Service Marketing of British Airways - Case Study Example

Service Marketing Executive Summary This report analyzes the flight services offered by British Airways (BA) using the 7ps of the marketing mix. The marketing of a service is different from that of a good owing to the intangibility and perishability characteristics of a service. A service is also produced and consumed at the same time therefore it has to include people who are very crucial in the perception of quality of the service consumer. The report analyzes how BA uses the concept of the extended marketing mix to deliver quality services to their clientele. The report findings point out that the marketing mix strategies of BA have been successful although the airline still needs to do a lot to remain ahead in a very competitive business environment. The report found out the marketing mix of people is the most significant challenge to BA in its bid to market itself more successfully as the airline of choice for those who need high quality services. The reports then recommend that BA should implement the following measures to improve their services: British Airways should streamline the boarding process for travellers by assisting them through the checking in process. To improve the interaction of customers with BA staff the report recommends that the airline seeks a permanent settlement to the labour disputes with its employees and also increase their remuneration package. The report also urges BA to offer their meals using high quality cutlery, improve their air conditioning systems and also offer free souvenirs as a send off gift to their customers To start flying to smaller airports and forming more alliances with other transport companies. Contents 1.0 Introduction 2 2.0 Extended Marketing Mix of British Airways 3 2.1 Products 3 2.2 Price 5 2.2.1 Objectives of BA’s Pricing Strategies 5 2.2.2 Pricing Strategies 6 2.3 Promotion 6 2.3.1 Sales Promotions 7 2.3.2 Advertising 7 2.3.3 Direct Market 7 2.4 Place 8 2.5 People 8 2.6 Process 10 2.8 Physical evidence 13 3.0 Recommendations 14 3.1 Process 14 3.2 People 14 3.3 Physical evidence 15 3.4 Place 15 4.0 Conclusion 16 References 17 1.0 Introduction The marketing of service is more complicated than that of a good as a service is intangible. It follows then that the marketing mix of service has to be more detailed and carefully chosen to influence the purchasing decisions of consumers of services. Every organization markets its services differently from its competitors in order to gain an edge over its competitors. Unlike a good whose marketing mix is limited to the 4 Ps of Product, Place, Promotion and Price the marketing of a service also includes the P of people, Physical environment and process. In this paper we look at how British Airways one of the most successful international airline uses the concept of the 7 P’s of the marketing mix to market its services across the globe. British airline Plc is an international airline registered in the United Kingdom. The company operates scheduled flight services to over 300 destinations across the globe. It is ranked among the best performing service companies in the world 2.0 Extended Marketing Mix of British Airways 2.1 Products A product is defined as something that satisfies the needs of customers. A service product is considered a package with features and benefits. BA’s service product is flights to various destinations to various cities in the world. British Airways is a leader in its industry sector in offering high quality services to its consumers. According to Le Bel (2005), a service offering is divided into three levels of a service; these are the basic package level, the augmented service level and the market communication level. At the service package level, BA’s core service is moving travellers from one destination to another. To satisfy its customers BA divides its services its flight services into Economy, Premium economy, Business and first class. By using this approach BA makes sure its services satisfy various segments of its customer base. BA uses the concept of the flower of service to ensure its customers service are up to the high standards expected by its consumers. Among the facilitating services at BA include online ordering that enables customers to book their flights online through a smooth process on its website. The website also provides detailed information about BA’s various service offering, while the airway keeps customers who have booked flights with them updated about the status of their flights. Payment and billing for BA’s service is done online through credit card payment making it easier for travellers who do not have to be inconvenienced in the process of changing currencies (Svensson 2006). In a competitive business environment a company must use several strategies to enhance their products to different them from those of competitors (Baghai, Smit and Viguerie 2009). Among the enhancing elements seen in BA service package include consultation where the airline consults its customers before the flight advising them on the best way to prepare for flight and offer in-flight directions on how to remain safe during the flight (Helkkula 2011). Secondly, BA uses exceptions to make the journey of people travelling with children more convenient. Thirdly, the hospitality of BA is world renown and their staff welcomes travellers warmly into their planes and they provide their customer with luxurious waiting lounges in the various airports they operate from in the world. British airways makes sure the luggage of their customers is well kept and in cases of misplacement the airline makes a concerted effort to return the bag to customers. At the Augmented service level the customer is involved in the production of a service (McKechnie, Grant and Golawala 2011). At BA the business travel class offers seats that can be converted to sleeping cots for their travellers. BA has also started offering onboard shower services for travellers in business and first class. At the market communication level BA uses several startergies to maintain its corporate image and have its customers spread good words about them. Word of mouth and in the age of internet reviews have become an important part of the service offering of any product (Sudhir and Reddy 2010). BA’s current slogan “British Airways. To fly. To serve” communicates the company’s commitment to satisfy its customers. To minimize the effect of service failure BA urges all its customers to first talk to their customer-relations department before taking any action. 2.2 Price A British airways uses a pricing strategy that charges customers according to the level of services they receive from the airline (Tiernan, Rhoades and Waguespack 2008). Pricing is where the business compensates it costs for provision of services while gaining a return on its investment. Customers expect the prices they are charged for services to be as close as is reasonably possible to the cost of producing the benefits to them. According to Avlonitis and Indounas (2007) the firms can use the pricing tripod model to balance between the costs of producing a service, the value created for customers and the prices charged by competitors for similar service offerings. BA uses various pricing strategies to realize various objectives in the market. These pricing strategies are: 2.2.1 Objectives of BA’s Pricing Strategies The main objective of BA’s pricing strategy is to increase the volume of revenue and thus maximize profits. To maintain and retain market share: BA aims to use the low-cost pricing objective to prevent its price sensitive customers from switching loyalties to other low cost carriers. To retain its brand image as a provider of high quality services. 2.2.2 Pricing Strategies 2.2.2.1 The Premium Strategy: This strategy is aimed at maintaining the market position of BA as one of the providers of high quality services in the market. In this pricing strategy BA offers high quality services at very high prices. Services in these price range means BA is able to provide fully flat beds, 18-channel or DVD entertainment, various choices of first class food so the travellers feel like they have not left the comfort of their homes. Other services include in-flight dining, in-flight lounges and private concierge on arrival. According Tiernan, Rhoades and Waguespack (2008) most customers who fly first class believe that the price charged for the service reflects their self-worth and it confirms they have made it in life. If British airways were to offer these services at lower prices than they would likely lose out on this price segment. 2.2.2.2 The moderate pricing strategy: In this pricing strategy reflects a balance on the quality and features of the service on a sliding scale. This pricing strategy is targeted at customers who need high quality services but are not prepared to pay premium prices (Avlonitis and Indounas 2007). 2.2.2.3 The Low price strategy: This pricing strategy is a reaction to the entry of low-budget airlines into the industry. To maintain its market positions BA offers the basic flight services with a few additional features. 2.3 Promotion This is a set of actions by the marketer of a product aimed at increasing demand for a service or product without making any changes to the other P’s of the marketing mix. It involves communicating persuasively with consumers to convince them to purchase a company’s services instead of other competing alternatives (Afridi 2009). Promotional activities include publicity, Sales, promotions and personal selling. 2.3.1 Sales Promotions A British airways uses various sales promotions to attract more customers and retain the existing ones. One of BA’s most popular sales promotions is the Christmas promotion dubbed “British Airways escape” which offers subsidised prices for flights during the Christmas season to select destinations. BA also provides prices as low as $49 for return flights for flights to European destinations. It also offers premium travellers opportunity to upgrade from Club World to first class at no additional costs. BA also offers customers who fly with the Airline a chance to redeem part of their airfare through the frequent flier program. 2.3.2 Advertising BA uses various media channels to advertise its services to potential consumers. BA’s print ads can be found on all popular newspaper in the destinations the airline flies to. British Airways uses TV, Radio, Print, Outdoor and online advertisement to reach various groups of consumer. BA uses the GRP (Gross rating points) of Media channels to select the most suitable channel to carry its advertising messages. According Afridi (2009) advertising makes people aware of the products availability in the market and influences their emotional perception of the product. 2.3.3 Direct Market Direct marketing involves the elimination of an intermediary in the marketing communication of a company to its customers. Direct marketing involves sending or communicating promotional materials to potential customers. It involves the sending of emails, telephone calls and short phone messages to people on a mailing list or a database. British airways always requests clients to create an account with them on their website if they want to be receiving market communication on various offers and service packages. BA alerts its clients of current offers through text messages and emails. In a show of consideration to customers concern of privacy, BA guarantees that the contact details stored in their database will not be used for any other purpose other than marketing communication. Users of BA online account have a chance to alter their profiles in order to fit their consumer preferences. 2.4 Place For a Company to effectively market its services it must create place and time utility for its services (Afridi 2009). BA has invested heavily in its website to ensure all its customers can complete their transactions at the convenience of their homes. The clients of BA can walk through the services the airline offers on their website or through various BA agent websites. Secondly, the process of selecting, booking and even confirming a seat at BA can be done online. Additionally, BA provides other services like booking of tours and hotels on its website to make sure that its clients can book a complete travel package without needing to navigate to another site. BA has also partnered with two other major airlines: Iberia and American Airlines and thus it will be able to take its customers to more destinations through connecting or direct flights without having to inconvenience them. 2.5 People Since the process of production of a service and that of consumption cannot be separated the people who deliver a service influence the final perception of a consumer of a product’s quality. For a service organization to realize total customer loyalty in the airline industry it must make sure their frontline staffs who come in direct contact with customers handle the interaction well (Meyer and Schwager 2007). The difference between whether a customer is satisfied with an airline service or not lies in the handling of his needs by the staff he comes in contact with (McKechnie, Grant and Golawala 2011). For an airline like BA that prides itself for superior customer service their staff must be competent, caring, have problem solving abilities, show goodwill to clients, be responsive to a customer’s queries and be reliable. To make sure its customers are satisfied by the services they receive from an organizations staff the organizations must first market itself to its employees (Babbar and Koufteros 2008). It is important that employees be aware of an organizations objective in service provision. British airway recently invested in changing their organizational culture. It also recently started a program to boost the morale of their staff as they have been affected by industrial disputes with the airline. BA has started profiting from the changes in human resource management and its workers are now welcoming to visitors and play a great part in enhancing the flight experience with the airline. The employees of BA that come into contact with the airlines customers are well trained and BA carries out training programs for the employees regularly. The staff involved in the customer service training program includes the airlines highly trained and skilled pilots, the ground staff with focus on terminal 5 at Heathrow airport, flight attendants and freight movers. The crew of BA are welcoming and their services have been described as excellent by most travellers who have used the airline. However, British airways have been faced with labour force unrest for a number of years. But since 2010 British airways launched the mixed fleet crews that have seen its rating for customer service improve significantly. 2.6 Process Process involves the process of various activities needed to complete the service experience for a customer. Process brings about the involvement of the customer in the production process of the service offering (Chen and Chang 2005). The process of service offering at BA involves different aspect of flower of service theory showing the amount of effort BA puts in offering a quality differentiated process to its customers Information gathering is the first part of the process most travellers engage in before deciding which airline to use. Changes in IT have meant information about flights and their prices is readily available over the internet. BA carries out extensive advertising to make sure as many as possible potential customers hear about the services they offer. Secondly, BA has one of the best designed and helpful website among all travel organization; this makes it easy for travellers to access the information they need about their flights. BA customers have three ways of knowing the exact description of the Services BA offers either through travel agencies, the Airlines call centre and through the internet. Consultation occurs when the customer needs to have something about the service offering elaborated further. Travellers who use travel agencies to book flights with BA expect their agencies to provide extra information about the flight services. BA has recently implemented a Mobile phone booking system where a customer who has booked a flight gets regular updates about the flight status. Order-taking at BA is a flawless online activity that allows customers to complete the booking of a flight from the confines of their homes. The online booking system at BA has some of the most effective staff in handling customer problems during the booking process. Most important, the staffs who work in the background of the booking process are very knowledgeable about the Airline’s services. After confirming the booking the service experience of BA’s customers begins. Sometimes, the airline provides shuttle services to bring its customers to the airport terminals. Once at the airport terminal the airline now is responsible for the comfort of the traveller, at which point BA provides its clients with comfortable waiting lounges. The airline’s staffs together with the airport staff checks the traveller’s luggage and his document in preparation for boarding. Once the traveller has been cleared to board the handling of his luggage is now taken care of by the airline which makes sure it’s safekeeping services are effective by employing individuals who deal only with luggage processing. After the sorting of luggage it is ferried to the plane. It is important for employees to get everything right while dealing with a customer luggage as any mishandling may spoil the luggage or lead to its loss at the airport. After the checking of hand luggage the customers are ferried to the plane parked on the airport tarmac. Once they are on-board they are met by friendly staff that welcome them and politely show them to their seats. In business and first section of the plane safekeeping services for hand-luggage and overcoats is provided by the hostesses. At this point of the process the crew offer their help to any customer who would like to know anything about the flight, the plane, usage of entertainment devices, how to adjust their seats and where various utilities like toilets are recorded. Once every traveller is seated the flight assistants explain the flight’s security procedure and depending on the communication from the Pilots inform the passengers of the time when the flight will be taking off or whether it will be delayed. Even though the airline provides earphones for each individual on the plane it also plays soft-classical music for its travellers over loudspeakers to ease the take off jitters. Soon after take-off the attendants start the process of entertaining the travellers using various means of entertainment for their visitors. Afterwards meals are served with the travellers in Business and first class given the option of choosing what they can eat from a menu while other classes of travellers are served with the same food. Business class travellers have more privileges than their counterparts in economy as they can access a lounge where they can choose from a wide range of drinks. To make sure they do not offer food that may negatively affect the health of any customer the flight attendants provide travellers with a description of the ingredients used in preparing the food. For client who express a reservation about a particular kind of food or ingredient a special alternative is offered. These exemptions to common service levels are most important to first class travellers who expect value for the premium price they have paid for the flight. Other services needed by travellers during the flight include toilets, provision of beddings and other utilities to make the flight comfortable. British airways in-flight crew are highly energised and complete this task efficiently while all the time smiling at customers. Apart from meal service exemptions the airlines also needs to make exemption for people travelling with infant; BA has implemented these by offering special seats and carrycots for free for travellers who are accompanied by toddlers. One of the processes that mark the culmination of BA’s service experience is the arrival and disembarking from the plane. The flight attendants make sure the travellers alight in an orderly manner by giving out instructions on how and where to get-off the plane. During the process of alighting from the plane the shilling attendants thank the travellers and bid them farewell. However, even after the travellers have arrived in their destination the airline staff still has to assist them get around the airport and avoid long queues while clearing at the immigration and custom office of their destination (McKechnie, Grant and Golawala 2011). At the destination airline baggage processing has to take place again and here also the ground crew must get everything right. BA’s ground crew make sure a customer’s luggage reaches them fast and with its content safely. In case a client’s baggage can’t be located client can talk to the airlines customer relations assistance that are at the floor of the airport. Once it’s confirmed that the luggage is missing the airline request the client to fill a luggage claim form detailing the contents and the address where the luggage will be delivered too once it is found. It is important for any company to include service recovery procedures in its service delivery process (Pranic and Roehl 2012). BA has trained its in-flight workers to handle any service crisis involving customers calmly and with an open mind even where customers are unreasonable, BA also provides customer care hotlines where customer can forward their complaint after the flight and the airline also carries out various surveys to find the levels of satisfaction of their clients with its services. 2.8 Physical evidence Any premium service provider must support the perception that the service they offer is quality by accompanying it with tangible physical cues. In the service environment of airline services physical evidence should add aesthetic and functionality to the service environment (Afridi 2009). In terms of physical environment BA’s plane are renewed every few years and the old ones sold out. Furthermore British airways overhauls the interiors of its airlines to make sure their travellers are comfortable and there are no eyes sores in the planes interior. BA was the first to introduce reclining seats that convert into a 6 feet by 6 inch bed. A British airway also offers spacious flight cabins and the width of the seats increases progressively from economy to first class. Additionally travellers can enjoy audio-visual entertainment on easy to operate screens mounted on seats, while listening in over high definition headphones. 3.0 Recommendations 3.1 Process British airways can improve the service experience of its travellers by making sure they do not undergo any unnecessary delays while boarding there planes. The airline should step up the level of assistance it gives it passengers at passport control to make sure the boarding procedure is hassle-free. On short flights the airline should minimize the number of checks needed to clear the passenger. It is difficult to streamline the boarding process for short distance travel as it has already been achieved by alternative means of travel like fast-speed trains. 3.2 People Even though British Airways staff have recently improved their attitude on board and most travellers express satisfaction with the airline’s staff they interact with, but the airline is still plagued by problems of industrial disputes. The airline needs to negotiate a long-term settlement with the workers union to avoid strikes that have led to service failure for the airline on multiple occasions. British Airways has also been accused of short changing its workforce by offering them low compensation for their services which soils the airlines images and affects staff morale. To boost staff morale the airline should introduce an attractive competitive package to ensure the employees are partners in BA’s objective of always putting customers first. Using the Cycle of success model BA can be able to ensure long-term success in the management of their workforce and therefore ensure they continue to achieve high levels of consumer satisfaction. The theory of cycle of success calls for extensive training of workers, wages above those of competitors, intensification in selection all aimed at achieving employee satisfaction which in turn leads to higher rates of customer satisfaction (Bamford and Xystouri 2005). Employee satisfaction leads to lower worker turnover which is also related to higher levels of customer loyalty. 3.3 Physical evidence To improve the physical evidence of its service quality BA should implement a number of measures. BA can apply the Mehrabian-Russell Stimulus-Response Model to enhance their service environment which proposes that by making their service environment more pleasant more customers will make return visits whereas unpleasant environment will lead to avoidance by present and potential customers of the airlines services (Lin 2010). First, the quality of the cutlery and crockery used to serve food on the flight should also be improved. Secondly, the airline should make sure that its air-conditioning system is working at all times to make as there have been complains about the quality of air in the airlines cabins. Finally, to make sure that its customers remain with a lasting image of the quality of the services offered by BA, the airline should offer free gifts of souvenirs like caps, model BA aircrafts and memorabilia like DVD’s of their advertising campaigns. 3.4 Place BA can improve the place marketing mix of its services by flying to smaller airports and forming more alliances with transport companies. Large airports are associated with overcrowding and thus passengers are delayed when boarding or alighting from their planes by flying to smaller airport BA can take advantage of lesser traffic making sure their customers do not have to spend too much time waiting in queues. Secondly, to make sure its customers are moved faster to their choice destinations BA should partner with bus companies, rail line operators and car hire companies so travellers who choose BA do not have to go through the additional hassle of looking for transport to and from the airport. 4.0 Conclusion To totally satisfy the customers who choose to fly with BA and influence others to choose BA as their preferred airline, BA must carefully design its services with considerations for each of the extended P’s of the marketing mix. It is clear that BA has excelled in providing quality customer service but more still needs to be done as more airlines are realizing the same service levels offered by BA. By implementing the recommendations discussed above BA can profoundly improve the service quality and the perception of their services by travellers and thus remain a leader in provision of quality travel services to air travellers. 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