Analyse Consumer Behaviour for Specific Markets

Your task is to gather information on the market segment for this product, analyse consumer behaviour within this segment and recommend what marketing strategies Virgin should develop to appeal to this market segment. This must be written in report form.

Gather information on the market or market segment for Virgin Hotels in accordance with Virgin’s marketing plan.

1. List the sources of information you used to gather information. This must include at least five sources of information.  Please reference each source in strict accordance with Imagine Education Guidelines for referencing.
2. Prepare a basic customer profile/ profiles, identifying consumer attributes of the market segment or segments you are targeting. For example: Demographics, values or attitudes, lifestyle, cultural and social influences. Active or inactive customers. Business or public sector customers
3.  Explain how you could identify what consumer responses were to past marketing communications. For example, how could you analyse a consumer’s preferred frequency of contact/ medium of contact/ average order value, etc.  List an example of the questions you might ask. Include at least three  questions.

Consumer Analysis

1.  Demographics: Virgin Hotels targets people in they early 30s and older up to their 50s. These people have finished their study, have a well-paid job and can afford a stay in “a 4 1/2-star hotel at four-star prices”. They may also be business travelers, whose hotel rates are paid by their companies. I believe the “Limited Edition” packages also targets the mature-age markets not only because of their income, but also because they often look for extra service, the locations are all very private and quiet, suitable for resting periods, where people are just cared for by the staff.
2. Geographics: Virgin Hotels official website states that “Virgin Hotels’ target list includes major global cities (e.g. New York, San Francisco, Miami, Los Angeles, Boston, Washington DC, London, Paris, Madrid, Sao Paulo, Bogota, Mexico City). We are keen to discover a range of interesting, authentic and high quality 150-400 room properties in appealing 2 neighborhoods that will meet the expectations of travelers in the “creative class” – a culture and mindset that represent the values of our target guests.”
3. Psycographics: Virgin Hotels official website states that “Our valuable target audience includes the high income, well-educated, metropolitan creative class.”

Virgin Hotels’ customers are used to travel and have different cultures and backgrounds, but all enjoy technology and look for a place where they can work and socialize as well (as the Australian Business Traveller declares, Virgin Hotels “are also aiming to provide “unique communal spaces” where business travelers can work and also network with other businesspeople. If that sounds rather like an airport lounge, that’s probably deliberate.” Virgin website, under the section “Virgin Hotels” sums up the company’s vision saying that “Virgin Hotels will be a place where guests feel ownership, where they can be themselves (with a few delights and surprises sprinkled in!) and where they can’t wait to come back.”

Especially business travelers are supposedly returning customers, not only to just the hotel, but to/from other services the Virgin Group offers. The Virgin Hotels website affirms that the brand intends to capitalize “on the Virgin brand’s global appeal and cosmopolitan fan base” to significantly enhance their marketing promotion, most probably with “flight+hotel” packages. The official Income: considering that Virgin is offering not only the 4 star hotels, but also luxury, “Limited Edition” packages, the company definitely targets the higher-income segment of the market.

Depending on the type of marketing communications, we could identify what consumer responses in different ways. Virgin Hotels’ website states that “Virgin Hotels’ marketing efforts are strongly rooted in digital, CRM and public relations. Leveraging Virgin’s global brand awareness to create collaborative marketing strategies with its other companies will allow Virgin Hotels to quickly garner brand awareness in the hotel industry in a fraction of the time it would take another new hotel brand.

Digital marketing is at the core of our marketing strategy as it achieves the most optimal revenue results while providing the highest ROI. We place a large amount of resources against creating the best in class websites, SEO/SEM efforts, email and mobile marketing, social media, and visually engaging content. Understanding our customer all the way through is vital to our marketing campaigns as we strive to provide meaningful, and contextual offers as well as personalizing their stay by knowing their preferences. Our CRM will be centered on bringing in new ambassadors for the Virgin Hotels brand as well as introducing it to the 65 million Virgin consumers worldwide.

Virgin Hotels will immediately align itself with the over 8 million Virgin Atlantic, America and Australia frequent flyers converting them into frequent hotel guests through preferred offers and status.” Therefore I believe 3 sample questions – which could be asked at website registration before booking a hotel stay or a flight – could be the following:

1. “Would you like to receive offers from other Virgin Group companies?”. A selection of the single companies could be offered to the user, for him/her to select.
2.  “What is your preferred way of contact?”. Sms/Email/Post…
3. “What is your preferred frequency of contact?”. Daily/Weekly… CTR (Click-Through-Rate) of the links offered in a promotional email is a good way of understanding the customers’ response and specific interests.

Consider Virgin’s Vision and Brand Personality

Explain how this relates to the marketing strategy for Virgin Hotels. Explain how the following two (2) factors will be emphasised in the marketing strategy for Virgin Hotels:

• Benefits
• Features

I believe Sir Richard Branson’s desire to offer great value for money is reflected in his intention to integrate Virgin’s frequent flier program members into the hotel project. Not only Virgin Hotels will acquire a huge consumer database, but it will also give consumers a great way to save money through combined offers. However, I think the “give customers good value and high quality” policy collides a bit with their targeted consumer, who is “the high income, well-educated, metropolitan ‘creative class'”. What if you are not wealthy and stylish?

As for the willingness to be perceived as always creative and innovative, I am sure Sir Richard Branson will come up with many other ideas along his career. For example, in 2005 he commissioned a study about energy drinks (Virgin Vibe). Such product would target young males who are into sports and video games (i.e.: RedBull). The competition from other brands was probably too high, and at the end Virgin decided not to proceed with Vibe, but this gives an idea of the kind of marketing strategy the company has decided to pursue: products for young, cosmopolitan fan base, attracted by the brand’s global appeal.

Being more specific, I believe benefits will be highly emphasized in the marketing strategy for Virgin Hotels. So far, only integration with Virgin’s frequent flier program has been announced, but I am sure there will be another program for hotel customers only (although nowadays it’s difficult not to think that someone is staying at a hotel without any flight, ever). Special promotions from Virgin partner companies will be launched as well
(i.e.: Book a spaceflight and get a week stay at one of our hotels for free), lotteries among users of other Virgin services (i.e.: get a Virgin SIM card by the end of the month and win a stay at one of our hotels). The Virgin Group is so big that the possibilities for joint marketing promotions are nearly endless. As for the hotels features, press doesn’t say much about the construction of the Virgin Hotel Chicago, but from what Internet reports

Consider Virgin’s Customer Needs Orientation

Explain how the following might influence the behaviour of customers (Think about both current and potential Virgin customers):

• The Australian culture
• A person’s family
• The economy
• Brand loyalty
• Time constraints

List at least three other individuals, social and/ or lifestyle influences that might affect consumer behaviour. Provide an example for each. The Australian culture and the attitude of saving money Australians have can match really well the “good value and high quality” customer orientation. The latest Roy Morgan Air Travel Survey reports that “86% of domestic business travelers polled in July 2013 said they were ‘satisfied’ or ‘very satisfied’ with Virgin Australia, compared to 77% two years earlier at a time when Virgin was still a low-cost carrier. Satisfaction for Qantas, however, has declined from 88% in July 2011 to 82% in July 2013.” If Virgin behaves with the same high-satisfaction standards with its hotel business, I am sure it will have great success here in Australia.

A person’s family can influence his preference for Virgin Hotels. The press doesn’t say much about the services the hotels are going to offer, but if the Virgin Hotels provide great services for kids (baby sitting, guarded play rooms and swimming pool, special activities for children, etc.), a family with one or more kids will surely consider staying at a Virgin Hotel for their holiday. But if the Hotels are more focused on the “smart and
stylish” crowd, probably this will attract young couples with no children, business travelers, etc.

In these difficult times, economy impacts everyone’s lives, and we are now all more expense-conscious than 5 years ago, when the financial crisis hit. I believe the “good value and high quality” customer orientation of Virgin Hotels is a win-win situation both for Virgin and the customers. Brand loyalty can influence the behavior of customers. Consumers who shop by price will tend to look for bargains, making Virgin Hotels deals stand out (especially if combined in a flight+hotel package).

Also, Virgin intends to massively promote its hotels through digital marketing. I believe that creating brand awareness requires such a huge investment in advertising and other marketing activities that Virgin’s competitors can only match after much time has elapsed, making Virgin’s task to get new loyal customers a bit easier. Also, I believe Virgin has the strength (and budget) to reinforce promotional messages over and over again.

Also positive comments and recommendations by the first Virgin Hotels customers through blogs and social networks will have a huge importance in getting Virgin Hotels more customers. Time constraint can surely influence customers. Let’s assume Virgin Hotels offers great deals on weekend stays: this will keep business customers away, which is exactly what Virgin doesn’t want. Therefore I believe the firm will concentrate its efforts in affordable, singlenight rates along business days. Consumer behavior can also be influenced by:

• Psychological factors such as the size of the hotel: Virgin plans to acquire 150-400 room properties, which may be considered too big by someone who prefers quieter and more private places to stay;
• Social factors: Virgin Hotel Chicago has announced Rooftop bar and clubhouse. If these become THE places to be in the city, customers will flock;
• Some other ethical factors can influence customers: we know that Virgin has a “employee friendly” policy. Some customers may choose to book at a Virgin Hotel because he knows that no workers are underpaid or harassed, etc.

 Recommend a focus of appeal that addresses the needs of the target consumer. Outline how this appeals:

• To individual, social and/ or lifestyle influences
• To the motives that influence decision-making

Make a compliance checklist (at least five points) to ensure the focus of appeal meets legal, ethical and organisational requirements of the marketing plan. For example:

• Does it comply with the Vision and Mission Statement?
•  Do our HR department comply with our “employee friendly” policy?
• Do our hiring policies comply with our ethical policy (no racial/religious/sex discrimination)?
• Does our hotel comply with all national and regional safety laws?
• Does our marketing promotion comply with the national privacy legislation?
• Does our offer comply with our “Customer Needs Orientation” policy?

Reference

1. Real Commercial website, October 15 2013: “Virgin Hotels wants to join chain”
   http://news.realcommercial.com.au/general/virgin-hotels-wants-to-join-chain/ – Virgin Limited Edition website, October 15 2013: “About Us” http://www.virginlimitededition.com/en/vle/about_us
2. Virgin Hotels official website, October 15 2013: “Property Specs” http://www.virginhotels.com/boutique-hotel-investment-property-specs.htm – Virgin Hotels official website, October 15 2013: “The opportunity” http://www.virginhotels.com/hotel-investment-opportunities.htm
3. Australian Business Traveller, November 20, 2013: “Virgin Hotels: coming soon to Sydney and Melbourne?”, by Bill Bennet http://www.ausbt.com.au/virgin-hotels-coming-soon-to-sydney-and-melbourne
4. Virgin’s official website, October 15 2013: “Smart, sensuous and delightfully yours!”
   http://www.virgin.com/company/virgin-hotels
5. Virgin Hotels official website, October 15 2013: “Operations” http://www.virginhotels.com/real-estate-investments.htm
6.  Infinite Leg Room website, “The Virgin Hotel Chicago Announces Rooftop Bar And Clubhouse”, by Will K on June 14, 2013 http://infinitelegroom.com/2013/06/14/the-virgin-hotel-chicago-announcesrooftop-bar-and-clubhouse/ –
7. Australian Business Traveller, August 28, 2013: “Virgin Australia beats Qantas for business travel, says survey”, by David Flynn http://www.ausbt.com.au/virgin-australia-beats-qantas-for-business-travelsays-survey