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Marketing and Business Environment Marketing Plan Assignment


Tailored for

By

Sameh Ashraf Nassar

M100-5955 MBA - INTAKE 9 - OCT, 2011

Marketing Plan for Ryanair 2011

2. Table of Contents
1. Main page .................................................................................................................................................. 1 2. Table of Contents ...................................................................................................................................... 2 3. Table of Figures ......................................................................................................................................... 3 4. Executive Summary ................................................................................................................................... 4 5. Business Mission ....................................................................................................................................... 4 6. Introduction............................................................................................................................................... 5 7. Marketing Audit ........................................................................................................................................ 5 7.1 The External Environment................................................................................................................. 5

7.1.1 PESTLE Analysis ............................................................................................................................ 6 7.2 Internal Environment (Micro) .......................................................................................................... 8

7.2.1 SWOT Analysis ............................................................................................................................. 8 7.2.2 VRIO Framework: ......................................................................................................................... 9 7.2.3 Value Chain Model ..................................................................................................................... 10 8. Competitors Analysis ............................................................................................................................... 10 8.1 Evaluating Competitors.................................................................................................................. 10

8.1.1 EasyJet........................................................................................................................................ 10 8.1.2 Aer Lingus................................................................................................................................... 11 8.1.3 bmibaby ..................................................................................................................................... 12 8.2 8.3 BCG Matrix ..................................................................................................................................... 13 Porters Five Forces........................................................................................................................ 14 Barriers to Entry (High) .......................................................................................................... 14 Bargaining Power of Customers (High) .................................................................................. 14 Negotiation Power of Suppliers (Medium) ............................................................................ 14 Substitute for Product (Medium)........................................................................................... 14 Threats of Competitors (Medium) ......................................................................................... 15

8.3.1 8.3.2 8.3.3 8.3.4 8.3.5

9. Marketing Objectives .............................................................................................................................. 15 10. Core Strategy ........................................................................................................................................... 16 10.1 Ansoff Matrix ................................................................................................................................. 17

11. Marketing Mix ......................................................................................................................................... 17 11.1 Product........................................................................................................................................... 17 Sameh Ashraf Nassar - M1005955 2

Marketing Plan for Ryanair 2011 11.2 11.3 11.4 Price ............................................................................................................................................... 17 Place ............................................................................................................................................... 17 Promotion ...................................................................................................................................... 18

12. Financial Budget ...................................................................................................................................... 18 13. Implementation....................................................................................................................................... 20 14. Control ..................................................................................................................................................... 20 15. Conclusion ............................................................................................................................................... 20 16. Bibliography............................................................................................................................................. 21

3. Table of Figures
Table 1: Ryanair keyfacts . ....................................................................................................................... 5 Table 2: SWOT Analysis ............................................................................................................................ 8 Table 3: VRIO Model ................................................................................................................................ 9 Table 4: EasyJetkey facts........................................................................................................................ 11 Table 5: Aer Lingus Key facts ................................................................................................................. 11 Table 6: bmibaby key facts .................................................................................................................... 12 Table 7: International Scheduled Passengers Carried ........................................................................... 12 Table 8: BCG Matrix ............................................................................................................................... 13 Table 9: Ansoff Matrix............................................................................................................................ 17 Table 10: Ryanair Financial Facts ........................................................................................................... 18 Table 11: Airlines net profit figures for 2011 ......................................................................................... 19

Sameh Ashraf Nassar - M1005955

Marketing Plan for Ryanair 2011

4. Executive Summary
Ryanair is the most popular and successful low cost airline in the European market, well-known to be travellers favourite choice. However, this success is based on well identified objectives, strong and focused strategic management. This marketing plan focuses on all the factors facing Ryanair in the current environment, highlighting the most recent challenges, and frequent change in the market; By using various modern methods of marketing analysis, as a result clear effective objectives are identified setting strategies for Ryanair to adopt, in order to increase their profitability and improve their reputation in the market.

5. Business Mission
Ryanair does not publish a formal vision or mission statement. however, Ryanairs CEO Michael OLearys, announced in a public statement, that their mission is to simply continue on being the most profitable low cost airline in all markets where they operate, while constantly working to lower their costs and increase the number of passengers. (Box, 2007)

Sameh Ashraf Nassar - M1005955

Marketing Plan for Ryanair 2011

6. Introduction

Ryanair was established in 1985 by the Ryan family and was the first company to introduce the
LCC model in the European market, adapting the No-frills2 approach from Southwest Airlines in United State. Ryanair has adapted this strategic approach and gained the market leadership and is considered to be the most favourable airline company in the European market. Ryanair currently operates more than 1,400 flights daily from 44 bases and over 1300 routes across 27 countries, connecting 160 destination together daily (Ryanair, 2011). Ryanair presently owns a 272 aircrafts fleet, consisting only of new Boeings 737-800, with 64 new aircrafts in the pipeline within the next two years. Ryanair employs over 8,000 employees and expecting to transport more than 75 million passengers by 2012. The main operations are focused on the European continent; facing competition from traditional and charter airlines, while approximately 50 other low-cost companies are replicating their no-frills approach. The following table outlines Ryanair key facts:
Table 1: Ryanair key facts (Ryanair, 2011)
1

Ryanair Highlights
Total fleet number Number of Routes and airport bases Number of Passengers Total revenue Employees Headcount 272 Boeings 737-800 aircrafts 1300 Route from 44 bases across 27 countries 72.1 million in 2011 (8% increase from 2010) 896 ( Million) 8,063

7. Marketing Audit
The marketing audit analyses the external and internal environment separately as to be aware of all the factors that might affect Ryanairs situation in the airline industry. As a result, more information will be obtained; making their future strategic decisions more effective, while developing the companys awareness of the market dynamics.

7.1 The External Environment


The external factors that can affect the organisation as a whole cannot be controlled by the organisations management, they have to face and overcome these issues practically without disturbing their operating environment as they greatly affect their profits and stability, these factors are analysed by using PESTEL analysis.
1
2

LCC: Low Cost Carrier No-Frills Approach: To provide only the basic services and necessities without special or additional features. (I.e. Meals, etc)

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Marketing Plan for Ryanair 2011

7.1.1 PESTLE Analysis


Political and Legal Environment Since that the European market is Ryanairs main focus, it supported in the stability of their operations, due to the political solidity of the European Union (EU); however it is constantly facing tough policies from different regulatory bodies. The European Union authorities is continuously forcing strict regulations for the airline industry, regulating the licensing of community air carriers, the law applicable to them and the pricing of air services. In order to give the opportunity for a fair competition between all the companies in the industry (EU Regulation: No 2407/92), not only that but the EU also have firm policies regarding noise and air Pollution known as Clean Air for Europe Programme and the INSPIRE initiative, where both policies aim to significantly reduce pollution by 2020. (Y.GOOSSENS, 2008) Moreover, the Trade Union operates a distinct system of labour legalisation and is continuously updating the framework of these laws, ensuring a non-discriminatory environment for employees in the industry; In contrast, such regulations can seriously affect the profitability of airline companies. On the other hand, there is a bright side for Ryanair from the political point of view; having Europe as their main target market, offers stability to Ryanair and flexibility to its clients, to move easily and freely between cities. However, in other continents, it would be much more different or at least the same huge customers flow would not exist, but in Europe the situation is different and more flexible due to the EU association, as a result, any country joining the European Union in the future, reveals new opportunities and fresh markets for Ryanair to expand their routes. Economic Environment Currently the global economic environment is insecure and unpredictable for all the industries as a whole, the world is facing a major financial recession over the past 3 years; affecting the profitability and growth of all companies worldwide, meanwhile the LCC market is one of the very few industries that wasnt affected by the drop down, as a result of their main strategy of providing to customer the lowest prices; considering that air travel is a necessary service that people will never abandon, But they will constantly seek out for the lowest prices. Another major factor affecting the airline industry is the global price of oil, which is regularly increasing and affecting the prices of all sorts of transportation, where any increase in oil prices directly reflect on the cost of aircrafts fuel eventually raising the price of tickets. However, Ryanair is controlling this problem by hedging 90% of its fuel costs, (Ryanair, 2011) through signing long term contracts with their suppliers, as they know that they must purchase fuel for as long as they want to stay in business.

Sameh Ashraf Nassar - M1005955

Marketing Plan for Ryanair 2011 Social Environment Logistics is no longer a concern as it used to be in the past, many people now travel frequently for business purposes, also students globally are travelling abroad for studies in different countries, aside to that, people all over the world are regularly seeking to travel to new destinations for vacations. Ryanair target all the three segments of the market. Moreover, the European culture is different from any other, where all European citizens are usually travelling to different countries in Europe without restrictions, as easy as going to any city within their homeland, which is not the case in any other culture, where citizens do not have this advantage. Technological Environment Ryanair is strongly focused on using technology in their operations, as it assists prominently in applying their low cost strategy. The internet booking rate at Ryanair is enormously high, up to 95% of their tickets are booked through their website (Ryanair, 2011), therefore they rely less on outsourced travel agents, also their online check in systems supports in decreasing the cost of airport personnel; in addition to faster check in, consequently maintaining a quick turnaround. Last but not least, is the use of GPS3/GBAS4 technology, several airlines already started switching to the GPS guided digital system; using satellites to constantly calculate the aircrafts speed, altitude, and proper approach, resulting in better synchronisation for flight operations, and more organized take offs and landings. Aviation consultant Michael Boyd estimates that the U.S. airlines alone waste up to $9 Billion yearly on flight delays beyond their control, which proves that the use of this technology allows airlines to fly better, and more efficiently. (LINDSAY, 2009) Environmental Analysis The main concerns about the impact of aviation on the environment is the level of CO2-emission, and noise pollution caused by aircrafts, however Ryanairs current fleet age is averaged to 3 years, therefore such modern fleet is not threatened by any of the EU regulations regarding these environmental factors. (Ryanair, 2011) Moreover, On November 19, 2008, the European Council of Ministers added aviation to the EU Emissions Trading Scheme as of 2012. This scheme is a cap-and-trade system for CO2 emissions to encourage industries to improve their CO2 efficiency. As per the legislation, airlines will be granted initial CO2 allowances based on historical revenue ton kilometres and a CO2 efficiency benchmark. To address any further requirement, allowances need to be purchased in the open market and/or at government auctions. This can affect Ryanair's cost management based on the allowances to be needed in 2012. (Ryanair, 2011)
3 4

GPS: Global Positioning System GBAS: ground-based augmentation system

Sameh Ashraf Nassar - M1005955

Marketing Plan for Ryanair 2011 In addition, other environmental disasters like last years volcanic ashes disruptions, and airport snow closures, resulted in the cancellation of more than 10,000 of Ryanair flights, the financial loss was estimated to 29 million as they were obligated to compensate all customers according to EU261 regulation right to care, although it was a natural disaster and completely beyond the control of Ryanair.

7.2 Internal Environment (Micro)


The overall evaluation of Ryanairs strengths, weaknesses, opportunities, and threats is called SWOT analysis; it involves monitoring key factors affecting the internal and external marketing environment. The purpose of this section is to scan and discern opportunities in the market to increase the companys profit. (Philip Kotler, 2006)

7.2.1 SWOT Analysis


Table 2: SWOT Analysis

Internal Environment

External Environment

Strengths First LCC in the market Strong brand name (Ryanair the low cost airline) Good deals with suppliers ( i.e. aircrafts, airports) Single brand of aircrafts (Boeing 737-800) Most flights are fully booked Fuel Hedging leading to stable fuel prices High internet booking rate (94%) Punctuality (No.1 on time airline award) Fast Turnarounds (average 25 minutes) Efficient fleet utilisation Proficient management team Not vulnerable to economic recession Opportunities European Union Expansion Increase market share Acquisition of smaller LCCs Expand operations and assign more routes to the global market Innovate and develop more ancillary services

Weaknesses Sensitive to any increase in charges (Fuel, tax, airport charges) Airports bases located faraway from destinations Poor customer relationship management Low employee moral leading to less loyalty Constantly observed by the press Limited access to landing slots in major airports

Threats Aggressive competition from both traditional and low cost airlines Customers only loyal to the best price Oil market not stable Other substitutes for traveling can be more practical for several locations Strict Environmental rules and compensation policies. Risk of suppliers raising costs when renewing contracts 8

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Marketing Plan for Ryanair 2011

7.2.2 VRIO Framework:


The VRIO framework analyses the organisations internal environment, by tailoring this model to Ryanairs resources and capabilities, the management can determine their competitive potential.
Table 3: VRIO Model

Physical Reputation Organisational Financial Intellectual Technology

Value Yes Yes Yes Yes Yes Yes/No

Rareness Yes No No Yes Yes No

Imitability No Yes Yes No Yes Yes

Organisation Yes Yes Yes Yes Yes Yes

Physical: Ryanair currently possess 275 Boeings 737-800 aircrafts, rather than its major opponent Easyjet whos currently operating 196 aircrafts of multi brands, leased and owned, and expected to reach 220 by 2013. (EasyJet, 2010), Ryanair is still ahead in fleet size, market share, and number of passengers, but still has to continually innovate and develop their strategy to retain their edge. Reputation: No frills Service, budget carrier, cheerful crew, also gains a lot of publicity across Europe as a result to several publicity stunts by their CEO Michael OLeary, however such stunts sometimes result with law suit and enemies due to his brash and arrogant attitude. (Moores, 2010) Organisational: Simple and focused on the basic flying service, no meals or seats allocation provided. Also relinquished their outsourced agent, and depend on Internet bookings, they maintain a quick turn-around time of flights (Avg. 25 minutes), also rely mainly on secondary airports; lowering their operational costs. Financial: holds a strong financial position in the market, Ryanairs net profit after Tax in 2011 is 401 million, with a 26% rise over last years 319 million. While the average fares rose 12%. Unit costs rose by 11% due to higher oil prices and a 10% increase in sector length. Excluding fuel, (up 37% to 1,226m) unit costs rose by just 3%. (Ryanair, 2011) Intellectual: Ryanairs management board with the lead of their CEO Michael OLeary, they have a highly focused vision, and always put forward new innovative ideas to help secure their position as a leader in the industry. Technological: the use of technology in Ryanairs operation has proven their dominant effect of lowering cost and easing their operation, more details will follow in this report.

Sameh Ashraf Nassar - M1005955

Marketing Plan for Ryanair 2011

7.2.3 Value Chain Model


The value chain model breaks down businesses into five 'primary' and four 'support' activities. As observed from the previous analysis, Ryanair business is centred on lowering costs in every single element of the value chain. In this model, it is clear how each such strategy is applied to all primary and secondary activities. As a result, Ryanair maintains a lower cost base than its competitors, whilst providing punctuality and safety. (Philip Kotler, 2006)

Figure 1: Value Chain

8. Competitors Analysis
Although Ryanair is the leader in the LCC market, however they are facing tough competition from other Major Low budget and traditional carries, in this section we will highlight on 3 of their major rivals in the industry, following by BCG matrix (also known by Portfolio Analysis)

8.1 Evaluating Competitors


EasyJet, BMI baby, and Aer Lingus, upon this research are the major companies following Ryanair in the LCC industry listed in descending order, beginning with Ryanairs first competitor easyJet.

8.1.1 EasyJet
Easyjet was born out of the liberalisation of European aviation by 'Open Skies'. Over the past five years, easyJet has grown from a UK centric airline to develop a significant presence in mainland Europe built around valuable positions at slot constrained airports. The main strength of their business model over Ryanair is offering almost the same low fares but to more convenient airports. Sameh Ashraf Nassar - M1005955 10

Marketing Plan for Ryanair 2011


Table 4: EasyJetkey facts (EasyJet, 2010)

EasyJet Highlights
Total fleet number Number of Routes and airport bases Number of Passengers Total revenue Profit before tax Employees Headcount 196 aircrafts 509 routes serving through 129 airport, in 59 Countries 56 Million, 2010 (6% increase from 2009) 2,973.1 ( million) 188.3 ( million) 6,887 as of 2010

Starting 2010, they are continually expanding their presence across Europe; EasyJets current strategy is to build stronger positions throughout major airports. As advertised their strategy is Turning Europe Orange, a simple and clever advertising that states their determination of extending all over the European continent.

8.1.2 Aer Lingus


Aer Lingus business model is centred on maintaining low unit cost, offering one way fares, maintaining effective fleet utilisation and developing the Aer Lingus brand. Consistent with this lowcost model, Aer Lingus' primary distribution channel is its website aerlingus.com. In 2010, approximately 81% bookings was made through their website, almost close to Ryanairs 95% (Aer Lingus, 2011) On the other hand, Ryanair owns 28.2% of Aer Lingus share capital, meanwhile they are in alliance with other airlines like KLM, British Airways, JetBlue, and Aer Arann, such alliance allows them to cover more routes, and effectively utilise their fleet. Below are some highlights about the company.
Table 5: Aer Lingus Key facts (Aer Lingus, 2011)

Aer Lingus Highlights


Total fleet number Number of Routes and airport bases Number of Passengers Total revenue Profit before tax Employees Headcount 32 Aircrafts ( 6 Airbus A321s and 27 Airbus A320's ) 102 routes 9,346 Million, 2010 (10% increase from 2009) 2,973.1 ( million) 57 ( million) 3,516 as of 2010

In conclusion, Aer Lingus were obligated to position itself as a value carrier because the pure low Cost/low fares model is not sustainable, whilst a full service model would not be competitive in the Irish market. The pure low cost/low fares model, in the image of Ryanair, is not sustainable for Aer Lingus for the following reasons: Exceptionally discounted aircraft deals are no longer available. Market proposition and customer expectation is for central not secondary airports. The higher cost of Aer Lingus staff.

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Marketing Plan for Ryanair 2011

8.1.3 bmibaby
bmibaby is a low cost airline, formed as part of the British Midland International group. The bmi group consists of three airlines British Midland International, bmi Regional and bmibaby, which each cover different markets and customer groups. The core markets for all 3 airlines are situated in the UK. bmibaby was Launched in 2002, bmibaby flies from: East Midlands, Birmingham, Manchester, Cardiff and Belfast City to 39 European destinations. Since November 2009, Lufthansa has been the sole shareholder of British Midland Ltd. (bmi)
Table 6: bmibaby key facts (Lufthansa, 2010)

bmi baby Highlights


Total fleet number Number of Routes and airport bases Number of Passengers Total revenue Employees Headcount 14 aircrafts (2 x 737-500, 12 x 737-300) 42 Destinations 6,194 million in 2010 896 ( Million) 3,612

Since November 2009, Lufthansa has been the sole shareholder of British Midland Ltd. (bmi) via the British holding company LHBD Holding Ltd. In 2010 the company was successfully integrated into the Lufthansa Group. At the same time extensive restructuring was carried out to bring bmi to profitability in the medium term. (Lufthansa, 2010)
Table 7: International Scheduled Passengers Carried (IATA, 2011) IATA airlines PAX report, 2010 Rank 1 2 3 4 5 6 7 8 9 10 Figure 2: Competitors strategic positions Airline Ryanair Lufthansa EasyJet Air France Emirates British Airways KLM Delta Airlines American Airlines Cathay Pacific airways PAX (M) 71.2 44.4 37.6 30.8 30.8 26.3 22.7 21.1 20.3 19.7

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Marketing Plan for Ryanair 2011

8.2 BCG Matrix


The BCG Matrix is a business method that was created by the Boston Consulting Group in the 1970s. This business method bases its theory on the life cycle of products, divided into four types of scenarios, Stars, Cash Cows, Dogs and Question Marks. Stars the scenario where there is optimum situation of high growth and high share, this method requires an increased investment due to the continuous growth, and it is the most relevant scenario to Ryanair. Cash Cow cycle deals with low growth and high share. This scenario requires a low investment, but the growth is very slow. Dogs method is the situation where the growth is low and the market share is low, this is one of the worst situations if the products are not delivering the cash then it is best to liquidate. Question Mark scenario is when high market growth but low shares. In this situation there is a high demand but low returns. It is best to try and increase market share or get it to deliver cash.

Table 8: BCG Matrix

High ---------> Market Growth ----------> Low

Star

Question Mark investment on Aer Lingus the expected ROI is the nature of Aer Lingus Dog

Ryanairs ancillary services, generates a lot of Ryanair made a huge extra revenue to their basic service; helping shares; meanwhile in continually increasing their market share. unpredictable due to operations. Cash Cow

Short point to point flight, and baggage Ryanair could face this situation, but internally with policy generates additional revenue, without one of their routes that might be not generating any extra cost for the company. adequate revenue, so assigning the aircraft to another destination will generate more profits
High

--------------------------------->

Market Share

-------------------------->

Low

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8.3 Porters Five Forces


8.3.1 Barriers to Entry (High)

The European market is full of potential, however there are some complications that would face any new entrants to the market, first would be the long authorization procedure to acquire the licenses to operate in the market, in addition to the high investment required in capital, before even starting operations, besides the tough negotiation process with suppliers for low cost deals, as it will reflect directly on their prices. On the other hand Ryanair and other major LCCs consolidated their position in the Industry; making it almost impossible to any new entrant to compete, as it will lead to an immediate price war, in order to ensure a considerable chance in gaining a market share, there has to be a unique selling point to that organisation to stand out from the crowd.
8.3.2 Bargaining Power of Customers (High)

At the present time, travellers have an enormous variety of choices to browse over the internet, with almost (number of airlines in industry), with all the fares and services clearly available online for the customer to compare, therefore there is no loyalty to a specific brand, customers are more concerned about the best deal they can catch. On the other hand, Travellers whom are targeting Ryanair are always expecting to get the lowest prices in the market due to the no frills service, however, if this is not always maintained then the comparison will be according to the quality of service, where many other airlines have a more respected reputation.
8.3.3 Negotiation Power of Suppliers (Medium)

For Ryanair to maintain their low cost prices, they are mostly forced to deal with secondary airports, due to the high costs and strong bargaining power of primary airports, which is already occupied with other traditional carriers. Globally there are only 2 aircrafts suppliers (Boeing and Airbus), Ryanairs fleet is entirely exclusive to Boeing, where it saves costs in maintenance and training of employees, however, that is a weak point in further negotiation with Boeing, as switching to another aircraft supplier will require major additional costs to Ryanair.
8.3.4 Substitute for Product (Medium)

Trains, Cars, and Coaches can be more effective to travel to many locations, where these modes of transport become a major competitor to air transport, not only in prices, but also in logistically, where trains for example have an advantage of direct access to most city centres, which saves travellers the hassle of transportation from and to the airport or about the baggage size and weight.

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Marketing Plan for Ryanair 2011


8.3.5 Threats of Competitors (Medium)

The LCC market is a highly competitive battle ground, the major competitor to Ryanair is Easyjet which follows the same no-frills strategy, and it is not easy for both airlines to advance with innovative ideas, as it can be copied by others straightway. However, both companies agreed on avoiding head to head competition, by concentrating on different routes to serve, in order to avoid any price wars, which will affect both companies mutually.

Entry Barriers
Low

Suppliers Power

Competitor Threats

Customers Power

Medium High

Product Substitutes

Figure 3: Porter's Five Forces

9. Marketing Objectives
Ryanairs objective is to firmly establish itself as Europes leading scheduled passenger airline through continued improvements and expanded offerings of its low-fares service. Ryanair aims to offer low fares that generate increased passenger traffic while maintaining a continuous focus on costcontainment and operating efficiencies. On the other hand, Ryanair is working on extending their fleet and in accordance flying to more routes across Europe, and the rest of the world.

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Marketing Plan for Ryanair 2011

10. Core Strategy


Ryanairs core strategies are highly sustainable, and have proven to be very effective throughout their 36 years of operations, as stated by their CEO Michael OLeary Our strategy is like Wal-Marts, we pile it high and sell it cheap (IMD, 2007). The key elements of Ryanairs strategy since establishment are: Low Fares: The first strategy is supplying extremely low fares, which are designed to captivate and also stimulate demand, some business and leisure travellers plan trips or adjust their plans, due to the attractive prices of Ryanair, where otherwise they would have used alternative forms of transportation or would not have travelled at all. Ryanair sells seats on a one-way basis, thus eliminating minimum stay requirements from all travel on Ryanair scheduled services. Ryanair sets fares on the basis of the demand for particular flights and by reference to the period remaining to the date of departure of the flight, with higher fares charged on flights with higher levels of demand and for bookings made nearer to the date of departure. Ryanair also periodically runs special promotional fare campaigns. Customer Service: Ryanairs strategy is delivering the best possible customer service performance in Europe. which is defined by Ryanair as lowest fares, best punctuality, fewest cancellations and least lost bags, and they managed to benchmark all these aspects according to the Association of European Airlines (AEA) statistics. In 2010, 88% of Ryanair flights arrived on time, less than one bag was lost for every 2,500 passengers and less than one complain only for every 1,000 passenger. (Ryanair, 2011) Ryanair achieves this performance by efficiency in their operations and primarily operating from uncongested airports. Customer satisfaction is also measured by regular online, mystery-passenger and employee surveys. Frequent Point-to-Point Flights on Short-Haul Routes: Ryanair provides frequent point-to point service on short-haul routes to secondary and regional airports in and around major population centres and travel destinations. Short-haul routes allow Ryanair to offer its low fares and frequent service, while eliminating the need to provide unnecessary frills, like in-flight meals and movies, otherwise expected by customers on longer flights. Moreover, Point-to-point flying allows Ryanair to offer direct, non-stop routes and avoid the costs of providing through service, for connecting passengers, including baggage transfer and transit passenger assistance.

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Marketing Plan for Ryanair 2011

10.1 Ansoff Matrix


The Ansoff growth matrix is a tool for mapping Ryanairs strategic product market growth, by considering four key factors, Market Penetration, Product development, market development, and diversification
Table 9: Ansoff Matrix

Products Existing M A R K E T S Market Penetration & consolidations Ryanairs main strategic direction. low cost flights and high market share Diversification New Market development Extend routes and bases Expand Globally Traditional and 2 way flights model would not be a successful approach for Ryanair New Product Development Ancillary Products

11. Marketing Mix


11.1 Product
Ryanair should sustain their current products, scheduled flight and ancillary services, meanwhile continue to expand their routes and destinations, while enhancing the ancillary services portfolio.

11.2 Price
For Ryanair to keep maintaining their position in the industry and increase sales margin, they have to keep sustaining the lowest prices in the market since it is their unique selling point; by continuously enhancing their operations cost effectively to support such strategy.

11.3 Place
Ryanair should continue investing in their online booking system, and encourage all passengers to use the system for booking tickets, since it was proven in previous analysis to be a highly effective solution, meanwhile expand their bases in strategically suitable airports

Existing

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11.4 Promotion
Ryanair current promotion are quite successful for their needs, with help of Michael OLearys regular publicity stunts. However, it is recommended to keep following such strategy without increasing investment in advertising, but focus on improving their image and reputation

12. Financial Budget


This section highlights on Ryanairs recently operating financial figures, which has been achieved in the low cost carriers market, according to the most recent data published in Ryanairs annual report (Ryanair, 2011). From the data and figures below, it is obvious that Ryanair is leading the market in many different aspects and this success was due to their successful business model, and their continuous observation of the market demands and dynamics.
Table 10: Ryanair Financial Facts (Ryanair, 2011) 2011 Million 2010 Million Increase %

3,629.5 Operating revenue 374.6 Net profit after tax 400.7 Adjusted net profit after tax 25.21 Basic EPS () cents 26.97 Adjusted basic EPS () cents Estimated costs, related to volcanic ash disruptions Investments in Aer Lingus shares -----

2,988.1 305.3 318.8 20.68 21.59 26.1 13.5

+21% +23% +26% +22% +25% -----

As a result of Ryanairs net profits in 2011, it was publicly announced by Air Transport World in July 2011 to be The worlds most profitable low fares airline. Moreover, Ryanairs adjusted profit after tax increased by 26% to 400.7m compared to 318.8m in March 31, 2010, primarily due to a 12% increase in average fares and high ancillary revenues. on the other hand, there was a 37% increase in fuel costs while the total operating revenues increased by 21% to 3,629.5 m as average fares rose by 12%. The most significant increase was the ancillary services revenue, which grew by 21%, aside to the 8% increase in passenger numbers. Total revenue per passenger, as a result, increased by 12%, whilst Load Factor was up 1% to 83% during the year.

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Marketing Plan for Ryanair 2011 On the other hand, their total operating expenses increased by 20% , due to an increase in fuel prices, the higher level of activity, and the higher operating costs associated with the growth of the airline, where Fuel represents 39% of Ryanairs total operating costs. The final adjusted net margin was 11%, similar to year 2010, and adjusted earnings per share for the year were 26.97 cent compared to 21.59 cent in 2010. (Ryanair, 2011) 10.1 Operating Revenues 1) Scheduled Revenues: The main source of revenue to Ryanair 2) Ancillary Revenues: As shown in the previous figures, this source of revenue generates significant extra profits; such services below should be constantly updated with new and innovative ideas
a. b. c. d. e.

In-flight Revenues Car Rentals Internet booking income Non-flight scheduled revenues Charter revenue

10.2 Operating Expenses 1) 2) 3) 4) 5) 6) Salaries Maintenance and materials Compensations Marketing budget Airport Charges Fuel

Finally, Ryanair was ranked as the most profitable airline in the international Low Cost Carriers market, and was followed by southwest airlines which was the first company to introduce the low cost model into the airline industry, and below is a list with the worlds leading low cost airlines net profit figures in 2011.
Table 11: Airlines net profit figures for 2011 (Ryanair, 2011)

Rank 1 2 3 4 5 6 7 8 9 10

Airline Ryanair Southwest Airlines AirAsia Berhad easyJet Cebu Pacific WestJet Gol IndiGo Airlines JetBlue Airways Air Arabia

Million $ 565 459 346.5 191.6 158.5 136.7 128.6 122.2 97 84.3 19

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13. Implementation
In order to achieve the objectives developed in this marketing plan, it is essential for Ryanair to successfully complete the delivery of the new --- aircrafts and the expansion of their new routes according to the set schedule.

14. Control
The following areas will have to be cautiously monitored by the management team, if they want to control their performance and current position in the market. a. b. c. d. Fuel hedging strategy Lowering operational costs Invest in technology Punctuality and reliability

15. Conclusion
Throughout this entire research, all the organization functions was observed and evaluated with all the environmental factors Ryanair is exposed to in the market, followed by identifying their competition and comparing the strategic differences between them, meanwhile highlighting the main financial elements. As a result of this information and analysis, a proper awareness about the market dynamics was generated, therefore assisting in a developing a tailored strategic direction for Ryanair to follow in the current and future market environment, while focusing on developing the existing effective strategies to maintain their performance and enhance their position in the whole industry.

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Marketing Plan for Ryanair 2011

16. Bibliography
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Sameh Ashraf Nassar - M1005955

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