Workshop Series: Peter Danaher
The paper describes the use of a marketing science model by Jetstar, a subsidiary of Australia's leading airline, QANTAS, to effectively and profitably compete in the low cost carrier marketplace. We trace the evolution of the Jetstar strategy, from a baseline calibration of its initial position, through to its efforts to attain price competitiveness and service parity, followed by a highly focused, cost-effective service delivery strategy. From a methodological perspective, in addition to developing a model that incorporates dynamics, we also allow for unobserved heterogeneity of both perceptions and importance weights of service attributes. This allows us to study not only how service design and pricing initiatives shift the perceived performance of Jetstar relative to its competitors, but also how the airline can shift market preferences towards areas in which it has competitive advantage. The contribution of the research is substantial. The Jetstar market share went from 14.0% to 18.1% during the first five quarterly waves of the research. Significant price perception and service level disadvantages were ameliorated. Profit for Jetstar went from $79 mm in 2006/07, before the study was commissioned, to $104 mm in 2007/08 and $124 mm in 2008/09 during a period of major industry losses. Join our staff, students and alumni attending workshops presented by visiting academics on their area of research expertise. For further information please contact our Workshop Administrator.
Peter Danaher is the Coles Myer Chair of Marketing and Retailing at the Melbourne Business School in Australia. He was previously at the University of Auckland and has had visiting positions at London Business School, The Wharton School and MIT. Peter serves on the Editorial Board for the Journal of Marketing, the Journal of Marketing Research, Marketing Science and the Journal of Service Research. He is also an Area Editor for the International Journal of Research in Marketing. His primary research interests are media exposure distributions, advertising effectiveness, television audience measurement and behavior, internet usage behavior, customer satisfaction measurement, forecasting and sample surveys, resulting in many publications in journals such as the Journal of Marketing Research, Marketing Science, Journal of Marketing, Journal of Advertising Research, Journal of the American Statistical Association, Journal of Retailing, Journal of Business and Economic Statistics and the American Statistician.