British Airways Marketing Mix paper

//British Airways Marketing Mix paper

British Airways Marketing Mix paper

INTRODUCTION

This project is about the four Ps of the largest airline in the world, British Airways. This company is viewed with special interest because British Airways is not only the leading airliner in the world through quality and service, but also through its strategic marketing which gives it a competitive edge over other companies.

 

PRODUCT

As an airliner, the ultimate product that British Airways provides for its customers is mainly transport from one destination to another. However, this definition is not as simple as it seems, because a huge airliner such as British Airways also provides many other products, some of which are traditional in the industry such as ticketing, reservation, confirmation, and others.

In order to realize its product to its customers, British Airways provides ticketing services to its customers. Traditionally, ticketing has been considered to be one of the most time-consuming services at any airline, especially with the traditional services accompanying it, namely, reservation and confirmation of reservation.

British Airways, seeing itself as a leader, aiming at reducing the inconvenience of its customers, has facilitated a new ticketing system which can reduce ticketing time for its customers to less than a minute. This system, known as Electronic ticketing, or E-ticketing, was first put in use for customers using British Airways inside Britain (on local transport) in 1994. Due to the great success it has achieved, by February 1998, British Airways expects to launch the system in Germany, where a large number of major German cities and airports used by British Airways, have been equipped with E-ticketing terminals. The airports so far included in the launch are located in Berlin, Frankfurt, Cologne, Munich, Dusseldorf, Hamburg and Stuttgart. This service is especially aimed at reducing the time lost by business passengers, particularly those whose trips are decided without prior planning. All what the person has to do is to go to the terminal, pay and get the ticket without having to wait. A similar system for reservations and confirmations is done. The company, expecting this project to be a success, will be extending this service to other parts of Europe and the Eastern coast of the United States.

The products of BA have long been known for their high quality, and the persistence of the company in creating a positive image of its services. Aware of this reality, the company has for years tried to establish certain values to become part and parcel of its products and services. For example, safety and security are among the highest priorities of BA, especially while air-traffic problems and disasters have become common in other companies. Safety and security, however, are not the only aspects of BA’s products, for, in addition to these, the company has made its customers used to innovations that come out every few months, making air transport more convenient, effective, efficient and pleasant. In this context, British Airways has been seen as the world leader in providing innovative services that aim at promoting air transport to passengers all over the world.

As provider of air transport, British Airways is the first in the world, reaching a record number of thirty-five million passengers in 1995, with a best passenger seat factor of 71.6%. In 1994, the number of passengers carried by BA was 24 million, still making the company the global leader in the industry, since the immediate competitor followed by a difference of 6.5 million passengers.

The company provides its services through a fleet of 283 aircraft, one of the largest in Western Europe. In addition to this, the company ordered 56 aircraft in March 1995, with options on another 29. At the end of 1994-1995, the average age of the fleet was 8.3 years, that is about 2.4 years younger than the industry average, and reflecting at the same time, the company’s concern about innovation, novelty and security. Besides, BA is one of two airlines flying Concorde, the world’s only supersonic passenger aircraft.

As the demand on air transport increased, BA realized that it was not efficient to continue increasing its productivity in the traditional means. Global alliances with other strategic partners was inevitable. This strategy is based on the recognition that by the turn of the century, almost 80% of the world air travel market will be based on six major markets in the world: North America, Europe, and the Pacific region and the markets that flow between them. BA decided to make investments in other carriers, rather than have marketing partnerships, as investors offer a more stable strategic link from which to build a global alliance. The most prominent and effective alliances so far have been with USAir and Qantas, both which have given BA increased presence in markets of North American and the Pacific region, which is the most important growth area in the world. Furthermore, its investments in Deutsche BA and TAT European Airlines (TAT) have strengthened the airline’s presence in continental Europe. As a result of these alliances, British Airways now covers some 492 scheduled destinations in 99 countries across the world’s major markets, offering an average of 7,000 departures every day.

In addition to its traditional services which have continuously been innovated, British Airways also offers duty free shopping on its carriers. The company announced in May 1997 that it was offering a 10% discount on all duty and tax free goods sold on board its flights (except those on Concorde). With some prices already 30% lower than those in shops, the discount means that the passengers can buy goods in flight at up to half price.

British Airways also launched its new “Shopping the World,” which passengers can browse through and make their choices. With prices started at ₤3, passengers can choose from over 200 items including perfume, liqueur, children’s toys and a range of gifts.

The service provided by British Airways is even more sophisticated than this. The company makes sure that even its seats are also branded, and that the brand is made familiar to the customer. The company considers that its customers’ convenience is among the most important parts of the product it is providing. For example, in 1994, the company launched its new Club Europe brand, with a ₤70 million package of improvements including new seats which are bigger and more comfortable, a network of lounges in airports at key business destinations throughout Europe, telephone check-in, Fast Track through passport and security checks at Heathrow’s Terminal 1, and a more flexible approach to catering, with better food and a choice between a snack and a full meal.

Very recently, British Airways launched a new product, British Airways Holidays, the airline is a significant operator of package holidays, offering a choice of nine programs covering longhaul holidays around the world, city breaks and specialist golf holidays.

Apparently, British Airways is trying to extend its  provision of services to reach as many destinations and carry as many passengers as possible, while at the same time, cutting its costs to the minimal possible level. This is consistent with the company’s objective to cut prices and increase quality at the same time.  Also, the service changes listed above are part of a British Airways’ shift of its East and Central Africa service from Heathrow to Gatwick which was started 1996. In the past four years, BA has introduced 71 new routes at Gatwick and it now serves more destinations from there than from Heathrow. This is also consistent with the company’s objective to reduce the impact of heavy air traffic on its customers, a step described as an increase in the quality of the company’s productivity and quality at the same time.

As to the cargo services, British Airways was ranked seventh on a global level, shipping 666,000 tons in 1995. This is considered to be a miracle in global cargo service provision, since BA is the only airline in IATA’s top ten cargo airlines without a dedicated freight fleet. The mainline scheduled route network is one of the world’s most extensive, servicing about 169 destinations in 80 countries. In 1994-1995, the airline operated an average of over one thousand flights a day, on an unduplicated route network of about 750,000 kilometers. The following is a listing of British Airways’ cargo products.

Scheduled Services: offering freight and cargo services to more than 500 destinations in more than 100 countries.

Express Freight: relying on dedicated express handling capabilities at airports throughout the world, offering late acceptance and priority treatment for urgent consignments. The maximum weight limit for any single item is 30kg, and the maximum limit for a consignment is 300kg.

Speedbird Courier: considered to be the world’s leading wholesale courier company, offering a wholesale airport to airport courier service to freight forwarders and air express companies guaranteeing discretion and impartiality with the British Airways On Board Courier.

Dangerous Goods: offering services by a specialist team that deals with packaging, marking and documenting dangerous goods for freight.

Valuable Cargo: offering the “safe option” for valuable cargo, ensuring maximum security and preferential treatment by British Airways staff.

Funeral Services: offering an efficient and sensitive service to professional organizations involves in the carriage of human remains.

Flying Pets: offering two services; FLY TOGETHER allowing owners and pets to travel together on the same service and UNACCOMPANIED, allowing pets to travel under the supervision of experienced cargo staff.

Diplomatic Mail: offering a range of services, depending on the sensitivity of any particular consignment through World Cargo, starting from delivery to the aircraft and collection by representative on arrival.

Perishable Goods: carrying more than 500 tons a week throughout international route network. A special facility established in London Heathrow is devoted specifically to the movement of time-sensitive fresh produce.

Personal Effects: offering the movement of entire contents of a house or simply transporting extra pieces of luggage without paying the additional cost of excess baggage.

 

In 1995, the company announced a ₤500 million three-year plan to revolutionize air travel. The program, called “Insight” matcheed with the relaunch of the company’s Club World longhaul business brand and Executive Club frequent flyer program. A completely new First Class Service, renamed simply First, was also offered later that year.

The latest improvement in its products and services was announced in May 1997, when the management of British Airways declared that an efficiency improvement program for the three years starting from 1997/8 worth ₤1 billion which will fund continued investment in products, services, infrastructure and people. The improvement will be achieved through a combination of cost reduction and asset utilization improvement.

In September 1997, the company announced that it was launching an extensive human resources program that aims at keeping its products updated and maintained. The program aims at ensuring that the company has the right people with the right skills in the right jobs for the new millennium. Severance and early retirement will be offered to 5,000 volunteers, and around the same number of new staff, skilled in customer services and languages, will be recruited.

British Airways does not only depend on sales and profitability figures to know the feedback of the market to its services and products. Every year, the company, or research agencies on its behalf, interview about half a million air travelers worldwide. Global monitoring of brands and services indicate that British Airways is seen as having a worldwide network and delivering a very professional service. New product development research shows that in addition to wanting excellent customer service and an easy passage, customer increasingly want the offering to be more personalized. Future development in the sub-brands will therefore be more responsive to the travelers’ agenda, incorporating more choice and flexibility. The Executive Club also enables the airline to deliver a more personal service and establish a closer relationship with its most frequent travelers. The frequent business traveler is an important customer for British Airways. Research around the world has shown that the business environment of the 1990s can be encapsulated by three words “accountability, profitability, and realism.” A lot is expected of business executives and therefore they expect a lot from an airline in terms of efficiency and superior customer service.

 

PRICE

British Airways has for long considered global leadership in the airline industry as a major objective. Prices play an important role in this equation. As a result, British Airways has established over the years several pricing strategies and tactics which aimed at reducing the expenses, costs and eventually the prices of BA in order to make the products of the company more attractive.

In the third quarter of 1997, British Airways had started slashing its prices in order to attract more passengers. More than 110 worldwide destinations were available for a getaway before Christmas. This was part of BA’s most recent strategy known as British Airways’ World Offers. Prices start from ₤69 for a return ticket to Amsterdam, ₤179 to New York and ₤397 to Singapore.

Transatlantic fares start from ₤179 return to Boston, Washington or Baltimore. Los Angeles, San Francisco and San Diego start from ₤299 return. Further more, Hong Kong starts from ₤399, Mexico from ₤429 and Cape Town from ₤469. In Europe there are more than 50 destinations from Antwerp starting ₤69, to Zurich starting ₤99. However, to qualify for discounted flights to Europe and North America, customers have to spend more than ₤250 using their Sainsbury’s Reward Card during the eight weeks of the promotion in any Sainsbury’s and Savacentre stores and cover ₤500 for tickets to destinations further afield. This qualifies them for half-price tickets for themselves and up to four travelling companions, offerings savings of up to thousands of pounds.

During the early 1990s, and due to the recession that rocked the air transport industry, especially due to the Gulf War, price wars became familiar in major regions of the industry, particularly in North America and the Pacific. In Europe, the situation was more stable due to the understanding reached amongst the major companies such as BA and Lufthansa. However, in the Pacific, price war was inevitable, especially as companies were striving for survival and not only for profit. The year 1992 was a disastrous year for most companies, excluding BA which turned out profitable, but the outcome on the industry was also noticed. It was apparent that the industry was moving towards major price reductions, especially as a large number of air carriers were merging together in an attempt to survive the sharp collapse in demand. BA prices in the mid 1990s are nothing but a reflection of the need to reduce prices, not only to compete in the short run and seasons, but also to establish a price range for BA that was difficult to be competed against by other companies.

PLACE

As an international airliner, British World believes that its place is the globe. The products and services of the company are not only restricted to London, where both Heathrow and Gatwick airports are established, but also including Europe, Latin America, the Pacific, Australia, North American and other regions of the globe.

The airline’s base is Heathrow Airport, London, the largest international airport in the world. It operates an increasing number of services out of Gatwick Airport, with a market share of 41% of the total available capacity of both airports.

Since the airport includes a number of the most important services and products provided by an airline, BA realized that Heathrow Airport would not be sufficient, especially with the increasing air traffic on its aircraft. As a result, the company decided to allocate more services to Gatwick Airport, also located in London. Today, Gatwick Airport receives almost half the BA international flights.

In consistency with this policy, the company announced in July 1996 that it was switching its Latin American services from London Heathrow to London Gatwick from  March 1997. The move, part of the company’s strategy to develop Gatwick as a complementary hub to Heathrow, follows the transfer of the airline’s East and Central African services to Gatwick in March 1996. The Latin American services compromise 13 weekly flights to Argentina, Brazil, Chile, Colombia, Mexico and Venezuela.

At the same time, the company introduced five new destinations, namely Phoenix, San Diego, Kiev, Malta and Jerez to the route network. Other routes were added from Gatwick to Stockholm, Zurich, and Edinburgh, and a new service was launched from Aberdeen to Paris.

As for new European destinations, British Airways announced several service launches in summer 1993, with destinations at Thessaloniki Greece. The route started operating daily in October, from Heathrow via Turin, taking advantage of new rights under the latest phase of European deregulation, meaning the airline could carry passengers flying solely between Italy and Greece, besides those starting or ending their journey in London.

In Mid 1997, British Airways introduced new series of service flights to its passengers. Travelers to East Africa and the Indian Ocean will find improved service in October as British Airways adds flights on its Gatwick service to the Seychelles, Mauritius and Uganda.

The airline began non-stop service to Entebbe, Uganda, twice a week. Flights are departing Gatwick on Thursdays and Sundays at 10:45 p.m. On October 26, 1997, BA introduced new changes to its service to the Seychelles and Mauritius. The airline is no longer offering its twice weekly flight from Gatwick to the Indian Ocean islands. Instead, British Airways is offering flights to Mauritius, via Nairobi, three times a week. Service to the Seychelles, via Nairobi, is scheduled for twice a week. The flight includes the new “flying bed” First. Flights on the Gatwick/Mauritius route are operating Tuesday, Thursday, and Sunday. Flights to the Seychelles are scheduled for Wednesday and Saturday.

 

PROMOTION

For the number one airliner in the world, promotion has been a strategic weapon used extensively but at the same time effectively. In 1992, and as the company was empowering its position on the global level, British Airways introduced the concept of global brand for the first time in the history of the industry. This campaign, was the first fully-integrated global advertising campaign called “Feeling Good,” which heralded a major new program of product and service innovations, including individual seat-back videos for Club World; a new Club World seat design; revolutionary Lounge Pavilion at Heathrow’s Terminal 4; and complete refurbishment of airline’s flagship, Concorde. In the same year, the company rebranded its cargo business British Airways World Cargo. The campaign was also considered the largest in the history of the industry, aimed at establishing a global image for British Airways all over the world. This meant that all the regional stations and branches of British Airways had to commit themselves to the same promotion tools set by the headquarters in England.

In April 1997, almost eight years after the major launch, British Airways launched another major campaign, but this time to support its UK domestic services, especially after the extensive growth of competition in the local markets.

Using posters and radio, the campaign highlighted British Airways’ frequent shuttle service between London and Manchester, Edinburgh and Glasgow, up to 17 times a day, 18 times a day and 17 times a day respectively.

The media strategy reflects the “frequency” message with one in five six-sheet posters in London in addition to regional sites booked for a two-week period. The posters will feature objects that go up and down, or back and forth, including a lift, shuttlecock, Frisbee, metronome and basketball. The campaign will wrap up with the unveiling of an 8-foot, working Yo-Yo on a large poster on London’s Cromwell Road.

The two week radio campaign also highlights the frequency of the shuttle service with four spots an hour during breakfast show and evening drive times. The advertisements will air on the major national and regional independent radio stations, including Classic FM, Capital, County Sound in the southeast, Clyde and Forth in Scotland, Piccalilli in the northwest and others. The quirky radio advertisements specifically targets the business market.

Bob Ayling, British Airway’s Chief Executive, said, “Our customers have told us that frequency of flights is essential. This major advertising campaign demonstrates the competitive advantage we have on the domestic network throughout the United Kingdom. The media approach with posters and radio reflects the frequency message, and gives us the opportunity to reach elusive business men and women throughout the country.”

The increased frequency of services is part of a ₤10 million package of improvements to the airline’s UK domestic services. It also sees a new electronic ticketing service which enables British Airways passengers to check-in within just one minute, together with more capacity and more lounge space.

Success of promotion at British Airways has been a historical record. In September 1993, the company announced “The British Airways Dream Ticket” considered to be the biggest-ever sales drive, designed to capture an additional ₤100 million revenue from the world business travel market. The campaign followed the announcement of a repeat of the joint promotion with Sainsburys.  In Spring of 1994, the company launched “World Offers” fares to more than fifty destinations, cutting prices by an average of 33%, in a major promotion campaign to attract more leisure travelers. Unlike most other fare types, World Offers remained on sale for a short period only, with destinations and prices changed regularly to sell seats that would otherwise probably be unsold.

In 1996, British Airways has been voted the top brand in the UK travel and holiday industry in the top 1996 Superbrands awards. The awards were presented to the most powerful brands in the UK by the Superbrands Council, whose members include leading figures in the communications industry, that is, advertising, public relations, design and marketing. The basic criterion for choosing winners was the provision of “a brand which offers consumers significant emotional and/or physical advantages over its competitors which consumers want, recognize, and are willing to pay a premium for.”

Only a week earlier to this event which took place on October 2nd, British Airways was named the world’s best airline, in a poll by readers of Business Traveler magazine. At the same time, business leaders throughout Europe also named British Airways the best European company at satisfying its customers, the most respected British business, the top rated organization in the European transport sector, and the second most respected company overall in Europe, in the annual poll which was conducted among 1,400 senior executives by Financial Times.

By | 2017-03-23T17:42:34+00:00 March 15th, 2016|Categories: Uncategorized|Comments Off on British Airways Marketing Mix paper