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The Strategic Analysis Of Virgin Atlantic Airways Marketing Essay

5125 words (21 pages) Essay in Marketing

5/12/16 Marketing Reference this

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Virgin Atlantic Airways is a UK based company that is co-owned by Sir Richard Branson 62 years old born on 18th July 1950 the owner of many other businesses of Virgin Group and Singapore Airlines. According to Forbes 2011 list of billionaires Branson is 4th richest citizen of United Kingdom he was born in black heath, London. he started his business from selling a mail order, shop to virgin group.

“My original aim was to be an editor but I become a publisher and

the entrepreneur by mistake.” (Richard Branson).

In 1970 Virgin kicked off as mail order record business in London. The Company began producing and established themselves as a leading British Studio. In the 1980’s Virgin began the expanding, creating the Virgin Vision in the 1983, Virgin Atlantic Airways and Virgin Cargo in 1984.In 1986 theVirgin Group was floated on the London stock exchange. However, Virgin Atlantic Airways remained an privately owned part of the Virgin Voyager Group. In 1988,

Richard Branson, believing that heading a public company on his Entrepreneurial style, and then he decided to buy back all outstanding shares. In 1992, Richard Branson sold Virgin Music to the Thorn EMI allowing him to invest more money into Virgin Atlantic and other Virgin enterprises.Virgin Atlantic mainly targets the customer segment that are all above average in terms of financial well-being, therefore the company service prices are all above industry average as well with relevant level of quality and services.Virgin Atlantic enjoys a high level of brand recognition there due to the personal commitment of the main owner of the company in practices of brand promotion. Also, the owner of the brand Sir Richard Branson is ranked to be number 212 on the list of richest people on the planet with the estimated personal wealth of over four billion dollars (Forbes, 2011). Therefore, the huge amount of financial resources are available for Virgin Atlantic to use for further expansion whenever is necessary there around the globe, and Virgin Atlantic was among the worst hit along with other companies in airline industry.

History – On the 22 June 1984, Virgin Atlantic operated its inaugural service between Gatwick and Newark using a lease Boeing 347 formerly operated as the. Part of Richard Branson’s approach to a business is to succeed within the first year or else exit the market. This includes a one-year limit there on everything associated with starting up. Virgin Atlantic became profitable during the first 12 months, aided by sister company virgin records ability to the finance the of a second-hand Boeing 747. The firm timed operations to take advantage of a full summer, from June to September – the most profitable period of the year.In 1986, the airline added another Boeing 747 and started a scheduled route from Gatwick to Miami Additional aircraft were acquired and routes launched from Gatwick to New York JFK (1988), Tokyo in  (1989), los Angeles in (1990), Boston in (1991), and Orlando in (1992).so In 1987, a service was launched in between luton and Dublin . In 1988 club air operated was two jet aircraft on behalf of Virgin. These served the Luton to Dublin route until about 1990.

http://upload.wikimedia.org/wikipedia/commons/thumb/a/ac/Virgin_Atlantic_A340-300_G-VHOL_LHR_2003-6-12.png/220px-Virgin_Atlantic_A340-300_G-VHOL_LHR_2003-6-12.png

In March 2000 the virgin group sold 49% and divided the airline’s holding company to Singapore airlines  for £600.25 million. Virgin Group still owns the remaining 51%.that is present there.In June 2002, Virgin Atlantic became the first airline to use the airbus A-340-600 In 2003 Virgin Atlantic carried 3.8 million passengers to different destinations. This increased to 4.6 million in 2006, placing it seventh among UK airlines, though the long nature of its operations made it second in terms of passenger-miles. so During the 2012 summer Olympics bids, Virgin Atlantic attached London 2012 to the rear of many of their Boeing 747-400s.As part of the test of biofuels, Virgin volunteered a Boeing 747 which flew in February 2008 without passengers from Heathrow to Amsterdam Schiphol Airport. Plant-based biofuel was provided 20% of power for one engine. The airline said it expected to use biofuels based on algae. Present there. In November 2010, it was reported that the Virgin Atlantic had an appointed Deutsche Bank to begin a strategic review of options for the airline following the tie-up between the British Airways and Airlines. By February 2011, it was confirmed that the Sky Team members Air France-KLM and Delta Air Lines had appointed Goldman Sachs to advise them that on a joint of potential approach for Virgin Atlantic. Ethan Airways was a also reported to be considering a deal with them, and Willie Walsh, Chief Executive of International Airlines Group, stated that the they would be interested in the airline, only for the lucrative take-off and landing slots on it holds at London Heathrow Airport. The airline is due to begin of the domestic UK services from 31 March 2013, operating between London and Manchester. Virgin was initially lease Airbus A319s for three daily flights between the airports, providing a link for international passengers flying to London.

Corporate affairs

Head office – virgin Atlantic office known as the office is located in the crawly business quarter, west Sussex, England that is near Gatwick airport.

London office – in the year of 1991 January tad’s opened the services for the virgin Atlantic airways for their flying services The London TDRs had come into effect in 1978, originally created to a achieve a fairer distribution of traffic between Heathrow and Gatwick, the UK’s two main international airports, to help Gatwick make a profit. The former rules stated airlines without an international scheduled service from Heathrow prior to 1 April 1977 would not be permitted operations there; instead they would have to use Gatwick. However, airlines that did not already operate at Heathrow were still able to commence domestic scheduled services there provided BAA, which ran both Heathrow and Gatwick on behalf of the UK Government, and the Secretary of State for Transport granted permission.The decision to open Heathrow to all newcomers in 1991 – other than those governed by Bermuda II – angered BA’s chairman Lord King, who stopped British Airways’ donations to the Conservative Party in protest. Lord King was further angered by the subsequent decision of the CAA to transfer two pairs of unused landing slots that British Airways held at Tokyo’s Narita Airport to Virgin to let it increase its frequency between Heathrow and Tokyo from four to six weekly round trips, making it easier for Virgin to compete against British Airways. King called the CAA’s decision, which the Government had endorsed, “a confiscation of his company’s property”.

Route Network

USA

New York (Newark) to Heathrow

New York (Newark) toGatwick

New York (JFK) to Heathrow

Boston to Gatwick

Washington D.C. (Dulles) to Heathrow

Miami to Gatwick

Orlando to Gatwick

Orlando to Manchester

Chicago to Heathrow

Los Angeles to Heathrow

San Francisco to Heathrow

Las Vegas to Heathrow

Europe

Heathrow to Athens

Gatwick to Athens

South Africa

Heathrow to Johannesburg

Heathrow to Cape Town

Asia

Heathrow to Tokyo

Heathrow to Hong Kong

Heathrow to shanghai

Heathrow to new Delhi

Caribbean

Gatwick to Barbados

Gatwick to st.lucia

Gatwick to Antigua

Airlines partnership – In the year 1999 December virgin Atlantic airways has made its partnership with the Singapore airlines with the share they share 49% stake in virgin Atlantic airways that is for 600.25 million British pound .In that deal virgin Atlantic airways injected 59% of the investment part in the deal while the Singapore airlines has given the 49% of the investment deal in that

Singapore Airlines controls 94 aircraft reaching at total of 98 worldwide

Destinations. This partnership is a unique the companies both have different route

Networks that are complementary. Singapore Airlines and Virgin Atlantic both share

Passenger lounges and airport facilities as well as initiating frequent flyer program

development that is present there. Airlines alliance – the virgin Atlantic have the sharing of the airlines with the continental airlines Malaysia airlines as well as with the British midland they also having the marketing agreement with the ansett.The code-share agreement allows with Continental for a higher frequency also high quality service, and efficient competition by the enhancing services on London and New York routes. This will offers seven services both ways, connections for Virgin Atlantic flights entering the U.S.and with check-in only in London. The alliance with Malaysia Airlines offers the twice-daily service between London / Kuala Lumpar. The alliance allows for connections to Sydney to Melbourne. The code-share agreement with British Midland allows passengers from a number of the European destinations access to Virgin Atlantic’s worldwide for better service. The marketing association with the Anisette Australia provides customers travel via Hong Kong to Australian cities. In a cooperation with the Air India, Virgin Atlantic now offers increased service between United Kingdom and India. Virgin Atlantic offers higher frequency flights into South Africa, at the Johannesburg and Cape Town, through an and agreement with the Nationwide Airlines, which allows Virgin to capitalize on their service throughout the South Africa

Strategic planning for the virgin Atlantic airways

Objective – the main mission of the strategic analysis of the virgin atlantic airways

SAMPLE DESIGN

Since there are time and resource restraints, a specific population had to be identified in order to generalize and create relevant segments. Thus, the sample size decided contains 50 respondents and these 50 comprises of male and female. The population for this research are professionals residing in London out of which travel from virgin atlantic airways. The city was chosen on convenience basis. Convenience sampling involves using samples that are the easiest to obtain and is continued until the sampling size that is need is reached.

Type of Research: Descriptive Research

Sample Size: 50 people

Sampling Technique: Convenience

Quantitative approach will be used where substantial datasheets as well as the inclusion of tables and statistics shall be made.

DATA COLLECTION

PRIMARY DATA: Primary data is fresh data collected and used first time in research. The primary data is collected through personal communication. Data was taken by questionnaire method which is directly collected from relevant respondents in various markets of London.

 

SECONDARY DATA: As name suggest, secondary data means data which already exist somewhere. It might have been used somewhere and we just have to collect it. The secondary data is collected through media advertisement, company’s catalogue & poster or through website or internet, existing databases , published articles, biographical accounts .

Primary data

Q1) how often you travel from the virgin atlantic airways?

Majority population said they frequently travel from virgin atlantic airways.

Q2) which travel class would you prefer in virgin atlantic airways?

20 of the people said they often go in economy class and business class.

Q3) how often you visit the virgin atlantic airways website?

In this 20 customer told they often visit website.

Q4) Do you think virgin atlantic airways gives value for money?

Majority of the population told yes they think virgin atlantic airways gives value for money

Q5) Do you prefer british airways or virgin atlantic airways?

In this people gave 20 people said british airways and 30 people said virgin atlantic airways opinion about both the airways.

Q6) On what basis you choose the virgin atlantic airways?

In this majority people said because of the low cost flight they want to fly with virgin atlantic airways.

Q7) Any bad experience with virgin atlantic airways?

It stated that majority people face no problems with the airlines if some faced that was because of the staff.

Q8) Is virgin atlantic airways are on time?

40 people was having no problem with the virgin atlantic airline times they are happy.

Q9) Virgin atlantic airways inflight service was gud rate?

Inflight services was excellent according to the majority.

Q10) how is the management of the virgin atlantic airways?

Majority of the people said the management needs to be improve more

Swot analysis

The main planning can be done by swot analysis that means strength, weakness, oppurnity and threats of the virgin Atlantic airways .the swot analysis can be carried out in place ,person and the product.

It also helps in the major forecast and facts of the company that comes from the internal and external factors those are present there.

After the internal and external factors we can state many primary and secondary strategic issues those are conforming the organization.

Now by doing the strategic formulation that is build on swot analysis can be done to confront the organization to capitalize on the opportunities there threats alleviate internal weakness of the virgin Atlantic airways .

Strengths –

The virgin Atlantic airways are a brand name that is known by 98% of the population.

They have a good team work there management is very good.

They have good in flight facilities there like good food beverages music etc.

Nice airbus

Innovative features

They provide competitive pricing for the business class offer good services.

They have other virgin brands too

The most beneficial thing is the virgin Atlantic partnership with the Singapore airlines so that the routes are easy not overlapping and it also allow the core competencies.

There returns are higher value are great load factor is better.

Positive publicity

Weakness –

Their main focus is on London

They have some undeveloped areas those are present there .

Flight efficiency need to be improve

No flight delays

There travel routes are very limited

There hot air magazine is very different from the traditional advertising magazine that include articles and many news

Redirected towards the galactic project

There alliances are still in the maturity stage.

After the September 11 tragedy they had cut down there routes to the Chicago, Toronto and cape.

Late getting on the internet for the e-commerce, website and WebPages.

Opportunities –

They have more than 287 airports in only Europe.

Its intra euro dominance is not declared yet.

Highly increased tourism

Virgin Atlantic’s Asian market is really very good.

The technology adds the improvement that has advanced inventory system

Got the good flight internet.

E-commerce and navigation has been improved

The recession can be a very opportunities for the growth.

They have warehouse facility at London Heathrow airport.

Threats –

The major threat can be terrorism.

After the 11th September recession there effect the entire airlines industry

Fuel prices

The regulations on the airline mergers

The communication improvement could decrease the business trips of the passengers

The competitors are purchasing new aircrafts as compare to the the virgin Atlantic airways.

Focusing more on the brand image not on the important products.

Objectives – any organization seeks the multiyear for its results are through their objectives those are present there. these objectives are its profitability return on the investment, also on its competitive position its technological lead Its productivity, its employee relations, its public responsibility, and its employee development The virgin Atlantic regional director stated that the “To maintain the safely of the customer environment through necessary the security procedures. Also to the concentrate on a core competencies by the consolidating routes of the directly related to the down. Workforce of the remain profitable while the targeting business of the passengers Strategies – Strategies are the statements of how a objectives are has to be achieved. These are usually long- term strategies and the necessitate of many different approaches there such as the product development its joint ventures and the strategic alliances. The Generic strategies such as low cost its differentiation and focus strategies characterize at the competitive orientation of the firm marketplace. In the order to remain profitable of the Virgin Atlantic has focused on core competencies. The company is a currently focusing on its strategies that sustaining greatquality.service and the maintaining a relationships with its Upper Class customers. This has been resulted to the virgin Atlantic in the closing of routes of the Toronto- Chicago and Cape Town. The company has also been reduced the amount of flights a day and personnel by 24% per route those are across the North Atlantic of the world. For example san Francisco routes.

Situational Analysis

The situational analysis given in there that involves analyzing, monitoring the past trends of the current situation its predicting future situation. This involves the formation of the analysis cooperative environment its competitive environment its economic environment its social environment its political environment and also its legal environment.Air travel is a living through the perhaps greatest upheaval in the history.

Liberalization its privatization the competition doing code sharing its alliances god e-commerce and massive financial pressures are the forcing an radical reorganizing within that industry. Air

travel is the one of the world’s largest industries that is generating over $300 billion revenues.

Developments that take place in the airline industry has been traced back to 1991at that time when the combinations of the Gulf War and the United States recession led to a 5% decrease in the international passengers formation after the analysis. Following are the 1991 initial growth came from the business travel as companies has became increasingly international in the investments of their supply and production changes that their customers forms there. Recently so the increasing use of the Internet is a further promoting the formation of the globalization trade. Consumers have engaged in the increased levels of a leisure travel targeting the worldwide population destinations due to the increases in a disposable. The Government in the developing countries has realized that the benefits of a tourism to their national economies also the facilitated forming development of a resorts and infrastructure to the encourage visitors from all over world. As economies of a developing countries have grown and their own citizens have already has become the new international tourists of future. A further stimulus to the air travel has been in the industry privatization, deregulation. In the early 1990’s, most airlines outside of US were state owned. Many had the poor levels of a efficiency so they required state aid in a order to support some of the routes. Now the major airlines have evolved towards in the partial private ownership. The US domestic market and its intra European market are the examples of its

the US has signed formed ‘Open Skies’ arrangements with the numerous countries around world.

This deregulation has given so many carriers freedoms to enter the new markets, though a

Experience of the US domestic deregulation suggests that this is the initial period of expansion is likely to be followed by the industry consolidation. The resulting competitive of the system pressures have to contributed to the declining trend in a airline yields so from which they have provided and added stimulus to the air travel growth. After this adjusting for inflation, airline revenues the per passenger kilometer are then about half the level of a 30 years ago. This yield decline had been matched by falling costs so assisted by developments in the aircraft technology and increasing efficiency and – between is in the early 1980s also in the late 1990s – falling oil prices. The trend is the increasing stage lengths has to also supported the decline in the yield per passenger-kilometer so the revenue terms airline industry growth has been closer to

2% a year then they only just ahead of the average world GDP growth rate

A number of the well-established markets are at or somewhere near the market maturity. This is to particularly the case markets in the developed countries that have to been already deregulated such as the formation of the US domestic market. The capacity constraints in termsof the congested airports there air traffic control systems are the limiting ability of some of most popular air travel destinations to the expand. By the September 11, disaster Virgin Atlantic Airways has operated a full Trans Atlantic flight schedule on time in order to clear the accumulation of the bereaved and stranded passengers. As of the October 2001, the airline has grounded five of its 737-200’s and reduced the activities by around 25% as a result of a long-term effects of September’s tragic events. “It is very much clear to everyone that there will be definitely significantly less traffic across the North Atlantic for some time,” said Virgin groups chairman sir Richard Branson. Virgin Atlantic has reduced its capacity across the North Atlantic by the cutting of its routes to Toronto and Chicago. Virgin Atlantic has also cut down the number of flights leavings an Francisco from two to one per day.23 The company will be taking all measures to minimize compulsory formation of redundancies by asking staff to come forward to the take unpaid leave redundancy. Virgin Atlantic is attempting to keep all members of the Virgin family employed in the Virgin group. For example, staff will be offered the chance to be

interviewed for employment with Virgin Active, Virgin’s leisure and health club

business. Virgin Atlantic is currently engaged in a £30 million expansion program in the

UK, which will create up to 700 new jobs over the next 12 months.

Competitive Strategy Analysis

Segmentation

Market segmentation is a process of dividing the market into groups of

Similar consumer and then selecting the most appropriate group for firm to serve. This is a

Concept that is achieved through one of the following six steps 1) firm’s current situation,

2) Determine the consumer wants and needs 3) the division of markets on relevant dimensions, 4) The develop product positioning, 5) The decide segmentations strategy, 6) The design marketing mix strategy. The percentage of UK originate passengers varies from the route to route but then on the average, there is a 50/40 bias to the UK. Upper Class passengers are predominately. Passengers in the Premium Economy are there split evenly between the traveling for business most are the male, average are of age 41. Those who are traveling on business are often doing the so because their company are operates an economy travel policy.

Economy passengers there are a much broader group so traveling mainly for the leisure,

Evenly spread across the most socio-economic groups and age ranges present there.

Targeting

Targeting is the when a firm has chooses one or more of the market segments as the specific

Target markets. Virgin Atlantic is a company that is it can considers every customer to be the

Upon evaluation of those questions that the company must be then assess opportunity in the

Target markets based on the segment size and the growth potential the competition the companies objectives and feasibility of the success in this market. Virgin Atlantic has been targeted upper class customers who are the primarily business passengers traveling on the transatlantic routes. Virgin Atlantic realized that the opportunity to gain a considerable market share through effective marketing of their “quality/ fun/ innovative/ honest/ caring airline.

Positioning

Positioning refers to the act of the locating a brand in which customers’ minds over and

Against the other products in terms of the product attributes and the benefits that brand does or

does not offer. There are so many of types different general strategies for the its positioning products present there Attribute that are benefit it quality and price to use or application, competition the high-tech and the high-touch and can be an achieve desired positioning.

Most significantly these Virgin Atlantic has an positioned itself as direct the competitor to the

British Airways on all routes. Firstly the Virgin Atlantic was a the extremely aggressive in

Obtaining slots at Heathrow International Airport. The Virgin Atlantic attacked Proposed a the British Airways and American Airlines so the partnership stating that unhealthy the for competition. The Virgin Atlantic has an strived to the compete with British Airways onall routes into and out of London. Virgin Atlantic attracts the customers by being fun and the innovative. On aircraft Passengers are experiencing spacious setting arrangements also state of the art in-flight entertainment system was the most importantly a high level of customer service. In addition to the Virgin Atlantic offers a distinctive upper class services at business class prices present there. Furthermore the Virgin Atlantic is installing the Internet capabilities and is implementing Galileo’s Inside Availability (R), the high-tech inventory management system.

Marketing Tactics

Differentiation

This is to realizing that the marketing strategy with regard to all interrelated factors

That differentiate one company there from another. These may be product the differences,

Customer satisfaction the customization of products and the services to suit the market segments.

Virgin Atlantic has been differentiated to their product by taking there customers’ expectations one step further through the communication with customer. A prime example can be seen in the

giving in flight ice cream, something other airlines do not offer there.

Marketing Mix

The marketing mix determines the combination of the – product/ price/ place/

Promotion – to be used online with marketing strategy. Virgin Atlantic has sought the

offer a fun and to innovative product with the high quality service and good convenient locations for the customer. Virgin Atlantic offers flights worldwide all in three distinct classes: upper class-

Premium economy – economy.

Upper class

They give Complimentary limo service onto the both sides of the Atlantic.

The Drive Thru checks in from limo.

In-flight beauty therapy available massages and manicures etc

The Freedom menu – restaurant style cuisine at any place and time.

The Onboard stand-up bar

The Personal 10.3 inch video screen.

Ergonomic seats with over the 6 feet of sleeping space.

Sleep service giving pajamas, full size pillows, and fleece blankets.

A dedicated nice sleeping area.

Premium Economy

They provide dedicated check-in desk.

Priority to the baggage handling.

Flexible ticket has to give no penalty for last minute changes.

Separate cabins given.

Comfortable and wider seats with up to 5 inches of the extra leg room

The Seatback video screen.

The Preflight champagne.

Fruits throughout the flight and ice cream serve during movies.

Free and nice amenity kits

Fast track-priority service through the immigration.

Economy

Providing Seatback video screen with the up to 44 channels of movies, music, food and video games.

The Choice of the three entrees that including a vegetarian option

A must Complimentary beverages, including cocktails etc

The Free amenity kits.

Children’s services that including K-iD backpacks, TV channels special meals for them.

Ice cream serves during the movies.

The Virgin Atlantic also offers transfer options given to upper class passengers that including

a limo service to the airport on both sides of Atlantic. A first class ticket is given on

Heathrow and Gatwick expresses both to provides limo services from Paddington Station and the

Victoria Station to the customers final destinations, and a two-day car rental for each of the sector. Virgin Atlantic offers exclusive use of clubhouses for the upper class

Passengers, including the Virgin touch beauty salon-massages/ facial/ barber services at

Heathrow and Gatwick airports. Also it included are the business facilities/ restaurant style dining and the full-service bar.

Selling

They are efforts to induce consumers to buy the things what the good company has to offer

Set in line with equally the marketing strategy. The Virgin Atlantic targets specific type of customers by making them communicating overall comfort and the quality of the airline by providing the identifiable customer service. So the Virgin Atlantic sells tickets primarily easily through the Internet, by travel agents also by direct communication with customers.

Integrated Marketing Communications

Integrated marketing communication is also defined by American Association of the

Advertising Agencies (AAAA) as a concept of marketing the communication planning

That have to be recognized by the added value of comprehensive plans that evaluates strategic roles of the variety of a communication disciplines – for a example general advertising and direct response/ sales promotion/ public relations combines these to them disciplines to aprovide clarity forms consistency and maximum communication impart on that year. The Virgin Atlantic uses a wide range of the marketing techniques. Advertising activity that Includes direct mail/ TV/press/ magazines/ outdoor posters and taxi sides present all over the featuring their most distinctive logo was the flying lady. Advertising is the used to encourage the people to fly with the Virgin Atlantic, to raise the awareness of new product that was developments and to the informed customers about the new routes. For example, NBC primetime series “Friends” featured sir Richard Branson with characters flying the Virgin Atlantic to London. In the year 2001 Virgin Atlantic was

Spent about 9 to 10 million dollars on the campaign linking with Virgin with movie “Austin

Powers: Spy Who Shagged Me.” So they painted and enlarged Austin Powers on the

Tail, also the Virgin was rebranded “Virgin Shag antic”, that was

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