Case describes the entry of low-cost competitors in the deregulated Australian airline industry, and the decision by the Qantas Group to launch a low-cost carrier subsidiary (Jetstar) in the domestic market. For Jetstar, initial qualitative research, found that consumers consider operational performance, and reputation to be the key components of airline qual-, ity. The evolution of the Jetstar strat-, egy is traced from its initial position through to its efforts to attain price competitiveness, and service parity. Managers contemplating a new product launch during the prosperous early years of the twenty-first century typically looked only in one direction: up. Without focusing on these it will be hard for them to satisfy their customers. Despite the higher customer churn and lower usage, we find that the two-part tariff is still the profit-maximizing pricing structure. But times change. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! Thus, Jetstar only gain losses from the start of their attempt to enter the Southeast Asia market. Company Registration No: 4964706. cial stress (and ultimate demise) suffered by low-cost, brands of other major carriers, such as British Airways’, “Go”, United’s TED, and Delta’s “Song”, Jetstar saw a. need to improve by changing consumer perceptions, through focused pricing and service initiatives, together. However, our results show that if firms ignore the pricing structure (or access fee) effect, then they would overcharge customers for the access fee and undercharge them for the per-minute price. implications of the models proposed. beliefs and tastes, can be accounted for. This invites a naïve interpretation, namely, that Jetstar, should focus on quality, since it lags behind Virgin by a, much greater degree on quality than it does on, However, the model reveals that price is much more, important to customers. Figure 1 depicts the model of global and micro process, attributes relevant to this airline environment and the, links between them. This article describes the application of a dynamic choice model of consumer preferences. for poor perceived prices with improved performance, price/quality trade-off is generally expected, Figure 4a, depicts the strength of this trade-off, which very much, At the time of wave 1 (January 2008), Jetstar was, almost exclusively using a “low price” message in its, communications, but the points of proof to make this, credible were not evident to consumers. Qantas established Jetstar in 2003 as a response to main competitor airline Virgin Australia (formerly known as Virgin Blue). Part Qantas owned Vietnamese low-cost carrier Jetstar Pacific is to be renamed as Qantas exits the business. Before building up a marketing strategy, they must look back into their marketing mix. year 2000 with the launch of a competitor, Virgin Blue. Interestingly, one criterion for attribute perceptions was, that improvements should not lead to undue canniba-, lization of the flagship “QANTAS” brand name amongst, Service quality improvements also had a substantial, effect on consumer perceptions. The simultaneous han-, dling of micro and macro level attributes provides a, strong nexus between specific management actions, and market outcomes, mediated by target market, preferences and beliefs. Their managers face a classic strategic conundrum: Should they tackle the threat head-on by reducing prices, knowing that will destroy profits in the short term and brand equity in the long term? This, is evidence that the market has changed in terms of its, preferences even over this 15 month period. Published: 1st Jan 2015 in By, focusing in areas directed by the research and design-, ing a migration path to its vision, Jetstar has reached. Qantas has experienced the reduction in sales of its flagship product as the result of the introduction of Jetstar as a low-cost alternative. No plagiarism, guaranteed! And there has been little research on how these defenders can use marketing to preemptively respond to new or anticipated threats. For instance, the subattributes, for Performance include “good route structure”, “easy check-in” and, “easy to reach airport.” The complete list of subattributes is given in, Figure 1, with 12, 10 and 7 subattributes for performance, reputation, placed on each subattribute corresponding to individual global attri-, The model captures unobserved heterogeneity in respondent prefer-. However, market research results suggested that Jetstar, was not generally perceived as competitive in value, to Virgin Blue. It further indicated how the airline could move market preferences towards areas in which it had competitive advantage. We discuss the empirical specification, parameter estimation and competitive—strategy. Do you have a 2:1 degree or higher? ity combination, being “value for money”. We trace the evolution of the Jetstar strategy from a baseline calibration of its initial position, to its efforts to attain price competitiveness and service parity, followed by its highly focused, This paper addresses the repositioning of Kmart Australia in 2011. Two things are apparent. All rights reserved. It is a wholly owned subsidiary of Qantas, created in response to the threat posed by airline Virgin Australia.Jetstar is part of Qantas' two brand strategy of having Qantas Airways for the premium full-service market and Jetstar for the low-cost market. Jetstar needs to implement more strategies in order to stabilize their sales and get them increase higher. Domestic leisure travelers departing from Syd-, ney, Melbourne and Brisbane in Australia form, the target market for the 20 minute online sur-, vey. But the customer response model indicated that a parity strategy-in which Telstra would offer lower rates on some routes and at certain times of day, even though its prices, on average, were higher than its rival's-was more likely to prevent consumers from switching. the stage where in the first half of calendar year 2009, it provided over 100% of the QANTAS group’, That is, without the contribution of Jetstar, the QANT. This paper presents and illustrates methods for modeling brand competition and brand strategies in markets where competitive effects can be differentially and asymmetrically distributed.