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Virgin Atlantic Case Study


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Virgin Atlantic Case Study

  1. 1. UNIVERSITY OF SAN JOSE- RECOLETOS COLLEGE OF COMMERCE TOURISM AND HOSPITALITY DEPARTMENT HOSPITALITY MARKETING MANAGEMENT CLASS CASE# 4 Virgin Atlantic Airways SUBMITTED BY: Ariza, Gee Kylie Krishna Chua, Zyera P. Comar, Grace Stephanie J. Dahil, Jennalyn Morales, Monique Joy SUBMITTED TO: Mr. Steven N. Sasam DATE SUBMITTED: February 16, 2010
  2. 2. Situational Analysis Demographic Virgin Atlantic Airways entertains the different status, gender and age. Most of the travelers are business traveler and leisure travelers. They allow children ages 5-and above to travel. Below 5 years old, the kid should have guardian ages 16 up or parents. For the unaccompanied child/children, they must follow a certain rule. The Virgin Atlantic also accepts trained pets who accompanied disabled person e.g. Blinds person. Also some of their passengers are packed with friends, families and high yield business travelers. Technological Virgin Atlantic Airways gives importance to technology. Technology could also upgrade the expectations of passengers. Virgin Atlantic Airways knows how dangerous to fly the airplane without further checking of its technology. There are aircrafts engineers that have been researching to improve security airlines. They also implement high technologies to entertain the passengers while waiting for arrival. They don't want the passengers feel bored during the flight. Innovations were implemented in order for the passengers to relax and to feel comfortable. There were video entertainment, Sony watchman on board, individual video screens for every seat; virgin’s onboard entertainment offered 20 audio channels, 16 video channels. Those innovations were created to cater the needs and wants of the customers as well as to understand the passengers needs and go beyond their expectations. They accept any status of passengers. Political-Legal In January 1991, the UK opened Heathrow Airport to Virgin when it abolished the London Air Traffic Distribution Rules in response to pressure from the industry. The London Air Traffic Distribution Rules had come into effect in
  3. 3. 1978, originally created to achieve a fairer distribution of traffic between Heathrow and Gatwick, the UK's two main international airports, to help Gatwick make a profit. The former rules stated airlines without an international scheduled service from Heathrow prior to 1 April 1977 would not be permitted operations there; instead they would have to use Gatwick. Before the abolition, airlines that did not already operate at Heathrow could commence domestic scheduled services there provided BAA, which ran both Heathrow and Gatwick on behalf of the Government, and the Secretary of State for Transport, granted permission. Economic The economic issues in the industry are also mostly concerned with deregulation. The evolution of industry structure plays an important role in determining the robustness and stability of lower air fares in unregulated markets. Deregulation keeps airline fares so low as compared to that of other countries. The reason for this is because despite the failure of most entrants since deregulation, investors continue to create new airlines. Market implications: lowered their airline tickets; discounts for senior citizens; discounts for group travelers. Socio-cultural Virgin Atlantic Airways have quality staff despite of low income. Virgin Atlantic’s employees should have the sense of responsibility in entertaining the passenger’s needs and wants. Branson wanted that their customers also feel the belongingness in the industry. The crew should also have the sense of fun. Sense of fun that while the crew have to work hard, they should have fun and should be satisfied with what they do and what to offer for the passengers.
  4. 4. Environmental Virgin Atlantic is committed to reducing our environmental impacts where we can by becoming a more efficient business, leading the industry to practical and technical solutions and engaging, inspiring and empowering our staff and customers to help us meet this challenge. Together with Virgin Atlantic's biofuel demo and push for more efficient aircraft this is the sort of initiative the airline industry needs at a time when emissions from this sector are growing at nearly 4% a year.” Firm analysis Strengths Opportunities • The dedicated emphasis • The increasing number of on customer service and travelers in the UK is also innovation an opportunity for Virgin • It is headquartered in a Atlantic. country where airline • There might have a push competition is tolerated on the market with its and enhances because latest Heathrow of the deregulation clubhouse. policy. Weaknesses Threats • Lacks transparency • The emerging consumer unlike other Companies mindset thus it is UK and around the dangerous to ride airlines world. because they are • Virgin Atlantic reach only susceptible to terrorist limited countries unlike attacks. other global airlines. • Emergences of new • The company has limited airlines, as there are destination. newly formed ones using
  5. 5. Virgin concepts. Porter’s analysis COMPETITORS SUPPLIERS INDUSTRY Buyers SUBSTITUTE Industry The airline industry is saturated. In a country, it can have more than five airlines, which also compete against each other. Since travel services are derived demand, new entrants should be able to cut a share in the pie in the presently saturated market. Virgin Atlantic Airways, a company with a good background in the industry and they are also backed up by Singapore Airlines. SUPPLIERS The main supplier for airlines is obviously its aircraft manufacturer. In Virgin Atlantic case, the main aircraft manufacturers are Boeing and Airbus. Fuel companies are also one of the key suppliers for airlines, since fuel is the basic necessity for aircraft in order to operate. the airport itself supplies the services
  6. 6. needed by aircrafts. IT companies such as IBM and NCR can be classified as suppliers as they supply IT solutions. COMPETITORS The competitions are very stiff at this point, because of the reduced of the government role and protective rules that lead to the increasing competition among airlines. Competitors in the industry have same capability in terms of interactivity of their web page. The core competence of the Virgin Atlantic Airways is their high technologies, cheap ticket and good schedules. BUYERS Virgin Atlantic Airways is known for the quality service render to their passengers. The Virgin Atlantic Airways offers the cheapest airfare so that the passengers can afford. Passengers were used to purchase their tickets directly from the airlines company. At that time, bargaining power of customers was very low, but now every airline spreads its distribution channel everywhere even overseas to keep up with the competition. This enables the airlines to cover the market, but on the other hand it also grants bargaining power to the buyers. SUBSTITUTE For every product or service a company offers, there is always a potential of a substitute for it. Virgin Atlantic Airways operates completely in air transportation. Air transportation is utilized by people who need to travel faster and time efficiency is crucial for them. If time is not a main consideration, people might choose to travel by sea or land and this saves them a lot of money. The main substitutes for airline industry are trains, buses and ships. STATEMENT OF THE PROBLEM
  7. 7. Primary problem: How will Virgin Atlantic Airways segment and position their firm in the market min order for them to surpass their competitors and become a market leader? Supporting details: Virgin Atlantic airways were founded by Richard Branson. Richard Branson believes knowing the needs and wants of the customers are the best core competence to them. By this way, the company can target all the market. The virgin Atlantic believes that they need to accommodate all potential customers for as long as they can afford unaccompanied children, male and female, employed or unemployed, and their different purpose of travels. The virgin Atlantic Airways don’t practice the marketing segmentation Secondary problem How the Virgin Atlantic maintain their good reputation and their services? Supporting details: The Virgin Atlantic Airways is known for its high technology, offers a best fares and schedules, comfortable seats than other airlines their entertainment system is the best among the others. Passengers expect what they saw in the websites and also in the magazines. A passenger expects good employees as well. But there are more unsatisfied passengers who commented in the internet about the Virgin Atlantic. The virgin Atlantic airways offers a best fares and schedules, the seats are much more comfortable than the most airlines, their entertainment system is better than anyone else. But unfortunately, the seats are tiny with absolutely no leg room in the premium economy class.
  8. 8. The seats recliner button broke. Passenger’s comment about their services and staff. Some of these are: lousy services, uninformed and uncaring employees, arrogant staffs, unprofessional, incredibly rude ground staffs, over-booked flight, inattentive attendants; they take no responsibilities for their mistakes. And they call their passengers foul names. Presentation of the alternatives Alternatives A for primary problem Virgin Atlantic Airways cannot serve all customers in a broad market. The company needs to identify their target market so that they can serve and do their job effective and efficient. Virgin Atlantic can apply the mass-market strategy. The mass-market strategy call on a firm to develop one product the is marketed to all potential consumer this approach considers the market segment with similar wants and needs of the customers. Alternatives B for primary problem Alternatives A for Secondary problem Virgin Atlantic Airways are known for their state-of-the-art facilities and their low price but there are still unhappy passengers because of some failures of their facilities which are not operating well. The main goal of the company is to give “Upper Class service in a low cost”. The management must check their equipments and facilities before and after the flight. So that the management can fix it ahead of time and also to avoid customers complaints. If the entertainment games is not available and must be fix for a longer time, they must informed the passengers about the problem and instead of on flight games, they can have an interactive games like bring me game, guessing game, playing cards and more to entertain the passengers and to avoid them to feel bored.
  9. 9. Alternatives B for Secondary problem Since in gaining good reputation and obtaining a good service, Virgin Atlantic should conduct a disciplinary action for their employees because they are the one who delivered the service to the passengers. The management should give a wish list through the attendants upon entering the plane or upon sitting on their sits. Attendants should distribute this wish list just like during Christmas. The passenger can write what they want during the flight and after the flight. They can wish to buy presents for them instead of them who will go to the duty free. By this wish list, the management and the attendants would know the likes and dislikes of the passengers and to avoid complaints. And they can also offer the Upper Class service to their passengers. Recommendation for the primary problem Recommendation for the secondary problem Gaining the trust of customers is not easy. Therefore we recommend alternative B because by this way the company would know the needs and wants of their passengers. They would also a big help for them because the staff would know what to do and what should not do. And they can give it much better than expected. Implementation and Control What Who When How 1. Globalize Marketing 2-3 years if By expanding on the Virgin Director possible some countries and Brand Name operate in other Further countries
  10. 10. 2. Develop Marketing 1-3 years By identifying the innovative ideas Director needs and wants of of services the customers then, produce 3. Ensuring the Mr. Richard Anytime By keeping their companies safety, Branson and eyes peeled for reputation and the rest of opportunities and success the staff threats of the company. 4. Conduct a Research 6 months-3 Distribute check-list market research Department years for every passenger. To know the passengers wants and likes.
  11. 11. HM11 Personnel Management Case Analysis Evaluation Case No. /Title: Virgin Atlantic Airways Date: February 16, 2010 Particulars Weight Grade Remarks Situation Analysis 1. Sufficient presentation of the relevant issues of the 10% company’s structure and environment 2. Sufficient presentation of the relevant issues of 10% the company’s marketing practices Problem Identification 3. Appropriate identification and phrasing of the 15% case problem(s) – primary, secondary with brie support discussion on the evidence and effects of the problems Alternatives Presentation 5. Development of sound, appropriate mutually 10% exclusive strategic alternatives 6. Construction of rational scenario for each 10% alternative, with relevant, exhaustive discussion of pros and cons Recommendation 7. Sound and thorough discussion of the alternative 15% selected and recommended, justifying recommendation with the strategic factors presented in item 6 Implementation, Evaluation and Control 8. Development of thorough and exhaustive 20% programs to implement and support the recommended alternative, replete with the relevant what, why, who, how much (relevant financial computations), when, where 9. Identification of relevant types of evaluation and 10% control mechanisms to ensure the implementation success of recommendation Final Grade General Comments