Marketing Strategy Of Virgin Atlantic Airways Tourism Essay

marketing Strategy Of Virgin Atlantic Airways Tourism EssayIt has won business and customer awards from around the world. Virgin Atlantic stands at the second largest international argumentationline to come under the British Long Haul category. Virgin Atlantic holds a linked Kingdom well-mannered Aviation Authority Type A Operating License, which permits it to carry riders, weight, and mail on aircraft with 20 or more seats. It is based out of Crawley, England. Virgin Atlantic operates a fleet of 38 aircrafts 13 Boeing 747s and 25 Airbus A340, with a pending 6 runs of Airbus A380, and 23 orders of Boeing 787 to be delivered in 2013 and 2011 respectively. Over 9000 people are utilise by the company. Virgin Atlantic has been known for its dfferent slogans, as shown. in the past Mines bugger than yours, 4 Engines 4 Long haul, Avoid the Q, Keep Discovering Until You Find The Best, No way BA/AA. Virgin Atlantic not only provides the product and utility, but adds its own style, an d personality to it, which most corporations lack.Geographical commercialiseThe airline attention is classified into four categories by the subdivision of Transportation (DOT) International Plans require 130 or more seats, and usually travel without many limitations destination-wise, and have an one-year revenue of one billion or more Ameri arsehole Dollars.National Airlines with capacities of about light speed 150 people, with an annual revenue between $100 trillion and $1 billionRegional Largely only used for short haul flights, these usually constitute of a total revenue less that $100 millionCargo Airlines that to begin with deal with transportation of goods, rather than passengers.PEST AnalysisPolitical FactorsState owned airlines are particularly affected by these factors. Parts of their business has to be done with consideration regarding pass mountways, free seating for ministers, etc. Private airlines do this as/when it is convenient, and would not go out on a limb. Archaic laws apply on State owned airlines regarding labour regulations, retirement age, etc. which decreases management options due to the strength of the Union, and the controlling of the government. This affects the quality of the service delivery therefore these airlines have to think of innovative service marketing ideas which overcome their problems, speckle keeping them in the running against private airlines.Economic Factors line of business cycles control a large part of the industry. At peaking phases people indulge themselves in travel and fares can be increased. However at economic recession, air travel is considered a luxury, and use of it is often decreased considerably, which leads to minimising business for the airlines, and lower rates.The terrorist attacks known by their date, September 11, led to a global recession, with the depression of the consumers. The outlet of income for airlines led to higher operational costs due to lower demand and higher insura nce costs, which increased after the terrorist attacks. This left the industry with little excerption but to lay off employees, which increases unemployment, decreases consumer spending, thus decreasing their sales. Even the SARS outbreak in the Far East was a major cause for falling off in the airline industry.Social FactorsThe changing travel habits of people have very wide implications for the airline industry. In UK, there are varied income groups, with varied ethnicities. The airlines have to recognize these individuals and should serve them accordingly. The destination, kind of food etc all has to be chosen carefully in accordance with the tastes of their major clientele, while keeping the bod in mind.Another good example would be the case of South West Airlines which occupies a solid impersonate in the minds of the US air travelers as a reliable and convenient, fun, low fare, and no frills airline. The major element of its success was the augmented marketing mix which it used very effectively. What South West did was it make the environment inside the plane very consumer friendly. The crew neither has any uniform nor does it serve any lavish foods, which indirectly reduces the costs and makes the consumers feel comfortable. scientific FactorsInternet alone has drastically changed the airline industry. Air Sahara has introduced a service through the internet, wherein the unoccupied seats are auctioned one week prior to the departure, as an example.Also, most airlines provide many internet based serve to its customer such as online ticket booking, updated flight information handling of customer complaintsTHE controversyAs an independent airline, Virgin Atlantic successfully competes on all of its routes with most of the industrys major national carriers. These include British Airways, bmi british midland, American Airlines, Continental, Delta and United on transatlantic routes BA and SAA to South Africa BA, ANA, Cathay pacific and JAL to the Far East BA to Delhi.THE COMPETITORS SALES AND PROFIT TRENDSThe airlines industry is very competitive, although the barriers of entry for crude airlines are lower in a market with a lack of government regulation. A deregulated market occurs when a government does not dictate airfares, route networks, and other operational requirements for airlines. Deregulation has produced far greater competition and because of this, average fares tend to drop 20% or more. 4 The competition, combined with the freedom of pricing, limit a new airline from competing at its stage, but similarly acts as a major constraint on profitability for established carriers, which tend to have a higher cost base.TABLE 1 Top 25 Global Airlines Revenue 2006Airline Lists2006 Revenues (Million US)%Air France KLM28,945.0010.28Lufthansa24,903.708.85AMR sens22,563.008.02 lacquer Airlines System Corporation18,905.406.72UAL Corporation17,882.006.35Delta Air Lines, Inc.17,171.006.10Continental AG13,128.004.66Northwest Airlin es Corporation12,568.004.47All Nippon Airways Co., Ltd.11,765.804.18US Airways collection, Inc.11,557.004.11British Airways Plc10,654.603.79Qantas Airways10,272.203.65Singapore Airlines Limited9,119.303.24Southwest Airlines Co.9,086.003.23Air Canada Inc8,934.403.17Korean Air Lines Co., Ltd.8,328.602.96SAS Group8,236.902.93Cathay pacific Airways Limited7,823.802.78Emirates Group7,423.202.64Iberia6,473.802.30Alitalia-Linee Aeree Italiane S.p.A.5,927.502.11Virgin Group3,518.101.25TAM S.A.2,515.500.89Air India2,060.800.73ExpressJet Holdings, Inc.1,679.600.60Total281,443.20100.00Source Datamonitor (www.computerwire.com)MARKET SHAREThe Companys Market Share stratumTotal passengers carriedTotal cumulative1984124,711124,7111985245,404370,1151986289,060659,1751987464,1961,123,3711988626,3191,749,6901989619,5062,369,1961990837,1363,206,33219911,044,7604,251,09219921,239,0115,490,10319931,398,8346,888,93719941,679,4038,568,34019952,029,62410,597,96419962,293,80212,891,76619972,806,53815,698 ,30419983,201,79518,900,09919993,622,40222,522,50120004,280,51326,803,01420014,105,11530,908,12920023,808,68734,720,68920033,850,57838,571,267Source http//www.virgin-atlantic.com/en/gb/allaboutus/ourstory/forstudents.jspTarget MarketsVirgin Atlantic offers very individualized services to their customers, due to their belief in the importance of individuals. Virgin Atlantic has targeted upper class customers who are primarily business passengers traveling on transatlantic routes. Virgin Atlantic realized the probability to gain a considerable market share through effective marketing of their quality, fun, innovative, honest, and caring airline.Business travels are often those who travel several propagation through a year, and often tend to purchase upgraded services, which is beneficial for the airline. On the other hand, leisure travelers are less likely to purchase these premium services as they are usually price sensitive. In times of economic uncertainty or sharp decline in co nsumer confidence it is expected for the core of leisure travelers to decline.The Companys Sales and Profit TrendsY/E April 2003 2004 2005 2006 2007TURNOVER 1401m 1272m 1630m 1912m 2140mPROFIT 15.7m 20.9m 20.1m 41.6m 46.8mSWOT AnalysisStrengthsWeaknesses-Brand image-Increased traffic-Financial strength-Declining market share in key markets-Lack of scaleOpportunitiesThreats-Expanding passenger traffic in Asia-Increase in trans-pacific cargo-Partnership with ANA-Cargo price-fixing investigation-Rising aviation fuel prices-Terrorist attacks and scares deter passengersfrom flyingSource Virgin Atlantic DatamonitorStrengthsStrong brand imageVirgin Atlantic is a part of Richard Bransons Virgin Group, which has strong brand image, and is known across most of the world.Increased passenger and cargo trafficVirgin Atlantic put down higher passenger and cargo traffic in 2006, as compared to2005. The number of passengers carried by the company rosebush by 3.7% to 4.5 million.The quantity of c argo and mail carried increased by 9.1% to 163,165 tons.Strong financial positionThe company has witnessed strong revenue growth in fiscal 2006. It recorded revenues of 1,912 million in fiscal 2006, an increase of 17.3% from 2005. The operational profit of the company was 41.6 million during fiscal year 2006 as compared to 20.1 million in 2005. Moreover, the operating margin of the company in like manner increased from 1.2% in 2005 to 2.2% in 2006.Privately OwnedVirgin Atlantic is privately owned therefore, decisions can made quickly.WeaknessesDeclining market share in key marketsDespite strong brand image and improved financial performance, Virgin Atlantics market share has declined in most of its markets in 2006. Its market share in New York, East Coast, Caribbean, India and China has declined from 25%, 21%, 59%, 23% and 22% in 2005 to 24%, 17%, 57%, 18% and 8%, respectively, in 2006.Lack of scaleThe company operates 27 destinations whereas, its top competitors British Airways andThai Airways International operates 148 and 600 destinations worldwide.OpportunitiesExpanding passenger traffic in Asia PacificDriven by increased economic activity in emerging Asian countries such asChina and India, demand for air travel to the Asia Pacific is rising. Virgin Atlantic already has significant presence in this region and is well positioned to benefit from increasing air travel to Asia.Increase in trans-pacific cargoThe outlook for trans-pacific cargo market is positive. During 2006-2009, the market is expected to increase by an average of 7%, an increase from a 4.3% average annual growth recorded during 1999-2004. Because Virgin Atlantic operates Virgin Cargo, a worldwide air cargo business, this will allow opportunity for the company to further strengthen its market position in cargo.Partnership with ANAIn September 2006, Virgin Atlantic announced that it has teamed up with one of the worlds ten largest airlines, All Nippon Airways (ANA), which allows Virgin Atlan tic passengers to fly to Japan on ANAs domestic services. This new arrangement with ANA would enable the company to offer better service to its customers.ThreatsCargo price-fixing investigationThe US Justice Department and the executive body of the European Union have launched an investigation into allegations of price-fixing in the air cargo industry in February 2006 and one of the companys investigated was Virgin Atlantic. If the company is rig to have participated in price-fixing, it may have to pay a significant fine and investor confidence could also be impacted.Rising aviation fuel prices receivable to the rising oil prices globally, the prices of aviation fuel have increased substantially. This could impact Virgin Atlantics margins as it is mostly reliant on air freight business.Terrorist attacks and scares can deter passengers from flyingWhen terrorist attacks occur, it places fear in potential customers, and can deter individuals from flying.SEGMENTATIONVirgin Atlantic has two primary segments Upper Class, and preservation class, with Economy Class segmented further to Premium Class, and Regular Economy, consisting of regular economy fare and coach fares. The premium class includes a separate economy cabin for full fares and option to pay extra for chauffeur driven cars and clubhouse lounges. The Upper Class is generally comprised of males between 35 to 45 years of age and that earn more than $75,000 a year. The Premium Economy is used evenly by business and leisure travelers, usually around 40 years of age. merchandise mixProductFor an airline, a marketing mix must be developed keeping both in-flight services, and ground services in mind, while also considering it as a tangible product, as well as a service.On the ground, transportation to and from the airport, online bookings, and check in services as well as duty free shopping, and parking options.In-flight services are most customers primary focus. Staff training becomes essential here, to allow customers to feel approached as they would appreciate, in order to to form customer loyalty and satisfaction.PriceMost airlines use competitive pricing for both economy and business travellers. The ticket fare is divided like soBasic fares subject to availability, class and destination.Insurance standardised.Inland Aviation Travel Tax (IATT) depending on the country intended to travel to.Passenger table service Fee (PSF) standardised.Also airlines use seasonal pricing. Tickets are usually more expensive when purchased during peak seasons such as holidays.PromotionIn the UK advertising consists primarily of TV, press, magazines, outdoor posters and taxi sides, all featuring our distinctive logo. Advertising allows awareness to be raised of current products, their improvements, and new products, as well as appeal to consumers personally. postal service allows more direct advertising to target markets and consumers, while informing known customers of improvements.During traditionally low seasons, tactical promotions and price advertising are also used to maximise aircraft capacity.Virgin Atlantic operates a frequent flyer programme, flying club to encourage loyalty in existing flyers.Virgin also markets to travel agents, who are the primary distributors of their airline seats. Along with the usual advertisements, the sales team offers various trade incentives, familiarization trips, and educational/social event deals.ConclusionMarketing is, very evidently, the Virgin Antlantics key strength. However, the airlines limitations in destinations, is restraining their growth increase. Richard Branson, himself suggested that Virgin Atlantic will be able to reach market-leader reputation if expand from the trans-Atlantic routes, to across the world, while keeping its service, which acts as its key difference between them, and the rest.