Marketing Case Study Analysis – The Virgin Group

The Use of Marketing by Virgin Group

The term marketing is an exceptional tool applied with the help of which the consumers are contented with the products or services being provided by the company, and are highly appreciated more than the company’s competitors are offering so that they will be persistent to buy your product. There must be enough profit to keep the business in operation. Marketing also means that the internal environment of the organization such as methods of productions, wages, and working conditions for employees and suppliers are provided punctually and accurately. The government laws and procedures are fulfilled precisely (McKean). Considering the marketing concept Virgin Group has always placed their customers first in every decision they have made. Virgin is applying the marketing tool in every means. Virgin is satisfying the consumer needs by providing improved services and exceptional features. Ninety-six percent of the consumers of the UK are aware of the Virgin brand, and the company believes that no product or service boundaries are limiting a brand name, it is all associated with the quality they are offering. They are fulfilling the customers’ needs by making the Virgin brand fun, successful, innovative, and reliable for all its customers. Virgin has applied marketing concepts by understanding the customer needs, wants, and demands, as they realized that the customer wants low-priced tickets and easy routes from the UK to the USA. Therefore, Virgin Atlantic provided the customers with innovative routes and excellent services at low fares. The company has always placed the customers first which has to lead the organization to higher profit margins and a successful business in every manner.

Advertising helps to promote the product through various mediums such as television, print media, billboards, the internet, and radio. According to the case, Virgin Group is promoting and advertising its products through its webpage named Virgin.com. The CEO of the company believes that the webpage would create cross-promote offerings for the customers, as every service offered by the company is available on that site ranging from traveling tickets, entertainment listings to financial services. The advertisements of Virgin are considered quirky and publicity stunts. Therefore, the company needs to portray better advertisements to attract more consumers. On the other hand, Virgin also needs to realize that advertising is different than selling. The company is selling its products through an online webpage; it is not properly advertising its products. Therefore the company needs to revise its promotional strategies by identifying their target audience for every service they are providing, then they have to set objectives of communication and at the end decide the best medium of promotional budget.

The pros of Virgin advertising are that it is reaching a high amount of consumers geographically at low cost, as Virgin.com is the one easily accessible site to promote all its products under one link. The second advantage is that the company’s advertisements are viewed by consumers as being justifiable and valid, as it is available basis and is easily reachable. The advertising campaigns are building a positive image in the consumer minds, as mentioned earlier; the end-users of the Virgin Group perceive the brand as a fun, innovative, and successful trademark.

The cons of Virgin advertising are that the advertising concepts are impersonal, and are considered quirky. Sometimes the viewers do not feel that they have to pay attention or respond to the advertisements.

Virgin’s Marketing Mix

Any firm or business can be successful by offering products or services that are able to fulfill consumer needs. Most of the companies are involved in offering a diverse collection of products or services, and most of them are related to each other. Similarly, Virgin Group is also presenting various services to the consumers. Although there is one drawback that the company is not offering a similar type of services, for instance, airline services are very different from financial services, and book publishing is different from music and entertainment. Therefore, the company has to apply effective marketing mix strategies in every service they are offering.

Product Life Cycle

Product Life Cycle is another fundamental theory required for all the products. The main purpose is that every product or service has a limited time span of popularity in the marketplace, and after its attractiveness starts dwindling. The Product Life Cycle is based upon six stages that are: Development, Introduction, Growth, Maturity, Saturation, and Decline (McKean).

Source: Product Life Cycle (Levitt 2010)
Source: Product Life Cycle (Levitt 2010)

The first step is Development in which with the help of market research and technical assistance the product is developed. The risk is high, and the sales revenue is very low. In the Virgin Co. scenario, the company developed many new concepts such as travel services, financial services, music and entertainment, hotel services, and many more. The development cost was high, and they were offering high prices for their services at the initial stage.

The second step is Introduction in which the product is promoted and advertised. It is introduced into the market. Initially, revenue generation is low, as the development costs need to be recovered. Virgin Company introduced a variety of services one by one into the marketplace such as Virgin Atlantic Airways, Virgin Holidays, Virgin Retail, a record shop, a joint venture with financial services, and a lot more.

The third step is Growth, as the product becomes well known in the consumer’s mind, then the sales and revenue generation increases. During this growth period, a number of competitors start arising for a particular product or service. Virgin brand is known all over the world, and today it is perceived as a fun, daring, and successful brand. The company has to face intense competition in travel services and retail services.

After growth comes the Maturity period, which is the time when the product sales are not growing rapidly mainly because of the entrants of the substitutes, which are considered as the competitors. During this time the competition is fierce and profit earning is low. Virgin introduced the retail outlet concept of the records which was later turned into megastores but in 1990 the entrants of rivalry affected the high annual growth of the company. Similarly in the airline business, Virgin Airlines business had to cut down the fare prices to attract more customers. Virgin is facing fierce competition in the European airline market and Ryan airlines who are offering low-fares to their customers.

The last two steps are Saturation and Decline in which the competitors take over the market and the sales of the company start decreasing. Eventually, the product has to be withdrawn from the market. To avoid this declining era, the company needs to introduce innovative ideas, develop new technologies for the product or service which would help to increase the life span of the product into the market. If Virgin Group has to expand their product’s life cycle then they are required to adopt new and different strategies at each stage of the life cycle particularly keeping in mind the seven main components of Marketing Mix.

Marketing Mix

In order to attain a successful business, it is highly important to consider the marketing mix which includes the seven basic elements product, price, place and promotion, people, processes, and physical evidence (McKean). According to a marketing point of view, a product can be a commodity, a service, a person, or an idea. Virgin Group is offering services such as airline services, radio broadcasting, book publishing, financial services, cinemas, and hotels.

Price is another vital element of the marketing mix it is necessary for Virgin Company to keep in mind the three basic factors while offering prices of its services which are consumers, trade, and its competitors, fulfilling these three main components would lead the brand to higher success. Currently, the company is famous for providing “low cost” “high frill” airlines in the United States and the United Kingdom.

Promotion is the most essential tool to make the product or service flourish. Promotion is associated with communicating information regarding a product or service; it helps to attract the customers or the markets to try the product. Promotion is done through advertising, personal selling, public relations, and direct marketing (McKean). Virgin is promoting its products through its website Virgin.com and through sales promotions and public relations.

Placement is also a vital marketing mix as it includes the distribution channels through which the product or service is made available to the consumers. Virgin Group is distributing its products such as music records, clothes, mobile phones, and electronic products through retail stores called Megastores. It is providing its airline tickets through its website and through different travel agents.

The services business also relies upon People. The human element plays a major role in making the service successful and the customer fully satisfied. Virgin has hired an efficient sales force for its services to make its business highly victorious.

Processes of the organization also help to generate a profit margin. Virgin Co. has implemented excellent quality control processes to make certain consistency of services.

Possible Changes which Could Occur in the Business

Every business environment is comprised of two major components microenvironment and macro environment. The micro environment includes everything that is associated with the internal environment of the company such as managers, employees, board of directors, and stakeholders. Functions such as operations, marketing, finance, manufacturing, distribution are associated with the management, suppliers, and competitors. On the other hand, macro environment embraces larger forces that influence the functions of the organization. Any firm has no control over the macro environment forces. These forces are also known as PEST, standing for Political/Legal, Economic, Sociocultural such as demographics and Technological (McKean). Both micro and macro environment forces are affecting the strategies of the Virgin.

Implement Policies and Procedures

The corporate culture of Virgin Group needs to be modified and the internal environment of the organization should be re-organized based upon proper procedures and policies. The corporate policies procedures are not well-defined. In order to overcome this issue, Virgin Group should formulate appropriate business policies and procedures which would enable the management to be more focused upon goal orientations for enhancing and sustaining the company’s competitive advantage.

Provide communication network to the employees

According to the scenario that has been explained in the case, Richard Branson, the Chairman of Virgin Group has created a very informal environment within the workplace. There is no interaction between the workforces. The employees and managers have no communication channels. The firm should also enable proper communication channels for the employees to easily interact with each other. Social networking and feedback system should be implemented which would help to build a friendly environment within the company. Award ceremonies and events should be introduced for the workforce.

Separate departments are required

There are no separate divisions for every department such as finance, marketing, operations, research and development. It is highly important that the senior management should provide separate departments for every sector. This would lead to easier the workload, and the efficiency of the workforce would increase. The company should also hire experienced operational strategists who would be able to counterbalance Virgin’s strategic decisions.

Strategies need to clearly defined to the work force

Company’s strategies are not well defined to the management and the workers. In order to achieve a competitive edge the company should also concentrate upon the marketing mix strategies. Positioning is one of the most vital aspects, the firm should adopt proper positioning strategies for every product in order to raise profits and attract more customers. Furthermore, during this recession era of music records, Virgin Group should sign up with new and upcoming music bands which would help to generate more profits, and they will be able to overcome from financial uncertainty.

More mediums required for streamlining the internal operations

Furthermore, the company is only one medium that is the web to streamline the internal operations of the organization. Internet is the only source available for the airline services, for megastore products and the financial services. Even the advertising staff is only dependent upon the Internet to coordinate with advertising agencies. The company needs to establish more mediums and database for streamlining its internal processes.

The marketing mix of Virgin Co. has already been mentioned in question 2, and on the basis of the analysis, the marketing mix needs to be altered on slight bases. In Product the company needs to elaborate its Product Mix, which means that the services and products offered by the company should be similar to each other, whereas in Virgin case the company is offering a diverse collection of services and products which are not inter related to each other under the same marketing mix. In Promotion, the company is required to provide advertisements through other means such as television, billboards and radio rather than only through Internet. Virgin Group has to emphasize upon the tangible cues that will help its consumers to understand and evaluate the services it is offering. Consumers also tend to favor “word of mouth” communication therefore it is necessary for the company to encourage customers to tell their friends about the good performance about Virgin. The Pricing of Virgin Group is compatible and affordable as compared to its competitors, so the pricing doesn’t need to be revised.

Different Promotional MethodsU within Virgin Promotion Methods

Virgin has adopted limited promotional methods to market their products. There are five main promotional methods advertising, sales promotions, public relations, personal selling and direct marketing.

Advertising

Advertisements help the advertisers to achieve the specific objectives. The objective can be anything ranging from notifying the consumer about a latest product, convincing the public to purchase your product or service or just telling again the end users about your organization. According to the case analysis, Virgin Company is only emphasizing upon advertising technique to promote their services. Advertising includes two main elements the message and the medium. Virgin brand is giving a message of fun, daring and successful trademark in its advertisements. The advertisement medium used by the Virgin Group is Internet, Television commercials and print media. Virgin’s advertising objectives are to introduce a variety of innovative products into the market for their consumers. The company has placed all its businesses on one easily accessible site called Virgin.com to cross promote the wide range of offerings such as airline tickets, music records, financial services, wine, entertainment listings and many more.

Sales Promotions

Sales promotions help to amplify the sales, and persuade a faster and stronger response from the consumers. It basically offers an incentive to buy now. In sales promotion, Virgin is offering low-fare tickets and innovative ideas to attract more customers. In record business, Virgin was offering popular records at prices 15 percent below than the record stores were offering, and in addition they were providing the records through mail orders. Such type of sales promotion is considered as consumer promotion technique.

Public Relations

According to Philip Kotler, Principles of Marketing, 3rd European Edition, Public Relation is defined as. “To build good relations with the company’s various publics by obtaining favorable publicity, building up a good ‘corporate image’ and handling or heading off unfavorable rumors, stories and events.” In Virgin Group, the Chairman of the company is the only person who is interacting with other agencies and companies. Initially Virgin Airlines used the Lobbying technique in Public Relations to develop association with government ministers to allow them to provide both end routes and allow low fares. On the other hand, the management has only developed public relations through Internet. Therefore, it is necessary for the managers and promotional department to interact with well known advertising agencies in person and build strong PRs.

Direct Marketing

The Virgin Record Business had adopted the direct marketing concept by enabling direct mail order of records to its consumers. In the current scenario, direct marketing is hardly implemented by Virgin Group. Therefore, it is necessary that the management should participate in various events such as public affairs, public conferences, events and other ceremonies to make the people aware of their brand, and can also examine the viewpoints of other people for the Virgin brand.

Impact upon Pricing Decisions

There are eight basic factors that influence the pricing processes of the organization. These include consumer, demand, competition, channels of distribution, legal, marketing objectives, organizational objectives and cost. The Virgin Group has considered demand, competition, legal and marketing objectives into their pricing decisions. Demand is dependent upon two main features: one is if the product substitute is not available then the product demand is high, and second how willingly the consumer needs the product. Virgin Group were the first to introduce mail order business offering popular records, and no other company was providing the records at the consumer’s doorstep therefore the demand of Virgin record business went high. Competition pricing influences the organization’s pricing decision. Virgin Co. is offering low pricing strategy for airline tickets as compared to its competitors. It also keeps in mind the prices of its competitors in other fields of its services provided to its end users. Legal is a vital tool for setting prices for products or services. It is highly essential to understand the legal and regulatory framework of the country the firm is operating in. Virgin Group is currently doing business in United States, Britain, Australia and other countries. Virgin Airlines has always highlighted the regulatory framework of the British and American Airline Industry.

The Different Distribution Chains within Virgin Distribution Channels

According to Philip Kotler, Principles of Marketing Third Edition, “Distribution Channels enables the organization to place the product or service available for use or consumption by the consumer or industrial user.” Any firm applies different channels of distribution such as through agents, whole sellers, retailers, suppliers and other intermediaries.

Retailers

Virgin Megastore has established Retail distribution channel. In retail distribution, they are selling the music records directly to the end users. This helps the company to persuade the consumers to buy the records that are sold in their Megastores.

Agents

Virgin Airlines is distributing the flight tickets through their webpage called Virgin.com and through well known travel agents. The agents have legal ownership of the airline fares but they take a prescribed commission and works on behalf of Virgin Express. It is very essential for the company to work with trustworthy and reliable agents. These distribution channels would help Virgin express to make its fares effectively available to travelers in key markets.

Other Intermediaries

Virgin mobile has made its cell phones available to the consumers by distributing them to the retail stores and through its website. Virgin is also providing financial services through making joint ventures with leading insurance and share trading companies. In addition, the customers can acquire financial services through Virgin.com, its homepage that is considered one easily accessible site to promote and supply its diverse range of services and products.

The company is using different channel levels for supplying its services to the end-users. They are directly supplying their goods from the manufacturers to the customers with the help of the Internet and retail outlets. This is applied to supply its mobiles, records, clothes, and consumer electronics. Then in Virgin Airline, they are using the channel level Manufacturer to Agent to End users, because agents are best sellers for airline tickets. The agents enable precise knowledge and proficiency of the best and provide cost-effective routes to the company.

Reference

McKean, James. Marketing: Introduction. n.d.

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