Marketing & Management 2011

Saphie Alim, MBA Marketing & Management

Marketing & Management

EasyJet Marketing Plan

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Content
1. 2. 3. 1. 2. 3. 4. 1. 2. 3. 5. 1. 2. 3. 4. 1. 2. 5. 1. 2. 3. 4. 6. 7. 8. 9. Executive Summary ......................................................................................................................... 4 Business Mission.............................................................................................................................. 4 External Marketing Audit ................................................................................................................ 5 Macroenvironment ..................................................................................................................... 5 The Market .................................................................................................................................. 6 Competition ................................................................................................................................. 7 Internal Marketing Audit ................................................................................................................. 9 Operating Results ........................................................................................................................ 9 Marketing Mix Effectiveness ....................................................................................................... 9 Marketing Structures and Systems ........................................................................................... 10 SWOT Analysis ............................................................................................................................... 10 Internal analysis : strengths and weaknesses ........................................................................... 10 External analysis : opportunities and threats............................................................................ 12 Situational analysis .................................................................................................................... 14 Marketing plan direction and objectives....................................................................................... 14 Strategic thrust and objectives.................................................................................................. 14 Critical issues ............................................................................................................................. 15 Core strategy ................................................................................................................................. 16 Target market(s) ........................................................................................................................ 16 Competitors targets.................................................................................................................. 16 Competitive advantage ............................................................................................................. 16 Marketing mix decisions............................................................................................................ 17 Budget ........................................................................................................................................... 19 Organisation and Implementation ................................................................................................ 19 Control ........................................................................................................................................... 19 Appendix........................................................................................................................................ 20 Appendix 1: Airline market growth ................................................................................................... 20 Appendix 2: Forecast and financial details ........................................................................................ 21 2010 Half Year Results ........................................................................................................................... 21 Appendix 3: Targeted market segments ........................................................................................... 23 Sources .................................................................................................................................................. 24

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1. Executive Summary
EasyJet is the second no-frills airline in Europe. It uses low-cost fares as an incentive to appeal to price-conscious passengers and business consumers. Its strategy is based on demand elasticity: the lower the prices, the higher the demand. However, given the increasing competition and market changes, EasyJet can no longer rely solely on pricing and selling orientation. In todays fast-paced market, the company has to implement new marketing strategies to remain competitive. Thus, our marketing objective will concentrate on building long-term relationship with customers while our societal objective will be related to green promises namely recycling, reusing and reducing our environmental impact. Our financial objective on its part will focus on growth in total revenue per seat, passenger numbers, gross profit margin and market share. Key strengths include our demand-based and dynamic pricing, environmental leadership, few frills and fast turnaround times aircraft. Weaknesses are lack of customer retention policy and focus on customers value, low level of customer service and the focus on pricing strategy essentially. Furthermore, EasyJet has no specific unique selling proposition and has to deal with it biggest competitors strengths: Ryanair offers the lowest prices in low-cost airlines market. This marketing plan highlights five opportunities: higher demand for low fares flights, recession, increase in the value of corporate social responsibility in the marketplace, demand elasticity and withdrawal of full services from regional market to international market. Five threats are also addressed: fluctuation in fuel prices, fast-paced and competitive market, natural disasters, low-cost airlines image and increase in carbon dioxide gases in the air due to aircrafts.

1. Business Mission
EasyJets mission statement is: To provide our customers with safe, good value, point-to-point air services. To effect and to offer a consistent and reliable product and fares appealing to leisure and business markets on a range of European routes. To achieve this will develop our people and establish lasting relationship with our suppliers1.

According to Brassington and Pettitt (2006), the purpose of a mission statement is to point out the essence, the value and the companys ideals clarifying managements priorities for shareholders and stakeholders. The rationale behind this is to help them understand the companys vision accurately in case they are considering investing in. For managers and employees, the companys mission is a kind of guide that must motivate and lead them to successful achievements. By claiming it provides point to point air services to its travellers, EasyJet clearly highlights its business area emphasising its strategy focused on cost efficiency. Simultaneously, it underlines the type of service it intends to offer. Furthermore, the market it serves and the customers it targets are respectively mentioned with European routes and business and leisure passengers. Thus, EasyJets mission answers to three questions which are a core requirement in a good mission
1

EasyJet [online]: http://www.easyjet.com/asp/en/book/index.asp?lang=en

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statement: What the company stands for?, Who will the organisation focus on as stakeholders?, What main markets will the organisation serve? Moreover, the guiding values the company intends to apply to achieve its goals can be clearly seen through safe, good value service. Finally, by stating its people and suppliers, EasyJets mission also shows it is capable of rallying employees and inspiring its stakeholders (Wood, 2010). However, this mission could be improved by adding the customers perception of the organisation, a focus on customers value that could differentiate and set the company apart from its competitors. Low fares airlines are seen as providing a low quality level of service to customers. EasyJet can position itself as the pioneer that breaks the mould. For instance, it could state we want to be recognised as, your satisfaction is our priority. Viability is also a crucial point of relevance. Is the mission statement aspirational and enduring to guide the organization into the future? EasyJets mission does not answer to this question precisely. For example, it could be expressed as We aim to be considerate as the best no-frill airline in the world making flying as affordable as coffee. Moreover, the airline industry is becoming green, people are adopting the green vision that is the catchword worldwide. Therefore, EasyJet could take advantage of this by insisting on its corporate social responsibility (its environmental code). For example, we consider striving for excellence in environmental activities as a vital behaviour for a successful and sustainable business.

2. External Marketing Audit

This section points out current market trends that are worth looking into since they are likely to have an impact on our marketing plan in the future. They should therefore be accorded great interest and taken into consideration for a successful definition of our objectives and critical implementation of new marketing strategies (Brassington, Pettitt, 2006).

1. Macroenvironment

Politico-legal factors As we plan to turn the world Orange, we must be aware of political and legal factors. For instance, the growing competition in the market leads to greater difficulties to obtain incentives from local communities. Furthermore, environmental damage and air pollution have become serious issues leading to health problems and affecting work efficiency of people. This is a consequence of a substantial fuel consumption and harmful gases emission. We thus have to reduce our carbon emission. Terrorism can also cause psychological shock and fear of flying. A prime example of this is anti-police riots which took place in Tottenham (North London) on 6th August 2011. The EU Eastenlargement should also be taken into consideration as it may create new opportunities for emerging countries and develop subsequently business and traffic in Europe as a whole.

Economic factors

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Economic changes may affect our operating results (costs, forecast sales and profit). For instance, fluctuation in fuel prices which involves a rise in oil prices will increase costs production and consumers may subsequently pay more. There is a strong likelihood that fuel costs will increase each year worldwide. Moreover, the cartel is likely to have a negative impact on oil prices due to instability in the Middle East where we have a significant presence. Another point worth mentioning here is demand elasticity which increase sales as travelling is portrayed as a luxurious good and the higher the demand, the better our expansion. Recession is also a key aspect since it has an impact on consumers buying behaviour. Many customers are eager to save money during this period. Both people and businesses are cost-conscious. Therefore, there is high price sensitivity in the marketplace and this may be an opportunity for EasyJet to attract price-sensitive travellers by offering low fares. Furthermore, the fear of recession is likely affect business travellers purchase decision as they may become a little suspicious about their travel expenses. Socio-cultural factors People are travelling more than ever due to globalisation effects. This may influence our sales. Additionally, depending on where they come from, people appear to be more demanding regarding quality and convenience. Similarly, they tend to become more suspicious about cheap flights prospection on magazines or the internet. This is owing to the final price (including taxes) which is generally much higher than the original price prospected to draw express attention of priceconscious travellers. Our communications must consequently be consistent. Moreover, the next Olympic Games will be held in London in 2012. This is an international and attractive event which may generate a lot of profit for EasyJet as the Olympics are well-noted worldwide. Technological and competitive factors Advanced technologies are an opportunity for us as they could help us develop our online marketing (booking, check-in). Paradoxically, the information becomes uncontrollable; competitors are offering similar services and the prices discrepancy on the Internet become easier. That means we must keep an eye on our competitors prices. In a globalised and challenging marketplace, we must always remain proactive by being constantly on the lookout for latest technologies (e-commerce, aircraft manufacture). The expected outcome is to gain a competitive advantage and to capitalise its technical know-how.

Ecological factors The value of Corporate Social Responsibility (CSR) has increased. In todays world, companies are likely to be widely recognised when they invest in environmental issues and respect the highest standards of social and ethical behaviour. Therefore, our vision as a green airline is in full compliance with the market tendency since environmental ethic is on the verge to become the catchword worldwide. It is clear that companies that encourage environments protection are perceived as bringing prosperity, growth and sustainability.

2. The Market

In Europe, the airline market includes three main types of carriers: full-service or network carriers (Britisk airways), low-cost airlines (EasyJet) and charter carriers or regional airlines (Lot Polish Airlines). There are three major segments of customers in this sector: price-conscious business Saphie Alim, A4032674 Page 6

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passengers, non-business passengers and quality-conscious business passengers. Passenger growth in the European short-haul market is expected to continue at 4% per annum, mostly in point to point business and leisure travel. Regarding routes, there are long routes and short routes. The European market could be represented like this:

No-frill airlines market is expanding progressively since 2000 (see appendix 1 p. 20). This market is led by Ryanair, EasyJet and Flybe that are using aggressive advertising techniques and pricing to penetrate the market and appeal to price-conscious business travellers. The worldwide market leader of low-cost airlines is Southwest Airlines in the United States. There is a clear trend towards growing economic volatility that creates greater uncertainty about future growth of no-frills carriers. Nonetheless, the low-cost airlines market is thriving (see appendix 1 p. 20). Although that economic instability may have adverse effects on low-cost airlines growth, their expansion has significantly affected yet positively the whole airline market. It has been estimated that their European market share is likely to rise slightly from 25 % to 35 % by 2020 establishing themselves on a long-term basis (Kentleton, 2010). Not only is low-cost carrier market portrayed as having a promising future, but it is also claimed that the sector is bound to be the dominant form of travel in Europe in the next decade. Price-conscious passengers are increasingly attracted by low-cost airlines tickets despite being aware of the price variation according to charges and taxes. Nevertheless, the sector is facing challenges in developing new routes and sustaining its growth.

3. Competition

Porters five forces are required to analyse competition properly. The threat of substitutes There are other alternatives modes of transport such as car or train which are cheaper sometimes. Saphie Alim, A4032674 Page 7

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The threat of new entrants The low-cost carrier market in the UK appears to be close to saturation. Nowadays, around 200 carriers compete in the European short-haul aviation market and the four leaders including EasyJet, represents roughly 60% of seats flown with the rest of the market. Low-cost business model is easy to copy, that encourages new entrants expansion. The power of suppliers Boeing and Airbus are the major airplanes manufacturers. Easyjet deals with Airbus solely. Relying on one manufacturer only (Airbus) may be a risk if the supplier fails to deliver on time for example or other suppliers offer lower prices.

The power of buyers No matter how expensive are tickets, consumers are buying as they are always seeking for the lowest prices. Most of consumers are price-conscious passengers, therefore, they are attracted by offers, and especially on the internet where prices are much cheaper. Rivalry among existing firms Globally, the leader of low-cost carrier airlines is Southwest Airlines in the USA. But the main low-cost carrier airlines that are operating from and to the UK are: EasyJet Flybe Ryanair Bmibaby

Since 1998, Ryanair is the most profitable low-cost carrier airline in Europe. He keeps its leadership thanks to its competitive prices, offering the lowest prices in the market2. An essential part of its success is also due to its strategy to reduce costs. A prime example of this is the choice of Ryanair to fly mainly to far secondary airports to lower costs despite passengers complaints. EasyJets direct and closest competitor is Ryanair as they are both using the same business model initially adopted by Southwest Airlines. This model consists of cutting costs, offering minimal frills and focusing essentially on pricing as well as turning flights around 25 minutes. The rationale behind this strategy is to provide a quick service and charge travellers for every extra, including snacks on board, handbags, food, check-in and priority boarding. The expected outcome is to keep operating costs as low as possible. Furthermore, an increasing number of intermediaries (like Thomas Cook, Flight centre) propose chartered flights and various packages (hotel+booking+safari tours) at competitive prices. Moreover, British Airways and other international carriers out of the UK (Air France, SM Brussels) are rivals as well but on a lower scale as they target different market segments such as wealthy individuals and high income earners. When booked earlier, passengers can get much cheaper tickets with those companies that offer a higher quality of service compare to low-cost airlines.

Rynair offers promotional prices periodically. It sells seats on selected and attractive destinations for 1 only to increase its market share and stay ahead of the competition.

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3. Internal Marketing Audit

1. Operating Results
Despite an increase in operating costs (4.3%)3 in 2010, EasyJet has achieved a remarkable performance compare to 2009. It has reinforced its position in short-haul travel aviation increasing its market share from 6.5% to 7.6%. Additionally, its total revenue per seat grew by 5.1% capacity measured in seat flown. EasyJet also managed to lower its underlying pre-tax loss increasing its cashflow by 283 million to 1,358 million (see appendix 2 p. 23).

2. Marketing Mix Effectiveness

Product

Few frills: EasyJet keeps costs down by charging passengers for every extra and offering few frills. Diversification and brand stretching: EasyJet offers also complementary servies such as car hire and accomodation on its website and customers can access to EasyGroup4 websites. Efficient jumbo jets: this is used in order to lower huge emissions of carbon and reduce fuel costs. One class: no business class seats to lower costs

Price

Reverse pricing system: the earlier customers book, the cheaper are the prices. Dynamic and demand pricing model: constant prices adjustments according to demand, flight dates and date of booking. EasyJet also cuts price temporary up to 50 % (promotional prices to avoid procrastination) to generate impulse purchase and create excitement. The stronger the demand, the higher the prices. Differentiated pricing: each segment of customers pays different prices for the same product or service. The company sets the price according to each groups behaviour and needs (Kotler et al., 2009). EasyJet suggests discounts for business travellers and tickets booked on the internet. Efficient jumbo jets: this is used in order to lower huge emissions of carbon and reduce fuel costs. Value for money: EasyJet do its best to offset the quality of the service its prices. Cost efficiency: due to its willing to lower it costs, EasyJet offers minimal frills and charges for every extra like priority boarding or snack board.

Promotion
3 4

EasyJet [online]: http://2010annualreport.easyjet.com/files/pdf/Full_Report_easyJet_AR10.pdf EasyJet is part of EasyGroup which is composed of EasyBus, EasyHotel and EasyCar.

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Aggressive advertising techniques: it has a bright and dynamic colour (orange) and catchy slogan: Come on, lets fly, the webs favourite airline. Moreover, its website is said to be one of the well-organised websites of low-cost carrier airlines. It is attractive and painted on plane. All its information is available on the website. Aggressive promotional sales on the internet: EasyJet offers discounts periodically to customers, especially during off peak period. For instance, they sell tickets at 9,99 to attract prince-conscious travellers. In addition, it offers incentives to passengers who want to book their tickets two months earlier: they can only book them online. The rationale behind this is to attract customers on their website since the internet is increasingly portrayed as the fourth power in todays world.

Place

Online reservation system: according to Brassington and Pettitt (2006), over 95% of booking are made online. EasyJet uses a direct marketing through the internet. The website is available in 15 different languages encouraging far greater flexibility and service efficiency than telemarketing could achieve as roughly seven e-mail bookings can be handled per second. The online Telephone booking: it is over 5% of booking. Customers mainly use telephone when they are dissatisfied and they want to complain or change their dates.

3. Marketing Structures and Systems

4. SWOT Analysis
The main purpose of SWOT analysis is to identify the key strengths and weaknesses within EasyJet, and help the company deal with the challenge of facing opportunities and threats in the marketplace. Wood (2010) also highlights the value of using SWOT analysis when he asserts that it enables to balance strengths and weaknesses. In addition, Wood (2010) adds that it anticipates threats and uses strengths to compensate weaknesses and threats.

1. Internal analysis: strengths and weaknesses

Strengths Weaknesses 125 airports (mainly major airports) and Brand name : easy to copy 29 countries Has little or no scope outside Europe Brand awareness Ryanair is much cheaper Dynamic and demand-based pricing Rely too much on price strategy, differentiated pricing Has no customer retention policy Saphie Alim, A4032674 Page 10

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A sustainable e-business : website (24/7 internet booking) Few frills Environmental leadership Carbon offsetting Efficient jumbo jets Fast turnaround times for aircrafts

Minimal services and no flexibility no focus on customers satisfaction and customer service

Strenghts

5 6

Brand awareness: EasyJet is part of EasyGroup which is composed of EasyBus, EasyHotel and EasyCar. Its brand name is popular in the UK. It has a bright and dynamic colour (orange) and catchy slogan: Come on, lets fly. Dynamic and demand-based pricing strategy: there are constant prices adjustments according to demand, flight dates and date of booking. EasyJet also cuts price temporary up to 50 % (promotional prices to avoid procrastination) to generate impulse purchase and create excitement. The stronger the demand, the higher the prices. EasyJet has a reverse pricing system: the earlier customers book, the cheaper are the prices. Differentiated pricing: each segment of customers pays different prices for the same product or service. The company sets the price according to each groups behaviour and needs. (Kotler et al., 2009) A sustainable e-business: its website is said to be the well-organised websites of low-cost carrier airlines. It is attractive and painted on plane. All its information is available on the website. Furthermore, booking and checking can be done on the internet: it is faster and beneficial for both the company and customers. Few frills: EasyJet keeps costs down by charging passengers for every extra and offering few frills Environmental leadership: Active member of the EU Emissions Trading Scheme (since 2003) which encourages companies to be more carbon efficient by reducing emissions significantly and banning dirty as well as old aircrafts. Simultaneously, EasyJet is supporting air traffic control in Europe as a whole, promoting its efficiency. It has an environmental code and campaigning for a greener future for aviation. The rationale behind this is to become environmentally efficient both on the ground and in the air. Carbon offsetting: with EcoJet, they balance the effect of the carbon emission from flights by encouraging certified projects such as Perlabi Hydroelectric in Ecuador5. They buy credits from this project which has been certified and essentially supported by United Nations Framework Convention. He has managed to lower the administrative costs of its carbon offsetting thanks to this scheme. Efficient jumbo jets: this is used in order to lower huge emissions of carbon and reduce fuel costs. EasyJet was designed to cut CO2 emission by 50 % in 20156. Fast turnaround times for aircrafts: this is an efficient system which increases flights frequency. For many destinations, EasyJet now offers frequencies better than British

EasyJet [online]: http://www.easyjet.com/asp/en/book/index.asp?lang=en EasyJet [online]: http://www.easyjet.com/asp/en/book/index.asp?lang=en

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Airways. Higher frequencies mean low-cost airlines become more attractive to business travellers who are finally a significant and key proportion of passengers for EasyJet.

Weaknesses

Has little or no scope outside Europe: this is a huge drawback if EasyJet is willing to expand globally. Ryanair is much cheaper: Ryanairs fares start from 0,99 to 1 while EasyJet ones start from 8,99 to 9. Ryanairs average price is roughly 40 whereas EasyJet ones is around 60 (excluding taxes and charges). Low level of customer service: the after-sales service is particularly mediocre and need to be significantly improved. Rely too much on price: in a customer focused market, relying solely on pricing may be a dramatic mistake and increasing the risk of failure in a company business. Developing other marketing strategies such as customers loyalty or enhancing customer service efficiency are to be core requirements in todays world. Minimal services and no flexibility: changing the tickets time or day (because of time or other unexpected factors) are often more expensive than the original ticket price. Buying a new ticket is cheaper than modifying an existing ticket. This leads to customers dissatisfaction, complaints and hassle.

2. External analysis : opportunities and threats

Opportunities Threats Low-cost carrier market growth Natural disaster Recession Fast-paced and competitive market environment Increase in the value of corporate social responsibility Terrorism Higher demand for travels from Fluctuation in fuel prices and travel European countries to the UK taxes Withdrawal of full services from regional Aircrafts increase carbon dioxide gases market to international market in the air Demand elasticity Growing interest for corporate social responsibility (see External Audit, Substantial increase in short haul travels Ecological factors)

Opportunities

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Low-cost carrier market growth: despite an uncertain future, the low-cost carrier market is thriving. The expansion of low-cost airlines has significantly affected yet positively the whole airline market. It has been estimated that their European market share will be expanded from 15 % to 25 % by 2020 establishing themselves on a long-term basis (Smiddy, 2010). Not only is low-cost carrier market portrayed as having a promising future, but it is also claimed that low-cost airlines are bound to be the dominant form of travel in Europe in the next decade. Recession and the airline market growth: many customers are eager to save money during this period. Both people and businesses are cost-conscious. Therefore, there is high price sensitivity in the marketplace and this may be an opportunity for EasyJet to attract pricesensitive travellers by offering low fares. Higher demand for travels from European countries to the UK owing to market movements: this is said to be one of the consequences of the weakening of the pound against the euro. Withdrawal of full-service airlines from regional market to international market: Fullservice airlines like British Airways are likely to withdraw from the regional market to concentrate on more profitable long-haul routes leaving the market to the low-cost operators7. The demand is elastic: since travelling is portrayed as a luxurious good.

Threats

Brand image: low-cost airlines are said to be providing a low level of service and customer care. Customers perception about these airlines is not positive at all. Natural disaster: this may lead to long delays or flight cancellations. For instance, the volcanic ash cloud over Europe in April 2010 leads to many delays. EasyJet had to offer compensations or refunds and deal with customers dissatisfaction. The company lost roughly $ 200 in a day. Fast-paced and competitive market environment: the low-cost carrier market is a promising and saturated market where competition is likely to intensify in the next decades with new entrants, substitutes, market movements and existing organisations. Competitors are offering similar services and the prices comparison can be done easily on the Internet. There are also alternatives and cheaper modes of transport. An illustration of this is the bus company Eurolines and the rail companies such as Eurostar and Thalys (cheaper when tickets are booked earlier). People prefer them also as they stop in the town center unlike low-cost airlines which stop sometimes so far away from city centres. Some people may use their own cars. Terrorism: it can cause psychological shock and fear of flying. For instance, anti-police riots which took place in Tottenham (North London) on 6th August 2011. Fluctuation in fuel prices and travel taxes: a rise in oil prices will increase costs production and consumers may subsequently pay more. There is a strong likelihood that fuel costs will increase each year worldwide. Moreover, the cartel is likely to have a negative impact on oil prices due to instability in the Middle East. Finally, increased travel taxes may affect the ability to offer the lowest fares.

EasyJet [online] : http://2010annualreport.easyjet.com/files/pdf/Full_Report_easyJet_AR10.pdf

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Marketing & Management 2011 3. Situational analysis

EasyJet is the second company in the low-cost airlines sector in Europe. EasyJet has a selling orientation marketing strategy which is essentially based on pricing. Furthermore, the company focuses on offering few frills to lower costs and expanding its route network especially in Europe. It has the ambition to be the largest no-frills airline in the continent. What sets it apart from the Market leader Ryanair is that it mainly targets business consumers and provides better customer service. In a growing and saturated market, it can be clearly seen that the company is well positioned although competition is likely to increase. Mc Call (2011), EasyJets chief executive supports this statement when she asserts that their network not only ensures that EasyJet is well positioned to capture leisure traffic but also will enable easyJet to continue to build its share of the 18 billion per annum European short-haul air travel market. However, pricing is not a sustainable strategy if EasyJet aims to become the market leader consolidating its position, improving its market share and establishing itself in a long-term basis. This approach also becomes a considerable drawback when customers associate price with quality. In addition, focusing solely either on pricing or lowering costs may be a dramatic mistake as the market is constantly moving owing to the threat of new entrants that can create price war, changing in customers needs and the likelihood of market followers. Another point worth mentioning here is the lack of a unique selling proposition in the marketing mix which subsequently deserves some improvements. EasyJet offers nothing that Ryanair is not providing yet. Therefore, we need to implement new marketing strategies to remain competitive and viable in the future.

4. Marketing plan direction and objectives

1. Strategic thrust and objectives

As argued previously (see 2. Business mission p. 4), the new mission statement will also be focusing on customers satisfaction, leadership in the low-cost airlines market and environmental activities. The rationale behind this is to be perceived as a viable and modern company which considers its passengers as a priority. The secondary outcome is to promote a forward-looking strategic approach among stakeholders. Our marketing plan covers two years (2011-2013) and if the marketing strategies implemented are successful, they will be maintained. We aim to pursue a growth strategy. From late 2011 to 2012, our direction will be a market penetration approach in order to consolidate our brand image and strengthen our relationship with customers (brand loyalty). We will target non-business consumers and business passengers. For 2013, we are planning the market development strategy to expand our market by reaching another segment of consumers such as students which are known for their price sensitivity.

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Marketing objectives

In a customer-focused marketplace, selling orientation and cost focus are no longer enough on its own. EasyJet needs to concentrate on building long-term relationship with customers. The expected outcomes are: developing customers loyalty through a good quality of service (focus on satisfaction and customer service); reinforcing brand awareness both in Europe and worldwide as evidenced by an increase in the demand (maximising brand awareness during the Olympic Games in 2012). The last objective is to implement a unique loyalty program for each consumers segments. This may help EasyJet capture market share from Ryanair by using differentiation.

Societal objectives

The primary objective is to minimise our environmental impact by recycling, reusing and reducing air pollution, huge emission of carbon as well as fuel costs. We are also planning to emphasise our environmental promises on sustainable development and green future. We aim to be portrayed as a green airline associated with environmental issues and ethical activities. We are essentially targeting business consumers and our shareholders here.

Financial objectives

In this report, we are assuming that EasyJets annual report of 2011 is the same as 2010 since the report of this year is not published yet. Thus, in September 2012, we are expecting a growth in total revenue per seat, up 8.1%, following strong growth in 2011 (up 5.1%)8. Passenger numbers may be up 10% to 48.82 million from 7.9% in 2011. Furthermore, we aim to improve our gross profit margin by 11% to 13% in order to increase our return on equity to 12.7% from 8.6% in 2011. We will also enhance our margin through fuel cost reduction (roughly 130 million from 122.7 million in 2011). Finally, we are hoping to gain market share across Europe by consolidating our position in European short haul aviation as a whole. We are thus planning to increase our market share from 7.6% to 11.6%. In 2013, we intend to improve our market share from 11.6% to 13.6% and to reduce our fuel costs from 733.4 million in 2011 to 720 million in 2012.

2. Critical issues
Our biggest competitor Rynair uses cost leadership by serving secondary airports to lower costs and proposing the lowest prices in the market place. Thus, Ryanair managed to achieve high sales levels maintaining its cost advantage and staying ahead of the competition. We have to focus on customers value in order to deliver a high level service with superior performance and flexibility. We should also anticipate the demand and passengers preferences. That may help us challenge our rivals and retain customers loyalty.
8

EasyJet [online]: http://corporate.easyjet.com/media/latest-news/news-year-2010/11-05-10.aspx

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5. Core strategy
1. Target market(s)

Market penetration We are targeting two major consumer market segments (see appendix 5):

Non-business consumers: this group includes price-sensitive adults aged (18-25, 26-45 and 46+) who belong to middle class, with middle to high income levels. They are travelling for leisure or personal reasons from/to Europe. Low prices are their priority but they tend to become more demanding concerning customer service quality Business consumers: this group consists of price-conscious business passengers and quality business consumers who are adults aged (24-45, 46+) travelling for professional reasons from/to Europe. The first segment focuses on low fares rather than quality while the second one is more concerned about quality, safety and convenience.

We will concentrate on customers value by adapting our marketing strategies to each segments needs and behaviour (see appendix 3 p. 23). A prime example of this is our differentiated marketing approach. For quality business consumers, we will be concentrating on high level of customer service and green initiatives promotion whereas for those who are price-conscious consumers, we will use aggressive advertising techniques based on pricing. We will also retain business consumers through loyalty schemes as they have always been our most profitable target.

Market development We will focus on students aged 18-25 who are travelling from/to Europe. We will have an aggressive pricing approach as they are price-sensitive and constantly seeking for promotions.

2. Competitors targets
Low-cost airlines are generally targeting price-conscious consumers (leisure travelers). EasyJet is the only major low-cost airline which arguably favours business passengers.

3. Competitive advantage
EasyJet has currently no specific unique selling proposition which sets it apart from rivals despite being the only European no-frills airline which mainly serves primary airports. He has a strong presence in the leading network (European short-haul aviation) operating on the top 100 routes. Saphie Alim, A4032674 Page 16

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Nonetheless, a particular focus on customers care and expectations as well as corporate social responsibility can be suggested. We are planning to provide an excellent level of service emphasising customers value. For instance, we will offer greater customer service assistance for online and telephone booking. The after-sales service will be quicker. Greater interest will be accorded to the service on board which will be more efficient with a higher level. The rationale behind this is to be perceived as the company that breaks the mould since low-cost airlines are portrayed as offering the lowest level of service and making profits companies. In addition, we will launch a unique loyalty scheme to retain our loyal consumers, especially business passengers. Membership loyalty cards Golden EasyMiles will be proposed to business travelers. The card will be free of charge; they will only need to give their details to obtain the card and open their account. The more they travel, the greater the reward. Gifts will be received according to miles. Consumers who travel regularly will obtain more points. For special events such as Christmas, Labour Day or birthday, we will offer extra bonuses to consumers. Every transaction with EasyJet including (priority boarding, snack on board and other extra) will give miles to consumers. The premise behind this scheme is to allow consumers to accumulate the maximum points to receive gifts. Gifts will vary from household items, electronic to free trips, flight rewards and reward shop (discounts in certain well-known shops). Generous passengers will be given the opportunity to offer their miles to underprivileged children in orphanages and hospitals. Furthermore, EasyJet should have the same policy everywhere. At the moment, in certain countries, both EasyJet and Ryanair charge passengers who print their boarding card at the airport. This service can be free of charge. Moreover, EasyJet could keep promoting intensively its green vision among business travelers. It should continue positioning itself as a green airline that encourages carbon offsetting and air pollution reduction through different incentives (new aircrafts design based on green vision with EcoJet, partnerships, research and development). The rationale behind this is to provide sales assistance, superior problem-solving, convenience and superior brand personality to customers. That will strengthen our corporate social responsibility as well as our customers reliability.

4. Marketing mix decisions

The 4Ps will cover the coming year and 2013. Product Two of our main objectives consist on reinforcing our brand awareness and offering higher level of service. Therefore, the emphasis will be put on: Jumbo jets: help EasyJet lower fuel consumption and gases emission. New designs and brand: green aircrafts designed by EasyJet with EcoJet to highlight its positioning as a green airline. Quality and performance: higher level of service will be delivered to passengers. The focus will be on customers value. Page 17

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Loyalty schemes: membership cards will be launched to retain business consumers loyalty (see)

Promotion To achieve our societal and financial objectives, we will also need to insist on: Consolidating brand awareness through environmental activities and EasyGreen campaign: EasyJet could develop partnerships with green companies and launch green campaigns. It can take advantage from the Olympics in 2012 to increase its reputation emphasising its green vision and enlarging its public to people outside the UK. It can use aggressive advertising techniques on its website and direct marketing (emailing, sms).The premise behind this is to appeal to companies whose staff is used to travel with EasyJet. Those companies are likely to improve their image if EasyJet become associated with environmental initiatives. Therefore, business consumers will start identifying themselves to EasyJet adopting the being green attitude. It could also invest more on Research and Development ( 30 000). CRM: Cause Related Marketing will help EasyJet highlight its positioning as a caring line by collecting foreign currency on board and donation on its website for less fortunate children (charities). Through this program, EasyJet could attempt gathering celebrities as well for charities events and ethical activities thereby appealing to its stakeholders and giving its passengers a psychological sense of well-being. London Olympic and Paralympic Games (from 21st July to 9 september 2012): EasyJet could cut prices for early bookings (2 months earlier). The lowest price could start from 5.99 instead of 9.99. Communication on new loyalty cards: Golden EasyMiles Cathy logo dynamic slogan: Its easyJet being green

Price The initial pricing system will be maintained (see ) with an emphasis during the Olympics. Prices will be increased aggressively in order to improve sales and generate profits reaching 13% gross profit margin as stated in our financial objectives. There will be two major changes:

EasyJet will give choice to customers: they could either print their boarding card before or at the airport. The service will be free of charge. 15% discount for students (from 2013) to attract them as there are price-sensitive. Flexibility: passengers will henceforth have the right to change their dates of travel up to three days before departure. This modification will be free of charge except if the passenger does not respect the given deadline. Page 18

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Place

Online booking: EasyJet will continue booking on the internet by emphasising more on customer service quality. Telephone booking: the level of the service will be improved as well.

The main objectives of our new marketing mix are to provide superior quality and performance (added value to passengers), to anticipate customers needs quicker than rivals and to build longterm relationship with customers. We aim to be better, faster and closer. These elements have been critically described to provide a measurable outcome.

6. Budget
The budget will be the same as the one in 2011. We will only modify Research and Development budget (R&D). This year, we will invest 30 000 for R&D. As we will recruit 4 interns, the personnel budget will thus increase. Each intern student will be paid 600 per month (see annual report 2010)9. We will also increase marketing/communication budget from 90 000 to 100 000 in order to optimise our advertising campaigns during the Olympic Games.

7. Organisation and Implementation

James Millett, EasJets head of digital Chief executive Carolyn McCall will be responsible for our marketing strategies implementation and decisions. They will be assisted by the head of brand and the head of marketing and communications. These two managers will be in charge of campaigns organisation and sales promotion. Four interns will analyse our operating results in order to control performance and quality.

8. Control
Given the crucial importance of marketing objectives and the challenge of meeting the goals, a proper screening of performance is a core requirement. We will have to ensure that our initial objectives have been achieved. A key part of this is an evaluation of our marketing mix through assessment tools. The rationale behind this is to ensure that performance does match objectives. We will implement short-term control and long-term control. Short-term control will include:

EasyJet [online] : http://2010annualreport.easyjet.com/files/pdf/Full_Report_easyJet_AR10.pdf

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Costs analysis (monthly and annually) Cash flow evaluation (monthly and annually) Sales profits (monthly and annually) Research and development, image as green and socially responsible airline (twice-yearly) Customer service and loyalty schemes assessment through short questionnaires of satisfactions (on a monthly basis) Recycling, reusing and reducing (air pollution and fuel costs) on a quarterly basis. Operating results: evaluation of gross profit margin, total revenue per seat, return on equity, passengers numbers (quarterly and annually) Market share (annually)

We are planning to recruit 4 trainees in 2012 from september to March 2013 to work on control and performance. The control will be on performance criteria. A weight will be arbitrary assigned to each criterion. Finally, we will give a score to each element. An illustration of this is the table below:

Performance Criterion Market share Profit margin Competitive advantage Customer satisfaction Project risk

Weight 30 20 15 30 5

Score /10 /10 /10 /10 /10

Weaknesses of marketing plan implementation will hence be identified and we will suggest recommendations to face them. Strategies will also be proposed to anticipate potential issues.

9. Appendix
Appendix 1: Airline market growth

The average growth of the market over the past 20 years has been 4.5% per annum. In the past year, overall capacity in the European short-haul market grew by 4.2%. Total passengers numbers across low-cost carriers in 2010 jumped 15.7% to 639.6 million, while passenger load factor grew nearly three points to 79.7%. Profits also took a turn for the better during 2010 with operating profits from nearly 30 top low-cost carriers worldwide doubling to reach $4.2 billion over the previous year (Dunn, 2011). Despite the recent recession, no-frill airlines continue growing. There is a clear indication that major low-cost airlines worldwide have performed well since 2000. Their profitability tends to increase.

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Intra European passenger airline market share, 2000-2010

Source : AEA IATA Mercer analysis.

Appendix 2: Forecast and financial details

2010 Half Year Results easyJet performance continues to strengthen Results at a glance 2010 1,170.7 (78.7) (78.7) (6.7) (4.4) (13.9) 2009 1,032.8 (129.8) (116.5) (12.6) (7.4) Change 13.3% 39.4% 32.4% 5.8ppt 3.0ppt

Total revenue ( million) Loss before tax underlying ( million) 1 Loss before tax - reported ( million) Pre tax margin underlying (%) 1 Return on equity (%) Basic EPS - reported (pence)

(20.4) Page 21

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2010

2009

Change

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Appendix 3: Targeted market segments

Targeted segment: Non-Business passengers Aged 18-25, 26-45 and 46+, men and women with middle to high income levels

Characteristics and needs

Our approach

- Price-conscious passengers who are more concerned by low prices than quality and comfort. They are looking for the lowest prices and safety. They tend to become increasingly demanding concerning customer service quality. They are generally travelling from/to Western Europe. - They are traveling for leisure (tourism) or personal reasons. - They have low expectations and they are familiar with the internet Business consumers They require high level of customer service, reliability, convenience and Price-conscious and frequent flights. Safety and destinations quality business are also their key concern. consumers

- Cutting prices periodically and offering care and a high level of customer service. - Being considered as making flying as affordable as a cup of tea.

- Turning flights around 30 minutes and offering a high level of service. - Promoting green vision to develop brand awareness, sensitising them to our environmental initiatives and corporate social responsibility. - Loyalty schemes will be launched to retain them. For quality business consumers, the emphasis will be put on loyalty schemes and high level of customer service.

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Sources
Books Blackwell, R., Miniard W., Engel, J., 2005, Consumer behavior. 10th editition. New-York: Paperback, p. 27. Brassington, F., Pettitt S., 2006, Principles of Marketing: Enhanced media edition, 4th edition. Pearson Education Limited, pp. 859-1008. Jobber, J., 2001, Principles and Practice of Marketing. 3rd Edition. London: McGraw-Hill International, pp. 394-450. Murphy, C., 2005, Competitive intelligence: gathering, analyzing and putting it to work. New South Wales: Hardback, p. 49. Porter, M., 1998, Competitive strategy: techniques for analyzing industries and competitors. Cambridge: Free Press, pp. 58-67. Woods B. M., 2010, Essential Guide to Marketing Planning. 2nd edition. London: Pearson, pp. 34-59. Websites Kentleton, R., 2010, 2010 half year results. [online] (11th May 2010) Available at: http://corporate.easyjet.com/media/latest-news/news-year-2010/11-05-10.aspx [Accessed 18 August 2010]. Mc Call, C., 2010, Annual report and accounts 2010. [online] (28th September 2010) Available at : http://2010annualreport.easyjet.com/files/pdf/Full_Report_easyJet_AR10.pdf [Accessed 19 August 2011]. Magazines Johnson, B., 2011, Marketing Week, EasyJet readies marketing team for European challenge, 26 May, p. 17. Parsons, R., 2011, Marketing Week, EasyJet hit by fuel and duty costs, 10 May, p. 12.

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