Branson's pride and joy; Virgin Atlantic

As outlined in the first blog post, the Virgin Atlantic event was arranged by the University’s Marketing Advertising and Public Relations Society (MAPR) where the Sales and Marketing Director, Paul Dickinson, gave a very informative and interesting talk giving an outline of Virgin’s history as well as some successful innovations, insights into their marketing campaigns and the everyday running of the company.

Some background information

Firstly, he pointed out that Virgin is all about image which is enforced through communication, advertising and inter-relations. Virgin is a well established brand and has been around for approximately 27 years due to its unique edge to survive in the competitive market, unlike many during the recession.

Unlike other airlines, Virgin owns 28 aircraft in the UK compared to its rival, British Airways, owning 250 aircraft. Many people believe Virgin to be bigger than its actual size due to the establishment of the brand. The company is known for its long haul and worldwide flights to over 30 destinations and has been calculated to be amongst the top 30 airlines in the world. Revenue equates to approximately £2bn and is still a private company with 51% being owned by Sir Richard Branson himself and the remaining 49% by Singapore airlines.

Three of Virgin’s priorities are:

• Brand commitment – achieved through word of mouth, customer service, products and memorable marketing
• Acquisition – via their loyalty programme and gaining data
• Retention – enhance loyalty and selling other items to their customer base such as insurance or Internet.

Virgin has realised that after money, people’s next priority is travel. Whatever the company or its size, travel receives high media coverage; such as the effect of the ash clouds on the running of the planes.

Although remote from the office, Branson is the figure head of Virgin used for Public Relations purposes. He established Virgin on the basis that he felt he could make a difference and look after customers better than he’d experienced by other companies.

Some highs…and some lows

Despite appearing a highly successful and established brand in the eyes of the public, this hasn’t always been the case. For example, Branson’s attempt to introduce Virgin Cola to the market was a highly unsuccessful venture as it appeared to have no benefit over the current competition with customers remaining loyal to brands such as Coca Cola and Pepsi.

On the upside, Virgin has had some extreme highs. Who’d have thought that they were the first airline to provide in-the-seat TV screens for its passengers. Paul explained that it’s impossible to always be ahead due to the associated costs. This is true for Virgin at the moment with their technological advancement updating current TV screens into an iPad-type device whereby passengers can flick through films, rate, choose, connect their phone and complete quizzes. This all sounded very impressive until Paul told us the price…£5m per aircraft!

In addition, Virgin also introduced the concept of ‘Premium Economy’ seating to their aircraft as they believed the gap and price range between ‘Economy’ and ‘Upper Class’ was too large and needed to introduce a middle level. This enabled Virgin to stand out…until other companies observed their success and imitated this; a clear example to show how innovations, especially those encountering high success, can never be protected from the imitation by competitors even if patents are obtained to avoid this from happening. Paul described the ‘Upper Class’ for passengers including all inclusive spas, hot tubs, pools, bars, beauty salons and much more. It’s no wonder some passengers turn up hours before their flight is due to leave to get their money’s worth of the facilities!

The above innovations, amongst others, demonstrate Virgin’s attempt to differentiate itself and stand out from its competitors.

Innovating beyond the norm of the airline industry

Virgin have realised that business travellers are their most valuable customers. This customer base is time-conscious and Virgin took this as an opportunity to innovate. At Terminal 3 in Heathrow Airport, Virgin spent £10m helping its business men and women avoid the long queues in the ‘U-Class Wing’ – gaining significant competitive advantage. It took 3 years to build and is designed as a terminal within a terminal using an integrated approach. Passengers experience a private security channel which is empty the majority of the time and £1m a year is spent on extra staff for this venture to succeed. It has been advertised as ‘Limo to Lounge in 10 minutes’. The passenger is met when they arrive by a member of staff with their travel ticket before entering security and straight onto the aircraft. Virgin highlighted this niche audience and primarily is aimed at males aged 35-55 years old. This specific audience allows more efficient targeting.

Overall, Virgin is a strong brand with loyal customers who like what they do through their excellent customer service, product innovation and memorable advertising. They believe measuring effectiveness is a key element in terms of improving in the future.

According to Sir Richard Branson himself:

“An innovative business is one which lives and breaths “outside the box”. It’s not just about ideas. It’s about a combination of good ideas, motivated staff and an instinctive understanding of what your customer wants and then combining these elements to achieve outstanding results” (Clegg, B. (2001:96).

References:

Clegg, B. (2001) Creativity and Innovation for Managers, Oxford: Butterworth-Heinemann