Marketing Analysis of Jetstar and Virgin Blue Airlines Essay

3369 Words May 28th, 2008 14 Pages
Executive Summary

This research report provides an analysis of two popular airlines in Australia; Jetstar and Virgin Blue, both whom are competing in the airline business. Jetstar and Virgin Blue can both compete and be highly profitable within the business, leisure and family market but however, it will ultimately be the service companies, and their associated marketing strategies and techniques which, will establish the difference between the market ‘leader’ and the market ‘loser’. This analysis will detail potential solutions to a number of major strategic issues confronting the companies to maintain its position and protect its profitability in its core domestic market.

There is intense competition between the airline brands and
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According to Kotler et al, advertising is advantageous for companies as ‘it can reach masses of geographically dispersed buyers at a low cost per exposure’ (2006, p. 558). Press releases are also regularly used for airlines, although bad publicity can lead to the company having to ‘engage in damage control by releasing its own counterbalancing publicity’ (Weaver and Lawton 2006, p. 224).

Pricing is another important factor relevant for Virgin Blue and Jetstar. As they are both considered to be low-cost airlines, their prices must reflect this. Upon research on fare prices from Adelaide to Melbourne, it was discovered that both airlines are generally similar in terms of price, with Virgin Blue’s flight being at a cost of $75 whilst Jetstar’s flight being $69 (Virgin Blue, 2007 and Jetstar, 2007). According to Creedy, Virgin Blue set their prices not only according to competitors and the cost of maintenance, but also due to ‘customer price sensitivity, how many seats are filled on flights and fuel consumption’ (2004, p. 3). Competition based pricing is also relevant in the airline industry, with an example being when Jetstar first entered the market. Virgin Blue experienced a decline in their market share, and in response had to cut their prices in order to ‘keep pace with Jetstar’ (Hopkins 2004, p. 28).
1.4 Market ‘leader’ and market ‘loser’
The reason why

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