Marketing Strategy for Qantas Airline Services - Case Study Example

Running Header: Report on Qantas Airline Services Surname: First Names: Student Number: Institution: Course Number: Course Name: Assignment Due Date: Table of Contents Table of Contents 2 Executive Summary 3 Situational analysis 4 Alternative 1 4 Undifferentiated product strategy 4 Gap analysis 4 Factors to be changed 5 Expected results 5 Implementation process 6 Problem solving 6 Alternative 2 7 Customization strategy 7 Gap analysis 7 Factors to be changed 7 Expected results 8 Implementation process 9 Problem solving 9 Recommendation 10 Gap analysis 10 Change to marketing strategy 10 Expected results 11 Strategy implementation 12 New strategy implementation 13 Management of change barriers 14 Problem solving 15 References 16 Executive Summary Situational analysis is an important of evaluating the company’s internal capability with regard to the environment in which the business operates in. this tool will be used to analyze the Qantas Airline Limited with regard to its business activities and how they are affected by the environment in which it is operating in. As discovered, earlier in the first report on the Qantas Airline, the company’s brand is fairly strong in the industry as opposed to the rest of the other airlines. The airline connects major cities in Australia and across the world and is based in the based in Sydney as its headquarters. By use of network agencies, the company has faired well in the industry because of its marketing in abroad. The research also found that major weakness of the company lies on its old brand, fleet and marketing strategies. Lack of good marketing strategies and external threats such as increase in fuel prices are key sources of company’s decline in market share. With regard to company’s strategy change, it has been found the company is on the run to regain its market share and remain the market leader. The two alternative strategies that have been identified for the company are use of undifferentiated product strategy and customization of service. However, the challenge for the company is to ensure that the implementation plan is done in order to ensure that all the strategies are made a success. The new strategy also implies that the company has to allocate enough resources in terms of finances and manpower for the implementation process. This is very important since the company’s ability to solve its problem greatly relies on how important they take the strategy implementation process. Situational analysis The Qantas airline is a local company based in Sydney Australia. The company in the recent years has experienced numerous challenges which have been contributed greatly by its decrease in the market share. This problem in August 2011 necessitated the need to change its strategy as one way of regaining back its position in the market. According to the chief executive officer (CEO), Alan Joyce, the company is experiencing this problem as a result of its higher operational cost which is about 20% higher as opposed to the other key competitors in the market (Virgin, 2011). Currently, the company has embarked in a five-year plan that will see the company regain its status of being one of the most profitable companies in the industry. The company is on the plan of opening new airlines to other parts of the world as well as offering premium airline services to its Australia global travelers. Alternative 1 Undifferentiated product strategy Gap analysis The current problem that is facing the business is decrease in the market share which has both threatened the company’s profits and capital base. One of the strategies that has been identified and that is expected to offer value to the customer and create more appeal is the use of the undifferentiated product strategy. The main reason of using this strategy is to ensure that a single product is developed that will create more appeal to the market. The main objective of the company is to provide airline services as its core task. This strategy is easy to use because it does not require much capital investment to execute (Lippitt, et al, 2005). This is because the company is able to mobilize all its resources for one common purpose. The cost of operation is greatly reduced in this strategy as result of specialization. And for this reason to invest and offer more of the service to the market rather than run so many activities that cannot be easily for business’ success. Factors to be changed However, to ensure that this strategy is made a success, some necessary changes in both the marketing mix and STP strategy have to be formulated by the company. For example, the prices need to be adjusted accordingly in line with the cost of service itself in order to reflect the true value of the product. In order for the customers to access the service, the company is also expected to design its internal structures in such as a way to accommodate good customer service that will ensure that the business is able to deliver the service not only as required but also where its required at the right time. Segmentation, targeting and position are very important tools in ensuring that this strategy is made a success (Skarke, et al 2001). This is because, first, the company has to identify whose customers are, and what they exactly require as well as how the product should be presented. This will be done by ensuring that all its services are readily available as when and where they are required. Expected results In terms of results, the strategy is expected to bring into board a number of different outcomes. First, it will be an obligation of the company, to cut down some of the cost expenditures in some activities that will not add value to the business as one way of getting to mobilize its resources to put the strategy into action. On the other hand, it will be for the benefit of the business to establish more service promotional channels such as both print and electronic media as a way of getting in touch with the target market (Kimchi, et al, 2005. The Qantas Company need also to identify the role advertising through the social media sites such as Facebook, twitter and YouTube can play for the business. The overall implication that the strategy will mean for the Qantas management is that internal restructuring such as the introduction of modern communication technology will be required. To some level, the management may be forced to hire or lay off some of its employees as one way of accommodating the new strategy. Implementation process The implementation process of this strategy requires that a number of considerations are made. First, the company must first identify its internal strengths and weaknesses that will affect the implementation process. Qantas airline is one such big company in the country which has a got a very strong brand and financial capability as some of its strengths. However, precautionary measures need to be put into consideration. This is important for the company since it will be able to manage any external threats which may include counter reactions by the rival companies like the Virgin airline. Back up ideas are supposed to ensure that the company is able to fully exploit the strategy without much problem. Setting of timeframes and strategy evaluation methods will ensure that the airline company is able to attain its goals within the stipulated time (Taneja, 2002). Problem solving As identified from the company report, the problem that is currently facing the company is decline in market share something that has been attributed to stiff competition which has been posed by the entry of new companies into the industry from both local and foreign countries. Therefore, to manage this problem, it is important for the company to provide a single product which they can offer and do it in the very best way in order to capture the Total Available Market (Mayer, 2007). This strategy is the most relevant way the company can use to reduce its cost of production, as cost has been cited as one of the major challenges the company is facing. Alternative 2 Customization strategy Gap analysis According to the press report of august 16th 2011, it is still clear that the company is yet to fully exploit the market by getting to know who its customers are and what do they expect. This strategy can be used in two different ways in order to bridge the gap that exists between the market and the airline company and they include either by use of product specialization or market specialization. Use of product specialization means that the company will choose to focus on a particular service that will be used to serve a large number of customers rather than offering a variety of service that are real not necessary and beneficial to the company (Mayer, 2007). This strategy is easy to apply and is less costly to the business as it only requires investment in one line. By, using this strategy, the Qantas airline is also able to reduce investment cost in so many products that are not appealing to the market and those other companies are doing best. Factors to be changed However, for the company to accommodate this strategy a number of changes need to be made by the company. First, the company must identify the cost of offering the service and the likely returns. This is important because it will determine the price the company will charge the customer for the service. Use of this strategy also implies that there are sufficient links between the customer that will ensure that the product that has been requested for has been available at the right time, place and price (Skytrax, 2009). The company is also expected to identify who is comprised of the market segment. For example with the case of Qantas airline there are a number of market segments that are served by the company both locally and internationally and they include: the business people, the students, the tourists and even the diplomats who are always in and out of the country. After the segmentation has been done, then the company will be able to determine who forms part of its target market and then strategize on how to position the company to meet the needs of that particular segment (Mayer, 2007). Let’s consider, for example the tourists segment. The company may position itself by ensuring it has in place some promotional activities such as offers and rewards for those customers who use their service during the peak seasons as one way of attracting the segment into its side. Expected results The ultimate goal of the company is to increase both its financial capability and market share. The resultant implication of this strategy in terms of the company finance is that it is easy for the company to plan and budget for a single product rather than mass of them. It is easy to evaluate and asses the possible returns by looking at the revenues generated from the sales. In terms of marketing, the company is likely to develop more specialized marketing expertise since all their resources, time and capabilities will be directed towards one line (Clarke, 2005). This way the company is likely to reduce its promotional and advertising activities and consequently the company operational cost. On the other hand, the company management will be expected to reduce its labor force size as the company will have reduced activities. This will mean that only those employees that are relevant to the new strategy are retained by the company. Implementation process The implementation process is one the most important stages in company strategy change. This is because, it’s the implementation stage that will ensure that the strategy is made a success or not. And for this reason, there is always need for the company to consider the strategy evaluation criteria that will be used to tell if the company is likely to achieve its objectives by using the strategy under consideration (Endsley & Garland, 2010). Another consideration that the company must make involves internal capabilities of the company to support the strategy and manage any threats that are likely to face it from the industry forces. For this alternative strategy to be sustained there is need for the company to invest in more research as one way of ensuring that the strategy is supported with new ideas that can make it more competitive in the market. Problem solving The current problem that is facing the Qantas Group is how to make company look more modern by offering both customer-focused and competitive aviation services. Given the stiff global competition in the aviation business, it is not easy for the company to engage in providing a wide range of services and yet remain the market leader. This is because capital required by the business to invest in provision of different business activities is enormous and can easily affect the company’s capital base (Clarke, 2005). However, use of this strategy of product specialization will enable the business to put more emphasis on what it can do best and put more of its effort to remain the market leader. Recommendation Gap analysis Given the current situation at the Qantas Group, it is evident that there exist the gap between the company and its customers. This is clearly demonstrated by decline in market share. Decline in market share simply means that the company is loosing some of its clients to the rival companies such as the Virgin airline in the industry who are able to offer them with services that satisfy their flight needs. One of the major gaps that have existed between the company and the market is lack of business diversity something that has been motivated by the fact that the company for over years has limited itself to Australia and therefore excluding those other potential clients who are foreigners. Expansion of the company services to other countries will ensure that the company is able to bridge the gap that exists with its customers (Endsley & Garland, 2010). The current operations of the company have limited the company to a very small customer base while the larger part of it remains unsatisfied. Global expansion of its services, the Qantas airline will be able to bridge the gap that currently exists with its customers by offering what is required to the market. Change to marketing strategy Change of marketing strategy in an organization, is always geared towards ensuring that the new business strategy that has been introduced by the business is well implemented. The most important factor to consider when designing the marketing strategy is the level of compatibility to the new business strategy and this requires that certain marketing elements also known as the marketing mix (4Ps) and the STP are considered. The 4Ps refer to product, place, price and promotion (Virgin, 2011). Therefore the whole essence of changing the marketing strategy at the Qantas Company is to ensure that the product or service is developed and well promoted. The marketing strategy should ensure that product is always made available whenever and wherever required at the most appropriate time. Marketing strategy should consider the effect of price change in the strategy implementation and therefore there is need to charge that price that is real reflective of the value the service has to offer. In order to fulfil its marketing concept, the Qantas Group must always ensure that the internal market team is ready to redesign and redirect its activities towards those points where the need and desire for a certain service exist (Mayer, 2007). To be able to do this, there is need for the company to engage more in carrying extensive market survey in order to identify the availability of the need and who real possesses the need. Market research will only be used as a tool to help the market team to segment the market and then target it. One way of meeting the market demands is by ensuring that the company is properly positioned in such away that whenever there is a need, it is satisfied immediately. Expected results Strategy change is always accompanied by different implications. There is need for the company management to identify the different implications the new implementation will bring into board. Recognition of different implications such as financial, marketing and managerial implications will play a very vital role in the success or failure of the strategy. This is because, it will be easy for the Qantas Company to budget for the strategy and allocate sufficient financial resources for its implementation. Financially, the management will be obligated to find out the ways of mobilizing the funds required for the implementation process (Clarke, 2005). Use of the above identified strategies will imply that the company must evaluate the internal capabilities in terms of skills and financial resources and whether they can be appropriate in the strategy implementation. If for example the company has got no enough resources for the strategy, then it is important for it to determine if to outsource some of the services such as technology and manpower to execute the strategy. Generally, the new strategy implies that there is need to establish that there are sufficient funds for the strategy and if not, then determine how to solicit funds for the project. Developing a proactive marketing team is one most important step the management must consider as away of establishing its capabilities to the new responsibilities. Strategy implementation Strategy implementation refers to the process of ensuring that a particular business change management is put into use. For the Qantas airline to make sure that strategy implementation is done in a more effective and efficient manner, the following considerations must be looked into as demonstrated by the Kottter’s eight step model: 1. Creation of a sense of urgency 2. Developing a guideline 3. Developing a vision for change 4. Communicating the vision 5. Empowering of a broad-based action 6. Generating short-term wins 7. Persistence to change management strategy 8. Transformation of the strategy into organizational culture In my own thought and as depicted in the Qantas Group, this model has been ignored completely. To demonstrate this, the airline, currently is operating under the urgency created by the decline in the market share something that ought to have been managed prior its occurrence. Strategy implementation is important since it will ensure that managerial problems which include: lack of clear company guideline, vision, communication process, action, short-term and long-term wins, persistence to change management and customization of the change into organizational culture are well tackled (Endsley & Garland, 2010). The airline is currently lacking the link between the business vision and the strategy. As indicated by Kotter’s Model these eight steps are key to success to strategy change implementation and lack of its recognition by the company explains the reason as to why the airline is not able to develop a long-term strategy that will ensure that customer demands are met in a more satisfactorily way. New strategy implementation Barriers refer to those obstacles that hinder the process of implementing the new strategy. These barriers require that extensive analysis is done by the management team in order to identify key challenges that are likely to be faced during the implementation process to make it easy for the management team to execute the change with little or no difficulties (UFAA, 2007). Some of the challenges that are likely to be encountered during change management implementation process include: 1. Poor organization structure 2. Lack of sufficient customer information 3. Inadequate market predictions 4. Facility overestimation 5. Lack of proper coordination 6. Lack of commitment by the management team 7. Low employee commitment 8. Failure to respect the action plan and its sustainability 9. Poor organizational communication procedures 10. Lack of clear link between vision and strategy Management of change barriers Table 1 below shows various barriers to change management and the ways in which their effect can be minimized. TYPE OF BARRIER EXAMPLE MINIMIZATION Organizational challenge Cognitive hurdle, Motivational hurdle, Resource hurdle, Political hurdle Establishing proper organizational structures that will take into account issues of motivation, allocation of enough resources and disengagement from political wars. Lack of customer information The customer needs, customer perception and the actual desire for the product by the customer. Undertaking extensive market survey in order to have a general view of the market dynamics. Inadequate prediction Failure to understand what the competitors have to offer, the strength of the brand and the price wars. Producing appropriate products that will meet the needs of the customer. Overestimation The ability of the facility, equipment and labour to handle change. Employee skills and management change processes. Carrying out proper estimation before undertaking a management change strategy. Lack of proper coordination Reporting, controlling and flexibility of the organizational structure. Establishing proper relationships that will allow adequate coordination. Lack of commitment by the management team. Lack of involvement and resource acquisition for change management. Determination by the management team to undertake strategy change Lack of employee commitment Unaware of the new strategies and lack of proper remuneration and incentives. Proper education and remuneration for the employees. Failure to respect the plan Lack of follow-ups, diverting from the actual plan without any action taken. Designing of performance measures Poor communication procedures Insufficient information and exclusion of key members to change implementation Establishing proper communication channels. Problem solving First and foremost thing to consider in strategy formulation is its ability to enable the business achieve both its short-term and long-term goals. The two recommendations that have been suggested as the company’s strategy are realistic, measureable and achievable within the accepted timeframe. For one, the strategies are cost friendly and provided the financial capability of the Qantas Company, then there is no doubt that this will be easy to execute and its objectives achieved (Boeing, 2011). Second, the strategies are also important in solving the current problem which is to regain both its market share and a position of being a market leader. This is because every customer who will desire to have the product will be attended to immediately. The implementation of the two strategies therefore is expected to be done in such away that all key factors such as cost and objectivity are maintained. References Boeing (2011). Boeing 787 will provide new solution to airlines. Retrieved Oct. 31 2011, from Clarke, E. (2005). Situational analysis grounded theory after the postmodern turn. Thousand Oaks: Sage. Endsley, R. & Garland, D. 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Washington: Transport research board. Virgin (2011). Skytrax Customer Service Award. Retrieved Oct. 31, 2011 from< http://www.virginaustralia.com/AboutUs/OurAwards/index.htm > Read More