Jetstar
66 GfK MIR / Vol. 4, No. 2, 2012 / Case Study
{ Summary }
Jetstar Airways HOW MODELING GUIDED THE BRAND MIGRATION STRATEGY OF A LOW COST CARRIER
John Roberts, Peter Danaher, Ken Roberts, and Alan Simpson
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This article describes the application of a dynamic choice model of consumer preferences. It supported Jetstar, a subsidiary of Australia’s leading airline, QANTAS, to effectively and profitably compete in the low cost carrier marketplace. The evolution of the Jetstar strategy is traced from its initial position through to its efforts to attain price competitiveness and service parity. To improve Jetstar first wanted to learn its relative image-position compared to competitors, how drivers and perceptions varied across the population, and the relation of service design features to perceptual drivers on a continuous basis. Strategies were implemented based on quarterly results and these were then expected to be adapted and refined over time in response to changes in customer perceptions and needs. A new Bayesian hierarchical model conceptually integrates macro level market share evolution with micro level attribute evaluation for service design into a single model. It also captures individual-level heterogeneity, an important factor which has often been ignored in service management. Global attributes are expressed in terms of the constituent subattributes that drive them, showing management where the most traction can be gained with improved pricing and service design. Subattributes with the largest estimated coefficients were identified in wave 1 (and the subsequent waves) and these primary drivers of competitiveness could be addressed with respective actions. The model further revealed that consumers who place high importance on price place low importance on performance and vice versa. That is, for price sensitive customers, it is harder to compensate for a poor perception of prices with improved
{ Summary }
Jetstar Airways HOW MODELING GUIDED THE BRAND MIGRATION STRATEGY OF A LOW COST CARRIER
John Roberts, Peter Danaher, Ken Roberts, and Alan Simpson
Turn to page …
42
... to read the full article
This article describes the application of a dynamic choice model of consumer preferences. It supported Jetstar, a subsidiary of Australia’s leading airline, QANTAS, to effectively and profitably compete in the low cost carrier marketplace. The evolution of the Jetstar strategy is traced from its initial position through to its efforts to attain price competitiveness and service parity. To improve Jetstar first wanted to learn its relative image-position compared to competitors, how drivers and perceptions varied across the population, and the relation of service design features to perceptual drivers on a continuous basis. Strategies were implemented based on quarterly results and these were then expected to be adapted and refined over time in response to changes in customer perceptions and needs. A new Bayesian hierarchical model conceptually integrates macro level market share evolution with micro level attribute evaluation for service design into a single model. It also captures individual-level heterogeneity, an important factor which has often been ignored in service management. Global attributes are expressed in terms of the constituent subattributes that drive them, showing management where the most traction can be gained with improved pricing and service design. Subattributes with the largest estimated coefficients were identified in wave 1 (and the subsequent waves) and these primary drivers of competitiveness could be addressed with respective actions. The model further revealed that consumers who place high importance on price place low importance on performance and vice versa. That is, for price sensitive customers, it is harder to compensate for a poor perception of prices with improved