Assessment of Ryanair's Marketing Strategies and Business Environment

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SIM337 Contemporary Developments In
Business And Management
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Contents
Task 1...............................................................................................................................................3
Introduction......................................................................................................................................3
Overview of the Chosen Organisation.........................................................................................3
Business Environment.................................................................................................................3
SWOT Analysis of Ryanair.........................................................................................................4
Porter Five Forces of Ryanair......................................................................................................5
PESTLE Analysis........................................................................................................................6
Conclusion.......................................................................................................................................8
Task 2...............................................................................................................................................9
Introduction......................................................................................................................................9
1. Analyze its relevance to your chosen organization and how it influences policies and
decision-making within your chosen organization or industry-sector.......................................10
2. Critically evaluate the effectiveness of the organization’s response..................................13
3. If possible and appropriate, demonstrate some areas for improvement in the response of
the organization.........................................................................................................................15
Conclusion.....................................................................................................................................17
References......................................................................................................................................18
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Task 1
Introduction
This part of the assignment provides an understanding of the business environment of the chosen
organisation, Ryanair. Primary external factors which the operations of the organisations are
affected as well as it also includes the importance such factors have for the organisation.
Overview of the Chosen Organisation
The organisation chosen for this assignment is Ryan Air which is an organisation which operates
in the aviation industry and is operating as a low-cost airline. This organisation was founded in
the year of 1984 established in Dublin, Ireland, Swords. The operational bases of this
organisation are at London Stansted Airport and Dublin Airport. In the year of 2016, Ryanair
was termed as largest European Airline which carried more number of international passengers
than any other organisation operating in the aviation industry. It was got the position of the
largest airline of Europe by the passengers flown as per schedule. Ryanair has a fleet of different
aircraft which includes 400 Boeing 737-800 aircraft and charter aircraft which are used for
backup and pilot training. This organisation provides its services in 35 nations in Morocco,
Israel, Jordan, North Africa, and Europe.
Business Environment
The “business environment” can be defined as marketing term which includes the forces and
factors by which operations of the organisations are influenced. These factors help in developing
the ability in order to build and maintain successful relationships with the customers. These are
factors by which the behavior of the individuals in regards to decision making is affected
towards the organisation. The organisation is considered as one of the fastest organisation in
terms of business expansion and its low-cost model for business. It can be stated that the
organisation is focusing on customer satisfaction rather than focusing on its own profits.
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Primary External Factors
These are the factors which are present outside the organisation or the factors on which the
management of the organisation has no control. There are number of analysis which is adopted
for generating an understanding of such factors.
SWOT Analysis of Ryanair
This analysis which provides an overview of the organisation’s strengths, weakness to overcome,
opportunities available and threats faced.
Strengths
 Ryanair operates in 35 countries in Europe, Middle East, North Africa, etc.
 Covers more than 200 destinations and over 1800 routes.
 Provides consistent returns to the shareholders (Reuters, 2017).
 Adoption of the low-cost model provides a competitive advantage.
 Operates as per schedule due to short distance locations.
Weaknesses
 Having such a high number of the fleet may result in an overcapacity of flight in the
future times.
 Reforms in the compensation agreements of the employees and labor relation affect the
business (Ryanair, 2016).
Opportunities
 The organisation has a wide scope in enhancing the revenues by myRyanair.
 Can have business in reduced segments of charter flights (Farrell, 2014).
 Adoption of the AGB (Always Getting Better) Program enhances consumer satisfaction.
Threats
 Pressure to reduce the prices due to Brexit.
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 Fluctuations in the prices of fuel have an impact on the business and its profitability
(Wyman, 2016).
 Organisation faces competition from other airline organisations and their schemes.
Through SWOT Analysis, the organisation will be able to generate an understanding of its
strengths, weaknesses, opportunities, and threats. This will provide assistance to the organisation
in making strategies accordingly.
Porter Five Forces of Ryanair
It is a significant analysis which includes the following:
Competitive Rivalry
In the aviation industry, there are various airline organisations operating on the low-cost model
on similar routes to Ryanair. Easy Jet, Wizz Air, etc are some of the airline organisations from
which Ryanair faces competition. As all of these organisations are operating on a low-cost
model, Ryanair is able to face the competition due to its large number of flight fleets, however,
in some routes, the organisation is facing intense competition from these organisations.
Threat of Entry
Aviation Industry is considered as an expensive industry which requires an investment of funds
or capital. The barriers to entry in this industry are high. Purchasing flights or airplanes are costly
instead of getting the slot at the desired airport (Bagdanskas, 2016). It takes experience and
efforts to develop an organisation based on the low-cost model and earn a profit at the same time.
Therefore, it can be considered that the chances of entry in such industry and competing with the
organisation is low.
Bargaining power of Supplier
There are various suppliers in the aviation industries, Airbus and Boeing are the two
manufacturers responsible for manufacturing the planes for the aviation organisations. Such
duopoly in the aviation industry has led to the charging of prices higher than the market price.
Other suppliers are organisations responsible for supplying jet fuels. The prices of the fuels are
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controlled by the world trade, therefore, Ryanair is unable to make a bargain in relation with
prices of the jet fuel. It can be stated that the bargaining power of supplier is high.
Bargaining Power of Buyers
Customers want to travel at a lower cost and get good services at the same time. Customers are
loyal towards low fare flights. In the aviation industry, the customers are not loyal towards a
specific organisation. Customers tend to move towards another airline with lower fares if one
organisation increases fares of the flights. It is essential for Ryanair to maintain its customer base
for which it is reducing its operating cost and provides better services at lower cost.
Threat of Substitutes
In Europe, there are various options available with the individuals to travel which includes trains,
cars, and buses. However, fares to travel through these means are expensive and time-
consuming. Ryanair provides services at lower fares due to which it is able to maintain its
customer base. This means that the threat of substitute is low for Ryanair.
With help of Porter’ five forces, Ryanair will be able to understand the market scenario or
market environment in which it is operating its business. Amendments in existing plans can be
made by the organisation in order to maintain its position in the market.
PESTLE Analysis
It is an analysis which provides an understanding of the impact of the external factors on Ryanair
business. It includes the following:
Political
Due to changes in the political environment i.e. events of Brexit makes the business environment
uncertain for the aviation industry (Aviation Voice, 2017). The uncertainty of the position of
Open Skies Agreement will make the operation of business difficult unless firm decisions on
such policies are made properly.
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Economical
The prices of the oil keep on changing which is required to be considered by Ryanair, however,
the price of oil is expected to remain constant at with price i.e. at $50 per barrel aiding margins
in relation with operations. Due to Brexit, GBP has become weaker which creates pressure on
the organisation to fuehrer decrease the fare.
Social
The growth and development of the low-cost airlines are linked with the rise in the disposable
income for individuals belonging to middle-class families and making these individuals
Generation Y Travelers who are able to afford a number of short trips in a year (BCG, 2013).
Technological
Due to technological advancement, the organisations are able to reach out to the customers more.
This provides opportunities to the organisation, Ryanair to compete in aviation industry
effectively (PWC, 2016). With the help of the establishment of “myRyanair”, the organisation
can make the experiences of the travelers leisure.
Environmental
One of the major issues related to the environment in the aviation industry is the emission of heat
waves from the airplanes (Perkins and Varinsky, 2017). Even if Ryanair is using the latest and
fuel-efficient planes, its contribution to the emission of carbon will be counted.
Legal
The organisation, Ryanair is facing challenges due to issues of Brexit. There will be changes in
the law related to the aviation industry, the organisation will face issues in complying with
applicable laws at first instance (FT.com, 2017).
With the analysis of PESTLE, Ryanair will get an overview of the factors by which the
operations of the organisation is affected. These factors must be considered while developing
plans or strategies and making sure those operations are done accordingly.
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Conclusion
From the above analysis, it is concluded that there are various factors by which the operating and
functional activities are affected. Such analysis will be beneficial for the organisation in its
planning process and helps in maintaining its position in the market. The organisation is affected
by the Brexit and the management must make sure that strategies are formulated accordingly.
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Task 2
Introduction
This part is presenting the second part of the report. This part is summarised and discussed
considering ‘Marketing Communications Mix’ as the theme. The marketing communication mix
can also be referred to as the promotion mix. It is a tool which is used by businesses to
communicate with its customers, shareholders, and prospects. Using effective marketing
communication mix is not dependent on the size of the organization or the nature of products in
which the organization deals. The operations and revenue generated of company Ryanair rely
highly on the strategies of the marketing communication mix followed. In this part of the report,
the relevance of the marketing communication mix for Ryanair and its influence on the policies
and decision-making of the company has been discussed. Further, the effectiveness of an
organization’s response has been evaluated. Lastly, recommendations for improvement have
been made.
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1. Analyze its relevance to your chosen organization and how it influences policies and
decision-making within your chosen organization or industry-sector.
As discussed in part one, Ryanair he is an Airline company, headquartered in Ireland. The airline
company is highly competitive as all the airline companies offer very similar products to the
customers and also the target customer base is similar. The airline companies are becoming more
and more creative with their strategies of marketing for attracting customers and creating a buzz.
For the purpose of marketing the services provided by airline companies, they are using social
media platforms and other non-traditional methods of advertising.
Relevance of ‘Marketing Communications Mix’ for Ryanair
The airline companies use various marketing strategies to communicate with its customers and
other stakeholders. These strategies include advertising, public relations, direct selling, sales
promotion, and such others. However, the company Ryanair does not invest much amount in the
advertisement (Farey-Jones, 2018). The company provides the services to customers at low cost
and this objective is fulfilled only after cost saving. Amongst the product and services provided
by the company to its customers, there is no free drinks or food for customers onboard. The
company provides the customers with low costs, no-frills travel by air to destinations in
European. The company does not use travel agents to sell its tickets and this saves the company
with 15% agency fees. The customers are required to book the tickets online directly through the
internet. Further, the company spends very less money on promotional activities.
In spite of spending a limited amount of money on advertising, the company Ryanair is
characterized by rapid expansion and has evolved among the most profitable airlines in the
world. In terms of a number of passengers, the company holds the position of the third largest
airline. The company is able to secure this position by using smart marketing strategies. The
company does not spend much money on marketing, yet it holds great significance for the
company. The advertisement provides the company with a road map for the achievement of its
objectives (Todorova, 2015). With the help of effective marketing strategies, the company is able
to align itself with the market demands. It helps the company in monitoring and controlling its
performance in the industry as a whole.
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The promotional activities of the company help in the immediate generation of revenue, traffic,
and cash flow. The marketing communication mix helps the company in reaching the large
market and target customers spread over the large geographical area. The marketing strategies
are also used by the company to ensure that the customers have trust in the products and services
provided by eth company. It is generally believed by the customers that the information which is
being provided by the company to the public at a large scale through advertising or any other
marketing strategies, shall not be false or misleading. Therefore, the products and services
offered by the company become more reliable and the customers become more comfortable in
spending money on such products and services (Al Khattab, et.al., 2015).
The marketing strategies used by the company invites the existing and potential customers of the
company to evaluate the products and services offered and to compare them with the products
and services offered by competitors. It is also used as a reminder to existing customers that the
company still exists in the market and offer various products and services in which the customer
might be interested (Hänninen, and Karjaluoto, 2017). The marketing strategies are not only
used by the company to attract existing or new customers but also to increase the morale of the
employees of the company and other people associated with the company.
Influence of ‘Marketing Communication Mix’ on policies and decision-making
The marketing strategies used by the company helps in developing effective policies and make
decisions which act in best interest of company and customers. The company uses these
marketing strategies to determine the needs of customers and understand their purchase patterns.
With the availability of data relating to needs of customers, the company is able to make policies
in relation to the products that must be offered to the customers and decide the time when such
products and services must be offered. For example- based on the purchase patterns of the
customers, the company can offer discounted prices to customers at festival times (Pawar, 2014).
Therefore, the company uses information collected through marketing to provide customers with
additional benefits.
The company further uses the information collected to provide the customers with more
customized products and services. The products and services offered by the company are more
effectively matched with the needs and wants of customers using marketing communication mix.
The company is also able to use the recommendations made by the customers to improve its
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products and services. The marketing not only helps the company in establishing a relationship
with customers but also with competitors. The marketing communication strategies used by the
company plays a significant role in tackling the competition (Naumovska, and Blazeska, 2016).
Using marketing communication, the company is able to make policies which present its
products and services in a better manner than the competitors.
Appropriate pricing of the products and services offered by the company is extremely relevant to
its success. The marketing strategies also include market research and the company can use the
data collected during research to set the right price of its products and services. The policies
relating to what products must be offered to the customers can also be established by maximizing
the effectiveness of marketing strategies (Regusci Peters, and Calvo, 2016). Therefore, it can be
stated that the marketing communication mix contributes to the policy and decision making to a
great extent.
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