Essay about Easy Jet
The marketing audit is a fundamental part of the marketing planning process.It is conducted not only at the beginning of the process, but also at a series of points during the implementation of the plan.The marketing audit considers both internal and external influences on marketing planning, as well as a review of the plan itself 1.
Environmental Audict on Easy jet(the factors that can influnce the company) A)Five porter’s forces: *Threats from new entrants : When new airlines enter the market ,how they affect easy jet *Threats from subsititue products: more options to go to a destination such as buses,train.. ow these things affect easy jet *Bargaining power of suppliers: if plane manufacturer factories sell planes with a high price ,how this affect the easy jet’s finance *Bargaining power of buyers: for instance easy jet makes a contract with plane factories for 10 years with the fixed charge so the factory can’t increase the price during this time. Bargaining lets you buy products at a cheaper rate *Internal Rivalry: Internal competation ,easy jet fight against other airlines Threat of substitutes-this can be anything that can be a substitute to EasyJet or airline industry in general.
For instance, another airline with even lower prices, consumers opting to use other modes of transport (trains for instance). When Heatrow was hit by that huge fog just before Christmas and no planes were flying, Eurostar trains were suddenly all booked. I would think, however, that for Easy Jet, there would be no big threat of substitutes. There is a threat of ever growing competition but this isn’t the case of substitutes. Substitues are in other words ‘me too’ products which are less likely to occur in airline industry or service industry then in FMCG. I think. Buyers-here you can list down any possible threats from buyers.
This is where you look at the relationship between Easy Jet and its targeted consumers. How strong is Easy Jet brand? Do consumers believe in, and to, Easy Jet? Are they loyal to Easy Jet or do they switch to other airlines with no real or perceived risks? If yes, why? If not, why not? Do consumers have alternative to Easy Jet? If yes, and I would say they do, how does the relationship between Easy Jet and its consumers change? Who has greater leverage in this relationship, consumers or Easy Jet? Who is more dependable on whom, why and to what extent? Etc… Ask as many questions as you can and you will get your answer.
Talk to someone who has used Easy Jet services, ask them what they liked and disliked about it, would they use it again and why, how do they feel about Easy Jet, how did they decide to fly with Easy Jet, will they choose Easy Jet again B)Swot analysis: 4 main strenghts and the opposite ones are for weaknesses *Finance *Technology *HR Department *Reputation and image EasyJet Airline Company Limited: Strengths: * EasyJet is a leading provider of low budget, no frills air travel servicing many of the leading city destinations in the UK and across Europe, including Berlin, Amsterdam, Barcelona, and Prague. They offer a high quality service at competitive prices and offer a number of features including ticketless travel, internet booking and assisted travel services. * They have a highly distinctive livery on their fleet of aircraft making them easily recognisable and distinguishing them from their competitors. * They have a user friendly website which fully discloses the price breakdown of the passengers planned travel. Offering a full breakdown of the price plan prevents any hidden charges when the customer confirms there booking. EasyJet offers an online promotion alert which is e-mailed to existing customers and contact on the company’s database. * Recognised as a leading brand name in the UK travel industry. * As a market leader in an industry widely seen as a leading contributor to the green house effect and global warming, EasyJet actively embrace there environmental responsibilities and continue to keep these factors as a keep priority when developing their future strategies. * EasyJet operate a fast and efficient service with an average turnaround time of 30 minutes or below.
This enables them to maintain a reliable and hassle free service to their passengers. * For the case study,planes and turnaround times means to take short time on departure,use of internet,financial position The easy brand is a well known brand across the UK and some areas of Europe. It is knownfor ‘low cost for the masses’ which is implied by their orange culture. They want to paint the worldorange, implying that they want to provide goods and services at the lowest possible price. easyJeteasyJet only offers a single fare class. Its pricing strategy is to offer ‘value for money’ and this is doneby keeping costs to a minimum.
Unit costs are kept low by eliminating travel agents, maintaining highaircraft utilisation, focusing on internet sales, eliminating unnecessary service frills, operating a fleet of similar aircraft and establishing long-term agreements with suppliers. One of the key strengths of easyJet has been the utilisation of the internet. easyJet bookings over theinternet relate to over 92% of total sales and is expected to increase. They see themselves as becomingthe first internet only airline. Strengths: • Cheap tickets. • A simple fare structure. • Image, differentiation on price andbrand. •
Commitment to customer service. • Multi-base network. • Strong corporate culture. • Flexibility to change bookings on theinternet. • Lower costs than the established airlines Weaknesses: * Domestic air travel is an extremely competitive industry with EasyJet’s main competitors being Jet2, BMI Baby, Ryan Air plus a host of smaller independent competitors. These external competitive forces can restrict and shape pricing policy on some of EasyJet’s less profitable routes as they seek to compete with their competitors. * They do not offer a free food service on longer flights of 2 hours plus. asyJet has many weaknesses but the main include the lack of service,flexibility and business focus making the low-cost model unappealing to business travellers. Businesstravellers are not included within easyJet’s business model. Since September 11 business travellersaccount for 50% of passengers and therefore should be a target for marketing and should be included inthe business model.This can be seen as a weakness for not targeting this segment. easyJet’s business model also relies on people flying more often. However, there is a limit as to howoften people fly.
The growth is not infinitive, it is possible that the low-cost market will be saturated. Itwill come to a point when the low-cost airlines will not be able to stimulate any more demand fromlow prices. (CPRE: The Future Development of Air Transport in the UK, July 2003 Weaknesses: • Pilots over 65 are not allowed to fly over France, Italy and Portugal. • No guaranteed departure. • No unaccompanied children under age of 16. • No autopilot. • Lack of service, flexibility and business focusmake the low-cost model unappealing tobusiness travellers. • Focus on price and convenience is reaching itslimit.
Differentiation will be difficult. • Due to quick success it is difficult to recruitand train new staff. • No customer retention scheme Opportunities: * Possible opening of alternative routes to major cities in Europe. A key route could be from Dublin to the UK, as this has a large potential for travellers going to soccer matches in the UK plus new links into corporate flyers to and from the UK. * Offering of free refreshments on flights with a travel time of over two and a half hours. This would offer an extra perk and comfort to passengers making their experience with EasyJet all the more comfortable and enjoyable. Updated versions of the fly on the wall documentaries would provide the brand with more coverage and publicity. The opportunities in the industry mainly come from the Eexpansion. On the 1st of May 2004, 10 countries will be joining the EU. Thus, the EU’s membership will be expanded from 15to 25 countries. The new states include former members of the Eastern Block and smaller “island”states. (bized. ac. uk) These are Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta,Poland and the Slovak Republic.
Further EU expansion is expected in 2007 when Bulgaria andRomania are hoping to join the EU, while Turkey is now currently negotiating its membership. (europa. eu. int)The addition of more than 100 million people to the EU’s market of 370 million will present anopportunity for further growth for the low-cost airline industry. easyJet has already announced its newroutes from Luton, Berlin and Dortmund airports to Budapest (Hungary) and from Stansted airport toLjubljana (Slovenia). (easyJet. com) Threats: * Competitors flying the same routes compete very competitively on price forcing pressure on margin on more popular flights and time slots. External market forces can have a significant impact on EasyJet’s business, e. g. the rising cost of oil can have a significant impact on running costs putting significant pressure on the profitability of less popular routes and time slots. * Pressure from unions and employee relations committees can signifigantly impact on the day to day operations with strikes proving to be very costly to the company’s image. * Economic downturn may lead to a decrease in casual flyers and corporate travel as companies seek to curtail what they see as unnecessary expenditure and in turn make less business trips. Financial Analysis Within the low-cost/no-frills airline industry in the UK,Ryanair is easyJet’s main competitor. Inevaluating the financial performance of easyJet, it is therefore useful to compare its performance withthat of Ryanair. For the purpose of this comparison, we will be making use of a number of ratioswhose formulae follow that of FAME. The data used for this financial analysis are easyJet’s unauditedpreliminary results for their financial year ended 30 September 2003, which provided results for boththe year ending 30 September 2002 and 2003.
Ryanair’s financial year-end however is 31 March 2004. Therefore in order to obtain data that would be directly comparable, it was necessary to use data fromtheir half-year which ends 30 September 2002 and 2003, and to use figures taken from their financialyear end 31 March 2002 and 2003. This enabled us to obtain figures for a full 12 months ending 30September 2002 and 2003. For a quick overview of all ratios refer to Appendix 3 and details of allcalculations are contained in Appendix 4. All financial reports were obtained from downloadsavailable onwww. easyjet. com and www. ryanair. com.
The first numerical set of data to be analysed is the Profit and Loss Account. This deals with therunning of the business, i. e. the amount of turnover, the cost of what has been sold, the expensesgenerated during the year and of course the profit that has been made, perhaps the figure that theshareholders are most interested in, but there are other criteria that could affect the profitability of thecompany PEST analysis for easyJet The following factors are likely to have an influence on the airline industry and should therefore be taken into account when formulating a Marketing Plan for easyJet.
Politico-legal factors • Threat of war in the Middle East • The Air Miles scheme is not considered as a taxable perk by the government in the way that company cars are taxed which may change to allow easyJet to compete on more equal grounds with the likes of BA. • A EU east-enlargement may provide access to viable, new markets. Economic factors • Likelihood of increasing fuel costs, congestion and other environmental restrictions, as well as the prospect of higher security and insurance costs to reflect the risk of terrorism. As the recession is likely to last for some more time, business travellers will keep an eye on their travel expenses. • Globalisation should continue to boost traffic in the long-term. • The introduction of the single currency in Europe is likely to bring more business to easyJet as Europe becomes more integrated. Socio-cultural factors • To win over the French and German publics might cause problems as there appears still to be a general reluctance to use credit cards over the phone and Internet . • The public are general quite friendly to the prospect of cheap flights.
However they may feel begrudged where they see promotions found in newspapers where flight are for ? 10 only to find that the actual cost is much higher for the particular time or day they wish to fly on. Technological factors • A key issue will be the extent to which technological advancements – such as the use of the Internet on distribution and cost synergies from industry consolidation – can offset upward pressures on prices and costs. • easyJet has to keep track of technological developments in the field of e-commerce and aircraft manufacture in order to gain a competitive advantage. CONTINUE..
The business environment is a set of political, economic, social, technological, environmental and legal factors otherwise know as PESTLE analysis. These factors are not controlled by the business. Which means that businesses must adapt quickly as the environment changes. These macro factors have a positive or negative impact on the business. The political factor can be affected through tax policies as Easyjet are charged with landing in different countries, employment laws, environment regulations, trade restrictions, tariffs and the government. The economic factor is forever changing with prices constantly fluctuating.
For example oil prices increasing affects overall profits for the company which in return affects how much money Easyjet can invest on improving the airline or giving back to the communities. Baines, Phil and Page (2008a) explain firms are effected by environmental issues such as wage inflation, price inflation, gross domestic product and income sales and corporation taxes. From the social aspect this looks highly on safety of the airline and its staff and passengers. Which then attracts passengers to fly again after being ensured of safe and secure flights.
To keep up in technology Easyjet must be internet dependant as flights are booked and checked via the internet. Therefore customers need to be satisfied with a quick and simple service. Easyjet also have a great career attitude which commits staff to be up to a excellent standard of service. Technology plays a huge factor within Easyjet as it has to rely hugely on the reliance of technology. Also as things improve technology becomes cheaper which means barriers to entry could be lower for competitors to join which could affect the profit of Easyjet. “Barriers to entry are designed to block potential entrants from entering a market profitably.
They seek to protect the monopoly power of existing firms in an industry and therefore maintain supernormal profits in the long run. Barriers to entry have the effect of making a market less contestable“. (Tutor2u n. d) To prevent this research and development expenditure can act as an obstruction to potential entrants to industry PEST analysis PEST analysis is chosen, to look at the possible business environmental impacts that may affect theindustry and easyJet. It can be used to infer a variety of trends, patterns and projections which willinfluence easyJet’s future strategic decisions (ACCA 2004).
PEST analysis was chosen over SLEPTanalysis as we found it difficult to differentiate between legal and political factors. The legal issubsumed into political. Consideration will be made to the political, economic, social and technologicalenvironments that may affect the industry and easyJet in the future. Political Environment The industry and easyJet must react to any regulations that are imposed by the political party and thecorporate governance code. The EU compensation ruling that will take affect in 2005 is currently beingchallenged by easyJet as well as other airlines.
If this challenge is unsuccessful then it would meanincreases, in legal battles, compensation payouts and overall increases in costs. As a result, fare prices easyJetwill increase and demand will fall. This would make it very difficult to see the future for the low-costindustry. Expansion of the UK airport system will play a major role in the future of the airlines growth model. Stansted is expected to have one additional runway and terminal, increasing UK air traffic growth to402 million by 2020, 501 million passengers by 2030 (Mintel report 2003).
The government are seeingthe benefits that the aviation industry can bring to the country. The question that remains to beanswered is, for how long are the government willing to help the growth of the industry before theystart to intervene? Any intervention from the government is likely to be costly in the future to theindustry. Economic Environment The government may decide to impose taxes on the industry. A possible introduction of a ‘Green tax’,a tax on fuel to try and reduce the pollution that it causes, would increase the costs and as a result couldraise easyJet’s fares by more than 20% (Financial Times, 1 st
November 2003). Also the ? 6 billionworth of subsidies that is currently received from the government may be reduced over time to limit thegrowth of the industry. The growth of the industry may need to be controlled to keep pollution to aminimum. As subsidies decrease there will be an adverse affect on fare prices causing demand to fall. This will also affect the business model as it would need to be revisited. The recent rises in the UK interest rate, which currently stand at 4%, has increased the public’sliabilities.
People have less disposable income and as a result are less likely to travel abroad. Theincreases will also affect easyJets’s loan repayments on its new order of aircrafts. At present, paymentsrelating to the purchase are not included in the hedging policy and therefore will affect the liabilities of easyJet. Social and Cultural environment The UK population as a whole are aging, people are living longer. The number of people between theage of 25 and 34 has been decreasing but the age group between 55 and 64 are expected to increasefrom 2005 (Mintel report 2003).
The older age group tends to have more disposable income (SAGAholidays target this group) and therefore should be targeted more by easyJet. Saying this, younger people who have less disposable income are now starting to go abroad for their holidays. This meansthat the airline industry is attracting more potential passengers because of their low fares. Technological environment easyJeteasyJet’s use of the internet needs to be enhanced, they are aiming to become the first ‘web-only’airline.
Currently 92% of their tickets are sold online and improving this figure will bring cost savingwhich in turn could be passed on to the consumers. This will make easyJet more competitive on price. easyJet will need to keep track of technical developments in e-commerce and aircraft manufacturing inorder to compete against its rivals 2. 7ps Marketing Mix of Easyjet Product – Easy Jet is a flight booking company located at London. The benefits of Easy Jet being online and on teletext means that they are providing better margins; this is where they are dedicated to customers digitally.
Place – Not solely online but majority of sales are online so Easy Jet will concentrate on this target market. Today, technology allows us to sell more goods to fewer people, which is far more efficient than selling fewer goods to more people. This is confirmed by Peppers and Rodgers in their Marketing concept. Peppers an advertising executive and Rogers a marketing scholar, their concepts addressed “one to one marketing”and how it concentrates on providing services or products to one customer at a time. This is by identifying and then meeting their individual needs.
It then aims to repeat this many times with each customer, this is so consumers feel relationships are in place when perhaps they are forged. Price – With Easy Jet being on the internet for such a long period it means it has cut out aspects such as “the post”, this is because tickets and boarding passes are now emailed to customers or printable online, therefore “cutting out the middle man”. Promotion – Easy jet’s website is offered through search engines and travel/flight comparison websites, this is both advertising and selling their service.
They also send members emails with promotional offers. Physical Evidence – Although Easy Jet is based mainly online now, Easy Jet are still booked through travel agents or in the airport itself. Physically offline Easy Jet have recently in the previous few months been advertising in Sainsbury’s stores by staff (uniformed Easy Jet T-shirts), advertising there new partnership. Physical evidence online differs, they have aspects such as “security icon” and policies in place which gives consumers a sense of security when booking online.
People – On Easy Jet’s website they have sections, such as blogs, FAQ’s and a whole section dedicated to customer service to try and give consumers a sense that even though they are online they still have some form of contact to Easy Jet. Process – As mentioned above Easy Jet integrates online and offline by having customer service in the airport and online. CASE STUDY Product: Easy jet is an low cost budget airline as well as no frill. The easy brand has been extended to other products. There are now easyinternet cafes,easycar,easymoney and new easycruise products.
Price: There 3 types of pricing which are Premium Pricing this is for specific segment of people for example apple targets for certain people. Low cost pricing which is for easyjet,targeting low cost price and low income people. Psycological pricing,99p instead of 1pound They use a low cost price to be competitive Place: It means Distrubition . Distrubition has manufacturer,agents,wholesalers,retailers,consumers. The more distrubition you have ,the more expensive your products will be. easy jet has manufacturers and directly deals with consumers so they save money. lmost 90 percent of tickets are sold through the internet for the 10 percent agents sell so they sometimes deals with agents too. Promotion : internet People : Paperless opeartions since its launch easyjet have simplified its working practices by embracing the concept of the paperless office. they do everything online rather than people going to branches and taling face to face ,everthing can be done online so easyjet saves money for hiring less people Process : Ticketless travel passengers,instead receive an email containing their travel details and confirmation number when they book online. his helps reduce significantly the costs of issuing,distrubuting,processing and reconciling millions of tickets each year Physical Evidence: it means beauty,new planes ,comfort flights… Each boeing is new 737 aircraft and has a list price in the region of 35million gbp. Therefore maximising utilisation of each aircraft reduces the unit cost NOTES FROM THE CASE STUDIES MARKETING:The mutual satisfactions of both suppliers and customers. The method is the process of shaping and managing the marketing mix in a way which takes into considerition the needs of the customer and the goals of the organisation at one and the same time.
Marketing is the performance of business activities that direct the flow of goods and services from organisation to their customers. Chartered Institute of Marketing defines marketing as; The management process which identifies ,anticipates and satisfies customer requirements effciently and profitably Professor Philip Kotler 1999 states;Marketing is a social and managerial process by which individuals and groups get what they need and want through creating,offering and exchanging products of value with others. People don’t only buy what they want to ,they buy them because of the value of products they require.
Marketing is concerned with customers ,they are the main element in marketing not quality or products. If customers are demanding for new products features,marketing department will have to communicate these requirements to the production department to make provision for new processes and new machinery. On the other hand if the customer change their pattern of shopping or seek more information regarding the safe us of product ,the company may have to recruit new marketing executives to match up to the demand. )Using technology on easyjet One of the most important developments in the UK travel industry in the last 15 years is the growth of the ‘budget’ or ‘no frills’ airlines, easyJet and Ryanair. Both of these airlines were launched when new regulations made it easier to operate between countries within Europe and both used new technology and other methods to sell seats, rather than through traditional high street travel agents.
The growth of both companies has been exceptional and the airlines have used similar approaches in their ‘business models’ * Use of the Internet to reduce distribution costs – easyJet was one of the first airlines to see the opportunity of the Internet when it sold its first seat online in April 1998. Now approximately 95 % of all seats are sold over the internet. * Maximise the time the aircraft is being used – For both Ryanair and easyJet maximising the use of each aircraft reduces the overall cost of running the aircraft. Ticketless travel – Passengers receive an email containing their travel details and booking reference when they book online, rather than a traditional ticket. This helps to reduce significantly the cost of issuing and processing millions of tickets each year. * ‘No free lunch’ – Not offering free catering on-board reduces cost. Passengers can purchase food on-board if they choose to. * Free seating – Unlike traditional airlines, Ryanair and easyJet passengers are not assigned a seat, unless they pay extra to board first.
This helps passengers to take their seats more quickly and saves time. * Efficient use of airports – By reducing turnarounds (the time between landing and take-off) to 30 minutes and below, easyJet and Ryanair maximise the use of their aircraft. Not having pre-assigned seating, like traditional airlines, helps reduce turnaround times. * Reduced fares – generally Ryanair and easyJet offer cheaper fares than traditional airlines, especilally for passengers who can book early and take advantage of the deals available.