region. Product Life Cycle Organizations need to identify the product life cycle which will help to determine the strategies based on which the organization will be able to develop strategies for the future. The product life cycle goes through different steps and dimensions which will require the use of different resources and will help to develop strategies accordingly. The product life cycle is as Introduction Stage: This is the first step in the product line and is characterized by huge investment as the product or services are unknown. Organization to ensure that the product or services becomes successful has to develop marketing strategies so that awareness can be developed (Czinkota & Ronkainen, 2004). The risk at this juncture is high as the ability of the organization to ensure that the product or services becomes successful depends on the manner the resources are used within the organization. Growth Stage: This stage in one where the business is able to ensure better growth rates as the returns are higher than the risk involved. This is a phase where awareness about the product or services spreads rapidly and the business earns super normal profits. This phase requires continuous efforts and are able to differentiate their business from others providing a competitive edge through which business will be able to gain effectiveness Maturity Stage: This is a stage where the product has reached its peak and requires infusion of fresh blood and energy in the market or product so that fresh demand can be generated (Czinkota & Ronkainen, 2004). This phase requires innovation and strategies which are new so that they are able to move away from competitors and bring the required change in carrying out the different activities. This period is often stagnated and results in lower profits and slow growth rates. Decline Stage: This stage the product starts to disappear from the market as despite making new investment in the same product the business faces losses (Czinkota & Ronkainen, 2004). Profits fall alarmingly and businesses have to look at closing down the venture or develop something new which will make the previous product or service obsolete and provide with something new so that business activities can be carried out. Qantas Airlines at this juncture is in the growth phase where the business is able to generate exponential returns due to the quality service it looks to provide to its customers. It is seen from the growth in its revenue which has reached over 15.7 billion Australia dollars and has an operating profit of 3.01 billion. The only consideration is that Qantas Airlines is moving towards the maturity stage and in a few years time will reach it. This will require that Qantas Airlines develop strategies and ensures innovation so that a change can be made and the business is able to garner maximum returns. While looking to develop new innovations Qantas Airlines has to ensure that the business works on the same business model and ensures maximum customer satisfaction by providing quality services. New Market Entry Organizations have to continuously evolve so that they are able to face competition and develop strategies which reduce risk and provide an opportunity to maximize returns. This is seen in case of Qantas Airlines who have spread their business over 40 countries so that diversification provides an opportunity to maximize return and lower risks. Organizations uses different new market entry strategies like entering a new market, developing a new product, adding new features to the existing product or reducing cost or repositioning its products in other markets so that better services can be provided to the customers. The new strategy is developed with the aim of ensuring higher returns and developing a mechanism through which better success and opportunities for success can be created. Qantas Airlines has identified the following mentioned strategies for its new market strategy keeping in mind the present working style and the other developments that the business looks to have based on the strategies that they are likely to accrue Repositioning: Qantas Airlines will look at repositioning its services by adding new features and attracting a different segment of the society. To deal with it Qantas Airlines proposes to provide extra services which are availed by people travelling at business class by a small hike in price. The different luxuries which Qantas Airlines aims to add is offer more leg space, comfortable seats, television and music system for each seat and similar other facilities (Best, Coney & Hawkins, 2004). The overall aim is to bring a complete transformation and reposition its offerings so that another niche segment of the customers can be attracted. Market Expansion: Qantas Airlines will look to increase its market share by operating in other regions of the world especially Asia. Given the wide opportunities and growth rate which Asian economies like India & China is providing the options seems a lucrative one. This will help to further diversify risk and provide with an advantage as the already established brand image will ensure good returns for the business. This will help to further enhance the brand image and bring the change while looking to perform in a new market. Pioneer or Follower Strategy Organizations based on their offerings looks to identify whether they will act as a pioneer or a follower. A pioneer is an innovator as looks to develop products and services based on the needs that have been identified from the market. The risk for such organizations is high but also increases the chances of return as the success of the product or services ensures better rewards. Follower on the other hand follows the pattern which has been already created in the market. The risk for such organization is low but also stiffens competition which thereby reduces the level of profits that the business is able to earn. Qantas Airlines looks to work as a pioneer as it has been able to create a niche market for its offerings and based on its brand image and new developments which the airline proposes it will look to change the working style and will be able to develop new innovative ways in the market. This has thereby made Qantas Airlines aim towards the following Develop a niche market: Qantas Airlines aims to work and develop a new niche market through enhanced offering in its services. To deal with it Qantas Airlines proposes to provide extra services which are availed by people travelling at business class by a small hike in price. The different luxuries which Qantas Airlines aims to add is offer more leg space, comfortable seats, television and music system for each seat and similar other facilities. The overall aim is to bring a complete transformation help them to act as a pioneer which will thereby attract people from different areas of the world. Skimming Strategy: Qantas Airlines is aiming towards developing its present offering by adding new features and services so that they are able to extend their product line by being able to capture a new segment of the society. To deal with it Qantas Airlines proposes to provide extra services which are availed by people travelling at business class by a small hike in price. The different luxuries which Qantas Airlines aims to add is offer more leg space, comfortable seats, television and music system for each seat and similar other facilities. This will help to develop a new market and will ensure product line extension which will thereby improve their resource utilization and provide an opportunity to earn higher returns. Growth Strategies Growth strategies are developed with the objective of fetching a higher return for the business. Organization based on their working style decides the strategy they will use. For example a pioneer or market leader looks to use strategies like market expansion, flanker, confrontation, fortress and contraction strategies whereas a follower uses strategies like like gorilla, frontal, leapfrog, flank or encirclement strategies. The strategies used are based on the needs and requirements of the business so that resources are effectively used. Qantas airlines look to work as a pioneer and are looking to develop new services so that another niche market can be tapped. This thereby provides an opportunity to use the following strategies Market Expansion: Qantas Airlines will look to increase its market share by operating in other regions of the world especially Asia. Given the wide opportunities and growth rate which Asian economies like India & China is providing the options seems a lucrative one. This will help to further diversify risk and provide with an advantage as the already established brand image will ensure good returns for the business (Manning & Reece, 2001). This will help to further enhance the brand image and bring the change while looking to perform in a new market. Confrontation Strategy: Qantas Airlines is looking to work on a confrontation strategy where they will look to reposition their services by adding new features and services to the present service so that product line extension becomes possible. This will facilitate an opportunity to look for a new market and will be able to tap a new segment of the customers. This strategy will help them to work in different markets and provide an opportunity for better penetration in the market. Shakeout, Mature & Decline Strategy Business based on the different phases of the business cycle needs to develop strategies so that they are ready to deal with any situation which might arise. The different phases requires different strategies which has been identified by Qantas Airlines as Shake out Shake out is the starting phase when business starts to face difficulties in retaining its market share and is largely due to intensified competition, lower profits and the inability to deal with changing business environment. Qantas Airlines has developed its strategies for the phase so that they are able to continue with their style of working Competitive strategy: Qantas Airlines looks at innovation by developing and adding a new product line for the luxurious segment of the customers. This will help to move into different areas and provide with an opportunity to create a new niche market which will help them to deal with the period effectively (Anderson & Merna, 2003) Market share: Qantas Airlines will look at lowering its cost and continuously strive for new markets so that market share increases. This will be supported by the new product line which Qantas Airlines has identified and will help to formulate strategies to retain its market share (Solomon & Rabolt, 2004) Mature Maturity is a phase fro where the business starts its downward journey until new investments and innovations are provided. This is the top most point and will require development of new methodology to support growth else the business will move downwards and finally has to be shut down. Qantas Airlines has identified the following strategies to deal with the maturity phase Increased penetration: Qantas Airlines will look at increased penetration by tapping and entering new markets. This will be matched by addition and extension of new product line which will help to attract and retain more customers (Arnold, 2005). This will thereby provide an edge over competitors and will develop the business to move into other areas thereby ensuring better strategies to deal with maturing markets. Market expansion: Qantas Airlines will look to increase its market share by operating in other regions of the world especially Asia. Given the wide opportunities and growth rate which Asian economies like India & China is providing the options seems a lucrative one (Artto & Dietrich, 2004). This will help to further diversify risk and provide with an advantage as the already established brand image will ensure good returns for the business. This will help to further enhance the brand image and bring the change while looking to perform in a new market. Decline stage This is a stage where the returns become negative and the business starts to lose investment. If steps are not taking quickly at the juncture it would result in winding up of the organization. Qantas Airlines has identified the following strategies for this phase Harvesting: Qantas Airlines will look to cut cost so that customers can be provided with the same service at lower price. This will be matched by the ability to improve the short term cash flow and adding new additional features and service standard to the offerings. The overall impact will be towards reviving the business and looking to cut down cost Niche: Qantas Airlines will aim at the niche market where there is little competition so that they are able to tap customers easily. This will provide a new dimension to the business and bring a change in the working style which will help the business to develop strategies of growth and future opportunities. Qantas Airlines has thereby developed new products and services to deal with the different phases of the business. New Economy Market Qantas Airlines with the objective of being able to capture the new market has aimed at formulating the following strategies for the new markets it aims to work at Improve customer satisfaction: Qantas Airlines looks towards increased customer satisfaction by developing the new innovative offerings based on the customer needs and expectations (Cohen, 2006). Qantas Airlines looks to enhance the experience of the customer and thereby looks to develop the standards through which better customer experience can be enhanced. Increase promotions: Qantas Airlines will look at providing better incentives and packages to the customers. This will be matched through new promotions and offers so that better sales can be adjudged. Providing new lucrative offers and will help to develop a pool of loyal customers through which potential customers can be identified. Organizational Structure Organizational structure helps to establish the required authority responsibility relationship and helps to develop a process through which communication will take place. The form of organizational structure is dependent on the functional, product and marketing needs of the organization (Cateora, Mary & Graham, 2009). Qantas Airlines has looked to follow a functional form of organization as it facilitates quick decisions and provides an opportunity through which the work can be better synchronized. This is matched by a flat form of organizational structure which allows communication to take place between departments and employees even at higher levels (Beest, Braam & Boelens, 2009). This form of organizational structure also helps to carry out the different activities in different countries thereby helping better collaboration and confrontation of the work so that goals can be best achieved. This will help to develop an environment where employees in the workplace would work and contribute positively. Marketing Plan Based on the different inputs and areas that Qantas Airlines looks to adopt in time of crisis the following SWOT has been identified Strengths Huge operating base due to large number of fleets Has business over major destinations of the world High quality services Strong and loyal customer base Strong brand image due to long term association with the business Weaknesses Functions mostly in Australia and neighbor countries Increasing cultural differences among employees High infrastructure cost Difficulty in controlling international expansion Opportunities Opportunities to move into other areas like Asia Improving the quality of service and developing the product line so that leisure segment of the customers can be attracted Tying with other players to improve services Threats Increasing operational cost like fuel, labor and so on Competition from other airlines working on the same business models Complex government rules and policies The SWOT analysis has helped Qantas Airlines to identify the different areas to work on. This has also helped to formulate strategies pertaining to contingencies. Qantas Airlines has developed a contingency plan which will be used in case the main plan fails. The plan has been developed keeping in mind the main plan, the objectives and other areas through which operational efficiency will be gained (Sheth, Mittal & Newman, 2009). This will reduce the chances of failure and provide with an opportunity based on which the performance can be altered and improved. Marketing Metrics Qantas Airlines has to develop new methods through which customer satisfaction can be enhanced. This will require additional promotional offers, advertising, special incentive for loyal customers and so on (Rath, Bay, Petrizzi & Gill, 2008). The overall aim should be such that it helps to ensure easy acceptability of the product line extension and helps to develop the required areas and metrics through which customer value can be enhanced. Marketing Audit Marketing audit helps to check the performance and determines whether the organization has been able to use its resources in such a manner that the goals can be achieved. Qantas Airlines has identified the following marketing audit method Strategy Audit: This will look at regular checks so that deviations can be found and steps can be taken at the appropriate time to reduce wastage. This will increase the chances to be successful and will help to make changes as required. Objective Audit: This will look at both the short and long term objectives and determine the future resources which will be needed to provide quality services. This will be matched by proper analysis of the environment and ensuring that the objectives are achieved (Chew, Cheng & Petrovic-Lazarevic, 2006). Conclusion This report analyzes the marketing strategy for Qantas Airlines which will help the airlines to formulate, implement and develop marketing strategies based on the needs of the market. This report will formulate and lay stress on different angels and aspects like the market entry strategy; product life cycle position of Qantas Airlines; strategies in relation to pioneer or follower so that growth can be witnessed; strategies for the different phases of business like shakeout, growth and decline; the organizational structure; marketing metrics and marketing audit. This will thereby help to improve productivity and gains from the best use of the resources leading to better market gains and brand recognition. References Arnold, J. (2005). Work Psychology: Understanding human behaviour in the workplace 4th ed. Harlow: FT Prentice Hall. Anderson, K., & Merna, A. (2003). Project Management Strategy—project management represented as a process based set of management domains and the consequences for project management strategy. International Journal of Project Management, 21: 387– 393 Artto, A. & Dietrich, H., (2004). Strategic Business Management through Multiple Projects. 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Selling today: Building quality partnerships (8th ed.). Upper Saddle River, NJ: Prentice-Hall, Inc. Rath, P., Bay, S., Petrizzi, R., & Gill, P. (2008). The why of the buy: Consumer behavior and fashion marketing. New York: Fairchild Books, Inc. Sheth, J., Mittal, B., & Newman, B. (2009). Customer behavior: Consumer behavior and beyond. Mason, OH: Thomson South-Western. Solomon, M., & Rabolt, N. (2004). Consumer behavior in fashion. Upper Saddle River, NJ: Prentice Hall. Read More