MARKETING - CASE STUDIES CASE STUDY EXAMPLE

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1 -Role of marketing in the firm and in society - Marketing plan outlines the strategies used to bring the buyer and seller together. - The core of marketing is satisfying existing customer wants, which should lead to repeat sales. - Marketing is the revenue-generating activity of any business. The business cannot operate effectively until a sale is made. MARKETING - CASE STUDIES The most important objective of marketing is to identify and satisfy the needs of the customer. This process increases profitability for the firm. As a result marketing is key to the success of Qantas and to ensure that they meet their profit margin. HARVEY NORMAN Harvey Norman, through Gerry Harvey connects his business with their consumers more effectively than many firms in the market. Gerry Harvey has become a major icon for the business and appeared on main stories such as 60 Minutes, Business Sunday etc acting as a spokesperson on behalf of the business. As a result consumers trust and respect Gerry Harvey along with Harvey Norman. The image this provides for Harvey Norman is priceless and becomes one of their major marketing strategies. Therefore the role of marketing in the firm and satisfy is to satisfy the needs and wants of the customer.

2 - Types of Markets * Resource * Industrial * Intermediate * Consumer * Mass * Niche HARVEY NORMAN Consumer Market/Intermediate. Consumer

3 * Production - Selling - Marketing Orientation HARVEY NORMAN Increase in more competition in the business environment meant that businesses could no longer solely rely on a production approach to sell all their output as demand is less than output. This lead businesses to develop strategies that satisfy consumers wants as well as needs as consumers began to have discretionary incomes. Within this marketing orientation we can see Harvey Norman in satisfying both consumers wants as well as needs with the creation of new brands to fill in different markets. The creation of Domayne for urban, more expensive items satisfies consumers wants and is achieved through maintaining a high-quality expensive brand name.

4 * The Marketing Concept - Customer Orientation, Relationship Marketing Customers seek more individualised personal treatment from businesses. In response businesses look for ways to develop long-term and cost-effective relationships with individual customers known as relationship marketing. Relationship marketing places an emphasis on customer retention and Qantas can be seen to do this through the frequent flyer scheme. It has more than 7.3 million members and 490 programme partners. Members obtain points through flying with Qantas or its partners. The scheme also offers an extensive database of customer information such as where the most frequent routes are travelled, how many customers travel at specific times and at what time of the year. This type of information aids Qantas in making more well-informed decisions and to effectively budget future operations. Qantas also through their brand Jetstar offer a Jetstar credit card which when consumers use are offered discounts and are exempt from a variety of fees when using the Jetstar credit card to purchase airfares. Consumers that use the card in theory will more frequently do business with Jetstar as they receive special deals which they may not receive from other airlines and resultantly Jetstar is able to develop long-term relationships with a large amount of their consumers, increasing customer retention and customer loyalty.

5 * The Marketing Planning Process 1. Situational Analsysis (SWOT) 2. Establishing Market Objectives 3. Identify Target Markets 4. Developing Marketing Strategies 5. Implementing, Monitoring and Controlling the Marketing Plan

6 - Elements of a Marketing Plan 1. Situational Analysis Strengths: - Extensive Network/One World Alliance - New aircrafts, lounge upgrades - Excellent airport locations and facilities - Largest Australian based airline loyalty program - Worlds most profitable airlines ranked in the top 10 (Skytrax awards) Weaknesses: - High risk nature of airlines - Higher labour and operating costs than competitors - Ongoing disputes between Qantas and militant unions - Postponed delivery of Boeing (Dreamliners) - Safety incidents have impacted Qantasʼs image Opportunities: - Expansion of Jetstar Internationalʼs network - Furthering e-commerce operations - Continually innovating aircraft technology - Merge with other international airlines (British Airways, Cathay pacific) - Further alliances Threats: -Threat that Jetstar and Jetstar international will ʻcannibaliseʼ Qantasʼ principal routes and diminish its profitability. - Increase in Government regulation to protect smaller rivals - Previous fall in Australian dollar - Increase in Fuel costs

7 2. Establishing Market Objectives Main marketing objective is to build two leading complementary brands, Qantas (premium airline) and Jetstar (low fares airline). In 2010 the main marketing objective was to preserve revenues and reduce costs. Another main objective was to return to modest growth. Other objectives include: - Maintenance of Qantas/Jetstarʼs combined domestic market share of 65% - Matching capacity with demand sustaining loads around 80% (?) - Growth of Jetstar - Increased internet sales - Increased customer service standards

8 3. Identify Target Markets Harvey Norman Considering the total market is too large and fragmented to be a viable target for a businesses marketing efforts, a business must therefore select a target market. A target market is a group of individuals with similar characteristics or currently or potentially purchase the product. Harvey Norman attempts to expand its company through market segmentation and satisfying particular customer needs and wants in a range of different target markets. Harvey Norman does this through their segmentation into four distinct target markets in Australia. 1. Harvey Norman, the core store - targets families. 2. Joyce Mayne - targets the budget minded families 3. Domayne - target empty nesters (no children) who reside in city apartments. 4. The home improvements department within Domayne (?) - target families in owner occupied homes conducting renovations

9 4. Developing Marketing Strategies Harvey Norman The marketing strategies assist in achieving the marketing objectives. These strategies outline how the business will use its resources to achieve its objectives. Price - Price skimming before commencing a series of discounts. Include extra features such as extended warranties and easy finance to boost the price margin on sales (flexirent). Consumers are willing to pay a high price for the latest product or newest technology (neo consumers). Consumers also expect comparable prices on older stock. Product - The very latest products are deliberately showcased in all stores. Uses power on suppliers to grant exclusive rights to new items. Staff is trained to exhibit a high degree of knowledge. Harvey Norman uses its market power and size to almost monopolise new product launches in the electrical/home market. The product knowledge and after sales service is also valued. (Use example of the release of Tivo 320 and it being sold exclusively to only three stores, Harvey Norman, JB-HIFI and Myer). Promotion - Advertising is continuous and repetitive. Gerry Harvey used as an opinion leader to reinforce the positive brand. - Uses a combination of in-house advertising, brochures, Gerry Harvey, sales staff and strategic sponsorship of major sporting events (state of origin). - Can see a threat while in 2009 advertising was cut by 8% and JB-HIFI increased their advertising by 40%. - Harvey Normanʼs promotion strategies work effectively and resultantly their stores are being recognised as reliable that provide the latest products and excellent service. However must consider strategies to win over the youth market as JB-HIFI has extensively promoted themselves towards this youth market. Place - Superstores away from major malls. New stores position in growing regional centers. This attracts customers who interested in making a purchase. Benefits Harvey Norman with lower rent and easier parking for customers. However there is a minimal online presence (slowly increasing).

10 5. Implementing, Monitoring & Controlling the Marketing Plan Qantas Implementation is the process of turning the marketing plan into action. Considering the business environment is unpredictable and a range of unforeseen events may occur Qantas has a systematic base for continually monitoring, controlling and adjusting its marketing activities using the following tools. * Developing a financial forecast of revenue using statistical models, past sales data, executive judgements and surveys of consumer buying intentions (could use Frequent Flyer Scheme (FFS) for some of this customer information). It then estimates the costs such as market research costs, promotion costs, product development costs and distribution costs. * Comparing actual and planned results using a number of performance criteria. This involves a sales analysis which breaks down sales by different products, segments and territories to better allocate resources in the future. * Market Share analysis is also undertaken to compare business sales with the performance of its competitors. * Market profitability analysis is used to measure the profitability of products, segments and territories as a percentage of sales. Qantas may use this to compare Jetstar and Qantas - Jetstar proved the higher performer in 2010 as the leisure market proved more resilient to the economic downturn and the dual brand of Qantas enabled the company to still capture the market with an alternative lower airfares. KEY PARAGRAPH>> - Use to link topics together * Revising marketing strategies and taking corrective action. This can be seen when Qantas forecasted a 6% growth in 2009 but actually experienced a 1.9% decrease mainly due to the global financial crisis. Qantas resultantly revised its marketing strategies by reducing its prices to stimulate demand, reducing flight frequency on some routes (minimising costs), cancelling and/or delaying orders for new planes (enabling Qantas to work their capital by extending the time period accounts payable) and also reconfiguring its planes with more economy seats.

11 * Market Research Process - Determining information needs - Data Collection (Primary/secondary) - Data Analysis & Interpretation Qantas uses market research to gather and analyse information to help make appropriate marketing decisions. Marketing strategies perform best when they are based upon accurate, meaningful information. Qantas must first determine its information needs, for example customer needs, attitudes, brand preferences, buying intentions and characteristics. The second step is to identify and select the data source, this is done through primary and secondary data. Qantas uses both of these - primary data through surveys, complaint monitoring and discussion with customer contact staff. Secondary data includes things such as Government data, airline magazines and reported interviews. Qantas may also use its Frequent Flyer Scheme as a primary source of data collection in providing a wealth of information about itʼs customers. The final step is to analyse and interpret the data. Qantas replaces its cold food boxes with hot breakfasts and dinners and a choice of menus for business class travellers after the results of recent customer surveys. This is done to satisfy customers wants and to gain a competitive edge of its competitors and hopefully lead to customer retention.

12 * Customer & Buyer Behaviour - Types of Customers (people, household, firms, educational institutions, government, clubs and societies, religious organisations) - The buying process, buyers and users - Factors influencing customers choice - psychological, economic, sociocultural, government Buying behaviour can be defined as the decisions and actions of people involved in buying and using products. Managers are better able to predict how customers may react to particular marketing strategies if they are aware of the factors that influence the buying behaviour of different types of customers. HARVEY NORMAN Harvey Norman caters towards three types of customers - families (Harvey Norman, Joyce Mayne), empty nesters (Domayne) and the leisure/sports market (Domayne Electrical). Amidst these groups of customers a new type of customer has emerged which are referred to as neo consumers. They are interested in quality rather than cost.they can be seen to be characterised by the following features: Use credit cards, high spending customers, have outstanding debt on their credit card, well insured, use internet to buy goods & services, aged in their 30ʼs and 40ʼs. Neo Consumers as result take a different approach to the buying process. Traditional customers will usually bargain hunt for expensive items or wait for sales however neo consumers focus on quality over cost and are influenced on the perceived level of quality from the product, whether from their social class or sociocultural influences which affect their buying behaviour. Harvey Norman is still able to cater for both neo consumers and traditional consumers due to their range of brands which cater for different types of customers. Harvey Norman can still focus their efforts on obtaining grants to receive the newest technology and in some cases receive it exclusively and neo consumers will pay a premium price for the highest quality and newest technology whilst at the same time as technology progresses and newer technology emerges the older stock can be put on sale and Harvey Norman will most likely still clear out its stock as traditional consumers seek sales and ways to save money.

13 * Developing Marketing Strategies - Market Segmentation/Product Differentiation - Product - Price - Promotion - Place Market segmentation is the process of dividing up the total range of potential or current customers into smaller discrete groups to facilitate analysis and planning. It enables Qantas to better meet the needs of its customers and to better tune the marketing mix to particular groups in the market. Qantas mainly uses behavioral segmentation to select its target market as buyers are distinguished according to trip purchase, business/leisure. This is seen with Qantasʼ different classes on their planes, e.g First Class, Business Class and Economy Class. Because of changing customer requirements Qantas uses highly differentiated brands to appeal to different customer segments. This is seen with Jetstar which targets cost sensitive travellers. The airline offers only two classes - Star Class and the standard class. Product Positioning is the image that Qantas projects in relation to its competitors. It uses a variety of positioning strategies to make aware to its consumers its service, these include... * Positioning in relation to its competition - it has launched its own ʻno-frillsʼ carrier, Jetstar to capture back some market share from Virgin Blue. Qantas now being dual-branded can position itself both as a high quality, premium airline and also has a low-cost, budget airline to increase market share and to appeal to a wider market segment. * Positioning in relation to target market - Concentrating on securing the corporate/business market through its City Flyer express service, lounge upgrades, Frequent Flyer Scheme and Qantas Club Services. Qantas attempts to differentiate its service by offering a wealth of features that other airlines may have but not of the same level of quality.

14 * Marketing Strategies Continued.. Branding is one of Australiaʼs leading brand names and has become a powerful marketing tool. It has developed an iconic brand symbol of the Kangaroo and the slogan ʻSpirit of Australiaʼ clearly distinguishes Qantas from its competitors. The almost flawless safety record is also associated with the brand name and which buyers use in their buying decisions and this characteristic is a major influence in a customers choice to choose Qantas over its competitors. Packaging is used to assist in sales. Well-designed packaging results in a positive impression and encourage first-time customers. Qantasʼ has recently adapted its flying kangaroo logo to fit the tail of the new A380 along with a new typeface with thinner litters to suit the more contemporary graphic design standards. These graphics along with the Qantasʼ brand image accentuates the perception of exclusivity and luxury, aiding in the influence of sales to customers. Price Price is a variable which Qantas can change quickly and as often as required. Previously these prices were regulated and there was a formula for all fares based on flag fall and distance. Recently pricing methods of qantas include: - Cost Plus Margin: Qantas determines the cost of production and adds a margin for profit - Market: Majority of fares are determined by the market, where demand is matched with supply - Competition Based: watching what other airlines are doing and adjusting their prices accordingly, the use of two brands, Jetstar and Qantas assists in this approach as they can target two large sectors of the market. Pricing Strategies include: - Price penetration: Uses this for Jetstar -- lowest possible price. - Full Fares: Used to target business customers as full fares are viable for refunds and changed which is essential for business customers as they require that flexibility however must expect to pay a premium price for it.

15 ^ Continued - Loss Leading: utilised by Jetstar when it was first launched in May 2004 and achieved by introducing incredibly low prices (Sydney-Melbourne route as low as $19). This is used to capture as much of the market as possible on launch as it targeted customers seeking low-cost airlines and customers who are on a budget. Promotion Advertising: Qantas uses advertising agencies to create media advertisements for television, magazines, newspapers, brochures, posters, billboards, radios. Qantas recently has attempted to use less blanket advertising (billboards) and use more direct marketing strategies especially to corporations. This is because there is a disadvantage of blanket advertising that majority of the people that are receiving the message are not the target market unless the advertisement is for image or brand recognition. Personal Selling: Based on sales representatives who sell directly to travel agents, businesses and government departments. Publicity: Used to enhance the image of Qantas through news releases, feature articles, press conferences and interviews. Qantas has used opinion leaders such as John Travolta and also sponsors a variety of rugby, NRL, netball and swimming sports. Place The distribution of Qantasʼ products is distributed in two ways, direct and indirect. Direct: Sales via its own outlets, it has its own Qantas Travel Centres called Qantas Holidays. Qantas has also bought into Viva, Jetset and Jetabout which reduces the likelihood of the owner entity selling competitor tickets. This is an example of vertical integration of the distribution chain. (? More outlets of tickets? ) - Uses telephone sales centers, airport ticket sales and the use of the internet as a major, cost-effective distribution channel.

16 ^ Continued * Environmental Effects on Distribution - Technology - Local Government Indirect: (Uses Intermediaries) This is done through travel agents. Qantas is selective in who they choose to resell their products and looks for intermediaries that have a good reputation, financial strength and expertise. However this distribution source means that the revenue of Qantas is reduced as travel agents receive commissions on their sales. Technology has a major impact on distribution and the most significant of these would be the lead up to nonstore retailing or e-commerce. We can see this technology with Qantas as they utilise call centres to place bookings and have a large amount of sales through the internet.

17 * Ethical & Legal Aspects All of Qantasʼ advertising, promotional and marketing material must comply with consumer protect laws and to ensure that Qantas is in compliance with these laws all material is reviewed by the Qantas Legal Department before publication. Qantas is aiming to produce environmentally friendly products. It has introduced boxed meals to reduce waste and also introduced lighting and air conditioning improvements using solar energy. It also has become a key partner of Landcare Australia. HARVEY NORMAN Considering that Harvey Norman has such large market power it is able to lift its prices when new products are launched, especially when these products are distributed exclusively to Harvey Norman. It has also been alleged that Harvey Norman used bait advertising to advertise products and not have sufficient stock on hand to meet demand. It can also be thought that the use of interest free loans although are a popular sales technique are a method to encourage customers who really cannot afford to make purchases on credit to make a purchase. In addition these consumers are charged fees, late fees and if payment is not made on time high interest rates may also be a feature. Consumers who undertake this loans may not fully be aware of the fine writing unless otherwise informed and can be deemed unethical.