Marketing . This audit report analyses and evaluates the present performance and strategies implemented by Qantas Airways Ltd.

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Audit Report


Executive Summary

This audit report analyses and evaluates the present performance and strategies implemented by Qantas Airways Ltd. This report also provides suggested recommendations to improve the current strategies used by the company. The appendices include graphs, tables and images that support the findings and recommendations discussed in the report.

The relevant market comprises of the internal environment factors which affect the organisation’s ability to serve their customers (company, customers, suppliers and competitors) and external environment which affects the factors of the direct environment (economic, technological, political, legal, and cultural and social environment. In addition, the competitive situation analysis shows that Qantas has the upper hand in competitive advantage within the market. Being a long term participant, their brand power alone is renown and its competitors are faced with high barriers to entry.

The SWOT analysis reveals Qantas should capitalise strengths, take advantage of opportunities, avoid threats and address the weaknesses. To accompany this, Qantas is situated on the borderline of growth and no growth on the GE grid with high business strength and low industry attractiveness. Qantas’ market research requirements can be improved through more effective marketing strategies such as online surveys for Frequent Flyer members to establish destinations of interest they would like to be offered and an opportunity to provide suggestions, and observational research to recognise appropriate times to offer holiday packages or sale prices due to peak and inter-peak times to fly.

Consumer behaviour issues have given rise to purchasing decisions from their current customers. People are influenced by the price, there are ‘price-sensitive’ customers who only want cheaper airfares. Natural disasters and epidemics also influence the flight services for Qantas. Qantas should aim towards a wider range of customers. Qantas’ primary target segments are domestic business and international business travellers. The reason for selecting these segments to target is because of psychographic factors. Corporate travellers are likely to be willing to spend more on the luxuries. Apart from the core benefit of getting from one location to another, customers who travel with Qantas also experience quality service.

Qantas is a prestigious brand that focuses on quality. The current strategy of Qantas’ product and branding aspect is the slogan ‘Spirit of Australia,’ but from their previous incidents, they need to build their reputation by providing more commitment to safety. They should position themself this way to avoid changes to the perception of the brand name.

In regards to pricing, Qantas’ strategy is purely profit based in that they aim to increase profit as much as possible. Internal and external factors influences Qantas’ pricing, however if Qantas decreases their prices they may need to substitute their quality and their quality of service is the reason why their customer base choose to fly with them.

The distribution strategy aims to open up as many sale opportunities at Qantas and allows them to reach their ideal market exposure by operating two channels, the direct and indirect distribution. Current promotional strategies include advertising, sponsorship and networking. The present methods of marketing communication are sufficient and the only improvement is additional research about the expectations of relevant target segments.

Frequent Flyers points maintain customer relationships and allow Qantas to provide extra services for Frequent Flyer members. Qantas should keep their services consistent to all of their customers.


Qantas Airlines Ltd. is an airline company that has renown reputation for quality service and offer premium service experiences on top of the core benefit of aerial travel. In recent times, Qantas faces challenges of competition, natural disasters which cause delays. The performance of the company’s current marketing strategies will be analysed in this report.

Throughout the audit, limitations were encountered. These included the limitation of access to sensitive company information such as their marketing strategies. Additionally, because Qantas offers a service as opposed to a product, the evaluation and analysis was relatively difficult in terms of finding relevant information. Lastly, the constraint faced was because the audit is only based on Qantas’ current strategies. Qantas also have subsidiary companies such as Jetstar and Qantaslink which are not analysed in this report. Therefore, the evaluation of Qantas’ current performance in the relevant market may be influenced.

During the reporting process of this audit, assumptions also were needed to be made. For the purposes of the analysis, it is assumed that Qantas does not currently undertake any form of market research. The following report will evaluate Qantas’ marketing performance and the current strategies used.

Relevant Environments

Internal Environment

The direct market environment includes the forces which directly affect the organisation and their ability to serve their customers. The forces include the company, customers, suppliers, and the competitors of the organisation[1].

Qantas provides transportation of passengers with “a vision to create the world’s best premium and low fares airlines in Qantas and Jetstar“[2]. Qantas’ target market is both business travellers and leisure travellers. Qantas is focused on the quality of their service – business and leisure travellers can afford to pay higher airfares and are willing to pay higher rates because they value quality highly. The suppliers of Qantas include Q Catering – responsible for the in-flight food on Qantas and other airlines (Singapore Airlines, Philippine Airlines, Cathay Pacific, etc.). Competitors facing Qantas include other companies that provide a method of transporting passengers such as domestic airlines (Tiger Airways, Virgin Blue etc.), other methods of transport (boat cruises, driving cars, etc.), and other international airlines (Air New Zealand, etc.).

External Environment

The external market environment includes the factors which affect all the forces of the direct market environment. The factors include the economic environment, technological environment, political and legal environment, and cultural and social environment[3].

The key economic concerns for markets include economic development, changes in income, and changes in consumer spending patterns. Qantas was affected by the Global Financial Crisis (GFC). The GFC affected consumer spending patterns and income – the demand for travel declined – causing annual profit to drop from nearly $1 billion to just over $100 million[4]. There was a decline in consumer confidence which reduced spending on luxury items.

The technological environment includes fast pace of change, high research and development budgets, focusing on minor improvements and increased regulation. Qantas has continuously improved the quality of in-flight experience through new add-ons such as in-seat televisions for each passenger on international flights and other sources of entertainment (selection of movies and music). They have recently begun using the new A330-200 aircraft, which is more comfortable and luxurious.

The key trends in the political and legal environment include legislation and enforcement. Legislation and regulations relating to Qantas include: Code of Conduct and Ethics Group Policy, Standards of Conduct Group Policy, Legal Matters Group Policy, Competition Law Compliance Group Policy, Legal Matters Group Policy, and Competition Law Compliance Group Policy and Competition Law Compliance Roadmap. Qantas must also be aware of the regulations and legislations in different states and countries as these will affect their flight times – for instance in Adelaide[5]

...the airport operates 24 hours of the day, but is operationally constrained, particularly to passenger carrying jet aircraft, by a legislated curfew between 2300 and 0600 hours local time.

Cultural and social environment include shifts in customer tastes and values. More people have a fear of flying due to events like terrorist attacks. Values in society are also changing and as a result, the perception of luxury is changing among customers. Therefore Qantas could be affected by this – people may no longer value the quality of flights and opt for a less costly alternative.

Competitive Situation Analysis

“A Competitor analysis allows a company to look into the strengths and weaknesses of competitors, and both their current and potential marketing strategies.”[6] It is based upon five factors[7];

Intensity of competitive rivalry within the industry

Qantas is a major competitor in the Australian and overseas airline industry. In fact, “Qantas’s record profits were in stark contrast with most of the financial performance of airlines worldwide”[8]. There are many rivals for Qantas including those who provide aerial transport via planes like tiger airlines and those who provide alternative transport such as buses, cars, boats etc. However, Qantas is “involved in the oneworld Alliance, which brands together 13 of the world’s biggest and best airlines”[9]. They also control a number of subsidiaries including Qantas Link and Jetstar. There are only a few entities that are able to compete in the airline industry, making it very aggressive.

Threat of new entrants to the industry

Qantas is branded by its iconic kangaroo symbol, which makes it recognisable and distinct locally and internationally. Due to its greater advantage in the market, Qantas has the power to control part of the market and has the ability to match prices. This increases the entry barrier bar making it difficult for new competition to enter, sustain and compete in the market. Qantas differentiates itself from other airlines like Tiger, by not setting low prices, but rather offering better service and providing a more luxurious journey. The threat of new entrants in this industry is rather low.

Risk of competition from substitute products

There are many substitute products for Qantas within the airline and tourism market. The risk of substitution can be due to many factors economical, social, legal, technological, environmental and political like a fear of flying or acts like terrorism. This can potentially lead to a substitute in transport. As Qantas prides itself in its “quality and services it provides”[10], the prices are usually higher than other budget airlines. In terms of pricing, Qantas can easily be substituted for another airline if people are on a budget. While quality is the primary focus for Qantas, airlines like Virgin Blue are beginning to offer high quality, no frills and low priced tickets[11]. However, unlike most airlines Qantas offers reward programs that look at building loyal relationships with customers. The rewards program, “Frequent Flyers” also works concurrently with other companies and programs to best maximise the benefits for consumers. They are also looking at ways to improve the flying experience by employing new services, like making it available for customers to check in via mobile[12]. As mentioned before, Qantas’s subsidiary company, Jetstar offers cheaper prices at the expense of luxury.

Relative power of industry members and suppliers

Qantas is able to switch between different suppliers of food and drinks as they can be easily substituted for other brands and flavours; however in doing so they may compromise their ‘high quality’ brand power. There would most likely be limited suppliers in regards to the manufacturing of the planes, therefore giving them a strong position.

Relative power of industry members and customers

There are many individuals in the market who have a want for airline tickets. They are influenced by brand loyalty and prices. The high barriers of entry limit the number of competition and give customers less bargaining power.

Overall, Qantas has a better competitive advantage exists in the market because of the competitive barriers competition must overcome. Their branding power makes them a well recognised airline in Australia and overseas and their slogan and kangaroo logo enhances their product recognition. Their high quality services and their many years of participating in the industry has given them an edge within the market against their competitors. They are able to make reasonable profit but can be influenced by other determining factors of competition.

SWOT Analysis and Position on GE Grid

The SWOT analysis outlines all the strengths, weaknesses, opportunities and threats of the business[13]. Identifying the strengths and opportunities will help managers focus on strategies to capitalise strengths, take advantage of opportunities, avoid threats and address the weaknesses[14].  

Qantas has been operating for over 87 years, so they have established strengths over other airlines although providing high quality services makes their fares more expensive compared to other airlines. Qantas is part of the oneworld Alliance which is a global airline alliance that brings together eleven of the world’s biggest and best airlines that are committed to providing world-class service and value[15]. This has led to a widely recognised brand name and a good reputation. Their logo – the Kangaroo and their slogan –  ‘the spirit of Australia’ has made their brand recognisable all over the world.

To continue gaining strengths over other airlines, Qantas should take advantage of as many opportunities as possible. Their ‘Fly Carbon Neutral – Help reduce the impact of carbon emissions on the environment’ program provides an opportunity for the community to help the environment for just a small contribution[16]. Qantas can use this as an advantage because social conditions are changing and the community is showing more concern for the environment – flying carbon neutral allows Qantas to be perceived as environmentally friendly by the community. Qantas flies domestically and internationally, however there are many destinations that they do not offer their services to. They should continuously try and find ways to establish routes to more places around the world. If they were able to offer flights to more locations, they will be able to attract new customers. There are many rules in place that restricts the times that they can fly in and out of locations.  If there were fewer restrictions in place, it will allow Qantas to have more flights to suit more people and allow for flexibility.

To uphold their strengths, Qantas must be aware of the threats and prevent them. The airline industry has high barriers to entry which decreases the chance of a new entrant being successful – high start up costs and the ability to be able to compete at the same level as other airlines. Also as society changes, their tastes and values may change. Their perception of quality may change and the demand for Qantas’ high quality flights may decrease. However, Qantas has Jetstar which is a lower quality experience for those trying to save money or do not look for quality service. Therefore, Qantas has already taken into account the fact that society’s perception of quality could change – avoiding a potential threat. Qantas must also be aware of other forms of transport that may become more popular – cruises, etc.

The General Electric (GE) strategic planning grid[17] helps managers organise information about the company’s marketing environments and the company’s strategy[18]. Qantas has high business strength but low industry attractiveness. Industry attractiveness is influenced by size, market growth pricing, market diversity, competitive structure, industry profitability, technical role, social, environment, legal, and human[19].There is low industry attractiveness due to the high barriers to entry. To enter the airline industry, they would need a large amount of capital due to the high start up costs and they would also need to be able to compete at the same level as all the other airlines currently in the industry. If they are unable to compete at the same level, they will find it difficult to attract customers and get a part of the market share. Business strengths are influenced by size, growth, share, position, profitability, margins, technology position, strengths/weaknesses, image, pollution, and people[20]. Qantas has high business strength as they have been operating for over 87 years, they are part of oneworld Alliance and have established a good customer base with a good reputation which reflects a positive image for them. As Qantas has high business strength and low industry attractiveness, they are on the borderline of growth and no growth.

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Market research needs

Market research involves procedures to develop and analyse new information for assistance in decision-making[21]. Research is important for businesses to market their product or service. In order for Qantas to attract their targeted segment – business travellers and leisure travellers, they must gather as much information to discover and meet their needs. The market research process involves four steps: (1) defining the problem, (2) developing the research plan, (3) implementing the research plan, and (4) interpreting and reporting the findings.

Defining the problem is a difficult stage. However, it is worthwhile to ensure that research ...

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