Virgin Airlines vs British Airways

8/3/2019 Virgin Airlines vs British Airways

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I N T E R N A T I O N A L M A R K E T I N G

S U B M I T T E D B Y :

Robin Masih

Rohin Rai

Prabhjot Singh Risam

Hardeep Singh Chawla

Kirtivardhan Banthiya

Comparative analysis of marketingstrategies


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The Industry

The airport dominance has grown competitive in thehospitality industry. In the accommodation of thiscompetitive growth, the aviation or airline industry

plays an essential role in helping the economy tosurvive although this type of business requires hugeinvestment.

The strategies applied in this kind of industry canhelp the entire organization in finding the dominantposition. Connection with media serves goodopportunities.


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Introduction

Virgin Atlantics The owner of Virgin Atlantics is Sir Richard Branson, who is famously

known for Virgin records. In 1984, Richard announced to the worldthat a high quality, value for money airline would begin operating

within a short span of time. In this way, Virgin atlantic airways wasborn.

In 1992 Richard sold Virgin Music to Thorn EMI and invested theproceeds into Virgin Atlantic, improving on an already great service.

In the same year they launched the first super economy service thatwent on to become their award winning Premium Economy.


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They spent most of the Nineties buying new planes, expanding theirroute network and generally breaking new ground in passenger service,both on the ground and in the air.

In 1999 Richard sold a 49% stake in the company to Singapore Airlinesvaluing it at a minimum of 1.225bn. In the same year, for services toentrepreneurship Richard received a knighthood.

And then the list of innovations and over- increasing facilities goes

endless.


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British Airways

British Airways (BA) is the flag carrier airline of theUnited Kingdom, based in Waterside, near itsmain hub at London Heathrow Airport.

British Airways is the largest airline in the UK based onfleet size, international flights and internationaldestinations.

BA's UK passengers originating at non-London airports

must connect via London after British Airwaysdiscontinued all direct overseas flights from UK airportsoutside London following the sale of BA Connect to Britishregional carrier Flybe in 2007.


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History

The British Airways Board was established in 1971 to control the twonationalized airline corporations, BOAC and BEA, and two smaller,regional airlines, Cambrian Airways, from Cardiff, and NortheastAirlines, from Newcastle upon Tyne.

On 31 March 1974, all four companies were merged to form BritishAirways. After almost thirteen years as a state company, that was soldin February 1987 as part of a privatization plan by the ConservativeGovernment.

The carrier soon expanded with the acquisition of British Caledonian in1987 and Dan-Air, Gatwick-based carrier, in 1992.


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On 12 November 2009, British Airways confirmed that it hadreached a preliminary agreement to merge with Iberia.

The merger between the two carriers will create the world'sthird-largest airline in terms of annual revenue and the

second largest airline group in Europe. The merger was confirmed on 8 April 2010, and on 14 July

2010, the European Commission approved the mergerunder Competition law and also allowed American Airlines to

co-operate with the merged entity on transatlantic routes tothe United States of America.

The British Airways merger with Iberia was finally completedon 21 January 2011, formally creating the International

Airlines Group, IAG.


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Marketing

of

Virgin Atlantics


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Its Customers

The percentage of UK originating passengers variesfrom route to route, but on average there's a 60/40

bias to the UK.

Upper Class passengers are predominately travellingon business and are male, 35 to 45 years old, andearning 50K plus per annum.

Passengers in Premium Economy are split fairlyevenly between travelling for business or leisure;most are male, average age 41.


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Those travelling on business are often doing sobecause their company operates an economy travel

policy.

Economy passengers are a much broader group,travelling mainly for leisure and evenly spread across

most socio economic groups and age ranges.


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Marketing of services

Advertising activity in the UK includes TV, press,magazines, outdoor posters and taxi sides, all featuringtheir distinctive logo. Advertising is used to encouragepeople to try the airline, to raise awareness of new product

developments and new routes.

Direct mail is also used to encourage trial and to supportabove the line product or route messages.

During traditionally low seasons, tactical promotions andprice advertising are also used to maximize aircraftcapacity.


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Advertising


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Virgin Atlantic operates a frequent flyer programme, flyingclub to encourage loyalty in existing flyers. However, inaddition to offering miles which can be exchanged for freeflights and other rewards, flying club members are

rewarded with a host of other benefits, e.g., a "one call doesit all" support service and Clubhouse access.

In addition to communication to consumers, they market to

travel agents, who are the primary distribution source forairline seats. In addition to advertising in tradepublications, they support their sales team with a widerange of promotions, trade incentives, familiarisation tripsand educational/social events.


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Key areas within Marketing Department

Communications - The role of the marketingcommunications department is to keep business and leisuretravelers informed through press and TV advertising,mailings and a variety of offers and promotions. Running

special promotions - like fare discounts on particular fares -increases the popularity of seats on each route all yearround.

The Communications department works alongside theSales department, offering support to the trade. This is aprocess that involves working closely with larger corporateclients and travel agents on joint marketing activity.


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The website (www.virgin.com/atlantic) offers fullelectronic booking capacity, allowing passengers toreserve and pay for tickets online, plus full

destination information and a comprehensive guideto what's in store when flying with Virgin

Atlantic.flying club members are able to use thesite to check their mileage balance, rewards and

earning opportunities. New members can also enrollonline.


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Creative Services - The in house design teamproduces everything from sales literature, tradematerial, newsletters and posters to photographyand video production. The design crew also managethe development and use of Virgin Atlantic'scorporate identity.


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Charity- In conjunction with the Virgin HealthcareFoundation, Virgin Atlantic's onboard charity, Change forChildren, supports four charities a year as well as specialappeals to support national fundraising days or natural

disaster relief. In 2000 Change for Children donated awhopping 401,850 to its chosen charities.

The Charity team receive on average 150 letters each week

asking for charitable assistance. Priority is given to peoplewho are terminally ill, the emergency services, schools andorganizations looking after people with special needs, andenvironmental and conservation concerns. Virgin Atlanticdoes not seek publicity for support of charitable activities.


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At Virgin Atlantic theyre passionate about supporting localcommunities both in the UK and in their globaldestinations. They tackle difficult social challenges by

using all the global resources available to them.

Last year they gave over 1 million to children and youngpeople who face extreme neglect, abuse, poverty, violence

and social exclusion. With their support, people have realchoices and opportunities to build a positive future.


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Change for Children is at the centre of a network of localand global social and environmental programmes and isone of the many ways they give something back to

communities in our destinations. Each month Change forChildren raises an average of 45,000.

For the next three years (2010 - 2012) their Change for

Children appeal will be supporting Free The Children, whosupport long-term sustainable change in our destinations.


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We've already developed excellent workingrelationships with Free The Children and arelooking forward to what the next three years will

deliver. Virgin Atlantic Charity climb


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Sponsorship - This is sometimes used to supportnew routes. For instance, Notting Hill Carnival wasthe perfect platform for Virgin Atlantic to launch theflights to the Caribbean, while becoming the Official

Airline for the Lions' rugby tour to South Africa wasspot on for the launch of the Johannesburg service in1997.

F1(09)

NFL


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Virgin London Marathon

When the London Marathon announced they were looking for asponsor, Virgin jumped at the opportunity to be part of somethingamazing.

Acc to Virgin- We knew the London Marathon raised massive amountsfor great causes each year, but we hadn't realized the race was in factthe single biggest annual fundraising event on the planet. The runnershave raised over 500 million for good causes since the first race in1981.

We were so inspired by the London Marathon's commitment to raisingmoney for charity that Virgin Money, Virgin's financial services arm,wanted to get involved and lend their expertise. As lead sponsor of therace, their ambition is to help the runners raise even more.


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Internal Communications - The InternalCommunications department looks after a variety ofpublications and activities that are aimed at Virgin

Atlantic staff, ranging from the intranet, Verb, andBuzz videos, to the annual staff party at RichardBranson's home in Oxfordshire.


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Events - the Events team manages a wide variety ofexciting activities to promote Virgin Atlantic and itsroutes. The team looks after new product launchesfor corporate and trade clients, as well as training

and social events for travel agents, exhibitions, roadshows and press launches.

For upper class at Business Travel.


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Loyalty - flying club, the airline's loyaltyprogramme, allows Virgin Atlantic to reward andrecognise its most important customers. The Loyaltyteam manages all forms of communications with thefrequent flyers, including letters and other mailshots.


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Partner Liaison - the Partner Liaison team is thecore of the flying club, linking the Loyalty

department, the flying club partners and the flyingclub members, and negotiating contracts withpotential partners to provide a huge selection ofmileage earning opportunities and rewards to spend

those miles on.


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Research - Virgin Atlantic commissions quarterlycustomer satisfaction studies that are conducted bythe prominent market research organisation NOP.

The surveys monitor everything from the punctualityof the flight departures to the length of check inqueues and the quality of the inflight entertainmentand service.

Results of the surveys are fed back to managersglobally, providing the airline with the valuableopportunity to review and improve its services

wherever it can.


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Virgin Atlantic also participates in industry widesurveys conducted by IATA (International AirTravellers' Association), TAPS (TransatlanticPassenger Survey) and SPEAR (Survey of Passengerson Europe Asia Routes). These provide a benchmarkfor all competing airlines on service levels, both on

the ground and in the air.


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Public Relations - The Press Office handles all directcommunication with the press, television and radio,working closely with Virgin Group's main Press Office inLondon.

The Press Office drafts and distributes press releasesproviding journalists with information about VirginAtlantic, as well as organising press briefings, running pressconferences, accompanying the press on new route

launches and setting up photo opportunities for nationaland overseas media.

The office also works with broadcasters and filmmakers tosecure product placement for Virgin Atlantic.


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Database Marketing - Working closely with the flyingclub team, the Database Marketing team manages andmaintains the extensive customer database.

This database holds a wide range of information includingdetails provided by customers who register their interest inVirgin Atlantic when visiting its' web site.

As well as being used to run precisely targeted campaignsand promotions, the database is also used to producemanagement reports on the behaviour of the customers andto track the mileage of the airlines frequent flyers.


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Environmental Policy

Virgin Atlantic has introduced a number of recyclinginitiatives both on board aircraft and throughout thecompany's offices.

These measures are environmentally conscious andcost effective, enabling the airline to assist a numberof charities and institutions.

Recycling is carried out in compliance with Ministryof Agriculture directives to ensure the highest healthand safety procedures are adhered to.


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Office initiatives

Paper- Strand Cleaning Services at Gatwick.

Printer toner cartridges- CLIC (Children's leukaemia

charity) Vending cups

Plastic glasses- Save A Cup Recycling Company.

Aluminum cans- Ifield Hall to raise money for theirtransport.


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Onboard Initiatives

Duty free bags- Virgin Atlantic was the first airline touse Byoplastic, a biodegradable material, with dutyfree bags introduced in 1988.

Magazines- Consumer and specialist magazines arecovered with protective plastic covers to enablereuse.

Economy amenity kits

Upper class amenity- Leftover snoozesuits arelaundered for re-use.


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Marketing

of

British Airways


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British Airways is a business offering serviceproducts, flights across destinations, in thetransportation industry.

Service is an intangible product involving a deed,performance or effort that cannot be stored orphysically processed, were customers directlyparticipate in the production process.

Product strategy is therefore very vital for theorganization's success. It needs to be developed andmanage very careful in order to be successful

Product strategy


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Product levels

1.At the beginning is the core benefit, the fundamentalservice or benefit that the customer really buying. The mostfundamental level is the core benefits; what the customerreally buys. In British Airways customers buying flight

tickets to satisfy their basic need which is to flight from onedestination to another.

2. The second level is the basic product, were customersbook their seat on a schedule flight to a particular

destination. British Airways flies to the busiest airports inEurope in 95 different cities and to 58 other destinationacross the world. It is by far the busiest Airways company inthe world operating a big number of airplanes


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3. The third level is the expected product in other wordsthe condition buyers expect when the purchase theirtickets. In British Airways customers expect to have an

allocated seat, meals and drinks, on board entertainmentgood service, in contrast with Easy-Jet were customer justbuy a ticket with no allocated seat and without onboard service of food and drinks.


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4. The fourth level is the augmented product that exceedscustomer expectation. The augmented product is the extraservices that British Airways provides and the supportfacilities. It has three different executive classes for

different needs: the blue, the silver and the gold. For themember of the silver and gold there are executive loungesin all the main airports where customers can relax awayfrom the noise and eat something or even have a showerand go to the gym. Customer from the first class can evenenjoy an on board sleep in their own bed seat. For busypeople were time is money British Airway offers greatservices to eliminate any time lost.


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Adding value to the customer

In the product development a key factor is the company'spositioning in order to choose the best possible strategy.

British Airways has positioned it self as high standard, highquality airline and it's the leader in its category. Thus the

strategy that follows it is not stop at the expected level butcontinues with emphasis to the augmented product level.

British Airways does not only concern for the coreproduct, but it pays a lot of attention to the augmented

product as well. It tries to satisfy all the different customerneeds and expectation from an economy class to thebusiness and the first class providing various services.


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It has different lounges for the first class customer and an on-board menu for the food and wines than it has for the economyclass.

British Airways offers business class seats, blue / silver or gold

card for frequent fliers and executive lounge atall main airports.

It also provides customers with free food and drinks on flightsand very good service. It has as well two in-flightmagazines, a great collection of movies, four radio channels andTV programs for the entertainment of the people.

It also flies the busiest and more convenient airports and fliesfrom and to almost every country in the world in 153 differentdestinations around the world.


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Brand Identity

A brand identity is the message sent out by the companythrough its form, name, visual signs, advertising etc.Kapfferer introduced the brand pyramid shown in thefigure below to help marketers analyze brand's identity

(Peter Doyle 1994). British Airways applicationto Kapfferer's brand pyramid can be analyzed as:

1. Brand core: "Quality flights for all people". This brand

core is applied to focus on the quality of the British Airwaysbrand which is available at different levels for differenttypes of customers.


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2. Brand style include:

o Culture: An airline company based in the UnitedKingdom.

o Personality: Confident, glamour, convenient.

o Self image: Quality of service, Business class.


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3. Brand themes:

o Physical: Quality flights across the world.

o Reflection: For everyone, with any needs and anywants.

o Relationship: Reliability, security, convincingness,comfortableness.


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Branding

Branding is a major issue in product strategy. It is the artand cornerstone of marketing. It is the name, term, sign,symbol or design, or a combination of them, indented toidentify the good or services of one seller or group of sellers

and to differentiate from the competitors (The AmericanMarketing Association).

British Airways brand is the safeness, the assurance, theconfidence, the luxury, the comfortableness that the brand

has built in the years. It is the symbol of British Airwayswhen you see generate awe of a brand strong enough tofulfill every customer attitude. A symbol which is simplebut represent the one of the best in safety and luxuryairlines in the world on customers minds.


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1. Attributes: British Airways is a luxury, safety, reliableand convenient airline which transfer people todifferent destinations.

2. Benefits: In other words the translation of theattributes into functional or emotional benefits.

The term luxury represents functional benefit when having

your own comfortable seat with a nice meal and beveragesof your choice and all the kind of comforts a customerwould like to make his flight easier and better.

Levels of Branding


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The attribute safety could be translated intoemotional benefits that calms down the customers andmake them feel safe.

The attribute reliability represents an emotional and

functional attribute. British Airways makes the customerfeel important with safe, reliable, scheduled flights alwayson time.

3. Values: British Airways brand stands for a prestige,glamour, comfortableness, safety and reliability that heairline has which can be used by all kind of people.


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4. Personality: Flying with British Airways gives apersonality which makes you feel like a business man or anexecutive traveler. It has the glamour any traveler woulddream and the right on time concept for people on a hurry.

5. Culture: British Airways is an airline company based inthe United Kingdom representing the English culture:organized, reliable, kindly.

6. User: The brand suggests the kind of consumer usingthe service. For example in British Airways you see morebusiness people than you see students. However peoplefrom any background can afford to use the service.


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However, a brand is more than a name or logo orcolor or symbol. It is a marketers promise to delivera specific set of feature and benefits to the customer.

British Airways is a big airline which flightinternational and oversea and offers great deals ofluxury safety and comfort flying from and to themost central and busiest airports in the world.


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Pricing

For these different types of customers BritishAirways has set different prices considering theirdifferent needs:

a) The executive class (golden members),

b) The middle class (silver members)

c) Economy class (blue members and free travelers).


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Pricing Strategy

* The premium strategy gives high quality in high pricesfor executive and business users. With this strategy BritishAirways attacks the business class of its competitors in overseasand international flights like Virgin, American Airlines and

Lufthansa.

* The medium price strategy gives medium quality, less thanquality than the premium strategy and more quality than lowprice strategy, in medium prices.

* The low price strategy has been developed to gives thebasic product as the low cost airlines (such easy jet and Raynair)with some more extra benefits which add more quality plus theadvantage of the brand image of British Airways.


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British Airways has set some promotional prices on flights tosome special occasion:

1) Christmas gift voucher. The promotional offer for theChristmas known as British Airways escape ticket offers aperfect present. Flying to 14 travel zones from 59 return onUK and Europe destinations and from 269 return on the restof the world.

2) Domestic and European fares from 49 return: Low fares to135 destinations across Europe.

3) Club World business class offer: When flying to club worldbusiness class you can upgrade to first class on a free one wayticket.

Promotional Pricing


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Conclusion

Both the airlines are different from each other in some orthe other way.

British airways do not focus mainly on low pricing becauseof its already established brand whereas Virgin Atlantic

provides a lot of low cost offers. VA shows its responsibility towards the environment.

BA do not compromise with its services. Believes inproviding the best as you pay whereas VA believes in

Customer Delight. VA is working a lot for charity so as to brand its product

and services and its introducing a lot of elite services tocompete with BAs Upper Class.


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Virgin Airlines vs British Airways

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