Competition within the airline industry has become a major factor that calls for the enhancement of better marketing management practices, higher customer value in service delivery and increased levels of productivity for profitability.
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According to Leeflang, (2011, p. 80), the fast changing systems of consumerism that dictate the need for greater value in service provision has driven businesses in the airline industry to build a culture of providing superior services.
It is against this consideration that this paper explores the marketing analysis of Virgin Blue airline as a major competitor in the Australian airline industry and its marketing as well as provision of catering services.
A brief background of the airline company
Virgin blue airline was established in the year 2000 from the Virgin Express airline to offer low cost flights between the major cities in Australia (Lucio & Giuliano 2010, p. 139). The company is based in Brisbane and is the Australia’s second largest airline by fleet.
Analysts cite its establishment and immediate success to be anchored in its marketing and provision of quality services. Due to effective management of marketing practices and provision of station quality management and catering services, Virgin Blue airline has assimilated vast growth to become the current global player in the airline industry.
According to Johnson, Whittington and Scholes (2011, p. 100), Virgin Airline’s strategic goals are derivatives of the operations of Southwest airline of the United States which had seen tremendous growth following its enhancement of marketing activities.
The goal of marketing its flight services like catering has perhaps been the major cause of its recent growth and ability to counter intensive competition in the Australian airline market (Lucio and Giuliano 2010, p. 139).
The practice carried out by Virgin Blue Airlines reflects what is posited by Johnson, Whittington and Scholes (2011, p. 100) that the ability of a business’ marketing strategy to succeed in generating the highest possible returns should always be anchored on the drive to generate the highest possible customer value.
Nature of the selected service
Virgin airlines runs airline and ground handing catering services in all its destinations. Its subsidiary services include Virgin Food Indistries, Country Foods Ltd, Aerolog Express, Virgin Catering services and virgin Airport Services in nearly 36 airports.
The flight catering department of Virgin Blue offers support and catering services to its customers for all its airlines flying in and out of Australia. It has two catering facilities which are technologically advanced and through which it produces everyday over 120,000 meals (Lucio & Giuliano 2010, p. 139).
The airline catering service has been able to garner considerable praise, a factor that many analysts credit to its management practice that recruits chefs having bespoke experiences (Parker & Russell 2004, p.60).
This has enabled it to market itself as the culinary traditions with which its meals are prepared and served do not merely meet the palate demands and tastes of its customers but also compatible with the cultures of their destinations.
In the airline industry, factors such as quality and success in the provision of products or services are always determined indirectly or directly by marketing management practices.
According to Hunt and Davis (2008, p. 19), the latter are controlled by both macro and micro-environmental factors. It is imperative to highlight that in Virgin Airlines, the management of its marketing practice involves controlling, coordinating, directing, organizing and planning of all processes.
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The marketing of its catering services has been very important in providing it with ample and diverse benefits which are vital for business success (Raisinghani & Meade 2005, p.115).
The environment surrounding the marketing operations of Virgin Airlines is composed of aspects that affect its marketing strategy which are conducted within and outside the company (Parker & Russell 2004, p.60).
In its marketing operations, the environment has played a vital aspect of changing, generating threats as well as massive opportunities. Virgin Airline’s macro environment is made up of legal, environment, technological, social, economic and political factors.
It is worth mentioning that social and legal factors do not significantly impact on its marketing of products as the company has a well set up ethical standards and serves a well defined group of customers.
It has been observed that local governments often face tough fiscal times largely attributed to economic downturns, a consideration that compels them to tighten their financial spending. Helfat and Peteraf (2003, p. 1005) point out that this leads to the slowing down of an economy.
Besides, the practice has the potential of driving down consumer demand and impacting on the provision of products and services to consumers. This has been the case with Virgin Airline which has had to survive tough political environments due to difficult economic times including the recent recession which has seen it adjust and re-strategize its catering and marketing services.
Australia has suffered the consequences of unstable equilibriums (Parker & Russell 2004, p.60). A shift that has been experienced in the recent past from short run to long run equilibrium has been linked to economic forces determined by slight deviations on price equilibrium.
Keynesian theory indicates that a price decline is induced by excess supply of services, output supply, product or demand. This causes the equilibrium to shift from a market situation especially when the quantity demanded is not equal quantity supplied.
Since equilibrium indicates a state of balance, Kroes and Ghosh (2010, p. 140) indicate that lowering of prices of services in an airline industry or any other industry in the global market arena will create a new equilibrium due to the disruption of the existing balance.
The success of the marketing practices of Virgin Airlines has been based on low price services not because the quality of catering services are low, but due to the fact that it seeks to adjust to the existing economic environment.
The ability of any company to articulate management that seeks to incorporate high customer value and effective staff satisfaction is critical in realization of high profitability and sustainability.
In order to achieve this objective, organizations have increasingly turned to information technology management that creates faster and more articulate mechanisms of facilitating the needed interlink between clients and the companies’ managements. The latter has been the case with Virgin Airlines.
Micro environmental analysis
Understanding the micro-environment of a business calls for developing knowledge on factors such as market selection, consumer characteristics and nature of products and services being offered.
Public policy makers and marketers in Virgin Airlines have encountered diverse challenges coming from its micro environment some of which include threat to entry, rivalry between competitors, consumer behaviour and bargaining power.
Threat of substitute services
One of the major micro-environmental challenges the organization faces in marketing its catering services is the threat of substitutes. Garcia-Morales, Llorens-Montes and Verdu-Jover (2007, p. 550) indicate that in a marketplace, there are many similar catering services being offered by airline companies.
As such, consumers of these products and services are bound to switch or turn to brands that offer similar services. In its marketing practice, Virgin airlines understand that it is not a sole provider of catering services.
Even though this has impacted on the sale of its services, it has resorted to production of diverse catering services that meet the needs of consumers at a relatively low cost. This is aimed at attracting consumers who tend to go for substitute services that sell at a cheaper cost.
Competition in the airline industry in Australia has been ubiquitous with airlines such as Jetstar, Qantas and Ansett offering stiff competition in provision of services (Parker & Russell 2004, p.60). The marketing and sale of similar catering services by the different competitors create rivalry and competition.
This has been vital to the Virgin Airlines since it has been able to use it to examine opportunities, weaknesses, strengths and threats, and to generate the best mechanisms in offering unique services.
Strengths and weaknesses
Since its introduction to the Australian airline market, Virgin Airlines has continuously grown to become the second largest airline in Australia domestic market based on its marketing and service provision.
The marketing practice accompanied by quality catering services has elevated its brand causing it to be ranked among the largest airlines in the country and to gather necessary customer confidence in both its local and international flights (Parker & Russell 2004, p.60).
During its establishment, the company sought to provide its customers with high quality services necessary for capturing the ready market locally and internationally (Brett 2005, p. 77).
However, it has not been able to fully attain this due to the tough global economic times. Its bid to market its services and reduce the cost of the same has been seen to affect the perceptions consumers have on quality.
Opportunities and threats
The main opportunity in the company has been depicted from the availability of the ready internal market for its services in Australia. From its establishment, the company enjoyed a ripe market that emerged from the failure of other airlines such as the Onsett airline (Raisinghan & Meade 2005, p. 119).
It is also worth noting that besides Virgin blue being very dominant in the Australian market; there is a great opportunity to generate better status from its service provision to enhance further growth and development.
Arguably, the management presents the company with the best opportunity to assess the market and therefore generate the correct measures and counter measures to address competition.
However, its marketing opportunities can be affected by several environmental factors some of which include legal factors, social factors, competition, political factors, and threats of new entrants into the market, substitutes, economic factors and technology.
From the above discussion, this paper concludes by reiterating that effective articulation of marketing mix in organizations forms the best platform for understanding the market, designing services based on customer’s needs, and exploring newer market niches.
Careful application of marketing mix, product, price, promotion and place enabled greater cooperation and response by a company to consumer needs.
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