EasyJet Company Analysis

This technical report is prepared to clarify the marketing strategies implemented by EasyJet in order to gain a competitive edge over its rivals in the market for low-cost aviation. I have researched the European ‘budget airline’ industry and looked at the various strategies used by EasyJet when comparing with its main rivals. Its clear from the research and the study, EasyJet has been very successful in its approach to its marketing campaigns and having a very large customer base as well as a brand name. In the dynamic marketing environment, EasyJet needs continually seek out new strategies and ideas as the industry becomes increasingly more competitive.

EasyJet an introduction

A successful example of a European no frills airline is EasyJet. The Civil Aviation Authority (CAA)’s publication on March 2010 shows, EasyJet as the UK’s largest airline, measured by the number of passengers who flown in a year. The statistics shows that the passengers who fly over EasyJet through UK airports are more than 28 million in 2009.

Stelios Haji-Ioannou (Greek) founded EasyJet 1995. It is based on the low-cost, no-frills model of the US carrier Southwest The historical journey begins when they started their first flight from London Luton to Glasgow (10 November) and Edinburgh (15 November) in 1995. It started with its marketing slogan of ‘Making flying as affordable as a pair of jeans – £29 one way’. Initially they started with two leased Boeing 737-200 aircraft.

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The history of the EasyJet shows a steady progress. In 1997 EasyJet launches its web site as easyJet.com to provide information on the airline. In1998 they bought 40% of Swiss charter operation, TEA Basel AG, later they renamed as ‘easyJet Switzerland’. In the year 2000 EasyJet floats on the London Stock exchange at an offer price of 310p, valuing the company at £777m. Shortly after, EasyJet joins the FTSE 250 list of companies. 2001 EasyJet makes Gatwick as its fifth base and becomes the second largest scheduled airline at the airport. In the year 2002 EasyJet purchases Stansted-based low-cost airline Go (which had originally been set up by British Airways) to create Europe’s number one air transport network. 2003 the first Airbus A319 goes into service in Geneva and 12 months after the deal to purchase up to 240 aircraft was announced by them. Year 2004 EasyJet airline becomes the first to take advantage of the newly-enlarged European Union by starting flights to Hungary and Slovenia.

Ten years from the start where they begin with two leased aircraft, in year 2005 EasyJet takes delivery of its 100th aircraft. 2007 easyJet moved to its new headquarters in an aircraft hangar at Luton airport. In the year 2008 easyJet truly becomes a pan European airline, which operates in 400 routes with over 175 aircraft in 27 countries. For the first time, over 50% of easyJet’s passengers originate from outside the UK. Year 2009 easyJet completes the acquisition of GB Airways, a London Gatwick-based airline operating to destinations across Southern Europe and North Africa [Web 14].

The mission statement of the Easy jet is “To provide our customers with safe, good value, point-to-point air services. To effect and to offer a consistent and reliable product and fares appealing to leisure and business markets on a range of European routes. To achieve this we will develop our people and establish lasting relationships with our suppliers.”[Web 15].

Situation Analysis

The situation analysis is used to identify where we are now in terms of e-Marketing. The analysis literally considers, Easy jet’s eMarketing situation by the perspectives of internal and external factors [Web02].

3.1 SWOT Analysis

SWOT analysis is a simple framework which is used for generating strategic alternatives from a situation analysis. This framework is used to identify Easy jet’s strengths, weaknesses, opportunities, and threats which is helpful in analyzing the marketing environment and make an e-Marketing strategy to its operations [Web01].

3.1.1Strengths of Easy Jet

Low budget, no frills air travel service – EasyJet is a leading provider this service to many of the leading city destinations in the UK and across Europe.

The brand name – The brand name EasyJet has all the qualities required for a long term memory storage and not easy to forget.

Leadership – The extremely strong, innovative and proactive leadership provide by the ex- Chairman and ex- CEO which is being continued.

Quality of service – The high quality service provide by the EasyJet at competitive prices and offers put them in a high position. Some of the features are ticketless travel, internet booking and assisted travel services.

Air line coverage – The EasyJet air line flies to main destination airport through out the Europe makes them as attractive business travelers.

Aircraft – EasyJet uses the same type of aircraft for its operations. This makes easy training, maintenance as well as less supervision cost[Web05].

Keen on environment- The leading contributor to the green house effect and global warming. EasyJet is keen on environmental responsibilities and continue to keep these factors as a priority when they are developing their future strategies [Web05].

Lowest age of fleet – The EasyJet fleet now having 130 aircraft with average age of 2.2 years which make them as the youngest of any major airlines in Europe[Web05]. This increase the safety of the passengers as well as higher fuel emission.

Overhead – EasyJet has a low overhead due to the flat structured organization.

Website – The user friendly web environment of EasyJet makes the customers easy on their operations.

Brand building investment – The airline is investing wisely on strong brand building measures like advertising and television ensures a high brand recall to EasyJet.

Employee culture – The maintenance of high quality of employee culture which increase the customer services.

Promotion – EasyJet offers an online promotion alert to the customer base, which increases the sales.

Direct sales – EasyJet sells the ticket directly and they don’t have agents to operate. This allows to give the tickets in less price

3.1.2Weakness of Easy jet

Food service – EasyJet do not offer free food service on their longer flights, which fly more than 2 hours.

Cost leadership – In a dynamic marketing environment it can be difficult to maintain a continues cost leadership

Price and convenience – The focus on price and the focus on convenience are the two drivers of the growth of the EasyJet. These has their natural limits

Regulatory decision on landing charges- the landing charges and airport access are determine more by the regulatory decision and less determine by the commercial negotiation, this may increase the cost.

Limitation of airports – EasyJet avoid big airports like London Heathrow airport to reduce the cost of landing. But this makes customers who live close to these airports uncomfortable, since they need to waste their time as well as money to travel to the EasyJet landing airports.

Law margin – The additional taxes or charges which are impose by the government or airport authorities will make a huge impact on EasyJet since they have a law margin.

Customer retention – The customer retention management or the building of customer loyalty is not available in EasyJet.

Expansion – Don’t have a long term plan on expanding the routes to outside the Europe .

3.1.3Opportunities of Easy jet

Recession – The current recession is favorable for the EasyJet since the people and businesses are more focus on cost-conscious

EU enlargement – There will be new destinations to fly since the EU enlargement.

Full service airline withdrawal – full service airlines are mostly focus on the profitable long haul rout and they may withdraw from regional market where they find difficult to compete with low cost operators.

Reduced aircraft prices

3.1.4 Threats of Easy jet

Nature – The nature disturbance like snow and volcanic ashes which made them to cancel their routes and 380,000 passengers disrupted by snow and 850,000 passengers disrupted by volcanic ashes. This made an impact on 75million to 100million on their profit[Web 11].

New viable route – It is difficult to expand as viable new routes from London.

Increased competition – Increased competition on low cost operators are likely to lead to greater difficulties in demanding incentives from communities. This makes some routes are not profitable.

Drop in business travel – Business travel of the companies are reduced in economic downturn, where they use alternatives like video conferencing for their meetings.

Terrorism – This will reduce the travel

Dependency on oil market – Fuel cost is depending on the oil market. This increase the variability in its cost.

Government rules – The government intervention can result in new costly rules or unexpected new international competition.

3.2 PEST Analysis

Political Factors

War – the war in the Middle East will increase the terror attack as well as increase the cost of the fuel.

A EU east-enlargement gives access to viable new destination as well as new markets

The increase taxation on flight tickets makes unaffordable for the customers.

Unstable government – The current UK government is unstable due to the collision with two parties.

Economic Factors

Increasing fuel costs, congestion and other environmental restrictions

Higher security and insurance costs due to the risk of terrorism.

As the recession is likely for some more years, travelers will keep an eye on their travel expenses.

Globalization should continue to boost the air traffic in the long-term.

The level of inflation for the past few years are very high.

There are lot of peoples without jobs. The unemployment ratio is high. This makes less on spending money for entertainment trips.

The increase taxation on flight tickets makes unaffordable for the customers.

Social/Sociological Factors

The Europe people are not moving towards the credit card usage for an example German and French people.

The culture of the European is changing towards low cost. This allows more air travel to EasyJet

Technological Factors

Using new aircraft which are fuel efficiency as well secured

EasyJet has to keep an eye on the technological developments in the field of e-commerce.

The web solution needs to travel towards mobile solution.

Introduction of bullet train will have an impact on air travel

Business users uses video conferencing technology for the meetings, this reduce the journey of the business uses via air travel in the recession period.

Supply chain software programs.

4. E-marketing strategy

4.1 Marketing mix

The marketing mix of EasyJet is co-ordinate with the efficient product, price, and promotion and place strategies to sell the product and services online. The trend of the consumers change to online from the traditional marketing, where they use internet to

research and purchase products or services online. There for it is a must to identify the proper strategies to satisfy the customers as well as it gives profit to the organization.

The strategies which attract and retain customers will give more profit to the organization.

4.2 E marketing strategy

Price strategy

Price strategy is one of the strategies used in the marking mix. The EasyJet has a reputation of giving the lowest price of air journey to the customers. Price strategy is always difficult to do and need to consider lot of areas, not like the traditional pricing on finding the costs, discovering how much consumers are willing to pay, and taking account of the competitor pricing and then setting the price. Due to the use of e-marketing there is no necessary of many staff to sell the product and the service of EasyJet, and allocate lot of area (store) to its booking and selling operations. But they have to add the online and offline marketing cost as well as the development and maintain the web system cost to its pricing.

The main functionality of the easy jet is the airline service through out the Europe. There for the business area mainly I am focusing is on airline services’ pricing strategy. When a consumer need to travel for a destination he is willing to by the lowest price ticket from a reputed service provided company for their convenience, safety as well as the economical situation where they live now not allows spending much money. There for they use the internet to search the best deal from many companies and fly from the one which more suits them. Not like the traditional purchasing which takes lot of time to spend on searching the service by calling to the service providing company or visiting their place, now it’s a matter of time to spend few minutes to select a service. There are search engines which search and give the best price from the different airlines. There for the pricing needs to be more accurate and needed to attract the consumers from the competitors. This needs a depth marketing research to give the best price to the customer frequently.

From the situation analysis we identified that the strength of the EasyJet is to give the lowest price ticket from the competitors to attract more customers. They have archived this by giving best price, but the competitors also adapting to the same policy. For an example Ryanair is also using the same theme of low price destination ticket with online booking of 94% from their total bookings[Web ]. Due to these factors when doing the pricing strategy they have to consider more on reducing the cost of operation as well as giving reward to the loyal customers.

The company has already having a customer base of more than 21millon in the financial year of 2010, which gave the revenue of GBP 912.4 million [Web11]. Maintaining the existing customer base and attracting new customers is the main objective of the marketing strategy. There are lots of loyal customers who fly often via EasyJet. The online booking system is giving an advantage of identifying the loyal customers, who travel frequently through EasyJet. When pricing for the loyal customers there should be a policy of giving a loyalty incentives to targeted group of them. This will allows to maintain the existing customers with EasyJet.

The price strategy will allow keeping the price low, if the operational cost is less. Easy jet uses different technique to keep the operational cost low. As we discussed in the SWOT analysis we can identify that the easy jet is using the flat management structure, which reduced the overhead as well as unnecessary managerial cost. They operate modern 737 aircraft because operating costs are low (compared to older aircraft), but also because crew training is simplified (avoiding the overhead of needing crew for several different aircraft types) [Web 10]. EasyJet uses the cost per seat model comparison with competitor airlines. Seats are sold accordingly. Seat prices start off very low, with the price increasing as more seats are sold, but still the passenger is always guaranteed with the lowest price [Web 10]. EasyJet don’t have a business class (Business Class can reduce seats from 149 to as low as 109 seats and increases cabin crew overheads), don’t have agents for its operations (EasyJet was the first airline to cut out agents), don’t give printed tickets (reduces delays for passengers picking up tickets, and printing cost etc), don’t provide free food (reduces costs and crew overheads), and do not travel to congested airports (avoid airports with big delays and high charges). All of the above gives the room of keeping the operational cost to less and more focusing on the price strategy of low price journey for the customers. This will increase the customer base.

Product Strategy

The customer used to by the product which they more prefer in price and quality of product and service via online medium. Once considering to the EasyJet they involved in selling air ticket, car rental function, hotel and apartment facility, Travel insurance to the customers, airport parking etc[Web09]. All of these product and services must meet the quality that the customer expect from them to maintain a large customer base. I am mainly focusing on the airline industry which is the core function of EasyJet from this strategy. There should be a clear online facts and information about the services provided by the EasyJet available on the website. This allows the customer to understand the process immediately and they don’t want to get assistance on booking a ticket in which days they prefer or the destination they travel etc.

According to the SWOT analysis we can understand that the passengers who fly more even more than two hours are not getting any food services. This will make inconvenience to the customers. There for the long rotes of travel its better to introduce a food service which will more attract the passengers.

Place Strategy

One of the biggest changes to the marketing mix is the online purchasing. According to the situation analysis customers use to by the tickets directly from EasyJet where they don’t have any agent to sell the tickets. The challenge for online marketing to the EasyJet is to distribute the service to the customer at right place as well as at the right time. Location is important within the place strategy. Online location can refer to where links are placed on the websites. Placing a link on Google or Yahoo would generate high consumer traffic to EasyJet. Knowing the customer and knowing where they visit will help EasyJet to understand where to place their online links and advertisements. [Web 08]

Promotion Strategy

Since EasyJet don’t sell their through the agent, they have to promote their business to the customers. The advantage which identified in the situation analysis is that EasyJet has a very good brand name. But in a dynamic marketing environment its better to focus more on promotional methods to increase the sales via advertising and creating a brand building of EasyJet. Here below are the promotional types which will be using by EasyJet to increase the customer base.

Search Engine Optimization

Search Engine Optimization (SEO) is a procedure that relates to attracting Internet traffic in to EasyJet website as much as possible. SEO is one of the crucial methods used in online marketing success of EasyJet’s business. It includes optimizing the website in such a way that it will appear in initial pages of the search, so that the web users can visit the EasyJet website for the contents they are in search of. This is done using keyword phrases that the users generally put in the Internet search engines for searching a particular product or service [Web 07].

Pay Per Click (PPC)

Buying sponsored adverts on search engine results pages and content pages while only paying for those ads on a performance basis, i.e. when they are clicked on, has proven to be an exceptionally cost-effective online marketing strategy because you only pay when it works. This will be a good tool to use to market EasyJet since its cost effective [Web 06].

Email Marketing Strategy

Email marketing which is all about sending information of the product and services of EasyJet to the potential customers using email. This is a proven effective method of using online marketing as an efficient tool for business generation. This is also a very good business marketing technique for building good business relations with the customers [Web 07]..

Online Advertising

Online advertising is a marketing method, that has a very substantial Return On Investment (ROI) value. It consists of placing advertisements of products and services on the company website, sites which are ranking on the first pages of the search engine, and sites which are getting a considerable amount of traffic from Internet users. Internet affiliate marketing is a very good example of online advertising, which relates to paying your company’s product advertiser as per the sales generation [Web 07].

Online Newsletters

Businesses generally issue online newsletters to regular customers for letting them know what new introductory offers are available and which new products are likely to be launched. Unlike email marketing, these online newsletters are issued at regular time intervals [Web 07].

Media News Rooms

A media news room is a facility on the web that includes most of the company blogs and information which can be accessed by social media. If the company information reaches the social media, it takes no time for the information and news to be transferred to the general public. The information in media news rooms is usually available to journalists and bloggers, who are visitors searching for specific news and facts of the products and not just general information. This is also one of the most effective Internet marketing strategies[Web 07]..

Banner promotions

The banner promotion is also a way of promoting the EasyJet in web pages. There are different type of banner adds namely Keyword banners and Random banners.

Web public relations (WPR)

This allows online PR tactics to reach their full potential because the brand gets to travel to so many places, continuously linking back to your site [Web 06].

4.5 Budget

To implement the new strategies with the web site will cost £74,850.00

5.Implementation

Implementation of new strategy for EasyJet will increase the customer base as well the profit of the company. The promotional strategy will reach most of the customers and the pricing strategy will attract most of the customers towards EasyJet. When implementing the strategy it is very important to create a Customer Relationship Management as a new core which extends the value for the customers.

In the competitive commercial world it is important to retaining existing customers and expanding business. The costs associated with finding new customers mean that every existing customer is very important. Customer use to do the online transaction in the EasyJet website, there for its necessary to manage the interaction with customer base. Customer relationship management (CRM) of EasyJet will help to gain an insight into the behavior of the customers and modify their business operations when it’s necessary to ensure that customers are served in the best possible way. CRM helps to recognize the value of its customers and to capitalize on improved customer relations. The better understanding of the customers, will give more responsive towards EasyJet. CRM can be achieved by

finding out about the EasyJet customers’ purchasing habits, opinions and preferences

profiling individuals and groups to market more effectively and increase the sales

changing the way of EasyJet operate to improve customer service and marketing

Implementing customer relationship management (CRM) solution to the EasyJet provides many potential benefits. A major benefit is the development of better relations with existing customers, which can lead to

increased sales in a particular time by anticipating needs based on historic trends, where a particular customer travel can be predicted

Easy identification of the needs by understanding specific customer requirements gives more customers to EasyJet

cross-selling can be done on other products by highlighting and suggesting alternatives or enhancements. The

Easily can identifying which of the customers are more profitable and which are not. For the more profitable customers we can give loyalty facilities which retain them with EasyJet.

a more personal approach of customers will gain more business in the future.

The customer satisfaction and retention, ensuring that the good reputation in the marketplace continues to grow and the brand value of EasyJet will be increased.

increased value from your existing customers and reduced costs associated with supporting and servicing them, increasing your overall efficiency and reducing total cost of sales

improved profitability by focusing on the most profitable customers and dealing with the unprofitable in more cost effective ways

The more we know about the customers will allow easier to identify new prospects and increase the customer base of EasyJet

The implementation of a customer relationship management (CRM) strategy will have the following steps

Stage 1 – Collecting information

Customers will enter their detail when they do a transaction with EasyJet

Stage 2 – Storing information

The information will be stored in a relational data base which allows up-to-date information about the customers

Stage 3 – Accessing information

The stored information will be available to staff in the most useful format.

Stage 4 – Analyzing customer behavior

Using data mining tools to analyze data to identify patterns or relationships that we can begin to profile customers and develop sales strategies.

Stage 5 – Marketing more effectively

Using CRM to gain a better understanding of your customers’ needs, desires and self-perception, we can reward and target EasyJet’s most valuable customers.

Stage 6 – Enhancing the customer experience

Give a chance to enhance the customers experience in to positive way. [Web 16]

The management will balance their online offline promotion methods to get a good advertisement to the EasyJet. They will evaluate the cost of investment of these sectors and the out come of the investment by customers feedbacks surveys.

The online promotion methods like Search Engine Optimization, pay per click, banner add, emails, web publication relationship , media room etc will be used to gain more online sales to the EasyJet. There will be a high level of investment will be done on this sector to gain more business.

The offline promotion methods will be performed like classified ads in newspapers, printing up brochures, offer tee shirts, caps, pens, coffee cups, and other trinkets, which are given to the customers. EasyJet can sponsor a national sports which will make a huge offline marketing to EasyJet. Equally a high level of investment will be put in to these offline promotion to get covered the total customer base. Some one who may not use internet will get to know by these as well as the internet users also have the facility to access the site of EasyJet by these advertisements.

6. Legal and Ethical Issues

There are many legal and ethical issues to consider when gathering, processing, distribution and use of information in a website. They are described here below

Copyright

Copyright gives the creator of some types of material rights to control the use or commercial exploitation of that material. This also includes in materials which are published on the internet. So we cannot use someone else’s text copy or photos or images on the website without the owner’s permission. Some creators or authors may allow using their material for free. A copyright notice on a website will often set out what you can and can’t do with the material on that site. The absence of a copyright notice does not mean you are free to reuse the material on that website – by default you should assume that other people’s works is covered by copyright unless stated otherwise. [Web 12]

Data protection act

The Data Protection Act 1998 (DPA 1998) is an act of the United Kingdom (UK) Parliament defining the ways in which information about living people may be legally used and handled. The main intent is to protect individuals against misuse or abuse of information about them. The fundamental principles of DPA 1998 specify that personal data must:

be processed fairly and lawfully.

be obtained only for lawful purposes and not processed in any manner incompatible with those purposes.

be adequate, relevant and not excessive.

be accurate and current.

not be retained for longer than necessary.

be processed in accordance with the rights and freedoms of data subjects.

be protected against unauthorized or unlawful processing and against accidental loss, destruction or damage.

not be transferred to a country or territory outside the European Economic Area unless that country or territory protects the rights and freedoms of the data subjects [Web 14]

Email Marketing

It is illegal to send unsolicited email messages to email users except in limited circumstances. If customers wish to receive information from in the past, ie opted in, then we can send them information on other things that we think they might be interested in. We must give these people the option to opt out of receiving any further messages from us [Web 13].

Trade Mark

We cannot use any trade mark key words on the online advertising.

7. Conclusion

The easy jet has a growing opportunity in the market since it has a very high infra structure and a better policy of cost management. Increasing the customer retention management module will increase sales of easy jet and it can focus on the future.

The resection gives an advantage of promoting the low price budget to easyJet towards the European market. The destinations which use to fly are an advantage to the customers since it covers most areas of Europe. The new flights which are used by the company increase the customer satisfaction as well as the safety and fuel consumption.

The future of enhancing the routs from European countries to other destination will increase the customer base.

The political factors of the current UK situation will not improve the sales where the customers don’t have way of increasing money. The taxes and vat increase will directly affect the EasyJet.

Adopting the new strategies in to their existing web site will increase the business.