The Integration of ADR and formal court procedures

 

  • Increasingly Courts are requiring that parties attempt to settle their differences through some form of ADR.
  • Most states have adopted programs that allow them to refer certain types of cases for negotiation, mediation, or arbitration.
  • In some places (Hawaii and California) certain types of cases are mandatorily to be settled by mediation and nonbinding arbitration, usually involving less than a specified dollar amount.
  • If one of the parties fail to reach the agreement, then the case will be heard by the court.

 

Court Annexed Arbitration – Arbitration mandated by the court.

Not all disputes will go to arbitration (issues involving title to real state or when court’s equity power is involved)

  • in Voluntary Arbitration, the court unlikely will revise the decision. the Award is usually final.

 

It differs from the voluntary arbitration.

1)Different standard of court review – a fundamental difference is the finality and reviewability of the award.

  • Any party may reject the award for any reason. If one of the parties reject it, the case will go to trial. The court will reconsider all evidence and legal question (to hear the case de novo)
  • The party who rejected it may be penalized with the court costs.

2)Dicovery – In Court Annexed Arbitration discovery occurs before the hearing. If a party seeks to discover new evidence, he/she needs approval from the court.

3) The role of the arbitrator – it is usually the same in both types of proceedings.

4) Which rules apply – It varies among states.

5) Waiver – If one party fails to appear at, or participate in, the arbitration proceeding as directed by the court however, that failure constitutes a waiver of the right to reject the award.

 

Court-related MediationToday, more court systems offer or require mediation, rather than arbitration as an alternative to litigation

  • It is often used in disputes relating to employment law, environmental law, product liability and franchises.
  • Important advantages for business are its lower cost (around 25% less than litigation), the speed with which a dispute can go through mediation (1 or 2 days)
  • The popularity lies in the fact that mediation goal is to work out a solution that benefits both sides

Summary Jury Trialsit is a mock trial that occurs in  a courtroom before a judge and jury

  • evidence is presented in an abbreviated form along with each side’s major contentions.
  • The Jury presents a veredict.
  • The difference between it and a trial – In summary the jury’s verdict is only advisory.
  • Its goal is to give each side an idea of how it would fare in a jury trial with a more detailed presentation of evidence and argument.
  • At the end, the judge meets with the parties and encourage them to settle their dispute without going through a standard jury trial.
  • The United Nation Convention on the Recognition and Enforcement of Foreign Arbitral Awards assists in the enforcement of arbitration clauses, as do provisions in specific treaties among nations.
  • The AAA provides arbitration services for international as well as domestic dispute.

Alternative Dispute Resolution (Arbitration)

Arbitration

– A more formal method of ADR

– An arbitrator hears a dispute and imposes a resolution on the parties

– It differs from other in that the third party hearing the dispute makes a decision for the parties

– Decision may be legally binding on the parties (or parties can also agree to non-binding arbitration)

– For legally binding, parties are obligate to abide by the arbitrator’s decision regardless of whether they agree with it.

 

Arbitration Clauses

– Almost any commercial matter can be submitted to arbitration

– Frequently, parties include an arbitration clause in a contract specifying that any dispute arising under the contract will be resolved through arbitration rather than through the court system

 

Arbitration Statutes

– The federal government and many state governments favor arbitration over litigation

– Federal Arbitration Act (FAA – 1925): federal policy favoring arbitration

– FAA does not establish a set arbitration procedure.

– FAA provides the means for enforcing the arbitration procedure that the parties have established for themselves

-Section 4 of FAA, allows a party to petition a federal district court for an order compelling (forcing) arbitration under an agreement to arbitrate a dispute

-Section 9 of FAA, the parties to the arbitration may agree to have the arbitrator’s decision confirmed in a federal district court. One party obtains a court order directing another party to comply with the terms

– FAA enforces arbitration clauses in contracts involving maritime activity and interstate commerce. Arbitration agreements involving transaction only slightly connected to the flow of interstate commerce may fall under the FAA

– Nearly all states follow the federal approach to voluntary arbitration.

– Adopted Uniform Arbitration Act (drafted by NCCUSL -1955)

– Under the uniform act, it gives full effect to voluntary agreement to arbitrate disputes between private parties. The act supplements private arbitration agreements by providing explicit procedures and remedies for enforcing arbitration agreements (however, does not dictate the terms of agreement). In the absence of a controlling statute, the rights and duties of the parties are established and limited by their agreement

– FAA preempted the state law (Cleveland Construction, Inc v. Levco Construction, Inc. – 2012)

 

The Arbitration Process

– In a typical arbitration, the parties present opening arguments and ask for specific remedies. Both sides present evidence and may call and examine witness. The arbitrator then renders a decision.

– Submission – The act of referring a dispute to an arbitrator.

–       Questions of fact, questions of law, or both to the arbitrator

–       5 things stated in the submission: the identities of the parties, the nature of the dispute to be resolved, the monetary amounts involved in the controversy, the location at which the arbitration is to take place, and the intention of the parties to be bound by the arbitrator’s award

–       Must be in writing and require the matters be submitted within a definite period of time

– The hearing – must specify the issues that will be submitted and the powers that the arbitrator will exercise. Regardless of who establishes the rules, the arbitrator will apply them during the course of the hearing.

–       Restrictions on the evidence and the manner may be less rigid and restrictions may also be less stringent

–       The parties begin as they would at trial by presenting opening arguments to the arbitrator and stating what remedies should or should not be granted à evidence is presented à Witness may be called and examined by both sides à closing arguments àthe arbitrator closes the hearing

– The Arbitrator’s Decision

–       The arbitrator’s decision is called an award, final word on the matter

–       When an appeal has been made by either side of parties, a court’s review on the decision will be much more restricted in scope than an appellate court;s review of a trial court’s decision.

–       More freedoms given through the process of arbitration, less reasons to complain

–       Limited situation only: award violates an established public policy, “bad faith” of the arbitrator’s conduct (prejudiced the rights of one of the parties)

 

Enforcement of Agreements to Submit to Arbitration

– The role of the courts in the arbitration is limited

– One important role is played at the prearbitration stage

– A court may be called on to order one party to an arbitration agreement to submit arbitration under the terms of the agreement.

– Role is to interpreting a contract

– The court must determine what the parties have committed themselves to before ordering that they submit to arbitration

 

The Issue of Arbitrability

– Courts decide whether the matter is one that must be resolved through arbitration

– If the court agrees, then a party may be compelled to arbitrate the dispute

– Usually allowed by courts when there are no excluded such claims by the relevant statute (the state arbitration or the FAA)

– No party will be ordered to submit a particular dispute to arbitration unless the court is convinced

– The courts will not compel arbitration if it is clear that the arbitration rules and procedures are inherently unfair to one of the parties

– The terms of an arbitration agreement can limit the types of disputes that the parties agree to arbitrate (“arbitration is a matter of contract between the parties, and one cannot be required to submit to arbitration a dispute which it has not agreed to submit to arbitration” – NCR Corp. v. Korala Associates, Ltd. -2008)

 

Mandatory Arbitration in the Employment Context

– U.S. Supreme Court has held that mandatory arbitration clauses in employment contracts are generally enforceable

 

Mandatory Arbitration and Class Action Waivers in Credit-Card Contracts

– A class action occurs when a large group of plaintiffs files a lawsuit collectively for a larger amount of damages that they could claim individually

– A class action waiver requires all disputes to be arbitrated on an individual basis, which provides an advantage to the credit card company (American Express Co. v. Italian Colors Restaurant – 2013 – Supreme Court stood by the FAA over the class action waiver)

 

Consumer Arbitration Agreements

– Unequal bargaining power (take-it-or-leave-it basis = adhesion contact)

– Lhotka v. Geographic Expeditions, Inc. -2010 – potent disincentive for an aggrieved client to pursue any claim by GeoEx, therefore, the arbitration clause is so one-sided

– The order denying GeoEx’s motion to compel arbitration is affirmed

 

Setting Aside an Arbitration Award

– After conclusion, the losing party may appeal the arbitrator’s award to a court, or the winning party may seek a court order compelling the one party to comply with the award

– The court’s rule is limited to determining whether there exists a valid award

Fact Finding and Legal Conclusions

– The arbitrator’s fact findings and legal conclusions are normally final

– No matter how obviously the arbitrator was mistaken in a conclusion of law, the award is normally nonetheless binding

– A court will not look at the merits of the dispute, the sufficiency of the evidence presented, or the arbitrator’s reasoning in reaching a particular decision

 

Public Policy and Illegality

– In keeping with contract law principles, no award will be given if it will result in the commission of a crime or would conflict with greater social policy mandated by statute

– For an award to be set aside, it must call for some action on the part of the parties that would conflict with or in some way undermine public policy

 

Defects in the Arbitration Process

-Setting aside an award when there is defect in the arbitration process

-Typified by FAA section 10

  1. The award was the result of corruption, fraud, or other “undue means.”
  2. The arbitrator exhibited bias or corruption.
  3. The arbitrator refused to postpone the hearing despite sufficient cause, refuses to hear evidence pertinent and material to the dispute, or otherwise acted to substantially prejudice the rights of one of the parties.
  4. The arbitrator exceeded his or her powers or failed to use them to make a mutual, final and definite award.

 

Waiver

– A party sometimes forfeits the right to challenge an award by failing to object to the defect in a timely manner

– If a party does not object on number 4 above at the first demand for arbitration, a court may consider the objection waived

– After making the objection, the party can proceed with the arbitration process and still challenge the award in court after the arbitration proceedings have concluded. If, however, a party makes no objection and proceeds with the arbitration process, then a later court challenge to the award may be denied on the ground that the party waived the right to challenge the award on the basis of the defect (???)

 

Conflicts of Law

– Interstate conflicts regard of transaction and each of their own arbitration acts

– Federal law preeminence – Strong federal policy favoring arbitration can override a state’s law that might be more favorable to normal litigation

 

Choice of Law

– The FAA has been interpreted as allowing the parties to choose a particular state law to govern their arbitration agreement – Choice-of-law clause

– U.S. Supreme Court has upheld arbitration agreements containing choice-of-law provisions

 

Disadvantages of Arbitration

– Unpredictable due to: do not need to follow any previous cases, arbitrators do not have to issue written opinions or facilitate a participant’s appeal to a court

– In some, arbitration can be nearly as expensive as litigation

– Discovery usually is not available in arbitration

– During the hearing the parties must take the time to question witnesses whom they would not need to call (???)

Alternative Dispute Resolution (Negotiation and Mediation)

Negotiation and Mediation

Alternative dispute resolution methods differ in the degree of formality involved and the third participant type.

– Negotiation = least formal method without third parties…Mediation = informal but involve the participation of a third party

 

Negotiation

– The simplest form of ADR

– A process in which the parties attempt to settle their dispute informally with or without attorneys to represent them

– Next step after negotiation is usually the dispute-resolution process

 

Preparation for Negotiation (3 elements)

– Documents

– Other evidence

– Witness should be prepared to testify

 

Assisted Negotiation

– Assistance of a third party

– Mini-trials, early neutral case evaluation, facilitation, and summary jury trial

Mini-trials – A private proceeding in which each party’s attorney argues the party’s case before the other party. A neutral third party (adviser and expert) is also present. If the parties fail to reach an agreement, the adviser renders an opinion as to how a court would likely decide the issue. Each party decide whether to settle or to take it to court

Early Neutral Case Evaluation – The parties select a neutral third party to evaluate their respective position. The evaluator then assesses the strengths and weaknesses of the parties’ position and uses it as the basis for negotiating a settlement

Facilitation – Friendly and non-adversarial manner type. A third party assists disputing parties in reconciling their differences. A third party set the schedule and carries offers back and forth if they refuse to face each other. Facilitators are not to recommend solution but a mediator is expected to propose solutions.

 

Mediation

– One of the oldest forms of ADR

– Mediator works with both sides and talk separately as well as jointly

-Emphasizes points of agreement, and helps the parties to evaluate their options

– Although the mediator may propose a solution (mediator’s proposal), he/she does not make a decision resolving the matter. Mediator charges a fee which can be split between two parties

– Some states (e.g. Florida) require undergoing ADR (mediation for most cases)

– Treat in separately form of assisted negotiation because traditionally it has been viewed as an alternative to negotiation.

– Mediators play a more active role than the neutral third parties in negotiation.

– Characteristics of mediation are being combined with those of arbitration.

– Binding mediation – the parties agree that if they cannot resolve the dispute, the mediator can make a legally binding decision.

– Mediation-arbitration – the parties first attempt to settle their dispute through mediation. If no settlement is reached, the dispute will be arbitrated.

 

– Advantages of Mediation: Fewer procedural rules, proceedings can be tailored to fit the needs of parties brings the parties together, and parties choose the mediator

– Disadvantages of Mediation: Mediator fee, informality and the absence of a third party referee, no deadline that would slow down the process, and less willing to make concessions (slow the process or even cause it to fail if one party does not like how the process is going)

Legal System and Small Business

  1. Jurisdiction: the power to speak the law
    1. It is important because it determines who hears the case; if a court doesn’t have jurisdiction, then it can’t hear a case
    2. Venue: the most appropriate location for a trial
    3. It is important because it determines what law applies, or if judges have a certain bent or tendency
    4. Standing: the “front door”
    5. It is important because it determines if someone is a stakeholder in a lawsuit enough to justify seeking relief through the courts
    6. 3 basic judicial requirements to be met before a lawsuit can be brought before a court:
    7. Jurisdiction
    8. Venue
    9. Standing to Sue: harm + causation + remedy
    10. Justiciable controversy: a controversy that is not hypothetical or academic, but real and substantial. A requirement that must be satisfied before a court will hear a case
    11. Subject matter jurisdiction: jurisdiction over the subject matter of a lawsuit
    12. Different from “in personam” jurisdiction because the latter is jurisdiction over a person
    13. In personam jurisdiction: personal jurisdiction over any person or business that resides in a certain geographical area
    14. In rem jurisdiction: jurisdiction over the thing
    15. Service of process: formally notifying the defendant of a lawsuit
    16. Key documents related: complaint and summons
    17. Jurisdiction related: in personam jurisdiction
    18. Diversity of citizenship: plaintiff and defendant are residents of different states; dollar amount in controversy exceeds $75,000. Federal courts can exercise jurisdiction over cases involving diversity of citizenship
    19. Jurisdiction related (subject matter or in personam?): in personam
    20. Diversity of citizenship applies in federal courts.
    21. Long-Arm Statutes: a court can exercise personal jurisdiction over certain out-of-state defendants based on activities that happened in their states; plaintiff must establish that the defendant had sufficient or minimum contacts in their state. International Shoe vs. Washington
    22. They are important because of convenience for the plaintiff, and the plaintiff’s law determines the outcome
    23. Sufficient Minimum Contacts are important to the Long-Arm Statute because it shows that the defendant has sufficient connection to the state for the judge to conclude that it is fair for the state to exercise power over the defendant.
    24. International Shoe vs. Washington: established the minimum contacts standard for the Long-Arm Statute
    25. Sliding scale standard: applied to determine when courts can exercise personal jurisdiction over an out-of-state defendant based on a defendant’s Web activities
    26. Jurisdiction applied: in personam jurisdiction
    27. Concurrent jurisdiction: when both federal and state courts have the power to hear a case (such as in the case of diversity of citizenship)
    28. Exclusive jurisdiction: when cases can be tried in only federal courts or only state courts
      1. Federal jurisdiction: federal crimes, bankruptcy, patents/copyrights, lawsuits against the US, admirality law (seaborne transportation/ocean waters)
      2. General jurisdiction: when courts hear cases involving a broad array of issues
    29. Limited jurisdiction: when court is limited to a specific subject matter, such as probate or divorce
    30. Trial court: original jurisdiction; questions of fact
    31. Appellate court/supreme court: reviewing courts; questions of law
    32. Small Claims Courts: inferior trial courts that hear only civil cases involving claims of less than a certain amount
    33. Jurisdictional limits: limited jurisdiction; informal; few lawyers
    34. Generally: $5,000
    35. In California: $7,500
    36. Three primary stages of the litigation process: pretrial, trial, and posttrial
    37. Three types of attorney fees:
    38. Fixed fees: charged for the performance of such services as drafting a simple will
    39. Hourly fees: charged for matter that will involve an indefinite period of time
    40. Contingency fees: fixed as a percentage (usually 25-40%) of a client’s recovery in certain types of lawsuits, such as personal-injury lawsuits; if the lawsuit is unsuccessful, the attorney receives no fee
    41. Petitioner: plaintiff in a civil action
    42. Complaint: Initial non-motion pleading by a plaintiff
    43. Respondent: defendant in a civil action
    44. Answer: Initial non-motion pleading by a plaintiff?
    45. Affirmative defenses: defendant admits to the truth of the complaint set forth by the plaintiff, but raises new facts to show that he or she should not be held liable for damages
    46. Motion to dismiss: asks the court to dismiss the case for certain reasons; either party can file
    47. Motion for judgment on the pleadings: asks the court to decide the issue solely on the pleadings without proceeding to trial; the judge will grant the motion only when there is no dispute over the facts of the case and the sole issue to be resolved is a question of law
    48. Motion for summary of judgment: asks the court to grant a judgment in that party’s favor without a trial; this can happen before or during the trial; the judge will grant the motion only when there is no dispute over the facts of the case and the sole issue to be resolved is a question of law
    49. Three primary discovery devices used in civil action: depositions, interrogatories, electronic discovery
    50. Three discovery requests made during the litigation process: requests for admissions; requests for documents, objects, and entry upon land; requests for examinations
    51. E-evidence applies to: requests for documents, objects, and entry upon land
    52. Requests for admissions and for examinations apply to parties, while requests for documents, objects, and entry upon land can apply to parties and non-parties alike
    53. The 7th amendment to the Constitution guarantees the right to a jury trial for cases at law in federal courts when the amount in controversy exceeds $20.
    54. A right to a jury trial may be waived; in this event, the judge determines the truth of the facts alleged in the case.
    55. Court-Mandated Arbitration: Mandatory Judicial Arbitration, or Court-Annexed Arbitration; arbitration mandated by the court (Arbitration: the settling of a dispute by submitting it to a disinterested third party other than a court, who renders a decision. The decision may or may not be legally binding)
    56. If arbitration is mandated by a court it is not binding. In the event that one of the parties foes reject the award, the case will proceed to trial and the court will hear the case de novo (from the beginning)
    57. Trial de novo: “from the beginning”; the court will consider all the evidence and legal questions as though no arbitration had occurred.
    58. Important?
    59. Main advantages of court-mandated arbitration: either party can reject the reward if dissatisfied
    60. Main disadvantages of court-mandated arbitration: the rejecting party can be penalized for rejecting the reward (might have to pay for cost of arbitration) so it is often favorable for them to take the reward decided in arbitration
    61. Voir dire: jury selection process
    62. It occurs before a trial
    63. Rules of evidence: whether evidence will be admitted
    64. Relevant evidence: evidence that tends to prove or disprove a fact  in question or to establish the degree of probability of a fact of action
    65. Direct examination: an attorney’s questioning of his/her own witness
    66. Cross examination: opposing counsel’s questioning of a witness
    67. Rejoinder evidence: defense attorney can use this to refute the prosecution’s rebuttal
    68. Rebuttal: presented by plaintiff’s attorney to offer additional evidence that refutes the defendant’s case
    69. Directed verdict:
    70. Jury verdict:
    71. Motion for a new trial: judge will grant if he or she believes that the jury was in error and that it is not appropriate to grant judgment for the other side; usually only when the jury verdict is obviously the result of a misapplication of the law or a misunderstanding of the evidence presented at trial or on the grounds of newly discovered evidence
    72. Motion for judgment n.o.v.: if the jury’ verdict is unreasonable and erroneous, the judge will overturn it and decide in favor of the opposite party
    73. Difference: if a motion for a new trial is granted, the judge does not make a ruling; rather, a new case starts. If a motion for judgment n.o.v. is granted, the judge will make a ruling in favor of the other party
    74. Three stages of posttrial litigation: motions, appeal, enforcing the judgment
    75. Complaint: the pleading made by a plaintiff alleging the wrongdoing on the part of the defendant; the document that, when filed with a court, initiates a lawsuit; brings the case to a court of original jurisdiction
    76. Appellate brief: formal legal document outlining the facts and issues of the case, the judge’s rulings or jury’s findings that should be reversed or modified, the applicable law, and arguments on the party’s behalf; brings the case to a reviewing court
    77. Five options an appellate court has after reviewing a case:
    78. Affirm the trial court’s decision (most often)
    79. Reverse the trial court’s decision (if it concludes that the trial court erred or that the jury did not receive proper instructions)
    80. Remand the case to trial court for further proceedings consistent with the opinion on the matter
    81. Affirm or reverse a decision in part
    82. Modify a decision
    83. Writ of execution: an order directing the sheriff to seize and sell the defendant’s nonexempt assets or property
    84. Issued when the defendant does not have the funds available to pay the judgment
    85. The proceeds of the sale are then used to pay the damages owed, and any excess funds are returned to the defendant.

Possible Marketing Plan for Virgin Air

Overview of the company

Virgin Airline is a United States-based airline that began service on August 8, 2007. The airline’s stated aim is to provide low-fare, high-quality service between major metropolitan cities. San Francisco International Airport is its main hub. The other main hubs are LAX and Dallas Love Field. Virgin America is launched by Sir Richard Branson. Virgin America operates in a range of markets across 200 countries. It’s main mission is to make flying good again. Its main theme and focus is to provide consumers with attractive fares, top-notch service, and innovative amenities that are reinventing domestic air travel. Special feature includes mood-lit cabins with fleetwide WiFi, custom-designed leather seats, power outlets, and a video touch-screen at every seatback offering guests on-demand menus and countless entertainment options.

Virgin America won many awards. Virgin America won best-in-class awards, including: “Best Domestic Airline” in both Condé Nast Traveler’s Reader’s Choice Awards Travel + Leisure’s World’s Best Awards for the past seven consecutive years.”

Facts

  • A service company
  • Started by Richard Bradson
  • Operates in a range of markets across 200 countries
  • California-based airline that is on a mission to make flying good again
  • Innovation in industries
  • innovative amenities that are reinventing domestic air travel.

Offerings

  • Low cost travel with high quality service
  • Featuring mood-lit cabins with fleetwide WiFi,
  • Custom-designed leather seats, power outlets
  • Video touch-screen at every seatback
  • Offering guests on-demand menus and countless entertainment options.

Target Market

  • “Young adults who aspire a stylish lifestyle”
  • Young, urban, tech savvy professionals
  • Ranges from 20-30 years old
  • Lives in urban area and socializes on the web
  • People who have previously been flying other airlines

Virgin America’s target market for the advertising campaign is young people in the age-range of 20-30 who live in urban areas. People in this age-group are exploring adulthood and at every step trying to reach a new level of class and style. The goal of the campaign is to hit the sweet-spot of this segment by showing them that their style can be transferred to the skies.

Competitive Advantage

  • Value (Customer focused, Deliver superior quality, Reasonable pricing)
  • Rare (Risk taking, Strong Leadership)
  • Imitability (Richard Bradson at the core, Company Values)

Virgin Airlines is a younger airline with a more modern look than the traditional and established airlines in the US. The stylish look and feel of flying with Virgin is one of the most valuable sustainable competitive advantages the company has. It is a point-of-difference that the older airlines have a hard time copying.

In addition, Virgin America receives a lot of free publicity and attention due to the popularity of its founder Sir Richard Branson. By also incorporating him in the image of the company, we can build on our competitive advantage and better reach our target market.

Where is our target market?

Virgin America wishes to appeal to the young adult audience and it is therefore essential that the advertising strategy takes into consideration the different  media channels and vehicles that are used by millennials in general and 20-30 year-olds in particular.

In general millennials or generation Y are more hesitant and resistant to advertising influences than any other generation (Valentine and Powers, 2013). This poses a challenge for us in creating a message that appeals to this demographic. The good news is, this generation likes the “different” and Virgin America is that different. Our strategy aims to appeal to the sensory of this generation by using simple, quick and fun advertising that is different from what they have been exposed to before.

One of the best ways to reach Millennials today is through social media. Research shows that no other age-group is as present online and with social media as this age group (Moore, 2012). The main vehicle we will plan for Virgin America is Facebook and Instagram in addition to internet radio channels such as Pandora and Spotify.

We will also recommend Virgin America to reach their target audience through magazines that also appeal to fashion and style, such as Vogue. Millennials are concerned about image and by showing them that Virgin America is the best way to fly in style, we are appealing to this demographic’s view of image (Williams, Page, Petrosky, & Hernandez, 2010). By doing this, we will also show that Virgin is different by choosing media vehicles not traditionally used by the airline industry.

Situational Analysis

Airline Industry

Air travel remains a large and growing industry. It facilitates economic growth, world trade, international investment and tourism and is therefore central to the globalization taking place in many other industries. The industry continues to grow rapidly, but consistent and robust profitability is elusive. Measured by revenue, the industry has doubled over the past decade, from US$369 billion in 2004 to a projected $746 billion in 2015, according to the International Air Transport Association (IATA).

Much of that growth has been driven by low-cost carriers (LCCs), which now control some 25 percent of the worldwide market and which have been expanding rapidly in emerging markets; growth also came from continued gains by carriers in developed markets, the IATA reported. Yet profit margins are razor thin, less than 3 percent overall.

Travel for both business and leisure purposes grew strongly worldwide. Scheduled airlines carried 1.5 billion passengers last year. In the leisure market, the availability of large aircraft such as the Boeing 747 made it convenient and affordable for people to travel further to new and exotic destinations. Governments in developing countries realized the benefits of tourism to their national economies and spurred the development of resorts and infrastructure to lure tourists from the prosperous countries in Western Europe and North America. As the economies of developing countries grow, their own citizens are already becoming the new international tourists of the future. Airlines’ profitability is closely tied to economic growth and trade. Despite this, the airline industry has proceeded along the path towards globalization and consolidation, characteristics associated with the normal development of many other industries. It has done this through the establishment of alliances and partnerships between airlines, linking their networks to expand access to their customers. Hundreds of airlines have entered into alliances, ranging from marketing agreements and code-shares to franchises and equity transfers.

Analysis of Virgin America

Virgin America is a subsidiary of the Virgin Group, which is a venture capital conglomerate, composed of 400 companies worldwide owned by Sir Richard Branson. The concept behind this business model is to infuse each subsidiary with the Virgin brand and core values in order to invest in different business areas. The Virgin brand is intrinsically linked to its owner, Sir Richard Branson. Branson infused the core values of being unconventional, hip, and innovative to each of the conglomerate’s subsidiaries with a keen emphasis on delivering high-quality products for a low price. These core values are present in Virgin America because it provides high-quality travel at a low cost. Virgin America’s primary operations are located in San Francisco International Airport and its headquarters are in Burlingame, CA.Virgin America started its flight operations on August 8, 2007 with an aim to provide low-cost travel with high-quality service between major cities across the east and west coasts.

Two years ago, Porter Gale, Virgin America’s vice president of marketing, relied heavily on the use of social media and “buzz” to amplify the brand. However, The airline is now active on all advertising medium to spread their word across and to create more awareness. From print ads, social mediums, television, web efforts and out-of-home iterations such as billboards and taxi wraps are in the media mix. Not only are customers tweeting about Virgin America on the ground, they are doing it for the sky, due to the recent addition of inflight WiFi.

In 2012, Virgin America has expanded its travel destinations to 13 cities in the U.S. now they gets you to all corners of the world. Currently, Virgin America’s target audience is the tech-savvy, business and leisure traveler. Dedicated to comfort, quality, and convenience; this technologically innovative airline caters to its target audience’s needs and wants. With a primary market of customers 35 and under, Virgin America’s innovative media platform ties in its marketing objectives perfectly to cater to the “Gen-Y” target.

With Virgin America’s vision in mind, the addition of more cities including international destinations will be apart of the long-term goal to reach into prospective markets. With the tech-savvy business and leisure traveler still in mind, Virgin America  plans to give their passengers more choices, destination wise. Not only would more destinations help the target market to grow but it would also allow the company to grow.

Virgin America Make the most of their route map from San Francisco International Airport with low fares and nonstop flights to hot spots like Los Angeles, Las Vegas, New York, and more. Virgin America reports first quarter 2015 earnings $10.5 Million Profit Excluding Special Items

Tenth Consecutive Quarter of Year-over-Year Improvement in Profitability

Distribution

There are two main distributions channels for Virgin America’s tickets. The main one, which accounts for 70% of the Airline’s ticket revenue is the company website, Virginamerica.com. The other 30% comes from online travel agencies, such as Travelocity or Expedia.

Competition

The airline industry is characterized by having high fixed costs and fierce price competition. As a result, airlines created several alliances as means to increase revenue and efficiency while reducing costs. There are three major airline alliances: One world with a market share of 22.7%, SkyTeam with 28.3%, and Star Alliance with the majority of the market share of 37.6%.7 This is key for Virgin America because it’s an independent airline, which means it has no alliances. This factor places Virgin America at a disadvantage when it comes to reducing cost via increased purchasing power or increasing revenue via costumer sharing, as the big three alliances do. Virgin America’s disadvantage is shown in it lower profits compared to airlines that are members of alliances.

Promotion

Because Virgin America’s target market is the “creative class”– young, urban, tech-savvy professionals using smartphones to frequent social media sites, such as Twitter and Facebook–the best place to reach them is online. For promotions and advertising, Virgin America is mainly active in two social networking sites: Twitter and Facebook. Twitter is the main promotional vehicle for Virgin America. It aims to attract new customers in the tech-savvy market with Promoted Tweets, which are advertisements that appear in the feed of people who aren’t following Virgin.This is a good strategy because even though Virgin America has over 300,000 followers, it can increase its revenues via more customers. Moreover, Virgin did a Twitter promotion through Promoted Tweets called “Fly Forward, Give Back”, which resulted in the fifth most successful day in ticket sales. Virgin America aims to create brand awareness, engage customers, and increase emotional bonds by being highly responsive with its followers.

SWOT

Richard Branson and Virgin Inc. have done well financially, but as many other, hit a bump during the recession around 2008 (Finkle, 2011). The thirst for innovation, however has served as one of the company’s biggest strengths and this is also passed on to Virgin America.

Being in an industry with high entry-barriers is serving the company well, and as one of the youngest airline companies, and the only one located in Silicon Valley, CA, there is a lot of room for Virgin to create points-of-difference that can attract a younger market. However, being different can also cause scepticism at Wall Street in which is considered one of the company’s weaknesses.

As Virgin America has expanded, some of their markets have reached maturity in which can also mean an opportunity to make more on those markets as the routes have been established in the minds of the consumers. Capital is something the company needs a lot of, especially due to the increase in labor and airport cost in recent years, in which serves as one of the threats for Virgin as well as other players in the American airline market (CAPA, 2014).

1.      Strengths

  1. Passenger favorite, generated countless accolades
  2. Relatively stable network
  3. Exceptional level of market disruption
  4. Young, single aircraft type fleet
  5. High utilisation and low CASM (Cost per available seat mile)
  6. RASM has improved (Revenue per available seat mile)
  7. Different programs to encourage innovation

2.      Weaknesses

  1. Their differentiated business model is difficult for Wall Street to understand.
  2. Elevated costs
  3. Spotty Profitability
  4. Low widespread investor confidence
  5. Lack of commanding position in its largest markets.

3.      Opportunities

  1. Growing market in the age range of 20-30 year olds (Generation Y)
  2. Expansion of more routes
  3. Certain markets reached maturity
  4. Increase accessibility
  5. Market reaching maturity
  6. Increased social media engagement
  7. New market awareness

4.      Threats

  1. Competing airlines
  2. Flight attendants union representation
  3. Rising labor costs
  4. Personalization of private jets
  5. High cost of terminal/gate fees
  6. Rising cost of fuel

Positioning and vision statement

Suggested Positioning Statement

The moment you step in any of our airplanes, you know it’s a different kind of airline, an airline that keeps your cool style. You’re welcomed by mood-lit cabins, custom-designed leather seats and the most advanced entertainment system in the skies. You feel you are where you should be. The Virgin America experience was designed to be like no other, marrying stylish design and innovative technology. The airline provides upscale flights and gives guests control over their in-flight experience in and elevated style.

Vision Statement:

Within the next 5 years Virgin America aims to be the leading low-cost, high-luxury airline in the United States by expanding flights, its air force and by creating new destinations.

Marketing and advertising objectives

The marketing campaign would be focused on expanding Virgin America current associate/member program called “elevate” and use the power of social medias to enhance the company’s brand and increase the number of young people choosing Virgin America as their preferable airline company. To accomplish this we would utilize several media channels like printed magazines, social media, radio, and smartphone apps like Pandora, Spotify and Apple Music and public relations.

The Main Campaign: Elevate Your Style

For Virgin America’s advertising campaign, we would like to take advantage of the fact that the company has one of the most modern and updated line of airplanes. By targeting the segment of people between the ages of 20-30 that are in the process of entering adulthood and constantly seeking a higher level of wealth and comfort, we will make sure to let them know that flying Virgin America is the only way to maintain the level of style in the air.

Public Relations:

In order for the advertising campaign to be successful, it is essential that the public relations department at Virgin America assist the rest of the marketing department with spreading the message and creating integrated communication. By writing press releases, actively speaking out about the campaign and making sure that inquires and questions from the media regarding the campaign is answered.

Print-Ad:

A print-ad will allow Virgin America to communicate it’s message by using intriguing images and fun, yet informative words. We can easily reach our target market, by putting the ads in magazines that are popular for our target market.

In addition, we will suggest that Virgin America put the ad in fashion magazines like Vogue in order to show how different Virgin is and how serious Virgin is about being the most stylish airline in the American market. An ad like this would also naturally stand out and could therefore lead to more people showing interest in it.

Example of print-ad:

At Virgin America we know you have certain standards down on earth. You shouldn’t have to settle with an airline that doesn’t reflect the cool person we all know you are.

Virgin is the only airline that lets you elevate your style to the skies. With modern airplanes, comfortable seats, sociable environment, fine food and drinks, free WiFi and amazing customer service – We make sure you get to your destination in style.

Don’t let the old airlines tell you how you should fly. Show them how it’s done by booking a flight with Virgin today and use hashtag #FlyingInStyle and @VirginAmerica next time you fly with us. Who knows, you might even win a free roundtrip flight of your choice.”

The text would be all lowercase except for the hashtags and the company name. Since the target audience is constantly online, a new trend seems that in the online environment people don’t care about the text being Capitalized on the beginning of the phrases. This would be an effort of “telling” the target audience that Virgin America is also understands their new “techy” lives.

The bottom part in purple with the text in white is a repetition of the text. This would be in purpose to have a chance to get people read the main objective of the campaign. We know people don’t like to read long blocks of text so that would be an effort to at least get more people aware of the campaign.

Social Media Strategy

Same picture as used in print-ad to repeat the image of Virgin America and the campaign as a whole. We will post the picture using the text:

“At Virgin we elevate your style to the skies. Don’t let the old airlines tell you how you should fly. Show them how it’s done by booking a flight with Virgin today and use hashtag #FlyingInStyle and @VirginAmerica next time you fly with us. Who knows, you might even win a free roundtrip flight of your choice.”

By taking advantage of Facebook and other social media’s sophisticated algorithms, we can target people in the age-group 20-30 living in urban areas. In addition we can target people who have previously checked in at major airports or even other competitor airlines. As these people scroll down on their page, a sponsored content post will show up from Virgin America with the above message and picture.

Radio Ad

(Sound of glasses and chatter in the background to make it seem like a cocktail-party). Narrator (Richard Branson): “This might sound like one of your regular cocktail parties, but It’s just our 2pm flight from Los Angeles to New York. Don’t let the old airlines tell you how you should fly. Show them how it’s done by booking a flight with Virgin America today and use hashtag #FlyingInStyle next time you fly with us to to enter a chance to win a free round-trip ticket of your choice. Elevate your style, with Virgin.”

Pandora/Spotify

Smartphone apps like Pandora and Spotify now are on the industry competing with radio and other media. The advertising in those apps doesn’t change much for one app to another. It plays a few songs and then it plays some ads. The advantage is that they stop the songs you are listening and asks for an interaction on the device. The ad could be very similar to the Radio Ad but tweaked to make it fit with the new technology:

(Sound of glasses and chatter in the background to make it seem like a cocktail-party). Narrator (Richard Branson): “This might sound like one of your regular cocktail parties, but It’s just our 2pm flight from Los Angeles to New York. Don’t let the old airlines tell you how you should fly. Show them how it’s done by booking a flight with Virgin America today and use hashtag #FlyingInStyle next time you fly with us to to enter a chance to win a free round-trip ticket of your choice. Elevate your style, with Virgin. Tap the banner to become an Elevate member now”.

Additional Promotional Campaigns

  1. Excess capacity
    1. Promotional group discounts for specific months
    2. February, March, June, October, November/December

Measuring Success

Social Media

A majority of industrial companies are having trouble measuring social media Marketing ROI. They know the importance of social media marketing but they do not know how to measure the effectiveness. Too many companies measure social media marketing success by only counting “Likes” and “Followers.” However, it is only the part of measuring success in social media marketing. Getting many Followers on Twitter, Likes on the Facebook page, Views and Subscribers on the YouTube channel is important part of measuring the success because it is the beginning of the measurement. Yet, these numbers do not automatically connect to the performance. It is important to check the interaction with companies’ message. Clicks on links in the social media posts, shares on Facebook and LinkedIn, Comments on the Facebook and LinkedIn posts are good measuring stick for actual engagement. Finally, if people took action because of the message provided through the social media would be the final measurement of impact of social media marketing efforts. It will tell you how many people took the next step to enter the lead generation funnel and join the marketing database. The activities include: Registrations for content downloads and webinar registrations, and customer satisfaction survey.

Radio/Magazine Ads.

It is important to select the radio stations and magazines that are popular among age group of 20-30. It is important to compare the traffic of the selected age group before and after the ad campaign started. For magazine advertising campaign, it would be determined easily by including the coupon that customers can redeem for a discount or other benefits. However, it is generally not the case for the airline advertisements for magazine. Magazine advertisement usually used to increase of brand recognition. It is hard to find the short-term effect but if the company invests long enough time to monitor the brand recognition improvement, the company can assess the effectiveness of the advertising campaign. Posttesting is a common for advertisers to measure the effectiveness of ads. We can recommend using inquiry tests “to measure advertising effectiveness on the basis of inquiries generated from ads appearing in magazine.” We can also recommend using recognition tests (Gfk-Starch) to determine recognition of “print ads and comparing them to other ads of same variety or in the same magazine (Belch and Belch, p 609, 2012).” For radio ads, we can suggest doing concept testing to explore the targeted consumer’s response to a potential new ad on focus groups in the target market which is 20-30 years range lives in urban area.

Advertising is not an exact science. You cannot determine how many sales dollars are generated by each advertising dollar you spend. This method of measuring the effectiveness of advertising is just rough estimation of whether ads are hitting the mark.

Overall, it is more important to focus on the number of returning customers to fly Virgin America for young age group. Retention rate is more important than rate of sales improvement in certain promotion.

Media Objectives

Our target markets for the Elevate Campaign for Virgin America Airlines are young adults between the ages of 18-34. As these young men and women transition from student to professional why shouldn’t they transition the way they travel also? Becoming an Elevate member with Virgin America allows them to enjoy the conveniences of a Virgin America flight such as redesigned interior decorations, mood lighting to enhance the travel atmosphere experience, an inflight bar to make socializing on Virgin Airlines incredibly unique and a refreshing experience, with Wi-Fi onboard they could never lose a moment to keep in touch and easily share and network their moment-and yes make their friends jealous.

With our media objectives we want to generate traffic to the website where people can sign up for the Elevate program-a FREE PROGRAM by the way-and our call to action will be to fly to the cities that Virgin America operates in.

We want to make flying fun again for the growing demographic of young professionals entering and dominating the future workforce in the USA. By having a creative campaign that attracts our target market, our last objective will be to improve overall brand equity for Virgin America (Wu, Wen, Dou, and Chen, 2015).

Cities Virgin America operates in:  (Population stats as of 2012 via CLR Search.com)

  • Austin, TX – 33.95% of population is made up of ages 18-34 (300,593)
  • Boston, MA – 40.44% (261,228)
  • Chicago, IL – 30.2% (821,138)
  • Dallas, TX – 27.69% (348,340)
  • Lauderdale, FL – 22.27% (38,391)
  • Honolulu, HI – 21.06% (82,289)
  • Las Vegas, NV – 23.15% (139,707)
  • Los Angeles, CA – 28.14% (1,092,957)
  • Maui/Kahului, HI
  • New York City, NY – 24.88% (2,091,412)
  • New York, EWR, NJ – 24.88%
  • New York/JFK, NY 24.88%
  • New York/LGA, NY 24.88%
  • Orlando, FL – 30.58% (78,126)
  • Palm Springs, CA – 15.28% (7,071)
  • Portland, OR – 29.32% (178,692)
  • San Diego, CA – 30.98% (994,767)
  • San Francisco, CA – 30.84% (258,267)
  • Seattle, WA – 32.4% (211,379)
  • Washington, DC, WAS – 37.13% (244,646)
  • Washington DC/DCA, DC – 37.13%
  • Washington DC/IAD, DC – 37.13%

Determining the success of our campaign will be to see an increase of new Elevate Memberships with Virgin America. The service is free to join and lasts a lifetime. We want to get more people flying in style with Virgin Airlines. Cost, Tracking, and ROI will be the most effective way we will be able to determine success for online media campaigns.

The costs have been set to run ads on a few of the major social media platforms. By tracking the interaction from the social media site that gets directed to the Virgin Airlines sit will we be able to determine how effective any one particular ad is in its respective medium. Every month a team from the agency will evaluate which ads created the most traffic and how it can be improved and changed if needed at all, and adjust the ads that did not generate sufficient traffic.

To evaluate the success of print ads it will be keen to focus on the amount of sales boosted (or if they’ve plateaued-or worse dropped) for flights and promotions advertised with our print ads. And also the amount of traffic drawn from the magazine’s target audiences who access the site and Elevate memberships from either their personal computer, or mobile device.

The success effectiveness for a billboard depends on the measurements provided by the billboard rental company. They are able to provide information about a certain billboard’s location but however the ad is what must determine if it’s a success of not by whatever the call to action from the ad. Our billboard ads will focus on promoting the Elevate memberships and the idea behind how great life can be to fly Virgin Airlines.

Frequency

Online Per month:

  • Facebook ads will pulse every two weeks for the six months.
  • Pandora ads will pulse every two weeks for the six months.
  • Spotify ads will pulse every two weeks for the six months.
  • Twitter ads will pulse for two weeks for the six months.
  • Google AdWords will run with the Search Network for everyday of the campaign during the six month duration.
  • Google AdWords will run with the Display Network for everyday of the campaign during the six month duration.

Continuity:

  • For six months out of a full year the ads will for the Elevate Your Style campaign. The months being; February, March, June, October, November & December.

Evaluating Media

Local Radio Stations

  • The strengths of local radio in major cities are, large audiences reached by way of public transit with radio station where our ad plays, easy listening during commuting hours, also easy listening when at work, and when a taxi cabs is taking fares and has the radio on.
  • The weaknesses of local radio in major cities are, people who don’t listen to the radio, satellite Radio preference over local AM or FM stations, loss of signal or reception due to weather interference.
  • Billboard Ads major strengths: In major cities billboards have a high reach potential
    dependent on placement to traffic heavy locations, billboards at airports are common for airlines to advertise their flights, something easy to read and comprehend, especially for passengers in the car.
  • Major Weaknesses for billboards can be; a driver could be in a rush to see the ad, the driver should always keep their eyes on the road, so an ad that doesn’t grab too much of the attention of the driver so as to avoid accidents, graffitti could damage the billboard, or another billboard could go up directly in front of the ad, thus lessening the amount of people the ad is exposed to

Online Social Media Ads

  • Strengths for Facebook: High number of active users, easy to share and like and comment, advertising with Facebook can be very specific to area codes to target audiences
  • Weaknesses for Facebook; users could feel overwhelmed by the amount of ads that pop-up in their feeds, users could be running adblock software for their internet browsers
  • Strengths for Instagram are; high number of daily users, easy to share and tag friends in, a great platform for businesses to connect with their customers, easy to use interface on mobile platforms.
  • Weaknesses for Instagram are; high amount of traffic could pollute the ad, users might feel offended by seeing an ad show up on their newsfeed, cost of advertising on instagram is incredibly high.
  • Strengths for Google AdWords are; easier SEO (Search Engine Optimization) options to make keywords and names easier to find and have a higher chance of showing up in search engines, heavily trafficked search engine, easy connection and integration with many other social media platforms.
  • Weaknesses for Google AdWords, high clutter from competing airlines into keyword search engines, timing to make sure relevant keywords are used and updated regularly
  • Strengths for Twitter; are high traffic, if it trends on twitter it’s trending on the internet, easy feedback from public, Richard Branson is a very active public figure
  • Weaknesses for Twitter; if something negative shows up it can go against the company in bad taste and easily be shared and trending
  • Strengths for Youtube; video sharing platform can easily share and send short enjoyable content across multiple social media platforms simultaneously, high traffic, can organize a video into more keyword demographics instead of just an airline
  • Weaknesses of Youtube, if a video is too long people might not want to watch it.

Print Ads

  • Strengths for Print Ads
  • Condé Nast’s audiences fit right into the 18-34 year old demographic, a print ad lasts forever (so long as the page itself doesn’t get torn up, burned, etc), with the rise of media integration in magazines it can be very easy to send someone from a print ad to a URL via their mobile phone, people like seeing pictures, so give them what they want.
  • Weaknesses for Print Ads; people might look over it, people read less so magazine circulation will slowly drop, could be too cluttered with copy and information, and it could send the wrong image.

Mediums for our campaign

Online Social Media

Google AdWords

  • Cost of using Google AdWords Search Network:
    • $1-2 ($168 for six months)
  • Cost of using Google AdWords Display Network:
    • Average CPC is under $1
  • Using Google AdWords would go towards utilizing SEO for the terms “Elevate” “Virgin” “Virgin America” “Virgin Airlines”

Facebook

  • 7% of Facebook users are between the ages of 25-34.
  • Average time spent on Facebook is 20 minutes
  • 50% of 18-24 year olds check Facebook when they wake up.
    • Cost Per Click (CPC) – $0.24
    • Cost Per 1,000 Ad Views (CPM) – $0.66 as of July 2013
  • The goals of the Facebook ad space would be to target our audience in the major cities, through using location management services where Virgin operates, through promotions for the airlines, flights, prices, and dates.
  • Currently the Virgin America Facebook page has 639,867 likes. The goal for the 6 month campaign will be to increase those likes to 1 million likes.

Instagram

  • Instagram is incredibly selective, but their ad space has ranged between $350,000 to $1 million.
  • Currently the Virgin America Instagram account has 89.4 thousand followers. Ideally it would be great to reach half a million if not more for that account over the 6-month campaign.

Twitter

  • Costs for Twitter advertising:
    • Promoted Tweets $0.50 – $4.00
    • Promoted Accounts $0.50 – $4.00
    • Promoted Trends $200,000 per day
  • Currently the Virgin America Twitter account has 85 thousand followers.

Youtube

  • Pay-per-view of ad with average ranging $0.10-$0.30
  • The Virgin America Youtube Account currently has 22,284 subscribers.
  • Their most viewed video is the Virgin America Safety Video #VXsafetydance at 10,946,723. The video was uploaded on the 29th of October 2013.

Pandora Online Radio

  • In 2014 Pandora had 815 active listeners and 250 million registered users.
  • 175 million in USA
    • 115 million access via smartphone
  • Pandora Pandora typically shows seven display ads per listener hour and runs 2.5 audio ads (of 15 or 30 seconds) per hour. Users might also see a video ad.
  • Visual ads, on a CPM basis, sell for $5-$7; audio ads, $8-$12; and video ads, $15-$25. The sell-through rate — the proportion of premium advertising is sold directly by Pandora — is higher on desktop than mobile.

Spotify Music Listening

  • As of June 2015 Spotify had an estimate of 75 million active users.
  • Spotify advertising must have the advertiser invest a minimum of $10,000 into one or more of their formats:
    • Audio Ads – these include campaign cover art and clickable scrolling text
    • Display Ads – Leaderboard and skyscraper ads
    • Billboard Ads – Behaves like a screensaver
    • Homepage takeovers – Huge, completely unavoidable impression
    • Branded Playlists – Includes brand logo, custom text, and optional link to campaign
    • Lightbox – Overlay window that displays after user clicks ad
  • Advertiser Page – Microsite within Spotify player
  • Small Town radio ad repeated at 20 times per week would cost around $500 per week.
  • Major City radio ad repeated at 20 times per week would cost around $8,000 per week.
  • Major cities would be: Austin, TX | Boston, MA | Chicago, IL | Dallas, TX | Ft. Lauderdale, FL | Honolulu, HI | Las Vegas, NV | Los Angeles, CA | Maui, HI | New York City, NY | Orlando, FL | Palm Springs, CA | Portland, OR | San Diego, CA | San Francisco, CA | Seattle, WA | Washington, DC

Print Magazine(s)

  • Working with Condé Nast will be a great outlet to reach the target audience for the ‘Elevate Campaign’. Because Virgin Airlines is not your plain plane, nor is its flying experience just like ‘blah-blah airlines’, targeting the student and young professional would be great to encourage them to fly with a style that really captures what they’re about.
  • 1 Page Ad into Vogue Magazine.
    • We will insert variations of our “Elevate Your Style” print ad into Vogue Magazines for the months of February, March, June, October, November/December.
      • Total Cost for Vogue Print Ad for six months: $1,134,000
    • The reason we will run ads in Vogue Magazine is to go where no other airlines goes, promoting their brand in a fashion magazine.
  • 1 Page Ad into GQ Magazine.
    • Total cost for GQ Magazine Print Ad for six months: $1,113,246
    • The same strategy with Vogue’s ads will be used for GQ. Being the only airline promoting itself in fashion and lifestyle magazines. We want these readers to not only elevate their fashion sense but also the way they travel. They’re becoming professionals, so why not fly like one too.
  • 1 Page Ad into Details Magazine.
    • Total cost for Details Magazine Print Ad for six months: $641,010
    • The same strategy with GQ magazines, except adjusted to the target audience of Details.
  • 1 Page Ad into The New Yorker.
    • Total cost of 1 Page Ad for New Yorker ad for six months: 1,045,488
    • The same strategy but with an ad more catered to the target audience of The New Yorker.
  • 1 Page Ad into Vanity Fair.
    • Total cost of 1 Page Ad for Vanity Fair ad for six months: $1,339,530
    • The same strategy but with an ad more catered to the target audience of Vanity Fair.

Billboards

  • Billboards typically charge a rental fee for 4-weeks in, the rental fee may vary depending on size of billboard and city. A monthly cost for a billboard would be the minimum amount of billboards used by the cost per billboard.
  • Average 700-sqft billboard ad will cost around $500
    • So if 12 billboards are used in a city like Los Angeles we could look at a cost of around $60,000 per month.

Media Budget Breakdown

  • Google AdWords Search Network – $168 (for six months)
    Google AdWords Display Network – $X (dependent upon number of clicks at $1 per click)
  • Facebook – cost per click is $0.24. Our target will be to have 1,000,000 likes meaning the like button would require 360,133 clicks. A Facebook ad budget of $86,431.92 to meet that goal.
  • Twitter – $840 to promote an account for two weeks every month for the six month duration.
  • Youtube – $0.30 per view by amount of views for video content. If our goal for a video will be to reach 1 million views per month for the 6 month duration of the program then the cost would be: $1,800,000
  • Pandora audio ad- $1,080 at once per day for three months spaced out of the six total.
  • Pandora visual ad- $630 at once per day for three months spaced out of the six total.
  • Spotify ad – $10,000 minimum to advertise with Spotify
  • Print Magazine total cost: $5,273,274

Billboard Costs for 17 major cities:

  • Radio Costs for 17 major cities: est. $2,160,000

Total Media Budget: $9,332,423.92

Agency Cost (15%): 1,399,863.59

References

Advertising on Facebook: https://www.facebook.com/business/products/ads

Belch, G.  E., & Belch, M.  A.  (2012).  Advertising and Promotion: An Integrated                                    Marketing Communications Perspective (9th ed.).  New York, NY: McGraw-Hill.

CAPA. (August 20, 2014). Virgin America SWOT Analysis Part 2: Opportunities for an                           IPO in a more benevolent environment. Retrieved from                      http://centreforaviation.com/analysis/virgin-america-swot-analysis-part-2-opportunities-for-an-ipo-in-a-more-benevolent-environment-182675

Finkle, T. A. (2011). RICHARD BRANSON AND VIRGIN, INC. (). Arden: Jordan Whitney                     Enterprises, Inc. Retrieved from http://ezproxy.lasierra.edu:2048/login?url=http://search.proquest.com/docview/886432663?accountid=25308

Magazine Ad Pricing for Condé Nast. Retrieved from http://www.condenast.com/brands

Moore, M. (2012). Interactive media usage among millennial consumers. The Journal of                            Consumer Marketing, 29(6), 436-444.                                                                                         doi:http://dx.doi.org/10.1108/07363761211259241

Noyes, David (2015) Top 15 Valuable Facebook Statistics on zephoria.com Retrieved

From:https://zephoria.com/top-15-valuable-facebook-statistics/

Population Statistics for major cities gathered from the United States Census Bureau *http://www.census.gov/

Prosser, Mark (16 July 2013) How Much Does Facebook Advertising Cost? on

FitSmallBusiness retrieved from: http://fitsmallbusiness.com/how-much-does-facebook-advertising-cost/

Prosser, Mark (2013) How Much Does Billboard Advertising Cost? on FitSmallBusiness

retrieved from: http://fitsmallbusiness.com/how-much-does-billboard-advertising-cost/

Smith, Craig (2015) By the Numbers: 45 Interesting Pandora Statistics on expandedramblings

via: http://expandedramblings.com/index.php/pandora-statistics/

Spotify | For Brands retrieved from: https://www.spotify.com/us/brands/

Valentine, D. B., & Powers, T. L. (2013). Generation Y values and lifestyle segments. The                        Journal of Consumer Marketing, 30(7), 597-606.                                                                                    doi:http://dx.doi.org/10.1108/JCM-07-2013-0650

Williams, K. C., Page, R. A., Petrosky, A. R., & Hernandez, E. H. (2010).                                                  Multi-generational marketing: Descriptions, characteristics, lifestyles, and attitudes.                     The Journal of Applied Business and Economics, 11(2), 21-36. Retrieved from                     http://ezproxy.lasierra.edu:2048/login?url=http://search.proquest.com/docview/815978214?accountid=25308

Wu, J., Wen, N., Dou, W., & Chen, J. (2015). Exploring the effectiveness of consumer creativity

in online marketing communications. European Journal of Marketing, 49(1), 262.

Retrieved from http://ezproxy.lasierra.edu:2048/login?url=http://search.proquest.com/docview/1649066900?accountid=25308

Business and the Constitution

Section 1. The Constitutional Power of Government

  1. Revolutionary War à States adopted the Article of Confederation àStates had the authority to govern themselves àFederal Government could exercise only limited powers
  2. National Economy Crisis (1789) happened because state laws are interfere each other and create lack of free flow of commerce between states àNational Convention calls àNew form of government formed
  3. Federal Form of Government National government and state government share sovereign power
  4. Federal Powers – Enumerated Powers – implied power to undertake actions necessary to carry out its expressly designate powers
  • All other powers are reserved to the States – 10th Amendment to the U.S. Constitution
  1. Regulatory Powers of the States
  • Sovereignty (Independence) àRegulate Affairs (10th Amendment)
  • State Regulatory Powers à Police Powers
  • Police Powers – Regulate private activities to protect and promote the public order, health, safety, morals, and general welfare
  • Local government including cities also exercise police powers pursuant (follow) to a state police power
  1. Relations among the States
  • Privileges and Immunities Clause and the Full Faith and Credit Clause
  1. The Privileges and Immunities Clause (Article IV Sec. 2)
  • Prevents a state from imposing unreasonable burdens on citizens of another state
  • Regard to means of livelihood or doing business (Seeking employee or accessing the court system)
  • Substantial reason for treating foreign state resident differently
  • The foreign state must also establish that reason for the discrimination is related to the state’s ultimate purpose in adopting the legislature or regulate activity
  1. The Full Faith and Credit Clause (Article IV Sec. 1)
  • Public Acts, records, and judicial proceeding of every other states
  • Only to civil matters
  • Ensure that rights established under deeds, wills, contracts and similar instruments in one state will honor by other states
  • Ex) Properties right enforced in all states, same-sex marriage
  1. Separation of Powers – Checks and balances
  • Congress (legislative branch)can enact a law, but executive branch has veto that law
  • Executive branch is responsible for foreign affairs, but treaties with foreign government require advice and consent of the Senate.
  • Congress determine the jurisdiction of federal courts, President appoint federal judge with the advice and consent of the Senate. Judicial branch has the power to hold action of other two branches unconstitutional.
  1. The Commerce Clause (Article I Section 8)
  • “To regulate commerce with foreign Nations and among states…”
  • To prevent states from establish laws and regulates that would interfere with trade and commerce among the states, Federal Government has power to regulate interstate commerce.
  • Federal government regulates both state and local commerce affairs
  • Ever since 1824, Federal supreme court regulate within the state policy (Gibbons v. Ogden)
  1. The Expansion of Nation Powers under the Commerce Clause
  • More involved in interstate policy with Civil Rights
  1. The Commerce Clause Today
  • 1995, congress had exercised its regulatory authority under the commerce clause
  • Medical Marijuana and the Commerce Clause – State medical marijuana laws do not insulates the uses from federal prosecution.
  • The “Dormant” Commerce Clause – State do not have the authority to regulate interstate commerce àNegative Aspects
  1. The Supremacy Clause and Federal Preemption (Article VI)
  • When there is a direct conflict between a federal law and state law, federal law wins
  1. Federal Statutes may specify preemption
  • Medical Device Amendments of 1976
  1. When the statutes does not expressly mention preemption
  • Congressional intent to preempt will be found if a federal law regulates an activity will be found if a federal law regulate activity is so pervasive (detailed), comprehensive, or detailed, statutes have no room to regulate
  1. The Taxing and Spending Power (Article I Section 8)
  • Uniformity in taxation among the states
  • Congress tried to indirectly regulate by taxation, if tax measure is reasonable, it generally allow by the courts
  • Spending power – for general welfare as long as it does not violate the Bill of Rights

Section 2. Business and the Bill of Rights

  1. U.S. Constitution – originally 12 Amendments and 10/12 are from Bill of Rights 1791
  2. Limits on Federal and State Government Actions
  • Originally, limits only the power of national government but 14th Amendment incorporated most of the right to state action
  1. 14th Amendment – 1868 after Civil War, “due process” 5th Amendment apply to state power. 4th Amendment, “seizure of properties” apply for both state and federal
  2. Judicial Interpretation
  • Bill of Rights is written in general term. Supreme court is the one interpret the constitution
  1. Freedom of Speech – 1st Amendment
  2. Reasonable Restriction
  • A balance must be struck between a government’s obligation to protect its citizens and those citizens’ exercise of their rights
  • Case by case
  1. Content-Neutral Laws – regulate the time, manner, place not content of speech
  • The restriction must be aimed at combating some societal problem (crime or drug abuse) not the conduct
  • Nude dancing as message is ok whereas other public nudity is not
  1. Compelling government interest – Laws that restrict the content of speech
  • Disallow sex-offender from using Social Media to restrict them from access to minors
  1. Corporate Political Speech – Non-profit or other for-profit organization can express their political views
  2. Commercial Speech – Advertisement and marketing involves only their commercial interest
  • Protections are less extensive than non-commercial speech
  1. Restriction on Advertisement
  • Misleading
  • Roadside beautification bans certain Billboard Ad.
  • 3 Criteria for commercial speech

o   Must seek to implement a substantial government interest

o   Directly advance that interest

o   Go no further than necessary to accomplish its objective

  1. Unprotected Speech
  • Violating criminal laws
  • Harms the good reputation of another, or defamatory speech
  1. Obscene Speech test
  • Average person finds that it violates contemporary community standards
  • The work taken as a whole appeals to a prurient interest in sex
  • The work shows patently offensive sexual conduct
  • The work lacks serious redeeming literary, artistic, political, or scientific merits
  1. Online Obscenity
  • Communication Decency Acts (CDA -1996), Child Online Protect Act (COPA-1998) à Failed
  • Children’s Internet Protection Act (CIPA -2000)

o   Public School and library to install filtering software

o   Meta tags – ban certain keywords

  1. Virtual Pornography – protect from promoting purported material
  2. Freedom of Religion
  • Establishment Clause – Government can’t establish any religion
  • Free Exercise Clause –Prohibit the free exercise of religious practices
  1. Establishment Clause
  • Applicable Standard – No praying, no state sponsored tuition vouchers at religious schools, teaching creationism instead of evolution theory at public schools
  • Religious Display – Not apply for historical significant display
  1. Free Exercise Clause
  • Restriction must be necessary – must have a compelling state interest
  • Ex. Mennonite’s steel tires tend to destroy newly surfaced roads. Appellants won since no much evidence that cleats really damaged the road, however, the state tried to ban it
  • Public Welfare Exception

o   Vaccination requirement à Public Safety is in danger

o   Muslims àScarf over the head in court setting is dangerous (hiding weapons)

  1. Searching and Seizures
  • 4th Amendment protects “Rights of the people to be secure in the persons, houses, papers, and effects.”
  • Must obtain search warrant from judge to public official authority
  1. Search Warrants and Probable Clause
  • Law enforcements officers must convince judges that they have reasonable grounds and evidence of illegality
  • Prohibits general warrants

o   Particular description required

o   Cannot extend beyond the description

  1. Searches and Seizures in the Business Context
  • Government inspectors do not have right to enter business premises without a warrant
  • Lawyers and accountants usually have other business information à Searching them require warrant as well
  1. Self – Incrimination
  • 5th Amendment – No person “shall be compelled in any criminal case to be a witness against himself”
  • Cannot be force to give testimony
  • 14th Amendment extend the protection to state courts
  • Only to natural persons – no corporations nor partnerships
  • Sole Proprietors and sole practitioners cannot be compelled to produce their business records à They have full protection against self-incrimination

Section 3. Due Process and Equal Protection

  1. Due Process
  • 5th and 14th Amendments provide no person shall be deprived “of life, liberty, or property, without due process of law.”
  • Due Process have two aspects – Procedural and substantive
  1. Procedural Due Process
  • Any government decision to take life, liberty, or property must be made equitably
  • Proper notice and an opportunity to be heard
  • Fair Procedure – have an opportunity to object to a proposed action before an impartial and neutral decision maker
  1. Substantive Due Process
  • Focuses on the content of legislation rather than the fairness of procedure
  • Limits what the government may do in its legislative and executive capacities
  • If something (law or government action) limits fundamental right, they must have legit and compelling reason
  • Fundamental Right – interstate travel, privacy, voting, marriage, and other 1st Amendments related actions
  • If not involving fundamental rights, a law action does not violate substantive due process
  1. Equal Protection Clause
  • 14th Amendment – a state may not “deny to any person without its jurisdiction the equal protection of the laws.”
  • 5th Amendment – Equal Protection Clause applicable to the federal government as well
  • When a law action limits liberty of all à Violates substantive due process
  • When a law action limits liberty of some à Violates equal protection clause
  • Distinguish among individual (discrimination) à Classification à Examine the classifications
  1. Strict Scrutiny
  • If a law or action prohibits or inhibits some persons from exercising a fundamental right, the law/action will be subject to “strict scrutiny” by courts
  • Must promote a “compelling state interest” to avoid strict scrutiny
  • If classification is based on a suspect trait, race nationality, or citizenship status, must promote a compelling state interest
  • Compelling State Interest includes remedying past unconditional or illegal discrimination but do not include correcting the general effect of “society’s discrimination.” (???)
  1. Intermediate Scrutiny
  • Based on gender or against illegitimate children
  • Must be involved substantially related to important government objective
  • EX. Males and females not situated equally in pregnancy of teenagers.  Harsher punishment for men apply in rape of minors
  1. Rational Basis Test
  • Valid if any conceivable rational based on which the classification might relate to a legitimate

Section 4. Privacy Rights

  1. In the 1960s, supreme courts endorsed constitution to protect individual privacy rights – 1st, 3rd, 4th, 5th, and 9th
  2. Federal Statutes Affecting Privacy Right
  • Personal Information à Freedom of Information Act (1966) – People can access governmental contained personal information
  • Privacy Act (1974) à right to access such information àNumerous laws protects private rights with financial transaction, electronic communication, and organization stored information.
  • Newly passed Cyber laws
  1. Pretexting
  • Process of obtaining information by false members
  • To clarify, congress enacted Telephone Records and Privacy Protection Act.

o   Federal crime to pretend to be someone else and make false representation

  1. Medical Information – HIPAA – protects health information
  2. The USA Patriots act (2006)
  • Can track some internet activity and general financial information, and student information to prevent from possible terror attack

Consumer Behavior

Marketing 3

Consumer Behavior

  1. Consumer Behavior
    1. Marketing and customers are directly related. Therefore, it is necessary for marketers to know about consumer behavior.
  2. Influences on Buyer Behavior
    1. There are other influences other than 4Ps
    2. There are few inner stimuli of consumers that controls in purchase decision
    3. Marketers really need to know those stimuli
  3. Cultural
    1. Race, city/rural, generations…
    2. Shared history, media, language…
    3. Value, customer, meaning…
  4. Society
    1. Belonging aspiration and dissociative (does not want to belong to any), family and friend (viral marketing), opinion leader (yelps…)
    2. Reference Group: Have influence to group that they are belonging. Very loyal to their group
  5. Personal Factors
    1. Their personal behavior has influence on their consumer behavior
    2. Life cycle stage (kids, marriage, young)
    3. Occupation, life style, personality, self-concept
  6. Psychological Factors
    1. Motivation: Like Maslow’s needs, there are other researches on the buying decision process of consumer à Qualitative research
    2. Perception: Making sense of world around you
    3. Learning: Previous experience will change the attitude towards the products in a future
    4. Beliefs/Attitudes
  7. Consumer Behavior Categories
    1. High Involvement: takes longer to decide (Computer, car)
    2. Low Involvement: takes short amount of time to decide (Salt, sugar)
  8. Decision Making
    1. Adoption Process
      1. Consumer thought process
        1. Relative advantage: advantages of DVD player compare to VCD player
        2. Compatibility: Can this new DVD player have function of VCD player as well?
        3. Complexity: Is it easy to use?
        4. Divisibility/trial ability: Is it not difficult to adapt new things?
        5. Observability/communicability: Is it relatively known product or not?

 

Information is the key of success in marketing

Sources

  • Internal Databases: Sales records, transaction records, consumer warranty cards, complaints…
  • Marketing Intelligence: Monitoring the environment, especially competitors’ information
  • Marketing Research: Syndicated/retail or media audits

Marketing Information

  • Secondary: Using the previously existed data
  • Primary: Newly gathered data
  • Exploratory: Understanding of hypothesis is the key
  • Descriptive: Objectively experimenting and gathering of data
  • Causal: Based on the result and trying to find the cause

Marketing Research Process

  • Defining the problem and research objectives à Developing the research plan for collecting information à Implementing the research plan – collecting and analyzing the data à Interpreting and reporting the findings
  • Qualitative
    • Flexible, Dynamic, Creative/Why?
    • Product, Concept development
    • Use it as precursor when you do survey study
    • Lengthy one or one interview or focus in group discussion
    • Open ending question, probing
  • Quantitative
    • Survey based closed ending question
    • Administration: Personal Interview, Telephone type interactive or self filling mail or email
    • Content is important
      • Awareness: Cued / uncued (Choose the product that you are aware of?)
      • Belief/Knowledge:
      • Preferences/Attitudes
      • Behavior: How often?
      • Demographic
    • Design
      • Scaling
      • Wording
      • Ordering
    • Sampling
      • Random: Simple random or stratified random (Classifying the group before and divided into group but collecting the experimental people randomly within previously selected requirements)
      • Cluster
    • Observation Method
      • Casual observation
      • Systemic observation: Setting up of specific scenario and observe

What is marketing?

What is marketing?

  • No right or wrong answer
  • Organizational function: To fulfill customer’s needs by providing satisfied product, price, place, and promotion
  • Process: Social, managerial process, and benefiting both individual and groups needs/wants

Earlier eras of Marketing

  • Production orientation: If there are demands, I can sell the product to them if I make it
  • Product orientation: If I make a better product, I can sell it to them
  • Sales orientation: It is important to make a good product, but it is also important to reach out to possible buyers
  • FYI: Marketing myopia means ignoring buyers’ needs bur rather focusing on product itself too much

The marketing era

  • Marketing orientation: It is new idea of selling that the producer focusing on the benefits of clients/buyers
  • We are not selling X product, but rather we are fulfilling the needs of Y clients
  • Marketing = relationship management

The selling concept vs. the marketing concept

  • The selling concept: factory (starting point) – existing products (focus) – selling and promoting (means) – profits through sales volume (ends)
  • The marketing concept: Market (starting point) – customer needs (focus)  – integrated (means) marketing – profits through customer satisfaction (ends)

Relationship management/ Life Time Value (LTV) of customer

  • It is easier to keep the existing clients than getting new clients
  • It is important to focus on lifetime value because one mistake will hurt your brand such as credit card or car companies right away (social media, internet era)

Core-Marketing Concepts

  • Markets – needs, wants, and demands – marketing offers (products, services, and experiences) – values and satisfaction – exchange transactions, and relationship – Markets
  • Customer’s needs and wants will trigger their purchasing power which will eventually converted to demand
  • By marketing offers by each company, the company would like to fulfill customer’s needs
    • Maslow’s Need Hierarchy – After fulfill the bottom needs, people want to move on to upper needs (Starbucks primary fulfill physiological needs, but through marketing, it fulfills esteem needs àincrease of price)
      • Self-actualization needs – self-development and realization (Top of the pyramid)
      • Esteem needs – self-esteem, recognition, status
      • Social needs – sense of belonging, love
      • Safety needs – security, protection
      • Physiological needs – hunger, thirst

Creating value

  • Original cost of production is not important if you come up with the price that satisfies the value (creating value = price)
  • Form Utility: Putting together different component to create useful values for customers
  • Place Utility: Displaying your products on convenient places for customers
  • Time Utility: Helping customers to get your products on their convenient time (Vending machine)
  • Ownership Utility: Legal possession of certain assets (car lease or car renting)
  • Risk Reduction
  • Example: currency exchange at Airport is more expansive because time/place utility
  • Example: IKEA’s DIY products are cheaper because they do not provide form utility

 

Analyze through 5Cs and create values through 4Ps

 

  • Customer: include current and future customer à Target Customer
  • Company: Find out company’s capabilities, strength, weakness through SWOT analysis
  • Competitors: both immediate (nearby real estate agents) and non-immediate (Zillow) competitors
  • Collaborators: Channels, Distributors, Media
  • Context: Government regulation, laws, external economy forces à Environment

 

Possible marketing plan for Virgin Air

Overview of the company

Virgin Airline is a United States-based airline that began service on August 8, 2007. The airline’s stated aim is to provide low-fare, high-quality service between major metropolitan cities. San Francisco International Airport is its main hub. The other main hubs are LAX and Dallas Love Field. Virgin America is launched by Sir Richard Branson. Virgin America operates in a range of markets across 200 countries. It’s main mission is to make flying good again. Its main theme and focus is to provide consumers with attractive fares, top-notch service, and innovative amenities that are reinventing domestic air travel. Special feature includes mood-lit cabins with fleetwide WiFi, custom-designed leather seats, power outlets, and a video touch-screen at every seatback offering guests on-demand menus and countless entertainment options.

Virgin America won many awards. Virgin America won best-in-class awards, including: “Best Domestic Airline” in both Condé Nast Traveler’s Reader’s Choice Awards Travel + Leisure’s World’s Best Awards for the past seven consecutive years.”

Facts

  • A service company
  • Started by Richard Bradson
  • Operates in a range of markets across 200 countries
  • California-based airline that is on a mission to make flying good again
  • Innovation in industries
  • innovative amenities that are reinventing domestic air travel.

Offerings

  • Low cost travel with high quality service
  • Featuring mood-lit cabins with fleetwide WiFi,
  • Custom-designed leather seats, power outlets
  • Video touch-screen at every seatback
  • Offering guests on-demand menus and countless entertainment options.

Target Market

  • “Young adults who aspire a stylish lifestyle”
  • Young, urban, tech savvy professionals
  • Ranges from 20-30 years old
  • Lives in urban area and socializes on the web
  • People who have previously been flying other airlines

Virgin America’s target market for the advertising campaign is young people in the age-range of 20-30 who live in urban areas. People in this age-group are exploring adulthood and at every step trying to reach a new level of class and style. The goal of the campaign is to hit the sweet-spot of this segment by showing them that their style can be transferred to the skies.

Competitive Advantage

  • Value (Customer focused, Deliver superior quality, Reasonable pricing)
  • Rare (Risk taking, Strong Leadership)
  • Imitability (Richard Bradson at the core, Company Values)

Virgin Airlines is a younger airline with a more modern look than the traditional and established airlines in the US. The stylish look and feel of flying with Virgin is one of the most valuable sustainable competitive advantages the company has. It is a point-of-difference that the older airlines have a hard time copying.

In addition, Virgin America receives a lot of free publicity and attention due to the popularity of its founder Sir Richard Branson. By also incorporating him in the image of the company, we can build on our competitive advantage and better reach our target market.

Where is our target market?

Virgin America wishes to appeal to the young adult audience and it is therefore essential that the advertising strategy takes into consideration the different  media channels and vehicles that are used by millennials in general and 20-30 year-olds in particular.

In general millennials or generation Y are more hesitant and resistant to advertising influences than any other generation (Valentine and Powers, 2013). This poses a challenge for us in creating a message that appeals to this demographic. The good news is, this generation likes the “different” and Virgin America is that different. Our strategy aims to appeal to the sensory of this generation by using simple, quick and fun advertising that is different from what they have been exposed to before.

One of the best ways to reach Millennials today is through social media. Research shows that no other age-group is as present online and with social media as this age group (Moore, 2012). The main vehicle we will plan for Virgin America is Facebook and Instagram in addition to internet radio channels such as Pandora and Spotify.

We will also recommend Virgin America to reach their target audience through magazines that also appeal to fashion and style, such as Vogue. Millennials are concerned about image and by showing them that Virgin America is the best way to fly in style, we are appealing to this demographic’s view of image (Williams, Page, Petrosky, & Hernandez, 2010). By doing this, we will also show that Virgin is different by choosing media vehicles not traditionally used by the airline industry.

Situational Analysis

Airline Industry

Air travel remains a large and growing industry. It facilitates economic growth, world trade, international investment and tourism and is therefore central to the globalization taking place in many other industries. The industry continues to grow rapidly, but consistent and robust profitability is elusive. Measured by revenue, the industry has doubled over the past decade, from US$369 billion in 2004 to a projected $746 billion in 2015, according to the International Air Transport Association (IATA).

Much of that growth has been driven by low-cost carriers (LCCs), which now control some 25 percent of the worldwide market and which have been expanding rapidly in emerging markets; growth also came from continued gains by carriers in developed markets, the IATA reported. Yet profit margins are razor thin, less than 3 percent overall.

Travel for both business and leisure purposes grew strongly worldwide. Scheduled airlines carried 1.5 billion passengers last year. In the leisure market, the availability of large aircraft such as the Boeing 747 made it convenient and affordable for people to travel further to new and exotic destinations. Governments in developing countries realized the benefits of tourism to their national economies and spurred the development of resorts and infrastructure to lure tourists from the prosperous countries in Western Europe and North America. As the economies of developing countries grow, their own citizens are already becoming the new international tourists of the future. Airlines’ profitability is closely tied to economic growth and trade. Despite this, the airline industry has proceeded along the path towards globalization and consolidation, characteristics associated with the normal development of many other industries. It has done this through the establishment of alliances and partnerships between airlines, linking their networks to expand access to their customers. Hundreds of airlines have entered into alliances, ranging from marketing agreements and code-shares to franchises and equity transfers.

Analysis of Virgin America

Virgin America is a subsidiary of the Virgin Group, which is a venture capital conglomerate, composed of 400 companies worldwide owned by Sir Richard Branson. The concept behind this business model is to infuse each subsidiary with the Virgin brand and core values in order to invest in different business areas. The Virgin brand is intrinsically linked to its owner, Sir Richard Branson. Branson infused the core values of being unconventional, hip, and innovative to each of the conglomerate’s subsidiaries with a keen emphasis on delivering high-quality products for a low price. These core values are present in Virgin America because it provides high-quality travel at a low cost. Virgin America’s primary operations are located in San Francisco International Airport and its headquarters are in Burlingame, CA.Virgin America started its flight operations on August 8, 2007 with an aim to provide low-cost travel with high-quality service between major cities across the east and west coasts.

Two years ago, Porter Gale, Virgin America’s vice president of marketing, relied heavily on the use of social media and “buzz” to amplify the brand. However, The airline is now active on all advertising medium to spread their word across and to create more awareness. From print ads, social mediums, television, web efforts and out-of-home iterations such as billboards and taxi wraps are in the media mix. Not only are customers tweeting about Virgin America on the ground, they are doing it for the sky, due to the recent addition of inflight WiFi.

In 2012, Virgin America has expanded its travel destinations to 13 cities in the U.S. now they gets you to all corners of the world. Currently, Virgin America’s target audience is the tech-savvy, business and leisure traveler. Dedicated to comfort, quality, and convenience; this technologically innovative airline caters to its target audience’s needs and wants. With a primary market of customers 35 and under, Virgin America’s innovative media platform ties in its marketing objectives perfectly to cater to the “Gen-Y” target.

With Virgin America’s vision in mind, the addition of more cities including international destinations will be apart of the long-term goal to reach into prospective markets. With the tech-savvy business and leisure traveler still in mind, Virgin America  plans to give their passengers more choices, destination wise. Not only would more destinations help the target market to grow but it would also allow the company to grow.

Virgin America Make the most of their route map from San Francisco International Airport with low fares and nonstop flights to hot spots like Los Angeles, Las Vegas, New York, and more. Virgin America reports first quarter 2015 earnings $10.5 Million Profit Excluding Special Items

Tenth Consecutive Quarter of Year-over-Year Improvement in Profitability

Distribution

There are two main distributions channels for Virgin America’s tickets. The main one, which accounts for 70% of the Airline’s ticket revenue is the company website, Virginamerica.com. The other 30% comes from online travel agencies, such as Travelocity or Expedia.

Competition

The airline industry is characterized by having high fixed costs and fierce price competition. As a result, airlines created several alliances as means to increase revenue and efficiency while reducing costs. There are three major airline alliances: One world with a market share of 22.7%, SkyTeam with 28.3%, and Star Alliance with the majority of the market share of 37.6%.7 This is key for Virgin America because it’s an independent airline, which means it has no alliances. This factor places Virgin America at a disadvantage when it comes to reducing cost via increased purchasing power or increasing revenue via costumer sharing, as the big three alliances do. Virgin America’s disadvantage is shown in it lower profits compared to airlines that are members of alliances.

Promotion

Because Virgin America’s target market is the “creative class”– young, urban, tech-savvy professionals using smartphones to frequent social media sites, such as Twitter and Facebook–the best place to reach them is online. For promotions and advertising, Virgin America is mainly active in two social networking sites: Twitter and Facebook. Twitter is the main promotional vehicle for Virgin America. It aims to attract new customers in the tech-savvy market with Promoted Tweets, which are advertisements that appear in the feed of people who aren’t following Virgin.This is a good strategy because even though Virgin America has over 300,000 followers, it can increase its revenues via more customers. Moreover, Virgin did a Twitter promotion through Promoted Tweets called “Fly Forward, Give Back”, which resulted in the fifth most successful day in ticket sales. Virgin America aims to create brand awareness, engage customers, and increase emotional bonds by being highly responsive with its followers.

SWOT

Richard Branson and Virgin Inc. have done well financially, but as many other, hit a bump during the recession around 2008 (Finkle, 2011). The thirst for innovation, however has served as one of the company’s biggest strengths and this is also passed on to Virgin America.

Being in an industry with high entry-barriers is serving the company well, and as one of the youngest airline companies, and the only one located in Silicon Valley, CA, there is a lot of room for Virgin to create points-of-difference that can attract a younger market. However, being different can also cause scepticism at Wall Street in which is considered one of the company’s weaknesses.

As Virgin America has expanded, some of their markets have reached maturity in which can also mean an opportunity to make more on those markets as the routes have been established in the minds of the consumers. Capital is something the company needs a lot of, especially due to the increase in labor and airport cost in recent years, in which serves as one of the threats for Virgin as well as other players in the American airline market (CAPA, 2014).

1.      Strengths

  1. Passenger favorite, generated countless accolades
  2. Relatively stable network
  3. Exceptional level of market disruption
  4. Young, single aircraft type fleet
  5. High utilisation and low CASM (Cost per available seat mile)
  6. RASM has improved (Revenue per available seat mile)
  7. Different programs to encourage innovation

2.      Weaknesses

  1. Their differentiated business model is difficult for Wall Street to understand.
  2. Elevated costs
  3. Spotty Profitability
  4. Low widespread investor confidence
  5. Lack of commanding position in its largest markets.

3.      Opportunities

  1. Growing market in the age range of 20-30 year olds (Generation Y)
  2. Expansion of more routes
  3. Certain markets reached maturity
  4. Increase accessibility
  5. Market reaching maturity
  6. Increased social media engagement
  7. New market awareness

4.      Threats

  1. Competing airlines
  2. Flight attendants union representation
  3. Rising labor costs
  4. Personalization of private jets
  5. High cost of terminal/gate fees
  6. Rising cost of fuel

Positioning and vision statement

Suggested Positioning Statement

The moment you step in any of our airplanes, you know it’s a different kind of airline, an airline that keeps your cool style. You’re welcomed by mood-lit cabins, custom-designed leather seats and the most advanced entertainment system in the skies. You feel you are where you should be. The Virgin America experience was designed to be like no other, marrying stylish design and innovative technology. The airline provides upscale flights and gives guests control over their in-flight experience in and elevated style.

Vision Statement:

Within the next 5 years Virgin America aims to be the leading low-cost, high-luxury airline in the United States by expanding flights, its air force and by creating new destinations.

Marketing and advertising objectives

The marketing campaign would be focused on expanding Virgin America current associate/member program called “elevate” and use the power of social medias to enhance the company’s brand and increase the number of young people choosing Virgin America as their preferable airline company. To accomplish this we would utilize several media channels like printed magazines, social media, radio, and smartphone apps like Pandora, Spotify and Apple Music and public relations.

The Main Campaign: Elevate Your Style

For Virgin America’s advertising campaign, we would like to take advantage of the fact that the company has one of the most modern and updated line of airplanes. By targeting the segment of people between the ages of 20-30 that are in the process of entering adulthood and constantly seeking a higher level of wealth and comfort, we will make sure to let them know that flying Virgin America is the only way to maintain the level of style in the air.

Public Relations:

In order for the advertising campaign to be successful, it is essential that the public relations department at Virgin America assist the rest of the marketing department with spreading the message and creating integrated communication. By writing press releases, actively speaking out about the campaign and making sure that inquires and questions from the media regarding the campaign is answered.

Print-Ad:

A print-ad will allow Virgin America to communicate it’s message by using intriguing images and fun, yet informative words. We can easily reach our target market, by putting the ads in magazines that are popular for our target market.

In addition, we will suggest that Virgin America put the ad in fashion magazines like Vogue in order to show how different Virgin is and how serious Virgin is about being the most stylish airline in the American market. An ad like this would also naturally stand out and could therefore lead to more people showing interest in it.

Example of print-ad:

At Virgin America we know you have certain standards down on earth. You shouldn’t have to settle with an airline that doesn’t reflect the cool person we all know you are.

Virgin is the only airline that lets you elevate your style to the skies. With modern airplanes, comfortable seats, sociable environment, fine food and drinks, free WiFi and amazing customer service – We make sure you get to your destination in style.

Don’t let the old airlines tell you how you should fly. Show them how it’s done by booking a flight with Virgin today and use hashtag #FlyingInStyle and @VirginAmerica next time you fly with us. Who knows, you might even win a free roundtrip flight of your choice.”

The text would be all lowercase except for the hashtags and the company name. Since the target audience is constantly online, a new trend seems that in the online environment people don’t care about the text being Capitalized on the beginning of the phrases. This would be an effort of “telling” the target audience that Virgin America is also understands their new “techy” lives.

The bottom part in purple with the text in white is a repetition of the text. This would be in purpose to have a chance to get people read the main objective of the campaign. We know people don’t like to read long blocks of text so that would be an effort to at least get more people aware of the campaign.

A mockup of how the print ad could look like:

Social Media Strategy

Same picture as used in print-ad to repeat the image of Virgin America and the campaign as a whole. We will post the picture using the text:

“At Virgin we elevate your style to the skies. Don’t let the old airlines tell you how you should fly. Show them how it’s done by booking a flight with Virgin today and use hashtag #FlyingInStyle and @VirginAmerica next time you fly with us. Who knows, you might even win a free roundtrip flight of your choice.”

By taking advantage of Facebook and other social media’s sophisticated algorithms, we can target people in the age-group 20-30 living in urban areas. In addition we can target people who have previously checked in at major airports or even other competitor airlines. As these people scroll down on their page, a sponsored content post will show up from Virgin America with the above message and picture.

Radio Ad

(Sound of glasses and chatter in the background to make it seem like a cocktail-party). Narrator (Richard Branson): “This might sound like one of your regular cocktail parties, but It’s just our 2pm flight from Los Angeles to New York. Don’t let the old airlines tell you how you should fly. Show them how it’s done by booking a flight with Virgin America today and use hashtag #FlyingInStyle next time you fly with us to to enter a chance to win a free round-trip ticket of your choice. Elevate your style, with Virgin.”

Pandora/Spotify

Smartphone apps like Pandora and Spotify now are on the industry competing with radio and other media. The advertising in those apps doesn’t change much for one app to another. It plays a few songs and then it plays some ads. The advantage is that they stop the songs you are listening and asks for an interaction on the device. The ad could be very similar to the Radio Ad but tweaked to make it fit with the new technology:

(Sound of glasses and chatter in the background to make it seem like a cocktail-party). Narrator (Richard Branson): “This might sound like one of your regular cocktail parties, but It’s just our 2pm flight from Los Angeles to New York. Don’t let the old airlines tell you how you should fly. Show them how it’s done by booking a flight with Virgin America today and use hashtag #FlyingInStyle next time you fly with us to to enter a chance to win a free round-trip ticket of your choice. Elevate your style, with Virgin. Tap the banner to become an Elevate member now”.

Additional Promotional Campaigns

  1. Excess capacity
    1. Promotional group discounts for specific months
    2. February, March, June, October, November/December

Measuring Success

Social Media

A majority of industrial companies are having trouble measuring social media Marketing ROI. They know the importance of social media marketing but they do not know how to measure the effectiveness. Too many companies measure social media marketing success by only counting “Likes” and “Followers.” However, it is only the part of measuring success in social media marketing. Getting many Followers on Twitter, Likes on the Facebook page, Views and Subscribers on the YouTube channel is important part of measuring the success because it is the beginning of the measurement. Yet, these numbers do not automatically connect to the performance. It is important to check the interaction with companies’ message. Clicks on links in the social media posts, shares on Facebook and LinkedIn, Comments on the Facebook and LinkedIn posts are good measuring stick for actual engagement. Finally, if people took action because of the message provided through the social media would be the final measurement of impact of social media marketing efforts. It will tell you how many people took the next step to enter the lead generation funnel and join the marketing database. The activities include: Registrations for content downloads and webinar registrations, and customer satisfaction survey.

Radio/Magazine Ads.

It is important to select the radio stations and magazines that are popular among age group of 20-30. It is important to compare the traffic of the selected age group before and after the ad campaign started. For magazine advertising campaign, it would be determined easily by including the coupon that customers can redeem for a discount or other benefits. However, it is generally not the case for the airline advertisements for magazine. Magazine advertisement usually used to increase of brand recognition. It is hard to find the short-term effect but if the company invests long enough time to monitor the brand recognition improvement, the company can assess the effectiveness of the advertising campaign. Posttesting is a common for advertisers to measure the effectiveness of ads. We can recommend using inquiry tests “to measure advertising effectiveness on the basis of inquiries generated from ads appearing in magazine.” We can also recommend using recognition tests (Gfk-Starch) to determine recognition of “print ads and comparing them to other ads of same variety or in the same magazine (Belch and Belch, p 609, 2012).” For radio ads, we can suggest doing concept testing to explore the targeted consumer’s response to a potential new ad on focus groups in the target market which is 20-30 years range lives in urban area.

Advertising is not an exact science. You cannot determine how many sales dollars are generated by each advertising dollar you spend. This method of measuring the effectiveness of advertising is just rough estimation of whether ads are hitting the mark.

Overall, it is more important to focus on the number of returning customers to fly Virgin America for young age group. Retention rate is more important than rate of sales improvement in certain promotion.

Media Objectives

Our target markets for the Elevate Campaign for Virgin America Airlines are young adults between the ages of 18-34. As these young men and women transition from student to professional why shouldn’t they transition the way they travel also? Becoming an Elevate member with Virgin America allows them to enjoy the conveniences of a Virgin America flight such as redesigned interior decorations, mood lighting to enhance the travel atmosphere experience, an inflight bar to make socializing on Virgin Airlines incredibly unique and a refreshing experience, with Wi-Fi onboard they could never lose a moment to keep in touch and easily share and network their moment-and yes make their friends jealous.

With our media objectives we want to generate traffic to the website where people can sign up for the Elevate program-a FREE PROGRAM by the way-and our call to action will be to fly to the cities that Virgin America operates in.

We want to make flying fun again for the growing demographic of young professionals entering and dominating the future workforce in the USA. By having a creative campaign that attracts our target market, our last objective will be to improve overall brand equity for Virgin America (Wu, Wen, Dou, and Chen, 2015).

Cities Virgin America operates in:  (Population stats as of 2012 via CLR Search.com)

  • Austin, TX – 33.95% of population is made up of ages 18-34 (300,593)
  • Boston, MA – 40.44% (261,228)
  • Chicago, IL – 30.2% (821,138)
  • Dallas, TX – 27.69% (348,340)
  • Lauderdale, FL – 22.27% (38,391)
  • Honolulu, HI – 21.06% (82,289)
  • Las Vegas, NV – 23.15% (139,707)
  • Los Angeles, CA – 28.14% (1,092,957)
  • Maui/Kahului, HI
  • New York City, NY – 24.88% (2,091,412)
  • New York, EWR, NJ – 24.88%
  • New York/JFK, NY 24.88%
  • New York/LGA, NY 24.88%
  • Orlando, FL – 30.58% (78,126)
  • Palm Springs, CA – 15.28% (7,071)
  • Portland, OR – 29.32% (178,692)
  • San Diego, CA – 30.98% (994,767)
  • San Francisco, CA – 30.84% (258,267)
  • Seattle, WA – 32.4% (211,379)
  • Washington, DC, WAS – 37.13% (244,646)
  • Washington DC/DCA, DC – 37.13%
  • Washington DC/IAD, DC – 37.13%

Determining the success of our campaign will be to see an increase of new Elevate Memberships with Virgin America. The service is free to join and lasts a lifetime. We want to get more people flying in style with Virgin Airlines. Cost, Tracking, and ROI will be the most effective way we will be able to determine success for online media campaigns.

The costs have been set to run ads on a few of the major social media platforms. By tracking the interaction from the social media site that gets directed to the Virgin Airlines sit will we be able to determine how effective any one particular ad is in its respective medium. Every month a team from the agency will evaluate which ads created the most traffic and how it can be improved and changed if needed at all, and adjust the ads that did not generate sufficient traffic.

To evaluate the success of print ads it will be keen to focus on the amount of sales boosted (or if they’ve plateaued-or worse dropped) for flights and promotions advertised with our print ads. And also the amount of traffic drawn from the magazine’s target audiences who access the site and Elevate memberships from either their personal computer, or mobile device.

The success effectiveness for a billboard depends on the measurements provided by the billboard rental company. They are able to provide information about a certain billboard’s location but however the ad is what must determine if it’s a success of not by whatever the call to action from the ad. Our billboard ads will focus on promoting the Elevate memberships and the idea behind how great life can be to fly Virgin Airlines.

Frequency

Online Per month:

  • Facebook ads will pulse every two weeks for the six months.
  • Pandora ads will pulse every two weeks for the six months.
  • Spotify ads will pulse every two weeks for the six months.
  • Twitter ads will pulse for two weeks for the six months.
  • Google AdWords will run with the Search Network for everyday of the campaign during the six month duration.
  • Google AdWords will run with the Display Network for everyday of the campaign during the six month duration.

Continuity:

  • For six months out of a full year the ads will for the Elevate Your Style campaign. The months being; February, March, June, October, November & December.

Evaluating Media

Local Radio Stations

  • The strengths of local radio in major cities are, large audiences reached by way of public transit with radio station where our ad plays, easy listening during commuting hours, also easy listening when at work, and when a taxi cabs is taking fares and has the radio on.
  • The weaknesses of local radio in major cities are, people who don’t listen to the radio, satellite Radio preference over local AM or FM stations, loss of signal or reception due to weather interference.
  • Billboard Ads major strengths: In major cities billboards have a high reach potential
    dependent on placement to traffic heavy locations, billboards at airports are common for airlines to advertise their flights, something easy to read and comprehend, especially for passengers in the car.
  • Major Weaknesses for billboards can be; a driver could be in a rush to see the ad, the driver should always keep their eyes on the road, so an ad that doesn’t grab too much of the attention of the driver so as to avoid accidents, graffitti could damage the billboard, or another billboard could go up directly in front of the ad, thus lessening the amount of people the ad is exposed to

Online Social Media Ads

  • Strengths for Facebook: High number of active users, easy to share and like and comment, advertising with Facebook can be very specific to area codes to target audiences
  • Weaknesses for Facebook; users could feel overwhelmed by the amount of ads that pop-up in their feeds, users could be running adblock software for their internet browsers
  • Strengths for Instagram are; high number of daily users, easy to share and tag friends in, a great platform for businesses to connect with their customers, easy to use interface on mobile platforms.
  • Weaknesses for Instagram are; high amount of traffic could pollute the ad, users might feel offended by seeing an ad show up on their newsfeed, cost of advertising on instagram is incredibly high.
  • Strengths for Google AdWords are; easier SEO (Search Engine Optimization) options to make keywords and names easier to find and have a higher chance of showing up in search engines, heavily trafficked search engine, easy connection and integration with many other social media platforms.
  • Weaknesses for Google AdWords, high clutter from competing airlines into keyword search engines, timing to make sure relevant keywords are used and updated regularly
  • Strengths for Twitter; are high traffic, if it trends on twitter it’s trending on the internet, easy feedback from public, Richard Branson is a very active public figure
  • Weaknesses for Twitter; if something negative shows up it can go against the company in bad taste and easily be shared and trending
  • Strengths for Youtube; video sharing platform can easily share and send short enjoyable content across multiple social media platforms simultaneously, high traffic, can organize a video into more keyword demographics instead of just an airline
  • Weaknesses of Youtube, if a video is too long people might not want to watch it.

Print Ads

  • Strengths for Print Ads
  • Condé Nast’s audiences fit right into the 18-34 year old demographic, a print ad lasts forever (so long as the page itself doesn’t get torn up, burned, etc), with the rise of media integration in magazines it can be very easy to send someone from a print ad to a URL via their mobile phone, people like seeing pictures, so give them what they want.
  • Weaknesses for Print Ads; people might look over it, people read less so magazine circulation will slowly drop, could be too cluttered with copy and information, and it could send the wrong image.

Mediums for our campaign

Online Social Media

Google AdWords

  • Cost of using Google AdWords Search Network:
    • $1-2 ($168 for six months)
  • Cost of using Google AdWords Display Network:
    • Average CPC is under $1
  • Using Google AdWords would go towards utilizing SEO for the terms “Elevate” “Virgin” “Virgin America” “Virgin Airlines”

Facebook

  • 7% of Facebook users are between the ages of 25-34.
  • Average time spent on Facebook is 20 minutes
  • 50% of 18-24 year olds check Facebook when they wake up.
    • Cost Per Click (CPC) – $0.24
    • Cost Per 1,000 Ad Views (CPM) – $0.66 as of July 2013
  • The goals of the Facebook ad space would be to target our audience in the major cities, through using location management services where Virgin operates, through promotions for the airlines, flights, prices, and dates.
  • Currently the Virgin America Facebook page has 639,867 likes. The goal for the 6 month campaign will be to increase those likes to 1 million likes.

Instagram

  • Instagram is incredibly selective, but their ad space has ranged between $350,000 to $1 million.
  • Currently the Virgin America Instagram account has 89.4 thousand followers. Ideally it would be great to reach half a million if not more for that account over the 6-month campaign.

Twitter

  • Costs for Twitter advertising:
    • Promoted Tweets $0.50 – $4.00
    • Promoted Accounts $0.50 – $4.00
    • Promoted Trends $200,000 per day
  • Currently the Virgin America Twitter account has 85 thousand followers.

Youtube

  • Pay-per-view of ad with average ranging $0.10-$0.30
  • The Virgin America Youtube Account currently has 22,284 subscribers.
  • Their most viewed video is the Virgin America Safety Video #VXsafetydance at 10,946,723. The video was uploaded on the 29th of October 2013.

Pandora Online Radio

  • In 2014 Pandora had 815 active listeners and 250 million registered users.
  • 175 million in USA
    • 115 million access via smartphone
  • Pandora Pandora typically shows seven display ads per listener hour and runs 2.5 audio ads (of 15 or 30 seconds) per hour. Users might also see a video ad.
  • Visual ads, on a CPM basis, sell for $5-$7; audio ads, $8-$12; and video ads, $15-$25. The sell-through rate — the proportion of premium advertising is sold directly by Pandora — is higher on desktop than mobile.

Spotify Music Listening

  • As of June 2015 Spotify had an estimate of 75 million active users.
  • Spotify advertising must have the advertiser invest a minimum of $10,000 into one or more of their formats:
    • Audio Ads – these include campaign cover art and clickable scrolling text
    • Display Ads – Leaderboard and skyscraper ads
    • Billboard Ads – Behaves like a screensaver
    • Homepage takeovers – Huge, completely unavoidable impression
    • Branded Playlists – Includes brand logo, custom text, and optional link to campaign
    • Lightbox – Overlay window that displays after user clicks ad
  • Advertiser Page – Microsite within Spotify player
  • Small Town radio ad repeated at 20 times per week would cost around $500 per week.
  • Major City radio ad repeated at 20 times per week would cost around $8,000 per week.
  • Major cities would be: Austin, TX | Boston, MA | Chicago, IL | Dallas, TX | Ft. Lauderdale, FL | Honolulu, HI | Las Vegas, NV | Los Angeles, CA | Maui, HI | New York City, NY | Orlando, FL | Palm Springs, CA | Portland, OR | San Diego, CA | San Francisco, CA | Seattle, WA | Washington, DC

Print Magazine(s)

  • Working with Condé Nast will be a great outlet to reach the target audience for the ‘Elevate Campaign’. Because Virgin Airlines is not your plain plane, nor is its flying experience just like ‘blah-blah airlines’, targeting the student and young professional would be great to encourage them to fly with a style that really captures what they’re about.
  • 1 Page Ad into Vogue Magazine.
    • We will insert variations of our “Elevate Your Style” print ad into Vogue Magazines for the months of February, March, June, October, November/December.
      • Total Cost for Vogue Print Ad for six months: $1,134,000
    • The reason we will run ads in Vogue Magazine is to go where no other airlines goes, promoting their brand in a fashion magazine.
  • 1 Page Ad into GQ Magazine.
    • Total cost for GQ Magazine Print Ad for six months: $1,113,246
    • The same strategy with Vogue’s ads will be used for GQ. Being the only airline promoting itself in fashion and lifestyle magazines. We want these readers to not only elevate their fashion sense but also the way they travel. They’re becoming professionals, so why not fly like one too.
  • 1 Page Ad into Details Magazine.
    • Total cost for Details Magazine Print Ad for six months: $641,010
    • The same strategy with GQ magazines, except adjusted to the target audience of Details.
  • 1 Page Ad into The New Yorker.
    • Total cost of 1 Page Ad for New Yorker ad for six months: 1,045,488
    • The same strategy but with an ad more catered to the target audience of The New Yorker.
  • 1 Page Ad into Vanity Fair.
    • Total cost of 1 Page Ad for Vanity Fair ad for six months: $1,339,530
    • The same strategy but with an ad more catered to the target audience of Vanity Fair.

Billboards

  • Billboards typically charge a rental fee for 4-weeks in, the rental fee may vary depending on size of billboard and city. A monthly cost for a billboard would be the minimum amount of billboards used by the cost per billboard.
  • Average 700-sqft billboard ad will cost around $500
    • So if 12 billboards are used in a city like Los Angeles we could look at a cost of around $60,000 per month.

Media Budget Breakdown

  • Google AdWords Search Network – $168 (for six months)
    Google AdWords Display Network – $X (dependent upon number of clicks at $1 per click)
  • Facebook – cost per click is $0.24. Our target will be to have 1,000,000 likes meaning the like button would require 360,133 clicks. A Facebook ad budget of $86,431.92 to meet that goal.
  • Twitter – $840 to promote an account for two weeks every month for the six month duration.
  • Youtube – $0.30 per view by amount of views for video content. If our goal for a video will be to reach 1 million views per month for the 6 month duration of the program then the cost would be: $1,800,000
  • Pandora audio ad- $1,080 at once per day for three months spaced out of the six total.
  • Pandora visual ad- $630 at once per day for three months spaced out of the six total.
  • Spotify ad – $10,000 minimum to advertise with Spotify
  • Print Magazine total cost: $5,273,274

Billboard Costs for 17 major cities:

  • Radio Costs for 17 major cities: est. $2,160,000

Total Media Budget: $9,332,423.92

Agency Cost (15%): 1,399,863.59

References

Advertising on Facebook: https://www.facebook.com/business/products/ads

Belch, G.  E., & Belch, M.  A.  (2012).  Advertising and Promotion: An Integrated                                    Marketing Communications Perspective (9th ed.).  New York, NY: McGraw-Hill.

CAPA. (August 20, 2014). Virgin America SWOT Analysis Part 2: Opportunities for an                           IPO in a more benevolent environment. Retrieved from                      http://centreforaviation.com/analysis/virgin-america-swot-analysis-part-2-opportunities-for-an-ipo-in-a-more-benevolent-environment-182675

Finkle, T. A. (2011). RICHARD BRANSON AND VIRGIN, INC. (). Arden: Jordan Whitney                     Enterprises, Inc. Retrieved from http://ezproxy.lasierra.edu:2048/login?url=http://search.proquest.com/docview/886432663?accountid=25308

Magazine Ad Pricing for Condé Nast. Retrieved from http://www.condenast.com/brands

Moore, M. (2012). Interactive media usage among millennial consumers. The Journal of                            Consumer Marketing, 29(6), 436-444.                                                                                         doi:http://dx.doi.org/10.1108/07363761211259241

Noyes, David (2015) Top 15 Valuable Facebook Statistics on zephoria.com Retrieved

From:https://zephoria.com/top-15-valuable-facebook-statistics/

Population Statistics for major cities gathered from the United States Census Bureau *http://www.census.gov/

Prosser, Mark (16 July 2013) How Much Does Facebook Advertising Cost? on

FitSmallBusiness retrieved from: http://fitsmallbusiness.com/how-much-does-facebook-advertising-cost/

Prosser, Mark (2013) How Much Does Billboard Advertising Cost? on FitSmallBusiness

retrieved from: http://fitsmallbusiness.com/how-much-does-billboard-advertising-cost/

Smith, Craig (2015) By the Numbers: 45 Interesting Pandora Statistics on expandedramblings

via: http://expandedramblings.com/index.php/pandora-statistics/

Spotify | For Brands retrieved from: https://www.spotify.com/us/brands/

Valentine, D. B., & Powers, T. L. (2013). Generation Y values and lifestyle segments. The                        Journal of Consumer Marketing, 30(7), 597-606.                                                                                    doi:http://dx.doi.org/10.1108/JCM-07-2013-0650

Williams, K. C., Page, R. A., Petrosky, A. R., & Hernandez, E. H. (2010).                                                  Multi-generational marketing: Descriptions, characteristics, lifestyles, and attitudes.                     The Journal of Applied Business and Economics, 11(2), 21-36. Retrieved from                     http://ezproxy.lasierra.edu:2048/login?url=http://search.proquest.com/docview/815978214?accountid=25308

Wu, J., Wen, N., Dou, W., & Chen, J. (2015). Exploring the effectiveness of consumer creativity

in online marketing communications. European Journal of Marketing, 49(1), 262.

Retrieved from http://ezproxy.lasierra.edu:2048/login?url=http://search.proquest.com/docview/1649066900?accountid=25308