Marketing Plan for Virgin Blue 2

von: Hakime Vanelli

Table of contents

3. Introduction 3

4. Current Marketing Situation 4

4.1. Macro Environment
- Political / Legal
- Economic
- Social culture
- Technology

5. SWOT Analysis  7

6. Issue Analysis 10

7. Objectives 12

7.1 Financial Objective
7.2 Marketing Objective

8. Marketing Strategy 13

9. Action Programs 15

9.1 Customer Connection Program
9.2 Communication outside
9.3 Communication Inside
9.4 Connections, Alliances, Partnerships

10. Controls 23

11. References 24

12. Appendix  25

1. Executive Summary

This marketing plan is prepared for Virgin Blue with the sole aim to increase their profit. A brief history of the company describes their quick success in the aviation industry. Followed by, the current market situation and the appropriate PEST Analysis. The SWOT and Issue Analysis are showing the two main Australian domestic market companies suc h as Qantas’ and Virgin Blue’s major facts in detail. Afterwards the contents of the Marketing and Financial Objectives of Virgin Blue will highlight the key issues. The Marketing Strategy along with recommended Action Programmes will outline how to introduce and to begin with the Project. The explanatory statement of the project shows that this project can start as soon as desired. The last section is ‘Controls,’ it shows how the project can be controlled.

3. Introduction

Virgin Blue Airlines is the Brisbane-based subsidiary of the Virgin Group and began operation in Australia in the year 2000. They began with 280 members and 2 planes flying the routes from Brisbane base to Sydney and return.1 From the success of running a student magazine in London, Sir Richard Branson founded Virgin a small mail order company in 1970 at the age of 20. In 1984 Virgin Atlantic Airways has been established as a British International Airline. As of 2002, Virgin Blue counts 1300 team members flying, 17 aircraft servicing and 18 different routes. Today, the Virgin Group has expanded into international music retailing, book and software publishing, film and editing facilities, clubs, travel, hotels and cinemas, through 300 companies worldwide in 25 countries, employing over 35,000 staff. Virgin Blue strives to be an innovative and vibrant Australian airline with a focus on delivering low fare travel to flight guests. Virgin Blue achieves this end through a managed reduction of operating costs that are in turn passed onto flight guests in the form of cheaper airfares.1 “Virgin Blue is based on the idea that people would fly a lot more if it cost a lot less”. 2

4. Current Marketing Situation

In 2000 when Virgin Blue began operation, they had 3 competitors, Qantas, Impulse and Ansett. Two of them dominated the domestic routes: Qantas and Ansett. In 2001, Qantas took Impulse over and in September 2001 Ansett Group collapsed. Upheavals like the terrorist attacks in the United States, Bali- Bombing, the war in Iraq and severe acute Respiratory syndrome SARS resulted in a decline in international tourism. These upheavals carried over to regional airline sector, where the numbers of domestic travels increased. Whole this international happenings including the Ansett collapse, offered Virgin Blue contingency for success. Currently Virgin Blue shares 30 per cent of the Australian aviation market. Virgin Group owns 46 per cent of the equity in Virgin Blue company, while Patrick Corporation- the large, diversified Australian transport and logistics company acquired 50 per cent of the airline in 2001-02. Senior staffs of Virgin Blue hold the remaining 4 per cent. Virgin Blue recorded a net profit of $ 35 million and it has been reported that its 2002-03 net profit result could be between $ 100 million and $ 120 million. (see Diagram 1.0 in Appendix) As its route network and service frequencies have expanded, it has shown an increasing marketing orientation towards leisure travellers. This specific target group is more concerned about travel times and service frequencies and less concerned about levels, such as business travellers. Revenue for domestic operators derives chiefly from the business sector and domestic and inbound tourism. It has been estimated that domestic tourism contributes 40 per cent of revenue, with the business sector contributing 35 per cent and inbound tourism 25 per cent.

4.1. Macro Environment

Political / Legal factors:

By denying a request from Qantas and Air New Zealand at the ACCC (Australian Competition and Consumer Commission), the government wants to maintain domestic market competition. They want to become them an alliance and deregulate the aviation industry. Economical factors: Aviation war-risk insurance has become a significant issue since the September 11 terrorist events in the United States in 2001. War-risk insurance offers cover losses arising from acts of war, including acts of terrorism, strikes, riots and sabotage. Because existing aviation thirdparty war-risk insurance was withdrawn from the global marketplace after the September 11 attacks, the Australian Government, like those of many countries, agreed to provide thirdparty war, terrorist and hijacking indemnity cover for damage on the ground airlines, airports and other service and facilities providers.

Social factors:

[...]

1 According to Kotler page 106

1 see www.aph.gov.au/library/pubs/RP/2002-03/

2 According to www.virginblue.com.au