Marketing Approaches for Baby Boomers
According to the predication of the Chris Richardson as the baby boomers become older it will lead the sale of the retail market to become double compared to the present situation. Further, it will change the national spending pattern too.
Secondly it has been argued by the given article that the shopping malls are in dilemma that whether the requirement of bookstore is higher or the sanity tope music that are being bought by the baby boomers. Considering the rising numbers of the baby boomers, it has become hard for both the retail stores and shopping malls to determine the ideal solution (Sullivan and Hyun 2016). Thus the demand in this can be determined through the change in the pattern of the expenditure of the baby boomers.
One of the best marketing approach has been provided by the Euro RSCG media director Ann Morrison, who argues in favour of market division for the different type of baby boomers and not to retrofit them by age within a group of product. It would be seem hard as first to serrate the market of the baby boomers due to numerically large number of them, who is accounted for 20% of the present US population (Ortman, Velkoff and Hogan 2014). However, it can be done utilising baby steps. It would rather aid the company to penetrate the market demand of these baby boomers easily.
Another trust worth marketing approach has been provided by the marketing man Nick Goddard who entails that it would be beneficial for the firm to market their product from broader perspective rather than for the baby boomer specific (Armstrong et al. 2015). It would help the product to larger amount of population and can enjoy the demand bonanza.
Considering the selected article it can be seen that the report published in the Sydney Morning Herald talks about the Qantas airlines, which is the largest market player in the country. At present, in Australia, there are only two large market players who provides both the domestic as well as the international flight service. The firms are namely Qantas and Virgin Blue, who enjoys 98% of the market share in the nation (Bamber 2015). To be precise, Qantas is accounted for 62% of market share in the domestic flights when it comes to the international flights, then it enjoys a healthy 28% market share that makes it the market leader within its industry in the Australia (Shaffner, Mills and Helms 2017). Next to this Virgin Blue is accounted for the 36% of the domestic market share and 8% of the international market share that makes it the second largest player within the Australian airline service industry (Hasan, Akhter and Kamruzzaman 2016). Though there are few small market players in the country who provides limited service in domestic regions, however, there market share is too low to consider. Under this situation it can be told that the Australian airline industry a duopoly market (Gregson et al. 2015).
The Australian Airline Industry
According to the selected article it can be perceived that there is higher demand of the Qantas’s service in the international market due to its high number of flights to Australia from USA. Considering the figure 1, it can be seen that as the service of the Qantas airline increase in abroad it will reduce the price, which will enhance the market share higher for the firm through enhanced quantity demand.
The newspaper report highlights that the Americans are the fourth largest inbound visitors to the Australia who sums up 14% of total tourists to the country. American airline market being an oligopoly market, face collusive pricing policy that makes it hard for the Qantas to penetrate it. Price elasticity of the demand is high in presence of the substitute option. In addition to this, it has been seen recently that, though the short run cost of the firm has been enhanced, it has managed to gain super normal profit in long run. The number of the visitors during the year 2016 has enhanced substantially compared to the previous year and presently it is as high as 711,400 people (Zhang, Sampaio and Fu 2016). The report also highlights that the tourists from the United Kingdom visits Australia in higher number, however the American tourists spend more that aids the domestic economy to become strong. 21% of the total US visitors to Australia comes from Los Angeles and to meet the demand of the passengers Qantas fly 14 hour flight straightaway from California to Australia (Melis, Silva and Silvestre 2017). The newspaper report highlights that the Qantas is aimed to introduce flights to London by 2022 and new cargo service to US, which is easy a market to penetrate due to reluctant nature of the present market players (Bourke 2018).
Being the senior manager of the Qantas Airline, it can be seen that the firm has been performed well since last one and half decades and it has enhanced its market share substantially over the time. During the 2015 there was certain fall in the growth of the Qantas, due to the fall in the demand of the airline service by the US citizens (Button 2017). One of the major reason for this reduction in demand of the Australian air service was recent recession and along with this, it has also been found that the US passengers fell that it take too much time to fly from US to Australia (Hampson et al. 2014). In addition to this, it has also been seen that the price of the Qantas airline is substantially higher than the US counterparts that makes it hard for the Qantas to entice the market demand for their service. Under this situation being the manager of the firm, it would be ideal to provide the following recommendations:
Demand and Penetration Strategies for Qantas Airlines
- Pricing policy of the firm need to be competitive and the firm has to go off its market power factor while deciding prices for the international market
- It would be ideal for the firm to introduce the cargo class service as soon as possible in order to reduce the long haul of the flights, which can substantially reduce the travel timing
- Though the firm has initiated its operation to introduce new non-stop route from London to Perth, however, it would be ideal for the firm to do something same for the US passengers too
- Providing offer of exclusivity and affordable pricing within quality service can be beneficial for the firm
- Advertising the Qantas and provide it much amount of exposure will allow it to get introduced to a whole lot of people, which can ultimately enhance the position of the firm
In Australia, recently it has been seen that the mining boom that arise during the year 2015 is already over due to the shift of the international demand. Presently there has been rise in the demand of the alternative source of energy, which according to the selected newspaper report is LNG (Duke 2018). Due to the change in the price of the Australian coal mining products in the international mining product market, International Energy Agency argues in favour of the alternative energy resource like gas that can aid the economy to become the highest energy exporter in the world. In order to study the effect of cross price elasticity of the same, below article has been selected:
Two factors that can influence the cross price elasticity is:
- Price of the product
- Demand of the product
According to the theory of the cross price elasticity, if the price of a product changes, then the quantity demanded is also tends to change in presence. In the case of the selected article it represents that the demand of the Australian core mining output has been changing due to the change in the demand of the same in the international market (Grace, Kivell and Laugesen 2014). As the market has reduced demand, price has also fell for the Australian mining product. As the report highlights, there is almost no change in the domestic consumption rather the export has decreased because foreign market is already saturated with the existing level of production, and further rise in production will lead to fall in price; however it cannot enhance the demand of the same (Olmstead et al. 2015). Contrary to this, there is expected rise in the gas production as the demand of the same has been rising in the recent days and the price is also on rise.
Managerial implications that can be perceived from the estimate:
It indicates the trade cycle: cross price elasticity aids to determine the fact that there will be change in the quantity demanded due to the change in price. However, it also entails that in case of the necessary and luxury goods, it demand change to remain unaltered even if there is change in the price. thus, cross price elasticity, determine that normal goods tends to face higher demand during prosperity with lower price and the reverse happen in the case of the recession, when the price is higher (Hong, Misra and Cilcassim 2016). Thus managers can understand the product lifecycle and determine the price depending upon the same.
Implications of Cross Price Elasticity for Product Management
Helps to forecast the demand: Utilising the cross price elasticity it can be seen that the mangers can forecast the demand of the product. If the product has moderate amount of positive cross price elasticity, then with the change in the price demand will also rise and in the case of the negative cross price elasticity, there will be fall in the demand and vis-à-vis (Sun 2017). Depending upon this managers can determine the future price.
Reference:
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.
Bamber, G.J., 2015. Low-cost airlines’ product and labor market strategic choices: Australian perspectives. Members-only Library.
Bourke, L. (2018). Reluctant Americans are behind Qantas’ quest to develop a cargo class. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/companies/reluctant-americans-are-behind-qantas-quest-to-develop-a-cargo-class-20180417-p4za6z.html [Accessed 24 Apr. 2018].
Button, K. ed., 2017. Airline deregulation: international experiences (Vol. 1). Routledge.
Duke, J. (2018). 2018 ‘the end’ of resources boom as commodity price drops bite. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/the-economy/2018-the-end-of-the-resources-boom-as-falling-commodity-prices-bite-20180107-p4yyaa.html [Accessed 27 Apr. 2018].
Grace, R.C., Kivell, B.M. and Laugesen, M., 2014. Estimating cross-price elasticity of e-cigarettes using a simulated demand procedure. Nicotine & Tobacco Research, 17(5), pp.592-598.
Gregson, S., Hampson, I., Junor, A., Fraser, D., Quinlan, M. and Williamson, A., 2015. Supply chains, maintenance and safety in the Australian airline industry. Journal of Industrial Relations, 57(4), pp.604-623.
Hampson, I., Fraser, D., Junor, A., Quinlan, M. and Gregson, S., 2014. Aircraft Maintenance in Australia: Issues and Prospects. International Labour Press Conference.
Hasan, M.Z., Akhter, S. and Kamruzzaman, M., 2016. Identifying macroeconomic risk factors in Australian airline companies. In International Multidisciplinary Conference on Sustainable Development, Dhaka, Bangladesh, 22-23 January 2016 (pp. 76-92).
Melis, D.J., Silva, J.M. and Silvestre, M.A., 2017. Characterisation of the anthropometric features of airline passengers and their impact on fuel usage in the Australian domestic aviation sector. In 17th Australian International Aerospace Congress: AIAC 2017 (p. 529). Engineers Australia, Royal Aeronautical Society.
Olmstead, T.A., Alessi, S.M., Kline, B., Pacula, R.L. and Petry, N.M., 2015. The price elasticity of demand for heroin: matched longitudinal and experimental evidence. Journal of health economics, 41, pp.59-71.
Olmstead, T.A., Alessi, S.M., Kline, B., Pacula, R.L. and Petry, N.M., 2015. The price elasticity of demand for heroin: matched longitudinal and experimental evidence. Journal of health economics, 41, pp.59-71.
Ortman, J.M., Velkoff, V.A. and Hogan, H., 2014. An aging nation: the older population in the United States (pp. 25-1140). United States Census Bureau, Economics and Statistics Administration, US Department of Commerce.
Shaffner, E., Mills, A.J. and Helms Mills, J.C., 2017. Reading Qantas History: Discourses of Intersectionality and the Early Years of Qantas. In Insights and Research on the Study of Gender and Intersectionality in International Airline Cultures(pp. 445-469). Emerald Publishing Limited.
Sullivan, P. and Hyun, S.Y.J., 2016. Clothing retail channel use and digital behavior: Generation and gender differences. Journal of Business Theory and Practice, 4(1), p.125.
Sun, C.H.J., Chiang, F.S., Guillotreau, P., Squires, D., Webster, D.G. and Owens, M., 2017. Fewer fish for higher profits? Price response and economic incentives in global tuna fisheries management. Environmental and Resource Economics, 66(4), pp.749-764.
Zhang, Y., Sampaio, B. and Fu, X., 2016. Duopoly competition between airline groups with dual-brand services: the case of the Australian domestic market.
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