Executive summary 3
Company Description 3
Strategic Focus and Plan
The Service and its Value Proposition 4
Marketing Goals 4
Marketing Situation
Strengths and Weaknesses 5
Opportunities and Threats 6
Market Strategy
Overall Marketing Strategy 7
Market Needs 7
Target Markets 8
Marketing Mix (4 Ps)
Product 8
Price 8
Promotion 9
Place 9
Conclusion and Recommendations 10
References 11
Appendix 1 13
Executive summary
The following report discusses market strategies and marketing mix, developed by Ryanair, Ltd. The company at hand operates a broad network of low-fare airline routes that connect 186 airports in Europe, as well as Africa (Morocco). The flights, offered by Ryanair, are short-haul and ultra-low-fare. The marketing goals of the company are determined by the fact that Ryanair has to compete both with traditional air carriers (e.g., KLM, Air France, British Airlines) and other low-cost operators (e.g., Wizzair, Volotea).
The crucial strengths of the company deal with its low costs, broad route networks and established brand, etc. Brand perception issues and seasonality of earnings are major Ryanair’s weaknesses. At the same time, Ryanair has a lot of opportunities, such as market growth, new customer service options and further development of products, targeting business travelers. The threats include external events, as well as changes in legislation and taxation. A multifaceted threat is constituted by Britain’s possible exist from the EU.
The overall marketing strategy of Ryanair is based on emphasizing the blend of low costs, developed routes’ network and quality customer service. Promoting the above features of its services, Ryanair tends to target the general public. While existing strengths and opportunities allow the company to demonstrate strong performance rates at the market, it is recommended to concentrate on targeting business clients, respective re-branding, as well as further expanding the routes’ network.
Сompany description
Ryanair, Ltd. is a world-known Irish low-cost air carrier. The company was established in 1985 by the Ryan family in Dublin. Interestingly, an initial share capital of the company constituted only £1 (Ryanair Official Website, 2016). The first route, launched by the company, was London Stansted Airport-Dublin. Over the period from 1985 to 1990, the yearly number of individuals, served by Ryanair, grew from 5.000 to 644.000. That was an impressive success. Following the comprehensive restructuring in 1993, the company launched its first flights to continental Europe (Charleroi Airport in Belgium). Already in 2000 Ryanair designed its large booking website that is currently highly popular worldwide. Since that time the company has demonstrated steady growth, continuously improving its financials and extending the network of routes. Nowadays Ryanair serves 1600 destinations in Europe and Africa (Morocco). In 2015 the company’s revenue accounted for €5.654 (Ryanair Official Website, 2016).
Strategic Focus and Plan
The Service and Its Value Proposition
Ryanair offers ultra-low-cost flights around Europe and from Europe to Morocco. The company has bases in 69 airports (overall, Ryanair has contractual relations with 186 airports), and operates more than 1600 routes (Ryanair Official Website, 2016). Apart from basic flight fares, Ryanair generates income through charging for a range of in-flight services, such as baggage, the use of an in-flight bar (that offers a selection of drinks, snacks, hot meals and sandwiches) and on-board purchases. Aiming to target frequent business travelers, Ryanair offers Business Plus package. The package includes an option of changing the flight time, destination and even a point of departure; priority boarding and premium seating, as well as a free access to fast and modern Ryanair application.
Marketing Goals
Ryanair, Ltd. aims to establish itself as the leading low-fares passenger air carrier in Europe. The company envisages to achieve this goal through continuous improvements and offering an ever larger network of routes. Emphasizing its low-cost model, Ryanair also underlines its commitment to cost-containment and operating efficiencies. The formulation of the above marketing goals is strongly determined by the fact that the company has to compete with both traditional air carriers and low-costs.
Marketing Situation
Strengths and Weaknesses
Ryanair enjoys a range of important strengths. First, Ryanair offers customers lowest fares. According to CAPA (2013), Ryanair fares tend to be 35 percent lower than the ones of EasyJet, its nearest competitor in terms of fares. Sustaining such low flights is possible due to the fact that Ryanair has lowest unit costs among the world airlines. Such low costs are determined by the fact that the management of the company successfully exploits the low-cost (LCC) model, providing for rapid turnover, point-to-point routing, the use of secondary airports and focus on single type aircrafts.
Second, Ryanair has a broad route network that encompasses 186 airports in Europe and North America (Morocco), serving 1600 destinations, being largest short-haul carrier in Europe.
Finally, targeting general public, Ryanair established itself as an ultra-low-cost carrier that offers available flights to a variety of crucial points in Europe, as well as Morocco.
The major weakness of Ryanair tends to be associated with its branding strategy. For instance, in 2014 Ryanair was recognized by customers as the world’s second worst brand. The majority of customers’ complaints dealt with the company’s complicated and ‘sometimes unfair’ system of pricing, a variety of ‘hidden charges’ and being too inflexible in cases related to baggage allowances. (Magrath, 2014)
The subsequent analysis of the above survey results by McGovern (2014) revealed that customer satisfaction is not always directly connected to customer behavior. Therefore, the fact that customers tend to dislike Ryanair branding does not mean that they refuse from utilizing the services, offered by the company.
The seasonality of earnings represents another weakness of the Ryanair. While the company manages to generate significant revenue during summer, the winter tends to be low-making.
As extra challenges one can mark an excessive concentration on secondary airports (that may make it complicated to target business travelers), as well as low frequencies of flights on the company’s routes (CAPA, 2014).
Opportunities and threats
Having established itself as a leading low-cost short-haul air carrier in Europe, Ryanair enjoys a range of crucial opportunities. First, the company can aim at ensuring further market growth and market share gains. To do that, Ryanair is expected to further expand its route network (e.g., by launching routes from primary airports and/or introducing long-haul flights, based on LCC model). Ryanair can also attempt to expand to the markets of the EU Neighborhood (e.g., MENA region and Eastern Europe).
Second, Ryanair can think about improving its customer service (e.g., by simplifying its booking system) and launching comprehensive loyalty scheme. It is worth mentioning that the company introduced its first loyalty scheme only in 2016 by offering one free return flight a year to a passenger, who booked twelve and more flights over a year (Humphries, 2016).
Third, Ryanair can also make steps to more successful targeting of business customers. While the company already has Business Plus option, offering routes from and to primary airports and developing luxury service packages can be viewed as major opportunities for making Ryanair’s image more flexible.
Finally, the company can use its brand image to offer products and services, going beyond airlines. Ryanair made so by preparing to introduce its novel Ryanair Rooms service that is expected to become the main competitor of Airbnb.
The main threats, experienced by Ryanair are as follows. Foremost, the company is vulnerable to external events, such as natural accidents and geopolitical tensions between countries. In this regard, a crucial role may be played by the changes in fuel prices, caused by political sanctions states apply to each other.
Second, the business can be threatened by the changes in legislation, especially in relation to taxation. Nowadays Ryanair is threatened by the possible Britain’s exit out of the EU. In case Britain leaves the EU, it will evidently change its legislation, so that it does not anymore comply with acquis communautaire. Subsequently, it will be hard and costly for Ryanair to observe both the EU and British legislation. Moreover, British exit from the EU will significantly decrease Ryanair’s revenues related to routes, connecting the UK and continental Europe.
Market Strategy
Overall Marketing Strategy
As it was mentioned above, Ryanair’s overall market strategy rests on three major pillars. They are low fares, developed route networks and an emphasis on customer service.
Market Needs
Strong Single Market and political integration of the EU, as well as a continuous facilitation of people-to-people networks across 28 EU states cause the need for a broad network of routes, bringing the EU states together. Given the geographical position of the UK , Iceland and Malta, air traffic is essential to ensure these countries’ being linked to continental Europe. EU’s active policies in the Neighborhood (including the introduction of visa-free regime with Moldova and an intention to grant visa liberalization to Ukraine and Georgia), there is a demand for cheap flights, connecting the above countries and the EU states. The globalization trend conditions the need for extending the LCC model to long-haul flights (e.g., from the EU countries to the USA and Canada).
Target Markets
Ryanair tends to target general public that travels inside the EU and some countries beyond the Union (Morocco). Recently Ryanair started to make a special emphasis on targeting two groups of customers, namely business travelers and families with children. To do so, the company launched service packages, suited to the needs of the above groups.
Marketing Mix
Product
Ryanair offers low-cost short-haul flights to a variety of destinations across Europe and beyond. The company also provides for a range of in-flight services. Special packages of services are offered to specific target groups, such as business travelers and families. Moreover, Ryanair recently announced that it would launch a special service, called Ryanair Rooms to offer cheap rooms EU-wide and in the non-EU countries.
Price
Low costs represent the major price-related feature of Ryanair. The fares usually vary from €10 to €130 for a one-way trip. Moreover, the company charges fees for extra services, whereby there is a considerable difference between the ‘online price’ and ‘airport price’. For instance, priority boarding with extra legroom will cost €15 (if purchased online) and €22.50 (if purchased at the airport). While online check-in is free, the fee for airport check-in accounts for €45. The fees for changing a flight range from €30 to €60, dependent on a season (Ryanair Official Website, 2016). Despite the introduction of a flexible system of fees, charged for extra services, Ryanair’s revenue per passenger is still the least within the industry (CAPE, 2013).
Promotion
According to McGarrity (2015), the promotion strategy of Ryanair is based on its ‘price mantra’. The airlines’ management also tends to exploit controversy and the lack of customer service-related scandals in order to promote Ryanair as cheapest airline (‘free PR’ strategy). In 2015 the company introduced a new digital marketing strategy, comprised of several important elements.
First, the company started to use online advertizing platforms (especially Skyscanner) to promote its routes and low fares. Second, Ryanair conducted search engine optimization to ensure that its website will appear at the top of search results instead of Skyscanner or Google (McGarrity, 2016). Despite the fact that Ryanair is present on a variety of social networks (Facebook, Twitter, Instagram), the quality of its social media-based marketing can be estimated as insufficient (Gleeson, 2015).
Place
Ryanair does not rely on travel agents. Most frequently customers book their flights, using Ryanair website. While Ryanair is based at 69 airports, it is also possible to purchase tickets at these airports.
Conclusion and recommendations
Ryanair, Ltd. is a leading European low-cost air carrier. Ryanair’s strategy is based on emphasizing low fares, developed route network, as well as customer service. Despite Ryanair’s current leading position at the market, there is still a range of recommendations the company can adhere to in order to improve its performance rates and develop its competitive advantage.
Foremost, it is advised that Ryanair applies re-branding efforts to be able to target not only the general public, but business clients. In this regard, it is essential to not only develop respective service propositions (including the ones, suiting the needs of corporate clients), but conduct a promotion campaign, focused on business.
Furthermore, Ryanair shall further expand its route networks in several ways. First, it shall consider making its flights more frequent, so that customers are more flexible, when designing their travel plans. Second, Ryanair can expand to the markets of the EU Neighborhood countries. It can also consider introducing long-haul flights.
Third, the company shall heavily invest into promotion, especially social media presence and loyalty programs.
Finally, the company shall further expand beyond flights, e.g. via the new Ryanair Rooms service.
References
CAPA (2013). Ryanair SWOT analysis: Michael O’Leary’s maniacal focus on being the lowest cost producer. Retrieved 12 June 2016 from http://centreforaviation.com/analysis/ryanair-swot-analysis--michael-olearys-maniacal-focus-on-being-the-lowest-cost-producer-96465
CAPA (2014). Ryanair SWOT: low costs remain the key strength, even as customer service enhancements take root. Retrieved 12 June 2016 from http://centreforaviation.com/analysis/ryanair-swot-low-costs-remain-the-key-strength-even-as-customer-service-enhancements-take-root-186145
Gleeson, A. (2015). Ryanair’s digital startegy for 2015? Retrieved 12 June 2016 from http://zartis.com/tech-focus-ryanairs-digital-strategy-2015/
Humphries, C. (2016). Ryanair extends charm offensive with loyalty rewards. Retrieved 12 June 2016 from http://uk.reuters.com/article/uk-ryanair-services-idUKKCN0X91VQ
Magrath, A. (2014). Ryanair named second –worst brand in the world for customer service. . Retrieved 12 June 2016 from http://www.dailymail.co.uk/travel/travel_news/article-2812512/Ryanair-named-second-worst-brand-WORLD-customer-service-AXA-insurance-comes-poll.html
McGarrity, P. (2016). Why Ryanair is investing into digital marketing? Retrieved 12 June 2016 from http://www.octavedigital.co.uk/2014/05/why-ryanair-is-investing-in-digital-marketing/
McGovern, G. (2014).Customer satisfaction is not a good indicator of customer behavior. Retrieved 12 June 2016 from http://gerrymcgovern.com/new-thinking/customer-satisfaction-not-good-indicator-customer-behavior
Ryanair Official Website (2016). Ryanair. Retrieved 12 June 2016 from https://www.ryanair.com/gb/en/
Appendix 1
SWOT Chart
