Marketing Strategies of Virgin Blue - Case Study Example

Running Head: MANAGEMENT REPORT Management Report [Writer’s name] [Institution’s name] From: ‘Expert Management Consultant’ To: CEO RE: Marketing Strategies of Virgin Blue I would like to state that I have gone through the SWOT analysis and Porter 5 analysis of Virgin Blue, after which I came up with some marketing strategies to improve it’s position. I realize that the mission statement is extremely important to the company, so I have made sure that all the strategies portrayed exactly that. I have given special attention to the fact that the growth of the company and customer care both is considered in the strategies. The strategies maybe a bit costly but since the threat of suppliers and the threats of entrants are less it is extremely affordable for the company. By the past and future analysis on the airline industry it may be said that, air travel will increase in the next 10 years. To keep our position in this fast growing market it is essential to implement the marketing strategies I have recommended in the report below. Best regards, Expert Management Consultant Management Report Introduction Every company requires asset of marketing strategies so that their product may be sold. The airline industry is so fast moving that it requires a prefect marketing agenda. This report gives an overview of the marketing strategies of virgin blue. It even considers the past and future trends of the airline industry. Since Virgin Blue is a well known airline, the report highlights all the important strategies required for it to hold it’s position in the market. Company Background Virgin Blue, one of the airline companies in Australia, which provides lost cost, low fare domestic airline, offering frequent passenger services on routes between all of the Australia's major cities, is one of the subsidiaries of the Virgin Group that established on 3 August 2000 with two aircraft initially offering seven return flights a day between Brisbane and Sydney. And this has been expanded to cover the major cities in Australia (Virgin Blue Press Release, 2000). By now, Virgin Group's holding in Virgin Blue has been reduced via a sale of half interest to Patrick Corporation, and later by a public float. By the closure of the offer, Patrick Corporation has hold 62% of the company, Current situation Virgin Blue performed extremely well in Dec-2009 (1HFY2010), it regained it’s high profit in a challenging operating environment. The stringent cost control effort along with improved domestic yields is what helped them regain their position. The carrier earned them a healthy net profit after tax of AUD62.5 million by the end of Dec-2009 (1HFY2010), it ended up getting a net margin of 4.1% (Centre For Asia Pacific Aviation, 2010) Airline industry has seen tremendous growth in the past years. It is predicted in the next 10 years it’s growth will be extremely rapid. It may be able to generate approximate 2.9% GDP of the economy. (Current Market Outlook, 2005) Mission statement The mission statement of Virgin blue is grow a profitable airline Where people love to fly And where people love to work (Virgin Blue Press Release, 2000) Considering such a simple yet strong mission statement helps in designing strategies for virgin blue. The marketing strategies they use are base on their statement. Even the future strategies should be based on the same criteria. Strategies The strategies designed were according to the porter 5 analysis and SWOT analysis. The strategies which virgin blue should consider are given below. It is to be noted that the rivalry in the airline industry has always been in the shape of alliance competition along with individual airlines competing in countries mostly where virgin blue is this. For this, is very essential for virgin blue to keep in mind it’s mission statement that it has to be a grow a profitable airline thus it must design it’s strategies accordingly (Sunday Mail, 2010). Keeping this in mind it should consider expanding it’s business towards countries like Pakistan and India. Such markets have been hard to enter after the 9/11. Many of their competitors will not try to enter such a risky market. Bargaining power of the buyers is something which every business ahs to face as customers require prices which fulfil their needs. In short, they require prices according to their financial condition. However, virgin blue has always used discounts as marketing strategy to capture the market (Herald Sun, 2010). Their customers are so important to them that they build a substantial demand which gives virgin blue an opportunity to set its prices in such a manner that it fulfils the requirements of the company as well as the customer. In the near future virgin blue should carry on with such marketing strategy. However it should increase it’s discount carriers. It should also follow strategies like year and Virgin Blue should keep promoting their ‘buy & fly’ retail first to offer a 50% off flights to customers who come to shop at different shopping canters or stores. They have done this in the past at Myers. They were extremely successful then. The above strategies which satisfy the Bargaining power of the buyers fulfil their mission statement that they care about their customer as well as give the airline a profitable growth. Like any industry even the airline industry has strong entry barriers exist. Virgin blue will have to keep in mind a few important key barriers, such as investment requirements, acquiring ample resources, and the economic condition when designing a marketing strategy (Hobart, 2010). At the moment other airlines are considering a lot of new discount airline carriers. This could be an important entrant threat virgin blue if he wants to enter into a new market. Keeping this in mind they must improve their services and as mentioned earlier increase their number of discount carriers. This too like the above mentioned strategy will help fulfil their mission statement that they care about their customer as well as give the airline a profitable growth (Reichheld, 1996). As Virgin blue is part of the airline and service industry the bargaining power of suppliers do not affect them much. With more or less 84% of their sales in 2006 proved that their profits come from the flights (News and Press Releases, 2006), they have no worries regarding the threat of suppliers. Thus, their marketing strategy should be highly financed as they do not have to worry about suppliers. They should target their advertising on the fact that they concentrate on customers and their comfort. For this they could give full print advertisements in new paper and take also in prime time TV for their advertisements. This costly strategy is something possible for them as they have the finance to do so. They can also spend the profits on sponsorship. Thus, the fact that they have no threat of suppliers gives them an added advantage. The fact that alliances have increased in the airline industry has made threats of substitutes less for virgin blue. As now, one airline will run the entire industry. Keeping this in mind the strategy they should take up should encompass a comparative strategy. In which they can compare their airlines to others to their customers (Tidd, Bessant, and Pavitt ,2001).This is an easy strategy in this time and age, as the alliances reduced the number of things to be compared. This can be in discounts or services. Either way the comparison will help the customers realize that virgin blue is the best choice. The strengths of a company are something which is usually highlighted in marketing campaigns. As per the identified strengths in the appendix, Virgin blue should base it’s marketing strategy on promoting and highlighting the Airbus A380 (Airguide Business, 2010). This is well equipped airplane and one of the best in the airline industry. This can be done by printing the advantages of the Airbus A380 on their pamphlets. Plus, they should give pictures of the airplane’s interior and exterior as well in their advertisements and pamphlets. The fact that all their aircrafts are equipped with top notch products makes then the preferred choice. Keeping in mind their mission statement they have tried to satisfy the customer. This can also be portrayed in their marketing strategy, by giving discounts and mentioning that even though their airlines provide better service they still cost less (Tidd, Bessant, & Pavitt, 2001) The fact that their networks of agents are vast makes getting their tickets more easy. This is not only strength but also a very good marketing strategy. They not only make it easy for the customers to but their tickets, but also market themselves in a vast area. In this away they become a well known airline, this strategy should not be discarded, and it should be carried on with. Their QuickCheck Kiosks as mentioned in the appendix is a great opportunity for the. They can even market this advantage in their pamphlets and advertisements. Apart from this, they can give their regular customers special service in their QuickCheck Kiosks. . While designing their strategies they should keep in mind that at time new entrants becomes strong (Reichheld, 1996). This may effect their strong position in the market. That is why it is advised that they follow the above mentioned marketing strategies. Conclusion The marketing strategies have to be strong enough to withstand the changing trends of the industry. They should not underestimate the fact that there are now alliances. It may be true that Virgin blue is a well known name in the Airline industry, but it is also a well know fact fats moving industries like the service industry undergo a lot of changes. Their discount strategy without a doubt is wonderful one. It gives them an edge over other airlines. However they must overcome their threats so that they may be able to stand strong. For this reason alone, it is advised that they follow the above mentioned marketing strategies. References AirGuide Business (2010). Virgin Blue. AirGuide Business Centre For Asia Pacific Aviation (2010). Virgin Blue's better-than-expected profitability in 1HFY2010; Expects tougher second half retrieved from http://www.centreforaviation.com/news/2010/02/24/virgin-blues-better-than-expected-profitability-in-1hfy2010-expects-tougher-second-half/page1 on 15 December 2010 Current Market Outlook (2005). From http://www.boeing.com/commercial/cmo/pdf/cmo2005_OutlookReport.pdf on 15 December 2010 Herald Sun (2010). Virgin's Blues Over . Herald Sun News And Press Releases (2006). Virgin Blue Holdings Limited Results For The 9 Months Ended 30 June 2006 Up 12% To $84 Million Net Profit After Tax. retrieved from http://www.virginblue.com.au/AboutUs/Media/NewsandPressReleases/U_001173.htm on 15 December 2010 Reichheld, F.F. (1996) The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value. Massachusetts, MA: Harvard Business School Press. Sunday Mail (2010). Virgin Blue Checks .Sunday Mail The Hobart (2010). Virgin Hoping For Blue Mercury. The Hobart Tidd, J., Bessant, J. and Pavitt, K. (2001) Managing Innovation: Integrating Technological, Market and Organizational Change, 2nd edition. Chichester: John Wiley & Sons Virgin Blue Press Release (2000) Virgin Blue Press Release, Virgin Blue Airways, Sydney Appendix Strengths Weakness Internal S1) Airbus A380 S2) Network of agents S3) Product Strength W1) Off-line Carriers Opportunities Threats External O1)QuickCheck Kiosks O2) Catering for different customers T1) Fuel Prices T2) Terrorism T3) New entries Read More