Ryanair Flies to America

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Advertising project from my erasmus at the University of Nicosia

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Ryanair Flies to America

  1. 1. University of Nicosia Ryanair flies to America For this advertising project we imagine the well-known company Ry- anair starting to offer low-cost flights to the U.S.A. Ryanair flight 231 at Stansted Photo by Aleksi Aaltonen Advertising May 2008 Zehra Fattah Karoliina Kotkas Federico Lovat Nicola Ann Whitehead
  2. 2. Ryanair... ...is a low cost passenger airline carrier which has been offering low cost flights from and to multiple destinations throughout Europe. The new concept we intend to develop is to offer cheap overseas flights using the same formula that has proven to be successful. We have many competitors, flying to destination throughout Europe. However there is no low cost airline flying overseas yet. This will give us a first mover advantage for the first few months. Enough to consolidate our public, strengthen the brand and boost the shareholder value. Compared to most other airlines which fly to overseas destinations, Ryanair will of- fer cheaper fares as the airports used will be small like for example London Stan- sted, which has lower taxes than Heathrow. Furthermore using these airports re- duces the waiting times and is therefore more convenient for customers. Arrivals in the U.S.A. will be in the small airports of major cities (like NYC, Chicago, LA, Miami, ATL) in order to be at the same time cheap and attractive to customers. Ryanair is currently positioned as being in the European low-budget airline indus- try. This, until now, has created a competitor group consisting of other European no -frills airlines and low-budget sub brands of traditional airlines but excluded the tra- ditional full-service airlines. In the overseas„ market we are going to compete with those full-service airlines so, in order for Ryanair to be successful in the „American project“ the SWOT of the cur- rent environment needs to be taken into account. By analysing the competitive forces at work in the overseas Airline industry and fo- cusing on Ryanair‟s Strengths, Weaknesses, Opportunities and threats, the following paragraphs will highlight the key issues which hold possible strategic emphasis. In short Ryanair‟s ability to offer low prices is dependant on the price of oil as the fuel costs incurred are dependant on the oil„s price. Year on year price increases may lead to Ryanair having to further higher flight prices. Ryanair initially fought its way into the market with an aggressive pricing strategy and this successful advantage will need to be maintained whether offering a flight to Ireland or to New York. Threats Threats to this dynamic industry are ever-changing and ever-challenging. Being as threats from the macro environment alone constitute and represent a key source of problems to an airline industry as often there is little that can be done to factors such as economic and political issues. The area of threats is so broad that there can be minor or major threats that have just as much effect and power as each other. For the low cost strategy which our air- line follows prices of fuel, taxes and government regulations are essentially impor- tant. A current issue that is affecting almost everyone of us in some way would be rising oil prices. From the pensioners bus fare rising another 50p per ticket to the business mans commuting fuel costing another £10 to fill up his tank. Of course this has
  3. 3. grave effects on our airline industry being the planes run on this oil through fuel. The political situation in nearly all the oil producing countries remains unstable for the future so what hope does this give Ryanair at remaining a „low cost airline‟? Fuel prices are denominated in US dollars and again the unpredictable exchange rate fluctuations continue to make the latter worse. The airline industries deregulation meant great things for Ryanair but also increased competition and air traffic which in turn led to new recent EU regulations in terms of safety and environmental issues which means the extent on this could continue if other short-haul airlines follow suit and turn long-haul too. Customers are very price sensitive when it comes to services like air travel and as the current economic cycle in the UK is more than likely in recession, flights more fur- ther a field to destinations such as America are unlikely to be as popular as if the economy were in a boom. Air traffic control charges are becoming more expensive as the sky is now filled with more planes and will continue to do so for the foreseeable future. The project „Ryanair flies to America“ will have to be taken to the European court to be approved. Situations like this make expansion more difficult and an increase in further costs. Another dangerous threat is the possible cannibalization of the European market by the new overseas routes. This may affect mostly the casual traveller‟s segment who are going on holiday. We cannot expect to enlarge the market without limit but this will probably affect part of the European business. Strengths Fuel prices are denominated in US dollars and again the unpredictable exchange rate fluctuations are rather unfavourable yet the weak dollar compared to sterling has had a positive impact for Ryanair so hopefully this won„t remain a short lived strength as this important factor saw sales in flights from the UK to the US soar es- pecially before Christmas 2007 when eager shoppers flocked in their masses to do their Christmas shopping in New York and other similar destinations as the cost of the flight overall made it a worthwhile trip to benefit from extremely cheap shopping for gifts. By not offering hot meals this no-frills airline not only has less cabin crew but cuts pre-flight departure time which ultimately leads to less expense, satisfies customers and gives a competitive advantage. The brand name is also a strength as now it‟s 18 years old. It is a well recognised name in the LCC market. We have a well established target public. This will make it easier to promote the campaign to the specific customers that Ryanair attract. As Ryanair being the market leader, they have the highest number of consumer and its consumer rating is the best one in the customer service category. This will help us to overcome a lack of trust people might have in a low-cost long-haul flight. The constant growth in technology and the improvement of management practices will help us make operations cheaper. Ryanair currently has first mover advantage on regional airports so it acts as a bar- rier to entry for new competitors. The internet site www.ryanair.com which currently has 94% the bookings lowers the cost of distribution and sales people as opposed to dealing over the phone or through a retail store eliminating the need of travel agents. The airline offers fast turned around as mentioned previously with methods such as not offering hot meals.
  4. 4. Finally the airline is reputable for being punctual, having low baggage loss and high rate of flight completion. Opportunities The „American project“ gives us the opportunity to enter the U.S.A. market for do- mestic flights too since low-cost is not so common there as it is in Europe. In addi- tion to consolidating our image as innovative and bold among both customers and investors. Being the first carrier to fly low-cost to the States may easily turn out in a leading position in that market segment. Previously with its European flights Ryanair has relied on a high number of seats sold to leisure travellers (those visiting family or taking a short trip away) but it„s proven that events such as “Sars” and September 11th have a massive effect on air travel especially with that of leisure travellers so Ryanair need to be targeting busi- ness people and being as business people often require long-haul to locations such as China and America and being as more terror attacks are predicted against Great Britain the market for purely leisure travellers is a risky one so branching out leads open to prospects of maintaining at least if not exceeding profits and market share. The EU enlargement and offering flights further a field means new destinations and a wider target market and market share (there is potential to double its market share in this industry). Economic slowdown actually helps Ryanair- changes in corporate culture, „steals‟ customers from traditional carriers as they seek lower fares. Weaknesses Due to rising oil prices and Ryanair having to decrease ticket prices to be inline if not cheaper than competitor‟s shares of late have been falling and the lack of invest- ment from shareholders can only lead to further worries for a public company. A key weakness currently is Ryanair are prone to bad press it is often perceived as arro- gant and the slightest incident tends to get a lot of press. Having a niche market as they currently do means restricted expansion possibility within their current target market. Distance of some regional airports from advertised destination: Over time custom- ers may find this a big inconvenience and would rather pay that little bit more if it means having a flight leave from closer to home as this reduces travel time alto- gether. They are known for having poor service/people skills especially if someone has a problem of issue with booking and cabin crew so this would need to be looked into before expanding. Ryanair (like all low cost airlines) is extremely sensitive to changes in charges (increase in fare value).The value of the euro is falling, as is the dollar. Also, if con- sumers are seriously concerned about their finances and the value of their money, demand for commodities such as air travel is likely to drop. And if demand drops, airlines will be forced to drop ticket prices even further. From the consumer point of view, it might sound unattractive to fly for many hours with a low-cost airline. We need to provide information about our standards so that customers may be reassured on the comfort of the flight. The strategy will be: you pay only what you want. We do have on-board movie but you don„t have to pay for it if you„re not interested. Being Ryanair an European airline it might be difficult to develop a market in the U.S.A. For people flying to Europe and not only from Europe to the U.S.A.
  5. 5. Setting the target The most important target group for Ryanair is formed by old customers who are used to buying cheap flying services from the firm. Ryanair is already a well known airline company in Europe. That is why we do not have to explain to our customers what it does. Ryanairs‟ targeting strategy focuses on: young people ages 15-28 (mostly students); Business travellers aged 25-45 holding medium responsibility positions; Tourists who are willing to do holidays in America ages 15-55; Over 55 year old people are not primary Ryanair‟s target group because usually they are less likely to trust the internet although they still might book through agencies. Young customers Ryanair is low cost airline company and therefore an example being it fits perfectly for young students who are interested in travelling with as little money as possible. Students are 15-28 years old women and men. Usually they like travelling together in groups of 2-15 people. They are following different kind of media like television, radio, internet, news papers, and magazines. They are willing to search information independently from different sources and they find it easily. For Ryanair this is a good thing because it means they do not have to put so much money in advertising. Internet is a cheaper place to put adverts as opposed to putting them on television. America is a big and interesting country which provides lots of things to see. Young target groups follow many TV-series, movies and news from America which affects their minds and therefore they want to see the culture themselves to see if it is really like what they see on TV. It is also very far away from Europe so the culture will be very different to that of Europeans and that is why it is an interesting place to visit. To attract interest Ryanair is offering different kind of discounts for students and young people. If you are aged 15-20 and you travel with a big group (including 8-20 persons) you will have 15% discount off flight tickets. For people who have just turned 21 and are legally adults in America Ryanair will offer 10% discount to en- courage the target market further. Ry- anair also have an early booking policy which means that if you book your flight earlier it will be much cheaper than book- ing it later. Student case Saul, Marco, Lisa and Maria are Spanish students from the same university ages 23 -25. They are happy, energetic and bright people who are interested of travelling around the world. Their economical bal- ance is low and all of them have to work during their studies. They have never travelled outside of Europe. For them
  6. 6. America is big, interesting and different country which offers lot of things to see. They have decided to visit the big apple. New York offers lot of amusements like res- taurants, clubs, shops, museums, city areas and buildings to see. Because of Ryanair low cost prices they can now do the trip they have wanted for so long time. Business target group Ryanair business targeting focuses on small and medium size firms which are will- ing to save in their travelling costs. These firms have just started to do business in America or have done it before but are now willing to change for a cheaper airline company. Potential business travellers are 28-45 years old and can be male or fe- male. Usually business people are travelling alone or with two or three persons. Usu- ally these people are in medium position in their companies. They appreciate com- fortable flights and cheaper prices together. They are sitting most likely in business class where there is more space for them to rest during the long flight. Business class also includes wireless connection and phone line. Usually standard customers have to pay immediately their food and snacks but for business people Ryanair has devel- oped a corporate card which allows their business customer not to pay immediately for the exras. After using this card Ryanair receives the transaction information and will send the bill straight to companies who will pay meals, phone calls and extra costs later. Those way business customers can enjoy more of their flight. John Smith case John Smith is 35 years old man working in a medium size electricity firm. He needs to fly to America at least once a month to check how the new factory‟s construc- tion things are going. He is in middle manager position and the company where he works is willing to save travelling costs. Company‟s CEO thinks that saving is always good thing for the company and it helps to keep the firms budget in balance. John Smith has used Ryanair before and thinks that it is trustworthy. Tourist target group The last target group for Ryanair is tourists. Tourists are usually people who are go- ing just for a holiday to enjoy of their free time. They can be 15-55 years old women and men. They have used Ryanair before travelling around Europe or they know what Ryanair is but have never tried. Now they can fly to America for a cheap price and are therefore willing to ignore the service that Ryanair doesn‟t offer to them. Tourists are travelling most likely as a couple, with friends or with family. They want to have fun on their trip and enjoy of the attractions but not to spend too much money for boring things such as flying tickets. Bob and Hyacinth case Bob 43 and Hyacinth 42 are happy British cou- ple and have been married now 15 years. Bob is
  7. 7. a salesman and Hyacinth is a nurse. They have two teenage kids. Now they are celebrating their wedding anniversary and are going to America. They are earning average salaries and that is why for them it is important to save costs although now there kids are a bit older they have a bit of extra disposable income which is why they have opted for America. Now they can fly to LA to see Hollywood where they are producing Hyacinth‟s favourite soap opera Bold and Beautiful. They will stay in a four star hotel which offers them a great amount of relaxation services. The couple is glad because now they can spend more money for other things than flying. They have already known what is Ryanair and they were very interested in cheaper tickets. Still they needed to ask help from their kids Anna and Tom because using internet to search for the best deals wasn‟t their strongest point. Now they are familiar with the booking service and can next time do it by themselves. Developing an Advertising Strategy Objectives: To improve awareness of the existing brand  To create awareness about the new service. (This will lead to brand improve-  ment and reinforce brand loyalty among existing customers.) To attract any possible kind of customer.  To use our market leading position to attract customers to fly to the USA again.  (USA travelers decreased in the last years as other destinations are cheaper). The advertising campaign can take advantage of the well known Ryanair brand. Peo- ple already know that Ryanair means cheap, quality flights. So in designing the cam- paign we can be creative and evocative in order to create an appealing image in the customer‟s mind. We do not need to explain our services with a lot of words because they‟re already well known. For this reason we chose to advertise on billboards, press and magazines. It‟s cheap and it allows us to use big evocative images to attract customers. The headline “Ryanair flies to America” is written in a thin, italic font so that it re- minds cheapness (thin prices) and speed (italic font) the color is the same blue from the corporate logo to give visual continuity. The headline is placed over a beautiful full-size image of American landmarks like the Statue of liberty, mount Rushmore, Hollywood hill… We have consciously chosen the word “America” in the slogan because it‟s informal, easy to remember and simply sounds better in the context than “U.S.A.” The art has to attract the customer to fly to America while the copy says “if you want to see this beautiful landscape, you can now go with low-cost Ryanair” The corporate logo at the bottom of the page seamlessly blends into the landscape as to give a bit more magic/dream to the scene. In theory we could have just put the Ryanair logo on the image without any copy but that would have been a little too hard to decode for a casual reader. The headline makes absolutely clear what we‟re talking about and it suggests a line to be spread through word of mouth: “You know what? now Ryanair flies to America” We sign each advertisement with the Ryanair.com logo that‟s like saying “for more information go to our website”. The tagline “fly cheaper” makes absolutely clear what‟s our main strength even to those who might not know us. Another concept that we‟ve developed
  8. 8. starts from the famous “I love New York” logo and it transforms it in “Ryanair flies to New York” using the “R” from the corporate logo and the airport symbol of a plane to symbolize the flight. This ad can be used on smaller spaces later on in the campaign when people already know the news as it is a bit harder to decode because the Ryanair “R” is not so well known. The first ad with the American flag is the most appropriate for the first phase of the campaign when the new service is about to be introduced to the public. It is ex- tremely easy to understand as the headline explicitly states: “Ryanair flies to Amer- ica” but at the same time it creates anticipation about the possible destination as there is no clue about that. The second ad with the Statue of Liberty is still created for the first stages in the ser- vice lifecycle but it also hints that New York is going to be a destination. The next three ads are intended to be used in the maturity stage when the overseas routes are already working. Now the headline is “Ryanair flies to…” leaving an open end for the reader to imagine the possible upcoming destinations. In the last three examples the arts are chosen in order to suggest a specific town in the States and the last ad is specifically designed to appeal business travellers. The budget and media planning Since we don't have the data about the cost of an advertising campaign we use a rela- tive method to set the budget. We take into account the last 5 years' advertising budget so to have a mean of past years' investments. Then we allocate another 30 of that number for the quot;Americanquot; project. From this initial budget we decide to allocate 60% to the press and magazines; 30% to billboards and city advertising (buses, metro…) and 10% to the internet. The press & magazines are the most expensive media in our campaign so they get most of the budget. We have to advertise on national newspapers in order to create awareness in the widest possible public. We cannot just advertise on local newspapers because we need to communicate to the whole nation. People are willing to travel through the country to get a cheap flight to the U.S.A. so we want to reach all these strategic target segments. Newspapers by the way are still cheaper than TV and they address a more educated public that‟s probably more willing to travel. As for magazines, we chose mainstream magazines as well as specialized ones like travel, lifestyle (both masculine and feminine) and business magazines. The billboards and city advertising are to be placed in towns where our flights leave from. They are fairly cheap but they are very good to create awareness among occa- sional travellers. They have the added benefit of reinforcing awareness for the whole product line. The Internet is also cheap and effective to reach young, educated people. Most of our tickets are sold through internet so we simply cannot ignore this channel. We are going to advertise on websites about travelling and leisure but also on more busi- ness/work related sites in order to reach business travellers. Evaluation
  9. 9. According to MacNamara‟s theory of successful public relation evaluation the objec- tives of our planning outline for the Ryanair campaign need to be measurable, real- istic and achievable. We applied this theory to our campaign objectives. The success of the campaign can be determined by an increase or decrease in ticket sales. An online survey will be available on the Ryanair website as well as a feedback form which will be handed out and filled in during the flight. Passengers will have the op- portunity to voice their opinion about the campaign and the new service offered and also describe their perceptions about the airline. The outcome of these surveys will give us the opportunity to evaluate how Ryanair is perceived amongst the public. An objective of the campaign is to increase revenue by 7%. That will come from the overseas ticket sales. After the campaign it will be clear and easy to measure if there has been an increase in sales. This is possible to determine by viewing company accounts. The number of people travelling will be measured by ticket sales. MacNamara stated that primary and secondary research is crucial for a successful campaign. Therefore we conducted various researches in order to establish a clear target public and objectives that would be appropriate to the campaign. Questionnaires and Focus group interviews will be executed to determine behavioral habits of Ryanair publics. Secondary research such as Mintel and Keynote reports were used to find out about the market. Although we have a fairly big budget we tried to keep the expenses little where possi- ble but the level of achievement as significant as possible, following MacNamara‟s theory of public relation evaluation according to moral and ethical achievement.

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