Marketing In British Airways - Essay Example

The organisations marketing environment (ME), using course concepts/frameworks from B203 Block 3, I wish to analyse is British Airways. British Airways (BA) is a global market leader in the airline industry. It operates chartered and scheduled air services carrying passengers, freight and mail, flying to over 300 destinations domestically and internationally, as well as supplying ancillary services. Its Chief Executive Willie Walsh recognises that to maintain its position as a market leader BA needs to successfully compete, have the drive to move forward and achieve profitability by operating within its margins and ultimately satisfy the customer’s needs.

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A starting point for analysis is information gathering. Monitoring ME factors through environmental scanning, developing a strategic marketing planning process which understands, responds and adapts to these factors (developments, opportunities, windows) which impact on it’s day to day business, these factors are split into two areas;- Macro environmental factors – political, legal, regulatory, societal/green, technological, economic/competitive. These are external to the organisation.

Micro environmental factors – the business, suppliers, market intermediaries, buyers, competitors, publics. These are more organisation specific. From BA’s point of view, the Macro environment has had a significant impact on its operations. Politically since the start of the millennium and in the wake of the terrorist attacks in 2001 and 2005, the wars in Iraq and Afghanistan and a period of crisis and instability Governments have imposed new security measures to restore customer traveling confidence. Controls have been imposed on where airlines can fly what products they can develop and pricing structures. Though in recent years considerable regulatory reform has meant companies have the opportunity to increase market competition, primarily the EU-U.S. Open Skies Agreement [1] ratified in 2008 has enabled airlines of the European Union and of the United States fly between any points in the European Union and the United States.

Legally BA has suffered under the power of the trade Unions, currently embroiled in a lengthy dispute with its employees over conditions and changes to working practices, the next round of strike action is scheduled for February & April 2011. BA must also consider the legal impact of regulations on employee and customer rights and environmental issues. Economically air travel is characterised by high income elasticity, world economic growth impacts on demand.

The continuing conflict in Iraq is one factor which raises the price of oil, in response to this BA has to continually review its fuel surcharges and fight to keep its air fares competitive. Worrying for BA, the world economy is slowing down under the current global recession, resulting in demand for worldwide travel for its business and leisure passengers declining, therefore developing a robust marketing strategy which will drive down operating costs that could be passed onto the customer through lower fares is key to gaining the edge over its competitors.

Social factors impact on BA servicing a diversity of countries. Demographic area and culture have to be taken into account with a marketing strategy pertinent to those countries. This led to closer working relationships between these undiscovered destinations and the industry ensuring the customer experiences the diverse culture the world has to offer, arguments have been that the western influence could be detrimental to these untapped cultures leading to the erosion of their finely balanced social and green environments. Thus BA need to be aware of the impact their carbon footprint, galvanising their efforts to minimise greenhouse gases emissions and contribution to global warming, the imposing of taxation by governments to those who flaunt their ‘green’ responsibilities.

Technology for BA is a vital tool in gaining competitive advantage and drives globalisation. One of the issues BA faces is the extent to which technology can offset the upward pressure on price and cost. BA holds online sales in high esteem and the hope is that the majority of it’s sales revenue will come from customers embracing the convenience of booking and purchasing their E-tickets on line thus reducing costs in the other areas of its customer service activities ticket desks, ticket printing and distribution and call centres. BA is also committed to development of drive thru check ins, WiFi hot spots and SMS mobile communications to keep ahead of its competitors which must include telecommunication companies.

Within BA’s Micro (ME) it’s strategists learn from the analysis of the Macro environment and tailor it to the organisations needs. Taking into consideration the attitudes, reaction and abilities of the internal environment (top management, finance, research & development (R&D), sales & marketing, purchasing etc) and matching those attributes to the corporate goal. Good relationships with its suppliers are key in ensuring that the manufacturing, logistical and buying lines are smoothly maintained. BA needs to be responsive to consumer attitudes, revising a marketing mix which meets that change, new suppliers entering the chain and adaptations of the manufacturing and logistical elements that meet customer demand.

Competitors are quick to exploit areas in which organisations are seen to be failing their customer. BA know they have a reputation in the industry which only a few can compare, backed by an advertising campaign proclaiming “Upgrade to British Airways”. By positioning itself within the emerging markets of low-cost, no-frills airlines by the acquisition of a 15% stake in Flybe, 2007[8] as well as overhauling its short haul & long haul products such as Business UK [3], First [4], Club Europe [5], Club World [6] and World Traveller [7] it remains highly placed to compete with the best of the best airlines. As well as dominance over take off and landing slots at the flagship airports such as Heathrow. The likes of Easy-Jet and Ryanair need to be worried.

Porters five forces of the marketing environment is a useful tool the BA marketer can adapt to the organisations specifics to analyse within the Micro (ME) were the organisation is and where it needs to be in maintaining its market share. A graphical representation of Porter’s Five Forces [2] Four areas requiring specific analysis than those detailed above are markets, competitors, customers and stakeholders. It would be useful for BA to look at these as a basis to formulate its marketing strategy and are fairly representative of the market environment it operates in.