Qatar Airways - Marketing Operations

Qatar Airways Marketing Operations The key issues affecting the Marketing Operations of Qatar Airways and strategies to cope up with them Name: Imran Imtiaz Butt Date: 24-11-2018 Term of reference: The purpose of this report is to highlight and investigate the key issues which are affecting Qatar Airways to run its marketing operations smoothly. This report will further provide recommendations for Qatar Airways in order to cope up with harsh market conditions both in regional and international level. Executive Summary: This report will describe the key factors which create hurdles in marketing operations of Qatar Airways (QTR), which is the national airline of the State of Qatar and also considered to be one of the youngest top airlines of the world. This report will further discuss the role of GCC crisis which intensified the challenges for QTR’s growth and also discuss the major opportunities for QTR in form of FIFA World cup (2022) which can give the airline a chance to grow exponentially. Being the national carrier of Qatar, QTR has always been in the centre of extremities of geopolitical conflicts, whether it is related to the sanctions imposed by its dominant neighbors or aggressive international competition who always seek reasons to criticize it. Furthermore, this report will appraise the current marketing strategies of QTR and also provide reasonable and unbiased recommendations to the airline for further growth and prosperity. Table of Content: S. No Topic Page No. 1 Introduction 4 2 Findings and Discussions 4 3 Conclusion 16 4 Recommendations 17 5 References 19 Introduction: Organizations with sound customer-focused or market-focused strategies initially determine the desires of their potential customers and then build products or provide services to meet their requirements. The marketing theory emphasizes upon the belief that customers only go toward those products or services which they perceive as most beneficial for them (Guiltinan et al., 1996). The marketing strategies revolve around two factors; first, to attract new customers (acquisition) and second, to retain existing customers along with nurturing the relationships between them (base management). In short, all businesses operate around its customers and in order to achieve competitive advantage, every business should run its marketing operations efficiently, which defines on gaining attention of potential customers and sale a product of service in order to secure profit (Philip, 1988). In this report, we will examine and appraise the issues present in managing marketing operations of Qatar Airways, which is the national airline of the State of Qatar, launched in 1997. It is considered to be fastest growing airlines in the world, having footprints over 150+ destinations with 220 advanced aircrafts, employing more than 45,000 personnel globally (Qatar Airways, 2018). We will also highlight the recommendations in order to enhance its future competitive position. Findings and Discussions: Key Issues in managing Marketing Operations: Qatar Airways (QTR) has developed a concrete reputation in the marketplace by offering exclusive packages to its passengers, resulted QTR to win airline of the year award from Skytrax in 2017, additionally, QTR has also been certified with 5-star rating against its state-of-the-art onboard products and exceptional services, and its airport services also (Skytraxratings, 2017). Despite its flourishing achievements and excellent reputation, the company still faces challenges in managing its operations and implementing market strategies. It is observed that the dynamics of world has been changed due to the challenges in the form of political uncertainty, social conflicts, unrest and radical ideologies, that clearly affects organizational growth (Xing, 2012). Similar situation is faced by QTR in form of gulf crisis which affected its operation from head to toe. In this section, we will discuss QTR SWOT and PESTLE analysis so that we can design our recommendations and conclusion respectively. QTR continuously works to promote its brand while simultaneously improves its operation by adapting latest technology and adding state-of-the-art aircrafts into its fleet. QTR is the member of global airline alliance “Oneworld” which ensures its growth for further expansions. People choose QTR due to its premium services and its increasing number of air routes. Its SWOT analysis is as follows: Strengths: Support from Government of Qatar in terms of finance and strategic, which gives QTR competitive advantage over others. Continuously expanding global network with newly added modern aircrafts. Expansion of new 16 destinations in 2018 (Airlines.IATA, 2018). Strong profitability and growth despite of embargo. Total profit of 2017-18 is more than QR9 Billion (Gulf Times, 2018). Superior airline with offerings of premium services. Weaknesses: Heavily dependent upon international passengers due to less local population. Difficult air route as Qatar has its sole land border with only Saudi Arabia which has already closed its air and land routes (The National, 2017). Lack of transparency while declaring operational and financial reports. Opportunities: QTR was the official partner and official airline of FIFA, 2018, and now it has another big opportunity to become official partner of FIFA 2022 world cup which will be held in Qatar itself (eTurboNews, 2018). Rapid development projects in Doha to achieve the target of Qatar National Vision 2030 which aims to shape Qatar as most sustainable and advanced country of the world (ILoveQatar.net, 2018). Embracing latest technology and gadgets to deliver more comfort and reliance to customers (i.e. GlobalBeacon) (Arabian Aerospace, 2018). Threats: Fierce regional and international competition from Emirates, Etihad, Saudi Airlines, Delta, United Airlines, Lufthansa etc. GCC crises in terms of blockade and embargo from Saudi Arabia, Egypt, UAE and Bahrain upon Qatar (Al-Jazeera, 2018). Political unrest, terrorism and uncertainty can drastically impact travel demand. The external forces in the macro-environment of the company can play a vital role in determining the growth, operations and marketing strategies of the business. The businesses should design their course of operations through strategic planning according to the influence made by these external forces. These forces are fall into the categories of political, economical, social, technological, legal and environmental factors (Evans et al., 2003). These factors have a considerable affect upon the business model, market operations and growth trajectory of QTR, as this airline is the national carrier of Qatar, so its operations are carefully observed by government officials under intense influence from legal and political factors. The PESTLE analysis is as follows: Political: Severance of political, diplomatic and trade relations with Qatar by primarily four Arab nations (Al-Jazeera, 2018). Blockade of air routes due to GCC crisis. Image 1: Series of events after the blockade upon Qatar Economical: President Trump’s protectionist policies against the gulf carrier in order to force them to stop receiving government subsidies which violates the open skies agreement and spread unfair competition (Washington Times, 2018). Blockade resulted in slow growth of Qatar’s economy. Social: The perception of passengers over premium and exclusive services. Recently, QTR has launched an exclusive offer for its customers to stay at luxury Ritz-Carlton Hotel, Doha for free upon acquiring certain fares (Business Traveller, 2018). Collaboration with world class brands in order to fortify reach of customers. Technological: Embracing latest technology to increase efficiency and productivity, such as GlobalBeacon (Arabian Aerospace, 2018). Completion of Smart Airport Project (Phase-I) in Hamad International Airport through which around 25% of QTR passengers will avail self-service facility for bag-drops and check-ins (Trade Arabia, 2018). Legal: International regulations such as Trump’s ban over laptops of passengers from Middle East to USA can also impact the marketing strategy. However, this ban has been lifted while ago (BBC, 2017). Environmental: International policies over climate change and greenhouse gas emissions through airline businesses. Latest addition of advanced fleet which can reduce carbon footprint (Qatar Airways, 2018). From above SWOT and PESTLE analysis, it has been observed that the marketing operations of QTR are implemented by considering these external factors. Qatar has proved that their economy is still growing despite the blockade but situation is hence not ideal for business perspective (The Peninsula, 2018). So, QTR should continuously work hard upon its marketing strategies to ensure its growth in hard times. 2.2. Analysis and appraisal of airline’s marketing strategies: QTR was once one of the fastest growing airlines in the world in between 2000 to 2008, around growth rate of 35% per annum (Ishutkina & Hansman, 2009). It launched its operations from just 4 carriers in 1997 to 200 carriers in 2018, including both passengers and cargo planes (Qatar Airways, 2018). It has managed its positive reputation with constant improvement and aggressive marketing strategies. QTR has always been more concerned about delay in flights, and it has been proved that delay in flight timings negatively affects the profitability in terms of huge costs, business operations and reputation of the airline (Nextor, 2010). But as per annual report of QTR (2016), it reveals that around 90.5% flights were on-time. This performance is considered to be outstanding in airline industry which was achieved through implementing advanced operation system to deal with flight operations known as Total Operations System (TOPS). But due to gulf crisis, QTR has faced immense pressure to sustain its reputation in form of long duration flights. Next, we will appraise the company’s marketing mix and also highlight the significance of its marketing strategies to fight with the odds. Product: QTR has always shown great achievement in delivering both its passenger and cargo services. Its cargo service has grown into world’s 5th largest freight airline with impressive growth (AirCargoNews.com, 2018). When talk about passenger services, it is delivering exceptional services along with comfort and reliability (Qatar Airways, 2018). First Class: This category is fall under premium services of airline which includes seats with adjustable legroom and can be unfolded to become beds, also equipped with entertainment, massage and food provisions. Image 2: Airbus A380 First Class Business Class: This category includes seats with option of unfolded horizontal beds, touch screen for entertainment purpose, wines and champagne provisions. Image 3: Boeing 777-200LR Business Class Economy Class: QTR is also famous for its services in economy class which resulted to achieve best economy class awards by Skytrax (Skytraxratings, 2017). Seats are equipped with individual screens along with WiFi and USB facilities. Image 4: Boeing 777-200LR Economy Class These all categories are powered by in-flight entertainment system “Oryx One”. Almost every aircraft is equipped with WiFi facility. Its official airport “Hamad International Airport” has premium services for QTR’s first class and business class passengers which offers spa services, sauna baths, nursery area, duty-free shops, Jacuzzi, restaurants etc. Price: QTR aggressively works upon pricing its airfares in connection with competition strategy. It matches the ticket price with the ticket price of its rival airlines but providing more services and comfort, which gives it competitive advantage over others. QTR offers value based prices in the range from its premium services to its economy classes. It mostly matches the prices of Etihad and Emirates in order to compete with them in the gulf region (Gulf News, 2017). This strategy of pricing is mainly related to the current affairs of the world which includes fluctuations in the oil prices resulting in fluctuation in tickets prices. QTR is also keeps itself updated and try to apply rub-off effect upon the customers in some special events or special days, such as Black Friday in which recently QTR has offered 10% flat discount on its airfares (CNBC, 2018). Place: Place of marketing mix explains the spot where the product can be observed, felt, sold, or distributed to the customers which can be either a physical location (e.g. retail store) or virtual location (e.g. online store) (Kyrgidou & Hughes, 2010). QTR operates from its core base at Hamad International Airport to cater more 150 destinations in all six continents. Its head office is at Qatar Airways Tower in Doha, Qatar. However it has three other offices such as Integrated Business Centre, Learning and Development Centre and Cargo Technical Building, which are also located in the same city. QTR has some major divisions which directly or indirectly play important roles to deliver best services to its customers. These divisions are QTR Cargo, Hamad Int. Airport, Qatar Aircraft Catering Company, Qatar Duty Free, Qatar Aviation Services, Qatar Executive, Qatar Distribution Company, Al Maha Services, QTR Internal Media Services and Dhiafatina Hotels. By combining all these services, QTR has a total workforce of 45,000+ employees (Qatar Airways, 2018). Image 5: Hamad International Airport, Doha Promotion: QTR has always been very keen to showcase its brand’s image in front of people through massive promotional activities not only in Qatar but across the globe. The major promotional platform which QTR prefers the most is through sports, as it has sponsored FC Barcelona which is one of the famous football clubs in the world, and now QTR is sponsoring A.S. Roma which is an Italian football club (The News Arab, 2018). Image 6: FC Barcelona with QTR logo shirts Image 7: A.S. Roma with QTR logo shirts Apart from football clubs and FIFA, QTR is also involved in sponsoring other sports such as Formula E racing, Tennis tournaments, Equestrian competitions such as Chi Al Shaqab, Australian Football League, Squash championships and many more (Qatar Airways, 2018). These high profile events help QTR to build a positive and strong brand image among the audience as these strategies mainly concentrates on upper and middle class passengers. Its promotional activities for its privilege club membership by collaborating with other hotels, airlines and rental car services have also played an important role in retaining its loyal customers. Image 7: E-Prix, Paris People: This factor defines the employees working in the organization, which includes workforce, salespersons and senior management people. People are considered as a backbone of the organization. Those companies who constantly work to develop an efficient human capital will succeed to achieve their goals. Thus, people are vital aspect for customer satisfaction and effective marketing (Kyrgidou & Hughes, 2010). According to R. M. Wilson and C. Gilligan (2012), the customer satisfaction is directly related to the people who represent the company. QTR has also embraced these thumb rules to best facilitate its employees, such as by providing them training programmes and employee benefit facilities. In this regard, QTR has won two awards for Best Employer and for Best Recruiter by LinkenIn Talent Awards, 2018, which is the second consecutive year for QTR to win these awards (The Peninsula, 2018). Image 8: QTR flight crew Samar, Ghani, and Alnaser (2017) customer satisfaction is directly influenced by the people representing the business. Process: Efficient processing system of the company ensures the delivery of products and services to its customers on time, which creates good impression upon customers and simultaneously reduces operational costs and saves resources. The company can grow much bigger by ensuring its processes must be efficient and always the same along the time to satisfy its customers repeatedly (Wilson and Gilligan, 2012). QTR continuously try to make its processes more and more efficient through latest technology and state-of-the-art infrastructure so that customers may not suffer. Whether offering its services through waiting lounges via its premium terminal located in different cities such as Doha, London and Paris or offering services through online portal for ticket booking, QTR has always been on top of it (Qatar Airways, 2018). QTR has also announced to extend its partnership with UnionPay to additional 31 countries so that passengers can easily book their tickets from their website (ETurboNews, 2018). Physical Evidence: QTR formed its physical evidence by constantly working hard to improve more and more which made them among the best airlines in the world that is acknowledged by Skytrax. Whether its facilities on ground or in flight, it always gives a long lasting wonderful experience for its customers. Its 24/7 services by its helpdesks or through its online helps build a strong relationship with its existing as well as its potential customer. Conclusion: After reviewing the above facts regarding key issues affecting market operations of QTR, it has been observed that QTR has shown its magnificence during the hard times faced by its country in form of blockade by the quartet countries. According to Mr. Rob Watts, MD at Aerotask, which is a consultancy firm for aviation industry, QTR has lost over 18 destinations and around 50 daily flights after the blockade. But QTR has survived by doubling its destinations through expansions (InternationPolicyDigest.org, 2017). Simultaneously, QTR also aggressively marketed its brand all over the globe through sports, awareness programs and co-branding which gave it more success to cope up with difficult times. But after the allegation from big 3 US airlines of Oneworld alliance upon QTR for taking subsidies from government which is against fair competition, QTR is now deciding to leave the alliance and operates on its own, which can be a decisive moment for CEO of QTR. However, QTR should not take such type of decisions abruptly as it can be harmful for business growth. Major recommendations will be discussed further in recommendation section. Recommendations: As already discussed, State of Qatar is still facing severance in trade and communication from its neighboring GCC countries which is directly affecting the business operation of QTR. Mr. Akbar Al-Baker, the CEO of QTR, has been selected for the chairman of International Air Transport Association (IATA) for one year (IATA, 2018). This implies great responsibilities upon the shoulders of the Mr. Al-Baker who is known to be an outspoken person and sometimes pass controversial statements which catches the attention of media in aviation industry. Recently, after taking charge as the chairman of IATA, he made sexist comment regarding the position of chairman, which he emphasize that this position can only be led by a man because it is very challenging position (OneMileataTime.com, 2018). It is recommended that the CEO of QTR should avoid making such controversial statements as global media has already been keenly involved upon any news from Qatar. Such type of bigotry or sexist comments from the CEO of the company can damage the brand image of the company in front of public. QTR’s CEO should also avoid himself to involve in any political spat which can also become potential threat to the airline. Efficiently implementing elements of Integrated Marketing Communication can grow any organization exponentially. For airline business, brand loyalty and brand awareness are the core elements. It is the brand image which indirectly reflects the image of the country of origin, through which people can link themselves in order to experience the essence of corporate identity (Baker et al, 2006). Qatar has a rich culture which can be portrayed through QTR, as people will involve themselves into the vividness of cultural traditions and mystic aura. This strategy can make QTR more distinguishable and more distinct from its competitors as people only choose those things which seem to be unique and different. As already discussed the blockade upon State of Qatar in detail, QTR has somehow managed the adversity with steadfast measures. Despite the counter strategies to tackle the hardship, QTR has reported loss in its annual fiscal report of 2017/2018 first time in its 20 years history (QTR Annual Report, 2018). The report has shown around net loss of 252million Qatari riyal. However, the company has managed the positive operating inflow of cash of around 13,312million Qatari riyal. The net loss is occurred due to inception of new travel destinations and its cost of initiating market presence. These stats show that QTR has proved itself to tackle any adverse conditions with ease and determination. The major reason behind the survival is its diversification strategy, as the group has already invested in different sectors and businesses that produce enough revenue to bear the operating costs. It has been globally observed that those companies, having diversified profiles, can easily be survived during the pitfalls in business because of their strong foundation and financial support (Beckmann et al., 2012). However, QTR is already planning to expand more by investing in different airlines as well, such as Meridiana Fly, Cathay Pacific, LATHAM Airlines and International Airlines Group (IAG). But, it is recommended that QTR should also seek opportunities in South Asian countries such as India, Bangladesh and Pakistan, which is the world’s largest population. In this region, there is vast number of opportunities to grow which QTR needs specifically. As an organization, QTR is currently doing wonderful for its employees and customers, by taking one step further to give benefits to them. That is the reason they flourish day by day despite massive opposition from its neighboring gulf carriers as well as US top 3 airlines upon Open Skies agreement. It is highly recommended that QTR should always be aligned to the strategy of providing more and more benefits to its customers regardless of low margins. This would give benefits to QTR in a long run. 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