The Success and Challenges of Ryanairs Operations and Marketing Strategies - Essay Example

Assess the success and challenges of Ryanair’s operations and marketing strategies, with justified recommendations for the future Contents Contents 1 Introduction 2 Discussion 2 Success 2 Challenges 4 Recommendation 5 Conclusion 6 References 7 Introduction Discussing about the success of Ryanair’s operation it can be said at first that it gives a scheduled passenger service with low cost and low frills. Its headquarters is located in Ireland. It has been the largest European airline in 2003 by scheduled passenger’s services. Its primary operations based on Dublin Airport and London Stansted Airport (Ryan Air, 2014). The company also faced some challenges apart from its success. As it provides low cost fare services so if any new tax or charges will be implemented or charged then it will affects on its figure of profits. Discussion Success The technology which is used by this company is one of the key factor successes because it saves check in time and also helps to reduce check in staff costs. Through this process company can maximize its profits. Effective resource planning and redesigning its operations are also the success factors. The company maintains low fare as it is generally operated short distance trips. This policy attracts fare conscious customers who have to travel frequently (Ryan Air, 2013). The demand is increasing and the travelers are motivated as they are getting best value for money air services. The company carries out point to point operations on a regular basis which helps to eliminate the requirement of frills services. This point to point operation eliminates extra cost and travelers can get direct routes and non-stop services which cannot be provided by the long route airlines services. Units costs are also reduced as the aircrafts are utilized more. As the routes are direct so it helps to reduce operating costs and further expenses. It targets to reduce aircraft equipment costs. They were generally used single type of air crafts but later they upgraded it by using new model of aircrafts for stiff competition in the market and also for environmental rules and regulations. So this competitive mentality is another key factor of success as well as they are thinking about the society at large and agreed with corporate social responsibility (Smith, 2014). The company has the core competence which is nothing but a set of technology and skills. Through this core competence the company enables to achieve a particular benefit which they also can provide to its customers. The paper now moves towards analyzing the marketing strategies then at first we suppose to do portfolio analysis. If we put this company on the Boston Matrix diagram then it can be seen that it falls under Cash Cow portion as it is growing slowly but simultaneously its market share is high. Its targets are to maximize its market share and cash flow. As the company is going to provide low fare cost, no frill policy and outsourcing then the investment needed by it has to be very low than the other competitor companies. Ryanair can launch new routes and expand their services. European Union enlargement and fleet expansion, low distribution cost, Micheal O’ Leary’s aggressive leadership etc are another key success factors to the company. Challenges Increasing so many low airline service companies with the same strategies is become another challenge for Ryanair. The company is prone to bad issue in the press which creates a bad impact on its brand value. The customer relationship of this company is very poor as because they spent less amount of money in this field and here it is a challenge for them. They have weak employee relation also. So employees are always trying to move any other rival companies. Here the growth path is also very narrow for the employees. So the employees are demotivated to continue service in this company year after year. In early years every employee had shares in the company (Geller, Folan and Shain, 2013, p. 3). At that point of time employee strength was 450 only. But in the present time the number of employees has been increased but they have not any shares of the company. Again, the company continuously refuses to negotiate with any union. Contracts which are offered by the company to its employees are very much complicated when comparing with other air line service companies. These contracts are unusual also. For example- through the contract the company is forcing the ground level staffs to open a bank account in a particular bank for getting their wages or forcing to the pilots for working through an agency. In the month of May 2014, Ryanair’s office [Marseille] was investigated and raided by the French police because the company was failing to follow French employment law. Ryanair’s service comes under niche market services which also hamper its brand value. Travelers who want to travel in a luxurious mood will avoid this company’s services. Customers who want to travel in long distance will also not take this company’s services. There are also some arrangement problems inside the aircraft like no seat back pockets and life jackets are kept on overhead rather to keep under the sits. Seats are also non-reclining. All the safety cards are stored on the back side of sits which is a problematic issue. The company also take some extra charges from its customers through various add on services like toilet fee, extra weight of baggage cost, faster cleaning and safety check costs etc. This airline has been criticised for its inefficient treatment with disabled and physically challenged customers. In 2002 they were refused to provide wheelchairs in London airport and they argued that airport authority was responsible fully for providing wheel chairs (Young, 2014). At that time the company was criticised by many newspapers and create a bad impact on this industry. Ryanair is failure to provide proper information in their websites which misleads the travelers and they become unsatisfied with its services. They are also failure to provide security to their customers for their low operating cost strategy. This is another reason for customer’s unsatisfaction. Statistic shows that 20% revenue earned by Ryanair is the revenue generated from other source not from the ticket fares. So this revenue is called ancillary revenue. Recommendation In the part of recommendation it can be said first and foremost the company has to take integrated marketing strategies with competitive price of fares, starting services in new routes which are in demand from the customer’s end etc. The particular “cheap” concept should be changed which will help to change the perception of customers towards the company. They should efficiently manage the customer relationship by providing them proper guidance and appropriate information on time. They should concentrate on improving their web sites through which customers can get details of their offered services. The company’s brand image has to be improved. Their marketing communication strategy also needs to be improved by sponsoring special events or through advertisement which gives a positive message to the mass. The speed of online ticket purchase transactions needs to be improved than the offline transactions. If this process would be better than the other rival companies then the demand of tickets will be increased and at the same time availability should be maintained by the company. Conclusion Ryan air is a well known brand. The company’s website is the 5th most searched website in the world among all the air line services. It gets free of cost publicity for its lowest fare, no frill services, excess baggage restriction, environmental issues, and charges on credit cards etc. As the fuel cost is increasing day by day so maintain the low price strategy now become a challenge to this company. Even though the company has high revenue in hand but it cannot expand its business or activities in other product line or other services. Ryan air should give the best quality services to their customers in the airline service market. References Geller, D., Folan, B. and Shain, B. 2013. Ryanair Strategy Report. [pdf]. Available at: http://economics-files.pomona.edu/jlikens/SeniorSeminars/Likens2013/reports/ryanair.pdf. [Accessed on 28th May, 2014]. Ryan Air, 2013. Ryanair Investor Day. [online]. Available at: https://www.ryanair.com/doc/investor/Ryanair-raises-its-growth-plans-from-100m-to-110m-pax-by-Mar-2019-Presentation.pdf. [Accessed on 28th May, 2014]. Ryan Air, 2014. About Us. [online]. Available at: http://www.ryanair.com/en/about/. [Accessed on 28th May, 2014]. Smith, O. 2014. Ryanair: still 'the world's favourite airline. [online]. Available at: http://www.telegraph.co.uk/travel/travelnews/10127013/Ryanair-still-the-worlds-favourite-airline.html. [Accessed on 28th May, 2014]. Young, S. 2014. Budget carrier Ryanair in plan to lure more business customers. [online]. Available at: http://www.reuters.com/article/2014/03/26/us-ryanair-airports-idUSBREA2P1SI20140326. [Accessed on 28th May, 2014]. Read More