Explanation of marketing strategies adopted by easy jet in the Airline Industry and its growth tactics. Then focus on easy jets efficient use of the marketing mix to enhance its competitiveness. Finally a discussion will be provided on easy jets current position, success factors in the industry and prospects for the future.
Introduction
I will be playing the role of a market researcher to evaluate the companies marketing a competitive strategy. The company easy jet was first established in the early 1995, the founder of the easy family was Stelios Haji-Loannou. He also branched out easy to various different regions of transactions such as easy cars easy money; the company base is located in Luton, and is recognized by the distinctive colour orange the building has been painted. Easy jet is one of the successful competitors in the low-cost airline industry, which at the moment is the leading low-cost airline in Europe, with has established 289 routes, from 36 airports all over Europe, with 122 aircrafts such as the Boeing 737 and airbus a319 aircrafts, transporting over 32million passengers.
Company
Traditional airlines have used complex and costly hierarchical business models, which faced intense competition from the newer companies with a more simple approach to their business models. This helped to reduce costs in the company which also reduced costs for customers, and improved on communication and operations as communication was more direct then having to go through a chain of people. This flat structure also helped reduce complexity for customers and costs for paying wages. Easy jet changed air travel by their ‘no frills’ policy, which cuts unnecessary costs such as travel agent costs, processing and printing tickets, instead they used internet booking which introduces further discounts.
Easy jet brought smaller companies in the markets such as 49% of TEA Basel AG which they later named easy jet Switzerland. And buys over ‘go-fly’ airlines.
PEST-G
Political
European Union’s commercial policy 1997 EUs deregulation of airlines
Airports push on taxes
Operating restrictions due to rotations and time
Environmental
Brand-new aircrafts being purchased, plus online bookings
Forth largest economy held by the UK
Costs increase as oil prices increases
Social
September 11th reduced numbers of customers from using such services which were substituted by ground transport, and for businesses teleconferencing.
Technology
Is fast developing in the airline industry which can result to be very costly, shared check in systems and self services gives opportunities to allow joint investments to step forward.
Geophysical
Cheap air travel is causing harm for the environment, as air travel creates more carbon dioxide then a car per passenger.
Expansion for Britain’s airports or even building new airports is being discussed.
400million air travel passengers are expected to travel through Britain’s airports by 2030.
Competition
Easy jet has high competitions with
1999 Swiss air which uses its political influence to prevent easy jet operating, in order to protect its route. Which has now been demolished as behaviours as this was made illegal within the European Union since 1993? The main competitor that easy jet has is Ryan air this airline is also a low-cost no frills airline that is as well established as easy jet. The rivalry stepped up a level when easy jet snatched the top performing airline award 2003 from Ryan air which Ryan air had been wining for the previous 3years in a row. The debate still goes on, to which company is bigger, and as both easy jet and Ryan air brought smaller firms.
Although easy jet carries more passengers Ryan air is still worth 2.5times more then easy jet. As easy jet accounts for a third of all trips, Other competitors such as BMI baby, jet 2, and flybe account for one in ten trips. Easy jet is still known as the market leader.
5forces
Michael porter the founder of the 5forces model he describes this model, to show the advances, and relationships between the 5factors: potential entrants, suppliers, buyers, substitutes, and competitors. This model is a basic example of a 5force model; every individual company has a model to suit them best.
5forces
Consist of:
Competitors
Suppliers
Buyers
New entrants
Substitutes
Potential entrants
High barrier to entry because of high competition in the market
Rising fuel prices,
Buyers
Cheap deals on the internet
Promotions
Customers choose the price, (price elasticity)
Substitutes
Ferries
Train
Euro tunnel
Cars
Suppliers
Airports
Management staff
Industry competitors
Low-cost carriers
Traditional carriers
Low-cost airlines
Sales and profits
Easy jet profits doubled to the year before which was 5.9million, although profits dropped at1.3million, analytically this was due to purchases of 15 of their very own Boeing 737 aircrafts. In 2000 air passenger duty was reduced, which accounted for the increase of profits and revenue, this also allowed a further discount on internet bookings; along with another order on 17more aircrafts being ordered. Easy jet paid a great influence on the government to reduce travel taxes even further as 12.98% of revenues gathered were profits. From year 02 profits kept plummeting as sales in 03 reached 932million, and the following years increasing by 10% in 04. The profit chart shows a positive correlation as revenues profits both increase.
Profits and Revenue:
Swot analysis
Strengths
Air travel is experiencing an increase on demand
Documantry /TV soap Airline gave easy jet the publicity it needed, become well established
The low cost airline has a great influence on the market
Easy jet eliminated all the extra costs involved, to make travel more affordable
Has a good safety record
Attracting a wider market as Europe’s airline industry is deregulated
Travel prices are appealing and economical
Paperwork is minimal as most transactions are computerised
Easy jet aims a 30minute turnaround, which adds to the efficiency.
Economically friendly, reduction of paper work etc
Europe’s leading low-cost airline
Repeatedly voted the best low cost airline
Awarded top performing airline
Weaknesses
Airports easy jet occupies are hard to access
Luggage space is limited
Air travel is an easy way for government to raise revenue
Customer services aren’t a priority
Seats aren’t located
Preferred timeslots are pre-booked, so most easy flights are off-peak
Lack of airspace, or airport capacity
Disturbances to air travel as extensive checks are carried out
Airlines stagnant- slow development
Too much competition with other low-cost airlines
Opportunities
Easy jet has been expanding continuously, by launching new routes, buying more aircrafts, making available more destinations.
Easy jet offers jobs and good career opportunities
New aircrafts are used to increase economy and to reduce pollution.
The take over of go-fly airline has reduced competition from one rival, it has also benefited the airline long term
Threats
Airport tax to compensate for the environment
Low-cost airlines may introduce lower fairs to more popular destinations
High competition from other low cost airlines, as a result of continuing liberalization of the European Union air transport market.
As easy jet it a smaller company compared to other competitors. Although easy jet has cut costs dramatically compared to its rivals, major threats such as marketing tactics being used on easy jet from a larger company could result into hardship.
Fuel prices have adverse effects on profits
High speed rail links may cut down on air travel
The company’s marketing strategy
Segmentation
The entire market broken down in to segments, to help focus on every aspect of the market without looking past it; this enables easy jet to find their target customers. Easy jets core market is leisure and business too, as low fares are attractive to frequent travellers.
Targeting
Identification, evaluation, and selection. Targeting customers varies as easy jet offers a variety of destinations, and everyone has their own preferences. Main targets would be under 45years of age as people from around this age tend to travel for leisure.
Positioning
Creating and maintaining a place in the market to benefit themselves and their products. Easy jet achieves this by maintaining their ‘no-frills’ policy and keeping travel fares low, by offering no free food, no paper tickets, limited luggage.
Growth
Developing more routes, branching out to more airports. Easy jet, along side its rival Ryan air could be placed at maturity stage, as both airlines are yet expanding.
Current Stage:
The marketing mix
As easy jet is a company where the customer chooses the price, targeting a specific audience is hard. The marketing mix consists of four basic stages for success. Which are also known as the four Ps (product price place and promotion?)
Product
Low-cost flights to various popular destinations, easy jet also offer other services such as easy jet hotels, which is appealing, as customers could put together their packages.
Price
As the customer chooses the price, after eradicating extra costs such as free food, extra luggage, no seating order, no processing tickets and paper work as most is done on computers. Making products more affordable doesn’t necessarily mean the public would be attracted as some people associate high price with quality.
Place
With 289 routes to various places, and a continuous growth in destinations easy jet remains an attractive airline to turn to. With internet bookings, easy jet is available anywhere and everywhere.
Promotion
Promotion is making the product known to the public, in a positive manner that’d increase passenger numbers. Easy jets best tactic used was by having a documentary/ soap broadcasted on ITV. Easy jet also has a lot of ‘word of mouth’ publicity. They have build customer loyalty through promotional techniques.
Passenger Statistics:
Evaluation
Current position
Easy jet is well established, with it’s no frills policy, which is the reason for easy jets continuous success. Although easy jet relies on fewer profits they believe that till pay off long term, which in its current state seems to be working out well. Low cost airlines seem to be putting the major players out of business, as British airways is stepping back form 20european companies,
Evidence
Easy jet already hold one third of the market share. 95% of all seats are sold online, with 81% of all flights on time and 94% of flights that arrive within an hour; with such great punctuality, loyalty of customer’s lye with easy jet.
Future prospects
The easy family has continuously tasted success; and wishes to one day take league in the market, this seems to be well on the way as their techniques to lure customers in never seems to tier itself out. As fuel prices are on a rise, easy jets profits will be further reduced as their tactic is to transport as many passengers as possible then bringing in profit, because they believe this’ll be benefiting long term.
Conclusion
Looking deep into easy jets marketing sector it can be concluded that easy jet had brought a new trend in the airline industry that stiffens competition, with low cost flights. The market easy jet is categorized under is one of the most aggressive of its kind, as costs are cut dramatically, and profits are purposely reduced just too out do the competition. Easy jets clever use of marketing mix, economy friendly approach, and macro and micro environmental, held the upper hand in this competitive industry. Operations, management and pricing tactics, contributed to the expansion of this airline. Easy jet would have to become more alert as this industry is rapidly developing, the company would have to put to use strategies that would suite the era. Becoming more alert would help to stay ahead of competition, as Ryan air runs close lines alongside easy jet because both offer similar products and services.
Easy jet Launch Dates:
Appendices
Appendix 1
Information extracted from
- A means of analysing the product portfolio and informing decision making about possible marketing strategies
- Developed by the Boston Consulting Group – a business strategy and marketing consultancy in 1968
- Links growth rate, market share and cash flow
-
Stars – products in markets experiencing high growth rates with a high or increasing share of the market
- Potential for high revenue growth
- High market share
- Low growth markets – maturity stage of PLC
- Low cost support
- High cash revenue – positive cash flows
- Products in a low growth market
- Have low or declining market share (decline stage of PLC)
- Associated with negative cash flow
-
May require large sums of money to support
- Products having a low market share in a high growth market
- Need money spent to develop them
-
May produce negative cash flow
- Potential for the future?
Appendix 2
Information extracted from
Revenue and profit
References
Investor relations, Easy jet airline company Ltd, 1997-2004
Source:
Accessed: 19/03/2007
Price search, London stock exchange Company, 2005-05-02
Accessed: 19/03/2007
Guidance notes bized,
Accessed: 19/03/2007
Guidance notes
CGP- A2-level business studies
The revision guide
Photos google.com, search Easyjet
