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the customers with high quality service which indirectly satisfies their needs (Sureshchandar et al., 2002, p.363). Now the big question here is “How do we satisfy the Customer?” The answer as given by Kano through his research is to meet their basic requirements and to delight them. (Matzler et al., 1996, p.7). Delighting the customer results from creating a positive emotional state wherein the customer’s expectations are exceeded to a surprising degree (Rust & Oliver, 2000, p.86). This paper revolves around a similar concept of how ‘Virgin Blue’, one of the largest airline carrier in Australia has made an effort to delight its customers by different innovative methods. Current and the transformed (after implementation) states have been discussed with reference to the Normann’s Service Management System (SMS) and finally light has been put on which major organizational factors have been required by ‘Virgin Blue’ to undergo the implementation of the innovative ideas to delight the customer. Starting its operations in August 2000, Virgin Blue is currently one of the most profitable airline carriers all round the globe with a total operating revenue close to 1.8 billion. Since its launch it has won various awards like the best ‘New Airline of the Year’, and has also introduced a number of different services like the ‘Velocity Awards’ which aims to provide better services to loyal customers, ‘The Lounge’ which is a refreshment zone for travelers and ‘Web Check in Options’. Various other services provided by Virgin Blue to its customers include seating options, extra legroom, in flight entertainment, freight services and gift vouchers for their customers. (Virgin Blue: The Virgin Blue History, 2007). For the purpose of this report all the above mentioned services have been taken into consideration as they form the core and peripherals of the service package.
their targets in future and more importantly their brand name in the market. pp.NORMANN’s SERVICE MANAGEMENT SYSTEM (SMS): The figure below shows the conceptual framework of Normann’s Service Management System. (Lovelock. Finally. who its customers are. The Service Concept refers to the benefits and the services that are offered to the client. 2 . 1991. 1991. Service Delivery System refers to the process by which the core and the peripheral services are delivered to the clients or customers. 2001). The Image gives an overview of what the company provides. 47-48). These include the core benefits which are essential and the peripherals which are add-ons to the core services . (Normann. p. (Normann.46) The Market Segment indicates the various kinds of clients for which the service is designed. p. Culture and Philosophy is the value and the ethics which are embedded within the company’s employees on which it survives. 46). The Service Concept The Culture and Philosoph y The Market Segment The Delivery System The Image Figure 1: Normann’s Service Management System Framework (Normann. 1991.
The table below shows the various services that are provided by Virgin Blue and the specific clients for which the service is targeted (Market Segment). 3 . Chec k-in Loung e Gate InFlight Baggage Claim Figure 2: The Travel Experience as a service process (Ekdahl et al. p..INNOVATION & SERVICES FOR DELIGHTING CUSTOMERS: Now the travel process or the travel experience model for a passenger (customer) where there could be a point of contact (Moment of Truth) by the company (Virgin Blue) is as shown below. 1999.405) Depending on this travel experience Virgin Blue has its own different kinds of services to suit different clients.
2007).Services Web Check-in Check-in Counter Kiosks Counters Lounge Lounge Room Seating Extra Leg Room In. relax zones and showers. Class & Business Youngsters Paid Flights Customers Old Age People. Business Class Especially Everyone Baggage Claim Loyalty Everyone Long term Customers Table1: Services & the Target Clients for Virgin Blue (Virgin Blue: Services. 2007). 4 . ‘The Lounge’ is open for everyone and provides the customers with an excellent environment to catch up on some work. This helps the customers to keep them refreshed and energetic on their journey (Virgin Blue: The Lounge. delicious choice of food and beverages.Flight In Flight Entertainment Freights Velocity Rewards Target Clients Tech Savvy Customers. with facilities that include free wireless broadband connection from Telstra. Tourists Everyone. (Virgin Blue: Velocity Rewards. 2007) The different t services have been explained below: Velocity rewards is one of the award-winning loyalty programs designed by Virgin Blue and is the only loyalty program that gives the customer Velocity Points and Status Credits when flying with Virgin Blue.
These benefits can be classified as the core. Virgin Blue has started their new service of providing with live streaming of the Foxtel channels at a very nominal rate. PREVIOUS AND CURRENT STATE SERVICE CONCEPT: 5 . 1991). This helps them to keep their customers relaxed and entertained all over the journey (Virgin Blue: In-flight Entertainment. (Normann. The next section discusses about the previous and the current state service concept and also benefits and returns Virgin Blue has received after introduction of the above mentioned services. ground services and information services right from the time they book their tickets until they check out their luggage. 2007). which are in addition to the core. Also from the above it is clear that Virgin Blue completely loads its customers with in-flight services. which are the more important ones and the peripherals.For In-Flight entertainment. Service concept is basically the benefits that the firm provides to its customers or clients.
348). getting their luggage to the right place and getting them at their destinations on time. (Gustafsson et al. p. 349) From the above figure it is clear that the core services for an airline carrier are passenger safety.The figure below shows a basic model on understanding how to fulfill the customers basic needs in the airline industry. Virgin Blue has been into innovation and done a similar job ever since it has launched. The company’s passenger base increased by 55 percent in 12 months whereas the profits raised by 47 percent over the previous year. The peripherals that were newly introduced included special seating comforts. (Virgin Blue: Annual Report.. p. Figure 3: Understand how to fulfill customers basic needs (Gustafsson et al. Blue Rooms to spend time before boarding and in-flight Catering in order to be a low cost airline carrier.1999. 1999. 2004) 6 . But in order to delight the customers the company needs to tailor the process shown in figure 2 by providing the value that the customer has invested (time & money) on the organization. Their major task in 2003 was to provide the above mentioned core services at lowest possible costs.
self check-in kiosks.9 percent from the previous year. 1999. Virgin Blue won the ‘Best Award Redemption’ title in 2007 and also the net profits raised by 92. the frequent flier program for loyal customers and mainly introduction of low fare philosophy all over Australia. (Virgin Blue: Annual Report. They have made the travel process transparent by giving the passengers control over all the services that they offer. p. 2007) The table below shows a comparison of the status of Virgin Blue in the year 2004 and 2007 based on the elements of the service package. The core service now is to make the passengers travel with comfort at low costs. 3. (Kim & Mauborgne. 2. So by the end of 2006. Year 2007 Reach Safely Reach on Time Baggage Safe & Sound 7 . Virgin’s core service had completely changed from just making the customer’s reach safely to providing them the value for the money invested by them on Virgin Blue.Since 2004 Virgin Blue has laid more emphasis on value innovating its products and services. Just six months after the launch of ‘Velocity Awards’. Elements of Service Package Core 1. Value innovation refers to innovation with buyer value because value without innovation may tend to improve buyer’s net benefit without considering the long term benefit to the company. Year 2004 Reach Safely Reach on Time Baggage Safe & Sound 1.45). For this they have introduced heaps of tangibles like live2air. 2. 3.
rather they have to be totally satisfied to delight them and achieve loyalty from 8 . Seating Comfort Luxury of Planes Greetings by Staff Cleanliness Table 2: Current & Previous State Service Concept (Virgin Blue Annual Report. Explicit Tangible 1. 3. 3. Headphones for watching TV.4. 5. 3. 2004 & 2007) From the above table it is clear that there has been a tremendous improvement in the innovative services offered by Virgin Blue to keep their customers completely satisfied. 3. Luxurious Journey Entertainment Low Cost Live2air Web Check-in The Lounge On Board Menu Freight Services 6. Reaching Destination on Time Luggage Would Reach Safely 1. Reach Safely with Great Entertainment No Hassles of Check-in at Airport Satisfaction of flying due to Velocity Awards Relaxing at the lounge Information Screens Luggage Space Seating Space Quality of Food Implicit Tangible 1. 1. 3. 4. 2. Also as said by Schneider & Bowen that not only satisfying customers is enough to retain them. 6. 4. 4. 2. 2. 2. 4. 5. 3. 2. 2. Low Cost Blue Zones Blue Rooms In-Flight Catering 1. 4. 3. 2. 2. Seating Comfort Luxury of Planes Greetings by Staff Cleanliness 1. Music Implicit Intangible 1. Environment Friendly Explicit Intangible 1. 4. Luggage Space Seating Space Quality of Food 5.
This is true as every year the customer base for Virgin Blue is increasing steadily. (Schneider & Bowen. 1999. 1991). Handling Complaints 3. (Legarreta & Miguel. With this the satisfaction level of the passengers has increased by providing them with hassle free journey. ORGANIZATIONAL FACTORS TO DELIVER THE BENEFIT BUNDLE: The last three elements of the SMS deals with the delivery of the above mentioned services while creating a culture and image that helps the organization to earn above average returns and at the same time satisfy their customer’s needs (Normann.them. One way of satisfying customer needs is to bundle their services which may offer them monetary savings (Naylor & Frank. (Virgin Blue: The Virgin Blue History. The explicit intangibles have increased from basic services like low cost & in-flight catering to complete luxury and entertainment from live TV and wireless internet facilities at the lounge. Changing Employee Mindsets 9 . As far as the similarities are concerned the implicit intangible services like the seating comfort. greetings. Bundling as defined by Adams & Yellen (1976) is ‘selling of two or more services in a single package for a single price’.270). 2004.35). p. p.264). p. cleanliness & luxury inside the planes remain the same. 2007) Based on information in the above table. Also every service that was provided in the year 2004 has still remained in 2007 with major explicit and implicit additions. Information screens have been set up in-flight for passengers to keep them informed about time and distance from the destination. Client Relationship 2. 2001. the key distinctions are as mentioned below: Core service is not just safety but safety along with comfort. In order to deliver the price bundle the major organizational factors that need to be considered include the following: 1. Benchmarking 4.
In order to implement these services successfully Virgin Blue has built a culture of mutual trust & equity between its employees which helps the employees to have the same attitude towards its clients. 2007). 2006). Changing Culture – From being Product focused to Value focused & 6. Thus all the three subcomponents of the service delivery system (Personnel. Since past two years Virgin Blue has been awarded 14 titles which include the ‘World’s top low cost airline’. Virgin Blue provides its customers with the combination/all the benefits/services that the passenger wishes to have depending on his/her requirements. Apart from this they have their guest service system and guest contact centers to respond to both customer compliments and complaints. It also takes care of the ongoing learning of all the staff members which help them in delivering the best service possible. Client & Technology) have been blended together to delight the customers.5. (Virgin Blue: Department Profiles. Another important factor in delivering this benefit bundle is constant innovation by development of new services (Naylor & Frank. (Virgin Blue: Annual report. Continuous learning & improving environment. (Virgin Blue: Annual Report. SUMMARY: Virgin Blue’s service system with reference to Normann’s SMS has helped in better understanding their service package. 2001). ‘Most popular travel-transport website’ & ‘Best environmental initiative’. on ground staff and the guest contact centre. Thus they have created an image not only in terms of their service and products but also as being the top airline carrier in terms of community service and environmental protection. The guest contact centre delivers the one to one customer service as well as support for online customers. They have always tried to provide the best possible 10 . 2007). Every year Virgin Blue comes out with different innovative tangible services to serve their customer’s needs better. The guest service system looks after the recruitment and initial training of the cabin crew.
F. Thus ongoing and creative innovation by a firm on behalf of a customer is the only strategy that can sustain the long term success of a firm and at the same time delight their customers. 1999. A. 6. Their culture of implementing innovative ideas to delight the customers has resulted in it being one of the world’s best airline carrier. Managing Service Quality.25) (Word Count: 1984) REFERENCES: Ekdahl. Gustaffson. pp. ‘Customer-oriented service development at SAS’. 9. & Edvardson.. p. 11 .service to their passengers at the lowest price. 403-410. B.. (Kamdampully. 2002.
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