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Consumer Behaviour Issues

Customers expect Qantas to provide high quality service, and that level of service is reflected on the price of the plane tickets. Consumers may see this as a ‘what you see is what you get’ which they prefer. Business travellers prefer Qantas as it provides great services throughout the journey. However, if prices were to decrease, consumers would assume the quality of service has dropped. Consequently, they would then turn to international competitors for their excellent services. The firm to customer relationship is relatively strong and therefore does not bring about any issues for present Qantas customers in purchasing decisions.

Australians feel a sense of pride with the song ‘I still call Australia Home.’ When heard, memories of the commercial created by Qantas resurface, of the National Boys Choir and the Girls choir, travelling and singing around the world. It releases many emotions, thus consumers want to travel with the airline that they can relate to. Business travellers prefer to fly with Qantas, because of their frequent flyer status which allows them to use Qantas’ facilities, i.e. use their conference room or relax in the Qantas lounge. Some people travel with Qantas due to social security as it boosts their self-esteem as

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it is Australia’s most prestigious plane. Others just want service and to be taken care of on the plane.

Travellers’ personality also influences purchasing tickets. Sophisticated travellers with a higher status would prefer to fly in a better quality plane, i.e. choosing Qantas rather than in Virgin Blue, Jetstar or Tiger Airways. Usually, when flying internationally, most Australians would choose to fly with Qantas. Since Qantas’ domestic airfares are highly priced, ‘price-sensitive’ consumers would avoid them, seeking cheaper alternatives.

There are also global events that influence consumer behaviour in choosing airline services. The September 11 attacks in 2001 have brought terror, shock and loss of trust around the world. Airline services plummeted in sales and consumers searched for other travelling means, i.e. buses, trains, ships and more. Despite the downfall, airlines have since recovered. In addition, the Influenza epidemic in 2009 and 2010 negatively affected the world, opting to avoid the health risk. There was also the global financial crisis where Qantas lost a fair amount of profit, as well as the entire airline industry. Fortunately, the global financial crisis in Australia was not as severe compared with the others. All airline services had a total loss of a forecasted $US9 billion.[24]

In 2010, Iceland had a major natural disaster which affected most of Europe. Volcano Eyjafjallajokull affected the airplane industry as the ashes from the eruption remained in the air, which could possibly disrupt the aircrafts. Even though the airline services had saved $110 million a day on fuel from the natural disaster, additional costs were faced due to sheltering stranded passengers.[25] The airline industry lost $2.8 billion which heavily affected profits. Qantas was affected from routes to and from European countries.

Qantas’ reputation has suffered since late 2008, when Qantas experienced in-flight incidents, such as the mini explosion due to an exploding oxygen tank while carrying passengers. Punctuality and reputation were harmed and took months to make a full recovery as well as productivity and costs. There has been industrial action undertaken. Consumers fly with Qantas to boost their self-esteem. Qantas portrays itself to be a prestigious carrier through its quality services. Consumers, who visualise business travellers or the premium leisure travellers in the business lounge, admire their upper class status. They psychologically feel as if they’d like to be a part of that “luxurious” environment, so they splurge to gain self-satisfaction and increase their self-esteem by paying extra for the airfares. They believe by doing so, social security would be obtained.

Qantas tries to provide consistent services to all customers. Those who were not content with the services offered by Qantas would not travel with the company in the future. This will consequently decrease the demand. Nevertheless, experiences that were perceived to be pleasant by customers will influence the choices that other travellers’ make based recommendations made on these experiences. Target Segments and Core Benefit Target Segments Qantas’ service in the generic market is “transport”. As their transportation service is aerial, in terms of their broader product market, Qantas will fall in the airline industry. In a narrower product market, Qantas’ primary target market are corporate travellers which includes both domestic and international travellers and premium leisure travellers. Qantas’ 2008/09 annual report shows that international travel sales outweighs the domestic travel.[26]

Segmentation

The whole market in general is the travel industry, and more specifically, the market for aerial travel. Effective segmentation requires the segments to be measurable, accessible, substantial, differential and actionable. Qantas practices differentiated marketing. Each travel class for example have slightly different features and benefits that are designed to target and appeal to certain segments of their target market.

The segmentation variable that Qantas utilizes is psychographic segmentation. This type of segmentation divides the customers into groups that are based on their personality, lifestyle and social class. It is evident that Qantas uses this form of segmentation to isolate its domestic and international corporate customers into their segments. In general, business travellers wilfully pay additional funds for relaxation and luxury because of their busy lifestyle. Supporting this, as their income is usually higher than average, they are not as conscious about the amount of money spent as long as they receive the expected value in return.

In order to evaluate Qantas’ market segments, they’ll need to look into the segment size and growth. This depends largely on the profitability of the target segments. Factors that may influence the structural attractiveness of a segment are its competitors, availability of substitute products and the power of buyers and suppliers in the market. It is vital to identify the key competitive advantage against competitors and incorporate company skills and resources to succeed in the target segments.

Core Benefit The core benefit of Qantas’ service is the mean of travel to get from one place to another. The actual service takes place aboard their aircraft where the consumer is exposed to the design, level of quality and features of the service. Firstly, Qantas offers several travel classes to cater for different customer preferences in the services aboard. This includes First, International Business, International Premium Economy, International Economy, Domestic Business and Domestic Economy.[27] Each class offers slightly differentiated features. For instance, Qantas’ First class customers will experience onboard luxury in an adjustable seat that folds out into a bed, priority service from flight attendants, entertainment, fine dining prepared onboard with up to 8-course meals and complimentary amenities such as toiletries and pyjamas.[28]

These services allow customers to feel relaxed and entertained for extensive travel periods. On the other hand, Domestic Business class have less features but cater to shorter travel periods. Business travellers’ entertainment changes throughout the day – news and sports in the morning followed by live music or comedy movies during the day. Because Qantas has been the longest continuously running airline in the industry, they’ve built a brand association based on high quality services. Amongst call centres, Qantas, together with QBE Insurance offers augmented services such as travel insurance. This is offered to a variety of their customers, including international insurance for single trips and seniors.[29]

Packaging

The physical appearance and location of the service provided forms the ‘packaging’ of a service.[30] The packaging of Qantas’ service is portrayed through the appearance of the flight attendants and other employees who deliver the direct service to the customers. Therefore, their appearance, attitude and the level of quality in their services are important. Throughout time, Qantas has introduced new collections of uniforms in line with changing fashion trends and to mirror the company’s outlook.[31] Their current uniform which was introduced in 2008 is stated to be ‘a fresh and contemporary look that reflects our premium style.’[32]

Positioning Strategy Positioning When Qantas positions its service in the travel industry, it is defined by its customers on important attributes such as safety and comfort. Not only does Qantas position their service to have high safety standards, it also positions itself to be a prestigious airline that essentially focuses on luxury. By positioning their services this way, Qantas’ service is attractive to their customers, especially business travellers, who are willing to pay additional funds for supplementary benefits.

This in turn places Qantas on a conceptual map[33] in comparison to its competitors. In order to optimise its success with selected target markets, Qantas needs to plan positions to give their products the greatest advantage in their chosen market. To achieve this, the identification of its competitive advantage and the creation of differentiated services are vital. This enables Qantas to be distinct against its competitors. Their strongest competitive advantage is the fact that they are the longest continuous running airline which insinuates that they are experienced and have a reputation for high standardised service.

Method

Qantas implements a mixture of service differentiation and personnel differentiation. Because Qantas is within the airline industry, the services performed aboard the aircraft should satisfy its customers’ expectations. Aboard the plane, flight attendants employed by Qantas play an important role in the direct delivery of Qantas’ service towards the customer. This involves personnel differentiation as their staff directly influences the service experienced by customers. Special training about safety is needed. There are minimum requirements to become a flight attendant for Qantas. These include for example obtaining a Senior First Aid Certificate, Responsible Service of Alcohol ‘Statement of Attainment’ and have an excellent level of fitness and health, especially to be able to lift up to 28 kilograms.

Additionally, they are required to be able to swim for a certain distance while fully clothed.[34] In fact, in 2008, Qantas invested in the implementation of a project called Centre of Service Excellence located in Sydney. The site has the rooms designed including Qantas’ various travel classes and lounges to train employees how to provide good service and to apply it to their actual customers. John Borghetti, the executive general manager stated, “It’s not just about being the airline with the best customer service. We want Qantas to be recognised as the company with the best customer service in the country,” portraying Qantas’ goal of excellence of service.[35]

Qantas differentiates their service to cater to different target segments through their travel classes. Each travel class has various packages that differ in some way to separate each other. The higher the class, the more benefits the customer will experience. This includes upgrades, individual suites on board with cabin sound proofing, leather seating and amenities especially designed for First class travellers.[36] In some sense, this allows each traveller to feel superior to other classes in their chosen travel class, giving them the incentive to travel with Qantas for these bonuses.

Role of their brand name

Qantas’ brand name is a simple and easy to remember. “Qantas” is an acronym for “Queensland and Northern Territory Aerial Services” that encompasses historical background. This invites their customers to feel a sense of heritage and loyalty towards its meaningful origin. This also engages in a relationship with Australian customers especially because the airline was first established in Australia. The basic benefit that is received is the service to travel from one place to another.

The other benefits customers receive are safety, comfort, luxury and other special features depending on their travel class. Qantas positions itself to be a prestigious and royal airline that focuses on the “quality” of its service and is customer orientated. This is evident through their reputation, awards and level of commitment to their customers. This demonstrates the firm to customer relationship.

On their website, Qantas has made a statement about their company’s future in the airline industry. “The future holds many challenges for Qantas – maintaining safe operations and world class product standards while building a viable and competitive position long term for the airline.”[37] This highlights that Qantas aims to preserve their reputation for safety, provide products that are of highly regarded standards and develop competitive advantages that will enable for their continuation in the industry in the future.

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