Ryanair

Ryanair

Europes first low-fare, no frills airline launched in 1985

by March 2008, one of Europes largest and most profitable airlines (over 51 million passengers
a year, over 481 million euro in net profit, from a revenue of 2.7 billion euro)

Corporate strategy: exclusive focus on providing low-cost transportation for consumers within the European
Union; seeks competitive advantage by offering the lowest fares of any airline
operating in
Europe
Low price competitive strategy keeping costs low
own rather than lease airplanes; 15% more seats per aircraft than traditional airlines
nearly all planes are Boeing 737s => standardization of maintenance activities and parts inventories
concentrate flights to and from underutilized regional airports (lower taxes and fees, less congestion)
no fees to computer reservation systems and no commissions to travel agents
Advertising and promotion are among the few areas where Ryanair has not tried to cut costs below its
competitors.

At the beginning of 2009, the company was operating 180 Boeing 737s but was negotiating to buy as
many as 400 more planes in order to double its passengers and revenues by 2012

Costs per passenger (EUR, ex fuel)

Staff
Airports
& Handling
Route
Charges
Aircraft
Oship &
Maint.
Sales &
Marketing
Total
% vs Ryanair

Ryanair
5

easyJet
8

Norwegian Air Berlin

15
14

Spirit
16

Southwest
33

18

26

15

22

13

17

20

16

17

12

31

27
-

46
+67%

65
+137%

99
+262%

51
+86%

74
+170%

Source: CAPA - Centre for Aviation and latest available accounts via Ryanair presentation 28 January 2013
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Foundation for the Marketing Strategy:

System of Company Objectives

Business
mission
Company
objectives
Functional objectives

Referring to
n Product decisions
n Pricing decisions
n Sales decisions
n Communication
decisions

SBU
objectives

Instrumental
objectives

According to Homburg/Kuester/Krohmer 2008

Ryanair: Components of Strategy

Corporate strategy mission and scope:
focus on the price-conscious segment of airline passengers travelling in Europe
Specific goals and objectives for corporate growth:
double number of passengers and revenues

Allocation of resources:
invest in new planes to enable it to schedule more flights; invest in advertising and
promotion to help build customer awareness and market share

This well-defined corporate strategy influences and constraints the strategic decisions that
marketers and other functional managers can make at lower levels
Pricing decisions
Cost cutting policy of avoiding travel agent commissions forced Ryanair to be a pioneer
in the direct marketing of tickets over the Web

Ryan Airs Growth

Ryanair passenger numbers (mill) FY2001 to FY2013f* and 2022 target**, and passenger
growth rates

Source: http://centreforaviation.com/analysis/ryanair-swot-analysis--michael-olearys-maniacal-focus-on-being-the-lowest-cost-

Ryan Airs Growth

Top 10 Airlines (3-Jun-2013 to 9-Jun-2013, Europe to Europe, System traffic), ranked by Seats

Source: http://centreforaviation.com/analysis/ryanair-swot-analysis--michael-olearys-maniacal-focus-on-being-the-lowest-cost-

Scope and Mission of the Organization

Scope and Mission of the Organization

A corporate mission statement should clearly define the organizations strategic
scope.
What is our business?
Who are our customers?
What kinds of value can we provide to these customers?
What should our business be in the future?

Example: PepsiCo

Mission statement early 90s: marketing superior quality food and beverage products for
households and consumers dining out
Acquire Frito-Lay, Taco-Bell, Pizza Hut

More recently: narrowed its focus on package foods and beverages distributed through supermarket and
convenience store channels
Divest all fast-food restaurant chains; acquire Tropicana, Lipton and Gatorade;
develop new brands targeted at rapidly growing segments such as Aquafina

Most recently: continues to focus on package foods and beverages, but seeks
performance with purpose (health, environment)
Naked Juice

On the Importance of Plans/Planning

A man who does not think and plan long ahead will find trouble right at
his door.
Confucius (551 B.C.E. 479 B.C.E.)

By failing to prepare, you are preparing to fail.

Benjamin Franklin (1706 1790)

A good plan today is better than a perfect plan tomorrow.

General George S. Patton (1885 1945)

Plans are of little importance, but planning is essential

Winston Churchill (1874 1965)

10

10

Macro Trend Market Analysis

Five major global demographic trends:
1.Aging
2.AIDS
3.Imbalanced population growth (Asia, Africa)
4.Increased immigration
5.Declining marriage rates

Macro Trend Market Analysis

Sociocultural trends are those that have to do with the values, attitudes, and
behavior of individuals in a given society.
Two major current trends:
1. Fitness and nutrition
Food industry (production and retail), health and fitness clubs and equipment, new services

2. Greater interest in ethical behavior by businesses

Companies must adjust their strategies to incorporate consumers concerns about business
ethics

Corporate Social Responsibility Statement :

Providing capital, expertise and products to manage the transition to a low-carbon economy. Since 2007, the company has
invested $11.6 billion in solar and environmental projects as part of a larger $20 billion, 10-year Environmental Business
Initiative

Loaning more than $92 billion to small and medium-sized businesses, $10 billion more than in 2009

Spending $4.1 billion with thousands of small and medium-sized diverse suppliers

Providing $200 million in philanthropic giving, making the bank the second largest cash giver in the U.S.

Providing $168.5 billion in community development lending and investments in 2010, the second year of a 10-year, $1.5
trillion community development goal

Launching the Bank of America Merrill Lynch Art Conservation Program, a unique program that funds the conservation of
essential works of art that are significant to the cultural heritage of a country or important to the history of art

Continuing its leadership in promoting volunteerism and service, with employees donating more than one million hours of
volunteer service in 2010. In 2011, this goal has been increased to 1.5 million hours

Providing more than $12.6 billion in loans to veterans and continuing its commitment to customer and employee diversity
and inclusion initiatives

Corporate Social Responsibility

http://www.helpthehoneybees.com/

Practicle Example Household Segmentation (1/3)

Nielsen PRIZM Features and Benefits

Household segmentation model that groups consumers in 66 segments (for all US households)

Aim: highly comprehensive insights into consumer behavior

Input: demographic data, consumer behavior, geographic data, shopping patterns, media preferences

Output: by further clustering the 66 segments, social groups and lifestyle groups can be
generated
o Social groups: level of urbanization (horizontal axis) & affluence (vertical axis)
o Lifestyle groups: stage of life (horizontal axis) & affluence (vertical axis)

Advantages:
o Supports marketers in identifying, understanding and targeting their customers with
tailored messages and products
o Segmentation is intuitive and easy to understand (supported by catchy names and images
for each segment)

http://www.claritas.com/MyBestSegments/Default.jsp

Practicle Example Household Segmentation (2/3)

Nielsen PRIZM Social Groups
Input

Urbanization:
o

Defined by the population density of the

area as well as its relation to the highest
density center in the area

Categories: Urban, Sub-Urban, Second City,

Town & Rural

Affluence:
Each segment is assigned a socioeconomic rank
that combines neighborhood data for income,
education, occupation and home value

Output

Practicle Example Household Segmentation (3/3)

Nielsen PRIZM Lifestage Groups
Input

Lifestage Classes
o

Younger Years

Family Life

Mature Years

These Lifestage Classes are used to describe segments

rather than strictly defining them

Lifestage Groups
o

by combining Lifestage Classes and social

groups a matrix grouping the 66 segments
into 11 Lifestage Groups is created

Output

Example SWOT Analysis

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SWOT Analysis (Ryan Air)

Strengths:

- Low operating costs

- Fast turnaround times
- Etc.

Weaknesses:

- Not serving major

airports
- Weak brand
- Etc.

Opportunities:

- Market growth
- Consumer increased
price sensitivity
- Etc.

Threats:

- Fuel cost increases

- Airport charges
increases
- Etc.

Scope and mission: To firmly establish itself as Europes leading low-fares scheduled
passenger airline through increased passenger traffic while maintaining a continuous focus on
cost-containment and operating efficiencies.
POTENTIAL OBJECTIVES

Capture 20% of the price

conscious traveler segment
within the EU by 2018
Maintain the rate of yearly
operating cost increases under
10% of total operating costs
Improve brand perception:
ranking in the top 5 most liked
brands in its category by 2018

POTENTIAL IMPLEMENTATION DECISIONS

Add 20 new airports to the 180 locations currently served;
Continue offering 0.99 Euro fare promotions for uncongested routes
Purchase only Boeing aircrafts as a single manufacturer strategy helps
reduce costs associated with personnel training and aircraft maintenance
Increase the pay-per-performance component of employee
compensation
Improving customer satisfaction by partly outsourcing customer services
to local airports
Participate in charitable initiatives supporting local communities in the
markets served
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Marketing Warfare

Art of War: Doctrine

Before the battle:
Win without fighting, if possible
Know the battlefield; Know yourself; Know the enemy
Plan & strategize; Strategy before tactics
During the battle:
Develop teamwork; whole team works as a unit
Attack from strong position / high ground
Take the Offensive: Occupy the battlefield first & wait for the enemy
Use surprise; Use unexpected routes & methods
Avoid enemys strength, attack his weakness
Take advantage of enemys unpreparedness
After the battle:
Build on your success
While in peace, train for war

Formulation of Marketing Strategy Central Questions

Strategic marketing
objectives/target groups
addressed by
marketing strategy
Customer benefits and
positioning as compared
to competition

Basic design and

structure of marketing mix

Central strategic
questions

Innovation
orientation

Competitive and
cooperative conduct
Customer
relationship
management

According to Homburg/Kuester/Krohmer 2008