Successful marketing requires recognition and authority at the top decision-making level. Marketing programs must be carefully planned and based not merely on knowledge of internal corporate affairs, but also knowledge of external environments. a service provider elected for analysis is British Airway (full-service carrier). Contracting out of services including aircraft handling, ticketing, baggage handling to third parties is the main difference between these companies.
British Airways (BA), a leader in airline industry carries more than 27 million passengers a year. Under this approach, business accepts the concept that improved marketing capabilities will furnish answers for some of the economy’s basic problems by directing the business to profitable growth opportunities. Marketing management bears the responsibility for utilizing marketing resources so that corporate objectives are achieved as effectively as possible.
External environment influences strategic planning and tactics of the company. Changing environments create market opportunities for BA that must be reflected in adaptive corporate action. Resources cannot merely be directed to the cultivation of old markets if competitive positions are to be enhanced. Marketing plays the corporate role of directing BA to profitable paths. It perceives business opportunities in a changing environment and creates markets. The mission of British Airways is to “deliver improved customer service more cost-effectively” (British Airways – supply chain, 2008). British Airways delivers growth in fleet, routes, traffic, revenues and profitability (Crawford 2003).
In airline industry, through marketing management, corporate resources are balanced both internally and externally. Internal balance is achieved by the coordination of all marketing activity and its integration with the other areas of the business. External balance is concerned with the continuous adjustment of a company to its market environments through changes in product, price, package, channels, advertising, and selling. In this sense, marketing forces are viewed by BA as shaping the total organization and all the business functions. The marketing manager thus becomes concerned with matching market opportunities with the unique capabilities of his firm -the development of differential advantage (Fill 1999).
In order to respond to increased competition from low-cost carriers like EasyJet British Airways bases its ‘identity on innovation and exceptional service offering. The company states “We offer outstanding products and a quality of service that people will alter their travel plans to enjoy” (Identity Heralds A New Vision, n.d.). BA establishes offerings in accordance with his perception of both actual and potential consumer demand; he continuously monitors the marketplace to adjust to changing consumer wants and needs; gathers marketing intelligence to delineate market opportunities; and integrates, coordinates, and controls marketing resources to achieve more efficient systems of action.
These activities are coordinated and integrated into a system of action. In addition, BA formulates corporate policies, objectives, plans, programs, and budgets taking into account external threats and risks: terror threats, seasonality and competition.
BA relates marketing activities to other functional departments and assesses market opportunities. The stage is that of marketing orientation, which BA has been emphasizing. The objective of the company now shifts from a simple service provider to the satisfying of actual and potential consumer needs, and marketing factors permeate the organization, affecting all activities. The orientation is an external one — the firm turns outward and becomes sensitive to environments.
The company progresses from a company with marketing concepts to a marketing company: Marketing establishes company policies, influencing short- and long-range decisions, and is tied to top-management echelons that cross-functional lines. This phase emphasizes the ability of a company to shape and influence its corporate destiny and market posture. The degree to which the function of market opportunity assessment is performed effectively, shapes in large measure the profitability of the business (Fill 1999).
BA segments customers according to their occupation and social class.. British Airways offers four classes of service: World Traveller (Economy Class) and World Traveller Plus (Premium Economy), Club World (Business Class) and FIRST (First Class) (British Airways, 2008). Service differentiation gives BA a share of a broad, horizontal market, whereas market segmentation tends to result in cultivation of a market position in depth. Given the analogy of a layer cake, service differentiation seeks to secure a layer of the cake, whereas segmentation seeks a wedge.
Differentiation, therefore, may be characterized more as a promotional strategy that endeavors to control demand by advertising and other promotional efforts, Market segmentation often results from substantial growth. After markets are developed on some general basis, they reach the point where additional effort tends to yield diminishing returns, and attention is given to specific market segments that become large enough to be attractive. By cultivating specific market segments, BA seeks to make use of a greater opportunity to maximize customer satisfaction. This maximization, in turn, results in the development of a more secure market position and posture.
Cost leadership helps BA to attract wide target audience and sustain loyal consumers. For instance, BA’s range of prices between 60 pounds from London to Europe and up to 500 pounds by traveling to Far East. The main target group of British Airways in Business Class and First Class passengers. Cost reduction is the main strategy followed by British Airways. British Airways CIO Paul Coby comments: “BA has cut overall IT spend by £93m – 34 per cepercentr two years.
But far from abandoning technology, Coby said the airline’s actual investment in new IT has increased and that technology is vital to the future of BA” (British Airways. 2008). The internal dimension indicates that the marketing-management concept, referred to as a breakthrough in management thinking, by its very nature incorporates the systems approach to management of the marketing effort. It emphasizes the interrelations and interconnections between marketing and other business elements, recognizes the integration of all components of the marketing program into a coordinated marketing mix, and requires the establishment of a communications network and linkages of the various functionaries and activities necessary for the accomplishment of marketing missions.
In BA, the micro-marketing-action system highlights the systemic functions of marketing, to be analyzed later. The assessment of opportunity, planning and programming, and the organization and control of marketing are undertaken to develop and manage the microsystem. The actual system is depicted by the combination and integration of marketing inputs into a product and service mix, a distribution mix, and a communications mix that form a cohesive whole — a marketing mix (Crawford 2003).
Product (service) differentiation is concerned with minor variations, adjustments, or adaptations in a product, such as in varying the kinds of filters in cigarettes, filter flows in automatic washers, or chrome molding or grills on cars. It may also be imparted by varying the package or color of the product. BA is faced with the need to instill an image in the minds of customers that distinguish their products from others and causes the customer to react more favorably toward them.
This is the result of the image of the company itself, its distributors, or the product per se. In matching differentiated products with markets, executives have the choice of selecting converging or diverging strategies. Converging strategy refers to the convergence of demand for product variety among individual market segments, so that distinct markets are satisfied by a single or limited offering.
Here, variations in individual consumer wants are minimized, and heterogeneous demand converges upon the product or product line. ‘British Airways is aiming to set new industry standards in customer service and innovation, deliver the best financial performance and evolve from being an airline to a world travel business with the flexibility to stretch its brand in new business areas’ (Identity Heralds A New Vision, n.d.). BA serves primary airports. The strategic goals of the company are based on new technology achievements and safety.
BA designs its marketing mix to meet the requirements of specific marketing segments or to develop a customer-prospect mix. Favorable purchasing reaction helps to achieve company goals. The external perspective of marketing systems relates various elements and activities of the total marketing unit. It presents a macro perspective of a marketing system. It shows that internal company resources (such as manufacturing capacity, labor, and finances) are linked with external resources (such as advertising and marketing-research agencies, banks, and transportation agencies) to develop a marketing mix.
The purpose of the mix is to satisfy consumer wants and needs and thus achieve corporate objectives (whether sales, profit, rate of return, or image). Communications and feedback help link the system together. It indicates that corporate welfare and consumer satisfaction are brought together through a network of actors and actions. Except for product, price and place, marketing mix involves promotion decisions. The main types of promotions are advertising in different media (TV, national and international press, radio, etc) and public relations (sponsorship and philanthropy) (Crawford 2003, British Airways. 2008).
BA focuses on actual authority structures, communications networks, interrelationships of elements, and the functioning process, rather than on the structure portrayed by static organization charts and the organization attributes capable of achieving goals. BA management emphasizes the integration and coordination of functions and facilities, the adaptation of organizations to its external environments, the impact of changes in one part of the organization on others, the resources necessary to support the organization system itself, the resources necessary to achieve goals, and the ends mean relationship. Systems stress the interrelationships or connectedness of organizations (Paley, 2006).
In sum, the basic premise of marketing management is that firms are goal-oriented and that systems of action must be developed. Although marketing planning and programming are rather fundamental activities, in most companies they remain in a relatively rudimentary state of development. Planning and programming activities are fundamental in adjusting an existing business system to future market patterns. They are the basic instruments for designing marketing systems.
Only recently have companies developed marketing-planning departments. Cost leadership and differentiation strategy help BA to create a core of loyal supporters and sustain unique image of the company. If goals are not clearly specified in terms of opportunities, dysfunction will occur in the firm and resources will be wasted. They transform a group of unrelated marketing activities into a cohesive system.
- British Airways. 2008. Web.
- British Airways – supply chain solution keeps airline on mission. 2006. Web.
- Crawford C. Merle. 2003. New Products Management. Irwin-McGraw Hill. 7th edition.
- Fill, C. 1999. Marketing Communication: Contexts, Contents, and Strategies 2 edn. Upper Saddle River, NJ: Prentice Hall.
- Identity Heralds A New Vision of British Airways. N.d. Web.
- Paley, N. 2006. The Manager’s Guide to Competitive Marketing Strategies. Thorogood.