Virgin Blue which is currently known as Virgin Australia is an airline company situated in Australia (Ranson, 2006). Analysis of literature has shown that this is the second largest airline in the country. The company is also based in Queensland, Brisbane and Bowen Hills (Raggatt, 2009).
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These are the numerous brands which were founded by Virgin Blue’s Chief Executive Officer Sir Godfrey Brett. The airline was established in 2000 and was later expanded in 2001(Ranson, 2006). Since then, the airline has developed numerous brands located in some of the cities in Australia.
Having operated for several years, the company has established a corporate plan for marketing its services at low cost. Consequently, this has made the airline to become a new world carrier, a factor that has equally improved its competitiveness with other companies of its status within the airline industry (Ranson, 2007).
It is against this backdrop that this paper discusses and evaluates the company’s background, marketing plan and numerous changes that have taken place in its operations.
Background of the company and its marketing plan
After the company was launched officially in 2000, it began its operations with only two single types of Boeing 737aircrafts (Ranson, 2006). This made it possible to make approximately seven flights daily from Brisbane city to Sydney. After a short while, the company expanded the flights by covering all the major cities in Australia.
Ranson (2006) observes that the expansion was triggered by stiff competition that existed among sister airlines in Australia. The entry of the brand to the market was a significant development within the Australian market since it replaced the gap left by Ansett Australia which collapsed in 2001.
Having replaced the Ansett Australia airline, it effectively dominated the market taking over the already established players, a factor that made it to rank second among the distinguished airlines in Australia. The airline grew rapidly to a point that it was able to access the entire terminus in Australia (Francis, 2006).
In order to increase its marketability, the airline initially acquired new equipment that enabled it to phase-out its old aircrafts. In this case, it replaced the Boeing 737-400 series with 7000 and 8000 series (Ranson, 2007). Moreover, the aircrafts were equipped with winglets, modern glass cockpits and had greater fuel efficiency.
It is imperative to note that in terms of flight cost, Virgin Australia faced stiff competition from other airlines (Knibb, 2005). As a matter of fact, it developed new cost models in order to elevate its marketability. For instance, the company adopted the best cost strategy that enabled it to offer differentiated services for relatively low costs than other brands (Anila, 2007). Therefore, the airline marketing strategies experienced a change since it focused on its crews to advertise new operations.
From a careful review of history, it is definite that the brand has faced numerous marketing challenges. For instance, as an international and domestic company, it has to devise ways of changing its marketing strategies to make them convenient and compatible with the prevailing market competition (Ranson, 2006).
Moreover, the adopted changes had to be attractive to travelers and the market at large bearing in mind that the company could lose its customers’ share. Studies have shown that the marketing changes made in the last five years have not sufficiently hit the target due to the increase in costs and new entrants in the market (Anila, 2007).
Notably, the flights conducted by the airline are leisure-based and hence are largely affected by economic crises. Therefore, irrespective of the marketing strategies, there comes a time when consumption declines. At this juncture, the company relies on government agencies, departments and business travelers who rely on travelling as a basic necessity (Raggatt, 2009). For this reason, Virgin Blue airline has ensured that effective marketing is one of its core activities.
Describe and evaluate the most recent changes to Virgin Blue which included dropping the Blue part of the Virgin brand and responses by competitors within the Australian market
The most recent development noted in the company is the change of its name from Virgin Blue to Virgin Australia. This change occurred in 2011 when its executive officers opted for the new brand name in order to redefine the airlines’ position in the local market. In addition to rebranding the company’s name, the management also opted to modify the staff uniforms and business-class seat (Ranson, 2007).
After effecting these changes, it is anticipated that it will help to make the new brand peculiar from other extensions such as Pacific Blue and Polynesian Blue (Francis, 2006). It is important to note that before the changes were implanted, the brand name had been fragmented to the extent that it could not be distinguished from other brands. In this case, it is definite that the change was also meant to transform the brand into a business class category which is largely perceived as a benchmark for success of the airline (Anila, 2007).
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Research has shown that this change is stage managed to ease the company from stiff competition. Furthermore, most of its competitors have branded their airlines with similar names. Some of these changes have been executed deliberately in order to attract more travelers who are often undecided on the choice of flight to use.
It goes without saying that the competition posed by other brands such as Qatar airlines led to stiff market rivalry (Anila, 2007). Additionally, even the unveiling of a new brand name, logo, staff uniforms and business-class seats led to more rivalry. Notably, the company could not accomplish the intended changes at once and therefore, it had to be implemented in stages. The other companies responded by improving certain features in their brands in order to keep the pace set by the Virgin Blue airline.
Evaluate Virgin-Blue’s changes to strategy using Ansoff’s matrix sand their best cost strategy and whether the strategy is being maintained within the present competitive environment, if not how best would you describe any changes?
According to Raggatt (2009), Ansoff’s Matrix is a tool that is used to develop marketing strategies in a business. These strategies include improving existing products, pricing and market environment. Therefore, the tool recognizes four major strategies such as market penetration, product development, market development and diversification. It is apparent that Virgin Blue airline has heavily applied the strategy of market penetration to increase its sales (Moynihan, 2003).
This has been made possible by product promotion and reduction of prices. It is arguable that the company understands the risks and products required in the market. For example, it has established business-class equipment such as new craft designs and staff uniforms. This has significantly improved the image of the company to become the second best world carrier in Australia (Ranson, 2007).
Besides, Virgin Blue has developed its products and services to meet the consumer need in the existing markets. Knibb (2005) notes that product development is one of the medium risks since every business employing this strategy understands or is familiar with marketing new services and goods. In this case, the airline was quite aware that the existing market required new models and efficiently designed aircrafts.
This made it easier to replace the Boeing 737-400 series with those of 700 and 800 series (Ranson, 2007). Besides, the company has employed market development strategy in order to maintain its position in the excising market. In this case, it employed the best cost strategy in order to attract more passengers. The company has used this strategy to enhance differentiation of services hence offering quality services at low costs.
Nevertheless, the airline has tried to create a balance between differentiation, quality and cost in order to evade price war that might occur due to competition (Raggatt, 2009). This strategy has continued to be maintained even in the current market situation since it has enabled the company to maintain a top position amid its competitors. Therefore, a best-cost strategy is recommended since it guarantees future success of the company.
For a business traveler who may traditionally select a legacy/full-service carrier such as Qantas, evaluate how Virgin Australia may present a value proportion that could attract a customer to this airline
There are numerous ways through which Virgin Blue airline can present its value proportion to attract customers. For instance, in order to boost its legacy, the airline expresses its value proportion by creating a strong marketing and sales team who are able to market the company’s services directly to the clients.
According to Ranson (2007), this will enable the company to acquire corporate clients who will be extremely important in contributing towards its success. In the process of marketing its products, Virgin Blue should offer discount for given volume of travels and can also partner with other agencies that offer additional services to travelers (Moynihan, 2003).
Moreover, the company can also lower costs of operation which is an added advantage for overhead expansion in numerous regions. This will help it to capture corporate clients in diverse destinations. The latter strategy will boost flexibility of travelers in spite of geographical barriers.
That notwithstanding, Virgin Blue company can employ or develop superior services and products that will attract large masses of travelers who will prefer the airline to traditional ones (Raggatt, 2009). For instance, if the company can reduce the overall time taken for travelling by disembarking on the use of modern aircrafts, it will not merely attract new clients.
It will also ensure that there is a good flow of return customers. A particular attention should be paid on improvement of cabin designs, travel processes, technology and product quality. This will help the company to stand out among other competitors and traditional airlines such as Qantas.
To recap it all, Virgin Blue has registered considerable success in the past 10 years since it was established in 2000. Moreover, its one-time performance has increased significantly by developing new brands in different cities both in Australia and abroad. Effective marketing strategies have enabled the airline to rank second in Australia. Despite stiff competition facing the airline, it has employed numerous strategies such as development of new products, rebranding and market development.
Anila, A. (2007). Virgin dumps budget image. B & T Weekly, 1(1), 1-5.
Francis, L. (2006). Virgin blue issues request for first long-haul aircraft. Flight International, 170(2), 25-32.
Knibb, D. (2005). Virgin blue at centre of power struggle. Airline Business, 21(10), 26- 28.
Moynihan, S. (2003). Low-cost blueprint lets Virgin soar. Retrieved from https://www.theage.com.au/national/low-cost-blueprint-lets-virgin-soar-20031116-gdwqzz.html
Raggatt, T. (2009). Virgin plans new flights for city bold move a huge tourism and business win. Townsville Bulletin, 1(1), 3-9.
Ranson, L. (2006). Virgin blue continues to cast net beyond leisure travelers. Aviation Daily, 366(18), 4-9.
Ranson, L. (2007). Virgin blue eyes higher yields from corporate travelers. Aviation Daily, 363(25), 3-8.