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Published: 23rd March, 2015 Last Edited: 23rd March, 2015
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In todays world of intense competitive rivalry, strategic marketing decisions often turn out to be the vital distinguishing factors between industry leaders and the other market players. The strategic marketing decisions taken by organizations are the reflections of their marketing mix, i.e. 4 P's of marketing. Controlling these parameters, a marketing manager can emerge victorious overcoming the various organizational external and internal marketing constraints. Formulation of innovative marketing plans to win over new customers and retain old ones are carried out through proper implementation of the marketing mix (Klein, 2007). Qantas Airlines is the largest airline company in Australia enjoying a major dominance in the domestic market. It also carries a considerable number of people to and fro Australia. But, the recent years have witnessed a growth slowdown in Australia's hugely flourishing airlines industry, especially after the global financial meltdown. This has affected Qantas' market too. A sharply growing market competition is also a matter of concern. This study will analyse its current market, the target audience of the airline and its various marketing mix elements. Based on this initial study, the marketing mix would be paid a closer look and then, recommendations would be provided on improving the mix. The aim of the whole exercise is to help consolidate Qantas' position as the market leader (Onkvisit, 2008).
Qantas, the short form for "Queensland and North Territory Aerial Services", is the oldest airline company in Australian and the second oldest in the world. Based out of Sydney, the Qantas currently operates close to 5000 weekly flights across Australia, New Zealand, Africa, North America, South America, Europe and Asia, flying close to 50 global destinations. Nicknamed 'The flying Kangaroo', it is the largest Australian & global airlines and a charter member of the "One world Alliance". Qantas operates domestically under the brand name of QantasLink, which carries out 2000 flights crisscrossing the Australian continent. The Qantas group also operates a low fare airline named Jetstar and Qantas Freight, handling operations related to air cargo. Its other well known subsidiary is Jetconnect. The organization employs close to 35,000 personnel worldwide. Its total revenue for the current has been close to $16 billion, with a net income of $250 million, which is lesser than its previous year's figures. The recent global financial turmoil has hampered the smooth growth previously enjoyed by Qantas; the current year has witnessed it coming back strongly to reaching close to reclaiming its old financial position (Qantas Airways, 2012).
The main markets of Qantas consist of the international and domestic passengers that it carries to the various parts of Australia and the rest of the world. 80% of the passengers that Qantas' flies are between domestic destinations and the rest to international locations. The Australian airlines industry has an oligopolistic nature with relatively small numbers of players serving a huge passenger market. There are approximately 30 million annual passengers travelling in and out of Australia each year. However, the market is characterized by cut-throat competition (Qantas Airways, 2011). Of this huge market, Qantas enjoys a share of 20%. In 1978 it used to serve 42% of the market and even just more than a decade ago, the figure was ranging close to 35%. Evidently, the fall has been considerable. In this domain, its major competitors of Qantas are Singapore Airlines, Emirates, Cathay Pacific and Air China. Singapore Airlines happens to be ranked second after Qantas for carrying passengers in and out of Australia. Its market share has dipped from 10% to 9% within the last couple of years. Emirates Airlines rose from having a minor market share to capture close to its 8% currently. Cathay Pacific is maintaining a very slow but steady growth rate with a current market share of 5%. The market share of Air China generally fluctuates between 3% and 5%. The rest of the market is served by many other international airlines like British Airways, KLM, Lufthansa, Malaysian Airlines, Air Asia etc. (Qantas Airways, 2012)
In the Australian domestic airline market, QantasLink enjoys a gigantic 67% of the market share. The airline almost has a monopoly over the market. Around 60 regional locations in Australia are serviced by QantasLink. Its major competitors are Virgin Australia, Skywest Airlines and Regional Express Airlines. As a whole, despite competition in the domestic market, the popularity of QantasLink is beyond questions (Qantas Airways, 2011).
The market segmentation of Qantas airlines can be termed as complex, based on the fact that segments have varied needs, requirements and expectations. Behavioral segmentation is generally adopted by the airline for target market selection. Qantas positions its airline services as one that provides endless comfort and the topmost quality world class service (Quantas has always been ranked as one of the top airlines globally). Safety is another aspect that comes into focus. It is also portrayed as a stylish airline that the passengers would like to get associated with (Ansoff, 2007). The target audiences of Qantas are business travelers who are travelling in or outside Australia. This is further broken down into routine travelers, conference travelers or emergency business travelers. Also, the leisure travelers are targeted by the airline. Again, this gets broken down into weekend tourists and multiple destination travelers. The target audience of Qantas doesn't hesitate to pay for the luxuries provided by the airline. It has a very popular customer loyalty program, known as Qantas Frequent Flier. It is the most premier of its kind in Australia and has more than 9 million members. The programme is very effective towards drawing in frequent business travelers. For the leisure travelers, the flight booking systems, in-flight services, the meals, allocation of seats, additional guidance services, very high safety records etc. are the attributes that become the determining factors (Freeman, 2010).
With an increasing competitiveness in the airline industry Qantas pays immense importance to product planning. Products are crafted to attract new customers and hold on to the current ones. Profitability is held at a very high priority. The products of Qantas include either passenger travelling accommodations in their airlines or freight containers.
Basically, Qantas offers premium travelling arrangements. A range of flying arrangements is offered by Qantas. First class, international business class, international economy, premium economy. Various kinds of seating arrangements, in flight services, meals and amenities are provided in each class. Domestic flights have separate business and economy classes, with separate in-flight passenger entertainment services (Paul, 2011).
Qantas always tries to augment its products with better services. Flight information is available online or received from the company via SMS.
The company tries to add up sophisticated and more advanced aircrafts to its fleet at regular intervals. In-flight entertainment has been given a boost with more investments in them
Provides its customers with best connecting flights around the world
It conducts one of the most popular frequent flyer programs in the world
One of the topmost industry brand names, used for attracting millions of passengers. The company history, logo and slogan distinguish it from its industry rivals.
Better connecting flight, safer containers, one of the quickest routes through the world are offered (Hussey, 2012)
Qantas majorly uses 'cost plus margin' method of product pricing. Markets with more demands prompts higher pricing for Qantas. Competitive pricing methods are also uses
Penetrative pricing is used for its low cost airlines
Qantas provides price discounts without portraying them as discounts. This is to maintain the customer price perception.
Frequent flyer program offers fantastic customer benefits (Proctor, 2000)
Advertisement - TV, radio, internet advertising, billboards, brochures, magazines etc are used for the purposes of branding and product promotion. Direct marketing is used to send across messages. Messages are customized as per each customer, to hit them at a personal level. This strategy has so far been very successful. It has been far more effective than using mass media to send across mass communication messages (Jackacki, 2001).
Social networking, blogs, email marketing are used to get closer to customers
PR activities, sponsorships of sports and event art & entertainment related programs, involvement and sponsorship of various charitable programs etc (Healey, 2008)
Direct sales are conducted from Qantas counters at the airports
Qantas' own retail outlets are used for ticket sales
Internet is being used more increasingly. Company website and other travel stes are used to sell tickets
Telephone and mobile phones can be used to buy tickets
Travel agents (intermediaries) are used (Thompson, 2010)
Since the time of its inception about one hundred years ago, Qantas has always been one of the leading premium airlines in the world. It has ranked amongst the topmost airlines in providing world-class products and services to its customers. The recent years, however, has witnessed Qantas sinking from the former overall number one position to relatively lower ranks (currently, 8th position globally) and also in terms of profitability (Qantas airways, 2012). In the more recent years, with an increasing competition, the airlines around the world have focused strongly on their product strategies. Innovative and creative products & services form the basis of success for every brand and therefore, Qantas should stress more on it (Ansoff, 2007). The numbers of wide body aircrafts are currently limited with Qantas, which makes them fall behind brands like Qatar and Emirates. Wide bodied aircrafts provide enhanced comfort levels for every customer, along with increased privacy. With more people travelling to worldwide destinations, the provided meals should be ideally customized for every customer, which Qantas has not been able to incorporate into their services till now (Freeman, 2010). The economy class passengers have recently been complaining of getting deprived of the better services from in-flight crew. There have been problems arising related to luggage losses and flight delays to and from major world destinations. The aged customers often suffer during flights due to lack of proper health arrangements (some flights lack the health safety measures, as promoted). Qantas provides In-flight experiences in the form of movies, television programs, radio, CDs, audio books, games etc. Wireless in flight entertainment, internet surfing, mobile usage, telecommunications etc. are also provided. Loss of internet or mobile connection midair has been reported and personalized demands like separate kids entertainments or audio/video-on-demand is lacking (Paul, 2011). Numbers of magazines are also limited in numbers. The ground services of Qantas have also been criticized in the recent times as not living up to the level of excellence that the brand promises. The lounges at the major locations need partial or full revamping tin order to attract more customers and strengthen the brand name. Despite being a charter member of the One World Alliance, Qantas still has some lacking as far as joint services with other world renowned airlines is concerned. The connecting flights can be arranged better that way. More numbers of locations can also be covered that way. There are a few routes which Qantas is serving to, despite lack of proper demand and it should be corrected immediately. Qantas' low cost airline Jetstar has been positioned as a no-frills airline but tending more towards a regular airline, which is sometimes very confusing for customers, resulting in losing valuable customers/prospective customers (Thompson, 2010). the simple and yet high quality products expected at Jetstar often don't get delivered in the experience that it provides. Services to business customers should be crafted more intelligently. Queues at terminals, flight delays, luggage losses and better quality aircrafts are the aspects which should be paid immediate attention to. The factor of 'certainty', great customer relationship, consistency in company messages and transparency previously associated with Qantas is missing and steps should be adopted to mend these areas (Damsch, 2010). Qantas' pricing strategies should be looked deeply into. The recent global financial turmoil has harmed the airlines market all over the world. Every organization is trying to attract more numbers of customers to earn much needed profits. The recent financial losses of Qantas are a direct result of these two factors. Even a very strong brand image cannot command the premium prices that Qantas charges. Customers are opting for airlines which are lesser priced and even low cost. Qantas should pay attention to building a very strong brand and cutting prices (maintaining a lower profit margin) and portray them as customer benefits (frequent flyer) & offers and not as discounts (discounts tarnish brand image). Even in the markets with huge demands, the pricing should be kept competitive. This would not only nullify the chances of other airlines entering into the consumer Consideration Set, but also intrigue customers from lower price segments to experience Qantas (Hussey, 2012). Penetrative pricing had not been used very often by Qantas in the past and some of the growing markets have been lost that way, but it should be used now. Price skimming has become more difficult in the current years and thus penetration pricing along with strong brand image is a more preferable path for Qantas. The company should be more cautious about spending money on promotions as its recent 'Re-positioning' campaign of Qantas as 'Spirit of the Australians' have been criticized as a waste of money and a vain exercise. Internet is a low-cost medium and it has yet not been used to the fullest by Qantas. Presence of internet ads in strategic partners' sites or in the particular sites visited by target audiences, are not ample enough. Pop-up ads/ pop-down / rich content /flash ads are little in number. Its blog is not attractive and lacks customer response. Its Facebook page has been rapped as impersonal and mechanical, with the company being tagged as a 'dying octopus' (Jackacki, 2001). Qantas television ads are thrown blindly at the public instead of just at the target audience. Enough billboards are not being used at strategic locations and magazine ads are not enough in numbers & not hitting target audience properly. Sales promotion should be used through the year and direct marketing used more often than now. Stronger PR activities should be pursued along with sponsoring correct events (Fifield, 2012). BTL activities like expositions, conventions, exhibitions, tourism fairs etc are not attended in good numbers. Qantas direct sales counters are often seen to have long queues at the airport with the services being slow and not customer-friendly. The retail outlets of Qantas do not necessarily have the atmosphere to make customers comfortable, with a lack in numbers of experts present. Internet sales give maximum profit as the costs involved are the minimum, but Qantas model does not promote internet sales as required. Internet travel sites are not used enthusiastically for selling tickets and there have been many incidences of travel agents not pushing the Qantas tickets to their own customers. Telephone-sales have also slowed down in the recent times (Handlechner, 2008).
Revamped branding campaign to create stronger brands. Quality services should be meshed up with branding to retain old customers and gain new ones.
At least 25 new Airbus and Boeing wide bodied aircrafts needed to serve customers with excellence and with more frequent services. Customers would enjoy more privacy.
Lesser numbers of seats in each row. Maximum pushback and leg-space. Larger washrooms
Customization of aircraft meals as per customer request.
Luggage loss should be brought down to a minimum (Jones and Hill, 2009)
Excellent on-board health arrangements. Top class disability assistance (e.g. allowing service dogs in passenger cabins). Medical services to treat any emergency in midair. Elderly and the expectant mothers should get special care. Infants and young travelers need special attendance
Strategic alliances with more One World partners to crate unbroken networks throughout the world (already has with British Airways and planning with Emirates)
Build up more in-flight entertainment options and entertainment system (like Oryx). Uninterrupted mobile, internet, power outlet services. Video / audio on demand services required. Special entertainment programs for children. Just released movies (maybe on the very same day) required to be added in movie list. Latest and popular television programming should also be included. Prizes can be offered for answering question related to in-flight movies. More variety in magazine selection should be shown (Ulph, 2011)
Premium lounges should be revamped at Hong Kong, Los Angeles and Singapore
Better, more elaborate coverage of the South American sky
Focus on developing countries, especially BRIC nations, with penetration pricing
Frequent flyer needs to add up more customer benefits (highest flyer special benefit, premium cabins fetching double points, bonus gold or silver coins, epiQure launch etc.). quality service with benefits add up to brand loyalty
Jetstar should be positioned as no-frills. The best of no-frills, low cost services should be provided
Qantas needs to build up a brand stronger than ever to regain old glory (Ansoff, 2007)
Adoption of penetration pricing strategy for winning back the lost customers and gaining new ones. The developing nations can be easily penetrated with Qantas' renowned brand, quality service and pricing strategy
Loss leader pricing in very selected, low demand markets
Multi-unit pricing specially crafted for corporations
Market skimming should be cut down and limited to high demand markets
Prestige pricing for very high demand segment (Paul, 2011).
Strong, well thought out, branding exercise through selected TV ads focused particularly the target segments (Healey, 2008)
Huge stress on internet ads on travel and business related sites and other popular sites the sites visited by target audience (Yahoo, Google etc.). Pop-up/down ads, flash ads, rich content ads should be placed as much as possible. Posters and ads in the sites of strategic partners
Social networking revamp needed. Page should be informal, customer-friendly and attractive, prompting customer participation. Online community should be build through sites like Facebook and Twitter. Exchange of views, getting across company fun & lesser known facts through these sites. Latest happenings in companies should be announced through these. Blogs should be more informal and dealing with airline related subjects and act as a tool to win customers.
Billboards needed at more strategic locations (Jackacki, 2001)
Email marketing and newsletter sending should be given a boost.
Event sponsorships and participation in expos, conventions, fairs etc
Direct sales counters with better and faster customer-services
Retail outlets should have better ambience, design and colors
Internet sales should be paid the most importance to. Special discounts, bonuses, memberships for internet sales.
Popular travel sites should be associated with for greater sales
Travel agents should be offered awards and rewards for pushing Qantas sales
Telephone sales should be paid importance to (Freeman, 2010)
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