Marketing: British Airways Group

The assignment focuses on analyzing summarizing and comparing two companies which deals in same sector or industry with a marketing aspect. The purpose states that the study of the module Marketing Management needs to be implemented in virtual front by providing meaningful process to the company chosen and revise the value proposition. The assignment is divided into step-by-step parts towards preparing a plan for the organization under study.

British Airways- Company profile

British Airways is the airline company of the United Kingdom. It has its headquarter in Waterside which is near its main hub at London Heathrow Airport and as found it is the biggest airline of UK on the record basis of number of international flights and international destinations it has. Its second hub is London Gatwick Airport. As per the research it found that The British Airways Group was formed on 1 September 1974. BA was formed by the merger of two large London-based airlines, British Overseas Airways Corporation (BOAC) and British European Airways Corporation (BEA), and two much smaller airlines, Cambrian Airways Cardiff and Northeast Airlines Newcastle upon Tyne. BA according to the research was found as the only two airlines to operate the supersonic Aerospatiale-BAC Concorde inaugurating the world’s first supersonic passenger service in January 1976. BA became the world’s most profitable airline following its strategies under the slogan “The World’s Favorite Airline”. Rather it was earlier Boeing customer. The formation of Richard Branson’s Virgin Atlantic Airways in 1984 began a tense relationship with BA. The main activities of British Airways Plc and its subsidiary undertakings are the operation of international and domestic planned air services for the deportment of passengers, freight and mail and the facility of ancillary amenities. (uk.reuters.com 2010)

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Franchisees

· Comair: based in South Africa, franchisee since 1996.

· Sun Air: based in Denmark, franchisee since 1 August 1996.

(uk.reuters.com 2010)

Customer Value

“It is the difference between what a customer wants from a product and what he or she has to give in order to achieve it”. ( Business dictionary.com 2010 )

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Customer Value proposition

“A customer value proposition is described as a business or statement of marketing that describes why would a customer buy a product or service he wish to use. It has been targeted towards the potential of customers rather than other consisting groups such as of workers, stakeholders or suppliers .It is designed for the customers to convince their self to one particular product or service which will add more value” ( Business dictionary.com 2010).

Types of CVP

1.All Benefits – Sometimes most managers formulates customer value proposition which includes all customers benefits which can be fulfilled by them by offering different types of offers to meet customer needs. It requires them a hard work to keeping records about customer needs and competitors in the market ( Ogle,2010).

2. Favourable Points of Difference – The second type of value proposition which includes all alternatives in which customers focus includes different types of products and services offered by others. It provides the customers with the best of its offers just to attract them without having the proper knowledge about what the customer is demanding but they try to fulfil their customer need( Ogle,2010).

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3. Resonating Focus – This is a very important aspect as it focuses on the value proposition having differences to an all benefits position of companies leading a value proposition for the customers .Resonating is the point which deals with the standard of the value proposition and it should be at its highest level .By this method the manager wants to do the business with the marketers who has the proper knowledge about the customers need and delivers the customers value proposition at the market capturing level ( Ogle,2010).

Importance of value proposition

A good customer value proposition is a method of convincing the customers to buy their products other than buying the competitors and find it different from others .This method has been used to grasp the attention of the customers and increase the sales at large scale which will help in increasing the market shares. To promote the product it has been always important to understand customers need . It is profitable in building a brand association that help in providing offers to the customers (Ogle, 2010)

Three Key Dimensions

Active vs. Reactive value

Extrinsic vs. intrinsic value

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Self-oriented vs. other-oriented value

As per the research on the British airways customer value proposition it has been found that :

Effect of British airways on customers mind

It has Strong brand name and brand image

good reputation in market as well as customers mind

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Reliability of British airways

BA Key Messages – is to provide the consistency in providing good service

Reliability in providing best quality of offering

Safety and security

Safety and security are key priorities for British airways. It follows the formal management system for the security which ensures with all relevant rules and regulations that are must be followed. British airways is into a system of operating a inclusive monitoring system to ensure that all incidents are reported before they occur and necessary action been taken.

HYPERLINK “http://en.wikipedia.org/wiki/Customer_value_proposition” l “cite_note-Lake-1″Question 2.

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The requirement of the question speaks about the two companies to be selected of the same industry which can be compared on various aspects particularly marketing strategy on a global scale; I have chosen the following two companies:

British Airways

Virgin Atlantic airways

The reasons for selecting these companies are:

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The value proposition of both the companies can be compared and differentiated based on their marketing assets.

Both the companies are intense competitors in the business of airlines and in providing superior quality of services to the customers

Virgin Atlantic Airways- Competitor Company Profile

Virgin Atlantic Airways Limited (operating as Virgin Atlantic) is a British airline owned by Sir Richard Branson’s Virgin Group (51%) and Singapore Airlines (49%). It is headquartered in Crawley, West Sussex, England, near London Gatwick Airport. It operates between the United Kingdom and North America, the Caribbean, Africa, the Middle East, Asia, and Australia from main bases at Gatwick and London Heathrow Airport, using a mixed fleet of Airbus and Boeing wide-body aircraft (innovationaleaders, 2010).

We all experience customer service, without even understanding it. The only time you’re likely to poster is when it surpasses your potentials, or it doesn’t meet them! Pleased customers are more likely to commend you to others.

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Customer Service is clearly a main part of any businesses corporate plan to recall and attract clients. Effective Customer Service is critical in portion a business to meet its planned sales intentions whilst meeting their client potentials through exceptional customer service.

CRITICALLY EVALUATING CUSTOMER VALUE PROPOSITON OF BRITISH AIRWAYS

British airways as being on the top of the chart of airlines industry to maintain its standard it has acquired several innovative ideas which have left certain impression on customers mind. British Airways is comparatively strong from a financial point of view and have a good reputation in comparison to other companies in the airlines industry, and it has positioned itself on the top leveled service provider but still it is facing some problems in satisfying the customers completely. BA provides it customers with affordable price flight ticket and spends to that level which delivers the minimum performance for the ante ( for example: providing nuts and soft drinks to the customers),Yet on the other hand BA maximizes its marketing by spending more effectiveness by removing ineffective spending on the ante that pushes the performance but does not leads to any change in customers behavior ( for example: BA don’t provide the customers with hot meals on short flights). British airways has redesigned its cabin into truly flat bed which are up to the best comfort of the customers and it helps in attracting more customers in business class at a time when other airlines merely increased leg room or seat width but to really rule in the filed of airline BA should also try to provide more innovative facilities for lower class customers too as they are being their regular customers. BA provides its customers with its key priority of security for which it has operated different security system specially for its customers safety.

In order to profitably satisfy customer needs, an organisation must understand its external and internal situation including the customer, the market and its own capabilities.

MARKETING MIX OF BRITISH AIRWAYS

Product Strategy

A product is characterized as anything that been offered to a party to another party in return of something. As we talk about BA, it provides its customers with different types of services like booking their tickets online, choose the sitting of their choice and meals of customer choice.BA provides the quality of compensating the customers at the time of cancellation of their flight tickets (123helpme, 2010).

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Pricing Strategy

Pricing strategy is the overall task of defining the price range and price movement through the time period given to support the organizational fund and profit gaining objectives. BA holds a different type of pricing strategy in its two sectors of airlines short-haul and the long-haul , it provides its customers with tickets at affordable price. It has different price standard for different categories of flights but with same quality of service. BA has the special system for optional product pricing charged for optional extra guaranteeing a window seat or reserving a row seats next to each other (123helpme,2010).

Place

This heading refers to distribution. This means all aspects that focus on to how the goods and services should ‘move’ from the producers to the end user. This means the coordination of retailers and/or wholesales and in the case of products the logistics involved in moving from factory/warehouse/head office, to the end user.BA has its main head quartos in U.K only. The airline hovers to above 550 destinations internationally and is measured to be a leader in the business. BA’s prices depend on fluctuations in oil prices which it cannot control (123helpme, 2010).

Promotion

It is refers to as advertising or promoting a product, brand or industry to gain profit and expand the business. British Airways launched an advertising campaign to promote the trial of its First and Club World services. BA gives a lot charity and launches exhibitions for the funds for the needy ones. BA provides training programs and provides the students with the scholarships for their better future (123helpme, 2010).

On a preliminary note it is important to understand the concepts of Mission and Vision for a particular organization.

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The difference between Mission and Vision statement is a Mission statement contains the information of the company in a nutshell about its products and services to customers while a Vision statement offers the future perspectives of the company or organization, the purpose or broader goal for being in existence or in the business. (Difference between, 2010)

Mission and Vision Statements of the British Airways and Virgin Atlantic are discussed below

Mission statement of ‘British Airways’

There is no official mission statement from the company’s website instead the social blogs have various statements out of which the best one chosen “To be the undisputed leader in the world of airlines for the next millennium”

Vision statement of ‘British Airways’- “The World’s Favorite Airline”

Mission Statement of ‘Virgin Atlantic’- “Safety, security and consistent delivery of the basics are the foundation of everything we do.”

Vision statement of ‘British Airways’- “To grow a profitable airline, where people love to fly and where people love to work”

Analyzing and comparing the Mission and Vision statements of British Airways and Virgin Atlantic

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The mission and vision statements of British airways seems to be in the line of business as both focus on world class operations not just local or domestic functioning, hence it is recommended that being a company which caters large scale audience/customers British Airways has to focus on its principles of functioning to achieve its vision. As far as Virgin Atlantic is concerned, nowhere it mentions about the functioning and catering the audiences of the world, it is known fact that Virgin Atlantic is more of a British nature and caters or prefers services priority to British audiences hence it needs to change its mission and vision statement which though is appealing but doesn’t come in the line of business.

Competitor Analysis

The airline sector is more competitive today than it was before in the past, provided now days consumers with more choice and with affordable prices than ever before due to the emergence of low-cost airlines.

British Airways operates within two strategic groups within the airline sector – the short-haul and the long-haul. Each of these sectors has different competitors. One group consists of airlines with regional operations offering scheduled flights and comparison on costs. The other group focuses on offering long haul flights, with great quality of environments and services to a wide range of destinations. Which makes BA to participate on a large scale at global, European, national and regional level. Within the UK, BA is the largest carrier in the market accounting for 45.1% of passengers with Virgin Atlantic being the second largest carrier in the market with 9.2% market share. It is also likely that long-haul licenses will be granted to low-cost airlines which will enable them to compete in both .This was originally a major cause for concern for British Airways and they initially set up Go-fly to be able to compete with its new competitors Virgin Atlantic. However, it later decided to focus on its core business and sold Go to Easy Jet in 2002.

For example, regional competitors such as Virgin Atlantic have entered the market offering European flights from local airports in Wales.

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.Virgin airlines change in strategy will have direct effect on BA as they continue to attract customers for their high quality standards. Another strategy that seems to be emerging amongst traditional carriers is to reduce fares in order to become more competitive with the low-cost airlines.BA also has to consider the indirect competitors.

New planes, new routes, additional flights and management changes are all factors that impinge a business. Such changes made by a competitor need constant monitoring in order for BA to examine its current position and develop future strategies. Virgin Atlantic has best online reputation as compared to British Airways that effects the working of the British airways.

CUSTOMER EXPECTATIONS AND OUTCOMES

This model talks about the services and quality promised to the customers and the service and quality the customer receives. It is very important for any company to understand the importance of its customer needs for its development and building a brand image. BA is a well-established company and holds a very good reputation in the markets with filling the need of their customer through the terms and conditions they have promised to their customers. The strength of BA lies with the satisfaction of its customers but in certain cases it is failed to satisfy its customers according to the promises been made, issues which have affected the reputation of BA are like not delivering hot meals in flights or not delivering meals at all in short flights.

These certain issues has disappointed the customer expectations from BA .

Therefore, from the model above which emphasis on the bond between the company offering and delivering to their customers, so it is found that customers are not receiving the quality of services which are been promised by BA .(Ogle, 2010)

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Question 3.

Answer: Using Piercy’s Value Proposition Model the above question can be solved

Piercy (1997) identifies 4 relationships to be considered when managing market-led organizations.

Figure 1.1: Key relationships in market strategy (Source: based on Piercy, 1997)

It identifies the key relationship-marketing issue as the refocusing of marketing effort: moving activities away from a marketing mix that creates a series of one-off transactions, to managing a complex network of relationships involved in the production of the whole consumer offering.

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Customer Analysis

Shaw (2004) addresses what the most fundamental and commonest mistakes made in airline marketing – failure to make a proper distinction between the ‘Consumer and the Customer’. Consumers are the ones who actually travel and it is significant that BA consider customers importance, as they are the decision makers of the organization. This is very important aspect for both consumer as well as industrial markets. BAs customers differ extremely in terms of their buying behaviour. Not only do they differ in terms of their age, income, educational levels and geographic location but more fundamentally in BAs case in terms of their lifestyles and potentials which are unfair by several factors. BA also deals in an industrial market where changes in buying behaviour are showed by the reserve of BAs purchasing policies, delivery dates and expected 7 This means using smaller airports, not allocating seats, making passengers pay for refreshments and not issuing tickets. The majority of these decisions are made by a group of individuals working to a set of purchasing criteria, known as the Decision Making Unit (DMU).

The mission statement is defined as the key to success and meeting the customer needs on a short span of time and it requires to be changed every year preferably. We now discuss about developing a mission statement, developing vision statement and value statement. (ba.com, 2010)

New mission and vision of British Airways

Mission Statement : Modernise aircraft fleet and offer new services managing at cost base.

Vision Statement : Increase corporate responsibility through environmental performance and partnerships.

Developing a Mission Statement

Mostly, the mission statement states the overall objective of the organization.

If the company decides to develop its vision statement before developing its mission statement it should not affect its working as both means the same and in the vision turns into mission for the company.

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Improving a mission statement can be done in a fast way by having proper discussion , different experience and should have survey about having different mission with working team of the organization.

Study any changes that may be required in wording of the mission statement can leads to any new suggested strategies during a recent strategic planning process which can affect its working.( Managementhelp, 2010)

Creating New Value Propositions

In order for a company to move to an unique position on the value frontier, it must change its strategies. Value propositions can be changed along four dimensions (price, place, product and promotion) to achieve one of the four strategies which alter positions on or of the value frontier (extending toward the low-end, toward the high-end, and shifting the frontier).

First, a company must identify which of the four strategies is appropriate. Extending the frontier toward the low-end is worthwhile if the low-end frontier point in a specific industry can compete with the high-end point in another industry (e.g., low-cost air travel competing with buses) or if customers would be interested in a product/service of lower performance at a lower price. Extending the frontier toward the high-end can be considered when the high-end in a specific industry can compete with the low-end point in another industry (e.g., high-quality prepared pasta competing with restaurants) or when there are customers willing to pay for more performance than what is currently available. If neither option makes sense, then shifting the frontier is the only alternative. This has traditionally been the basis of market competition.

Changing value propositions to achieve such frontier changes rely on changing one or more of the four dimensions. Managers need to think of innovating ways to reduce price, risk, and efforts as well as to address the multiple roles customer play, such as having customers co-create some of the work. So now we will focus on transforming product performance by suggesting generic ways of changing product/service attributes.

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Desired attributes are those most often already delivered in another customer segment, but unreachable at the price point of customers who also desire them. Technological innovation is the most common lever for bringing down the price points to deliver such attributes to a new market segment. For instance, British Airways started providing individual color screens to every economy class passenger when matrix display technology got advanced enough to lower the costs sufficiently. One way to elicit these attributes is to find out what performance level customers would ask for if they had unlimited resources. What service could be delivered to them? And are there any ways to provide some of these services at a more reasonable price (e.g. British Airways adding beds to airplanes). So to answer these question British Airways must improve it. (Source: archive.nyu.edu, 2010)

Improved value proposition of British Airways

Upgrade customer experience via the introduction of text and mobile services for business class customers as well as regular customers and maintain low price for all types of services.

Defining/ Implementation of the Plan Value Propositions and Value Frontier

The first step in the process is to define the value frontier. This is fairly easy to do. Managers must first identify what their competitors offer in terms of performance and cost. A value frontier extends from low-cost substitutes to fulfill a specific need (automobile or railway vs. aircraft) to high-end embellishments that are currently offered at high prices and define superior performance . Thus, we ask managers to consider ways of fulfilling core needs beyond the ways currently offered in their industry segment.

This is a critical first step in identifying new strategies.

Once the value frontier is defined, what are the value propositions of the companies along the frontier? What are the performance, price, risk and effort attributes across customer roles that define the companies on the frontier? Defining the value proposition of different locations on the frontier allows managers to elicit key attributes for differentiation. It also forms the basis for comparing the companies value propositions with a competitors.

It should avoid price related struggles and should adopt policies which comprises of low prices.

Good communication channels should be adopted in order to avoid confusion about the services been provided to the customers.

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Better quality of technology should be use to entertain the customers in flight.

Should not promise the customers to deliver the services which are cannot be fulfilled.

BA should provide its customers with hot meals in all kind of flights. It reflects good impression on the customers.

BRITISH AIRWAYS SHOULD ADOPT NEW MARKETING MIX

“Suppliers, shareholders, customers and employees are not rivals for the battle for profits they are partners, and will be more successful once they learn to work together.” (Egan and Thomas, 1998)

NEW MARKETING MIX FOR BRITISH AIRWAYS

On the basis of status financial British Airways is relatively stable to other companies in the air transport industry, and it has positioned itself as a best service provider. It has formed alliances with other carriers, and has already segmented its market successfully. The best strategy for the BA is to follow the strategic plan it has made and monitor that all of its activities support that strategic focus.

Product strategy

Product is always been the most important aspect for the organization’s success. It needs to be advanced and achieve very careful in order to be successful. British Airways product strategy comprises of good quality services, quality of flights leads to various destinations through Europe and rest of the world. It has executive class, business class, speed, security, support facilities and having experience of several years. To satisfy its customers should it provides them with their basic need to other alternatives too and fulfill their demands.

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Pricing strategy

Pricing strategy followed by British Airways is Price Discrimination. There is a condition of price war between different airline companies as the new breed of airlines, the so called low cost airlines is growing fast. The most successful among these low cost carriers are Southwest Airlines (USA), Ryan air (Ireland), easy jet (UK). So British Airways should adopt the policy of low price.

Promotional strategy

British Airways launched an advertising campaign to promote the trial of its First and Club World services. As part of the campaign, British Airways is offering new members of its Executive Club Canada frequent flyer program free economy class tickets for two to a global destination in exchange for their opinion about their flying experience in First Class or Club World this will help in attracting customers.

Place

British Airways working globally should focus on its key destination countries and should adopt such policies to meet the demands of its customers on time.

CONCLUSION

British Airways remains cautiously optimistic about its future prospects. However, it is certain that considerably more work lies ahead if the airline is to succeed. Rising prices could place BA in a disadvantageous position, particularly given the continued popularity of budget airlines. This is an important factor for BA to consider.

BA must understand that the key growth area for BA is likely to be in value-added travel. In some areas, BA found that it could improve customers’ experience while reducing costs, such as in its building up of online sales. Overall, BA must continue to strive to reduce costs and improve customer and employee satisfaction.

List of References

123HELPME 2010, Product Strategy of the British Airways [Online] Available at: http://www.123helpme.com/view.asp?id=121683 [Accessed on 05 December 2010 ].

Business dictionary 2010,customer value [online] Available at:http://www.businessdictionary.com/definition/customer-value.html [Accessed on 06 December 2010].

Business dictionary 2010, value proposition [online] Available at: http://www.businessdictionary.com/definition/value-proposition.html [ Accessed on 05 December].

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ba.com 2010 (Official Website) Available at: www.ba.com[Accessed on: 30th November].

Difference between (no date), Difference Between Mission and Vision [Online] Available at:http://www.differencebetween.net/language/difference-between-mission-and-vision/ [Accessed on 06 December 2010].

Innovation leaders 2010, Profile: virgin atlantic [online] Available at: http://www.innovationleaders.net/va_company_profile.html [Accessed on 05 December 2010].

Karnbil , A.1996, Re-Inventing Value Propositions[online] Available at: http://archive.nyu.edu/bitstream/2451/14205/1/IS-96-21.pdfhttp://archive.nyu.edu/bitstream/2451/14205/1/IS-96-21.pdf [Accessed on 06 December].

Ogle, D, 2010. Types of Customer value Proposition BD415031S Marketing Management. Anglia Ruskin University, Unpublished.

Ogle, D, 2010. Importance of value proposition BD415031S Marketing Management. Anglia Ruskin University, Unpublished.

Ogle, D, 2010.CUSTOMER EXPECTATIONS AND OUTCOMES BD415031S Marketing Management. Anglia Ruskin University, Unpublished.

Reuters 2010, Profile: British Airways PLC (BAY.L) [online] Available at: http://uk.reuters.com/business/quotes/companyProfile?symbol=BAY.L [Accessed on 06 December 2010].

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