Marketing Strategies: Low Cost Airlines in Australia, Semester 1, 2024

This report analyzes the marketing strategies for a new low-cost airline in Australia, focusing on competing with existing budget airlines like Tiger Airways and Virgin Blue. The report examines key characteristics such as no-frills services and higher connectivity, particularly to smaller cities. It delves into areas affecting pricing, including labor and fuel costs, as well as demand fluctuations. Distribution channels like travel agencies, online booking portals, and social media are explored. The target customer segments are identified as students, low-income households, and frequent business travelers. The report also covers customer priorities, the positioning of the new airline, changes in customer service processes, and the marketing mix. Strengths, weaknesses, opportunities, and threats are analyzed, along with a proposed marketing budget. The primary focus is on low-cost travel and enhanced connectivity to attract customers, especially those seeking affordable and frequent travel options.

1. Key characteristics of low cost airlines:
a. Low cost airlines: This is done to compete with Tiger airways and virgin blue
b. No frills services: In order to help the organization offer low cost, it is imperative that the
organization offers low frill services.
c. Higher connectivity: In order to differentiate itself from tiger airways and virgin blue, this
low cost airline would provide a much higher connectivity by reaching smaller cities more
frequently.
2. Areas affecting pricing:
a. Labor costs: Every involved in the functioning of the airlines on a daily basis
b. Staff salaries: Air hostesses, pilots, back end managers, cleaning staff etc.
c. Fuel costs: This is the biggest cost involved
d. Demand: If the demand is high, then prices can be increased and if demand is low prices can
be reduced to attract customers.
3. For the new airlines, the price will be extremely competitive to attract demand from customers.
4. Channels of distribution:
a. Travel agencies: This is an offline source. The airline could tie up with various agencies and
offer them a certain percentage of the price.
b. Online travel booking portals: Every one books tickets online and hence tying up with online
booking portals like Thomas cook and help gain customers.
c. Social media marketing is one of the most important channels of reaching out to consumers.
5. Customers who could not afford the airlines will now be able to travel and this will lead to
increased demand. Also smaller cities will now have airline facility.
Airlines can only offer a no frills service. Every other on flight service would be charged extra.
6. Target customers:
a. School and college students: Who cannot afford a flight yet and have no source of income.
b. Low income households: who prefer to travel in a low cost airline and do not require frills.
c. Office goers who travel frequently for work and on short notice.
7. Customer priorities and needs in the target group:
a. Low cost travel
b. Travel safety

8. The current customer base is already getting served by the previous airlines. This is a new
service started by Quantas. Their previous airline is already functional and catering to the needs
of its existing customers.
9. The new airlines would be positioned as a no frills low cost airlines to compete with tiger
airways and virgin blue. Hence the traits of the customers would be low income group. People
planning sudden and frequent travels. Office goers who travel for work very frequently or work
away from their homes and travel to and fro weekly.
10. The customer service process would be changed and the level of services provided would be
drastically reduced. Food and beverages both alcoholic and non-alcoholic would be paid. The
staff will be young fresh graduates rather than experienced ones. Of course all the safety
measures would be in place but these additional services would be removed.
11. The name of this airlines would be entirely different. Secondly the marketing team would ensure
that both the airlines are marketed and promoted differently. And there is a clear demarcation
between the two airlines. They would even be promoted to different people and hence there
would be no confusion. Also once the people start travelling, they would automatically realize
that the quality of Quantas is not hampered and the word will soon spread.
12. Strengths – reduced cost is the biggest strength of the firm over which the entire positioning is
done. Secondly higher connectivity even is smaller cities is a major advantage.
Weaknesses – No frills airlines. No food or beverage offered. All the in flight services will be
charged extra. The airline is also not assuring punctuality.
Opportunities – Connecting to small cities where no other airlines are currently going. And
special monthly passes can be offered to frequent flyers.
Threats – Competition like Virgin blue and tiger airways are causing major threat.
13. Marketing Mix is a strategic marketing tool:
a. Product – Low cost airlines
b. Price – Low price
c. Promotion – TV Advertisements and email marketing
4. Place – Australia
14. Low cost and higher connectivity are the only two features which are very important to target
market and the product would be positioned around the same.
Part B

1. Marketing budget involves taking into account all the expected costs and revenues generated by
the launch of a new product. It is the cost involved in promoting the product to its target
customers
2. Fixed cost – TV ads, newspaper ads
Variable costs – Events done to promote the product
3. Cash flow analysis