The Marketing Strategies Implemented By The Airline Easyjet Marketing Essay

The Marketing Strategies Implemented By The Airline Easyjet Marketing EssayThis report has been conducted in order to clarify the trade strategies implemented by the airline business easyJet in order to gain a warlike edge every(prenominal) all over its rivals in the market for piteous- woo aviation. We researched in shrewdness the European budget airline industry and looked at the various strategies used by easyJet, a hanker with its main rivals. The main findings from our study offer that easyJet has been very sure-fire in its approach to its marketing campaigns, as it has built and sustained a strong image over the course of its operations at the top of the airline industry. The company however, must continually seek place stark naked strategies and ideas as the industry becomes increasingly more rivalrous.IntroductionEasyJet was established in 1995 by Stelios Haji-loannou and ope rank as a no frills inexpensive airline, aiming to under-cut its rivals, such(preno minal) as, BMI Baby, Ryanair, and FlyBe. They all operate on a similar business model to that of the highly successful USA southwestern United States airlines. The hawkish emolument of budget airlines is defended by achieving low operating cost, increasing r fifty-fiftyue and using new economy technologies such as the net profit to sell their product.The low-cost airline sector currently has an 8.65% sh be of the total airline market with easyJet attaining 3.76% (Belfast Telegraph, 2004). EasyJet achieved a profit of 62.2m in 2004 and announced major expansions into cardinal/Eastern Europe in an effort to apply their winning stressula to a wider proportion of the airline industry (EasyJet, Company Overview 2005).The project will mention easyJets marketing and competitive environment to ascertain the spatial relation they hold in the industry, thereby constructing an analysis of the various strategies easyJet implements to achieve a competitive edge over their rivals.EasyJet s Marketing and agonistical 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 potential of new competition to enter the market, the behaviour of suppliers and buyers, and the availability of substitute products (2001, p.20). Introduced in the trope 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 fitted to take advantage of the relaxed laws and expand their operations.EconomicMercer Management Consulting (2002) reported that the low cost airline market con take ins to the criteria of collar components (Figure 1). Firstly, it provides a simple product consisting of no seat reservation, free seating, and adequate in flight service. They are a genuine no frills airline with a simple product offered to the market. Webster (2004) noted easyJets ability to maintain a high degree of customer focus by dint of a new, user friendly website with an improve troth process.Figure 1 Source Impact of Low Cost Airline Mercer Management Consultancy 2002Secondly, it is apparent that the low cost airline market is characterised by mergers and acquisitions the expansion of existing low cost airlines and concludingly, market exits as a result of bankruptcy e.g. Debonair. Furthermore, the low cost carriers operate short haul, blame to point traffic with short frequencies, pursue aggressive marketing campaigns and deal with secondary 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 sales, high productivity of resources, low maintenance costs and low wages.The price of o il which is currently 50% more expensive than a year ago is a cause of concern for the low cost airline industry. Chief Executive of easyJet Ray Webster say 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 become year. The problem of high oil prices may be a cause for concern for smaller carriers who are not able to maintain low cost bases.SocialThe low cost carriers position their product to leisure travellers and non business travellers (See Figure 2), however easyJet has differentiated by targeting the business and leisure segments. This behavioural division creates a more dynamic edge in comparison to their competitors who solely focus 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 winder countries. It has 190 routes to 58 airports and 163 million people live within one hour of easyJets airports.Figure 2 Source Low Cost Airlines Gaining Momentum in Europe Schneiderbauer, D. Fainsilber, O. (2000)TechnologicalLow cost carriers have the ability to maintain a high degree of customer focus through user-friendly websites with alter booking processes. These websites have the capability of charging bookings with corkinger ease and utilising an easy to use get along with finder to obtain the cheapest fares. Selling tickets via the technological medium of websites and hence by having no travel agents, they avoid paying agency commissions.Competitive EnvironmentStrengthsEasyJets core strengths according to Morgan Stanley relate to their ability to provide a simple fare structure with good value for money and maintain low unit costs. Furthermore, they have developed a strong brand through serving the Swiss and UK market and through strong corporate culture, whilst developing a broad multi base n e iirk.WeaknessesEasyJets weaknesses have become apparent in the fiscal year of 2003, whereby cabal costs rose by 68% to 97 million which accounted for 13% of operating costs. Additionally, advertising 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 staggering 149 million.OpportunitiesThe BBC (2005) highlighted easyJets acknowledgement of the opportunities that stern become apparent as a results of the fierce competition from Ryanair. The new demand from business customers has forced the need for the provision of certain facilities such as airport lounges for the frequent flyer one way of looking at the practicalities of developing better services. Meeting the demands of lifestyle changes is crucial and with the ever growing new routes such as to Rome and Berlin, this will help retain some competitive edge.ThreatsSome of the main competitors are Ryanair, Bmibaby and FlyBe. Ryanair were i nitially founded in 1985 and then re-launched in 1990-91. Their aim was to offer fares 50% or lower than those offered by the heavy(p) flag airlines, specifically as a low-fares, no-frills operation. Mintel (2003) reported that Ryanair generated 190 million profit before tax. They had acquired other rivals such as KLM and Buzz, hence in the 2004 3rd quarter results they stood in introductory position for passenger growth, with the lowest 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 lowered their prices in the newest markets such as Knock, Cork and Shannon. They are building up press in Liverpool and Luton with further 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 Advan tageAn 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 per giveed 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 regard to the product or service offered to them and the prices charged. Applying this to easyJet we can guesstimate 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. sensed priceHiHiPerceived use valueLoLoWestHeterogeneous views, with regard to the demands for the service, indicate that, one service meets all demands may baksheesh to mistakes in the competitive strategy. Within the airline segment there will be consumers who are price sensitive and thus demand the low-cost alternative. Hence, easyJet are following the customer matrix price strategy in order to attain sustainable competitive advantage (maintaining benefit whilst reducing price)Location whizz 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 flies 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 level with easyJet, do not operate approximately as efficient a route map. Arguably such rivals can only offer the low-cost advantage through flying to more outdoor(a) destinations. EasyJet operate to the highest level of efficiency at the airports themselves with rapid turnaround times and can thus fully u tilise their fleet system, whilst running extra flights for passengers. EasyJet has greatly expanded 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 channels available, easyJet has been able to build and sustain a successful corporate image from the birth 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 made sure that wherever there are potential customers for the airline, their presence is made known through advertising offers on flight costs, launch of new routes or merely to express 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 considerably intensify easyJets consumer reach. Although national media is an available marketing option, easyJet adopt a regionalised European approach to advertising (Dixon, 2005). Much of easyJets marketing campaigns have concentrated on making an encroachment 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 contributed to their success, was the fly on the wall documentary series Airline broadcasted in January 1999. It was aerial across the nation on superlative time TV channels and was nominated for programme of the year in 2001 (BBC, 2005).Although the programme depicted easyJet in a bad light in certain instances, for example, re fusal to allow 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 few competitors going for the low cost image. This clearly shows that according to Miles and Snows theory (1978), easyJet were acting 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 information also favorable 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 p rices immediately, thus maximising flight profitability.Porters theory in relation to easyJet clarifies that they are adopting a cost leading strategy which is portrayed to customers via the cheap fares offered online. However, although technology provides advantages in terms of cost reductions for easyJet, its competitors have followed suit and have established websites of their own, offering consumers extremely competitive rates in comparison to easyJet. Consequently, easyJet needs to constantly adapt it strategies in order to retain a competitive advantage.Product DifferentiationPorters theory details two basic types of competitive advantage lower cost and differentiation (OShaughnessy, 1996). EasyJet achieves a competitive advantage by following the cost-leadership approach, transferring this low-cost advantage to the consumer in the form of low price.EasyJet have made 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 generally the trend setter for differentiation in its market.CNN reports that EasyJet has recently relaxed consecrate luggage restrictions which are 40% bigger than the current allowance (EasyJet, 2004). EasyJets no weight restriction for cabin baggage and flexible ticket scheme which can create earlier flight standbys highlights their ability to pursue consistent innovation 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 check 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 afte r 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 spurious 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 single Air Operator Certificate (AOC), and the launch of a unified sales channel. The integration costs incurred amounted to 7.9 million, approximately 3 million less than forecasted (EasyJet fiscal report 2002/2003). According to Stelios, the deal contributed significantly to our objective to become Europes leading 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 supernormal profits. Additionally, the merging firms were able to endeavour 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 willingness to support 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 depend ableness and the opportunity for lower fares with its unbeatable operating economics. Additionally, the sizing of the A320 family allows easyJet to graduate up to the 180 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 many prime routes to major airports such as recent expansions at Gatwick airport (and other European airports) which shifts the focus to high yield traffic while abandoning economic and shamus 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 facilitate 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 leading competitors.EasyJet has constantly tried 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 o f 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 come about 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