Social factors impact on BA servicing a diversity of countries. Demographic area and culture have to be taken into account with a marketing strategy pertinent to those countries. This led to closer working relationships between these undiscovered destinations and the industry ensuring the customer experiences the diverse culture the world has to offer, arguments have been that the western influence could be detrimental to these untapped cultures leading to the erosion of their finely balanced social and green environments. Thus BA need to be aware of the impact their carbon footprint, galvanising their efforts to minimise greenhouse gases emissions and contribution to global warming, the imposing of taxation by governments to those who flaunt their ‘green’ responsibilities.
Technology for BA is a vital tool in gaining competitive advantage and drives globalisation. One of the issues BA faces is the extent to which technology can offset the upward pressure on price and cost. BA holds online sales in high esteem and the hope is that the majority of it’s sales revenue will come from customers embracing the convenience of booking and purchasing their E-tickets on line thus reducing costs in the other areas of its customer service activities ticket desks, ticket printing and distribution and call centres. BA is also committed to development of drive thru check ins, WiFi hot spots and SMS mobile communications to keep ahead of its competitors which must include telecommunication companies.
Within BA’s Micro (ME) it’s strategists learn from the analysis of the Macro environment and tailor it to the organisations needs. Taking into consideration the attitudes, reaction and abilities of the internal environment (top management, finance, research & development (R&D), sales & marketing, purchasing etc) and matching those attributes to the corporate goal.
Good relationships with its suppliers are key in ensuring that the manufacturing, logistical and buying lines are smoothly maintained. BA needs to be responsive to consumer attitudes, revising a marketing mix which meets that change, new suppliers entering the chain and adaptations of the manufacturing and logistical elements that meet customer demand.
Competitors are quick to exploit areas in which organisations are seen to be failing their customer. BA know they have a reputation in the industry which only a few can compare, backed by an advertising campaign proclaiming “Upgrade to British Airways”. By positioning itself within the emerging markets of low-cost, no-frills airlines by the acquisition of a 15% stake in Flybe, 2007[8] as well as overhauling its short haul & long haul products such as Business UK [3], First [4], Club Europe [5], Club World [6] and World Traveller [7] it remains highly placed to compete with the best of the best airlines. As well as dominance over take off and landing slots at the flagship airports such as Heathrow. The likes of Easy-Jet and Ryanair need to be worried.
Porters five forces of the marketing environment is a useful tool the BA marketer can adapt to the organisations specifics to analyse within the Micro (ME) were the organisation is and where it needs to be in maintaining its market share.
A graphical representation of Porter's Five Forces [2]
Four areas requiring specific analysis than those detailed above are markets, competitors, customers and stakeholders. It would be useful for BA to look at these as a basis to formulate its marketing strategy and are fairly representative of the market environment it operates in.
Markets
In the airline industry the last 10 years has seen significant changes. BA according to the Standard Industrial Classification System (SIC) [9] is primarily in the category for Transportation (7) however it also has interests in communication, leisure and logistics yet it has seen a downturn in profits and passenger numbers falling due to the recession, industrial action and rising fuel prices.
Competitors
The markets in which BA operate are highly competitive. Direct competition from other airlines on BA routes, as well as from indirect flights, charter services and from other modes of transport. The cost structures of other airlines are lower than BA’s or have other competitive advantages such as support by government intervention.
Fare discounting has had a negative effect on BA profitability by a response to competitors’ fares to maintain passenger levels. BA has a strong global market positioning, network and alliances along with a diverse customer base to address the risks.
Customers
BA needs to recognise and respond to customer behaviours. A customer’s decision to fly with a particular brand is dependent on their age, income, geographic location, lifestyle and expectations. Taking these factors into account the customer will vote with their feet if BA doesn’t factor these into the customer experience and cater for these needs.
Stakeholders
Financial stability cannot ensure long term prosperity, BA’s belief is in loyalty, trust and support from its stakeholders - customers, employees, suppliers, banks, governments, pressure groups and local communities. Most of these view BA as one of the UK’s most trusted super brands (2009/2010) [10].
The driving force for change and growth from a stakeholder’s point of view is within the internal environment, marketing strategies highlight and enforce the areas that need to reform and direct focus. The recent reforms amongst workforce practices, in reaction to the downturn, has led to the employees loosing confidence and lowered morale.
Another tool BA would have at their disposal to analyse concisely the above discussion would be by application of SWOT Analysis as illustrated below;-
In spite of the current difficult climate and financial constraints BA are very optimistic about the future and recognises more work is needed to remain competitive. A sound marketing environment with a clear and defined organisational objective will be key to BA riding the storm and remain a market leader for the next ten years.
Over the last year under Willie Walsh’s guidance they have achieved considerable savings in operating costs and are well on the way to achieving that magic figure of 10% operating margin. However they also realise that this leaner more sustainable company should not be to the detriment of the customer or to its employees. Therefore a main priority will be to maintain customer confidence, be innovative in providing new services for the customer, providing sound value –added services and promoting on line services. For the employee BA will need to ensure working conditions are fair. Listen to its workforce and react to difficulties raised in a proactive way. Be clear and visionary engaging all stakeholders in making BA a success and maintaining its market share
Monitoring and analysing of the market environment and reacting to the external forces will be an ongoing process for BA, using the tools and updating market conceptions along the way. Keeping it’s finger on the pulse and reacting to the marketing environment in its many guises is at the heart of BA’s strive to be the market leader. (1694 words)
Question 2
In order to critically evaluate how BA is responding to its changing environment and adapting the marketing activity I am going to analyse is its Branding.
I start by looking at the quote on Brand Reputation published in BA’s latest annual report 2009/2010.
Our brand has significant commercial value. Erosion of the brand, through either a single event, or series of events, may adversely impact our leadership position with customers and ultimately affect our future revenue and profitability. [11]
It appears that BA has learned by its mistakes, in 2008 Terminal 5(T5) opened at Heathrow Airport and heralded as the future of BA. Willie Walsh pre launch statement proclaimed 'People will be genuinely wowed when they experience Terminal 5. [12] However T5 was be set with operational issues, mismanagement and plain bad luck from day one with analysts proclaiming a PR disaster.
BA quickly countered the damage done to its Brand Equity – the strength of its marketing and financial value in the marketplace. Worked hard installing faith of its customers, by dealing effectively with the issues emphasising the reliability of BA as a global player and the problems as teething pains.
Recently BA has re branded it’s cabins offering a range of comfortable and prestigious flight experiences, along with replacing and upgrading its fleet. It has formed alliances with Iberia (Jan 2011 – forming IAG International Airlines Group) and American airlines via the Open Skies Agreement opening up the competitive landscape ensuring BA is a major stakeholder in the global market.
It make sure BA has pitched itself right fostering and repairing brand loyalty, the management team gauges customer satisfaction though the global monthly Think Customer Survey as well as ongoing research and development of the BA product to mitigate risk.
Where BA got its branding spectacularly wrong it has held its hands up, apologising and where it gets it right the steady increase in customer base and flights undertaken speak for themselves. (320 words)
Part 2
Question 1
Nortel has over the past year undertaken a programme of divestment of key products to the likes of Ericsson to realise a balance sheet of £1.7 billion under Creditor Protection Proceedings implemented in January 2009[13]. This radical restructure has enabled them to continue to compete in the marketplace and steam line its products, services and organisational structure. However they cannot reap the rewards and reinvest this revenue until its creditors are satisfied.
As part of that restructure the marketing team have had to adapt their marketing strategy making it leaner and meaner. Bringing their after sales service inline with those services offered by other organisations.
Having learned from Block 3 that branding and positioning is fundamental to a restructuring process. I can see offering services and products unique to the marketplace will give Nortel a distinct advantage. Though they are quick to recognise that raising their standards will come at a price “Customers’ demands are increasing; yet raising service level standards from 80% to 85% can mean an exponential increase in Nortel’s costs.”[14]
Developing after sales service as a brand and positioning it as an all in one yet bespoke service will set Nortel apart from the main competitors.
Using the comments within the TGF regarding Nortel I understand the importance of a clear market strategy and the marketers responding positively to changes within the marketing environment. They are in a very precarious state presently. Scaling back of overseas operations and offloading of certain products I particularly related to the comments made that possibly Nortel didn’t respond quickly enough with innovative areas and now are suffering at the hands of their competitors, strengthening their brand equity and constant adaptation of the 4’P’s (product, promotion, price, place/distribution) marketing mix maybe a way out of the situation. (293 words)
Reference
[1] (accessed 23/01/2011)
[2] (accessed 23/01/2011)
[3][4][5][6][7] (accessed 23/01/2011)
[8] (accessed 23/01/2011)
[9] Pg156, Marketing Essentials, Dibb and Simkin, 2008
[10] (accessed 24/01/2011)
[11] (accessed 25/01/2011)
[12] (accessed 25/01/2011)
[13] (accessed 26/01/2011)
[14] (accessed 26/01/2011)
