Managing the marketing process is an issue that companies have to contend with in the new dynamic and competitive environment. Performance of most businesses in contemporary environment is gradually shifting to the need of superior marketing strategies that are able to respond to the market needs in the most appropriate way. Therefore, this research intends to look at how management of marketing process can be enhanced in the increasing competitive business environment.
The research will be a case study on Virgin Blue Company, which is an airline company based in Australia.
Virgin Blue Company sees itself as possessing a humble background and beginning especially for being the first type of company to initiate the first and unique sustainable low far airline in Australian skies (Virgin Blue Company n.d).
The company, through steady progress, has evolved and grown to become a recognized company in the world as innovator and leader in the global aviation industry. Blue Virgin Company started its operations in on 31 August 2000, with initial two aircrafts to start with (Virgin Blue Company n.d).
It operated one route and had 200 team members who collectively shared a clear and concise goal of changing in the most drastic way the air travel in Australia (Virgin Blue Company n.d). As a way of revolutionalizing aviation industry with regard to way of doing business, the company reduced the airfares by almost 50 per cent while at the same time introducing genuine Guest service to the flying public, coupled with a strong commitment to being the best in the business (Virgin Blue Company n.d). Company’ mission indicates what the company is trying to achieve, what is the purpose of the company, and why it exists, hence, mission statement constitutes a short statement that says what a company stand for and it outlines a company’s strategy that becomes a key referential tool by company’s members in making key decisions (Griffins and Goffar n.d). Virgin Blue Company’s culture has been created based on the company’s core values.
For instance, the company expresses that “the big secret to Virgin culture is simple – there is no secret, where creation and maintenance of an enviable culture has been the top secret of the company and this has been done by infusing the company’s core values into everything the company does where we get that right and the Virgin culture just follow” (Virgin Blue Company n.d, par.3). The company’s values have been infused with everything that the company takes part in. For instance, the company works hard and participates in everything necessary to provide work environment characterized by the “right policies, processes, systems, communications, facilities, benefits, interesting work, fair pay, and reward and recognition to support our people and our business operations” (Virgin Blue Company n.d). Virgin Blue Company has code of conduct and practice that it has established and acts as guide to business conduct in the organization (Virgin Blue 2010).
One of the director in the company summarizes “all personnel are required to support the quality of Virgin Blue and to take an active role in identifying and facilitating opportunities for improvement where the ultimate commercial success of the company is intrinsically linked to both perception and reality that the company operate safely, surpassing both the competitors and the required regulation and legislation” (Virgin Blue 2010, p.1). Code of ethics at Virgin Blue outlines key responsibilities members have to demonstrate and these responsibilities have been categorized into groups of: underlying values for the company, business integrity, which stress virtues of honesty, integrity, and fairness with regard to reporting, political involvement, and competition (Virgin Blue 2010). Brett Godfrey, CEO of Virgin Blue Company observes that the company has greatly moved away from organizational structures, instead the company work more brilliantly to establish a lesser organizational hierarchical in the workplace (Brett n.
d). Instead of an organizational structure and hierarchical, Virgin has instead embraced structure that is kind of pie chart and not the traditional and usual triangle structure. The CEO of Virgin goes on to state that, as a leader he lacks confidence and is non-believer in organizational charts and instead advises that all leaders in the company should view themselves to be equal to each other.
The company has an established marketing department headed by marketing manager and a dedicated team that is responsible to all aspects with regard to brand, product, and retail media advertising in television, radio, and related online campaigns (Virgin Blue Company n.d). Marketing objectives at Virgin Blue are built on the principles of SMART, which stands for: specific, measurable, attainable, relevant, and timely objectives.
First, Virgin Blue has pursued its marketing objectives through strategic alliances with other companies (O’Sullivan 2011). Strategic alliances have been favored by the company mainly to create extensive marketing channels and networks in region the company cannot afford to go it alone (O’Sullivan 2011). At the same time, Virgin Blue, upon its establishment, rested on the philosophy of endeavoring to be low cost, but offer reasonable services. In addition, the initial marketing strategy of the company based on these objectives was motivated by prevalence of market domination by airlines like Qantas; hence, Virgin Blue adopted an aggressive marketing expansion based on low costs which in actual were about 30 to 40 per cent less that that of Qantas (Bamber 2006). As part of implementing market plan, there is need to carry out monitoring, controls and adjusts process, which can be undertaken using different tools such as “developing a financial forecast of revenue using statistical models, past sales data, executive judgment and surveys of consumer trends” (Cooper and Argyris 1998). After this has been done, there is need to carry out estimation of “costs such as market research costs, promotion costs, product development costs and distribution costs” (Cooper and Argyris 1998).
At Virgin Blue Company, the management and overall organizational culture encourages working together of departments hence sharing of information is key to the success of the company. The company further encourages ‘cross pollination’ of ideas and communication, which in turn leads to working and implementation of strategies at the company more easy (Brett n.d). On large scale ‘silo mentality’ has been discouraged, which has opened up communication channels to be more easy and frequent.
Virgin Blue currently controls about 33 per cent of the airlines market in Australia where the company global marketing strategy has been simple perceived to largely involve offering of easy-to-understand, low priced carrier and at same time use of low-cost business model that generate high profit margins (Virgin Blue Company n.d).
Virgin Blue brand stand exceptionally in a situation that has numerous opportunities only when appropriate environmental scanning had taken place. Situation analysis according to Michael E. Allen in the book titled ‘How to promote and advertise’ observes that it involves describing what is happening in the markets in which the company operates and competes and also the company’s products and distribution trends (Allen 2006). Situation analysis for Virgin Blue Company can be grouped into macro-environment situation; market situation; competitive situation; target buyer or end user situation; product/service situation; and lastly, distribution situation (Allen 2006). In order to carry out this situation analysis more effectively Virgin Blue may employ two critical situation analysis tools: SWOT analysis and PEST analysis.
Virgin Blue can be assessed with regard to Strength, Weakness, Opportunities, and Threats (SWOT) as follows. The strengths of the company include: the company has relatively low cost structure; the company has out-won its competitors given its low fare offering policy; further the company as compared to the competitors boost of having a management team that possess significant and beneficial airline experience that continue to be utilized in the company (Asian Travel Tips, 2003).
Moreover, other related strengths of the company include presence and possession of strong brand in the market as compared to some of its competitors; presence of unique culture and the overall enthusiasm of the organization that has endeavored it to customers; and lastly commitment and general productivity of its workforce (Asian Travel Tips 2003). With regard to weakness, first Virgin Blue Company is not an Australian owned company an aspect that sometimes has affected the company’s operations especially with regard to legal and political policies in the country. Second, the overall Virgin Group financial structure has continued to change and remain fluid translating into impacts in other Group’s units like Virgin Blue Company (Grant 2004). For instance the company’s structure of ‘stand-alone’ financing of each company has executed a lot of pressure on individual companies resulting into accumulation huge debts (Grant 2004). This situation has left Virgin Group vulnerable to bad debts in one part of the group that in turn swiftly infect the rest of the companies (Grant 2004). Being part of the Virgin Group, Virgin Blue has not been immune to these debts. With regard to opportunities, Virgin Blue Company has some opportunities in its way. For instance, the fact that international security has become an issue especially after the 2001 terrorist attack in USA, international tourism declined and this particular situation translated into the number of domestic travels increasing (Isik-Vanelli 2003).
At the same time, the collapse of Ansett Company has provided unexploited opportunities which with adequate and appropriate strategies Virgin Blue can create a contingency for success. Moreover, all indications point to the possibilities that the route network and service frequencies are destined to expand, an opportunity Virgin Blue can exploit to expand in the Australian market (Isik-Vanelli 2003). Lastly, the increasing market orientation towards leisure travelers still has few players who can adequately exploit hence Virgin Blue Company is presented with an opportunity to venture in the area. At the same time, threats that face Virgin Blue Company largely originate from the increasing competition in the airlines market. The main fierce competitor for Virgin Blue Company in the Australian Market is the Qantas which has eclipsed Virgin Blue Company (Virgin Blue Holdings Limited n.d).
Qantas airlines given its expansive network and huge financial base has continued to offer much lower fares as compared to Virgin a situation that has immensely executed pressure on Virgin Blue (Virgin Blue Holdings Limited n.d). Other threats facing Virgin Blue company has to do with the government initiatives to liberalize airlines in Australia, a situation that is going to see increased entrance of low-fare companies thus increasing the competition environment.
PEST is an acronym for Political, Economic, Social and Technological factors which are used to assess the market for a business or any organizational unit (Chapman 2006). Assessing the Virgin Blue Company with regard to PEST, the following information is generated. With regard to Political-Legal effects affecting the company, it can be deduced that Australian overall liberal policy has created an environment that favor and motivate new entrants to enter the Australian market (Slide Share In.
2009). At the same time, Australian international aviation policy is seen to be ‘multiple designations’ where at the same time the deregulation that has been taking place since 1990 has led to more controlled form of competition between the two rival competitors Qantas and Virgin Blue (Slide Share In. 2009). With regard to economic factors, it can be deduced that since the events of September 11 2001 in USA, international tourism has continued to suffer as more customers hold back due to security concerns.
Further, other economic issues such as increasing fuel costs has continued to pose challenge to Virgin’s policy of low-cost fare whereby the increased fuel costs has in turn affected the basic costs of flights which in turn affects the likeability of customers to book a flight (Slide Share In. 2009). Socio-Cultural factors on the other hand that impact Virgin Blue has to do with the current situation of tightening of labor market specifically with regard to skilled fields that forces the company to increase its employee motivation. At the same time it is predicted that the demand for personnel in other and distant countries will lead to the need to initiate foreign-language training (Slide Share In. 2009). Lastly, the technological impact in the increasing information world requires Virgin Blue to institute appropriate technologies for its services. For instance, online booking is a technological aspect the company will need to explore.
On overall, the growth of information industries is creating knowledge-dependent global society and information is gradually becoming the primary commodity for the success of industries (Slide Share In. 2009).
SWOT Analysis and PEST Analysis forms the two critical assessment and evaluation tools Virgin Blue Company can use to identify opportunities and threats which in turn can lead to formulation of appropriate marketing objectives especially with regard to international markets. SWOT Analysis in nature concentrate on international assessment of the company, in other words, it largely dwells on micro-environment analysis of the company. On the other hand, PEST Analysis makes assessment of the external environment of business where the emphasis shifts from micro-environment to macro-environment evaluation. Therefore, the results generated from the two assessments become critical in postulating the company’s marketing and overall strategies especially with regard to corporate strategy of the company.
Virgin Blue after successful assessment of SWOT and PEST, the following international marketing objectives of the company can be pursued. According to Richard Branson, the Virgin Group founder asserts that “Virgin Blue has already proven its ability to operate successfully in a competitive market and the directors are confident that this will continue in the future” (Asian Travel Tips, 2003, p.1). Given this observation it can be deduced that Virgin Blue company need to create and develop business travel market that has focus on fulfilling the needs of leisure travel market (Asian Travel Tips, 2003).
At the same time, with increasing entrance of new competitors Virgin Blue can create new and unique ultraslow cost carriers so that it can be in position to challenge its competitors offering low fare services such as Qantas and JetStar (Asian Travel Tips 2003). Another marketing objective that can be formulated in the future involves instituting a new carrier such as Virgin Light Blue that has potential and capability of serving regional airports that in the current state are not served and this should also include secondary metropolitan airports. Furthermore, Virgin Blue need to formulate marketing objectives that reflect desire to provide domestic air services in all parts of Australia and also international services to countries like New Zealand, Vanuatu, any many more (Asian Travel Tips, 2003). Lastly, the marketing objective Virgin Blue should concentrate on involve online marketing and this should involve implementing a better IT system that enables customers to book ticket and holiday much easier through the web (Asian Travel Tips, 2003). In order to manage risks which in large part are presentable in threats the company face. Managing risks will need the company to increase the quality of its services and products in order to out-perform the competitors. At the same time, offering low fares should be within the economies of financial position of the company. The Asian market appear promising and prospective with forecasting indicating that any venture in the market has the potential to realize about 20 per cent increase.
But how well can Virgin Blue exploit these opportunities given its current position? One possible and viable international marketing operation structure the company can adopt involve joint venture with an Asian countries airline. Virgin Blue needs to bring on board new airline partners to penetrate and exploit the Asian market. This aspect is necessary given that all indications point to the fact that international cooperation that in turn will results into growth of the market size (Asian Travel Tips, 2003).
In order to successful succeed in international market; Virgin Blue Company needs to develop an international marketing communication strategy that will be critical in the promotion of the company and its products and services. The main aspects that the communication strategy should have include: assessment of marketing communication opportunities, analysis of marketing communication resources, setting marketing communication objectives, developing and evaluating alternative strategies, and lastly, assigning specific marketing communications tasks (Czinkota and Ronkainen, 2007).
Increasing competition in the Australian airline market has resulted into companies adopting various marketing strategies that are intended to position their businesses at an advantageous level in winning customers.
Virgin Blue Company has adopted cost leadership strategy, which in turn has been rewarding for the company. In summary what the company need to know is that, airline market is becoming more competitive, dynamic and price elastic while at the same time not compromising quality of the products and services offered. Therefore the company needs to device other marketing strategies based on the market situation, customer needs, company objectives, consumer needs, and overall business environmental situation. International marketing is challenging but again the company needs to create and implement an international marketing communication strategy that is able to incorporate the corporate strategy of the company together with external environment the company face.
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