International Marketing of British Airways
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International Marketing of British Airways
The British Airways has gone through different phases in its development. The airline was established in September 1974 in a both international and domestic air transport industry. In 2008, the airline was accommodating a total of 33 million passengers in its 300 destinations with a head count of over 42, 377 between 2007/2008(British Airways, 2015). In 1987, the airline was privatized during a type the airline was almost getting bankrupt as directed by the Labor Government of London. Since then, the airline has experienced growth as it gained competitive advantage in the market(Kyrgidou & Hughes, 2010). In addition, it was declared recently as the airline that has reduced the greenhouse gases immensely as well as allowing the passengers to print their online boarding passes. Besides being affected by the Great Recession between 2008 and 2009, the airline has recovered and gained market control again. In addition, the airline is working on strategies to gain maximum profitability by reducing the unnecessary costs(Johnson & Scholes, 2002, p. 11).
The British Airways has embarked on strategic formulation that is expected to earn the airline a competitive advantage in the market today(Michel, 2007, p. 12). Currently, the airline is integration the new technology in the airline industry in mobile and computer accessible databases. In addition, the airline is also expanding the business operations it engages in to take advantage of the recovering economy in the global environment as the number of passengers using the airline industry continuous to grow(Neil & John, 1999, p. 6). The main strategic approaches the organization is engaging in include(Snyman & Kruger, 2004, p. 7):
- Introduction of mobile applications for the business class users of the airline. In addition, the airline is structuring the ability to send and receive text messages during the on-flight hours to the business class customers.
- The modernization of the fleet in service and introducing new services
- Increasing the airline’s corporate social responsibility by promoting effective environmental performance and partnering with the environmental organizations in promoting safe global environment.
The industry has worked on strategic approach to the market analysis of the airline industry by identifying the target regions. In addition, the airline has structured a diverse buying preference, identification of the industrial structures and strategies to gain competitive advantage in the competitive business environment. These factors have been identified and analyzed broadly in the market mix(John, 2001, p. 23). The differentiated marketing strategy defines the process by which the organization targets varying segments of the market in developing the distinct products in the market or the services with differentiated marketing options for the customers. The growth strategies in the market refers to the paths the organization maximizes on in growth by focusing on new or existing product in the new or existing market(Christoph, 2008, p. 6).
The British Airways is influenced by the external factors that are highlighted by the PESTEL analysis as shown below.
The air control measures security concern has been the main political factor that influences the airline industry since the September 11 attack. In addition, the air industry is fragile when the issues such terrorism are concerned. In addition, there are a number of regulations that influences the schedule the airline is supposed to have in the running of its activities(John, 2001, p. 21). It is noted that, the oversea travels require permit and compliance to certain airline standards that the British Airways is subject to. In order to remain operational and profitable in the airline industry, the British Airways must comply with these conditions to exist in the market(Neil & John, 1999, p. 6). Furthermore, the security concern is not only important to the government authorities, but the customers require an airline they feel they are secure. This shows the need for compliance with the security standards. This assures the customers safe journeys hence promoting their confidence when using the airline(Kyrgidou & Hughes, 2010, p. 52).
The global economic crisis that hit the world between 2008 and 2009 had great effects on the airline industry. As the world is recovering from the shock, the economic growth has continued rising. The fluctuation in the oil prices has also affected the airline industry. In addition, there has been weaknesses in the pound against the Euro. However, the British Airways has encountered high growth even in the harsh economic environment(Nigel, et al., 2012, p. 12).
The British Airways has social impact both the United Kingdom and other regions where the airline operates. With the population of the Britain being those who are aging, there has also high level of unemployment in the society that has not been experienced before during the Great Recession. The British airways has benefited from the aging population who are willing to travel in other countries for tourism after the retirement. With high unemployment rate, the competition in the market is high due to reduced number of customers. This indicates that the airline requires changes and strategic moves to ensure it remains competitive in the increasingly competitive environment(John, 2001, p. 17).
This is the most revolutionized sector in the airline industry. The airline has seen great growth where customers can do the booking through the online platform. In addition, it is a strategic marketing tool where the airline can formulate a structure of marketing through mobile applications and online. In addition, the online platform has enabled the consumers to compare flight prices in the leading airlines before making a decision on the airline to use. However, even though there is concern on online ticket booking and check in, the British Airways should note that the old in the society prefer making the traditional purchase of receipts(Johnson & Scholes, 2002, p. 11).
1.3.5. Environmental/ Ethical
According to Michel (2007, p. 15)here are a number of policies that have introduced in the airline industry that concerns the environmental protection through reduction in nose and pollution from the fossil fuels. The legislation are affecting the industry due to lack of the land to expand the airline that is nowadays overcrowded. The legislations and policies being introduced are increasing the operation cost of the British Airways hence the need to identify their impact on the airline cost. In addition, the airline has structured on a measure to reduce the environment concerns through the corporate social responsibilities by partnering with the environmental agencies. The increase of the operation cost translate the cost of tickets hence the airline should search for better cost reduction functions that will balance the current trend.
After the merge between the British Airways and the American Airlines, there has been huge legislation process that has increased the operation cost. In addition, there has been increased legal challenges in the airline like the recent cabin crew strikes which increased the cost of operation of the airline(Sweeney, 1994, p. 13).
The analysis of the British Airways is an effective form of assessment of the organization’s strengths, weaknesses and other factors crucial to the internal business environment. This form of analysis will analyze the strengths, weaknesses, opportunities and threats in the airline industry that helps the management in planning for the organization strategic approaches to gain the competitive advantage in the competitive market(Neil & John, 1999, p. 9).
The British Airways has a brand name with good reputation in the aviation industry especially after privatization. The name of the airline has been in the market for long and with the reputation of punctuality and good customer relations. In addition, the airline has a strong partnership with the United Airlines especially in the formation of Oneworld airline that is considered the third world’s largest airline. Furthermore, the other strength of the British Airways is the most powerful airline in the United Kingdom region in terms of the financial size and the stabilityBritish Airways (2015). The completion of terminal 5 development will promote and improve the mobility in the Heathrow airport.
The organization has a poor history on the treatment of employees and their compensation plan. This is due to a number of cabin crew strikes that has been witnessed in the recent days. The issues they raise take long before being implemented in the organization. The increased cases of terrorism has led to poor performance of the airline industry of which the British Airline is among. The change process and integration of technology is normally done at slow pace during the implementation process in the British Airways(British Airways, 2015).
The British Airways should take advantage of the low cost airline market through budget travelling. Secondly, the airline should advantage of slow and poor delivery of services by its competitors by ensuring that customer satisfaction in enriched in the airline. In addition, the struggle in the global economy and high competition in the industry has led to some of the airline closing their businesses that increases the market demand for the British Airways. The rise of the British Airways in the Skytrax quality system could be used as a marketing tool to ensure that the industry continues to experiences growth(British Airways, 2015).
With the signing of the Open skies agreement, the small airline industry have taken advantage of the low cost air services where they posing threat in competition with the British Airline industry. The removal of these barriers has led to evolution of small competitive airlines that are posing threat by increasing competition in the airline sector. Secondly, the global economy has not recovered fully affecting the British Airways which operates in the Europe region where the effects of global economic crisis was felt most. The profit margin of the British Airways is experiencing challenges as other airlines are working on measures to reduce the cost of operation. Finally, the changes in the environmental policies on pollution and energy conservation is another challenge that increases the cost of operation(British Airways, 2015).
This involves the process of creating distinctive perception and attitude in the mind of the consumer about the advantages on using the service from the organization. This involve the introduction of special services that the competitors do not give. The main factors influencing the positioning of British Airways are the competitors and origin. From the British Airways quality service provision and customer treatment, the airline has a got a name and position in the mind the consumer that has made it competitive in times of high competition in the market with new entrants(British Airways, 2015).
The British Airways Ansoff market matrix could be evaluated in four model cycle that is shown below. This model reflects on the assessment of the products along with market growth strategy. The model analyzes the virtue of the existing or new products with the new or existing market structure. Analyzing the four components critically will review the market form and strategy to apply in increasing the British Airways competitiveness in the market(Kyrgidou & Hughes, 2010, p. 57).
1.6.1. Market Penetration
This type of growth focuses on the existing product in the existing market through maintenance or increment of the current product market control also referred to as the competitive pricing strategies and the promotion approaches. Secondly, market penetration can be done by driving the competitors out the existing market through ways such as embarking on aggressive promotional campaigns. In addition, the market penetration could be through creation of customer loyalty schemes(Snyman & Kruger, 2004).
1.6.2. Market Development
This could be done through the process of selling the existing strategies to the new or freshly opened market. This means that the British Airways could embark on marketing the products in the new market, using different distribution channels in the industry or applying policies on different prices for trans-market customer pulling(Snyman & Kruger, 2004, p. 13).
1.6.3. Product Development
This strategic approach requires the British Airways pushing the new products into the market that is existing(Sweeney, 1994, p. 5). This includes branding new products in the existing market.
1.6.4. Diversification Strategy
This process involve the introduction of new products in the new market. This will allow the British Airways in dominate a market that did not exist in the initial setting hence expanding the market of the airline(French, 2009, p. 15).
Through the four models, the British Airways could embrace the market share that has not fully been utilized. Having an organizational culture that is well rooted, the organization can increase its market through the above processes hence increasing its chances for profitability and market control increasing the competitive advantage(Sweeney, 1994, p. 11).
Ensuring the organization has a sustainable competitive advantage over their competitors is an essential in ensuring that the organization remains profitable in all seasons. This can be done through embracing new technology to innovatively transform the service delivery and having a well-trained and experienced human resource department to ensure that the employees are motivated for effective productivity in the industry. The two main source of competitive advantage for the British Airways is the alliances with other airlines in the industry and direct express flights from London to other parts of the world nonstop(Brown, 2005, p. 218).
These are approaches that influences the choice of the consumer of the airline industry. The promotion strategy in the British Airways include direct marketing, advertisement, good public relations, personal selling of the products and internet marketing. The most effective promotion strategy has been the internet marketing and the advertisement in the media. These two reaches a very high number of consumers and create awareness on the availability of a given product or service in the British Airways(Sweeney, 1994).
From the international marketing plan for the British Airway, it is clear that the airline is doing well in the industry. However, there are areas that have been identified crucial in promoting competitive advantage in the market. The British Airways has got a chance of marketing the airline and reaching out to the region that have not been served effectively(Kyrgidou & Hughes, 2010, p. 45).
From the external and internal analysis of the British Airline industry, there are a number of lessons that could be learnt where the improvements would increase the performance of the airline in the market.
- The British Airways should embrace the technological advancement and innovation in marketing the airline through the online platform, mobile application and social media. This will create awareness on the type of services the airline offers(Kyrgidou & Hughes, 2010).
- The airline should focus on the weaknesses existing in the market improve on them to remain competitive in the market. In addition, this could help the airline in reducing the operation cost hence providing cheaper services(Sweeney, 1994, p. 14).
- Considering the changes in the environmental policies, the organization should embrace innovative ways of reducing the waste and other environmental unfriendly wastes(French, 2009, p. 12).
- The British Airways should diversify the current routes and possibly find new routes that have arisen due to globalization and the open air airline agreements. In so doing the airline will remain profitable and competitive in the market(Brown, 2005, p. 229).
British Airways, 2015. British Airways Affiliate Marketing programme. [Online]
Available at: http://www.britishairways.com/en-gb/information/about-ba/affiliate-programme
[Accessed 24 March 2015].
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