A Study Of Easyjet E Marketing Strategies Marketing Essay
EasyJet is an airline company operating in Europe with its base in UK. It was founded by Stelios Haji-Ioannou in mid 1995. EasyJet's operations are paperless, with all business transactions done through the internet.
EasyJet has experienced a successful online business due to its e-market strategy that aims to provide low cost no frills air transportation. Under the strong and charismatic leadership of Stellios, it has accomplished its goal by creating brand awareness, adoption of an efficiency-driven operating model and maintenance of a high level customer satisfaction.
EasyJet conducted its business using telephone in order to achieve the goal of undercutting traditional carriers and increase savings by direct selling. Business was later on conducted over the internet aiming to cut down cost on it call centers, to make flying affordable and to compete even with busses by attracting people who would have otherwise not travelled by air.
EasyJet is doing this by using a website which is designed with high usability and has an intuitive navigation allowing user to do booking and purchase ticket online. EasyJet also does promotion on newspaper by running internet only promotion, giving discounts to consumers who purchase online only. This mix has helped in EasyJet promotion giving impressive results by achieving tremendous sales results.
The design, structure, usability and usefulness of its website have enabled EasyJet to secure leverage over its competitors. The most important fact is that EasyJet has incorporated flexibility in its e-marketing strategy enabling it to anticipate changes and further develop its strategies to counter-act accordingly. The impact of EasyJet e-market strategy is evident on the growth that EasyJet has enjoyed through the years
In general the e-marketing strategy followed by EasyJet works for it. EasyJet is obviously aware of its surrounding environment, and appreciates the magnitude of closely monitoring and control of its strategy, so as to stay ahead in an environment that constantly evolves by keeping a close eye on any happening changes. It's evident that EasyJet takes few risks and applies firm business principles while carefully exploring the market.
Company Background, Financial Performance and Key Services
EasyJet is an airline company based in Britain with its headquarters at London Luton Airport. It operates 500 domestic and international routes between 118 countries within Europe, West Asia and North Africa carrying more passengers than any other UK based airline. Its parent company EasyJet plc is listed in London Stock Exchange. (Wikipedia, n.d).
EasyJet Airline was founded in Britain by Stellios Haji-Ioannou, holder of masters' degree in business and son of a Greek Cypriot shipping tycoon. He started the company with £5 million loaned by his father after he was approached by Virgin Atlantic's Greek franchisee to invest in a London-Athens route and decided to start his own airline instead. The company started with two leased airplanes operating in two routes; London Luton to Edinburgh and Glasgow respectively and later Aberdeen.
Stellios was inspired by principle of price elasticity applied by Southwest Airlines based in the United States. Southwest air fares were so low that the airline attracted people who would not have otherwise traveled by air. It aimed to compete with busses as much as it did with other airline companies.
In the beginning, EasyJet operated a paper airline contracting British World Airlines to fly and maintain its two 148 seats leased planes. Its base in London was at Low-rent Luton airport. After acquiring its first plane, EasyJet started competing against British Airways and KLM on the route to Amsterdam focusing on short-haul routes aiming to offer half of its competitors' fare. Stellios later on capitalized on the Swiss connection buying 40% stake in a failing charter airline; TEA Switzerland.
It is believed that, in the beginning EasyJet spent all its revenue on advertising, offering cheap air fares. A specific example of billboards declaring a fare of £29 for London-Scotland route which was one-tenth the price charged by British Airways. Advertisements on TV directed customers to bypass travel agents and directly call the company reservation number which was also painted on all EasyJet planes. Direct selling was the strategy from start and later the Internet became EasyJet's preferred booking media.
Dress code for its employees was jeans and orange sweatshirts which reflected a casual yet fast-paced attitude. Only pilots were allowed to wear neck ties. Organization culture of EasyJet was described as 'brutally transparent', allowing employees in all paperless offices to share all types of information except payroll, by scanning all its documents into a computer system accessible to all employees.
The company is lean on services having no in-flight catering, charging for snacks and soft drinks and having no cancellations or refunds option. The three keys to EasyJet strategy were Simplification, Frugality and Friendliness with a motto of 'Easy come, easy go'. Some passengers were apprehensive of low-rate airlines compromising safety, EasyJet had to change tactic in advertising by explaining why it was possible to reduce fares without compromising safety. EasyJet stimulated traffic in all the markets it entered by introducing price competition to a market that was previously driven by free offers such as frequent flier miles. This enabled EasyJet to turn a profit of £2 million in the year 1997.
In 2000 fiscal year, EasyJet declared a profit of $33 million and floated a quarter of the company's stock on the London Stock Exchange with shares offered exclusively to institutional investors, raising £190 million which was used to purchase 32 new Boeing 737 airplanes. After it merged with Go Fly in August 2002, it became one of Europe's biggest and leading low cost airlines. (Business Essays, n.d)
Since its establishment in mid 1990s, EasyJet has enjoyed a rapid expansion growing through a combination of mergers, acquisitions and base openings brought about by demand of low-cost air travel by consumers. It now boasts a fleet of over 180 aircrafts with 20 bases across Europe and is ranked as the second largest low-cost carrier in Europe having carried 45.2 million passengers in 2009. (Wikipedia, n.d).
EasyJet has had its fare share of legal battles, the most popular one being with British Airways. It has also faced criticism in Germany for not observing the European Union law on compensation and on environmental issues due to its advertisement that EasyJet aircrafts made 22% less emission compared to its competitors.
Services offered by EasyJet include real time on-line booking, telephone booking for 3 months before flight bookings, in-flight magazines containing destination guides, holiday and accommodation products, car rentals, airport parking, travel insurance and on-board sales of fragrances, cosmetics etc.
A business does not operate in isolation. Business reactions and decisions depend on what happens on its environment. The factors happening outside an organization are known as external factors or influences. The external factors affect main internal operations and the objectives and strategies of the organization. It is therefore important to identify factors that might in turn affect a number of vital variables that are likely to influence the organization's supply and demand levels and operation costs (Kotter & Schlesinger, 1991; Johnson & Scholes, 1993).
The strategy of EasyJet is to offer low cost, no-frills air transportation. This strategy has enabled EasyJet to prosper. It is however, important to continually strive to satisfy customer needs and stay in a competitive position by evaluating market trends and situation. This calls up the need to do situational analysis which involves the studying of important business elements such as competitors, customers, costs, climate (external environment), collaborators and the company itself. Conducting a situational analysis for a company provides the knowledge and context for planning by describing the company's competitive position, financial and operating conditions and the general state of the company's internal and external affairs. To accomplish this methods such as SWOT and PEST are used.
PEST stands for Political, Economical, Social and Technological. PEST analysis is a framework used to categorize environmental issues that influences an organization Politically, Economically, Socially and Technologically.
Papers4you.com (n.d) quoting Kotler (1998) and Porter (1985) states that:
"Kotler (1998) claims that PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. The headings of PEST are a framework of reviewing a situation, and can in addition to SWOT and Porter's Five Forces models, be applied by companies to review a strategic directions, including marketing proposition. The use of PEST analysis can be seen effective for business and strategic planning, market planning, business and product development and research reports. PEST also ensures that company's performance is aligned positively with the powerful forces of change that are affecting business environment (Porter, 1985). PEST is useful when a company decides to enter its business operations into new markets and new countries. The use of PEST, in this case, helps to break free of unconscious assumptions, and help to effectively adapt to the realities of the new environment." (papers4you.com, n.d)
PEST analysis is therefore useful tool for understanding and determining the market growth or decline of an organization, the position as well as the potential and direction of a business. PEST analysis for EasyJet shows the following:
The change of government or policy may influence the company profile as new regulations are introduced.
EasyJet has been involved in various legal disputes a good example is when Germany criticized EasyJet for not observing the European Union law on compensation.
Political changes in the countries where EasyJet has routes. EasyJet operates in different countries across Europe; changes in these countries may affect its operations.
Local government councils object to noise and prohibit building of new runways.
Governments wanting to promote tourism in their countries may welcome and act in the favor of EasyJet.
Different taxes that are charged in different countries for fuel, landing, airport tax etc.
Changes in employment laws, trade restrictions and tariffs has impacts on EasyJet business operations for example in April 2000, EasyJet had to launch a campaign to stop Barclays from increasing landing fees by 300%.
Economic recession where some countries economy might grow and some might collapse.
Uncertainty due to the cost fluctuation of energy and fuel.
Business involves having loans; change of interest rates and foreign exchange rates may affect EasyJet long term loans.
There has been unrest in consumer's attitude due to the September 11th attacks which caused a significant decrease in the confidence of airline travelers.
Flying with EasyJet may attract companies with employees doing frequent business trip since EasyJet do not offer in-flight luxuries thus less cost to companies.
Stability in economy and expansion of tourism means many people want to fly away for holidays.
Low cost, no frills attracts wider demographic of consumers including people who would have otherwise not think of travelling by air.
Outbreak of contagious diseases such as the bird flu, SARS may cause decrease of travelers.
Safety measure applied while on air and on the ground conveys a positive image of the company thus many people feel safe to travel with EasyJet planes.
The friendliness and efficiency of EasyJet employees make customers to always want to travel by EasyJet.
The growth of population means more travelers and people in a certain life stage have more disposable income to spend.
EasyJet runs an environmental friendly business; depending entirely on the internet running paperless operations which means less waste. This gives it a positive outlook from a world that is so environmental conscious.
The rate at which technology changes has favored EasyJet by making it possible to conduct paperless operations therefore reducing operation costs. IT technology is available in competitive price thus enabling EasyJet to design a system that can be remotely accessed by all its employees.
The growth in technology also ensures the availability of spares and maintenance services to its fleet of airplanes.
Technology has become cheaper; it is cost effective in the running of the company but at the same time the entries to barrier are lower for competitors to join in.
SWOT is an important part of strategic planning that involves a scan of internal and external organization environment. SWOT analysis provides helpful information for fitting organizations capabilities and resources to the competitive environment it operates in. SWOT analysis is used to determine the Strengths, Weaknesses, Opportunities and Threats of an organization.
EasyJet is under the strong and charismatic leadership of Stellios who possesses great entrepreneurial vision, is adaptable to change and is able to identify business opportunities
EasyJet is original and has very effective promotional strategies.
EasyJet is serving many of the leading city destinations across Europe and is leading as provider of low budget and no added costs air travel.
It is a well known, respected and recognized as the leading brand name in travel industry in UK.
Has a low running cost due to the use of internet giving its customers the benefit of paying for local calls.
EasyJet is easily recognizable and distinguishable from their competitors due to the high distinctive corporate colors on all of its aircraft.
EasyJet has diversified into other market such as car rental and internet cafes making life easy for their customers by being served by same company when requiring these services.
Has an excellent customer service for example EasyJet offers refunds for flights that have been delayed for 4 hours or more.
It operates an efficient and fast service with an average turnaround time of 30 minutes or below thus is able to maintain a hassle free and reliable service to its passengers.
It has a very user friendly website showing fully the price breakdown structure for passenger planned trips. Divulging the full breakdown price plan prevents any hidden charges to customers when confirming their booking.
It has a sophisticated system that offers online promotion alerts by e-mail to existing customers.
EasyJet relies so much on computers for booking and information storage which could be risky.
EasyJet flies exclusively within Europe.
EasyJet does not offer free in-flight food services.
The extreme competitiveness of the domestic air travel industry can restrict and shape pricing policies on some of EasyJet's less profitable routes. EasyJet has to charge low rates even on these routes to compete with their competitors which are Jet", BMI Baby, Ryan Air and other smaller independent companies.
Possible opening of other routes to major cities in Europe such as from Dublin to UK and new links into business flyers to and from UK.
Restructured versions of the fly on the wall documentaries would provide the EasyJet brand with more coverage and publicity.
Offering free in-flight refreshments would be a bonus and would increase comfort to EasyJet customers.
Threat of substitution where travelers travelling as a group might choose other means to save on travelling expenses.
Other airlines flying the same routes compete fiercely on price forcing pressure on margin on popular flights and time slots.
External market forces such as the rise of price of oil can have major impact on running costs posing significant pressure on the profit of less popular routes and time slots.
Day to day operations of EasyJet can be significantly affected by pressure from unions and employee relations committees, strikes have proved to be costly to the company and its image.
Economic recession may decrease the number of casual and business travelers.
To fully understand what e-marketing involves, it is worthwhile to revisit the original definition of marketing before it was prefixed by 'e'. Nowsell.com, (n.d) quotes cim.co.uk definition of marketing as follows:
"Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably" (nowsell.com, n.d)
The definition accentuates the focus of marketing on the customer, while implying the need to link other business operations to achieve the required profitability.
E-marketing is therefore defined as achieving marketing objectives through the use of electronic communication technology which includes internet, eBooks, e-mail, databases, wireless mobile phones and digital television.(nowsell.com, n.d). The internet, as noted by Smith and Chaffey (2001) can be used to support the aims mentioned in the definition i.e. identifying, anticipating and satisfying as follows:
Identifying - use the internet for market research to find out customer needs.
Anticipating - the internet provides an additional channel for customers to access information and makes purchases. Understanding this demand is basis to governing resource distribution to e-marketing.
Satisfying - an important success factor in e-marketing is accomplishing customer satisfaction through electronic channel by making sure that the site performs adequately and is easy to use.
Planning is essential in order to succeed in e-marketing. A successful e-marketing plan relies on traditional disciplines and planning techniques that is adapted for the digital media environment and mixed with digital marketing communication techniques. SOSTAC is a generic framework used for e-marketing planning. SOSTAC stands for:
S - Situational analysis (where are we now)
O - Objectives (where do we want to go)
S - Strategy (how do we get there)
T - Tactics (the details of strategy)
A - Action (or implementation)
C - Control (evaluation, measurement)
The Situational analysis above has identified the current position of EasyJet using SWOT and PEST methods. The analysis shows EasyJet holds a strong position and has gained a competitive advantage due to the use of technology - internet in particular - in conducting its business operations.
The objective of EasyJet is to increase online revenue, minimize cost and retain their customers. EasyJet has accomplished this by creation of brand awareness, adoption of an efficiency-driven operating model and maintenance of a high level customer satisfaction.
Strategy is the process of developing options to achieve a desired outcome. E-marketing strategy therefore consists of steps taken and procedure followed for marketing a brand through the website. (buzzle.com, n.d). The important aspect in any e-marketing strategy is the company website which needs to be properly formatted and designed, so as to give a good impression and attract users and thus increase sales.
EasyJet uses internet to meet its objectives. EasyJet has a comprehensive website with good usability and structure that presents EasyJet services without the use of redundant graphics and advertisement which usually distracts website visitors. EasyJet went online because of the need to reduce cost. EasyJet aimed at making flying affordable and urged travelers to deal direct and cut out travel agents. An overview of EasyJet lists the following strategies:
Reduction and distribution of costs by online booking.
No tickets during travel, just an e-mail with the booking reference is adequate to board the plane. This reduces tasks and costs associated with issuing, distributing, processing and reconciling tickets.
Paperless operations making the internet useful in other aspects of the business such as administration and management.
EasyJet URL is printed alongside all its planes. The company aimed to scale down its call centers operations by selling most of the tickets online. By putting the company URL everywhere, it increased the use of the website and this helped EasyJet get more customers thus making EasyJet flights prices cheaper.
EasyJet also uses the website as an aggressive tool. A good example is the competition to predict BA losses on 'Go' enticing visitors with prizes. EasyJet also had earlier on used a TV series to promote itself in every household in the UK.
The value proposition and differential advantage of this strategy can be seen on the benefits offered to customers as well as cost cutting experience by EasyJet. EasyJet operates cheaply making it possible to give its customers reliable, convenient and great value for money service.
The EasyJet market mix (i.e. the 4ps: product, price, placement and promotion) can easily be evaluated at the structure of its website. EasyJet has identified its website audience as those on-line visitors living in Europe requiring cheap, comfortable and comprehensive real time travel without needing to go through travel agents. For this, EasyJet offers low cost, no frills flights and other services such as car rentals and accommodation (product) at reduced online price with no hidden-added cost (transparency) - showing fully the price breakdown structure (price), that can be purchased direct (disintermediation) online without the need to go through third party travel agents (placement), letting travelers know where to buy ticket by advertising on TV, newspapers, EasyJet planes and through e-mails (promotion).
The website has all the required information readily available in all dominant languages of the continent and is sectioned under different tabs of accommodation, travel insurance, car rentals, flight bookings and airport related transport to enable users to go directly to the service they require. Moderate use of text eradicates wastage of time yet communicates accurate message to website visitors to guide them through various links based on logical visitor's usage. It also has enough information on each page to support the need of visitors without abstract marketing banners to distract real buyers. EasyJet website gives attention on usability and reliability of information rather than visibility and colorful display alone; it however does not lack color. Orange color has consistently been used throughout the website helping clients to easily associate the website with the airline. EasyJet maintains a website that can be considered an ideal re-intermediation where service provider is in direct contact with the consumers via an electronic medium (Internet). This reduces cost to both consumer and service provider and creates business value. (businessteacher.com, n.d)
The implementation of EasyJet e-marketing strategy has been achieved on the company's website. The EasyJet website has been designed to offer high usability to visitor and is simpler to use compared to some of its competitors. It is simply designed, with an intuitive navigation - allowing users to move from page to page without the need to go via home page. It has high functionality and is without excess baggage. It was created with the intention not to tire the visitor with redundant graphics and advertisements which would distract its visitors and make them walk away from the website. It employs moderate use of text eliminating time wastage while conveying accurate message to guide users through various links. Each page on the website consist enough required information without abstract marketing banners to sidetrack real buyers. For example if a user wants to book a flight, he would enter the date of travel, destination and check flight availability then move on to make booking or purchase.
How the managements creates new core and extended value for customers
The purpose of setting up an on-line business is to ensure growth, efficiency, competitive advantage and leverage over competitors.(businessteacher.com, n.d). Using the internet, EasyJet has been able to reduce running cost and to cut down its supply chain by removing intermediaries and dealing direct with customers enabling it to sell almost 90% of its flight over the internet. EasyJet website targets business and leisure travelers who are keen on saving time and money and do not want to deal with third party intermediaries, providing them with easy access to booking, flight scheduling, transportation and accommodation. Facilities such as choice of airport lounges or parking are important in completing the process of travel booking, and having this on the website EasyJet extends value for customer.
They also analyze consumer e-mail queries and use these to formulate services according to customer needs. Operating in this way reduces cost and helps the company, by use of technology mediation, to sell its product and services and create business value.
There are exclusive promotions for on line booking customers and all customers who book online receive discount for each leg of the journey example EasyJet was able to reduce £1 for people who booked online. Online customers also get the benefit of paying the price of local call. EasyJet make it a point to put all cheap flights online and customers can search flights by fair and view flights that are available over two weeks. Customers can make flight transfers, change names, reschedule flight bookings, and request duplicate confirmation by e-mail and check in on-line. There is also an option of speed boarding which enables the passenger to board the flight before other passengers.
They also have flight promotions which intend to avoid customers who would fly with EasyJet. These promotions are advertised few minutes before the flight time aiming to get rid of empty seats.
Balancing online and offline promotion methods
The management balances online and offline promotion by using newspapers to advertise about new online promotions and offers by calling or e-mailing journalists and referring them to the website. EasyJet does this by putting internet-only promotions in newspaper encouraging travelers to purchase their ticket online. The "guess BA Go Losses" and the section entitled "Battle with Swissair" were advertised on newspaper to lure more people to the website.
Impact of the implementation of the strategy on business performance
The implementation of the strategy has an impact on the business performance because the site is well integrated into EasyJet's existing systems and business process. A good example is the ability to feed press release into the site through electronic and new destination appearing automatically once fed into the company's information system. Also the effectiveness of the website was proved when the dedicated phone number on the site hit six months target within six weeks. The log file recorded 8 minutes average time spent on the website per person and almost each caller made a purchase. The website proved that EasyJet phone operators were busy selling tickets rather than answering questions over the phone.
Legal and Ethical issues
The use of Internet in e-commerce has brought up invasive legal and ethical issues. This is partly due to its underlying features and the way it has been exploited by businesses disrupting existing social and business relationships and understanding.
EasyJet like many other businesses has benefited from commercial development of the internet but this commercial development demand a price from individuals. EasyJet gathers and processes customer information and uses this information for marketing by sending e-mails. This is regarded as intrusion of solitude because once a customer registers in the EasyJet website, then they will be receiving constant emails which can be really annoying. This has resulted to consumer use of spam guard (junk mail filters) to stop receiving unsolicited emails.
Sherrington (2009, p 19) emphasizes that the status of a business is not respected; it is earned (Sherrington, 2009, p 19). It is not good for a business to burst into people's inboxes or profiles on social networks such as Facebook, advertising their brands just because it has spotted a potential customer. Consumers regard this as abuse and violation of their privacy and some can punish the business by never purchasing their product or service. It is important in e-marketing to demonstrate integrity, honesty, respect and a willingness to share and apply the golden rule of treating consumers as you would like to be treated. This can be accomplished by letting consumers know before their information is gathered, give consumer the opportunity to agree or deny secondary usage of their information, give consumer access and the right to review personal data, store accurate consumer information and have in place a clear means by which consumer can address the situation if any of their right is violated.
The use of internet excludes a certain group of people who do not make use of internet. A good example is older people who do not seem to grasp the use of computers. EasyJet are likely not to have customers from this group of people.
The use of internet sometimes violates copyright laws where intellectual properties such as trademarks of others are used without consent. EasyJet went through a legal battle with British airways for using a slogan that resembles that of BA. EasyJet called itself "The web's favorite airline" mimicking the BA slogan "The world's favorite airline".
This report mirrors EasyJet strategy for its online business model. In wide-ranging EasyJet strategy works well for the company. EasyJet is aware of its business environment and realize the importance of monitoring it. Through the use of internet, EasyJet succeeded to be among the top low cost, no frills airline companies in the UK. The design, structure, usability and usefulness of its website have enabled EasyJet to secure leverage over its competitors. The most important fact is that EasyJet has incorporated flexibility in its e-marketing strategy enabling it to anticipate changes and further develop its strategies to counter-act accordingly. As a result, the website has become one of the most successful on the Internet hence forging the success of EasyJet operations.
However, the competition in low cost airlines is strong, and in order to remain strong and maintain its status, EasyJet has to continue being inventive in its e-marketing strategies. For EasyJet to remain competitive, I would recommend that EasyJet should consider the possibility of moving into other advertising mediums to strengthen their market power. EasyJet should also concentrate in maintaining its leadership in marketing; analyze its environment often and strive to enhance on its advertising style by employing the help of its existing customers. This can be achieved by identifying loyal customers and award them with special offers and discounts in return for helping EasyJet with advertising. EasyJet should also find a way of reaching out to customers who do not want to book online.
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