The Competition in the Market - British Airways - Essay Example

?Running Head: ABBREVIATED OF YOUR CHOICE (all caps) and Section # of Marketing British Airways is UK's largest international scheduled airline. In fact, it is one of the largest airlines in Europe. The origins of the company go back to the 1920's. This paper would conduct a PEST analysis on the airline as it is planning to expand. It would also discuss the various market research techniques that could be used by British Airways. Moreover, it would evaluate the competition in the market. Discussion Political: there are heavy regulations that have to be followed in order to contribute the operations. These regulations could be in relation to pensions and the change equal opportunities to employees regarding the age of cabin crew and pilots. Compliance to Political regulations would be needed in order to function. These regulations monitor the expansion of businesses operations and its impacts. Political factors also encompass the increased security due to the international security conditions. The terrorist attacks of the past have an impact over the way Airlines functions. British airways would need to have more security in order to comply with the political safety measures and to ensure customer satisfaction. Economical: there is a global economic crisis and most countries of the world are going through recession in the economy. This economic crisis can lead to reduction in sales. When expanding the business, this could be a consideration as during recession it is most feasible for companies to try and cut costs to keep up with the declining economy. Moreover, due to the condition of the economy, many people may be switching to cheaper modes of travel. When there is economic downfall, the currency rates are affected. Pound weaken especially against the euro, this decline in the exchange rates makes UK airlines vulnerable. There is a rise in the oil prices due to the middle ease unrest, these fluctuation in the price of oil and petrol affect the exchange rates and consequently the cost base of British Airways. Also, as fuel prices increase, the costs rise and this makes it hard to deliver competitive advantage. Moreover, there has been a considerable decline in the spending of average UK population. This makes the airlines vulnerable to competition. (Milmo, 2011) Social: According to the national statistics, the UK has an aging population, this is an advantage for British Airways as the older generation seems to indulge more in leisure activities and has more time to travel. The unemployment rate is increasing in the UK which means that there is more workers supply than the demand. This increase in the rate of unemployment gives the company bargaining power over the employees. Technological: with the passage of time and the advancement of information technology, the use of internet for buying and selling has been on a constant rise. Online presence is necessary for every business especially airlines and travel agencies. Recent studies reveal that there would be an increase in the use of price comparison sites by the consumers which means that the bargaining power of the consumer would increase as they would be comparing the prices of the airlines and competition would also increase. The internet usage and purchases have increased online bookings and ticket reservations. The trend of purchasing airline tickets over the internet has become widespread. With these trends it is imperative for British Airways to expand its virtual presence and keep up tp date with the advancements in technology, whilst maintaining a physical presence for the consumers that do not use the internet. As majority of the consumers are now moving to buying tickets over the internet, due to this change, market research could be conducted through email questionnaires and online reviews. With concise and straightforward questionnaires, a sample from the target market can be analyzed. Surveys can also be conducted through interviews; these interviews could be taken from passengers that are travelling. These are the direct users of the service and would be an accurate sample to assess the position in the market. Focus groups can be conducted to get further insight into the views of the target market. A focus group would help determine the areas where British Airways can expand its services. More often than not, the response generated from interviews and focus groups is deviant from that of the actual behavior of the customers. Observation techniques could be used to get a more realistic picture regarding the preferences of consumers and the services of the airlines. (Hague, 2002) Secondary research takes advantage of previously conducted surveys and research. It is less expensive, saves time and usually forms a base to conduct primary research upon. Since British Airways is a company that has been functioning since a long time, secondary research may not be as effective. However, it would help the company identify any new users, potential users and a new target market that they could segment the services to. British Airways could use internet as a source. It could assess the click stream behavior of the online users. Database of customers and population surveys can be assessed. Journals, magazine and other literature can also be used. (Proctor, 2005) British Airways caters to both, Long haul and short haul flights. In the long haul, the competitors are closely linked in terms of offerings and prices. However, with the advent of various small airlines catering to short haul, this segment has become fragmented. As there are low cost airlines catering to short flights, these have been preferred by travelers for domestic travel. There are no frill airlines that offer cheap travel for less services, this seems more attractive to frequent travelers. There is fierce competition with the other large airlines such as Virgin and Lufthansa. And British Airways faces competition with a number of contenders within the UK including Virgin Atlantic and United Airlines. Moreover, with the downfall in the economy, air fares have dropped and this has further increased competition. In order to carry on with successful expansion, British Airways would have to focus on the offerings, have more interaction with the customers and improve its online services by offering unique features. Conclusion With the help of the Pest analysis and the competitor analysis the prospects of expansion for British Airways were examined. It can be concluded that with the advancements in technology, online presence is pertinent. Hence, BA can try to focus its expansion over the internet. BA can implement strategies to improve the security of the flights and offer more options to passengers. References Gaskell, K. (1999). British airways: its history, aircraft and liveries. Airlife Pub. Ltd Baker, M.J (2001). Marketing: critical perspective on business and management. Taylor and Francis Stimpson, P (2002). Business studies. Cambridge university press Hague P.N (2002). Market research: a guide to planning, methodology and evaluation. Kogan page publishers. Proctor T. (2005) Essentials of market research. Financial times prentice-hall. Milmo, D. (2011, Feb. 25). British Airways may review expansion plans due to oil spikes. Retrieved April 2, 2011 from http://www.guardian.co.uk/business/2011/feb/25/british-airways-reviews-expansion-plans-oil-price Read More