British Airways Marketing Mix

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18th Jul 2017 Marketing Reference this

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“British Airways plc (LSE: BAY) is the flag carrier airline of the United Kingdom. The headquater of Britsh Airways is situated in Waterside near by its core London Heathrow Airport and BA is the biggest air commuter carrier on the based of swift, and long distance flights. The second main airport after heathrow is Gatwick airport, from where British Airways offers short haul flights.

The British Airways Group was bring into existance through Labour Government on 1st of September 1974 through. The existance of BA was due to the alliance of two biggest London-based air passenger carriers, BOAC and BEA, and with the two comparatively quite small local airlines, Cambrian Airways Cardiff and Northeast Airlines Newcastle upon Tyne. All of these four originally separate companies finally got dissolved on 31 March 1974 to form British Airways (BA) and then after thirteen years, in February 1987, the company got privatised. Later on British Airways got expanded by acquiring British Caledonian in 1988 and then Gatwick-based carrier Dan-Air in 1992. British Airways is the major and biggest buyer of boeing aircrafts.and in November 1998 British Airways placed its first main order of 89 A320 crafts.and then the second largest order was placed In 2007 for starting their long distance flights. The centrepiece of the airline’s the long-haul fleet being the Boeing 747-400; with 54 examples. Now British Airways is counted as the largest operator of the type in the world.

Richard Branson’s established Virgin Atlantic in 1984 and after that Virgin Atlantic begin a rigid and tense relationship with British Airways . In 1993 British Airways apologised Virgin Atlantic without urguing on compaign against Virgin Atlantic. This was the first time in airline industry that any airline was penalised for damaging the reputation of other airline and so Britsh Airways had paid damages to them. But British Airways still stayed as a biggest airline till 2008 on the base of large number of customers which was around 35.7 million passengers . But later on Easy Jet get the tittle of carrying maximum customer in the same year which was around 44.5 million. British Airways got listed on the London Stock Exchange 2001 with FTSE of 100 index.

On 12 November 2009, British Airways announced its alliance with the largest spain based airline called Iberia Airlines. This newly combined airline will make BA world’s third-largest carrier (Delta Airlines at number one ranking and American Airlines standing on second number) in terms of annual revenue.

Literature Review

2. Marketing:-

The American Marketing Association defines marketing as “the process of planning and executing conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals”. So it can be said that marketing “is getting the right product to the right people at the right price at the right time”.

2.1. Marketing concept:-

Marketing concept means the ways an organization should adopt to maximise their profits by fulfilling the needs of their customer groups. This marketing concept is very straight forward and that is why it has a great deal of commonsense validity.

The effective marketing starts right with the identification and appreciation of customer’s needs and expectations and then working backwards to develop such products and/or services to satisfy their customer’s needs and or demands. “The basic task of the marketing function operating under the marketing concept is not to manipulate customers to do what suits the interests of the firm, but rather to find effective and efficient means of making the business do what suits the interests of its customers”. It does not mean that all firms practice marketing in this ideal way. However efficient as well effective marketing as defined here requires that consumer’s needs should be kept first in organizational decision-making process.

2.2. Marketing Objectives

  • Growth in market share
  • Clearer product differentiation
  • Long term brand value to customers
  • Creating and launching new products / services – ‘Innovation’

2.3. Marketing Strategies

Marketing Strategies are the means by which marketing objectives can be achieved and generally can be remembered as 7Ps (also known as Marketing Mix) are as follows:

  • Price
  • Product
  • Place
  • Promotion
  • Customer Satisfaction
  • Processes
  • Physical evidence
  • People

Marketing Strategies of British Airways get fit into the marketing mix as:-

Product: On the basis of BA high class products (services they provide their customers) they are awarded with official 4 stars ranking.

Price: As far as pricing strategy of BA is concerned Officials of British Airways strongly, categorically and confidently address their customers to book their tickets online with full confidence at BA.com and if they ever find lower rates than British airways (anywhere online) they commit to refund all the difference, even if they make the booking online.

Promotion: British Airways is famous for introducing different kinds of vouchers and discounted coupons for their customers. They always seem offering discount voucher codes to their customers even if they are not the club members (but requires a simple registration only once with them). They also offer special rewards and benefits in terms of long/ short holiday packages not only for cheaper flights but for rented cars as well (in order to make their customers more happy and loyal towards their integrated services). The only thing customer is supposed to do is just collecting the BA miles points by flying with them or with any of the partner airlines and by staying in selected hotels and also by rented cars. All adding to customer’s points towards getting more and more points.

Place: British Airways having a vast network of flights across the globe serves destinations across all the six major continents including almost 371 destinations. Though main hub of British Airways is at London Heathrow airport but British Airways also operates a majority of their flights at London Gatwick Airport. Previously British Airways used to have its main hub in Manchester Airport which later on moved to London Heathrow.

3. Environmental Analysis of British Airways

3.1. SWOT Analysis

SWOT Analysis is a measure to audit an organization and its environment (internal and/or external). It is assumed as the first stage of planning and ultimately helps marketers to specifiaclly focus on the key issues facing that organization.

SWOT analysis is comprises of four different factors strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are basically meant to represent internal environment of an organization while on the other opportunities and threats are considered as external factors directly or indirectly influencing business of the organization.

(S)trengths

  •             Strength of British Airways’ is its Brand and rated as a first new speedy airline,specially purchased to promise comfortable travelling of passengers. This strategy was introduced by keeping an eye on customer complaints. previously received by the fleet used by British Airways in the past. The magnitude of Airways’ operations allows them on pro over all of their competitors by giving high class services to a far more wider variety of customers.
  •             Moreover, on the basis of knowledge and skills, BA operational research department claims that analytical skills performed by the members of the company and its employees are its strengths. Their strong customer focus further develops expertise in customer service areas in terms of purchasing high-end software for the air services and wide selection of it further enhance the organisation strength on compititors.

(W)eaknesses

  •             Britsh Airway is always great criticised on their poor marketing strategies which is one of the worst weeknesses of the airline which have had a bad impact on customer satisfaction. Despite the great infrastructure owned by the company, BA still needs to introduce and carry out better market schemes in order to attract more customers. Hence, a separate competitive package for customer service must be introduced in order to make the current service somewhat more attractive towards its clients, further prompting an opportunity of earning larger amounts of revenues. Morever limited knowledge about simulation software and its development is also reflects airline weeknesses.

(O)pportunities

  •             The rapid changing in techonologies and innovation in product , would implemented on the right time could be a great opportunity. As it is rightly said that the global changes can be considered and utilised as an opportunity to work with, while ignoring certain opportunities can be considered a weakness. In BA, virtual reality and appreciation of these opportunities could definately provide new sources for simulation and/or obtaining network softwares and ultimtely sharing expertise by means of special interest/focused groups. So opportunities derived from such kind of common thinking can really be utilized to further strengthen the company’s business.
  •             Technological trends further opens doors for new opportunities in terms of various business domains, (however, if it is taken for granted), opportunities can either be a treated as a threat or as a weakness as well. In order to promote global trends would be a greater chance for the organisation.

(T)hreats

  •             It is not really important that threats would be external it can be external. Internal threats as seen in management are not only the centralized but a bureaucratic system and above all poor decision-making really adds fuel to fire. Moreover, the company’s focus on national and local problems pose a threat since much more problems which company seems to neglect can be easliy appreciated in the global scheme. It neglects the global problems instead focusing deeply on the national and/or local levels. The global problems greatly offer tremendous threats if and when companies will ignore such. Moreover, globalization can be an opportunity and strength but at the same time can also be considered as a threat if not to be keen and vigilant of its tricks and treachery. Further, rapid changes on technology and customers’ behavior (in accordance to their demands) can also be a threat if interpreted mistakenly.

3.2 PESTEL Analysis

A PEST analysis is a business measurement tool, looking at factors external to the organization.

PESTLE is an acronym for Political, Economic, Social, Technological, factors. These factors are generally used to assess the market for any business or organizational unit. The PEST analysis points present as a framework for reviewing a situation, and can also be used to review organiztion’s current strategy or position, direction of a company, its marketing proposition and /or idea. There are many variants on this model including PESTLE analysis.

(P)olitical and (L)egal Factors

Political factor does effect any organisation in certain ways if the appropriate step will not taken to resolve . The incident of 7/11 left security threat for the airline industry as well ,due to this kind of activity will effect the government stability . If we talk about war in Iraq does prove that country is in crisis or instable.So due to these kind of accidents athourities has to imposed more strick strick legislation which evryone has to follow.

Recently legislation athourites has placed amended important regulations in airline industry which create opportunities and increase the competition as well.

The most important legal factor which effects British Airways were the strikes called by union leaders and recently they announced one more call of strike in coming summer, well BA always stayed in the news either the issues raised by union or it is plane crash but these events have bad impact on the potential customers.

(E)conomic Factors

Economical factors are very important while doing external analysis because if the price of fuel gone up does effect airline. According to recent survey the average spending on travel is dramatically goes down due to global crisis. Many of the organisation working on cost effective soltutions and try to use alternates instead of spending more.The demand for air travel is characterised by very high income elasticity. Usuall fuel prices goes parallel to the value of $ dollar and the exchange rate or lower value of sterling will also effect airline industry.

Due to the political instability in Iraq has effect the fuel prices and these price get record higher which add £100 million in BA’s budget.

(S)ocial Factors

The effect of social factor on trading is different for different countries but still this factor is considerable in growth and development of airline.So BA need to trained their staff on demographic changes. Recently in channel 4 they mentioned that the average people over than 50s’ do frequent travells as compared to young generation so, British Airways need to make such tempting strategies which brings more customers of this age .

(T)echnology

BA does around 57000 surveys every month to get best knowledge what their customers want and expect from them. Almost third of airline booking are now made online that again signifies presence of high class technology. With almost half of all Europe from UK site. Travellers can have access to their bookings or any changes via their mobile phones even. They can check-in and also access real time arrival and departure information with online system. This system is definitely saving their time as well as money of travellers and company.

(E)nvironmental

In Enviornmental analysis British Airways is focusing on climate change because this issue keep more value rather then others and on other hand new legislation on enviornment does efffect the company growth . British Airways have introduced programme on change of climate which has four core areas.

  • Green Scheme
  • Carbon emission
  • Fuel consumption
  • Noise pollution

“In March 2009 company carbon offset scheme became first ever airline offset product to meet the requirements of the UK Governments Quality Assurance Scheme”. Company targets to reduce company net CO2 emission by 50% far by 2050. Meeting this target will require intense investment in terms of newer technology, appropriate bio-jet fuels and in cost-effective emissions reductions in other sectors of the economy by the creation of new effective global carbon trading markets. Company continue to look for newer ways to improve fuel efficiency and most surprisingly over 600 projects have been assessed so far of these 55 have been implemented successfully.

4. Market Analysis OF British Airways:-

The main focus of Brtish Airways is on transportation but they also providing freight forwarding and leisure to their customers.

Market of Britsh Airways has increased to 5.7% in 2009 which allow them to reach £9.2 billion. Airline is considered as a most comfort medium of transport. In 2009 the ration of short distance flights was very high which gain 72.9% of the market. Currently other airlines acquiring maximum share of the short distance flight market because of cost effective.But these airlines still have a threat from the fuel prices.

4.1. Competitor Analysis

The competition in airline industry is getting boom now if we compared this market with the past market, because now customers has more choice in terms of luxury, cost effectiveand many others.

British Airways has two different marketing competitiotrs one based on short distance or at national level where as the other competitors are for international flights operating world wide. According to these two markets British Airways has keeping two different standards like national level flights are cost effective and very economical where as for international flight BA’s has entirely different enviornment on the base of luxury,price and other aspects.. Therefore, BA seem competing on a global, European, national as well as on regional scales.

New planes, new routes, additional (frequent) flights and management changes are all factors that promise an improved business. Such changes made by competitors need constant monitoring in order for BA to examine its current position and to develop future strategies.

4.2. Customer Analysis

“Shaw (2004) addresses what he calls the most fundamental and commonest mistakes made in airline marketing – failure to make a proper distinction between the ‘Consumer and the Customer”. Consumers are the people who actually travel and avail the service however it is important that BA consider customers, as they are the decision makers. This is important in both consumer markets as well as in industrial markets.

BAs customers can be found differ enormously in terms of their buying behaviour. Not only they differ in terms of their age, income, educational levels and geographic location but more fundamentally in BAs case in terms of their lifestyles and expectations which are influenced by many factors.

BA also operates in an industrial market which differs in buying behaviour that can further be exhibited by the formality of BAs purchasing policies, their delivery dates and their expected and actual performance.

Over the last few years increasing complexity in customer needs has been appreciated, as the customers have become more educated and demanding due to this following changes have occurred.

A shift in demographic to older passengers rather

Increased global connectivity ultimately allowing the customers more frequent usage of internet and search mediums (in terms of comparison of services, prices and general layout. Well maintained up to date data on company websites further make decision easier for the customers).

Increased requirement of convenience (new destination, quick check-in, in flight service/ entertainment etc).

Price no doubts remains more of priority.

All bits of major and minor egments have become more defined within their needs.

Evidence that British Airways is failing to respond to the changing customer landscape includes:

“The amount of BA customers recommending their services reduced from 61% in 2006/7 to 59% in 2007/8 (British Airways 2008).

BA have been criticised for innovation (Doganis,2006, Pg 165).

Poor reliability and baggage handling (AQR)

Failed attempts to target the price conscious consumer through low cost airline operation (Eirma,2008)”.

5. Branding

A name, term, sign, symbol, memo, design or a combination of all intended to identify the goods or services of one seller or a group of sellers and at the same time to differentiate them from those of competitors.

5.1. Scope of Branding

Branding creates a mental structure which helps consumers to organise their knowledge about the product or the service in such a way that clarifies their decision more in order to make appropriate decision ultimately providing positive value to the firm.

British Airways brand value stresses to ensure that all behaviours and communication should properly reflect the qualities of their brand. Any sponsorship by them must get fit in with these values.

“Brand values of British Airways are:

Safe and secure

Professional

Warm

Thoughtful

Responsible

British”.

As a global company they are interested in working with other companies with the purpose of reaching far international audiences.

5.2. Brand Crisis Analysis:

Early investigation shows that the British Airways’ get more damaged due to disaster in terminal.

A Disturbance in Public relation occured due to disorgansed management , lack of strategy in marketing, and the events of the past few days blighted BA’s brand for years. “The problems at T5 hit 100% of the brand, all over the world. Then there is the very specific damage done to BA’s brand equity. At the heart of its positioning are ‘reassurance’ and ‘reliability’, making it peculiarly vulnerable to a debacle like that of T5”. In branding terms, there is a world of difference between inconsistency and contradiction. BA is found facing the mother of all contradictions, which was further exaggerated by the coverage of international media. But this was favourable for international passenger carrier to shatter the compaign based on Scheduled-BBH- created brand building. But the unfavourable covering left bad reputation of brand on customer expeirence, on the other hand this will lead to Britsh Airways’ This, however, leaves the brand facing a torrent of negative coverage and a black mark on passenger’s experiences, without any possible injection of brand equity in the predictable future.

BA’s poor strategy of marketing really effected the Brand. Few days before British Airways adverise that the Terminal 5 would be the future of airline to just create attention of customers. “The image of BA chief Willie Walsh, arms outstretched, gushing, ‘I think it’s great and it’s going to get better. This is a hundred times better than anything else at Heathrow,’ has been etched in the annals of PR blunders”. Aside from undermining Walsh and his tenure as chief executive, this has compounded a huge damage to the brand name of BA. Britsh Airways’s have contigency plan for the worst situation whereas skillful and Public relation staff is not possible to managed. British Airways is always staying in the news wheather it was plane aircrash or some thing different. Like few months before an air craft was crashed and this news stay on news channel for long four days.

The dilemma of Britsh Airways is not finished yet like loss of 15,000 bags of customers still missing, 10% of scheduled flights were canceled and no positive assurance that these problems are ssorted . So,in the end there is no point to claimed that British Airways’ is out from the crisis. A last weeken aspect is the issue on British Airways staff. One day higher offical of terminal 5 Gareth Kirkwood”Unlike T5 boss Gareth Kirkwood, who usually around with praetorian come forward recklessly infront of media reporters for announcement but later on he moved back to his office before answering to the questions asked by media. When senior supervisors or managers are not around they want staff to deal annoyed passengers, even one of the union leader issue a statement in which he requesting customers that do not use harsh words for British Airways’ employees. British Airways announced terminal 5 as an favorable circumstances for their employeed but on the other hand prospect in its employer brand strategy to manage staff is quite weaken. Morever the major weak point for British Airways is its unfortunately weak chief executive; the terminal which will stay open for ages is destroyed at initial stages. Furthermore the Brand name of leading airline getting damaged in front of interntaional customers.

6. Customer Relation Management

CRM is “the development and maintenance of mutually beneficial long-term relationships with strategically significant customers (Buttle, 2000)”.

CRM is “an IT enhanced value process, which identifies, develops, integrates and focuses the various competencies of the firm to the ‘voice’ of the customer in order to deliver long-term superior customer value, at a profit to well identified existing and potential customers.(Plakoyiannaki and Tzokas, 2001)”.

6.1.Customer loyalty:

The term customer loyalty is used to describe the behaviour of customers/their tendency to come to same service or product again. In terms of air travel industry companies offering good ratings, reviews, or testimonials definitely have a strong impact on customer’s choice. Customers referring others to the same service they get satisfied really add to marketing of the company with absolutely no cost. By praising a service or in other words offering favourable word of mouth publicity regarding a product, telling friends and family, adding them to the number of loyal customers ultimately adds to the profitability of the company.

British Airways is to announce a shift in strategy by providing passengers not only cheap fares but also providing them the access to luxury airport lounges and other benefits through their new loyalty schemes.

The British Airways Executive Club is not just another frequent flyer programme. It has been designed not only to recognise but also reward business travellers every time they fly. The airline is responding to the slump in business travel during the recession by offering frequent flyers the elite membership of its Executive Club even sometime in a year to those passengers as well, buying discounted economy tickets.

Previously, only passengers on expensive fares could earn Tier Points needed for Gold or Silver membership which opens the doors to world-class facilities for them, including its £60 million ‘Galleries’ lounges at Heathrow’s Terminal 5 featuring champagne bars and free fine dining etc. But now company introduces certain packages for the less frequent or short flight passengers as well, though they can avail its benefits in certain times not in the whole year like frequent flyers.

7. E-Marketing

E-marketing means using digital technologies (newer and improved) to help sell one’s goods or services. These technologies are definitely a valuable complement to traditional marketing methods whatever the size of the company or business model actually has.

7.1. E-Marketing Strategies:-

“Electronic sources- Internet, mobile, itv

Interactive media Personalized communication service

Global reach

Cost efficiency

Easy access

Targeting right audience

Branding

Measurability”

7.2. E-Marketing Tools

“Websites- easy to use, content specific, simple design

SMS/ texting through mobile

Email strategy

Sell the product

Speak to customers

Serve people

Save time

Sizzle and extend brand identity”

The use of e-marketing strategies allows organisations like BA to approach customers at their convenience and improved convenience and quality of their services adding to positive word of mouth, ultimately better profitability.

“British Airways has announced its newly friendly user website, and promote this website as a planning tool for their customers to maximise their online business nad made it tempted for the customers who preffer to do online bookings and travel planning . As a Brand online bookings and travell planning is a far easy way of communication for its customers. British Airways spend more than around $180 million in developing and maintaining the websites which reflects a straight and simple version in context of online operations so in result the largest airline received customer satisfaction.

” Britsh Airways has always been focusing customer for their creativity and improvement.Rob McDonald leading staff of Britsh Airways said in a statement That website is not only cost and time effective , the extensive operation on new websites also allow the customer to get more control regarding time management, money and deliver them best travel experience on board. In addition he said that we are trying to devlop more smart website so customer can easily grasp information regarding their proposed travels, furthermore he said that we know our customer needs and to fullfil them is our priority.

Online booking system through British Airway’s website has increased massively from 2001, customer getting awareness day by day and they do prefer online bookings rather then pop in to travel agent. The ratio of online booking in 2001 is just 3% but now it increased to 20% which is comparatively 7 times higher then before. Similarly overall worldwide revenue is also increased which is twice from the last 2 years and on other hand revenue for Asia Pacific region is five time higher then before so these online transaction system increased the company revenue.

As a leading brand in global international airline market, aircrafts of British Airways’ landed on the runways to almost more than 200 destinations almost all over the worldand from which half of the flights are the world’s largest international passenger airline, British Airways plc’s planes touch down daily on runways almost everywhere from Tehran to Lagos to Bogota. About half of its flights are across an ocean and most of the flights fly to US. British Airways’ marketing department has launched various email marketing strategies especially for the loyal customers who travels on long haul flights and introduced a niche website to maximise their online trasactions.

Conclusion:

British Airways as a leading international airline has to work hard and need improvement on their marketing strategy. The poor marketing strategy have always bad impact on company growth. I have analysed that British Airways need to improve marketing strategy to gain maximum customer loyalty. Furthermore British Airways is really effected due to global financial crisis, so to handle this situation Britsh Airways need to develop such marketing stratagies to get competitive advantage. Morever the new legislations imposed by the athourities on enviornment, noise pollution have direct and indirect impact on the airline. Britsh Airways need to target older people over 50s’ because they often travel and planned journeys so they would be potential customer. Britsh Airways is planning to introduce more rewards for frequent travellers. In addition British Airways has a threat for their short haul flights from Easy Jet because Easy Jet is cost effective for short haul flights so britsh airways should develop competitive stratagy to sustain in airline industry.

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