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easyJet
- 1. AB112 Marketing Lee Mun Han Lim Yiqian Lin Meiling Mah Zheng Pin Pauline Hwang
- 2. Summary “To provide our customers with safe, good value, point-to- point air services. 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.”
- 3. Summary • Safety is our No. 1 priority • Build Europe’s No.1 air transport network • Develop a winning customer proposition • Deliver low cost and maximise margins
- 4. Summary • Most basic form of air travel • No frills • Charge customers for extras such as meals, baggage and priority boarding Product • Value-based pricing • Time pricing – reverse price system • Discount and allowance pricing • Provides the lowest price relative to other airlines Price
- 5. Summary • Budget airline that travels within Europe • Allows online booking of tickets for convenience Place • Distinct orange colour • Internet • Facebook Promotion
- 6. STRENGTHS Lowest Price Eco-friendliness WEAKNESSES High bargaining power of buyers OPPORTUNITIES New Routes THREATS Rising Costs SWOT Analysis
- 7. Key Issue
- 8. • How has easyJet been able to offset rising costs • Evaluation of easyJet’s strategies • Our recommendations Effectiveness in Offsetting Rising Costs
- 10. Increase Revenue • Reverse Price System • Loyalty Card Reduce cost • No frills • EcoJet easyJet’s Strategies
- 12. Market Targeting Business travelers Business executives Sales personnel Leisure Luxurious traveling Economical traveling
- 13. Shortcomings ofTargeting Unable to capture potential demand from consumers who cannot afford the cheapest rate from easyJet Unable to capture potential demand during non- peak season
- 14. Enhance their current reverse price system by using additional pricing strategies Recommendations
- 17. Promotional Pricing • Payment by instalments • No-interest financing
- 18. Early Bird Price £70.99 1st March: Deposit £30.99 10th March: First Instalment £20 20th March: Second Instalment £20 Pricing on 20th March: £90.99 Amount Saved: £20 Promotional Pricing For departure on 30th March
- 19. Evaluation • Liaise with easyMoney • Benefits low-income group and students • Limited benefits
- 21. Business Travelers Students 3 Weeks before departure £40.99 £35.99 2 Weeks before departure £50.99 £45.99 1 Week before departure £60.99 £55.99 Only available on NON-PEAK season SegmentedPricing
- 22. • Students • Business travelers Market • Students: Elastic • Business travelers: Inelastic Varying Degree of Demand • Minimal cost in differentiating the market Extra Revenue VS Cost
- 23. • Discounted rate for students is legal Legal Segmented Price • Students VS Business travelers Differencein Perceived Value
- 24. Unable to benefit the adults who travel for leisure purposes during the non-peak season Evaluation Loyalty card -> Businessman
- 25. Reduce Cost
- 26. Increase Revenue • Reverse Price System • Loyalty Card Reduce cost • No frills • EcoJet easyJet’s Strategies
- 27. Sources of Rising Costs Fuels costs Crews costs Adverti - sement Airport charges NO-FRILLS: Free onboard catering Hold baggage Priority boarding etc.
- 28. Fuel Costs Main problem as it is unavoidable Focus: Solving the increase in cost
- 29. EcoJet
- 31. Recommendations Integrate NASA software into EcoJet Efficient flight plan
- 32. Evaluation Can only mitigate the impact of rising fuel cost Flight plans are very susceptible to changes in external factors
- 34. References • http://www.nasa.gov/home/hqnews/2010/oct/HQ_10- 280_Direct_Software.html • http://www.boeing.com/commercial/aeromagazine/articles/qtr_03_09/article_ 08_1.html • http://www.eturbonews.com/17528/easyjet-plagued-crew-shortages-and- ineffective-rostering • http://www.businesstraveller.com/news/easyjet-launches-frequent-flyer-card • http://www.easyjet.com/asp/en/book/index.asp?lang=en • http://easymoney.com/ • http://www.airlinepost.com/airline-news/most-eco-friendly-airline.html • http://www.easyjet.com/en/news/easyjet_ecojet.html • http://stirmedia.bokee.com/1415635.html • http://www.novinite.com/finart/studentloans/student_airfares_to_europe.html • http://www.inhabitat.com/2007/07/17/easyjet-ecojet/ picture • Principals of Marketing 13th Edition Philip Kotler Gary Armstrong
- 35. Thank You!
Editor's Notes
- mission
- objective
- Explain why easyJet is using value-based pricing How reverse price system is an eg of time pricing Eg of discount and allowance pricing easyJet is using: loyalty card
- Banners in many websites, facebook group,
- Cost-leadership- ‘At easyJet.com we’re constantly reviewing our prices to ensure they’re as low as possible. We promise our fares will be the lowest available on any route! If we’re wrong, we’ll refund you double the difference!’ Eco-friendliness- in the five most eco friendly airlines, easyJet is in the third position Little room for differentiation- Natural limit of focuses, low prices and increased convenience New routes-Create alternative routes to and from cities in Europe. Eg. Increase in direct flights from other european countries to UK as demand from soccer fans increases and/or Create new routes to and from Scandinavian countries such as Stockholm Rising costs-briefly states the factors of rising costs
- Only need to talk about easyJet’s strategies to increase revenue, zp will talk about reducing cost Explain how easyJet uses reverse price system (talk about reverse price system) and earn more revenue
- Talk about how the use of loyalty card can create more revenue. Loyalty card is mainly targeted at businessman because they are more frequent fliers. And hence, purchasing this card can help them save more when they fly more.
- To comment on their strategy, we would like to look at their targeted consumers. For business travelers, it is the sales personnel while for people travelling for leisure, they are those who travel economically. From here we can see that they are a group of cost-conscious consumers who prioritise cost > comfort/service when travelling eg of people travelling economically
- Both the reverse price system and loyalty card are unable to capture these potential demand Explain why. Non peak season means eg school days
- By enhancing, we do not mean to change their current pricing strategy. We only want to enhance their pricing strategies by using other price strategy along with their current one.
- Explain briefly on each pricing strategies. Eg of how they are used in different companies Discount and allowance pricing- loyalty card (explain why) International pricing- not really applicable to easyJet because they only operates within Europe Dynamic pricing- We feel that reverse price system (one of the segmented pricing) is still working well now for easyJet. Morever, dynamic pricing also provide many negative effect such as: most customers would find it galling to learn that the person in the next seat on that flight paid 10 percent less just because he or she happened to call at the right time or buy through the right sales channel. This can be shown through the example of amazon.com. They learned when they experimented with lowering prices to new customers in order to woo their business. When regular customers learned through Internet chatter that they were paying generally higher prices than first-timers, they protested loudly and this embarrassed Amazon.com who later on halted the experiments. This shows that dynamic pricing is damaging to customer relationships when marketers are not careful to use dynamic pricing to take advantage of certain customer groups. There is no need for easyJet to totally eradicate their current pricing strategy and use dynamic pricing -> risky
- Introduction of easyMoney (can manage the installment) Can collaborate with easyMoney instead of other external financial instutitions/ set up a new department to manage this installment Talk about how other airlines are using it
- How our promotional pricing works- flight account Student is another group of cost-conscious consumers. How it is beneficial to low income people Ticket is let out immediately when installment is unpaid after email reminder
- Low income group of people includes students Limited benefits because businessman usually can afford the tickets
- Time pricing- currently used by easyJet for reverse price system Location pricing- popular VS non-popular airports. However, distance is already a factor for the price. Location pricing may make the pricing messy and complicated- more costs. Mostly flying to popular airports (primary airports) Only available for non-peak seasons- usually during school days Liase with school so that the students in school travel for (excursion) educational purposes. Explain why we are using on non-peak season only EMPHASIS that we’re not changing the strategy. Acknowledge that we know that they are using segmented pricing too but they concentrate on time pricing while our strategy try to combine both cust. segment + time pricing during non-peak season
- How we use segmented pricing system during non-peak season Evaluate that this additional segmented pricing is not really very confusing to consumers
- Segment thr customer is feasible as it fulfills the five criteria Explain why students belong to elastic demand and business travelers: inelastic Explain why minimal cost in differentiating the market Maybe add in how easyJet’s time pricing fulfills these five criteria
- Discounted rate for students is legal: Buses in Europe also have student pricing
- Businessman will not be unhappy because of this segmented pricing because they have the loyalty card. Loyalty card for frequent travelers. Students not likely to travel so often to enjoy the benefit of loyalty card (plus need to buy the card). So both strategies aim to benefit the student, a group of elastic demand + cost conscious consumers. Able to capture more potential demand from them. The demand for these travelling leisurely adults are actually elastic. However, it is not easy to capture potential demand from them during non-peak season. it is hard to differentiate these adults from business travellers. The cost of differentiating these adults from business travellers may exceed the extra revenue earned which does not fulfill the third criteria.
- Increased efficiency of fuel for ecoJet -> reduce cost
- Fuel costs- Across the industry, fuel costs account for 40 percent of total airline costs compared to just 13 percent five years ago. Energy costs have claimed a number of causalities in the airline industry over the past six months leading up to the summer of 2008. some 25 carriers have folded and across the whole industry airlines have posted a lost of $2.3 billion Crew Costs: Easyjet said cabin crew headcount has increased to 3,580 for the week ending July 12 compared with 3,321 in the same week in 2009 after a recruitment drive over the spring, while pilot numbers have jumped to 1,793 compared to 1,677 a year earlier. http://www.eturbonews.com/17528/easyjet-plagued-crew-shortages-and-ineffective-rostering Crew cost per seat at constant currency was up £0.44 or 8.7% compared to 2008. It is also due to maintaining higher than required crew numbers over the winter due to reduced aircraft utilization. Trainings are also required to improve the efficiency of the crew team. Advertisements costs: They aim to gain maximum coverage and improve customers awareness of its services Airport charges: The key driver of this increase has been over-inflation price rises in airport passenger related charges at a number of locations across the network, increasing costs by approximately £30 million.
- http://www.inhabitat.com/2007/07/17/easyjet-ecojet/ picture
- Print screen the NASA website Highlight this sentence (Direct-To enables airlines to save fuel and reduce emissions by automatically identifying flight route shortcuts that are wind-favorable and acceptable to air traffic controllers)
- easyJet got two types of planes- boeling and ecoJet Boeing uses NASA software currently, can intergrate into EcoJet Assuming it is technically possible Find efficient flight plan
- Maybe talk about what external factors
- We look at how easyJet increase revenue and reduce cost but how they are limited in their strategies So we recommend ways to enhance their current strategies and evaluate our own strategies