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 is not wasted on the wrong problem. Marketing managers should be aware of their target market and their ability to satisfy the needs of this market.
Qantas targets business travellers and leisure travellers thus they should be aware of their needs and whether they will be able to meet those needs. They should know the destinations of interest not offered yet for business and leisure travellers as well as the peak and inter-peak times to fly. Understanding the destinations that are not currently offered could open up more opportunities for Qantas. For instance, starting from 29 March 2006, Qantas offered international flights to San Francisco – developing tourism opportunities[22]. They should recognise the most effective time to offer holiday packages or sale price tickets to encourage customers to fly during inter-peak times to maintain sales. Holiday packages will attract customers as it results in a slightly cheaper alternative with included accommodation – leisure travellers will perceive holiday packages as high value.
Qantas must continue to keep up with the technological advancements to ensure they are able to provide services that will meet the needs of business travellers – such as online bookings and domestic ‘Mobile check-in’[23]. As technology continues to advance, many tasks are now undertaken online. Therefore, Qantas has made online services available enabling bookings and check-in to be more efficient and faster for business travellers on the go. In addition, in-flight technology is continuously advancing. Customers are now able to improve their in-flight experience as a result of being able experiencing services such as entertainment of newly developed technology. This includes in-seat television screens for each passenger, allowing them to watch movies or play games.
Developing the research plan consists of three steps: (1) determining specific information needs, (2) gathering secondary information, and (3) planning primary data collection. Secondary information is information that already exists somewhere that is obtained quickly and cheaper however sometimes may not be usable. Primary data collection is information collected for the specific purpose at hand.
Secondary information can be used to keep up-to-date with technological advancements, peak and inter-peak times which will then help recognise the most effective times to offer holiday packages and sale prices. Primary data collection involves different approaches – observational research, survey research, and experimental research. Observational research gathers data by observing people, actions and situations. It is useful to Qantas when monitoring peak and inter-peak times to fly due to sale fluctuations. Survey research involves asking questions about attitudes, preferences or buying behaviours. Online surveys would be the best option for Qantas – it is cheaper and more efficient for their target market. All frequent flyer members could be emailed the survey to help establish destinations of interest they would like to be offered and gives them an opportunity to provide suggestions.
Consumer Behaviour Issues Relevant to the Purchase and Consumption of the Service
Customers expect Qantas to provide high quality service, and that level of service is reflected on the price of the plane tickets. Consumers may see this as a ‘what you see is what you get’ which they prefer. Business travellers prefer Qantas as it provides great services throughout the journey. However, if prices were to decrease, consumers would assume the quality of service has dropped. Consequently, they would then turn to international competitors for their excellent services. The firm to customer relationship is relatively strong and therefore does not bring about any issues for present Qantas customers in purchasing decisions.
Australians feel a sense of pride with the song ‘I still call Australia Home.’ When heard, memories of the commercial created by Qantas resurface, of the National Boys Choir and the Girls choir, travelling and singing around the world. It releases many emotions, thus consumers want to travel with the airline that they can relate to.
Business travellers prefer to fly with Qantas, because of their frequent flyer status which allows them to use Qantas’ facilities, i.e. use their conference room or relax in the Qantas lounge. Some people travel with Qantas due to social security as it boosts their self-esteem as it is Australia’s most prestigious plane. Others just want service and to be taken care of on the plane.
Travellers’ personality also influences purchasing tickets. Sophisticated travellers with a higher status would prefer to fly in a better quality plane, i.e. choosing Qantas rather than in Virgin Blue, Jetstar or Tiger Airways. Usually, when flying internationally, most Australians would choose to fly with Qantas. Since Qantas’ domestic airfares are highly priced, ‘price-sensitive’ consumers would avoid them, seeking cheaper alternatives.
There are also global events that influence consumer behaviour in choosing airline services. The September 11 attacks in 2001 have brought terror, shock and loss of trust around the world. Airline services plummeted in sales and consumers searched for other travelling means, i.e. buses, trains, ships and more. Despite the downfall, airlines have since recovered. In addition, the Influenza epidemic in 2009 and 2010 negatively affected the world, opting to avoid the health risk.
There was also the global financial crisis where Qantas lost a fair amount of profit, as well as the entire airline industry. Fortunately, the global financial crisis in Australia was not as severe compared with the others. All airline services had a total loss of a forecasted $US9 billion.[24]
In 2010, Iceland had a major natural disaster which affected most of Europe. Volcano Eyjafjallajokull affected the airplane industry as the ashes from the eruption remained in the air, which could possibly disrupt the aircrafts. Even though the airline services had saved $110 million a day on fuel from the natural disaster, additional costs were faced due to sheltering stranded passengers.[25] The airline industry lost $2.8 billion which heavily affected profits. Qantas was affected from routes to and from European countries.
Qantas’ reputation has suffered since late 2008, when Qantas experienced in-flight incidents, such as the mini explosion due to an exploding oxygen tank while carrying passengers. Punctuality and reputation were harmed and took months to make a full recovery as well as productivity and costs. There has been industrial action undertaken.
Consumers fly with Qantas to boost their self-esteem. Qantas portrays itself to be a prestigious carrier through its quality services. Consumers, who visualise business travellers or the premium leisure travellers in the business lounge, admire their upper class status. They psychologically feel as if they’d like to be a part of that “luxurious” environment, so they splurge to gain self-satisfaction and increase their self-esteem by paying extra for the airfares. They believe by doing so, social security would be obtained.
Qantas tries to provide consistent services to all customers. Those who were not content with the services offered by Qantas would not travel with the company in the future. This will consequently decrease the demand. Nevertheless, experiences that were perceived to be pleasant by customers will influence the choices that other travellers’ make based recommendations made on these experiences.
Target Segments and Core Benefit
Target Segments
Qantas’ service in the generic market is “transport”. As their transportation service is aerial, in terms of their broader product market, Qantas will fall in the airline industry. In a narrower product market, Qantas’ primary target market are corporate travellers which includes both domestic and international travellers and premium leisure travellers. Qantas’ 2008/09 annual report shows that international travel sales outweighs the domestic travel.[26]
Segmentation
The whole market in general is the travel industry, and more specifically, the market for aerial travel. Effective segmentation requires the segments to be measurable, accessible, substantial, differential and actionable. Qantas practices differentiated marketing. Each travel class for example have slightly different features and benefits that are designed to target and appeal to certain segments of their target market. The segmentation variable that Qantas utilizes is psychographic segmentation. This type of segmentation divides the customers into groups that are based on their personality, lifestyle and social class. It is evident that Qantas uses this form of segmentation to isolate its domestic and international corporate customers into their segments. In general, business travellers wilfully pay additional funds for relaxation and luxury because of their busy lifestyle. Supporting this, as their income is usually higher than average, they are not as conscious about the amount of money spent as long as they receive the expected value in return.
In order to evaluate Qantas’ market segments, they’ll need to look into the segment size and growth. This depends largely on the profitability of the target segments. Factors that may influence the structural attractiveness of a segment are its competitors, availability of substitute products and the power of buyers and suppliers in the market.
It is vital to identify the key competitive advantage against competitors and incorporate company skills and resources to succeed in the target segments.
Core Benefit
The core benefit of Qantas’ service is the mean of travel to get from one place to another. The actual service takes place aboard their aircraft where the consumer is exposed to the design, level of quality and features of the service. Firstly, Qantas offers several travel classes to cater for different customer preferences in the services aboard. This includes First, International Business, International Premium Economy, International Economy, Domestic Business and Domestic Economy.[27] Each class offers slightly differentiated features. For instance, Qantas’ First class customers will experience onboard luxury in an adjustable seat that folds out into a bed, priority service from flight attendants, entertainment, fine dining prepared onboard with up to 8-course meals and complimentary amenities such as toiletries and pyjamas.[28]
These services allow customers to feel relaxed and entertained for extensive travel periods. On the other hand, Domestic Business class have less features but cater to shorter travel periods. Business travellers’ entertainment changes throughout the day – news and sports in the morning followed by live music or comedy movies during the day. Because Qantas has been the longest continuously running airline in the industry, they’ve built a brand association based on high quality services. Amongst call centres, Qantas, together with QBE Insurance offers augmented services such as travel insurance. This is offered to a variety of their customers, including international insurance for single trips and seniors.[29]
Packaging
The physical appearance and location of the service provided forms the ‘packaging’ of a service.[30] The packaging of Qantas’ service is portrayed through the appearance of the flight attendants and other employees who deliver the direct service to the customers. Therefore, their appearance, attitude and the level of quality in their services are important. Throughout time, Qantas has introduced new collections of uniforms in line with changing fashion trends and to mirror the company’s outlook.[31] Their current uniform which was introduced in 2008 is stated to be ‘a fresh and contemporary look that reflects our premium style.’[32]
Positioning Strategy
Positioning
When Qantas positions its service in the travel industry, it is defined by its customers on important attributes such as safety and comfort. Not only does Qantas position their service to have high safety standards, it also positions itself to be a prestigious airline that essentially focuses on luxury. By positioning their services this way, Qantas’ service is attractive to their customers, especially business travellers, who are willing to pay additional funds for supplementary benefits. This in turn places Qantas on a conceptual map[33] in comparison to its competitors. In order to optimise its success with selected target markets, Qantas needs to plan positions to give their products the greatest advantage in their chosen market. To achieve this, the identification of its competitive advantage and the creation of differentiated services are vital. This enables Qantas to be distinct against its competitors. Their strongest competitive advantage is the fact that they are the longest continuous running airline which insinuates that they are experienced and have a reputation for high standardised service.
Method
Qantas implements a mixture of service differentiation and personnel differentiation. Because Qantas is within the airline industry, the services performed aboard the aircraft should satisfy its customers’ expectations. Aboard the plane, flight attendants employed by Qantas play an important role in the direct delivery of Qantas’ service towards the customer. This involves personnel differentiation as their staff directly influences the service experienced by customers. Special training about safety is needed. There are minimum requirements to become a flight attendant for Qantas. These include for example obtaining a Senior First Aid Certificate, Responsible Service of Alcohol 'Statement of Attainment’ and have an excellent level of fitness and health, especially to be able to lift up to 28 kilograms. Additionally, they are required to be able to swim for a certain distance while fully clothed.[34] In fact, in 2008, Qantas invested in the implementation of a project called Centre of Service Excellence located in Sydney. The site has the rooms designed including Qantas’ various travel classes and lounges to train employees how to provide good service and to apply it to their actual customers. John Borghetti, the executive general manager stated, "It's not just about being the airline with the best customer service. We want Qantas to be recognised as the company with the best customer service in the country,” portraying Qantas’ goal of excellence of service.[35] Qantas differentiates their service to cater to different target segments through their travel classes. Each travel class has various packages that differ in some way to separate each other. The higher the class, the more benefits the customer will experience. This includes upgrades, individual suites on board with cabin sound proofing, leather seating and amenities especially designed for First class travellers.[36] In some sense, this allows each traveller to feel superior to other classes in their chosen travel class, giving them the incentive to travel with Qantas for these bonuses.
Role of their brand name
Qantas’ brand name is a simple and easy to remember. “Qantas” is an acronym for “Queensland and Northern Territory Aerial Services” that encompasses historical background. This invites their customers to feel a sense of heritage and loyalty towards its meaningful origin. This also engages in a relationship with Australian customers especially because the airline was first established in Australia. The basic benefit that is received is the service to travel from one place to another. The other benefits customers receive are safety, comfort, luxury and other special features depending on their travel class. Qantas positions itself to be a prestigious and royal airline that focuses on the “quality” of its service and is customer orientated. This is evident through their reputation, awards and level of commitment to their customers. This demonstrates the firm to customer relationship.
On their website, Qantas has made a statement about their company’s future in the airline industry. “The future holds many challenges for Qantas - maintaining safe operations and world class product standards while building a viable and competitive position long term for the airline.”[37] This highlights that Qantas aims to preserve their reputation for safety, provide products that are of highly regarded standards and develop competitive advantages that will enable for their continuation in the industry in the future.
Product and Branding Strategy
Qantas’ intangible product is its service of quality and professionalism aimed at both business and leisure travellers. Since Qantas only provides services, consumers cannot try the service before purchasing the service. Therefore, Qantas depends on its advertisements campaign and consistently provide the exact same service all the time as they need to gain the trust of consumers in order to maintain customer loyalty.
The value added to this service is the quality. All airlines include similar services but Qantas differentiate theirs by promoting their service through commitment. Their commitment is portrayed through their current advertisements with the logo ‘Spirit of Tomorrow.’ The company depicts their commitment to the future by illustrating Qantas’ pilots, cabin crew, airport staff, engineers as well as customer service officers as part of their whole service.
Qantas is just a name, but once it is associated with the kangaroo, Qantas’ symbol, it is instantly identified. The kangaroo is their trademark and their service mark. It was originally copied from an Australian coin representing Australia’s post-war era. Throughout time, the kangaroo logo that had formerly encouraged pride and speed in the modern society of Australia eventually became old fashioned. [38] Qantas has altered the identity of the logo but the original meaning behind the symbol remains the same. In the year 2007, Qantas’ symbolic kangaroo logo was stated to “reflect the changing structure of the airline's new generation aircraft, and keeping with Qantas' increasing focus on contemporary design for its in-flight and on-the-ground products”[39]. This shows it adapts to the changing Australian society.
With the new Qantas Airbus 380, people are more aware of the luxurious and comfortable seatings, entertainment and service and are interested to see and experience it for themselves. After testing it out on a selection of customers, it was found to be successful. It was not difficult to adopt as media placed an awareness of the plane through advertisements, which caught people’s interest. They acknowledged that the price was worth their value for money because of all the extra entertainment, etc included. There was a trial for celebrities, faces of Qantas all tested it out, and advertised what they thought of the new airbus.[40] Qantas sales increased as more travellers desired to become a passenger on the airbus.
Their subsidiary airline carrier Jetstar, delivers services to different destinations at a lower cost. The two brand strategy grants Qantas unique strength for networking, scaling and customer communication. Qantas still remains Australia’s carriers of choice for premium and corporate travellers.
In 2010, Qantas won The Chicago Anthenaeum’s Annual Good Design Awards for their design of the Qantas A380 First Class Suite.[41] It is the second award, since the Qantas A380 Economy Seat won the previous year called the Australian International Design Award of the Year. It boasts fourteen luxurious private suites with sofas that become a wide, long and flat bed. This shows customers that Qantas hopes to achieve the best services for their customers, and want them to enjoy a pleasant journey.[42]
‘I still call Australia home’ is another one of Qantas’ brand campaigns which has an emotional appeal as it gives Australians a sense of pride and belonging to the Australian society. With the choir advertisement, started in 1997, marketing manager Geoff Dixon flew them all around the world to sing the song ‘I still call Australia home.’ During the Olympics, this advertisement was played on TV continuously, engaging people all over the world portraying Australia as a home to all Australians.
Pricing Strategy
Qantas’ is a profit orientated company in that, it aims to maximise profits by offering high quality services, increasing seating capacity available and by charging higher prices. They also utilise a premium strategy, whereby the quality of service is high and prices then follow suit.
Internal and external factors can greatly affect the supply and demand of the airfares which can lead to price changes.
Internal factors are those involved directly in the business. The marketing objective for Qantas is to maintain a high level of quality in their services and so this must reflect in the price. The marketing mix can also influence the way the price is set. The ‘place’ where tickets are sold can affect prices greatly. Generally, if purchased online; fees are reduced as there are less employee payments, however if sold in an intermediary, it usually involves extra costs as it’s sold through a third person. Promotions are used to increase both sales and service awareness. Qantas has many types of promotions which add to its sales expenses including, television advertisements, sponsorships[43], etc. They also have promotions that require no expenditures through services such as Facebook and Twitter[44]. Their service is designed to generate high quality experiences aimed at business people and those who enjoy luxuries of life. The quality of the service affects the prices through means of training costs the employment costs and others[45]. Prices can also be affected by the costs of the actual parts in manufacturing the aircraft and the distance of the destinations can even alter prices through discounts.
External factors can usually have more impact on prices because they’re much more volatile. It can be affected by factors including the nature of market demands, patrons who are likely to be deterred from aerial travel and prefer other travelling means when they hear news of terrorists, engine failures or even thunderstorms[46], etc. This creates obstacles for Qantas. Also, to keep customers happy, they would have to find quick alternative solutions. Competition also affects the prices because as quality is much lower, they substitute this for minimal costs and so Qantas can charge a higher price as seen in fig10.1. There are also many other external factors that can affect pricing which includes petrol prices, volcano eruptions creating smog, or government laws and more.
International airfare prices[47] are determined mainly on competition and demand, while domestic airfares[48] are based on the wide range of internal and external factors[49].
The price elasticity of demand for Qantas services is likely to be relatively elastic in the market as a whole. This is due to the substitutes in the market, and its known volatile behaviour in response to price changes. However, the price elasticity will likely be inelastic to a certain point for those customers who have brand loyalty and travel specifically for Qantas’ services.
Qantas’ approach to price setting is established on the cost-based pricing system. It looks at the level of service and service quality before putting a price and value for customers. Qantas also adjusts their pricing to reward customers through seasonal discounting where during non-peak seasons they reduce their prices to encourage customers to travel. They also offer functional discounts for the intermediaries selling their services to ensure that they promote and sell the services of Qantas to customers.
Qantas can make many changes to decrease prices. However, in doing so they would have to substitute price for their quality. Their quality of service is their differentiating factor within the market and is what their target market and customer base their perception of flying with them on.
Distribution Strategy
Qantas’ distribution strategy involves making their services accessible anywhere, anytime through an increase in internet services. The quantity of patrons able to fly with Qantas is limited to the size of the plane. However, Qantas are designing aircrafts that have a larger seating capacity to meet these needs[50]. Qantas’ distribution strategy involves the distribution of tickets.
The level of market exposure for Qantas is considered intensive within the ‘airline’ market. It aims to expose itself and sell through as many intermediaries who will sell airline tickets as possible.
There are two possible channels of distribution for Qantas. The first is the direct channel, where Qantas directly deals with their customers. This is made possible, when they make flight arrangements with customers online[51] or even through telephone sale centres[52]. The reason Qantas likes to have direct distribution is to maintain their control over their prices. The second is the indirect channel where Qantas channels the sale of tickets through intermediaries such as Flight Centre[53]. Qantas uses these agents to increase convenient locations and to meet the needs of customers more effectively. By channelling the sale of tickets through these intermediaries Qantas can avoid the cost involved with investment in establishing facilities and hiring people.
The business to business relationships established between Qantas and travel agencies complement each other by composing package deals to advertise and sell tickets[54]. While Qantas loses part of their control on sale of tickets, they increase their market exposure by allowing a range of travel agencies to sell their services. The ideal market exposure for Qantas is by selective distribution which means that certain outlets aimed at providing travel services would be able to provide customers with the option of flying with Qantas.
Qantas’ reverse channels deal with product recalls and complaints from customers. Qantas allows customers to cancel their bookings and depending on their circumstances some are able to claim a refund[55]. When their services are made unavailable, Qantas offers their patrons a number of options, including deferring their travels or changes in destinations with the previous ticket, etc.
In distributing their services, Qantas is expected to maintain a high and prestigious level of customer service. Qantas flight attendants are expected to undertake training to meet a certain criteria in dealing with customers[56].
Qantas’ overall distribution strategy effectively works for them and opens up many sale opportunities for Qantas. Through direct distribution, Qantas keeps their costs to a minimal by selling tickets online and are able to keep control of their service. By means of indirect distribution, Qantas can channel the sale of their tickets through intermediaries such as Webjet and Flight Centre and while it may cost them to do so in regards to both money and control, it enables them to increase their advertising strategies. Indirect distribution also meets needs of customers more effectively and cuts out establishment costs.
Promotion Strategy
Promotion objectives
Promotion strategy is also known as “marketing communication”, in which a firm attempts to deliver messages or information to their target market and potential customers. The general purpose of marketing communication in a firm is to influence the behaviour of customers.[57] The major theme of Qantas’ promotional strategies is their slogan, Spirit of Australia.[58] Qantas employs distinct promotional strategies that have push and pull effects, discussed below.
Advertising
A large proportion of Qantas’ promotion is through means of advertising. The company has also produced various new television advertisements that include, ‘The Spirit of Tomorrow,’ which advertises their experience, quality service and commitment to customers; and the ‘Airbus’, a new aircraft designed to cater for larger numbers of travellers.[59] The infamous television commercial, ‘I Still Call Australia Home’,[60] along with their kangaroo logo, portrays Qantas as a proud Australian owned company. This influences Australian customers as they are positioned to feel a sense of national pride and are encouraged to support the Australian company.[61]
Networking and communication
Embracing current technological trends, the company and customers can connect on the popular social networking programs, ‘Facebook’ and ‘Twitter’.[62] Through these programs, ‘Qantas Travel Insider’ updates customers with new service changes or flight information. This has a pull effect as consumers may wish to enquire about and demand for these services. Qantas also delivers promotional e-mails to appeal to their subscribed customers. [63] Qantas also has a service which allows customers to access and view up-to-date flight information using their mobile phones.[64] This service is efficient and convenient, especially to busy customers.
Sales promotion - Loyalty Programs
“Frequent Flyer” and “Qantas Club” are Qantas’ loyalty programs. Customers who join Frequent Flyers can earn points to receive membership benefits such as special offers on flights, gift vouchers and exclusive access to lounges on board.[65] By rewarding members who travel with Qantas on a regular basis, the Frequent Flyer club maintains customer loyalty as they have incentives to travel with their airline. The Qantas Club is a similar system. Members can receive exclusive access to lounges and shows on board, upgrades, priority baggage services and more.[66] These programs appeal to customers who fly frequently; for example, business travellers.
Sponsorship
The sponsorship of sports teams and other organisations is also a strategy Qantas uses to promote their company to the public. For example, the ‘Qantas Wallabies’, is the national Rugby Union team in Australia.[67] The company also has swimming, athletics and football programs that give the community the opportunity to get involved.[68] Art Gallery of NSW and The Australian Ballet are only two of the many arts organisations that Qantas sponsors.[69] In addition, the ‘Qantas Foundation’ is a group within Qantas that are advocates for charities.[70] This form of promotion demonstrates public relations with the general community.
Customer Service and Relationship Activities
Qantas’ focal point of their business is customer service. They believe it is vital to provide each customer with exceptional service. In January 2009, they opened the Qantas Centre of Service Excellence in Sydney[71], which is an investment in customer service quality and their employees, allowing over 18,000 Qantas employees to participate ‘eXceptional’ service training, gaining abilities and knowledge[72] to deliver outstanding service at every stage of the customers’ journey.
Before flying, Qantas provides pre-flight services for their customers. The online service allows customers to check-in flights 24-hour prior to departure, obtain the seat they want and redeem their Frequent Flyer points if they’re members. Another service is offered before a flight, in Qantas Club Lounges. It offers bar facilities, comfortable seating, reading materials, complimentary light refreshments and more. Some lounges also include shower facilities. These are offered in Sydney, Melbourne, Brisbane and Canberra. The purpose is to provide their customers a relaxing environment before their flight.
On the flight, there are not only services provided by Qantas employees, whom they provide safety instructions to customers, serve food and drinks; there is also ‘In Sky Shopping’ which allows the customers to purchase certain gifts for their family and friends. They also provide in-seat in-flight entertainment which allows the customers to enjoy their journey in the air.
Qantas meeting rooms are now available in Adelaide, Brisbane, Melbourne and Sydney. This is a service designed for business people, to create convenient locations for meetings to discuss business. In addition, if they arrive early in the morning, this facility helps avoid the morning traffic.
Qantas has provided customers with a better plane, as the A380 features fourteen first suites, seventy-two flat sky beds and 332 next-generation economy seats as well as an advanced entertainment system. This innovation shows constant improvement for better service to ensure customers have a customer-oriented flight to look forward to.
Building loyal relationships with key profitable customers is significant to Qantas. There are some clients who are more important to the success and achievement of the business and deserved special consideration. Qantas used award flights and instigate customer loyalty, which has become an effective strategy pursued by over 70 airlines.[73] Though, to achieve this, Qantas has developed a number of customer relationship programs. The Frequent Flyer program provides customers 'frequent flyer points' every time they fly, gain points from a wide range of partner programs, such as Woolworths, and be redeemed for a range of benefits such as cabin upgrades or award flights. Aside from earning points, receiving status credits such as bronze, silver, gold or platinum level membership rewards customers with additional benefits which include extra baggage permitted to be carried, the privilege to relax in the Qantas Club Lounge.
However, relying on this strategy unaided may make it difficult to maintain some VIP customers. Qantas wanted to acknowledge and encourage customer loyalty on occasions when some of its most profitable frequent flyers did not want to board a plane and preferred to be at home with their family or friends. Hotel stays, gifts was not the most effective way of rewarding this group, so instead, to thank their customers, Qantas provided 'money can't buy' rewards such as particular experiences shared with family, such as Qantas hosting a swimming clinic for the frequent flyers' children. This suggests that Qantas is serious about thanking their customers and recognised what customers really wanted, rather than just a smooth flight.
Implementation Issues
THE SWOT ANALYSIS AND GE GRID:
The SWOT analysis will help Qantas managers to capitalise the strengths, take advantage of opportunities, avoid threats and address the weaknesses. Managers should conduct a SWOT analysis yearly. This will help managers continuously keep up and take advantage of arising opportunities and avoid arising threats. Essentially this could help Qantas move from the borderline of growth and no growth to a growth period – high business strength and medium industry attractiveness. Although undertaking a yearly SWOT analysis will be helpful for Qantas, they must also consider the costs involved. The yearly SWOT may become too costly for Qantas to undertake.
COMPETITIVE SITUATION ANALYSIS
The competitive situation analysis shows that one of the weaknesses of Qantas is that they only offer high quality and high priced tickets while their competitors offer a high service, no frills and low priced tickets. This means that Qantas can be easily substituted and while Qantas owns a subsidiary that operates as a ‘cost-leader’, it may choose to also compete in prices with some other routes. A possibility is to offer cheaper domestic flights as the flights are often shorter and so the services offered may not be required. A consideration is opting to survey current and potential customers on how airline ticket affects their perception on the airline and whether it influences them in purchasing tickets. As the market is generally competitive, Qantas should implement a plan as soon as possible to be able to continue to compete within the market.
MARKET RESEARCH:
Market research is important for Qantas to market their service therefore their marketing managers should understand who their target market is and their ability to satisfy their needs. Marketing managers should find cheap and efficient ways to gather useful information from their target market. As their target market is business and leisure travellers, they must find a way to gather information that fits into their lifestyle. Business travellers benefit more from online surveys that are fast and efficient so they can complete it on the go. Online surveys are also a cheap way to gather information about their target market which can be conducted as often as necessary as it is not costly for them to conduct. Through online surveys, Qantas can ask simple yes or no questions or ask them to give suggestions on routes to new destinations they would like Qantas to offer. This way, Qantas has an idea of what to improve on to continue satisfying their customers. Additionally Qantas should constantly observe the times their customers choose to fly in order to identify peak and inter-peak times of flying. Knowing this information will allow Qantas to be aware of the appropriate times to implement holiday packages and when to put tickets on sale. Observing when customers choose to fly will not cost Qantas much as information can be gathered from secondary information – their sales records.
TARGET SEGMENTS
At present, Qantas’ target segments are mainly corporate travellers and customers who seek premium leisure. As other airlines are beginning to offer higher quality services, Qantas should consider performing research to identify other potential target segments. The annual report of 2008/09 reveals that international flights exceeded the number of domestic flights by around 10%. This indicates that Qantas should seek to put more emphasis in targeting international travellers – either in the segments for corporate or premium leisure travellers. Before attempting to do this, Qantas should first wait and observe if this trend continues by reviewing their sales trends for a number of years and forecast it for the future. Market research through surveys and questionnaires could also be undertaken to find out which segments would most likely be interested in travel. For example: ‘Do you intend to travel domestically or internationally in the next 3 months?’ Because these travelling decisions may change rapidly, these surveys should be taken on a frequent basis. The issue with the implementation of this recommendation is how to distribute the surveys and how to ensure the highest accuracy of the survey results. Another issue with re-segmenting is that if the target segments are not well segmented, the company may incur losses in effort and sales. To avoid this, Qantas should plan their research and ensure that the proper procedure of target segmentation is implemented.
PRODUCT AND BRANDING STRATEGY
With Qantas, they should acknowledge procedures in case of accidents. After the mini explosion, passengers claim they were stranded inside the plane for hours because the Qantas crew would not let them leave. There are exits, life jackets and more. This altered the reputation of Qantas but due to lacking of pressured situations, people feel unsafe about flying with Qantas. There has been quite a number of complaints and consumers had started to reject Qantas in case any more explosions occurred. However, Qantas number one priority is safety. Although they have further training in safety awareness, they need to apply their new knowledge to their cabin crew, captains and ensure the procedures will go smoothly. Otherwise, the reputation of Qantas will fall more as more complaints are noted and demand for Qantas will decrease. Qantas services should involve safety procedures, which is highly important as customers need to feel secure with flying on an aircraft.
DISTRIBUTION
A marketing strategy for Qantas’ distribution is to channel their ticket sales through more means. Currently, they sell tickets online, through intermediaries and offer phone sales centres to certain states. To increase distribution, they may firstly opt to increasing the seating in their planes by either using space more wisely or designing a larger aircraft. In doing so, this will mean more customers are able to purchase tickets and possibly improve their economies of scale. This strategy would involve engineering costs, architectural costs and monthly costs. However, if they are just using their space more wisely then petrol costs, etc. would stay the same. It is expected for their economies of scale to improve as a plane of the same size with more seating capacity would lead to more customers being able to fly with Qantas, therefore increasing overall profits. Secondly, they may choose to make the phone sales centres available to more people. Those who are limited in accessibility may find it more convenient to make a phone call rather than to purchase online. In doing so, they may experience set up costs to build the centres and employee fees etc. Although convenient, it may not be as successful as most of the market can access through various means.
PROMOTION
Through the finds of the report, Qantas’ main promotion strategy relates to the ‘quality’ that is offered in their services. Although this strategy is effective in maintaining purchases from target segments who opt for premium services, for customers who are concerned about safety and efficient departure and arrival times the current promotion strategies may not be effective in this sense. Especially due to the recent episodes of major flight disruptions, customers who are worried about their safety would be more conscious in purchasing airfares.
Therefore, rather than only promoting the ‘high quality’ of their service, they should also aim to maintain the confidence of their customers by promoting their ‘safety standards’ and perhaps by offering other benefits such as insurance. These promotions should be undertaken as soon as possible because the longer the delay of this, the more customers’ confidence in travelling with Qantas would decrease. If Qantas offers packages and deals or promotional sales for a certain period, this will appeal to customers who’re price sensitive and compete with Qantas’ competitors, in particular Virginblue who are now offering higher standard services for a lower price. An issue that needs to be considered is the profitability of these promotions and how it’ll affect the company in the long term.
CUSTOMER SERVICE AND RELATIONSHIP ACTIVITIES
Frequent flyer points has been easier to earn now, since joining forces with Woolworths, etc. Qantas is also part of the oneworld Alliance which points can be additionally earned while flying on different planes. However, after earning and claiming the points, it was always something small but insignificant. Frequent flyers do not need another phone, or another notebook, etc. From the findings of the report, the very frequent flyers prefer to spend more time with their families and friends rather than fly and work, gaining frequent flyer points for extra services such as hotel booking deals, upgrades to a higher cabin class, and more. They have only recently involved a few family activities including swimming lessons for a family taught by a professional swimmer, as well as inviting the whole family a season pass to watch sports games. It is recommended that more family activities should be offered to these frequent flyers, so they feel Qantas is making the most of their service by giving the consumers extra little gifts for themselves and their families.
Conclusion
In conclusion, Qantas’ overall marketing performance is relatively stable. The current strategies implemented by Qantas are evidently strong. Its brand power is its most competitive advantage over other airlines as it has been a long established carrier. The main concern is that Qantas should consider expanding their market and offer the services to more destinations to broaden their market. Qantas should aim to maintain their existing customers’ loyalty by building upon customer-to-airline relationships. As it is less costly to maintain existing customers than attempt to draw in new customers, Qantas should focus on satisfying their current customers’ expectations and to create long term relationships with them.
Recommendations
- Internal environments involve factors which affect their ability to serve customers therefore Qantas should manage internal factors as much as possible because external factors are out of their control. Qantas is able to control internal factors to minimise the effect external factors have on the company.
- Qantas’ Competitive Situation Analysis shows that they are at the top of their game. A possibility for them to sustain their competitive edge is to possibly offer high quality, no frills and lower priced tickets. They should also look into other catering groups of they want to gain a better bargaining position with their suppliers.
- To continue to strengthen their business strengths, Qantas should take advantage of every opportunity. Qantas should also provide the opportunity for their customers to give suggestions on improvements, to discover what their target market wants or needs. Although entering the airline industry is difficult due to high start up costs and established competition, Qantas should be aware of potential threats of new entrants. New entrants could be international airlines trying to enter the Australian airline industry. Qantas should also be mindful of shifts in consumer tastes and values – consumer perception could change leading to them seeking alternative services.
- The firm should make use of market research and establish all the opportunities available to them to continuously meet the needs of their target market – for instance advancing technologies, reduced restrictions allowing for more services, new routes to new destinations, and flying carbon neutral.
- Qantas should offer special deals, so price-sensitive customers can try the services Qantas offers, which would increase the market range. During system failures, they should respond in an efficient procedure to avoid unnecessary delays. This affects the reputation of Qantas, and costumers are not satisfied, therefore will not rely on their services in the future.
- The current target segments are primarily corporate travellers and customers who seek premium leisure. Because other airlines are beginning to offer higher quality services, Qantas should consider performing research to identify other potential target segments.
- Qantas should continue to position themselves to offer premium services and maintain a high standard reputation. Repositioning themselves may lead to a decrease in demand especially due to the historically built reputation that they’ve established.
- The kangaroo logo is recognised as Qantas, so when innovating their exterior design, they should consider not altering it too dramatically as recognising the brand is crucial to distinguishing them from competitors.
- Qantas’ pricing strategy is aimed at achieving high profits and by maintaining current prices. Although the prices are quite high, people’s perception of high prices would connect to the high quality service. If it decided upon that Qantas would reduce their prices, it must be taken into consideration that it may compromise their quality.
- The current distribution strategy effectively aims to sell as many tickets as possible, limited to the number of seats available. Qantas should firstly consider increasing seating on their planes to increase their distribution size and should aim to sell through more intermediaries or even opting to increase the phone sale centres.
- The firm should consider offering packages and deals or promotional sales for a certain period to appeal to customers who’re price sensitive. In addition, rather than promoting the ‘high quality’ of their service, they should aspire to maintain the trust of customers by promoting their ‘safety standards’ due to the recent episodes of major flight disruptions.
- Qantas needs to keep their services consistent to avoid deterring their customers. They should involve more family activities for those very frequent flyers to maintain them.
Reference List
Books
Bartol, K., Tein, M., Mathews, G., Sharma, B. (2008). ‘Management A Pacific Rim Focus 5e’. McGraw Hill Australia Pty Limited. Pp.77-83.
Q uester, McGuiggan, Perreault & McCarthy, 2006, Marketing: Creating and Deliverying Value (5th Edition), McGraw-Hill, pp.45, 86-88, 108-109, 123-125, 136, 507
Tywoniak, Stephane and Galvin, Peter (2007) Qantas: The High Flyer of the Airline Industry? In: Hill, Charles W. L. (Ed) Strategic Management: An Integrated Approach, 2nd Australasian Edition. John Wiley & Sons, Milton, C23-C39.
Websites
Adelaide Airport Limited, 2007. ‘Facts and History’. http://www.aal.com.au/common/uploaded_images/FactsHistoryMay07.pdf. Accessed 31 March 2010.
BBC News, Flight disruptions cost airlines $1.7bn, says IATA, 21 April 2010, , accessed: 3 May 2010
Flight Centre, , accessed: 20th April 2010
Flight Centre, Cheap Holidays and holiday packages, , accessed: 21st April 2010
Kelly, M (2006) New Jetstar Distribution Strategy, Travel trends, accessed: 29th April 2010
Lannin, S (2009) ‘Qantas hit by GFC and swine flue’ ABC News, 19 August.
O'Sullivan, K Qantas CEO walks the walk with flight attendants , The Sydney Morning Herald, on-line version, , February 7, 2009
Qantas Airways Limited, ‘An overview of Qantas Group Business Practices, Working toward our vision’ http://www.qantas.com.au/infodetail/about/corporateGovernance/BusinessPracticesDocument.pdf Accessed 23 March 2010.
Qantas Airways Limited one world alliance, http://www.qantas.com.au/travel/airlines/oneworld/global/en, accessed: 19th March 2010
Qantas Airways Limited, The Qantas group fact file, , accessed: 19th March 2010
Qantas Airways Limited, Qantas Launches Mobile Check-In, 2010, , accessed: 29th April 2010
Qantas Airways Limited, 2010. . Accessed 14 May 2010.
Qantas Airways Limited, 2010. . Accessed 14 May 2010.
Qantas Annual Report ‘CEO’s Report’, Alan Joyce , 2009, Accessed May 1 2010
Qantas Airways Limited, Annual Report 2009, , accessed: May 2, 2010
Qantas Airways Limited, Travel Classes, , accessed: May 1, 2010
Qantas Airways Limited, First, , accessed: May 1, 2010
Qantas Airways Limited, Travel Insurance, , accessed: May 2, 2010
Qantas Airways Limited, Flight Attendants - Essential Requirements, , accessed: March 12, 2010
Qantas Airways Limited, History, , accessed: March 12, 2010
Qantas Airways Limited, FactFiles, , accessed: 21st April 2010
Qantas Airways Limited, Advertising, , accessed: 20th April 2010
[1] Bartol, K., Tein, M., Mathews, G., Sharma, B. (2008). ‘Management A Pacific Rim Focus 5e’. McGraw Hill Australia Pty Limited. Pp.77-83.
[2] Qantas Airways Limited ‘An overview of Qantas Group Business Practices, Working toward our vision’ Accessed 23 March 2010.
[3] Bartol, K., Tein, M., Mathews, G., Sharma, B. (2008). ‘Management A Pacific Rim Focus 5e’. McGraw Hill Australia Pty Limited. Pp.77-83.
[4] Sue Lannin (2009) ‘Qantas hit by GFC and swine flue’ ABC News, 19 August.
[5] Adelaide Airport Limited, 2007. ‘Facts and History’. . Accessed 31 March 2010.
[6]Quester, Mcguiggan, Perreault and McCarthy (2007) Marketing Creating and Delivering Value, McGraw-Hill Australia Pty Ltd, pages 86-88, 123-125
[7] Refer to appendix 2.1
[8] Tywoniak, Stephane and Galvin, Peter (2007) Qantas: The High Flyer of the Airline Industry? In: Hill, Charles W. L. (Ed) Strategic Management: An Integrated Approach, 2nd Australasian Edition. John Wiley & Sons, Milton, C23-C39.
[9] Qantas Airways Limited one world alliance, http://www.qantas.com.au/travel/airlines/oneworld/global/en, accessed: 19th March 2010
[10] Qantas Airways Limited, The Qantas group fact file, , accessed: 19th March 2010
[11] Virgin Blue Airlines Pty Ltd, News and Press Releases, Swap Queensland for Queenstown, 2010, , accessed: 29th April 2010
[12] Qantas Airways Limited, Qantas Launches Mobile Check-In, 2010, , accessed: 29th April 2010
[13] Refer to Appendix 3.1
[14] Quester, McGuiggan, Perreault & McCarthy, 2006, Marketing: Creating and Deliverying Value (5th Edition), McGraw-Hill, p.45
[15] Qantas Airways Limited, 2010. . Accessed 14 May 2010.
[16] Qantas Airways Limited, 2010. . Accessed 14 May 2010.
[17] Refer to Appendix 3.2
[18] Quester, McGuiggan, Perreault & McCarthy, 2006, Marketing: Creating and Deliverying Value (5th Edition), McGraw-Hill, p.108-109
[19] Quester, McGuiggan, Perreault & McCarthy, 2006, Marketing: Creating and Deliverying Value (5th Edition), McGraw-Hill, p.109
[20] Quester, McGuiggan, Perreault & McCarthy, 2006, Marketing: Creating and Deliverying Value (5th Edition), McGraw-Hill, p.109
[21] Quester, McGuiggan, Perreault & McCarthy, 2006, Marketing: Creating and Deliverying Value (5th Edition), McGraw-Hill, p.136
[22] Qantas Airways Limited 2010, ‘Qantas to Fly San Francisco to Australia’, , 10 August 2005.
[23] Qantas Airways Limited 2010, ‘Qantas Launches Mobile Check-In’, , 28 April.
[24] Qantas Annual Report ‘CEO’s Report’, Alan Joyce , 2009, Accessed May 1 2010
[25] BBC News, Flight disruptions cost airlines $1.7bn, says IATA, 21 April 2010, , accessed: 3 May 2010
[26] Qantas Airways Limited, Annual Report 2009, , accessed: May 2, 2010
[27] Qantas Airways Limited, Travel Classes, , accessed: May 1, 2010
[28] Qantas Airways Limited, First, , accessed: May 1, 2010
[29] Qantas Airways Limited, Travel Insurance, , accessed: May 2, 2010
[30] Quester, Mcguiggan, Perreault and McCarthy (2007), Marketing Creating and Delivering Value, McGraw-Hill Australia Pty Ltd, p. 312
[31] Refer to Appendix 6.1 and 6.2
[32] Qantas Airways Limited, History, , accessed: March 12, 2010
[33] Refer to Appendix 7.1
[34] Qantas Airways Limited, Flight Attendants - Essential Requirements, , accessed: March 12, 2010
[35] Kay O'Sullivan, Qantas CEO walks the walk with flight attendants , The Sydney Morning Herald, on-line version, , February 7, 2009, accessed: March 30 2010
[36] Qantas Airways Limited, ‘Qantas Facts’, , accessed: 28 March 2010
[37] Qantas Airways Limited, History, , accessed: March 12, 2010
[38] Refer to Appendix 8.1
[39] Qantas Airways Limited, The Kangaroo Symbol, , accessed: 23rd April 2010
[40] Brendan Sobie, Qantas to offer A380 demonstration to Hollywood stars, , accessed 3rd May 2010
[41] Business Travel Guru, Qantas A380 First Class Suite Takes Out Prestigious Good Design Award, , accessed 5th May 2010
[42] Refer to Appendix 8.2
[43] Qantas Airways Limited, Advertising, , accessed: 20th April 2010
[44] Qantas Airways Limited, Travel Insider, , accessed: 19th April 2010
[45] Qantas Airways Limited, Qantas Careers, , accessed: 22nd April 2010
[46] Qantas Airways Limited, Major Disruptions, , accessed: 20th April 2010
[47] Refer to appendix 9.1
[48] Refer to appendix 9.2
[49] Qantas Airways Limited, Fact Files, , accessed: 21st April 2010
[50] Qantas Airways Limited, Qantas A380, , accessed: 21st April 2010
[51] Qantas Airways Limited, Home, , accessed: 19th April 2010
[52] Qantas Airways Limited, FactFiles, , accessed: 21st April 2010
[53] Flight Centre, , accessed: 20th April 2010
[54] Flight Centre, Cheap Holidays and holiday packages, , accessed: 21st April 2010
[55] Qantas Airways Limited, FAQS, cancelling bookings, accessed: 29th April 2010
[56] Qantas Airways Limited, Flight Attendants – Essential Requirements, accessed: 29th April 2010
[57] Quester, Mcguiggan, Perreault and McCarthy (2007), Marketing Creating and Delivering Value, McGraw-Hill Australia Pty Ltd, p. 507
[58] Refer to Appendix 11.1
[59] Qantas Airways Limited, The Spirit of Tomorrow, , accessed: March 21, 2010
[60] Qantas Airways Limited, I Still Call Australia Home, , accessed: March 21, 2010
[61] Refer to Appendix 11.2
[62] Qantas Airways Limited, More Qantas Travel Insider, , accessed: March 22, 2010
[63] Qantas Airways Limited, E-mail Subscription, , accessed: March 20, 2010
[64] Qantas Airways Limited, qantas.com Mobile, , accessed: March 23, 2010
[65] Qantas Airways Limited, Frequent Flyer, , accessed: March 21, 2010
[66] Qantas Airways Limited, The Qantas Club, , accessed: March 21, 2010
[67] Qantas Airways Limited, Spirit of Sport, , accessed: March 21, 2010
[68] Ibid.
[69] Qantas Airways Limited, Spirit of the Arts, , accessed: March 23, 2010
[70] Qantas Airways Limited, The Qantas Foundation, , accessed: March 23, 2010
[71] Qantas Airways Limited ‘Our company “Qantas Centre of Service Excellence” ‘ http://www.qantas.com.au/travel/airlines/excellence/global/en , Accessed 23 March 2010
[72] Refer to Appendix 12.1
[73] Quester, Mcguiggan, Perreault and McCarthy (2007), Marketing Creating and Delivering Value, McGraw-Hill Australia Pty Ltd, p. 125
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