Easyjet Casestudy

The elements of marketing process is referred to â€Å"As a set of controllable tools that the firm blends to produce the response it wants in the target market, so it consists of everything the firm can do to influence the demand for its product†( Kotler and Armstrong, Principles of Marketing 2004, Tenth Edition, New Jersey Pearson Education Inc. ). The Elements of Marketing or Marketing mix which is famously known as the â€Å"4P’s of Marketing†( stated by McCarthy in 1960) which include Product, Price, Placement or Place and Promotion. When these elements of marketing are analysed with the Easyjet case study, it gives a good example as how the 4P’s help an organization scale to new heights with increased sales and customer base. They are; Product:- In the respective case study as Easyjet is a airline industry, its main fleet consists of Airbus A320-200, Airbus A319 and Boeing 737-700. Easyjet is a budget airliner and intended to attract business customers and leisure travelers spending lesser time travelling between destinations. The company does not provide complimentary meals or refreshments on board to reduce costs and increase space to accommodate more customers, whereas customers can buy items on board by using Easyjet Bistro (buy on board programme). The onboard programme also helped the airliner to increase its revenue. Easyjet has also got other value added services like Eastcars, Eastjet holidays and Easyjet Hotels. With these services Easyjet can provide one stop shop for its customers, both Business customers as well as travelers on holiday. Price: In generally it is a conception that if a company lowers the price of its product, the organization would have expanded sales. Practically it is an invalid argument as the customers do not decide on price; they do look for other components such as quality, cost effectiveness, time, easy accessibility and value added services with also keeping in mind the customer relation management of a firm. The element â€Å"Price† of marketing mix could be divided into two categories, such as price determination and price administration respectively. Easyjet whose business model is similar to the Southeast airlines of US has kept its prices lower than that of other airlines. Easyjet reduced its prices to accommodate more passengers and to fill out empty seats on the flight. The reduced prices by cost cutting in various areas such as airport charges, direct sales to the customer and also reducing their advertisement costs. The per seat cost was cut down by 16% by increasing the seating density and no business class. Easyjet saved 64% of cost per seat by these strategies, which helped them to reduce their overall prices to the customer. Figure 1. (Referred www. corporate. easyjet. com) Placement/Place: â€Å"Placement or Place under marketing mix involves all company activities that make the product available to targeted customers†(Kotler and Armstrong, 2004). The Easyjet strategy has to serve all big continental European destinations such as Amsterdam, Berlin, Paris, London and many more cities. They are also targeting the Asia Pacific market as there is a potential to grow business. Figure 1. b Promotion: Promotion is nothing but the means in which a company communicates to its customers about their product, values and benefits of a product. Easyjet used various strategies to communicate to their customers. They are: The company has mentioned its website address where ever it can. They have literally put the address on its Boeing 737’s. Easyjet also runs internet promotions on newspapers. Its first promotion was in â€Å"The Times† in February 1999. The result of this promotion ended up with Easyjet selling 20,000 out of its 50,000 seats in the first day and all other seats were sold in next 3 days. Using this strategy the company was able to cut down 250 jobs and saved money. Easyjet also follows first come first serve basis, the following table gives a clear indication. Figure 1. c The website was also used as a tool instead of paying the PR companies. Captions such as â€Å"The web’s favourite airline†, â€Å"Battle with Swissair† and the latest â€Å"come let’s fly†. Easyjet became a house hold name in the United Kingdom as it was listed in a Airline TV series which was aired on TV during 1999 to 2007. (b) Evaluate benefits and costs of marketing orientation for the case organization. Marketing Orientation means how a company develops new product considering the two approaches of orientation, which are product oriented and marketing oriented. Product Orientated† approach means a firm develops product based on its choice or what the company is good at delivering to the customer rather than keeping the customer in mind. This approach is not appreciated in competitive markets and may often lead to unsuccessful venture. â€Å"Marketing Orientated†, in this the businesses analyses the needs and wants of t he customer in developing a product. The product revolves round the information and data provided by research on the customer’s needs and wants and developing a right product. This type of orientation often leads to successful business. Easyjet uses marketing orientated strategy towards its customers into its business. The have researched and came to a conclusion that a business customer or a leisure customer do not like to spend more time in traveling and waiting at the airports. They also used the cost cutting strategy to reduce its cost and their cost expenditure per customer is about 15? per person whereas other competitors spend about 25? on each passenger. This strategy is very successful in the airline industry as there is another example of a similar airliner that operates in the US, called as the South West Airlines. The company is making a gross profit of 15 to 20% annually. The achieve this, they have hollowed various strategies. No refreshments served onboard except for snacks for which the customer has to pay. The above mentioned concept leads towards fewer cabin crews. Business class seats were removed to accommodate more passengers onboard Regional airports were used to reduce airport charges. Direct marketing, use of the internet, and saving commission by selling the tickets directly to the customer. 2. (A) Describe macro and micro environmental factors which influence marketing decisions. The â€Å"Micro Environment†, in these factors influences the business directly. This factor includes suppliers, employers, caterers, Financers and any other stake holders who directly influence the business. The Micro Environmental factors are relationship between the driving forces and the business that controls the above mentioned relationship. The management of the firm controls the relationship between the stake holders and the business. When Easyjet is taken into consideration, the micro environmental factors that influence its business are: Assets: Easyjet owns all of its planes and has complete control over it. They do not take any property or asset on rental basis. They go for 100% ownership. Hence complete control over assets. Employees: Easyjet has fewer staff due to no-flinch strategy onboard. Agents and vendors: Easyjet uses direct selling strategy and does not out source its ticketing or customer service to any other organization which means they have control over marketing and customer relation management. The â€Å"Macro-Environment†, these factors that indirectly influence the business and the company do not have a direct control over these factors. The company need to resolve round these as the company should be in a position to adapt to these factors. The factors include such as Political, environmental, social and technological factors. Easyjet has adapted to these macro factors. By keeping themselves advanced enough in technological factor by consistently upgrading there planes. They also use the internet technology to sell there products to the end users. When it comes to environmental factor, they have adapted a new process called the â€Å"Ecojet† in which they are using new engines which are environmental friendly which would be introduced in 2015. They are well ahead of there competitors like the BA and Ryanair. 2. (B) Propose Segmentation criteria to be used products in different markets. Marketing segmentation is nothing but to target specific customers in the market who give more value to the business. In business market segmentation there are 3 types: Geographic: Includes customer orientation, regional growth rate and macro economic factors. Demographic: â€Å"Includes age, gender, ethnicity, education, occupation, income and family status†. Psychographic: includes values, attitudes, factors such as loyalty and order size. According to the owner of the Easyjet who says that he wants only 6 million customers in a year rather than targeting all 56 million people in Europe to keep his airline seats occupied. Easy marketing segmentation is targeted towards business customer and leisure travelers in Europe. Easyjet flies to all major tourist and business destinations in Europe. Easyjet has segmented or concentrated more on business customer who’s tickets are normally paid by the companies and leisure travelers who fly to major European destinations with travel packages, which include easycar and easyhotel value added services. . (c) Choose and explain targeting strategy for the product/service in the case organization. Targeting strategy may be influenced with the following factors: Maturity of the market. Buyer’s needs and choices. Competition. Number of sales required for profit. In the case study of Easyjet, if you use the above template: When Easyjet entered market it was quiet mature as t hey had stiff competition with Biritish Airways and Ryanair but Easyjet understood the users needs and wants by research. In which they came to a conclusion which notes that business customers prefer cheaper flights for shorter destinations and value added services if customer is looking for leisure travel. Competition was stiff from Ryanair and British Airways, to a get better of these competitors Easyjet user various promotional campaigns using the internet and newspapers. They also used direct selling strategy to have control over there sales and eventually improved the sales. They worked towards having there airline seats filled up on any given day and ensured they pay as less a charge in the airports. 2. D) Demonstrate how buyer behaviour affects marketing activities in different buying situation. Consumer or End user buying behaviour is influenced by the following factors: Social factors. Psychological Factors. Personal factors. Social factors: These are the factors wherein a customer is influenced by other people in the market or other social factors that influence on the customer to accept or de cline the product. In the above case study, Easyjet used some of the captions like â€Å"Battle with Swissair† or â€Å"Low fares needn’t BA con! † on their website. This influenced lot of customer’s visiting Easyjet website. The more customers visited the website the more Easyjet became an household name. Psychological Factor: This factor depends on the individual customer who is influenced by motives, perception, learning, personality and attitude. When Easyjet had majority of users coming to their website, they introduced trivia’s, luck dips and questionnaires on their website which influenced the customer and made kept the users visiting back to the site. In 2002, Five thousand customers won 2000? each using the Easyjet website, but the company had sales over 2 million pounds from the customers who visited during this period. Personal Factors: This factor includes situational, life style and demographic factors. Easyjet entered the market as a low budget airline, which means its main target will be business customers by providing customers with good quality, affordable and quick service. They successfully achieved the above motive. 2. (E) Propose New market positioning for a selected product/service. Easyjet has started its venture in Asia-pacific market. There is a lot of potential in North America and in India. As Business customer in these mentioned countries are frequent flyers and use airways a median of transport for short destinations. Easyjet also has sister companies such as Easycar and Easyhotels which it can utilize in the new markets to stabilize its hold and attract new customers. They could also start a new venture for road transport or have a Joint venture with road transport and railway companies to offer a complete package to both its business and leisure customers. (A) Explain how products are developed to sustain competitive advantage. When a company sets standards and bench marks in a particular business over its competitors, is known as competitive advantage. All the companies work towards having a competitive advantage in the market. According to Michael Porter there are two types of competitive advantage, cost advantage and differentiation advantage. Cost Advantage: This advantage is gained by a company when it delivers similar products or services as their rivals at a lower cost. Easyjet attained this advantage by flying to the same destinations but at a lower cost as it is a budget airliner when compared with other airlines such as British Airways, Lufthansa and Air France. Differentiation Advantage: When a company provides value added services and a better overall package to the end users at the same price as provided by the competitors in the market. Easyjet has always aimed at providing value for money for its customers by punctual flights and flexibility to the customers. Easyjet and Ryanair have similar price tags on their tickets but Easyjet flies to major European destinations whereas Ryanair lands at airports of smaller cities. (B) Explain how distribution is arranged to provide customer service. Distribution is a important part of marketing strategy. Distribution is the channel in which the company supplies or provides its products or services to its customers. The main functions of Distribution are Information (Market planning), Promotion (Spreading information and offers about the product), Contact (Communicating with buyers), Matching (Adjusting offers to fit customers’ needs and wants), Negotiation, Physical distribution (transportation) and financing. Easyjet uses a distribution channel called â€Å"Direct marketing†, as the company wants to reduce its costs by avoiding resellers and distribution partners. This approach of Easyjet has ensured that their ticket selling price to the customers is reduced and they also have a direct control over sales. The company also handles its own customer service. 3. (c) Explain how prices are set to reflect an organisation’s objectives and market conditions. Easyjet follows penetrating price strategy, wherein they have reduced the price towards the customers needs and wants. Here leaser the price the more demand for the product or service. Easy jet have also reduced their costs to gain more profits, hence lesser they spend the more profit they have. 3. (d) Illustrate how promotional activity is integrated to achieve marketing objectives. There are two main kinds of promotional strategy named a push strategy and pull strategy. Push strategy is a form of promotional activity wherein the company promotes the products to wholesalers and retailers. Whereas in pull strategy the company promotes the products or services directly to the customers. Easyjet is a service industry and also believed in direct marketing uses the pull strategy to communicate with its customers. The various forms of communications they followed were: The company has mentioned its website address and phone number where ever it can. They have literally put the address on its Boeing 737’s. Easyjet also runs internet promotions on newspapers. Its first promotion was in â€Å"The Times† in February 1999. The result of this promotion ended up with Easyjet selling 20,000 out of its 50,000 seats in the first day and all other seats were sold in next 3 days. Using this strategy the company was able to cut down 250 jobs and saved money. Easyjet also follows first come first serve basis, the following table gives a clear indication. The website was also used as a tool instead of paying the PR companies. Captions such as â€Å"The web’s favourite airline†, â€Å"Battle with Swissair† and the latest â€Å"come let’s fly†. Easyjet became a house hold name in the United Kingdom as it was listed in an Airline TV series which was aired on TV during 1999 to 2007.