little red

Marketing Plan

2013

Executive Summary

Virgin Atlantic is looking to launch a sub-brand, Little Red, to enter the UK domestic short haul market. There is a primary focus on targeting business customers. It will begin by opening connections between London and Manchester, London and Aberdeen and London and Edinburgh. It’s strategy will be based on providing it’s existing quality service associated with it’s Virgin Atlantic brand at competitive prices.  

Corporate Objectives

Mission

Virgin is looking to compete with British Airways in the premium segment of UK domestic air travel. The aim is to increase Little Red’s market share at the expense of the market share belonging to British Airways, which is currently 25% and a near monopoly on London/Scotland routes.

Little Red will give Virgin customers a seamless Virgin experience when flying to the UK or when traveling to London and beyond. Little Red aims to give customers a greater quality service than currently offered by British Airways, at a similar price.

Objectives

Virgin will bring existing knowledge and services, as part of its Virgin Atlantic brand, to a new market (UK domestic flights).

Virgin will use Little Red to bring customers to its Heathrow base, from which it can connect them to international destinations with Virgin Atlantic.

In the first 12 months, Little Red’s goal is to carry 1 million passengers and gain 5% market share of the UK domestic market as measured by total passengers carried on UK domestic flights.

Situation Review

Market Analysis

The number of passengers on domestic scheduled flights declined over 2007-2011, falling by 13.2% from 22.1 million passengers to 19.1 million passengers. The year-on-year decline is a result of a rise in airfares, with taxation and fuel costs creating higher costs, therefore driving passengers towards alternative and more affordable methods of transport.

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Little Red’s route map

Competitive Analysis

The current UK domestic airline market is dominated by budget airlines and British Airways. This is shown below with each airline’s relative market share.

The data indicates EasyJet is likely a growing competitor as it has increased its market share at the fastest rate.

After British Airways bought BMI in 2012, British Airways had an effective monopoly on routes from Scotland to London. Little Red therefore will mainly compete with British Airways on these routes as it aims to give customers more choice and fairer prices. Moreover, with BMI no longer feeding Virgin Atlantic long haul traffic at Heathrow, many people in the north of England are looking for alternatives and in turn Virgin’s load factor has declined somewhat.

Little Red will also be competing with road, rail and bus travel. Each method of transport has it’s benefits and limitations, highlighted below. As the travel market, and airline market in particular, is highly price sensitive, an indication of average journey price is given.

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Situation Review

It is worth noting the relative high cost of both City Jet and Flybe. This is likely due to their low economies of scale as a result of a small market share on UK routes.

Perceptual Map

In the UK airline market, there are three distinct market segments: budget, middle market, and premium.

Little Red will be categorised as a Premium brand, alongside British Airways. Characteristics of premium brands include:

• In flight refreshments at no extra cost

• Better quality service & more comfortable seats

• Generous luggage allowance

• Loyalty rewards scheme

High Price

Low Price

High Quality

Low Quality

Premium Sector

Economy BrandsBudget Brands

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Marketing Audit

Market Segmentation & TargetingVirgin’s Little Red is looking to focus on the business traveller. Business travel is a growing market, growing at 1.5% a year, and outpacing growth in the leisure market.

Virgin is well placed to appeal to business customers. The ‘Flying Club’ loyalty program, as well as the ‘Flying Co’ corporate booking website, will generate brand loyalty and make booking easier for business customers. Perks such as priority check in, taxi/limo services and lounges appeal to business customers aiming to be productive while traveling.

Virgin will be targeting the 30% of the UK population who live over 3 hours away from London. This area is highlighted in the map. Data shows that penetration of air travel is just 12.7% in the north or England and 19.4% in scotland, compared with 22.2% in London (Keynote, 2013). This indicates these regions have the opportunity for growth.

The majority of business travelers were male (18.4%) versus 13.5% female (Keynote, 2013). Although, data also suggests that female business travelers are increasing at a faster rate than male business travelers, indicating target customers may equalise in the next few years.

Data indicates the age groups of 25-34 and the 55-65 are the most likely to travel by air (Keynote, 2013).

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Marketing Segmentation & Targeting

18.4%Male

13.5%Female

2011 2012 2013 2014 2015

20,000

Expenditure (£m)

Trips (000’s)

5000

10,000

15,000

Business Travel by Age Group. Data source: MarketlineAge Group

25%

20%

15%

10%

15-19 20-24 25-34 35-44 45-54

5%

55-64 65+

Busin

ess

Mar

ket P

enet

ratio

n

Data suggests business travelers who fall into social class ‘A’ (upper-middle class) are the most likely to travel by air (Keynote, 2013). Virgin is therefore targeting consumers in Classes A and B.

Key Market Trends

The performance of the industry is expected to accelerate, with a compound annual growth rate (CAGR) of 10.9% for 2011-2016. In 2016, the UK airline industry is forecast to have a total value of $40.7 billion, an increase of 68.2% since 2011 (Keynote, 2013)

Increased awareness of the environment

There is an increasing trend among airline companies to invest in greener technologies, reduce emissions and use fuel more efficiently.

Mintel research has shown that 70% of people aged “18-34 either currently consider, or would consider if available the ‘greenness’ of airlines or other long-distance travel providers, when choosing their provider”. Moreover, domestic flights can be substituted by car, bus, or rail, which are generally viewed as ‘greener’ alternatives.

Airlines that work toward being more environmentally conscious will likely be perceived as innovative and sustainable, and may receive greater consideration for future air travel needs.

Budget business travel

Business travel companies are increasingly focusing on the lower cost end of the market as a result of business’s budgets being squeezed. Mintel (2012) found that over half of business travelers say that their company chooses/makes them use budget option, seeking to fly with Ryanair and easyJet.

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Social Class

25%

20%

15%

10%

A B C1

5%

Busin

ess

Mar

ket P

enet

ratio

n

C2 D E

30%

A: Upper-Middle classB: Middle ClassC1: Lower middle ClassC2: Skilled Working ClassD: Working ClassE: Lower Levels

Marketing Segmentation & Targeting

Budget airlines, such as easyJet, are focussing on high value business customers by providing enhanced products and services, such as in flight power sockets, priority seating, and free hand luggage. These services allow easyJet to maintain low prices and compete with legacy business airlines such as British Airways.

High speed rail and international train links

With the conception of high speed rail links, connecting Leeds, Manchester, Birmingham, and London, journey times will be halved from their current times. For example, a high speed rail link from Edinburgh to London will take just 2h 6m (Little Red will take 1h 35m). Increases in rail fares are set to continue since the latest increase of 3,9% in January 2013. If this trend continues, business travelers may be pushed to other methods of travel.

Eurostar and Deutsche Bahn are expanding their services out of London to more European destination, indicating international rail travel for business is set to expand further.

Business Travel Trends

A core strategy of Virgin should be to target business customers flying from the UK to London and beyond, as well as International flights arriving in London and customers making connections to northern England.

The business travel market in the UK is expected to grow on average 1.5% year on year until 2015.

SWOT AnalysisInternal Analysis

Strength Weakness

• Strong reputation for quality and reliability.

• Excellent customer service

• Superior inflight entertainment.

• Little Red can provide travelers an complete service from UK cities to international destinations by linking with its parent brand, Virgin Atlantic. This is attractive solution for customers as it allows them to remain loyal to the brand and simplifies the purchasing process.

• Adverse current economic conditions are a threat to the market.

• Severe weather conditions cause delays and added costs.

• Increases in operational costs due to jet fuel prices

• Increasing tax through air passenger duty, which increased by 8% in 2012.

• Environmental pressure groups opposed to airlines.

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Marketing Segmentation & Targeting

External Analysis

Opportunities Threats

• Growing demand during economic recovery in the past 2 years.

• Little Red can expand into European flights from the UK.

• Little Red my have the opportunity to open more routes to more UK cities

• The UK remains one of the most popular tourist destinations in the world

• Overseas visitor increase due to the London Olympics.

• British Airways does not charge the extra fare between Scotland and Heathrow for some of its passengers who are traveling from London to international destinations.

• Manchester Airport has been increasingly used as a UK hub for international flights. This may reduce demand for Little Red.

• With current Government policy ruling out expansion, and with Heathrow Airport reaching maximum capacity, the UK could become less competitive as airlines look elsewhere to expand.

• In 2012, the airline industry was included in the EU emission trading scheme (ETS). This may result in higher costs for some UK airlines.

Portfolio Summary

To summarise the SWOT analysis and to make it easy to see Little Red’s overall position in and relative importance of each segments to the company, a portfolio matrix has been made.

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SWOT Analysis

The outlined circles represent the value and relative importance of each market segment in the first 12 months. The dotted circles represent the value and importance of that segment in 3 year’s time. It is expected that:

• Connecting UK passengers to international destinations is the most lucrative and profitable market.

• The leisure market is a strong and stable market segment, however is unlikely to grow significantly in 3 years.

• Business travel is a segment that is likely to become a stronger market as business travel increases and consumers become more loyal to Virgin’s brand.

• Domestic flights only is likely to become a stronger market segment as Virgin becomes more able to convert passengers onto international flights using flash sales and discounts.

PESTLE Analysis

Political Air Passenger Duty: Increasing government regulated taxes in the form of fuel duty will affect passenger demand, as a result of increased air passenger duty (8% in 2012).

Political

Jet Fuel Prices: Volatility in oil prices due to political factors directly affects jet fuel prices, hence operating costs.

Political

Uk Emission Targets: The UK aims to reduce greenhouse gas emissions by 50% from 1990 levels by 2025. Airlines will have to react by researching alternative fuels and utilising carbon trading schemes, which might create extra cost to the consumer.

Recommendation: Form alliances to increase economies of scale and use hedging strategies when buying fuel.Recommendation: Form alliances to increase economies of scale and use hedging strategies when buying fuel.

Economic Business Confidence: As the UK emerges out of the recession, the business confidence is likely to grow, thus the demand for domestic and international travel is likely to increase as well. Moreover, since the decline in passenger number in 2008 and 2009, there has been a resurgence in the number of business and leisure travelers; rising by 9.6% and 3.2%, respectively.

Interest Rates: With central banks keeping interest rates at low levels, currently 0.5%, this is a good time for Virgin to invest due to low rates of borrowing.

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Portfolio Summary

Recommendation: Due to the current market outlook and the low interest rates, it is suggested Virgin takes this opportunity to invest in Little Red while targeting business consumers

Recommendation: Due to the current market outlook and the low interest rates, it is suggested Virgin takes this opportunity to invest in Little Red while targeting business consumers

Social Population: The UK population is growing by around 0.7% a year (Marketline, 2013), hence an increase in potential demand for domestic travel.

Social

International Travel: There is an increase in passengers traveling abroad for leisure and business (Keynote, 2013). International flight demand decreased at a lower rate than domestic flights during the recession, indicating demand will continue to be strong.

Recommendation: Virgin could potentially forfeit profits on Little Red in order to maximise load on the more lucrative international flights market under Virgin Atlantic. However, Virgin should remain dedicated to developing Little Red into a profitable ‘Cash Cow’ in the future.

Recommendation: Virgin could potentially forfeit profits on Little Red in order to maximise load on the more lucrative international flights market under Virgin Atlantic. However, Virgin should remain dedicated to developing Little Red into a profitable ‘Cash Cow’ in the future.

Technology Price Comparison Shopping:The growth of price comparison usage is likely to continue growing, particularly as consumers are price sensitive in the airline market.

Technology

Smartphones: Smartphone technology is developing at a significant rate, with 48% of the population having access to one (emarketer, 2013) Airline online booking and check-in systems have increased popularity. Virgin should maximise its online and mobile presence to allow customers easier ways to book tickets.

Technology

4G Internet: The advances in 4G internet, the latest generation of high speed mobile internet, will allow business travelers to be more productive on journeys and may potentially place lower importance on journey times. As a result the competitiveness of other forms of transportation i.e. trains or buses would increase.

Recommendation: Virgin should be an early adopter of mobile technologies. Investments in scanners at all airports should allow passengers to check in using mobile barcodes to make the experience seamless. Virgin should utilise a price matching system to remain competitive with other airlines, particularly British Airways.

Recommendation: Virgin should be an early adopter of mobile technologies. Investments in scanners at all airports should allow passengers to check in using mobile barcodes to make the experience seamless. Virgin should utilise a price matching system to remain competitive with other airlines, particularly British Airways.

Environmental Emissions: Consumers are becoming increasingly aware of the negative effects air travel has on the environment. Furthermore, recent campaigns have highlighted the environmental benefits of using the train rather than flying within the UK. This may result in lower demand for domestic air travel. Alaska Airlines, for example, has responded to environmental concerns by utilising 20% biogas in its domestic US flights. Depending on approval and cost, this could be a trend in the UK in the near future.

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PESTLE Analysis

Airport Capacity: Domestic airports, particularly Heathrow (already the world's busiest), are reaching maximum capacity. This may result in increased ‘slot’ prices at key hub airports, such as Heathrow.

Recommendation: In the long term, Virgin could look at utilising bio fuels i, which would improve their public image with consumers and strengthen their corporate relations.

Recommendation: In the long term, Virgin could look at utilising bio fuels i, which would improve their public image with consumers and strengthen their corporate relations.

Legal Carbon Trading: In 2012, the airline industry was included in the EU emission trading scheme (ETS). This scheme aims to make firms more accountable for CO2 emissions and lower emissions through free market mechanisms. This may result in higher costs for some UK airlines. Furthermore, Airlines will be subject to increasing tax through air passenger duty, which increased by 8% in 2012.

Recommendation: Little Red should establish a team dedicated to researching way to reduce waste and improve efficiency company wide.Recommendation: Little Red should establish a team dedicated to researching way to reduce waste and improve efficiency company wide.

The Current Market

Key Market Trends

The performance of the industry is expected to accelerate, with a compound annual growth rate (CAGR) of 10.9% for 2011 - 2016. In 2016, the UK airline industry is forecast to have a total value of $40.7 billion, an increase of 68.2% since 2011.

Increased awareness of the environment

There is an increasing trend among airline companies to invest in greener technologies, reduce emissions and use fuel more efficiently.

Mintel research has shown that 70% of people aged “18-34 either currently consider, or would consider if available the “greenness” of airlines or other long-distance travel providers, when choosing their provider”. Moreover, domestic flights can be substituted by car, bus, or rail, which are generally viewed as ‘greener’ alternatives.

Airlines that work toward being more environmentally conscious will likely be perceived as innovative and sustainable, and may receive greater consideration for future air travel needs.

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PESTLE Analysis

Budget business travel

Business travel companies are increasingly focusing on the lower cost end of the market as a result of business’s budgets being squeezed. Mintel (2012) found that over half of business travelers say that their company chooses/makes them use budget option, seeking to fly with Ryanair and easyJet.

Budget airlines, such as easyJet, are focussing on high value business customers by providing enhanced products and services, such as in flight power sockets, priority seating, and free hand luggage. These services allow easyJet to maintain low prices and compete with legacy business airlines such as British Airways.

High speed rail and international train links

With the conception of high speed rail links, connecting Leeds, Manchester, Birmingham, and London, journey times will be halved from their current times. For example, a high speed rail link from Edinburgh to London will take just 2h 6m (Little Red will take 1h 35m). Increases in rail fares are set to continue since the latest increase of 3,9% in January 2013. If this trend continues, business travelers may be pushed to other methods of travel.

Eurostar and Deutsche Bahn are expanding their services out of London to more European destination, indicating international rail travel for business is set to expand further.

Five Forces AnalysisA comprehensive analysis of the five key industry factors affecting Little Red.

Figure: Forces driving competition in the airlines industry in the United Kingdom, 2011.

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The Current Market

Buyer Power

There are many buyers in the market and price sensitivity is high as a result of price comparison websites, reduced corporate travel budgets, and the rising use of budget alternatives such as easyJet and Ryanair. Airlines can defend themselves against this by differentiating their service, for example by offering  additional features (power sockets) on more expensive seats, extra leg room, VIP check in and inflight entertainment.

Switching costs for buyers is negligible, which strengthens buyer power. Airlines have responded by using loyalty schemes, for example Virgin’s ‘Flying Club’ or British Airways ‘BA Miles’. These points are lost if a buyer should switch airlines, and can be viewed as switching costs. Overall buyer power is moderate.

Supplier Power

Airlines must enter into contracts when purchasing or leasing aircrafts from their suppliers. Breaking these contracts incur heavy costs. Moreover, there is essentially a duopoly in the jetliner market with Boeing and Airbus being the two major suppliers. The relative lack of substitutes increases supplier power. Furthermore, in an industry where safety, reliability, and the quality of the planes are of primary concern, supplier power is increased.

Aircraft fuel is estimated to represent 29% of total operating costs (IATA, 2011), up from 26% in 2010. Relatively few companies supply aircraft fuel, strengthening supplier power, although airline companies generally defend against fuel prices increases by using hedging strategies.  

It is common for airlines to form alliances, to not only increase its route network, but also to increase economies of scale in the purchase of jet fuel. Alliances allow airlines to reduce supplier power in this way. Overall, supplier is seen as strong.

New Entrants

There exist high barriers to entry in the UK airline market, which include high upfront costs to obtain the planes, high maintenance costs , cost of setting up online booking systems, and establishing relationships with travel agents. Airport ‘slots’ for takeoff and landing need to be obtained, which is becoming more difficult to obtain with the growing congestion at major UK hub airports. Moreover, established airlines hold a monopoly over these slots, making it harder for new airlines to open or for existing airlines to set up new routes. Overall, there is a low chance of new entrants into the industry.

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Five Forces

Threat of Substitutes

Other travel methods including road, rail, sea are considered as substitutes for domestic air travel, which represents 17.6% of UK flights. Buyers consider the cost of travel as well as the time taken to take the corresponding forms of transport. Furthermore, consumers are becoming more aware of the negative environmental impacts air travel has on the environment.

Bus travel, as provided by National Express and MegaBus, links UK towns with major UK cities and European cities. Tickets are generally low cost, although time consuming. The opening of the channel tunnel in 1994 allows to direct travel by train between London and the European mainland. This acts as a strong alternative to air travel, with return tickets being comparable with air fares.

For business travel, alternatives include ‘virtual-meetings’ via online video conferencing. This is a growing trend as business seek to reduce travel expenses. Overall, the threat of substitutes is moderate.

Degree of Rivalry

Rivalry is strong as the competitive landscape includes several large companies, such as British Airways, as well as smaller competitors. Rivalry is increased by the presence of budget airlines which compete intensely on price. Most airlines diversify their revenues through freight, although this represents a small proportions compared to selling seats. A lack of diversity forces firms to compete more intensely on their core business.

In conclusion, rivalry in the UK airline industry is intense, due in part to the size of competitors and the difficulty of exiting the industry. Despite a large number of buyers in the UK, buyer power is strengthened by high price sensitivity as product differentiation tends to be negligible, with low switching costs. Budget airlines compete intensely on price with legacy carriers, such as British Airways. Supplier power is strong as airlines must enter into contracts with manufacturers or leasing companies. Airbus and Boeing dominate the airliner market, and the lack of viable alternatives increases their power. Volatile fuel prices could make it difficult to hold margins and discourage new firms entering the market. Strong rivalry results from factors including low switching costs for buyers, and a focus on passenger transport which leave firms vulnerable to declines in demand in an industry that is highly sensitive to the economic environment.

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Five Forces

Strategic Objectives

Little Red Competitive Positioning

Virgin Little Red intends to position itself as a market challenger to the monopoly of British Airways in the premium segment of domestic air travel in the UK. In the context of the Ansoff Matrix, this is considered market development as it is utilising existing knowledge and services in a new market. More specifically, the objective is to achieve a market share of 5% in the UK in first 12 months, as measured by total passengers carried.

In terms of the Boston Matrix, Little Red is categorised as a problem child as it is a new brand being launched. Since Virgin is supporting the brand, it is expected to develop into a rising star quickly and eventually a cash cow. The speed of the process is important as we wish for Little Red to be a successful extension strategy for Virgin Atlantic in its product lifecycle (shown below).

Goals for the Virgin Business Portfolio

In addition to working pointedly to capture market share from British Airways, Virgin Red also intends to increase profitability and widen the customer pool for its parent airline, Virgin Atlantic. The aim in this regard is two-fold:

1)Increase overall profitability of International Virgin Atlantic flights by converting 20% of Little Red passengers onto outbound international Virgin Atlantic flights.

2)Increase load factor (average capacity utilization) of Virgin Atlantic’s International flights flying from Heathrow. The objective is to increase load factor from 77% to 85% over the next 3 years.

The Virgin Competitive Advantage

Virgin Red hopes to achieve the above-stated organizational goals by capitalizing on the brand identity of its parent company, Virgin Atlantic and serving as an extension of the brand in the domestic market. Virgin is famed for its high-quality, competitively priced

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Ansoff Matrix: Virgin will follow market development strategies.

Strategic Objectives

flights that provide an unsurpassed customer experience with unique and thoughtful in-flight accoutrements, supplemented by cutting-edge marketing that reflects the organizational value for the eccentric, quintessentially British sense of humor. In addition to the usual attention-grabbing, out-of-the-box marketing that Virgin is known for, the focus will also be on extensive business-to-business marketing, given that business travelers are a key target demographic.

The Virgin Core Competencies

Virgin Little Red will be focusing on these core competencies, and will provide a premium domestic airline service that offers quality flights with several carefully thought-out extras  for a competitive price, comparable to that of its chief competitor, British Airways. This being a domestic service, the typical fun, ‘boutique’ experience offered by Virgin will come in the form of a thoughtfully curated collection of bespoke, gourmet British food products such as plane-shaped Tyrrell’s Crisps and drink offerings such as Bacardi martini miniatures, in addition to hot English and Scottish breakfasts served on board the morning flights.

In this manner, Virgin Little Red hopes to differentiate itself from its competition and become the go-to airline for those looking for a quality, value-for-money domestic flight experience with a bit of personality.

Marketing Mix

Product

• One class: standardized high quality service (Virgin Atlantic livery) available to all travelers, better value of money due to the elimination of price discrimination for different classes.

• Comfort: complimentary food/drinks, comfortable leather seats, generous luggage allowances (23kg), and access to virgin’s exclusive lounge. Extra bag of 23kg (upper class up to 32kg, three bags) if connecting to a Virgin Atlantic longhaul flight.

• Easy connections: Virgin will aim to connect domestic travelers to its many international destinations by selling through Virgin Holidays and Virgin Atlantic. Buses are provided with no need to go through security.

• Efficient jets: Aircrafts will be leased from Aer-Lingus to reduce upfront costs. Airbus A320

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Comfortable seating, entertainment and ambient lighting will give customers a more enjoyable journey compared to other airlines

Strategic Objectives

Price

• Reverse pricing system: The earlier the customer books, the cheaper the cost of the ticket. Prices will also vary depending on the time of day that the flights departs.

• Competitive prices: An automatic price matching system will be used to match or resemble British Airways’s prices on all routes.

• Dynamic and demand pricing: Prices will automatically adjust based on demand levels. Virgin may also offer promotions to maximise profits.

• Discounts: Flash sales, reduced prices for ‘Flying Club’ members, and promotional vouchers will be made available from launch.

Promotion

• Slogan: “Paint the Skies Red”.

• Advertising: Virgin will use pull advertising methods to directly advertise to its customers. Business customers will be targeted through a range of print and digital strategies. Print ads will include billboards, especially in places where a high number of business people would notice them, like the London Underground. Furthermore, features in publications such as ‘The Week’ and national newspaper’s travel sections would extend the reach to potential customers. Digital advertising will be in the form of mobile and search ads as well as social media campaigns. Considering the growing use of mobile devices, specific targeting of advertisement banners to business-related apps will be important.

At launch, emphasis will be to educate the public about British Airways’s unfair dominance in the industry and the benefits to Virgin’s entrance into the market. Furthermore, promotional ‘giveaway’ of £1 tickets for a number of flights over a period of time would be a worthwhile investment, by allowing us higher publicity and focus on the lifetime value of consumers.

• Free Advertising: Virgin has risen to prominence partly due to Branson style and usage of “free advertising”. As it can be seen in the picture to the right, Branson uses his fun personality to attract publicity and media attention to the brand.

• Build corporate relationships: Relationships with large UK companies will be established to allow them access to Virgin’s exclusive corporate

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Competitive prices and flash sales will be used.

Marketing Mix

Richard Branson wearing underwear saying “Stiff competition”- highlighting the competitive spirit between Virgin and BA.

Travelers will earn reward miles as part of Virgin’s ‘Flying Club’.

loyalty programme, ‘Flying Co’. Specifically, Little Red will focus on personal selling, while targeting business customers. Sponsoring of corporate events such as the yearly Canary Wharf Motor expo in London, would reach our target group of business people.

• Rewards Programme: ‘Flying Club’ will allow customers to earn miles which can be spent on holidays and future fares. This builds brand loyalty. At launch, double rewards will be offered for a period of 3 months.

Place

• Direct distribution: Online bookings (representing 95% of total bookings) will be integrated with Virgin’s existing booking system. Phone bookings can also be made.

• Indirect distribution: Virgin will use national and regional agents as well as online third parties (e.g. Expedia) to sell tickets to leisure and business customers.

• Mobile Apps: iPhone & Android app to allow customers to easily book flights, check flight status and act as a digital ticket during boarding. Discount notifications will also be delivered through the app.

Process

• Leasing: The planes will be ‘wet-leased’ from Aer-Lingus, meaning the services are operated by Aer-Lingus staff, pilots and planes. This has the benefit of reducing upfront costs.

• Consistent service: Bookings, airport check-in and in flight service will be kept in keeping with what customers have become accustomed to on Virgin’s long haul flights.

• Digital: The use of mobile apps, online booking, email confirmation and SMS alerts will make accessing information easier for customers, and reenforce Virgin’s innovative and customer orientated service.

People

• Stewards: All staff will be trained in Virgin’s methods of service, etiquette and customer safety.

• Sales team: Will be educated on the new routes and how to book connecting flights to international destinations.

Physical Evidence18

Mobile apps make booking air tickets easy and checking in a seamless experience.

Planes will be ‘wet-leased’ from Aer-Lingus

Staff will be will trained in Virgin’s etiquette.

Marketing Mix

• Timely departures: Ground staff will be prepared to minimise delays.

• Experience: Tidy, clean and comfortable in flight experience for all customers. This applies during the flight and in the airport.

Campaign TimelineBelow is a 12 week timeline of the marketing time line.

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Campaign Timeline

Marketing Budget

Virgin Red should budget approximately £5,010,000. This is inline with its competitors’ average advertising expenditure relative to market share. In 1 years time, an assessment will be made on the effectiveness of the campaign strategy on achieving its corporate objectives.

Bibliography

eMarketer (2013) Available at: http://www.newmediatrendwatch.com/markets-by-country/18-uk/154-mobile-devices. Accessed on 17th April 2013

Keynote (2013) Airlines Market Report 2013. Available at: http://www.keynote.co.uk.ezp1.bath.ac.uk/market-intelligence/view/product/10661/airlines/chapter/8/buying-behaviour. Accessed on: 17 April 2013.

MarletLine (2013). United Kingdom- Airlines. Available at: http://advantage.marketline.com/Product?pid=MLIP0830-0028. Accessed on 16th April 2013.

Mintel (2012) Holidays - Attitudes and the Impact of Recession. Available at: http://academic.mintel.com/display/479788/?highlight=true. Accessed on 17th April 2012

NRS social grade (2013). Wikipedia, the free encyclopedia. Available at: http://en.wikipedia.org/wiki/NRS_social_grade. Accessed on 17/04/2013.

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Marketing Budget