Ryanairs Marketing Strategies - Assignment Example

RYANAIR’S MARKETING STRATEGIES By Location Ryanair’s Marketing Strategies Introduction For several years, Ryanair has focused on becoming Europe’s most profitable airline. However, the company’s venture to register increased profits in the airline industry has not been an easy journey. Over the years, the company has faced the compulsion of adopting effective marketing strategies that can serve to increase profits by promoting customer loyalty. Ryanair has had a reputation of offering low-cost flights to its customers for some time now. However, the industry is proving to be quite different, a factor that compels Ryanair to adopt more effective strategies than its low-cost culture. Worth noting is the fact that its low price strategy propelled the company to success for some years. However, towards the end of 2013 and part of 2014, the company experienced a decline in profits. The decline served as a warning for the company to develop better strategies so that it can survive in the industry. This paper will describe Ryanair’s low-cost strategy and highlight its recent marketing strategy, which has helped the company to rise from the decline. Ryanair Company Profile Ryanair is a company founded by three individuals named Christopher Ryan, Liam Lonergan, and Tony Ryan in 1985. Notably, the three of them began with a family aircraft that were determined to develop the company into a successful airline. Ryanair would soon develop to become a low-fare airline in Europe, providing customers with an opportunity to travel at cheaper rates. In 1990, the company undertook a venture of restructuring the company and focusing on the low-cost model. In 1995, the company became the greatest airline in Ireland overtaking its competitors in the country. In 1997, the company went public on the Dublin stock exchange. In 2000, the company advanced to introduce online booking for its customers. The company progressed to open up new roots and expansion of its business in the European airspace in 2004. However, in 2009, the company registered an annual loss of € 169M. With such a loss, the company needed to strategize on how to get back on the right track (Dominic OConnell 2014, p. 6). Notably, the company has five main bases Madrid, Bremen, London, Charleroi, and Marseilles. The current CEO of the company is Michael OLeary. The company’s core vision is to register evolution in line with the company’s maturity. The company’s mission is to ensure that it remains profitable and offers customers opportunities to travel at low-cost while maintaining high customer standards. Recently, the company’s vision is centred on registering improved customer relations. In its most recent venture, Ryanair seeks to integrate low-cost fares and quality customer service. For a long time, the company gave minimal attention to customer service and focused on maintaining its low-cost fares (Kenny n.d, p. 1). The company earned itself the reputation of being the only ultra-low-cost airline in Europe. However, the company has registered growth, and its presence is experienced in 180 airports in 29 different countries in both Europe and North Africa. Currently, the company has about 57 bases and 1611 routes. The company hires about 9000 employees with 50% of its flight crew working on a contractual basis. Ryanair’s Dependence on Low-cost Strategy In 1992, Ryanair opted for the low-cost strategy in an effort to become a leader in the market. The low-cost strategy requires an organization to minimize its expenses in an effort to offer services at a cheaper price compared to the competitors. Uniform aircraft types, high seating density, as well as load factors, define the low-cost model adopted by Ryanair. In addition, the model supports direct booking via the internet or call centres. It also relies on simple systems of management. It does not offer frills such as foods and drinks served free on some airlines. Ryanair chose to focus on secondary cities and airports, which was a critical cornerstone of its strategy. Opting for secondary cities and airports served to reduce the landing charges, which are higher in major airports. Since many major airports are subject to high levels of congestion, Ryanair was content with secondary airports, which allowed it to improve its turnaround time (Nathalie 2014, p. 3). In addition, Ryanair opted for point-to-point flights, eliminating additional functions involved in baggage transfers. Therefore, the company’s planes register a faster turnaround. The reliance on the single type aircrafts has served to reduce the cost of maintenance for the company. The company’s maintenance engineers, service all the planes eliminating additional costs and time wasted if the company had aircrafts of different types. The low-cost strategy became an integral part of the company’s culture, explaining why the company registered success. With its cost reduction in operations, the company had better profit margins than its competitors did. Hence, it could offer lower fares for customers. The company also made successful negotiations with secondary airports in an effort to ensure that the landing rates were much cheaper. The company’s chief executive officer was well vast with the low-cost model explaining why Ryanair adopted it successfully. For several years, the company’s low price was its core competency. Therefore, it proved sustainable for some time (Ryan Air recruits marketing chief amid big shake-up 2014, p. 86). The fact that the company had adopted a cost-conscious culture, the low-cost strategy proved to be more sustainable helping the company register remarkable growth. Both the senior management and the frontline managers were in favour of the low-cost model and were determined to make it successful. Although Ryanair’s low-cost culture helped the company register growth, the company developed a poor image according to the perception of many passengers. Notably, the Ryanair staff did not give any regard to quality customer service. Many passengers had to put up with rude staff members and insults from some crew members. In addition, the online booking process was extremely long involving 17 clicks. Unfortunately, the online booking process led to some passengers paying more for their flights. It became evident that the company had focused on reducing costs and providing lower fares and forgotten the importance of quality customer service and positive relationships with customers. After the annual loss in 2009, the company managed to get back on the right track until 2014 when it registered another profit loss (Ryanair customer service drive picks up passengers 2015, p. 4). Although the airline proved a leader in providing passenger with an opportunity to travel at a cheaper rate, it had failed to consider other factors that determined the success of a company in the airline industry. The company’s low-cost culture no longer proved appealing to customers because customers had to put up with poor quality services from the company’s employees. Therefore, many passengers opted for other airlines that provided remarkable customer service. Ryanair needed to make changes that could win back many of its customers and help the company reach its objectives for the future (‘Ryanair rolls out digital marketing strategy at AGM’ 2013, p. 4). The Importance of Quality Customer Service in Determining Customer Satisfaction in the Airline Industry The recent years have registered an increased demand for airline services. However, the demand for airline services has introduced multiple companies in the industry triggering a stiff competition. With the increasing level of competition, there is a registered increase of consumer demands, who require high-quality services. Without doubt, quality customer service is a determinant of customer satisfaction in the airline industry. Notably, airline companies with the capacity to exceed the expectation of the customers are more likely to trigger customer satisfaction. However, some airline companies are unable to meet the needs of customers a factor that triggers dissatisfaction. Customer satisfaction depends on the perception and the expectations of the customers (Taylor 2014a, p. 6). After the service is delivered, the customers undertake a cognitive and affective psychological assessment that determines the level of satisfaction. In any business, service quality is a determinant of success. Therefore, the airline industry is not an exception. Customers are keen to analyse the service quality delivered by the airline companies. According to the American approach of service quality, factors such as reliability, empathy, responsiveness, and other assurances are of critical determination of the customer’s perception of customer quality. However, the American approach has been adopted in other regions and by other scholars when assessing the quality of service. It is interesting to note that customers are likely to associate price with the quality of service. Many customers have the perception that premium services have premium prices attached to them. Therefore, low-cost and prices are associated with poor quality. Therefore, combining high-quality and low-prices is a difficult venture for many companies. The association of low prices with poor quality is one of the factors that led to a poor brand image of the Ryanair Company. In the airline industry, customer satisfaction and service quality also depend on the attitude exhibited by the employees. Customers usually assess the willingness of employees to offer attention and to help as well as giving guidelines when required (Taylor 2014b, p. 10). In the low-cost airlines, there have been complaining about a bad employee attitude, specifically, Ryanair has suffered from a poor employee attitude because passengers have reported cases of rude employee who are unwilling to develop any positive relationships with customers. Many of the employees of the company have lacked the required courtesy and understanding when handling passenger issues. Researchers have highlighted that employee attitude is of critical importance in the airline industry. In addition to basic services such as reliability and timeliness of the flights, customers expect a measure of comfort and confidence with the planes. Therefore, the attitude exhibited by the employees determines how customers view the airline. Airline companies need to meet the specific needs of customers, as well as the perceived needs. Unless a company can meet both of these needs, it will lack the customer loyalty and have a negative image. In addition, being able to meet all the needs of the customers gives an airline company a competitive advantage while attracting new customers. Failure to deliver quality customer service contributes to a remarkable decline in the business. In the case of Ryanair, the company registered decreased profits, dissatisfied customers, and an extremely poor public image. There were also litigation cases that the company had to handle because it lacked quality customer service. In order to recover its public image, Ryanair did not have an option but to endeavour on rebuilding its brand and reputation (Vizard 2013, p. 5). It needed to adopt new marketing strategies in order to improve customer relations. Airline companies that recognize the importance of customer loyalty, consider it as a strategic objective. Achieving customer loyalty compels the airline companies to adopt strategies of training employees so that they can deliver exemplary services. Employees need to understand the perceived value of the customer concerning quality and be able to meet the perceived needs. Maintenance of a positive brand image is of critical importance. Customers are unlikely to develop loyalty if a company has a negative corporate image. Therefore, airline companies with the negative public image are likely to register losses. Such a case was evident with Ryanair, whose brand name and public image had been tarnished by its continued poor customer service. Airline companies that need to brand their services need to focus on several dimensions. Such companies focus on determining the reasonable prices for their flights while maintaining timely and accurate as well as reliable core service (Vizard 2014a, p. 9). Such companies should also have a good reputation and a positive image backed up by competent and courteous employees. In addition, such companies focus on reliable, informative, and impressive advertising. Ryanair’s New Marketing Strategies in the Past One Year As highlighted above, Ryanair registered an annual loss in the early quarter of 2014. The annual loss compelled the company to adopt new marketing strategies that would get it back on the right track. After a year, Ryanair registered a 14% increase in customers as well as increased profits. A close analysis of Ryanair’s marketing strategies adopted in 2014 will reveal how it managed to have a turnaround. Notably, Ryanair took a critical step towards the end of 2013 by hiring Kenny Jacobs as the chief marketing officer. The company resulted in hiring Kenny Jacobs because of his previous experiences in other companies. Prior to bringing in Kenny Jacobs, some customers had moved to other airlines completely because of the continued lack of courtesy exhibited by check-in staff as well as the unwillingness of the cabin crew to help the passengers (Vizard 2014b, p. 1). Over the years, the company had ignored the poor customer service that it exhibited. However, the situation that the company found itself compelled the chief executive officer to adopt new strategies. Michael OLeary highlighted that the company needed to develop quality customer service and cease “pissing off people”. The first strategy adopted by Kenny Jacobs was changing the public perception about Ryanair. According to his assessment, the company registered very poor customer experiences, a factor that had contributed to a negative brand image. In his efforts to improve customer experience with the airline, Kenny Jacobs highlighted five objectives. He needed to company to do away with aspects that customers did not like. In addition, he wanted the airline to improve the travel experience immensely (Vizard 2014c, p. 3). The company was to work towards attracting business travellers and families and reintroducing the centralized booking system. Finally, many customers had complained about the online experience at the company’s website. Therefore, Kenny Jacobs sought to improve the online experience remarkably. He named the program as “always getting better”. In addition to doing all these, the company began to regard passengers as customers (Vizard 2014d, p. 4). Concerning the Ryanair website, Kenny Jacobs had highlighted that the website was an old version and that it did not give customers a memorable experience. Therefore, he updated the website in order to allow customers to access services easily. Kenny Jacobs was well aware that it was impossible to improve customer experience without relevant data about regular customers. Ryanair had never invested in gaining customer data that could help the company make critical decisions. It was practically impossible for the company to understand the customer needs because it did not give attention that sought to establish critical information concerning its customers. In the modern business front, companies consider data as an important asset (Vizard 2014e, p. 6). They rely on such data in an effort to meet customer needs and expectations. Therefore, Ryanair established the Ryanair Lab, which would help the company indulge in digital marketing, as well as bring together data teams that could analyse the market as well as the customers and provide critical information on improving the customer service. The company also hired data scientists and other experts who would be actively involved in collecting data for the company. This was a critical move taken by Ryanair in 2014 in its efforts to change the brand image and design strategies for improving the customer experience (Vizard 2014f, p. 4). It had become evident that customers were dissatisfied with the services offered by Ryanair employees. In addition, Ryanair sought to develop mobile and tablet applications that would offer a remarkable experience to customers who rely on online booking. Prior to developing these applications, the company ensured that the upgraded company websites only required five clicks down from 17 previously. These improvements definitely proved appealing to customers who had been frustrated by the previous website and its incompatibility with mobile phones and tablets. The company declared that it would triple the amount it spends on marketing in order to indulge in a rigorous advertising venture that would promote a positive brand image. Therefore, Ryanair also unveiled numerous television campaigns aimed at repairing the company’s image. Without doubt, the company had recognized the value of improving customer experience through exemplary customer services (Keiningham et al., 2014, p. 416). As highlighted above, providing exemplary customer service translates to an exemplary customer experience. However, it requires very competent employees who understand that the attitude and actions affect the customer experience immensely. In the past, customers have complained about the incompetence, negative attitude, and lack of professionalism exhibited by the Ryanair employees. Therefore, the company has embarked on training programs that will seek to empower employees so that they can deliver exemplary customer service. Previously, Ryanair had not given any attention to training employees. However, in its efforts to register improvements of the customer experience through quality services, the company has launched training programs that will impact employees with the relevant values, skills, and competencies so that they can play their roles well. Worth noting is the fact that employees define the critical link between the organization and the customers. Therefore, Ryanair is doing the right thing by training employees. The company should also strive to promote employee satisfaction because it contributes positively to customer satisfaction (Curry & Gao 2012, p. 108). Kenny Jacobs was keen to recognize that Ryanair was doing some things that caused displeasure among its customers. Therefore, he analysed such things and sought to do away with them. For example, the company had been fining its passengers €60 if they reprint the boarding pass. In addition, the company practiced the no-exceptions and one cabin bag rule, which was unfavourable to many customers. Notably, Kenny Jacobs has exhibited his expertise in understanding the customer needs and concerns. Whereas the company had been practicing things that were not appealing to customers, it had not considered the negative effects of the customer experience. However, with Kenny Jacobs, he helped the company adopt the right perspective in an effort to improve the customer experience and promote customer loyalty (Curry & Gao 2012, p. 116). Worth noting is the fact that Ryanair had not developed any television advert for 25 years. However, with the help of Kenny Jacobs, the new approach of marketing and focus on customer service required the company to venture into increased advertising. Whereas the company had indulged in rigorous service improvements and launched new products, the public needed to be aware of its improvements. Therefore, the tripling of its expenditure on marketing was of critical importance. The television advertisements urged more people to give Ryanair a trial because it had registered improvements in different aspects. The television advertisement was of critical significance in increasing awareness of the new products as well as remarkable service improvements. The company also ventured into online advertising in an effort to adopt digital marketing. The company had lagged behind remaining unwilling to adopt new digital marketing platforms. However, Kenny Jacobs has helped the company embrace digital marketing and registered positive results (Curry & Gao 2012, p. 111). The company is relying on different tactics used in online advertising in order to ensure that its adverts register a high traffic level. Conclusion Without doubt, the company recognized that its low-cost strategy was ineffective in the airline industry whereby customer service is of critical importance. When the company ventured into low-cost strategy, it registered remarkable growth. However, the company needed to recognize the importance of integrating low costs and high quality. It is unfortunate the company did not recognize the importance of customer service until in 2014 after Kenny Jacobs was hired as the chief marketing officer. Without doubt, the chief marketing officer introduced improvements in the services and sought to train employees so that they can deliver exemplary customer service. Ryanair registered improved profits in a year by venturing in the improvement of customer experience. It is expected that the company will register higher profit margins in the future if it continues with the efforts of improving customer experience. 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