Virgin Atlantic - SWOT Analysis, Marketing Mix, and Special Events - Report Example

Introduction

The current international business environment is highly competitive, and the success of a business is to provide unique products and services by focusing on the needs of the target customers. Virgin Atlantic is one of the companies that have started from a small beginning to great success in the airlines industry due to its marketing savvy. The purpose of this report is to examine the performance of Virgin Atlantic in terms of marketing and events, and the impact of its marketing efforts on the organisation’s performance in the market. The first part of the report will provide a short background of the company; its history, turnover, management structure, markets, and corporate goals and objectives. A SWOT analysis will also be conducted to establish the strengths, weakness, opportunities and threats of the company. The report will also explain key concepts of the marketing such as the marketing mix and special events model, and relate them to the marketing approach.

Findings and Analysis

Virgin Atlantic’s Background

Virgin Atlantic is a British airline founded in 1980s by Richard Branson. The initial focus of Branson was to develop an airline that offered quality and value for money. The company started with one airplane and a team of dedicated employees in 1984 (Virgin Atlantic, 2016). By the end of 1980s, the airline had served over 1 million passengers travelling to different destinations of the world. In the 1990s, Virgin Atlantic pursued an ambitious expansion strategy by acquiring new planes, expanding its route network and offering new passenger services. Branson sold 49% of stake in the company to Singapore Airlines (Virgin Atlantic, 2016). The company has received a lot of awards and positive ratings on service quality.

The main objective of Virgin Atlantic’s business strategy is to build its foundations on business and leisure markets, and drive efficiency and effectiveness (Virgin Atlantic, 2016). Its mission is to embrace the human spirit and allow it to fly. This mission suggests that the company focuses on the needs of customers and tries to meet them through the airlines business. The success of the company in achieving its goals and objectives can be seen in its expansion and turnover. Virgin Atlantic started with only one leased plane and rose to become the second largest long haul airline in the UK.

In terms of financial performance, the company earned total revenue of £2.78 billion and pre-tax profit of £22.5 million, which reflects an increase of £10.1 million from 2014 (Virgin Atlantic, 2016). The company also has over 9,000 employees and flew over 6 million passengers to 50 destinations in 2015 (Virgin Atlantic, 2016). As competition increases in the industry, Virgin Atlantic has developed new service systems and invested in new technologies such as new Boeing 789-9 aircraft to improve efficiency and effectiveness of customer flights and services.

SWOT Analysis

SWOT analysis is a business management technique used by managers to determine the strategic position of their products, services and markets when making strategic decisions related to growth and expansion of the business (David, 2011). It entails identifying strengths and weaknesses of the business and opportunities and threats of the market and industry. Ommani (2011) suggest that SWOT analysis can help a business to determine its past performance and come up with solutions to its problems. Whalley (2010) developed a SWOT analysis matrix which has four quadrants categorized as internal versus external and harmful versus helpful factors as shown below:

HelpfulHarmful

Strengths

Weakness

Opportunities

Threats

Internal

External

SWOT analysis Matrix (Whalley, 2010).

Virgin Atlantic also has its own strengths, weaknesses, opportunities and threats that affect its business as shown in the SWOT analysis matrix below.

HelpfulHarmful

Strengths

• Effective customer service
• Financial strengths
• Service quality
• Innovation
• Value proposition

Weakness

• Operates few planes
• Its market is still small
• Little economies of scale
• Small network

Opportunities

• Advancement in technology
• Potential in emerging and Developing markets
• Partnership and alliances

Threats

• Terrorism
• Competition
• Air-traffic
• Fuel Costs

Internal

External

The table above indicates that Virgin Atlantic can take advantage of its strengths in financial performance, value proposition, customer service, and service quality. The company offers superior service quality with attractive cabin and crew as well as respectful and warm treatment of employees (Rice, 2012). The company also creates value proposition through innovation and service quality to create value for money to satisfy customers and improve its customer base (Balmforth, 2009). However, the company faces internal weaknesses such as small networks, little economies of scale and few planes to operate. These weaknesses lead to high production costs and limited access to potential customers.

External threats such as competition from leading airlines such as British Airways also limit the company’s market potential. However, the company may use some opportunities such as advance in technologies and partnerships and alliances to pool resources and increase its market growth potential (Sadler, 2003). For example, the acquisition of 49% stake by Singapore airlines is a good potential to increase its financial resources and penetrate the Asian market.

The Marketing Mix

The marketing mix is a marketing tool used by managers in targeting and meeting the needs of customers in specific markets. According to David (2011), the variables of the marketing mix are used in market segmentation and product positioning strategies. Market segmentation refers to the process of dividing the market into subsets of customers that exhibit similar characteristics, needs and buying habits (David, 2011). It is important in strategy implementation because it enables companies to acquire new markets and develop new products to achieve their organisational objectives. Furthermore, it minimises the use of resources because it does not require mass production, mass advertisement or mass distribution.

Some of the marketing mix variables required by a firm to segment the market and position its business effectively include: product, place, promotion and price (Kotler & Armstrong, 2006). A strategic company should focus on product aspects such as quality, features and options, style, brand name, packaging, product lines, warranty, and service level. These aspects should meet the needs of the target market. Furthermore, the company should focus on various strategies related to the element of place such distribution channels, outlet location, inventory levels and distribution coverage. In terms of promotion, marketers should focus on any advertising, sales promotion, publicity and personal selling strategies that can meet the buying habits and needs of customers (Kotler, 2000). Lastly, companies need to develop the right pricing strategy that considers the price level in the market, discounts, and payment terms.

Marketing Mix of Virgin Atlantic

Virgin Atlantic focuses on the 7Ps of the marketing in various ways. In terms of product, the company suggests in its mission statement that it focuses on creating value for money through quality and service. The company has increased its planes and introduced TV services for its customers to make leisure travels enjoyable for travellers especially tourists who are part of the company’s target market (Balmforth, 2009).

The place or distribution strategy of the company is characterised by multi-channel distribution strategy in which different airline agents and partners are used to acquire customers. For example, the company has used Singapore Airlines to reach the Asia market.

The promotion strategy of Virgin Atlantic is done through advertising and digital marketing. The company’s advertisements can be seen in various print and mass media channels intended to boost the company’s brand name. In digital marketing, Virgin Atlantic’s videos are posted in Youtube and other social media platforms.

In relation to price, the Virgin airline uses a competitive pricing approach. The company offers slightly higher prices than main competitors with a better quality to meet the glamorous and luxurious segment of the market. However, it also plays safe by offering lower prices than other luxurious airlines.

The fifth element of the 7Ps is People. Virgin Atlantic uses its people (employees) as human resources to provide services to customers effectively. Over 9,000 employees of the company are trained to provide effective customer services to make the customers feel comfortable in their flights.

The element of “process” entails the delivery of service to customers. Virgin Atlantic delivers flight services to passengers through three cabin configuration classes – upper class, premium economy, and economy classes. The flights on Morden Boeing planes are enhanced with wider seat and more legroom for the premium economy class. The upper class use seats that can be easily adjusted to become a bed.

Lastly, physical evidence refers to the physical products accompanying services delivered by a company. Some of the physical products of Virgin Atlantic include planes such as Boeing 787-9 and Airbus A340-600 which are used to carry passengers and their luggage. These products are fitted with modern technologies to make travelling comfortable for passengers. The seats are also comfortable because they have enough resting space.

Special Events

Special events are promotional strategies that require face-to-face contact between the company and its customers (Hoyle, 2002). The diagram below shows the different classifications of special events that organisations may consider in marketing.

The figure shows that there are two categories of special events – opt-in-rate events and open rate events. Opt-in-rate events can be implemented through web pages and banners while open-rate events can be communicated through emails (Hoyle, 2002).

Virgin Atlantic Events

Some of the Virgin Atlantic events include tourists’ visits to attraction areas, publicities in busy cities, entertainment events, and shows and exhibition events. From the table above, the tourist visits and shows and exhibitions can be classified as open rate special events while entertainment events and street publicities are opt-in-rate events. To attract visitors to the open-rate events, the company may send emails to customers, partners and employees to participate. On the other hand, entertainment and street publicities are promoted through the social media and website with links to web pages advertised in the social media.

Impact of Virgin Atlantic’s Marketing and Events Strategy

The major impact of marketing and events strategy of Virgin Atlantic is that it has achieved a large customer base and increased competitive advantage. The company started with only one plane and around 1 million passengers in the first year, but it now flies more than 6 million passengers and operates in many destinations. The marketing strategies have enabled the company to meet the needs of the customers and improve its turnover and profits. As competition increases in the airlines industry, the company has also succeeded in reaching the second position in UK’s airlines market share because it offers quality services and value for customers through its marketing strategies.

Conclusion

This report has provided a clear insight into the marketing and events strategy of Virgin Atlantic. It shows that the company’s marketing and events has become effective in meeting the company’s objective of building basic foundations on business and leisure markets, and drive efficiency and effectiveness. The company’s marketing strategy driven by an appropriate marketing mix and market positioning has enabled it to improve the quality of products and value for money, meeting the needs of its target market – the luxurious customers. They provide extra comfort, effective customer services, good technology and multichannel distribution channels to achieve its strategic objectives. Overall, these strategies have enhanced superior financial performance and competitive advantage.