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BA New
Table of Contents
Executive Summary....................................................................................................................................... 3 Introduction .................................................................................................................................................. 4 Task 1: ........................................................................................................................................................... 5 Dynamics and Trends in the Airline Industry ............................................................................................ 5 Marketing Activities by British Airways .................................................................................................... 5 SWOT Analysis of British Airways ............................................................................................................. 7 (The Write Press Journal, 2012) ................................................................................................................ 7 PESTEL Analysis ......................................................................................................................................... 7 Internal Advertising................................................................................................................................... 8 Task 2: ........................................................................................................................................................... 9 Market Research ....................................................................................................................................... 9 Importance of Market Research for British Airways ................................................................................ 9 STP Analysis for British Airlines ............................................................................................................... 10 Marketing Mix ......................................................................................................................................... 10 Case Study: British Airways Executive club and its Marketing Mix ........................................................ 11 Service Innovation .................................................................................................................................. 12 Task 3: ......................................................................................................................................................... 14 Competitors of British Airways: .............................................................................................................. 14 Suggestions to increase competitiveness ............................................................................................... 14 Recent Case: Online Shopping and Delivery on Board ........................................................................... 15 Strategies to build competitiveness and gain sustainability................................................................... 15 Conclusions: ................................................................................................................................................ 17 Bibliography ................................................................................................................................................ 18
Executive Summary
Aim: The aim of this research is to understand the aviation market in Europe and the position of British Airways as compared to its competitors. The research also aims to understand the marketing activities carried out by British Airlines. Topics Covered: The major topics covered in this report are the trends and market dynamics being followed in the marketing environment of the aviation sector and briefly talking about the British Airways. The report also covers about the market research, its benefits, marketing mix with its components and a small case of the service they are providing and understanding all seven marketing mix components individually. Post that, it covers the recommendations to the British Airlines so as to go to the next level. Key Findings: It is found that the Airlines spend a lot on the primary research and based on their research findings, they improve and target the exact audience to get a better profitability. With respect to marketing, they try to position themselves as a premium airline and hence pricing is higher keeping the luxuries at a greater extend for the high income segment. Recommendations: It is recommended to the airlines that they must try to cut down cost keeping basic luxuries common. They must also deviate their concentration in Europe and move towards expansion in the developing countries in the Middle East.
Introduction
The aim of the research is to understand the volatile aviation industry in Europe and the role played by the British Airways. The report aims to understand in details the marketing activities currently done, its impact on customers; the new marketing activities to be done that increase customer retention and provides a higher profitability There are three major tasks in the report, the first one is covering the dynamics in the aviation industries and the marketing activities done by BA. The second task covers the importance of the market research, both primary and secondary. It even covers the STP analysis and the Marketing Mix with respect to a specific example. The third and the last task covers the recommendations to the airlines with certain fresh ideas which can help take the company to a higher profitability level. About the Airline: The company was founded on 31st March 1974, British Airways (BA) is the largest airline based on its number of flights, international flights and destinations in the United Kingdom (UK). It has continued to grow since privatisation in February 1987. (Airways, n.d.) British Airways, one of the esteemed and biggest companies in the aviation sector now has even the new Boeing 787 Dreamliner. This indicates companys inclination toward adaption of latest fleet of aircrafts and moving towards excellence. (White, 2013) The company has faced a lot of problems a few years back, but luckily has come up from it and now doing pretty well and rather much better than its competitors. The airline believes in innovation and has a trend of showcasing good marketing activities.
Task 1:
Research, analyse and evaluate the dynamics and trends within the marketing environment of your chosen Airline Company
Further, the Olympics in 2012 presented an opportunity to British Airways to adhere to their promise of To Fly, To Serve and even cater to a larger market from a different demographic. BA sponsored the Olympics as the first tier sponsor and this helped it to come into limelight at the games through the massive campaign that it had organised. British Airways was the one to have organised the transfer of the Olympic flame into the country and called it the FIREFLY' plane. Another part of the campaign was the Park Live Event, where it arranged for large screens to be set up in the Olympic Park along with picnic benches. One major marketing strategy risk that British Airways undertook was the Don't Fly' campaign. It conveyed to the British residents to stay in the home country and support their players. This strategy paid off successfully. What BA tried to communicate through this was that as an airline that usually performs the function of flying people in and out of the country, it supported its home country and encouraged its residents to support the games and their countries. According to the managing director in charge of marketing and customer services, the campaign of promoting the home games was a huge advantage as it connected to people at an emotional level and hence turned the event into a huge success. To further soften the serious image, British Airways had put in a bag race advertisement which showed baggage services racing for different luggage of the travellers. The Olympic campaign helped British Airways to try different marketing strategies and experiment with their different campaigns. It helped them reach out to a larger audience and customer base and also maintain their existing customers. (THEDRUM, 2012) BA also acquired the BMI in April, 2012, which basically points out to its intention of winning back their market share. British Airways also attempted to reach a wider segment of customers by repositioning themselves to use the opportunity of short haul customers. It also compared the price differences between different low cost carriers to gain transparency and communicate the hidden charges to customers to be mainly looking at the cheapest means of transport available to go from one point to the other.
Strengths: Brand image and awareness Huge organization size Strategic Alliances Solely dedicated Terminal 5 Opportunities: Can be present in developing countries More expansion via online medium through digital marketing Building alliances with new companies
Weakness: Management of manpower Lack of trust by customers No openness towards innovation Reliant more on UK markets Threats: Policies and laws by the government regarding air rules Price competition by low cost carriers High fuel costs
PESTEL Analysis
PESTEL Analysis helps us understand the effect of the environment on the organization Political: Since Airlines have to follow strict regulations by the government to avoid terrorisms and attacks, political decisions affect all the airless drastically Economical: With rising fuel cost, British Airways still have to reduce the prices else face severe competition by the LCC (Low cost Carriers). Social: Going by demographics, the young generation is busy travelling for business travels and the older generation has time to visit to tourist places. Flight rates can be customized accordingly Technical: More investment should be done in technology and British Airlines must ensure that they are updated with the new technical devices that can be put in to their use Environmental: British Airlines takes proper care of the environment factors like no smoke from airlines, proper maintenance of fleet, using green materials wherever possible and they even provide with their environmental reports.
Legal: British Airlines have already signed the open skies agreement and abides by it legally. Also, by maintaining proper relationships with employees and customers, they avoid any legal problems. (The Write Press Journal, 2012)
Internal Advertising
When you are advertising to the end customers who are your main target audience, you must also remember to advertise to the internal members as well. Otherwise, the communication and brand image outside the company would be very nice, but the same would be very bad inside the company. Many companies believes in advertising regularly within the organization; this also keeps the employees motivated to an extent. Internal advertising to the staff and communication inwards is also a very important part of research when it comes to development of strategies. The employees were made to feel like an integral part of the company and feedback was taken from them regarding the customer experiences, their requirements and suggestions for the same. They also passed the video of their new advertisement to the staff asking for their opinions a night prior to the launch of the advertisement to the public. It helped to establish internal communication and strengthened the employee morale. British Airways reported a profit of about GBP 8.1 million, in the first half of the year itself which was due to the positive impact of the marketing campaigns. Even in an industry where there was a lot of turbulence in the condition of the companies in the industry, British Airways marketing efforts helped the company to regain its image and even tap a larger client base. It also helped in creating happier employees and changed the perception of British Airways internally as well as externally. British Airways has achieved progress and altered its position in the minds of the customers and its ranking in the industry through its marketing strategies. (Bacon, 2012)
Task 2:
Using appropriate sources, discuss the importance of market research, marketing mix and service innovation for your chosen Airline Company
Market Research
Definition: Gathering information about the target markets or customers or any other information in an organized way is called market research. It differs from every industry to every company and its needs and goals. Market research is very important to gain an edge over competitors. Generating revenue of more than $501 billion, the global airline industry expanded by 12% in 2010. It is expected to grow by 42% by 2015. Doing a Market Research would never go waste, the analysis and report of one research may sometime be helpful while conducting another research or some other related research project.
The British Airlines does spend a lot of money into research every month. They believe in taking customers response and they target their customers dynamically based on responses and even study some of the important hypothesis in detail. (UKEssay, n.d.)
Secondary Research: it gives quick information but the data of past. This research helps BA understand the increase in customer base, sales, profits, employee retention, and information recorded on strategic implications.
Marketing Mix
Definition: Marketing mix is the framework used for developing the overall brands, products and services. It has basis of 4Ps along with the blend of 3 more since we are dealing with the airline industry. BA being in services sector caters to 7Ps in its marketing mix.
7Ps of marketing mix are: Product Price Place Promotion Process People Physical evidence
Case Study: British Airways Executive club and its Marketing Mix
Studying the case study well learn about the importance marketing mix plays in formation of BAs standards of where it is now presently. The example of British Airways Executive Club mobile application proves to be useful for studying the extended marketing mix because it was a service that was introduced into the world when mobile technology (and hence mobile marketing) really began to take off. Few years ago, British Airways, for its Executive Club Program created a mobile application. This program brought the convenience to customers for collecting frequent flyer mails, making reservations, and managing flight schedules much easier. The app is available on the Google Play Store, Apple Store, and Windows store and even on the Blackberry App World. (Nguyen, n.d.) Product: Extending the Executive Club experience with a mobile application and allowing members to track their miles, reservations, and flight information just a click away. Price: For Executive Club members, its a free service. Place: The application was made available on its website and across mobile application stores. Promotion: British Airways realized that a significant percentage of its e-mail subscribers open mailings with a mobile device. The decision was taken to focus its marketing campaign on mobile-focused emailing promotions by the airlines. In addition, it also segmented the campaign down to four mobile platforms: iPhones, Androids, BlackBerrys, and desktop (as mentioned earlier) computers making it easy for people to download the right application for the right mobile device. Based on the device they were using, Mail recipients were provided tailored emails. People: The mobile application itself is personified for acting as that extra person in customers company. This extra person is there along side with the club member ready to answer his or her questions at any time. What time is the boarding? Which gate should I go? Did I forget to collect my boarding ticket? The application is there on standby, always ready to answer.
Process: The application is comparatively easy to use and allows users to access any needed information (such as flight itinerary) at any point of time. Physical Evidence: Reviews give its main form of physical evidence. It has received nearly 4,000 application user reviews so far. (Desai, 2011)
Results
Over 250,000 of the mobile applications were downloaded shortly after its launch. Its e-mailing campaign gave a large contribution that achieved the following results: mobile e-mail open rate of over 50%and a click-through rate of 25%. Today, the British Airline Executive Club mobile application is considered to be one of the top ten airline applications.
Executing & measuring 7Ps effectively
Lets analyze about applying and measuring the products and processes from the 7Ps. Using the example of a mobile application: companies need to make sure that they are sending out something useful and that is easily available to the end users. If you are planning to make your own company's mobile application, consider going for tools like the PhoneGap or working with a marketing agency that has deep experience in creating mobile applications. A great way to structure and analyze what you are trying to create and deliver to customers is by applying concepts from the 7Ps of marketing It can be used to think at a very high level as much as it can be used to analyze results in great details.
Service Innovation
Innovation is highly considered in coping with international markets, where the competition as well as technological world changes its phase every moment. BA requires regular innovation plans to stay in its competitive position. During past, a global financial crisis set against BAs high exposure to the premium business travel market which resulted in large losses. BA appears to have regained its footing with several key innovative programs and plans now in motion, with those difficult days largely behind it. (Pillsbury, 2012) The benefits of service innovation for British Airways:
GBP 5 billion investment British Airways announced in September 2011 the five-year GBP 5 billion investment program which encompasses several key areas of focus including BAs customers benefitting from new aircraft, updated World Traveler (economy) and World Traveler
Plus (premium economy) cabins, and an array of improvements to in-flight service, such as a more personal service and catering. To Fly. To Serve. Central to this effort is BAs GBP 20 million branding campaign, The To Fly. To Serve. advertisement campaign has the goal of re-igniting passion and belief in the BA brand among its customers and staff. A 90-second commercial, created by Bartle Bogle Hegarty, was launched and premiered on the airlines official Facebook page. Onboard service innovation With special recognition of its top-tier customers, BAs business plan is to deliver outstanding passenger service for all passengers. Its investing in additional training of its flight attendants. Equipped with Enhanced Services Platform feature of iPad 2, attendants know to store and receive relevant passenger details on or before time, such as meal preferences, itineraries and other data items that allow for a more tailored approach to in-flight service. Height Cuisine Hospitality being the major factor in airline business, British Airways has tapped that area of innovation too. To make meals served on airplanes taste better, Height Cuisine is the partnership with English celebrity chef Huston Blumenthal to come up with new, healthy menus and innovative culinary approaches. Premium Services London is a global financial hub which gives BA a very high percentage of business travelers. The airline has upgraded its lounges at Heathrow and launched a new First Class cabin alongside two other niche premium concepts. Meanwhile, BA subsidiary openskies, provides a niche, boutique flying experience on its route between Paris Orly and New Yorks Newark Airport. The airline added an Economy cabin to its premium-only cabin and every passenger has access to an iPad.
Task 3:
As a newly appointed marketing manager of your chosen Airline what marketing techniques will you use to increase competitiveness and sustainability of your company? Your suggestions must be inspired by appropriate theories and real-life/academic case studies
GAP2: The second GAP is the one which exists at the company level only. The gap focuses on the difference between the designs and standards created and it practical working GAP3: This Gap is the most important Gap since it is between the Service provider and the service delivery. If the company assesses and finds that this GAP exists that means we need to work hard on it. GAP4: This Gap is caused when there is a difference in the delivery section and the external communication to the customers Digital Marketing: Last, but not the least, Digital Marketing should be taken to a new level while marketing the British Airways. Technology is going ahead day by day and so are new and new tools coming up to make life simpler. With the help of Digital Marketing, you can track what kind of customers are coming to your Website, what type of customers are leaving your Website. You can now follow these customers wherever they go and even collect feedback from the customers leaving the Website. This feedback gives you a better understanding that where the company is losing customers to its competitors and how can it retain them back.
Conclusions:
The aim of the research of studying in detail the marketing strategies and activities done by the British Airways is completed successfully and many types of analysis such as the SWOGT Analysis, the PESTEL Analysis, the STP analysis, the marketing mix, the 7 Ps of service marketing and even the GAP Analysis are carried out. To summarize the report, we can say that the British Airways is a major and established firm in Europe; in this sector of aviation the market is not controlled by the companies or the market forces, it is the government rules and regulations that have bonded certain laws. The marketing strategies and innovations hold a great deal of importance for British Airways which caters to massive customer base and plans to expand. The following factors can further help with its growth Key findings of the report explain the premium segment, high income groups segment is enjoyed by the airline. The airline has a very strong brand image, but only in the Europe. Outside the Europe, the company needs a lot of branches and they need to expand to the developing countries majorly in the middle-east. The company needs to cut some costs, since the fuel costs are rising and the disposable income of the customers is either reducing or constant and hence people will start moving to Low Cost Carriers down the line if the Airlines doesnt deviate from their current strategies. Some Recommendations to the Airlines:
Take and Implement Reviews understand what the customers think about the application overall and exactly why they like or dont like about the service. Reviews will give you a general indicator on what youre doing right and what you can do better. Technical Improvement - Make sure you implement new versions that will address product or service short comings and include what people want in the application this is collaboration between those making the application itself and the product owner of the application. Customer Retention - Your first sets of happy customers are critical. They will help you win more customers with word of mouth publicity or deter customers with physical evidence (i.e., reviews and ratings). Competitor Analysis The airline must do competitor analysis on a regular basis. With the help of analytical tools, you can measure what types of people are leaving your Website and going to your competitors Website that help you study the reasons of people going back
Bibliography
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