Ryanair was Europe’s original low fares airline and is still Europe’s largest low fares carrier. In the current year Ryanair will carry over 42m passengers on 495 low fare routes across 25 European countries. We have 19 European bases and by the end of March 2007 Ryanair will operate a fleet of 134 new Boeing 737-800 aircraft with firm orders for a further 117 new aircraft (net of planned disposals), which will be delivered over the next 5 years. These additional aircraft will allow Ryanair to double in size to over 84m passengers p.a. by 2012. Ryanair currently employs a team of 4,200 people, comprising over 25 different nationalities.
The following work emphasizes on the marketing strategy of the Ryanair and analyses the present and future market situations.
2. PRINCIPLES AND PROCESSES INVOLVED IN DEVELOPING MARKETING STRATEGY
There is a wide range of definitions of strategic marketing. Of all these Kotler(1987) provides one of the widest definitions;
Marketing is a human activity directed at satisfying needs and wants through exchange processes.
Marketing strategy is a crucial part of corporate strategy at the level of the SBU and the portfolio of products it manages. As a part of this process the techniques are fundamental to the allocation of resources which forms a key part of the strategy implementation.
This is the most important aspect to taken into consideration because there are only two unique activities in business ‘Innovation and Marketing’ (Drucker).
In this present chapter, key principles and processes involved in the development of marketing strategy are identified with regarding to the organization Ryanair.
The marketing planning process involves the following steps:
· Corporate objectives
· Marketing audit
· SWOT analysis
· Marketing objectives and strategies
· Estimate expected results
· Identify alternative plans and mixes
· Measurement and review
The marketing plan of an organization contains
SWOT analysisAssumptionsMarketing objectives and strategiesProgrammesSWOT analysis analyses the internal strengths, weaknesses, opportunities and threats of an organization to analyse its position in the market
Some assumptions about the key determinants of marketing success and failure.Overall marketing objectives and strategiesProgrammers containing details of timing, responsibilities and costs with sales forecasts and budgets.The degree to which each of the separate steps in the diagram needs to be formalized depends to a large extent on the size and nature of the company. The marketing planning procedures generally result in greater profitability and stability in the long term and also help to reduce friction and operational difficulties within organizations.
2.1.Marketing strategy of Ryanair
Ryanair borrows its business model from American air carrier Southwest.Ryanair is the largest low-cost airlines in Europe It flies mainly to leading airports.Ryanair places more focus on attracting both business and leisure travellers although all its aircraft have single-class cabins.
2.2 Key concepts to aid strategic planning
A group of customers with broadly similar needs constitutes a market segment .Ryanair evaluates the current and potential segmentation to reveal the untapped or under-tapped opportunities in the travel market.It identifies its customers as holiday tourists,business traveler and special or common interest traveller segments and tries to evaluate the opportunities to develop its marketing strategy.
One of the key decisions is about the positioning of the product in the market. This results from the simultaneous analysis and interpretation of the external and internal environments.Ryanair
Uses the PEST analysis and SWOT analysis to interpret the market environment and for the accurate positioning of its product in the market.
The marketing mix includes the 4 p’s ;Product,Price,Promotion and Place. Each of them has its different strategy to be adopted.Ryanair devises its own marketing strategy for each of its 4’ps which will be later discussed in the following chapters.
3.TOOLS AND TECHNIQUES USED TO PRODUCE A STRATEGIC MARKETING PLAN
The following tools and techniques are used to analyse the competitive business environment within and external to the organization to produce a strategic marketing plan. An organization selects and utilizes its own tools and techniques which suit its business environment to reach its set goals and objectives.
3.1 Porter’s Five Forces Model
Michael Porter was an innovator in structural analysis of markets. Porter’s five forces to analyze are
Threat from potential new entrantsThreat from substitutes using different technologyBargaining power of customersBargaining power of suppliersRivalry among existing firmsThe interactions between the five forces build a useful model of industry attractiveness about the present and future changes and the ambitions of the different players in the market themselves.
Ryanair applies this tool of Porter’s five forces to analyze the present and future trends and the position of its competitors in the market.
3.2 PEST Analysis
In trying to cover a wide spectrum of study, it is necessary to recognize the value of internal and external information for organization .External information is collected from a wide variety of sources.
PEST stands for
PEST Analysis allows Ryanair to analyze and assess the competition it is facing and changes in the technological and economic conditions affecting its business situation. Social, environmental and political information is increasingly important as wider issues may affect the firm.
3.3 SWOT analysis
It is a commonly used tool. Its primary purpose is to locate the organization in its operating environment and try to assess its internal and external capabilities and vulnerabilities-its purpose is diagnostic.
SWOT is a mnemonic standing for
Strengths and weaknesses are internal and are usually within the control of the organization.Oppurtunities and Threats are external and are not within the control of the organization.
Ryanair utilizes SWOT analysis to
Put the shorter-term plans together to consolidate strengths and address weaknesses.It calls for mare research, analysis and idea generation about the environmental factors; the threats and the opportunities.3.4 Marketing audit
This establishes the internal position of the company in marketing terms-in other words ‘where are we now’. The purpose of a marketing audit is to establish the marketing position for the company.
The main points associated with an audit are :
The current marketing situation of a company or department is compiled using a marketing audit. It is the means by which information for planning is organized.It is the means by which a company can relate to the environment in which it operates.It is a systematic, critical and unbiased review and appraisal of the environment and of the company’s marketing and its operations.3.5 The Ansoff matrix
This is a well known model. Its primary purpose is to analyze the organization’s approaches to is products and to its markets to assure that an appropriate marketing strategy is being pursued and possibly to reveal opportunities.
The Ansoff matrix
3.6 Boston Consulting Group (BCG) matrix
BCG matrix is simple and concentrates on the criteria of market growth and market share.
Stars are SBUs with a high market share in a high growth industry and have a good earning potential. This product is usually costly to maintain.
Cash cows have a high market share but have probably matured in s slow, or zero, growth market they are typically well established with loyal customers.
Question marks are ones having a relatively low market share. They need development expenditure.
Dogs are characterised by low market share and low growth. These are for potential liquidation and in some circumstances their retention may be necessary.
This matrix is dynamic and will change overtime as market conditions get better or worse and indeed as products move through their product life cycle stages.
3.7 General Electric model
This matrix is developed by the management consultants, McKinsey & Co, for General Electric (USA).It was an attempt to try to overcome some of the difficulties encountered when attempting to apply the BCG matrix .The technique uses market attractiveness and business position as its two criteria.
3.8 Shell directional policy matrix
This was developed by Shell Chemicals in 1975.Its scope covers the organisation’s competitive capabilities and prospects for profitability. But it has certain limitations;
It assumes that the same set of factors is universally applicable for assessing the prospects of any
Relevant factors and their importance vary both according to the firm’s products and individual characteristics of each company.
No guidelines on how to implement the strategy is mentioned in the matrix.
. 4.GENERATION AND EVALUATION OF MARKETING STRATEGY OPTIONS
To evaluate its marketing strategy each and every organisation uses certain possible options.Ryanair also uses certain options to develop its marketing strategy which are discussed in this chapter.
4.1 Porter’s generic strategies
Porter’s generic strategies assume that the organisation will seek to dominate a segment or segments of the market, seeing off all competitors by the excellence with which they serve those segments. Porter advocates ‘gaining and maintaining competitive advantage’.
Ryanair uses this option to gain competitive advantage over its competitors.
Porter’s generic strategies are
This is the strategy where an organisation offers a product or service which is uniquely different from its competitiors.This can be achieved by offering a totally different product or service.
This is the strategy where the organisation enables itself to provide the product or service at a cost less than any other competitive organisation. This mainly emphasises on the ability of the organisation to price below its competitors.
This is the strategy where the organisation enables itself to provide the products or services at a
Given sector of the market with great accuracy and with a depth of capability and knowledge to support its position in the sector.
Ryanair pursues the cost leadership strategy .This is a low-cost airline where the entire market is based on offering competitive prices and best services to its customers. With in a less period of time this airline implemented this strategy amidst tough competition and emerged as the largest low cost carrier in the Europe.Eventhough this airline is targeting different segments of the market to strengthen its position it is still following its low fare price structure.
4.2 Core competences
An organisation’s skills and capabilities to run and develop its operating businesses are called its core competences. The core competences will be the key options for an organisation to develop its marketing strategy.
The following are the core competences of Ryanair which help in crafting of its marketing strategy
Ryanair acts as a “virtual airline” with ‘Low price’,’Value for money’ and ‘Efficiency’ a core values.Ryanair’ website forms an integral part of it business.Ryanair has a performance related pay structure.Efficient yield management system which enables it to sell seats from a single reservation system.4.3 Competitive advantage
Five types of strategic situation have been identified which determine competitive advantage. They are
Market developmentMarket dominationMarket selectivityDifferential advantageNo advantageRyanair gains its competitive advantage by adapting differential advantage type of strategic situation. This arise from special capabilities and experience in the aviation field as the largest European low cost carrier and possessing sophisticated fleet, low-cost source, innovative services,favaorable brand image ,strong sales force and excellent distribution system through internet. This type of advantage forms a key component of its marketing strategy.
4.4 BUSINESS ANALYSIS
The optimal business portfolio is one that fits perfectly to the organisation’s strengths and helps to exploit the most attractive markets and industries. For the portfolio planning framework the GE matrix is more advanced form. GE matrix is applied to Ryanair and a brief conclusion of the analysis is given below.
General Electric model
High medium low
Invest heavily for
Invest selectively and build
Develop for income
Invest selectively and develop selectively
Harvest or divest
Develop selectively and harvest
Build on strengths
Ryanair’s position is analysed and identified as invest heavily for growth where the business position and market attractiveness is high .So ryanair is currently adapting its strategy to expand its network and strengthen its position by investing to develop its air traffic system and 161 firm orders for the Boeing 737-800 fleet indicates that it is investing heavily in the market to gain its advantage over its competitors and to strengthen its position. It develops its marketing strategy based on this evaluation.
Ryanair positions itself as a market challenger which is a strong follower in the market share terms. The position is evaluated as its rival companies are not far behind in services even though it is the largest player in the low cost airline sector in the European market. The second largest player in this sector Easyjet is gaining relative market share and is posing a challenge.
All the above marketing strategy options and their evaluation play a major role in writing a strategic marketing plan for Ryanair
5. STRATEGIC MARKETING PLAN
5.1 EXECUTIVE SUMMARY
To provide the best, economic and safe point-to-point air services.
The intended audience will be the customers of all kinds including the business class peoples to whom also we will offer the best services which are money-valued.
Scope of this plan is to come up with a best strategic marketing plan for the RYANAIR airlines .In this plan emphasis will be given on the competitors, market share and the services provided by the Ryanair.
Mission of Ryanair is “to provide the customers with safe, good value, point-to-point air services and to deploy industry lowest cost-short haul seats in European market. To effect and to offer a consistent and reliable product and fares appealing to leisure and business markets on a range of European routes. Developing people and establishing lasting relationship with the suppliers.’’
To execute this mission it is highly focussed on minimizing all the operational costs including staff,aircraft,airports,marketing and financing.
Keys to success
The following are the key factors which are contributing to the success of Ryanair.
Costs which are genuinely lower.Yield management system for efficient use of air traffic.Market growth for low cost carriersShifting of customers from established airlines and surface transport to low cost carriersNumber one position in customer serviceInitial primary service
Ryanair’s early marketing strategy was based on ‘making flying as affordable as a pair of jeans ‘and asked travelers to ‘cut out the traveling agent’.Ryanair places more focus on attracting businesses travelers as well as leisure travelers all though all its aircraft have single-class cabins.
Ryanair is the largest low cost airlines in Europe and flies mainly to leading airports.
Ryanair is the largest European low cost carrier with highest turnover rate with an average 40 million passengers every year and imaging rate of ticket sales soaring every month. Even though it is facing tough competition from its closest rival Easyjet and other established airlines which are adopting low fare strategies it continues to maintain its top slot in the European sector. The following marketing plan aims at achieving its target sales and continues its growth rate to strengthen its position in the European low fare market.
5.2 OBJECTIVES OF THE FIRM:
The objectives of the firm are:
Best customer service.
BEST CUSTOMER SERVICE:
Ryanair’s first and topmost priority is to provide best customer service within the economic range. It aims to offer a wide range of services which are no less than the major airline companies operating across the world.
The sole basis for any organization is to make profit. It is necessary for the wellbeing of the organization, its customers, staff ,to cope with the competition, to provide best services and to maintain reputation in the market. Ryanair is the organization which exactly suits this purpose ; its revenue and profits are increasing year by year which shows a healthy sign in the market.
Ryanair aims at growth both in terms of market and finances .It first started as airlines offering low cost scheduled air services within Europe. Now it has operating bases throughout the UK and mainland Europe.
Ryanair also stands as one of the good examples for corporate companies by performing its duties for the society. This airline offers funds to charities.
Ryanair also contributes a lot to environment through its low noise producing and less fuel consuming fleet.
5.3 MISSION STATEMENT:
Mission of Ryanair is simple and straight forward.
“To provide the 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 they will develop their people and establish lasting relationships with their suppliers.”
5.4 COMPANY SUMMARY:
Ryanair airlines was founded in 1985 by Christy Ryan(after whom the company is named),Liam Lonergan(Owner of a irish tour operator named Club Travel) and noted Irish businessman Tony Ryan,founder of Guinness Peat aviation.The airline began with a 15 seat Embrear turboprop aircraft flying between Watford and London Gatwick with an aim of breaking the duopoly on London-ireland related flights at that time held by British Airways and Aer lingus.
Ryanair is a irish company headquartered in Dublin.Its biggest operational base is at London Stanstead airport.It is europe’s largest low-cost carrier and it is one of the world’s largest and most successful airlines.Ryanair operates –at one count- on 460 routes to 25 countries.
Ryanair now owns 124 flights including latest Airbus A350XWB and Boeing 737-800 .It plans to increase its fleet to 147 which include Airbus A350XWB and Boeing 737-800 by the end of 2007 which will add a feather in its cap.
Ryanair takes a pride in its dedicated staff both on ground and in the sky whose contribution enables the company to deliver its service without compromise.
Ryanair is certainly a profit making company.It boasts of a record 19% growth in annual profits compared to 2006.The Dublin-based carrier declared that its adjusted profits after tax for 2007 is 321.8 million euros (204 million pounds) compared to 289.3 million euros the previous year.
In developing a strategic marketing plan, market analysis is the most important thing to be performed.It helps a market planner to demonstrate the exact position of the organisation in the market.Strategic marketing analysis includes the following steps.
Identifying the target market.Market segmentation.Identifying the business competitors.Target market:
To assume which segment or segments of the market the organisation seeks to dominate, we use the Generic Strategies of Michael Porter (1980).Porter’s tool aims at
‘Gaining and maintaining competitive advantage ‘’ which corresponds more accurately
To the definition ‘’ gaining and regaining competitive advantage’’ (Richard D Avenue)
Porter’s latest model of generic strategy (1985) emphasizes on identifying three broad stages in the evolution of the market.
In this stage buyers are hesitant over the product since the industry and their products are in the early stage.
Transition to maturity:
It is the stage there is a general slow down in the growth and reduction in the profits of an industry.
In this stage the needs of the customer changes and the product is basically becoming stale.
5.6 APPLYING PORTER’S GENERIC STRATEGY TO EASYJET
Ryanair basically is a budget airline which offers air services at low cost across Europe.
Its target customers are both
leisure classBusiness class.Leisure class->this includes the people who fly for holidays across Europe.this is the most important target group for Ryanair where it concentrates more on providing low-cost airfares for the whole family and o