Company Case Virgin America: Flight Service for the Tech Savvy After an exceptio
ID: 361079 • Letter: C
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Company Case Virgin America: Flight Service for the Tech Savvy After an exceptionally frustrating day at the office, Jessica set an industry characterized by customer complaints about ser- out to unwind in one of her favorite third places. The mood vice, it would seem that a customer-centric approach would be ghting immediately brought her blood pressure down as she walked in and took a deep, relaxing breath. She was happy that her favorite spot was available-a comty leather chair in the already established themselives based on a 'oustomer first back corner of the room, where she used the touchscreen at mantra, including industry leader Southwest Airlines. And Virgin the table in front of her to order her favorite drink. Then, putting America knew that it could not expect to succeed by playing the on a set of noise-canceling headphones, Jessica began catch- low-price game. Not only was Southwest the reigning champion ing up on her favorite TV show with her own personal entertain- on value, but the bulk of airline competitors were already beating enough to gain a foothold in the market. But when Virgin started air service in the United States, at least a few other airlines had each other up for low-price dominance. Virgin America found a different competitive hook. It targeted If this sounds like a local Starbucks or trendy nightclub, think again. Jessica had just boarded a flight on Virgin America, a segment of frequent fliers who were young, savy, influential, one of the youngest airlines in the United States. It's also the and willing to pay just a lttle bit more for an airline that would hottest airline, besting all competition in various industry and take care of them-the Silicon Valley faction. By providing customer surveys. And after just six years America also reached profitability faster than any other airline slice of airline customers, Virgin America has been able to charge in all of airdom. in business, Virgin ceptional service and amenities that appeal to this particular slightly higher fares and still establish a growing base of fiercely How does a startup airline break into one of the most com- loyal patrons petitive industries in the world, notorious for barriers to entry? For Virgin America, the answer is two-fold-by putting customers Homing in on the Details irst and by targeting the right customer segment. Offering unique amenities in the airline business is a challenge for any company. But from the beginning, the Virgin Amenica experience was designed with its target customer in mind. Its fleet consists of 61 Airbus A300 series planes, each brand new Targeting the Right Customers Virgin America first took to the skies in 2007. This wouldn't be the first shot at starting an airline for Richard Branson-founder when it went into service, minimizing the unexpected of parent company Virgin Group. Virgin's intemational airine, to maintenance and repairs roomier and more comfortable than average coach seating. And Virgin Atlantic, had been crossing the pond between the United States and Europe since 1984. But Virgin America entirely independent enterprise. And while Branson and other appealing purplish glow, it automatically adjusts to one of 12 dif would be an that mood lighting? Not only does it bathe the aircraft cabin rgin Group executives make no day-to-day decisions at Virgin ferent shades based on outside light. America, the unorthodox Virgin culture-fun, creative, even whacky-is unmistakable. To appeal to tech gurus, Virgin America focused on equippin ts planes with the latest hardware and software. From day or offer fleetwide in-fig at it maintains to this day, even as it h One of Branson's core values that permeates Virgin America Virgin was the only domestic carrier to s this: Take care of your people first and profits will follow. In Wi-Fi-a distinction tExplanation / Answer
7-19: Target Segmentation of Virgin America airline services using the full spectrum of segmentation variables:
Virgin America organization uses Psychographic and Behavioral segmentation variables. With the company having a focused market segment tech-savvy younger generation and influential
individuals, it follows concentrated marketing, covering a niche segment. And accordingly, fine-tuning prices and services as per the requirements of the target segment have taken into
consideration. Thereby, Company Virgin America designed the aircrafts with the modem software and hardware, amenities like a USB port, power outlet and touch screen and other interactive services on every seat. These represent like-minded individuals who portray loyalty. The company is providing premium services for the target customer who is willing to pay for the additional services.
7-20: Market Targeting Strategy used by Virgin America:
Virgin America organization is following the Concentrated Marketing strategy, whereby the firm goes after a small share of a large market or some smaller segments. Such targeting strategy may allow the company to achieve high levels of growth with the development of that segment of consumers. This strategy allows the company to achieve a strong market share because of great knowledge of the target segment. Company Virgin America can always well -shaped its services and other offerings while serving the customers more effectively and serve them in the best possible manner.
7-21: Positioning Statement for Virgin America:
Similar to target segment consisting of young, energetic and savvy individuals, the airline is of similar nature; offering technologically advanced amenities, best services in terms of on-time transit, mishandled baggage, customer complaints. The company has managed to match their service with the requirements of its target segment. So, Company Virgin America has positioned itself as the youth airways. The company is continuously improving its operations and service. The social media is a manner for widespread word-of-mouth for the company. The company is focused on providing every customer with little extra and the company will be applying the same as it grows.
7-22: Potential issues for Virgin America following the Alaska Airlines acquisition:
Virgin America organization has operated very effectively till now, with profits to show for the past few years. Further, the top management knows the importance of consistent superior customer service as it will not take time for competitors to catch up. The company has won industry awards or efficiency in operations. Thus, the company has a good vision on how to venture ahead. There will be obstacles as the airline company will expand its services and increase its scale of operations. Hence, for the fundamental success to continue, the company should keep enduring the good service and continues with its operational efficiency.
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