Virgin Blues Marketing Strategy for a Business Class - Case Study Example

Content Executive Summary 2 Introduction 3 Market Segmentation 3 SWOT Analysis 3 BCG Matrix 4 Ansoff Matrix 5 Buyer Behaviour 6 Market Positioning 7 Cost Reduction 7 Pricing Strategy 7 Promotion Strategy 8 Conclusion 9 Findings 9 Recommendations 10 References 11 Executive Summary Virgin Blue airlines being in the low cost sector eyes the leisure sector who are price conscious. The company has an aggressive marketing strategy and is looking towards becoming a cost leader and differentiator. The company along with this has brought a basic change and is eyeing the business sector. For this the company had brought about some changes which will help Virgin Blue. The company has also used technology by having tie ups with retailers and is marketing the product aggressively. The Ansoff matrix and BCG matrix demonstrates it. SWOT also shows the same. The company has a good work force and has been able to define the markets properly. The company has become a low cost provider by offering no meals in flights, using the airport facilities on an agreement basis and not issuing printed tickets. The company for the business sector has brought about changes in the flight by having more leg space, removing the middle seats and allowing more baggage. Thus, the company by following an aggressive marketing policy can become a cost leader and a differentiator. Introduction Virgin Blue since operation from 2000 has become one of the largest low cost provider. Virgin Blue being in the leisure sector has transformed itself and is eyeing the business sector as this sector is growing. The company has brought about changes which have helped it to become a cost leader and differentiator. Virgin Blue to market in the business sector is looking towards aggressive marketing. To do this the company has come up with different features such as more baggage allowance and more leg space. The company to retain them is also developing reward programs so that it can retain both the segment and grow to become a leader. Market Segmentation Virgin Blue being “a low cost airline is eyeing the leisure segment where people are price elastic”. (Bamber, 2006) Virgin Blue has been successful as price conscious people prefer the low cost service. With the recent change in business model Virgin Blue has started to eye the business sector. They have at the same time ensured that the basic model of low cost doesn’t vanish. Virgin Blue has ensured that it eyes both the leisure and the business segment so that it can expand its reach in different markets. SWOT Analysis This tool highlights the factors which act as an advantage to Virgin Blue. It also helps to identify areas where the company can work on. This is shown below Strengths It has a large fleet of flights with efficient technology It is an innovator in in-flight service by making improvements It ensures effective communication along all levels thereby ensuring smooth transformation Weakness Changing its business model by having seats in flights for business class along with leisure Opportunities Opportunity to expand in new markets Opportunity to develop new technology and integrate it with the existing one Develop new strategy to attract different group of customers Threats Threat from rising fuel prices Threat from new entrants Virgin Blue has worked on the opportunity and has as a result been able to come with a new business model which falls in line with the growth pattern. BCG Matrix Virgin Blue BCG Matrix looks as follows when we consider the sector in which the airlines is operating and tends to operate in the near future. Market Growth Rate Stars Question Mark Business Sector Leisure Sector Cash Cows Dogs Relative Market Share Here, we see that “leisure sector is the most revenue generating sector as the company works on the business model of low cost airlines and the business sector is a growing sector which the company is eyeing so that it can develop it and transform itself into a star sector thereby generating larger revenues”. (Anweshabh, 2010) Ansoff Matrix Virgin Blue by using this tool can find out the opportunity through which it can grow and market its strategy. This will help Virgin to better position its product so that they can grow. Product Market Market Present New Present Market Penetration Product Development Promoting its low cost airlines in the leisure sector Promoting its airline by new ways to attract different segment Promoting its airlines with new reward programs New Market Development Diversification Promote Virgin Blue airlines into new markets so that it can gain the advantage of cost leadership Improving their presence by entering into agreements with hotels, and other facilities for growth The above strategy helps to understand the buyer behaviour which can leads towards strategy development for the future. Buyer Behaviour The competition in the airlines industry is putting pressure on each company to influence buyer. Their buying pattern is affected by “social factors, cultural factors, personal, environmental and others which determine their pattern”. (Kotler, 2001) The buying behaviour according to Kotler is influenced by the following Complex Buying Behaviour: “Marketers need to provide more information to consumers so as to retain them” (Kotler, 2001) which Virgin Blue has been able to do well by informing the customers about their flying pattern. Dissonance-reducing Buying Behaviour: “Providing consumers with quality service and product so that they don’t feel like leaving the product”. (Kotler, 2001) Virgin Blue has been able to achieve this by providing proper in crew service and at the same time ensuring service at airports by proper luggage’s and lounges maintenance facility. Variety-seeking Buying Behaviour: “Provide services to ensure that customer don’t switch products”. (Kotler, 2001) Virgin Blue has done it by having rewards for frequent flyers by having reward point. They at the same time offer special prices and incentives to those. Habitual Buying Behaviour: “Encourage more consumers to try the product so that they develop this habit of using it”. (Kotler, 2001) Virgin Blue is working on it by keeping the first few lines of the flights for business class with much leg space; no seat in the middle and ensuring that fly becomes pleasant. Thus, it helps to understand the path which will help Virgin Blue to market its product. Market Positioning Virgin Blue with a relative change in its outlook is looking to position its product “in between the leisure customers who are price conscious and the business class who want facilities even at a higher price”. (Treacher &Pollard, 2004) For this Virgin Blue has used the same aircraft. It had developed it in such a way that it has both the business and economy class. This will help Virgin Blue position itself better and will help to improve its image within the business class people. Cost Reduction Virgin Blue has been successful in branding itself as a cost differentiator. “The company has been successful by developing internal branding in areas which it has no relation thereby ensuring that the company gets the best talent”. (Verma, 2006) This has ensured that the company is able to reduce cost by hiring the best talent who provide quality service. The company to be a cost leader has also ensured that they don’t use printed tickets; the meals provided in the flight have been done away with, operate a single type of flight and make use of the facilities of the airport on a competitive agreement. Pricing Strategy Virgin Blue being a low cost provider uses the “just in time technology where customers get tickets at a lower rate if it is booked in advance as compared to the date nearing the journey”. (Colley, 2001) This strategy is reaping good results as they have integrated technology by being online to sell tickets. The company also prices its tickets “in comparison to its competitors thereby resulting in huge discounting as there are many low cost providers thereby intensifying competition”. (Tansy, 2004) This is making consumers prefer Virgin Blue as they get tickets at a very low cost. Promotion Strategy Virgin Blue to market its airline has used various strategies and developed new ways which will help them work on the new business model which will help them capture a chunk of the business sector at the same time enter new markets. The strategies which will help Virgin Blue are New reward format by introducing the “Corporate Plus fare which is aimed at the corporate sector which offers new incentives like access to lounge, baggage up to 32 kg and priority check in”. (George, 2006) This is a good way and will help to attract more business travellers as they get a comfortable and pleasurable journey. Loyalty programs like “velocity for frequent traveller who get a free life membership card where the points collected can be redeemed for a ticket all the year round”. (Gunter, 2007) This is helping Virgin Blue to promote its service as price conscious people who are frequent flyer can use it and get some advantage. This has helped them to increase loyal. Entering into “partnership with online retailers so that consumers have more easy access to the airlines facility” (Kelly, 2005) has helped them to promote its product. This has ensured that Virgin Blue instead of “relying on the traditional methods has taken advantage of technology” (Kelly, 2005) to promote itself. Conclusion Virgin Blue has a good market share in the low cost sector and with the aggressive marketing strategy and being a low cost provider the company has been able to retain customers. The company has also developed some very good loyalty rewards for frequent travellers thereby ensuring loyal customers. The company change in business model to integrate the business sector has an opportunity for growth as this sector is growing and are will to pay extra which could help Virgin Blue earn extra. Findings Low cost provider and differentiator due to different marketing strategies Aggressive marketing strategies Proper integration of the new model to integrate the business sector with the leisure sector by transforming the industry and its aircrafts High on customer satisfaction due to the in cabin and air crew services Recommendations Virgin Blue by its strong marketing strategy can attract business class as they offer on time flights and pleasure of travelling Virgin Blue needs to use its flight effectively so that the extra burden of flights which might delay flights is reduced as business class want on time flights References Anweshabh T, (2010), “Differentiating the dogs from the stars”, BCG Matrix, Blue Water Press Bamber, 2006, “Market analysis of Jet Star and Virgin Blue Airlines”, Business Category, OPPaper.com, page 6 Coley A, (2001), Virgin Blue Fire sale wreaks havoc online”, Business News, CBS Interactive, A CBS Company George T, (2006), “New Corporate Plus Fare Delivers Significant Cost Savings to Corporate”, News & Press Release, Virgin Blue Airlines Pty Ltd Gunter P, (2007), “Virgin Blue Velocity Program”, Airline Business Media Partner, Edition 7 Kelly M, (2005), “Virgin sleeps around seeks new partner”, Travel trends, Travel Tech, Blue Water Press Kotler P, (2001), Marketing Management, page 201, 11th edition, Prentice Publication, Upper saddle River, New Jersey Verma M, (2006), “Internal Branding & HRM at Virgin”, Internet & e-commerce, OB Case study code HRM0047P Tansy H, (2004), “Virgin defends price war despite losses”, High Beam Research, Australian Business Intelligence News Wire Treacher K & Pollard J, (2004), “Does Virgin Deliver on Promise”, Marketing Strategies, B & T Today Read More