Case Study: Marketing Strategy for Ryanair
In this report, model of PESTLE and SWOT will be employed to analyze the macro and internal environment of Ryanair. Given the current condition of Ryanair, marketing strategies that would be employed by Ryanair would be presented and concluded. In this report, it finds out that Ryanair, which is famous for its low-cost strategy, has beat most of its competitors. It could be found that Ryanair is facing a fiercer and fiercer for issues like oil cost, environmental protection, staff cost and also competitors. Furthermore, Ryanair has formed the model of increasing airlines to reduce cost in daily operations. Hence, it would be more reasonable for Ryanair to insist on the low-cost strategy. However, Ryanair should also figure more creative and innovative strategies and measures to attract attention of customers.
Table of contents
2.1 Political and Legal Factor 5
Ryanair is the first airline company in Europe that provides low fare to customers and has been the most favorite airline around the world (Creaton, 2004). In 2010, Ryanair claims that there are about six thousand employees being employed in fleet of 247 Boeing 737-800 aircrafts. Though competitions between different airlines are being fiercerand fiercer, Ryanair still keeps its competitive advantage for its extremely low-ticket price.
In this report, situation of Ryanair Company would be reviewed. Aiming to know more about the marketing strategies of Ryanair Company, model of PESTLE and SWOT would be employed. Basing on the model above, marketing strategies and programmes would be given then.
Ryanair has been viewed as the most profitable company in the world. At the very beginning of the low-cost aviation market, Ryanair Company has already been the leader in the market. In following years, Ryanair turns to be the most profitable airline company in the world (Creaton, 2004). Most of the airline companies are influenced by the 911 event. However, Ryanair Company still keeps track of profits.
It could be found that the development of airline companies is being controlled and influenced by government of each nation for a long time. After the First World War, private commercial airlines begin to be developed. After the Second World War, the international air transport association starts to formulate the international air rate standard and impose control on airline at the same time. Furthermore, the airline control system in Europe has been controversy and then in 1978, America achieves full deregulation of domestic airlines. As a result, pricing, airline arrangement, entry and exit are highly free. With the aim to be profitable, airline companies choose to reduce their ticket fare significantly.
In 1999, the government of Ireland issued a decree to divide business scope of Aer Lingus (Aer Lingus, 2015). However, the division of business scope could not change the loss of Ryanair. Currently, some of the countries increase taxes on travel, which may affect the volume of customers. As a result, the low-cost market would be influenced. Hence, it could be said that there is a positive trend of low-cost airline markets.
Economically, the enhancement of consumption ability increases the development of requirements. An increasing need of business communication make it necessary for companies to turn to airline companies for help. Furthermore, airport fee reform is being promoted steadily, which could promise the development of low-cost airline market to some extent.
Though there are increasing requirements, challenges still exist. Competitors like Virgin MRT and Easy Jet, who are concentrating on low-cost markets, are imposing great pressures on Ryanair Company.
Give social culture, it could be found that business people’s insensitivity to price and increase of people’s awareness of consumption develop the improvement of airline markets and so does Ryanair company. However, the development of environmental protection awareness drew criticism across airline companies for that aircraftreleases too much carbon dioxide.
In the aspect of technology, public facilitates are being improved gradually and the Internet ticket service could be achieved conveniently. Furthermore, the Internet greatly pushes the development of airline industry for that the Internet increases the transparency and save searching cost during the period of customers’ choosing of the airline company.
As what has been mentioned above, emission of carbon dioxide would affect the environmental protection, which is being viewed as a serious problem by the public. Then, Ryanair is also being influenced by volcano since the volcanic ash is influencing the majority of the airspace over the northern Europe.
The most obvious strength of Ryanair is the low-cost ticket and good brand image. In such a recession around the world, Ryanair still keeps its advantage among different airline companies in a leading position. Given statics in 2009, revenues of operations reach 2.94 billion Euros. Volume of customers reaches 58.5 million, reaching an increase of 15% (Ryanair, 2015). Ryanair introduces about 700 new flights and new bases are being set for over 223 new airlines (Ryanair, 2015).
Figure 1 Passenger numbers of Ryanair
Source from: Ryanair, 2015, About Us, viewed 28th February 2015, http://www.ryanair.com/en/about
Low cost and high ancillary income is the other strength of Ryanair. Low cost and high revenue of Ryanair make it possible to achieve greater development in the long run. Ryanair concentrates on the achievement of low cost in operations. With the decrease of ticket fare, Ryanair makes a decision to develop more ancillary income in the future.
The cost-ignoring increase of airlines is the most obvious weakness of Ryanair. It is possible for Ryanair to reduce cost and achieve lower and lower cost in the long run once it increase its airlines continuously. However, the increase of airlines also leads to the increase of operational cost.
Ryanair also develops strategies to reduce cost of operations. For example, the increase of cost in human resources makes Ryanair develops a new strategy to reduce cost by cancelling the check-in counter and call for customers to check-in in the internet. In that way, Ryanair successfully reduce the cost to some extent, which help Ryanair to turn disadvantage into advantage.
Recession creates opportunities for development of low-cost airline companies. Global recession make people be more sensitive to price. Consequently, people would like to turn to Ryanair to since the ticket fare is in low price and they can enjoy the low price and more excellent services provided by Ryanair.
Furthermore, Ryanair could beat its competitors during the period of increasing the volume of customers. Some of the small size airline companies could not afford the long-term low-cost strategies and hence some of the competitors may choose to give up.
It is said that the greatest challenge of Ryanair is its ambitions of takeover of Aer Lingus and Lufthansa Airlines. Ryanair believes that Lufthansa Airlines could be one of the most influential competitors. At first, Ryanair set up the ambition to take over Aer Lingus. Then, Ryanair also makes up its mind to take over Lufthansa Airlines. However, the act of takeover could lead to Ryanair’s loss in operations because of its distraction.
Figure 2 Operating profit margin of Ryanair
Source from: Ryanair, 2015, About Us, viewed 28th February 2015, http://www.ryanair.com/en/about
Furthermore, the increase of oil price makes the low-cost strategy of Ryanair in vain. Since the cost increase, development strategies of Ryanair should also be developed.
Ryanair is facing challenges and it is said that in the following ten years, no matter what kind of creative measures have been developed, attentions of customers could be attracted. The increase of oil price make potential market is smaller and smaller. Recession currently help Ryanair provide a solution of the question be posed in the short time. Ryanair prove the world that it could survive from the serious economic recession and also achieve development and improvement. Under such condition, Ryanair still concentrates on resource audit. Audit of value of resources and market capability would be of great use for achieving low cost strategy in the market (Francis, Humpreys & Ison, 2004). In the aspect of resources, physical resources, human resources and financial resources are being arranged well.
Firstly, in order to achieve and remain cost leadership in the market, Ryanair uses a cost reduction strategy to make it the strategy work. Strategies of Ryanair have been examined by a series of policies and tactics (Scholttke, 2009). Then, Ryanair could subcontract some of its daily issues the third parties, including aircraft handling, ticketing, handling and the other daily functions. Thirdly, Ryanair also should insist on managing its staff cost and productivity. As what has been mentioned above, check-in counter is being replaced by Internet in the future to reduce human resource cost.Finally, more perfection programmes should be created to adapt to the development of market.
Ryanair, which is famous for its low-cost strategy, has beat most of its competitors. It could be found that Ryanair is facing a fiercer and fiercer for issues like oil cost, environmental protection, staff cost and also competitors. Furthermore, Ryanair has formed the model of increasing airlines to reduce cost in daily operations. Hence, it would be more reasonable for Ryanair to insist on the low-cost strategy. However, Ryanair should also figure more creative and innovative strategies and measures to attract attention of customers.
Aer Lingus, 2015, Investor Relations: Financial Reports, viewed 28thFebruary2015, http://www.aerlingus.com/media/aerlinguscom/content/pdfs/corporate/EIALR300410.pdf
Creaton, S., 2004, Ryanair–How a Small Irish Airline Conquered Europe, Aurum Press Ltd, London.
Francis, G., Humpreys, I & Ison, S., 2004, Airports’ perspectives on the growth of low-cost airlines and the remodeling of the airport-airline relationship, tourism, Journal of Management, vol. 25, no. 1, pp.508-520.
Ryanair, 2015, About Us, viewed 28th February 2015, http://www.ryanair.com/en/about
Scholttke, G., 2009, Low-Cost Carriers in Europe, Published Dissertation, Georgia institute of technology, Atlanta, Georgia, USA.