Flying out of trouble

The year 2014 was a shocking year for Qantas, reporting a crimpling $2.8 billion loss for the year (Janda 2014).

On a mission to re-emerge into the black, Qantas went through a major overhaul making significant changes to its business to deliver its best calendar year financial result for 2015 in its 95-year history (Cameron 2016).

Qantas has prided themselves on delivering a number of successful marketing campaigns in the past 12 months led by Jo Boundy, Qantas Chief Marketing Officer of Qantas Loyalty. Boundy quotes “so much of marketing, and particularly loyalty marketing, is all based around data…the biggest challenge will be how we make best use of the information we have to deliver the most valuable program we can for our customers” (Clampet 2016).

Boundy is a key member of Qantas senior management, with Mintz and Currim supporting that the employment of a CMO reduces uncertainty that Qantas top management faces in marketing areas (Mintz and Currim, 2013).

The Qantas Investor day briefing presentation for 2015 included the capture and use of specific marketing metrics for social media, including the number of followers with 630,000 fans of Qantas Facebook page.

Qantas Investor Day 2015 briefing

Loyalty program

Qantas Loyalty Program metrics

Qantas’ loyalty program has enabled the business to gather valuable behavioural profile metrics for purchase frequency. Qantas also boasts of the marketing efficiencies that have been achieved due to their loyalty program with improved targeting and segmentation, differentiated incentives and insight driven campaigns (Qantas, Investor Day 2015).

Qantas utilise the marketing metric of reach for their loyalty program quoting 10.7 million members representing 50% of Australian households, and the marketing metric of hits to Qantas website, with a reported 2.5 million visits to Qantas.com per week.

Red Planet

Red Planet a new digital marketing business was launched by Qantas which focused on delivering media, analytics and research services.

Red Plant delivering value for Qantas

Red Planet was a success, with Qantas estimating that the marketing delivered a staggering return-on-investment of 19.3, quoting this marketing was 4 times more effective than other typically used social media targeting methods (Qantas, Investor Day 2015).

However one could side with Ambler and Roberts, who argue that the financial metric of return-on-investment has its flaws, becoming a fashionable term that can be used to describe any type of profit arising from marketing activities. With strong support that the fall in the price of airline fuel as a major input costs playing a contributing factor in the increase in underlying profit and not the marketing program (Ambler and Roberts, 2008).

Dashboards

Marketing dashboards are a recent evolution for Qantas, with a Melbourne Business School MBA Student Cuicui Jin developing a marketing dashboard for Qantas as part of an internship. Qantas Brand Strategy Manager Jonathon Thompson quoting “thanks to Cuicui, we have a more effective communication tool to demonstrate the commercial contribution of marketing to the airline. It means our executives are able to have a far more holistic view, and it gives us a really simple tool to showcase our performance across the broader organisation” (Melbourne Business School 2015).

Jonathon’s comments align to the view of Ambler and Roberts, who endorse that a dashboard is essential to help top management drive the business as it facilitates the ability to “bring together the multiple measures seen by senior into a clear, integrated and concise package” (Ambler and Roberts, 2008).

One could see how Qantas could be heavy on utilising marketing metrics as opposed to financial metrics. However this is consistent with the argument that Qantas is a market-oriented business as its top management has a customer-based focus, supported by an interest in assessing customer satisfaction and needs, linking to the relationship between satisfaction and the Qantas brand assets (Mintz and Currim, 2013).

But in a competitive industry, shouldn’t customer-based focus be the strategy? The supporting evidence you ask – well don’t the Qantas 2015 results speak for themselves?

(Markart 2012)

Blog by Annika Bate, wordpress username: annikampk732, student ID: 214448725. email: annikab@deakin.edu.au

Reference List

Ambler, T and Roberts, J 2008, Assessing marketing performance: don’t settle for a silver metric, Journal of Marketing Management. Sep2008, Vol. 24 Issue 7/8, p733-750, Deakin university database

Cameron, N 2016, “Qantas reveals history-making financial results; announces Wi-Fi services”, CMO, retrieved 21 May 2016, < http://www.cmo.com.au/article/594531/qantas-reveals-history-making-financial-results-announces-wi-fi-services/&gt;

Clampet, J 2016 “Skift CMO Interviews: Qantas CMO on Marketing Through Better Loyalty”, Skift, retrieved 20 May 2016, < https://skift.com/2016/04/28/skift-cmo-interviews-qantas-cmo-on-marketing-through-better-loyalty/>

Janda, M 2014, “Qantas shocks with $2.8bn full-year loss, analysts call for management spill” ABC News, retrieved 18 May 2016, < http://www.abc.net.au/news/2014-08-28/qantas-full-year-profit-result/5702266>

Markart 2012, Cartoon gallery, retrieved 21 May 2016, <http://www.markart.com.au/archive.html&gt;

Melbourne Business School, 2015 “Cuicui Jin is flying high at Qantas”, retrieved 20 May 2016, <https://mbs.edu/news/cuicui-jin-flying-high-at-qantas>

Milichovsky, F and Simberova, I 2015, “Marketing Effectiveness: Metrics for Effective Strategic Marketing” Engineering Economics  Vol. 26 Issue 2, p211-219. Database: Business Source Complete. Doi: 10.5755/j01.ee.26.2.3826

Mintz, O and Currim, I 2013, What drives managerial use of marketing and financial metrics and does metric use affect performance of marketing mix activities? Journal of Marketing, Volume 77, pp. 17-40, Deakin university database

Qantas, 2015 “Qantas Investor Day”, retrieved 21 May 2016, <https://www.qantas.com.au/infodetail/about/investors/investor-day-presentation-2015.pdf&gt;

Old school media verse new school media

(Lomp 2016)

Advertising is big business and a recent outlook forecasts the Australian advertising market to hit a mega $13.5 billion in 2016 (Mason 2016).

So why spend the big bucks on advertising? Iacobucci (2015) endorses advertising as facilitating customers’ awareness by luring potential customers and claims it strengthens brand awareness, positive attitudes and perceptions of brand equity. This then enables the consumers to behave just how we would like them to – buy buy buy! As it stimulates behaviours that result in more purchases, more frequently and for the more expensive stuff, and to ensure they tell all their friends via word-of-mouth (Iacobucci 2014).

Old school media

Television advertising growth is forecasted to remain relatively flat at a lousy $4 billion in 2016 (Mason 2016). Television is old school and continues to be viewed as the established and reliable main vehicle for building a brand (Draganska et al 2014).

This pricey media continues to dominate the Australian media choices, as it yields the largest reach numbers (Iacobucci 2014). Let’s take a look at Kmart, a heavy user of television advertising.

Kmart’s target audience are women and mothers, and Kmart nailed their reach by exposing as many of their target customers to their ads, airing them on prime-time television spots with heavy frequency, enticing them with rotating catchy pop songs that are hip, fun and funky.

Exploiting the television media option, Kmart takes full advantage of seasonal ads with the most recent campaigns for Easter and Mother’s Day.

But what about the other traditional ‘nonintrusive’ media players of newspapers and magazines you ask? Well, it turns out these two old fogies are falling behind, with newspaper advertising forecast to decrease 18% and magazine to decrease 17.1% in 2016 (Mason 2016).

(Lewis 2013)

Direct mail is old school and serves as a cheaper option targeting those consumers wanting a whole lot of detailed product information (Iacobucci, 2015). Consumers perceive print advertising as allowing a clearer message of the advertisement and information of the message, compared to other media such as radio and the internet (Roozen and Meulders, 2014).

Kmart’s version of direct mail is otherwise known as “junk mail” or aka catalogues to the budget-savvy consumer. Kmart advertising does not utilise elaborate and expensive celebrity endorsements, but instead includes a diverse group of models intended to represent all consumers. Media recently praised Kmart for the inclusion of disabled children in their catalogues.

New school media

Internet advertising in Australia is charging ahead, with growth for 2016 forecasted at 12.1% to total a whopping $6 billion (Mason 2016). Not too shabby, despite Draganska et al (2014) argument that there is still hesitation amongst advertisers to transition their advertising spend from television campaigns to the Internet.

Kmart’s recent success has been attributed to the use of social media, with a reported explosion of social media buzz fuelling the “cult of Kmart” on Facebook and Instagram. Kmart’s word-of-mouth advertising has taken-off with a multitude of online communities such as Kmart Lovers Australia and Kmartaus_inspire that share images and DIY styling details of the naturally exciting Kmart’s products.

Kmart has officially been titled as the jewel in Wesfarmers crown, with news.com.au reporting a 17.9% growth in sales in the most recent quarter (Murphy 2016).

(Murphy 2016)

Kmart’s recent revival could be viewed as the ultimate return on marketing investment (ROMI), with improved earnings positively correlated with the revised marketing campaign.

One thing is for certain, Kmart is doing something right as it successfully demonstrates advertising across a number of media – television, social media, direct mail, in a consistent yet complementary manner (Iacobucci 2014).

So will Kmart continue to adopt the strategic approach of spending the big bucks on advertising, viewing it as a worthy investment? Or does it believe it has already successfully achieved the long-term benefits of brand building?

 

Blog by Annika Bate, wordpress username: annikampk732, student ID: 214448725. email: annikab@deakin.edu.au

Reference List

Create Revolution 2016, Cut-Price Chic: Six Strategies that made Kmart cool, retrieved 8 May 2016, <http://www.creativerevolution.com.au/mi/cut-price-chic-six-strategies-made-kmart-cool&gt;

Draganska, M, Hartmann, W, Stanglein, G 2014, Internet Versus Television Advertising: A Brand-Building Comparison, Journal of Marketing Research (JMR). Oct2014, Vol. 51 Issue 5, p578-590. 13p. 12 Charts, 2 Graphs. Database: Business Source Complete

Iacobucci, D 2014, ‘Marketing Management (MM), 4^th Edition, Cenage Learning, Mason.

Lewis, M 2013, Why Newspapers Will be Dead Soon, retrieved 5 May 2016, <http://loo.me/2013/02/why-newspapers-will-be-dead-soon/&gt;

Lomp, S 2016, ‘Old Media vs New Media’, Stephan Lomp Impressum, <http://www.lomp.de/illustration/old-media-vs-new-media/&gt;

Mason, M 2016 “Australian advertising market to hit $13.5 billion in 2016”, The Sydney Morning Herald, retrieved 7 May 2016, <http://www.smh.com.au/business/media-and-marketing/australian-advertising-market-to-hit-135-billion-in-2016-20151220-glrs3i.html>

Mennega, D, 2008 retrieved 5 May <https://dmennega.wordpress.com/tag/b2b/&gt;

Murphy, J 2016, “Why Kmart is Wesfarmers’ jewel in the crown” News.com.au retrieved 7 May 2016, <http://www.news.com.au/finance/business/retail/why-kmart-is-wesfarmers-jewel-in-the-crown/news-story/c1e288b797e17d9e7757967ad8b771bf>

Roozen, I and Meulders, M 2015, Has TV advertising lost its effectiveness to other touch points? Communications: The European Journal of Communication Research. Nov2015, Vol. 40 Issue 4, p447-470. 24p. Database: Communication & Mass Media Complete

Varun, 2015, Internet vs. Traditional Marketing – 10 Points to Settle the Battle, Fatbit Technologies, retrieved 8 May 2016, < http://www.fatbit.com/fab/internet-vs-traditional-marketing-10-points-settle-battle/>

Is Coca-Cola still king?

Whether it’s Coke, Diet Coke, Zero or Life, one thing is for certain, Coca-Cola dominates the market accounting for 49% of the carbonated soft drinks sold in Australia (Chessell 2016).

So why is it that this strong brand is still the king of the beverage industry? Perhaps it’s due to its status symbol – as we all want to drink what Taylor Swift drinks right? Or is it due to the brand’s strong reputation as being reliable and predicable in quality, after all we are willing to pay a premium price for Coca-Cola verse the likes of Pepsi (Iacobucci 2014).

Branding

Coca-Cola has recently announced that they are moving to ‘one brand’ marketing, as they unite the four big brands – Coke, Diet Coke, Zero and Life under the one new trendy tagline ‘taste the feeling.’

(Arthur 2016)

The new branding will include a revamp to the packaging and product logo graphics with the introduction of a ‘red-disc’ to assist consumers in identifying that all the Coca-Cola’s products are linked – just in case we weren’t already aware of this (Micallef 2016).

(Wentz 2014)

“Packaging is our most visible and valuable asset” was quoted by the Coca-Cola global chief marketing officer Marcos de Quinto (Micallef 2016), with Coca-Cola highlighting the importance of packaging colours and logos as a means of engaging with customers on a visual and sensual level (Iacobucci 2014).

Coca-Cola has spent decades building their brand name through heavy marketing communications to their consumers – but even this king has learnt to adapt and evolve logos and packaging over the years.

(Patel 2016)

The ‘one brand’ marketing is an enormous undertaking encompassing the biggest overhaul of Coca-Cola’s marketing and brand strategy in decades – a bold and very expensive move.

The previous model Coca-Cola adopted was to market each sub-brand separately with its own identify – we all remember the Diet Coke ads with hunky hard-working sweaty men, which triggered a brand community of female demographic Diet Coke followers.

(Brech 2014)

Coca-Cola has successfully utilised their brand name across their line extension for the four major brands – Coke, Zero, Life and Diet Coke, achieved by applying the brand name within a product line to achieve depth (Iacobucci 2014).

Coca-Cola has also profited from the umbrella branding approach for its Coke line as the company had an established key brand name in the marketplace, that enabled the subsequent new products of Zero, Diet Coke and Life to share the same name brand, winning customers as they understood and accepted the brand (Iacobucci 2014).

So why does Coca-Cola need to do something?

Coca-Cola is sitting idle in the maturity stage of the product life-cycle where industry sales have levelled off with competition intensifying, triggering higher marketing costs with the weaker companies to be forced out of the marketplace if they do not take action (Iacobucci 2014).

(BBC 2014)

Coca-Cola’s ‘one brand’ marketing will support the strategy of seeking to enlarge its distribution channels, and is complemented by its trendy new packaging.

The ‘one brand’ marketing strategy will support market penetration – by trying to sell more of the same stuff to the same customers (Iacobucci 2014).

Coca-Cola responds with product development

Coca-Cola was targeted as a key contributor to the global increase in obesity and diabetes, which has fuelled the fight against sugar as supported by Jamie Oliver, and even Australia has jumped on the bandwagon with the Rethink Sugar Drink Campaign.

(Bacon 2012)

The response by Coca-Cola – product development, with the introduction of Coca-Cola Life containing natural sweetener stevia as a low-kilojoule option, and smaller portion sizes including 250ml cans offered as new products to keep the current sugar-hating customer base happy (Iacobucci 2014).

Will the king of the beverage industry be successful in their ‘one brand’ strategy, or will we see Coca-Cola lose its throne and stumble into the decline stage of the product life-cycle?

Blog by Annika Bate, wordpress username: annikampk732, student ID: 214448725. email: annikab@deakin.edu.au

Reference List

Arthur, R 2016, “Extending equity and iconic appeal: Coca-Cola unites brands with global campaign”, Beverage Daily, retrieved 24 April 2016, <http://www.beveragedaily.com/Manufacturers/Extending-equity-and-iconic-appeal-Coca-Cola-unites-brands-with-global-campaign&gt;

Bacon, J 2012, “Bacon: Sugar Shock”, The Washington Times, retrieved 23 April 2016, <http://www.washingtontimes.com/news/2012/apr/6/sugar-shock/?page=all&gt;

BBC, 2014, “Product lifecycles”, retrieved 23 April 2016, <http://www.bbc.co.uk/schools/gcsebitesize/design/graphics/evaluationictrev3.shtml&gt;

Brech, A 2014, “The Diet Coke bloke: an evolution,” Stylist, retrieved 23 April 2016, <http://www.stylist.co.uk/life/diet-coke-blokes-an-evolution#art&gt;

Chessell, J 2016, “Coca-Cola fights anti-sugar campaign by uniting brands in ads for the first time”, Australian Financial Review, retrieved 23 April 2016, <http://www.afr.com/business/media-and-marketing/Coca-Cola-fights-antisugar-campaign-by-uniting-brands-in-ads-for-the-first-time-20160119-gm9h91>

Coca-Cola 2016, “The Diet Coke Story”, retrieved 22 April 2016, http://www.coca-cola.co.uk/stories/history/advertising/the-diet-coke-story/

Iacobucci, D 2014, ‘Marketing Management (MM), 4^th Edition, Cenage Learning, Mason.

Micallef, R 2016, “Coca-Cola to roll-out “one brand” packaging in Australia”, AdNews, retrieved 23 April 2016, <http://www.adnews.com.au/news/Coca-Cola-to-roll-out-one-brand-packaging-in-australia>

Patel, L 2016, “The Evolution of the Best Brand Logos in History”, Citizen Tekk, <http://www.citizentekk.com/best-brand-logos/&gt;

Wentz, L 2014, “What You Need to Know About Coca-Cola’s Surprising New CMO”, Advertising Age, retrieved 24 April 2016, <http://adage.com/article/cmo-strategy/Coca-Cola-s-surprising-cmo/295577/

 

Letting go of the wheel…

https://www.google.com/selfdrivingcar/

Just sit back and relax whilst you are chauffeured on your smooth and effortless journey to your humble abode from another gruelling day at the office. Forgo the daily battle of chaotic peak hour traffic, as your driverless car will be your eyes and ears piloting your journey home safely and efficiently.

Feeling inferior? Unwanted and no longer needed? Perhaps redundant? Accepting the reality that you are no longer rendered capable of being in control of another vehicle again?

But alas there are positives to this enigmatic technology that is ever looming – no more speeding fines, less trips to the fuel station, no accidents accompanied by lower insurance premiums, and of course – spending that precious commuting time attending to the finer things in life.

http://www.driverless-future.com/

Welcome to the evolving segment of the Driverless Car Market, where there are many key players vying for the ability to dominate this segment including: Google, Ford, Toyota, BMW, Audi and Volkswagen.

Segment – who actually wants to relinquish control and join the robots?

The autonomous driver segment is aimed at consumers pertaining the psychological traits of being tech savvy and early adopters – those who embrace artificial intelligence, thrive on neural networks and get excited about robotics and drone technology.

Geography does plays a role in this segment, targeting urban and suburban areas, to improve congestion, improve road safety and decrease demand for city car parking.

http://www.theatlantic.com/technology/archive/2015/10/snake-people-cars/410923/

When it comes to demographics, a survey conducted by Pew Research Centre in the US discovered there was no real generational differences for the 50% of respondents that answered yes to wanting to ride in a driverless car. However the findings confirmed consumers are more likely to be tertiary educated.

Is the segment profitable?

The Driverless Car market is forecasted as the next big trend with the Transport Minister for South Australia predicting the growth of the driverless car segment in Australia of $90 billion in 15 years.

Currently driverless cars are not available for sale, and are restricted for experimental use only. However, this hasn’t deterred the segment leader Google from heavily investing and producing 100 prototypes that have been US tested as they campaign for the approval of their self-driving cars on public roads.

Market favourite Tesla have also dipped their toes into this lucrative pool, with the introduction of semi-autonomous features on their trendy Model S with the inclusion of autopilot functionality known as Level-3 autonomous driving technology, however the model it is still regulated to hands-on-the wheel.

Trial of Volvo’s driverless cars on SA roads http://www.businessinsider.com.au/south-australia-has-just-legalised-driverless-cars-2016-4

As Australia continues to traditionally lag behind most other countries in technology, we have started taking baby steps to catch up to our big sister North America who is leading the revolution of driverless cars, with South Australia successfully passing legislation for driverless vehicles, enabling the testing of driverless vehicles by manufacturers on the states roads.

What about target and positioning?

This driverless car segment has multiple targeting opportunities with the most lucrative target to be the transportation market – Uber, taxis, trucking and logistics.  IHS Automotive estimates there are a staggering 6.2 billion people worldwide that do not have a licence, which is 85% of the world’s population as a potential target market. The possibilities are limitless and could extend from the transportation of elderly patients to the daily school drop-offs.

Initial market positioning will be aimed at high price, high quality, and exclusive availability due to the infancy of the technology, with the price eventually decreasing with the evolution of the technology.

So will you surrender and join the rise of the robotic car?

Blog by Annika Bate, WordPress Username: annikampk732, Student ID: 214448725. Email: annikab@deakin.edu.au