MARKETING MANAGEMENT

[Type the document title]

23 May 2011 VINAY RAMAMURTHY [P120536]

MARKETING MANAGEMENT

BRITISH AIRWAYS

INDEX
INDEX.......................................................................................................................... 2 INTRODUCTION........................................................................................................... 3 1.1 MARKETING DEFINITION.....................................................................................3 1.2 ROLE OF MARKETING IN ORGANISATION ...........................................................4 1.3 MARKETING IN B.A..............................................................................................4 2. SEGMENTATION.......................................................................................................4 2.1 CONSUMER, INDUSTRIAL and TYPES OF APPROACHES........................................5 2.2 TARGETING AND POSITIONING...........................................................................7 2.3 APPLICATION OF SEGMENTATION TO B.A............................................................9 2.4 PROFILING CUSTOMERS....................................................................................10 3. BRANDING.............................................................................................................12 It is a process of creating awareness amongst people and maintaining a good reputation form the organizations point of view. According to Matthew Healey (2008:6) the word brand comes from the Old Norse of Germanic root meaning burn. We use this meaning literally talk about branding an animal, or an amphora of wine, to indicate its owner; we mean it figuratively when we talk about all the attributes of a product that make a lasting impression in a customers mind. .......12 3.1 DEFINITION.......................................................................................................12 A brand is a promise of satisfaction. It is a sign, a metaphor operating as an unwritten contract between a manufacturer and a consumer, a seller and a buyer, a performer, and an audience, an environment and those who experience it. (Matthew Healey, 2008).........................................................................................12 3.2 STRATEGIES.....................................................................................................12 3.3 USE IN MARKETING COMMUNICATIONS.............................................................15 3.4 IMAGERY AND POSITIONING IN MARKETS.........................................................16 3.5 METHODS OF VALUING BRANDS.......................................................................18 3.6 ESTIMATE VALUE..............................................................................................19 4. WEB 2.0 TECHNOLOGIES.......................................................................................21 4.1 TYPES .............................................................................................................. 21 4.2 USEAGE ........................................................................................................... 22 4.3 BENEFITS ........................................................................................................ 22 4.4 DRAWBACKS.................................................................................................... 22

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4.5 APPLICATION BY B.A.........................................................................................22 5. APPENDICES ......................................................................................................... 23 5.1 Appendix-1 (SWOT analysis of BRITISH AIRWAYS)...............................................23 5.2 Appendix-2 (Twos Matrix Strategy Formulation by BRITISH AIRWAYS)................24

INTRODUCTION
In this Marketing report we will be focusing on keys areas of marketing management with respect to BRITISH AIRWAYS (B.A.) as an example to assist a better understanding of the concepts. The key areas of focus are categorized into 3 sections SEGMENTATION BRANDING WEB 2.0 TECHNOLOGY

B.A. was the largest company in the airline industry which is listed on the London Stock Exchange. The airline globally flies to over 550 destinations making it a leader in the industry. As the global airline industry is facing problems due to changing behaviors of customers, rise in number of competitors marketing management plays a vital role in maintaining and enhancing the business in the future of B.A.

1.1 MARKETING DEFINITION

Kotler (2000, pg 8) suggests that marketing is a form of selling ones goods to the customers. He also says marketing is a process where individuals get what they need by creating and offering services and goods with each other.

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Whereas Marketing Management is the process of planning and executing the conception, pricing, promotion and distribution of ideas, services to create exchanges that satisfy individual and organizational goals (Peter D. Bennett, 1995).

1.2 ROLE OF MARKETING IN ORGANISATION

The role of marketing by the marketing department of organizations is to formulate a marketing strategy based upon the type of business, environment and opportunities in the future. (Hooley et al 1998, pg 51) says strategic marketing planning involves deciding on the core strategy, creating the competitive positioning of both the company and its offerings, and implementing that strategy.

1.3 MARKETING IN B.A

B.A. has come up with a number of strategies in their marketing to overcome the decline of the company from the past decade and provide better service to customers, thus striving to outsmart their competitors in the process.

B.A. launched its first brand advertising campaign in 2004 focusing on high levels of service.

They came up with their new slogan or tagline Upgrade to BA. B.A. is the official sponsors for 2012 Olympics and is using England footballer Bobby Zamora to publicize its backing of Englands bid to host the 2018 World Cup.

B.A. to promote classic British attractions.

2. SEGMENTATION
Segmentation is an important aspect in marketing theory and practices today. Market segmentation implicitly lies at the core of most, if not all, strategic marketing initiatives facilitating the identification and satisfaction of an organizations most

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profitable customers (Dibb et al., 2005). It can be simplified as classification of global markets (large) into local markets (small) to help targeting and positioning for marketers. According to Kotler et al. (2001, pg 316) market segmentation can be classified into Mass Marketing Addressing a large and heterogeneous market with an undifferentiated market offering is less and less effective as a marketing strategy. Brennan, R. et al. (2003, pg 107) Segmentation Marketing They adapt a companys offerings so they more closely match the needs of one or more segments.

Niche Marketing It adapts a companys offerings to more closely match the needs of one or more sub segments where there is often little competition.

Micro Marketing It is a form of target marketing where companies tailor their programs to the needs and wants of narrowly defined geographic, demographic, psychographic or behavioral segments.

B.A can adopt mass and marketing as their marketing strategies.

2.1 CONSUMER, INDUSTRIAL and TYPES OF APPROACHES

CONSUMER

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The consumer market falls under Micro marketing which is an important aspect as per British airways. Their strategies based on consumers can be classified into Geographic It is classification of markets geographically into countries, sates, cities etc. Demographic Customers are classified based on Gender, Income, Age, Life cycle stage. Psychographic Lifestyle, personality, attitudes and social classes Behavioural Usage, Benefits sought, purchase occasion, Perception and beliefs of the customers.

INDUSTRIAL It focuses more on the B2B aspect for organizations. In b2b there tend to be fewer, larger customers and consequently the sales force model is more common. Fifield, P. (2005 pg.21) B.A uses CARGO as a part of industrial selling. They carry goods or products to different countries. Recently they merged with Iberia to challenge Lufthansa in this business sector (Bloomberg.com, 2011) They can be classified under

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Behavioural It is based on frequency of usage patterns, loyalty to suppliers etc.

Geographical It is divided based on industrial growth rate, economic factors.

Type of Customer They depend on size of the organization, value chain, market value etc.

2.2 TARGETING AND POSITIONING

TARGETING Targeting is a process of choosing the right market for implementation of the marketing strategies. According to Kotler et al. (2001, pg 343) categorizes this into three areas Undifferentiated Marketing It is a market strategy where an organization decides to ignore market segment differences and target the market as a whole with one offer. Differentiated Marketing Separate offers designed for different customers are the objective of this strategy.

Concentrated Marketing Organization trying to get a large share of few sub markets is the goal behind this market coverage strategy. (Niche marketing)

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Positioning Kotler (1997) said positioning is an act of designing the companys offering and image so that they occupy a meaningful, outstanding and competitive position in peoples mind. Positioning is done by the customers and not the company. There are two approaches

Functional It uses actual facts and is a rational approach.

Expressive It is a subjective and an image based approach assisted by emotions.

According to Kotler et al. (2001, pg 379) positioning can be categorized as Under positioning It is a positioning error referring to failure to position a company, its product or brand. Over positioning It is a positioning error referring to too narrow a picture of the company, its product or a brand being communicated to target customers. Confused positioning It is a positioning error that leaves consumers with a confused image of the company, its product or a brand. Customers position our products and services by using perceptual maps, strategies and taglines. They involve re-positioning back up variables which are

Repositioning- changing product identify. Depositioning- Change identity of competing products.

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2.3 APPLICATION OF SEGMENTATION TO B.A

B.A. destinations include 6 continents making it one among the few other competitors in the market.- Geographic segmentation

Categorizes customers based on Age for example they provide offers for people travelling below a certain age limit which targets the student sector mainly. The have different classes like business class, economy class luxury which is classification based upon the income. - Demographic segmentation

It has special flights which provide a homely flying experience includes gym, shower and such other facilities of comfort.- Psychographic segmentation

A separate unit CARGO- industrial segmentation. Has a executive club segmenting frequent flyers and business executives.- Behavioural segmentation (All above mentioned features are findings from britishairways.com, 2011)

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Segmentation Matrix of British Airways

2.4 PROFILING CUSTOMERS

The aspect of profiling comes into picture for the airline industry to identify its typical customers. Identify customers who are brand loyal i.e. who use prioritizes or give first preference to B.A. According to Nicolini G. and Salini S. (2006, Pg 581) B.A. uses two non classical methods, based on the analysis of qualitative data, and is applied to evaluate customer satisfaction and classify its customers.

An algorithm based on DECISION TREE theorem is performedo Conserving the original ordinal measuring scale of items. o It is possible to rank the dimensions in order to obtain map references o Select groups of subjects more or less satisfied o Delineate the peculiar characteristics of each group.

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A probabilistic model such as the RASCH model is applied o To distinguish between satisfaction and quality o Obtain numerical interval measure for both components.

A SWOT analysis of B.A. helps segmentation of markets by the company (see appendix-1) and target customers in the future based on markets.

The next major area of focus for the industry after segmenting and identifying its customers needs is the branding which plays a vital role in attracting new customers and retaining its existing customers.

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3. BRANDING
It is a process of creating awareness amongst people and maintaining a good reputation form the organizations point of view. According to Matthew Healey (2008:6) the word brand comes from the Old Norse of Germanic root meaning burn. We use this meaning literally talk about branding an animal, or an amphora of wine, to indicate its owner; we mean it figuratively when we talk about all the attributes of a product that make a lasting impression in a customers mind.

3.1 DEFINITION
A brand is a promise of satisfaction. It is a sign, a metaphor operating as an unwritten contract between a manufacturer and a consumer, a seller and a buyer, a performer, and an audience, an environment and those who experience it. (Matthew Healey, 2008) According to Davidson (1997) stated the visibility of core elements of a brand which are visible and invisible to the customers. Visual elements consisted of Name, Symbols, Price, Advertising and Packaging whereas the invisible elements are Quality of service, Supply chain, Production and sales services.

3.2 STRATEGIES
A Brand essence plays a vital role in formulating strategies for marketing. Govers and Schoormans (2005) provide one of the best pieces on the concept of brand management, claiming that, beyond their functional utility and purpose, products and series have a symbolic meaning, and parts of this symbolic meaning are accounted for by concepts like brand personality and product-user image, which describe the symbolic meaning associated with the brand or product class. It can be classified mainly under two groups

Differentiation

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The company differentiates its products from the others in the market.

Added Value
o

The company shows it has something extra than the other selling features which are common.

Various forms of Brand strategies are

Company Brand The main focus is on the company itself.

Range Brand It has a separate company to take care of marketing.

Multi Branding Using individual brand names for marketing.

Family Branding Use company names with individual brand names as parts of branding exercise.

Brand Stretching Using company name to acquire new areas of business which not relative in most cases.

B.A. has five strategic goals

Be the airline of choice for longhaul premium customer Deliver an outstanding service for customers at every touch point. Grow our presence in key global cities.

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Build on our leading position in London. Meet our customers needs and improve margins through new revenue stream. [Source: British Airways 2009/10 Annual Report and Accounts]

Key strategies of B.A can be evaluated by strategy formulation using Twos matrix (see appendix-2) and help to meet objectives effectively by bridging the gap between the strengths and weaknesses. B.A. also uses GAP analysis as a part of their decision making program.

HIGH

Strategic Group Analysis (Source: Johnson et al., 2008, p73-77.) B.A analyses its competitors by carrying out a strategic group analysis which

PRICE

helps them in strategic planning and analyzing market segment based on brands and advertising.

LOW

Specialist e.g. PalmAir

Mass Service Providers e.g.

Nonscheduled e.g. Thomson

Local e.g. BMI

No-frills e.g. Ryan Air, Easy Jet

BA, Virgin, Lufthansa, AirFrance KLM

LOW

BREADTH OF SERVICE

HIGH VIN

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FOCUS ON SERVICE OFFERINGS

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3.3 USE IN MARKETING COMMUNICATIONS

Marketing communication is presenting your business to the public in order to create awareness of your presence and draw more customers for business. Marketing communication is uplifting the 7 Ps of marketing which are price, promotion, product place, people, process and physical evidence. A good marketing mix is necessary to promote the brand value of the organization. In order to achieve this integrated marketing communications (IMC) is essential. The below diagram explains the planning and execution of all types of communication to meet objectives for a brand.

Relationship between IMC and brands- Macrae Ch. (1996, pg 377)

The diagram shows the core ideas that relate branding and IMC. B.A. uses IMC effectively Advertising

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Is a paid for form to commute message to audience. B.A uses the commercials on television, radio etc to promote their brand. Public Relations Is a non-paid for form to reach audiences and maintain reputation. B.A. makes Press releases, organizes exhibitions of aircrafts Sales Promotions Is a short term activity designed to stimulate sales by giving added value. B.A. designs seasonal offers for customers, holiday packages and Go extra mile offers. Direct Marketing Is a way of delivering personalized message to individual customers. B.A sends out emails, letters to its valued customers on a regular basis. Personal Selling Is a face to face meeting with organization representatives.

3.4 IMAGERY AND POSITIONING IN MARKETS

Branding can be used in managing and developing, according to Taylor, D. (2002) an example positioning tool Insight Foundation Brand Promise Core insights Consumer target Market definition Page1 6 Job of the Brand
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Brand Truths Benefits Human side of the Brand Values Personality Rallying calls Essence Imagery is the visual representation of the brand which accounts to logo, design, colors and such visual elements Brand positioning plays a very important role in todays market. B.A. is taking certain steps towards increasing their brand value

OpenSkies

gets

smart

with

new

brand

positioning

and

advertising(bx.businessweek.com, 2011)

FutureBrand worked with British Airways to develop a new brand positioning, building service and status back into the corporate language.(futurebrand.com, 2011)

A perceptual map or Mapping positions can assist positioning of brands. G.E Matrix of B.A. gives a clear picture of target markets for the future.

Competit

Market Attractiveness High Medium Low

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ive Strength

High

North America BA=1.7%

Latin America BA=1.9%

Medium Western Europe BA=6.9% Asia Pacific Middle East and Africa BA=1.1% BA=2.3% Eastern Europe Low Australasia BA=2.2% BA=4.0%

Source: Johnson et al., 2008, p280.

3.5 METHODS OF VALUING BRANDS

Each brand is unique and has value of their own, depending on the operation or functionality of business. A detailed analysis into few aspects may help in valuation process such as Brand Audit This depends on global presence of brand, willingness to opt, power and brand standing. B.A. flies to over 300 destinations and 33 million customers as per annual report 2008/09. Current Earnings

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It is the value of the share price in the market. Weighted average share price is 1.88 GBP in 2009. Future Profits It is a forecast of performance of the organization. B.A. estimated share price falls to 1.85 in 2010. Capital Value What we sell at? B.A. is earning over 8.7 billion in revenue in 2007/08 The Brand value of British Airways are- (britishairways.com, 2011)

Safe and secure Professional Warm Thoughtful Responsible

3.6 ESTIMATE VALUE

Initial research into the valuation of brands originated from two areas: marketing measurement of brand equity, and the financial treatment of brands. The first was popularized by Keller (1993), and included subsequent studies by Lassar et al (1995) on the measure of brand strength, by Park and Srinivasan (1994) on evaluating the equity of brand extension, Kamakura and Russell (1993) on single-source scanner panel data to estimate brand equity, and Aaker (1996) and Montameni and Shahrokhi (1998) on the issue of valuing brand equity across local and global markets. B.A. followed Value-Brand led marketing. To estimate the value of its brand NPS- Net Promoter score system is being used around customer loyalty. NPS score assessment as a proxy for determining how well their overall customer experience is performing.

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The theory goes that customers who give firms high NPS ratings are influential in a positive way, by recommending the company to others (as well as remaining loyal themselves). Conversely, low-scoring NPS customers bad-mouth your brand, and so create negative influence (customerfaithful.com, 2011).As, competition is increasing B.A. introduced value calculator in order to compete with prices against Ryanair and easyJet. Methods to assist brand evaluation are

Cost based Market based Economic/ income based Formulator based Special situation based Price Premium valuation Incremental sales valuation Future earnings valuation

Young and Rubicams Power grid method which is stature verses strength also helps in the process of evaluation. Guilding and Moorhouse Formulator methods consider facts such as leadership, marketing, internationality, trend, support and Protection. B.A. implies Balmer Acid test for corporate Brand management and is evident that it is effective form past three decades (scribd.com, 2011).

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4. WEB 2.0 TECHNOLOGIES

Web 2.0 is the latest buzz word in the internet technology which is being used of late. The key factors which are considered are interactivity, social networking, sharing information and user generated content.

4.1 TYPES
Classified into five categories according to the source (bluethots.com, 2011) Customer to customer (C2C) The main focus of C2C is social networking. They include applications like FaceBook, Twitter, Google Docs, Wikis, etc. The aim is to bridge the communication gap between people, so this can be used as a great tool for marketing. Business to consumer (B2C) These include many case studies like Gold Corp, Lego etc. They focus on getting consumers to contribute and share expertise on products and services, which can be used as analytical tool by marketers. Consumer to Business (C2B) The concept of forums comes into picture here where consumers can post their reviews about products or services of organizations. Business to Business (B2B) It deals with how two different organizations communicate on common lines thus sharing information.
Enterprise Level

This deals with internal social networking and collaborating within organizations. There are limited amount of resources available for sharing information. Page2 1
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4.2 USEAGE
WEB 2.0 can be used by marketers in wide aspects of marketing.

For gaining insight view of customers opinion regarding the product. Analyzer in measuring the success rate of organizations. Provides better opportunities for communication and act also act as new marketing medium.

Helps in promoting and creating brand awareness.

4.3 BENEFITS
Web 2.0 has many benefits in todays real world out of which some plays a very important role from a marketing perspective. The technology is global so as a result it provides rapid spread of information through cheapest means which helps in cost effective marketing. The ease of access and effectiveness in the market is immense. It creates grounds for scope of innovation which leads to more business opportunities and growth of organizations. It helps build public relations and advertise free of cost. It also allows direct marketing and promotes sales for businesses.

4.4 DRAWBACKS
The biggest draw back of marketing on the web is misinterpretation of data presented and limited security. People with no accesses to technology are excluded which is not a good sign. It is mostly driven by the younger generation and can lead to negative marketing, damage the brand value of organizations if not managed well.

4.5 APPLICATION BY B.A

Source (britishairways.com, 2011)

B.A. allows its customers to book tickets online and also helps them manage bookings.

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B.A. goes mobile, which keeps customers updated on the latest on their phone. Information like delay in flight timings is very helpful, and they also provide features like Mobile Boarding Pass.

It provides features like online check-in which saves a lot a time for travelers. British Airways worked with Web Liquid on a social media campaign to promote OpenSkies a differentiated customer experience for air travel.

They market using social media like FaceBook and Twitter to advertise, Promote and also serve as a customer service tool.

5. APPENDICES

5.1 Appendix-1 (SWOT analysis of BRITISH AIRWAYS) Strengths

Financial Size and stability Strong brand recognition Customer loyalty Partnerships and alliances

Weaknesses

Change and innovation Baggage lost in past Poor employee relation history Delayed & Cancelled Flights

Opportunities Emergence of new markets Acquire failing airlines or their assets Decreasing costs as industry expectations decline

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Competitors failing to deliver reliability Able to join the "Mile High Club" for a fixed fee Fuel costs Environmental awareness Loosing Goodwill Global economic crisis

Threats

5.2 Appendix-2 (Twos Matrix Strategy Formulation by BRITISH AIRWAYS)

External Opportunities Skytrax- star system of quality Competitors forced exit Competitors failing on delivering reliability Emergence of new markets Strengths Internal Brand Image Strategies for strengths to meet opportunities: Threats Open skies agreement Environmental Awareness (Climate change bill) Global Economic Crisis Lower cost competition Strategies for Strengths to defend threats:

Partnerships and Alliances

Segment focus. Supply chain migration. Introduction of complimentary services. Broader service offering.

Renovation of brand image. Diversify into other transport markets.

Financial Size & Stability Terminal

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Weaknesses

Poor employee relations history Recent negative attention on reliability and trust Quick innovation and change

Strategies for opportunities to overcome weaknesses: Improved people processes. Technological advancement.

Strategies for Weaknesses not to expose threats: Improved environmental stance.

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