For this unit I will be looking at the marketing of an existing service. The service that I will investigate are the Virgin Trains service which is own by Virgin.
Contents Page
Pages 3 to 8 - E1 - Principal of market
Pages 8 to 18 - E2 - Establishing customer need
Page 18 - C3 - Reliability of data
Pages 19 to 24 - E3 - Promotion
Pages 24 to 26 - C2 - Marketing mix proposals
Pages 27 to 28 - E4 - External influences
Pages 28 to 33 - C1 - Links between external influences and marketing strategy
Pages 34 to 37 - E5 - Presentation on one aspect
Page 23 - Bibliography
Unit 3 - Marketing
For this unit I will be looking at the marketing of an existing service. The service that I will investigate are the Virgin Trains service which is own by Virgin.
Virgin trains spawned from Richard Branson's multi-pronged entrepreneurial empire, following the privatisation of the railways. Despite some other companies running nationwide services, such as the economy fares of Silverlink, Virgin is by far the most comprehensive service, covering most areas of England, Wales and Scotland.
Virgin is one of the best-known business names in Britain today. The Virgin Group of companies is lead by its founder, head and prime mover, Richard Branson.
Over the years, the activities of Richard Branson have multiplied, many in conjunction with other major businesses. The Virgin Group has interests that include air travel, stores, financial services, music, rail travel, entertainment, cosmetics, cola and the Internet.
Virgin is a private limited company, one of the most successful the UK has ever seen. In 1986, virgin became a plc to inject more capital to finance Branson plans for developing the businesses. But in 1988, due to not having complete control, Richard Branson bought back the business at 248 millions.
E1 - Principal of market
Marketing is a complete process within Virgin Trains which includes:
* Finding out what the customer wants - this is called market research and involves finding out what types of service are wanted and what prices consumers are prepared to pay.
* Helping to produce the right service at the right price.
* Persuading customers to use Virgin Trains - by means of advertising and packaging.
Marketing can also be seen as the interface between Virgin Train and the market in which they operate. Ideally they receives information from both and, as a result of analysing and interpreting the data, enables Virgin Train to function more effectively in the market place.
The chartered Institute of Marketing uses the following definition:
'Marketing is the management process responsible for identifying, anticipating and satisfying consumer requirements profitably.'
Understanding customer needs
A market exists when buyers and sellers come into contact. In some markets buyers and sellers meet, whereas in others they may do business by some other form of communication such as letter, phone or fax. Markets simply provide the opportunity for exchange to take place, by bringing together consumers who share a common need or want and who are in a position to engage in a transaction.
The way in which Virgin Trains respond to market signals (such as rising demand) will reflect its corporate objectives, and this will in turn influence the strategies and techniques it employs. These objectives give an organisation a unifying purpose and create a yardstick against which to assess achievements.
The marketing mix
The role of the marketing department is to develop a strategy, which enables Virgin Trains to achieve its marketing objectives. Decisions are then made which turn ideas and proposals into reality. A marketing strategy involves identifying the customers whom, Virgin Trains wishes to reach and then creating an appropriate marketing mix - product, price, place, and promotion - directed at those customers in the target market.
The marketing mix is made up of the four Ps. To meet the needs of customers, virgin must:
* Develop a PRODUCT to satisfy them (TRAINS)
* Charge them the right PRICE
* Find a PLACE for the train
* Make the customers aware of the service through PROMOTION.
Virgin's Train is the product, which, satisfy customer by getting them from A to B whilst trying to provide a good service so customer will come back. Virgin Trains will have to check its prices with competitors from both the rail and budget airline industry because there are few budget airlines offering the same route for cheaper prices.
Understanding and keeping ahead of competition
Virgin Trains must at all times be aware of its competitors and the nature of what they are doing. Competitors are those who sell similar products or services in the marketplace, or who could sell similar products or services. In transport market there are lots of competition, signified by an abundance of services, so that consumers have a massive choice. In other markets competition may be limited and customers may only be able to choose from a limited range of products and services.
Virgin Trains operate in a harsh environment. If their service is not good, they are likely to make less profit. Even if Virgin Trains have a successful service at the moment, their competitors might launch trains with better services and cheaper prices onto the market in future. The government might affect Virgin Trains too by passing laws, which restrict what they can do. For instance, there are reduced speed limits in placed due to the safety of rail tracks therefore train journeys become longer and customers are more likely to use other form of transports.
Successful long-term businesses are ones, which find solutions to these problems. Over a period of time they continue to provide service which appeal to their customers. They adapt how they operate to conform to government regulations and laws. They motivate their worker to produce as high quality service as possible within cost budgets.
Virgin Trains main competitors are long distance train companies like Great North Eastern railways, Midland Mainline. Other competitors are coach companies like network coach, which provide services to same place as virgin trains. Coaches are cheaper to operate therefore cheaper in prices, however they are less favourable as their journeys are longer. Another new popular form of transport that is becoming a major competitor for Virgin Trains are budget airline like easy jet. This form of transport is safer, quicker and in certain cases cheaper for customers. For example, a Virgin Trains standard ticket from London to Manchester is 49 pounds but easy jet offer the same route for 42 pounds. All these competitors I have mentioned are relying on the cheapness of there fare to attract customer. Virgin trains on the other hand are relying on the quality of their services like Internet connections to attract customers.
Constraints on marketing activities
Internal
Internal constraints exist as a result of the nature which Virgin Train and the situation it is in at a particular time. A manager examining internal constraints should be concerned with the strengths and weaknesses of Virgin Trains compared with those of its competitors.
When Virgin Trains decides to launch a new service, begin an advertisement campaign, it is investing money. Before embarking on a project in marketing Virgin Train must be aware of the financial implications.
The production capacity of is a major constraint upon marketing. It is pointless to attempt to increase sales if the production department cannot meet the additional orders. Equally it is ridiculous to promote on quality if the stated quality level cannot be reached.
External
The marketplace has been described as a jungle. There are thousands, sometimes millions of potential customers. Unless Virgin Train is a monopoly there are competitors, every one of which has their set of objectives that they are striving to reach. Businesses are often presented as the ones in control. Yet approximately 80 per cent of new services put on the market fail, and a significant proportion of new businesses also fail. The constraints on Virgin Train that come from outside are beyond their control, and they are always changing, somehow they have to deal with them. The following are some external constraints that affect Virgin Train:
. Competitors - there are very few services that are not produced by more than one business. If the customer is not satisfied it is usually possible to find a close substitute of the service Virgin Trains provide by another business.
2. Consumer - if Virgin Train is not market focused or if consumers are not interested in their service, then it will be difficult to market.
3. Legislation - the customer needs protection. Over the years a body of law has been built up to protect the consumer, in particular from the careless or criminal practices of business.
4. Economy - there are times when people feel or are prosperous. There are other times when they have less money at their disposal. How people feel affects their buying decisions. Media reports of redundancies generate a feeling of insecurity. People tend to save money, they are less willing to spend and to take on the responsibility of credit agreements. It could make it difficult for Virgin Trains to market business class seats.
Maintain a relationship with stakeholders
Stakeholders are those individuals and groups who depends on Virgin Train to achieve some of their goals and on whom in turn the organisation in some way and include shareholders, suppliers, government, employees/trade unions, special interest groups, competitors, customers, creditors, trade associations and communities.
In creating a strategy it is important for Virgin Train to take into account the wishes of these stakeholders and the coalitions that exist between these stakeholders grouping.
Shareholders are often the most important stakeholders. Their prime interest will be in receiving a good return on their investment, and they may therefore seek to block strategies, which threaten the dividends that they expect to receive. However, in given situations other stakeholders may be more significant - for example the government may block a business strategy to merge with another company because of the resulting monopoly situation that might arise. Employees and trade unions may resist strategies, which threaten employment. Customers are always an important stakeholders interest and no company afford to alienate its customers.
E2 - Establishing customer need
A consumer requires goods and services of all types for personal as well as household usage. Sometimes referred to as customers, each consumer is something of an enigma to marketers. How does he or she perceive products, brands, stores or even entire organisations? How are individuals product choice made? Is customer loyalty attainable? A trend of consumer behaviour has emerged in recent years to help Virgin Trains better understand critically important issues such as these.
Targeting
Virgin Train 1st Class traveller can be divided into two different segments. These segments are made up of business clients and consumers from social classes A, B and C1. Keynotes (2002), state that the average number of trips per week on national rail for social class A-C1 is considerably higher than that of social classes D & E. Also, the age groups that use the national rail most frequently are 20-34, which are those from an employed status.
However, Virgin Trains have decided to target the first class business traveller. Tapp (2000, p16) states that most airlines are driven by the 80/20 rule which could also be applied to the rail sector. The rule is that twenty percent of customers are from the business sector contributing to eighty percent of its profits. This suggests that it may be more profitable for Virgin Trains to target the business traveller.
An existing database holds information about companies who have previously booked first class seats on Virgin Trains. This will be used as a way of targeting ...
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However, Virgin Trains have decided to target the first class business traveller. Tapp (2000, p16) states that most airlines are driven by the 80/20 rule which could also be applied to the rail sector. The rule is that twenty percent of customers are from the business sector contributing to eighty percent of its profits. This suggests that it may be more profitable for Virgin Trains to target the business traveller.
An existing database holds information about companies who have previously booked first class seats on Virgin Trains. This will be used as a way of targeting existing customers and further lists will be bought from another source.
Segmentation
In order to maximise the effectiveness of the marketing strategy it is essential to segment, especially in terms of geographic location. It is important that the companies and business people targeted are geographically located along Virgin Train routes, as there is no point in communicating to companies who do not have easy access to Virgin Trains.
Market research
Before any service can be properly marketed Virgin Trains must know a great deal about:
* The market it is to be operated in
* The demand for the service itself
* The needs of the users for design, quality, colour, etc.
* The best media to advertise the service in
* The price which people are prepared to pay for the service.
Most of this information is obtained by specialist marketing people who arrange for two types of research to be carried out:
. Secondary Research - which involves finding out what has been written already about the service and the market for it.
2. Primary Research - which is the testing of the service ideas by asking people what they think of it and by looking at the competition (how good are competitive services and how much is being charged for them).
Secondary research is highly skilled work and requires patience and the ability to know which facts are useful and which are not. Primary research on the other hand, requires skill in writing questionnaires and in arranging samples of the public to try out the product.
The scope of marketing and market research is very broad. In fact almost every aspect of the production, promotion, sales life of a service is scrutinised at some point for one particular purpose or another.
Primary Research - Surveys
A survey usually involves asking questions of respondents - people or organisations who reply to the questions asked. Virgin Trains, for instance, used a survey to find out about the quality of service and preferences of consumers. The survey showed that most of the people said the quality of service was very good.
Surveys can only be useful for market research purposes if the questions asked are appropriate. For instance, sometimes it is important to ask closed questions. These are questions, which have a definite answer. An example would be: 'how may train journeys have you had last week?'. Other times, the market researcher might want to find out about opinions and allow the respondent to develop an answer. It is best then to ask open questions, which have many possible answers. For instance, 'why do you like this service?' is an open question.
Sampling
A survey cannot ask every customer for his or her opinion. Only a fraction or sample of customers can be surveyed. To be useful, the sample chosen must be representative of all customers (the population).
In a random sample, every potential respondent has an equal chance of being chosen. Random numbers can be used to do this or it can be done by 'picking people out of a hat'. It is often quite difficult to construct a truly random sample.
So a cheaper and quicker method is to use a systematic sample. This is where, say, every 100th or 1000th person on a list like a telephone directory or the electoral register is chosen. A systematic sample is not truly random though and therefore the results may be less reliable.
In a quota sample, the sample is broken down. This is a far cheaper method than random sampling.
Below is a sample of the questionnaire I used for my primary research. I did most of my questionnaire around train and tube station like Sudbury hill station.
Questionnaire
This questionnaire will be asking questions to you about the rail industry and what you think about the situation it is in.
*Please circle the appropriate answer
Q1. What age group are you in?
20 under 21 - 30 31 - 40 41 - 50 50+
Q2. What is your gender?
Male Female
Q3. Have you ever travelled by train? If not go to question 6.
Yes No
Q4. What was your main reason for commuting?
Work Pleasure Hobby/Sport
Education Other
Q5. How would you rate your train service?
Very bad bad average good very good
Q6. Would you pay more for a better service?
Yes No
Q7. Which of the following do you think will improve rail services?
More funding Extra staff Improve catering
Cleaner carriages Comfortable seating Other______________
Q8. Should the rail industry be taken back into Government ownership?
Yes No
Q9. Which of the following do you feel is safer to travel on?
Rail Car
Q10. Which newspapers do you read?
Times Sun Mirror Guardian
Other___________ don't read newspaper
Q10. Which type of television programme do you watch the most?
News football comedy drama
music Soaps 0ther________________
Thank you for answering these questions.
Results of Questionnaire
My questionnaire received a number of votes supporting the re-nationalisation of the railways. A lot of people felt that the only real incentive for Railtrack and the operating companies like Virgin Trains is to make more profit for their shareholders. They felt Railways should be seen as part of the public infrastructure and returned to public ownership.
One person said they would be prepared to pay more if the railways were publicly owned, but not to private companies just to add to their profits.
Recent reports from the BBC News online suggest that it will be unbelievably expensive to re-nationalise the railways and will give less control to the government but they would have more direct control and influence over the polices and practices.
My questionnaire revealed that 58% of people are willing to spend a little more if it will guarantee them a better service.
The most watch programme are comedies. Virgin trains main marketing are business people. From my observation of my questionnaire, I found out that most business people that I asked this question to chose the news. From this I suggest that virgin trains should do a television advert before or during a news programme like 'news at 10 with Trevor Mc Donald'. By doing this the advert will reach the target successfully.
Also most of the same business people said that they read broadsheet newspapers like the Times. From this information Virgin Trains could place an advert in the Time. Below are the results of which newspaper are most read. As you can see The Sun came first followed by the Mirror.
Secondary research
Public transport
According to social trends 2000, the number of rail journeys has increased since 1981-82, and is now approaching the levels of the late 1950s. Because of the great increase in car travel, however, rail has a much smaller share of total travel in the 1950s. Below is a graph showing the percentages of each mode of passenger transport.
Source: department of the Environment, Transport and the Regions
Rail Journey
Below is a graph showing the number of rail journeys made by each operator during 1981-1999.
Source: department of the Environment, Transport and the Regions
A significant development in recent years has been the increase in the number of rail operators. Following the privatisation in 1996, passenger rail services on the national network are provided by 25 franchise holders which lease rolling stock and pay access charges to Railtrack plc for use of the track. Virgin Trains are one of those franchise holder and they regulated by the Franchising Director of the Shadow Strategic Rail Authority (SSRA), which monitors their performance and controls fares.
Virgin Trains runs on the National Rail line, Passenger traffic on this line rose by three per cent in 2001-01, when some 957 million passenger journeys were made (table above). This is the highest number of passenger journeys since 1962, but there had been more than a billion rail passenger journeys a year in 1961 and before.
The amount of distanced travelled are much higher than the early 1960s, which suggests that people are using the railways for longer journeys than previously. This stat is good for Virgin Trains as they provide a long distance travel service to places like London, Birmingham, Manchester, Liverpool and Glasgow.
Rail complaints
Following the Hatfield crash in October 2000, which the Health and Safety Executive believe was due to a fractured rail, temporary speed restrictions (TSRs) were imposed by Railtrack on around one thousand sites throughout the national rail network. Due to these restrictions Virgin Trains had to issue new timetables for its services, and these, coupled with severe flooding in some areas, had an adverse affect on service timelines. For example, between July and September 2000, 80 per cent of long distance trains arrived on time (within 10 minutes of advertised time); between October and December, this figure fell to 48 per cent. Below shows the percentage and types of complaints received.
Source: Strategic Rail Authority
These problems contributed to a sharp increase in complaints made to the Train Operating Companies (TOCS), which run trains on Great Britain's rail system. Between the fourth quarter of 1999-00 and the fourth quarter of 2000-01, the rate of complaints received per 100,000 passenger journeys rose by 54 per cent. Complaints about train service performance, although the most common type of complaint increased by only 2 per cent from 1998 to 2001.
C3 - Reliability of data
Primary data are not always reliable. It is up to me to use a suitable technique, which will gather the right amount of people. Everyone has different tastes so it is important for me to question all types of people. If my entire questionnaire was given to college students than all my results will be bias as most teenagers have the same taste i.e. cheaper prices.
I made sure that my primary research was not bias by asking questions about age and gender to specify what each class want and then making sure I had equal amount of each types of class. I consider my questionnaire to be reasonably reliably as the people who answered them were speaking the truth.
The secondary data may also not be reliable as the information could be out-of-date and not be specific to my business. The secondary data I gathered is not specific to marketing, it is about the industry in which Virgin Trains operates. The secondary data is more accurate than primary research. This is because the research was done on a national scale unlike my research, which was done by 40 people who mostly were around train stations.
All together secondary data may not be reliable so its up to me to make sure the source of the information is creditable. Most of my secondary data was adapted from the National Statistics books 2001-2003 and their website.
E3 - Promotion
Creative platform
At present Virgin has a uniqueness, which differentiates them within the market. First of all they always uses the colour red and people associate this with the company. Also the public perceive Virgin as being extremely creative and innovative. Both of these factors of Virgin can be taken advantage of and utilised when communicating to the business sector.
Virgin Trains have already started a Television advertising campaign, which has Rik Mayall as a businessman travelling in a car encountering disaster after disaster, whilst his colleagues go successfully by Virgin Train. This advert is successful in attracting the business sector, but it required more methods of communication to support it and maximise its effectiveness.
Virgin has created a single-minded proposition, which is used in this current campaign and should be further used in the future. The single-minded proposition is:
"Business Brains take Virgin Trains"
This is what Virgin wants the business sector to think of, so when they think of transport they think of Virgin Trains. This is good as it is relevant and will appeal to the business market, and hopefully this is how Virgin will be referred to. This phrase should be consistently used and marketed in a colourful, creative and humorous way as it is at present.
Marketing objectives
The marketing objective for Virgin Trains to achieve is to see an increase in sales by 50% from the use of the first class train carriage over the next twelve months. In order to accomplish this, further campaign objective have been established.
Campaign objectives
For Virgin Trains to analyse the success of the communications campaign, simple, measurable, accessible yet realistic and time-based (smart) objectives have been established to enable the best potential for maximum profits.
. To increase awareness from 30% to 60% of the new facilities in first class carriages and the reliability of the Virgin Train service.
2. To increase the customer base of the corporate businesses.
3. To reposition Virgin Trains brand image among corporate business clients to be the UK's number one business train.
4. To evaluate the success and impact of the communication plan.
Strategies and Tactics
The strategy that will be used are important to enable Virgin Trains to retain existing business customers and acquire new business customers to travel on board their first class carriages.
A combination of push and pull strategies will be used with in the communications plan by adopting a variety communication tools. Using below the line advertising, such as outbound telemarketing and direct mail, will enable Virgin Trains to pull customers in to use the service. Using above the line advertising such as business magazines will enable them to push Virgin Train service into the distribution channel.
Elements of the communication mix should integrate with other tools so that a unified message is consistently reinforced. This also pushes the customer through various stages of the purchasing process.
The following strategies will enable Virgin Trains to achieve the campaign objectives. There are three main elements, which are:
. To use business-to-business techniques to send direct mail to corporate clients. This will include sending information packs to inform businesses about the first class carriages on Virgin Trains.
2. To contact existing customer from Virgin Trains database using outbound telemarketing to create a relationship
3. To create an awareness of the first class carriages on Virgin Trains by advertising to the business sector through business magazines and newspapers.
TACTICS
A number of communication tools have been considered to achieve the objectives and strategies.
Business-to-Business Marketing
Direct mail will be used to contact current and potential business clients to inform them of Virgin's new investment to improve the service. Direct marketing is a good tool to use to communicate difficult messages or those that need detailed explanations. According to Dibb et al (2002 p161), business-to-Business customers "are usually viewed as more rational and more likely to seek information about a product's feature and technical specifications." This suggests that detailed information about the first class carriage should be given to this clientele.
Information packs will be sent to companies from two different databases. One-database hold records about all companies that have previously booked first class seats for business travel. The other database will be taken from business directories such as Kompass, which gives company details about the name, address, phone number and annual sales. This will allow Virgin Trains to develop potential lists of customers by area. Each information pack will include pictures, photographs, recent developments and new investments, and the benefits of travelling with Virgin Trains. Order forms with relative discounts for future travel purchases will also be included as an incentive for the customer.
Outbound Telemarketing
Having sent the information packs to companies, Virgin Trains will then follow this up with a telephone call to determine and speed up the response. Calls will only be made to those from existing database, as Tapp (2000, p285) suggests "calling people who are not your customers without having a sound reason is not seen as good business." It would also be very expensive to call all companies from both databases.
The objective of these calls will be to confirm that the company received the information pack and provide more information if required. Questions will then be asked to establish if the company has been satisfied with Virgin Trains service they have experienced and if they will be using the service in the future.
Magazine and Newspaper Advertising
There has been an explosion in the amount of magazines and newspaper within the market and consumers are now confronted with a massive choice that dilutes the impact of this media type. However, this media type would work well for Virgin Trains in achieving their strategy of increasing the business traveller segment. This is mainly because the target audience only reads specific magazines and newspapers, and by advertising in these Virgin Trains can contact most of the relevant people. Example of the magazines and newspapers which business people generally read are the Economist, Financial Times, The Grocer and the Telegraph.
Advertising in specific magazines and newspapers is reasonably cost effective, and will enable Virgin Trains to contact a high percentage of their target market. Virgin Trains need to communicate the important factors to the potential business traveller for example, the benefits of Virgin Trains and the improvements and investments made to improve it for them i.e. spacious lounges, internet and fax access etc. virgin Trains due to the industry in which it operates is confronted with various barriers (bad publicity). By using magazine and newspaper advertising the company can communicate with their target market attracting more, and hopefully it will assist in overcoming barriers i.e. changing peoples perceptions.
Other Communication Tools
Obviously there are many other communication tools available to Virgin Trains but the above appear to be most suitable in this case. For example, Television and radio is the easiest way of reaching a mass audience. However this form of media will not be used as the specific target audience is business travellers and Virgin do not want to reach such a large audience. Television will make it challenging to reach this target market. Also the production cost can be very high & so can airtime costs.
Control
It can be very difficult to justify and measure the effects of any marketing plan. It is however essential to construct measures that monitors the progress and success of this marketing communication plan. The following measures will be used to evaluate the success and impact of the proposed plan.
Virgin Train press advertisements will have an information telephone number. Recording the level of response on this telephone line will give an indication of how effective this press campaign has been. The receivers of the business information packs will be called after they have been received. This will give the opportunity to measure the level of understanding about these packs. The customer service team can then explain further the benefits of using the first class carriages.
The level of sales after the communication plan has been implemented will be measured. This will enable Virgin Trains to compare the data with previous sales to understand if there has been an increase and the plan has been successful.
Questionnaires will then be distributed to a sample of the Virgin Trains business users to understand the impact of the campaign. This questionnaire will be distributed during train journeys and an incentive will be given for completion. The level of complaints that is received by Virgin Trains will be measured and compared to previous level.
This stage of the marketing plan will determine Virgin Trains success, their current market position and indicate whether or not a new plan to be devised.
In conclusion it can be seen that it is feasible for Virgin Trains to target and attract the first class business traveller. As discussed there are many ways that Virgin Trains could adopt in order to target this segment. This marketing plan proposes three main communication tools to be used that will have the best possible impact. Though communicating to this segment, Virgin Trains should be able to increase the level of business travellers using the service. The research conducted suggested that Virgin Trains are capable of such a campaign and have the finances. Thorough effective monitoring and control, this campaign will be successful and will enable them to achieve the objectives.
C2 - Marketing mix proposals
The marketing mix involves the 4p's (price, promotion, place, product). In E3 I have explained my proposal for promotion. For place, Virgin Trains runs its service on certain rail line which cannot be marketed or changed so place is not important for my marketing proposal. However I will talk about price and product.
Price
Virgin trains have many different fares with competitive prices. There are five different price schemes that virgin offer depending on which seats a customer wants. Virgin trains have two classes on their trains, First and Standard.
The first scheme is called Business Advance First, Which gives all the benefits of First Class at a discounted price if you can book by 6pm the day before travel. This scheme is offered any day and is available on all Virgin Trains services to and from London Euston and other selected journeys to/from the South East.
The second scheme is called Business Advance Standard, which gives all the benefits of Standard Class at a discounted price if you can book by 6pm the day before travel. This also is available on all Virgin Trains services to and from London Euston and other selected journeys to/from the South East.
The third scheme is called First Open Return. This ticket gives you the greatest level of flexibility and the ability to really stretch out in First Class. Unlike the first two schemes this ticket can be booked on the day of travel. The return trip must be made within a month of travel.
The fourth is called Virgin Business. This is an all-inclusive ticket, offering you convenience and excellent value for money. On top of enjoying all the benefits of First Class, you'll also receive a zone 1 Underground ticket so you can continue your journey in London, and complimentary 24 hour parking at selected stations. This ticket is available on all Virgin Trains.
The fifth is called Value Advance Upgrade. This upgrade from Virgin Value Standard Class gives you the flexibility to travel First Class for one or both journey legs. This gives all the benefits of First Class for a fraction of the normal price; simply buy at least 7 days in advance.
There is one price scheme that I want to suggest. The scheme is a savers ticket, which offers value for money. Customer will get seats in standard class. I suggest this ticket will only be available on off-peak times (5pm - 10pm) as fares are normally cheaper then anyway. As an additional benefit, people can travel on any train without restriction. I think this ticket will be aimed at customers that use cheaper transport like coaches. This savers ticket will involve competition based pricing. I suggest virgin trains to look at how cheap competitor's prices are. Then based the price of this savers ticket on that information. For example network coach charge £16 from London to Birmingham. So I suggest Virgin trains to charge near that figure.
Product (service feature)
Virgin trains product is their trains and what features they have on it.
On Virgins standard class, virgin trains provide customers a walk-in, self-service shop, which includes a large range of food (including vegetarian options), hot and cold drinks, magazines, books, CDs and games.
Every seat comes with a complete audio entertainment system. Their exclusive Virgin FM offers Pop, Easy and Kidz channels, or you can tune into live BBC Radio 4. The headphone jack, channel finder and volume control, are on the panel between each seat. Headphones are sold in 'The Shop' or you can just use your own.
Standard seats have headrests, adjustable arm-rests and a comfortable amount of legroom. Each seat has a table, with a reading light above and window blinds that can be drawn down. By each seat there's also a handy power point for charging mobile phones or laptop computers.
On all first class services, you can take advantage of a complimentary hot savoury snack and pastries in the morning and a selection of cold snacks throughout the day. In addition the first Class offer includes coffee, tea, soft drinks, a newspaper. Free headphones are also available for use on new Voyager services. Complimentary items can be collected from the Shop/buffet - just show your First Class ticket.
An at-seat service is also available in the central area of the network between 7am-7pm, Monday to Friday. This includes most services between Preston/Manchester/Liverpool/Blackpool and Newcastle down to Reading/Paddington/Bristol/Swansea.
A feature that I want to suggest is Internet connection in first class carriages. It will be free to first class passengers. To cover the cost of this feature I suggest a small rise in prices. This feature will be aimed at business clients.
E4 - External influences
Stakeholders
Stakeholders are people who have an interest 'stake' in Virgin Trains. It matters to them what Virgin Trains does. These people may have a direct investment, or the may be affected by the activities of Virgin Trains. Whatever the situation they can act to influence the way Virgin Train is run. Virgin Trains stakeholders are:
* Customers
* Shareholders
* Employees
* The local community
* The government
Customers
Virgin Trains are customer-focused in other words they aim to keep their customers happy by looking after them, listening to their views and meeting their needs with business in such keep competition, a customer ignored is a customer that is lost.
If customers' views are not taken into account, the results can be serious. Customers are often represented by pressure groups such as Greenpeace. Other example of pressure group being exerted are on supermarkets, for example in the withdrawal of genetically modified foods.
Shareholders
Shareholders are clearly stakeholders in Virgin Trains because they have a financial stake in the company. Their wishes are made known in the shareholders meetings (AGM). One interest they have is the share of profit - dividends. A frequent criticism in shareholders meeting is the large pay package earned by some 'fat cat' directors.
At the moment Virgin Trains is making huge profit, which means higher dividends to shareholders but due to recent rail crashes and safety issues about Rail lines, Virgin Trains value of shares has gone down meaning shareholders share value decreasing, this affect Virgin Trains as potential shareholders will be less willing to buy into the company.
Employees
Employees are stakeholders in Virgin Trains because a contended and motivated workforce will help a business to succeed. If Virgin Train neglect employee training, welfare and pay levels in the interests of profits, it is likely to lose them money in the long run. Businesses are also involving employees more and more in decision-making, some have set up 'workers councils' which are common in Europe.
The local community
The local community has an interest in local business for a number of reasons. The local community needs full support for local events and charities. Local pressure groups can often have significant influence on Virgin's business decisions, blocking planning for a new business project for example.
Virgin Trains need to take account of these needs and pressure by offering employment locally, and not cheap labour from other areas. They may also sponsor local sporting and charitable events and help the environment by cutting train emission.
C1 - Links between external influences and marketing strategy
The interest and power of stakeholder grouping play an important part in the development of Virgin Train's marketing strategy. The power/interest matrix below outlines a way of evaluating the effect of stakeholders and of drawing conclusions about the way they should be treated.
Stakeholders with little interest and little power are not significant players and need not have much attention given to them, However stakeholders with bigger interest and more power need to be considered much more carefully.
The power/interest matrix
Level of interest
Low
High
Low
A Minimal effort
B
Keep informed
High
C
Keep satisfied
D
Key player
E-V-R Congruence
David Marshall chose the E-V-R Congruence framework to demonstrate the underlying concept of strategic management. Strategies are used in such a way that Virgin Train meets the demand and expectations of its stakeholders, and responds and adapts to changes in the environment. In other words, it has strengths, which take advantage of the opportunities and deal with potential threats in an environment of change.
E Managers would need to fully understand the dynamics, opportunities
Threats present in their competitive environment, and that they are paying fsull regard to the wider environment.
V The values of Virgin Train would need to match the needs of the environment and the key success factors. These values would need to be shared and followed throughout the organisation.
R The resource of Virgin Train would need to be managed strategically taking into account the strengths, weaknesses and opportunities.
Environment
Virgin Train needs to be in tune with their environment. They therefore need to can the environment continually to identify changes, in order to make appropriate strategic responses to these changes. The term 'environment' is used to describe the general conditions that surround an organisation - e.g. a competitive environment is one in which there is a lot of rivalry between firms, a dynamic environment is one in which there is rapid changes, etc.
There are a number of important steps involved in analysing the environment. The most important of these are:
* To identify which forces are the most important and why they are so significant
* To forecast how these forces might change in the future
* To build expectations and predictions into decision making
An external analysis will be devised using PEST to find if any environmental factors are currently affecting the business or may do in the future. An internal analysis will then be conducted using a SWOT analysis.
PEST Analysis
Political
In 2000, the government announced a ten-year plan for transport. The main aim was to increase the use of public transport. 120bn was invested in rail schemes (Source: Financial times, 21st June 2000). One of its targets was to increase rail use in UK by 50 per cent by 2010 (Source: DETR)
The rail network is highly regulated by the Government. They oversee the development of the national rail network. Many safety restrictions were imposed on the railway network following the Hatfield train crash. For example, speed and safety checks.
Economical
The UK currently is at the lowest level of inflation and interest rates, fluctuating only slightly around 2.5 per cent and 5 per cent in 2003 respectively. These are beneficial to the train-operating companies on their further development and investment (Source: Boden, 2003)
Social
The car is by far the most important form of passenger transport in terms of frequency and use. (Source: DTLR). However, many people nowadays are changing their lifestyle to travel by rail due to the limitations on parking and congestion. Kingham et al (2002) found that people are aware of both pollution and congestion because of excessive car use and that people are prepared to act to improve the situation. This reflects a strength of the train network because of the increasingly concerned with 'green' environmental issues.
According to the Keynote Report, people on higher income, (social groups A, B, C1) are more likely to travel on the national rail system for commuting to work and leisure since they can afford longer journeys, compared with lower income earners who normally travel by the buses. This is an opportunity to national rail operators to target the higher income group.
Technological
Railway companies place an investment on the new improved trains, signalling and track in order to provide the better services and improve the safety level to the travellers.
SWOT Analysis
Strengths
* According to Keynotes (2002, throughout 2002 Virgin Trains has had the largest advertising budget at 6.3m. This should enable them to capture a larger share of the market.
* Although Virgin Trains only operates within the UK, there is global brand recognition. The company therefore sustains competitive advantage through its strong brand.
* Keynotes (2002) states that "in the year ending 2002, Virgin Rail Group Ltd rose by 5.1% to 513.5m."
* Virgin Trains have the capital to encounter in future and current development enabling them to be one step ahead of the competition. They are currently investing in new trains to enable them to increase the number of passengers aboard.
Weaknesses
* The keynote Report (2002) suggests that Virgin Rail Group Ltd pre tax profit have dropped by 39.5% to 17.1m. The group needs to detect why this loss has occurred.
Opportunities
* According to Keynotes (2002) an opportunity for the rail industry could be the development of schemes to encourage the integration with other forms of transport. For example Virgin Trains could have a contract with a shuttle bus company enabling customers to get to and form shopping centres from the railway station.
* According to the Financial Times article (July 2000), the government announced that they were investing in the biggest transport plan over the next ten years, spending 180bn to boost rail passengers by 50%.
* The continuous investment to improve Virgins performance and service quality should stimulate a growth for demand of rail usage.
* The government is trying to encourage the use of public transportation, which may be stimulated by the increase of road use taxes and parking charges.
* Virgin Trains are trying to tempt Railtrack (the company that replaces the rail line) with an improvement package. This involves 2.1bn to be invested by Railtrack to increase the speed of the line in turn for a share of Virgin's profits. Although this scheme will not be confirmed until Spring 2004, it could be an opportunity for Virgin to capture a larger share of the market.
Threats
* Although Virgin Trains only run along certain tracks, it is a highly competitive industry with many Rail companies offering competitive prices.
* The industry has a bad image due to recent train accidents including the recent Hatfield disaster.
* According to Keynotes (2002), "there has been an under investment in the rail infrastructure for many years". It is a separate company that provides the rail track and power and due to the lack of rail investment, Wolmar (1996) reported that this was the reason for over 75% of Virgins breakdowns and failures.
* There has been an increase in the number of low cost airlines offering cheap domestic flights to the same destinations as Virgin Trains and other rail companies. Customers may prefer to travel by air, as it is quicker and may be more convenient.
* According to keynotes (2002), train travel has the lowest penetration compared to the use of cars.
E5 - Presentation on one aspect
Presentation speech
For my presentation I will be looking at one aspect of my marketing strategy for my chosen business. I will be talking about Virgin Trains, as you know the Virgin Group is one of the biggest brands in Britain and one of the most famous Private limited company to ever succeed.
The marketing strategy for Virgin Train is to increase the level of business travellers using the service.
The aspect that I will be looking at will be promotion. There are three main elements to this marketing strategy, which are:
SHOW OHP SHEET ' STRATEGIES TO USED BY VIRGIN TRAIN'
4. To use business-to-business techniques to send direct mail to corporate clients. This will include sending information packs to inform businesses about the first class carriages on Virgin Trains.
5. To contact existing customer from Virgin Trains database using outbound telemarketing to create a relationship
6. To create an awareness of the first class carriages on Virgin Trains by advertising to the business sector through business magazines and newspapers.
SHOW OHP
Business to Business Marketing
For this element, Direct mail will be used to contact current and potential business clients to inform them of Virgin's new investment to improve the service. Direct marketing is a good tool to use to communicate difficult messages or those that need detailed explanations. According to Dibb et al (2002 p161), business-to-Business customers "are usually viewed as more rational and more likely to seek information about a product's feature and technical specifications." This suggests that detailed information about the first class carriage should be given to this clientele.
Information packs will be sent to companies from two different databases. One-database hold records about all companies that have previously booked first class seats for business travel. The other database will be taken from business directories suck as Kompass, which gives company details about the name, address, phone number and annual sales. This will allow Virgin Trains to develop potential lists of customers by area. Each information pack will include pictures, photographs, recent developments and new investments, and the benefits of travelling with Virgin Trains. Order forms with relative discounts for future travel purchases will also be included as an incentive for the customer.
Outbound Telemarketing
Having sent the information packs to companies, Virgin Trains will then follow this up with a telephone call to determine and speed up the response. Calls will only be made to those from existing database, as Tapp (2000, p285) suggests "calling people who are not your customers without having a sound reason is not seen as good business." It would also be very expensive to call all companies from both databases.
The objective of these calls will be to confirm that the company received the information pack and provide more information if required. Questions will then be asked to establish if the company has been satisfied with Virgin Trains service they have experienced and if they will be using the service in the future.
Magazine and Newspaper Advertising
There has been an explosion in the amount of magazines and newspaper within the market and consumers are now confronted with a massive choice that dilutes the impact of this media type. However, this media type would work well for Virgin Trains in achieving their strategy of increasing the business traveller segment. This is mainly because the target audience only reads specific magazines and newspapers, and by advertising in these Virgin Trains can contact most of the relevant people. Example of the magazines and newspapers which business people generally read are the Economist, Financial Times, The Grocer and the Telegraph.
Advertising in specific magazines and newspapers is reasonably cost effective, and will enable Virgin Trains to contact a high percentage of their target market. Virgin Trains need to communicate the important factors to the potential business traveller for example, the benefits of Virgin Trains and the improvements and investments made to improve it for them i.e. spacious lounges, internet and fax access etc. virgin Trains due to the industry in which it operates is confronted with various barriers (bad publicity). By using magazine and newspaper advertising the company can communicate with their target market attracting more, and hopefully it will assist in overcoming barriers i.e. changing peoples perceptions.
Other Communication Tools
Obviously there are many other communication tools available to Virgin Trains but the ones that I have suggested are most suitable in this case. For example, Television and radio is the easiest way of reaching a mass audience. However this form of media will not be used as the specific target audience is business travellers and Virgin do not want to reach such a large audience. Television will make it challenging to reach this target market. Also the production cost can be very high & so can airtime costs.
Money
It is essential to calculate the cost of implementing any communications plan. According to my secondary research, throughout 2002, Virgin Trains have spent the most on advertising within the transport industry. With a huge budget allowing them to spend 6.3m.
Now I am going to show you a table showing the cost for the communication plan:
SHOW OHP 'COST OF ADVERTISING'
This column shows how much it would cost per thousand people. This next one shows the target audience that each medium should reach. The total cost is worked out by taking how much it would cost per thousand then multiplying it by the target audience, which would cost 4,000.
Also Virgin Train will have to count the cost of using agency to produce information pack. The cost of agency will total 64,000.
And finally the total Campaign Costs will come to 102,000.
And Virgin Trains marketing communication campaign will run over twelve months.
Conclusion
In conclusion it can be seen it is feasible for Virgin Trains to target and attract the first class business traveller. As discussed there are many ways that Virgin Trains could adopt in order to target this segment. This communications plan proposes three main communication tools to be used that will have the best possible impact. Through communicating to this segment, Virgin Trains should be able to increase the level of business travellers using the service. The research conducted suggested that Virgin Trains are capable of such a campaign and have the finances. Thorough effective monitoring and control, this campaign will be successful and will enable them to achieve the objectives.
Bibliography
Heinemann AVCE Business
Authors: Dave Neeham, Rob Dransfield
www.virgintrains.co.uk
Business for Higher Awards
Authors: Dave Neeham, Rob Dranfield, Rob Harris, and Martin Coles
www.bized.co.uk
Advanced Business
Authors: Jon Sutherland, Diane Canwell
www.tutor2u.co.uk
Sukhbir Hayre David Kinnerley W112
