Impact on the Marketing Mix of Qantas Airlines - Case Study Example

Introduction Organizations are increasingly becoming complex and global in nature and as such require a broader strategic vision and impetus to makethem compete at the global level. The widespread and uncertain landscape of the global markets places a significant challenge on both the smaller as well as larger organizations to become efficient and effective in their operations and strategies. It has now become relatively irrelevant whether an organization is controlled by the government or under the private ownership as competition has almost equal effect on such organizations operating at global level. Qantas is the second oldest airlines in the world and the largest airline in Australia with over 65% of the domestic share in the country and handling almost 19% of the international traffic of Australia. These figures suggest that Qantas is the leading airlines in the world with a rich history and a developed market to serve. What is critical to note is also the fact that like other international airlines operating at the global scale, Qantas is also subject to uncertain macro-environmental factors which can hamper its overall progress and competitive position in the market. However, Qantas’s presence in both the domestic as well as international market makes it an interesting case study regarding whether it is subject to domestic or international macro-environmental factors will have greater impact on the overall competitive landscape of the organization. This paper will discuss and explore as to how some of the macro-environmental factors actually can have an impact on the marketing mix of Qantas airlines. Qantas Airlines Qantas is the largest Australian Airline and one of the oldest in the world with a rich history of not only serving the domestic Australian market but also the international market. With over 65% of the market share in the domestic market of Australia, Qantas also take care of the international traffic and controls more than 18% of the international market share also. Such high level of market share therefore clearly outlines the overall importance of Qantas in the domestic as well as international market for airlines. Qantas started as a local airline in Australia in 1920 however, it started to operate international flights from 1935. Over the period of time, Qantas has been serving at least 20 domestic destinations as well as 21 international destinations. This passenger traffic is covered through a fleet of 140 planes whereas it is also considering ordering new planes to improve its overall servicing in its existing as well as new markets. Considering the overall nature of the business and expanded market space available to Qantas, it is clear that Qantas shall consider itself as a global organization. Though it is majority owned by the Australian government however, the increasing complexity of the organizations, greater influence of the private firms as well as the fewer Australian owned organizations at the global stage suggests that Qantas’s success largely depends upon how it is influenced by the macro-environmental factors at international level. Following analysis will discuss and explore as to how macro-environmental factors can have an impact on the Qantas airlines. Macro-environmental factors Political Factors Airline industry has been subject to volatile political environment especially after the wake of 9/11. The events of 9/11 not only increased the risks to the consumers to travel through air but increased the security and other issues besides having active involvement of the governments in establishing stringent travel requirements on passengers. These political moves therefore resulted into gradual decline in the passengers travelling through the air. It is critical to note that Qantas is still a majority owned Australian Government entity therefore it may be subject to more legal laws and requirements. Though airline industry witnessed a gradual decrease in the regulations and is now one of the de-regulated industries however, increasing risks posed to the lives of the travelers in the wake of international terrorism may increase the overall regulatory impact on the airlines. (Amann, 2013) Apart from this, Australian government is considered as a business friendly with less stringent laws to start and operate the business. Besides, international markets where Qantas operates also have relatively good relationships with Australia. This is despite the fact that Australian government was once the part of the international forces which took part into the war against terror. This has also resulted into significant political risks as organizations like Al-Qaeda actually threatened to target the Australian assets in order punish the Australian government for its participation into the war. As such the overall political environment remained volatile and may have significant impact on Qantas. Economic Factors Australia was probably one of the few countries which achieved consistent economic growth despite the fact that most of the developed world was witnessing one of the worst economic recessions in the modern history of men. One of the key reasons as to why Australia was able to perform better during the crisis was the fact that most of its trade was with China. Since China remained the largest growing economic in the recent past therefore the overall contagion impact of the economic recession was relatively softer on Australia. However, despite the acceptable performance of Australian economy, overall economic growth remained sluggish and international travel declined. Since international economy was witnessing slow progress therefore the number of international travellers also declined over the period of time. This reduction in the number of international travellers therefore forced many international airlines to actually reduce the international fares and thus registered low margins and slow growth in the revenue. (Tribe, 2011) It is therefore critically important to understand that economic factors can have a significant impact on the revenue and pricing strategies of the firms. International airlines chose those destinations where the overall revenue per passenger is maximized and the number of passengers is higher. As such, international airlines may not be able to serve the routes which are less profitable or have relatively low number of international passengers to serve with. This is however, mostly due to the economic factors which restrict the ability of business travellers to frequently travel at international level. (Bamber, 2009) Social Factors It is critical to note that at global level, airline passengers are segregated according to the income levels. Accordingly, the airlines sell its tickets and other facilities according to the various facilities offered to these customers. Normally, there are different classes such as economy and business class sections within the airplanes which cater to the needs of different segments of the market. (Prideaux and Whyte et al., 2013) Apart from this, the major portion of the passengers comprised of either the tourists or business travelers. This therefore clearly indicates that the overall social dynamics of airline industry are being dominated by the income as well as the lifestyle approaches of the customers. In order to deal with such market segments, pricing and the overall product offering therefore needs to be designed in a manner which can cater to the needs of all consumer classes. Qantas also operates Jetstar, an airline service which is focused upon catering the needs of the low income passengers. It is a low-fare airline which flies from Australia and New Zealand to 15 international destinations including that of the Asia Pacific Region. This therefore clearly outlines that Qantas has been affected by the purchasing power of its passengers while at the same time addressing the issue of serving the customers according to their lifestyles. It is therefore critical to note that social factors may have an important impact on the pricing and product development of the firm as it need to cater to the different customer groups. Technological Factors Technology may have relatively deeper impacts on Qantas as new and improved methods of technology are making the air travel different. Apart from this, the alternatives offered to the consumers i.e. cars and public transport etc are also being changed as consumers are being offered faster and cheaper alternatives to air travel specially in domestic markets. (Fairbrother and Paddon et al., 2002) Electronic check-in, mobile payments as well as new safety and security technologies may have a greater impact on the overall marketing mix of Qantas. Increasingly, global consumers are paying through mobile phones while at the same time looking for cheaper deals marketed through third party websites. As such, in order to dominate this market, Qantas has to actually develop a network with alternative delivery channels to continue to achieve progress at the global level. It is also critical to note that technology is also probably the only factor which keeps on changing rapidly. New technologies are being introduced at much larger pace as compared to the changes in other factors. As such, in order to remain competitive and boast an image for the safe and secure airline, Qantas has to actually continue to update its technology to meet the new challenges. Apart from this, the emergence of big data may also prove as one of the key new technological trends to watch in order to further penetrate into existing domestic as well as local markets. (Edkins and Pfister, 2003) Legal Factors The airline or the aviation industry is one of the most regulated industries in the world as historically most of the airlines remained under the control of governments. Qantas is also a majority government owned organization however; it may be subject to the regulations from other governments also specially in its global market. Most of the legal complications arise in terms of complying the with safety and security standards set by each individual government allowing international airliners to operate in their countries. This therefore creates a relatively large set of regulations to be followed by Qantas while operating in the global markets. Complying with these international regulations on safety and security therefore result into an increase in the overall cost of operations for the firm. (Mcintosh, 2003) It is also important to note that airline industry witnesses a period of de-regulation however, after the 9/11, it increasingly become complex for the global airlines to operate under a heavily regulated environment. New security protocols were set up in order to ensure that airplanes are not being used for the purpose of terrorism. Apart from this, some of the destinations were discarded due to increasing security threats and other related issues. As such, legal environment may also be one of the significant challenges for Qantas to actually deal with. Environmental Factors Environmental factors are critical to the overall marketing mix of Qantas as issues such as global warming; carbon emission as well as departure taxes is some of the trends which can hurt the overall pricing decisions of the firm. There are stringent protocols and regulations to be followed by the airlines specially when operating within EU region. The limits on the CO2 emission and other protocols therefore clearly outlines as to how much environmental protection protocols have to be followed by the airliners. (Forsyth, 2005) It is important to note that due to compliance with the environmental factors, the overall cost may increase thus Qantas may have to increase its prices. However, it is also critical to note that Qantas can use its environmental protection compliance as one of the public relation and promotional tool. Green airlines and having sustainable business practices therefore can help Qantas to actually gain sufficient promotional experience at the global level. Conclusion Macro-environmental factors may have significant impact on the marketing mix of Qantas as it continues to operate at the global level. Important factors such as technology, legal issues and economic variables may continue to have significant impact on the way it designs and develops its overall marketing mix. One of the key elements of marketing mix to be affected by the overall situation is the way Qantas has to price its products and segment its customers and destinations served. Compliance with regulatory environment as well as ensuring efficient and technologically advanced planes may increase the overall cost of operations. This invariably may result into reduction in pricing or revenue for the firm and have an impact on the long term sustainability of Qantas. Qantas therefore need to take into considerations the macro-environmental factors existing at the global level to operate competitively. References 1. Amann, W. 2013. Integrity in organizations. Houndmills, Basingstoke, Hampshire: Palgrave MacMillan. 2. Bamber, G. 2009. Up in the air. Ithaca: ILR Press/Cornell University Press 3. Edkins, G. and Pfister, P. 2003. Innovation and consolidation in aviation. Aldershot, Hants, England: Ashgate Pub 4. Fairbrother, P., Paddon, M. and Teicher, J. 2002. Privatisation, globalisation, and labour. Annandale, NSW: Federation Press. 5. Forsyth, P. 2005. Competition versus predation in aviation markets. Aldershot, Hampshire, England: Ashgate in association with the German Aviation Research Society. 6. Mcintosh, L. 2003. Pax, slips and dunlops. Sydney, Australia: Watermark Press. 7.  Prideaux, B., Whyte, R. and All. 2013. 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