Jetstar Marketing Plan Analysis Essay Example

  • Category:
    Marketing
  • Document type:
    Essay
  • Level:
    Undergraduate
  • Page:
    3
  • Words:
    2149

Jetstar Marketing Plan Analysis

Jetstar Marketing Plan Analysis

Introduction

According to Kotler & Armstrong (2016, p. 37), a firm’s marketing strategy describes the customers that the company will serve and how it will create and deliver value to the identified customers. A marketing plan then defines the actual program that the business will follow to realise its objectives. The marketing plan consists of a marketing mix which describes the product to be offered by the business, the price at which the product will be sold, how the firm will make the product available to customers, and how the company will communicate with the customers (Kotler & Armstrong 2016, p. 37). This report focuses on Jetstar, an Australian airline that offers low fares to assist more individuals to travel to more destinations with greater frequency. The report begins with an overview of the company and an analysis of its target market. This is followed by the identification of the essential elements in Jetstar’s marketing plan and how these elements relate to each other. The paper concludes by drawing key recommendations from the analysis of Jetstar’s marketing plan.

Company Background

Jetstar is an Australian airline that was established in 2004 with the intention of serving budget-conscious individual and business travellers. The company is a fully owned subsidiary of Qantas, an Australian airline that concentrates on the premium end of the aviation market. As of 2017, Jetstar had carried more than 200 million passengers through its 4,000 weekly flights to more than 75 destinations (Jetstar 2017). Jetstar’s destinations cover Australia, New Zealand, and the Asia Pacific and it operates a fleet of over 70 aircraft. When it comes to performance, airlines are ranked by the reliability of their departures and overall safety. Jetstar’s on time departures ranged between 65.9% and 80.3% in 2016, indicating that it is a reliable airline for a low-cost carrier (Jetstar 2017). Regarding market share, Jetstar is the third-largest carrier in the domestic Australian market and is ranked in the top five airlines that serve routes to and from Australia (Jetstar 2017). This substantial market share is an indication that Jetstar has developed and implemented an appropriate marketing plan.

Target Market

Segmentation is the process of dividing a market into unique groups of buyers who have varying needs, behaviours and characteristics. Segmentation also defines the division of the market into consumers that require separate products or marketing programs (Kotler & Armstrong 2016, p. 75). Airlines typically segment the market according to punctuality, flexibility, schedule, comfort, and price (Teichert et al. 2008, p. 235). In the case of Jetstar, the airline has opted to target the low-cost or budget segment of the aviation market. In other words, Jetstar focuses on creating a product that suits individuals who want to fly to their destinations at the lowest cost while not giving up on punctuality and flexibility. These individuals are typically young adults with low to middle levels of income. This targeting is evidenced by Jetstar’s price matching strategy that guarantees the lowest fares in the market as well as its performance record that shows that up to 80% of its aircraft take off on schedule (Jetstar 2017).

Marketing Mix

Product

Product is an element of the marketing mix that describes the tangible object or intangible service that a firm creates and offers to consumers (Gordon 2012, p. 122). According to Ciliberto & Schenone (2012, p. 565), the aviation industry is characterised by very high levels of competition. This rivalry is evidenced by the fact that both low-cost carriers and national carriers often seek bankruptcy protection. The need for protection comes from wars of attrition where airlines intentionally create products and services that weaken or reduce the effectiveness of rivals (Ciliberto & Schenone 2012, p. 565). The nature of the industry helps to explain the product that Jetstar offers to its market. According to Whyte and Lohmann (2014, p. 1), Qantas Group established Jetstar to compete with Virgin Blue which entered the Australian market as a low-cost carrier. It is evident that Jetstar was set up to weaken a new entrant that threatened the full-service Qantas airline. Therefore, the product that Jetstar offers consumers is the transportation of passengers and cargo to local and international destinations at affordable prices.

It is worth mentioning that Jetstar tries to enhance its product to retain its share of a highly competitive market. The enhancements appear in the form of an increased choice of destinations owing to the company’s expansion into Asia. Jetstar has also entered into code sharing agreements with Asian, European, and American airlines which allow its customers to have easier access to destinations that are not covered by Jetstar. For example, Jetstar’s clients have easy access to European cities as a result of the airline’s alliance with Emirates Airlines (Whyte and Lohmann 2014, p. 5). Other aspects of the Jetstar product include access to lounges, a frequent flyer product that provides added benefits to travellers, and the Club Jetstar membership program that offers discounted fares. Overall, Jetstar’s low-cost flying product is suitable for the target market of young passengers with low to middle levels of income. The competitive nature of the industry also influences the nature of the product where Jetstar has to offer extra benefits to remain relevant.

Price

Price is an element of the marketing mix that describes the economic cost that a customer will incur to obtain a product or service (Gordon 2012, p. 122). It is worth mentioning that organisations have different objectives when setting prices. One firm can select a price level that maximises profits, while others set prices to maximise sales or maintain the status quo in the market. Kotler and Armstrong (2016, p. 349) note that pricing strategy typically changes as the product goes through its life cycle. As stated, Jetstar was established in 2004 as a way for Qantas to fend of competition from the entry of low-cost carriers (Whyte and Lohmann 2014, p. 5). Therefore, the pricing objective during the initial stage of Jetstar’s life cycle was the maintenance of the status quo. Jetstar charged the lowest prices in the market to frustrate the growth of competitors like Virgin Blue thereby ensuring that the broader Qantas Group would retain market dominance (Jetstar 2017).

The growth of Jetstar coupled with improvements in information technology has led to Jetstar’s current use of discount and allowance pricing and dynamic and internet pricing strategies. The existence of the frequent flyer program and Club Jetstar offers evidence of Jetstar adjusting their prices to reward existing customers. When it comes to dynamic pricing, Jetstar and other airlines continuously adjust their prices to meet the needs of travellers. These adjustments are facilitated by information systems that adjust prices according to demand, competitor pricing, and costs (Kotler & Armstrong 2016, p. 356). A relevant example is Jetstar’s price beat guarantee that ensures that customers are charged 10% lower than any comparable fare online (Jetstar 2017). Overall, Jetstar began operations by using a penetrative pricing strategy that allowed the firm to acquire new customers while protecting its market share. Evidently, the current dynamic pricing strategy is suited to the target market of budget-conscious travellers.

Promotion

Promotion refers to the communication that marketers use to present a product or service to consumers in an effective manner and persuade them to make a purchase decision. Promotion is ranked as one of the most powerful elements in the marketing mix as it shapes the image of a product in a way that creates a competitive advantage (Singh 2012, p. 42). Jetstar uses a promotional mix that combines different tools. For example, the company makes use of public relations in the form of sponsorships to communicate with the target market of young adults. The company has become a sponsor of the National Rugby League, a sport that attracts the same market segment that the airline targets. The sponsorship has been combined with the announcement of extra flights to destinations that host some of the biggest rugby events (Jetstar 2017). The public relations also extended to the creation of a reality TV series called Going Places that profiled the airline’s services and staff (Luck & Goss 2016, p. 170).

Jetstar also makes use of advertising owing to its ability to reach a broad audience that is geographically dispersed at a low cost. The company makes good use of its aircraft through branding of the fuselage to advertise booking numbers and the company’s website (Luck & Goss 2017, p. 170). It is worth mentioning that internet advertising plays a central role in allowing the airline to communicate with millions of customers in the areas served by the airline. The internet has also facilitated direct marketing where Jetstar can leverage social media to send customised messages to individual consumers. It is arguable that direct marketing is more efficient for a low-cost carrier as the airline can serve the unique needs of each customer. Sales promotion also plays a central role in Jetstar’s promotional mix. As a budget carrier, Jetstar’s goal is to offer the most affordable flights to destinations within and outside Australia. As stated, the airline uses dynamic pricing to reduce fares during low seasons or in response to competitors, a strategy that offers an effective discount to travellers. The airline also has a membership club and a price beat guarantee which gives flyers the incentive to choose Jetstar over other competing firms (Jetstar 2017). Evidently, the company’s promotional mix matches with its desire to reduce costs thus allowing it to offer low fares. The promotional mix also suits the target market, with a large proportion making use of the Jetstar website to communicate with the company.

Place

Place, also referred to as the distribution channel, represents the location where buyers can purchase a product or service. It is essential to note that place includes both virtual outlets and physical stores (Gordon 2012, p. 123). Jetstar emphasizes reducing operational costs to generate profits from low prices. The implication is that the airline uses few distribution channels that require minimal investments with the internet serving as the primary distribution channel (Luck & Goss 2016, p. 169). Jetstar’s website and other third-party websites distribute tickets from low-cost carriers and full-service airlines. Luck & Goss (2016, p. 169) also note that the internet lowers distribution costs by removing the need to print tickets and boarding passes since customers can receive their tickets through email and print them at their expense. The internet also reduces the cost of collecting payment since most travellers simply use debit and credit cards and payment providers like PayPal. In addition to the internet, Jetstar distributes its tickets through call centres, travel agencies, ticket counters, and third parties. As stated, the airline has entered into alliances with other airlines to expand its geographical reach. For example, a customer can purchase a ticket through Emirates and fly within Australia on a Jetstar flight, meaning that other airlines can act as part of Jetstar’s distribution channel (Whyte and Lohmann 2014, p. 5). It is apparent that Jetstar’s distribution channels complement the other elements of the marketing mix while being suited to the target audience.

Conclusion

Jetstar was established to allow Qantas to compete in the low-cost segment of the aviation industry. The company developed an appropriate marketing strategy when it entered the market, and it has continued to update the marketing plan to protect its position. Jetstar’s position as the third leading Airline in the domestic market is evidence of the success of the marketing plan. The report presents an analysis of Jetstar’s marketing strategy illustrating how well the product, price, promotion, and distribution strategies match with the target market as well as the company’s overall objective to be an efficient, low-cost carrier. It is recommended that the company continues to employ its innovative marketing that changes according to market conditions. A redesign of the company’s website is also recommended as it plays a central role in Jetstar’s marketing strategy that emphasizes reducing operational costs.

References

Ciliberto, F & Schenone, C 2012, ‘Bankruptcy and product-market competition: Evidence from the airline industry’, International Journal of Industrial Organization, vol. 30, no. 6, pp.564-577.

Gordon, R 2012, ‘Re-thinking and re-tooling the social marketing mix’, Australasian Marketing Journal, vol. 20, no. 2, pp.122-126.

Jetstar Group 2017, About us, Jetstar Airways Pty Ltd, viewed 19 August 2017 <https://www.jetstar.com/au/en/about-us>

Kotler, P & Armstrong, G 2016, Principles of Marketing 16th Global Edition, Pearson.

Lück, M & Gross, S 2016, The low cost carrier worldwide, Routledge.

Singh, M., 2012, ‘Marketing mix of 4P’s for competitive advantage’, Journal of Business and Management, vol. 3, no. 6, pp.40-45.

Teichert, T, Shehu, E & Von Wartburg, I 2008, ‘Customer segmentation revisited: The case of the airline industry’, Transportation Research Part A: Policy and Practice, vol. 42, no. 1, pp.227-242.

Whyte, R & Lohmann, G 2015, ‘The carrier-within-a-carrier strategy: An analysis of Jetstar’, Journal of Air Transport Management
, vol. 42, pp.141-148.