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Easyjet Report.

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Introduction

Easyjet Report MMM3310 MSC MARKETING By Andrew Orchard (aco98) 981752693 CONTENTS PAGE Page(s) SECTION 1 INTRODUCTION 3 SECTION 2 INDUSTRY ANALYSIS 3 DIAGRAM 1 PORTERS 5 FORCES 3 SECTION 2.1 POTENTIAL ENTRANTS 3-4 SECTION 2.2 BARGAINING POWER OF BUYERS 4 SECTION 2.3 BARGAINING POWER OF SUPPLIERS 4 SECTION 2.4 INDUSTRY COMPETITORS 5 SECTION 2.5 AVAILABILITY OF SUBSTITUTES 5-6 DIAGRAM 2 EASYJET'S SUBSTITUTES 6 SECTION 3 CUSTOMER ANALYSIS 6 SECTION 3.1 CUSTOMER MOTIVATIONS 6 SECTION 3.2 SEGMENTATION 7 SECTION 4 NATURE AND EXTENT OF COMPETITION IN 8 THE MARKET SECTION 4.1 HOW COMPETITIVE ADVANTAGE IS SOUGHT 8-10 DIAGRAM 3 SOURCES OF COMPETITIVE ADVANTAGE 8 SECTION 5 SWOT ANALYSIS 10 SECTION 5.1 INTERNAL ENVIRONMENT 10-11 SECTION 5.2 EXTERNAL ENVIRONMENT 11 SECTION 5.3 PEST ANALYSIS 11-13 SECTION 6 CONCLUSION 13-14 SECTION 7 APPENDIX 15 SECTION 8 BIBLIOGRAPHY 16 SECTION 1 INTRODUCTION Stelios, the owner of Easyjet was so impressed after flying Southwest airlines (of the US) that he decided to set up his own European version of the company. Today Easyjet are one of those companies that need little introduction. They have taken the European budget airlines market by storm. When people think cheap flights they now think Easyjet. This report will examine how and why Easyjet are doing so well. SECTION 2 INDUSTRY ANALYSIS SECTION 2.1 POTENTIAL ENTRANTS * Entrance of companies new to the industry. * Entrance of companies already present in the industry but previously or currently competing in the high service segment. Although Stelios believes that 'the market is bigger than most people think', there are already many competitors serving that segment and thus competition is becoming intense. ...read more.

Middle

SECTION 4 THE NATURE AND EXTENT OF COMPETITION IN THE MARKET Since the deregulation of European airlines in 1992, competition has become intense. The low cost carriers compete by price, non-price competition is not really an option, as frills are left out of their service. The low-cost airlines, especially Easyjet have allocated large sums of money for promotional offers and deals, e.g. fly to allocated places for �1. This kind of offer has raised public awareness of the companies involved and has prompted similar competitive moves from the other low-cost operators. Easyjet has recently teamed up with The Telegraph newspaper offering extremely cheap deals in return for the collection of coupons. This type of ploy has been extremely successful in earning Easyjet a sizeable portion of market share. According to The Observer newspaper, 'budget airlines have captured almost one-fifth of the UK air travel market - 23 million passengers a year - generating ticket sales of �1 billion. If they go on growing at the current rate, they will overtake the established airlines in the short-haul market by 2020, leaving the big names to fight it out for high-spending Business and First-Class passengers on long-haul routes.' This shows how well the budget airlines have done. As more air companies recognise the significance of being a budget airline, the number of competitors in the low-cost market will rise. SECTION 4.1 HOW COMPETITIVE ADVANTAGE IS SOUGHT Diagram 3 below shows the possible areas in which competitive advantage can be sought. Easyjet certainly operates within the overall cost leadership box, by obtaining a cost structure that is below that of many of their competitors within the industry. ...read more.

Conclusion

SECTION 6 CONCLUSION This report has shown how well Easyjet has done and is doing. However they should be aware that they do not become over confident they must keep note of what their competitors are doing, and should always have enough capital available to them to implement radical changes. Listed below are some ways in which Easyjet could improve their performance and profitability. * Could create a database of customer profiles to enhance the customer-supplier relationship. * Easyjet could look to increase the number of routes and countries that they fly to. * Easyjet could build alliances with transatlantic operators, therefore providing connections with their flights. * Collaboration of other Easy businesses e.g. Easyfinance can offer 0% interest loans for flights, Easyrentacar could offer deals on transport to and parking at airports. * According to Computer Weekly magazine 'Easyjet's web site is robust and scalable enough to meet the ambitious target of selling all its tickets online.' Therefore Easyjet could abolish their call centres and thus cut more costs. * As the number of low cost carriers is growing it could be beneficial for Easyjet to adopt some kind of loyalty scheme. * Conduct focus groups to determine how Easyjet can improve their no-frills service further. Listed below are 3 sizeable problems that Easyjet may come across. * Over diversification (as Virgin seem to have done) * Easyjet are looking to increase their fleet numbers which would result in more flights, it is therefore possible that they will be unable to provide the same punctual efficient service, also expansion of a company is accompanied by a rise in their cost base. * Easyjet's choice to float their company on the stock exchange may result in a change in organisational goals, and also riskier strategies may be now rejected. ...read more.

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