UNIVERSITY OF SAN JOSE- RECOLETOSCOLLEGE OF COMMERCETOURISM AND HOSPITALITY DEPARTMENT

HOSPITALITY MARKETING MANAGEMENT CLASS

CASE# 4Virgin Atlantic Airways

SUBMITTED BY:Ariza, Gee Kylie KrishnaChua, Zyera P.Comar, Grace Stephanie J.Dahil, JennalynMorales, Monique Joy

SUBMITTED TO:Mr. Steven N. Sasam

DATE SUBMITTED:February 16, 2010

Situational Analysis

Demographic

Virgin Atlantic Airways entertains the different status, gender and age.

Most of the travelers are business traveler and leisure travelers.

They allow children ages 5-and above to travel. Below 5 years old, the kid should

have guardian ages 16 up or parents. For the unaccompanied child/children, they

must follow a certain rule. The Virgin Atlantic also accepts trained pets who

accompanied disabled person e.g. Blinds person. Also some of their passengers

are packed with friends, families and high yield business travelers.

Technological

Virgin Atlantic Airways gives importance to technology. Technology could

also upgrade the expectations of passengers. Virgin Atlantic Airways knows how

dangerous to fly the airplane without further checking of its technology. There are

aircrafts engineers that have been researching to improve security airlines. They

also implement high technologies to entertain the passengers while waiting for

arrival. They don't want the passengers feel bored during the flight.

Innovations were implemented in order for the passengers to relax and to

feel comfortable. There were video entertainment, Sony watchman on board,

individual video screens for every seat; virgin’s onboard entertainment offered 20

audio channels, 16 video channels. Those innovations were created to cater the

needs and wants of the customers as well as to understand the passengers

needs and go beyond their expectations. They accept any status of passengers.

Political-Legal

In January 1991, the UK opened Heathrow Airport to Virgin when it

abolished the London Air Traffic Distribution Rules in response to pressure from

the industry. The London Air Traffic Distribution Rules had come into effect in

1978, originally created to achieve a fairer distribution of traffic between

Heathrow and Gatwick, the UK's two main international airports, to help Gatwick

make a profit.

The former rules stated airlines without an international scheduled service from

Heathrow prior to 1 April 1977 would not be permitted operations there; instead

they would have to use Gatwick. Before the abolition, airlines that did not already

operate at Heathrow could commence domestic scheduled services there

provided BAA, which ran both Heathrow and Gatwick on behalf of the

Government, and the Secretary of State for Transport, granted permission.

Economic

The economic issues in the industry are also mostly concerned with

deregulation. The evolution of industry structure plays an important role in

determining the robustness and stability of lower air fares in unregulated

markets. Deregulation keeps airline fares so low as compared to that of other

countries. The reason for this is because despite the failure of most entrants

since deregulation, investors continue to create new airlines.

Market implications: lowered their airline tickets; discounts for senior citizens;

discounts for group travelers.

Socio-cultural

Virgin Atlantic Airways have quality staff despite of low income. Virgin

Atlantic’s employees should have the sense of responsibility in entertaining the

passenger’s needs and wants. Branson wanted that their customers also feel the

belongingness in the industry. The crew should also have the sense of fun.

Sense of fun that while the crew have to work hard, they should have fun and

should be satisfied with what they do and what to offer for the passengers.

Environmental

Virgin Atlantic is committed to reducing our environmental impacts

where we can by becoming a more efficient business, leading the industry to

practical and technical solutions and engaging, inspiring and empowering our

staff and customers to help us meet this challenge.

Together with Virgin Atlantic's biofuel demo and push for more efficient aircraft

this is the sort of initiative the airline industry needs at a time when emissions

from this sector are growing at nearly 4% a year.”

Firm analysis

Strengths Opportunities

• The dedicated emphasis

on customer service and

innovation

• It is headquartered in a

country where airline

competition is tolerated

and enhances because

of the deregulation

policy.

• The increasing number of

travelers in the UK is also

an opportunity for Virgin

Atlantic.

• There might have a push

on the market with its

latest Heathrow

clubhouse.

Weaknesses Threats

• Lacks transparency

unlike other Companies

UK and around the

world.

• Virgin Atlantic reach only

limited countries unlike

other global airlines.

• The company has limited

destination.

• The emerging consumer

mindset thus it is

dangerous to ride airlines

because they are

susceptible to terrorist

attacks.

• Emergences of new

airlines, as there are

newly formed ones using

Virgin concepts.

Porter’s analysis

Industry

The airline industry is saturated. In a country, it can have more

than five airlines, which also compete against each other. Since travel services

are derived demand, new entrants should be able to cut a share in the pie in the

presently saturated market. Virgin Atlantic Airways, a company with a good

background in the industry and they are also backed up by Singapore Airlines.

SUPPLIERS

The main supplier for airlines is obviously its aircraft manufacturer. In

Virgin Atlantic case, the main aircraft manufacturers are Boeing and Airbus. Fuel

companies are also one of the key suppliers for airlines, since fuel is the basic

necessity for aircraft in order to operate. the airport itself supplies the services

needed by aircrafts. IT companies such as IBM and NCR can be classified as

suppliers as they supply IT solutions.

INDUSTRYINDUSTRYSUPPLIERSSUPPLIERS Buyers Buyers

COMPETITORSCOMPETITORS

SUBSTITUTESUBSTITUTE

COMPETITORS

The competitions are very stiff at this point, because of the reduced of the

government role and protective rules that lead to the increasing competition

among airlines. Competitors in the industry have same capability in terms of

interactivity of their web page. The core competence of the Virgin Atlantic

Airways is their high technologies, cheap ticket and good schedules.

BUYERS

Virgin Atlantic Airways is known for the quality service render to their

passengers. The Virgin Atlantic Airways offers the cheapest airfare so that the

passengers can afford.

Passengers were used to purchase their tickets directly from the airlines

company. At that time, bargaining power of customers was very low, but now

every airline spreads its distribution channel everywhere even overseas to keep

up with the competition. This enables the airlines to cover the market, but on the

other hand it also grants bargaining power to the buyers.

SUBSTITUTE

For every product or service a company offers, there is always a

potential of a substitute for it. Virgin Atlantic Airways operates completely in air

transportation. Air transportation is utilized by people who need to travel faster

and time efficiency is crucial for them. If time is not a main consideration, people

might choose to travel by sea or land and this saves them a lot of money. The

main substitutes for airline industry are trains, buses and ships.

STATEMENT OF THE PROBLEM

Primary problem:

How will Virgin Atlantic Airways segment and position their

firm in the market min order for them to surpass their competitors and

become a market leader?

Supporting details:

Virgin Atlantic airways were founded by Richard Branson. Richard

Branson believes knowing the needs and wants of the customers are the best

core competence to them. By this way, the company can target all the market.

The virgin Atlantic believes that they need to accommodate all potential

customers for as long as they can afford unaccompanied children, male and

female, employed or unemployed, and their different purpose of travels. The

virgin Atlantic Airways don’t practice the marketing segmentation

Secondary problem

How the Virgin Atlantic maintain their good reputation and their services?

Supporting details:

The Virgin Atlantic Airways is known for its high technology, offers

a best fares and schedules, comfortable seats than other airlines their

entertainment system is the best among the others. Passengers expect what

they saw in the websites and also in the magazines. A passenger expects good

employees as well. But there are more unsatisfied passengers who commented

in the internet about the Virgin Atlantic. The virgin Atlantic airways offers a best

fares and schedules, the seats are much more comfortable than the most

airlines, their entertainment system is better than anyone else. But unfortunately,

the seats are tiny with absolutely no leg room in the premium economy class.

The seats recliner button broke. Passenger’s comment about their services and

staff. Some of these are: lousy services, uninformed and uncaring employees,

arrogant staffs, unprofessional, incredibly rude ground staffs, over-booked flight,

inattentive attendants; they take no responsibilities for their mistakes. And they

call their passengers foul names.

Presentation of the alternatives

Alternatives A for primary problem

Virgin Atlantic Airways cannot serve all customers in a broad

market. The company needs to identify their target market so that they can serve

and do their job effective and efficient. Virgin Atlantic can apply the mass-market

strategy. The mass-market strategy call on a firm to develop one product the is

marketed to all potential consumer this approach considers the market segment

with similar wants and needs of the customers.

Alternatives B for primary problem

Alternatives A for Secondary problem

Virgin Atlantic Airways are known for their state-of-the-art facilities

and their low price but there are still unhappy passengers because of some

failures of their facilities which are not operating well. The main goal of the

company is to give “Upper Class service in a low cost”.

The management must check their equipments and facilities

before and after the flight. So that the management can fix it ahead of time and

also to avoid customers complaints. If the entertainment games is not available

and must be fix for a longer time, they must informed the passengers about the

problem and instead of on flight games, they can have an interactive games like

bring me game, guessing game, playing cards and more to entertain the

passengers and to avoid them to feel bored.

Alternatives B for Secondary problem

Since in gaining good reputation and obtaining a good service,

Virgin Atlantic should conduct a disciplinary action for their employees because

they are the one who delivered the service to the passengers. The management

should give a wish list through the attendants upon entering the plane or upon

sitting on their sits. Attendants should distribute this wish list just like during

Christmas. The passenger can write what they want during the flight and after the

flight. They can wish to buy presents for them instead of them who will go to the

duty free. By this wish list, the management and the attendants would know the

likes and dislikes of the passengers and to avoid complaints. And they can also

offer the Upper Class service to their passengers.

Recommendation for the primary problem

Recommendation for the secondary problem

Gaining the trust of customers is not easy. Therefore we

recommend alternative B because by this way the company would know the

needs and wants of their passengers. They would also a big help for them

because the staff would know what to do and what should not do. And they can

give it much better than expected.

Implementation and Control

What Who When How

1. Globalize

the Virgin

Brand Name

Further

Marketing

Director

2-3 years if

possible

By expanding on

some countries and

operate in other

countries

2. Develop

innovative ideas

of services

Marketing

Director

1-3 years By identifying the

needs and wants of

the customers then,

produce

3. Ensuring the

companies safety,

reputation and

success

Mr. Richard

Branson and

the rest of

the staff

Anytime By keeping their

eyes peeled for

opportunities and

threats of the

company.

4. Conduct a

market research

Research

Department

6 months-3

years

Distribute check-list

for every passenger.

To know the

passengers wants

and likes.

Particulars Weight Grade RemarksSituation Analysis1. Sufficient presentation of the relevant issues of

thecompany’s structure and environment

10%

2. Sufficient presentation of the relevant issues of the company’s marketing practices

10%

Problem Identification3. Appropriate identification and phrasing of the

case problem(s) – primary, secondary with brie support discussion on the evidence and effects of the problems

15%

Alternatives Presentation5. Development of sound, appropriate mutually

exclusive strategic alternatives10%

6. Construction of rational scenario for each alternative, with relevant, exhaustive discussion of pros and cons

10%

Recommendation 7. Sound and thorough discussion of the alternative 15%

selected and recommended, justifying recommendation with the strategic factors presented in item 6

Implementation, Evaluation and Control8. Development of thorough and exhaustive

programs to implement and support the recommended alternative, replete with the relevant what, why, who, how much (relevant financial computations), when, where

20%

9. Identification of relevant types of evaluation and control mechanisms to ensure the implementation success of recommendation

10%

Final Grade

General Comments

HM11 Personnel ManagementCase Analysis EvaluationCase No. /Title: Virgin Atlantic Airways Date: February 16, 2010