Marketing Analysis of Virgin Atlantic

This assignment involves a comprehensive marketing analysis of Virgin Atlantic, covering its current positioning, competitors, brand value, supply chain, pricing strategies, HR strategy, and SWOT analysis. The report aims to provide an in-depth understanding of the company's strengths, weaknesses, opportunities, and threats, as well as its future prospects over the next 2-5 years.

EXTENDED PROJECT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASKS.............................................................................................................................................1
Market size and structure........................................................................................................2
Customers segment.................................................................................................................2
What makes the company different ?.....................................................................................2
Supply chain ..........................................................................................................................2
Pricing.....................................................................................................................................2
Brand values ..........................................................................................................................3
Marketing ..............................................................................................................................3
Human Resources...................................................................................................................4
Comparison of Virgin Atlantic and their competitors............................................................4
Porter five forces....................................................................................................................4
Ways in which Company has changed its position last few years.........................................5
Recommendations............................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
APPENDICES...............................................................................................................................10

INTRODUCTION
Virgin Atlantic is a British airline having its head office in Crawley which is in United
Kingdom. This company established in the year of 1984 (Merkert and Morrell, 2012). This was
originally created by its co- founders Randolph and Alan Hellary for flying between London and
the Falkland Island at the beginning. It is the British second largest long haul global airline
(Akaka and Alden, 2010). The corporation has approximately 8,875 workers. The company has
code share agreements with different ventures like Delta Air Lines, Jet Airways, Air China, etc.
The present report is explaining how the firm is gaining competitive advantages.
TASKS
Virgin Atlantic's is a well known British airlines which have operations in more than 29
destinations. It has three main operating bases which are Gatwick, Heathrow, Manchester. The
company is operating since last 33 years successfully (Zhang, Shen and Wu, 2011). It has many
competitors, out of which British Airways possess biggest threat to the company ability to
perform. It is also a major company which have more resources than Virgin airlines (Hesterly
and Barney, 2010). The competition for organisation is very tough in UK that is why it focuses
on other countries to ears profits, such as USA.
Virgin Atlantic is currently serving to more than 29 destinations which are profit making
routes for company. It is in the mode of expansion which will allow firm in enhancing its market
share and diversifying risk by reducing dependency on UK market which is mostly controlled by
British Airways or Easy Jet (Sirmon and et. al., 2011). It positions itself in a very different
manner which enables it in attracting customers and increasing productivity. The company has a
tag-line for its positioning scheme, “It refers itself to be a premium airline which is under the
budget of common man” (Chiou and et. al., 2011). Also, they focus on customer experience as
well as hospitality as to attract customers towards its services. They aim to gain competitive
advantage via using different methods as well as strategies. Competitive advantages can be
simply defined as an advantage over the competitors which is achieved by offering customers
unique products in comparison to their challengers . This can be in the form of best quality
services, having greater value which can be provided by means of minimum pricing, giving
greater benefits, etc.
The present status or market positioning of Virgin Atlantic are listed below:
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Market size and structure
The company has an around 5.44 million customers and approx 8,875 number of
employees in the year of 2016. This reflects that it has a larger size in terms of their workers as
well as consumers (Sirmon and et. al., 2011). But the net income of the venture decreases from
2.78 pound billion (in 2005) to 2. 69 pounds (in 2006). The main competitor of Virgin Atlantic
are Emirates, British Airways, Jet Airways, British Midland, etc. (Aaker and Joachimsthaler,
2012). But the company is on a growing stage. They are developing their infrastructure, services
quality, etc. and attempting to provide best services to their customers. Virgin Atlantic is
enjoying a high-level brand image due to the personal sincerity of main owner of the corporation
in practices of brand promotions (The Five Forces, 2017).
Customers segment
There are commonly three segments of people: some are from a rich background, some
of them are from middle sectors and some are from poor backgrounds (Akaka and Alden, 2010).
The company mainly targets to those section of the society that are average in terms of financial
background. So, as a result they cover both the middle one as well as the richer section of the
society.
What makes the company different ?
Venture is using several methodologies for making themselves unique among all other
corporations (O’Connell, 2011). This can be achieved by gaining competitive advantages. They
are using following methodologies for gaining the competitive advantages :
Supply chain
A supply chain is a system of people, data, organizations and resources included in
moving a service or product from supplier to consumers. Virgin Atlantic has its own private area
for waiting the passengers (Hesterl and Barney, 2010).
Pricing
The corporation is providing the cheapest services to their consumers. There are various
pricing strategies can be used by the corporation that are listed below:
 Price skimming: price skimming of can be performed in the market by providing
products or services at a higher price on the basis of minimum volume (Barney, 2012).
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This can be easily referred to superior travellers in markets for services or products such
as British Airways Concorde, business classes, First, Superior economy and Virgin
Atlantic Upper Class.
 Penetration pricing: In this strategy, cost is settled at a low level in order to attract a
large number of consumers, high volume of sales and creating marketing share,etc. This
strategy assists in launching a potential positioning of market (Chang, 2011). Virgin
Atlantic uses the attraction of superior service at minimum costing for entering the North
Atlantic market in a wide-open competition in comparison to good established British
Airways.
 Cost plus pricing: This is created on the basis of addition of extra mark up on the total
cost. Even if it is utilised as an appropriate starting point, it is not the best standard for
determining the cost as it does not consider the key factors (Kim, Kim, and Hyun,
2016).
 Marginal Pricing : This is done based on the price of last unit of outcome, for instance,
price of carrying out extra travellers on a plane (Chiou and et. al., 2011). This would be
likely equal to the price of meal and drinks given to the boards and are very minimum in
relation to the total pricing of maintenance, fuels, staffing and so on.
Brand values
Whether in the fields of banking, entertainment, health and fitness, travel or
communications, the Virgin Brand has become one of the most desirable brands in the globe.
Achievements of brands have been identified by the number of prestigious award schemes
(Sirmon and et. al., 2011). Recently this airline has won or achieved a huge number of well-
respected awards consisting of Best Long Haul Business Airline at the Business Travel Awards,
Business Super brands Awards, Conde Nast Traveller Awards, etc. (Davis, Spohrer and Maglio,
2011) . The back bone of brands are their values that is offering heartfelt services to their users .
Marketing
Company is investing a large sum of money in performing promotional activities. This is
done by using the social media such as Facebook, Twitter, WhatsApp, YouTube, etc. (Schmuck,
2014). This is done for attracting the substantial number of travellers towards their services. This
will assist in increasing their turnover (Gebauer, Gustafsson and Witell, 2011).
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Human Resources
Virgin Atlantic has involved human resources sector in their corporation. This helps them
in recruiting skilled workers such as high personality air-hostess, skill-full pilots, etc. (Greene,
2012). This is very important to hire skilled pilots as lives of thousands of people are in the hand
of two or more pilots (Rosenberg, 2015).
Comparison of Virgin Atlantic and their competitors
There are different competitors of Virgin Atlantic such as British Airways, Emirates, Jet
Airways, British Midland, etc. Virgin Atlantic is providing unique services to their customers.
They welcome their travellers by offering them juices or glass of champagne. But the quality of
food is not good in relation to their competitors (Whyte and Lohmann, 2016) . They are also
providing good entertainment services to their users. But there is a weapon from which Virgin
cannot compete with British Airways that is box sets (BA VS VIRGIN ATLANTIC : WHO HAS
THE BEST PREMIUM ECONOMY, 2017). Seats and headrests of BA are more flexible and
comfy in comparison to Virgin. So, there are lot of areas where Virgin needs to improve itself
for gaining competitive advantages.
Porter five forces
This method assist in gaining the competitive advantages. Main elements of porter five forces are
listed below:
 Threats of New Entry and exit barriers : The entry and exist barriers for the airline
corporation are quite high as it can be recognised from the facts that it takes a lot of
working capital to the enter the sector (Carter, 2013). Virgin Atlantic are facing an
external environment which is comparatively very tough for the new entrants for
entrenching themselves (Hesterly and Barney, 2010) .
 Competitive rivalry: It is also very high and something that affects the corporation very
much. Rivalry between airlines is leading to a more consolidation as the mantra of larger
is good and the scarcity of the profitability is emerging the airlines towards mega bigger
(Li, Miyoshi and Pagliari, 2012).
 Bargaining power of Supplier: The providers of transportation for Virgin Atlantic are
the makers of aircraft such as Airbus and Boeing in addition to the air power fuel
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ventures and the solid ground assistance and treating or handing vendors (Sirmon and et.
al., 2011).
 Bargaining power of Buyers: If there is one force having large amount of influence on
Virgin Atlantic, it is the power of buyers as the industry of airline is essentially a market
of buyer because of the excessiveness of choices, aggravated fare wars and the always
looming threat of minimum cost carrier consuming the market share of established rivals
(Hofmann-Wellenhof, Lichtenegger and Collins, 2012).
 Threat of substitute products: Civilians of the west frequently used to travel by air and
hence the threat of substitute is not much higher for Virgin Atlantic (O’Connell, 2011).
Another remarkable trend is the fragmenting down of leisure time travel and subbing it
with cheapest choices such as budget sail and slow tourism that are entailing less
dependence on air travel (Kaynak and Kucukemiroglu, 2015).
Ways in which Company has changed its position last few years
Virgin Atlantic has completely transformed itself in last 10 years. In 2007, the company
was not allowed to fly on short routes such as, London to Scotland. Today the company has been
given green light to fly on short paths which will give tough competition to British Airways. Its
major competitor (Merkert and Morrell, 2012). There many changes that took place in this time
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Source 1 (Porter’s five forces, 2017)

period, such as, it started earning profits. It is serving to more destinations than before and even
though its profitability is down but company has increased its market value and share (Zhang,
Shen and Wu, 2011). It is one of the late comers in the online world. But today, company has
established its online site and it is focusing on interacting with consumers as to understand the
demand and clear their grievances.
When it comes to comparing company position against its competitors then it can be said
that company is slowly getting back on track. After it has gained permission to fly on short
routes, this profit ratio will go up only (Greene, 2012). In 2016, the company posted a pre tax
profit of 30 million dollars which is a 10 percent rise. While the market leader also posted a
profit rise of 7 percent in profits. From being a premium flying machine to being a budget and
customer oriented company, this is what changed in last 10 years as stated by a senior official in
Virgin group (Barros and Couto, 2013). The company is known in developed market where it
provided products at a higher price bracket. Virgin Atlantic has changed its image in market in
last few years and this has assisted the organisation in attaining a competitive edge. The airline
provider is known to serve consumers in a very effective manner and the ways it differentiates
itself in market is mentioned above (Aaker and Joachimsthaler, 2012). They have changed their
approach towards market which allowed them in overcoming issues which would have hindered
organisation effectiveness. The changes are stated below:
 Shifting resources in developing countries: The company has started relocating its
resources in developing economies like China and ASEAN. (Sirmon and et. al., 2011)
They have understood that consumers living in these markets need qualitative services at
minimum prices and accordingly the company is establishing itself in the market.
 Enhancing travel destination numbers: In the past the company was serving to only 26
destinations which has grown to 36 in last few years (Malaval, Bénaroya and Aflalo,
2014). This shift came when the top managers realised that they need to explore more
market share.
 Aggressive advertising: The company was not focusing on advertising but in the last
few years they invested aggressively into the promotion of company as they understood
that this is the only way to attract more consumers ( Zhang, Shen and Wu, 2011).
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These are the changes which came into positioning of company in last few years. This
allowed organisation in gaining more market share and ensured that all task is completed with
maximum efficiency.
Recommendations
There are some shortcomings in the organisation approach towards the market and other
factors. They need to make certain changes to ensure that they can maintain their competitive
advantage and position in the mind of consumers. At present, there are 3 recommendations for
the company:
 Lower expenditure: They need to cut down the expenses, so that the efficiency rate can
be boosted. This is hampering expansion plans and causing lower profitability to
organisation.
 Increasing the margin of profits: Virgin Atlantic top management has to ensure that
cost of each activity is minimised and they have to focus on expansion plans so that more
consumers are served and profitability is increased.
 Serving more destinations: They must provide transportation services to more
destinations for increasing market share and global presence.
CONCLUSION
In this report, it is stated as how organisation position itself in the eyes of consumers.
There are different areas where they focus and ensure that their efficiency remains higher. Also,
the quality of services given to consumers has to be maintained in order to create a better image
in their mind. They need to relocate all their resources and ensure that they are utilised in an
effective manner. There are certain areas which needs changes and management must make sure
that they are adapting to enhance the company’s growth. As a personal experience and
knowledge gaining from this report, it can be stated that company needs to change its approach
so that it can target more customers and increase its flying rate. It also has to reduce its cost of
operations, so as to increase its profitability.
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REFERENCES
Books & journal
Aaker, D. A. and Joachimsthaler, E., 2012.Brand leadership. Simon and Schuster.
Akaka, M. A. and Alden, D. L., 2010. Global brand positioning and perceptions: International
advertising and global consumer culture. International Journal of Advertising. 29(1).
pp.37-56.
Barney, J. B., 2012. Purchasing, supply chain management and sustained competitive advantage:
The relevance of resource‐based theory. Journal of supply chain management. 48(2).
pp.3-6.
Chang, C. H., 2011. The influence of corporate environmental ethics on competitive advantage:
the mediation role of green innovation. Journal of Business Ethics. 104(3). pp.361-370.
Chiou, T. Y., and et. al., 2011. The influence of greening the suppliers and green innovation on
environmental performance and competitive advantage in Taiwan. Transportation
Research Part E: Logistics and Transportation Review. 47(6). pp.822-836.
Davis, M. M., Spohrer, J. C. and Maglio, P. P., 2011. Guest editorial: How technology is
changing the design and delivery of services. Operations Management Research. 4(1-
2). pp.1-5.
Gebauer, H., Gustafsson, A. and Witell, L., 2011. Competitive advantage through service
differentiation by manufacturing companies. Journal of business research. 64(12).
pp.1270-1280.
Greene, J., 2012. Design Is How It Works: How the Smartest Companies Turn Product into
Icons. Strategic Direction. 28(11).
Hesterly, W. and Barney, J., 2010. Strategic management and competitive advantage. Pearson,
ed., Pearson Prentice-Hall.
Hofmann-Wellenhof, B., Lichtenegger, H. and Collins, J., 2012. Global positioning system:
theory and practice. Springer Science & Business Media.
Li, W. K., Miyoshi, C. and Pagliari, R., 2012. Dual-hub network connectivity: An analysis of all
Nippon Airways’ use of Tokyo’s Haneda and Narita airports. Journal of Air Transport
Management. 23. pp.12-16.
O’Connell, J. F., 2011. The rise of the Arabian Gulf carriers: An insight into the business model
of Emirates Airline. Journal of Air Transport Management. 17(6). pp.339-346.
Sirmon, D. G. and et. al., 2011. Resource orchestration to create competitive advantage: Breadth,
depth, and life cycle effects. Journal of Management. 37(5). pp.1390-1412.
Zhang, X., Shen, L. and Wu, Y., 2011. Green strategy for gaining competitive advantage in
housing development: a China study. Journal of Cleaner Production. 19(2). pp.157-
167.
Merkert, R. and Morrell, P.S., 2012. Mergers and acquisitions in aviation–Management and
economic perspectives on the size of airlines. Transportation Research Part E:
Logistics and Transportation Review. 48(4). pp.853-862.
Barros, C.P. and Couto, E., 2013. Productivity analysis of European airlines, 2000–2011. Journal
of Air Transport Management. 31. pp.11-13.
Malaval, P., Bénaroya, C. and Aflalo, J., 2014. Market Segmentation and Positioning. In
Aerospace Marketing Management (pp. 123-156). Springer International Publishing.
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Kaynak, E. and 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,
Cham.
Carter, J., 2013. Marketing Plan Example: Virgin Atlantic Little Red.
Whyte, R. and Lohmann, G., 2016. Airline business models. Air Transport Management: An
International Perspective. p.107.
Rosenberg, M., 2015. Strategy and sustainability: a strategic logic for engagement with the
environment.
Schmuck, R., 2014. Operations strategies. Regional Formation and Development Studies. 7(2).
pp.133-141.
Kim, S., Kim, I. and Hyun, S. S., 2016. First-Class in-Flight Services and Advertising
Effectiveness: Antecedents of Customer-Centric Innovativeness and Brand Loyalty in
the United States (US) Airline Industry. Journal of Travel & Tourism Marketing. 33(1).
pp.118-140.
ONLINE
BA VS VIRGIN ATLANTIC : WHO HAS THE BEST PREMIUM ECONOMY. 2017. [Online].
Available through:<http://www.independent.co.uk/travel/news-and-advice/ba-vs-virgin-
atlantic-who-has-the-best-premium-economy-10013386.html>. [Accessed on 6th
September 2017].
The Five Forces. 2017. [Online]. Available through:<http://www.isc.hbs.edu/strategy/business-
strategy/pages/the-five-forces.aspx>. [Accessed on 6th September 2017].
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APPENDICES
WEEK 1
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Selection of company name is done which is Virgin Atlantic this week. Here the present
positioning of the company is determined.
WEEK 2
In this week, the competitors of the venture are recognised.
WEEK 3
Here the brand value, and supply chain of the firm are identified.
WEEK 4
In this week, the Pricing strategies and the HR strategy used by the company is analysed.
WEEK 5
SWOT analysis of corporation are done in this week.
WEEK 6
The change of positioning of the company recently is recognised and also where it will be 2 to 5
years are identified.
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