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Marketing: A Case Study On Qantas Airline

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Questions:

1. Consider the basic tools for conducting a marketing audit, like the SWOT and the PEST. How might Qantas use specific business tools to assist it to undertake formal marketing auditing and planning? Provide four examples. Note: do not describe the business tools at length, rather explain how they might be used?

2. Thinking specifically of the airline market, what are the most important factors in Qantas macro-environment? Briefly describe them and explain the reasons for their importance. Note: there is not a right or wrong answer – explain the reasons for choosing these as the most important factors?

3. Thinking specifically of the airline market, what are the most important factors in Qantas microenvironment? Briefly describe them and explain the reasons for their importance. Note: there is not a right or wrong answer – explain the reasons for choosing these as the most important factors?

4. How would Qantas position itself differently for its consumer and business markets? How could Qantas use marketing research and marketing intelligence to assist it to undertake marketing planning and implement marketing strategy for each of these two markets?.

5. How could Qantas use segmentation and specific segmentation variables like demographics, psychographics, buyer-graphics and geographics? Provide a specific example?

6. How could an understanding of market positioning be of assistance to Qantas for targeting its target segments?

7. How could an understanding of buyer behaviour be of assistance to Qantas? Provide a specific example of how Qantas could tailor its promotions based on buyer behaviour?

8. Why would Qantas undertake formal marketing auditing and marketing planning? What is the link between auditing, planning and corporate strategy? Note - do not simply discuss these broadly—apply the concepts directly to the Qantas case?
 

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Answers:

Introduction

Qantas is one of the largest airlines company founded in 1920, Australia. Qantas is known for the standard air fares and isknown for its domestics and international airlines.  Company is been revenue of more than 15.9 billion as per the 2013 report (Aaker, 2010).  Company has able to earn the net income worth of the 6 million. Recently company is been facing tough to survive in the businessbecause of the huge competition among the rival firms. The study will focus on the Qantas marketing strategies in recent years. Apart from that, study will also cover various marketing tools in order to assess the company major loopholes and the opportunities areas.  The study will also focuses on the USP of the Qantas in compare to its competitors (Qantas.com.au, 2015). Vision of the Qantas is long term whichis to operate the world’s best premium airlines. Mission of Qantas is to cater best low fare carrier in a global platform. Consistent customer service with excellence is another major mission of the company. Lastlycompany is alsofocusing on the safety which is their major priority and wanted to world achieve the best safety practices and reporting.

1. Marketing Audit tools

Qantas is going through very tough phase as the company is very much facing harder to survive in the current competitive scenario. Some of the major marketing’s tools such as PESTLE and SWOT are very much helpful analysing the loopholesareas and the opportunitiesareas which has been lacking the international business of Qantas (Adair, 2011).  Company has not been able to garner the large customer base in Asiapacific and Middle East nations because of pricing issues.

SWOT

 SWOT analysis of Qantas international

Figure 1: SWOT analysis of Qantas international

(Source: Adcock, 2010, pp-129)

Benefit of using SWOT

Some of the major benefits of the SWOT analysis are that it is less costly in compare to other tools. It is micro analysis and is generally known for internal analysis.  SWOT analysis is very much helpful in addressing the complex situations (Boone and Kurtz, 2012).  This would be helpful for the company byimproving the business without expense of an external consultant. It help in the understanding the businessbetter address the internal weakness which is high attrition attritions rates and is very much focus on the Australia.

On the other hand, capitalizing the opportunities which show that, company has international presence and has high brand value in term of value propositions (Bose, 2010). The SWOT analysis develops business goals and strategies for achieving them for the companies. However, it does not give enough scope for the complex issues and does not provide solutions.

PEST Analysis

PEST analysis on Qantas Airlines

Figure 2: PEST analysis on Qantas Airlines

(Source: Handlechner, 2008, pp-225)

Benefit of using PEST

From the above, it has been found that, PESTanalysis is very much helpful in gaining the external influences which affecting the company. Political scenario of the Australia is very much stable and helpful increasing the high brand value of the company (Harrell, 2008). Apart from that, PEST analysis will giveenough scope to measure the market growth andposition of the external factors which affecting theQantas. It is very much simple and is useful tool to analyse the external factors which are influencing the Qantas decision makings (Agrawal and Lal, 2007). PEST is verymuch useful and relevant for the larger and more complex organisations rather than small or medium sizeorganisations.  PEST analysis is currently modified into PESTLE.

 

2. Macro Environment factors for Qantas

Competitions factors

Porter’s five forces model is very much suitable for the larger organization and has globalisedbusiness whichwould helpful to analysis current competitors and the existing competitors along with chances of entering into the airline market of Australia (Aksoy et al. 2008). Porters five forces model gives the power of supplier, power of buyers and threats of substitutions along threat of new entry. The porter’s five forces mode shows the competitivepositioning of nations.

This theory is given by the Michaelporters in 1985 and was alsoappointed offer the presidents Ronald Reagan commissions on industrial competitiveness (Becker et al. 2009). However, there are some of the major drawbacks it is only used in the large organization and does not focus on the other than competitors factors. Apart from that, the model does not consider non market forces and is only applicable insimplemarketstructures (Qantas.com.au, 2015).

Five forces model

Analysis

Ratings

Barging power of suppliers

In airline industry, the supplier like Boeing and Airbus are only few suppliers who are being supplying manufacturing the aircraft. Apart from that there is cartel form in fuel of airlines by Middle east nations which creating problem for the company (Bendapudi and Leone, 2008).

Medium

Bargaining power of buyers

Buyers have now more options because of the rise in competition in airlines company (Bhattacharya and Korschun, 2008).As per their affordability and luxury customers can choose their preference of airlines.

High

 Threat of new entrants

 With rise in new airlines like Ryan airline Jet airways and Spice jet are taking high market share because of the low pricings strategies which is one of the major threats for the Qantas.

Low

Threat  of substitutes

With the presence of lots of international airlines like Etihad Airways and KLM, Lufthansa and British airways (Carpenter and Fairhurst, 2009), the competition in the international market is higher.

High


Pricingfactors

Pricing strategiesof Qantas airlines

Figure 3:  Pricing strategiesof Qantas airlines

(Source:Connell, 2008, pp-98)

Another major factor is pricing, As the Jet star is sellingits airfare in internationalmarket cheaper and with high quality’s. Since the increases in the cheaper airlinesin Asian nations has created problem for the company (Corstjens and Lal, 2008). With the help of Pricings strategies, Qantasmacrofactors shows that company is not able to gain high market share inthe internationalmarketsbecause as the people of Asia are very much pricesensitivity. Therefore, Airline Company which ever is charging lower is option for those airlines (Darke et al. 2008).

 

3. Micro Environments factor for Qantas international venture

Low salary: With low salaryand rise in the attrition has decreased the company goodwill in the international market (Dawarand  Philip, 2008). As Jet start is known for the economy pricing flights where the salary and wages of the pilot and attendeesare very much low in compare to its competitors like indigo and others.

Lack of technological advancement: Apart from the above, low technological advancement has decreased the customer base of the company (Patel, 2011). As the international customer like British airways, Etihad Airways and Emirates are some of the major companies are using ICT and mobile apps have to gain the large customer base.

 These two are the major factors which have been consideredbecause these two factors are helping to creates goodwill in the international market. Apart from that, lack of poor technological advancement has decrease the customer base as it provides powerful customer relationship management system (Darkeet al. 2008).

4. Qantas position for consumer marketing and business markets

Consumer Marketing: ForConsumer marketing, Qantas usesvarious typesof lucrative offers and theadvertisement in order to attract the customer base. Consumer marketing strategy of Qantas in Australia has made the company to monopoly in the Australian region in 1995-2004 (Corstjens and Lal, 2008).

Consumer marketing strategy of Qantas Airways

Advertisement: Company spends more than $ 3.5 million in advertisement every year in order to attract the customer’s base. Some of the major investment made by Qantas is in the promotional activities are as given below:

Promotional strategies

Expenditure (%)

Social media (Face book, Twitter, and YouTube)

58.01%

TV

32.02%

Websites

28%

Newspapers

21.03%

Magazines

14.11%

Offers, free discounts coupons

9.07%

 Expenditure conducted in International airways

Graph 1: Expenditure conducted in International airways

(Source: Boone and Kurtz, 2012, pp-128)

Brand Ambassador: Apart from the above, Qantas has signed Miranda Kerr as their domestic Brand Ambassador for their Australian branding. Apart from that, for global brand ambassador,Qantas has chosen John Travolta as their global ambassador (Becker et al. 2009). This has increase thebrand value of the Qantas as the John Travolta is popular Hollywood star across the globe (Qantas.com.au, 2015).

CSR activities:Qantas has been using fuel efficient plane by using Boeingdream lines 787is very much fuel efficient which is becauseof the Aerodynamic drag which has been used in jet Star.  Apart from that,it is very much associateswith theconserving the fossil fuel within the company thathelpstheorganisationsto saves the fuel which helps the organisation saving more than4.9millionofFuel per year (Bendapudi and Leone, 2008). This has decreased the sustainability issues in order to save the ecological balance. Customer today’s are very much associated with company who are using the sustainable and environmental friendly services

Business marketing:Qantasalso has B2B customer base.  In order to do so, company uses various form of tactic to attract the bulk suppliers. Oneof the major tactics of the Qantas for the international B2B business support is the tactics the companies by using low cost pricing strategies for carriages (Carpenter and Fairhurst, 2009). Apart from that , company also has increase  For international bulk customers, company uses donesellingstrategies which is are of narrowing a customer’sexpectations and matching them with more effectively with solution that fulfil their needs. As per the IATA data:

Scores

Results

Market perspectives of Jet star

6

Need more attentions

For postal companies and form the courier companies

8

Good

Export companies

7

Ok

Cheaper  but fails to reach in time by IT companies

9

Very good

Film exhibitor reels


PR media:
Company uses PR media to gain the positive response from the build supplier of carriages. PR media like Mango Australia is very much helpful to gain the large business base for the Qantas in terms of carriages.

 

5. Segmentations of the Qantas

Segmentation bases

 

Customers segment for Qantas international flights

Geographic

Region

Australia, Asia, Latin America, Europe

 

Density

Domestic and international (48.8 million)

 

Age

All age category

 

Gender

Male, females, family  and others

 

Income

High and Middle income groups

 

Occupation

Employees and professionals

Demographic

Social status

Working class, middle class and higher class

 

Family size

Single, nuclear, joint family

Psychographic

Lifestyle

Traditional and moderns

 

Occasions

Regular  and other Festive seasons

Behavioural

Benefits

Price advantages and various services under one roof  like B2B business

 

Occasions

Festive season , non festive season and for the employees professional


6. Targeting the customers base

Qantas international target customer in Asian region and South America regions. In order to position the brand within the customer mind, companyhas international goodwill brand ambassador John Travolta along with Miranda Kerr to create make the products more recognizable (Patel, 2011). Apart from that company has invested more in social media like Face book and the Twitter as the major needs for attracting the customers.

Age group for snacks food

Targeting (%)

8-18 (part of the family memebers)

10.11%

18-25

41.1%

25-40

48.1%

Above 40

23.3%

All

38.8%

 Target customer base of the QantasInternationalregion

Graph 2: Target customer base of the QantasInternationalregion

(Source: Patel, 2011, pp-149)

Target income group for international customer base

Income group per month of international customers base (Europe , UK and Asia)

Market shares (%)

$10,000

34.01%

$10,000-$20,000

28.09%

$20,000-$35000

31.03%

$35000-$40,0000

19.1%

$40,000-$50,000

11.08%

Above 50,000

-


From the above, it has been found that, major target market for the Qantas is medium level of income group rather than low level. Besides that, company is also targeting the family and professionals via using various offers and using loyalty card for lifelong for the every frequent fliers (The Australian, 2015).

Qantas has high market share in the domestic airlines with 2ndpositionbut company rank 11thposition in international regions. International passenger for major airlines in higher but company is not able to compete with the existingairlines company.

Airlines companies

Market share%

Qantas (Jet Star)

9.1%

Malaysian airlines

17.2%

Thai airways

8.8%

Virgin Australia

8.1%

Cathay pacific

7.9%

Air Asia

4.6%

Singapore airlines

3.8%

British airways

3.4%

Emirates

2.8%

AirNZ

2.5%


Market share of the Airline industry in regions

Graph 3: Market share of the Airline industry in regions

(Source: Padhi and Aggarwal, 2011, pp-734)

7. Buyingbehaviour of customers

 Four types of buying behavior

Figure 4: Four types of buying behavior

(Source: Dawarand  Philip, 2008, pp-82) 

From the above, complex buyingbehaviour is where the individual spends lots of item and is very much expensive or of high cost value like buying car or house. However, Qantas lies in the variety seeking buyingbehaviour, here, consumer are firstly  shop and considers various options  for buying the products or services (Darke et al. 2008). Customers after searching best deals and offers seeks to purchase the only that air fare in order to achieve maximum satisfactionslevel.

8. Consumer purchasing process

 Consumer purchasing process

Figure 5: Consumer purchasing process

(Source: Padhi and Aggarwal, 2011, pp-728)

Problems recognition:Qantas need to assess the problems for the customers which is affordable airfare and the quality service which is reaching at destinations at right time (ertr.tamu.edu, 2015). In this area Qantasneed to use the air fare use value pricingstrategies which will help to solve the problems of the consumers.

Information evaluations: At this reason company should look to adversities products in newspaper, at magazines and TV commercials. Oneof the mostparts of advertising would be Internet which is one of the much popular media (Rohlfs and Kimes, 2007).

Evaluation options: By giving low cost airfare with high quality service would attract the customer to choose the Jet Air in compare to the competitors.

Purchase decisions: After evaluations process, consumer will select the services, Qantasneeds to sell the service as per their promise given in advertisement. Apart from that make the easy payment options and give right kindof physical ambience (Padhi and Aggarwal, 2011).

From the above, it has been found that, E-CRM in order to help the large customer base. This will also help the company to reach to the large customer with 24/7 helpline. E-CRM will help to gain the company tracking the customer behaviour and accordingly make the services more customised. This will also help to match the behaviour with various offers.

9. Marketing audit, planning and corporate strategy of Qantas airways

 Qantas marketing plan and strategy

Figure 6: Qantas marketing plan and strategy

(Source: Corstjens and Lal, 2008, pp-282)

Marketing audit

Formal marketing audit Gives Companyto assess the actualcondition of the company performance in compare to its competitors and the external influenceswhich isneeded to be taken care (Carpenter and Fairhurst, 2009). External influence help the company play safely as per the external environment like political and economical situations changes.  Formal auditing will give the Qantas enough scope to make themarketing planning byanalysing the internal and external search and weakness of the itsown.

 

Marketing planning

Apart from that, the formalmarket audit will help the company to make the marketing plan and toset marketingobjective for the company.  For instance, company has spends more than 1 million in creating the innovating the advertisement in order to cater the large customer base. Marketing plan of the company comprises of various other strategies like onlinestrategy and off line strategy. Company is extensively catering online marketing planning for the European and the Australian customers (Bhattacharya and Korschun, 2008). However, in Asian region company is invested more in the TV commercials and news paper article to cater the large customer base. In the Asian region, most of the customer are been using the internet usually.

Corporate strategy

Lastly, marketing strategy like WOMO, and Social media are some of corporate strategy which company has made to capture the large customer base. All of these decisions are made at high level of the author for the Qantas (The Australian, 2015). Corporate strategy of marketing the products via cheap, pricing in Asian and region and price skimming in the European region are some for the major decision that is takenbut the board of directors of the company.

Conclusion

 From the above , study it has been found that, SWOT and PEST are one of the major sources of the marketingaudit too, which gives an internal and external factor which is influencing the Qantas. Apart from that, Qantas has able to create more than 48.8 million loyal customer base in all over the world. With help of targeting and position tools, Qantas spends on the advertisement and targeting only for the middle class people rather than the lower income group for the international regions. Lastly, with the help of formal marketing audit company will be able to under at the loopholes and strengths areas.

 

Reference list

Books

Aaker, D. (2010) Strategic Market Management: Global Perspectives. 6th ed. Oxford: Blackwell Publishing.

Adair, J. (2011) Effective Communication: The Most Important Management Skill of All. 5th ed. London: Prentice Hall.

Adcock, D. (2010) Marketing: Principles and practice.4th ed. London, Thousand Oaks CA: Sage Publication.

Boone, L. E. and Kurtz, D. L. (2012) Contemporary Marketing, Page 84, 7thed. New York: Kaplan Publishing.

Bose, C. (2010) Modern Marketing – Principles & Practice. . 5th ed. Mason: South-Western Cengage Learning.

Handlechner, M. (2008) Marketing strategy .5thed.Canada: Grin Verlag.

Harrell, G. (2008) Marketing: Communicating with Customers.4th ed. Germany: Grin Verlag.

Journals

Agrawal, D. and Lal, R. (2007) ‘Contractual Arrangements in Franchising: An Empirical Investigation’, Journal of Marketing Research 32(3): 213–221.

Aksoy, L. Groening, C., Keiningham, T. L. and Yalçın, A. (2008) “The Long-Term Stock Market Valuation of Customer Satisfaction,” Journal of Marketing, 72, 105–122.

Becker, U.J., Greve, G. and Albers, S. (2009) The impact of technological and organizational implementation of CRM on customer acquisition, maintenance, and retention. International Journal of Research in Marketing, 26(3), 207–215.

Bendapudi, N. and Leone, R. P. (2008) “Psychological Implications of Customer Participation in Co-Production,” Journal of Marketing, 67, 14–28.

Bhattacharya, C. B. and Korschun, D. (2008) Stakeholder marketing: Beyond the four Ps and the customer, Journal of Public Policy & Marketing, 27(1), 113–116

Carpenter, J. M. and Fairhurst, A. (2009) Consumer shopping value, satisfaction and loyalty for retail apparel brands. Journal of Fashion Marketing and Management, 9 (3), 256-269.

Connell, S. (2008) Travel broadens the mind — The case for international research. International Journal of Market Research, 44 (1), 97–106.

Corstjens, M. and Lal, R. (2008) Building store loyalty through store brands. Journal of Marketing Research, 37 281-291.

Darke, P. R., Ashworth, L. and Ritchie, R. J. B. (2008) Damage from corrective advertising: Causes and cures. Journal of Marketing, 72(6), 81–97.

Dawar, N. and  Philip P. (2008)  "Marketing  Universals:  Consumers'  Use  of  Brand  Name, Price,  Physical  Appearance,  and Retailer Reputation  as  Signals  of  Product Quality."'  Journal of Marketing, 58, 81-95.

Patel, P.C. (2011) Role of manufacturing flexibility in managing duality of formalization and environmental uncertainty in emerging firms. Journal of Operations Management, 29 (1–2), 143–162.

Padhi, S.S. &Aggarwal, V. (2011).Competitive revenue management for fixingquota and price hotel commodities under uncertainty. International Journal of Hospitality Management, 30(3): 725-734.

Rohlfs, K.V. &Kimes, S.E. (2007).Customers' Perceptions of Best Available Hotel Rates. Cornell Hospitality Quarterly, 48(2): 151-162.

Websites

ertr.tamu.edu, (2015).The search for and purchasing of an airline ticket. [online] Available at: https://ertr.tamu.edu/files/2013/03/enter2013_submission_30.pdf [Accessed 13 Jan. 2015].

Qantas.com.au, (2015).Flights to Australia | Australia travel | Qantas. [online] Available at: https://www.qantas.com.au/travel/airlines/home/in/en [Accessed 10 Jan. 2015].

The Australian, (2015).Qantas blames rivals for market share drop on routes to Australia. [online] Available at: https://www.theaustralian.com.au/business/aviation/qantas-blames-rivals-for-market-share-drop-on-routes-to-australia/story-e6frg95x-1226784446855 [Accessed 14 Jan. 2015].

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