Marketing Principles - Essay Example

Marketing Principles: An Analysis on easyJet LCC "Marketing is concerned with providing people with products and services which work effectively, continue to work effectively in the longer term, and are offered at a fair price" (Blythe, 2006) Abstract The demand for fast and affordable travel is increasing day by day. Low cost airlines have become an inappropriate need of the hour. easyJet is a famous UK low cost-carrier (LCC). It is ranked as the largest LCC in UK by the number of people it carries every year. This study explores the various marketing strategies followed by the company to gain dominance in the market. It analyses the micro and macro environment for easyJet. It examines how certain services provided by the airlines impress particular market segments enormously leading to its huge success. easyJet operates both domestic and international flights. The difference between managing them and the importance of enhanced marketing is discussed in detail throughout the paper. Introduction easyJet plc has a fleet of 200 planes flying over 600 routes across 30 countries across the European Union and to the neighbouring countries. The company earned net revenue of £ 3.854 billion in 2012. More than 8000 people work with easyJet all across the world. easyJet carries more than 59 million passengers per year. easyJet was started in 1994 by Stelios Haji-loannou. They fly to all the nearby countries in the European Union like Spain, France and Germany and the countries outside it, like Russia at a very cheap cost. They are a no-frill airline providing very low cost air travels. An array of services like food and magazines are available to the customers for rent on the plane. Task1 A. Discus Its Core Marketing Concepts and Various Elements Of Marketing Process Choosing the Right Target Group The competition for LCCs in UK is quite high. There are many airlines like Ryanair flying at a much lower cost than easyJet. So easyJet comes up with numerous new marketing ideas frequently to keep themselves ahead of others. Their marketing slogans like "Turn Europe Orange", "Europe by easyJet" & "Come on, lets fly" are quite famous in the advertising industry. easyJets marketing structure is very simple. As their mission statement says their aim is to provide safe, good value, point-to-point travel to all their passengers. They concentrate on customers who spend their own money for business and leisure instead of the people who travel on their company accounts. They target small entrepreneurs, businessmen and people who travel on leisure with their family as well as youngsters. Haji-Loannou was a man with a great vision. He sold the 10 millionth ticket of easyJet as they aimed within four years of starting the service. easyJet was able to establish the same only through vigorous marketing and serving the right target customers. Adding Value for Customer’s Money Pricing was their main focus in every ad. Travelling through easyJet is cheaper than travelling through train for certain famous destinations. They never had a fixed price for a particular seat on flight flying on a selected location. The sooner the person books the ticket, the cheaper the price is. The costs of the tickets vary based on the holiday season, weekends, and the seating location etc. If a person wants a window seat on the first row, he has to pay a little extra. People who wanted specific luxuries were able to fulfil their requirements at a very low cost through easyJet. The company did not provide very cheap service. At the same time it did not make it quite costly too. The customers flying through easyJet always feel they are paying only for the luxuries they are actually using and not spending one extra penny. B. Evaluate the Benefits and Costs of Marketing Orientation for the Chosen Company Benefits and Cost Effectiveness of easyJet’s Marketing Strategies They always used different types of platforms for marketing. All the bookings and reservations for easyJet can be done through their website. They were the first LCC to use the social media for marketing. They have over 54885 followers on Twitter and nearly 120000 people follow their Facebook page. Any new features announced by them reaches the users in blitzkrieg speed through the internet. While the other flight carriers depend upon TV and print media ads to popularize their new schemes, easyJet’s new promotions and discount schemes reach the public in no time through the web. Their ads rightly claim themselves as "the webs favourite airline". Further there are ample cost benefits in using them. The amount spent for marketing through social media is much cheaper than other forms of advertising. Task 2 A) Explain how macro and micro environmental factors can influence your marketing decisions. The Macro and Micro Environmental Analysis Macro analysis of a particular company can be done through the PESTLE Analysis.The IT boom in the world created many upper middle class families who were ready to spend much more money on holidays. This affected the growth of LCCs significantly. Political Factors: The war in the neighbouring countries and the unsteady governments might affect the international flights operated by easyJet. The flights travelling to the Middle East and Russia often face severe threats from terrorists and hence have to follow stringent protective measures. This increases the operating cost of the airlines considerably. The political enmity between the inter-European countries also makes the neighbouring countries governments inflict very strict rules on LCCs from UK. They have to pay more taxes than the domestic LCCs of those countries. Economical Factors: Constant increase in the fuel cost is the main problem faced by them. The natural disasters and bad weather prevalent during certain seasons make them change the flight schedules constantly. Such factors increase their administration costs considerably, forcing them to charge their customers more. Further factors like the Euro debt crisis and the global recession affect the purchasing power of the customers making them go towards the other competitors like Ryanair. All this forces easyJet to control the amount they spend on marketing. Social Factors: easyJet only sells its tickets online. Certain traditional customers are still reluctant to use their credit cards online. Further, many rich people prefer using reputed aircrafts even though they charge more because of prestige. Hence, easyJet’s marketing always targets growing businessmen, youth and the new billionaires who do not have any such old beliefs. Technological Factors: The low cost tickets give them very little chance to use advanced technologies in their flights. Though they use all the modern media for marketing, easyJet still uses traditional technology for managing daily operations. But, their marketing strategy focuses on other productive aspects like low cost tickets and unique routes instead of showcasing technology. Legal Factors: easyJet faces many complaints regarding customer satisfaction. Also the modern regulatory laws rolled out in the UK by the BIS controls them from maintaining a dominant position in the market. The UK governments liberalized foreign policies opens up the UK LCC market for Chinese and American airlines to enter the market. This will increase the already prevailing competition in the market by many folds. easyJet will have to compete tough with the new arrivals in terms of marketing as they will approach the country with new and innovative marketing ideas. Environment Factors: The strict laws enforced by the UK government forces all LCCs to switch to greener technologies. Implementing green measures in administration level is easy. But, enforcing them all over easyJet especially in the flights will involve millions of pounds. The government laws prevent the banks and other financial institutions from lending huge loans to small scale LCCs. So such factors keep increasing the operations cost of the easyJet forcing them to curb the amount spends for marketing. The Micro Environment Analysis on easyJet The micro environment for easyJet comprises of their customers, suppliers, shareholders, suppliers, competitors as well as employees. Porters 5 forces analysis can be used to analyze the micro environment in a detailed way. Bargaining Power of the supplier: One of the main missions of easyJet is to maintain a smooth relationship with their suppliers. The aircraft manufacturers are their main suppliers. They have very good relationship with them. The bargaining power of the suppliers is very low or limited as the aircraft manufacturing companies are already facing a tough time. They would never want to miss a huge company with more than 200 flights in their fleet. Bargaining Power of the Customer: Bargaining power of the customers is very high. There are several choices for them to choose from both LCCs as well as traditional luxurious flights. Extensive customer service is required to make a customer use the airlines for the second time. Threat from New Entrants: Threat from new entrants is also high because, the UK government is planning to let in the US and the Chinese airlines use their airports. Though they will initially target the ethnic minorities, the local UK residents will also be lured to use them very quickly. Threat from New Substitutes: Substitute of threats from trains is very high. Railways stations are situated near the city rather than remote locations like airports. So, many people prefer using them instead of LCCs. Rivalry among Competitors: There are many companies like Ryanair, bmibaby and Flyair operating in the domestic market. They operate in the same way easyJet does following similar marketing strategies and promotional techniques. So, threat from rivalry is very high. B) Explain how you would segment consumer markets and organisational markets for any two products sold by your chosen company and select a target market. Justify your selection with reasons. The main target customers for easyJet are businessmen holding small and medium level companies, and families travelling for leisure. The consumer market for easyJet is the families and the youngsters travelling across the world in minimum budget and the organizational market is these businessmen. The high demand for LCCs could fall in the following years because of these increased security measures in all the European country airports. This will affect the international flight operations of easyJet. Similarly, the improvement in the railway links spread across the UK cities emerge as a strict competitor for their domestic flights services (Ram, 2007). So easyJet tries various marketing mix strategies to maintain their position in the market. easyJet offers various products starting from rental Sony media players which can be watched on the plane during travels to sandwich and drinks. One famous service or product made famous by easyJet is their "Easy Jet Bistro". Most of the luxury airlines charge the customers for food. They do not worry whether the customers hardly use the numerous food items stocked in front of them. But, this buy on board facility permits them to purchase only the necessary food items or alcoholic drinks and pay only for them. This facility is voted as the best by most of their target customers belonging to the business class as they do not have to pay for the services they do not use. It sells a variety of food items. So, it gives them a feeling of visiting a restaurant while flying. They also sell magazines, fragrances and gifts eliminating the need for the customer to purchase on the airport. This facility is also appreciated by most of the business class people. The budding entrepreneurs do not have the time to go shopping in the places they visit. But, they have the necessity to buy mementos and small gifts to several people starting from their family to workers and the clients they are about to meet. This on-flight shopping saves them time, money and the unnecessary effort of exchanging currencies. The target customers of the easyJet get satisfied perfectly by both these services. Families travelling with children also appreciate this service very much for the same reasons. C) Explain How Buyer Behaviour Can Effect Marketing Of The Two Products Mentioned In (B) Above. D) Select one of the two products mentioned in (B) above and explain how its positioning will influence the companys marketing mix factors. Consumer perception and buying behaviour of these products will affect the marketing strategy of the company directly. Offering these products on board is an extra facility for them. These products can be purchased elsewhere also. But, they are bought to the seat of the customer directly. It increases their comfort level, indirectly influencing the good opinion on the aircraft. This type of marketing will always make them spread good word or mouth reputation about easyJet among their friends, which is very important to gain more customers. Task 3 A) Explain how the extended marketing mix elements - product development, pricing, promotion, distribution, people, process and physical evidences - are used by your chosen company to achieve its marketing objectives. Every product is classified based on its durability and tangibility says porter. The Marketing mix strategy for every product is different (Kotler, 2009). The marketing mix strategy for any company consists of four main elements, the products, price, place and promotion. Selling an alcoholic drink or a gift to a flight passenger onboard with company logo will help them remember it whenever the object is used. Similarly, it is priced reasonably as it is purchased in bulk. The best place to promote about easyJets service is their own flight. These on-board sales help the company do the same indirectly. easyJet need not worry about price, because this is sort of free promotion to them. These products influence all the marketing mix strategies in a positive way. The acquisition London - Grenoble route by easyJet is a good example of product proliferation. They started to operate from two bases Gatwick and Luton to provide more flexibility to the customers (Barbot, 2006). Many different airways including the British airways were operating in the route. They targeted the business customers as well as the leisure travellers to France. This dual boarding measure helped easyJet attract many customers towards them. The cost incurred was initially very high. But, they interlinked the routes and increased the frequency of the flights to seat more customers and overcame the loss in a short while. They used all the marketing mix elements perfectly to achieve this success. It is a common practice in the industry for any LCC to form an alliance with other company if they are not large enough to meet the rivals. These entries pose a threat to new entrants. If the new entrants are quite huge capable of spending a huge cost, they make sure they overcome this competition (Lin, 2005). easyJet hasn’t tied itself to any such alliance so far. But, the company’s senior officials agree that they might consider doing the same in future if foreign airlines are given permission to enter the UK market. Task 4 A) Select any two products from your chosen company for two different segments of the market and explain how marketing mix varies to different markets segments. Market Segmentation is the process of dividing the market into various subsets based on age, spending power and the psychology of the customers. Selecting a proper marketing segmentation is not easy. To measure whether the market segmentation is viable, a particular size of the market with stable size which is easy reachable should be selected. Their views should be measurable in the form of surveys or feedbacks (Nirmala, 2008). Their Inspire me and catch some sun schemes are quite famous among many easyJet customers. The catch some sun scheme advises the families about the various beach locations covered by easyJet and takes care of everything from cab booking to hotel booking in the area. This scheme gives a feeling of having a personal chauffer on their rides in easyJet. It makes them use easyJet service every year. Promotion is given importance here while product marketing mix strategy is given importance in the second one. The Inspire me targets curious youth ready to explore the world. They give them ideas about several interesting places which fit within their budget. Youngsters form a very small percentage of easyJets target customers. But, this scheme helps increase their proportion considerably. B) Explain how marketing activities differ between consumer markets and organisational markets. The main difference between organizational and consumer markets is that organizations purchase raw materials to produce goods for customers while the customers purchase goods for their personal use (Writing, 2012). The budget and size of purchases for organizational markets is much huge. Companies purchase goods in massive volumes. Consumer markets purchase very few or single items for personal use (Kokemuller, 2012). easyJet knew the difference between handling both perfectly. They target CEO’s of small businesses particularly because they aim in selling huge group tickets to them. Once satisfied with their service, these people will use the service of easyJet to make all their executives travel. They also target families and lure them with various offers if they are capable of making their friends use their service for huge family outings. In short easyJet aims in catching the organizational markets through satisfying their target customer’s personal needs perfectly. C) Discuss the factors that differentiate international marketing from domestic marketing. Domestic marketing do not have any language and cultural barriers. Most of the major companies depend upon the local markets for their lions share in total profit. International marketing requires high amount of financial resources, a strong legal team to meet the various regulations and domestic support from the locals in every move. International marketing is much more complex than domestic market because everything from the language to culture and the expectancies of the foreigners are completely different. easyJet is serving both the domestic as well as international travellers. It faces the challenge of satisfying both the customers. But, the company does it effectively by appointing staffs from the concerned countries, fluent with the required languages. There are four different types of work culture guided missile, Eiffel tower, incubator and family work culture. easyJet follows guided missile work culture which give more emphasis to teamwork for solving any issues (Cole, 2004, pp 103). References 1. Barbot, C., 2006, ‘Entry and Accommodation in Airline Markets: easyJet Caught in the Middle on the London-Grenoble Route’, CETE, Retrieved 17th January, 2013, from http://www.fep.up.pt/investigacao/cete/papers/DP0602.pdf 2. Blythe, J., 2006, ‘Principles & Practice of Marketing’, Thomson Learning, London, Retrieved 17th January, 2013, from http://books.google.co.in/books?id=KN6PqQMnFBAC&printsec=frontcover&dq=kotler+marketing+management&hl=en&sa=X&ei=xfH2ULf2BYOQrgewlYHwAw&ved=0CDMQ6AEwAA#v=onepage&q=marketing%20mix&f=false 3. Cole, A. 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Lin, M. H., 2005, ‘Alliances and entry in a simple airline network’, Economics Bulletin. 8. Nirmala, 2008, ‘Segmentation and the Marketing Mix’, Retrieved 17th January, 2013, from http://www.slideshare.net/Annie05/segmentation-and-the-marketing-mix-presentation 9. Ram, V, 2007, ‘EasyJet to Success’, Forbes.com, Retrieved 17th January, 2013, from http://www.forbes.com/2007/10/05/easyjet-britain-update-market-equity-cx_vr_1005markets20.html 10. Writing, A., 2012, ‘What Are the Differences Between the Organizational and Consumer Markets?’, Smallbusiness.com, Retrieved 17th January, 2013, from http://smallbusiness.chron.com/differences-between-organizational-consumer-markets-641.html Read More