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Service industry dominated the contribution in GDP and market development. Different market development, technology advancement and social changes are impacting service industry by shaping demand and supply structure. Service is the act of providing some form of service to the master; therefore it can be defined as an act of helping, benefiting through an act to other person. Services are time based performance, it involve experience rather than transfer of ownership of some form of product. Due to real time customer involvement and experience it is highly sensitive industry to be dealt with. Service marketing is very different from product marketing in terms of elements and approaches. This paper involves marketing analysis on Qantas airline, it include in-depth analysis on service marketing strategies of the company, its advantages, disadvantages, followed by recommendation for improvement.
Qantas airline was founded in the year 1921; it’s a renowned brand in Australia with 65 percent of market share. It is an Australia based airline that has seen tremendous growth with its effective marketing and customer services. This airline operates in 41 regions, there are 146 fleets owned by the brand that runs on both national and international boundaries. There are 33,625 employees are working with the brand. It has strong market presence with 15 percent of total travellers in Australian market (Qantas Airways Limited, 2011).
Airways companies compete with both local and international players. Among all, the strong competitor for Qantas is Virgin Australia (centreforaviation.com, 2015). Both the airlines dominate the national market with similar kind of service offering and customer segment. Apart from this, Emirates and Etihad are major international players giving tough competition to local players. In the year 2013, Air India also entered Australian market; Chinese operator China Eastern also enhances competition for global air market in Australia. This analysis will present its strategic comparison with Virgin Australia only, as it is the major competitor for the brand (Coghlan, 2013).
Service marketing mix is different from product marketing due to very nature of service that it is intangible, heterogeneous and perishable in nature; in this industry experience is the key to attract and retain customers for long run. Real time service encounters planning needs to be perfect for proper service execution. The whole service delivery strategy revolves around seven Ps which are discussed below.
Service marketing does not involve a physical form rather it deals with experience, but there are physical elements that shape the offering (Armstrong, Harker, Kotler, & Brennan, 2009). Designing a proper service offering involve three key elements, the core service, supplementary service and delivery process. core service involve the primary set of benefits that industry must render to its customers, for example in case of Qantas, airline industry is responsible for transferring people from one place to another, it aims to support travelling. Supplementary products are accompanied services with core service, it include food service, music and other amenities provided by the airline.
To cater different customer segment with different needs, Qantas has launched different subsidiaries such as Qantas Jet Airways, which is a lost cost airline; second is Jet connect focus on inter country travel in different cities of Australia and between New Zealand and Australia. Different attribute and benefits that brand offers to its customers include route frequency, convenient timing, and direct flights. It aims to make customer trip convenient and stress free by offering meals, entertainment. Similarly, its major competitor Virgin is also targeting leisure travellers, which are price elastic and concerned. However, Virgin is changing its strategy and focusing on upscale and international markets to gain profitability (Farabi, 2012). In terms of product offering Qantas is performing well with its wide range of services that include services, economy, and dining facility, wine, wide range of amenity collection, Qantas clubs and lounges, online check in kiosk, next generation check in facilities and Qantas web connect. All these supplementary services help in enhancing service experience.
Next key element is price, it impact the revenue management, in airline industry the booking system indirectly takes up the effect of competitors booking system. In Airline tickets booking, if the prices are kept too low it leads to higher booking and therefore no scope is left for later booking at high price, leading to make travellers move to competing airline (Wilson, 2005). This industry opts for a price customization strategy therefore charging different price to different customers for the same offering. This company uses nonphysical fence for price, based on transaction characteristics, which include time of booking the reservation, location of booking and flexibility of ticket usage. Pricing in service industry is quality complex which increase difficulty for customers to select among various operators. There is also risk of unethical pricing by different operators in the market. As airlines price varies very frequently customer tend to set price reference associated with brands, it is crucial to ensure that price fluctuation should not upset customers.
Different pricing strategy used by Qantas airline include market pricing in which prices are set according to rate fence and matched with supply and demand of the services. Pricing strategy is also competition based, as there is change in prices according to competitors offering, there cannot be huge difference between prices between different service providers due to intense market competition. Another is full fare strategy, which is offered to customers who seek for changes and flexibility in their travelling plans. It also opted for loss leading pricing strategy in the year 2004 to gain its market share by providing services at extremely low prices in the market.
This deals with distribution strategy of the company, it deals with availability of its offering at different places. Qantas uses both direct and indirect mode of distribution, direct mode include selling tickets through its exclusive outlets. Website also plays key role in ensuring proper distribution strategy of the company, it should be user friendly, simple to use by customers. Wide range of indirect mode of distributions are also used, it include selling through various holidays and ticket selling platform, these are also known as shared platform; here all airlines sell their tickets, therefore customers tend to compare various offering based on price, time and other amenities offered to select the best deal that suits them. Place element in service also includes the place where service is delivered. To ease customer experiences, brands are putting their exclusive kiosk in airports to help customer segregation and fast execution of services; another example is use of virtual queues to ensure customers can use their time optimally.
Promotion is the key element of marketing, it is the process through which company create awareness about its offering, it helps in targeting new customers, maintaining relationship with old customers. Due to intense market competition, no marketers rely upon single promotional tool rather they opt for an integrated communication mix that offers different tools to target different customer segment. Different promotional tools used by Qantas include personal communication, advertising, sales promotion, public relation, corporate design. Qantas has the history of making the most expensive advertisement in Australia, “I can still call Australia home”; it also signed an advertisement agreement with Australian tourism. In the year 2014, it launched “feel like home” campaign. Qantas plan its advertisements through third party agency. The recent advertisement focus on its core service that is to bring people home; it aims to depict the hard work employees do, trust customer have in the brand and the pride that Qantas have on its services.
Next key strategy used by Qantas is sales promotion that aims to increase sales for a short period of time through price reduction. When Jet star was launched by the brand, huge number of tickets was sold at only $49. It also float a promotion for two in one passenger change, this promotional offer allowed second person to travel at only taxes and charges. Third strategy is personal selling which aims to target corporate clients for bulk sale and continues business. It is done by sales representatives of the company who are responsible for selling to ticket seller, corporates, travel agents and other shared platform. Qantas also use sponsorship strategy to enhance its brand presence and awareness in the market, it include sponsoring Rugby, NRL, swimming etc. Brand also supports various social causes, which help in creating an image of responsible seller, ethical practitioner and positive brand in the market. Different social causes supported by Qantas include Care Australia, Starlight children foundation etc.
Social and digital media is the recently focused and adopted strategy by the brand. It has also implemented all in one marketing platform that offer personalized and real time customer engagement. It helps in sending more than 250 camping and 50000 newsletters every month. It also implemented integrated marketing management tool that aims to offer single sign-on system that include digital messaging, marketing operations, marketing analytics, customer data management and campaign management. Qantas is putting continuous effort to reduce its total time to bring a campaign in the market.
In service marketing context people plays a significant role, they are the one responsible for delivering services, shaping customer experience with the brand. It is crucial to hire correct people for service advantage and growth. Service excellence and productivity is dependent on leadership executed within organization. It requires hiring right people, motivating them and helps them in executing their services effectively through training and support. In marketing terms, proper dress code is assigned to all Qantas employees providing corporate identity, the band invest $275 annually to provide training to its employees on customer management (Cleary, 2011). Still, Qantas encounter immense problem due to its poor people management strategy. Brand encounter problems of strike, sudden lock by employees; such behavior creates poor brand image and impact service delivery adversely in the market. In order to stay competitive, company need to reduce cost of service, another problem is ageing workforce, average employees age is 42.5 years, there is need to make strategies for proper use of ageing workforce. Under the leadership of Alan Joyce Qantas seen positive growth, leader incorporated diverse teams in his strategies and also equal participation opportunity. Leader implemented culture of flexibility in decision making, transparency, honesty, learning culture and collaborative strategic implementation.
It involves all tangible factors that impact customer choice of service. It includes the way staff behaves with customers in flight, during telephonic conversation or grievance handing. It also includes the logo, the signage used to help customers (Kollmorgen, 2015). The in-flight experience which customers have, the infrastructure and facilities within flight have strong impact on this element (Lovelock, 2007).
It involves the overall process of service deliver it involve the way customer is involved, operations are executed, customer’s role at each stage; it involve overall sequence and design of a service. A service blue print help in understanding service process, find out chances of service failure, areas where improvement can be done on quality and productivity. Blue print for Qantas is discussed below.
There are different point of interactions in which customer interact with the company, first among them is when a customer purchase a ticket, followed by service execution, experience in airport, inflight and after the journey (An & Noh, 2009).
(Lovelock, 2007)
Above diagram shows wide range of activities that occur in airline services. First stage starts with customer seeking information regarding tickets availability and purchasing the ticket; it requires effective IT system of the company. Different stages that can create customer dissatisfaction include improper queue management, proper customer waiting facility, behavior of boarding staff and service failure recovery process in case of loss of luggage.
Qantas shows effective service management, marketing and delivery process; yet there are few areas of services that can be improved through further strategic actions are as follows;
Below is different strategic suggestion to improve service delivery process and marketing in Qantas Airline;
Above analysis facilitates in understanding service marketing scenario of Qantas in local market; it helped in understanding the key role played by seven P, it shapes all strategic actions. It facilitated in understanding present scenario of the company, its strategic actions and issues. This paper showed the way service marketing differs from product offering, real time employee and customer involvement. Different types of service gaps encountered by Qantas and strategies to overcome the same.
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