FM - Marketing Qantas

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Strategic Planning, Product Positioning and Customer Value Marketing Theories Applications at Qantas Group

A Report By Amit Singh ID: c3099441

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Amit Singh ID: c3099441

Executive SummaryQantas was founded in Queensland in 1920 as Queensland and Northern Territory Aerial Services. It is twelfth largest and second oldest airline in the world. Since Qantas was privatised in 1993, it has operated profitably in international and domestic air services and a range of related businesses. This report has attempted analyse and discuss some of the marketing theories such as strategic planning, product positioning, and customer value that Qantas has applied and what benefits it obtained strategically from applying the theory in it marketing strategy.

Global trend in rapid emergence of low-cost carriers and launch of Virgin Blue in 2000 provided very steep challenges to Qantas for survival. Qantas identified this changing environment and designed its business portfolio as part of its strategic planning. This included purchase of Impulse airline, launch of low-cost carriers like Australian Airlines and JetStar and expansion of nonflying businesses such as catering travel and freight. Qantas also reviewed and re-designed its business portfolio regularly to ensure its business portfolio best fit the companys strengths and weakness to opportunities in the changing environment. This included cease operations of Impulse and Australian airlines. Through these strategies planning Qantas successfully competed with low-cost carriers and also to reduce the risk of cannibalisation of the mainline carrier.

Qantas offer has many competitive advantages such as safety, schedules, seat allocation, inflight services, oldest Australian airlines, spirit of Australia and few others. However, Qantas has positioned its product only as safety and Spirit of Australia because these are the only differentiations that are

important, distinctive, superior, communicable, affordable, profitable, and most importantly pre-emptive. Product positioning cannot be built on empty promises. Qantas very few incidents during its 88 years history has built its brand reputation as one of the worlds safety airline. Qantas has developed reputation as Spirit of Australia, mainly because Qantas has always assisted

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Amit Singh ID: c3099441

Australians during times of crisis. Qantas red kangaroo logo has provided a strong brand recognition and image differentiation.

Qantas has created and delivered customer value by providing best possible experience to customers before, during and after the flight. As customers are value maximisers and they see product as complex bundles of benefits that satisfy their needs, Qantas has augmented products benefits by having high quality inflight services, seat allocation, convenient check in, Qantas Club, holidays packages, car rental facilities and many more. Qantas brand reputation for safety and spirit of Australia has also played a big role in creating and delivering customer value.

In line with all above discussions, it can be concluded that Qantas has applied strategic planning, product positioning and customer value marketing theories very well in it marketing strategy. However, few safety incidents within last few months, ongoing cost cutting, outsourced maintenance agreements and ongoing disputes with personnel have all served to undertake not only Qantass reputation for safety and engineering excellence, but also confidence in the airline as a whole. So, it is time for Qantas to refocus on the process of creating value to customers as well shareholders through strategic planning. If shareholders value dominates, customer value is reduced and consumers actively look for alternatives. If customer value dominates, shareholders do not receive sufficient value in terms of dividends and capital growth. Hence, Qantas needs to get the optimal balance between shareholder value and customer value through strategic planning.

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Amit Singh ID: c3099441

Table of ContentsExecutive Summary .........................................................................................II Table of Contents........................................................................................... IV 1. Introduction ..................................................................................................1 1.1 Qantas Background ..............................................................................................1 1.2 Performance and Awards .....................................................................................2 1.3 Challenges............................................................................................................2 2. Strategic Planning........................................................................................2 2.2 Strategic Planning Theory....................................................................................2 2.3 Qantas Strategic Planning ....................................................................................4 3. Product Positioning ......................................................................................7 3.2 Positioning Theory...............................................................................................7 3.2 Qantas Product Positioning Strategies .................................................................8 4. Customer Value .........................................................................................12 4.1 Customer Value Theory .....................................................................................12 4.2 Qantas Customer Value .....................................................................................14 5. Conclusion and Recommendation .............................................................18 References ....................................................................................................20

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1. IntroductionThe purpose of this report is to analyse and discuss some of the marketing theories that Qantas has applied and what benefits it obtained strategically from applying the theory in it marketing strategy. The report will focus on three marketing theories in particular. They are strategic planning, product positioning and customer value. The report will begin with information on Qantass background, performances and challenges that it has faced. The next three sections will discuss about strategic planning, product positioning and customer value marketing theories in sequential order, and conclusion and recommendation at the end. Each section provides theoretical concept detail first, followed by analysis and discussion of how Qantas has applied the theory and what benefits it have achieved.

1.1 Qantas BackgroundQantas is twelfth largest and second oldest airline in the world. It is also Australias largest domestic and international airline (Qantas, 2008). It was founded in Queensland in 1920 as Queensland and Northern Territory Aerial Services Limited. The name Qantas is derived from the initial letters of the words in this title. Since then, Qantas has played a key role in the development of Australian and international aviation. Qantas was privatised in March 1993 with British Airways taking 25% stakes in the airline for A$665 million.

Qantass main business is the transportation of passengers. It is recognised as one of the worlds leading long distances airlines, having pioneered services from Australia to North America and Europe. Qantas offers services across a network covering 145 destinations in 37 countries. At 30 June 2008, the Qantas Group operated a fleet of 224 aircraft, comprising Boeing 747s, 767s, 737s and 717s and Airbus A330s and A320s, Bombardier Dash 8s and Bombardier Q400. The flying businesses of Qantas Group are grouped under two major brands Qantas and Jetstar. In addition to its Qantas and Jetstar flying operations, the Qantas Group operates a diverse portfolio of airlinerelated businesses. These include Qantas Engineering, Airports, Q Catering, Qantas Freight and Qantas Holidays.FM Assign 2 Page 1 Amit Singh ID: c3099441

1.2 Performance and AwardsFor the full year ended 30 June 2008, Qantas reported a record profit before tax of $1,408 million, a 46 per cent increase on the full year to 30 June 2007. Net profit after tax, also a record, was $970 million (Qantas, 2008).

Qantas is Australias leading brands with a proud history of reliability, safety, engineering excellence and outstanding customer service. Qantas was voted the third best airline in the world in 2008 by research consultancy firm Skytrax. Qantas is one of only two airlines to have been listed in the top five in the world for six consecutive years. Some of the other awards include: WAEA Avion Awards best overall inflight entertainment (2002, 2003, 2005, 2006), Sky Awards best first class cellar, best business class sparking award (2008).

1.3 ChallengesSince Qantas was privatized in 1993, it has operated profitably in international and domestic air services and a range of related businesses (Bamber et. al, 2005). It is only because Qantas has successfully managed the challenges that it has faced in past. Some of the challenges include: launch of low cost carriers worldwide, and Virgin Blue and Impulse airlines in Australia increasing competition, increasing fuel price leading to higher operating cost, unpredictable factors like terrorism and natural disasters affecting airline revenue (Firth, 2008). However, the report will only focus on challenged faced by Qantas as result of launch of low cost carriers.

2. Strategic Planning2.2 Strategic Planning TheoryMost organisati