Ryanair Marketing Strategies: Opportunities, Threats - Essay.

Question:

Discuss about the Marketing Plan For Ryanair.

Company Background

Ryanair's route serves 34 countries in Europe, Africa (Morocco), and the Middle East (Israel). The Irish low-cost airline was founded in 1984 has its headquartered in Swords, Dublin, Ireland. Its primary operational base is at Dublin and London Stansted airports. The company is characterized by the rapid expansion that made them one of the most profitable low cost airlines in 2016. It is the third largest Airline in Europe by the number of passengers. It has world’s youngest fleet of BOEING 737-800s, with an average age of 4 years.  The airline is known across the world for carrying a lot of people due to the low flying cost.

Company competition, customer’s value and services

In the current competitive analysis the company strategic marketing plan is a process through which the company can plan its future activities. Marketing strategies of Ryanair are defined as a process through which an organization can align itself with the market in order to operate activities efficiently.  A strategic plan is formed beyond the next fiscal year.  Marketing planning plays an important role in delivering efficient results to the company.

The airline understands the market activities to identify the problems and to propose a plan to achieve desired solution.

The strategy development is focused on analyzing the various aspects that are involved in gaining the targets.  These strategies are used by the brand in making a difference that includes an extensive campaign (Kozlenkova, Samaha and Palmatier, 2014).  Strategic development is based on growth over the long-term sustainability. The market tactics are focused on achieving the long term objectives that are chosen to generate distinguished marketing opportunities. In the recent time, an excessive competition in the low-cost airlines industry has changed the situation.  Action plan includes three activities that include allocating tasks responsibilities, scheduling of marketing plan and setting of the budgets (Samaha, Beck and Palmatier, 2014).

New objective set and justification

Ryanair's objective is to firmly establish itself as Europe's leading airliner. Through its continuous improvements and expansion offerings they are consistently gaining a competitive edge over the other companies.

Specific	After Brexit the company is looking out to develop itself in the European market. Moreover they anticipate significant changes due to referendum in the airline industry. The company wishes to attain significant growth against its competitor EasyJet.
Measurable	Yes, the goals are measurable in terms of change in revenue
Attainable	Yes
Realistic	The goals are realistic in nature and highly depend upon the airline industry
Timely	They can find sustainable growth in coming one year

ENVIRONMENTAL ANALYSIS

Marketing Audit with SWOT, Porter's 5 Forces, PESTLE Analysis

The market audit helps in defining a comprehensive, systematic, independent and productive plan b understanding the internal and external contingencies. The main purpose is to improve the performance of the company by understanding the need of growth and development by developing the market performance structure. (Armstrong, Kotler, Harker, and Brennan, 2015)

Strengths and Weaknesses

SWOT Analysis

Strengths ·         The airline is famous for low cost of operations whether measured by cost per available seat kilometer (CASK), cost per seat, or cost per passenger. ·         remarkable fleet ·         A wide  network of routes ·         Ryanair's average revenue per passenger is lower than any other competitors. ·         Technology advancement has become the key to Ryanair's success. ·         Ryanair's management has shown a strong focus on doing best by keeping costs and fares low.

Weaknesses ·         They are facing lower profits ·         Cash flow condemnation in public ·         They tend to cut down facilities for their passenger due to low price. ·         Ryanair’s earnings are highly seasonal

Opportunities ·         Opportunity to expands operations ·         They have an opportunity  to gain more customers ·         Opportunity to improve business class will help in increasing the overall revenue.

Threats ·         Increasing Oil Prices ·         Price Wars in Saudi Countries ·         External Issues ·         Excessive competition from the nearest competitor EasyJet. An increase in the low cost airliners company is posing a threat on the company.

7S Mc Kinsey Model

Strategy: The Company is concentrating on becoming a low cost airline in a true sense. Ryan Air maintains a competitive advantage over the other airliners like EasyJet.

Structure: The structure of the company is based on a hierarchy system. Ryan Air is such that all head of sectors account straight to the CEO of the company. Consequently Ryan Air includes a short organizational structure. By Maintaining this structure company can ensure simplicity in protected with an efficient tasks.

Systems: enhanced frontline employees to make the most of the operational efficiency in order to handle any situation. Company can work by not taking an advantage of the price sensitive consumer and instead, embracing them. This would allow Ryan Air to reach goals in sales.

Shared Values: The culture of Ryanair is related with growth and prosperity of the company and the stakeholders. They are a low budget service provider, catering and sticking to basic needs to focus on the value of the company.

Style: The style of leadership used by Michael O'Leary is near to a 5 leader. But there is a wide scope for the company to improve the operations. The leadership style is by far considered as one of the best in the airline industry to become successful.

Staff: The organization focus on providing with a Better training and career development plans. They train their employees by contributing to employee morale and inspiration. The organization is focusing on more training programmes in order to enhance their efficiencies to maximize overall operational efficiency in the best possible way.

Skills: The skills and Competencies that the organization is focusing upon is providing with a better market efficiency. Strong financial plans ensure in managing cost leadership by focusing less on differentiation. Company can make gain by not taking advantage of price sensitive consumers and as a substitute accepting goals.

Political

• There is a strong political environment though Brexit has created a necessity to change the contractual relation(Kierzenkowski, Pain, Rustically and Zwart, 2016)
• Open sky agreement in European nation
• Low cost airlines have more scope
• Third largest airlines by passengers in Europe

Economic

• There is uncertainty in the cost of fuel. The prices of fuels are subject to change,
• Recession in the economy is in favor of the airlines urging people to fly.
• Beneficial for people belonging to middle class. The airliner is famous among people with a limited budget (Posture, et al 2017).

Social –cultural

• Large number of customers from Europe causing difficulty in segmentation
• A change in the EU will affect the airliner on a huge scale.

Technological

• New innovations focus on creating a fuel efficient, less noise productive, less polluting environment
• Focusing on deducting excess cost by e-ticketing, online check-in, promote products online

Environmental Factors

• Ryanair has taken different measures to reduce carbon emission.
• EU has made it obligatory to decrease carbon footprints

Legal

• Some European governments are in favor of Green Tax to combat carbon emissions
• Security related law to combat against the issues related to Terrorism.

Segmentation

There are three types of customers – Business, Individual/Family and Agent.  Ryanair has divided the market according to the basic customers based on number of tickets they purchase and their loyalty towards Ryanair. The airline is famous among the middle class age group.

Targeting

They are currently targeting Individual and Business customer. Ryanair is the cost-leader in the airline industry offering with Individual/family segment is the most price sensitive segment of all. They are targeting the middle class age group. The price sensitive segment is using the facilities as provided by the company.

Opportunities and Threats

Positioning

In order to gain a competitive advantage it is necessary to gain an effective place in the airline industry. They have positioned themselves in a well an effective way in a low cost carrier airliner. Less for much less” proposition is the rule followed by the company in order to gain a relative effective position.

Igor Ansoff has presented the matrix that focused on the firm’s present and potential products. Through this tool the company can look onto the products and new products, and existing markets and new markets. It is based on the following components: market penetration, product development, market development, and diversification.

 Ryanair seems to effectively draw and penetrate the markets by offering its products in a most reasonable price. The services offered in flight are significant at a low-fare scheme. It forces itself to define additional development and its expansion internationally, required divergence of employees and culture. With its operation in different locations and destinations it has to diversify people and management to attain success to further penetrate and develop their products to existing and new markets.

Existing Products

• Low cost airlines

Existing Markets

• New

Product development

• Free flight
• Effective IT development through online checking
• Use of new plane in order to gain competitiveness
• Development of the Ancillary product

Market Penetration

There are various strategies that can be used to determine the business strategy. These strategies are important for the business to extend their support in an efficient way.

Market Penetration is a strategy that includes an increase in sell of accessible product in the existing market (Hollensen, 2015). In case of Ryanair, market penetration involves influencing existing customer to make more revenue.

Product Development:

The strategy includes increasing of new product and provides them to the existing market. It works well when demand of existing product is declining (Babin and Zikmund, 2015).

Market Development:

This strategy engages selling the company's accessible product to a new market.  The airliner can go to another country to offer existing service to the new customer (Armstrong et al 2015).

Diversification:

Diversification is related to a new product and supplies into a completely new market. Ryanair can comprise generating a new service such as formation of link with hotel, resort, restaurant etc. There are ample of opportunity with the airliner to diversify itself looking onto the current market situation.

Competitive Strategy

In order to sustain in the market it is important for the airliner to determine the strategy to compete with other airlines (McDonald and Wilson, 2016). The Competitive strategy can be articulated as three possible strategies-

• Cost Leadership
• Focus
• Differentiation

Marketing Mix

The Cost leadership strategy is used in case of a costing advantage over competitors. The Differentiation strategy aims to present unique products against the competitors (Czinkota and Ronkainen, 2013). Focus uses both cost leadership and differentiation apart from focusing on particular segment of a market to a certain extent on the entire market.

In case of Ryanair, the cost leadership is regarding the proficiency relate with cheapest price. The upcoming changes due to Brexit will have a substantial impact on the market.

Marketing Mix for Ryanair

The marketing mix is the planned marketing tools that the organization can use to produce the response. These strategies consist of everything the firm can do to control the demand for its product (Armstrong, Adam, Denize and Kotler, 2014).  It consists of 7 Variables products known as 7P’s. These can be achieved by setting marketing goals and objectives.

Product mix:

Product includes the totality of goods and services that the company offers to consumers (Boone and Kurtz, 2013). In case of Ryanair Airlines the main product is the fleet that takes people to the desired destination. In case of the marketing development strategy the airliner needs to focus on the ongoing services. Till the time when there is no trade agreement between UK and EU they have to follow the old agreement.  The Low cost airline is the main focus of the company however there is a need to improve the services. The product is cost effective and famous among the people for providing effective services.

Price Mix:

Price is the money charged. Price plays an important role in marketing.  The airline company is already known as the cheapest airlines in Europe.  It should focus on delivering services at the same price.  In case of future expansion the airline industry needs to focus on the Asian market which will attract more customers because the flights provide the function at a cheap price.

Promotion Mix:

Promotions are the activities that attract customer to the product or service. Ryanair functions well through promotional offer such as family package including discount. They can promote their product through media such as TV, Newspaper. Moreover they are sponsor of various cricket tournament held in the country in order to reach a wide range of customer (Shaw, 2016).

People Mix:

People are the employees that work in the company. The employees are highly motivated and trained to offer efficient service to the customer to uphold the brand image of Ryanair. The well trained staff is proficient enough to deliver services in a better way (Baker, 2014).

Conclusion

Process Mix:

Process mix involves the activities of Ryanair. Ryanair do not operate through travel agencies. The online portal is a process that is used by the company to reach its customers. They need to plan methodically to preserve operations.

Physical evidence mix:

Physical evidence is related to the process through which people can see and the process. This might influence their awareness of the service supplied. They are very well preset in the European market. The local travelers are using its services in order to save money and time.

Place Mix:

Place includes company activities that make the product obtainable to target buyers.  The tickets are being sold through internet.  There online presence and promotional offers has helped increasing the sales. The services are provided in all over Europe. The company is planning to expand its services. 

Porter's 5 Forces

A Porter 5 force is used to analyze better understanding in the industry in which it operates.  The 5 forces therefore helps in understanding the effects of different aspects relatively attached with the competition. The five forces are as follows:

Bargaining power of buyers

The buyers for company are customers who are using the service of Ryanair. It is related to the choices made by the customers regarding the products and the services. The bargaining power of the buyers is high due to the availability of other low cost airlines like EasyJet.  So, the buyer has a choice to opt from the other airlines as well (Turnbull and Valla, 2013).

Bargaining power of the suppler

Supplier gives with a necessary impact that is required to provide efficient services to the customers. Ryanair has an exclusive fleet of Boeing aircraft. It allows the suppliers with a high bargaining power over Ryan Air.  It is difficult for them to switch from one provider to the other because of the high necessity to train the pilots, engineers and mechanics.  The company is at the mercy of oil suppliers. There is a need to buy oil at the prices they quote. Moreover Ryanair is also at the mercy of bigger airports. They charge a higher amount due to the amount of traffic they receive. Due to this reason the company is not capable to bear the expenses (Jarach, 2017).

New Entrants

This is not easy for new airlines to make an entry in the market.  The airline industry is saturated. This requires a very high investment from a company to start an airline. The organization should be capable enough to bear the losses (Lovelock and Patterson, 2015). There are factors that they do not finding a right slots at certain airports. They also do not have to compete with the fact that they it is not easy getting flight routes.

Threat of Substitutes

Recession in the economy has ensured that customers are very inconsistent with their money (Kotler, et al 2016). They tend to choose best option possible option for them. It is a budget airline and people use it for inevitability and not for the motive that they are faithful to the brand. They can for all time opt for additional options like the train, ferry or cars. Availability of more modes of transport option makes it easier for them to have alternative option.

Competitive Rivalry

In the current competitive economy there are a lot of rivals in the budget airline market. Ryanair has to deal with rivals such as Easyjet and AerLingus. These rivals do not struggle with each other on the same routes but create a lower margin.  They need to compete with airlines forming strategic alliances in order to form efficient strategic alliance.

Recommendations for Ryanair:

Ryanair needs to increase their profit, and then develop market with a right strategy for them. Ryanair can consider the Asian market while expanding its operations. They should create efficiency by including more fleets at a cheapest fare. As discussed previously there is an opportunity for Ryanair to expand their operations under the new open air pact.  It will be good for the airliner to operate long flights and take benefit of the circumstances.

Conclusion

To conclude it is evident that the Ryanair can choose to operate well after Brexit to increase their profitability. In order to gain proficiency they need to implement strategy focused on improving the quality of service.  There will be severe limitations in the industry affecting the relationship with the fellow EU state. Ryanair has to cease its flight from EU state to UK. They need to wait till the time a new bilateral agreement is formed. In such a circumstance they need to be ready to manage aftermath of Brexit.

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