STP Analysis for Qantas Airlines Report Writing

1. Introduction:

Qantas Airways is an Australia-based airline with its main base in Sydney. The airlines started their domestic operations in November 1920 and their international operations in May 1935. Today, they have a 65% domestic market share and carried 14.9% of the total number of passengers traveling to and from Australia. 

This report will be a detail description of the Segmentation, Targeting and Positioning strategy (STP analysis) implemented by Qantas Airways to maintain their position in the domestic and international market and how it help them to explore new markets. In order to implement a successful STP analysis, it is very important to understand the consumer behavior and their buying pattern of the customer at the beginning in the new markets. This provides us with the detailed understanding of the consumer for developing the product or service strategy which can be associated with the implementation of the STP strategy (Oladeji, 2005).

2. Consumer Behaviour towards Qantas 

Engel, Blackwell, and Mansard have defined consumer behavior as the decision-making process of all the individual while purchasing goods and services for personal consumption only.  Now when we discuss consumer behavior, it is important to consider their taste, preferences, likes or dislikes, capacity, and ability to purchase the product. 

It is important to understand the consumer behavior to design product or services as per the needs and requirements of the consumer. If the product doesn’t fulfill the needs then it cannot sustain in the market (Mitchell, 2007). 

Internal influence factors are

• Need and willingness to purchase the product: In this competitive environment where a consumer is surrounded by ample products with similar benefits to satisfy his needs. It is very important for the organizations to understand the exact needs of the consumer to be the firsts to provide him with a solution. 
• Recently due to an entry of the new domestic airlines, they are losing their share to these new entrants.
• Perception of the consumer: the Brand image of the organization plays an important role to develope a positive image and perception in front of the customer. If the customer has never utilized the product or services then he is completely dependant on the external sources of the information and experience of the previous customers who have tried and tested the services. 
• Australian citizens’ perception about Qantas being one of the safest airlines was damaged when according to a poll, 63 percent of the flyers voted about doubting the maintenance standards and degrading of the safety measure (Belch, 2009).
• Past Experience of the consumers: If the customer has already tried the product or service once and is not happy with the result then it will be very difficult to get him back as a repeated customer. 
• Qantas has experience grievances from a lot of customers in the past and they tried hard to restore their image and reputation in the market. According to a news article dated on  8th November 2011, a similar issue arose due to delayed can canceled flight, leaving the customers agitated against Qantas Airways. 

External factors affecting the decision are:

• Culture: culture defines the perception way of looking at an individual towards a product or the organization. Norms of the society, beliefs, and values together combine to provide a meaning about culture. The buying behavior differs from culture to culture. For instance, in India, discount and bulk purchasing are more popular than in the western countries.
• Geographic effects: The PESTLE effects can be termed as one of the most external factors affecting the growth of the organization. PESTLE includes Political, Economical, Social, Technological, Legal and Environmental changes that need to be taken care of.
• Increasing fuel prices and maintenance cost led to decrease in growth for this airline at some time.

3. The buying decision process:

The buying decision process is the process by which an individual decides about the product to be purchased to satisfy his needs. There are various airlines in Australia which provide same services to the customers but differs in the customer experience. The buying process begins with Problem recognition and involves 6 steps (Jain, 2003). 

1. Problem recognition: The buyer could be a first-time buyer or may be looking for better options available to him. This could be due to past bad experience with the service provider or the customer might not be satisfied with the limited services and expect it to be better.

2. Information search: Customer instantly starts looking for alternative options once he defines what exactly is required. He starts comparing between the service providers and tries to look for the best option. 

3. Evaluation of Alternatives: Today markets are flooded with competitors providing the same quality product at the similar price to the customer. Companies cannot completely rely on their branding activity and consider that the customer would approach them. The customer has become much smarter these days and he has his own extensive research done before purchasing the product (Kotler, 2007). 

4. Purchase Decision: by now the customer has evaluated all the multiple options available for him including their quality, price, durability and payment options available for him. This is the step where the customer decides the product he wants to purchase from a particular dealer. 

5. Purchase: here the customer has finalized the product and the provider. Companies need to ensure to have simple purchase procedure because if the customer finds the procedure to be lengthy then he might back out and turn to another provider.

6. Post-Purchase Evaluation: Customer service and after sales service plays a major role for organizations at this stage. The customer needs to be satisfied and should have a positive experience after the purchase.  

Segmentation

Segmentation can be defined as the sub-division of homogeneous market in to small and clear identifiable market segments based on characteristics like needs, wants and demand of the product. Segmentation helps an organization to make a proper division of the market and select the target audience in the new market or current market and prepare marketing mix (Levens, 2012). 

While segmenting the market to explore new opportunities, Qantas can segment the market in different segments based on the above attributes.

The different segments would be:

• Business travellers.
• Holiday travellers.
• Urgent travellers
• Budget conscious.

We would be focusing on the Business travelers and Holiday travelers for Qantas airways.

• Demographic Segmentation can be done on various parameters like age, family size and income of the family. The family holiday travelers would need complete holiday package with the airlines instead of one single service. Business travelers are the regular and loyal customers who can be retained by providing them with discount coupons or extra benefits during their travel.
• Behavioral variable includes the attitude and loyalty of the customer. In case of holiday traveler, the past experience of the family or the person can earn loyalty and have a positive attitude for the airlines. In case of a Business traveler, people are concern about the inflight services and on time schedule of the flights. 
• Geographic variables like cities and regions will help Qantas to focus on exploring new location services and increase their customer base.
• Psychographic variables focus on customer’s attitude which is directly proportional to kind of services provided to both the segments of the customer. It all depends on what treatment they receive and if they retain it.

7. Target Market: For Qantas Airways we would be focusing on the Business travellers and Holiday travellers. These two segmenst would be always in need of the services and looking for options which would give them the desired results. They are frequent travellers.

Strategies for Targeting these segments

Business travellers can be targeted by providing discount offers on their next travel and loyalty programs and bonuses and extra facilities during their travel.

Holiday travellers can be targeted by having complete holiday package at discounted prices and on advance booking.

8. Positioning map

Qantas position itself as an affordable airlines. They have established Jetstar Airways as low cost carrier.

Qantas Airlines in s commited to provide best of the services to their customers at the standard rates.they have launched their low cost carrier in order to meet the expectation of the budget constrain customers. They didnt compromise on their cost or services for Qantas. Hence we posted them to be high on price bt high on the emotional benefits like the high end customer service (Volkema, 2000).

9. Recommendations: 

We would recommend to focus on the business travellers segment. This is important because holiday travellers can be large in numbers because of family but they are seasonal. Business travellers are not seasonal and they don’t have different expectations. Broadly you can align the requirement of the business travellers to be standard and fulfil them effectively and efficiently.