“Marketing your business is about
how you position it to satisfy your market’s needs” (Ehmke, 2005). One of the most basic concepts in marketing is the 4 P's of
marketing (Marketing mix). A marketing mix is a combination of four variables
(product, place, price, and promotion), which can be arranged in different ways
to develop marketing strategies to meet organizational objectives. Ryanair is a European low cost airline. This airline provides low cost, no
frills services to European destinations without free food or drink onboard.
Travelers can take their own food and drinks with them. Ryanair also has
other income stream called ancillary revenue. The ancillary revenue comes from deals with
Hertz car rental, hotel business, phone card, and bus tickets business.
The targets of Ryanair services are leisure travellers, visiting friends, and visiting
relatives. Low price, value for money, and efficiency are core values of
Ryanair. Ryanair company controls costs throughout all marketing practices. In about 20 years, Ryanair has grown from a single plane company to the
largest airline in Europe . However, under the tough economical condition, Ryananir made its first
annual loss in 2009. In this article, Ryanair’s data is
going to be reviewed and its marketing mix is going to be analyzed. Rrecommendations are
going to be made on how the organization might become more effective by
rearranging the marketing 4 P’s.
Price
Pricing directly affects a company’s profit and is one of the most
important elements of the marketing mix. Pricing should reflect the following
elements: competition, company objectives, proposed position, cost, defined
target groups, and the perceived value. Establishing a relatively low price for
service can stimulate demand and acquire shares market. Low price makes the most economic sense for the service
provider when there is significant potential volume, or when the customers are
price sensitive. Thus, low price strategy fits Airline business well.
Low price and price with different arrangement are two of Ryanair’s prising
strategies. Raynair has different prices for its fares: 70% of seats are sold at the
lowest price, 30% of the seats are charged at higher price, and 6% seats are
sold at the highest price. Other pricing strategies include a €4 airport fee for passengers that don’t plan ahead, and fees
are also charged for checked baggage and start at €9 for the first piece when
paid in advance at the website, which double to €18 when paid at the airport.
Ryanair’s CEO, Michael O'Leary, has a vision that the fares could drop to
nothing as local communities would subsidize the airline to bring a steady
traffic of business people and tourists to their regions. Ryanair's lower costs operations are passed
on to its passengers in the form of low fares. But Ryanair occasionally gets in trouble with
Advertising Standard Authority in the United Kindom over difference between
advertised and the actual prices. Ryanair's price advertising is deliberately controversial. Ryanair often
use their advertising to make direct price comparisons and attack its
competitors. Those activities had led to a number of complaints to the Advertising
Standards Authority (ASA) and occasionally court actions were taken to against this airline.
Low cost operation and
low fares are the strength of Ryanair. Its core value of
providing low cost fare should not be changed in spite of environmental turbulences. Essentially, marketing is about providing benefits to customers. The practices of publishing misleading price advertisement violated
regulations. The way how Raynair provides low price fare should be
re-evaluated. Unethical practice could cause
huge financial damage and the damage of public images. Ryanair must take social
responsibility and stop unethical activities.
Actually, many other things that Ryanair can do to keep the price low such as control of operating
costs, maximizing seat capacity, limiting overhead costs, lowering turnover
ratio of employees, developing
innovative programs for employees to keep them motivated and satisfied. Ryanair can also increase the corporation with
local communities.
Product or Service
In 2008, Ryanair reported that revenue from services
such as car-hire commissions, checked-baggage charges, and priority boarding
increased by 30% to €111 million for the quarter ended December 31, 2007. The manager
of Ryanair said it was on target to generate 20% of total revenue from
ancillary sources within the next three years. Ryanair’s net margin of 21% is a
remarkable achievement in an industry. Generating revenue from ancillary
sources and offering customers air transportation with no extra services to
keep cost down are good ideas; however,
Ryanair has been criticized in the past for its poor
treatment of disabled passengers. In 2002, it refused to provide wheelchairs for disabled
passengers at London Stansted
Airport, and greatly angered disabled rights groups (Appeal Court
Place
Ryanair does not use travel agents
so it does not pay agency commissions. It uses direct marketing techniques to
recruit and retain customers. Booking online saves Ryanair 15% agency fees.
Ryanair is based in Stanstead in Essex , which
is secondary airport. It is cheaper to fly from Stanstead than either Heathrow
or Gatwick. Most of Ryanair’s destination airports are secondary. Secondary
airport tends to be smaller regional airports, the cost to use this type of
airport is lower, and aircraft can be turned around faster. Ryanair tries to
keep aircraft in the air as much as possible. Taking advantage of the Internet,
Ryanair has implemented new reservation system called Skylights. The Skylights
system allows internet
users to access Ryanair’s host reservation system to pay and confirmed
reservations in real time through Ryanair’s Ryanair.com website.
However, Ryanair does not offer customers the possibility of contacting the
company by email or web. Customers can only reach the company through a premium
rate phone line. A
proper place for any product and service is necessary for marketing success.
“Consumers expect contact that gives them relevant value, when they need it”
(McMahon, 2009). Ryanair can create more
communication channels to provide convenience services to customers, which in
turn will enhance public images and awareness for better public relations.
Promotion
Many forms of
advertisement can be used for promotion.
Ryanair spends as little as possible on advertising and does not hire an
advertising agency, instead, all of the advertising is done in-house. Ryanair
uses simple advertisement such as brochures, newsletters, fliers, and posters
to inform passengers that they have low fares. In-house, Raynair can also
develop unique features of their services and benefits by focusing their
efforts on innovative processes to keep cost low and to let users know why they
need to use its services. Since the launch of the Skylights system, Ryanair has
heavily promoted its website through newspaper, radio and television. As a
result, internet bookings have grown rapidly, accounting for in excess of 96%
of all reservations on a daily basis.
The internet
is changing the way businesses sell products and services. More and more
consumers use the internet to research and purchase products and services
online.
Ryanar needs to continuously
keep up with the latest internet technologies and applications to improve the efficiency of promotion. Ryanair
could increase the effort to use more e-marketing tools to promote its services
and to attract more consumers. For example, Ryanair can place banner
advertisements on its web pages for e-promotion. News worthy stories based on
related services can be placed on the company's webpage too, or sent to review
sites for consumers to read. E-leaflets and email marketing can also be
beneficial to reach consumers. The Social-media marketing is a new e-marketing
trend. “Social-media marketing includes
participation on social-networking websites, such as Face book, LinkedIn, and
MySpace; video- and photo-sharing websites, including YouTube and Flicker;
blogging; micro-blogging” (Forootan, 2010). Ryanair
should take advantage of this new Social-media marketing trend.
Conclusion
Ryanair is a successful business with great brand. The
analysis of Ryanair‘s marketing 4 P’s indicted that the low cost is the
strength of this company. Ryanair's marketing mix reflected its core
values of low price, value for money, and efficiency. These core values should
not be changed regardless of the operating environment. However, Ryanair could become more effective
by making some adjustment of its marketing mix.
Due to the fact
that Ryanair occasionally gets in trouble with Advertising Standard Authority
in the United Kindom over difference between advertised and the actual prices,
and other social responsibility issues, Ryanair
must take actions to stop unethical activities since unethical practices could
have the potential to cause huge financial and public image damages. Actually, many other things that Ryanair can do to keep
the price low such as control of operating costs, maximizing seat capacity, limiting
overhead costs, lowering turnover ratio of
employees, developing innovative programs for employees to keep them
motivated and satisfied. In addition, Ryanair
could improve the value of services by improving the
baggage handling, ticketing process, flexibility of flight schedules,
efficiency of checking in and checking outs on the airport, and the work ethic
of employees. More communication channels should be created to provide
convenient services to customers, which in turn will enhance the company's
public images for better public relations. Finally, Ryanair needs to continuously
keep up with the latest internet technologies and applications to improve the efficiency of promotion.
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