Keeping the Air Flair Virgin Blue - Essay Example

 Keeping the Air Flair Virgin Blue Executive Summary The businesses across the regions have become highly competitive because the technology and rapid globalization have significantly altered the dynamics of business across the globe. To maintain competitive advantage, Virgin Blue Airlines needs to incorporate factors that would help it to meet the challenges of emerging new dynamics of global business. It has adopted the best-cost strategy that encompasses competitive pricing with distinct differentiating elements which would make it attractive to the customers. The various value additions to the core competencies of the airlines facilitate better response and provide the firm with necessary differentiating elements to gain leverage against the new entrants and other competitors. 1. Introduction The businesses across the regions have become highly competitive because the technology and rapid globalization have significantly altered the dynamics of business across the globe. Strategic marketing plans have become the crucial part of promoting products and services of an organization because they involve development and execution of goal-oriented procedures to deliver value to the customers. Hence, to maintain competitive advantage, Virgin Blue Airlines needs to identify and analyze factors so as to meet the challenges of the fast changing business environment. 2. Brief Summary of the case and identification of issues Virgin Blue airline is one of the leading airlines that are facing stiff competition from other low-cost airlines. In the cutthroat environment of competitive business, the company needs to evolve the innovative business strategy to gain leverage over its competitors. The company has adopted creative communication strategy to promote the changes. The price war amongst the various airlines has significantly impacted the performance outcome of Virgin Blue. It also faces challenges from the rising cost due to inflationary trend and competition from new entrants in the industry. Thus, the highly competitive environment of global business has forced the Virgin to evolve new business strategies. The company has adopted more aggressive communication strategy to promote its strategic goals and value-added product and services. 3. Situation Analysis Virgin blue has realized the futility of entering into the price war and instead decided to change its business strategy to maintain its market position. It has adopted the best-cost strategy that encompasses competitive pricing with distinct differentiating elements which would make it attractive to the customers. In a fiercely competitive business environment when the global economy is under tremendous pressure, a firm must gain their position by leveraging its strengths. According to Michael Porter, the firms’ strengths can be broadly categorized into cost advantage and differentiation. Three types of generic strategies emerge when these strengths are applied by the firm: cost leadership, focus, and differentiation (Porter, 1980). It has become imperative for the business to become creative and evolve the strategic approach that would effectively meet the challenges of the time. Since the leisure industry is dependent on the market, market segmentation has become the important part of the strategy. Focus on the changing requirements of the business travelers would provide Virgin with sustainable business over a longer period of time. Shultz says that it is the end-users who now control the markets rather than the marketers (Shultz, 2001). Indeed, the company anticipates that the offering of fringe benefits to the regular travelers would create committed clientele and improve profitability. The company has introduced the concept of providing ‘more personal space' by making the front rows available to the business travelers who pay for premium economy and corporate plus fares. They have also converted the central seats at the table for their convenience. The company has introduced these innovative schemes while ensuring that the base-line flexible fare option for the leisure market. These value additions to the core competencies of the airlines facilitate better response and provide the firm with necessary differentiating elements to gain leverage against the new entrants and other competitors. To reduce the overall cost, the company has also introduced some stringent measures like cutting salaries of the employees but ensuring them productivity bonus; eliminating in-flight meals and paper tickets; using airports that offer competitive terms and conditions etc. Indeed, in such a scenario of emerging new competitive environment, the strategic leadership initiatives of the firms become the major enabling factors of competitive advantage. The paper tickets have become redundant in the digital age and the in-flight meals, especially in short flights, did not carry much value for the customers. Elimination of these provisions would considerably reduce the overhead costs. 4. Evaluation of situational analysis The core business strategy of any business heavily relies on the market strategy that facilitates its products and services to meet the needs and requirements of the people at large. Competitive pricing and strong market position are major business compulsions that are need driven and especially target the vulnerable segment of society who are more prone to buy their products and services. The technological advancements and interests of the emerging new pluralistic societies are important factors that necessitate more comprehensive and innovative approach to market strategy. Virgin Blue has incorporated these issues into its strategy and expertly exploited them to gain competitive advantage. 4.1 New communication strategy The firm has also adopted focused communication strategy in its marketing plans. The company realizes that ‘brand building is needed because products are the same’ (Kotler, 2005). The airline needs to project its brand image with the new clear-cut differentiating element that would provide it the requisite leverage to compete against its rivals in the same business. It has done so through creative advertisements. The various contextual factors vis-à-vis size, technology, environment, diversification, and globalization are vital elements of the system that have the significant impact on the decision making. Hence, in the contemporary times, markets have been designed to cater to the system as a whole rather than exclusively to the customer. The more innovative the product and fancier the promotional techniques, the higher are its chances of capturing market space. Thereby, asserting that brands, advertising, and promotional techniques are very important tools of marketing and the company must use all the available sources for maximum impact. (Campbell, 1999) asserts that companies are building strong brands using a corporate vision with “a way of doing business” approach where customers identify with their attitude and promise to deliver. Virgin has also adopted appealing slogans like ‘where smiles are free’ and promoted its new approach through intense advertising. 4.2 Segmented market approach Levitt says that the marketing takes into account the preferences of the customers and builds a solid customer loyalty. This results in sustainable customer base that has the potential for growth because it continues to satisfy their changing preferences (Levitt, 1960). Virgin Blue has successfully identified the factors that need to be addressed. Its innovative approach to meet the challenges clearly reflects its desire to develop the better understanding with customers with regard to consumer demands and correlate it with the product so as to develop the appropriate market strategy. 4.3 HR Strategy The company pays less to its employees than its competitor but lures them with the attractive package of productivity bonus and positive internal culture. The organizational competencies in terms of organizational culture and leadership initiatives that exploit human capital for improved performance outcome are the highly relevant element of competitive advantage (De Wit & Mayer, 2005). In the highly cutthroat business, the organization needs to create the appropriate climate that inculcates confidence and mutual trust building. The encouraging and incentive driven work environment promotes retention of employees and gives the organization better leverage to compete with their rivals. The experienced and motivated workforce is conducive to the higher degree of creative inputs and innovative approach which may give a unique positioning to the organizational products and services. 5. Recommendation (Mintzberg, 1990) emphasizes the need to exploit the informed choices, gained through the accumulated knowledge regarding the changing trends and preferences of the people and market conditions. Markets thrive on the processes of the learning organization which continuously make efforts to disseminate information across the organization about markets, products, technologies, and business processes. Hence, in the competitive business environment data, information and knowledge become the three major elements of the informed choices that need to be effectively linked to the organizational goals and objectives. The product is of vital importance and pricing makes it a saleable item. But maintaining a good database of customers must become the intrinsic part of market strategy because it helps to know the changing preferences of the customers. Hence, Virgin must use the feedback from customers to improve and improvise its strategies for better performance outcome. (Moller,2006) says that ‘marketing mix involves solving of market segmentation problem, being able to carry out market positioning analysis, and finally being able to differentiate the mix from the competitors’ offer using the target customers’ preferences’ (Moller, 2006). Segmentation helps to identify the target customers for the existing and new products and create a niche position in the market. In the fast-changing dynamics of global business, marketing mix helps establish strong market position. The company needs to adopt integrated marketing concept (IMC) in its marketing strategy to promote its new schemes and changed the image. Porter argues that a company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at a lower cost, or do both (Porter, 1996). The Internet has considerably affected the various aspects of a business activity. It greatly facilitates interactive communication between the client and the business house and promotes the professional relationship between the two. While it helps to improve and improvise the quality as per customer’s requirements the customer also gets the best deal because of the competitive nature of the internet. Hence e-communication Virgin Blue must make it an intrinsic part of its business strategy. Since the need for strategic partnership with global business entities has become essential to remain afloat in the highly competitive global business environment, it is imperative that Virgin Blue looks into the various proposals for partnership and strategic alliances with other firms and industries, especially leisure industry and corporate business houses. (Kay, 1995) says that all types of contract business relationship are the linkages that facilitate the higher level of efficiency and organizational growth which would offset a competitive advantage over their rivals. It is enforced ‘not by legal process, but by the need, the parties have to go on doing business with each other'. Reference Campbell, Amy. (1999). Brand Architecture: A Method to the madness. Available from: [Accessed 9 March, 2010]. De Wit, B., and Meyer, R. (2005). Strategy Synthesis: resolving strategy paradoxes to create competitive advantage. Thomson Learning, London. Kay John. (1995). Foundation of Corporate Success. Oxford University Press. Kotler, Philip. (2005). Toward Stronger Marketing. unpublished presentation to the ARF, “Future of Advertising” Conference, Chicago, 10.24.05. Levitt, Theodore. (1960). Marketing Myopia. Business Harvard School Review. Available from: [Accessed 9 March, 2010]. Mintzberg, H. (1990). The Design School: Reconsidering the Basic Premises of Strategic Management. Strategic Management Journal, 11(3), 171-195. Moller, K. (2006). Comment on: Marketing mix revisited: towards the 21st-century marketing. Journal of Marketing Management, 22, 439-450. 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