Virgin Group - Understanding the Market Situation and Marketing Opportunity the Business Provides - Case Study Example

Executive Summary Virgin Group which performs in the aviation industry is looking towards providing customers new adventures as it looks towards providing the opportunity to the customers to fly at an altitude of 68 meters and allow them to stay at the space from where they can view both the earth and the space and can enjoy the weightless gravity for five minutes. This is a new space in the direction and will provide adventurous people an opportunity to experience something new. This will help to attract more people and ensure an opportunity of growth for business. This report thereby looks into the strategic factors through strategic analysis which helps to evaluate the manner in which the steps taken will ensure competitiveness and growth for the business. This is thereby reflected in the vision and mission statement which helps them to develop strategies for maximum customer satisfaction. This has helped to identify the key target customers and the pricing strategy which will ensure growth and opportunity of growth for the business. Also looking into the intensifying competition level and the manner in which the business risk can be managed by understanding the environment will help to make strategies which benefit the business and are able to sustain in the market for a longer period of time. This will thereby help to improve the brand image and act as a contributor towards the growth of the organization. Table of Contents Introduction 3 Objective of the Assignment 3 Current Strategy 4 PESTEL Analysis 4 Porter Five Force Model 7 Target Customers 9 Marketing Mix 10 Marketing Strategies 13 Competitors 14 Ethical Issues to be Considered 15 Recommendations 16 Conclusion 17 References 18 Introduction Virgin Group which performs in the aviation industry is looking to provide adventurous people with an option through their brand Virgin Galactic. The company through this looks to provide customer an option to fly at an altitude at 68 meters from where they can jump for four to five minutes of zero-gravity weightlessness and views both space and Earth. This will be something new in this direction and will help to attract thousand of people as it will make people have adventure something which they otherwise would not have. This will provide an increased opportunity for Virgin Group to grow their business and will enable them to ensure long term profitability from this new venture. Objective of the Assignment The objective of this assignment is to identify the manner in which Virgin Group which is looking towards expanding its business ensure better strategic developments for its customers. To analyze the strategic analysis so that the effectiveness of adding a new business venture proves beneficial for the business. To find out both the short and long term objectives and the manner in which Virgin Group looks towards accomplishing those objectives. To find out a risk management analysis this will dwell on product, marketing and contingencies so that the organization is able to develop a strategy for growth. Along with it finding the core customers, the pricing strategy and other areas that will help the business to be able to deal with the growing opportunity that the business presents Current Strategy Virgin Group is looking towards adopting a strategy which helps to increase the penetration level as the company offers services which helps to multiply the satisfaction level of customers. For this the company has looked to provide the required training and skills to its employees, improving the logistics management and ensuring availability of the products, improving the brand awareness and ensuring transparency by building on the values of a trustworthy brand which makes more customers choose the brand. The company is planning to add a new product where it will enable the adventurous people to experience four to five minutes of zero-gravity weightlessness and view both space and Earth. This will help Virgin Group to change its strategy and ensure that new value is provided to the customers. PESTEL Analysis The PESTEL analysis will help to understand the manner in which the external environment will have an influence on Virgin Group and the steps the company needs to take so that they are able to deal with the market in a better way and ensure growth for their business (Coughlan, Stern, & Ansary, 2006) Political Political situation helps in determining the manner an organization will be able to perform. Virgin Group while looking to operate needs to understand the form of government. This makes it important that Virgin Group conducts proper market surveys that will determine the manner the company will be able to perform. Virgin Group thus needs to meet the political standards set by the targeted market and follow a flexible route to adapt itself with the changing needs and ensure a success in its endeavor to go global, special care has to be taken to meet the quality standards of the services as per the requirements of the different countries (Coughlan, Stern, & Ansary, 2006). Economic The world economy have been drastically been affected by the global recession which has resulted in decrease in the purchasing power. People are postponing their expenses for the future which has resulted in decrease in the sell of products which are luxurious. Virgin Group while looking to provide an adventure which is costly needs to ensure that all aspect of the business is looked minutely. Virgin Group will also have to face the economic situation so need to look into the manner the economy is performing and the chances of recovery in the near future needs to be analyzed before Virgin Group is able to develop its strategy of launching the new adventure package (Coughlan, Stern, & Ansary, 2006) Social Social perspective shapes the manner in which an organization performs and it’s especially correct for Virgin Group which looks to provide people extra adventure activity especially for the upper segment of the customers. The changing life style of people and improving living standard has increased the likelihood of people using the new adventures provided to them. This has resulted in widespread changes in the taste and preference of customers (Coughlan, Stern, & Ansary, 2006) Technological The rapidly evolving world has gained momentum due to widespread changes seen on the technology front. This has aided towards the better and developed services which ensure better safety norms. Technology has helped to develop mechanism which will ensure that the threat to human life during the adventures is minimized and customers are able to receive maximum satisfaction (Coughlan, Stern, & Ansary, 2006). Environmental Virgin Group has looked into this factor and has ensured that the while providing services to the customer in the form of adventure the environment is not compromised. This will help to ensure that Virgin Group is able to preserve the environment at the same time provide the customers the joy of adventure (Coughlan, Stern, & Ansary, 2006) Legal Virgin Group has ensured that they obtain the required permission and meet the legal requirements that have been stated by law. Virgin Group in their endeavor has to look into the legal requirements and being able to meet the required laws will help in the growth of their business. Virgin Group through this mechanism will thus be able to ensure that they look after the different rules laid down by the government and other organization (Phillip & Gary, 2001). Porter Five Force Model This analysis also dwells on the external environment but is more related to Virgin Group and will help to understand the manner in which Virgin Group is able to cope up with the requirements of the external environment (Wylick, 2010) Rivalry within the industry The degree of rivalry is very high as Virgin Group faces stiff competition from other global players working on the same model (SCRIBD, 2010). This has improved the options for the customers and made customers switch between one company and another. The degree of rivalry further intensifies when the different sector is considered as this sector looks towards providing similar services directly based on the customer demands and makes changes as the customer wants Bargaining power of Suppliers Suppliers have a high bargaining power as oil constitutes a major component of the raw material and with different government rules and regulations the suppliers are able to get a good bargain for their supply (Porter 5 Forces, 2012). Virgin Group on this front has looked towards backward integration but is limited to a large extent (SCRIBD, 2010). This has increased the concentration of power in the hands of the suppliers and having many producers who are on a look out for raw materials has ensured higher prices for the suppliers. Bargaining power of customers Customers are seen to have a mixed bargaining power as similarity and availability of different provider has increased the options for the customers (Porter 5 Forces, 2012). This has made Virgin Group look towards offering discounts and having different loyalty programs so that they are able to retain customers and ensure regular sale. The bargaining power seems to increase when the unorganized sector is considered as there are many providers like roads, sea are less costly and can be developed as per the customer requirements. Threat of Substitute The degree of threat is very low as people still rely on airlines when they have to travel over long distance. Over short distances the degree of substitute is high as customers can look towards road or sea or rail transport (SCRIBD, 2010). This has helped Virgin Group as it has ensured that they are able to use their business model and ensure low price for the customers. Thus, with little or no substitute available in the market the risk reduces to a large extent Threat of Potential Entrant The threat of new entrant shows a mixed picture as there as many players like “Air Asia, Lufthansa and others who are in the markets” (SCRIBD, 2010). This has increased competition and due to the heavy cost associated with establishment and rapidly changing technology the risk has been limited to a large extent. Virgin Group on this front has an advantage as they look towards backward integration which has helped them to grow their business. The risk of new entrant in high but the effect of that sector on Virgin Group is limited to a large extent. Target Customers Virgin Group is looking towards positioning its products for people who love adventure and are willing to take extra risk. The company has looked towards identifying their strategy based on it so that they are able to position their services clearly in the mind of the consumer. This will help Virgin Group in targeting the correct customers and will also ensure that they are able to target the correct market. Virgin Group while looking towards positioning its products have identified various parameters and have looked towards enhancing customer satisfaction by delivering products which provide customer value for money (Bangs, 2002). This has helped to identify the market positioning based on different parameters as Geographic Countries where people have a love for adventure and are willing to spend a part of their income on it Demographics The young and fit person who has been medically allowed to take adventure sports so that the risk gets marginalized Social Economic status Aimed at the upper strata of the society where people and household are they have the required money to spend on adventure activities Psychographics Continuous improvement by developing new services Virgin Group has thereby identified various parameters based on which the company has looked to identify their target market. The company in its endeavor should look towards launching their products for the middle and upper segment of the society as they have a higher purchasing power which will help Virgin Group in selling their selling. This helps to identify the target market as Customer Aimed at Age Classification of purchaser Purchaser requirements Households, Students, Business Community, Adventure Lovers 18-40 Married and single households Having a high purchasing power and the willingness to spend money on adventure Virgin Group by developing their marketing strategy which looks to satisfy customer belonging to the upper provided segment will be able to correctly target the customer and also ensure that they are able to position their product differently and able to cater to maximum people. Marketing Mix This aspect of the marketing will help to understand the strategy which Virgin Group will follow to ensure that their services is accepted by the public and provides the required return which the company is looking for. Product Virgin Group is a specially designed adventure program looking towards providing customers new adventures as it looks towards providing the opportunity to the customers to fly at an altitude of 68 meters and allow them to stay at the space from where they can view both the earth and the space and can enjoy the weightless gravity for five minutes. This will help to attract people who love adventure as they will be able to experience something new. Also, the fact that the service will be entirely new and doesn’t have a presence presently it will look towards creating a different market space. It will also result in having special facilities and providing new adventure thereby creating a niche market for the products. Price Virgin Group is looking towards pricing its adventure tour in such a manner that it is able to aim at different section of the society. The company has looked towards following a policy high pricing due to the heavy cost and risk associated with the service. For this purpose the price of the adventure tour will be relatively kept high. Having a high price will ensure that the upper section of society which looks towards adventure are able to take advantage of it. The company also looks towards high pricing because of the fact that they are eyeing a niche market and since it is a specialized service available to a few so the pricing is justified accordingly. Also, the fact that the service is new of its kind and doesn’t have a presence in the economy this will result in higher cost. The different directions and manner in which the services will be provided to the customers requires higher pricing as it will ensure that being able to launch it first in the market Virgin Group is able to garner maximum profit due to lack of competition level. Also, the fact that the specialized services is aimed at a few sections and people who have the required disposable income so pricing the services high is justified and will ensure an opportunity of growth for the airlines. Place Virgin Group looks towards launching the product in Australia because of the wide potential that the place presents. The prime reason for choosing Australia is the manner in which the population has grown. This provides an opportunity for selling the services as the number of tourist visiting the country is increasing which will thereby result in more customers looking towards the services. Australia have a fluctuating exchange rate and an economy where the government is stable and the policies of the government are implemented towards the growth of the economy. Further, having a stable government and growing infrastructure provides an opportunity for Virgin Group to ensure that their strategies and demand for the product is accepted which will help to ensure maximum penetration of the market (Czinkota & Ronkainen, 2004). This will help Virgin Group to ensure that they are able to develop the services in the most effective manner and having millions of tourist visiting each year will provide the opportunity that will help them to grow the business and ensure proper returns for the business. Promotion Virgin Group has laid special stress on marketing of the new services. This is vital as marketing the service aggressively will ensure that customers accept the service easily and will help to ensure maximum sales. On the promotion front Virgin Group looks towards using different media. The company looks to spend the same in different areas so that the benefits of different form of promotion are availed. The company looks towards advertisement, billboards, pamphlets and other form of advertising so that awareness about the product can be spent. Thus, Virgin Group has looked towards using media and ways to advertise their service so that customers become aware about the service and look towards spreading awareness about the product (Bangs, 2002). This will help Virgin Group and will result in increased sale and help the business to ensure proper growth and return in the future. Marketing Strategies Marketing constitutes an important aspect for Virgin Group especially due to rising risk and concern towards the safety involved in adventure. This increases the importance of promotional campaign and Virgin Group needs to devise strategies to deal with it. On this front Virgin Group should look towards increased campaign both print and video. This will help to create an image in the mind of the customers. Virgin Group has to look towards television commercials, hoardings, print media and other form of advertising to ensure maximum growth and return. While designing the different campaign Virgin Group need to highlight the core issues and present before the people the innovation that has taken place (Doole & Lowe, 2001). The campaign should be designed in such a manner that it helps to attract maximum people and creates a positive image. This will have a strong presence and will make more customers accept the product and ensure that they are able to associate with the products and will transform into increased sale Competitors The Australian aviation industry is highly competitive and fragmented due to the fact that the competition level is very high. The aviation sector faces stiff competition from the organized sector making it difficult to execute a strategy which will benefit the business. The aviation industry in Australia is characterized by many players who are looking to supply similar products by offering different lucrative offers so that customers are attracted towards the products and helps the retail players to improve their market share and have a pool of loyal customers. The major reason contributing towards stiff competition level in the aviation sector is the fact that the product and services offered are homogeneous with little differentiation. This has resulted in the players offering something extra to lure the customers. It has been found out that some players provide extra schemes and incentives for the loyal customers (Ireland, Hoskisson & Hitt, 2007). This has thereby greatly multiplied competition. The fact that the economy is growing and the disposable income has increased has ensured that different players like Air Asia, Lufthansa, and others have airlines operating all around the country. This has increased the penetration level and increased the degree of competition as customers have different options to choose from. This has resulted in the business looking towards new direction and offering customers special incentives like buy now pay later or once a life time offer where they are provided special offers. Thus, rising competition has increased the difficulty level. Virgin Group by providing by a new venture where they look to provide adventure to the customers who are fond of it will be able to create a niche market. The fact that there is no player in the market which is looking to offer a similar package will help Virgin Group to tap a large section of the society. Also the fact that the competition level is low will provide an opportunity to price the service high due to the additional cost and risk associated in the service. This will help Virgin Group to conduct business away from competition for a period of time until which new players with similar services enter the business. This will thereby ensure that the competition level remains low for a certain period of time but over a longer period the degree of competition will intensify and thereby result in reduced price and better offerings for the customers. Ethical Issues to be Considered Virgin Group while looking to marketing its services have to give due consideration in ensuring that they remain ethical in all their doings. This requires that Virgin Group communicates clearly with the customers regarding the price, the risk involved, and other issues which could have an impact on the brand name. Along with it Virgin Group has to ensure that they remain ethical and abide by the laws and rules prescribed by the law. The airlines has to ensure that while advertising they communicate the message clearly so that it leads towards improving the brand image and makes customers look forward to the services. Along, with it Virgin Group has to ensure that they clearly demonstrate the way they are acting and act what they say. This will help to spread positive messages and will ensure that Virgin Group abides by the rules and regulations and remain ethical in all their doings. This will thereby help to create the positive effect which will ensure that Virgin Group is able to abide by the rules and regulations which will help to ensure that they remain ethical and carry out their duties in the most respectable manner. Recommendations Virgin Group while looking to enter the adventure field and provide adventure tours to customers in the form of sky diving at an altitude of 68 meters where people will be able to see both the earth and the space should look towards ensuring that they are able to target the correct customers. Virgin Group has to ensure that they target the people who are fond of adventure and look towards complying all the medical requirements, legal requirements and the ethical requirements when they enter into a business transaction with the customers. Virgin Group should also look towards developing a marketing strategy where they promote the adventure by making realize the fun and adventure they will go through. Further, being able to develop a strategy where Virgin Group is able to tap the upper section of the society and look towards pricing their product for the upper section that have the disposable income to be spent on it will ensure that they are able to get good returns from the business. Virgin Group can look towards thereby developing a mechanism where they look towards aggressive marketing strategies will ensure that the business is able to fetch the required returns and ensure maximum growth for the business. Thus, Virgin Group has an opportunity to expand its business and being able to work on the smaller aspect will ensure that Virgin Group gets a good return on their investment. Conclusion This paper thereby looks to present the manner in which Virgin Group has been able to understand the market situation and look towards using the marketing opportunity that the business provides. The situational analysis highlights the various opportunities that the market presents and being able to use it to develop their business will ensure that Virgin Group is able to successfully ensure that the new service is appreciated by its customers. Virgin Group also has long history of performing well in the market and if Virgin Group is able to integrate the market changes in their business environment than they will be able to ensure better growth. Thus, the marketing strategy and positioning is also based on it which will thereby ensure better returns for the organization Thus, Virgin Group should look towards developing a strategy by identifying the correct potential market so that they are able to perform and tap the correct segment of customers. This will thereby help Virgin Group to diversify and ensure that the business is able to grow and will help the business to gain maximum efficiency in their operations. References Bangs, D. 2002. The market planning guide: creating a plan to successfully market your business, product, or service, Sixth Illustrated edition, Kaplan Publishing Coughlan, A., Stern, W. & Adl Ansary, E. 2006. Marketing Channels, 7e, ISBN 9780131913462 ISBN 10:0131913468 , Pearson Education Czinkota, M.R. & Ronkainen, I. A. 2004. International Marketing, 7th edn. South-WesternPublishing:Australia. Doole, I., and Lowe, R. 2001. International Marketing Strategy. 3rd Edition, Bedford Row, London, Thomson Ireland, R. D, Hoskisson, R. E, and Hitt, M. A, 2007. Competing for advantage, Cengage Learning Kramar, R., Bartram, T., De Cieri, H., Noe, R., Hollenbeck., J, Gerhart., B, and Wright, P. 2011. Human Resource Management: Strategy, People, Performance, McGraw Hill: Sydney. Phillip, K. & Gary. A. 2001. Principles of Marketing, 9th ed. Upper Saddle River, NJ: Prentice Hall, p.245 Porter 5 Forces. 2012. Porter 5 Forces. Retrieved on March 21, 2012 from http://chiakwongmin.blogspot.com/2005/05/porter-5-forces.html SCRIBD. 2010. Executive Summary since 1997, Virgin Airlines has grown. Retrieved on March 21, 2012 from http://www.scribd.com/doc/28080693/Executive-Summary-Since-1997-Virgin-Has-Increased Wylick, V. 2010. Porter’s 5 forces. Retrieved on March 21, 2012 from http://aviation.blogspot.com/2007/10/porter-5-forces-how-they-work-3.html Read More