The Marketing Strategies Implemented By The Airline Easyjet Marketing Essay

The merchandise Strategies Implemented By The Airline Easyjet merchandise EssayThis communicate has been confidence gameducted in clubho accustom to clarify the foodstuffing strategies implemented by the skyway roaringJet in distinguish to gain a agonistic edge every redact its rivals in the market for outset- damage aviation. We researched in depth the European cypher air passage manufacture and calculateed at the various strategies intentd by easyJet, on with its main(prenominal) rivals. The main findings from our study suggest that easyJet has been very roaring in its approach to its merchandise campaigns, as it has built and sustained a unbendcapable image over the course of its operations at the top of the skyway assiduity. The company so far, essential continu some(prenominal)y seek out sweet strategies and ideas as the industry becomes increasingly much private-enterprise(a).IntroductionEasyJet was established in 1995 by Stelios Haji-loannou and miscellanys as a no frills meek- apostrophize flight path, aiming to under-cut its rivals, such(prenominal) as, BMI Baby, Ryanair, and FlyBe. They all operate on a similar business model to that of the advanced-pitchedly triumphful USA southwest air ducts. The competitive proceeds of budget airlines is maintained by achieving paltry operating exists, increasing revenue and using invigorated parsimony technologies such as the Internet to sell their reaping.The cheap airline field currently has an 8.65% sh atomic number 18 of the total airline market with easyJet attaining 3.76% (Belfast Telegraph, 2004). EasyJet achieved a cabbage of 62.2m in 2004 and announced major elaborations into Central/Eastern Europe in an effort to apply their winning rowula to a wider proportion of the airline industry (EasyJet, Company Overview 2005).The project will consult easyJets marketing and competitive environment to ascertain the pip they hold in the industry, in that locationby constructing an outline of the various strategies easyJet implements to achieve a competitive edge over their rivals.EasyJets Marketing and Competitive EnvironmentEasyJets marketing environment will involve a PEST analysis, highlighting major influences upon the low cost airline industry. The competitive environment analysis will signify as Sanderson and Luffman confirms, current strategies of competitors, the capability of new competition to enter the market, the behaviour of suppliers and buyers, and the availability of substitute overlaps (2001, p.20). Introduced in the form of a SWOT analysis.Marketing EnvironmentPoliticalIn 1990 the European deregulation of commercial aviation coincided with the expansion of the low cost airline industry. The low cost carriers in the industry were able to slay advantage of the relaxed laws and expand their operations.EconomicMercer caution Consulting (2002) cover uped that the low cost airline market conforms to the criteria of three comp one and only(a)nts ( jut 1). Firstly, it put ups a simple product consisting of no seat reservation, free seating, and adequate in flight dish out. They be a genuine no frills airline with a simple product volunteered to the market. Webster (2004) far-famed easyJets ability to maintain a high degree of customer commission through a new, user friendly website with an improved employment process.Figure 1 Source Impact of Low comprise Airline Mercer Management Consultancy 2002Secondly, it is apparent that the low cost airline market is characterised by jointures and acquisitions the expansion of existing low cost airlines and finally, market exits as a depart of bankruptcy e.g. Debonair. Further much(prenominal), the low cost carriers operate short haul, consign to point traffic with short frequencies, pursue aggressive marketing campaigns and deal with standby airports. EasyJet, however, has differentiated in this respect by dealing with major hub airports e.g. Gatwick. Finally, the industry operates a low cost ethos, which is maintained by lean gross revenue, high productivity of resources, low maintenance costs and low wages.The expense of fossil crude oil which is currently 50% more expensive than a year ago is a cause of concern for the low cost airline industry. pass Executive of easyJet Ray Webster said The price of fuel remains high and volatile. In spite of this, operating margins for the period are expected to be broadly in line with last year. The problem of high oil prices may be a cause for concern for smaller carriers who are not able to maintain low cost instals.SocialThe low cost carriers localization their product to leisure travellers and non business travellers (See Figure 2), however easyJet has differentiated by hind ending the business and leisure segments. This behavioural segmentation creates a more dynamic edge in comparison to their competitors who solely strain on leisure travel. Thus, easyJet must ensure that its strategy is tailored to a wider market. Walton (2005) confirmed that easyJet was presented as a European low cost airline with a current reading of 26 million passengers in 14 discover countries. It has 190 routes to 58 airports and 163 million people live in spite of appearance one hour of easyJets airports.Figure 2 Source Low Cost Airlines Gaining Momentum in Europe Schneiderbauer, D. Fainsilber, O. (2000)TechnologicalLow cost carriers contrive the ability to maintain a high degree of customer management through user-friendly websites with improved booking processes. These websites have the capability of charging bookings with greater ease and utilising an easy to use fare finder to obtain the flashyest fares. merchandising tickets via the technological medium of websites and hence by having no travel agents, they vitiate paying agency commissions.Competitive EnvironmentStrengthsEasyJets core strengths according to Morgan Stanley furbish up to their ability to provide a si mple fare structure with safe value for money and maintain low unit costs. Furthermore, they have true a strong brand through serving the Swiss and UK market and through strong corporate culture, whilst developing a broad multi base network.WeaknessesEasyJets weaknesses have become apparent in the fiscal year of 2003, whereby bunch costs rose by 68% to 97 million which accounted for 13% of operating costs. Additionally, advertize costs also increased by 43% to 28 million, accounting for 3.7% of total costs and crucially, easyJets airport charges had surged to 103% to a walk 149 million.OpportunitiesThe BBC (2005) highlighted easyJets ack instantlyledgement of the opportunities that discharge become apparent as a results of the raging competition from Ryanair. The new demand from business customers has forced the need for the supply of certain facilities such as airport lounges for the frequent flyer one way of looking at the practicalities of developing better services. Meet ing the demands of life style changes is crucial and with the ever growing new routes such as to capital of Italy and Berlin, this will help retain some competitive edge.ThreatsSome of the main competitors are Ryanair, Bmibaby and FlyBe. Ryanair were initially founded in 1985 and then re-launched in 1990-91. Their aim was to offer fares 50% or humble than those offered by the big flag airlines, specifically as a low-fares, no-frills operation. Mintel (2003) reported that Ryanair generated 190 million cyberspace before tax. They had acquired other rivals such as KLM and Buzz, hence in the 2004 third quarter results they stood in first position for passenger growth, with the terminal fares and lowest costs in Europe. It was apparent that recently, they have continued to maintain their position at the top of the industry.Ryanair have responded aggressively to easyJets home markets. They have bring d birth their prices in the newest markets such as Knock, Cork and Shannon. They are building up pressure in Liverpool and Luton with advertise rises in operating flights and with the development of new competitors such as Jet2 and Monarch, easyJet are facing potentially turbulent times.EasyJets Marketing Strategies to Achieve Competitive AdvantageAn analysis of easyJets marketing strategies, namely product differentiation, mergers and acquisitions, location, the website, advertising and marketing campaigns and the Airline TV documentary will now be performed to depict how easyJet gains a competitive advantage in the low cost airline industry.The consumer matrix (Bowman and Faulkner, 1997) details perceptions that customers have with date to the product or service offered to them and the prices charged. Applying this to easyJet we can guestimate the general perception generated by the market. EasyJets flights offer the consumer value for money as the benefits gained from the transaction relative to price appear favourable in comparison to their competitors.Percei ved priceHiHiPerceived use valueLoLoWestHeterogeneous views, with regard to the demands for the service, indicate that, one service meets all demands may lead to mistakes in the competitive strategy. Within the airline segment there will be consumers who are price sensitive and gum olibanum demand the low-cost alternative. Hence, easyJet are next the customer matrix price strategy in order to attain sustainable competitive advantage (maintaining benefit whilst reducing price) fixingOne of easyJets successful marketing strategies implemented is the location element of the destinations to which it runs flights. In order to gain a competitive advantage over its competitors, easyJet wing to all the main business and leisure airports in Europe so that customers do not then have to then transfer a long distance to their final destination.Other firms in the industry such as Ryanair for example, although attempt to compete at a price direct with easyJet, do not operate nearly as effici ent a route map. Arguably such rivals can only offer the low-cost advantage through flying to more remote destinations. EasyJet operate to the highest take of efficiency at the airports themselves with rapid turnaround times and can thus fully utilise their fleet system, whilst running extra flights for passengers. EasyJet has greatly expand its hub airports, to now having bases in all parts of the UK and more recently, integration into European airports.Advertising and Marketing CampaignsThrough utilising to the full the marketing take addressable, easyJet has been able to build and sustain a successful corporate image from the stemma of the company 10 years ago. EasyJet advertisements can be seen everywhere, in cities all over Europe from giant billboards to public transport buses. The company has do sure that wherever there are potential customers for the airline, their presence is do known through advertising offers on flight costs, launch of new routes or merely to expres s why one should chose to fly with easyJet.In a highly competitive market, easyJets marketing team has had to sustain a strong advertising strategy and look to implement new marketing ideas so that they are not losing out to other airlines. In more recent years, they have taken much greater advantage of online advertising and with the increasing personal use of the Internet, this has examineably enhanced easyJets consumer reach. Although national media is an available marketing pickaxe, easyJet adopt a regionalised European approach to advertising (Dixon, 2005). oft of easyJets marketing campaigns have concentrated on making an impact at a local level and has proven to be a more personalised strategy, which has enabled them to adopt their methods of marketing to the regional customers they are addressing.Airline TV documentary seriesA marketing strategy implemented by easyJet which has contri entirelyed to their success, was the fly on the wall documentary series Airline broadcas ted in January 1999. It was aired across the nation on prime time TV channels and was nominated for programme of the year in 2001 (BBC, 2005).Although the programme render easyJet in a bad light in certain instances, for example, refusal to hold passengers to board the planes, it acted as positive publicity for easyJet. EasyJet promoted themselves as a cheap and reliable airline, in a market where there were previously a couple of(prenominal) competitors going for the low cost image. This clearly shows that according to Miles and Snows theory (1978), easyJet were playing as a prospector, as they were the first movers in the market place to try and unlock the low cost airline niche market.WebsiteEasyJets website acts as a main distribution channel for e-ticketing with all flight info also accessible to customers online, thus reducing material costs. EasyJets website can be viewed in 15 languages in attempt to make their flights accessible to a wider audience. Sophisticated yield management systems have been implemented in order to maximise seat revenue which is seen as the largest area of competitive advantage (Jobber, 2004). The use of new economy technologies has improved flows of information, allowing easyJet to update prices immediately, thus maximizing flight profitability.Porters theory in relation to easyJet clarifies that they are adopting a cost leadership strategy which is portrayed to customers via the cheap fares offered online. However, although technology provides advantages in harm of cost reductions for easyJet, its competitors have followed suit and have established websites of their own, offering consumers passing competitive rates in comparison to easyJet. Consequently, easyJet needs to constantly conform it strategies in order to retain a competitive advantage.Product specialismPorters theory details two basic grammatical cases of competitive advantage lower cost and differentiation (OShaughnessy, 1996). EasyJet achieves a competit ive advantage by hobby the cost-leadership approach, transferring this low-cost advantage to the consumer in the form of low price.EasyJet have make notable attempts to make their product stand out from its low-cost airline competitors. McDaniel (2000) argues that a products differentiating feature acts as a competitive advantage and there will be no long-term survival unless it has one. Also, it is evident that easyJet is mainly the trend setter for differentiation in its market.CNN reports that EasyJet has recently relaxed hand luggage restrictions which are 40% bigger than the current allowance (EasyJet, 2004). EasyJets no freight restriction for cabin baggage and flexible ticket scheme which can create earlier flight standbys highlights their ability to pursue consistent mental hospital for their customers. This may be an attractive prospect for business passengers and differs from other low-cost airlines, which maintain limits.Furthermore, they have implemented a 100% self yellow journalism in with plans for self-handling to minimise disruption. EasyJet has also deviated from the typical pricing methods used by other airlines by implementing inclusive pricing instead of prices that exclude booking charges and taxes. This decision came after the Air Transport Users Council had highlighted consumers dislike of airlines trying to con them with low fares that do not exist, by offering a low fare up front, only to add a host of gilded taxes and charges later on in the booking process (Internet Travel News, 2005).On Thursday 1 August 2002, easyJet and Go completed a merger deal worth 374 million. This represented a form of horizontal integration and indicated easyJets desire to increase its market share. By December 2002 easyJet had reached two further important milestones in its merger with Go by announcing a maven Air Operator Certificate (AOC), and the launch of a unified sales channel. The integration costs incurred amounted to 7.9 million, approxima tely 3 million less than forecasted (EasyJet financial report 2002/2003). According to Stelios, the deal contributed meaningfully to our objective to become Europes leadership low-cost airline, by strengthening our position in important target markets(Financial Times, 2004). The Go acquisition was a major step away from easyJets own strategy of growing organically. By operating almost as a monopolist in the low fare airline market, the merger gave easyJet the option to raise prices and restrict supply in order to create paranormal profits. Additionally, the merging firms were able to exploit economies of scale to reduce cost. The purchase of Go has given easyJet a major presence at Stanstead, home of both Ryanair and KLMs buzz. Prior to the acquisition, their networks barely competed and they had rarely even flown out of the same airport. The following data was compiled a year after the deal completion which illustrates the success of the merger between EasyJet and GoAirbuses wi llingness to brave out the costs of introducing the new aircraft type to the fleet far outweighed the costs of the complexity of running a dual fleet. The A319 provides a number of advantages for easyJet. It offers passengers more comfort, safety, travel quality, higher reliability and the probability for lower fares with its unbeatable operating economics. Additionally, the sizing of the A320 family allows easyJet to graduate up to the clxxx seat A320 and even 220 seat A321, if they choose to do so in the future.Mathur and Kanyon (2001) proposed a matrix (see below) that identifies and classifies types of competitive positioning which creates differentiation. EasyJet, in terms of support differentiation, provide a differentiated service by offering more prime routes to major airports such as recent expansions at Gatwick airport (and other European airports) which shifts the focus to high yield traffic opus abandoning economic and operative advantages of secondary aiports. In terms of merchandise differentiaton, easyJet provide variables such as self check in kiosks, ease of use for the websites and booking of tickets, unrestricted baggages restraints such features of differentiation helps the consumers to make repeat purchasers with easyJet. Furthermore, easyJet use high quality Airbus A319s which provides customers with a range of benefits as listed above.The purpose of this report has been to assess how EasyJet has utilised successful marketing strategies through the various channels available, in order to establish and maintain a dominating position in the low-cost airline industry. One of the great business success stories of the past five years has been the launch of the easyJet airline company (Dixon, 2000). To press forward our analysis of this objective, we not only researched EasyJet and its marketing campaigns adopted over the years, but also identified the main strategies used by the other starring(p) competitors.EasyJet has constantly trie d to identify itself to its consumer base as the best form of budget travel in Europe. The company recognised the demand for this form of travel and its marketing strategies have been primarily geared around providing more efficient, low-cost flights, whilst maintaining as a high a quality of service as possible. Through their clear, effective website, they have strived to make it increasingly easy for customers to deal with the company, whilst strategically positioning their advertising to be directed at the market served. Policies for expansion have been the driving force behind easyJets significant growth and have enabled them to eliminate key rivals from the industry.However, with the emergence of new, strong competitors in the industry and the increasing demand for low-cost travel, it is evident from the report that easyJet must remain innovative in its marketing and allocate sufficient resources to securing a long-term position as the market leader.RecommendationsThe low-cost airline industry is reaching maturity. Miles and Snows theory of the Four Business Strategies would suggest easyJet should move towards being an Analyzer from a Prospector. This therefore takes into account that easyJet needs to concentrate on maintaining its established market leadership.With regards to enhancing their market power both long and short-term, easyJet should look to move into newer mediums for advertising, primarily using television broadcasting.EasyJet need to further consider developing the levels of efficiency and motivation within their wide employee base and by fomenting such other dimensions of this business, will help maintain another key element which still, other rivals fail to recognise.Word Count 3,195