Virgin Virgin AtlanticAtlantic

A Brand Case A Brand Case StudyStudySubmitted to : Prof. KamathPresented by : Giles Castelino – 4

Bhavin Godhaniya – 12 Amit Kanchan – 17 Jignesh Karia – 19

Pavan Patil – 35Sudhir Sawant - 43

MMM – 2007 - 2010

Virgin Atlantic – A Player with a Twist

After Establishing Virgin Records as one of the Top 6 companies in 1980’s, Branson launched Virgin Atlantic Airlines in 1984

Known for his Crazy Stunts, Branson’s colleagues & employees were skeptical

Over a Period of Time Virgin Atlantic has become second largest international long haul airline to operate out of London, overtaking British Airlines

How did Virgin Manage it ?

Virgin has a well Integrated Strategy

The Mission statement sums it up:

“To Grow Profitable airline that people love to fly and where people love to work”

Virgin is a brand name that is known for Innovation, Quality and a sense of fun

How did Virgin Manage it ?

Resources & Capabilities

Virgin enjoys a sufficient & steady cash flow, mainly due to Branson’s ability to raise funds

Sale of Virgin Music Company for US$ 1 Billion – 1992 Branson’s personal equity in the organization Reinvesting Profits back into the company

Virgin has acquired access to several important logistical resources over a period of time

How did Virgin Manage it ?

Virgin brought about the following changes:

Stressing flexibility in its Information & Planning Structures involving

Financial accounting covering Management Accounts

Direct operating costs, involving the core overheads intrinsic to the airline business, such as landing fees, fuel costs, and the fluctuations in currencies that can make or mar the working day

Planning for the future, which involves exploring the impact of new routes or new aircraft on the bottom line

Analysts and heads of departments, who need the ultimate flexibility to examine “what if” scenarios

How did Virgin Manage it ?

Virgin implemented “Applix” System

The “Applix” system enables Virgin Atlantic to assess its progress as a company

The information system collects information on the airline and provides analyses for the following 3 purposes:

Where the company has been, Where exactly it stands now, and Where it should be heading in terms of its success as a market

player in the airline industry

How did Virgin Manage it ?

Virgin Atlantic also has a partnership with Micromuse Inc., a provider of fault management and service assurance software

The software that the airline uses is Abilitec, a tool that crash-proofs Virgin Atlantic’s Operational Support System (OSS)

The OSS provides information and services to Virgin Atlantic staff member

This assurance of a properly running information system for employees enhances Virgin Atlantic’s capabilities as a company by automating technological functions that would have otherwise required added costs and resources

How did Virgin Manage it ?

Although its central headquarters are in Crawley, England, Virgin Atlantic has established headquarters in eight other major locations throughout the world:

United StatesCaribbeanSouth AfricaHong KongTokyoShanghaiDelhiLagos

This strategic placement throughout the world has contributed to Virgin Atlantic’s scope as an international company

How did Virgin Manage it ?

Finally, its talented management team has succeeded in marketing Virgin Atlantic’s brand and establishing the company as a valuable and innovative name

Its image has contributed significantly to Virgin Atlantic’s success, and the overwhelming effort contributed to marketing and differentiating the company in the industry is responsible for its success from its entrance into the market until today

The pull of its brand value gives the airline power in the world market and thus extends its capabilities as far as its brand name will take it

Sources of Competitive Advantage

Despite its wide array of competitors, Virgin Atlantic has managed to bring in enough market share to boost itself to the top of the industry

One way it has accomplished this goal is by forming alliances or partnerships with some of its main competitors and, therefore, eliminating the competitive aspect altogether between certain companies

The following companies have entered into agreements with Virgin Atlantic as a result of its strategic offers:

Continental Airlines, Singapore Airlines, Malaysia Airlines, BMI and Nationwide Airlines based in South Africa

Sources of Competitive Advantage

Another way the airline has competed within the industry is by building its customer relations and, consequently, increasing its customer loyalty

It has accomplished this goal to build customer relations both conventionally and uniquely

Just as many other airlines do, Virgin Atlantic offers a frequent flyer program called “Flying Club”

Virgin Atlantic offers incentives to retain its customers

Sources of Competitive Advantage

Another method for broadening its target market, and thus expanding market share, is to offer a discount version of the original airline; and so it did

Virgin Atlantic’s discount airlines

Virgin Blue, has already established basic routes through the Australian, New Zealand and Tasmanian areas

Sources of Competitive Advantage

A third means of building customer loyalty — a less conventional method — is through Virgin Atlantic’s Customer Service Simulations

CSS program has enabled the company to gain distinct competitive advantage by simulating customer service experiences and working to improve the flying process

The company has improved customer service for passengers and reduced costs by reorganizing existing, and introducing new, check-in services at airports around the world”

This technique has led to concrete changes, and Virgin Atlantic has retained both its customers and competitive edge over time

Company Strategy

The company’s organizational structure — the core of its strategy — is based on four principles:

Encouragement of independence,

A long-term approach,

Competitive cost levels and

A loyal customer following

All of management’s efforts in building the company stem from some aspect of these general organizational values, and this direction gives Virgin Atlantic the momentum it needs to succeed as an international firm

As far as the value of independence goes, Virgin Atlantic emphasizes this concept as apart of its overall appeal as an airline

Its mission values of caring, honesty, value, fun, and innovativeness reflect the individual as the focal point for all its energies

Company StrategyVirgin Atlantic has one of the largest and most developed marketing departments in the industry

The areas within the department cover every necessary aspect of the airlines marketing planning and implementation needs:

CommunicationsCreative ServicesCharitySponsorshipInternal CommunicationsEventsLoyalty (Focus: flying club)Partner LiaisonResearchPublic RelationsDatabase Marketing

Company Strategy

The final aspect of its strategy is customer loyalty

Virgin Atlantic has been very successful in retaining customers and recruiting new ones

One example of this universal appeal is the services they offer in- flight. Not only do employees sell the atmosphere but they also sell the experience as a whole

As of February 1, 2004, passengers have had access to the airline’s Vport entertainment system onboard, which provides “200 hours of video and audio entertainment”

Also, aside from the Flying Club to build customer loyalty, Virgin Atlantic provides travel agents with a commission program as an incentive to advocate this airline to travelers over others

All these moves combine to effectively and smoothly plan and implement the Virgin Atlantic Airlines strategy

SWOT Analysis

Strengths

•Differentiation based on value, service, & price•Universal appeal to wide variety of customers•Established and highly-recognizable brand image•Innovative features that distinguish the company name•Talented management team (i.e. Branson)•Strong, well-designed organizational structure

Weakness

•Some underdeveloped channels (i.e. Premium Economy)•Underdeveloped distribution system•Marketing primarily focused on London market•Ineffective utilization of alliances and partnerships

Opportunities

•Increased tourism with the improvement of the economy•Alliances and mergers •Airline growth post-recovery because of the trimming of the airlines since 2000•Latin America as a low-terror, high growth potential market•280 airports within Europe (growth opportunity)•No major carriers dominating Intra-EU aviation market•Germany, Spain, and France (next largest markets after UK)•Asian market expectation (fastest growing over the next ten years)

Threats

•Terrorism leading to decreased tourism and confidence in the airlines•Health problems (such as SARS)•Regulation problem for airlines aiming to merge or grow (ie. antitrust legislation)•On-going supply surplus resulting in maintained low revenues•Internet booking allowing greater price transparency Improved

Recommendations & Potential Future Trends

Regardless of future industry trends, one aspect of Virgin Atlantic’s strategy—the aspect that gives it direction, perspective, and long-term potential—is its fundamental organizational structure

The four aspects, encouraged independence, long-term approach, competitive pricing,and a loyal customer following, are the pivotal values around which the airline should build its organization

With these concepts in mind, Virgin Atlantic can tackle any or all of the opportunities that the above SWOT analysis uncovered.

Recommendations & Potential Future Trends

A second direction that the company should pursue is its emphasis on marketing its brand

Richard Branson knows the value of brand equity & constantly takes action to maintain the market value of the company

The latest campaign to promote the airline is Branson’s plan to provide live video coverage of Steve Fossett’s eighty-hour non-stop flight around the world, the first round-world flight

Scheduled for some time in April, the flight will serve as a powerful public relations tool for Virgin Atlantic, even further proving the importance of a powerful marketing strategy

Recommendations & Potential Future Trends

A final and wide-ranging concept that the airline should adopt to ensure success in the future is to keep its success measures—corporate performance, profitability, market share, and system performance — at the forefront of strategic planning and decisions

By monitoring its progress, the company can analyze what strategies have worked and will most likely work in the future to bring growth to the company over the long term

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