Ryanair Strategic Management & Marketing Strategy
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Transcript of Ryanair Strategic Management & Marketing Strategy
RYANAIR’S STRATEGIES
Presentation outline
1. Company overview2. Strategic analysis (External and
Internal)3. Key Elements of Strategy4. Marketing Strategy5. Revenue model6. Is the strategy sustainable?7. Concrete recommendations
Company Overview
Low budget airline
Started in 1985
160 airports, 27 countries 1,300+ routes 1,500+ daily departures
Fleet of 275 Boeings (Newest fleet (3yrs))
5 main bases: Stansted (London) Charleroi (Brussels) Marseilles Madrid Bremen
Leader
Michael O'LearyRyanair, CEO
Company Overview
Strategic Analysis
What is a strategy ?
Corporate strategy is the set of explicit or implicit decision rules that determines what business(es) a firm will be in and not be in.Business strategy is how a firm develops and sustains a competitive advantage within an industry.Functional strategy is the set of decisions made in marketing, operations, finance, research and development, and human resources that supports the business strategy.
(Faculty, Darden, 2012)
External Analysis
PESTEL-Analysis
SocialEconomic environment customerUnemployment in January 2012 was 14.2%, Consumer travel lifestyle and demographics
PoliticalStrong Political EnvironmentOpen Sky Agreement.
EconomicalUncertainty of fuel cost.Economical Recession in favor of Ryanair
.TechnologicalInternet adaptation/Check-inEnergy efficient engines will increaseUse of Trains
EnvironmentalControlling noise pollutionCarbon footprint & Global warming concerns
.
LegalCorporate lawsuitsMisleading advertisements
Internal Analysis
Vision
Become Europe’s leading passenger carrier
Objectives of Ryanair’ Strategy
Establish itself as Europe’s leading low-fares 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
Through maintaining a continuous focus on cost-containment and operating efficiencies.
The Key ElementsLow cost-Core of business model-
Stimulates demand, particularly from fare-conscious leisure and business travelers who might otherwise have used substitutes of Transportation
Ryanair sets fares on the basis of the demand for particular flights
How ? Maintain focus on cost-containmentMaximise ancillary revenue
The Key ElementsLow Operating Costs
Ryanair strives to reduce or control four of their primary expenses:
Aircraft equipment/FuelPersonnel productivityCustomer service costsAirport access and handling costs
NO FRILLS STRATEGY
Graphical Analysis of Ryanair costs
EUR million 2013 Change vs FY2012 % of 2013 total
Fuel 1,886 18,3% 45%
Airport & Handling Charges 612 10,4% 15%
Route Charges 487 5,7% 12%
Employee 436 5,0% 10%
Depreciation 330 6,6% 8%
Materials, repairs 121 16,1% 3%
Aircraft Rentals 98 8,3% 2%
Other 198 9,9% 5%
Total Expenses 4,166 12,4% 100%
(Source: https://www.ryanair.com/doc/investor/present/Half_Year_Results_2012.pdf)
The Key ElementsCustomer Service
Deliver the best customer service performance in the low-budget airline Industry
Ryanair has achieved better punctuality, fewer lost bags and fewer cancellations than all of the rest of its peer grouping in Europe.
How? Ryanair achieves this by focusing strongly on the execution of these services and by operating from uncongested airports
The Key ElementsFrequent Point-to-Point Flights on Short-Haul Routes
Frequent point-to-point service on short-haul routes to secondary and regional airports
Short flights + Frequent service eliminating the necessity to provide “frill” services
Non-stop routes and avoid the costs of connecting passengers, baggage transfer, transit passenger etc.
The Key ElementsFocused Criteria for Growth.
Additional routes from the U.K. or Ireland to other locations in continental Europe/USA
Increasing the frequency of service on its existing routes
Starting new domestic routes within EU countries; establishing more new bases in continental Europe.
The Key ElementsTaking Advantage of the Internet
January 2000, Ryanair launched new reservation system: Flightspeed
Make and pay for confirmed reservations in real time through Ryanair’s Ryanair.com website.
Ryanair has heavily promoted its website through newspaper, radio and television advertising. (96% of all reservations online)
MARKETING STRATETGY
WEBSITE
Publicity Marketing
Deliberate controversial statements, to gain media attention.
MARKETING STRATETGY
“We want to offer the lowest fares while
keeping advertising costs to a minimum”
Michael O’ Leary
Subsidies20%
Ancillary revenues22%
Core revenues58%
“Any fool can sell low airfares and lose money! The difficult bit is to sell the lowest airfares and make profits.” Michael O’Leary
Ryanair Revenue Model
Ancillary Revenues
Hotel reservationsExcess baggage feesCar Hire: HertzOnboard sales of beverages, food and merchandise. Internet Income……………….
Is the Strategy sustainable over the next five years ?
Market Growth
Low
High
High LowMarket Share
Stars Question Marks
Cash Cows Poor Dogs
Boston Matrix-model
New Destinations such as USA, Croatia,etc.
Top Destinations – London, Madrid, Brussels,etc.
Really unfrequently used destinations.
Unknown airports/destinations Unfrequently used. Morocco.
Concrete Recommendations
Increase Flight Frequency of Routes
Open New Routes in EU
Strategic Alliance
Seek to protect themselves from oil prices
Investigate Load Factors
Exploit tourism Trends
Thank you for Listening!
Any Questions ?
Sourceshttp://www.ryanair.com/doc/investor/Strategy.pdfhttp://www.ryanair.com/en/investor/statementhttps://flightfox.com/tradecraft/polyester-airlines-europe-vs-americahttp://www.theguardian.com/business/ryanairhttp://www.slideshare.net/kevinconstant96/ppt-ryanair2http://www.docstoc.com/docs/23288365/Ryanair-Case-Study---PowerPoint
Sourceshttp://faculty.darden.virginia.edu/bourgeoisj/files/chapter%205.htmlhttp://www.air-scoop.com/downloads/In-Depth-Analysis-Ryanair-Business-Model-Air-Scoop-Nov2010.pdfAnon., n.d. Ryanair.http://www.ryanair.com/en/about/ryanair-and-the-environmentAviation, C. C. (2011, May 25). CAPA Centre for Aviation. http://www.centreforaviation.com/analysis/ryanair-earnings-up-26-but-change-in-tack-for-2012-52109BBC, 2012. Ryanair 'sexist adverts' banned after complaints. [Online] Available at: http://www.bbc.co.uk/news/uk-17036830