British Airlanes Marketing Plan Proposal - Essay Example

?Section I Marketing, according to Gronroos (1997), is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchange and satisfy individual and organizational objective. The concept of marketing mix emerged from the notion that all the elements of marketing mix have to be integrated to maximize profits. Today the marketing mix elements have stretched beyond the four Ps and now include 7 or even 9Ps. Thus the right product should be offered at the right time to the right target audience, through the right sales and promotion strategy at the right price (Bennett, 1997). Internationalization and globalization have made markets competitive and the airline sector in particular, has had to revise its marketing mix to suit the current trends and customer needs. An evaluation of the existing 7Ps of the marketing mix of British Airways (BA) would help develop an integrated one-year marketing strategy. Product: the product in the airline sector is more than just the sectors the airline flies to. It also has to take into account the airports it operates from, the type of seats on offer, the on-board facilities including food and entertainment. In addition, aligning with customer needs is important. BA flies customers at convenient times to the best located airports across the world. They have the best global connectivity and they have a strong presence in the top tier global cities. The target customers of BA include both corporate and the leisure segment. However, with a focus on the business travelers, they want to promote their new sleeper service (Bahnond, 2004). Nevertheless, they are targeting several segments simultaneously – they are also rethinking the leisure segment Pricing: Pricing also has to take into account consumer psychology, the sectors, the season (as demand in certain sectors are seasonal). However, BA does not believe in cutting costs at the expense of quality (Prokesch, 2000). Even in a cutthroat, mass market there are many would be willing to pay premium price for the services. BA commands premium price as they fill customers’ value driven needs. Place: Place in the airline sector refers to the location from where the passengers can access bookings and avail of the services. BA has done away with intermediaries like the travel agents and the purpose is not merely cost reduction. It enables the airline to collect personal passenger details. Most of their business comes through the internet and very little is derived through telephones or call centres. Through the internet they are pushing services such as online check-in, fast bag check, and pre-flight selection (New Media Age, 2004). Through this they target the regular BA travelers and those receptive to new technologies. They have dedicated travel sites for this and the purpose is to communicate the convenience of the web services. This focuses on people who book through the net. Promotion: This includes advertising, sales promotion, direct selling and public relations. Again, this could vary depending upon the season, the sector and competition. BA’s public relations strategy is supported by values and goals. They try to ‘understand customers better than competitors’ which is in line with the communications theory that it is essential to understand the customer and not enough to just listen to the customer (Olorunniwo, Hsu & Udo). To lure the holiday makers they have appointed specialized marketing agency. People: This, in the airline sector would also include the staff that delivers the service. The customer facing staff at BA is passionate about delivering outstanding customer service. To promote organizational values among people they have a “Owning Our Future” program which every employee throughout the organization has to undergo at some point (Summerfield, 2005). People should understand the business direction, the business environment which would help them understand how the business can be taken forward. Process: This refers to the automation and the control procedures. The long haul fleet replacement program is fully financed up to 2013. They have a fleet of other aircrafts on which BA expects to improve the services for all customers. They have also invested in terminals and lounges. They have also launched a premium-only direct service from London to New York (BA AR 2009). Physical: refers to the ambience of service, the decor, and cleanliness. Based on customer experience, BA treats each of its passengers to a luxury experience (Bell, 2008). Even within the aircraft, for the long haul passengers they have a Well-Being in the Air program so that passengers are able to combat fatigue and improve circulation (Prokesch, 2000). While BA makes the best efforts to reach the target customers and take care of their needs, with an efficient customer-service staff, it is struggling as it has to deal with competition, with a demotivated staff and disgruntled passengers (Reed, 2008). Through the internet BA offers other value-added services like check-in, seat allocation, printing boarding pass, book hotels and car at the destination and order special meals on-board. However, the premium customers would not be willing to spend time on the internet to make bookings. They would prefer to make the booking either directly with the airline or with an agent. Moreover, they focus on different segments through different techniques and have lost direction. They want to lure the holiday makers, they target the regular passengers and they also focus on the premium corporate customers. However, any organization should target the highest revenue generator segment and devise the marketing strategy accordingly. Section II Marketing strategy The airline industry in general is facing the most challenging business environments due to several factors. These include decreased load factors, increased competition, in addition the rising insurance and labour costs (Boland, Morrison & O’Neill, 2002). The emergence of the low-cost carriers has added to the concerns of the airlines. Long haul premium customers are the key to profitability for BA even though they also cater to the leisure segment. To be the airline of choice for these customers, the following marketing strategy has been suggested. They have to make investments in improvements targeted at these premium customers. With the objective to enlarge the overall market and to enhance profitability, BA must differentiate itself in the long haul premium customer segment. Segmentation Marketing strategy enables the airlines to determine which segment of the market to target their product to, and accordingly position their product. Due to the influx of the low-cost airlines in the sector, segmentation in this sector has to be based on the consumer demands. Usually segmentation is based on demographics (age, gender, income, education) but in the case of airlines it has to be based on consumer expectations (Diaz-Martin et al., 2000). Expectations based segmentation is a powerful tool in the services sector as it provides knowledge for customer identification. This aids customer service. Understanding of the consumer needs and expectations helps plan the promotions for the services. Airlines cannot afford to merely develop schedules to fill seats. This is a sales-oriented approach and is based on attitudinal form of segmentation where the results have been very flat as in the case of British Airways, United Airlines and Singapore Airlines (Goller, Hogg & Kalafatis, 2002). At BA customer satisfaction is critical to success and they base all their business decisions on this (Britishairways.com). They gather data on customer satisfaction through ongoing survey which measures the reactions to all aspects of the service. Gathering data from different routes, from different airports and different airports helps them take an informed decision. Meeting the rising customer expectations is central to their strategy of transforming BA into the world’s leading global premium airline (BA AR 2009). Hence, their segmentation strategy is in alignment with their central strategy – meeting customer needs. Thus, relationship at each stage would have to be evaluated as this provides the direction in which the relationship is progressing (Zineldin, 2006.) Such customers would be willing to pay a premium price for the services. Thus, BA would have to identify the needs of the premium long haul customers. However, segmentation should not result in ignoring the needs of other customers. Targeting Targeting implies renouncing a great number of potential customers and holding back from the strategy to sell as much as possible (Daneels, 1996). It differs from a sales-oriented approach and is a customer-focused approach. After segmentation, an action plan has to be devised which targets the area to be covered, the customers to be reached and the advertising budget to be allocated for this particular target customers. Targeting is essential as it helps in employing the right marketing mix. BA should devote all its resources to acquire and retain the loyal customers. Within this set of target customers also, BA should have two or three levels which would help the airline to integrate the elements of marketing mix. There may be some unprofitable customers or customers that have switched the service provider, within the long haul premium segment. BA should focus on getting them back and this would require an understanding of why they switched in the first place and what their needs are. Again, this would help in devising the right marketing mix. Positioning The target market is the long haul premium customers and the older customers that have switched to other airlines. BA now has to position their service against competition. Positioning is the image and the impression about the airline (Moschis, Lee & Mathus, 1997). In projecting the image, BA would have to take into account the values of the customers and the impression they carry of the competition. The high-priced segment is sensitive and hence the positioning or the brand image has to be determined accordingly. Product positioning should be done based on the fact that the target audience is composed of both sexes. Tactical integrated marketing plan: Product: BA has already started premium-only direct flights between London and New York. They should seek more such destinations because just one sector is not sufficient for the premium passengers. They can even add premium flights for holiday destinations. Place: since BA uses only the internet for bookings and amendments they must ensure that customers have a smooth experience as the first experience results in not only repeat purchase but also referred customers (FitzGerald & Arnott, 1999). However, for the premium customers, internet may not be the answer. Internet suffices for the cost conscious passengers but the premium customers seek personalized service at each stage of the booking process. Price: Price should not be too low because this impacts the image of the airline. The premium passengers seek service and are willing to pay the premium price for it. If prices are low, there would be a tendency to compromise on quality which may take away even the loyal customers from BA. No differential pricing policy should be followed in the case of premium passengers. Promotion: Men and women process advertisement messages differently with women being more sensitive to the risks in any product (FitzGerald & Arnott, 1999). Advertisements should reflect the changing needs of women customers. Press reports have more impact than the advertisements. Airlines should offer benefits that are important for customers and difficult for competitors to duplicate (Long & Schiffman, 2000). People: people should be trained in implementing relationship management and practice CRM (customer relationship management). Certain staff should be designated to look into the needs of the premium long haul passengers and these should be senior executives. This would help to achieve a differentiated product which competitors would not be able to duplicate. Process: Service both outstanding and poor influences customer loyalty (Wirtz & Johnston, 2003). Since BA has international reputation, delivering outstanding customer service remains a continuous challenge. Both complaints and compliments should be taken seriously. Physical: The all premium flights should be the ultimate in luxury. This requires an understanding of individual needs of the premium customers. In fact to attain customer delight, they must give more than customer expectations. Appropriate control and evaluation mechanisms At every stage of the relationship, BA should evaluate the relationship with every premium customer. This can be done through effective CRM which is very poorly maintained at BA. Effective CRM would enable BA to determine the various elements of marketing mix more effectively. This is because it has become imperative in the airlines sector to respond quickly to the changing demands of the customers (Jiang, 2003). CRM applications would also help evaluate of they are on the right track. Summary of the Marketing Plan Structure Segmentation strategy should always be in alignment with the central strategy – at BA it is meeting customer needs. BA should target the long haul premium passengers as these customers are the greatest revenue generators. Targeting helps in applying the right marketing mix and plan the advertising budget. All the seven elements of the marketing mix should me with sole purpose of positioning itself as a premium airline. It should project such a brand image that the customers feel a sense of pride in flying BA. 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