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Company Case 6
Virgin America: Flight Service for the Tech Savvy
Synopsis
There are far more failures among airline startups than there are successes. And in the
past few decades, the most notable successes have pursued a low-cost/low-fare model
(think Southwest, Allegiant, Spirit, Frontier, etc.). This case shows there is room in the
market for an airline that doesn’t try to beat the competition by offering the lowest price,
but by offering the best service and the most appealing amenities. Virgin America is
succeeding by doing these things and by targeting the right customer.
Teaching Objectives
The teaching objectives for this case are to:
1. Provide a practical application for possible ways that companies can segment
markets.
2. Underscore the difference between segmentation and targeting.
3. Show the importance of establishing a positioning for a brand that is consistent
with a targeting strategy.
4. Illustrate that established brands can reinvent themselves through modifications to
a targeting strategy.
Discussion Questions
1. Using the full spectrum of segmentation variables, describe how Virgin America
segments and targets the market for airline services.
While there are numerous segmentation variables that can factor into Virgin’s
strategy, start with the ones that make the most sense. Then, describe the profile
based on others. For example:
Occupation – Professional and technical (specifically in the high-tech
Geographic – Silicon Valley. While this may seem obvious, it doesn’t pan
out well as there is no way that any airline could succeed by only serving
Lifestyle – There are numerous lifestyle schemas (VALS, Experian, etc.).
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Part 1: Defining Marketing and the Marketing Process
2. Which market targeting strategy is Virgin America following? Justify your
answer.
Based on the information in the case, it seems that Virgin America is focused on a
single segment. This qualifies as concentrated strategy. While the airline certainly
3. Write a positioning statement for Virgin America.
Follow the basic template set forth by the textbook: To (target segment and need)
4. Will Virgin America succeed in the long run? Why or why not?
The fact that Virgin America has recently turned a profit for an entire year is a
good sign. This is especially true considering all the barriers to entry as well as
Teaching Suggestions
Ask students to consider their most recent airline experience. Ask them what they loved
about it (not just what things the airline did well, but what they loved about it). The list
will likely be pretty short. Then, ask students what aspects of the experience were
negative. List both sets of responses on the board. After they have read the case, make a
list of all the amenities on Virgin America that are unique. Finally, ask the class if they
would be willing to pay more for that kind of experience. Finish by asking how much
more.
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