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Marketing Plan Example: Virgin Atlantic Little Red

Essay 2013 20 Pages

Business economics - Offline Marketing and Online Marketing

Excerpt

Executive Summary

Virgin Atlantic is looking to launch a sub-brand, Little Red, to enter the UK domestic short haul market. There is a primary focus on targeting business customers. It will begin by opening connections between London and Manchester, London and Aberdeen and London and Edinburgh. It’s strategy will be based on providing it’s existing quality service associated with it’s Virgin Atlantic brand at competitive prices.

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Little Red’s route map

Corporate Objectives

Mission

Virgin is looking to compete with British Airways in the premium segment of UK domestic air travel. The aim is to increase Little Red’s market share at the expense of the market share belonging to British Airways, which is currently 25% and a near monopoly on London/ Scotland routes.

Little Red will give Virgin customers a seamless Virgin experience when flying to the UK or when traveling to London and beyond. Little Red aims to give customers a greater quality service than currently offered by British Airways, at a similar price.

Objectives

Virgin will bring existing knowledge and services, as part of its Virgin Atlantic brand, to a new market (UK domestic flights).

Virgin will use Little Red to bring customers to its Heathrow base, from which it can connect them to international destinations with Virgin Atlantic.

In the first 12 months, Little Red’s goal is to carry 1 million passengers and gain 5% market share of the UK domestic market as measured by total passengers carried on UK domestic flights.

Situation Review

Market Analysis

The number of passengers on domestic scheduled flights declined over 2007-2011, falling by 13.2% from 22.1 million passengers to 19.1 million passengers. The year-on-year decline is a result of a rise in airfares, with taxation and fuel costs creating higher costs, therefore driving passengers towards alternative and more affordable methods of transport.

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Competitive Analysis

The current UK domestic airline market is dominated by budget airlines and British Airways. This is shown below with each airline's relative market share.

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The data indicates EasyJet is likely a growing competitor as it has increased its market share at the fastest rate.

After British Airways bought BMI in 2012, British Airways had an effective monopoly on routes from Scotland to London. Little Red therefore will mainly compete with British Airways on these routes as it aims to give customers more choice and fairer prices. Moreover, with BMI no longer feeding Virgin Atlantic long haul traffic at Heathrow, many people in the north of England are looking for alternatives and in turn Virgin's load factor has declined somewhat.

Little Red will also be competing with road, rail and bus travel. Each method of transport has it's benefits and limitations, highlighted below. As the travel market, and airline market in particular, is highly price sensitive, an indication of average journey price is given.

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It is worth noting the relative high cost of both City Jet and Flybe. This is likely due to their low economies of scale as a result of a small market share on UK routes.

Perceptual Map

In the UK airline market, there are three distinct market segments: budget, middle market, and premium.

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Little Red will be categorised as a Premium brand, alongside British Airways. Characteristics of premium brands include:

- In flight refreshments at no extra cost
- Better quality service & more comfortable seats
- Generous luggage allowance
- Loyalty rewards scheme

Market Segmentation & Targeting

Virgin’s Little Red is looking to focus on the business traveller. Business travel is a growing market, growing at 1.5% a year, and outpacing growth in the leisure market.

Virgin is well placed to appeal to business customers. The ‘Flying Club’ loyalty program, as well as the ‘Flying Co’ corporate booking website, will generate brand loyalty and make booking easier for business customers. Perks such as priority check in, taxi/limo services and lounges appeal to business customers aiming to be productive while traveling.

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Virgin will be targeting the 30% of the UK population who live over 3 hours away from London. This area is highlighted in the map. Data shows that penetration of air travel is just 12.7% in the north or England and 19.4% in scotland, compared with 22.2% in London (Keynote, 2013). This indicates these regions have the opportunity for growth.

The majority of business travelers were male (18.4%) versus 13.5% female (Keynote, 2013). Although, data also suggests that female business travelers are increasing at a faster rate than male business travelers, indicating target customers may equalise in the next few years.

Data indicates the age groups of 25-34 and the 55-65 are the most likely to travel by air (Keynote, 2013).

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Details

Pages
20
Year
2013
ISBN (eBook)
9783656423799
ISBN (Book)
9783656424192
File size
2.2 MB
Language
English
Catalog Number
v213738
Institution / College
University of Bath
Grade
1st
Tags
marketing plan strategy virgin atlantic little red business plan marketing strategy

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Title: Marketing Plan Example: Virgin Atlantic Little Red