Excerpt
Table of contents
Executive Summary
1. Introduction
1.1 Company Background
1.2 Purpose
2. Marketing Objectives
3. Financial Objectives
4. Target Markets
4.1 Existing Market
4.2 Potential Market
5. Strategy
5.1 Market Penetration
5.2 Market Development
5.3 Product Development
6. Marketing Mix
6.1 Product
6.2 Price
6.3 Promotion
6.4 Place
6.5 Packaging
6.6 Positioning
6.7 People
7. Controls
8. Implementation
9. Conclusion
10. References
Executive Summary
The purpose of the report is to develop a marketing plan for Virgin Australia based on the business analysis report prepared before by creating ideas for how the company can best conduct their marketing activities.
Virgin Australia aims to achieve 10% sales growth with 25% increase in the market share of business travellers by 2013. The primary target market of Virgin Australia is the domestic leisure market with business people, young families and students as their potential customers.
Virgin can undertake market penetration strategy by a combination of competitive pricing strategies, advertising, promotion and perhaps more resources dedicated to personal selling. It can also expand its destinations to tap Qantas market share and can introduce new service dedicated to business travellers.
To achieve its objective Virgin could improve in-flight services, introduce frequent flyer miles programme and tailor packages for young families, adventurers and students. Peak and off-peak pricing, student discounts, stand-by fares, early booking discounts could also be introduced as part of its pricing strategy. Advertising activity could include direct mail, TV, press, magazines, outdoor posters etc. A customer connection database can be used to information to send birthday greetings or information about the quality of customer service. Virgin has to extend its operations two fold if it wants to compete with Qantas. High quality first class private lounges with premium class private suite could be introduced for business customers. To position itself in the mind of business customers, it has to develop a two-brand strategy, targeting both the segments of leisure and business customer market. Attributes which may not be so important for leisure travellers have to given top priority to attract business customers.
In order to facilitate an integrated approach for managing marketing resources different softwares could be used organization-wide such as Enterprise Resource Planning (ERP), Material Requirements Planning (MRP), and Efficient Consumer Response (ECR) systems etc. Integrated marketing communications (IMC) approach can be used to estimate the value of marketing mix executions based on the changes in customer behaviour these executions generate.
The marketing strategy has to be divided into bits and pieces so that it could be handled easily. Communication channels have to be open to discuss new ideas, issues, challenges and opportunities. Additionally, any achievement has to be rewarded while repetitive failures have to be penalized.
1. Introduction
1.1 Company Background
Virgin Australia, formerly known as Virgin Blue, is Australia's second largest airline co-founded in the year 2000 by renowned British business magnet Sir Richard Branson and former Virgin Blue CEO Brett Godfrey.
Initially started as a low-cost carrier, the company improved its services to become a “new-world carrier” as described by themselves (Virgin Blue media release, 2011, para. 2). In 2011 the company further stretched the strategy introducing new uniforms, new catering service on board, new wide-body aircraft and business class; together with a new livery and a renaming to Virgin Australia. It is the market leader in the low-cost carrier service market. Currently the airline is considered a four-star airline by research consultancy firm Skytrax (Skytrax, 2012, p. 1).
1.2 Purpose
The purpose of the report is to develop a marketing plan for Virgin Australia based on the business analysis report prepared before by creating ideas for how the company can best conduct their marketing activities.
2. Marketing Objectives
Setting SMART objectives will allow virgin Australia to better understand where its role fits and what its activities are. SMART objectives focus on outcomes rather than activities and allow to measure success. SMART stands for Specific, Measurable, Achievable, Realistic and Timely.
Virgin Australia aims to achieve total revenue of $1016 million in 2013, which represents a 10% increase from last year (CNN, 2011, p. 1).
Up to this period, the main target market of Virgin Australia is the leisure market, which primarily consists of travellers who are not willing to spend much money and are not concerned much about travel time. However, if the company now wants to tap the business travellers, it needs to undertake a slightly different strategy as they are doing now because it has to accommodate their product to live up to expectations of their business customers. Therefore, more focus has to be given on business and government travellers in order to increase market share. This is why the company expects to increase the market share of business travellers to 25% before 2013 (Virgin Australia Annual Report, 2011, p. 21). However, these objectives have to be achieved maintaining its image of low-cost carrier.
In addition to that, Virgin could also bring out affordable product for students since they constitute a large part of Australian community with 39 universities and numerous colleges and institutions.
3. Financial Objectives
The financial objective of Virgin Australia is to earn an annual rate of return on sales over the next three years of at least 33% before interests and taxes. According to Virgin Australia’s forecast, it expects a profit after-tax of $115 million in the next year with $191 million on operating cash flow (Virgin Australia Annual Report, 2011, p. 56).
4. Target Markets
4.1 Existing Market
The primary target market of Virgin Australia is the domestic leisure market because it is a low-cost carrier and the leisure market tends to be more price elastic than business customers. However, Virgin has introduced several strategies to attract to business travellers such as: velocity frequent flyer programme, the relaunch of lounges at major airports, web check-in, flexible fares for business and government travellers, completion of new code-share technology and an application programme interface facility for corporate accounts (Virgin Australia, 2006, p. 5).
4.2 Potential market
Besides targeting the leisure market, Virgin Australia could also consider the business people, young families and students as their potential customers.
Australia’s emergence as a business and tourism destination has provided the domestic airlines the room for growth and has fuelled domestic air passenger traffic. According to World Travel and Tourism Council (2009, p. 16) Australia accounted for around 2.4% global travel and tourism activity in 2010, forecasting a growth of 5.9 % for the years to come. Virgin should plan to take advantage of this boom for increasing their market share.
In addition to that, Australia is the third most popular study destination in the English-speaking world, with more than 200,000 international students in Australian institutions across all education sectors (Australia Education, 2012, p. 1). Virgin could come up with products and services specially tailored towards student segment.
Young families, who want to spend their holiday with their children, could also use specially tailored family packages to travel regularly with Virgin Australia.
5. Strategies
Australian domestic airline industry has reached its maturity and there is vigorous competition among its key players. According to the analysis of external and internal factors, to effectively achieve its objectives, Virgin could adopt the strategies described below:
5.1 Market Penetration
This is a growth strategy where the business focuses on selling existing products into existing markets. To achieve its objectives, Virgin, at first, has to maintain or increase the existing market share. This can be achieved by a combination of competitive pricing strategies, advertising, promotion and perhaps more resources dedicated to personal selling. With a much stronger and aggressive promotional campaign supported by a pricing strategy, Virgin could restructure the market by driving out competitors.
5.2 Market Development
Market development strategy means deploying current services into new markets where company seeks to sell its products. Possible way to achieve this strategy by launching existing services into new geographical area or new market segments.
It is suggested that Virgin should add new routes and destinations, especially if it wants to capture the market of Qantas.
[...]
Comments