The Marketing Strategy for Virgin Blue Airline - Case Study Example

Title: Virgin blue airline Executive Summary: Virgin blue airline has faced a marketing challenge to change the marketing strategy as to capture the lucrative business traveler market without losing its base share through a shift in the overall strategy of the organization. The organizational strategy is the central pillar of the company to attract new customers with an additional objective to retain the previous customers as intact to generate additional resources in favor of the company (1). The strategy will help in pursuing the agenda of the organization as to achieve the mission of the organization as in profitable manner to ensure the sustainability in the competitive market of the air business. Successful implementation of the strategy that is "New World Carrier" of the company primarily based on the pattern of combination of the two strategies that is differentiation strategy and low-cost strategy as in the shape of a combined strategy as differentiation and low –cost strategy(2). The strategy will keep the original formula intact with a set of administrative, marketing and financial measure. These measures include elimination of the printed tickets for lowering the operational cost of the airline, removal of inclusive in-flight meals to the passengers and through the introduction of a single type of aircraft, a Boeing 737. Similarly, productivity bonuses to the employees for their retention as good staff and to use the airports, which are offering services on competitive basis, are the additional steps, which are contributing for the achievement of the objectives as are included in the business strategy(3). The success of the business strategy in a competitive environment depends on the renovation and adoption of the latest technology and a proactive marketing strategy for the improvement of the performance of the airlines. The marketing strategy will focus on the benefits as are associated with the newly formulated business strategy and the implementation of the strategy will provide an opportunity to the airline to position the airline as on sustainable basis(4). The major thrust of the strategy is to achieve the objectives of the organization with the utilization of the available resources as on optimum basis and to achieve the results as on maximum basis in economic basis. All the available resources that are human, financial and technological resources will be utilized in favor of the airline for their synergetic impacts. The strategy will serve as a template for all other similar industries for the achievement of similar results as by the Virgin blue though the adoption of differential and low –cost strategy. Case Issues: The differential and low –cost strategy of the Virgin blue has designed to address the following basic issues as are associated with the successful implementation of the strategy: a) Introduction of new marketing strategy for the achievement of the overall objectives of the airline as per its vision and mission with the utilization of optimum resources, b) The adoption of new business tools as a part of the change management for addressing the needs of the business as have been necessitated by the external environmental forces and internal forces to make the organization as a profitable entity, c) Lowering the cost of the business with the introduction of a set of administrative, financial and technological measures for sustainability and profitability of the organization in the competitive business environment. All the steps are a part of the new business strategy that is differential and low –cost strategy with special emphasis on the elimination of printed tickets, elimination of inclusive in-flight meals and introduction of differential seating availability to attract the new customers(5). These steps will be supplemented through the retention of the regular customers with a special focus on the quality of services as are being provided by the airline, d) All these steps will be analyzed as on cost benefit basis for the promotion of the business as on profitable and sustainable basis. The selection of differential and low –cost strategy will be helpful in the achievement of the objectives as included in the new business strategy. The differentiation strategy will help in the addition of new customers in the higher classes of the aircrafts that is in the business class and the low- cost strategy will ensure retention of the regular customers through a concept of win- win position both for the customers as well as for the airline(6). Analysis of the issues as based on Marketing Theory: Four major issues have been identified; their analysis as based on marketing theory is given below: a. Introduction of new marketing strategy Virgin Blue Airline has introduced a new marketing strategy for the achievement of the objectives of the airline for the fulfillment of its objectives in the competitive air business environment. The introduction of the new strategy has been necessitated by the major rivals including Qantas in the business environment. All the organizations are working for the achievement of their financial targets with a special focus on the utilization of available resources including human, financial and technological as on optimum basis with a target to satisfy the emerging needs of the customers and all other stakeholders on satisfactory basis(7). The new strategy will be helpful in the achievement of two major targets that is to attract new customers in differential category and to retain the current customers as on low cost basis. The strategy will serve as a business tool for the achievement of satisfactory results as in favor of the airline as on sustainable basis. b. New business strategy as a part of the change management Virgin blue airline has adopted a new marketing strategy for addressing the needs of the changed business environment. The change management is a part of the business strategy for addressing the business needs as have been originated from the external business environment and the internal organizational environment (8). The top management has noticed the changed trends in the business environment as to make adjustments in the marketing strategy for ensuring the sustainability of the organization in the competitive business environment. The organization has initiated the change in the shape of a new strategy and successful implementation of the strategy will help in the sustainability of the airline in a profitable manner. Change management in the shape of new and modified strategy will provide an opportunity to the administrators to attract the new customers, to retain the regular customers and to gain more revenue as on low-cost basis (9). c) Lowering the cost of the business with the introduction of a set of administrative, financial and technological measures: The new strategy has primarily been formulated and adopted by the Virgin Blue to lower the cost of doing business in the airlines sector, to introduce a new class of services as on differential cost basis and to increase the revenues as in favor of the airline. All these steps have been complemented with the administrative, financial and technological measures as on timely basis. All these steps are the inputs for the completion of the business cycle as to deliver the services on competitive basis. Modifications in the administrative setup, inclusion of new business tools in the shape of new marketing strategy and technological up-gradation will serve as input factors. The whole business cycle will work for the achievement of final output in the shape of quality services to the customers and more revenue to the airline and subsequently, sustainability of the airline will be achieved as in profitable basis (10). d).Cost benefits Analysis of the new Marketing strategy: The new business strategy is based on cost benefit analysis of the new marketing strategy; the cost for the introduction of new business strategy will be recovered through the additional business opportunities as will be available to the airline because of the implementation of the strategy. More customers will be added in the already existing set of the customers with high economic revenues. The cost of the strategy will be recovered through these additional revenues. Alternative courses of action: Virgin Blue Airline has decided to introduce a new marketing strategy in the shape of differentiation and low cost strategy for increasing the revenues in favor of the airline, sustainability of the organization and for the delivery of the valuable services to the customers as on economical basis. However, the same results could be achieved through the adoption of the alternative courses of action for the achievement of the similar results. These alternative courses of action are as under: 1. The adoption of low cost marketing strategy for pursuing the agenda of the airline through the retention of the previous customers. The strategy will help in saving the revenues as to be incurred for the introduction of the new marketing strategy. 2. The adoption of a differentiation marketing strategy as part of the business strategy in the new economic environment with the expectation that the strategy will be accepted by the growing airlines market. The option however, will not be fruitful for the achievement of the desired results as the organization will not be in a position to make necessary administrative, financial and technological changes in a short span of time. 3. Do nothing approach The organization has the option to adopt do nothing approach and to stick to the original marketing strategy as a low cost strategy. The strategy will retain the original customers but all of these customers will move towards the other airlines, as innovation and introduction of new tools are the essential business requirements. The airline will gradually become obsolete and redundant (11). Recommendations: The adoption of new marketing strategy by the Virgin Blue Airline will provide an opportunity to the administrators and top executives to review overall business strategy of the organization as on regular basis. For making the strategy as a successful business model, the following recommendations are made: a) Marketing strategy may be introduced with both print and electronic media with the adoption of new business techniques. The step will help in the introduction of the strategy among all the potential customers in the air trafficking business and finally more revenue will be generated in favor of the airline. b) The airline needs to introduce administrative changes for the implementation of the new business strategy. Imparting of training and new administrative skills will help in the achievement of the business targets within the specific period. c) The airline needs to review the financial results of the differentiation and low cost marketing strategy as on regular basis with a focus to achieve the financial results. The step will facilitate the top executive to take strategic decision on timely basis. More revenue, low financial cost and quality services will be the signals that the strategy has contributed positively however, any deviation from these targets will be a signal that the administration needs to amend the strategy for the achievement of the desired results especially in financial terms. References: 1. Chaffee, E. “Three models of strategy”, Academy of Management Review, vol 10, no. 1, 1985. 2. Schumacher, E.F. Small is Beautiful: a Study of Economics as if People Mattered, ISBN 0061317780 (also ISBN 0881791695) 3. Levinson, J.C. Guerrilla Marketing, Secrets for making big profits from your small business, Houghton Muffin Co. New York, 1984, ISBN 0-396-35350-5. 4. Pascale, R. and Athos, A. The Art of Japanese Management, Penguin, London, 1981, ISBN 0-446-30784-x. 5. Rehfeld, J.E. Alchemy of a Leader: Combining Western and Japanese Management skills to transform your company, John Whily & Sons, New York, 1994, ISBN 0-471-00836-2. 6. Hamel, G. & Prahalad, C.K. “The Core Competence of the Corporation”, Harvard Business Review, May–June 1990. 7. Barney, J. (1991) “Firm Resources and Sustainable Competitive Advantage”, Journal of Management, vol 17, no 1, 1991. 8. Hammer, M. and Champy, J. Reengineering the Corporation, Harper Business, New York, 1993. 9. Lambert, Douglas M. Supply Chain Management: Processes, Partnerships, Performance, 3rd edition, 2008. 10. Post, James (2002), Redefining the Corporation: Stakeholder Management and Organizational Wealth, Stanford University Press, http://www.sup.org/book.cgi?id=1967, retrieved 2009-01-29  11. Figge, F.; Schaltegger, S.: What is Stakeholder Value? Developing a Catchphrase into a Benchmarking Tool. Lüneburg/Geneva/Paris: University of Lüneburg/Pictet/ in association with United Nations Environment Program (UNEP), 2000 Read More