- The use of the Internet to reduce distribution costs. EasyJet operates under the branding of the ‘web’s favourite airline’, based on the fact that EasyJet sells a higher proportion of seats online, through EasyJet.com, than any other airline. EasyJet was one of the first airlines to embrace the opportunity of the Internet when it sold it’s first seat online in April 1998. In August 2001 approximately 89% of all seats were sold over the Internet, making EasyJet one of the UK’s biggest Internet retailers.
- Direct sell only. EasyJet only sells tickets over the Internet, through the telephone sales centre or at an airport desk. This means there are no middlemen adding unnecessary costs.
- Ticket less travel. Passengers instead receive an email containing their travel details and confirmation number when they book online. This helps to reduce significantly the cost of issuing, distributing, processing and reconciling millions of tickets each year.
- No free lunch. Eliminating free catering onboard reduces cost and unnecessary beauracracy and management. It is also an important differentiator between EasyJet and other airlines and a potent reflection of the low-cost approach. The concept of a ‘simple service model’ also reflects a more general point about eliminating other unnecessary, complex-to-manage and costly services, such as pre-assigned seats; interline connections with other airlines and cargo/freight carriage.
Ultimately, EasyJet identified a segment of the market which had a need for low cost air travel, with no ‘frills’ and through implementing this concept EasyJet, during the financial year to 30 September 2000, reported pre-tax profits of £22 million on a turnover of £263 million and carried 5.6 million passengers.
In addition the company has won many awards and tributes voted for by consumers. The airline was named ‘Winner of Best Value’ category in the first ever ‘Visa E-tail Awards’ held at the beginning of 2001, voted for by the public. EasyJet also excelled in a Consumers Association Survey, being the only low-cost airline to be ranked in the first division of a customer satisfaction table in ‘A Holiday: Which? Survey. EasyJet also outrivaled competitors, in a survey for the best low-cost airline, (two years in a row) from Business Traveller magazine and readers of The Daily Telegraph, and was voted seventh best airline in the world. The above six places going to long-haul carriers renowned for the quality of their service.
EasyJet targets customers who want great value fares. They achieve the satisfaction of their customers by keeping costs to a minimum, by cutting out the unnecessary ‘frills’, eliminating the middleman, by selling direct to passengers, and using less congested and less expensive airports.
This customer-focused philosophy is known as the ‘marketing concept’. The marketing concept is a philosophy, not a system of marketing or an organisational structure. It is founded on the belief that profitable sales and satisfactory returns on investment can only be achieved by identifying, anticipating and satisfying customer needs and desires. Barwell.
TOOLS USED TO IMPLEMENT THIS PHILOSOPHY
Relationship Marketing
Relationship marketing is the name of a strategy that involves developing and enhancing enduring partnerships with customers. The goal is to deliver long term value to customers and the measure of success is reflected in lasting customer satisfaction.
It is important for companies to recognize the importance of retaining current customers. Competition for EasyJet is increasing and the costs of attracting new customers are rising, moreover building and maintaining a base of committed customers is extremely profitable to any organisation.
The best approach to customer retention is to deliver high customer satisfaction that results in strong customer loyalty. EasyJet applies the following value building approaches that can be used as tools for an organization to use to develop closer customer relations. Firstly by adding financial benefits to the customer partnership. For example, as the internet plays a vital part in the EasyJet business plan, and is critical to it’s on going success, EasyJet offers financial incentives for people to book via the internet. This is due to the Internet being the most cost-effective distribution channel and low-cost operations are crucial to EasyJet’s ability to offer low fares.
The following are some of the incentives offered to customers who book via the Internet:
- Passengers booking online receive a discount of £2.50 for each leg of a journey.
- If customers wish to book seats more than a month in advance of the departure date of the flight, they can only do so by booking online. This is due to fares generally increasing, as the departure dates get closer. As a result the best fares are firstly available to those who book via the Internet.
- EasyJet offers the flexibility on all its fares, unlike many other airlines. For an administration fee of just £10, plus any difference in fare you can alter your flight up until the last moment.
All EasyJet promotions are exclusive to the Internet so that customers are required to book online to take advantage of the discounted fares.
The second approach is to add social benefits as well as financial benefits to the customer partnership. By researching and identifying customer needs and wants, EasyJet established that there was a segment of the market, mainly business customers who required the option of open-ended return tickets, offering this service would enable the customer to travel to their desired destination and return on their preference, whether it be a duration of two days or three weeks, moreover, by adopting this option passengers can still qualify for the lowest fares, unlike many other airlines who charge extra for this convenience.
However Relationship Marketing does not just apply to the relationship between the company and the customer, but also a network of relationships between stakeholders, suppliers and employees.
The following definitions of Relationship Marketing from Everet Gummesson support this concept.
“Relationship Marketing is marketing seen as relationships, networks and interaction”.
“Relationship Marketing is the creating and maintaining a network of relationships – outside as well as inside the company”.
Relationship Marketing is evidently a strategy, which is eagerly enforced within EasyJet, which is apparent from the following mission statement:
“To provide our customers with safe, good value, point to point air services. To effect and to offer a consistent and reliable product and fares appealing to leisure and business markets on a range of European routes. To achieve this we will develop our people and establish lasting relationships with our suppliers”.
In order to employ relationship marketing every department in the organisation is required to interlace and work directly together with marketing as a team to serve the customer.
Internal marketing
In market-led organisations, real customer focus has to work from the top down and the bottom up. And has to be fully accepted by the whole workforce. To achieve successful implementation of the marketing concept, the organisation therefore focuses on how best to tap and channel the knowledge and understanding, the motivation, the inspiration and the imagination of all staff to deliver products and services that meet exactly what the customer requires from the organisation.
The underlying assumption of the philosophical perspective of the market orientation is that organisational attitudes, values and beliefs influence the behaviour of the firm, an ultimately its performance.
Internal marketing is another important ‘implementation’ tool. It aids communication and helps us to overcome any resistance to change. It informs, and involves all staff in new initiatives and strategies.
Internal marketing is about identifying and satisfying the wants and needs of employees as a prerequisite to satisfying the wants and needs of customers. Essentially internal marketing is concerned with prompting market-orientated management in which marketing is not a function but a way of doing business. The success of the external marketing programme depends on the internal marketing organisation and asserts that this identification translates into lower employee dysfunctional behaviours.
Managing Change
The similarities in differing groups of internal customers allow you to segment them. As Jobber (1995) explains, you can target three different segments namely ‘supporters’, ‘neutral’ and finally ‘opposers’. Each group requires a slightly different internal marketing mix in order that the internal marketing objectives can be achieved.
The aims of internal market orientation appear to be two fold. Firstly it aims at improving market performance directly via customer satisfaction, employee motivation and retention, leading to lower employee related costs such as recruitment and training. Secondly, it appears to influence marketing performance indirectly by improving the internal environment of the firm and fostering market orientated behaviour.
Leadership
Firms that adapt and implement the marketing philosophy are said to be market orientated. Market orientation requires top-management leadership, a customer focus, competitor intelligence and inter-functional coordination to meet customer wants and needs and deliver superior value. It also entails establishing and maintaining mutually rewarding relationships with customers.
The effect of market orientation on employees is further examined by Menguc (1996) who determines that in market orientated companies sales people show more customer orientation, less role ambiguity and less role conflict. Role stress, (both role conflict and role ambiguity) is associated negatively with job satisfaction and employee commitment so by improving the market orientation of the organisation Menguc (1996) finds that job satisfaction and employee commitment are improved, as is the customer orientation of the sales force.
“The role of management in developing appropriate systems and structures for market orientation is particularly emphasised. This role includes, the use of appropriate human resources policies, (recruitment, training and rewards systems) to foster market orientated attitudes and beliefs, the development of a market-orientated culture, the reduction of interdepartmental conflict and barriers, and the development of interdepartmental coordination and communication”.
Market performance benefits internal marketing orientation suggesting that employees become more productive, morale improves, and employee turnover drops; the ensuing reputation for lower staff turnover means that the firm can attract and retain the best, most experienced staff and more productive and happy workers should translate into higher profits, reduced customer turnover and fewer customer complaints.
Consumer Behaviour
If a marketer can identify consumer behaviour, he or she will be in a better position to target products and services at them. It is important to understand the relevance of human needs to buying behaviour as marketing is about satisfying.
To understand buying behaviour is to understand how the person interacts with the marketing mix. The marketing mix constitutes the company’s tactical tool kit for establishing strong positioning in target markets.
The marketing mix also referred to as the 4 P’s i.e. promotion, price, product and place can be increased further to the 7 P’s including process, people and physical evidence. The 7 P’s in general represent the sellers’ view of the marketing tools available for influencing buyers.
Although marketing managers ultimately make decisions about target segments, packaging, pricing, promotion and distributing. People at all levels of the marketing system must work together to implement these marketing plans and strategies.
In addition the customer’s perception of the quality of services delivered and consumed are mainly affected by the performance of the contact personnel.
Competitors
Understanding your competitive arena and competitors strengths and weaknesses is a critical component of market orientation. This includes assessing what existing or potential competitors might be intending to do tomorrow as well as what they are doing today.
Conclusion
In conclusion the implementation of the marketing philosophy within an organisation….benefits…as opposed to….. ensure that…by putting into practice factors such as internal marketing, etc…………
Include in conclusion
The overall air transport market in Europe is expected to grow substantially in the coming years. The International Air Transportation Association estimates that the number of international scheduled passengers travelling between countries in Europe will grow from 176 million in 1999 to 215 million in 2003, reflecting an average annual growth rate of 5.1%
By contrast, the low-fare segment of the market is expected to grow at a significantly higher rate. A report published in January 2000 by Cranfield University estimated that low-cost airlines currently carry 4% of all domestic and international passengers within Europe, a figure expected to increase to 12-15% by 2010.