Qantas Report PDF

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Business report on Qantas using the 7 P's Marketing Mix and the SERVQUAL model...

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Assessment Task 2 Group Report - Qantas BUMKT 2601 Services Marketing

Reference Style: APA Word Count: 3,273 words

2 Executive Summary The organisation discussed in this report is Qantas, one of Australia’s most trusted airline services since 1919. The 7 P’s Marketing Mix is analysed against Qantas. This section discusses the product/service Qantas provides, the place or distribution of its services, the pricing of Qantas compared to competitor airlines, the different techniques Qantas use to promote their services, how the employees and consumers are a focus to Qantas, how the physical environment and colours ensure Qantas are noticed and remembered, and analysing the Blueprint of Qantas’ major interactions and how Qantas would respond to potential complications. The major service Qantas provide is flights, as well as offering a range of supplementary services to enhance the customers experience during their flight. Qantas created a low-cost carrier, JetStar Airways, to reach a broader market and remain competitive. The most attractive element of Qantas is the red kangaroo on the vertical stabiliser, in which consumers know it is an Australian airline. The potential service gaps and reommendations are discussed regarding Qantas’ services. Parasuraman, Zeithaml and Berry’s (1988) SERVQUAL survey was created to evaluate an organisation’s service quality by comparing it to consumers’ perceptions and expectations using 21 broad questions and a 7-point rating system. The recommendation to Qantas is to adopt a feedback survey system to consistently improve their services by receiving genuine feedback from consumers. The delivery gap is discussed and is recommended that Qantas continuously train their flight attendants to work at a high level of service and to manage customers expectations by learning what customers expect and working toward that level or working above and beyond. The communication gap is focused around the difference between what the company communicates and what the customer understands and subsequently experiences. Qantas should strive to ensure that the advertising content reflects those service characteristics that are most important to their customers.

3 Table of Contents Introduction

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Part One: Describe the Service Organisation’s 7 P’s

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1.1 Product/Service 5 1.2 Place (Distribution) 5 1.3 Price 6 1.4 Promotion

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1.5 People 8 1.6 Physical Environment 8 1.7 Processes 9 Part Two: Identify Service Gaps and Provide Recommendations

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2.1 Conceptual Model of Service Quality (SERVQUAL) 11 2.2 People and Deliver Gap 11 2.3 Promotion and Communication Gap 12 Conclusion

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References

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4 Appendices

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5 Introduction Services is widely known as doing a thing for you, not making something for you (Silvestro & Johnston, 1990; Johns, 1999). Services are monetary activities implemented by one party to another. Services are usually time-based and deliver desired outcomes to the consumers. Services are often exchanged using money, time, and effort; therefore, customers expect value in return from expertise, goods, networks, facilities and systems (Wirtz & Lovelock, 2018). The marketing mix is a set of marketing tools that a business recognises when producing the feedback that it desires from its various target markets. It consists of all the elements a business can utilise to influence the demand for the services it offers to consumers. The service sector uses 7 P’s to satisfy the needs of service consumers. The 7 P’s are product, place, price, promotion, people, physical environment and processes (Ivy, 2008). The organisation discussed in this report is Qantas; the most well-known Australian airline, notorious for their red kangaroo symbol. Qantas, which stands for Queensland and Northern Territory Aerial Services, was founded in 1919, just after World War One. Qantas provide a range of services, including flights, in-flight services, accommodation, cruises and frequent flyer rewards. Qantas are passionate about their consumers, employees, and providing the best service they can, ensuring each person is satisfied with the services they provide. This report analyses Qantas’ services against the 7 P’s Marketing Mix and identifies the potential gaps and recommendations to improve their services using the SERVQUAL model.

6 Part One: Describe the Service Organisation’s 7 P’s 1.1 Product/Service The product or service element refers to the service that is sold to the customers. The major service Qantas provides to customers is seats on a flight. On top of this, Qantas provide a range of supplementary services and products. Supplementary services are necessary, either for enhancing service delivery or are needed on top of the product purchased (Wirtz & Lovelock, 2018). In regards to Qantas, this includes the booking method for the customer, the options for booking a seat and alternative ways of paying online. Enhancing supplementary services add extra value and appeal for customers (Wirtz & Lovelock, 2018). Qantas’ enhancing supplementary services include a 24/7 customer service hotline and eliminating extra fees during the pre-process stage. Throughout the flight, Qantas offers a complimentary meal and beverage (excluding alcohol), inflight entertainment and USB outlets (Qantas.com, 2019). Qantas also collaborate with various hotels and Airbnb’s to allow consumers to book for all neccessities on the Qantas website and can earn more frequent flyer points. You can additionally purchase wine and insurance through their website. 1.2 Place (Distribution) The place or distribution element refers to where the service takes place. During the various stages of Qantas’ services, the service can take place in a range of different places. The first stage is when the customer books the flights, this can happen from anywhere, but more commonly online or through a travel agent. The next phase occurs predominately a few hours before the fight, where the passenger(s) check into the airport. This process typically occurred in person at a service desk, in many cases this is the passengers first direct contact with Qantas staff, or alternatively, the check in can be done online or at the self-check-in kiosks. After moving through the airport, the passenger needs to board the plane, this includes meeting flight staff and finding their seat. The next phase is the core phase of the service, which is the duraiton fo the flight. This is considered an intangible phase as much of what the customer has purchased is how they are treated by staff and the seat they are sitting in. Finally, when the plane lands at the destination, the customers final place of service will often be at the baggage claim, where they pick up their luggage and, finally, depart the airport and the service terminates.

7 1.3 Price Effective pricing is vital to the financial success of service firms. Any pricing strategy must be based on a clear understanding of a company’s pricing objectives (Wirtz & Lovelock, 2018). The comfort and entertainment facilities inside the airliners, allows Qantas to charge a premium price from its customers. For grasping a larger market, Qantas also offer economy tickets which tend to be more reasonably priced. Another strategy Qantas has used to reach a broader market and remain competitive is having a low-cost carrier, JetStar Airways, to give consumers the alternate choice in the price and convenience. Qantas uses the ‘cost plus margin’ method of product pricing. Markets with more demands prompts higher pricing for Qantas. Qantas provides price discounts without portraying them as discounts. This is to maintain the customer price perception (UK Essays, 2018). A document prepared by Homsombat, Lei and Fu (2014) explored the effects of the airlines-within-airlines strategy adopted by the Qantas airline group, which runs Qantas Airways and its low-cost carrier, JetStar Airways. JetStar has been used as a competitive brand against other low-cost carriers such as Virgin Australia and their cheaper airline Tiger Airways. Studies found that while all of these carriers have adopted revenue management practices, the pricing of Qantas and JetStar does not seem to be coordinated (Zhang, Sampaio, Fu & Huang, 2018). Comparing the airlines in terms of value to the organisations, both offer very similar benefits. They both provide a loyalty program. Qantas owns the Frequent Flyers rewards program and Virgin Australia owns the Velocity Frequent Flyers program. Loyalty programs offer a high level of benefits, depending upon the loyalty base of their consumers (MBASkool, 2019). Qantas also has a wide alliance of international partnering airlines which allows customers using their frequent flyer program to benefit from more trips and upgrades on a larger number of airlines (Simple Flying Learning Team, 2018). Another competitor for Qantas is Emirates airways. Comparing flights between the two airlines, Qantas came out significantly cheaper overall, even with added baggage costs. In terms of deals, both airlines offer similar prices for deals, especially to European destinations (Yip, 2019). Overall, Qantas as an airline has more deals available for a wider range of destinations despite Emirates flying to more destinations.

8 1.4 Promotion Qantas uses many media channels such as TV, print and online ads to market its services. Qantas’ Frequent Flyer program is considered one of the best loyalty options, as it offers a lot of extras when using Qantas and its corporate partners. Promoting online has many benefits as technology is continuusly advancing and more consumers are using online sites to book flights and to browse other options. Qantas sponsors the Australian rugby team called the Qantas Wallabies. Rugby is one of the main sports in Australia; Qantas would benefit from the sponsorship as it aids powerful brand recognition. Qantas also openly supports the LGBTIQ community which promotes brand recognition through campaigns. This also builds consumer trust and creates a positive brand image (MBASkool, 2019). Promotional strategies used by Qantas include advertising, sales promotions and public relations. Qantas uses advertising agencies to create media advertisements for television, radio, magazines, newspapers, brochures, posters in travel agents and billboards. In 2004, Qantas reshot its famous 'I still call Australia home' commercial at an estimated cost of $10 million, making it the most expensive advertisement in Australian history. Its advertising debut was the first commercial break in the opening ceremony of the Athens Olympic Games. Sales promotion is seen as a form of communication with an incentive. They are usually specific to a time period, price, or customer group (Wirtz & Lovelock, 2018). Overtime, Qantas and Jetstar have had a number of promotional sales. When Qantas first launched Jetstar it released 100,000 tickets at an introductory price of $29 (Qantas, 2004). Public relations involves the efforts to stimulate positive interest in an organisation and its products by sending out news releases, holding press conferences, staging special events and sponsoring news-worthy activities put on by third parties (Wirtz & Lovelock, 2018). Previously, Qantas used famous US actor, John Travolta as a brand ambassador to promote the company. Australian actor Hugh Jackman and AFL sportsman Adam Goodes also feature as ambassadors for Qantas airways (Qantas, 2019). Qantas has previously experienced backlash over their promotional material. In 2011, one of Qantas’ social media promotion turned into a PR disaster as users hijacked a promotional tag

9 to tear into the airline. On its official Twitter account, the airline asked its followers: “What is your dream luxury inflight experience? Answer must include #QantasLuxury”. But things quickly turned bitter, with users hitting the airline with a barrage of brutally critical tweets, just weeks after it left thousands of travelers stranded (Casey, 2011). 1.5 People The people element refers to the staff, salespeople, and stakeholders who work for and are involved with a business. Bagozzi (1975) states organisations have two marketing goals, (i) to satisfy consumers’ needs, and (ii) attain competitive advantage. To achieve both goals, the organisation needs to uphold good relationships and interpersonal skills with employees and consumers, ensure consumers are directly involved with the service, and by recruiting the right people and training staff to perform the finest service (Judd, 1987). Qantas believe their employees represent the excellent service of the airline and uphold the values of Qantas. Qantas expresses acknowledgement of its success by nominating employees each year for the ‘employees by employees’ award for showing consistency in abiding by Qantas’ Group Values (Qantas, c2019). Qantas gives back to its consumers by introducing the Frequent Flyer Program. The Frequent Flyer Points program allows consumers to earn points doing everyday tasks, such as shopping, using a credit card, booking a hotel, hiring a car, and travelling. The program is designed as a competitive strategy to yield customer loyalty and encourage the repeat use of Qantas’ services (Whyte, 2003). The service-profit chain model is a tool to help managers develop service and impact the satisfaction levels of employees and consumers to maximise competitive advantage (Wirtz & Lovelock, 2018). Comparing with Qantas, the service quality, group values and the satisfaction levels of its employees are the reason Qantas maintains the service value and satisfaction of its consumers. 1.6 Physical Environment The physical environment refers to everything customers see when interacting with a business. This includes furnishings, interior design and layout, the staff's uniforms, how the staff act, equipment, branding and signage, packaging and labels, website, and other visible cues (Wirtz & Lovelock, 2018). Services are intangible, so there is no physical product to evaluate,

10 rather, the tangible aspects of the environment shape consumers attitudes (Baker, Grewal & Parasuraman, 1994; Bitner, 1992; Koernig, 2003; Shostack, 1977; Zeithaml, 1988). The most well-known physical aspect of Qantas is the red kangaroo on the vertical stabiliser, which helps consumers identify the plane as an Australian airline (Koernig, 2003). Qantas also use the colour red on their website to attract consumers. The colour red can be associated with energy, earth, love, passion, adventure and power (Wirtz & Lovelock, 2018). Red is a very noticeable and dominant colour which attracts the eye almost instantly, which may be a ploy Qantas use to gain its consumers’ attention and ensures consumers think of Qantas whenever they see a red winged plane in the sky. 1.7 Processes The process element refers to the how and the what of an organisation; how an organisation does things and what it does. Having good processes in place ensures that delivery and service processes are implemented effectively, as this will save time and money by increasing efficiency (Wirtz & Lovelock, 2018). Referring to appendix 1, the service blueprint showcases the major interactions consumers have with Qantas, the direct action from service personnel, the backstage processes, the potential emotions of consumers, and the technology operation. The major processes of Qantas include the initial booking of flights, getting to the airport for flight, the check-in stage, waiting at the gate before boarding, and boarding the plane before flight. Most of these interactions are completed with communicating to personnel. The backstage processes revolve around maintaining the quality of service and the satisfaction of the consumer. Potential issues could occur during the ‘get to the airport’ stage and the ‘get to gate’ stage. Complications may include experiencing traffic whilst trying to get to the airport which could result in missing the flight, and delayed flights whilst waiting at the gate to board, which could occur from weather. Unexpected complications could result in consumers having a negative emotion toward Qantas, which would affect their overall satisfaction. Qantas is a very large organisation, and can often endure backlash over certain outcomes, such as delays, cancelled flights, corporate social responsibility, and safety concerns. Qantas are responding to change, in which is crucial to the long-term success of the organisation. Qantas’s changes include technology and resources, identifying what customers want, and adapting via innovation (Qantas,

11 c2019). To achieve this, Qantas’ processes include creating a low-cost carrier (JetStar) to allow a more diverse segment of consumers to endure the service, create customer loyalty programs, and widening travel routes.

12 Part Two: Identify Service Gaps and Provide Recommendations 2.1 Conceptual Model of Service Quality (SERVQUAL) Service quality is a high standard of performance that constantly meets or exceeds consumers expectations. It is critical to organisations to continuously improve the service quality and keep it at a consistent level as it is a key factor of consumer behaviour, including word of mouth (Wirtz & Lovelock, 2018). The five broad dimensions of evaluating service quality include tangibles (appearance of physical elements), reliability (dependable and accurate performance), responsiveness (helpfulness), assurance (credibility, security and competence), and empathy (easy access and good communications)(Zeithaml, Parasuraman & Berry, 1990; Zeithaml, Bitner & Gremler, 2013; Wirtz & Lovelock, 2018). Parasuraman, Zeithaml and Berry (1988) created the SERVQUAL survey to evaluate an organisation’s service quality by comparing it to consumers’ perceptions and expectations. It is a generic measurement tool that can be applied to a vast majority of service industries (Wirtz & Lovelock, 2018). There are 21 broad questions under the five dimensions of service quality, and the questions are accompanied by a seven-point scale ranging from strongly disagree to strongly agree. The SERVQUAL model is relevant to Qantas because most companies today email surveys to consumers, containing questions about the consumers recent purchase or use of service to find out where there could be improvements and what was done well. The recommendation to Qantas would be to adopt a feedback system for their services. This gives consumers the opportunity to be truthful about their experience and can eliminate bad word of mouth by being given the opportunity to speak of their concerns directly to the organisation and having it resolved straight away. Qantas may ask consumers to fill out a feedback form to find out about the service quality of the air hostess’, the food and drink range and timeliness, ease of flight and booking procedures, and overall service quality of Qantas. 2.2 People and Deliver Gap The Gap model of service quality is a framework that was created to help understand customer satisfaction and dissatisfaction levels, and the methods to address these issues to close the customer needs gap (Expert Program Management, 2019). The delivery gap focuses on the

13 differences between expected experience of the service processes and the reality of the delivery process (Wirtz & Lovelock, 2018). As a company Qantas prides itself on its customer relations and positive staff; this can create high expectations for the delivery of the serviceand affects the fifth P - People. Problems in the delivery aspect of Qantas are likely to occur because there is a high interaction between staff and the consumers, due to the reputation of being customer orientated. Qantas employees must acknowledge all customers to meet satisfaction expectations. It is recommended that Qantas continue to ensure all employees are continuously improving their skills to ensure the customer service element is meeting customer service standards (Wirtz & Lovelock, 2018). In comparison, Singapore airlines implement continuous training throughout the flight attendants time working at the airline. This includes completing assessments b...