External and Internal Factors Affecting Qantas Airlines: A Marketing Management Report

This report discusses the external and internal factors affecting Qantas Airlines, along with consumer behavior and recommendations for future business strategies.

Running head: MARKETING MANAGEMENT
Marketing management
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Executive summary
The aim of this report is to discuss about the external and internal factors or forces being faced
by Qantas airlines. There are number of positive and negative factors identified in this report. In
addition, this report also identified the internal competitiveness and weaknesses of Qantas, which
will have potential impact on their operation in the long term. The consumer behavior of the
target customers of Qantas is also discussed and in accordance to that, this report discussed a few
recommended steps that will enhance their business in future.

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Table of Contents
Introduction......................................................................................................................................3
Determination of the external market factors..................................................................................4
Determination of the internal marketing factors..............................................................................5
Determination of the consumer behaviors.......................................................................................8
Recommendations............................................................................................................................9
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................11

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Introduction
Contemporary business organizations are having different sets of business approaches
available to them. This is enabling them to accept their business approach according to the
business environment. In addition, the current business scenario is posing huge challenges for the
business organizations by means of enhanced competition in the market (Bocken et al. 2014).
Thus, it is becoming more important for the organizations to have a certain business model,
which will help them in earning profit in the market and gaining competitive advantages. One of
the major and most competitive markets in the current time is the airliner industry due to the
presence of good number of players (DaSilva and Trkman 2014).
Qantas is the largest airliner and flag carrier in Australia with having their presence in
different regions across the world. Being a flag carrier, they are mainly catering to the premium
customers by offering premium services (Qantas.com 2018). They are following legacy airliner
business model, which is helping them in them in gaining more profitability from the market
along with maintaining the brand value. This business model of Qantas is well aligned with the
target customers due to the fact that target customers of Qantas airlines are mainly the premium
customers opting for long haul flight services. Majority of the customers for Qantas airlines are
international.
This report will discuss about the of market environmental factors that are having impacts
on the success of Qantas airlines. In addition, this report will also discuss about the consumer
behaviors along with a few recommended steps for future business state of affairs.

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Determination of the external market factors
Political factors  Qantas is having their business operation in multiple countries and
thus they are facing the challenge of different and diverse legal
situations.
 Different regulations including different rate of taxation is
affecting the profitability of Qantas.
 Factor such as negative diplomatic relationship among the
countries is affecting the business of Qantas. This is due to the
reason that issues in international political relationship will affect
the international route of Qantas along with their customer traffic
(Murray and Benvenuti 2014).
Economical factors  Profitability of Qantas airlines is highly influenced by the global
economic stability due to the reason that ticket fare is much higher.
 Thus, economic recession will lead to reduction in revenue stream
for Qantas. (Pierson and Sterman 2013)
 Competition in the market will also influence the profitability of
Qantas due to the reason that the more will be the competition in
the market, the less will be the profitability for Qantas (Pearce
2013).
Social factors  Social factors such as change in the requirement and expectation
of the customers will affect the success of Qantas (Araghi et al.
2014).
 If the preference pattern of the customers is more towards the

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budget carriers, then Qantas will find it difficult in attracting new
customers.
 Social scenario of the target market also determines the extent to
which the marketing activities of Qantas will be effective (Garcia,
Tor and Schiff 2013). Thus, their branding activities will have
different impacts on the success of them.
Technological
factors
 Technological advancement refers to the updated technologies
used by Qantas in providing more secured and diverse services to
the customers.
 Aviation technology is rapidly evolving and this is posing
challenges for Qantas in coping up with this change (Marais et al.
2013).
 Added cost is involved in procuring latest aircrafts and acquiring
other technologies for Qantas and this will take a toll in their
profitability.
 On the other hand, adaption of newer technologies will help
Qantas in regulating their cost of operation and contribute more in
their success.
Determination of the internal marketing factors
Strengths  Qantas is regarded as one of the well known airliners in the world.
 This is helping them in increasing their revenue from new markets.
 Being a flag carrier, Qantas is having the support and assistances

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of the Australian government (Homsombat, Lei and Fu 2014).
 This is helping them in having advantages in doing business in the
foreign countries.
Weaknesses  Qantas is having their major concentration in the Australasian
region. They are yet to make a mark in the western regions. This is
restricting their global success.
 Target customer segment for Qantas is narrow and thus the
potentiality from the market for them is low compared to some of
their major competitors.
Opportunities  With the acquisition of more fuel efficient aircrafts, the cost of
operation for Qantas will get reduced. This will increase in the
profitability of Qantas.
 Average global economy is growing and this the potential market
for the airliners is getting increased.
 This will help Qantas to target more customers and increase
organizational success.
Threats  Entry of new entrants in the future will lead to further reduction in
the profitability of Qantas airlines.
 Emergence of economic recession will reduce the purchasing
power of the customers and revenue will get reduced for Qantas
(Curtis, Rhoades and Waguespak 2013).

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Determination of the consumer behaviors
Segmentation process will be initiated in order to determine the consumer behavior of
Qantas airliners. In terms of the demographic variables, the target customers for them are the
customers are vast and wide and customers across all the age groups are being targeted. This is
due to the reason that Qantas airlines are offering flight services, which can be availed by the
customers from any age groups (Floh et al. 2014). Furthermore, both the male female customers
are targeted. In terms of the income level, only the premium customers are being targeted. This is
due to the fact that service offerings of Qantas are targeted towards them only.
In terms of the geographic segmentation, customers from the capital cities and some other
metropolitan cities across the world are being targeted. This is due to the fact that Qantas is
having their presence only I the tier I cities across the world. However, the customers from the
tier I cities are the primary set of target customers. On the other hand, the customers from other
regions can be considered as the secondary customers for Qantas due to the reason that these sets
of customers can also avail the flight services through their areas of operation. In terms of the
psychographic segmentation, customers will having active and higher end lifestyle are being
targeted (Hjort et al. 2013). This is due to the reason that customers with active lifestyles will
have the interest towards the premium added services offered by Qantas. In addition, customers
with having higher end lifestyle will have preference for the premium services of Qantas airlines.
In terms of the behavioral segmentation, professional customers with having both
corporate and business background are being targeted. This is due to the reason that corporate
professionals will have the requirement for flight for their business appointments and business
people will also have the similar requirement. In addition, these professionals will also have the

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higher level of purchasing power for the service offerings of Qantas airlines. It is also identified
that majority of the targeted customers for Qantas are need based and customer loyalty. This is
due to the reason that flight services are the need of the professionals for their professional and
personal purposes. On the other hand, Qantas is having number of schemes for maintaining the
loyalty level of the customers and this ensures that customers buy the service of Qantas on the
basis of loyalty.
Recommendations
 It is recommended that Qantas airways should initiate the market growth strategies. This
will enable them to target the new potential markets and increase their revenue. It is also
recommended to them that their growth strategy should also include the tier II cities,
which will further help them to target larger section of customer segments. It should be
noted that in the current time, tier II cities are developing faster than that of the Tier I
cities.
 It is also recommended that Qantas airways should also initiate the market penetration
strategy by means of introducing the shorter haul services. This is due to the reason that
Qantas airlines are not having shorter haul services as of now. Thus it will help in further
penetrating in the existing market.
 Qantas airways should also initiate the continuous process of technological advancements
and this will help them to have lower cost of operation in the long term and thus the
profitability will get increased. This will act as their competitive advantages in the
market.

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Conclusion
This report concludes that Qantas airlines are facing number of negative factors in terms
of internal and external business factors. In this report, all these factors are being identified and
discussed along with identifying their potential impacts on the organizational success of Qantas.
In addition, this report has also discussed about the consumer behavior of the target customers of
Qantas airlines. Segmentation variables are used to determine the consumer behavior of them. In
accordance to the negative factors identified in this report, there are few recommended steps also
being discussed in this report.

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Reference
Araghi, Y., Kroesen, M., Molin, E. and van Wee, B., 2014. Do social norms regarding carbon
offsetting affect individual preferences towards this policy? Results from a stated choice
experiment. Transportation Research Part D: Transport and Environment, 26, pp.42-46.
Bocken, N.M., Short, S.W., Rana, P. and Evans, S., 2014. A literature and practice review to
develop sustainable business model archetypes. Journal of cleaner production, 65, pp.42-56.
Curtis, T., Rhoades, D.L. and Waguespack Jr, B.P., 2013. Regional jet aircraft competitiveness:
challenges and opportunities. World Review of Entrepreneurship, Management and Sustainable
Development, 9(3), p.307.
DaSilva, C.M. and Trkman, P., 2014. Business model: What it is and what it is not. Long range
planning, 47(6), pp.379-389.
Floh, A., Zauner, A., Koller, M. and Rusch, T., 2014. Customer segmentation using unobserved
heterogeneity in the perceived-value–loyalty–intentions link. Journal of Business
Research, 67(5), pp.974-982.
Garcia, S.M., Tor, A. and Schiff, T.M., 2013. The psychology of competition: A social
comparison perspective. Perspectives on Psychological Science, 8(6), pp.634-650.
Hjort, K., Lantz, B., Ericsson, D. and Gattorna, J., 2013. Customer segmentation based on
buying and returning behaviour. International Journal of Physical Distribution & Logistics
Management, 43(10), pp.852-865.

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strategy–Pricing and route entry patterns. Transportation Research Part E: Logistics and
Transportation Review, 63, pp.1-16.
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R.J., 2013. Evaluation of potential near-term operational changes to mitigate environmental
impacts of aviation. Proceedings of the Institution of Mechanical Engineers, Part G: Journal of
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Murray, P. and Benvenuti, A., 2014. EU‐Australia Relations at Fifty: Reassessing a Troubled
Relationship. Australian Journal of Politics & History, 60(3), pp.431-448.
Pearce, B., 2013. Profitability and the air transport value chain. IATA Economics Briefing, (10).
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Dynamics Review, 29(3), pp.129-156.
Qantas.com 2018. Fly with Australia’s most popular airline | Qantas AU. [online] Qantas.com.
Available at: https://www.qantas.com/au/en.html [Accessed 22 Oct. 2018].