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

A Report By Amit Singh ID: c3099441

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Executive Summary
Qantas 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 company’s 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 world’s safety airline. Qantas has developed reputation as ‘Spirit of Australia, mainly because Qantas has always assisted

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However. Qantas has augmented products benefits by having high quality inflight services. If customer value dominates. Qantas needs to get the optimal balance between shareholder value and customer value through strategic planning. car rental facilities and many more. Qantas Club. So. seat allocation. it is time for Qantas to refocus on the process of creating value to customers as well shareholders through strategic planning. but also confidence in the airline as a whole. customer value is reduced and consumers actively look for alternatives. As customers are value maximisers and they see product as complex bundles of benefits that satisfy their needs. few safety incidents within last few months. product positioning and customer value marketing theories very well in it marketing strategy. holidays packages. Qantas red kangaroo logo has provided a strong brand recognition and image differentiation. outsourced maintenance agreements and ongoing disputes with personnel have all served to undertake not only Qantas’s reputation for safety and engineering excellence. it can be concluded that Qantas has applied strategic planning. FM– Assign 2 Page III Amit Singh ID: c3099441 .Australians during times of crisis. Qantas brand reputation for safety and spirit of Australia has also played a big role in creating and delivering customer value. during and after the flight. In line with all above discussions. If shareholders value dominates. Qantas has created and delivered customer value by providing best possible experience to customers before. ongoing cost cutting. shareholders do not receive sufficient value in terms of dividends and capital growth. convenient check in. Hence.

........3 Challenges...................................12 4............................................................18 References ............................................. Strategic Planning....................................................... Customer Value ................................................................................1 1........................2 Qantas Product Positioning Strategies ...............................................7 3....1 1...................................2 Performance and Awards ...........2 Strategic Planning Theory...........................................................................................................................20 FM– Assign 2 Page IV Amit Singh ID: c3099441 .............................................................................................................................................................................................................. Introduction .................................................12 4......................................................................2 2.........................1 Customer Value Theory .........................14 5............................................II Table of Contents.3 Qantas Strategic Planning ..................................................4 3.................................................................. IV 1.........................................................................2 2............................2 2..............................8 4......................7 3........ Product Positioning ...............................................................................................Table of Contents Executive Summary ......2 Positioning Theory............... Conclusion and Recommendation ............................................................................................................1 Qantas Background .........2 Qantas Customer Value ........2 1.....................................

Qantas was privatised in March 1993 with British Airways taking 25% stakes in the airline for A$665 million. 737s and 717s and Airbus A330s and A320s. Airports. Since then. 1. product positioning and customer value.1 Qantas Background Qantas is twelfth largest and second oldest airline in the world. the Qantas Group operates a diverse portfolio of airlinerelated businesses. the Qantas Group operated a fleet of 224 aircraft. 2008). At 30 June 2008. Introduction The 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. It was founded in Queensland in 1920 as Queensland and Northern Territory Aerial Services Limited. Q Catering.1. In addition to its Qantas and Jetstar flying operations. FM– Assign 2 Page 1 Amit Singh ID: c3099441 . The name Qantas is derived from the initial letters of the words in this title. It is recognised as one of the world’s leading long distances airlines. and conclusion and recommendation at the end. Qantas Freight and Qantas Holidays. Each section provides theoretical concept detail first. The next three sections will discuss about strategic planning. comprising Boeing 747s. Qantas has played a key role in the development of Australian and international aviation. These include Qantas Engineering. followed by analysis and discussion of how Qantas has applied the theory and what benefits it have achieved. 767s. The report will focus on three marketing theories in particular. The report will begin with information on Qantas’s background. Qantas’s main business is the transportation of passengers. The flying businesses of Qantas Group are grouped under two major brands – Qantas and Jetstar. having pioneered services from Australia to North America and Europe. Qantas offers services across a network covering 145 destinations in 37 countries. Bombardier Dash 8s and Bombardier Q400. They are strategic planning. product positioning and customer value marketing theories in sequential order. It is also Australia’s largest domestic and international airline (Qantas. performances and challenges that it has faced.

However. it has operated profitably in international and domestic air services and a range of related businesses (Bamber et. action plans and major factors affecting the organisation during next 5-10 years period. 2. the report will only focus on challenged faced by Qantas as result of launch of low cost carriers.2 Performance and Awards For the full year ended 30 June 2008. and Virgin Blue and Impulse airlines in Australia increasing competition. 2006). 2005. safety.. Net profit after tax. 2008). Qantas reported a record profit before tax of $1. Some of the challenges include: launch of low cost carriers worldwide. 2007). Sky Awards – best first class cellar. was $970 million (Qantas. Qantas is one of only two airlines to have been listed in the top five in the world for six consecutive years. the market and consumer FM– Assign 2 Page 2 Amit Singh ID: c3099441 .1. marketing strategy. So. The annual plans consist of the action plan. also a record. best business class sparking award (2008).408 million. 2003. The long-terms plans deal with resources. Some of the other awards include: WAEA Avion Awards – best overall inflight entertainment (2002. These usually include annual plans and long-term plans (Kotler et al.2 Strategic Planning Theory Most organisations operate according to some sort of formal plans. 1. al. objectives. increasing fuel price leading to higher operating cost. a 46 per cent increase on the full year to 30 June 2007. these two plans basically focus on the current business direction and its continuation. Strategic Planning 2. It is only because Qantas has successfully managed the challenges that it has faced in past.3 Challenges Since Qantas was privatized in 1993. However. 2008). Qantas is Australia’s leading brands with a proud history of reliability. budgets and controls for the year. engineering excellence and outstanding customer service. Qantas was voted the third best airline in the world in 2008 by research consultancy firm Skytrax. objectives. 2005). unpredictable factors like terrorism and natural disasters affecting airline revenue (Firth.

It relies on developing a clear company mission. each business unit prepares detailed marketing and other plans in line with company’s mission and objectives. 2007). strategic planning occurs at different levels of the organisations. To compete effectively.behaviours are dynamic in nature that always keeps changing with time. This mission statement is then translated into detailed supporting objectives outlining how company intends to accomplish its mission. According to Hamel and Prahalad (cited in Kotler et al. In turn. the main purpose of strategic planning is to help companies understand how they can compete for the future. A hierarchy of strategies is shown in Figure 2. This is where the role of strategic planning becomes vital as the strategic planning helps the firm to adapt to take advantage of opportunities in its constantly changing environment. firms not only must continually improve their operations but they frequently need to reinvent themselves to remain differentiated and relevant. 2007). Business unit. Each business unit has a separate mission and objectives and can be planned independent of other business unit. Guided by the company’s mission and objectives.. setting supporting objectives. 2007) At corporate level.. For a complex organisation. FM– Assign 2 Page 3 Amit Singh ID: c3099441 . Marketing & other functional strategies Figure 1 – Steps in Strategic Planning (Kotler et al. the company now selects its business portfolio (business units and products) that best fit the company’s strengths and weakness to opportunities in the changing environment.. Strategic Planning is defined as the process of developing and maintaining a strategic fit between the organisation’s goals and capabilities and its changing marketing opportunities (Kotler et al. the company first outlines its overall purpose and mission of accomplishment through a mission statement. product & market level Defining the company mission Setting company goals and objectives Designing business portfolio Planning. designing a sound business portfolio and coordinating functional strategies as shown in Figure 1.

traffic loss attributable to the war in Iraq and severe acute respiratory syndrome outbreaks in parts of Asia and Canada (Kain and Webb. Qantas took over Impulse in November 2001 and derived savings from utilising Impulse's low- FM– Assign 2 Page 4 Amit Singh ID: c3099441 .3 Qantas Strategic Planning These have been turbulent times for the Australian airline industry since 2000. To protect itself from the impact caused by the spread of discount airlines in domestic and overseas markets. Against the background of low fare war.pacific region (Firth. and more recently in 2003. 2005). Qantas applied a significant market strategic analysis and planning as discussed below. Australian airline industry was not immune to this. It has been confronted with a marked decline in international tourism in the aftermath of the September 2001 terrorist attacks in the United States. But as Qantas had higher overheads. 2003). a significant worldwide trend in rapid emergence of low-cost carriers was observed. Qantas immediately felt the growing popularity of discount air travel and reduced its fare to match start-up deals. two low-cost carriers namely Impulse and Virgin Blue airlines were launched in 2000.. Because of the low fare war.Figure 2 – The Strategic Hierarchy (Ngo. 2008) 2. In addition to these. the fare reductions challenged Qantas (Bamber et al. Qantas mission to be a leading provider of air transport and related services in the Asia. 2008) was under threat.

low-cost international subsidiary. especially in growing leisure markets. which were 30-40 percent less than Qantas’s. But the Virgin Blue’s aggressive expansion based on lower costs.. JetStar had mission to provide consistent low fares to Australian. which Qantas and Virgin Blue moved quickly to fill. helped Virgin Blue to win about one third of the domestic markets within three years (Bamber et al. This strategy. using two brands to target different markets. In addition. Qantas also launched its new wholly owned. JetStar’s business performed to plan in its first year to capture over 10 percent of domestic market and contributed more than A$19 million before tax profits in its first six months (Kotler et al. Thus. The collapse of Ansett in September 2001 left a large gap in the market. catering and freight by acquiring other businesses to expand its existing operations (Kotler et al.. in October 2002 to compete with low-cost carriers in overseas markets. After Ansett’s collapse Qantas held more than 80 percent market share.. Qantas also expanded other non-flying businesses such as travel. 2005). whilst Qantas as a full service airline to concentrate on business markets. To respond to this competitive threat from Virgin Blue and to restrict Virgin Blue and other carriers from taking more than 35 percent of domestic market Qantas launched JetStar. 2004). 2007). The airline was established to serve markets from which Qantas and other airlines had withdrawn and to service inbound tourists from Asia. Australian Airlines. 2003). Australian Airlines FM– Assign 2 Page 5 Amit Singh ID: c3099441 . on 25 May 2004 and ceased operation of Impulse airline (Harcourt. New Zealand and Asian leisure travelers.operating cost. aimed to close the gap at the lower end of the domestic market and also to reduce the risk of cannibalisation of the mainline carrier. all-economy class Boeing 717 aircraft and streamlined staffing/work practice arrangements (Kain and Webb. 2007). low cost carrier. Qantas intended to force Virgin Blue to respond either by reducing costs to compete with JetStar or by increasing costs to compete with Qantas in the corporate market. establishment of low cost carrier (JetStar) allowed Qantas to compete with Virgin Blue on price.

2008). To accomplish this Qantas identified the changing worldwide trend in rapid emergence of lowcost carriers in airline industry. 2003). full-service flights and reportedly has operating costs some 30 per cent lower than Qantas's international operations (Kain and Webb. As part of strategy to focus on two strong brands – Qantas and JetStar – Australian Airlines was ceased operation in July 2006 (Qantas. Qantas designed its business Qantas Qantas Defence Service Qantas Engineer ing Qantas Holidays Qantas JetStar Group Limited JetStar Asia Airports Qantas Freight Qantas Catering Qantas Link Figure 3 – Qantas Business Portfolio (Strategic Business Units) portfolio. JetStar and expansion of non-flying businesses such as catering. This included purchase of Impulse airline. It can be concluded from above discussions that strategic planning played a vital role in Qantas success and survival. Guided with this.provides all economy. FM– Assign 2 Page 6 Amit Singh ID: c3099441 . The strategic planning started with mission of Qantas to be a leading provider of air transport. launch of Australian Airlines.

Identifying possible competitive advantages: Consumers typically choose products and services that give them the greatest value. FM– Assign 2 Page 7 Amit Singh ID: c3099441 . This included cease operations of Impulse and Australian airlines. impressions and feelings that consumers hold for the product compared with the competing product. it gains competitive advantages. If a company can position itself as providing superior value to selected target markets either by offering lower prices than competitors or by providing more benefits. Product Positioning 3. services. So. personnel and image.2 Positioning Theory Product position is the way the product is defined by consumers on important attributes – the place that product occupies in consumers’ minds relative to competing products (Kotler et al. Qantas used the marketing strategy to use two brands Qantas and JetStar to target different consumers groups in airline industry. a product’s position is the complex set of perceptions. it important for marketers to select and communicate product position that will give their products the greatest advantage in the targeted markets.. In other words. 2007). Each of these strategic business units within the Qantas business portfolio had separate mission and objective such as JetStar mission was to provide consistent low fares to Australian. Qantas also reviewed and re-designed its business portfolio regularly to ensure its business portfolio best fit the company’s strengths and weakness to opportunities in the changing environment.. and communicating and delivering chosen position to the market (Kotler et al. Thus. Qantas Group current business portfolio is shown in Figure 3. positioning begins with actually differentiating the company’s offer so that it gives consumers more value than a competitor’s offer. New Zealand and Asian leisure travellers. Consumers position products with or without the help of marketers and use product position while making a buying decision. Positioning a product has three steps: identifying possible competitive advantages. 3. Finally. selecting the right competitive advantages.travel and freight. A company offer can be differentiated along lines of product. 2007).

Communicating and delivering chosen position to the market: Once a company has decided on a product position. superior. As Qantas is a leading provider of air transport. plane seating configuration. which is highly associated with safety along with high quality in-flight entertainment services. the Qantas brand. 2008). the Qantas brand image has also been associated with ‘the Spirit of Australia’.Selecting the right competitive advantages: If a company offer has more than one competitive advantages. the core benefit that a customer will receive is ‘time-critical transport’. food and beverage service. close monitoring and adaptation over time to match changes in consumer needs and competitors’ strategies. pre-emptive. Apart from Qantas image associated with safety records. Qantas’s product and service differentiation is shown in Figure 4. A company should generally avoid underpositioning. Once the desired position is built. affordable and profitable. overpositioning and confused positioning errors. The Qantas brand is synonymous with Australia and is regarded as part of the fabric of the country (Brandstrategy. distinctive. and frequent and on time plane schedules they all provide core benefit to consumers. Qantas has many opportunities for differentiating its offer and gain competitive advantage against its competitor Virgin Blue through product and service differentiation. the company must maintain the position through consistent performance.2 Qantas Product Positioning Strategies The first step of positioning strategies is to identify possible competitive advantages. Qantas is Australia’s largest airline serving Australian since 1920 while Virgin Blue was only launched in 2000 can be also used to differentiate Qantas offer against Virgin Blue. convenient flight booking system. FM– Assign 2 Page 8 Amit Singh ID: c3099441 . Qantas red kangaroo logo has provided a strong brand recognition and image differentiation. it must first deliver that position and design appropriate marketing mixes to communicate the desired position to the targeted consumers. then it should only promote differences that are important. However. communicable. 3.

no competitor can copy this but still Qantas does not product position as the oldest and largest airline as these attributes are not important to most travellers. So. communicable. inflight services. attributes like schedules. underposition or confused position its product. flight booking system. affordable and profitable. Qantas needs to decide how many differences to promote and which one so that it does not overposition. None of these attributes are pre-emptive either that is the competitor can easily copy the attribute. and seat allocation may be important to some travellers while not so important for others. This is not to suggest that pre-emptive is the most critical selecting criteria.Safety Record Schedules Meals Australia’s Oldest Airlines In-flight Services Time-critical Transport Australia’s Largest Airlines Seat Allocation Flight Booking System Figure 4 – Qantas Product and Service Differentiation The second step of positioning strategies is to select the right competitive advantages: Qantas offer has many competitive advantages as discussed in previous section and shown in Figure 4. and time critical transport are important to most travellers but yet again Qantas product FM– Assign 2 Page 9 Amit Singh ID: c3099441 . The attribute like high quality meals. Similarly. Qantas is the oldest and largest airline in Australia. Qantas should only promote differences that are meaningful and worthy whilst meeting the selection criteria requirements like important. Qantas product differentiation selecting criteria matrix is shown in Table 1. superior. preemptive. distinctive.

positioning is not along the line of these attributes simply because these attributes are not pre-emptive. X √ √ √ X √ X X √ √ √ X √ X √ √ √ √ √ √ √ √. X √ √ √ √ √ √ X X √ √ √ X It can be seen in Table 1 that ‘Safety records’ and ‘Spirit of Australia’ are the only two attributes that meet all the selection criteria requirements. Competitors can easily copy these attributes and it will be no longer competitive advantage to Qantas. X √ √ √ X √ X √ √. Qantas needs to do a very careful assessment selection of attributes that will be promoted as product positioning. X = No √ √ √ √ X √ √ √ √ √ √ √ √ √ X √ √ √ √ √ √ √ √ X √ √ X √ √. In other words. Table 1 – Qantas Product Positioning Selecting Criteria Matrix Product Product Positioning Selecting Criteria Differences Important Distinctive Superior Communicable PreAffordable Profitable emptive Time Critical Meals Inflight Services Safety Records Largest Airlines Seat Allocation Oldest Airline Schedules Spirit of Australia Flight Booking System Note: √ = Yes. Qantas FM– Assign 2 Page 10 Amit Singh ID: c3099441 .

In 2004. The study also found that safety is the most important factor to build trust in an airline. Qantas is quite right to select ‘Safety records’ and ‘Spirit of Australia’ as its brand image for product positioning. Qantas has also developed reputation as ‘Spirit of Australia. The third step of positioning strategies is to communicate and delivering chosen position to the market. According Unisys (2008) study Qantas ranks in the top four most trusted airlines in Asia.competitor. mainly because Qantas has always assisted Australians during times of crisis – both in Australia and abroad (Qantas. Before Qantas starts communicating its brand image as ‘Safety’ and ‘Spirit of Australia’. Qantas responded to the October 2002 bombings in Bali by carrying more than 4. Qantas operated a special flight to carry more than 120 volunteer tradesmen and emergency services personnel to Cairns to help rebuild homes and essential services. Because of this Qantas has reputation for safety and safety is a pillar of its brand. cannot implant these attributes in the public’s mind overnight using advertisements. 1999 and 2008. and flew medical and charitable supplies free of charge.500 people home to Australia. Qantas assisted with relief efforts following the Boxing Day earthquake and tsunami. Qantas has also established ‘Sharing the Spirit’ program in 2004 to discover and foster young Australian talent in a diverse range of creative fields. Qantas must first deliver these positions. Virgin Blue. In recent years. Since then. 2008). When Cyclone Larry destroyed parts of North Queensland in April 2005. So. which devastated parts of South East Asia. The airline operated special flights to Thailand. Qantas has some fatal incidents during World War II while operating on behalf of Allied military force (Wikipedia. 2008). Let us examine how Qantas is doing this. Product positioning cannot be built on empty promises. FM– Assign 2 Page 11 Amit Singh ID: c3099441 . the Maldives and Sri Lanka to deliver medical personnel and supplies and evacuate people to Australia. only few minor incidents have been reported in 1960.Pacific region. The last fatal incident suffered by Qantas was in 1951. This is an outstanding safety records considering the number of fatal accidents that other major airlines in world have gone through in last 88 years history of Qantas.

Qantas has also been communicating ‘Spirit of Australia’ brand image through various charity and community work. The consumers are value maximisers. Determinants of customer delivered value are shown in Figure 5. So. There is when the role of customer value becomes vital. 2007). In addition. Any company can create customer value by selling their products and services for free or at reduced price. and supporting Australian sports. This is also called customer delivered value. Consumers satisfy their needs with products and services.1 Customer Value Theory Consumers have needs of various kinds. Consumers view products as bundles of benefits and they buy the product that give them the best bundle for their money. Kangaroo is national animal of Australia and Kangaroo represent Australia in world. Consumers make their buying decision based on their perceptions of the value that various products and services provide.. consumers choose the marketing offer that they believe gives them the most value. In other words. really is a customer value? Customer value is the difference between the prospective customer’s evaluation of all the benefits and all costs of an offering as compared to the perceived alternatives (Kotler et al. FM– Assign 2 Page 12 Amit Singh ID: c3099441 . Customer Value 4. 4. The concept of product is not limited to physical objects. this is not called customer value. Qantas is the naming rights sponsor of two of Australia’s premier national sporting teams – the Qantas Wallabies and Qantas Socceroos. But consumers usually find a broad range of products and services that might satisfy a given need. There is no greater testament to represent Qantas’s the 'Spirit of Australia’ image in their hugely successful 'I Still Call Australia Home’ advertising campaigns.The Qantas has been communicating its ‘Spirit of Australia’ brand image through its red kangaroo logo. Customer value is about creating and delivering values to customers while managing profitability for the company at the same time. This is the most basic concept around which marketing revolves. However. The importance of physical goods lies not much in owing them as in the benefits they provide.

and this judgment will influence their satisfaction and future FM– Assign 2 Page 13 Amit Singh ID: c3099441 .. Customer will buy the marketing offer that the customer believe delivers highest customer value after taking into account of both total customer value (benefits) and total customer cost (costs). Branding is an important part of product and branding add customer value. 2007) Total customer value is the perceived monetary value of the bundle of economic. obtaining and disposing of the given markets offering. total customer cost is the bundle of costs customers expect to in occur in evaluating. After purchasing.Figure 5 – Determinants of Customer Delivered Value (Kotler et al. the customer makes some assessment of the value they think they have received from the product. functional and psychological benefits customers expect from a given market offering. Brand name allows customers to associate benefits that they receive from the product and to differentiate the product from those of competitors. Similarly.

To consumer. Qantas website www. On the other hand. E-ticket and QucickCheck facilities are available at domestic airports allowing check-in to complete in less than 60 seconds for FM– Assign 2 Page 14 Amit Singh ID: c3099441 . they are not just after the air ticket and a seat on a plane and customers tend to see product as complex bundles of benefits that satisfy their needs. Customers are after value that they can receive before. So. When a customer buys a Qantas air ticket for Hong Kong.2 Qantas Customer Value Let us examine how Qantas is creating and delivering customer value while making profit at the same time.com has been recently awarded best website customer experience by Global Reviews (Qantas.qantas. Some other consumers might buy air ticket from supplier who has better in-flight services. these augmented benefits become an important part of the total product value and will contribute to their choice of airline for their purchase of air ticket. Understanding of these concept are very important to marketers as it provide they opportunity to assess the total customer value and total customer cost associated with each competitor’s offer to how their offer rates in the buyer’s mind. If their offer value is poorly rated in customer’s mind then marketers can increase the offer value rating by increasing the benefits associated with product (total customer value) or by decreasing total customer cost. Qantas’s competitor Virgin Blue can provide an air ticket and a seat on a plane.buying behavior. other group of consumers might buy air ticket from supplier who has car rental facilities at the airport. Some consumers might buy air ticket from supplier who has better flight booking system and convenient check in facilities. 4. Qantas is well capitalised on augmented benefits that it provides to customer for creating and delivering customer value. during and after the flight. the customer receives a Qantas air ticket and a seat on a plane as product and service. 2008). the real question is why would a customer buy Qantas air ticket? From customers’ perspective. Similarly. are more reliable and has better safety records. if marketer is aware that their offer value is highly rated in customer’s mind then marketer can charge a premium over the competitor’s offer.

Qantas has designed their product and found ways to augment it in order to create and deliver bundle of benefits that will provide the greatest value for consumers. For holiday lover customers.customers without baggage. Customers use kiosks to access and review their booking. Figure 6 – Qantas Airline Augmented Benefits (Ngo. and best overall inflight entertainment and service award by WAEA Avion from 2002 to 2006 are very good indication for customers who are after inflight services. Qantas has a dedicated Qantas Holidays branch that sells holiday packages to destinations throughout Australia and around the world. Qantas has also opened Qantas meeting room at Sydney and Melbourne terminals. In other words. 2008) FM– Assign 2 Page 15 Amit Singh ID: c3099441 . Every customer will find matching benefits from the bundle of Qantas’s benefits that will satisfy their need. select a preferred seat if available and to obtain a boarding pass. Customers who expect service before flight can join Qantas Club. Frequent flyer scheme is there for customers who like the idea of receiving a bonus points from flying with Qantas. Qantas also has car rental facilities available from airport to make customers experience better after the flight. Best first class cellar and best business class luxury awards in 2008.

This is important because value that customer assigns to a benefit may be different for different customers. Hence. service value and product value categories for Qantas and Virgin Blue. For value column. Accordingly.5 points more than its competitor Virgin Blue. Point allocations for all determinant of customer delivered value is shown in Figure 7. Points have been allocated accordingly for personal value. Hence. Qantas brand reputation for safety and spirit of Australia has also played a big role in creating and delivering customer value. for cost column ‘10’ represents most expensive and ‘0’ represents least expensive. 1 point has been allocated for these categories. energy and time costs will be identical and very minimal for both Qantas and Virgin Blue because customer can obtain air ticket price by calling travel agents or by looking at company websites. Now let us examine what customer value Qantas is delivering against it competitor Virgin Blue using determinants of customer value. service value and product value because of its high quality call centre. Psychic. Similarly. Qantas has highly rated personal value. inflight service. Qantas air ticket benefits associated with customer value are summarised in Figure 6. 8 points has been allocated for Qantas and 4. But it does not mean that customer will always buy Qantas ticket. ‘10’ represents best value and ‘0’ represents worst value. being a low cost carrier does not provide good quality services and reliable operations. For example if customers considers ticket price being FM– Assign 2 Page 16 Amit Singh ID: c3099441 . Virgin Blue.5 points for Virgin Blue. It can be seen from Figure 7 that Qantas has customer value 11. Similarly. Beginning with image value. Customers operate under various constraints and they are after different benefits. The actual air ticket cost for Qantas is quite high as compared to Virgin Blue. a reasonable customer will highly rate Qantas image because of its brand reputation for safety and spirit of Australia while Virgin Blue is still searching for brand representation. 8 point has been allocated to Qantas and 3 point to Virgin Blue for image value as shown in Figure 7. and reliability and safety of its operation. and are shown in Figure 7. on the other hand.

if they want to compete with Qantas they need to increase their customer value. Hence. However. services. Virgin Blue can do this either by increasing total customer value (benefits) or by reducing total customer cost. then they are more likely to buy tickets from Virgin Blue. For Virgin Blue. Figure 7 – Qantas Airline Customer Delivered Value FM– Assign 2 Page 17 Amit Singh ID: c3099441 . It has implications for both Qantas and Virgin Blue. personnel and image benefits. There is nothing much Virgin can do to reduce total customer cost because it is already the least expensive. Virgin need to focus on augmenting their offer’s product.the only factor. customer delivered value is a useful framework that applies to many situations and yields rich insights.

seat allocation. Qantas offer has many competitive advantages such as safety. Qantas needs to be aware that if it charges too much premium then customers might decide that the high price of Qantas can’t be justified and that a competing Virgin Blue offer provides better value. and customer value that Qantas has applied and what benefits it obtained strategically from applying the theory in it marketing strategy. oldest Australian airlines. Global trend in rapid emergence of low-cost carriers and launch of Virgin Blue in 2000 provided very steep challenges to Qantas for survival.For Qantas. spirit of Australia and few others. It is twelfth largest and second oldest airline in the world. This included purchase of Impulse airline. Conclusion and Recommendation Qantas was founded in Queensland in 1920 as Queensland and Northern Territory Aerial Services. it is important to understand that customers value their offer more than Virgin Blue so that they can charge a premium over Virgin Blue. Since Qantas was privatised in 1993. This report has attempted analyse and discuss some of the marketing theories such as strategic planning. Through these strategies planning Qantas successfully competed with low-cost carriers and also to reduce the risk of cannibalisation of the mainline carrier. product positioning. This included cease operations of Impulse and Australian airlines. 5. However. Qantas has positioned its product only as ‘safety’ and ‘Spirit of Australia’ because these are the only differentiations that are FM– Assign 2 Page 18 Amit Singh ID: c3099441 . launch of low-cost carriers like Australian Airlines and JetStar and expansion of nonflying businesses such as catering travel and freight. However. inflight services. it has operated profitably in international and domestic air services and a range of related businesses. Qantas also reviewed and re-designed its business portfolio regularly to ensure its business portfolio best fit the company’s strengths and weakness to opportunities in the changing environment. Qantas identified this changing environment and designed its business portfolio as part of its strategic planning. This is exactly what Qantas is doing and this explains why Qantas ticket is expensive than the Virgin Blue. schedules.

holidays packages. Qantas has created and delivered customer value by providing best possible experience to customers before. Qantas Club. Qantas brand reputation for safety and spirit of Australia has also played a big role in creating and delivering customer value. Qantas red kangaroo logo has provided a strong brand recognition and image differentiation. shareholders do not receive sufficient value in terms of dividends and capital growth. outsourced maintenance agreements and ongoing disputes with personnel have all served to undertake not only Qantas’s reputation for safety and engineering excellence. If shareholders value dominates. Qantas needs to get the optimal balance between shareholder value and customer value through strategic planning. ongoing cost cutting. and most importantly pre-emptive. If customer value dominates. distinctive. it is time for Qantas to refocus on the process of creating value to customers as well shareholders through strategic planning. car rental facilities and many more. during and after the flight. superior. However. few safety incidents within last few months. Qantas has augmented products benefits by having high quality inflight services. Hence. As customers are value maximisers and they see product as complex bundles of benefits that satisfy their needs. Qantas very few incidents during its 88 years history has built its brand reputation as one of the world’s safety airline. convenient check in. Product positioning cannot be built on empty promises. profitable. In line with all above discussions. Qantas has developed reputation as ‘Spirit of Australia. but also confidence in the airline as a whole (Hogan. mainly because Qantas has always assisted Australians during times of crisis. affordable. product positioning and customer value marketing theories very well in it marketing strategy. FM– Assign 2 Page 19 Amit Singh ID: c3099441 .important. seat allocation. 2008). So. customer value is reduced and consumers actively look for alternatives. communicable. it can be concluded that Qantas has applied strategic planning.

Lansbury.au/webapps/portal/frameset. viewed 14 November 2008..au/dspace/bitstream/10072/13201/1/40523. and Armstrong. T. K.brandstrategy.. Prentice Hall. L. Australian Financial Review. 7th Edn. view Firth. M (2008) Protecting your brand in a downturn. viewed 17 November 2008.pdf Brandstrategy (2008) Brand therapy: Qantas. S.aph.uk/issues/2008/October/Brand_therapy_/Browse. C.com.pdf Kotler. (2008) Marketing lecture 6..newcastle. L. http://www.edu.. (2003) Turbulent Times: Australian Airline Industry Issues 2003.au/qi/intranet/Lean_Thinking_in_Manufacturing_and_Ser vice_2008/Neal_Firth. (2004) Qantas in Radical Plan for Jetstar. (2008) Lean Sigma at Qantas. and Yazbeck. viewed 14 November 2008. (2007) Marketing.smartcompany. Burton. (2005) Low-Cost Airlines Product and Labor Market Strategic Choices: Australian Perspectives.au/Premium-Articles/TopStory/20081001-Protecting-your-brand-in-a-downturn. R. Ngo. S. viewed 17 November 2008. P. http://video. http://www. Brown. viewed 16 November 2008. Hogan. http://blackboard. G. N. Adam. http://www.pdf Harcourt. p.edu.au/library/Pubs/RP/2002-03/03RP10.org. J.wch.. 25 February.jsp?tab_id=_1_1 FM– Assign 2 Page 20 Amit Singh ID: c3099441 .html Kain.co.1. G. and Webb. viewed 13 November 2008.gov. R. http://www98.griffith. Rainthorpe. J..References Bamber.

pdf Unisys (2008) Qantas ranked as one of the world’s most trusted airlines. viewed 14 November 2008.org/wiki/Qantas FM– Assign 2 Page 21 Amit Singh ID: c3099441 . viewed 11 November 2008. http://www.au/about__unisys/news_a_events/20080725_1. http://en. viewed 17 November 2008.wikipedia.com.au/infodetail/about/FactFiles.unisys.com.qantas.htm Wikipedia (2008) Qantas. http://www.Qantas (2008) Qantas at a Glance.

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