EasyJet International Marketing - Case Study Example

EasyJet International Marketing International marketing has become an important concept for global organizations due to the dynamic and complex nature of this market. While the international airline market has garnered a lot of demand, there is evidence that competition is increasing steadily and investors are forced to change their marketing plan. International marketing is concerned with the development of strategies to create brand awareness and to position an organization in the international landscape. EasyJet is one of the airline companies that have ventured in the international airline industry targeting different market segments. While the company has become a well-known brand within the industry, it marketing plan have become obsolete and is low-cost model have failed to push the company to success (EasyJet, 2011). Companies such as Ryanair and Air France have become serious threats to the survival of the company, which has increased the need for the company to change its marketing plan. This report provides a critical analysis of the airline industry, Easyjet’s marketing plan and identifies various failures of the organization. Besides, the report will provide workable recommendations that can help the company to win in the market. Porter’s Five Forces Analysis of EasyJet Porter’s five forces analysis provides a strong ground for the analysis of a company’s competitive position. One of the important perspectives of the model is the threat of new market entrants. New market entrants refer to other airline companies that are strategizing to enter into the same market that EasyJet has invested (Benavent, 2009). Threat of new market entrants always spells increased in the height of competition within a market. From a close analysis, the threat of new market entrant within the airline market is very low. The process of launching an airline company has become more demanding and positioning the company in the market is too difficult. Therefore, this has become a risky market and companies are in fear of entering this market. Therefore, Easyjet does not anticipate any competition from new market entrants within this industry. Next, the supplier power has become an important factor within the airline industry in the recent past. In this industry, there are two major suppliers; the airline supplier and the oil supplier. Boeing and Airbus are the two airplane suppliers. The two companies enjoy high demand due to the increase in the number of target customers. Therefore, the two companies have high bargaining power and are able to control prices. As a result, EasyJet has a lower bargaining power and have little influence of the prices of airplanes (EasyJet, 2011). Secondly, the oil supplier have a high bargaining power which means that they can fix the prices with less influence from the airline companies. As the number of suppliers remains fairly the same and the demand continues to increase, the petrol suppliers will have a higher bargaining power. The customer bargaining power has consistently increased due to the increase in the number of airline companies within the international market. Other competitors such as Ryanair have become a great threat to the survival of the company (Kumar & Rogers, 2000). Like EasyJet, Ryanair has venture in the low-cost airline market, which makes increases the competition within this sector. The competition intensity results to the increase in the business rivalry which provides buyers with a higher bargaining power. The customers can bargain for more comfort as well as lower prices within the airline industry. The high bargaining power of the customers has become a pushed the profit margins down and has threatened the survival of the airline company. The threat of substitutes as increased considerably within the airline market. Threat of Substitutes in the airline industry has resulted to decline in the number of customers demanding air travel. Increase in the availability of fast trains in Europe has attracted customers in this direction. The safety of such substitutes has made it more preferable for public transport especially after insecurity has faced the airline market. In the local market, more customers have substituted air travels for bus travels, which they consider cheaper during tough economic times (Pels & Rietveld, 2004). Therefore, air services are restricted for long distances as substitutes take over in short distances. This factor has severely affected EasyJet as their customer shift to alternative means of travel. The competition rivalry is the last aspect of Porters Five Forces. Competition rivalry within the airline market has become increasing important within the market. EasyJet takes the fifth position as a dominant European airline, and the second low-cost airline company after RyanAir. The company has differentiated within the airline market by focussing on the tourism as well as the business travellers. This has guaranteed the survival of the company within the market due its targeting difference. RyanAir, EasyJet’s main competitor has focussed on the leisure market but ignores business travellers (Kumar & Rogers, 2000). However, competition is increasing as more airline companies such as AirFrance focus on engaging price-competition strategies to compete with these companies. From a close observation, there is high competition rivalry within the airline market and it is crucial for the company to re-evaluate its marketing strategy. SWOT Analysis of EasyJet SWOT analysis is an effective model that helps to understand the external and internal market environment within a company. A SWOT analysis of EasyJet will help to understand the micro and macro-environment factors that influence the company’s performance within the market. One strength of EasyJet lies in its ability to provide competitive prices to its customers (Business teacher, 2011). The company’s has marketed its products effectively by providing quality services at competitive prices. The company positioning strategies such internet booking and assisted air travel services has worked well for the company. Besides, the company enjoys a good brand name that is well known within the public domain. The name of the company has become an important marketing tool that signifies its good reputation within the travel industry. Strong advertising has created to brand awareness and has attracted customer loyalty within the market. For instance, the company has an online promotion alert which sends e-mails to their loyal customer whenever the company has offers. This explains why the company has won a large customer population. For instance, the company has over 55 million customers who use the company’s travel services every year. However, the company’s weaknesses have limited the ability of the company to perform well within the market. To begin with, the company offers limited services including exclusion of business class which has led to loss of customers who are concerned with comfort during travel. Secondly, the company has targeted used wrong marketing strategies to target the possible customers V (Businessteacher, 2011). For instance, the company uses online booking system as a target strategy. While this platform is crucial, the company fails to target the old business and tourism population who are not regular internet users. The company’s weaknesses have undermined its performance and have considerably reduced its potential customer population. Notably EasyJet has a wide range of opportunities available for exploitation within the airline industry. The company has an opportunity to expand its market coverage and focus on potential markets such as Asia whose airline demand is increasing each day. Internet revolution has become a new opportunity for development of a strong marketing platform. As the members of the public become frequent internet users, the company has a new avenue to streamline its operations within the market. Internet makes marketing easier and allows for global interconnection. The ability of the company to focus on these opportunities in a prompt manner will determine its success in the market. Importantly, the number of threats within the airline industry has consistently increased. Competition within the market by low-cost airlines such as RyanAir has become more important within the market. RyanAir has enjoys a customer flow of 76 million passenger every year, which is much higher than the customer flow of EasyJet. Besides, competitors such as Air France are becoming preferable by customers who prefer comfort rather than cheap services. The regulation of the employment sector has increased the employee’s salaries and hence decreased the company’s profit margins (Bamber, 2009). The existence of market threats within the industry has pushed the company to focus on new approaches to survive within the market. The ability of the company to survive in this market depends on the its efficiency in utilizing the company strengths, eliminating weaknesses, taking advantage of opportunities and neutralising market threats within a dynamic market. Porter’s competitive model A wide range of authors have focused on the concept of competitive advantage for business organizations. A competitive advantage refers to the various strategic decisions that the management of a company implements in its efforts to acquire a top profile within the market. Porter (2010) is among researchers that ventured on this concept in an effort to shed light on the various option paths that organizations must follow on their way to the top of the market. Porter’s generic competitive strategies provide that organizations must focus either on differentiation, cost leadership and focus while developing a competitive front. Cost leadership refers to companies that use low-cost models to compete within their industry of specialization. EasyJet is among companies that have focused of price-based competition to create a competitive position. In its model, the company capitalizes in reducing expenditures within the organization to be able to offer such services. A low cost service provider requires commanding prices in every operation to become an effective cost leader. In this airline industry, RyanAir is another company that has focused on cost leadership as a means of gaining competitive advantage. RyanAir provides low-cost air travel services to attract middle class customers within the market. Comparison between RyanAir and EasyJet shows that that their cost leadership models differ by prices and the use of airports (Airobserver's, 2011). While RyanAir offers lower costs, the airline uses secondary airports which are further from town, while EasyJet utilizes airports closer to towns. Next, differentiation is another aspect of porter generic model of competition. Porter (2010) refers to differentiation as the strategy through which a firm establishes a unique identity within the industry and this becomes its primary marketing tool. The company focuses on certain business dimensions that depict value for customers and that customers perceive as crucial within the market. Such companies are more concerned with quality, comfort and luxury in the airline industry. EasyJet’s strategy differentiation strategy focuses on differentiation strategies to create a sense of comfort during travel. The marketing officers has marketed the company as a convenience and caring company that offers low cost flights. Convenience can be seen from the company’s use of primary airports where customers can easily access the town. This avoids over-focus on price reduction strategies that may undermine conveniency of services. Differentiation has helped the company to win the market and avoid criticism that has faced RyanAir. While RyanAir is recognized for low prices, more customers have launched complains as they find it hard to access town when the land in secondary airports. They have to incur higher costs to pay for taxi in order to access the town regions. Recommendations for EasyJet From the analysis of the EasyJet, it is recommendable for the company to focus on new target markets to guarantee its survival. For instance, potential markets such as Asia are becoming key players in the airline industry as more people rise into the middle income class (Kumar & Rogers, 2000). The company needs to market its low-cost services within this market to ensure that the company can increase its target population. In these new markets, the company should target the leisure and business market to ensure that the company has a broad target market. This differentiation strategy will help to increase the company’s customer population as well as the amount of profits. Secondly, the company needs to cut expenses on media and television advertisement and focus more on online marketing. While media advertisement is essential, it is expensive and does not appeal to a broad range of population. Since the internet population is increasing each day, targeting them would be a more viable marketing strategy (Koenigsberg, Muller & Vilcassim, 2008). Creating an international brand awareness will ensure that the company brands itself as a low-cost and convenient airline. Next, the company needs to increase its customer focus by targeting the old business and leisure travellers (Koenigsberg, Muller & Vilcassim, 2004). Providing an alternative booking system, besides online booking, would help to target the customers who are less aware of internet use. Since aged population is less aware of the use of online booking systems, they will prefer alternative booking systems. Therefore, diversification will allow the company to increase its customer focus and hence increase the customer population. Increasing the number of customers will provide the company with higher profits and help it to survive intensive market competition. References Airobserver's, (2011). Ryan Air And easyJet: Two Different Strategies [online] available from Bamber, G. (2009). Up In The Air: How Airlines Can Improve Performance By Engaging Their Employees. Oxford: Oxford University Press. Benavent, C. (2009) EasyJet Strategies. Accessed from Businessteacher (2011) easyJet Swot Analysis. Accessed from EasyJet, (2011). Présentation d'easyJet. Accessed from Koenigsberg, O., Muller, E., & Vilcassim, N. J. (2004). easyjet airlines: Small, lean, and with prices that increase over time. Working Paper, Graduate School of Business, Columbia University. Koenigsberg, O., Muller, E., & Vilcassim, N. J. (2008). easyJet® pricing strategy: Should low-fare airlines offer last-minute deals?. QME, 6(3), 279-297. Kumar, N., & Rogers, B. (2000). easyJet. The Web’s Favourite Airline. International Institute for Management Development. Lausanne: ECCH, 1501, 3-0873. Pels, E., & Rietveld, P. (2004). Airline pricing behaviour in the London–Paris market. Journal of Air Transport Management, 10(4), 277-281. Porter, M. (2010). Competitive Advantage: Creating and Sustaining Superior Performance. California : Free Press University of California. Read More