Marketing of Virgin Atlantic
Individual Assignment 1: Using a company that you are familiar with, explain how factors in the external business environment influence marketing strategies and outcomes
The airline business is an industry that is competitive and unique, focussing on consumer choice and the responsiveness of airlines to changes in the external business environment. For any airline, this environment can be very complex as it is ‘hard for them to fully understand and impossible for them to fully control’ (The Times, n.d. p1). Virgin Atlantic is an international airline that is based in the UK. It was started by the entrepreneur Richard Branson in 1982 and now flies to 30 destinations around the world (Virgin Atlantic Airways Ltd, 2011). By looking at the PEST forces of Virgin’s external environment, the aim is to see how these influence the airline and how Virgin can use this information to their advantage.
Two main political factors in Virgin’s external business environment are deregulation and infrastructure. Before the 1980s airlines were typically controlled by the government, now due to deregulation, governments do not dictate airfares or routes etc and thus leave an open market for new competitors. As there is more competition for market share, airlines are forced to become efficient and competitive therefore driving prices down. Deregulation is said to have caused an estimated 20% in air fares (Dayao, et al., 2009). In 1979 the “open skies” act was introduced. This refers to an international deregulation policy to ‘liberalize the rules and regulations and minimize government intervention’ (USLegal, n.d.) One recent act is the open skies policy between the US and Europe, ‘allowing airlines based in the United States and Europe to fly across the Atlantic between any two airports in each region’ (New York Times, 2008). Although airline deregulation is not a recent concept, ‘its effects are still being felt today’ (Smith and Cox, n.d.) through the emergence of
The airline business is an industry that is competitive and unique, focussing on consumer choice and the responsiveness of airlines to changes in the external business environment. For any airline, this environment can be very complex as it is ‘hard for them to fully understand and impossible for them to fully control’ (The Times, n.d. p1). Virgin Atlantic is an international airline that is based in the UK. It was started by the entrepreneur Richard Branson in 1982 and now flies to 30 destinations around the world (Virgin Atlantic Airways Ltd, 2011). By looking at the PEST forces of Virgin’s external environment, the aim is to see how these influence the airline and how Virgin can use this information to their advantage.
Two main political factors in Virgin’s external business environment are deregulation and infrastructure. Before the 1980s airlines were typically controlled by the government, now due to deregulation, governments do not dictate airfares or routes etc and thus leave an open market for new competitors. As there is more competition for market share, airlines are forced to become efficient and competitive therefore driving prices down. Deregulation is said to have caused an estimated 20% in air fares (Dayao, et al., 2009). In 1979 the “open skies” act was introduced. This refers to an international deregulation policy to ‘liberalize the rules and regulations and minimize government intervention’ (USLegal, n.d.) One recent act is the open skies policy between the US and Europe, ‘allowing airlines based in the United States and Europe to fly across the Atlantic between any two airports in each region’ (New York Times, 2008). Although airline deregulation is not a recent concept, ‘its effects are still being felt today’ (Smith and Cox, n.d.) through the emergence of