Qantas Strategic Focus - Case Study Example

Qantas’ Strategic Focus Name: Institution: Date: Background to the topic Strategic marketing decisions are the game changers in today’s competitive business world. Strategic marketing decisions undertaken by organizations are manifested in the marketing mix (4 P’s of Marketing). The management has to overcome both international and external barriers to effective marketing. Coming up with innovative marketing plans with the objective of winning new customers as well as building loyalty in old customers are achieved through the implementation of the proper marketing mix (Armstrong, Adam, Denize & Kotler, 2014). Market research is important in gathering and analyzing information that can assist in marketing decisions. Market strategies have to be developed based on some verified data about the market. The information need has to be identified by the company. Introduction Qantas is the largest airline within Australia dominating the domestic market. It also transports people outside Australia boundaries. Slow growth in the Australian airline industry has been witnessed particularly following the global financial crisis. This has also affected Qantas as one of the airlines operating in Australia. Increased competition in the market is also a matter of concern for Qantas. The collapse of Ansett airline made Qantas complacent until the emergence of other rivals into the market. Qantas has an opportunity to grow its market in the international level and tap into developing countries where it can be a formidable brand. This essay discusses Qantas application of its marketing plan and critiques its influence on product, price, promotion, and place. Theoretical framework The marketing mix describes the way a company uses its resources to make its product reach the final consumer. The marketing mix is the type of choices that corporations make in bringing the service or product into the market. A company uses different tactics to product the brand of a product in the market. The 4Ps marketing model involves the enhancement of the marketing mix component (Pike & Page, 2014). It helps in the definition of the marketing options available with regard to product, price, place, and promotion in order to meet the presence needs of customers. The marketing initiative of any organization has to consider have to improve the marketing mix that involves the 4Ps. The impacts of the marketing initiative of the firm on its: 1. Product Product is the item or service that is being packaged for sale in the market. Due to increasing competition in the airline industry, Qantas has focused much on product planning. Profitability is apriority in product planning. Qantas comes up with products that attract and retain customers from a specific market segment. Qantas provides premium arrangements for travelling. The company enjoys 80% of the domestic market share and serves 60 regional locations within Australia (Ataman, Van Heerde & Mela, 2010). Varying flying arrangements are provided by Qantas which includes international class, first class, premium economy, and international economy. The company tries to augments its products with superb services. The company has added more advanced and sophisticated aircrafts to its fleet at strategic intervals. The generic products for the company are provisions of a container (freight) or seat (passenger). The passenger side is organized on the basis of time of arrival or departure, direct flights, number or stops and the type of the aircraft. The company enhances its basic product through possessing the best connecting airline. Comfort bases features comprises of lounges, in-flight drinks and meals, seat width and in-flight entertainment. The freight products are enhanced through handling efficiency, frequency and routing (Díaz & Martín-Consuegra, 2016). Qantas product has been positioned as a leading brand in Australia. The brand name of the company distinguishes it from its competitors within Australia. Domestic flights possess distinct economy and business classes with separate in-flight passenger entertainment services. Qantas has to revitalize its branding campaign with the purpose of creating a stronger brand that can be successfully sold internationally. Quality service has to be complemented with branding to win new customers and retail the old ones. The company has to expand its fleet by buying more aircraft with enhanced comfort. The number of seats in a row has to be reduced to ensure maximum leg and pushback space (Ataman, Van Heerde & Mela, 2010). The meals during flights have to be customized according to the request of the customer for premium services. The company has to ensure consistency its quality of standards to retail customers and attract new ones through referrals. 2. Price Price is the value that is put in a particular product. The company witnessed tailwinds within the operating environment including lower fuel prices as well as weaker Australian dollar. Price is very important in the marketing plan. Previously prices were regulated through International Air Transport Association (IATA) and Airlines Agreement that proposed a formula for all fares on the basis of flag fall as well as distance. The prices that are applied by Qantas comprise of costs plus margin, market and competition based. Using the market approach demand is matched by the existing supply to determine Qantas fares and this method is common (Díaz & Martín-Consuegra, 2016). Cost plus margin involves determination of the cost of production and then adding a margin for profit. Competition based involves watching what the competitors are charging before fixing the fares. Following Ansett collapse the domestic flights of Qantas have not been influenced by competition. The company is not forced to be competitive as compared to early 2001 when Ansett was operating together with Impulse. However, Qantas is bound to face more competition following the merging of Patrick Corporation and Virgin Blue. Qantas uses several pricing strategies in its operations. Price penetration strategy is deployed by its new low cost Asian Airline. The strategy is used to penetrate the existing market. The company also uses full fares targeting business travellers where there is flexibility and fares can be changed or refunded. Fare refunding offers flexibility to the customers to change their flights, destination or departure time (Pike & Page, 2014). Qantas offers price discounts subtly without positioning them as discounts. This has the objective of maintaining the customer price perception. Promotional fares are not advertised but quoted as a price. They are provided in the economy class during low demands in order to match competitors’ aggressiveness. The company has to use penetration pricing strategy with the objective of winning back customers who had defected and getting new ones. Qantas can use its renowned brand to penetrate the international market particularly the developing nations. Multi-unit pricing has to target corporations. Market skimming has to be reduced and focused in high demand markets. Prestige pricing has to be tailored towards high demand segment (Díaz & Martín-Consuegra, 2016 The television ads have to be tailored to a specific group of people instead of being general. 3. Promotion Promotion describes the means that an organization uses to communicate its products as well as image to the potential customers. It encompasses all the activities that are performed to make the product known to the customer. Qantas made use of advertising agencies in creating media advertisements for magazines, television, posters, newspapers, brochures, radios and billboards (Von Bergen & Miles, 2015). The company also attempted to avoid blanket marketing like the use of billboards and employ direct marketing strategies particular to corporations. Personal selling was done using sales representatives who sold directly to travel agents, government departments and businesses. Publicity was used in enhancing the image of Qantas via news releases, interviews, conferences, and feature articles in media. Sales promotions have been used during the times of subdued demand. The company has segment the target market into four variables that includes gender, age, social class and occupation. The company has distinct markets for Jetstar and Qantas. Qantas services target business and corporate clients who are wealthier (Ataman, Van Heerde & Mela, 2010). Jetstar targets low income earners for customers with a budget and do not need prestige aviation service. The company has set up international and domestic fliers with alliance partners with the objective of reaching out to people from diverse backgrounds. The internet advertising strategy has to be used more due to its low cost and potential of reaching out to a diverse clientele. The company has to invest more in social networking. Qantas page has to be informal, attractive and customer-friendly enhancing customer participation. The company has to promptly respond to customers’ grievances and queries on social networking sites like twitter and Facebook (Von Bergen & Miles, 2015). Social Billboards have to be erected at strategic locations to increase visibility. The company has to use stronger public relations activities to sell its brand within and outside Australia. 4. Place (distribution) Place in marketing describes the point of sale. The major markets for Qantas consists of both domestic and international passengers carried to various parts within Australia and internationally. Approximately 80% of the company’s passenger’s flights are in domestic destinations while the rest are international (Pike & Page, 2014). The industry is oligopolistic in nature where few airline industries serve a huge market of passengers. Qantas uses various direct and indirect ways in its distribution strategy to reach the customers. The company uses direct sales through its retail outlets. Qantas has a chain of wholly owned travel centers known as Qantas Holidays. It is the largest travel wholesaler within Australia. The company also uses direct ways like telephone sales centers, airport ticket sales, and the internet has become an important low cost medium for promotional fares. The company also uses indirect ways through intermediaries. The common intermediaries used are the travel agents (Ataman, Van Heerde & Mela, 2010). The company is careful concerning the person or corporate used to resell its products. Qantas sources for intermediaries who have a good reputation, expertise and financial strength. The travel agents receive a commission for their work hence reducing revenue for the company. The retail outlets have to be augmented with colours, design and ambience. Direct sales customer must have better as well as faster customer services. Internet sales have to be encouraged though offering bonuses, discounts, and members for internet sales. Travel agents have to be remunerated highly and rewarded for pushing Qantas products. Greater sales have to be concentrated within popular travel sites (Luan & Sudhir, 2010). The company has also to pay attention to telephone sales to increase its revenues. The company has to focus its growth strategy in the international market and avoid concentrating majorly on the domestic market. Practical Implications Since its inception Qantas has been one of the leading airlines in the world. It is an important airline offering world-class products as well as services to its customers. The company has to design new promotional campaigns designed to sustain interest and invoke interest in new customers. Most of the time the old message used in promotion gets worn out and needs reinvention to sustain interest. Growth of the international market will help Qantas to diversify geographical in case of any strive in the domestic market. Differentiation of the product and enhancement of quality service will retail old customers and gain new ones. Diversification reduces risk and increases the customer base (Pike & Page, 2014). Enhances quality services will expand the domestic customer base amidst increased competition from new entrants. Market segmentation has helped Qantas to reach to reach to certain type of customer and maximizes its sales revenue. Summary and Conclusion Qantas has dominated the domestic market in Australia for a long period. A review of its marketing plans shows some gaps that need to be bridged in order for the company to compete effectively domestically and internationally. The market mix shows a great attempt by the company to package its product and sell to the customers. Product differentiation and enhancing quality service will increase the customer base of Qantas and give it a competitive edge over the other players in the market. Promotion has to be tailored towards specific audience in the market and general ads avoided. Market segmentation is important in addressing the diverse needs of customers in the market. Good use of 4Ps of marketing model will enhance the growth of Qantas brand in the market. The marketing plan of the company has to implement strategies that address the needs of the customers. The critique of the marketing plan exposes some of the areas that need improvement. The issues raised have to be addressed keenly to ensure effectiveness. Increased competition calls for innovation and improved quality of service to retain customers and win others. References Armstrong, G., Adam, S., Denize, S., & Kotler, P. (2014). Principles of marketing. Melbourne: Pearson Australia. Ataman, M. B., Van Heerde, H. J., & Mela, C. F. (2010). The long-term effect of marketing strategy on brand sales. Journal of Marketing Research, 47(5), 866-882. Díaz, E., & Martín-Consuegra, D. (2016). A latent class segmentation analysis of airlines based on website evaluation. Journal of Air Transport Management, 55, 20-40. Luan, Y. J., & Sudhir, K. (2010). Forecasting marketing-mix responsiveness for new products. Journal of Marketing Research, 47(3), 444-457. Pike, S., & Page, S. J. (2014). Destination Marketing Organizations and destination marketing: A narrative analysis of the literature. Tourism Management, 41, 202-227. Von Bergen, C. W., & Miles, M. P. (2015). Social negative option marketing: a partial response to one of Spotswood, French, Tapp and Stead’s (2012) “uncomfortable questions” Journal of Social Marketing, 5(2), 125-138. Read More