Virgin airlines is a leading airline company which was formerly better known as Virgin Blue Airlines. It is Australia’s second largest airline. The airline is co-founded by the famous businessman and serial entrepreneur Richard Branson. The airlines came into existence in 1999 and currently serves over 30 cities of Australia with hubs in Brisbane, Melbourne and Sydney (Krupp & Schoemaker, 2014). The airline offers economy class, upper economy class and business class services to its customers. The enterprise has done a tremendous job at targeting and catering to a varied market with its no frills as well as premium paid services. The biggest competitor of Virgin airlines is British airways besides Lufthansa, American airlines and Cathy pacific.
This report throws light on various strategies used by Virgin airlines and their success as well as failure in the business. The airline industry on the whole is growing at a rapid pace. This is dedicated to factors like improved lifestyles, slashing oil prices and increasing globalization which is making the world a flatter place (Homsombat, Lei & Fu, 2014). During the past 20 years, international aviation capacity has grown from 9.3 million inbound seats in 1995 to 24.6 million seats in 2016 (Tourism Australia, 2017). But the increasing growth of the industry has been complemented by increasing competition among the players of the industry. Product competent airlines are offering better in flight services while price competent airlines are offering lower cost to customer for travel.
At present Virgin Airlines has witnessed a drop in the number of customers as well as total generated revenue (The Economist, 2014). A few reasons for the decline may be attributed to the market and industry scenario while a few are the marketing loopholes within the branding of the airlines. To gauge a better understanding of the industry, PEST analysis tools has been used as given below:
Richard Branson bids goodbye
Richard Branson has given up control of the Virgin Atlantic by selling 31% share in the airline that he fondly cofounded (The Guardian, 2017). The company has grown leaps and bounds under the impeccable leadership of Sir Richard Branson. The brand has often utilized the charm and charisma of the ambassador to enhance the effectiveness of their promotions. Even though Branson would continue being the chairman of the organization, it would be truly difficult for the brand to replace him. Virgin airlines has always ensured to position themselves as a fun and lively brand and this has been accomplished with the flamboyance of Richard Branson.
Limited Markets
Virgin Airline has been effectively catering to the whole of Europe and parts of North America. However, the increasing competition has bound to compel other airlines to expand and diversify their businesses especially in emerging markets like Asia and South Africa. This is a major weakness and problem with the strategic intent of the business. Limited market automatically reduces the customers to a drastic extent including those European and American customers travelling to another parts of the world.
In order to survive the cut throat competition of the airline industry, it is imperative that the brand mends its ways. Various problems have been noticed within the brand and given below are a few recommendations to improve upon the same.
Expanding markets
Brand presence plays a very important role in ensuring that more and more people are aware about the brand and its attributes (Kim & Mauborgne, 2014). It is high time that Virgin Airline build, establish and expands its presence in developing countries of Asia and Africa. Countries like Japan, India, Russia, South Africa, Canberra, China, Malaysia and Hong Kong offer excellent opportunities for an airline to expand its market. This is owing to the large populations and changing lifestyles of these areas. Expanding its services to these nations and other parts of the globe is sure to increase the brand’s presence and awareness among people. This is turn establishes a goodwill in the industry and helps to attract more customers.
The competition in these areas is also comparatively less. At the same time, the brand’s wide awareness will make it easier for the airline to mark their space and gain a market. Entering a new market is often difficult and involves immense planning. But such a move is sure to help the airline expand its customer base and enhance their brand’s awareness among consumers (Armstrong & Kotler, 2015). At present, over 40% of the Virgin Airline flight’s seats go empty during every flight. This showcases the lack of customer interest in travelling by the airline. On the other hand, no complaints regarding inflight services of customer relations have been witnessed by the airline. This only goes to show that the airline is losing customers on account of a smaller network as compared to its competitors. Therefore it becomes increasingly necessary to enhance and expand the network especially to Asian and African continent.
Effective Marketing
Although Virgin Airlines has been using marketing tool efficiently in order to target and reach out to their consumers. However, they could up their social media marketing strategy in order to target the youth (Baker, 2014). Social media platforms like Facebook, YouTube, Instagram, Twitter, Pinterest and Snapchat are omnipresent in the current scenario. They have rather become an important part of people’s lives and most people spend a long time on social media platforms. This is why these platform become an effective tool in ensuring that the right customers are targeted and in the right manner (Tuten & Solomon, 2017).
The use of Facebook advertisements as well as Twitter Hashtags has increased manifolds by brands in their marketing strategy. They are used so widely because they leave a large impact on the target consumers. Therefore it becomes important that marketers must switch to these platforms for effective marketing. The Virgin Airlines brand has a strong presence on Facebook, Instagram and Twitter but they have not yet adopted the Snapchat marketing culture. Secondly, the amount of user generated content is much lesser as compared to other brands which goes to show that the brand’s marketing strategies are not consumer engaging.
Brand Positioning
Brand positioning refers to the image that brand holds in the minds of its direct consumers. Brand positioning plays a very important role in attracting customers (Hankinson, 2015). Marketers put immense efforts in deciding and then imbibing a particular image of the products of their firm. Until a while ago, Richard Branson was the face of Virgin Airlines. The Cofounder had immense impact upon how the brand was positioned. After he sold off 31% of his share to Alaska Airlines, people no longer associate him with the brand which has adversely impacted the brand’s reputation.
Moreover, the brand has provided options to consumers of travelling by economy class, upper economy class or business class. Although, this may lead to the convenience of catering to a larger target market in a single flight, it confuses people about the brand’s positioning. The brand could work upon either adhering to the lower middle class and middle class segment of the market or the brand could position itself in a premium fashion by catering to the higher income group.
However, at present it is essential that Richard Branson either enhances his presence or an ambassador of a similar persona and charm must be hired to project the brand in various public platforms. This would lead people to believing in the brand and hence would lead to increased sales and more customers.
Conclusion
Virgin Airlines is a leading airline based out of Australia and headquartered at Brisbane. The Airline was launched by the name of Virgin Blue in August 2000 with a small fleet of two Boeing aircrafts. The airlines came into existence just at the time of Ansett’s failure, the then leading player in the aviation industry of Australia. The airline gained immense appreciation and welcome from across the country owing to the Virgin brand name and the charismatic personality of Sir Richard Branson who cofounded the airline. In the year 2016, the airlines carried 23.7 million passengers and generated a revenue of $5021 million (Virgin Airlines Annual report, 2016).
However, Richard Branson has sold the majority share of the airline and hence the brand can no longer leverage on his position for its own marketing. Also, the brand is facing immense competition from various low cost airlines. Therefore in order to survive the cut throat competition, it has been recommended that virgin airline must focus on effective marketing strategies and enhancing their network to continents of Asia and Africa. This would lead to enhanced customers and better brand awareness.
References
Armstrong, & Kotler, P., 2015. Marketing: an introduction. Pearson Education.
Baker, M.J., 2014. Marketing strategy and management. Palgrave Macmillan.
Hankinson, G., 2015. Rethinking the place branding construct. In Rethinking Place Branding (pp. 13-31). Springer International Publishing.
Homsombat, W., Lei, Z. and Fu, X., 2014. Competitive effects of the airlines-within-airlines strategy–Pricing and route entry patterns. Transportation Research Part E: Logistics and Transportation Review, 63, pp.1-16.
Kim, W.C. and Mauborgne, R.A., 2014. Blue ocean strategy, expanded edition: How to create uncontested market space and make the competition irrelevant. Harvard business review Press.
Krupp, S. and Schoemaker, P.J., 2014. Winning the long game (p. ix). New York: Public Affairs.
The Economist, 2014, ‘Little Red’s big problems’, https://www.economist.com/blogs/gulliver/2014/10/virgin-atlantics-woes, retrieved on 2 January, 2018.
The Guardian, 2017, ‘Richard Branson cedes control’, https://www.theguardian.com/business/2017/jul/27/richard-branson-cedes-control-of-virgin-atlantic, retrieved on 2 January, 2018.
Tourism Australia, 2017, ‘International aviation capacity to Australia’, https://www.tourism.australia.com/en/markets-and-research/aviation.html, retrieved on 2 January, 2018.
Tuten, T.L. and Solomon, M.R., 2017. Social media marketing. Sage.
Virgin Airlines Annual Report, 2016, ‘Snapshot’, https://www.virginaustralia.com/cs/groups/internetcontent/@wc/documents/webcontent/~edisp/2016-annual-report.pdf, retrieved on 2 January, 2018.
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