Ryanair Marketing Plan - Sameh Nassar

1. Main page

Marketing and Business Environment

Marketing Plan Assignment

Tailored for

By

Sameh Ashraf Nassar

M100-5955

MBA - INTAKE 9 - OCT, 2011

http://www.lsbf.org.uk/

Marketing Plan for Ryanair

2011

Sameh Ashraf Nassar - M1005955 2

2. Table of Contents

1. Main page .................................................................................................................................................. 1

2. Table of Contents ...................................................................................................................................... 2

3. Table of Figures ......................................................................................................................................... 3

4. Executive Summary ................................................................................................................................... 4

5. Business Mission ....................................................................................................................................... 4

6. Introduction............................................................................................................................................... 5

7. Marketing Audit ........................................................................................................................................ 5

7.1 The External Environment ................................................................................................................. 5

7.1.1 PESTLE Analysis ............................................................................................................................ 6

7.2 Internal Environment (Micro) .......................................................................................................... 8

7.2.1 SWOT Analysis ............................................................................................................................. 8

7.2.2 VRIO Framework: ......................................................................................................................... 9

7.2.3 Value Chain Model ..................................................................................................................... 10

8. Competitors Analysis ............................................................................................................................... 10

8.1 Evaluating Competitors.................................................................................................................. 10

8.1.1 EasyJet ........................................................................................................................................ 10

8.1.2 Aer Lingus ................................................................................................................................... 11

8.1.3 bmibaby ..................................................................................................................................... 12

8.2 BCG Matrix ..................................................................................................................................... 13

8.3 Porter’s Five Forces ........................................................................................................................ 14

8.3.1 Barriers to Entry (High) .......................................................................................................... 14

8.3.2 Bargaining Power of Customers (High) .................................................................................. 14

8.3.3 Negotiation Power of Suppliers (Medium) ............................................................................ 14

8.3.4 Substitute for Product (Medium) ........................................................................................... 14

8.3.5 Threats of Competitors (Medium) ......................................................................................... 15

9. Marketing Objectives .............................................................................................................................. 15

10. Core Strategy ........................................................................................................................................... 16

10.1 Ansoff Matrix ................................................................................................................................. 17

11. Marketing Mix ......................................................................................................................................... 17

11.1 Product ........................................................................................................................................... 17


2011


11.2 Price ............................................................................................................................................... 17

11.3 Place ............................................................................................................................................... 17

11.4 Promotion ...................................................................................................................................... 18

12. Financial Budget ...................................................................................................................................... 18

13. Implementation ....................................................................................................................................... 20

14. Control ..................................................................................................................................................... 20

15. Conclusion ............................................................................................................................................... 20

16. Bibliography............................................................................................................................................. 21

3. Table of Figures

Table 1: Ryanair keyfacts . ....................................................................................................................... 5

Table 2: SWOT Analysis ............................................................................................................................ 8

Table 3: VRIO Model ................................................................................................................................ 9

Table 4: EasyJetkey facts ........................................................................................................................ 11

Table 5: Aer Lingus Key facts ................................................................................................................. 11

Table 6: bmibaby key facts .................................................................................................................... 12

Table 7: International Scheduled Passengers Carried ........................................................................... 12

Table 8: BCG Matrix ............................................................................................................................... 13

Table 9: Ansoff Matrix ............................................................................................................................ 17

Table 10: Ryanair Financial Facts ........................................................................................................... 18

Table 11: Airlines net profit figures for 2011 ......................................................................................... 19


2011


4. Executive Summary

Ryanair is the most popular and successful low cost airline in the European market, well-known to

be traveller’s favourite choice. However, this success is based on well identified objectives, strong and

focused strategic management.

This marketing plan focuses on all the factors facing Ryanair in the current environment, highlighting

the most recent challenges, and frequent change in the market; By using various modern methods of

marketing analysis, as a result clear effective objectives are identified setting strategies for Ryanair to

adopt, in order to increase their profitability and improve their reputation in the market.

5. Business Mission

Ryanair does not publish a formal vision or mission statement. however, Ryanair’s CEO Michael

O’Leary’s, announced in a public statement, that their mission is to simply continue on being the most

profitable low cost airline in all markets where they operate, while constantly working to lower their

costs and increase the number of passengers. (Box, 2007)


2011


6. Introduction

Ryanair was established in 1985 by the Ryan family and was the first company to introduce the

LCC1 model in the European market, adapting the No-frills2 approach from Southwest Airlines in

United State. Ryanair has adapted this strategic approach and gained the market leadership and is

considered to be the most favourable airline company in the European market.

Ryanair currently operates more than 1,400 flights daily from 44 bases and over 1300 routes across 27

countries, connecting 160 destination together daily (Ryanair, 2011). Ryanair presently owns a 272

aircrafts fleet, consisting only of new Boeings 737-800, with 64 new aircrafts in the pipeline within the

next two years.

Ryanair employs over 8,000 employees and expecting to transport more than 75 million passengers by

2012. The main operations are focused on the European continent; facing competition from

traditional and charter airlines, while approximately 50 other low-cost companies are replicating their

no-frills approach.

The following table outlines Ryanair key facts:

Table 1: Ryanair key facts (Ryanair, 2011)

Ryanair Highlights Total fleet number 272 Boeings 737-800 aircrafts

Number of Routes and airport bases 1300 Route from 44 bases across 27 countries

Number of Passengers 72.1 million in 2011 (8% increase from 2010)

Total revenue 896 (€ Million)

Employees Headcount 8,063

7. Marketing Audit

The marketing audit analyses the external and internal environment separately as to be aware of all

the factors that might affect Ryanair’s situation in the airline industry. As a result, more information

will be obtained; making their future strategic decisions more effective, while developing the

company’s awareness of the market dynamics.

7.1 The External Environment

The external factors that can affect the organisation as a whole cannot be controlled by the

organisation’s management, they have to face and overcome these issues practically without

disturbing their operating environment as they greatly affect their profits and stability, these factors

are analysed by using PESTEL analysis.

1 LCC: Low Cost Carrier

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


2011


7.1.1 PESTLE Analysis

Political and Legal Environment

Since that the European market is Ryanair’s main focus, it supported in the stability of their

operations, due to the political solidity of the European Union (EU); however it is constantly facing

tough policies from different regulatory bodies.

The European Union authorities is continuously forcing strict regulations for the airline industry,

regulating the licensing of community air carriers, the law applicable to them and the pricing of air

services. In order to give the opportunity for a fair competition between all the companies in the

industry (EU Regulation: No 2407/92), not only that but the EU also have firm policies regarding

noise and air Pollution known as “Clean Air for Europe” Programme and the INSPIRE initiative,

where both policies aim to significantly reduce pollution by 2020. (Y.GOOSSENS, 2008)

Moreover, the Trade Union operates a distinct system of labour legalisation and is continuously

updating the framework of these laws, ensuring a non-discriminatory environment for employees in

the industry; In contrast, such regulations can seriously affect the profitability of airline companies.

On the other hand, there is a bright side for Ryanair from the political point of view; having Europe

as their main target market, offers stability to Ryanair and flexibility to its clients, to move easily and

freely between cities. However, in other continents, it would be much more different or at least the

same huge customers flow would not exist, but in Europe the situation is different and more flexible

due to the EU association, as a result, any country joining the European Union in the future, reveals

new opportunities and fresh markets for Ryanair to expand their routes.

Economic Environment

Currently the global economic environment is insecure and unpredictable for all the industries as a

whole, the world is facing a major financial recession over the past 3 years; affecting the profitability

and growth of all companies worldwide, meanwhile the LCC market is one of the very few industries

that wasn’t affected by the drop down, as a result of their main strategy of providing to customer

the lowest prices; considering that air travel is a necessary service that people will never abandon,

But they will constantly seek out for the lowest prices.

Another major factor affecting the airline industry is the global price of oil, which is regularly

increasing and affecting the prices of all sorts of transportation, where any increase in oil prices

directly reflect on the cost of aircraft’s fuel eventually raising the price of tickets. However, Ryanair

is controlling this problem by hedging 90% of its fuel costs, (Ryanair, 2011) through signing long

term contracts with their suppliers, as they know that they must purchase fuel for as long as they

want to stay in business.


2011


Social Environment

Logistics is no longer a concern as it used to be in the past, many people now travel frequently for

business purposes, also students globally are travelling abroad for studies in different countries,

aside to that, people all over the world are regularly seeking to travel to new destinations for

vacations. Ryanair target all the three segments of the market.

Moreover, the European culture is different from any other, where all European citizens are usually

travelling to different countries in Europe without restrictions, as easy as going to any city within

their homeland, which is not the case in any other culture, where citizens do not have this

advantage.

Technological Environment

Ryanair is strongly focused on using technology in their operations, as it assists prominently in

applying their low cost strategy. The internet booking rate at Ryanair is enormously high, up to 95%

of their tickets are booked through their website (Ryanair, 2011), therefore they rely less on

outsourced travel agents, also their online check in systems supports in decreasing the cost of

airport personnel; in addition to faster check in, consequently maintaining a quick turnaround.

Last but not least, is the use of GPS3/GBAS4 technology, several airlines already started switching to

the GPS guided digital system; using satellites to constantly calculate the aircraft’s speed, altitude,

and proper approach, resulting in better synchronisation for flight operations, and more organized

take offs and landings. Aviation consultant Michael Boyd estimates that the U.S. airlines alone waste

up to $9 Billion yearly on flight delays beyond their control, which proves that the use of this

technology allows airlines to fly better, and more efficiently. (LINDSAY, 2009)

Environmental Analysis

The main concerns about the impact of aviation on the environment is the level of CO2-emission,

and noise pollution caused by aircrafts, however Ryanair’s current fleet age is averaged to 3 years,

therefore such modern fleet is not threatened by any of the EU regulations regarding these

environmental factors. (Ryanair, 2011)

Moreover, On November 19, 2008, the European Council of Ministers added aviation to the EU

Emissions Trading Scheme as of 2012. This scheme is a cap-and-trade system for CO2 emissions to

encourage industries to improve their CO2 efficiency. As per the legislation, airlines will be granted

initial CO2 allowances based on historical “revenue ton kilometres” and a CO2 efficiency benchmark.

To address any further requirement, allowances need to be purchased in the open market and/or at

government auctions. This can affect Ryanair's cost management based on the allowances to be

needed in 2012. (Ryanair, 2011)

3 GPS: Global Positioning System

4 GBAS: ground-based augmentation system


2011


In addition, other environmental disasters like last year’s volcanic ashes disruptions, and airport

snow closures, resulted in the cancellation of more than 10,000 of Ryanair flights, the financial loss

was estimated to €29 million as they were obligated to compensate all customers according to

EU261 regulation “right to care”, although it was a natural disaster and completely beyond the

control of Ryanair.

7.2 Internal Environment (Micro)

The overall evaluation of Ryanair’s strengths, weaknesses, opportunities, and threats is called

SWOT analysis; it involves monitoring key factors affecting the internal and external marketing

environment. The purpose of this section is to scan and discern opportunities in the market to

increase the company’s profit. (Philip Kotler, 2006)

7.2.1 SWOT Analysis Table 2: SWOT Analysis

Strengths Weaknesses

Inte

rnal

En

viro

nm

ent

First LCC in the market

Strong brand name

(Ryanair the low cost airline)

Good deals with suppliers

( i.e. aircrafts, airports)

Single brand of aircrafts (Boeing 737-800)

Most flights are fully booked

Fuel Hedging leading to stable fuel prices

High internet booking rate (94%)

Punctuality (No.1 on time airline award)

Fast Turnarounds (average 25 minutes)

Efficient fleet utilisation

Proficient management team

Not vulnerable to economic recession

Sensitive to any increase in charges

(Fuel, tax, airport charges)

Airports bases located faraway from

destinations

Poor customer relationship management

Low employee moral leading to less loyalty

Constantly observed by the press

Limited access to landing slots in major airports

Opportunities Threats

Exte

rnal

En

viro

nm

ent

European Union Expansion

Increase market share

Acquisition of smaller LCCs

Expand operations and assign more routes to

the global market

Innovate and develop more ancillary services

Aggressive competition from both traditional

and low cost airlines

Customers only loyal to the best price

Oil market not stable

Other substitutes for traveling can be more

practical for several locations

Strict Environmental rules and compensation

policies.

Risk of suppliers raising costs when renewing

contracts


2011


7.2.2 VRIO Framework:

The VRIO framework analyses the organisation’s internal environment, by tailoring this model to

Ryanair’s resources and capabilities, the management can determine their competitive potential.

Table 3: VRIO Model

Value Rareness Imitability Organisation

Physical Yes Yes No Yes

Reputation Yes No Yes Yes

Organisational Yes No Yes Yes

Financial Yes Yes No Yes

Intellectual Yes Yes Yes Yes

Technology Yes/No No Yes Yes

Physical: Ryanair currently possess 275 Boeings 737-800 aircrafts, rather than its major opponent

Easyjet who’s currently operating 196 aircrafts of multi brands, leased and owned, and expected to

reach 220 by 2013. (EasyJet, 2010), Ryanair is still ahead in fleet size, market share, and number of

passengers, but still has to continually innovate and develop their strategy to retain their edge.

Reputation: No frills Service, budget carrier, cheerful crew, also gains a lot of publicity across Europe

as a result to several publicity stunts by their CEO Michael O’Leary, however such stunts sometimes

result with law suit and enemies due to his “brash and arrogant” attitude. (Moores, 2010)

Organisational: Simple and focused on the basic flying service, no meals or seats allocation

provided. Also relinquished their outsourced agent, and depend on Internet bookings, they maintain

a quick turn-around time of flights (Avg. 25 minutes), also rely mainly on secondary airports;

lowering their operational costs.

Financial: holds a strong financial position in the market, Ryanair’s net profit after Tax in 2011 is

€401 million, with a 26% rise over last year’s € 319 million. While the average fares rose 12%. Unit

costs rose by 11% due to higher oil prices and a 10% increase in sector length. Excluding fuel, (up

37% to €1,226m) unit costs rose by just 3%. (Ryanair, 2011)

Intellectual: Ryanair’s management board with the lead of their CEO Michael O’Leary, they have a

highly focused vision, and always put forward new innovative ideas to help secure their position as a

leader in the industry.

Technological: the use of technology in Ryanair’s operation has proven their dominant effect of

lowering cost and easing their operation, more details will follow in this report.


2011


7.2.3 Value Chain Model

The value chain model breaks down businesses into five 'primary' and four 'support' activities. As

observed from the previous analysis, Ryanair business is centred on lowering costs in every single

element of the value chain. In this model, it is clear how each such strategy is applied to all primary

and secondary activities. As a result, Ryanair maintains a lower cost base than its competitors, whilst

providing punctuality and safety. (Philip Kotler, 2006)

Figure 1: Value Chain

8. Competitors Analysis

Although Ryanair is the leader in the LCC market, however they are facing tough competition from

other Major Low budget and traditional carries, in this section we will highlight on 3 of their major

rivals in the industry, following by BCG matrix (also known by Portfolio Analysis)

8.1 Evaluating Competitors

EasyJet, BMI baby, and Aer Lingus, upon this research are the major companies following Ryanair in

the LCC industry listed in descending order, beginning with Ryanair’s first competitor easyJet.

8.1.1 EasyJet

Easyjet was born out of the liberalisation of European aviation by 'Open Skies'. Over the past five

years, easyJet has grown from a UK centric airline to develop a significant presence in mainland

Europe built around valuable positions at slot constrained airports. The main strength of their business

model over Ryanair is offering almost the same low fares but to more convenient airports.


2011


Table 4: EasyJetkey facts (EasyJet, 2010)

EasyJet Highlights Total fleet number 196 aircrafts

Number of Routes and airport bases 509 routes serving through 129 airport, in 59 Countries

Number of Passengers 56 Million, 2010 (6% increase from 2009)

Total revenue 2,973.1 (£ million)

Profit before tax 188.3 (£ million)

Employees Headcount 6,887 as of 2010

Starting 2010, they are continually expanding their presence across Europe; EasyJet’s current strategy

is to build stronger positions throughout major airports. As advertised their strategy is “Turning

Europe Orange”, a simple and clever advertising that states their determination of extending all over

the European continent.

8.1.2 Aer Lingus

Aer Lingus’ business model is centred on maintaining low unit cost, offering one way fares,

maintaining effective fleet utilisation and developing the Aer Lingus brand. Consistent with this low-

cost model, Aer Lingus' primary distribution channel is its website aerlingus.com. In 2010,

approximately 81% bookings was made through their website, almost close to Ryanair’s 95% (Aer

Lingus, 2011)

On the other hand, Ryanair owns 28.2% of Aer Lingus share capital, meanwhile they are in alliance

with other airlines like KLM, British Airways, JetBlue, and Aer Arann, such alliance allows them to

cover more routes, and effectively utilise their fleet. Below are some highlights about the company.

Table 5: Aer Lingus Key facts (Aer Lingus, 2011)

Aer Lingus Highlights Total fleet number 32 Aircrafts ( 6 Airbus A321s and 27 Airbus A320's )

Number of Routes and airport bases 102 routes

Number of Passengers 9,346 Million, 2010 (10% increase from 2009)

Total revenue 2,973.1 (£ million)

Profit before tax 57 (£ million)

Employees Headcount 3,516 as of 2010

In conclusion, Aer Lingus were obligated to position itself as a “value carrier’’ because the pure low

Cost/low fares model is not sustainable, whilst a full service model would not be competitive in the

Irish market. The pure low cost/low fares model, in the image of Ryanair, is not sustainable for Aer

Lingus for the following reasons:

Exceptionally discounted aircraft deals are no longer available.

Market proposition and customer expectation is for central not secondary airports.

The higher cost of Aer Lingus staff.


2011


8.1.3 bmibaby

bmibaby is a low cost airline, formed as part of the British Midland International group. The bmi

group consists of three airlines – British Midland International, bmi Regional and bmibaby, which each

cover different markets and customer groups. The core markets for all 3 airlines are situated in the UK.

bmibaby was Launched in 2002, bmibaby flies from: East Midlands, Birmingham, Manchester, Cardiff

and Belfast City to 39 European destinations. Since November 2009, Lufthansa has been the sole

shareholder of British Midland Ltd. (bmi)

Table 6: bmibaby key facts (Lufthansa, 2010)

bmi baby Highlights Total fleet number 14 aircrafts (2 x 737-500, 12 x 737-300)

Number of Routes and airport bases 42 Destinations

Number of Passengers 6,194 million in 2010

Total revenue 896 (€ Million)

Employees Headcount 3,612

Since November 2009, Lufthansa has been the sole shareholder of British Midland Ltd. (bmi) via the

British holding company LHBD Holding Ltd. In 2010 the company was successfully integrated into the

Lufthansa Group. At the same time extensive restructuring was carried out to bring bmi to profitability

in the medium term. (Lufthansa, 2010)

Table 7: International Scheduled Passengers Carried (IATA, 2011)

Figure 2: Competitors strategic positions

IATA airlines PAX report, 2010

Rank Airline PAX (M)

1 Ryanair 71.2

2 Lufthansa 44.4

3 EasyJet 37.6

4 Air France 30.8

5 Emirates 30.8

6 British Airways 26.3

7 KLM 22.7

8 Delta Airlines 21.1

9 American Airlines 20.3

10 Cathay Pacific airways 19.7


2011


8.2 BCG Matrix

The BCG Matrix is a business method that was created by the Boston Consulting Group in the

1970’s. This business method bases its theory on the life cycle of products, divided into four types of

scenarios, Stars, Cash Cows, Dogs and Question Marks.

Stars the scenario where there is optimum situation of high growth and high share, this method

requires an increased investment due to the continuous growth, and it is the most relevant scenario

to Ryanair.

Cash Cow cycle deals with low growth and high share. This scenario requires a low investment, but the

growth is very slow.

Dogs method is the situation where the growth is low and the market share is low, this is one of the

worst situations if the products are not delivering the cash then it is best to liquidate.

Question Mark scenario is when high market growth but low shares. In this situation there is a high

demand but low returns. It is best to try and increase market share or get it to deliver cash.

Table 8: BCG Matrix

Hig

h

----

----

->

Mar

ket

Gro

wth

---

----

--->

Low

Star Question Mark

Ryanair‘s ancillary services, generates a lot of extra revenue to their basic service; helping in continually increasing their market share.

Ryanair made a huge investment on Aer Lingus shares; meanwhile the expected ROI is unpredictable due to the nature of Aer Lingus operations.

Cash Cow Dog

Short point to point flight, and baggage policy generates additional revenue, without any extra cost for the company.

Ryanair could face this situation, but internally with one of their routes that might be not generating adequate revenue, so assigning the aircraft to another destination will generate more profits

High ---------------------------------> Market Share --------------------------> Low


2011


8.3 Porter’s Five Forces

8.3.1 Barriers to Entry (High)

The European market is full of potential, however there are some complications that would face

any new entrants to the market, first would be the long authorization procedure to acquire the licenses

to operate in the market, in addition to the high investment required in capital, before even starting

operations, besides the tough negotiation process with suppliers for low cost deals, as it will reflect

directly on their prices.

On the other hand Ryanair and other major LCCs consolidated their position in the Industry; making it

almost impossible to any new entrant to compete, as it will lead to an immediate price war, in order to

ensure a considerable chance in gaining a market share, there has to be a unique selling point to that

organisation to stand out from the crowd.

8.3.2 Bargaining Power of Customers (High)

At the present time, travellers have an enormous variety of choices to browse over the internet,

with almost (number of airlines in industry), with all the fares and services clearly available online for

the customer to compare, therefore there is no loyalty to a specific brand, customers are more

concerned about the best deal they can catch.

On the other hand, Travellers whom are targeting Ryanair are always expecting to get the lowest prices

in the market due to the no frills service, however, if this is not always maintained then the comparison

will be according to the quality of service, where many other airlines have a more respected

reputation.

8.3.3 Negotiation Power of Suppliers (Medium)

For Ryanair to maintain their low cost prices, they are mostly forced to deal with secondary

airports, due to the high costs and strong bargaining power of primary airports, which is already

occupied with other traditional carriers. Globally there are only 2 aircrafts suppliers (Boeing and

Airbus), Ryanair’s fleet is entirely exclusive to Boeing, where it saves costs in maintenance and training

of employees, however, that is a weak point in further negotiation with Boeing, as switching to another

aircraft supplier will require major additional costs to Ryanair.

8.3.4 Substitute for Product (Medium)

Trains, Cars, and Coaches can be more effective to travel to many locations, where these modes of

transport become a major competitor to air transport, not only in prices, but also in logistically, where

trains for example have an advantage of direct access to most city centres, which saves travellers the

hassle of transportation from and to the airport or about the baggage size and weight.


2011


8.3.5 Threats of Competitors (Medium)

The LCC market is a highly competitive battle ground, the major competitor to Ryanair is Easyjet

which follows the same no-frills strategy, and it is not easy for both airlines to advance with innovative

ideas, as it can be copied by others straightway. However, both companies agreed on avoiding head to

head competition, by concentrating on different routes to serve, in order to avoid any price wars,

which will affect both companies mutually.

9. Marketing Objectives

Ryanair’s objective is to firmly establish itself as Europe’s leading scheduled passenger airline

through continued improvements and expanded offerings of its low-fares service. Ryanair aims to

offer low fares that generate increased passenger traffic while maintaining a continuous focus on cost-

containment and operating efficiencies. On the other hand, Ryanair is working on extending their fleet

and in accordance flying to more routes across Europe, and the rest of the world.

Customers

Power

Suppliers

Power

Product

Substitutes

Entry

Barriers

Competitor Threats

Low

Medium

High

Figure 3: Porter's Five Forces


2011


10. Core Strategy

Ryanair’s core strategies are highly sustainable, and have proven to be very effective throughout their

36 years of operations, as stated by their CEO Michael O’Leary “Our strategy is like Wal-Mart’s, we pile

it high and sell it cheap” (IMD, 2007). The key elements of Ryanair’s strategy since establishment are:

Low Fares:

The first strategy is supplying extremely low fares, which are designed to captivate and also stimulate

demand, some business and leisure travellers plan trips or adjust their plans, due to the attractive

prices of Ryanair, where otherwise they would have used alternative forms of transportation or would

not have travelled at all.

Ryanair sells seats on a one-way basis, thus eliminating minimum stay requirements from all travel on

Ryanair scheduled services. Ryanair sets fares on the basis of the demand for particular flights and by

reference to the period remaining to the date of departure of the flight, with higher fares charged on

flights with higher levels of demand and for bookings made nearer to the date of departure. Ryanair

also periodically runs special promotional fare campaigns.

Customer Service:

Ryanair’s strategy is delivering the best possible customer service performance in Europe. which is

defined by Ryanair as lowest fares, best punctuality, fewest cancellations and least lost bags, and they

managed to benchmark all these aspects according to the Association of European Airlines (“AEA”)

statistics. In 2010, 88% of Ryanair flights arrived on time, less than one bag was lost for every 2,500

passengers and less than one complain only for every 1,000 passenger. (Ryanair, 2011)

Ryanair achieves this performance by efficiency in their operations and primarily operating from un-

congested airports. Customer satisfaction is also measured by regular online, mystery-passenger and

employee surveys.

Frequent Point-to-Point Flights on Short-Haul Routes:

Ryanair provides frequent point-to point service on short-haul routes to secondary and regional

airports in and around major population centres and travel destinations. Short-haul routes allow

Ryanair to offer its low fares and frequent service, while eliminating the need to provide unnecessary

“frills,” like in-flight meals and movies, otherwise expected by customers on longer flights. Moreover,

Point-to-point flying allows Ryanair to offer direct, non-stop routes and avoid the costs of providing

“through service,” for connecting passengers, including baggage transfer and transit passenger

assistance.


2011


10.1 Ansoff Matrix

The Ansoff growth matrix is a tool for mapping Ryanair’s strategic product market growth, by

considering four key factors, Market Penetration, Product development, market development, and

diversification

Table 9: Ansoff Matrix

MARKETS

Products

Existing New

Exis

tin

g

Market Penetration &

consolidations

Ryanair’s main strategic direction. low cost flights and high market

share

Product Development

Ancillary Products

New

Market development

Extend routes and bases Expand Globally

Diversification

Traditional and 2 way flights model would not be a successful

approach for Ryanair

11. Marketing Mix

11.1 Product

Ryanair should sustain their current products, scheduled flight and ancillary services, meanwhile

continue to expand their routes and destinations, while enhancing the ancillary services portfolio.

11.2 Price

For Ryanair to keep maintaining their position in the industry and increase sales margin, they

have to keep sustaining the lowest prices in the market since it is their unique selling point; by

continuously enhancing their operations cost effectively to support such strategy.

11.3 Place

Ryanair should continue investing in their online booking system, and encourage all passengers

to use the system for booking tickets, since it was proven in previous analysis to be a highly effective

solution, meanwhile expand their bases in strategically suitable airports


2011


11.4 Promotion

Ryanair current promotion are quite successful for their needs, with help of Michael O’Leary’s

regular publicity stunts. However, it is recommended to keep following such strategy without

increasing investment in advertising, but focus on improving their image and reputation

12. Financial Budget

This section highlights on Ryanair’s recently operating financial figures, which has been achieved

in the low cost carriers market, according to the most recent data published in Ryanair’s annual report

(Ryanair, 2011). From the data and figures below, it is obvious that Ryanair is leading the market in

many different aspects and this success was due to their successful business model, and their

continuous observation of the market demands and dynamics.

Table 10: Ryanair Financial Facts (Ryanair, 2011)

2011 Million €

2010 Million €

Increase %

Operating revenue 3,629.5 2,988.1 +21%

Net profit after tax 374.6 305.3 +23%

Adjusted net profit after tax 400.7 318.8 +26%

Basic EPS (€) cents 25.21 20.68 +22%

Adjusted basic EPS (€) cents 26.97 21.59 +25%

Estimated costs, related to volcanic ash disruptions --- 26.1 ---

Investments in Aer Lingus shares --- 13.5 ---

As a result of Ryanair’s net profits in 2011, it was publicly announced by Air Transport World in July

2011 to be “The world’s most profitable low fares airline”.

Moreover, Ryanair’s adjusted profit after tax increased by 26% to 400.7m compared to 318.8m in

March 31, 2010, primarily due to a 12% increase in average fares and high ancillary revenues. on the

other hand, there was a 37% increase in fuel costs while the total operating revenues increased by

21% to 3,629.5 m as average fares rose by 12%.

The most significant increase was the ancillary services revenue, which grew by 21%, aside to the 8%

increase in passenger numbers. Total revenue per passenger, as a result, increased by 12%, whilst

Load Factor was up 1% to 83% during the year.


2011


On the other hand, their total operating expenses increased by 20% , due to an increase in fuel prices,

the higher level of activity, and the higher operating costs associated with the growth of the airline,

where Fuel represents 39% of Ryanair’s total operating costs.

The final adjusted net margin was 11%, similar to year 2010, and adjusted earnings per share for the

year were 26.97 € cent compared to 21.59 € cent in 2010. (Ryanair, 2011)

10.1 Operating Revenues

1) Scheduled Revenues: The main source of revenue to Ryanair

2) Ancillary Revenues:

As shown in the previous figures, this source of revenue generates significant extra profits; such

services below should be constantly updated with new and innovative ideas

a. In-flight Revenues

b. Car Rentals

c. Internet booking income

d. Non-flight scheduled revenues

e. Charter revenue

10.2 Operating Expenses

1) Salaries

2) Maintenance and materials

3) Compensations

4) Marketing budget

5) Airport Charges

6) Fuel

Finally, Ryanair was ranked as the most profitable airline in the international Low Cost Carriers market,

and was followed by southwest airlines which was the first company to introduce the low cost model

into the airline industry, and below is a list with the world’s leading low cost airlines net profit figures

in 2011.

Table 11: Airlines net profit figures for 2011 (Ryanair, 2011)

Rank Airline Million $

1 Ryanair 565 2 Southwest Airlines 459 3 AirAsia Berhad 346.5 4 easyJet 191.6 5 Cebu Pacific 158.5 6 WestJet 136.7 7 Gol 128.6 8 IndiGo Airlines 122.2 9 JetBlue Airways 97

10 Air Arabia 84.3


2011


13. Implementation

In order to achieve the objectives developed in this marketing plan, it is essential for Ryanair to

successfully complete the delivery of the new --- aircrafts and the expansion of their new routes

according to the set schedule.

14. Control

The following areas will have to be cautiously monitored by the management team, if they want

to control their performance and current position in the market.

a. Fuel hedging strategy

b. Lowering operational costs

c. Invest in technology

d. Punctuality and reliability

15. Conclusion

Throughout this entire research, all the organization functions was observed and evaluated with

all the environmental factors Ryanair is exposed to in the market, followed by identifying their

competition and comparing the strategic differences between them, meanwhile highlighting the main

financial elements.

As a result of this information and analysis, a proper awareness about the market dynamics was

generated, therefore assisting in a developing a tailored strategic direction for Ryanair to follow in the

current and future market environment, while focusing on developing the existing effective strategies

to maintain their performance and enhance their position in the whole industry.


2011


16. Bibliography

Aer Lingus (2011) Aer Lingus: About Us, 6 November, [Online], Available:

http://www.aerlingus.com/aboutus/alliances/ [7 November 2011].

Box, T.M. (2007) 'SUCCESSFUL LOW COST LEADERSHIP', Journal of the International Academy for Case

Studies, vol. 13, no. 3, November, p. 67.

EasyJet (2010) Reports and accounts, 30 September, [Online], Available:

http://corporate.easyjet.com/~/media/Files/E/easyJet/pdf/investors/result-

center/easyJet_AR10_18_1_2011.pdf? [5 November 2011].

easyJet plc (2010) http://corporate.easyjet.com, 30 September, [Online], Available:

http://corporate.easyjet.com/~/media/Files/E/easyJet/pdf/investors/result-

center/easyJet_AR10_18_1_2011.pdf? [6 November 2011].

IATA (2011) Publication & Interactive Tools, January, [Online], Available:

http://www.iata.org/ps/publications/Pages/wats-passenger-carried.aspx [8 November 2011].

IMD (2007) 'Ryanair Case Study', RYANAIR: Defying Gravity, vol. 03.09.2007, no. IMD431, September,

p. 21.

LINDSAY, G. (2009) www.fastcompany.com, 1 May, [Online], Available:

http://www.fastcompany.com/magazine/135/ground-control.html [4 November 2011].

Lufthansa (2010) Lufthansa Investor Relations, 30 December, [Online], Available:

http://reports.lufthansa.com/2010/ar/groupmanagementreport/businesssegmentperformance/passe

ngerairlinegroup/britishmidland.html [6 November 2011].

Moores, V. (2010) 'Low-Cost Leadership', The Power of Flight, 1 August, p. 30.

Philip Kotler, K.K. (2006) Marketing Management, 12th edition, New Jersey: Pearson Prentice Hall.

Ryanair (2011) Ryanair - About Us, 17 October, [Online], Available:

http://www.ryanair.com/en/investor/download/2011 [17 October 2011].

Ryanair (2011) Ryanair Website, 17 October, [Online], Available: www.ryanair.com/en/about [17

October 2011].

Y.GOOSSENS, E. (2008) http://www.europarl.europa.eu/, Jun, [Online], Available:

http://www.europarl.europa.eu/parliament/expert/displayFtu.do?language=en&id=74&ftuId=FTU_4.

10.6.html [27 Oct 2011].

Ryanair Marketing Plan - Sameh Nassar

Documents

Transcript of Ryanair Marketing Plan - Sameh Nassar