Easyjet Presentation

swot analysis of easyjet

strengths

weaknesses

opportunities

Threats

Question 1 How do easyJet’s marketing objectives and its marketing mix strategy affect its pricing decisions?

EasyJet ’s Mission Statement: “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.”

objectives
Low fares and high frequency between major European airports
Consumers willing to pay ( a little ) more for value-added proposition
Growth based on joining the dots and adding frequency

Segmentation and Targeting :Business and Leisure Consumers Differentiation and Positioning :Flies to all the primary airports in EuropeCommitment to customer service

With recognition for providing more efficient, low-cost flights, whilst maintaining as a high quality of service as possible, easyJet is positioning itself to its consumer base as the best form of budget travel in Europe. Price is a crucial positioning factor

Therefore, the marketing mix is based on keeping costs to a minimum to allow the airline to offer the lowest fares possible

Product / Customer solution : Features: Punctual and no-frills Brand name: EASY to pronounce, recognise, and remember Packaging: ORANGE

Place / Convenience : easyJet’s website acts as a main distribution channel for e-ticketing Can be viewed in 18 languages

easyJet advertisements can be seen everywhere, in cities all over Europe from giant billboards to public transport buses.
Promotion/Communications :

Question 2 Discuss factors that have affected the nature of costs in the airline industry since 2000. How have these factors affected pricing decisions?

Factors since 2000
Heightened Environmental Consciousness
Information Age
Terrorism
Energy Crisis

Heightened environmental consciousness
2002's World Summit on Sustainable Development
Environmental Taxes
Cleaner plane models/engines

information age
Broadband mainstream since 2000s
Introduction of advanced technology
Less cost for labour and infrastructure and less time incurred to complete the same job

terrorism (9/11 attack)
9/11 attacks
Security procedures introduced
High-tech detection hardware
Higher costs incurred for safety and peace of mind
Aviation insurance

energy crisis
2000s energy crisis
Rising cost of crude oil
Higher costs are translated to airline industry as jet fuel is processed from crude oil
Hedging policy reduces fuel cost increase to a limited extent

Average u.s. jet fuel price

airfare pricing trends
Low enough to attract demand, high enough to offset increases in cost
Airfare price range depends dramatically on the following variables listed in order of importance:
Competition on Route
Seat Demand
Distance of Route
Seat Supply
Fuel Prices
Ancillary fees charged separately

Southwest reported that its average one-way fare increased 19 percent to $132, not including government taxes and fees.
JetBlue reported a 10 percent jump in average fares (to $139 one way).
American Airlines reported a 14 percent rise in its passenger yield, an industry measure that represents the average fare paid.
None of these numbers include the extra fees, so travellers are most likely paying even more for a flight than these double-digit fare increases indicate

1995 Q1 to 2010 q2
Average air fares

Factors decreasing prices
Introduction of Information Technology (IT)

factors increasing prices
Environmentalism
Terrorism
Energy Crisis

OUTCOME
Higher Costs Are Translated To The Airfares

Question 3 How do the nature of the airline market and the demand for airline service affect easyJet’s decisions?

nature of airline market
Oligopolistic competition
Consists of some older and major conventional airlines
A few up and coming low cost carriers
Rival consciousness prevalent

Demand for airline service (from easyjet’s viewpoint)
The price-demand relationship: lower the price, the higher the demand
easyJet has positioned itself as low-cost airline
Its pricing strategy is based on Good Value Pricing

price elasticity of demand (for easyjet services)
easyJet faces a consumer DD that is highly elastic
i.e. There will be a large change in Q d for a small change in price

reasons for high ped
Its services are no-frills airplane flights. These are not unique .
Relatively easy to find similar substitutes
Total expenditure of airline tickets is a significant proportion of Y d

easyjet marketing decisions
Nature of market + DD product = Marketing Decisions

Competing with other airlines

Question 4 What general pricing approaches have airlines pursued?

Pricing strategies matrix Quality LOW HIGH LOW P r i c e HIGH ECONOMY PENETRATION SKIMMING PREMIUM

Full service carriers
Price Discrimination
Based on fare classes
Charge each customers as much as they are willing to pay

Value-Added Pricing
Offering passengers a superior range of ground and onboard services
In return for a much HIGHER fare

“ Fences”
Must be built to prevent passengers from substituting higher fares for discounted tickets
In the form of minimum stay requirements, date and/or route change penalties

Different Class of Services
First, Business, Economy Plus, Economy
Business class may cost 5-10 times more than Economy but the service costs much lesser than that

Reverse Price System
The further the date of departure, the cheaper the ticket
Encourages customers to book early
Able to gauge demand for every flight
Low cost carriers

No “Frills”
No free meals and beverages onboard, no frequent fliers program etc
More seats are available in one flight to maximise profits

One-way Ticketing Policy
Customers only required to buy one-way ticket
Need to purchase two one-way tickets for a round trip
Gives full flexibility to plan their trip as they please
Appeal to the business travellers

Question 5 Do you think that EasyJet will be able to continue to maintain a competitive advantage based on price? What will happen if other carriers match the low-price leader?

Current competitive advantages based on prices
No frills
Lower operating costs
High productivity of resources Increasing revenue
Reduced distribution costs

ARGUMENTS AGAINST MAINTAINING COMPETITIVE ADVANTAGES BASED ON PRICES
Low cost airline industry increasingly competitive
Competitors serving secondary airports (More cost savings)
Natural limitations on price; Increases in fuel price and airport charges

Competitors imitate online booking process and offer competitive flight rates
Low cost airline industry characterized by mergers and acquisitions

Examples of mergers/acquisition

Maintaining NON-PRICE BASED COMPETITIVE ADVANTAGES THROUGH DIFFERENTIATION
Flying to main airports in cities

Improved online booking system (User friendly, interactive)

City, Bars + Nightlife, Shopping, Eating, Cafes, Events
EasyJetPlus Card

Punctuality and safety

Flexibility

recommendations

Background:
Businessman
Age: 25-39
Middle Income
High reliance on information technology
Independent
Work for SMEs (size of the company price sensitive)
Job scope requires them to fly frequently
Needs:
Punctuality of flights
Adequate amount of comfort
Flexible reservation systems
Affordability
Profile #1: Winston

INFRASTRUCTURE
Develop infrastructure for in-flight Wireless Internet service
Provide in-flight Wireless Internet for FREE

discounted contracts
Develop discounted contracts with SMEs
Partner with prominent SMEs and provide their staff with benefits when they travel with easyJet

business-select seats
Implementation of business-select seats/tickets
Provide front row seats with more leg rooms

frequent flyer program
Implementation of frequent flyer program-loyalty based benefits to ensure continued revenue
Eg. KrisFlyer
Current easyJet card has only membership-based benefits

Background:
Backpacker
Single
Age: 19-29
High reliance on information technology
Independent
Adventure Seeking
Low family commitment
Needs:
Affordability
Flexibility
Relish challenges/fresh experiences
Backpackers/locals interaction
Profile #2: Shermine

Facebook and Twitter
Social Networking Sites to keep EasyJet backpackers informed for the latest tourist attractions

Discounts for Reliable & Low-Cost Accomodation
Exclusively for easyBIG members

easyjet backpacker forum (Ebf)
Provide a common platform for exchange of information and preferences on tourist destinations
Inform backpackers of upcoming EasyJet promotions
Tourists with common interest can travel together

EasyJet Merchandise
Partner with an established baggage brand (eg, Crumpler, Timbuk2)
Allow members to accumulate flyer points to redeem such merchandize
This can create a sense of belonging

Links between Recommendations and Profiling of Backpackers

Generic recommendations
Sequence of boarding
To minimise obstruction

Implement full refund for cancellations within 24 hrs
Abolish cancellation fee
Psychological comfort – peace of mind
Eg, For Businessmen- meeting time changes
For Backpackers – Unforeseen circumstances such as weather conditions / political situations

conclusion “ Come on, let’s fly!!”

Easyjet Presentation

by esteewu on Mar 22, 2011

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