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Situational analysis and emarketing strategy for EasyJet

4961 words (20 pages) Essay in Marketing

5/12/16 Marketing Reference this

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Easyjet was founded in 1995 by Stelios Haji-loannau as a no frills budget Airline Company. Its initial aims were to under-cut the current rivals that targeted the same markets. Low-cost airlines achieve their competitive advantage through achieving low operating costs and increasing their profits in order to provide the best prices. Easyjet stumbled onto a gold mine that allowed them to cut their costs by such a margin that they became the market leaders (Chaffey 2009).

Easyjet experienced early success in their company’s lifetime through the adoption of an eMarketing strategy. Initially the company rejected the idea of adopting the internet as a way to do business addressing it as a place for “nerds”. But after taking baby steps into this new area Easyjet soon saw how valuable this new channel could be. It proved to be even more beneficial to them in the first few years of operation than they could even predict.

Easyjet adopted the “cost leadership” strategy to differentiate itself from the other competitors out there. They strived to have the lowest airline costs in the market and maintain it. They were able to achieve this due to the amount of money that they saved in operations due to their implementation and adoption of the internet into their business (Chaffey 2009).

In the first years of operation their website gave them approximately 40% of their bookings, which eventually became 90%. They soon made their website the primary source of their flight bookings, aiming to provide easier methods in which clients could interact with them. They were the first company to adopt an eMarketing strategy as a primary means of doing business but others soon followed.

The sophistication of their site allowed Easyjet to be a very flexible company, changing prices and deals within a moment’s notice to deal with any market changes or gaps they found. The site also provided them with fast accurate feedback that required only checking statistics of their webpage. Easyjet has permanently changed the way air travel companies conduct themselves in the market place and probably will continue to do so in the future.

Situational Analysis

SWOT Analysis.

Strengths:

EasyJet is the leading Low cost air travel service provider in many of the leading city destinations in the UK and across Europe.

Is regarded as the leading brand name with regards to the travel industry within the UK.

Their aircrafts have a distinctive look making them easily recognizable and easy to differentiate between them and their competitors.

Their services are offered at a high quality while maintaining competitive prices.

EasyJet, being a company in an industry being closely watched by the publics’ eye in terms of contributing to the green house effect and global warming, has taken active steps to reduce its carbon footprint and has made this a priority in future developments.

They offer a number of features including internet booking, ticketless travel and assisted travel services.

Their website is regarded as being very user friendly and is easily navigated. All the costs are clearly laid out before the user so that no hidden costs are thrust upon the unsuspecting client.

Weaknesses:

EasyJet, on flights longer than 2 hours, does not offer a free food service.

EasyJet is part of the domestic air travel market which is a very competitive market. Competitors can restrict and shape pricing policies on EasyJet’s less profitable routes.

Opportunities:

EasyJet could expand their routes by opening alternative routes to major cities in Europe. Soccer players who travel from Dublin to the UK might appreciate a route linking the two places.

Long trip flights can be quite unbearable on domestic flights, so if EasyJet offered free refreshments for flights longer than 2 hours this would make their long distance flights more inviting than their competitors.

Threats:

Popular flights are highly sought after and fought amongst by competitors flying the same route forcing pressure on the pricing and profit of those routes.

Less popular flights could become costly if the external market has an impact on it. If the price of oil increases the profitability of these less popular flights could drastically decrease.

Economic recessions may lead to businesses and casual flyers to cut down on unnecessary expenditure which may result in them flying only when they have to causing them to fly less.

Pest Analysis

Political

The expansion of the budget airline industry corresponded with the European deregulation of commercial aviation in 1990 which allowed the low cost carriers in the industry to take advantage of the laws being more lenient and enlarge their businesses.

Economical

Figure 1: True low-cost airlinesFor airlines to be considered true low-cost airline companies they must adhere do the 3 components displayed in figure 1. As can be seen below Easyjet, Go and Ryanair all qualify to operate in Europe as genuine low-cost airlines. Easyjet manages to catch the eye of customers through their website that is user-friendly, new with an advanced booking process (Webster 2004).

(Mercer Management Consulting 2002).

Most low cost airlines operate by carrying a small load, in terms of luggage and people, and travel directly from one point to another. These trips are normally short and done regularly. Their marketing strategies are normally aggressive and mainly focus on secondary airports. Easyjet differs here as they deal with major hub airports. The industry tries its best to operate at a low cost, which is achieved by sales that have little excess, maintenance kept at a low cost, wages kept low and a high productivity of resources.

Oil prices being on the increase also has a big effect on the airline industry but regardless of this Easyjet has been able to keep their costs relatively the same due to their size while smaller airline companies haven’t been able to maintain competitive prices.

Social

Figure 2: Airline PositionsBelow is a figure expressing the different airlines and to what type of people they aim their services to in figure 2 (Fainsilber 2000).

From the above it can be seen that low-cost airlines normally focus on Non-business Passengers and Price-Conscious Business Passengers. Easyjet has set themselves aside my targeting the business and leisure segments. They have ensured that its marketing strategy is marketed for a wider market than the competitors giving them a slight competitive edge.

Technological

The new functions of websites allow low cost airlines to save a lot of money on their bookings due to the lack of personal needed to keep it running. This allows them to remain competitive and also gain a new form of advertising which clients can easily access. Having no travel agents means not having to pay any travel agency commissions.

e-Marketing Strategy

E-Marketing can be defined as “Achieving marketing objectives through use of electronic communications technology” (Smith, Chaffy 2001). Electronic communications technology refers to the Internet, e-mail, Ebooks, database and mobile phones.

“Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.” (Smith, Chaffy 2001).

The above quote shows marketing’s focus on the customer and how to satisfy the customer to reap profits.

Internet as a marketing tool can be used to support the following aims:

Identifying your clients needs and desires: The internet allows clients to give feedback from any location at their own time with relatively no effort required at all. WebPages can also give readings back to features most used and others that are rarely used so they can optimize their eMarketing strategy.

Anticipating the demands for new or existing products: Allowing customers to make purchases and bookings online opens up a new channel by which the clients can interact with the business. This tool allows the company to get feedback from their site showing which of their features are more popular and which ones aren’t. Also they are able to check what other companies might be doing so they can adjust and keep the competitive edge.

Satisfying the client’s needs and desires: The internet is very easy to use if implemented correctly. This makes the experience the client has when accessing the website a pleasant one. The key success factor for e-marketing is making sure the clients are satisfied through the electronic channel. As easy as the site is to access, it is just as easy to close. Therefore keeping the users attention for as long as possible is a key desire. (Smith, Chaffy 2001).

Another way in which the internet can positively affect a company if implemented correctly is what Smith and Chaffey (2001) call “the 5S’s”. These are as follows:

Sell – Growing sales through better customer understanding and a cheap but effective means of advertising.

Serve – Adding extra value in using the site such as special benefits or deals that can only be gained through the site. Also displaying more information for the client so that they can have easier access to it.

Speak – Allowing the company to get closer to their clients by means of online surveys, learning about customer’s preferences through site tracking. Mainly by creating dialogue between the client and the company.

Save – Saving costs by not requiring people to interact with the clients, or requiring costs of traditional methods of advertising such as printing out advertisements or paying for adverts on the television. Also providing a method to communicate to clients that otherwise would be too expensive to communicate to by traditional means.

Sizzle – Allows for brand extension via online methods. Not only can the brand be expanded, but the expansions made can easily be made to the clients who access the site.

Easyjet initially took baby steps onto the idea of websites being beneficial to their company. After they experienced success in this they decided to start shifting towards making their business more “web” orientated with the goal of benefiting from everything stated above (Chaffey 2009).

In the early stages of the sites life, it generated 38% of the business airline bookings. Below is an extract from Easyjets website (Easyjet 2010a) showing their end of year finances for 30 September 2010.

Figure 3: Easyjet Full Year Results for the year 30 September 2010

90% of their sales can be attributed to online sales. This compared to the companies 87,710 seats sold online in the year 2000 for a single week in October, which was 74% of total sales (Easyjet 2010a). From this information and the information in the figure it can be seen Easyjet has grown by a huge amount since their initial adoption of the internet into their company structure. The growth was so extreme at one point in 2000 Easyjet managed to double their number of flights in just one year reaching 1000 flights per week (Easyjet 2010a).

Easyjet moved towards only allowing bookings through their site until 2 weeks prior to the flight date where conventional booking methods would be allowed. This differentiated their product from other airline industries as they were the 1st airline company to do this (Chaffey 2009).

Easyjet has adopted the colour orange to represent their company. Their website has this colour used everywhere and their fleets are painted orange as well. This allows the company to easily be distinguished by customers between other airline companies (Easyjet 2010a).

The direct connection the customers have now in booking their flights, allowing them to be their own travel agents, has not only saved a lot of money in terms of paying travel agencies commissions for their services, but it also has increased the clients buying power.

“This direct connection can be used for special offers to last-minute impulse buying customers, dynamic pricing, cross-selling, improved cash flows due to direct sales and cost reductions such as the opportunity to outsource revenue accounting to lower wage countries.” (Soldt, Bobbink & Ying 2007).

As can be seen from the above quote, the benefits from clients having a greater buying power are quite substantial. Below is a figure showing why airline companies are all shifting towards a more e-Commerce marketing strategy.

Figure 4 Forces driving growth of e-commerce in air transport (Soldt, Bobbink & Ying 2007).

All the factors mentioned in the above figure all lead towards airlines becoming more e-Commerce orientated. Ryanair set itself aside by claiming itself to be “the World’s most loved airline company”. Easyjet set itself aside by claiming itself to be “the Web’s most loved airline company” (Butler & Denholm 2006). In order to keep competitive advantage, Easyjet took the “cost-leadership” approach transferring all this low-cost advantages to the consumer in the form of low prices.

In terms of product differentiation, Easyjet has allowed customers to “self check in” (Easyjet 2010a) to minimize disruption which no other airline had implemented at the time. Also in their pricing methods they have taken a different approach from the typical stating prices excluding taxes and other charges. They decided to implement “inclusive pricing” which showed the total price upfront (Internet Travel News, 2005). This has helped build customer trust towards Easyjet.

Implementation

New Core and extended value for customers

Management is creating new core and extended value for customers in a number of ways. With the booking purely being done online and the need for travel agencies are not required, the customers have become their own travel agents. This has increased the customers buying power and they are in more control over their flight bookings than ever before.

Due to customers being able to directly communicate with the company via their website customer relations have increased causing Easyjet to better understand their client base. This has allowed them to come up with specials and other offers that really appeal to their client base, giving them more value in their experience with Easyjet (Soldt, Bobbink & Ying 2007).

Easyjet’s website can be viewed in 15 different languages which was an attempt in increasing their flight audience. Clients feel more at home when dealing in their home language. This has made the experience of booking on the Easyjet website a pleasant one. It has definitely increased the websites value for clients using the site (Easyjet 2010a).

Easyjet has adopted a cost leadership approach as a way to distinguish themselves from the other airlines. This was able to be achieved do to the low cost and costs saved from running their website. This has allowed Easyjet to release prices that where unmatched and gain the competitive advantage. This has lead to other airline companies adopting an e-Marketing approach by developing their own WebPages. This has caused Easyjet to have to constantly adapt in order to keep competitive advantage but being the first to adopt this web based approached has set them ahead (Chaffey 2009).

The website allows Easyjet to update their pricings and special deals immediately which allows them to be very flexible in the market. Also due to their increased flow of information gathered through their website they can quickly gain current market situation knowledge and adapt almost instantly. This has allowed them to remain constantly competitive (Chaffey 2009).

Easyjet relaxed their hand luggage restrictions which allow passengers to bring up to 40% more luggage onboard compared to their previous restrictions. Also with their no weight restrictions for cabin baggage along with their flexible ticket scheme which allows them to create earlier flight standby’s all which is very appealing to business passengers who want to get on and off as soon as they can to minimize the time spent at the airport, and allowing them to carry more onboard means they don’t have to check in any luggage which means they can leave the airport as soon as they get off the flight (Easyjet 2010a).

Balancing of online and offline promotion methods

Management is balancing their online and offline promotion methods. As mentioned above they use online promoting a lot, but also take great care in their offline promotions. One of their major offline promotions is their positioning of their operations. Recent studies have shown that Easyjet is within 30 minutes average travelling distance from the general population (Easyjet 2010a). This is appealing to customers as after and before flight travelling times are kept to a minimum.

Easyjet recently announced a strategic agreement with Lowcosttravelgroup, which will allow Easyjet customers discounted prices at any Lowcosttravelgroup available offers (Easyjet 2010b). These include holidays, hotel accommodation and many more perks. Easyjet CEO Carolyn McCall said, in response to this agreement:

“We see a significant opportunity to further grow our ancillary revenues, by offering our customers a huge range of flexible and low cost beach and city holidays.” (Easyjet 2010b).

This promotes customers to use Easyjet to not only gain discounts on flights but also receive discounts on their holidays.

Easyjet recently won the Business travellers Best Low-Fares Airline for the tenth year in a row (Easyjet 2010c). Winning this award allows other business travellers to notice Easyjet and increases their promotion of their airline. The fact that Easyjet has won this award 10 years in a row shows their dedication to making sure they get it and keep it. This promotes trust between the customer and the company.

9.7 million People tune into Airline, a TV documentary series, when it was covering Easyjet (2010d). This was 37% of all people watching Airline instead of other channels. This was vital advertising that made Easyjets current standing in their market well known to the public. Easyjet even offered customers that watched the documentary a chance to win free flights, promoting them further.

Probably the most important form of advertising and product promotion is the Easyjets colour scheme of orange. Customers instantly identify this colour with Easyjet and everything to do with Easyjet. Their website is covered with this colour and so is their fleet. Also all their advertising is drenched with this colour all to make sure that customers identify Easyjet and the colour orange (Easyjet 2010).

As it can be seen above, Easyjet not only has numerous online promotion methods, but they do not neglect their offline promotion techniques. The combination of these two methods provides Easyjet with tons of strategic promotion opportunities.

Implementing impact of the strategy

There is an impact of implementing this strategy upon the performance of the business. Initially it cost them 10 million pounds to implement their website and get it running to bring benefits to the company. They initially had a goal to reach a certain amount of customers via the web site in 6 months. This goal was reached within the first 6 weeks of the site being up.

As seen in figure 3 above, Easyjets total revenue for the financial year of 2010 totalled 2 973.1 million pounds, which was an 11% increase from the previous year. This shows the company has grown exponentially from their initial baby steps onto the online world and continues to grow to this day. They are now regarded as the UK’s top airline (Easyjet 2010) in terms of passengers carried.

It has taken Easyjet a long time to get their site to what it is today but because of its state Easyjet can keep one step ahead of their competitors due to the functionality of the site and the feedback it gives. This allows them to become proactive at the same time as being able to be reactive in the way they operate in the market, being able to shift prices and deals almost instantly thanks to the speed of the website (Chaffey 2009).

Initially the implementation of the website destroyed a lot of jobs in Easyjet as certain parts of the business where no longer needed, or no longer needed at that size. The call centre no longer needed many people to manage as most of the bookings came from the site, therefore a lot of jobs were lost and possible jobs in the future in that field reduced to a minimum (Chaffey 2010).

In the process of losing jobs, Easyjet has been able to produce more job opportunities within their company by their company’s growth. If the company didn’t implement their website, it is safe to say they wouldn’t have been nearly as successful and as big as the company is today. Therefore the jobs lost outweigh the jobs been created today.

As can be seen above, Easyjets strategy brought them more success than previously could be predicted. Even they failed to predict the amount that the website would benefit them underestimating it by 450%. Some negative effects did occur but in the long run it was worth it in the end.

Legal and Ethical issues

One of the major ethical problems that comes up in terms of the internet and electronic media is intellectual property issues. There are laws that protect physical property that people can see and touch. This idea is easily understood. The idea of intellectual property theft is a grey area with most people. Legally though, any ideas thought up by a person or company are regarded as his property, and any attempt to take that idea without his/her consent is regarded as theft (TekXam 2002).

Easyjet, as they operate daily within this field, has to obey all the laws and ethical beliefs stated below to maintain their image and have to make sure they don’t violate any of them. They must also be ready to take legal action against anyone who violates these laws against them as it could damage their business permanently.

The main areas of legal and ethical concern for the internet and electronic media (TekXam 2002) are identified and discussed below:

Protection of intellectual Property

There are several ways in which intellectual property is protected. The first way is to keep the idea a secret. This is probably the most obvious step as no-one can steal an idea that no-one else knows about. Another way is if the idea is copyrighted. Copyright protection is for an “original expression of an idea that is fixed in any physical medium” (TekXam 2002) and the “right” to how this idea is expressed is given to the person who owns the Copyright.

Trademarks are used to protect brand names, logos or phrases that uniquely identify the company. Trademarks do not prevent people from copying products, but instead prevent anyone from using their trademarked band, logo or phrase to identify their product. Trademark protection is automatically applied when that mark is applied to that product and then sold.

Patents is a right of ownership that is given to an idea that is new for things such as a new machine, manufacture, composition of matter, or method, or an improvement of an existing item previously stated. This prevents other people from legally taking this idea and using it as their own (TekXam 2002).

Prevention of fraud

When contracts are provided to clients as an agreement that both parties have agreed on, the companies providing the service are bound by these by laws. If the company does not provide the service specified in the contract, they may be taken to court. An example of this could be an internet company that set rates for specific connection speeds. The company could be flooded with new businesses and their lines might slow down due to the new volume of traffic. This would cause the clients to get speeds under what was specified in their contract resulting in a breach of contract (TekXam 2002).

Protection of freedom of expression versus problems of defamation

Defamation of a person or companies character or image basically means slandering/libelling their name. Slander is a statement that is false made to damage the reputation of a person or group of people. It is illegal to defame someone or something (slander their/its name) but the issue that arrives on the internet is people can slander other people or things anonymously without worrying about being punished by the law, as no-one can track them. Companies also have to worry about not defaming clients. This could result in a law suit (TekXam 2002).

Protection of privacy

Information is gathered about us all the time. For most of the time we are aware that this is happening and are fine with it. But due to the functionality of the internet, a person’s every click can be tracked and recorded into a profile about them without their knowledge. This has raised several issues and now clients must be made aware that their information is being tracked. They must be given an option whether they want their information to be tracked or not. They should also be able to access this information that is being kept about them. This data that is kept about them should be safely stored and not given to any other companies/people. Any information that is leaked about them is viable for legal action (TekXam 2002).

Control of Internet indecency versus free speech

Anyone’s opinions are allowed to be stated on the internet. Many options are available to make your point known. This can come as a blessing or a curse. While people can express themselves, there are some people that like to spread hate speech, or items that aren’t deemed acceptable to the general public. These items must be made known to the user before entering the site, also any item that is not decent for people under the age of 18 must have an option to confirm the age before entering the site (TekXam 2002).

Control of spamming

The act of spamming involves sending an e-mail, or e-mails, aimlessly without the permission of the receiver of the e-mail. The people sending have no disregard of the appropriateness of the message.

This has lead to laws that state the sender needs to identify themselves and their IP when sending messages, and identify whether or not the mail is regarded as advertising or not. Also there must be a functionality that allows users to prevent all mails from the specific sender as a way of protecting them from spam (TekXam 2002).

Management Summary

Recommendations for the company from what has been discussed are as follows:

Due to the low-cost airline industry reaching maturity recently, Easyjet needs to change from being a “Prospector” to an “Analyzer” in accordance to Miles and Snow’s Organizational Strategy, Structure, and Process. That classifies businesses into four different categories which are as follows:

“Defenders have a limited range of products and focus on efficiency and process Improvement; Prospectors have a broad market/product domain and tend to lead change in the industry; Analyzers fall between the above two groups and are likely to follow a second-but-better strategy; Reactors have no consistent strategy and they merely respond passively to environment pressure.” (Tan, Weston & Tang 2005). 

From the above it can be seen that a Prospector is more focused than an Analyzer, but not as broad. If Easyjet wishes to keep its market leadership it is going to have to once again set itself aside from the rest of the companies.

Easyjet should tap into untapped advertising fields such as advertising on the TV. They had a documentary on them but nothing they initiated as pure advertising. This should increase their current market power and future.

Due to Easyjets Company being so large, they should spend time refining each branch improving their levels of efficiency and motivating their employees to provide better service. This would increase Easyjets popularity with the general public even more.

Conclusion

The purpose of this document was to assess how Easyjet achieved the success they managed to achieve. They utilized very successful marketing strategies through many different means available to them and managed to set themselves a lasting image of being one of the best low cost airlines in Europe. To fully understand Easyjets position in the market, the market that Easyjet operated in also had to be analyzed.

Easyjet has always tried to make itself known to the consumer for being the best form of low cost airline travel in Europe. Almost all their marketing strategies have been aimed at reducing their costs so that they can provide cheaper, competitive costs to the people. While they aimed at becoming the cheapest mode of airline travel, they also strived to keep their quality at a high, making sure their services remained at a high quality.

There website brought them great early success and made the act of flying easier to the average person giving them more power over their choices of flights. They have strived to make their site as user friendly to the clients as possible, making it easier for the clients to interact with the company. Through this they have experienced great growth and become the market leaders.

Though they experienced early success, their competitors are catching up fast and Easyjet is going to need to continue to be innovative if they want to keep their strategic advantage for the future.

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