CONTENTS

This research assesses Virgin Atlantic's advertising plan utilising STP analysis and the five forces model developed by Porter. Key findings indicate that Virgin Atlantic maintains a robust standing in premium air travel by employing distinct consumer segmentation and emotive branding strategies. Intense competition, reliance on suppliers, and the necessity for digital transformation pose significant hurdles. Recommendations encompass augmenting digital personalisation, broadening environmental activities, and refining dynamic pricing to bolster competitive advantage in the tourism industry (Kotler et al., 2019; Virgin Atlantic, 2023).

Chapter One

An Introduction that Defines Tourism Marketing Concepts

1.1. Introduce the aim of the report.

This paper evaluates Virgin Atlantic's tourism marketing strategy through the application of STP and Porter's Five Forces models to examine its place in the market and competitive dynamics (Morgan et al., 2021).

1.2. How information will be presented in the report.

The analysis advances from an internal STP assessment to an examination of external industry dynamics, culminating in strategic suggestions based on tourism marketing theories (Middleton et al., 2022).

Chapter Two

Background of the Company

2.1 Describe the background of the company

Established in 1984 by Sir Richard Branson, Virgin Atlantic is a notable British airline that focusses on long-haul travel, recognised for its innovative services and customer-oriented philosophy (Virgin Atlantic, 2023). The airline, based in Crawley, UK, conducts flights to prominent international destinations in the United States and Canada, the Caribbean, the continent of Africa, and Asia, emphasising luxury experiences and sustainability. Renowned for its unique corporate identity—merging British beauty with a defiant ethos—Virgin Atlantic operates in the very competitive aviation industry, contending with established airlines as British Airways and global competitors such as Emirates.

2.2 A brief introduction of the company you have chosen from the tourism industry.

Virgin Atlantic, a pivotal entity in the tourist sector, prioritises emotive branding, digital interaction, and loyalty initiatives (e.g., Flying Club) to ensure customer retention. The airline has engaged in environmentally sustainable initiatives, including as carbon-neutral objectives and environmentally friendly aviation fuel (SAF), in response to increasing demand from consumers for ethical travel (Virgin Atlantic, 2023). Strategic alliances, including a partnership with Delta Air Lines, enhance its worldwide reach and market standing.

Chapter Three

Internal Analysis

3.1. Group customers into segments based on similarities and differences, including geographic, demographic, psychographic, and behavioural segmentation

Customer Segmentation: Virgin Atlantic utilises a multi-faceted segmentation strategy to adeptly address varied customer requirements within the competitive airline sector. The airline categorises its market by four primary methodologies:

Geographic Segmentation: Virgin Atlantic predominantly targets long-haul routes connecting the UK to significant worldwide destinations, particularly prioritising transatlantic connections that provide 62% of its profit (OAG, 2023). Primary hubs comprise London Heathrow and Manchester, catering to business and leisure travellers to the North American continent, the Caribbean, and certain Asian locales.

Demographic Segmentation: The airline focusses on specific demographic segments.

- Higher Class: High-income specialists aged 35-55 with average incomes surpassing £75,000 (Mintel, 2023)

- Prestige Economy: Middle-income families and discerning travellers

- Economy: Budget-conscious youths and travellers visiting friends and family (VFR)

Psychographic Segmentation: Virgin Atlantic targets experience-oriented travellers who appreciate its "rebel spirit" corporate identity (Morgan et al., 2021). The airline effectively targets "aspirational experiencers" desiring luxury travel with character. "Conscious luxury" travellers who harmonise opulence with sustainability considerations.

Behavioural Segmentation: The airline recognises significant customer behaviours.

- Regular travellers (Flying Club members yield 30% greater revenue)

- Leisure travellers constitute 59%, while business travellers account for 41%.

- Infrequent versus frequent travellers (Virgin Atlantic, 2023)

3.2. Determine the targeting strategy, whether it's undifferentiated marketing (targeting the entire market), differentiated marketing (targeting multiple segments with distinct offerings), concentrated marketing (focusing on a specific segment), or niche target marketing.

Virgin Atlantic utilises a diverse marketing strategy, addressing various categories with customised solutions (Kotler et al., 2019):

Upper Class Segment:

- Target Audience: Senior executives and wealthy leisure travellers

- Offerings: Lie-flat beds, luxury lounges, chauffeur services

- Value Proposition: "Business transformed" through personalised service

Premium Economy Sector:

- Target Audience: Discerning leisure travellers and small to medium-sized enterprise business travellers

- Offerings: Increased legroom, priority boarding, and superior meal options

- Value Proposition: "Upgraded economy" experience

Economic Sector:

- Objective: Cater to cost-conscious travellers and the Visiting Friends and Relatives (VFR) segment

- Offering: Economical rate coupled with a Virgin-branded experience - Unique Statement: "Flying should be enjoyable" at economical rates

This multi-segment strategy enables Virgin Atlantic to optimise market reach while preserving its premium positioning throughout cabin categories (Doganis, 2019). The plan is underpinned by advanced revenue management tools that enhance pricing optimisation across various segments.

3.3. Create a positioning/perceptual map for the company with a minimum of four competitors.

Perceptual Map: Price versus Service Quality

Superior Service Quality:

- Emirates (Premium Pricing) - Virgin Atlantic (Moderate-High Pricing) - British Airways (Premium Pricing)

Moderate Service Quality:

- Delta (Moderate Fare) - American Airlines (Moderate Fare)

Substandard Service Quality:

- Norwegian (Moderate Pricing)

- Ryanair (Economical Fare)

The examination of the perceptual map indicates Virgin Atlantic's unique market positioning.

It occupies a distinct niche between British Airways' conventional superior status and Emirates' ultra-luxurious offering.

The airline distinctly differentiates itself from low-cost carriers by providing greater service quality.

In comparison to US transporters, Virgin has a more unique service persona at somewhat elevated pricing levels.

This approach is underpinned by the airline's brand promise of "flying in the face of ordinary" (Virgin Atlantic, 2023), which integrates British heritage with modern service design. The perceptual map illustrates Virgin Atlantic's effective establishment as the "attractive rebel" in premium aircraft (Morgan et al., 2021), circumventing direct price warfare with both legacy carriers and cheap airlines.

The STP analysis validates Virgin Atlantic's proficient market segmentation and targeting strategy; however, there are chances to enhance its premium economy positioning in order to compete more effectively with British Airways' World Traveller Plus offering (Skytrax, 2023). The airline's continuous investment in client satisfaction and brand uniqueness seems warranted by its robust positioning on the perceptual map.

Chapter Four

External Analysis

Porter’s Five Forces framework is a foundational instrument for assessing industry structure and business strategy, delineating the parameters of competition and a firm's profitability (Porter, 2008). This analysis use the model to examine Virgin Atlantic Airways, concentrating on the highly competitive long-haul, especially transatlantic, airline sector.

4.1. Identify the intensity of competition among existing firms in the industry and determine the number and size of competitors in the industry.

The competition among current rivals is really fierce. Virgin Atlantic functions within a market characterised by the predominance of major network operators and alliances. Its principal competitors include British Airways (IAG), American Airlines, and Delta Air Lines, with whom it maintains a joint venture. The market constitutes an oligopoly characterised by a limited number of substantial firms; yet, competition is intense due to various factors: elevated fixed costs necessitating capacity utilisation, reduced marginal costs inciting price wars, and negligible variation in products in the economy category (Doganis, 2019). The competition for share of the market is unyielding, particularly on primary routes like as London-New York, rendering this factor a considerable limitation on profitability. The suppliers possess significant bargaining power.

4.2. Identify the intensity of bargaining power of suppliers, the key suppliers in the industry, and their importance.

The principal suppliers are:

Aircraft Businesses (Boeing and Airbus): This duopoly has significant power. Virgin Atlantic faces significant transition expenses due to customised training, servicing, and parts inventories for its fleet. The substantial capital expenditure associated with aeroplanes further enhances the suppliers' leverage.

Fuel Providers: Airlines are price-takers in the global oil market, where fuel is their major operational expense, rendering them susceptible to price volatility with minimal bargaining power.

Airport Operators (notably Heathrow): Providers of essential infrastructure, such as landing slots at capacity-restricted hubs, wield significant influence.

According to Graham (2018), the limited availability of optimal take-off and landing slots at airports such as Heathrow (LHR) provides these suppliers with a significant advantage in negotiations.

4.3. Identify the intensity of bargaining power of buyers, the key buyers, and evaluate their bargaining power.

The bargaining strength of purchasers is categorised as *moderate to high* overall. Purchasers predominantly consist of private leisure travellers, business travellers, and travel agencies.

Leisure tourists has significant influence, they exhibit high price sensitivity and encounter minimal switching costs, utilising comparison websites to promptly identify the lowest fare (Taneja, 2016).

Corporate Buyers possess moderate influence. Although they can negotiate bulk pricing, their ability to bargain is mitigated by the necessity of certain directions, schedules, and the significance of frequent flyer programs, which foster soft loyalty and elevate the costs of switching for their employees.

4.4. Identify the intensity of threat of new entrants and barriers to entry(e.g., economies of scale, capital requirements, and government regulations).

The risk of fresh competitors is minimal. The entry obstacles are excessively elevated:

Capital Requirements

The expense of procuring a fleet of contemporary long-haul aircraft is exorbitant.

Economies of Scale

Established companies such as Virgin Atlantic get advantages in procurement, marketing, and network reach that a new competitor cannot replicate.

Regulatory Obstacles

Bilateral air service contracts and stringent safety and operational certifications provide considerable challenges.

Access to Infrastructure

The primary obstacle is obtaining landing slots at overcrowded hub airports such as Heathrow, which are either inaccessible or too costly, hence hindering new competition on the most profitable routes (O’Connell, 2021).

4.5. Identify the intensity of threat of substitutes, substitute products or services, and their attractiveness to customers. You should consider factors such as switching costs, brand loyalty,

and the level of differentiation.

Moderate The threat of alternative goods is modest. Video conferencing technologies, like as Zoom and Microsoft Teams, have significantly diminished the demand for specific corporate travel, particularly in the business travel sector (IATA, 2022).

* Other Airlines/Connections: On routes with several stops, alternative airlines providing indirect flights may serve as a cost-effective substitute, albeit with reduced time efficiency. Alternative Transportation Methods: Transatlantic maritime travel isn't a feasible alternative due to the significant time disparity. The absence of a viable alternative for swift long-distance travel alleviates this threat; but, the technological replacement for business communication persists as a substantial and ongoing concern.

Chapter Five

Future Development and Conclusion

5.1. Identify and discuss the issues raised by the marketing audit.

The marketing audit identifies multiple significant concerns. Virgin Atlantic primarily contends with formidable competition on its principal transatlantic routes from robust joint ventures among legacy carriers, hence constricting its share of the market and profitability. Its significant dependence on the crowded and costly London Heathrow hub renders it susceptible to supplier influence and operational disturbances. Moreover, the post-pandemic alteration in demand, characterised by a more gradual resurgence in beneficial business travel compared to leisure, poses difficulties to its traditional premium-centric model (Doganis, 2019). The urgency of climate change compels its environmental policy, necessitating expedited spending on Sustainable Aviation Fuel (SAF) and asset modernisation to alleviate social and regulatory risks (ATAG, 2022).

5.2. Analyse the existing marketing strategy and provide recommendations for an effective marketing plan.

Virgin Atlantic's approach capitalises on a robust brand identity founded on character, creativity, and customer service. To guarantee future growth, this policy must adapt.

Recommendations:

Diversify Route Network

Strategically establish routes from Manchester and Scotland to secondary U.S. destinations to mitigate reliance on Heathrow and address unmet demand.

Augment Customer Value Proposition

Differentiate through data-driven personalisation, in addition to brand identity. Utilise consumer data to improve loyalty programs through customised offers and experiences, hence augmenting customer satisfaction and the cost of switching (Kotler et al., 2022).

Commit to Ecological Differentiation

Expedite the sustainability strategy. Invest in a contemporary, fuel-efficient fleet and clearly convey commitments to sustainable aviation fuel (SAF). This converts a universal expense into a significant means of brand distinction for eco-conscious tourists, connecting corporate strategy with shifting client preferences (Keller, 2020).

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Marketing Evaluation of Virgin Atlantic

Executive Summary