|Quoting TN486 (Reply 164):|
For those complaining about high airfares to AFL Grand Final - take your consumer shoes off and put on your airline CEO's shoes or your shareholders shoes. Different slant on things yes? Would I pay the fares asked, no way. Why? cause I am not that well endowed with disposable cash. Also, at last glance, I was sure Tiger was part of the Virgin Group of airlines. Yes, I know, its late, and I get a bit cranky when I am tired. Ni nite all, sweet dreams.
No body is arguing this!
I think what we have to remember is that the remake of Virgin Blue in to Virgin Australia really shifted the airline up a notch in market segments. The trick was always going to be how to do this without disenfranchising its existing (and somewhat loyal) customer base.
From a marketing perspective Virgin Australia would have been very conscious of this in it's marketing efforts.
noted that the migration of some of VA's budget concious customers to Jetstar was always included in the VA marketing plan. If we consider last year Jetstar grew by 4% in a market that reduced in size by 2% we have some very significant numbers (1% of the Australian market is worth approximately $150m in incomes and in stating this, at the same time there would have been quite a few QANTAS customers who also migrated to Jetstar).
If we consider the behaviours of market segments and how they have fundamentally changed over the last ten years, the marketing campaigns relevant ten or even five years ago are probably no longer relevant today.
For instance, if we look at Social Media, VA's once traditional customer heartland (25-35 age group) are not shy in venting their frustration at perceived poor service / value for money. They are also a lot more cynical and will again vent their frustration (via social media) at what they perceive as marketing gimmicks.
As such, we had a social media campaign that instantly targeted VA's high ticket prices and poorly targeted marketing event for football grand final events.
What we have to remember, with Social Media a very small campaign can have a very large audience. It also has a lot of credibility because it represents the opinion of the market and not the marketers. As such a poorly targeted marketing campaign can almost have an immediate negative impact on a brand.
For me this is going to be a water shed year for Virgin Australia. It's transformation is almost complete!
In reality the capacity and market share numbers will shortly start telling us the real story! If the Virgin Australia airline sustainable in its own right into the future?
I suspect VA have gone a step too far! If we start seeing more VA customers migrating to Jetstar and TigerAir we will have a situation where VA's presence in the Australian market will decrease. For instance, at this stage VA is still an unprofitable airline and its fortunes going forward will in part be reliant upon them commanding a price premium for their seat offerings. Ultimately, this will result in higher ticket prices.
If we use the old marketing rule that every percent in price movement will have a corresponding movement in demand, a 5% increase in fares could see 5% of the airlines customers looking for other travel options. That would result in 1.75% of the total market looking to shift from VA to another carrier (TigerAir / Jestar) or means of transport (vehicle).
Again, these are serious numbers!
Profitability isn't just about charging the highest price. It is about having regular customers who are willing to pay a fair price for a product that they want. The question for VA becomes, will they have enough of those customers going forward!