MARKET PLANNING

Marketing Planning

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Introduction The Virgin group is London based and chaired by Richard Branson (Aviation Week 2005). Under the Virgin banner; various businesses have been ventured into. They include; wedding gowns, condoms, financial services and airlines. Virgin started as a mail order record business in 1970, in London. In 1983, Virgin vision was created followed by Virgin cargo and Virgin Atlantic airways in 1984; and in 1985 Virgin holidays was created. Virgin group got floated in 1986, on the London stock exchange. Nevertheless, Virgin Atlantic airways remained as a privately owned company by the Voyager Group. Richard Branson bought back all the outstanding shares in 1988. (Rifkin 1998) Virgin Atlantic had their first inaugural flight launched on 22nd June 1984. A major kickback was that the airline was denied permission to fly out of Britains largest airport, Heathrow. However, in 1991 the airline had a breakthrough, and it was granted the permission. There are three core products offered by Virgin Atlantic Airline namely; upper class, premium economy and economy. The benefit associated by the products is what differentiates the classes. The airlines mission statement is; To grow a profitable airline that people love to fly and where people love to work(Rifkin 1998). Task 1-Marketing Audits a) Changing Perspectives in Market Planning of Virgin Atlantic. Marketing tactics This involves differentiation, market mix and selling. The art of realizing market strategy in regard to all interrelated factors that differentiate a company from others is called differentiation (Keegan & Green 2000). This could be in terms of customer satisfaction, product differences or customization of services or products to go well with market segments. Virgin Atlantic practices

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differentiation by taking their customers expectations to a notch higher through communication with their customers. Provision of in-flight ice cream is a good example of differentiation since other airlines do not offer this. Market mix, incorporates a combination of product, price, place and promotion that goes inline with market strategies (Keegan & Green 2000). Virgin Atlantic offers innovative and fun products with quality services. These products are flights offered worldwide in upper class, premium economy class and economy class with prices:$9,000.00, $3,000.00 and $500.00 dollars respectively to London. In relation to place, Virgin Atlantic does not engage in a lot of routes as their competitors. Non-stop services are offered to selected routes in the united State and international flights. Transfer options like limo services from the airport are offered to upper class passengers who, in addition enjoy exclusive clubhouses. Barber services, facials, salon massages, fullservice bar, restaurant style dinning, and business facilities are offered to passengers. Virgin Atlantic continuously promotes itself through different media. We shall look at the different media in the Integrated Market Communication part. Under selling, Virgin Atlantic aims at particular customers by communicating the quality and comfort provided by the company. The company sells tickets via the internet, direct communication with customers and travel agents. Marketing value We shall look at brand values, service (The Branson Factor) and process. The Virgin brand has the ability to exploit its competitors weaknesses on customer service skills and the ability to self-promote the company. Virgin Atlantic has a brand recognized by Interbrand being among fifty global brands. Across the world, people increasingly prefer the Virgin brand name. Quality

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and experience have been introduced into the airline because of the award winning reputation that Virgin brand has. Virgin Atlantic has a principle for increasing quality of their services to customers. Mr., Branson shows fearless reputation for antics through his entrepreneurial attitude. Management at Virgin Atlantic has played an important role in global success of the Virgin brand. Process at Virgin Atlantic relates to external communication through strategic alliances and internal communication through employees. Management structure at virgin Atlantic enables all head officers to report to Mr. Branson directly (Rifkin 1998). The chairman himself actively communicates with his employees. External communication at the company is shown by engaging in strategic alliances and code sharing with various airlines. Integrated marketing communication This is defined as a concept in market communication planning that evaluates a variety of communication disciplines. This involves general advertising, sales promotion, public relation and direct response. Virgin Atlantic advertising activities include; TV, magazines, direct mail, press, taxi sides and outdoor posters. All these feature their distinctive logo; the flying lady. The company also operates the Flying Club, which is a flyer program that encourages customer loyalty. Flying club members are offered support services like clubhouse access and rewards like exchange. They have a website that allows full electronic booking of tickets plus information on various destinations. There is a design team for Virgin Atlantic that develops Virgins identity through newsletters, posters, literature and other creative media. Communications with the press, radio and television, are handled directly by the Virgin Atlantic Press Office. Lastly, Virgin Atlantic involves itself in sponsorship programs, and it has an events team that organizes various activities aimed at promoting the company (Rifkin 1998).

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Competitive strategy It includes market segmentation, targeting and positioning (McDonald & Wilson 2011). Market segmentation is whereby a market is divided into groups, whereby, the most appropriate group or groups are selected for the organization to serve. Males between the age of 35-45 dominate the upper class passengers and the earn $50k and above annually. In the Premium Economy, passengers are evenly split either traveling for leisure or business. In the Economy pack, passengers travel mostly for leisure. They are of a much broader group and their age ranges. Targeting is a process where an organization chooses one or more market segment as a specific target market. Customers are considered to be important by the Virgin Atlantic and thus individualized services are offered to them. Virgin Atlantic targets on upper class customers who travel on transatlantic route on business purposes. Virgin Atlantic positions itself in all British airways routes as a direct competitor. This can be shown by its aggressiveness in getting slots at Heathrow International Airport: attacking American Airways and British Airways proposed partnership. Lastly, the company has endeavored to compete on all routes in and out of London, with British Airways. Spacious setting arrangements are experienced by passengers on the aircraft. In addition to this, passengers enjoy an in-flight entertaining system and quality customer services. Furthermore, at business class prices Virgin Atlantic Company offers a unique upper class services; the company is also installing internet capabilities and implementation of a high technology inventory management system, Galileos Inside Availability(R) (Rifkin 1998). b) Virgin Atlantics Capability for Planning its Future Marketing Activities

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First and foremost its management team has an understanding of institutionalized markets. The team ascertains complacency in the market. The company ploughs through due to this expertise and experience. Secondly the strong Virgin brand name overcomes barriers to new entrance in the Airline business and this minimizes competition as well as their profits are increasing. In addition, the company limits its risks in joint ventures with other companies. Lastly, management structure allows a sense of ownership in the company since they are not restricted; this in return promotes responsibility and innovation. Innovation keeps the company at per with advancement in technology and provision of quality services. c) Techniques for Organizational Auditing and for Analyzing External Factors Affecting Market Planning and Analysis of Virgin Atlantic. We shall look at PEST and SWOT techniques; PEST analyzes external factors and SWOT analyzes internal factors that affect an organization. PEST analysis is based on political, economic, social, and technological factors affecting an organization. A SWOT analysis is an assessment of strengths, weaknesses, opportunities, and threats of an organization. This involves the firms internal strengths and weaknesses and the firms external opportunities and threats. It offers information needed to formulate corporate, financial and business strategies of a firm. The analysis helps in utilizing the organizations strength, get the most out of opportunities, counteract threats and ease internal weaknesses. PEST analysis for Virgin Atlantic Political issues Effects of deregulation are an example of how politics affects the airline industry. The government tries to control or regulate prices offered to consumers, and this has shifted competition to prices from services (Rhoades et all, 1998). The department of Transport is also

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watching and following keenly airline activities. The department checks on environmental issues, creates and amends several laws governing airline industries. Key International bodies such as, the European Union, European Civil Aviation Conference and International Civil Aviation Organization affect the Airline industry by setting standards to be adhered to by the industry within Europe( DfT, 2003). Lastly, a political issue affecting airline companies is the emergence on alliances between or among airlines. Economic issues Deregulation has a major effect economically on airline industry; this is due to the regulated prices. This keeps airline fares low in comparison to other countries. Another economic issue is the contribution to the worlds economy by the airline through employment and GDP. Social issues Attention must be given to consumer expectation issues. This includes the reason for traveling and the class the consumer prefers to travel on. Service quality demanded by consumers is another social issue that affects the airline Industry. Lastly, attacks by terrorist are a bugging issue concern to the airline industry. Technological issues Technological concerns include competition in technological innovation, faults and services assurance solutions, electronic flight bag solutions and online solutions which are alternatives to dial-up. All these are affecting the airline industries as they try to provide efficient and quality services to their customers. SWOT analysis for Virgin Atlantic Strengths

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The companys brand name is recognized by 98% of British public. Introduction of innovative technology; Galileos Inside Availability(R) Quality trained workers recruited from other airlines. Quality services offered to customers travelling in any class. Innovative entrepreneurial management offered by the chairman Richard Branson. Being a private company, other virgin brands can easily be formed and more control. High returns and greater value due to a better load factor than competition. By winning every quality awards, Virgin Atlantic has a positive publicity.

Weaknesses The company has limited flight route. Flight delays experienced once in a while. Due to September 11 tragedy, routes to Toronto, Chicago, and cape were cut. A one man managed company by Richard Branson, who is the director and owner of the multiple companies. Getting late on the internet for web page, web site, and e-commerce.

Opportunities Strategic marketing above others by being more innovative, caring, maintaining value, fun, and producing quality. A need to improve on the websites. Investing on recession as an unexpected opportunity. Generation of additional routes. A warehouse facility Heathrow London.

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Threats

Flying into outer space-Virgin Galactic. Technological adds improvement.

Recession, airline industry has and will be affected by September 11th resulting into risk aversion for flying customers and order cancellations.

Competition from other routes. Fluctuation of fuel prices, where fuel expenses accounts for 15% of all the airline expenses.

The expanding brand image may result to a brand dilution; which may be too global.

Task 2-Barriers to Market Planning a) Virgin Atlantics main Barriers to Market Planning Deregulation is a barrier that has increased competition in the airline industries and in a way lowers profits made by the company. Another barrier is the many businesses under the Virgin Group; where Virgin Atlantic airline has suffered a case of bad publicity once in a while. An example is the Virgin Rail that was ranked being the most unpopular rail operator by the Strategic Rail authority Review in 2000; this affected other Virgin Groups such as Virgin Atlantic. Environmental barriers are experienced by the Virgin Group. The prevailing political, economic, social and technological regulations are a great hindrance to effective market planning. These factors bring forth, limitations or restrictions that Virgin Atlantic should work or regulate its businesses.

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Cultural barrier is faced by the company. Organizational culture has a major influence in any organization performance. Cultural barriers in Virgin Atlantic include; sexual explicitness, stereotyping, emotional appeals and gender roles. Management also has issues with an increase of intercultural employees. The problem is managing different cultures and knowing various laws that different countries implement. Cognitive barriers pose a threat to effective market planning. Lack of skills and knowledge, results to incompetence; which eventually affecting proper implementation of a market plan. Marketers who lack proper understanding of the market, customers and products make distorted market plans. b) How to Overcome the Barriers It is important for an organization to identify barriers that affect its effective market planning process. In order to succeed in any business, organizations need to take necessary measures to overcome the barriers. Virgin Atlantic can overcome these barriers by the Virgin group having a change in strategy, becoming less diverse and accounting year end (Micromuse 2002). The groups policies need to be changed in order to accommodate both joint and independent ventures. This should help the group to rely on short term profits from its few businesses so as to raise capital and to release the ring-fenced policy. Virgin Atlantic can benefit from this financially during its low moments. Policies and philosophies should be adjustable with time but not restrictive. The group should become less diverse as its brand name is becoming diluted. Workable value can be done developing and investing in real expertise rather than sharpening a knife that is already sharp on both sides. Accounting year end for all Virgin Businesses should be brought in line at the same date. This will help in giving a good picture of the wealth and health of the

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Virgin Group. Finally, cultural issues can be overcome by support and participation offered by the management team. To overcome cognitive barriers, Virgin Atlantic should ensure that they employee people with experience and the right requirements for the given positions. In addition, the company should also offer training to its employees in order to equip them with the right knowledge and skills for their work. The company should also try to understand more on matters relating to cultural sensitiveness of its customers and employees. Environmental barriers can be overcome by an affective external analysis done on the company, to identify the issues and knowing the correct measures to take from the analysis.

Task 3-Marketing Plan a) Market Plan for a New Product The new product: Energy drink Market analysis Energy drinks are a small player in the drinks market, but they are acquiring ground alongside other non-alcoholic drinks. Currently in US, energy drinks account for less than 2% of all carbonated soft drinks valued at $60 billion dollars (Roberts 2004). Energy drinks trend in the market are; market is usually males between ages of 18 and 25 years, containers revolve around size and imagery, marketing of energy drinks is usually through ports, video games, music and drugs. In the beverage industry, energy drinks are the fastest growing sector (Day 2004). Customer Analysis

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Generally energy drinks are made foe males between ages of 18 and 25 but this trend is changing. Hip hop audience are targeted by brands such as Russell Simmons among others, video gamers are targeted by Bawls Guarana, and sugar free brands for athletes and adults such as Pit Bull are changing the trend too. Target markets for consumers in geographical terms would be Asia and North America they are the biggest consumers of energy drinks. In terms of psychographics, the energy drink should be one that increases energy for studying, partying and working (Balfour 2005). Secondary target market should be considered so as to expand into new market, for example, women and health conscious consumers. Competitor Analysis Industries like Red Bull offer strong competition being the market share leader in energy drinks which controls almost 70% of the global sales in energy drinks. Other competitors are Coca-Cola, Anheuser-Busch and Pepsi Co (Day 2004). SWOT analysis Strengths include; quality services to customers, a globally recognized brand, innovative technology, and quality trained employees. Weaknesses include; flight delays, limited travel routes, and high costs of overheads. Opportunities include; inflight technology, strategic marketing above other airlines, and adding more routes. Threats include; brand dilution, and competition from other airlines especially British Airways. Selected marketing strategy Marketing less expensive products will help in compete with the products already in the market. Another marketing strategy would be to increase the number of ounces in each can. Monitoring and Reviewing

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Virgins consultants propose that the target market be women who have an active life style, and want an energy drink that is healthy and one that provides extra energy with a pleasing taste. Virgin should practice segment marketing to create a unique product, hence efficient distribution channels and communication. Women are currently generating more income and, therefore, this means a great purchasing power, in addition to maintaining a healthy lifestyle. On basis of product concept, Virgin Vibe, the energy drink to be developed can be patented since no other product goes by that name in the US. On price matters, Virgin Vibe can be sold at a much lower price and still make profits because, according to our research, energy drinks are overpriced. Distribution is to be done using already existing channels because costs will be minimized. Promotion will be done using a model of do-feel-learn because our target audience perceives minimal differentiation within this category of beverages. On matters relating to budget, for the first couple of years the promotional budget will be higher. Conclusion The product is very much sustainable, and its introduction would realize great profits according to the analysis made. b) Why Market Planning is Essential in Strategic Planning Process Market planning helps in identifying what the consumer wants and needs are and determines the demand of their product (Chan, 2000). Design of products fulfilling consumer needs is aided by a market planning. Identification of competitors and evaluating of Virgin Atlantics competitive advantage over its competitors is aided by a market plan. New product areas or potential and new customers are realized through a market plan.in addition measure for cash

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generation to make profits and debt repayment are identified by a market plan. Lastly, Virgin Atlantic can identify its weaknesses and work on them by the help of a market plan. c) Techniques for New Product Development For a new product development, there are several techniques done in seven steps (RDI 2011). The steps are; Step 1 Idea generation Step2 Screening Step 3 Concept testing Step 4 Business analysis Step 5 Product development Stet 6 Market testing Step 7 Commercialization

Idea generation is whereby a company comes up with a product idea that enables it to realize the targeted objectives. Various sources like researchers, marketing team and sales staff, bring about these ideas. The next step is screening of the ideas since not all of them will meet the

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companys objectives and capabilities. Those that do not are rejected. Concept testing involves testing the product concept with potential consumers and customers. By doing this, the company tests the reaction of the customers towards the new product. Business analysis is the next step which entails assessing the product to determine whether it will add to the companys sales, profits and costs. At the fifth step, the company checks the feasibility of the product on technically basis. Benefits in consumers minds, tangible and intangible attributes are revealed at this step. Market testing is a step where introduction of the proposed product is introduced to a given area representing a potential market. Finally, commercialization is put in place which is manufacturing of the new product and plans for a fullscale marketing are refined. d) Recommendations for Pricing Policy, Distribution and Communication Mix I would recommend that Virgin Atlantic implement a market- oriented pricing policy in the company. This is because, unlike other pricing, techniques, market oriented pricing takes into account particular market conditions (Parker & Donnelly 2001). Political factors, competition, costs, and explicability are some of these market conditions. Virgin Atlantic will actually judge what is paid for by their customers rather than just looking at the costs incurred in producing the products. Another suggestion based on distribution to the company would be to concentrate more on selling directly to consumers as opposed to selling through agents or third parties. This is because the company can contain costs that are attached to their products distribution. More should be done on internet communication since technology is advancing and most of information or communication is done through the internet. e) Factors affecting Effective Implementation of the Marketing Plan

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These include barriers, timing, performance measures and marketing budgets. In terms of barriers, people in a company tend to feel threatened or aggrieved if a company tries to implement new strategies. People need to change for a new strategy to be implemented. Virgin Atlantic ensures that it cultivates change to its employees for effective implementation. Some of the employees may not support the change no matter the level of persuasion. However, a support ladder (Parker & Donnelly 2001) shown below may help in creating the change.
Commitment

Acceptance

Compliance

Resistance

Opposition

Virgin Atlantic ensures that performance measures are taken into account by ensuring that a good work framework is in place. The frame work involves setting of clear objectives, then having a strategy in internal marketing; proper execution on everything in the company follows, and lastly evaluation is done. A clear time schedule is put in place, and market budget is taken into consideration by analysis on sales and profits made by Virgin Atlantic. This ensures a proper implementation of a market plan.

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Task 4-Ethical Issues a) How Ethical Issues Influence Marketing Planning in Virgin Atlantic Ethics such as marketing ethics (product, price, promotion, and distribution), environmental ethics, ethical behavior, and consumer ethics influence market planning in Virgin Atlantic. Product ethics arises when a company gives misleading information concerning the value, function or use of a product. Virgin Atlantic provides correct information about its products and services. Pricing ethics comes handy when a company offers unfair, unstable and discriminating prices. Virgin Atlantics prices are very fair and stable according to the different classes of flight products. Promotion ethics is concerned with misleading and manipulative advertisement or sales promotions. The company does not give manipulative promotions. Their advertisements reflect the value and standards of products and services that they offer. Distribution ethics entails limited provision of a companys products or services. Consumer ethics comes into consideration in situations where customers dupe or mislead companies, and environmental ethics deals with issues relating to pollution and waste problems. There are policies that certain regulatory bodies, for example, the Federal Aviation Administration (FAA), put forward to be implemented by airline industries (Feldman 2002). Environmental ethics are closely monitored by FAA and therefore Virgin Atlantic ensures that it has the required standards. Lastly, ethical behavior involves responding to situations by behaving in appropriate ways in different situations. All these ethics must be considered since they influence market planning I one way or another. b) How Virgin Atlantic Responds to these Ethical Issues

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Virgin Atlantics products, which are flights, in upper class, premium economy class, and economy class are provided for with all true and necessary information involving the products. Any changes are communicated to the customers about these products. Their prices are fair, stable and not discriminating, according to the services that the company offers, in its different flight classes. Virgin Atlantic does not offer misleading and manipulative advertisements, manipulative or deceptive sales promotion; it does not use deceitful information to attract customers nor publicize confidential information about their competitors. The company provides quality services through their flight worldwide. They do not restrict their supply of their products. The wellbeing of employees and passengers safety is highly reflected by the Virgin Atlantic company since safety is the uppermost priority. The management has a procedure that checks on shifts, schedules and rests for pilots (Oyama 2001). This procedure ensures that the pilots are not overworked, or fatigues, at any time, to avoid plane crashes. The airline has a code of conduct that creates ethics. Employees are aware of what is wrong and what is right. This ensures that whatever they do adheres to the companys rules and regulations thus eliminating ethical dilemmas to employees. Customers are treated fairly and equally regardless of whatever class they are taking their flight on. Employees are engaged in decision making process on the company, and they are promoted on merit basis rather than gifts or bribes. Lastly, the company ensures that environmental issues are taken seriously. For example, planes engines kept off, therefore, preventing air pollution where a total of two tons of carbon pollution per every flight is cut. Recycling of their waste products such as papers vending cups aluminum cans etc. is highly practiced

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c) Examples of Consumer Ethics and the Effect it has on Market Planning in Virgin Atlantic Consumer ethics arise when consumers act in a way to dupe or mislead a company (RDI 2011). There are five instances of such cases. Return of merchandise is where customers change their minds about goods they have already bought, and they go ahead seeking for a refund. Warranty deception, is whereby customers have damaged goods they have already bought, but they make claims against the company based on the manufacturers warranty. Another example of consumer ethics is false insurance claim (RDI 2011). Customers in such scenarios exaggerate the size of the loss. In other instances customers lose or damage the goods themselves deliberately, in order to make a claim. The fourth type of consumer ethics is recoding of videos and music. Many consumers are downloading and recording music and videos from the internet illegally. When such copies are sold this becomes a legal matter. Lastly, we have software copying (RDI 2011). Again, customers are copying software from the internet which is illegal especially if it is for financial gain. Returns of merchandise and warranty deception are two examples of consumer ethics that affect Virgin Atlantic. An example is, returned flight tickets already bought. This has affected Virgin Atlantic as it brings losses to the company; it has forced the company to come up with strict policies to overcome and to discourage such practices (Skytrax 2005).

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References: Aviation Week 2005, Richard Branson: Winner of the 2005 Wings Club Awards Among, Above and Beyond, Aviation Weeks Spotlight, Washington, DC. Balfour, B 2005, February 24, Buzz words: Sobe it...Its no Bull that marketers have gone Full Throttle into energy drinks. CanWest News Service. Retrieved March 2, 2005, from LexisNexis Database. Chan, D 2000, The Development of the Airline Industry from 1978 to 1998: A Strategic Global Overview. Journal of Management Development, Vol. 19 No. 6: pp. 489-514. Day, S 2004, Energy drinks charm the young and caffeinated. The New York Times. Retireved March 2, 2005, from Factiva Database. Department for Transport (DfT) 2003, The Future of Air Transport. Presented to Parliament by

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the Secretary of State for Transport by command of Her Majesty. Feldman, J.M 2002, CRM is back, Air Transport World, Vol. 39 Issue 6: p. 52. Keegan, W & Green, M 2000, Global Marketing, 2nd Edition, New Jersey: Prentice Hall. McDonald, M & Wilson, H 2011, Marketing Plans: How to Prepare Them, How to Use Them, Oxford: Butterworth Heinemann. Micromuse 2002, Virgin Atlantic Case Study, Micromuse Inc., San Francisco, CA. Oyama, D 2001, Virgin Atlantic Plans to Reduce Capacity, Cut 1,200 Positions. The Wall Street Journal, 18 September 2001, natl. ed.:A14. Parker, J & Donnelly, J 2001, Marketing Management: Knowledge and Skills 6th Edition, New York: Irwin/McGraw-Hill. Rhoades, D, Treudt, E & Waguespack, B 1998, Service Quality in the US Airlines Industry: Progress and Problems. Vol.8, No.5; pp. 306-311. RDI Learning Materials 2011. Marketing Planning. [Online] Available at http://www.rdi.co.uk/ Accessed July 23, 2012. Rifkin, G 1998, How Richard Branson Works Magic, Strategy and Business, Booz, Allen, & Hamilton, 1998, http://www.strategy-business Roberts, Jr & William, A 2004, June,Beverages with a boost. Retrieved March 1, 2005, from http://www.findarticles.com/p/articles. Skytrax 2005, Virgin Atlantic (online). Available at: http://www.airlinequality.com/Forum/vir_atl.htm

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