Virgin Atlantic: Marketing Mix Analysis

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Introduction

Virgin Atlantic is the business name of Virgin Atlantic Airways Limited, and Virgin Atlantic International Limited. It is an airline, operating under the Virgin Group, that was initiated by Sir Richard Branson. Its maiden flight was made in 22nd June, 1984, and the entity has proceeded to evolve and grow to become one of the leading service providers in the United Kingdom. The airline also represents the values reflected by the “Virgin” brand, which is ‘the value for money, quality, innovation, fun and a sense of competitive challenge’ (Virgin Atlantic, About Us, n.d.)

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Currently, the Virgin Atlantic airline is controlled by the Virgin Atlantic Limited holding company, with a 51% stake vested by the Virgin Group under Sir Richard Branson, and Delta Airlines which has a 49% stake. Its head offices are situated in Crawley, England and operate in the United Kingdom, out of Heathrow Airport. Despite having only about 3% of slots in the busy airport, the airline enjoyed approximately 10% of movements, and a further 23-24% market share in the North Atlantic region by 2010 (Kingsley-Jones, 2013).

Before the entry of Virgin Atlantic into the foray, British Airways had been the only service provider from the United Kingdom that offered long-haul routes to destinations in the Far East, the Caribbean, and North America (Kingsley-Jones, 2013). Due to its market positioning, and target demographic, Virgin Atlantic is a primary competitor to British Airways, but also other comparable airlines including Cathay Pacific, Lufthansa, and American Airlines. These are the airlines that the following market analysis of Virgin Atlantic will be compared against, as well as assessing its position within this industry.

The airline industry was a highly profitable sector during the rapid expansion period that preceded the 1969 slump. However, in modern times, the industry has faced significant decline, and is widely considered a hostile, unattractive market, particularly in regards to its returns on investment (Hutchkinson, 2011). The decline of the airline industry has been identified to rely upon several influencing factors, including volatility in fuel prices, natural catastrophes, economic crises, increased politicization of the sector, and harsher legislative and institutional regulations (Hutchkinson, 2011).

To effectively secure a market share, and expand in the face of these burdening circumstances, airlines are required to go above and beyond to design a marketing strategy, and differentiate their services. Virgin Atlantic is undoubtedly exerting its marketing effort into solidifying its brand image, and creating brand awareness and presence by highlighting the experience of using its services. However, this may not be sustainable as Hutchinkson (2011) asserts that the general perception on flying has increasingly become so universally unappealing that ‘airlines competing on superior service is like a dentist competing on the basis of having a more comfortable chair’.

The 7Ps Marketing Mix

The conventional 4Ps Marketing Mix model do not offer sufficient scope for many modern products, and especially services. While the extended marketing mix, also called the 7Ps marketing mix, were developed purposefully for the service sector, they are in essence more appropriate for products today, which have become heavily service-oriented as well (Akroush, 2011). The 7Ps Marketing Mix framework is especially useful in analysing the market strategy of Virgin Atlantic, from the strategy formulation and implementation of the brand’s marketing. Further, as a service-oriented player in the airline industry, this framework is highly appropriate. The 7Ps work in tandem, with each element ideally complementing the next, rather than clashing with it.

The extended(7Ps) marketing mix
Figure 1: The extended(7Ps) marketing mix

Product

The product, particularly in the marketing mix framework is the core offering presented by a company. This is the package presented, that is aimed at fulfilling the needs of the consumer and therefore, if the product is faulty, the entire business model and marketing strategy fails. The product, and its attributes vis-à-vis competing offerings and substitutes are essential in the assessment of competition, and as a result, the marketing strategy formulated and implemented.

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In the service-oriented industry, the product includes all components of the service delivery that create value to the end-user or client. In this case, therefore, the product would be air travel by Virgin Atlantic. The value of the product would be objectively determined by several factors, including travel comfort, time management, additional services and amenities offered, travel times and so forth. The Virgin Atlantic strategy is to corner the target demographic and streamline their service delivery, or product offering to this specific subset of passenger, with their particular needs.

With the Virgin Atlantic product, their service delivery follows a recognizable ethos that their clientele relates with. This is achieved via a consistent brand image that stands for “value for money, quality, innovation, fun and a sense of competitive challenge” (Virgin Atlantic, n.d.). As a result of this, the company seeks to fulfill the customer’s need for air travel, and surpass it by offering additional amenities that surpass their basic needs. With a small fleet of planes, which are about 30+ in number, and serving about 34 different routes, the company can therefore focus more in the service delivery and provision of additional amenities to each individual flight and unit. The company employs a three-class cabin configuration, structured as Economy, Premium Economy, and Upper Class, with each class offered their wide range of amenities and luxuries (Kaynak & Kucukemiroglu 2015). As a premier airline focused on quality, its cabins have wider seats and more legroom, with passenger access to lounges and luxury facilities, priority check-in, and different menus. This allows the client to look forward to their flight, rather than use the service simply because they need to.

Price

At often times price is taken to be a proxy for quality. This is because of the running tab that when something is quite expensive then it must be of a very high quality. Virgin Atlantic Airline being among leaders in its industry incorporates this into its pricing strategy. The airline industry especially being high end is very lucrative and therefore Virgin Atlantic Airline faces competition from formidable opponents such as British Airways, American Airlines, Cathay Pacific and many others. In order to stand out among all this listed airlines, Virgin Atlantic believes that for any given customer looking for luxury, price is not the main driving force for choice but the best quality is. Based on this Virgin Atlantic has directed its efforts into ensuring they provide the best quality there is for their customers. You would expect with such a mantra their prices must be exorbitant. Virgin Atlantic understands that it’s a competitive market and sometimes quality alone will not cut it and hence it has a comparative pricing strategy. This ensures that their products and services are priced lower by a hair compared to its competitors such as British Airways. Even though they are still slightly higher than economy flights, they have a demographic and people prefer them for this. On top of that Virgin Atlantic provides high and low seasonal prices depending on the travel destination. The low seasonal prices are predominantly in the months of January, February, September and December while the high seasonal prices are predominantly in the months June, July and August. Virgin Atlantic further has special offers and discounts in order to attract more customers to their airline.

Place

The geographic location and accessibility of a product or service can deter a customer. Only time you can negate place depends on the type of product or service and customer loyalty. Services are often preferred based on their place utility. In the case of Virgin Atlantic Airline, place will be the destinations it offers and the number of flights. The company has an extremely large distribution channel. Virgin Atlantic’s products are distributed online on their website which makes very convenient for someone looking to book a flight does have to go their offices. Virgin Atlantic has contact information also such as telephone services which you can use for flight bookings and other services. Virgin Atlantic has also employed tour operators and works with travel agents to ensure their easier accessibility even though they are based of Crawley, United Kingdom.

Virgin Atlantic Airways provides worldwide flights but it operates from three places in the United Kingdom which are London – Gatwick Airport, London Heathrow Airport and Manchester Airport. The company owns a limited number of flights approximately 39 which offers services to 29 destinations. It uses the flight distribution channel to sell some of their products such as meals and offer some other services such as entertainment. It also has three different classes for their flights which is also part of place. The three different classes are economy, premium economy and upper class. This different classes act as place through the level of comfort provided for different target class of customers whether it is middle-income earners, business people and those that want the high-end services. It is also important to note that the company has offices in other different cities e.g. Hong Kong, Barbados and others.

Promotion

The company also employs monolithic branding whereby the striking color red is employed across all branding and is fairly consistent throughout. Furthermore, the name “Virgin” is stylized in a consistent font across all the company’s offerings, making the logo to be instantly recognizable. As a result of this prominence, a consumer may get the impression that the company is trustworthy and reliable, especially if they have used a different service or product in the Virgin group.

Virgin Atlantic also employs a diverse array of promotion outlets, from the novel social media implementation, with the use of social “influencers” such as Kendall and Kylie Jenner, to more conventional means including Television, Magazines, Outdoor posters and taxi sides, and the press. These all bear, in one form or the other, the depiction of the prominent Virgin logo in its signature font and colour schemes. Advertising is employed to persuade people to try the airline, while creating awareness on new routes, and new product development.

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During low seasons, price advertising, as well as tactical promotions are employed to bolster flight capacities. The airline also employs a frequent flyer program with loyalty programs and rewards for existing and repeat customers. These can be exchanged with respectable rewards, including free flights, and a host of other benefits. A tier offered in this program is also the “Flying Club” membership, whose members enjoy specialized support access, and Clubhouse access as well.

Special events and marketing drives are employed by the company to improve outreach to specific subsets of its target demographic or the general public as well. For instance, the “Still Red Hot” campaign marked the 25th anniversary of the airline, and as a result sought to target the youth, particularly those in the 25-year age-group. The marketing campaign was employed in 13 of the airline’s major markets, with special emphasis in the US, the UK and Australia (Coursaris et al. 2014). The primary objectives for the marketing is to create product awareness, while providing incentives to select the airline.

People

People are a crucial element in the service delivery domain. The importance of this element can be expressed with a relatable analogy, whereby a delicious meal may be soured by poor service from the waitresses. In Virgin Atlantic, the cabin crew dons instantly recognizable red outfits that are a long way from the more neutral colors worn by cabin crews of other comparable airlines. Trust is built in people, and the easy recognizability of Virgin Atlantic Cabin Crew may elicit nostalgia in returning clients, and curiosity from new ones, enhancing customer acquisition and retention.

The brand identity of Virgin Atlantic is also heavily intertwined with its owner, entrepreneur Sir Richard Branson. He does embody the brand, and also uses his recognizability by the general public by appearing in the airline’s commercials and informercials. He is also rather active in Public Relations stunts in association with the company with one of the most widely covered and beloved ones being when he lost a bet with the CEO of Air Asia on Formula 1, whereby the loser ought to serve as a female flight attendant in the victor’s airline. This penalty, and Richard Branson’s appearance was heavily covered in the media, and sought to reinforce the Virgin Atlantic brand of fun (CNN, 2013). This ethos was further reinforced with the recruitment of both Kendall and Kylie Jenner, who developed a video introducing the bars and massage parlours offered by the airline by demonstrating how fun the entire experience was.

Process

Processes, in the context of a marketing mix, can be broadly seen as the means employed to achieve an idea outcome. This element usually has an input, a throughput, and the output or ideal outcome(s). In a service delivery environment, processes may comprise direct activities, which add value to a customer interface and improve the consumer’s experience of the service, or an indirect activity which supports the development of the service, providing support before, during, and after it has been consumed

Additionally, process mapping will make sure your services are deemed as reliable. Process begins even before a service is provided. It begins with the prospect making first contact with the service provider whether it be going to their website, making a phone call to customer service, reading a brochure and so on. Virgin Atlantic has ensured they have a very user-friendly website and on a server that is ran diagnostics regularly. Their website also allows for the performance of a lot of services all in one platform making it very convenient. The company has also recruited well trained and friendly employees to handle any customer interactions be it queries, looking for a service and complaints. The most important thing is the process of actually delivering the service. For example, even though booking a ticket did not require any hassle a customer will still be dissatisfied if there was a confusion of maybe their destination or class they booked. That’s why Virgin Atlantic has an airtight process aimed at providing maximum customer satisfaction. The company conducted an empirical test before adopting the process and did market analysis. If you are a prospect wishing to fly with Virgin Atlantic your first step is to either visit their website or use a local travel agent to book for you a flight. You are then provided with a ticket containing details of your itinerary and luggage. On arrival at the airport there are check-ins based on your class. There are also lounges on where to wait before boarding.

Physical Evidence

Physical Evidence refers to the environment within which the service in review is rendered, and where the service provider and customer primarily interact. This environment forms an essential part of the service experience, and therefore becomes synonymous with the service provider in the client’s perspective. Further, the location from where the service provider interacts with their clients, as well as the physical elements within it facilitate service delivery, and differentiate one service provider from the other. Therefore, it contributes significantly in the cultivation of brand awareness, and customer loyalty.

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This awareness is what has fueled Virgin Atlantic to embrace the market principle of service delivery, where the client is king and real value for money is availed when purchasing air travel service from the company. The overall message relayed from the company to its target consumers, who are primarily corporate level and business-class individuals is class and luxury, and this is apparent from the physical evidence deployed as a marketing tool; including the interior design and décor, seats, lounges, waiting rooms, dressing and uniforms, the company website, equipment and the planes, landscape, entertainment, ambience, food and refreshments, parking and signage.

The company website is themed in red, which is striking without being overwhelming. Further, it provides sufficient information that reduces the necessity to visit the company offices for information. The information itself is catalogued in a manner that is both easy to access, and understand from the client’s perspective and illustrates additional functionality accordingly. The website is also mobile optimized, which allows a greater deal of versatility in access (Virgin Atlantic, n.d.). As a complementary addition to the website, the company further has a mobile app calls The Virgin Atlantic App. This allows the customer to allocate their seats, and check on the status of their flights. It further outlines various flight schedules, the tier points of the clients Flying Club Account, destination videos, and games, which makes it the ultimate digital companion.

Virgin Atlantic also offers clubhouses for relaxation and enjoyment in various cities including Hong Kong, Washington, Heathrow, Johannesburg, and Tokyo among others. In these establishments, guests are welcomed to high quality furniture and company-themed décor that enforces the brand awareness. There are also diverse amenities offered, from a bar with cocktails and beverages, and restaurants for food, to quiet nooks for reading or work. In addition to these clubhouses are lounges, which despite being for lesser price-tier travelers, exude elegance and a keen sense of class and detail (Virgin Atlantic, n.d.).

From economy class tier, to the upper tier passenger, the experience and service within the plane is unmatched. The planes have sufficient seating capacity and legroom regardless of the price-tier with amenities offered by distinct cabin crew wearing red uniforms. Entertainment is available in the form of movie catalogues that are also age-appropriate. The ambience is exemplary, with complimentary food and beverages supplied in-flight (Virgin Atlantic, n.d.).

How this Marketing Mix Contributes to Achievement of the Satisfaction of the Target Market

The brand awareness, and overall strength of the Virgin brand has found implementation in several complementary businesses, including Virgin media and telecommunication, which further improve the overall experience of brand-loyal consumers. The brand has become known for pleasure, superiority in quality, value for money, and superb customer service. The airline provides recommendations to consumers for other subsidiaries of the group who abide by the same ethos for a more holistic service delivery to consumers.

Organizations, irrespective of the domain in which they operate, often struggle to acquire new clients, as well as maintain those who already indulge by developing customer loyalty. This is the very nature of a competitive environment. However, this competitive nature of a market necessitates the need for a marketing strategy (Wright, 2009), such as that employed by Virgin Atlantic, and in essence, the greater Virgin Group. While the entire Virgin Group is a multinational company, with multitudes of customers located within different countries, the effectiveness of the customer-centric marketing approaches can be assessed in various domains.

The price tiering in Virgin Atlantic is especially sensitive to demand and affordability relative to prevailing market conditions (Wright, 2009). An apparent example is whereby the airline employs six pricing tiers to choose from, which ensures an option for everyone, regardless of the money they spend. Furthermore, the competitive pricing ensures that competing airlines in the same market are often pressured to lower their prices as well to remain competitive within the market which offers more value for money to passengers.

It is worth noting, however, that consumers are often willing to pay higher, if a better level of satisfaction can be obtained (Chekitan & Schultz, 2005). Virgin Atlantic has made its brand name synonymous with this additional service delivery, which promises its target demographic a better travel experience despite of their budget, ensuring the competitive product and service delivery.

The exponential development of the airline is also a positive trend towards customer satisfaction, with novel technologies such as e-commerce being implemented in the sector as well. Virgin Airlines is significantly capitalizing on the new market landscapes, with efficient product deliveries to clients in many areas of the globe through online purchases and delivery using their cargo planes. As the airline is relatively small and streamlined, decisions can be implemented easier, allowing further versatility within the market as well.

Strategies on How to Improve each of the Marketing Mix elements

There is the opportunity to appeal and access a larger subset of the population by incorporating improved accessibility to disabled individuals on the company website, the application, and its planes, and lounges. For instance, the company website and application can include high-contract modes for individuals with impaired sight, as well as screen readers for better accessibility. Further, the company lounges and clubhouses in airports, as well as the airplanes themselves can be more wheelchair accessible or friendly to ensure more inclusion, and therefore, a greater clientele-base.

Virgin Atlantic can also implement an improved transference of its loyalty programs to other carriers. Virgin Atlantic has not yet joined an alliance to provide loyalty programs to its clientele as of yet. This hinders its loyalty programs, relative to its direct competition which includes Cathay Pacific, British Airways, and American Airlines, who are all members of Oneworld, and Lufthansa, which is a member of Star Alliance. As a result, clients of Virgin Atlantic are only able to transfer their air miles to a select and limited number of other carriers of whom they have a code-sharing agreement, despite the airline’s loyalty program itself offering attractive rewards.

Finally, an analysis of market trends within the airline industry suggests a significant growth in the Asia-Pacific market. Thus, a subsidiary airline, that could be rebranded as Virgin Pacific, and focused primarily in scope and marketing to this region would be a natural product development progression. The company’s foray into Hong-Kong, Tokyo and other Asian markets already establishes some brand awareness in this market, with its further involvement with Singapore Airlines making it rather reputable and trusted, if only by association. This is a definite opportunity to expand on the Virgin Atlantic brand.

Conclusion

As a brand, Virgin Atlantic has identified and mastered is marketing strategy, that hedges heavily on brand awareness and recognizability. Its ethos, outlined as “value for money, quality, innovation, fun and a sense of competitive challenge.” (Virgin Atlantic, n.d.) has proven to be a viable marketing wagon for the company’s agenda, and has been in the most part successful. This is evident in the airlines popularity, as a primary service provider in the United Kingdom, and competing in the same space as bigger service providers as the British Airlines. This further underlines the requirement for an effective marketing approach, one that is consumer-centric, and then allowing the enterprise to scale to accommodate the increasing capacity.

References

Akroush, M. N. (2011). The 7Ps Classification of the Services Marketing Mix Revisited: An Empirical Assessment of their Generalisability, Applicability and Effect on Performance Evidence from Jordan’s Services Organisations. Jordan Journal of Business Administration, 153(3141), 1-32.

Kaynak, E. & Kucukemiroglu, O., 2015. Marketing Airlines Internationally: US Travellers’ Attitude Toward Domestic Versus Foreign Carriers. In Proceedings of the 1993 Academy of Marketing Science (AMS) Annual Conference pp. 176-180. Springer International Publishing.

Wright, R. (2009). “Branson urges £1bn rail spend”. Financial times. 12-15.

Chekitan, D., & Schultz, D. (2005). In the Mix: A Customer-Focused Approach Can Bring the Current Marketing Mix into the 21st Century. Marketing Management 14.1. 10-20

Virgin Atlantic. (n.d). Web.

Hutchinkson, M. (2011). Why the Economics of the Airline Industry are Hopeless. Web.

Kingsley-Jones, M. (2013). Dollars and sense: as incoming chief executive Craig Kreeger looks for a quick financial turnaround at Virgin Atlantic, he is relying on new partner Delta to unlock more revenue from the USA and smart fleet roll-over plan to cut its high fuel bill. Airline Business, 29(9).

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