Virgin Atlantic - Service Product Analysis - Case Study Example

Service Product Analysis xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Instructor xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date Executive Summary Virgin Atlantic is the second largest carrier in Britain which was founded in 1984. It operates long haul services to quite a large number of destinations across the world and has been recognized by its innovative standards of service and has set the pace in the air transport. It offers this service with the help of 9000 employees and has at least served more than 53 Million Passengers. Virgin’s Aircraft are divided into three categories: economy, premium and business class cabins. This company has worked hard towards positioning itself accurately in the airline market and this has bore fruits for it is one of the most competitive airlines in the whole world. Virgin Atlantic operates with the plight of customers at their mind and therefore their services are all geared towards ensuring that their customers experience what they cannot experience in any other company. Additionally, this company has a record of having the best innovations and designs that achieve much when it comes to customer comfortably and this has resulted to brand loyalty. To remain competitive in the market and achieve the desired goals and objective, virgin Atlantic need to change some of her operations so as to attract and even more importantly retain the existing customers. For instance, they need to have price differentiation from other companies so as to have a competitive advantage. It is agreed that, Virgin Atlantic services are recommended by many customers who have hand first hand experience with this company. Table of Contents Table of Contents 2 Introduction 3 Service Analysis 5 Positioning 6 Product 7 Price 8 Promotion 9 Process 10 People 10 Physical Environment 11 Recommendations 12 Product 12 People 13 Price 14 Physical Environment 15 Conclusion 16 Bibliography 17 Introduction Virgin Atlantic is the second largest carrier in Britain which was founded in 1984. It operates long haul services to quite a large number of destinations across the world and has been recognized by its innovative standards of service and has set the pace in the air transport. This company employs more than 9000 people and is said to have served more than 53 million passengers. Many of Virgin’s Aircraft are divided into three categories: economy, premium and business class cabins (Goetzl, 2000). Virgin Atlantic holds a United Kingdom Civil Aviation Authority type A operating license and this means that it is permitted to carry passengers, cargo and mail on aircrafts with 20 or more seats. Its headquarters are situated in Crawley, England, United Kingdom. It operates a fleet of 38 aircrafts: 13 Boeing 74712 Airbus A340, with 6 orders of Airbus and 23 orders of Boeing 787 to be delivered in 2013 and 2014.it is worth noting that, airline earn their revenue from transporting cargo, selling frequent flier mile to other companies and the largest portion of the revenue is gained from regular and business passengers (Goetzl, 2000). Price is assigned to their services so that they can be able to maximize profits. Even with the tremendous growth that this company has experienced, it has remained customer driven with its emphasis on value for money, quality and innovation. Its 51% owned by the Virgin Group and 49% owned by Singapore airlines. Singapore bought the 49% when Richard Branson singed an agreement to sell a stake of the company to get a unique global partnership. This sale was completed in the year 2000. Virgin Atlantic has gained considerable market share through effective marketing of their quality, fun, innovative and caring airline services. This has made them have a globally recognized brand which has on the other hand continually increased their market share (Goi 2005). They have also worked hard to ensure that their services are different from the competitors without compromising on the quality and the price of the same. Moreover, they have continually gained roots as airline service providers by always having their customers as the first priority and this has continually increased their market share. Additionally, Virgin Atlantic has realized the marketing strategy in regard to all the interrelated factors that differentiate one company from the other. This being the case, they have actively focused on customer satisfaction, customization of services to suit their customers and the market segment at large (Garette & Dussauge 2000). For example they have differentiated their product by taking customers’’ expectations one step further through continuous communication with the customer. This for instance is exonerated by providing flight ice cream, something that other companies do not offer. In this article, a service analysis of Virgin Atlantic is undertaken, precisely and deeply in the customer oriented service that this company undertakes. Service Analysis This analysis will involve and exoneration from the 7Ps: positioning, price, place, promotion, people, process and physical environment. Positioning This refers to the process of locating a brand in customers’ mind over and most importantly against other products in terms of product attributes and benefits that the same brand does offer or even does not offer (Garcia, Tor, & Gonzalez 2006). There are quite a number of attributes that can be used to successfully achieve positioning. These can be quality and price, use of application, competitions, high tech just to mention but a few. This being the case, Virgin Atlantic has adequately positioned herself in the airline service. This company is rightly positioned as a direct competitor to British Airways on all routes. First the company worked very hard to get slots at Heathrow international airport and has successfully strived to compete with British Airways on all routes into and out of London (Goetzl, 2000). Most importantly, Virgin Atlantic attracts customers by being fun and innovative. It is a matter of fact that, passengers experience spacious setting arrangements, state of the art in-flight entertainment system and high level customer service which makes them an option when it comes to air travel. On the other hand, Virgin Atlantic offers a distinctive upper class services at business class prices. This not enough, they have installed internet capabilities and has implemented Galileo’ Inside Availability (R), an inventory management system that no other airline has tried (PR News Wire, 2001.). Product Virgin Atlantic have three categories of products which are tailor made to cater for the customer’s needs and strength, which include three class services on its long distance flights as well as a new cargo transporting service for bulk goods. The upper class is available in their 747-400. A340-600 and A340-300 fleet of aircraft. This class has luxurious leather arm chair that fold over into a bed, freedom menu service that give passengers a chance to order a wide variety of meals anytime they want during the flight. The upper class also has a board bar, in-flight massage, high tech entertainment system and shower rooms just to mention but a few. Premium economy is accurately designed for the budget travelers who still want extra space and comfort in their journeys. It offers bigger seats, more leg room, and adjustable headrest and recline of seat. As for the economy class, the budget flyer is catered for adequately. It has contoured, space saving seats that offer a maximum amount of leg room available. There are also free drinks, a choice of three meals and in-flight entertainment (Goetzl, 2000). This airline boasts of a customer friendly cabin crew, who are obliged to bringing Virgin experience to the life with the fun and attentive service. Additionally, they give free bag goodies to the customers having personal amenity kit which has all what is needed for ones grooming. This includes toothbrush and toothpaste, earplugs, Socks, eyeshades and even a pen. Additionally, for those travelling with kids are given a special meal for them and dedicated entertainment, and also have an activity pack of full goodies. Their products are all directed to improving the experience of the customers, an issue that is not common with other airline services. Price Virgin Atlantic believes that price is a key element which must be acceptable for the target customer and must have a clear reflection of the other marketing mix elements. Literatures depict that, value of the service is the value which is correlated to it by the service provider and it must correlate also with the customer perception of value (Hunt, 2004). Virgin Atlantic in this case offers a superior service undercutting competitor’s fares. It is even worth noting that, this airline is an exception for it has disclosed objective which is to benefit passengers through lower fares on those routes where other airlines take advantage of bilateral agreements or even absence of competition to keep prices high. The biggest competitor is BA, but still they have not managed to oust Virgin Atlantic from the file for the fare offered by Virgin are relatively low. This is attributed to the basis of network provided by Virgin give it an advantaged position. For instance Virgin fares to NY and LA are £ 100 less that that offered by the competitors. This is however done without the compromising of the value and the quality of the services offered. A comparison of the prices between BA and Virgin Atlantic British Airways £ London –NY Virgin Atlantic London – NY £ First Class 3,900 Upper class 2,400 World Club 2600 Premium Economy 870 World Traveler 700 Economy Class 600 For the table above, it is clear that, customers who transit with Virgin Atlantic get value for their money. In actual facts they get to travel through a low price flyer and get high class services al the same. This shows that, the fares have been set with the customer’s need given the first consideration as well as not compromising their services. This has lead to an increase in market share which has even resulted to competition and price wars with other airline services. Promotion Virgin Atlantic has quite a variety of promotional activities which are aimed at making known their presence everywhere (Curhan, Elfenbein & Eisenkraft 2010). Their promotional activities include TV, press, magazines, outdoor posters and taxi sides, whereby a distinctive logo is featured. These promotional activities are all aimed at encouraging people to try the airline, raise awareness of new product development and new routes. During the traditionally low season, tactical promotions and price advertising are also used to maximize aircraft capacity. Additionally, Virgin Atlantic operates quite a vast number of flyer programs, fly club to encourage loyalty in existing flyers. This being the case, they offer miles which can be exchanges for free flights and other rewards, flying members therefore get rewards with a host of very many other benefits (Goetzl, 2000). This not enough, the company also have travel agents, who are the primary distributors of the airline seats. They also support sales team with wide range of promotions, trade incentives, familiarization trips and educational/social events to make them competitive and conversant with the ever rising competition in the business environment. Their website is also a platform of more efficient communication between virgin Atlantic and customers. They also utilize a vast customer database to further their marketing initiates. Process This is the principle that a company uses for the direct or even indirect involvement of every employee in their customer satisfaction process (Schultz, 2001). Virgin Atlantic’s process is linked to both internal communication through employees and external communication which is realized through strategic alliance to further capabilities. The management structure in Virgin Atlantic allows all heads to report to Richard Branson directly and this creates an active communication with employees. The company also engages in code share and strategic alliance with various airlines which increases the external communication. Additionally, Virgin Atlantic differentiates strongly on customer experience. This is achieved by offering end to end service from booking through their website and a live person where by customers are engaged in real time, giving live chat keeping the customer informed about every process and what to expect (Goetzl, 2000). This being the case, customer queries are dealt with immediately, improving first contact resolution and rising customer satisfaction. People Since Virgin Atlantic is customer focused, much in inclined to the innovation which is aimed at realizing appropriate services. Being a service industry which is correlated to high level of people interaction, the workforce is used efficiently to satisfy customers. Training and development and strong relationship with intermediaries are given the first priority in Virgin Atlantic and highly considered. Training of employees, use of IT for efficiently, both at the staff and agent level are areas that are highly emphasized in Virgin Atlantic. People in Virgin Atlantic all work together towards managing the customer experience and thus they are good ambassadors of heir brand. They carry on their duties with the customer at heart and this has resulted to quite a number who choose to use Virgin Atlantic become loyal customers. Al from the management, are equipped with skills that together they achieve their objectives with ease. In other words all employees understand how his or her works impacts the customer experience. This being the case, leaders in Virgin Atlantic articulates the company’s brand strategy and is committed to the branded customer experience by investing much time and resources which are required to make good things happen (Goetzl, 2000). The people of Virgin Atlantic have made the company rise to the heights it is now. Virgin Atlantic has realized that, people are the face of any organization and therefore, their effort towards their work is of great important. Training gives them a better platform for discharging their skills and they are highly motivated and thus employee satisfaction is well catered for in this company (Oyama, 2001). Physical Environment Physical environment refers to the setting in which service is delivered or even through which an experience is created. This influences the customer perception and behavior and this has been utilized by virgin Atlantic accurately. This company has commendable designs which influence customer’s emotions and their experience at large. This is common for instance in their airport lounge and aircraft interiors designs (Simons 2000). Additionally, there is combination of sensory in the journey design where, the bars and the galley in their aircraft and this means that, passengers are not hit by smell of food from the galley when boarding the plane, but instead the smell of fresh orange juice that greets them. There are brochures which elaborate more about Virgin Atlantic. In their rouges, the furnishing, lighting, layout, decoration, the appearance and attitude of the employees positively influence customer perception of the service quality and experiences. This also happens in the aircrafts which have accurate and beautiful designs which increase comfort. Not all transactions take place in the premises, new technologies including internet are adequately utilized. Recommendations Product Customer service and commitment to passengers is one of the strongest driving forces in Virgin Atlantic. It is a code of practice in this company that sets minimum standards of service for air carriers. However, despite all this efforts, it is impossible not to have some shortfalls. This is attributed to the fact that, not all times things will be running freely and as planned. However, the company needs to have a series of procedures for dealing with customer feedback both efficiently and effectively. There is a need to have an operational and very competent customer relation department which is aimed at dealing with any breakdown in the services standards. They should not only contact passengers in order to resolve the complaint, but they should also pass on the same information to the concerned department to make sure that the same mistake does not occur again. This will ensure more satisfied customers and this will end up to having customers as marketing agents (Goetzl, 2000). In many cases when complaints are not solved efficiently of effectively, the same may occur again and this will be putting the company at a disadvantaged position as far as competitiveness is concerned. This is as a result of certain occasions when there is a certain problem and nothing seems to work or the contacted staff seems not to be conversant with the ways to deal with an issue and seems there are no laid procedures to handle some occurrences in the aircraft. Customers should receive the services as articulated by the standards and anything short of that should be solved immediately and communication made to the said customer immediately. People This is a service provider and therefore much of the work done here involves a lot to customer staff interactions. These being the case, Virgin Atlantic need to ensure that, only those skilled and experienced people are part of their workforce. This is correlated to the notion that, as successful business also needs dedicated, loyal and enthusiastic employees (Britt 2005). The company has to work very hard in ensuring that their employees have confidence in the business and this can only be realized through internal communications department. Much should be aimed at training and further developing employees, especially the use of the new It or people management skills so that customers can be handled accordingly to the benefit of the entire organization. When employees are satisfied, there are high chances that the customer will be satisfied. This means that, Virgin Atlantic must work very hard towards ensuring that their employees are motivated and satisfied. Good working environment and excellent package should be given first priority to the employees for this will mean that, the best skills are retained and this in the long run ensures that there is low rate of staff turnover (Melewar & Saunders 2000). Moreover, when much has been invested in training and nurturing skills in employees, it is of great importance also to invest in aspects that will ensure that the same employees are retained in the company so that it can rip the benefits of the skills and experience of its employees. Price Price in the airlines acts as a platform for harnessing more customers, especially in the era of economic hard times. This being the case, many customers are opting for those services with low prices and uncompromised quality. Due to the flooding of airline service providers competitive prices are of great importance. This being the case, Virgin Atlantic needs to have forms of customer loyalty, incentives and discount programs which will mean that their price will be competitively low. They are precompetitive because this offers benefits, many times in form of low prices as an incentive to customers for them to buy more. Just as this will be of great benefit to the customer, it will also be of great benefit to the company at large. This is due to the fact that, this kind of incentives will encourage repeat business from loyal customers and this will promote competition on merits. Bearing in mind that BA poses as a strong competitor against Virgin Atlantic, there is a need to have substantial differences in their prices as well as many other competitors who are offering prices which are equal to those being offered Virgin Atlantic (Yu & Cannella 2007). None of the companies give discounted rates and therefore this is a better platform for Virgin Atlantic to remain competitive in the market as well as increase on it market share. It is worth noting that, many customers are looking for discounted services and this will benefit the company in a big way. Conclusively, from their customer, they can start rewarding those who are loyal customers by offering them discounted prices rather than charging them like new customers. Physical Environment This is of great importance in this kind of service. This is due to the fact that, where the service is purchased and where it is consumed is equally important. Literature depicts that, when a certain service is opted for, the customer cannot be sure whether they will enjoy them or not (Möller, 2006). Their emotions and expectations are influenced by factors like layout of the aircraft, furniture, noise level, temperature, lights and other factors like the brochure of the company and thus Virgin Atlantic need to consider them as a prerequisite of satisfied customers. For instance, there is a need to have comfortable and long beds in the business class and even more spacious n comfortable seats. Additionally, they need to improve on their technology and have innovative touch screen entertainment system, unique mood lighting, stylish uplifting interiors and in plane mobile and GPRS connectivity. This will ensure that their environment and innovation cannot be copied by any other company. Their lounges in Heathrow are commendable but more innovation is recommended. The passenger should have more of natural light and airy spacious architectural feeling without any compromising of the activities contained within. This will ensure that, customers benefit from a clear sightline, delivering transparency so that they can see the Virgin branded space clearly. This will increase confidence of new customers and it will make it comfortable for them to make virgin Atlantic their option. The seats in the lounges also to be made more comfortable and cozy and also the arrangement of the same are made more appealing to the eyes. This will make customers more comfortable in the lounge. There is also a need to improve on the comfort ability of the seats in the aircrafts by increase some space mostly in the economy class. Conclusion Virgin Atlantic is an\airline which has tremendously grown due to the quality of services offered to the customers. Their position in the market is felt by all the competitors for their services are hard to copy. The standard of their services is all aimed and ensuring that customers are comfortable and this has been successful in attain brand loyalty and thus increasing the returns of the entire company. Bibliography Britt, T. W. (2005). The effects of identity-relevance and task difficulty on task motivation, stress, and performance. Motivation and Emotion, 29: , 189–202. Curhan, J. R., Elfenbein, H. A., & Eisenkraft, N. (2010). The objective value of subjective value: A multi-round negotiation study. Journal of Applied Social Psychology,40: , 690–709. Garcia, S. M., Tor, A., & Gonzalez, R. . (2006). Ranks and rivals: A theory of competition. . Personality and Social Psychology Bulletin, 32: , 970–982. Garette, V. and Dussauge, P. . (2000). Alliances versus acquisitions: choosing the right option. European Management Journal, 18(1), , 63-69. Goetzl, D. (2000). Virgin Atlantic Airways, Advertising Age,. Vol. 71, Issue27 , Page 37. Goi, C. L. (2005). Marketing Mix: A Review of ‘P’. Journal of Int. ernet Banking and Commence, , 10. Hunt, S. D. (2004). Market segmentation strategy, competitive advantage and public policy: grounding segmentation strategy in resource-advantage theory’, . Australasian Marketing Journal, 12, 1, , 7–25. Melewar, T. C. & Saunders, J. . (2000). Global Corporate Visual Identity Systems: Using an Extended Marketing Mix. European Journal of Marketing, 34(5/6), . , 538-550. Möller, K. (2006). The Marketing Mix Revisited: Towards the 21st Century Marketing by E. Constantinides. . Journal of Marketing Management, 22(3), , 439-450. Oyama, D. (2001). Virgin Atlantic Plans to Reduce Capacity, Cut 1,200 Positions. The Wall Street Journal, 1, natl. ed , .:A14. PR News Wire. (2001.). London, Virgin Atlantic Implements Galileo International. Schultz, D. E. (2001). Marketers: Bid Farewell To Strategy Based on Old 4Ps. Marketing News, 35(2) , , 7. Simons, M. S. (2000). Global airline alliances- reaching out to new galaxies in a changing. competitive market-the Star alliance & Oneworld. Journal of Air Law and Commerce, 65(2), , 313-325. Yu, T., & Cannella, A. A. ( 2007). Rivalry between multinational enterprises: An event history approach. Academy of Management Journal, 50: , 663–684. Virgin Atlantic datamonitor Read More