Picture Of Premium Economy Seating Of Virgin Atlantic Marketing Essay

Published Date: 23 Mar 2015

Virgin Atlantic Ltd. is a major British success story. From its first leased jumbo to the UKs second largest long haul airline, weve come a long way, and theres still much more to do! (virgin-atlantic.com, 1992)

. Virgin Atlantic ltd. launched the first super economy service that became and transformed in a winning Premium Economy. The organization spend money during the nineties in acquisitioning new planes, expanding the route network and

Looking forward for the improvement of the passenger service. In 1999 the board of directors of Virgin Atlantic agreed to dell a 49% of the stake to Singapore Airlines adding a value of £1.225 bn. (virgin-atlantic.com, 1999)

Building with much attention the Business class, launching in 2003 the longest and most comfortable flat bed and seat, the organization revolutionary called it "Upper Class Suite". (virgin-atlantic.com, 2003)

Picture of the Upper Class Suite

Than in March 2006 at Heathrow the new Virgin Clubhouse opened. Games room, hair saloon, cocktail bar, cowshed spa are amongst the many features of the flagship lounge. (virgin-atlantic.com, 2006)

Picture of Virgin Atlantic Ltd. Clubhouse at the HEATHROW airport

Economy class and Premium Economy passengers got a brand new check in facilities at Heathrow Terminal Three in 2007. (virgin-atlantic.com, 2007)

The Upper Class Wing appeared as well for the Upper Class Passengers offering a private security corridor for speeding up the checking in. (virgin-atlantic.com, 2007)

Picture of premium economy seating of Virgin Atlantic Ltd.

In 2008 between London and Amsterdam Virgin Atlantic pioneered for the first time a biofuel demonstration with Boeing and engine manufacturer GE Aviation on a 747 plane. It proved once again the innovative aspect of a commercial line using biofuel. (virgin- atlantic.com, 2008)

TASK 1 a: Examine a few definitions (at least two) of marketing and explain the marketing process with example drawn from your chosen organization.

According to the American Marketing Association (AMA) Board of Directors, Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. (american marketing association.com, 2012)

Marketing is "the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit.  Marketing identifies unfulfilled needs and desires. It defines measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services." (Dr. Philip Kotler, 2012) 

Marketing is "The management process responsible for identifying, anticipating and satisfying customer requirements profitably." - (The Chartered Institute of Marketing, 2012) 

"Marketing is the process of anticipating, managing, and satisfying the demand for products, services, and ideas." - (Wharton School, University of Pennsylvania, 2012)

 The marketing process which Virgin Atlantic is using involves a wide range of techniques. Therefore:.

Advertising at TV

Advertising in the press and magazines

Advertising on the outdoor posters and taxi slides. "Advertising is used to encourage people to try the airline, to raise awareness of new product developments and new routes". (virgin-atlantic.com, 2012 )

Among other techniques Virgin Atlantic also uses tactical promotions and price advertising in particular during traditionally low seasons to maximize the capacity of the aircraft. Direct Mailing to customers in order to encourage trials and support regarding the line product. The flyer programme is another Virgin Atlantic advertising procedure for encouraging loyalty among the existing customers and strengthening the flying club members. Thus the loyal clients are getting offered miles which can be exchanged for free flights, and other benefits, , e.g., a "one call does it all" (virgin-atlantic.com, 2012) support service and Clubhouse access.

Travel agencies are Virgin Atlantic primary distribution source for the airline seats. In addition there are packages familiarization trips and educational/social events. (virgin-atlantic.com, 2012)

Task 1 b: Explain the various marketing concepts and evaluate the cost and benefits of adopting marketing orientation in your organization.

Marketing Tactics

Differentiation

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

that differentiate one company from another.41 41 Keegan, Warren J & Green, Mark S., Global Marketing, 2nd Edition, New Jersey: Prentice Hall, Page 40,

2001

These may be: product differences,

customer satisfaction

or customization of products and services to suit market segments

. 41 Keegan, Warren J & Green, Mark S., Global Marketing, 2nd Edition, New Jersey: Prentice Hall, Page 40

Virgin Atlantic has differentiated their product by taking the customers' expectations one

step further through communication with the customer. A prime example can be seen in

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

When a firm is market-oriented: product and brand management implications are on the focus as well as in the case of Virgin Atlantic the services for the customers. What it makes the differences between the Virgin Atlantic flights comparing with British Airways flights?

A market-oriented firm is a business-model innovator, a product-market pioneer and a brand developer (Bryan A. Lukas, 2012)

Customer oriented

Competitor oriented

Collaborator oriented

A five year contract signed between OSyS (fuel management software company, a wholly-owned subsidiary of Rolls Royce) and Virgin Atlantic could bring £ 20 million a year and in fuel efficiency savings 92,000 tones a year. Thus what Virgin Atlantic is looking for is a sustainability programme called the Fuel Management Solution (FMS) which will underline the airline's "Change is in the Air" motto. The company is expecting to deliver significant cost benefits mostly because at the time being the price of fuel is consistently at very high levels.(virgin-atlantic.com, 2012)

The system will collect 300 items of data per flight to drive efficiencies, and will monitor areas like how arrival delays and holding patterns are affecting fuel usage, pilot techniques and fuel use on the ground. "This really is a very exciting phase in our commitment to drive fuel efficiency and carbon reductions. We have had initiatives in place for many years which are generating significant benefits, however the OSyS tool will truly be a step change for us." (Corneel Koster, director of operations, safety and security at Virgin Atlantic, 2012)

This is what Virgin Atlantic is looking for:

About 1.4 tones of fuel on each flight it is estimated to be saved

3.15 tones of CO2 will be saved for the planet with every tone of fuel burned

This equates to 4.41 tones CO2 saved per flight.

Multiplied by 21,000 flights a year means 92,610 tones of CO2 saved a year

"Our engineering colleagues now look forward to getting quantifiable reports on how maintenance drives fuel savings, and our pilots look forward to getting more fuel-related facts at their fingertips to drive their decision making."( Corneel Koster, director of operations, safety and security at Virgin Atlantic, 2012)

Virgin Atlantic benefits are according to the owner "the recognition and rewards they truly deserve for the hard work they do" mentioning the company employees and the passengers.

pension

life assurance and spouse& dependants benefits

income protection

airshare - profit share

private medical plan

childcare benefit

holiday purchase

season ticket loan

staff store& saloon and gym (Richard Branson, 2013)

Task 2 a; Analyze the macro and micro environmental factors that influence the marketing decisions.

SWOT Analysis

The next segment of reviewing a firm's strategic plan is to perform a SWOT

analysis. This entails identifying a firm's internal strengths and weaknesses and their

external opportunities and threats.

After analyzing the external environment and internal resources, strategic decision

makers have the information they need to formulate corporate, business, and financial

strategies of the organization. A comparison of strengths, weaknesses, opportunities, and

threats is normally referred to as a SWOT analysis.

A SWOT analysis helps executives

summarize the major facts and forecasts derived from the external and internal analysis.

From this, executives can derive a series of statements that identify the primary and

secondary strategic issues confronting the organization. Strategy formulation builds on

SWOT analysis to utilize strengths of the organization in order to capitalize on

opportunities, counteract threats, and alleviate internal weaknesses. In short, strategy

formulation moves from simply analysis to devising a coherent course of action.10

10 Bateman & Snell. Management: Building Competitive Advantage, 4th Ed., 1999.

The findings of a SWOT analysis are the basis for developing objectives and

strategies that can be implemented in a company's strategic plan. Therefore, it is

important for companies to continue to perform SWOT analyses, because external andinternal factors affecting companies are constantly changing. New strategies need to be

developed and old ones need to be revised in order to reflect the current internal and

external conditions that affect a company.11

11 Pearce & Robinson, Strategic Management: Formulation, Implementation, and Control. Sixth Edition,

Page 171, 1997.

Internal strengths and weaknesses are activities that a company performs

particularly well or poorly. These internal activities stem from all departments and

components of a business. After a company identifies its strengths and weaknesses, it

should then develop strategies that capitalize on its strengths and minimize or improve its

weaknesses.12

12 Pearce & Robinson, Strategic Management: Formulation, Implementation, and Control. Sixth Edition,

Page 171, 1997

External opportunities and threats are events that occur outside of the company

and are events that the company has no control over. Companies benefit from external

opportunities and are harmed by external threats. It is important for a company to

recognize its external opportunities and threats so it can formulate strategies to take

advantage of future opportunities and to avoid future threats.13

13 Pearce & Robinson, Strategic Management: Formulation, Implementation, and Control. Sixth Edition,

Page 171, 1997.

Strengths:

· Virgin Brand recognized by 98% of British Public.14

(14 Millenium Group, Re-inventing Retail Financial Services Research and Development Programme,

November 1996 Report 2: Creating and Delivering Value, 3.5 Virgin - Innovative New Entrant,

http://www.millenn.co.uk/96Reps/96Rep2.pdf)

· Clients expect good customer service in each separate class Business/Economy.

· Virgin Atlantic introduced innovative technology: including in flight music, ice

cream, games, and movies

· New in flight innovation is offered to gold club holders or J-class with lounges

offering quality food and comfort.

· Quality trained employees recruited from other airlines.

· Virgin Atlantic is spawned from as a private company allowing for other Virgin

brands and more control.

· Richard Branson's innovative entrepreneurial management.

· Competitive pricing for business class offers more services.

· Partnership with Singapore airlines because they are the minority shareholder at

49%. The reason why this partnership is beneficial is because their routes are

non-overlapping and the partnership allows the transfer of core competencies.

· Load factor is better than competition; therefore, returns are higher and value is

greater.

· Positive publicity, in regards to winning every quality award known to man.

Weaknesses

· Flight delays: need to improve flight efficiency.

· The travel routes are limited.

· Hot Air magazine separate from traditional airline advertising magazines

including articles and marketing advertising.

· Cut routes to Chicago, Toronto, and Cape in relation to the September 11 tragedy.

· Late getting on the Internet "Missed the Boat" for web site, web page, and ecommerce.

· Richard Branson is a one man manager being the owner and director of multiple

companies.

· Costs associated in the overhead of keeping two five star chefs, lounge, and limoservice.

· Virgin's reliance on Trans Atlantic traffic makes them more vulnerable to the

drop in demand for travel to and from the U.S.

Opportunities

· Strategic Marketing above the rest utilizing by being innovative, fun, maintaining

values, caring, and produce quality.

· Technology adds improvements (Galileo) an advanced inventory system.

· In flight Internet connection.

· Web site needs to be improved possible weakness for e-commerce and regular

web site navigation.

· Generate additional routes.

· Virgin Galactic, we are flying into outer space.

· Warehouse facility -Heathrow, London.

· Recession may be an unexpected opportunity for investment

· On-line strategy in targeting branding and ongoing ad campaigns, through on-line

media planning and buying account

Threats

· Recession, September 11th will and has affected the entire airline industry, order

cancellations, risk aversion for flying customers

· Brand Dilution by a rapid expanding brand image may be too global and not

focused towards the important products.

· Competition for routes British and United.

Fuel prices are fluctuating, which accounts for 15% of total airline expense

Objectives

The results that an organization seeks over a multiyear period are its long-term

objectives. Such objectives typically involve some or all of the following areas:

profitability, return on investment, competitive position, technological leadership,

productivity, employee relations, public responsibility, and employee development.15

15 Parker, J. Paul & Donnelly Jr, James H., Marketing Management Knowledge and Skills 6th Edition, New

York: Irwin/McGraw-Hill, Pages 17-19, 2001.

Eric Starks, Virgin Atlantic Regional Director, stated the following objective: "To

maintain a safe customer environment through the necessary security procedures. Also to

concentrate on core competencies by consolidating routes, directly related to downsizing

workforce, to remain profitable while targeting business class passengers."

Strategies

Strategies are statements of how objectives are to be achieved. These are usually

long- term strategies and necessitate many different approaches, such as, product

development, joint ventures and strategic alliances. Generic strategies such as low cost,

differentiation, or focus strategies characterize the competitive orientation of the firm in

the marketplace.

In order to remain profitable Virgin Atlantic has focused on its core

competencies. The company is currently focusing its strategies on sustaining great qualityservice and maintaining relationships with their Upper Class customers. This has

resulted in the closing of routes to Toronto, Chicago, and Cape Town. The company has

also reduced the amount of flights a day and personnel by 20% per route across the North

Atlantic.16 Eric Starks, Regional Director, Virgin Atlantic, 10-21-01, 2001

For example, the San Francisco routes were reduced from two flights to one

flight per day.

BRTISH AIRWAYS

VIRGIN ATLANTIC

CONCLUSON

One of the biggest changes has been the growth of social and digital platforms. From a BA perspective, that has meant ensuring the technology enables us to do all the best things that we do. We've done a fair bit of co-creation work in big social forums and used our communities online to get regular feedback. That has required us to think quicker, smarter and react. You need to have two-way conversations with customers, which means listening and responding

(Abigail Comber, British Airways head of brands and marketing,2012

)&(marketingweek.co.uk,

2012)

"Our objective in producing this TV ad was to bring to life the 'it' that makes Virgin Atlantic such a special and unique airline," said Paul Dickinson, director of sales and marketing at Virgin Atlantic. "We were keen to do that in a highly memorable, eye-catching and amusing way."

(guardian.co.uk,2010)

Much more will ride on the airline's transatlantic joint venture with Delta, which still awaits clearance. Virgin is to file for anti-trust immunity within the next two weeks to the US department of transport to ensure the plans can go ahead. The airlines must also wait for approval from the European competition authorities and the US department of justice for the deal, which will see Delta take a 49% stake in Sir Richard Branson's airline.

(guardian.co.uk,2013)

We're pulling out some of the real differentiation points about flying BA versus low-cost carriers. Some of the things that you might expect to be included but are not with low-cost carriers can add up to a lot of money. On the BA website there is a value calculator that shows how costs can add up to more than £70 in extra charges for things you would reasonably expect to be included, such as paying with a debit card, taking a small bag with you and having a snack and drink on board.

With losses expected to exceed £125m this year, topping last year's £80m deficit, Virgin is looking to modify its model. Its new "Little Red" services to Aberdeen, alongside the Edinburgh and Manchester routes it has started flying in the past week, are primarily designed to feed more connecting British passengers into its long-haul network.

(guardian.co.uk,2010)

British Airways:

use social and digtal platforms

use feeback from customers online i.e listening and responding to the customers n order to improve the services

Virgin Atlantic:

promoting new tv advertising every year in order to attract customers

a joint venture will solve the losses of Virgin Atlantic Ltd.

more british pasangers into inside routes

(marketing week.co.uk,2012)&(guardian.co.uk,2013)

.

Task 2 b: Examine the concept of segmentation and recommend segmentation criteria and targeting methods to be used for two products in your chosen organization.

Segmentation

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

similar consumer and selecting the most appropriate group(s) for the firm to serve. This

concept is achieved through the following six steps 1) delineate firm's current situation,

2) determine consumer wants and needs, 3) divide markets on relevant dimensions, 4)

develop product positioning, 5) decide segmentations strategy, 6) design marketing mix

strategy. 33

33 Parker, J. Paul & Donnelly Jr, James H., Marketing Management: Knowledge and Skills 6th Edition, New

York: Irwin/McGraw-Hill, Page 71, 2001

The market segmentation concept is to understand better the needs of customers and what it makes them to decide between one offer and another. Therefore the target is to form groups of customers who are sharing the same or similar value criteria. After this an organization is then able to determine what group of customers are best suited to serve and which product and services are to be offered. (marketsegmentation.co.uk, 2013)

The main objective of segmentation is therefore how to win and keep the customers that are to be served." The process of splitting customers, or potential customers, in a market into different groups ,or segments within which customers share a similar level of interest in the same or comparable set of needs satisfied by a distinct marketing proposition." (marketsegmentation.co.uk, 2013)

Virgin Atlantic is underlining the demographical segmentation i.e. entertains business travelers as well as leisure travelers. Therefore it makes no difference for their customers regarding the status, the gender or the age. Thus they allow children ages 5 and above to travel, and if the child is under 5 years old than the kid should have guardians either their parents or someone aged 16. The Virgin Atlantic is also opened in accepting pets, trained pets which are accompanying blind people. In the same time Virgin Atlantic are accepting family friends, entire families and of course business travelers.(virgin-atlantic.com, 2013)

According to the company site the originating passengers are varying depending by the route they choose. Therefore the average is a 60/40 customers which are based in UK. Virgin Atlantic has 3 different flight classes. The Upper Class passengers are predominantly business travelers. A portrait can be assumed as male,35 to 45 years old with an average income of £50 K plus per annum. (virgin-atlantic.com, 2013)

Customers belonging to Premium Economy Class are separated 50/50 as travelling for business as well as for leisure. A portrait defined them as male,41 years old and the business customers on this class are considered doing very often flights because mainly o the company operating economy travel policy. Meanwhile the customers for the Economy class are travelling mostly for leisure and they are evenly spread across most socio economic groups and age ranges. (virgin-atlantic.com, 2013)

Task 2 c : Identify factors that influence buyer behavior and propose a new positing strategy for a product or service of your organization.

Positioning

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

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

does not offer.38 There are many different general strategies for positioning products.

Attribute or benefit, quality and price, use or application, competition, high-tech and

high-touch, can achieve desired positioning.39

Most significantly, Virgin Atlantic has positioned itself as direct competitor to

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

obtaining slots atHeathrow International Airport. Secondly, Virgin Atlantic attacked the

proposed British Airways and American Airlines partnership stating that it was unhealthy

for competition. Finally, Virgin Atlantic has strived to compete with British Airways on

all routes into and out of London.

Virgin Atlantic attracts customers by being fun and innovative. On the aircraft

passengers experience spacious setting arrangements, state of the art in-flight

entertainment system, and most importantly a high level of customer service. In addition,

Virgin Atlantic offers a distinctive upper class service at business class prices. Furthermore, Virgin Atlantic is installing Internet capabilities and is implementing

Galileo's Inside Availability (R), a high-tech inventory management system.40

39 Keegan, Warren J & Green, Mark S., Global Marketing, 2nd Edition, New Jersey: Prentice Hall, Page 40,

2001.

40 PR News Wire, London, Virgin Atlantic Implements Galileo International, 5 September, 2001

Figure 2 (marketing91.com, 2013)

Virgin Atlantic organization when it comes to socio-cultural issue says:

despite of low income, have quality staff

sense of responsibility for entertaining the customer needs and wants

sense o fun while working hard

satisfaction offered to passengers

attentive and dedicated employees

(virgin-atlantic.com, 2013)

"Our objective is to fly a profitable airline that people love to fly and where people love to work. Our focus is on further improving customer services for our business and leisure travelers, as well as setting new standards for the rest of the industry to follow. Our strategy is to ensure we offer the best business product in the air, grow our leisure business even further, and run an efficient but effective global airline."(sir Richard Branson, 2013)

Task 3 a : Using your chosen company, explain how products are developed to achieve sustainable competitive advantage.

Brand Values

A brand is a complex bundle of images and experiences in the customers' mind.

A brand represents a promise by a particular company about a particular product.47

Brands allow customers to seek out particular products and to differentiate between

products.

The Virgin brand has been built on Branson's shrewd ability to exploit

weaknesses in competitors' customer service skills, as well as a flair for self-promotion.

Sir Richard's business philosophy is built around reputation, quality, innovation, and

price rather than image.48 The Virgin brand is recognized by Interbrand as one of the top

50 global brands.49 Gordon Maw, Virgin money's marketing manager, explained that

Virgin has four key business areas - mobile, airline, entertainment and financial services servicesand

that the group is now working to build the Virgin brand globally based around these

four core propositions.50

People all over the world increasingly prefer Virgin Atlantic's brand image.

Virgin's award winning reputation has introduced quality and experience into airline

travel. Consumers and business travelers with limited experience in international travel

are highly likely to choose Virgin Atlantic rather than other airlines. These prestigious

awards influence a customer's choice ofVirgin Atlantic for their travel needs. Virgin's

Atlantic's web page describes their brand image encompassing the following words:

caring, value, fun, innovative, quality, and honesty.51

Virgin Atlantic was originally conceived by Richard Branson to offer the best

possible service while delivering the best possible value at all times. Internationally

recognized as a fun-loving and highly innovative brand and one that is admired for its

friendliness, intelligence, and integrity.52

48 Alison Smith, "A Genius for Publicity," Financial Times (August 4, 1997) p.9.

49 Marketing Week, Centaur Communication Limited, 2 August, 2001.

50 http://www.lexis-nexus.com

51 http://www.virgin-atlantic.com

52 http://www.virgin-atlantic.com

Service (The Branson Factor)

This is the company's principle for increasing the quality of service delivered to

its customers. 53 Virgin Atlantic strives to offers service to satisfy total customer needs.

Mr. Branson's entrepreneurial attitude towards innovative publicity is seen in his

fearless reputation for antics such as ballooning across the Atlantic Ocean. Virgin

Atlantic's Managing Director, Steve Ridgeway is an equally passionate advocate of brand

values and shares Richard's irrepressible spirit of adventure, having been his co-pilot in

the record-breaking speedboat crossing of the Atlantic in 1986.54 Virgin Atlantic's

management attitude has played an important part in the widespread global success of the

Virgin brand and promoting the values with which consumers can identify. In the

following quote, Sir Richard Branson clearly represents the ingenuity within the Virgin

Empire.

"A brand name that is known internationally for innovation, quality and a sense of

fun - this is what we have always aspired to with Virgin."

53 Keegan, Warren J & Green, Mark S., Global Marketing, 2nd Edition, New Jersey: Prentice Hall, Page 40,

2001.

54 http://www.virgin-atlantic.com

Virgin Atlantic is announcing that successfully completed its biggest ever product investment programme according to their reports of 2012 financial results. Thus the organization reported:

increase in revenue

increase in passenger number

increase in cargo sales (virgin-atlantic.com, 2012)

In February 2012 Virgin Atlantic invested £100m in the Upper Class product:

cabin with new seats and bar

new menu and new service

New York JFK opened a new Clubhouse

November 2012 opened a new Clubhouse in New York city and Newark city

new route launched from Manchester to Las Vegas

to be delivered in 2012 six Airbus A330 (virgin-atlantic.com, 2012)

"In an incredibly challenging market, we have managed to grow top line revenues and fly more customers than last year. However, with the prevailing uncertainty in the economy, sky high fuel prices and a 25% hike in our air passenger duty fees, converting this sales growth into profit has not been possible.(Virgin Atlantic CEO Steve Ridgway)

Task 3 b : Evaluate a range of distribution methods to provide convenience to a target group of customers in your chosen organization.

Virgin Atlantic innovative culture enhances customer experience with real-time proactive chat. On august 8,2012 the organization implemented with success the LivePerson Chat experience. In this sense, the LP Chat is focusing on 2 main goals:

answering customers questions in real-time online

improving sales to online tickets (prnewswire.com, 2012)

Because of this new experience Virgin Atlantic successfully improved customer satisfaction by saving them from emailing or calling. Also the organization reduced the costs per interaction when it compared to email and phone channels. (virgin-atlantic.com, 2012)

"LP Chat has become a core feature of our customer service program, particularly in crisis situations, allowing us to reach a large number of customers with personalized support,"(John Giddings, General Manager, Virgin Atlantic Contact Centers US and UK, 2013).

"The results we've experienced with LP Chat in terms of conversions have exceeded expectations so much so that we plan to increase the number of agents available via live chat to best service our customers." (John Giddings, General Manager, Virgin Atlantic Contact Centers US and UK, 2013).

The results speak for themselves:

Improved rates of conversion : it has been realized that the customer who is using LP Chat is converting at nearly 3.5 times the rate of those who are not using it

An average increase of order value : the average order value of those who chat increased more than 15% comparing with those who self serve

Costs are reduced: Thus the cost per chat is cheaper than both phone and email, saving on labor costs

Customer experience improved: Customer Satisfaction got to a score of more than 80% and their needs are fulfilled in real time.

Planning resource much better: The platform has reduced email volume and backlog, allowing customer inquiries to be dealt with at first contact.(John Giddings, General Manager, Virgin Atlantic Contact Centers US and UK, 2013).

"Virgin Atlantic is well known for its innovative and customer-centric approach to airline passenger services. By implementing Chat, Virgin Atlantic is able to provide an online engagement experience that is both consistent with their leading brand and valuable to their business," (Tony Heyworth , Director International Marketing, LivePerson, 2013)

Task 3 c : Discuss the various pricing methods used by business and critically evaluate the pricing strategy of your organization.

Virgin Atlantic is the second largest airline in the UK, successfully being the first in:

Having individual TVs in all classes

providing child safety seats

offering a super economy service

having no smoking flights

having drive-thru check-in

allowing mobile connectivity and SMS texting on board

having an arrivals lounge

having at-seat podcasting

flying one of its planes using biofuels.( innovationleaders.org, 2006)

In order to catch the target market's imagination introduced for the first time Upper Class service providing" first class experience at a business class price" thus changing the customer perception of business class travel. ( innovationleaders.org, 2006)

Because competitors responded with similar products, Virgin Atlantic introduces in 2003 the Upper Class Suite. The concept was about introducing a flip over chair providing a completely flat bed and a wider seat than any other alternative airline. On the top of this it included also an in-flight cocktail bar, on-board massage as well as personal limo services for customers. ( innovationleaders.org, 2008)

In 2006 Virgin Atlantic opened its new £11m Heathrow Clubhouse which changed fundamentally the perception of what a lounge could be. "More like a cross between and night club and a private club, it contains a myriad of features ranging from a long bar, a deli, a brasserie, a poolside lounge, a library and a rooftop garden through to a Cowshed branded spa which houses four massage bays, a sauna, six steam-shower rooms, sun-tan booths and, for those fancying a quick dip before flying, a hydro-pool!"( innovationleaders.org, 2008)

Task 3 d: Explain the concept of integrated marketing communication and discuss the elements of promotional mix as relevant to your organization.

Definition: Integrated marketing communication is "A management concept that is designed to make all aspects of marketing communication such as:

advertising,

sales promotion,

public relations, and

direct marketing work together as a unified force, rather than permitting each to work in isolation".( marketing.about.com, 2013)

Integrated marketing communication is defined by the American Association of

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

that recognizes the added value of a comprehensive plan, that evaluates the strategic roles

of a variety of communication disciplines - for example general advertising, direct

response, sales promotion, and public relations - and combines these disciplines to

provide clarity, consistency, and maximum communication impart.56

Virgin Atlantic uses a wide range of marketing techniques. Advertising activity

includes direct mail, TV, press, magazines, outdoor posters and taxi sides, all featuring

their distinctive logo, the flying lady. Advertising is used to encourage people to fly

Virgin Atlantic, to raise awareness of new product developments and to inform customers

about new routes. For example, NBC primetime series "Friends" featured Richard

Branson with the characters flying Virgin Atlantic to London.57 In 2001, Virgin Atlantic

spent 8 to 10 million dollars on a campaign linking Virgin with the movie "Austin

Powers: The SpyWho Shagged Me." They painted an enlarged Austin Powers on the

tail, and Virgin was rebranded "Virgin Shaglantic", featuring phrases such as: "There is

only one virgin on this billboard, baby!"58.

Virgin Atlantic operates a frequent flyer program, the Flying Club, to encourage

loyalty in its customers. In addition to offering miles that can be exchanged for free

flights and other rewards, Flying Club members are offered other support services and

clubhouse access. Virgin Atlantic has pioneered Internet marketing in the airline industry.

56 Belch, George E., Belch, Michael A., Advertising and Promotion, Fourth Ed. Page 9-12, 1997.

57 http://www.nyama.org/mhf98.htm

58 Goetzl, David, Virgin Atlantic Airways, Advertising Age, 26 June, 2000. Vol. 71, Issue 27, Page 37.

Their web site allows more efficient communication between Virgin Atlantic and

customers. Virgin Atlantic also utilizes an extensive customer database to further their

marketing initiates. Moreover, Virgin Atlantic plans to add Internet capabilities to their

aircraft. Virgin Atlantic has signed a contract with Tenzing Communications that will

connect travelers to the web through seat back television screens or passengers' personal

laptops.59

Virgin Atlantic's communications department works closely with their sales

department, supporting larger corporate clients and travel agents on joint marketing

activity. The Web site (www.virgin-atlantic.com) offers full electronic booking capacity,

allowing passengers to reserve and pay for tickets online, plus full destination

information and a comprehensive guide to the benefits of flying with Virgin Atlantic.

Flying Club members are able to use this web site to check their mileage balance,

rewards and earning opportunities while new members can subscribe online. An example

of Virgin Atlantic's unique advertising to flying club members was there Valentines' Day

campaign of 2001. The company sent 5,000 single red roses accompanied by a Valentines' Day card to journalists, young managers, and flying club members. The card

directed the recipient to the websitewww.fellingthorny.com. Upon logging onto the site,

a message on a pair of lips greets you "You've been kissed…...Virgin Atlantic."60

Virgin Atlantic has their own design team who continuously develops the Virgin

Atlantic's corporate identity through the use of literature, newsletters, posters, and other

creative media. An interesting feature of Virgin Atlantic Airways is their work with the

Virgin Healthcare Foundation. Virgin Atlantic sponsors an onboard charity, Change for Children, which supports four charities a year as well as a natural disaster relief program.

In 2000, Change for Children donated £401,850 to its chosen charities.61 Virgin Atlantic commission's quarterly customer satisfaction studies are

conducted by the prominent market research organization NOP.62 The surveys monitor

the punctuality of flight departures, the length of check-in-lines, and the quality of inflight

entertainment and service. The results of these surveys provide the airline with

valuable information on which to base improvements in its services. Virgin Atlantic also

participates in industry-wide surveys conducted by IATA (International Air Travelers'

Association), TAPS (Transatlantic Passenger Survey) and SPEAR (Survey of Passengers

on Europe Asia Routes).63

These provide an evaluative benchmark for customer services.

Virgin Atlantic's Press Office handles all direct communication with the press,

television and radio. The Press Office drafts and distributes press releases providing

journalists with information about Virgin Atlantic, as well as organizing press briefings,

running press conferences, accompanying the press on new routes while creating

opportunities for national and overseas media exposure. Sir Richard Branson openly

admits that his most important and highest paid employee is his Public Relations and

Communications Director, Will Whitehorn. Virgin Atlantic also is continuously involved in sponsorship programs. Virgin

Atlantic has their own communication program aimed at staff within the company. With

regards to promoting the company, Virgin Atlantic has an events team that organizes

press launches and other activities.

59 DiSabatino, Jennifer, Virgin Airways Set to Fly the Wired Skies, Computer World Online, 27 March,

2001.

60 http://www.virgin-atlantic.com

61 http://www.virgin-atlantic.com

62 http://www.virgin-atlantic.com

63 http://www.virgin-atlantic.com

According to Alex Brownsell from the (marketingmagazine.co.uk, 2012) "Irresistible" is the magic word Simon Lloyd the marketing director of Virgin Atlantic hopes on making air travel seem "sexy and glamorous" . A long -haul strategy with its fresh positioning" Flying in the face of ordinary" will provide a long term platform for the brand.

"Virgin Atlantic is renowned for its big TV advertising, and when we set out on this we wanted to live up to that expectation. But (the new positioning) gives us the platform to do a lot of innovative and playful stuff in the digital space. That's where we want the brand to live," he says. (marketingmagazine.co.uk, 2012)

"The majority of people will only fly with us once or twice a year, so I want to see how we can have much more of a relationship with customers before and after flying,' adds Lloyd. 'The big advertising campaigns will always be part of our marketing mix, but we want to make Virgin Atlantic irresistible to our customers, and to do that we need to spend enough time understanding what their needs are, way before they make a decision to fly". (marketingmagazine.co.uk, 2012)

"Flying in the face of ordinary" is more than a marketing campaign; it is a powerful brand proposition and long-term platform that will be reflected in all areas of the business, from communications and marketing to product and customer service"(Simon Lloyd - marketing director of Virgin Atlantic, 2013).

Task 4 a : Examine the nature of extended marketing mix and discuss their relevance to service marketing.

According to (marketing91.com, 2013) website the service marketing mix consists of 7 P's as compared to the 4 P's of a product marketing mix.

Figure 3 : Services Marketing Mix

(marketing91.com, 2013)

Marketing Mix

The marketing mix determines the combination - product, price, place, and

promotion - to be used inline with the marketing strategy. Virgin Atlantic has sought to

offer a fun and innovative product with high quality service and convenient locations for

the customer.

Virgin Atlantic offers flights worldwide in three distinct classes: upper class,

premium economy, and economy highlighted below.42

Upper class

· Complimentary limo service on both sides of the Atlantic

· Drive Thru check in from the limo

· In-flight beauty therapy - massages and manicures

· Freedom menu - restaurant style cuisine at any time

· Onboard stand-up bar

· Personal 10.4 inch video screen

· Ergonomic seats with over 6 feet of sleeping space

· Sleep service - pajamas, full size pillows, feather duvets and fleece blankets

· A dedicated sleeping area

42 Virgin Atlantic Customer Service Representative, Quick Reference Guide, 2001.

Fast track-priority service through immigration

Premium Economy

· Dedicated check-in desk

· Priority baggage handling

· Flexible ticket - no penalty for last minute changes

· Separate cabin

· Comfortable, wider seats with up to 6 inches of extra leg room

· Seatback video screen

· Preflight champagne

· Fruit throughout flight and ice cream during movies

· Free amenity kit

· Fast track-priority service through immigration

Economy

· Seatback video screen with up to 43 channels of movies, music, and video games

· Choice of three entrees, including a vegetarian option

· Complimentary beverages, including cocktails

· Free amenity kit

· Children's services including K-iD backpacks, TV channels and special meals

· Ice cream during movies

The price for the upper class ticket is around $9,000 dollars. Premium economy

tickets are listed around $3,000 dollars and economy tickets are currently priced at

$500.00 dollars to London.

Virgin Atlantic is a small private airline that is not engaged in as many routes as

other competitors. Virgin Atlantic offers non-stop services in the United States to and

from London out of Boston, Chicago, Las Vegas, Los Angles, Miami, New York (JFK),

New York (Newark), Orlando, San Francisco, Toronto, and Washington DC (Dulles).43

43 Virgin Atlantic Customer Service Representative, Quick Reference Guide, 2001.

International flights are offered in and out of Athens, Johannesburg, Tokyo, Hong Kong,

Shanghai, Delhi, Barbados, St. Lucia, and Antigua. 44

44 Virgin Atlantic Customer Service Representative, Quick Reference Guide, 2001.

Virgin Atlantic also offers transfer options (for upper class passengers) including

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

Heathrow or Gatwick expresses, provides limo services from Paddington Station and

Victoria Station to the customers' final destination, and a two-day car rental for each

sector flown. Virgin Atlantic offers the exclusive use of clubhouses (for upper class

passengers), including Virgin touch beauty salon-massages, facials, and barber services at

Heathrow and Gatwick. Also included are business facilities, restaurant-style dinning

and a full-service bar.45

45 Virgin Atlantic Customer Service Representative, Quick Reference Guide, 2001

Promotion is the publicized announcement designed to attract customers. Virgin

Atlantic is continuously promoting through various media. These media will further be

discussed in the Integrated Marketing Communications section.

Selling

Theses are efforts to induce the consumer to buy what the company has to offer

set in line with the marketing strategy.46

46 Keegan, Warren J & Green, Mark S., Global Marketing, 2nd Edition, New Jersey: Prentice Hall, Page 40,

2001

Virgin Atlantic targets specific customers by

communicating the overall comfort and quality of the airline by providing identifiable

customer service. Virgin Atlantic sells tickets primarily through the Internet, travel

agents, and direct communication with customers.

Task 4 b : Evaluate the marketing mix variables for two segments of the consumer market and discuss how different it would be for business-to-business services(B2B).

In 2011 Sagefrog Marketing Group conducted a survey about marketing mix on 126 marketing and management professionals. The purpose was to gain insight into the marketing tactics that organizations are investing in, and the return on investment of these tactics. (sagefrog.com, 2011)

Because the trend of digital marketing is on the rise, the results showed that three of the top five marketing tactics being used relate to online marketing (Website development, e-mail marketing and social media marketing).

Among other marketing practices used, the respondents also reported press releases, direct marketing, Search Engine Optimization, and seminars. Also other survey questions examined a range of marketing topics:

including most-used social media tactics,

top areas of marketing spend, and

top sources of sales leads. (sagefrog.com, 2011)

Key results included:

digital marketing, including website development, direct marketing (e-mail and direct mail) and online marketing, are the areas of highest marketing spend.

LinkedIn and Facebook (66 percent), blogs (34 percent), and video sharing sites (29 percent) are the most utilized social media tactics as social networks.

40 percent of respondents expect their marketing budget to increase in 2012.(sagefrog.com)&(piworld.com, 2012)

"Marketers are reporting that our B2B Marketing Mix Survey is helping them to allocate their marketing resources wisely, optimize their marketing mix investments, and maximize business results,"(Mark Schmukler, managing partner at Sagefrog Marketing Group, 2012).

Task 4 c : Assuming that your selected organization is to enter the international market, examine and discuss the differences between domestic marketing and international marketing.

 Virgin Atlantic is the second largest longhaul airline in the UK and the third largest European carrier over the North Atlantic. The route network has grown rapidly to include destinations in the US, Caribbean, Far East, India and Africa, and we have won virtually every award the travel industry has to offer.(virginatlantic.com)

Virgin Atlantic Airways international capacity by region (% of seats): 06-Aug-2012 to 12-Aug-2012

 

Source:( CAPA - Centre for Aviation, 2012)

Figure 4

Virgin Atlantic Airways top 10 international routes based on capacity (seats per week): 06-Aug-2012 to 12-Aug-2012

 

Source: (CAPA - Centre for Aviation, 2012)

Competition on Virgin Atlantic's top 10 international routes: 06-Aug-2012 to

12-Aug-2012

City pair

Competition

LHR-JFK

Virgin Atlantic /British Airways /Delta Air Lines/ American Airlines / Kuwait Airlines

LGW-MCO

Virgin Atlantic / British Airways  

LHR-EWR

Virgin Atlantic / British Airways /United

LHR-LAX

Virgin Atlantic / British   Airways/ American Airlines / United/ Air New Zealand

MCO-MAN

Virgin Atlantic

LHR-SFO

Virgin Atlantic / British Airways/United  

LHR-MIA

Virgin Atlantic / British Airways/ American Airlines  

LGW-MIA

Virgin Atlantic / British Airways  

LGW-BGI

Virgin Atlantic/ British Airways  

LHR-LOS

Virgin Atlantic/ British Airways/Arik Air  

Note: LHR = London Heathrow Airport; LGW = London Gatwick Airport; JFK = New York John F Kennedy International Airport; MCO = OrlandoInternational Airport;

EWR = New York Newark Liberty International Airport; LAX = Los Angeles International Airport; SFO = San Francisco International Airport; MIA =Miami International Airport; 

BGI = Bridgetown Grantly Adam International Airport; LOS = Lagos Airport.

Source: (CAPA - Centre for Aviation, 2012) 

On the domestic market Virgin Atlantic operates from four UK airports, but its main operating base is at London Heathrow. It operates :

97,000 seats per week from Heathrow,

31,000 from London Gatwick and under 10,000 from Manchester, according to schedules in Innovata for the week of 06-Aug-2012 to 12-Aug-2012.

It operates a single route from Glasgow International Airport,

a once weekly flight to Orlando International.

The company strives to have balance between leisure flying out of Manchester and Gatwick supported by Virgin Holidays and a more business-oriented offering out of London Heathrow. (centreforaviation.com, 2012)