Discuss about the Marketing Environment of Virgin Australia.
The main purpose of the performing the situational analysis of the Virgin Australia is to gain insight in to the product, market place, distribution trends and for this the various elements of competitions, macro environmental situation, products are exploited. Analyzing the situation of Virgin Australia would help in offering the correct product because of assessing the market rigorously (Chan, 2012). The SWOT analysis is to be performed to evaluate the situation. The analysis and investigation of the current market environment in which Virgin Australia operates is also performed. The Game change strategic plan of Virgin Australia comprised of activities that makes it different from the incumbent airline. This is essential for the company to gain competitive advantage over its competitors. The vision of the company and the objective of the strategy of game change are to make improvement in the cost margins when it comes to operating the full service airline (Virginaustralia.com, 2016).
The situational analysis of the virgin Australia is conducted using the tools of SWOT that is strength, weakness, opportunity and Threat of the airline. This would give the insight in to the business and the operation of the company (Grant, 2016). Performing the swot analysis would provide the competitive advantage over its competitors. The strength, weakness, threat and opportunity is listed as follows:
Strength of Virgin Australia:
- Higher growth rate – the company has been focused on delivering the goals and has been able to provide the sustainable returns to its shareholders.
- Lower labor costs- the airline company enjoys advantage when it comes to the labor costs, which is one of the strength.
- Domestic market- the domestic business of the company has become profitable and the local market has improved rapidly. The lower fuel price is provoking the growth in the domestic demand.
Weakness of Virgin Australia:
- Productivity- The productivity of the airline has reduced in the recent year as the service has become more centered to the specific customers.
- Future profits-
- New products and services- the loyalty of the customers can be increased and the satisfaction of the customers is increased by introducing the services, which is new to the industry.
- Growing demand- there is a growing demand of the airline industry and this provides the company an opportunity to expand the business.
- Growing economy- the economy of the Australia is ever growing and it would be consistent with the growth of the company.
- Changing price- the company has to control the volatility of the price changes, which affects the financial statement of the company and the revenue. The volatility of the price is a threat to the company.
- Growing competition- the virgin Australia is not core to the international business and the business was internationally unprofitable. The threat comes from the other airlines such as Qantas.
- Increasing cost of raw material- the cost base of the virgin Australia has increased and this has resulted from the transformation and the move up of the market has naturally added up the costs.
The performing of the SWOT analysis would help in depicting the environmental factors and this would help in identifying the areas of strategizing using different methods.
The poor profit is a current concern for Virgin Australia and the company has taken a narrow scope of the view of its business opportunities. This is due to the service squeeze and the price issues that come from its competitors. The dual focus of maintain the cost and the differentiation strategy has led the company to gain popularity. The company intends to expand the portfolio of its existing product rather than adding the product. However, the main thrust of the strategy is to explore the new market where it would have a brand name and help in creating the competitive advantage (GRIN - Virgin Australia: Situation analysis of the ‘Game Change’ strategic plan Grin.com. 2016).
The internal environmental analysis of the Virgin Australia is depicted with value chain diagram.
Environmental analysis of Virgin Australia
Source: (created by author)
The virgin Australia has a competitive advantage in the human resource management and this is mainly in regard with the training and recruitment of the customer facing staff. One of the untapped advantages of the company is in area of Brand promotion. The area of advertising and promotion would act as strength for the Virgin in the future. In respect of the yield management, the competitive disadvantage is the most significant for the company (Farabi, 2012).
The virgin Australia has an advantage when it comes to servicing the customers and this happens through the lowering of the costs and it is with the help of electronic booking and the other measures. However, the company is lagging in its ability to maximize the savings of the fuel as this would lead to the short-term competitive advantage to the company. The capability of the company delivering the great product has made it secured and is a regular winner for the award of the customer service. Some of the cost reduction strategies are fitting with the context of the company’s target of saving and making the use of fuel efficiently (Grant, 2016). The strategy of eliminating the routes, which are not efficient. Usage of the technology to improve the lounges for check in. The strategy to rationalize and redeploy the staffs is the ways of managing the human resource, which is consistent with the ongoing strength as depicted by the value chain. The company strategies to make the check in system online and automated (Hubbard et al., 2014).
The main problem of the Virgin Australia is the marketing problem and this calls for the market to be sensitive to the female, male and the leisure travelers. Some of the marketing styles needs to be avoided by the Virgin are not using the predominantly female personal assistant and the gatekeepers. In this context, the company has followed the strategy of promoting the brand through the platform of social media and the word of mouth.
Chan, K. M. (2012). Virgin Australia: Situation analysis of the ‘Game Change’strategic plan.
Farabi, Y. (2012). Analysis of Marketing Environment of Virgin Australia. GRIN Verlag.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
GRIN - Virgin Australia: Situation analysis of the ‘Game Change’ strategic plan. . Grin.com. 2016 Retrieved 23 August 2016, from https://www.grin.com/en/e-book/209340/virgin-australia-situation-analysis-of-the-game-change-strategic-plan
Hubbard, G., Rice, J., & Galvin, P. (2014). Strategic management. Pearson Australia.
Virginaustralia.com.(2016) Retrieved 23 August 2016, from https://www.virginaustralia.com/cs/groups/internetcontent/@wc/documents/webcontent/~edisp/annual-report-2015.pdf