Marketing Essays – Easy Jet E-Marketing

Easy Jet E-Marketing

Management Summary

This is a report about the e-marketing management of the easyJet airline which is one of the airlines which has embraced the concept of online bookings. Under this arrangement, the company has been able to cut a portion of the market and its customer base has been rising since it started online bookings in 1998. The company has been able to commence other service and integrate them with its websites such that customers have more access to various services through one search engine. This has helped the company to grow and diversify its range of product.

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EasyJet was founded by Sir Stelios Haji-loannou in 1995 as a family business. Up to date, the family remains a major shareholder in the airline which is now referred as easyJet PLC. The founder also owns a group of other companies which own the brand name easy although there is not cross-shareholding between the easyJet and other easyGroup which is the licensee company. Although the group operates separately, there are some cross marketing agreement that are shared between the airline and the other groups.

The airline operates from Hangar 89 at Luton Airport. But contrary to other airline which have their headquarter reflecting their status in the market easy Jet has a simple headquarter which is a bright orange building which represent it low-cost ethos.

Since April 1998, the company became some of the airlines which embrace the use of internet in selling it seats. Currently it is estimated that 95% of all the seats in the company are sold over the internet which has made one of the leading internet retailer in the European market.

Marketing can be defined as a management process that is responsible for identify and satisfying what the customer requires which is done for a profit. There have been many ways in which marketing has been carried out but the news strategies have been through the use of e-tools like the internet. It has been used to do research on to know what exactly does customer needs. It has as also been able to anticipate the demands for digital service and therefore have a good resource allocation. E-tools have helped to satisfy customer demands as they find a range of products at on location. The use of information and communication technology to achieve the above objective of market is referred to as e-marketing or digital marketing.

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Background

EasyJet was has been one of the most successful airline in the world. The company was founded by Stelio Haje-Ionnou who was a son of a Greek shipping tycoon. This company was set up in 1994. it as set up as a low cost airline which was looking to undercut other traditional carriers like British Airways in order to have a lean operation. In order to come up with such an operation, the founder had decided on single sales channel to survive in the market and therefore he settled on the phone as the most appropriate. This was considered a ground breaking but the founder insisted on having direct selling methods to the consumers. Although he had refuted the user of the internet at that time he kept a close eye when the trials for the sites were going on. What ensued was as stead rise in calls that were being made per week and quickly the company grew oft of space to handle the customers. Therefore the owner decided it was either the company decides to sell over the internet or build a new call centre. This turned to be a success story of e-marketing of the company. (Miles 2006, P. 2)

Company Overview

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It has been recorded that easyJet is one of the most refuted British tour operators which has been successful in cutting a niche on the market. It has been able to cut competitive price edge which has been attributed to strict management of the cost by bypassing intermediary agencies that increased the cost of management. The company has also been able to successfully use non-saturated airports which have been on of its cost cutting measure that it has taken.

The company has successfully offered freights to Great Britain, Switzerland, Holland and other countries with a total number of 18 destinations and its inventory has a fleet of 21 Boeing 737-300. The company sells a one way tickets only and it doesn’t require any minimum stay in any destination.

The above management strategies have been one of the success points of the company which has helped it to expand its operation. But the success point has been the fact that it has been able to eliminate many of the intermediary agencies who acts as representatives of the company to the customers. This has been through adoption of selling of majority of its ticket through ht internet as it owns and manages a number of website related to its operations. Some of these websites include eassyrentacar, car hire, easy value through which consumers are able to compare different prices of products, eassy.com, free mailbox, and easymoney.com which gives the customer credit card service to enable them to pay their air fares and buy other things. The use of internet technology has but helped the company to move to great heights and it is currently expanding rapidly in Europe. (easyJet.com, 2008)

Business Description

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The company operates in the airline industry where it offers various air travel services especially to the tourism sector.

Financial performance

The company has been performing relatively on its financing and has been listed in the London Stock Exchange in 2000. Currently the company has been selling shares in order to acquire more capital to expand. In 2004, 8.4% stake of the company was purchased by FL Group who are also the owners of Iceland air and Sterling airs and company further increased its shared in 2005 to 16.9% which was seen as a takeover bid for the airline but it sold its stake in 2006. (EasyJet Plc, 2008)

In terms of its financial performance the company has been posting increased profit which has correlated with increase passengers operation activities. Its net profit has been increasing since 2000 from 22.1 million pounds in 2002 to 152.3 million pounds in 2007. At the same time its passengers have increased from 5.6 million in 2000 to 37.2 million in 2007. The company posted more than 50% increase in net profit in 2007 having increased from 94.1 million pounds in 2006 to 152 million pounds in 2007

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The following is the financial analysis of the company from the year 2000 to the business year ending 2007

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Adapted from: Graham, D 2008, easyJet urges for new tax as part of green push, Flight International, September 2008

Major products and services

To make sure the company diversifies its operations, it offers a variety of services to the consumers but most of which are related to transportation. All the services are designed to support the company in its operations and to aid in offering of conveniences in the travel. The following is the rage of services that is offered by the company which are all sold online.

(i) Booking services

While initially these services were offered by telephone call, easyJet has been able to upgrade its system and 95% of the booking services are now done through the internet. This means there are not incentives for travel agents to sell the bookings which translate to lowered cost for the passengers.

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(ii) Cabin services

The aircrafts that are used by the company are configured in a single class with a high density layout. The airline does not provide meal or beverages while on board and passenger are supposed to purchase these from the easyJet shops which sells products like sandwiches, toasted sandwiches and others. This means that on-board-sales are quite important for the company as a part of their extra revenue. These shops also sell other items like gifts including fragrances, cosmetics and other easyJet branded items to customers on board. There is also sale of internet transfer services. (EasyJet, 2008)

In addition, the aircraft also provide entertainment on board especially for long flights. In such case there is usually a charge of about 3 pounds fro every person. It also provides in-flight magazine which are published on monthly bases and contain articles of interest to the customer and destination guides.

(iii) Hotels and holidays

From 2004, the company partnered with Hotelpia a subsidiary of First Choice Holidays and launched accommodation booking services co-branded EasyJetHotels. These hotels offer accommodation products in all the network areas where easyJet operates. In this regard it provides infomation and quote of hotels in particular destination which accompany prices in their websites. (Mathew 2004, p. 1)

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The same companies have launched EasyJetHolidays which are offering holiday packages using the service of both the companies. In this regard easyJet provide flight services while Hotelopia provides accommodation services. (easyJetHotels.com, 2008)

Car and parking space services

In order to make it easy for the customers to move out of the airport, the airline provides car hire service in which customer can hire cars in advance before they land. In this case they will not waste their time looking for taxis and instead will have pre-arranged cars waiting for them. The company also offers parking service where customers are supposed to book for a packaging space online. This service is offered in conjunction with NCP and the process has been made easy as it uses the easyJet booking websites. (easyJet4parkign.com, 2008).

Present Position Analysis

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EasyJet has been able to clinch a sizable market share for along time since it started operation with a policy of low cost airlines. The following represent the SWOT analysis of the company as at the present

(i) Strengths

The company has been able to cement its operation in the market based on some strength which has been acquired from its operation. The following are the points that represent its strength in the market

• The company has a sound financial base. Having operated as a part of the easyGroup which has a good financial base, the company has been able to use this to expand in the market. This financial strength enabled the company to place a bid for 120 new jets. This has helped to increase its fleet and convenience for its air services. The financial base for the company has been growing tremendously and by end of 2007, its net profit had hit an all time high of 153.2 million pounds. This means financial soundness of the company which raises the confidence of the customers and investors. It share price have been on the increase since then. (EasyJet, 2008)
• The airline also draws strength from good reputation that it has been able to build in the market. It has been reputed by customers for convenience of its service ranging from booking through the internet to fast flights and from airport travel services. In this regard the customer base has been growing from a mere 30,000 in 1995 to more than 37 million passengers by the end of 2007.
• The company offers a range of service which is a good cause of customer support point. In this regard a customer is able to book the flight online and at the same time book for holiday services and accommodation from the same websites. Customers are able to access other service like car rental service, insurance cover, parking services an others.
• The company has exploited the web very well and having all its operations around the web means that it is able to offer convenient services to the customers. This has made it a choice for many customers.
• The company has been able to convince customer that it is offering low cost travels which have helped it to create price competitive edge as compared to its competitors. This has helped it to emerge as the leading Europe’s no-frills airline.

(ii) Weaknesses

At the same time there are some weaknesses that have been dragging the company behind in all its moves for prosperity.

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• One of the weakness that has been dragging the operation of the company has been the fact most of those who are computer illiterate are unlikely of book fro the airline since it has cantered its operations on the internet. This means that it is losing some of its valuable customers.
• The risk of internet hacking has been a security threat to the company since it can work to the positive or negative of it operations.
• There is a weakness in the sense that not all people have access to internet service and hence it could be losing more customers.

(iii) Opportunities

Having seized the first opportunity as a major player in the internet business, there are still more opportunities that the airline can exploit.

• One of such opportunity lies in the company expanding its operations in other parts of the world. Currently, their operations are limited to only European countries. This can be achieved since internet services have been rolled all over the world. Therefore the country should consider expanding its operation to other areas in the world especially the developing nations where there is emerging operations.
• The company may also expand its range of services to other areas in order to diversify it products and services.
• The company could also diversify to other modes of transport like cruise ships where it would use the same business strategy

(iv) Threats

The company is faced by many threats in its operations

• There has been increased calls for the regulation of such airlines on account that they have increased the rate of global warming by providing low cost travels which translates to more air travels and increased emissions of carbon dioxide to the air.
• There is a threat posed by other airlines resulting to the same measures which will mean that the rate of competition on low-cost airlines will increase.
• There is a threat of failure of internet technology which may pose a set back to its operation.
• There is a threat of airline security due to increasing terrorist attacks which could constrain prospects of future air travel.

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Industry Analysis “Air Travel”

You should also consider analyzing the organization using Porter’s five forces model.

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(i) Threat of new entrants

The industry has been growing at an alarming rate and more and more new entrants are making their way in the market. As per the position of easyJet the real threat of entry of new player will be the entrant of another airline in the low cost air travels segment which will mean that there will be increased competition. There is likelihood that due to the increased growth of its customer base, other companies may take the same steps that the airline has taken to reduce their cost of operations. This means that there will be other players in the industry and the level of competition will increase. With increased preference on low cost air travels there is a real threat of entrants of the new operators in the low cost market segment. (Grant 2005, p. 34)

(ii) Bargaining power of customers

As the economies of the European nations and other countries continue to grow, the purchasing power of customers is increase and the tourism sector continues to grow. Due to many airlines in the industry, the consumer retainer the power to influence many factor in the industry including prices and others. EasyJet is not prone to such power of buyers as they are the one who have built it and can easily bring it down. The price sensitivity in the industry has led to many of them preferring to use the airline over others. Due to the rising concern about the environment crisis, there is a likelihood of the buyers having a more say in the industry which may affect the price of the company as more environment measures are taken.

(iii) Bargaining power of suppliers

The company has tried to create a level of independence in its operation by ensuring that it is controlling most of the supporting services including establishing its own website with are maintained by the company. As such the company may not be threatened by the bargain power of the suppliers as it has limited contact with the suppliers except in the purchase of aircrafts. Therefore we can say that this increased level of independence in the company has enabled it to escape the pressure that can affect its operation as far as suppliers are concerned. It has been able to control the cost of its inputs which mean they correlate well with its price.

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(iv) Threat of substitute products or services

Due to the nature of travels that the company provide the thereat o substitute is kept low. Unlike other local airline which targets cities which are close apart by about 600 kilometres, easyJet has been targeting airlines which are over a distance which means air travel remains the only viable option. But there is a threat of other travel service like cruise ships which are becoming increasingly popular with most tourist. The company has been able to keep its price checked and hence the cost of travelling through the airline may remain a more viable option for many traveller based on price considerations

(v)Rivalry among the existing firms

The airline industry in the UK is quite competitive and new entrants are coming in year after year. This has increased rivalry as the airlines compete for the few available customers. But there are few competitors in the low cost market segment and hence the rate of rivalry is not a big factor in its operation. However there is rivalry from other operators who have been competing with the firm on the available customer and how have been accusing it of not observing the environmental issue. There are no entry or exit barriers that can hinder the existing or new airline and hence the competitive edge of the company remains its point support of its operation.

E-Marketing strategy

In the mid 1990s the company had decided to try it sales over the internet but the founder refuted it as and declared the internet as for the nerds and were convinced that it would not help his business in any way. But the company decided to try it and internet booking and other services were started in 1998. By 1999 38% of the seats were sold over the internet. This was beyond its initial target of 30 Percent of sales by the year 2000 which meant that it had grown beyond their expectations. In order to encourage e-bookings, the company increased its online discount by 2.50 dollars for a single trip which was a higher level of discount that has ever been advanced on the airline industry. By September, online sales of air ticket had reached 85% of all sale and by 2003, it accounted for over 90% of all sales.

Once the trials for e-marketing had taken root and the company needed to go over selling in the internet rather than relying on direct calls, the company recorded massive growth in its capacity of operation. It has turned out to be a 100% internet booking business which meant that it was able to internet the web to its central booking system. The company has designed its website such that consumers can access a lot of information from the website. It is the main medium of communication with its customers. The website contains information about the company and various deals that constitute its operation. Therefore consumer can learn about the service online and book online.

What is the value proposition and differential advantage of this strategy?

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There were a number of advantages that were associated with the move that was made by the company. First it meant that the company had eliminated the intermediary agencies that could have been acting on behalf of the company and get paid a certain commission. The company had averted the potential channel conflicts hat could come with some of these intermediaries. As spelled by its name easy jet simply stands for easy travel. The name has dictated its means of operation which are quick and tailored to the demands of the consumers. Their services are above those of other operators in many ways. First they differ from other airline in the sale of air tickets as they have been able to use online booking to the convenience of the consumer. Second they don’t offer means while on board unlike in other airline. This makes them reduce the cost of travel for customer convenience. What makes them ahead of other operators is the price they charge for their flights and the customers’ value that is attached to the low price. (EasyJet, 2008)

But the overall implications that it had was that the founder was able to realize the dream of setting up the airline in the sense that it was possible for the company to remove most of the intermediary costs. Their business strategy had been the integration of services that led to reduced cost of operation which could be transferred to the travellers as low cost operations. This was coupled with reduced cost which could have been incurred in network tie-ups and in-flight meals. Instead the company decided to set up easyJet shops from which customer could purchase foods and other drinks during the journey. In the e-booking strategy, the company gives each customer a PIN number which gives them the right to get to the airport and catch their flights.

This has been an important to a company like this one where each customer generate a profit of 1.50 pounds and therefore minimizing the cost of operation has been very important. This is because the Company has been able to operate on such a reduced profit from customer owing to reduced expenses on the same customer.

The company has been able to offer a variety of products and services over the internet. This has helped to improve the quality of service that it is offering to the company. Quality services have helped to raise the image of the company in the market as it has act as brand. It has ensured that customer have access to the service at any time they want which have a warrant as they are issue with a PIN. (Graham 2008, P. 2)

Through the internet, the company has been using various promotions to encourage the consumer to book their flight online. This has been aimed at increasing the rate of booking over the internet for the company. It has improved its market communication and the public relation with the company as well. This has been a form of direct marketing through personal and sales promotion.

It also has had an effect on the price as the company is able to lower the prices of its product to the level that the consumers can afford. It has helped to position its price with that of the market below that of other operators. This has helped to create a price competitive advantage.

The company has also been able to create a direct marketing channel as it has reduced the chain of distribution of its service. This means that it is able to communicate direct with the customers through the internet. This has ensured that the change of distribution functions as a whole system rather than a segmented channel.

It has been able to target the right kind of customer for its operation. This means that the e-market strategy has been focused on the customer to make it easy to them to access the services that are offered by the companies. Maintaining individual contact with the customer has been essential in ensuring the company establishes a working relationship with the customers. To ensure that the company maintains this trend, it has been carrying out timely training and development of the workforce to especially the customer support staff.

The process of e-marketing has been focused on the customer. It has been supported by the information technology which means it is widely accessible to all the customers. It is focused on bringing the services of the company close to the people. The company has been able to design its website with features such that customers can easily access all the information that they need using one search engine. (O’Neil, K 2003, p. 54)

The strategy can be considered to have been a success for the company as physical evidence and experience shows that it has been able to increase its sale. There has been increased booking online and at the same time there has been increased customers satisfaction. The reason that keeps customers going back to the web is because each and every time they are aspiring for a new experience.

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Implementation

How are they creating new core and extended value for customers?

The company has been able to integrate various cores of operation in their strategy in order to give customers values for what they are paying for and give them new experiences every time they visit their website. In this regard the company has been able to come up with various strategies which are all aimed at ensuring that their e-market strategy continues to prosper.

Through their website the company has been adding new services which are all meant to attract the customers. To start with, they dumped the phone call service and took over the internet service of booking. Then they started developing their sites in order to come up with diverse service like car booking, EasyJetHotels, EasyJetHolidays, and many other which have been able to kept the customers attracted to these sites. The main secret behind e-marketing is the way in which a company can attract more and more customers to its sites. Through this strategy the customers have been finding it necessary to go to these sites and get more information.

Currently in their through their website, the company has been able to offer a variety of services including, flight charges, online booking, online flight schedule, information on the EasyJetHotels and EasyJetHolidays, information on booking of cars and parking spaces, and other services which means the main channel of communication to the consumers it through the internet.

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How are they balancing their online and offline promotion methods?

Apparently the company has been running various mixes by running internet promotion in the news paper. In their first promotion which was run in The Times in 1999, the company had given out 50,000 seats to all reader and almost 20,000 of theme were sold in the first day only and the figure swelled to 40,000 in the third day. This meant that such kind of promotion helped many customers to go to the site of the company and the company did not have to hire more call centre agents in order to cope with the rising number of customers. The company uses flight promotions in order to avoid attracting people who would fly with the company which should be achieve by advanced booking. The company has been using such kind of promotion in order get rid of empty seats

What type of price tactics are they utilizing?

The company has been successful in using various price tactics in order to attract more customers. Right the start, the company chose to pursue a low priced flight cost and it has been able to achieve this. This means that the company has been able to reduce the costs that are expended on each customer in order to lower the cost of flight. In all its service even in car rental, the company has bee pursuing a policy of low cost renting car for 9 pounds a day.

How are they implementing their partnering strategy etc?

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The company has been implementing its strategy through a number of means. It has been able to customize its website in order to make navigation easy. In this regard customers do not have to go through the home page in order to access the information that they want. The company has also enterer into partnership and has been using such occasion in order expand in their operation.

What impact is the implementation of strategy having upon the performance of the business?

The implementation of the strategy has been having a great impact on the performance of the company. It has helped the company to increase the number of passengers who are using the service and hence the company has been able to increase its profits. This means that customers have been satisfied with the overall strategy of the company.

Conclusion

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E-marketing is the new concept of marketing that many businesses are turning to in order to reach as many customers as possi

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