Strategies of Qantas Airlines to Mitigate Risks to a Considerable Extent - Example

EXECUTIVE SUMMARY This report focuses on a complete marketing plan for Qantas Airlines in order to achieve its goals and objectives with lesser efforts and in a systematic manner. The report throws light on the various stages of product life cycle and different strategies which can be implemented by Qantas Airlines to mitigate risks to a considerable extent. Current situations and past activities identifies that Qantas Airlines is more likely to follow a pioneer strategy and emerge as market leader. Product life cycle of Qantas Airline indicates the company to be in the growth phase and enjoy higher profits with new innovations in its working style. The company mainly focuses on providing superior quality travel services and is more likely to follow a functional organizational structure for quick decision making. Qantas Airlines is more likely to adopt a strategy and objective audit techniques to ensure more effectiveness in its working style and ensure timely completion of its short term plans and objectives. Qantas Airlines is looking to tap the Asian market and bring new innovations in its existing service to deliver customers with a life time travelling experience and focus on customer satisfaction to increase its market share and build its own brand image. TABLE OF CONTENTS Introduction 3 Products and services of Qantas Airlines 3 Product life cycle 4 New market entry 6 Pioneer or follower strategy 8 Growth strategy 9 Shakeout, mature and decline strategy 10 New economy market 13 Organizational structure 14 Marketing plan 15 Marketing metrics 16 Marketing audit 17 Conclusion 18 References 19 INTRODUCTION This report highlights the complete marketing strategy of Qantas Airlines, one of the largest airlines of Australia and focuses on formulating, implementing and measuring the marketing strategies in a logical manner. In order to develop an appropriate marketing strategy various aspects has been considered minutely which includes market entry strategies, product life cycle of Qantas Airlines and current position of the company along with strategies it needs to develop to gain maximum advantage, identifying whether Qantas Airlines looks to follow a pioneer or a follower’s strategy with different strategies for different phases pertaining to growth, shakeout, mature and decline stages of a product life cycle. The report further throws light on the organizational structure suitable for the company along with marketing plan, marketing metrics and concluding with marketing audit to check the overall impact on the organization. The report has been designed with a motive of helping Qantas Airlines to increase it productivity, gain optimal benefits from its resources and ensure to develop superior quality and innovative performance for the company to emerge as a market leader and gain higher returns, profits and brand recognition. PRODUCTS AND SERVICES OF QANTAS AIRLINES Qantas Airlines is today regarded as the one the leading airlines in Australia and came into operation during the 1920’s. The company aims in providing safety, reliability, engineering and maintenance and excellent customer service and satisfaction. The company operates on a number of strategies, like the corporate strategy which focuses on the scope and resource deployment of Qantas, the business level strategy which focuses on sustainable developments and competitive edge over its rivals (Flight Global. 2010). The company’s main business is providing transportation to its customers using two complementary air brands Qantas and Jetstar. Lastly, functional strategies to look after the accomplishment of company objectives within a specific service market. Apart from customer transportation in its own brands the company also focuses on providing aircraft services, courier services, catering services etc. The company connects over 40 countries across the globe and provides employment to over 33000 employees globally. In order to make its services easily available Qantas has opened its own windows in leading airports and appointed many agencies and travel agents to boost up the sales of the company. Mission and Vision of Qantas Airlines From the very inception of foundation of Qantas Airlines the company aimed in providing best quality services to its customers in every aspects of its product line. Customer satisfaction has been always ensured and efforts are made to deliver superior quality services to its customers. Qantas vision to emerge as the world’s global leader in airlines business is always aimed by setting short term goals and regular evaluation of the same. The company has already made it services available in major parts of the globe covering over 40 countries and efforts have been directed to enlarge the same (Qantas Airways, 2011). Market share and business growth rate had been phenomenal with equal focus and advancement in use of latest technology to provide its customers with comfortable travelling experience and creating brand loyalty and brand image of its own. Qantas has aimed to “earn goodwill” rather than “purchase goodwill” and efforts are directed to achieve the same in future years to come. PRODUCT LIFE CYCLE Every product has its own life cycle and it is important for management to identify the stage or phase of the product life cycle in which the product lies and develop strategies accordingly to gain maximum advantage of the available resources and strengthen its position in the market. A complete analysis of product life cycle is discussed as under Introduction Stage: This is the first stage of the product life cycle and is usually when the new product or service actually comes into picture and is launched in the market. This stage requires intense marketing strategies to promote the benefits of the products and create awareness about the product or service (Bangs, 2002). Continuous investments are required to make people more and more familiar with the product and the added advantage of the product over the already existing products and services available in the market (Luther, 2010). Growth Stage: This stage involves higher returns with lower risks, the product life cycle takes an upward curve indicating brand recognition, higher sales, higher revenue and overall growth of the product or service (Bangs, 2002). Organizations tends to enjoy supernormal profits and it further provides opportunity to build a larger capital base and develop strategies accordingly to ensure more profits and returns in future years. Maturity Stage: This stage is characterized when the product or service reaches its zenith and the product life cycle tends to show a fall in the next stage. This stage requires intense management capabilities to bring new features and innovation to cover the present stage into a new growth stage (Bangs, 2002). Business is often stagnated in this stage with threats of decreasing profits in future years. Decline Stage: This is the last stage of product life cycle when there is a continuous dip in the product life cycle curve (Bangs, 2002). Profits fall sharply in spite of higher investments. Organizations tends to come out of this stage by ultimate closing of the business to save investments and looking for a new product or service in the same or different product line. Qantas Airlines looks to be in the second stage of the product life cycle i.e. Growth stage where the company has been able to generate higher returns from its quality services provided. Its current revenue is over 15.7 billion Australian dollars with an operating profit of over 3.01 billion Australian dollars. However it is to be noted that the company is heading towards maturity stage and shall reach the same in few years to come. Qantas in order to enjoy the same profits and keep itself in the growth stage requires more innovation and added features in its existing product line and services offered (Hamel & Prahalad, 1994). Qantas should look to develop new strategies to ensure maximum advantage of its available resources. Quality at no cost should be compromised for higher returns and continuous efforts are required to create more loyal customers and strengthen its brand image. NEW MARKET ENTRY New market entry has great significance for any organization in this fast dynamic environment. It focuses on the way an organization looks to develop strategies for its future projects and success. Qantas Airlines has already made its presence in over 40 countries and has emerged as the leader in Australian economy. Qantas looks towards identifying a new technique or mechanism to enter into a new market or introduce a new product or service out of the box. There are various ways an organization can look for new market entry by targeting a completely new market or adding new products or adding new features to the existing products or services or aiming a cost reduction strategy to higher profits or repositioning its existing products and services to create a larger market base (Ireland, Hoskisson, and Hitt, 2007). It is to be noted that each such strategy is basically aimed to move the business from its existing style to completely new format and ensure higher sales or returns, and success for the organization in a better and systematic manner. Qantas airlines with an outlook to generate more business with higher returns and larger market share shall look to identify the following new market entry mechanism based on its experience and current market position which has been discussed as under. Qantas Airlines aims at repositioning its existing services and products in a different manner. The company is looking to add luxury services even in economy class of its services offered. The company shall look to provide extra comforts and luxuries with a minimum hike in its existing prices. Qantas is looking to introduce new airplanes with extra leg space to comfort seating and use technology to place televisions and music systems connected to each system with an aim of providing a memorable travelling experience to its customers. Qantas in order to increase its market share is looking to expand its services in new untapped Asian markets of India, China, etc. Further courier services offered by the company will be strengthen to provide the same in Asian countries as well. Expanding the business in Asian countries will indeed help Qantas airlines to boost up its sales and expand market share with higher returns and profits. The company through its renowned brand image shall indeed emerge as a tough competitor to other Asian airline companies and make it presence felt in a better and systematic manner. PIONEER OR FOLLOWER STRATEGY Every organization through its strategies most suitable for its success endeavor to follows either a pioneer or follower outlook. A pioneer is someone who is more inclined towards innovations. A pioneer develops strategy to emerge itself as different from existing in the environment. Degree of risk is on the higher side of being failed however with higher risks they are rewarded with other to follow their strategy. A follower on the other hand is someone who prefers a business model already successfully implemented by a pioneer. The chances of failure are lower and with lower risks the returns are lower as well. A follower indeed follows the path already laid down by a pioneer. Qantas Airlines looks to follow a pioneer strategy owing to its brand image already created and loyal customers. Further the company has always aimed to bring new innovations and set examples for others to follow in the industry. On basis of the strategies which Qantas Airlines follow the following pioneer strategies are best suited for the organization. Qantas Airlines looks to target a niche market. With the company bringing in new technology to provide a luxury and memorable travelling experience to its customers and ensuring a higher level of customer satisfaction (Hoffman, 2010). Qantas is looking for a complete new change towards a pioneer strategy to widen the leg space in seating zones of economy class in its airplanes with added facilities of television, route maps and stereo systems for complete relaxation and entertainment to its customers. Qantas Airline aims at a skimming strategy to develop new products and provide new services in a different manner as per customer demand and satisfaction. Further skimming will help management to target the niche market in a better and effective manner and set higher standards as benchmarks (Justin, 2008). It shall help the company to create more loyal customers and optimum utilization of its available resources in a more productive and systematic manner. GROWTH STRATEGY Growth strategies play a significant role in future development of an organization. An organization based on its capabilities, risk taking, resources and future goals and objectives can decide to choose itself as a leader or a follower. Deciding on the two available options an organization can further provide a direction to its current undertakings. An organization which decides to work as a leader is more inclined towards new innovation and prune to higher risks and returns. It looks to develop strategies like market expansion, flanker, confrontation, fortress and contraction strategies (Cateora, Mary & Graham, 2009). On the other hand an organisation which decides to choose and become a follower takes lower risks and achieves lower returns. It decides upon various follower’s strategies like gorilla, frontal, leapfrog, flank or encirclement strategies. It is to be noted the basic objective remains the same to gain more benefits and overall growth of the organisation. Qantas Airlines had always been innovative in its thoughts and always looked towards pioneer strategies and aims to reposition its products and further enlarge its market base by expanding its business in the Asian market. Qantas Airlines looks to target a niche market and is more inclined towards a leader strategy. It has already emerged as the market leader in Australian economy in the airlines business and aims to emerge as a market leader globally in aviation business. The growth strategy most suitable for Qantas Airlines has been discussed as under Market Expansion: Qantas Airlines is looking for market expansion by targeting new untapped Asian markets and expand its market base to generate higher returns and profits. The company has already moved steps to introduce new added features in its existing services offered by providing a complete new travelling experience to its customers. Further the company has been able to create a brand name of its own which adds to its advantage to expand its market in a more effective and efficient manner with lesser efforts. Confrontation Strategy: Qantas Airlines aims to work on a confrontation strategy to ensure more growth in its services provided. Qantas Airlines is looking to reposition its existing product line and add new features to its existing ones to ensure more growth in future years. Qantas Airlines aims to bring a revolutionary change in the airline business and set standards which acts as benchmarks for others to follow in the industry at global levels. SHAKE OUT, MATURE AND DECLINE STRATEGY Organisations need to develop different strategies for different phase of the product life cycle in order to ensure maximum utilisation of its available resources and gain optimal advantage from the same. Various strategies related to different phases of product life cycle for Qantas Airlines has been discussed as under. Shake out Shake out is a period when organization start facing lower returns and difficulties in sustaining its market share with tough competition from the rivals in similar industry. Qantas Airlines to fight against the same shall look to develop the following shake out strategies in order to hold a grip on its market share and ensure sustainable returns. Competitive strategy: Qantas Airlines have already made its presence in the airline business and has a brand image of its own. With its new innovation of luxurious travelling experience even in the economy class will attract more loyal customers and help the company have a competitive edge over its rivals. Market share: Qantas Airlines during the shakeout phase in order to build on its market share, can enter into new innovations or join hands with other airlines, however the company will always look to strengthen its own market shade by adding more features to its product line and attracting more loyal customers. Qantas Airlines thereby develop its strategies accordingly to fight against the shakeout stage and aim at sustainable development. Mature Maturity is another phase of product life cycle where the product or the service reaches its zenith and investments start ranking at moderate to low levels. This phase call for some effective ramifications to change the current scenario and efforts are made to bring the product again in the growth stage by adding new features in the existing products or services in order to generate more revenue and mitigate the risk of shutdown (Chrisan, 2001). Qantas Airlines in order to fight against the same looks to draw upon the following strategies. Increased penetration: Qantas Airlines today enjoys the profits of growth stage but the management is much aware about the maturity stage. Qantas Airlines shall look for increased penetration strategy in order to attract more and more loyal customers. The company has already started to increase its products line by extending its courier services and adding new features in its existing products to gain a competitive edge over its rivals. This different dimensions and to act as a pioneer have provided Qantas Airlines to create a market base of its own and deal with maturity phase in a more logical and systematic manner. Market expansion: Qantas Airlines has already made a move to extend its services in the Asian markets. The company has already been able to connect over 40 countries across the globe and is looking to expand the same. Qantas Airlines had been successful in creating a brand image of its own which shall help the company to enter new markets with lesser efforts. Further the same is accompanied with new innovations in its existing services and providing a new life to its business. Decline stage The decline stage is the last stage of a product life cycle with is very detrimental for any organisation as the same is characterised by declining profits rather losses and investments are very low (Value Based Management, 2010). In fact organisations look to shut their business to save more than operate and incur heavy losses. Qantas Airlines in order to deal with the same looks to draw upon the following strategies. Harvesting: Qantas Airlines shall look to maintain the quality with reduced prices in order to attract more customers. The company shall look to generate more short term cash flow in order to add new and exciting features and revive its products and services and endeavour to give a new direction to its products and services offered. This will provide great opportunities to Qantas Airlines to revive again towards a growth stage. Niche: Qantas Airlines shall look to target a niche market to lower competition level and gain maximum utilisation of its available resources. This shall provide Qantas Airlines to act differently and flourish its business by targeting different dimensions of its working style pattern. This shall further ensure a new outlook to the business and help the organisation to maximize on its gains and earn higher revenues. Thus, we see Qantas Airlines has developed different strategies to fight against the adverse effects of different phases of the product life cycle in order to emerge as the market leader in airline business. NEW ECONOMY MARKET In this era of rapid changing environment, technology growing and increased market penetration has increased complexities for organisation. Monopolistic market no longer exists and intense competition is felt in any industry. Customer services have changed to great extent with equal changes in the support mechanism to ensure success of the business (Koranteng, 2009). Qantas Airlines in its airlines business looks to develop new modern techniques to capture new markets and enlarge its customer base of loyal customers and develop a brand image of its own in the following manner. Improve customer satisfaction: Qantas Airlines from the very beginning has always aimed for superior quality products and services with higher customer satisfaction. Its new innovation of luxuries in economy class with entertainment to provide customer with a life time comfortable travelling experience is aimed to provide high customer satisfaction (Gunter, 2007). This shall further ensure new opportunities for the company through its improved customer services and setting higher standards for others to follow. Increase promotions: Qantas Airlines look to provide new offers and exciting packages at lower prices. The company has been successful in developing a standard public relation and constantly looks for new promos, offers and discounts to boost up sales (George, 2006). Its new features shall emerge as more lucrative and create more urge in its potential customers to fly via Qantas Airlines. ORGANISATIONAL STRUCTURE Organizational structure plays a vital role in making crucial decisions and communication of the same through reliable communication channels to make information available to all in different levels of the organizational hierarchy (Harcourt, 2009). Organizational structure varies from organization to organization based on its functional activities and need. It may range from functional or product management or marketing management to matrix organizational structure. Qantas Airlines looks to work on functional organizational structure in order to facilitate successful decision making and communication of the same through reliable sources. The company looks to designs different departments based on its functional activities where different organizational heads work in a synchronized and coordinated manner to make effective decisions with equal accountability and responsibility (Treacher & Pollard, 2004). Further since the company aims to operate in different countries with varied culture and diversities functional organizational structure provides a desired direction to all to achieve a common organizational goal in an effective and efficient manner (Creedy, 2009). Control and evaluation becomes easier and desired objectives are achieved with lesser efforts and make the workplace a better place to work for. MARKETING PLAN SWOT Analysis provides an insight about how an organization can develop strategies to convert its potential threats and weakness into opportunities and strength. It provides a complete understanding of the current situation of an organization (Luther, 2011). The SWOT analysis of Qantas Airlines has been performed as under. Strengths One of the largest operating airlines in Australian economy. Connects over 40 countries across the globe and looking to expand more. High quality services backed with premium and loyal customers Strong backing from the Australian government. Good brand building through appropriate promotional tools and advertising. The company is regarded as the oldest airline operators in the world. Weaknesses Mostly concentrated towards Australia and its neighboring countries. Cultural differences among employees giving rise to cultural conflicts. Infrastructure cost is very high. Difficulty in monitoring and controlling international expansions Opportunities Australian airlines have been largely tapped with company owing the major market share in Australia, thus giving other competitors a very small share (Platt, 2009). more international expansion opportunities specifically the Asian markets Tie-ups with other airline giants to provide better services and expand its market share at global levels. Threats Increasing fuel prices leading to higher operation cost and lower profits Rising labor cost. Increasing competition from new entrants lime Singapore Airlines etc. New government policies and regulations making the business more complex. It is to be noted that this analysis of strengths, weaknesses, opportunities and threats help Qantas Airlines to develop contingency plans. Contingency plans are developed with an initiative to support the organization in situations of contingency and act as backup plans to support the main plan. Qantas Airlines has been developed in line with organizational objectives; the company has designed special promotional offers for contingency situations (Bamber, 2006). Further contingency plan includes special fares and tie-up with other airline giants and support from Australian government to tackle the situation in a better way. MARKETING METRICS Qantas Airlines in order to be successful in its new venture of tapping the Asian markets requires more loyal customers and build a brand image of its own in Asian market. In order to achieve the same customer satisfaction is the best suited alternative to attract a larger pool of loyal customers. This require Qantas Airlines to introduce more promotional offers in the Asian market with considerable amount of advertising to make people aware of the special services and products offered by the company (Coley, 2001). Qantas Airlines through its new innovation of luxury and comfort seating arrangements in economy classes as well will create a different outlook of its services provided and having a competitive edge over its competitors and act as a differentiator in airline business (Berkman & Gilson, 2001). Being able to develop strategies accordingly with a pro active planning will indeed ensure easy market penetration for Qantas and higher probability of tasting success in the long run. MARKETING AUDIT Marketing audit helps an organization to keep a regular check on the business of the company. It helps in finding loopholes and variances from the standard and strategies are designed accordingly to overcome such adverse situations (Matt, 2010). Qantas Airlines among a number of marketing audit techniques regards the following as best suited for the organization. Strategy Audit: This focuses on a regular check of the strategies developed and implemented by Qantas Airlines and determines the manner in which business is able to ensure effectiveness and correct selection of strategies. It further helps in finding variance from the planned objectives and provides opportunities to develop strategies as per market requirements. Objective Audit: Qantas Airlines through this can achieve its objectives in a systematic and logical manner. It shall ensure that both short term objectives and long term objectives are met within the required time and further help in better utilization of its available resources. CONCLUSION This report highlights the complete marketing strategy or plan for Qantas Airlines. It throws focus on different phases of product life cycle for Qantas Airlines and different suitable strategies to be applied during each phase. Further we see Qantas Airlines shall act as a pioneer and leader with new innovations and expansion of its international business in Asian market. A SWOT analysis has been prepared to identify potential threats and opportunities with strategies suitably designed for the same. The company is more pruned towards functional organizational structure and looks to introduce objective and strategy audit plans to ensure higher returns and success in the long run. REFERENCES Bamber, T. (2006). Market analysis of Qantas Airlines, Business Category, OPPaper.com, page 6 Bangs, D. (2002). The market planning guide: creating a plan to successfully market your business, product, or service, Sixth Illustrated edition, Kaplan Publishing Coley, A. (2001). 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