Easy Jet Case Study Management Marketing Essay

It is renowned that online marketers try to put there URL where ever they can catch customers. We often observe the most of the products have packaging with well mentioned URL on it. Similarly easyjet took this concept as guaranteed and mentioned their URL on the side of their Boeing 737s. Meanwhile, they easyjet varied the marketing mix time to time by promoting their products in Newspapers and famous magazines. First of them was The Times in Feburary 1999 which yield very impressive results.  

About 50,000 seats were about to be sold through this promotion and out of them 20,000 were captured on the first day by their customers, which then reached to 40,000 in next three days. As the director marketing, Tony Anderson, said that if these seats were not sold then they would have been going wasted.. There is one main thing in their online promotion that the internet is spread so wide and far which help the easyjet organization to cut its expenses on marketing. Almost 250 employees were needed to take up this task and there was still no guarantee that it would satisfy the marketers. However, the risk was managed by introducing a new domain (www.times.easyjet.com) for promotion in Times magazine in order to avoid the crash down of the website.

As the Anderson says that the online marketing practice was aimed to fill up the empty seats in their travels which yield an extra £15 per head. After this the management team launched a five-week campaign for the promotion in collaboration with The Times and The Sunday Times newspapers, in this scheme they introduced cheap fares and low cost tickets. It is stated that almost 100.000 seats were sold during this campaign and the company earned £2m. Out of all of them 30% seats were booked online remaining transaction being completed by the phone; it was remarkable achievement that 13,000 out of 15000 were the visitors who bought the tickets on the first day.

Haji-Ioannou the CEO of the firm in one statement mentioned that the website also works as a PR tool. He has a sharp move by making sure that the news papers and reporters keep on visiting the website that make them aware of the new promotions and offering by the firm. He avoided phoning or faxing and referred them to the website. For example, competition of easyjet in which they asked the people to guess what would be BA’s losses would be on ‘Go’ which was a rival to easyJet (the figure turned out to be £20m). It had a dramatic effect as soon after the result was announced 50 tickets were given to the participants out of a huge number i.e. 65,000. Another good example is that of Battle with Swissair giving easyJet’s showed its view that the Swissair’s head suggested the ban on easyjet to get license of Gheneva Barcelona route. easyJet also mentioned ‘The web’s favourite airline’, to itself in 1999.

Aircrafts operated by Easyjet are

Fleet history

Aircraft

Introduced

Retired

Notes

Airbus A319

2004

–

In service

Airbus A320

2008

–

In service

Airbus A321

2008

2010

Inherited from GB Airways

Boeing 737-300

1996

2007

Replaced by A319’s

Boeing 737-700

2000

–

To be retired by the end of 2011

They provide the single class system of flying. Also they do not provide meals on their shorter flights. This is also one of the reasons why they are able to operate in low costs. They are able to place 156 seats in their aircrafts by saving the space through small galleys and placing the lavatory in unused space at the back of the aircraft.

Easyjet also provides In-Flight Entertainment with the help of PSP device, which includes games, movies, TV shows preloaded and are available in different languages. It also provides magazines to their passengers at free of cost and also some special magazines are sold to their customers.

They also have the Easyjet Hotels and easyjet holidays for the customers. Customers booking the tickets through the website of easyjet can also avail the choice of booking the hotels at their required destination. Also they can separately book the hotels for their stay alone without booking the flight tickets. Easyjet holidays offers holiday packages including the flight tickets in easyjet and hotel bookings at easyjet hotels.

Background

Describes the background context of the organisation. This can include, for example, historical information on the company’s formation, the financial performance, and the key products and services.

Introduction

EasyJet Airline Company Limited is a British airline which is headquartered at London Luton Airport. It operates 500 routes between 118 European, North African, and West Asian airports on domestic and international scheduled services. Easyjet airlines is the subsidiary of EasyJet plc which is in London Stock Exchange listed companies and is has a share of a component of the FTSE 250 Index. It employed 8,000 professionals in September 2009, it is spread throught in Europe but head is in UK.

EasyJet Airline Company Limited was reputed in 1995. Haji-Ioannou was the founder of the company who was the Greek investor. In the beginning it had just two wet leased Boeing 737-200 aircraft, and they just covered two destinations in London Luton and Glasgow along with Edinburgh. The easyjet resided on Aircrafts with lease but in April 1996 it had first aircraft under its sole ownership so they started reaching Amsterdam. It was the time in 1997 when they first got the Certificate of Air Operators until then they were in partnership with GB Airways and then Air Foyle. But the story is different now the company is making mergers and acquisitions now and is in the low cost service providers 2nd ranked.

Easyjet has a history, an ambition and they have the right cradebility to hold the position they are in at the moment. Stelios Haji-Ioannou the greek owner of the company established the foundations of the company in 1995. The US company is widely known for its low-cost, no frills model. The easyJet believes that there is more demand of short-haul air transport which in mean time is elastic with prices in simple they believe that if the prices of the air transport will reduce then the more people will be willing to travel by air rather then the land routes. It is common perception that the airline travels depend on the economic condition of the country and the lower prices would simply lead to less profits. This concept was first declared wrong and then proved by the steps taken by the Easyjet they lowered down their prices and made the cheap air travel to increase the customers which proved right as they got a rapid increase in the sales of year 1999 and onward. It was an idea of European Markets because they were deregularised and their profits were going to suffer. The financial condition of Easyjet strengthened became more impressive as they grabbed the market share of other companies.( which they have listed in their website,) today Easyjet have more then 75 european Airports to pick and drop Travelers with more then 150 routers to cover with their round about 200 air crafts. Their website shows Passenger numbers up 7.9% to 48.8 million and load factor increased by 1.5ppt to 87.0% for the year 2010.

Background:

From the date of its incorporation in 1995, it has seen a rapid growth through acquisitions and the consumer demand for low cost air travel. Now the Easyjet along with the Easy jet Switzerland flies over 180aircrafts. It has 20 bases across Europe, and the main one is London Gatwick. In 2009, it carried around 45.2 million passengers, and thus is considered to be the second largest low cost carrier in Europe, next to Ryanair.

In November 1995 the era of easyjet success started when they reached new destinations like Glasgow, Edinburg and increased their flight capacity to 148 sears and reduced their price to £29. The developed new ways of selling seats and started reservation over telephone in advance. Then in 1996 easyJet took advantage and delivered its first wholly owned aircraft and sent first international flight on it from Luton to Amsterdam. The success did not stop there and they managed to launch the website in 1997 for the first time which in 1998 became the source of emarketing and profit generation and today that website is the major source of sales for the easyjet. Almost 90% of the sales are online. Then in 2002 August easyjet expanded its number of operations and international routes by successfully acquiring British Airways subsidiary GO. Then soon after in October they set up a deal to purchase 120 of Airbus air crafts that helped in achieving their growth target and successfully retained their growth. There was a strategy in time upto this that they were operating in just one type of Air craft i.e. Boeing 737 which they thoyght that lower cost that was the thinking because the Air bus planes were expensive and ere denting the financial position of the business. On the other hand they also were very much confident about they are skilled in utilizing Boeing 737 so Airbus would create a new challenge for its staff. easyJet’s deal of Airbus was stunning” no doubt but also an costs increase, which secured through the type of planes those were “far outweigh by the financial remuneration of this deal”.

easyJet have a statement that both Airbus and Boeing aircrafts had same features but that a major passageway on A319 helped in making it quick to success, because it had a seat more than the other one so in the end A319 was lowering the overall cost by 10% as against the mix of aircraft, which would have contributed in lower ticket fares.

Situation Analysis

Present Position and Industry Analysis: You should consider analysing the organisation’s current position using both of the following tools:

SWOT

and PEST

Present Position and Industry Analysis:

The easyJet holds a very high esteemed position in the market of Air travel industry. The airline industry has not been so large but the competition is still very strong. The easyJet has a value proposition to provide as low fares as possible which is working very handy for them till now. In the past decade, air travel has grown up to 7% per year. Travel for both business and leisure purposes grew strongly worldwide. Last year scheduled airlines carried 1.5 billion passengers. In the leisure market, the availability of large aircraft such as the Boeing 747 made it convenient and affordable for people to travel further to new and exotic destination sand take up more holiday trips. Governments in developing countries realized the benefits of tourism to their national economies and spurred the development of resorts and infrastructure to lure tourists from the prosperous countries in Western Europe and North America which helped the industry lot during the past years. As the economies of developing countries grow, their own citizens are already becoming the new international tourists of the future.

Recently, business travel has also grown as companies become increasingly international in terms of their investments, their supply and production chains and their customers. growth in business travel has been contributed through the rapid growth of world trade in goods and services and international direct investment.

The overall situation for easyjet was far better than they would have thought for but still there are some areas to improve. Like the following discussed.

Strengths:

EasyJet have an image of low cost service providers by eliminating unnecessary frills from the flights. They are strengthed by reaching key destinations across Europe. Centered in UK they are covering routes of Amsterdam, Berlin, Barcelona so whole of the leading city destinations in the UK and across Europe, including Berlin, Amsterdam, Barcelona, and Prague.

They have an absolute advantage of online sales. They were first to introduce online competition thus they hold an esteem position in the minds of their customers. .

They are one of the leading companies in terms of design and features. They provider an efficient quality service in a unique way.

Their ethical responsibility holds them dear to their customers as they provide their customers loyalty by not hiding anything from them. This feature makes them more reliable and customers willingly accept their offers.

The easyjet is in top rank of the lowest rate provider for air travel.

As they are the leading company in the air travel, so they also are social responsible hence they create value by being socially responsible so that also provide their customers some likeness with the company.

Easyjet has a turnaround rate of less then 30min which make it more significant and reliable.

Weaknesses:

There is a lot of competition and the customers are limited. So the company is still lacking behind to achieve the major market share and meanwhile it also have to be very aggressive in order to gain the major market share.

In order to decrease the cost they have cut down expense of food and drinks and such luxury which is a matter of concern for the customers.

Opportunities:

They should now think of opening new routes like they are still not operating in Middle East which is now considered as Hub for international travel. So they have a great opportunity to start there operations in this region.

Offering luxury to the customers to make their journey more enjoyable they would have to take steps and should have to consider the fact that providing refreshment to passengers would increase their reputation.

They should start marketing in the media so to grab the customers and also rely on documentaries as this would be a major source of the media.

Threats:

They are limited in their timings and also are not working to increase their number of travels, hence business class would always willing to grab some other flight in order to save the time. So they should have to increase their operations.

They are about to face a big threat in the form of taxes. As they have mentioned in their case that the Swiss company was about to stop their operations there hence it seems likely that some government would put some more taxes on them.

Hydrocarbon would be a big threat to them as the prices in international markets as increasing so if they want to be the low cost service provider then they would have to face the challenge.

Labour Unions and other labour Laws are a threat to them because they want to increase their wages and cut down the work load.

The Economic pressure is also present there as that would lead to major decline in air travel.

PEST analysis for easyJet for the next 5 years

The Air industry is facing concerns after the incident of September 9/11 which has changed the scenario and companies are now have to spend more on security. In the next five years following are the some of issues that may have to be faced by the companies of Air travel.

Politico-legal factors

There is a threat of legal barriers between Asian and European countires. Because China and India are emerging strong and would not allow European companies to take their share.

The political position of UK is stable and it may have an impact on the future growth of air industry.

Economic factors

Fuel prices are surging day by day and the economic conditions are needed to be analyzed in order to tackle these factors.

The current state of economic decline may loom large in future

Asian companies would definitely try to come to Europe so Air travel would be more handy at that times.

Socio-cultural factors

There is a fair chance that the social and culture factors play there role as we know that the public is now trying to travel more through land routes then air due to fare prices.

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.

eMarketing Strategy

What eMarketing strategy has the organisation adopted or is planning to adopt?

What is the value proposition and differential advantage of this strategy?

In this section you should build upon your Situation Analysis (You should also evaluate the organisations’ ‘marketing mix’).

EasyJet seems to be positioned very well with experts predicting excellent growth opportunities for the low cost-sector. Given the saturated market and the shortage of other options in the UK, The purchase of Go has some positive effects on the easyJet but that would also increase the competition. The UK market offers little growth opportunity, therefore concentration will be on the continental market, a step forward in this direction is setting up a major new base at Berlin, with flights from 11 European cities [1] , and possibly as well on Eastern Europe. Focus remains on pricing Strategy and expansion of its route network. Promotion needs to persuade people that it is safe to fly and institute easyJet as Europe’s major low-cost carrier (as easyJet is already doing in its announcement: “Size matters!”)

Internet business model:

Online Target Search strategy

easyJet has a absolute advantage in utilizing its online resources. These days there 80% sales are online and they have a target customer online which is a loyal one and they growth is still going. They are offering there customers best possible fares and that gives customers a choice of there own.

Online Sales efficiency strategy

As we know that they have increased the domain while promoting with Times advertisement. Similarly they are keen to make more online promotions so the main focus is to increase the efficiency of the online sales. They have twice done it and the results were remarkable. Moreover, these days the website is functioning quite handy for the company where not only external but the internal as well as reporters and the agents get latest updates.

Simple and effective online software provides the customers with a number of choices which then make there work more and easier. “So its all about easy.”

Low Cost provider strategy.

The company is very confident with its online business that they have used there online sales efficiency to reduce they cost. They have cut short the sales through phone calls and the major source of buyers is online.

Value Proposition and differential advantage of this model:

Buyers get the value of, reduced searching transaction cost and time.

They also get the nice experience as they are not in need of waiting on the phone to get the answers which they need. Instead they can search the website for the information as they needed.

The suppliers, that is, the easy jet officials, get the value of reduced time to search for the customers.

The most important value proposition that is gained by the customers of easy jet is that this is the new model and so they get the new experience in such a type of shopping.

Marketing Mix

Price

• Low price is a key element of the brand.

• Uses differential pricing; off-peak travelling and booking in advance makes a ticket less expensive.

• Discounts for tickets booked online.

Product:

• “no-frills”, point-to-point air services

• also car hire on its website (use of the Internet for bundling products) and links to other easyGroup websites (see appendix 1 for other easyGroup enterprises).

Place/distribution

• Internet booking system (over 90% of bookings).

• Telephone reservation system.

Promotion

• Highlights its number one position among Europe’s low-cost airlines (advertising strap line:

“Size matters!”, slogan: “the web’s favourite airline”)

• “No Bullshit” approach (Stelios), humorous, attention-catching campaigns (e.g. the giving away of free tickets on Go’s inaugural flight and Stelios protesting in a orange boiler suit against an increase of airport fees at Luton in a branch of Barclay’s bank which owns the airport).

Implementation

How is the management creating new core and extended value for customers?

The reporter Shefiled has reported something regarding colour according to him there were some managers who stopped him putting his major colour on the website as he is the media consultant so the has some point to argue. The website was supposed to be more and more functionally attractive rather then show off. According to him the home page must be more attractive and colourful rather then its current form as the one with few options and few moment columns and there is something catchy that the site has a simpler booking system then the other websites of competitors another major advantage that there website have is that of the navigation with in the website the customers don’t need to search around the whole website the simplicity is the key to the website.

The one issue that should always remain in focus, while building the website is that it should match the business that the company is undertaking. So the website of easyJet is well in theme with their business. For example, the new destinations whenever they are to be added every one is updated simultaneously through website. There is and installed system that keeps the record of number of visitors on the website and on the phone simultaneously. A phone line is dedicated specially for this purpose.

Hence in this way they have achieved their 6months targets in 6 weeks. That was all possible because they had a customer focus website and they are destine to create value for the customers.

How is the management balancing their online and offline promotion methods?

It was difficult to keep a record of offline customers so the website log file was safely maintained and the number of customers was kept a track who visited the website. In start the online promotion method was clearly taking advantage as the online customers were buying tickets like hot cakes on the other hand the phone calls where yielding poor results the ratio was 6 to 1 on phone. The major problem in that was the call centre representatives were not doing answer questions instead they were just selling tickets. Once they were done with the website they were selling many more tickets online so they though out some promotions for the offline customers. Hence in order to balance both they were have to bring offline customers online. So they mentioned their website URL on the planes and hence started promoting offline too.

Their next main strategy was to make everything easier for their customers. They added the prefix of “easy”. Where, easyEverything means, the separate internet cafe which allowed the customers to browse free through the easyjet site.

In easyRentacar, it offered the cars for less rent. But it was able to offer only single car type. These were some of the strategies followed by the easyJet to make the customers remember of their services and name of easyJet even in offline, that is, even at the street.

After they have implemented the new system of marketing technique, that is through the internet, their sales rose considerably. It helped them to reduce the running costs, which is very important to any company. Since their costs were reduced, they were able to give their customers a discount of €1.

What impact is the implementation of strategy having upon the performance of the business?

For the company it was also easier to measure how much tickets got booked with the help of their website. This was possible with the help of the special telephone number on the site. It was actually, their six months’ target was reached just in six weeks. Also, one great advantage they found out with the help of the easyJet’s website was, almost everyone who called booked their tickets, opposite to the phone line where only one caller out of the six callers booked their ticket.

Their main promotion of their site was through the newspapers at first. Mainly they used ‘The Times’. This brought a very impressive result. Where on the first day itself 20,000 tickets were sold out. Thus they used the offline advertising to promote their online ticket bookings.

Legal and ethical issues

What legal and ethical issues does the organisation need to consider with regard to the gathering, processing, distribution and use of information on the Internet?

Consideration for legal and ethical matter with regard to the gathering, processing, distributing and use of information on the internet is now becoming very important. As the technology grows the relationship between the society and politics also increases. Ethical and legal decisions are thus becoming very important to balance the needs and rights of everyone.

Some of the netiquettes to be followed are…

The information should not be disruptive or threaten others.

The information provided should be true.

People’s time should not be wasted unnecessarily.

There are many legal and ethical issues in regard to the gathering, processing, distributing and use of information on the internet by the organisation.

The first and foremost legal issue is copyright. It is provided by United States for those original works of persons. It is provided for both the published and unpublished works.

Next comes the trade mark. It is the “ownership of intellectual properties that identifies goods or services”. In internet trademark is mainly used in naming the domains.

The freedom of expression in the internet is protected by the First Amendment Act. The spam is the main problem for many users of internet. CAN-SPAM act is mainly considered with the e-mail marketing which imposes certain regulations.

There are also many emerging problems such as frauds, where the fraudulent people prepare the websites as that of the true one and mislead the people.

Conclusion

Presents the conclusions that you have reached based upon your findings and the recommendations to the management of Easy Jet.

The whole document was to emphasize on the performance of the easyJet along with what should be their future perspective. In the current scenario it seems a bit of reality that the low cost sir travel would grow more and more but the environment is fast changing that new areas of investment are emerging every other competitor in the air industry is increasing the pressure over the rivals. The experts says that in future the market would become more concentrated so the survival of the fittest will remain in competition and there would be only 3 or 4 companies will remain to compete and all the others with have to make their way out. Hence the idea of EasJet of no frills is stll very much attractive and they would have a great opportunity to remain in the business if they keep relying on it. Moreover, an effective restructuring to update the equipment and operations would be required to make sure that the company keeps focus on success.

The air travel industry is still in the stage of growth and they need to be making some strategies for the future as the market will soon be maturing. There is also very likely that the falling barriers would not take the air travel industry to a new height because they are now not that much attractive. As we have discussed that the fuel prices are surging and the easyJet is focusing on the low cost so to sustain in this market this strategy would be very difficult to maintain because increasing pressure to avoid terrorism and increasing pressure to maintain high security tends to increase the cost. Then there is also possibility that offering new services on air travel and making the website work better and better would make the company more stable. The major companies in the world like british airways and cathy pacific are not easy to be competed as they have a very vast network and they seem to be more strong then the no frill companies. (In the US foreigners cannot own more than 25% of a national airline, in the EU the restriction is 49% [2] ).

US market of no-frills is more mature then the UK. Hence a growth rate would be very high in near future as the companies are trying to attain the major market share and more and more promotion campaigns are nearly visible. Meanwhile, UK has more instinct to become saturated as compared to US because they are trying to find out the European hubs.

It will be motivating to see how the corporation reacts to changing market conditions. EasyJet has constantly tried to identify itself to its consumer base as the best form of budget travel in Europe. The company recognised the demand for this form of travel and its marketing strategies have been primarily geared around providing more efficient, low-cost flights, whilst maintaining as a high a quality of service as possible. Through their clear, effective website, they have strived to make it increasingly easy for customers to deal with the company, whilst strategically positioning their advertising to be directed at the market served. Policies for expansion have been the driving force behind easyJet’s significant growth and have enabled them to eliminate key rivals from the industry

Financial Position of the Comapny

EasyJet financial performance

Year ended

Passengers flown

Load factor

Turnover (£m)

Profit/loss before tax (£m)

Net profit/loss (£m)

Basic EPS (p)

30 September 2010

48,754,366

87.0%

30 September 2009

45,164,279

85.5%

2,666.8

54.7

71.2

16.9

30 September 2008

43,659,478

84.1%

2,362.8

110.2

83.2

19.8

30 September 2007

37,230,079

83.7%

1,797.2

201.9

152.3

36.62

30 September 2006

32,953,287

84.8%

1,619.7

129.2

94.1

23.18

30 September 2005

29,557,640

85.2%

1,314.4

67.9

42.6

10.68

30 September 2004

24,343,649

84.5%

1,091.0

62.2

41.1

10.34

30 September 2003

20,332,973

84.1%

931.8

51.5

32.4

8.24

30 September 2002

11,350,350

84.8%

551.8

7