The student provided a comprehensive description of the companys segmentation variables. In addition, the student provided adequate reasoning and justification

Company Case Virgin America: Flight Service for the Tech Savvy Provides inesses commut ve Think elpingid malaty Retete After an exceptionally frustrating day at the office, Jessica set out to unwind in one of her favorite third places. The mood lighting immediately brought her blood pressure down as she walked in and took a deep, relaxing breath. She was happy that her favorite spot was available--a comfy leather chair in the back corner of the room, where she used the touchscreen at the table in front of her to order her favorite drink. Then, putting ona set of noise-canceling headphones, Jessica began catch- ng up on her favorite TV show with her own personal entertain # this sounds like a local Starbucks or trendy nightclub, think again. Jessica had just boarded a flight on Virgin America, one of the youngest airlines in the United States. It's also the hottest airline, besting all competition in various industry and Customer surveys. And after just six years in business, Virgin America also reached profitability faster than any other airline How does a startup airline break into one of the most com Dettive industries in the world, notorious for barriers to entry? For Vrgin America, the answer is two-fold-by putting customers fest and by targeting the right customer segment. an industry characterized by customer complaints about ser vice, it would seem that a customer-centric approach would be enough to gain a foothold in the market. But when Vegin started air service in the United States, at least a few other arties had already established themselves based on a customer first mantra, including industry leader Southwest Airlines And Virgin America knew that it could not expect to succeed by playing the low-price game. Not only was Southwest the reigning champion on value, but the bulk of airine competitors were already besting each other up for low price dominance Virgin America found a different competitive hook it targeted a segment of frequent fiers who were young, sawy, nuential and willing to pay just a little bit more for an airine that would take care of them--the Silicon Valley faction. By providing e ceptional service and amenities that appeal to this particular slae of artine customers. Vrgin America has been able to charge slightly higher fares and sal establish a growing base of fiercely ment portal 220 5 y art 7 ore in all of airdom. loyal patron gav.tr Homing in on the Details Targeting the Right Customers Vrgin America first took to the skies in 2007. This wouldn't be the first shot at starting an airline for Richard Branson-founder of parent company Virgin Group. Virgin's international airline, Vogin Atlantic, had been crossing the pond between the United States and Europe since 1984. But Virgin America would be an Verjn Group executives make no day-to-day decisions af Virgin Stirely independent enterprise. And while Branson and other America, the unorthodox Virgin culture-fun, creative, even stis Take care of your people first and profits will follow. In One of Branson's core values that permeates Virgin America Offering unique amenities in the airline business is a challenge for any company. But from the beginning, the Virgin America perience was designed with its target customer in mind. Its feat consists of 1 Airbus A300 serios planes, each brand new When it went into service, minimizing the unexpected delays due to maintenance and repairs Custom-designed leather seats are roomier and more comfortable than average coach seating. And the mood lghting? Not only does it bathe the aircraft cabin in an appealing purplish glow, it automatically adjusts to one of 12 dit- ferent shades based on outside light. its planes with the latest hardware and software. From day one, To appeal to tech gurus, Virgin America focused on equipping Virgin was the only domestic carrier to offer fleetwide in-flight Wi-Fi-a distinction that it maintains to this day, even as it has re Whecky-is unmistakable 240 PART 3 3 Designing a stayed ahead of the competition by upgrading the network to ensure the fastest in-flight speeds available. Every seat has its own power outlet, USB port, and 9-inch video touchscreen with a QWERTY keyboard/remote control That touchscreen provides access to the most advanced entertainment and Information system in U.S. skies. Virgin America's proprietary Red system allows each guest to choose on-demand movies, TV programs, music, or video games. Red also allows patrons to track their flight on interactive Google Maps, engage in seat-to-seat chat with other customers, and or der food and drinks for themselves or anyone else on board. It's a system designed to give passengers a feeling of control during an experience that is otherwise mostly out of their control Many of these ideas came by way of Virgin America's techy clientele. It's no accident that the company's headquarters are located in Burlingame, California, just a few short miles from the San Francisco airport. In fact, Virgin America is the only ar- Tine based in Silicon Valley. Not only is the company constantly experimenting with every aspect of the business, it has made strong efforts to involve Silicon Valley entrepreneurs and execu- tives in the process, helping Virgin to think like its disruptive cli- entele. "We see ourselves as more of an incubator," says Luanne Calvert, Virgin America's chiet marketing officer Take VX Next, for example-a group of 30 so frequent fli- ers who act as a brain trust for Virgin American penerating ideas for the company at no charge. Among other winning ideas, this group was instrumental in developing the company's recent in teractive promotional campaign. Alth center of the campaign is a slick cinematic site that provides wors with a virtual tour of a Virgin America flight. Demonstrating the insin-fight porks are founders and CEOs of companies such Pandora, G. and Pitchfork. As part of the tour, visto to the discover that several of the passengers onboard we Vigin America frequent thers and Silicon Valley celebrities who have made creative con- tributions to the airline's services with things such as curating in-fight music and menu items Virgin America's home-brewed toch panel was also instru- mental in creating the company's latest safety video. When the company started operations, it delighted customers with a safety video like none other-an animated short featuring a techie nun and a matador with his bull Posted online as well, the video tacked up millions of views and comented Virgin America's im- age as a company that could find creative alternatives to just about anything, even a federally mandated reminder to wear Seatbelts. That image has carried over to Virgin America's now safety video-one created by a top Hollywood director and world-class choreographers that features 10 So You Think You Can Dance alums, two former Olympians, and one American Idol finalist. Debuting In Times Square and getting plenty of coverage from the press the now safety video racked up 6 milion views in less than two weeks. annual Airline Quality Report-a survey that ranks afines et there as wel. In fact, Virgin America has been number onente on mishandled baggage, customer complaints, denied boarding Consumer Reports survey for customer satisfaction in the air and on-time percent-for the past three years in a row. In att not only did Virgin America tako top honors, it came away with the highest score achieved by any U.S. airline in many years. Despite all of Virgin America's success, the airline nous is a tough place to survive and thrive. In the United States, four airlines control more than 80 percent of the market Vio America knows that maintaining its high rankings will be a che lenge, especially as it expands into new markets particular markets with cold climates, a factor that increases the lico of canceled or delayed flights. As the number of passengers on flights increases, boarding and deplaning times will also crease, affecting multiple customer service metrics. And with Virgin's techy and connected clientele, any sip-up is likely to be texted, tweeted, or otherwise broadcast for all the world to see Playing the features and amenities game is also problematic Things that delight customers today become ho hum tomorrow especially when competitors are constantly trying to improve their offerings as well To romain competitive as it moves into the future, Virgin America recently announced that it has agreed to be acquired by Alaska Airlinos-another small West Coast-based are known for its high level of service and customer loyalty. With more than 1.200 daily flights and 280 aircraft, the combined ar Ine wit provide much stronger competition on the West Coast even with the largest airlines. This should be a boon for custom ers of each airline who have boon frustrated by limited route options in the past But with such a strong and unique positioning targeted to ward a specific segment of the industry, many are wondern what effect the Union of these two airlines will have on Virgin America's style and quality of service. After all, if hip best de scribes Virgin America's style, Alaska Airlines is best described as practical "My hope is that Alaska goes in with an open mind and that they learn some things, says one travel industry analyst. It's not hip. It's not sexy, but Alaska has a lot going for it The deal is st subject to approval by regulators, and are morgers can take years to complete. But one thing is for sure Alaska Airlines is not only acquiring an airine with a strong ser Vice record. It's taking on an unusualy profitable airine. Vign America achieved an annual profit after just sex yoors Flying the face of skeptics. the brash young artine continued on upward trajectory by posting strong increases in profits in each of the two years since For the most recent year, Virgin America achieved $201 million in profit on $15 bon in revenues-139 percent higher profits than the year before and the highest ever for a young airline. The company also recently wort public in the second largest arine IPO in history. The question is this wa the new Virgin America continue to do what it has done in the past-wow every customer with exceptional service who giving the tech community a little something ext? Or we that special Virgin America brand personally slowly dancer in the shadow of older, more established Alaska Arines brand? Above the Clouds Although there is plenty of anecdotal evidence that Virgin America's customers are thrilled with its service. It's the industry quality mat ings that count. Vrgin Amoncais coming through with flying colors