Marketing_Mix

The Marketing Mix: The Cases of easyJet and Ryanair Following the deregulation of the airline industry in the late 1980s, which built considerable momentum in the 1990s, the opportunities for low-cost carriers (LLCs) increased leading to the introduction of a number of LLCs such as Buzz, easyJet, Go and Ryanair. This paper assesses the marketing mix of both easyJet and Ryanair, thereby examining the two companies in terms of their product, price, place and promotion. In so doing, it draws on a number of key sources (Calder, 2003; Creaton, 2005; Datamonitor, 2005; easyJet, 2006; O’Higgins, 2002; Ryanair, 2006). Adcock et al. (1998) state that the product “determines the upper limit of a supplier’s profitability. The quality of the remaining components of the marketing mix determines the extent to which that potential is achieved.” (151). According to the authors, the product can be defined as “everything that the customer receives that is of value in terms of a perceived want, need or problem” (152). The ‘basic product’ or in other words, the essential benefit derived from both easyJet and Ryanair’s offering is a no-frills, low-cost airline service with an increasing choice of routes across Europe. Nonetheless, the ‘real product’, in terms of the specific tangible elements of the two companies’ products, including design, colour, quality, brand and so forth vary somewhat. Both brands are headed by seemingly charismatic leaders in the form of Stelios Haji-Ioannou of easyJet and Michael O’Leary of Ryanair, which are a key part of the companies’ real product. Stelios gives the brand its fun, no-frills nature through the airline’s brand identity (the rich orange and white coloured fleet) and the personality that is exuded in the press. In contrast, O’Leary is known as a hard-nosed businessman, who has established Ryanair as the very lowest cost no-frills operators. As a result, the companies differ in terms of their ‘total product’, which contains intangibles such as delivery, customer services, assurances that the flights will arrive on time, and so forth. In this area, easyJet is the victor. easyJet has followed a focused strategy around its three cornerstones: “focus on our customers”, “own our markets” and “reduce our costs”, which has remained robust. As a result, whilst service failures do occur, the airline is considered the friendlier of the two. In contrast, Ryanair has sometimes followed its low-cost operation at the cost of customer service, which is evident in its own employee relations. Indeed, the airline has relatively poor labour relations, resulting from its anti-union and what some call anti-social stance towards its employees. Such a stance has resulted in serious strike action in Spain and a series of court disputes during 2005, which impact on the airlines ability to conduct efficient operations. In recent years, both airlines have added to their total product offering through the introduction of an array of services, including car hire, accommodation booking, travel insurance and so forth. Adcock et al. (1998) highlight how “many companies are no finding that pricing lower than competitors is not the way to succeed, it generally leads to an eroding of profit levels and an inability to fund future growth projects” (212-213). The authors go on to state that “when it comes to low price as a strategy, it is as well to remember that anyone can give money away. Anyone can cut the price of their product, but price rarely offers a sustainable competitive advantage” (213). Despite this, both easyJet and Ryanair have built their businesses on the back of out-pricing their more traditional competitors, the large flag-carriers. Nonetheless, their ability to offer the lowest price does work in tandem with a low-cost strategy, as indicated by Porter (1980, 1985) in his discuss of generic strategies. After all, budget airlines within Europe continue to suffer financial collapse, with Italian operator Volare, which competed on a number of Ryanair’s routes, being a recent addition at the end of 2004. Indeed, cost leadership is underpinned by a more robust cost strategy. In the case of easyJet, this is exemplified through its online booking system, meal-less flights (food can be bought onboard), long-term maintenance contracts (e.g. with SR Technics) and a willingness to move away from overpriced airports or poorly performing routes. Similarly, Ryanair has capitalized on a number of key advantages including fare-conscious leisure and business travelers through the sale of one-way seats based on changing demand, the use of secondary airports, which are cheaper and less congested and the signing of multi-year, third party outsourcing agreements. As a result, Ryanair has managed to establish itself as the leading low-cost carrier. An especial part of the two airlines’ pricing strategy has been the use and importance of technology, integrating many aspects of their supply chain and retail business through the use of the Internet, providing customers with real-time, low cost flights. Marketing has been about “making it easier for your customers to say yes” (Adcock et al., 1998: 191). Nonetheless, as Adcock et al. (1998) state, “there are really very few products where customers will beat a path to your door. It is therefore very important that products are made readily available to customers” (191). In the case of easyJet and Ryanair, this means the sale of airline tickets through the Internet. This is especially the case with easyJet, which from the started emphasized the use of its online book system leading to the strapline, “The web’s favourite airline.” This varies considerably from the traditional flag carriers whose place of sale includes branded sales offices around the countries in which they operate, multiple travel agents, as well as by phone and across the Internet. Promotion reflects a firm’s advertising, publicity, sales promotion and personal selling activities. Both airlines are similar in this regard, choosing to adopt adversarial advertising techniques aimed at discrediting (and point out the cost differences) between themselves and the flag carriers, as well as each other. Nonetheless, the focus of this advertising is centred on the companies’ two leaders, who play a key role in using their media relations to gain publicity for their respective airlines, with Stelios of easyJet appearing to be the most successful. Both companies also follow a keen strategy of price promotions, especially Ryanair, which offers flights (exclusive of taxes and charges) from as little as 1pence! On the other hand, direct selling is not a promotion strategy followed by either of the airlines. This paper highlighted the product, price, placing and promotional strategy (in other words, the marketing mix) for easyJet and Ryanair. In so doing, it highlighted that whilst the two firms differ to some degree in the way that they market themselves, the ‘low cost, no frills’ strategy that both airlines follow has resulted in a fairly similar marketing mix being enacted in reality. References: Adcock, D., Bradfield, R., Halborg, A. and Ross, C. (1998) Marketing Principles and Practice, 3rd edition. London: Financial Times Management. Calder, S. (2003) No Frills: The Truth Behind the Low-Cost Revolution in the Skies. London: Virgin Books. Creaton, S. (2005) Ryanair: How a Small Irish Airline Conquered Europe. London: Aurum Press. Datamonitor (2005) Ryanair Holdings. easyJet (2006) Annual Report 2005: www.easyjet.com [Accessed 08 February 2006]. O’Higgins, E. (2002) Ryanair – the low fares airline, Exploring Corporate Strategy, 6th ed. Harlow: Pearson Education Ltd. Ryanair (2006) Annual Report 2005: www.ryanair.com [Accessed 27 January 2006].