Unit 2 Marketing Management – British Airways Assignment
Introduction
This assignment was originally written by our expert assignment helper and the main purpose of this Unit 2 Marketing Management British Airways Assignment help report is to develop a marketing plan for British Airways. This report demonstrates a brief analysis of segmentation, targeting and positioning strategies used by British Airways, the largest airline in the United Kingdom (UK). Students seeking an in-depth understanding of this topic can seek help from our professional assignment help services. At Locus Assignments, we are dedicated to providing students with the best and most appropriate answers. Further, this report also explained SWOT analysis, PESTEL analysis, marketing mix and Michael Porter’s five forces with respect to British Airways. The report analyses the methods of promotion used by British Airways to attract customers and also explains the company’s vision, mission and objectives. This report will also focus on the current marketing strategies of British Airways. Through strategic evaluation, various significant recommendations that British Airways can make are suggested.
Company Overview
British Airways is considered the UK’s flagship airline and is amongst the best airlines in the world and also has one of the most extensive route networks, globally. It is also rendered to one of the largest airlines based on the number of flights on a roll and the number of destinations it covers. To manage British Overseas Airways Corporation, British European Airways and two other smaller regional airlines, the government of the UK established the British Airways Board in 1972. But later on, all four companies combined to form British Airways in 1974. British Airways provides scheduled air services for cargo and passengers and flies to more than 160 destinations worldwide. Airline marketing, aircraft financing and maintenance, insurance services and package holidays are provided by British Airways (Annual Report, 2015).
The company has continued to grow along with rising competition after privatisation in the airline market over the years. British Airways has been considered a pioneering airline in green technology adaptation and business environment friendly strategic decisions. In order to reduce the emission of greenhouse gases, British Airways has supported the scheme of European countries. The company was also affected by the global collapse in the year 2008 in terms of revenue. British Airways has always committed to providing quality and world-class services to its customers.
British Airways has a fascinating history and a strong presence in the aviation industry. If you're studying such case studies or need assignment help services for similar topics, let our experts provide you with detailed and well-researched solutions. Upload assignment details now to get started with it ASAP!
Current strategies
As compared to other airline companies, British Airways is in a good position. The company has developed certain strategies to promote its brands at both national and international levels. In order to build confidence and commitment, British Airways has developed lots of customer-friendly strategies. British Airways' aim is to become the most responsible airline, and in terms of fleet size, international destinations and international flights, British Airways is the largest airline based in the United Kingdom. The company has utilised computing and mobile technology in order to provide effective services to customers (Grundy & Moxon, 2013). The company has developed various strategies such as:
• With the introduction of mobile application services for business-class customers, the company has upgraded the customer experiences
• The company has also provided texting and mobile services for business-class customers during on-flight hours
• In order to offer new services, British Airways has modernised the current fleet of aeroplanes
• Strategies have been developed to manage cost-base operation
• To make the journey more comfortable, British Airways has developed strategies to modify the aircraft
• Managing the cost of tickets is the most effective strategy (Annual Report, 2015)
Segmentation Targeting And Positioning (STP)
The STP model has helped organizations to evaluate market conditions. This model contains three steps:
• Segment the market
• Target best customer
• Position of services or products (Howell, 2015).
In order to develop strategies for further development, customer segmentation strategies will be effective. Hence market segmentation of British Airways can be explained as:
Step 1: Segmentation
The process of dividing the total market into a number of sub-markets on the basis of certain characteristics is known as segmentation. There are various ways to segment the target markets. British Airways’ market segmentation can be divided into four categories: Demographic, geographic, behavioural and psychographic.
• Demographic variable: British Airways has segmented the market on the basis of various demographic variables such as income, gender, age, education, etc. In order to compete with low-cost airlines, British Airways has introduced a pricing strategy to appeal to a wider range of demographic segments.
• Psychographic variables: Market segmentation can also be done through customer lifestyle and attitudes. British Airways has segmented its customers based on their means of travel, whether it is for business and leisure or for both. High-quality food and drink, spacious seating and friendly onboard staff have been provided by British Airways to make customers brand loyal.
• Geographic: On the basis of region and density of customers, British Airways has segmented the domestic flights in the UK and Europe. For example, more domestic and international flights are scheduled in those regions where people use air transport (Lewis, 2013).
• Behavioural: This type of segmentation is based on how people use products or services, how loyal they are and what benefits they are looking for.
Step 2: Targeting
In order to sell products and services, organizations choose specific market segments i. e. targeting. Target market selection can be facilitated according to several patterns: an organisation may target a single market with a single product (single-segment concentration) and target various market segments with different products. Single-segment concentration is followed by British Airways which offers four different service packages to different customer segments. Economy, premium economy, first-class and executive are four levels of services offered by British Airways to target different customer segments. British Airways target a segment of citizens involving the primary market of ABC1, which prefers high-class services provided by British Airways. Through the expansion of its short-haul market, British Airways has emphasized attracting a more diverse set of consumers (McDonald, 2013).
Step 3: Positioning
The last step of the STP process is positioning. It refers to the selection of a marketing mix the most suitable for the target customer segment. British Airways does not promote itself on the basis of having the cheapest flights as other airlines do. The organisation has mainly focused on metropolitan areas where most business owners work and live. British Airways has positioned its brand very well and customers also view its services as high quality. The attractive positioning of products and services is the major success factor for British Airways. In order to achieve long-term growth, British Airways needs to position its products and services effectively (Lewis, 2013).
Pestel Analysis
It is generally a framework used for evaluating an organisation’s external macro environment by considering factors such as political, economic, socio-cultural, technological, legal and environmental. All these factors influence the growth and development of any organisation. This is a very effective tool used by organisations when introducing new products or services and also very effective when incorporating competitive strategy for the future. British Airways' PESTEL analysis includes an analysis of the impact of these external factors on the airline.
1. Political: Government rules and regulations may influence the economy or a certain industry. For example, the government may introduce new taxes or duties due to which overall revenue-generating structures of organisations may change. British Airways has to comply with government rules to continue its operations. The government has focused on the security of passengers due to terrorist threats which affect the whole airline industry. British Airways is also affected due to trade unions, in order to meet the demands of employees’ trade unions threatening companies with strikes (Bogdanovska, 2011).
2. Economic: Inflation, exchange rates, economic growth, etc. are the factors that affect the growth of business. The global economic crisis has affected various organisations in different sectors and the airline industry very much. The weakening of the pound against other currencies also affected British Airways' operational activities. Over the last few years, landing charges have also increased which also affected the revenue structure of British Airways. Oil price fluctuations across the world have affected exchange rates and also the airline industry. Economic and social development has been influenced due to excessive taxation on international air transport. In order to reduce taxes, the International Air Transport Association (IATA) runs several campaigns.
3. Social: The shared beliefs and attitudes of populations and factors such as age distribution, population growth, etc. have significantly affected the airline industry also. In the UK, the ageing population is also an area of concern because older people have low spending power and they prefer to travel by other means of transport. Increasing unemployment also affects the spending behaviour of people. British Airways has taken advantage of an increasingly ageing population, as older people have more time to travel (Annual Report, 2015).
4. Technological: British Airways has utilised the latest technology to provide quality services to customers. The company has developed a platform for online booking of tickets. The online ticketing system is also a more competitive environment for British Airways, as customers can easily compare prices of various airlines on different websites. However, the highly technological system has benefitted both customers and airlines. The company has provided in-flight Wi-Fi services to customers which is a great achievement. British Airways has used advanced technology for the development of engineering and service quality of flights.
5. Environmental: The government of each country has developed environmental laws for airline companies. British Airways is also aware of not creating any environmental destruction and also takes important steps to save the environment from noise pollution. In order to minimise noise problems for residents around the airport, British Airways uses planes with noise reduction technology. British Airways' reputation would be affected if the company fails to maintain environmental maintenance.
6. Legal: British Airways has been affected by the activities of trade unions and is involved in legal issues with employees. There are many legal problems that have arisen in the airline industry, British Airways has faced legal issues when the government applied restrictions on mergers and this restriction affected the merger proposal between American Airlines and British Airways. In addition, British Airways has also been affected due to cabin crew strikes that created some legal issues. The low-cost airlines have created problems for British Airways, they provide the same facilities at lower prices (Shaw, 2011).
The PESTEL analysis gives valuable information about British Airways regarding factors such as political, economic, social, technological, environmental and legal that affect the continued operations. In order to introduce new business strategies, these factors are important and they must be involved in the planning of the strategy. British Airways and other airlines have been affected due to various governmental policies and to reduce issues that affect the environment, British Airways developed its strategies to comply with government rules and regulations. The company has also received several awards for its valuable services to society; these awards include Best Airline in Western Europe (McDonald, 2013).
Understanding British Airways' PESTEL analysis provides valuable insights into the airline industry. If you're struggling to conduct such analyses for your assignments, seek assistance from our expert assignment helpers and get high-quality, customised support, contact Locus Assignments today for your personalised assistance!
Michael Porter's Five Forces
In order to assess the position of British Airways in the market, Porter’s five forces are an effective tool. Porter’s five forces analysis is a process that helps organisations evaluate the competition within an industry (Dobbs, 2014). The five forces are:
1. Threat of new entrants
2. Threat of substitutes
3. Bargaining power of buyers
4. Bargaining power of suppliers
5. Industry rivalry
|
Threat of new entry |
Competitive rivalry |
Buyer power |
Supplier power |
Threat of Substitution |
|
|
|
|
|
In order to increase profitability, Porter’s five forces analysis will enable British Airways to make strategic decisions. British Airways market situation can be explained through five forces:
|
Strength |
Threat/Force |
|
Low
|
The threat of new entrants • There are various significant barriers in the airline industry such as high capital, economies of scale, product differentiation, etc. • New airline companies have to face tough competition from existing players. Experience staff is very important for an airline company to survive. • Compete on limited routes • Difficulty in finding suitable airports |
|
Low
|
Threat of substitutes • There is no real alternative to long-haul air travel in terms of cost and time • In short haul or short distance flights, British Airways has some substitutes • So British Airways needs to focus on domestic flight • Hence British Airways does not have more threats in international operations |
|
High |
Competitive Rivalry • British Airways has mainly focused on short and long-haul flights. In terms of pricing and service offering there is little differentiation between British Airways and its competitors • The short-haul flights are more affected because of other competitors • Competition has increased due to variations in tickets • Virgin Airlines opposed the strategies of American Airways and British Airways and increased completion at a very high rate (Müller, 2011) |
|
High |
Supplier power • The power of bargaining has increased due to more suppliers of aircraft • British Airways is restricted to a sole supplier of fuel to the airport |
|
Medium |
Buyer power • In the airline industry, the buying power of consumers is influenced because there are several airlines that offer different prices of tickets. • Online ticket booking has increased competition, consumers can easily compare prices of different airlines through various websites • Most consumers are not aware of high technology like using the internet so bargaining power is medium (Annual Report, 2015). |
Swot analysis
To evaluate British Airways' strengths, weaknesses and ways for improvements, SWOT analysis would be a good way. SWOT stands for strength, weakness, opportunities and threats.
Strengths:
• It is a leading brand in the airline industry with a large fleet size and international flights.
• British Airways has a strong fleet of aircraft.
• The company operates on all continents and has a number of international destinations worldwide.
• Customers have shown great brand loyalty and trusted the brand.
• Agreement between the United States led to the foundation of a new subsidiary called Open Skies, which provides quality services to customers (Grundy & Moxon, 2013).
• Its greatest strength lies in its operational staff that handles customers very well.
Weaknesses:
• An increase in fuel prices is always a problem for the airline industry. The increased prices resulted in an increase in ticket prices which affected the revenue.
• The slowdown of the UK’s economy also affected British Airways’ financial stability.
• Opening of a new terminal at Heathrow Airport has created problems.
• Non-fuel costs, such as those from staff and the landing charges, have also affected British Airways’ operational activities.
• Middle Eastern Airlines gives tough competition to British Airways (Annual Report, 2015).
Opportunities:
• Reductions in the cost of aircraft have reduced the operating cost of all airlines and created several opportunities in the market.
• British Airways has opportunities to expand in emerging markets like China, India and the Middle East region.
• The company has expanded its global operations by exploring new markets.
• In emerging economies, the company can also start various flights on international routes.
Threats:
• In European markets, British Airways has faced tough competition from other market players.
• The airline industry has also been affected by the global recession.
• Rising fuel costs are a great threat faced by British Airways and other airline companies. Continuous increases in fuel enable companies to increase rates of tickets.
• Due to tough competition from other market players, British Airways has to spend a large amount of money on marketing and promotions (Bertillo, et. al., 2013).
Marketing Mix
In order to promote brands or products in the market, companies apply the concept of marketing mix. The 7 Ps of marketing is price, product, place, physical environment, process, people and promotion (Groucutt & Hopkins, 2015). These elements of the marketing mix can be explained as:
|
Product |
• Technology • Design • Quality • Branding • Packaging |
|
Price |
• Cost of goods and services
|
|
Place |
• Wholesale • Direct sales • Retail • Multi-channel • Online platform |
|
Promotion |
• Advertisements • Direct marketing • Special offers • Free gifts
|
|
People |
• Customers • Management • Staff members • Culture
|
|
Process |
• Service delivery • Standardisation |
|
Physical evidence |
• Facilities • Interface |
This table describes various elements of the marketing mix and also important factors required for particular elements. The marketing mix of British Airways can be further explained as:
1. Product: British Airways has provided excellent services, and the products offered have satisfied the wants and needs of buyers. The company has provided flight tickets at reasonable prices and fulfils all needs of customers. The Airways has provided the best possible in-flight services such as Wi-Fi, fresh meals, drinks, etc.
2. Place: Placing refers to the distribution of services and products from the manufacturer to the consumer. Without proper distribution channels, services or products of an organisation cannot be reached to consumers. British Airways directly sells its products via the Internet which reduces the cost of retailers, initially, the company used retailers to sell products but technology has changed the distribution channel (Gaggero & Piga, 2011).
3. Price: British Airways has planned the prices of the products according to the choices and needs of customers. For example, to travel from one destination to another in economy class, customers pay £100; on the other hand, there are customers who pay £400 to get additional services in business class. On the basis of the requirements of customers, British Airways has segmented its ticket prices and services.
4. Promotion: In order to promote its services or products, British Airways has used various promotional activities. Direct marketing, public relations, advertising, sales promotion, etc. are ways through which organisations develop promotional strategies. For the purpose of promoting services, British Airways has set some prices on flights. For example, during Christmas, the company sells tickets at reasonable and discounted prices as “Christmas gift vouchers”. Electronic and print media are used by British Airways for the promotion of products and services. Other ways such as sponsoring events on health awareness, magazines, etc. are various promotional activities.
5. People: The success of a business is dependent on people because products and services are utilised by people. British Airways involved its employees relations in marketing because they are the ones who interact with customers. Therefore, it is important to hire and train the right people to deliver effective services to clients (Shaw, 2011).
6. Process: The execution of services is affected by the systems and processes used by organisations. So, to minimise costs, British Airways has developed an effective distribution system and systematic procedures and steps to ensure smooth working.
Physical evidence – In the services industry, it is important that the services and products offered are unique and have good quality. British Airways has provided excellent quality and services to customers. The company provides effective services on both international and domestic flights.
Conclusion
It is concluded that this marketing management British Airways Assignment evaluates the marketing mix, SWOT analysis, PESTEL analysis and Porter’s five forces of British Airways. British Airways has continuously operated successfully in different destinations but at the same time, there are some issues faced by airlines. Other airline companies give tough competition to British Airways by adopting various strategies such as low ticket prices (Kotler, 2012).
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References
Annual Report, 2015. British Airways [online available at http://www.iairgroup.com/phoenix.zhtml?c=240949&p=irol-reportsannual accessed on 18 November 2016
Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.
Howell, R., (2015). Market segmentation: the importance of age cohorts. The Neumann Business Review. pp.21-54
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