Competitive Situation Analysis Essay
“A Competitor analysis allows a company to look into the strengths and weaknesses of competitors, and both their current and potential marketing strategies.” It is based upon five factors; Intensity of competitive rivalry within the industry Qantas is a major competitor in the Australian and overseas airline industry. In fact, “Qantas’s record profits were in stark contrast with most of the financial performance of airlines worldwide”. There are many rivals for Qantas including those who provide aerial transport via planes like tiger airlines and those who provide alternative transport such as buses, cars, boats etc. However, Qantas is “involved in the oneworld Alliance, which brands together 13 of the world’s biggest and best airlines”. They also control a number of subsidiaries including Qantas Link and Jetstar. There are only a few entities that are able to compete in the airline industry, making it very aggressive.
Threat of new entrants to the industry Qantas is branded by its iconic kangaroo symbol, which makes it recognisable and distinct locally and internationally. Due to its greater advantage in the market, Qantas has the power to control part of the market and has the ability to match prices. This increases the entry barrier bar making it difficult for
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Risk of competition from substitute products There are many substitute products for Qantas within the airline and tourism market. The risk of substitution can be due to many factors economical, social, legal, technological, environmental and political like a fear of flying or acts like terrorism. This can potentially lead to a substitute in transport. As Qantas prides itself in its “quality and services it provides”, the prices are usually higher than other budget airlines. In terms of pricing, Qantas can easily be substituted for another airline if people are on a budget. While quality is the primary focus for Qantas, airlines like Virgin Blue are beginning to offer high quality, no frills and low priced tickets.
However, unlike most airlines Qantas offers reward programs that look at building loyal relationships with customers. The rewards program, “Frequent Flyers” also works concurrently with other companies and programs to best maximise the benefits for consumers. They are also looking at ways to improve the flying experience by employing new services, like making it available for customers to check in via mobile. As mentioned before, Qantas’s subsidiary company, Jetstar offers cheaper prices at the expense of luxury.
Relative power of industry members and suppliers Qantas is able to switch between different suppliers of food and drinks as they can be easily substituted for other brands and flavours; however in doing so they may compromise their ‘high quality’ brand power. There would most likely be limited suppliers in regards to the manufacturing of the planes, therefore giving them a strong position.
Relative power of industry members and customersThere are many individuals in the market who have a want for airline tickets. They are influenced by brand loyalty and prices. The high barriers of entry limit the number of competition and give customers less bargaining power. Overall, Qantas has a better competitive advantage exists in the market because of the competitive barriers competition must overcome. Their branding power makes them a well recognised airline in Australia and overseas and their slogan and kangaroo logo enhances their product recognition. Their high quality services and their many years of participating in the industry has given them an edge within the market against their competitors. They are able to make reasonable profit but can be influenced by other determining factors of competition.
SWOT Analysis and Position on GE Grid The SWOT analysis outlines all the strengths, weaknesses, opportunities and threats of the business. Identifying the strengths and opportunities will help managers focus on strategies to capitalise strengths, take advantage of opportunities, avoid threats and address the weaknesses. Qantas has been operating for over 87 years, so they have established strengths over other airlines although providing high quality services makes their fares more expensive compared to other airlines. Qantas is part of the oneworld Alliance which is a global airline alliance that brings together eleven of the world’s biggest and best airlines that are committed to providing world-class service and value. This has led to a widely recognised brand name and a good reputation. Their logo – the Kangaroo and their slogan – ‘the spirit of Australia’ has made their brand recognisable all over the world.
To continue gaining strengths over other airlines, Qantas should take advantage of as many opportunities as possible. Their ‘Fly Carbon Neutral – Help reduce the impact of carbon emissions on the environment’ program provides an opportunity for the community to help the environment for just a small contribution. Qantas can use this as an advantage because social conditions are changing and the community is showing more concern for the environment – flying carbon neutral allows Qantas to be perceived as environmentally friendly by the community. Qantas flies domestically and internationally, however there are many destinations that they do not offer their services to. They should continuously try and find ways to establish routes to more places around the world. If they were able to offer flights to more locations, they will be able to attract new customers. There are many rules in place that restricts the times that they can fly in and out of locations. If there were fewer restrictions in place, it will allow Qantas to have more flights to suit more people and allow for flexibility.
To uphold their strengths, Qantas must be aware of the threats and prevent them. The airline industry has high barriers to entry which decreases the chance of a new entrant being successful – high start up costs and the ability to be able to compete at the same level as other airlines. Also as society changes, their tastes and values may change. Their perception of quality may change and the demand for Qantas’ high quality flights may decrease. However, Qantas has Jetstar which is a lower quality experience for those trying to save money or do not look for quality service. Therefore, Qantas has already taken into account the fact that society’s perception of quality could change – avoiding a potential threat. Qantas must also be aware of other forms of transport that may become more popular – cruises, etc.
The General Electric (GE) strategic planning grid helps managers organise information about the company’s marketing environments and the company’s strategy. Qantas has high business strength but low industry attractiveness. Industry attractiveness is influenced by size, market growth pricing, market diversity, competitive structure, industry profitability, technical role, social, environment, legal, and human.
There is low industry attractiveness due to the high barriers to entry. To enter the airline industry, they would need a large amount of capital due to the high start up costs and they would also need to be able to compete at the same level as all the other airlines currently in the industry. If they are unable to compete at the same level, they will find it difficult to attract customers and get a part of the market share. Business strengths are influenced by size, growth, share, position, profitability, margins, technology position, strengths/weaknesses, image, pollution, and people. Qantas has high business strength as they have been operating for over 87 years, they are part of oneworld Alliance and have established a good customer base with a good reputation which reflects a positive image for them. As Qantas has high business strength and low industry attractiveness, they are on the borderline of growth and no growth.
Market research needs Market research involves procedures to develop and analyse new information for assistance in decision-making. Research is important for businesses to market their product or service. In order for Qantas to attract their targeted segment – business travellers and leisure travellers, they must gather as much information to discover and meet their needs. The market research process involves four steps: (1) defining the problem, (2) developing the research plan, (3) implementing the research plan, and (4) interpreting and reporting the findings. Defining the problem is a difficult stage. However, it is worthwhile to ensure that research is not wasted on the wrong problem. Marketing managers should be aware of their target market and their ability to satisfy the needs of this market.
Qantas targets business travellers and leisure travellers thus they should be aware of their needs and whether they will be able to meet those needs. They should know the destinations of interest not offered yet for business and leisure travellers as well as the peak and inter-peak times to fly. Understanding the destinations that are not currently offered could open up more opportunities for Qantas. For instance, starting from 29 March 2006, Qantas offered international flights to San Francisco – developing tourism opportunities. They should recognise the most effective time to offer holiday packages or sale price tickets to encourage customers to fly during inter-peak times to maintain sales. Holiday packages will attract customers as it results in a slightly cheaper alternative with included accommodation – leisure travellers will perceive holiday packages as high value.
Qantas must continue to keep up with the technological advancements to ensure they are able to provide services that will meet the needs of business travellers – such as online bookings and domestic ‘Mobile check-in’. As technology continues to advance, many tasks are now undertaken online. Therefore, Qantas has made online services available enabling bookings and check-in to be more efficient and faster for business travellers on the go. In addition, in-flight technology is continuously advancing.
Customers are now able to improve their in-flight experience as a result of being able experiencing services such as entertainment of newly developed technology. This includes in-seat television screens for each passenger, allowing them to watch movies or play games. Developing the research plan consists of three steps: (1) determining specific information needs, (2) gathering secondary information, and (3) planning primary data collection. Secondary information is information that already exists somewhere that is obtained quickly and cheaper however sometimes may not be usable. Primary data collection is information collected for the specific purpose at hand.
Secondary information can be used to keep up-to-date with technological advancements, peak and inter-peak times which will then help recognise the most effective times to offer holiday packages and sale prices. Primary data collection involves different approaches – observational research, survey research, and experimental research. Observational research gathers data by observing people, actions and situations. It is useful to Qantas when monitoring peak and inter-peak times to fly due to sale fluctuations. Survey research involves asking questions about attitudes, preferences or buying behaviours. Online surveys would be the best option for Qantas – it is cheaper and more efficient for their target market. All frequent flyer members could be emailed the survey to help establish destinations of interest they would like to be offered and gives them an opportunity to provide suggestions.