1.0 Executive Summary
2.0 Background and Introduction
3.0 External Analysis
3.1 Macro Environmental analysis
3.1.1 Political and Legal Factors
3.1.2 Economic Factors
3.1.3 Social Factors
3.1.4 Technological Factors
3.1.5 Environmental Factors
3.2 Micro Environmental Analysis
3.2.1 Industry Analysis
3.2.2 Market Analysis
3.2.3 Competitor Analysis
3.2.4 Customer Analysis
3.2.5 Stakeholder Analysis
4.0 Internal Analysis
4.1 Resource Analysis
4.2 Marketing Audit
4.2.1 Marketing Strategies Audit
4.2.2 Marketing Structure Audit
4.2.3 Marketing Systems Audit
4.2.4 Marketing Function Audit
4.2.5 Marketing Productivity Audit
4.3 Innovation Audit
4.4 Other Auditing Tools
4.5 SWOT Analysis
5.0 Conclusion
6.0 Bibliography
7.0 Appendices
This report identifies through research, the impact that marketing environmental issues
have on British Airways. It clearly outlines the macro and micro environmental factors and
internal factors that the new Chief Executive, Willie Walsh, has to consider in order for
him to successfully drive the company forward and receive a 10% operating margin.
British Airways (BA) is the UKs largest international scheduled airline, operating
international and domestic scheduled and charter air services for the carriage of
passengers, freight and mail and the provision of ancillary services. The airline flies to
over 550 destinations globally and is considered to be a leader in the industry.
In order to profitably satisfy customer needs, an organisation must understand its external
and internal situation including the customer, the market and its own capabilities.
Furthermore, it needs to understand and adapt to the dynamic and uncontrollable factors of
the environment in which it operates.
A marketing audit is in a number of ways the true starting point for the strategic marketing
planning process, and is therefore, as Kotler (1999)has suggested a comprehensive
systematic, independent and periodic examination of a companys-or business
units-marketing environment objectives, strategies and activities with a view to
determining problem areas and opportunities. An analysis of the three key perspectives of
a marketing audit; the macro-environment, the micro-environment and the internal
environment will be carried out for BA.
2005 saw a new Chief Executive being appointed in BA; Willie Walsh, former head of Aer
Lingus. The man with an excellent reputation for driving down costs has stressed his
determination to realise his predecessors, Sir Rod Eddingtons, goal of a 10% operating
margin.
The marketing environment is ever changing and therefore it is essential that a structured,
detailed and continuous analysis of the principal dimensions of the environment is made.
3.1.1 Political and Legal Factors
The start of the millennium is turning out to be some of the most difficult times that the
airline industry has ever faced. The events of terrorism attacks in September 11, 2001 in
New York and July 7, 2005 in London along with the wars in Iraq have no doubt caused an
unprecedented crisis and political instability. The events have caused the introduction of
new security regulations from the EU and US that come into effect in summer 2006 and a
fall in customer travelling confidence.
Governments have controlled where airlines can fly, and aspects of their product planning
and pricing policies. In recent years, substantial regulatory reform has taken place, giving
carriers more opportunity and increasing the market competition. Deregulated companies
like BA require systems that enable decisions to be made quickly Open skies is an
agreement which changes the regulatory landscapes significantly (appendix 1).
A significant legal factor affecting BA is the power of trade Unions. BA has suffered many
strike actions (August 2004 and August 2005) and is aware of the implications that the
trade unions can cause. Legal regulations on employee rights, customer rights and an
upsurge in environmental and ecological issues are more factors that BA must consider.
3.1.2 Economic Factors
The demand for air travel is characterised by a very high income elasticity. Therefore, as
the world economy grows, so the demand for air travel can be expected to increase too.
The political situation in Iraq has helped to drive oil prices to a record high and for BA, the
oil price rise might add 100 million to their costs. In response, the cost of fuel surcharges is
always at risk (appendix 2). BA is in the business of transporting people to and from
worldwide destinations for both business and pleasure. If the international economy slows
down, business trades less and fewer business people will use planes. Equally, people may
choose less exciting holidays.
3.1.3 Social Factors
The social and cultural influences on business vary from country to country however it is
important that such factors are considered and include demographic and cultural aspects.
These factors affect customer needs and the size of potential markets. Demographic
changes have resulted in the development of the grey market who are spending more on
leisure and travelling. Lifestyles , tastes and fashions are all changing; customers require
opportunities to visit new and interesting, often long-haul, destinations.
3.1.4 Technological Factors
Technology is vital for competitive advantage, and is a major driver of globalisation. A key
issue will be the extent to which technological advancements can offset upward pressures
on prices and costs. Online sales are regarded highly important by BA and they are placing
considerable faith in its website presence to boost online-sales which will reduce customer
traffic via BAs call centres. E-Tickets are now the standard ticket format used by BA,
making flight ticketing more straightforward, flexible and secure (appendix 3).
BA is focused on improving its customer service in line with modern technology and has
opened its first drive-through, offer Wireless LAN systems and communicate through
