Ryanair Company’s 7 Ps Product & Service Analysis

Executive summary

This paper reviews Ryanair’s marketing mix by analyzing each element (the 7 Ps), and thereafter, based on the analysis, suggests some adjustments which would enable the airline to strengthen its market position. Being a service company, the traditional four Ps of product, price, promotion, and place would not be satisfactory, hence the additional three Ps of process, people, and physical evidence.

Ryanair stands out in Europe’s overcrowded skies which are flown by tens of competitors, some of whom are very strong such as Air France, EasyJet, British Airways, Alitalia, Lufthansa, and several others. This company’s success is owed to its perfect marketing mix which can be said to be unique in some ways. Most companies charge higher prices for their services while Ryanair maintains low ticket prices.

Though a low-cost airline, like EasyJet, the two have completely different marketing mixes which seem to be right for each of them. It is very essential for a company to arrange its marketing mix in such a way so as to create competitive advantages. For Ryanair, the strategy involves offering point-to-point flight services, no-frills services, and so forth. Based on the results of the analysis, several recommendations have been provided which when implemented could better the market position of this company. To produce this report, most of the information used has been researched from various sources and databases, as well as a personal experience that arises from being Ryanair’s customer.

Introduction

Ryanair indisputably provides a very remarkable entrepreneurial story considering its level of success in the air travel business in Europe. After understanding that there was a huge need for low-cost air transport, the founders proceeded to create a low-fare, no-frills airline; the airline version which provides passengers or clients with the exact kind of services they need (Hägele 2006 p. 76). It competes with other major companies in the airline business, the likes of Air France, EasyJet, British Airways, Alitalia, Lufthansa, and several others. It has 44 bases and as many routes as 1100, which are all low-fare routes.

Its plane flight is very large to an extent that Ryanair has the second-largest fleet, just after Southwest Airlines which owns the largest one. This analysis tries to show how this company has arranged the seven elements in marketing its services, which is the secret behind its success (‘Ryanair’s Fleet Grows To 200 Aircraft’ 2009). According to Hoffmann, (2008 p. 7) these marketing mix elements are essential for the success of an organization that wishes to have customers buy its products. Based on the findings, further recommendations are offered which have the potential of enhancing the market position of this airline company. In order to understand the company to be analyzed better, a short overview has been provided.

Ryanair: Company Overview

Ryanair Holdings, or simply Ryanair, is a low-fare passenger airline that serves point-to-point and short-haul routes in several regions of Ireland, the United Kingdom, Continental Europe, and Morocco. It is one of the biggest airlines with its center of operations being Dublin (Ireland). The company employs more than 8,560 workers in various areas. Its number of bases is to the count of 44, and the low fare routes are more than 1100 in number.

Its favorite and only aircraft model is the Boeing 737-800, which for now owns more than 250 of them. More orders have been made for a newer generation of the same airplane model to increase the fleet size. The revenue recorded by the company during FY2011 which ended in March amounted to $4,796.7 million. This figure was reported as showing a 21.5 percent increase over FY2010. The recorded operating profit of Ryanair was $645.2 million in FY2011 (an increase of 21.4 percent over FY2010), while the net profit reported in FY2011 was $495.1 million, a 22.7 percent increase over FY2010 (‘Ryanair Holdings plc Swot Analysis’ 2012).

Considering its level of success to date, Ryanair can be ranked among those companies which have managed to employ excellent marketing mixes. The operating strategy adopted enables the company to achieve a very high level of asset utilization and consistent on-time service delivery. The strategy involves delivering the most excellent achievable customer service performance within Europe and other parts of the world. The strategy can be defined by elements such as lowest fares within the industry, least flight cancellations, outstanding promptness, and least luggage losses (Reals, 2011).

To prove the success of the company in achieving these objectives, it has successfully managed to benchmark each of these aspects, in consistent with the AEA’s (Association of European Airlines) data. In 2010, 88 percent of Ryanair’s flight managed to arrive punctually. Also for every 2,500 customers, luggage losses were less than one bag, not forgetting the few customer complaints (not more than one complaint about 1,000 customers) which were reported. This performance is achieved through efficient operations, which are run primarily from the less congested airports. Regular online surveys, employee surveys, mystery-passenger surveys, and other approaches have been employed to measure the level of customer satisfaction (‘Ryanair Holdings plc Swot Analysis’ 2012).

Marketing Mix

Marketing strategies are usually structured around only four Ps: “product”, “price”, “promotion”, and “place”. However, if the company involved operates in the services industry, or markets a service, additional three Ps (“process”, “people”, and “physical evidence”) ought to be included in the mix. Each of the strategic elements is analyzed below to show how Ryanair has managed to balance all of them and succeed in the skies of Europe which as earlier mentioned, are filled with competitors.

The most important thing in a marketing mix has been found to be the company’s ability to vary the elements and come up with a winning mix. Although Ryanair operates a low-fare airline, just like its main competitor, EasyJet, it does not mean that the two marketing strategies are similar. The two companies utilize discount strategies as part of their price element, but a major difference occurs where EasyJet is slightly oriented towards sober promotion and more frills on customer service (Poulsen & Fowler 2012).

Contrary to this, Ryanair strives to minimize frills or cut customer service-related costs and does not invest a lot in advertising. However, it has managed to design a marketing mix whose element balance provides other opportunities for creating competitive edges for the airline. To show how the company is determined to reduce the amount of customer service, it decided to get rid of check-in desks in the airports in the year 2009. It may not win as many customer service awards as its rival, EasyJet, but it certainly is doing better in other areas to be able to survive in the airline business. Below is a detailed analysis of each element (‘Ryanair’s Fleet Grows To 200 Aircraft’ 2009).

Product

The product aspect of Ryanair’s marketing mix is the intangible services which the company provides to consumers. A product is anything that a company offers to its consumers. It consists of several attributes such as physical goods, experiences, services, places, events, persons, information, properties, ideas, and organizations. As for Ryanair, the product element involves the intangible customer services rendered. It offers low-cost and no-frills air transport to passengers to destinations such as Ireland, Continental Europe, the United Kingdom, and Morocco (Thomson & Baden-Fuller 2010).

These are mainly point-to-point and short-haul routes. While onboard, passengers are supposed to cover their food and drink expenses because the airline does not provide them for free. Affiliation with Hertz Car Rental, as well as several hotel businesses generate extra revenues for the company and increase the portfolio of product services that the customers receive from the company. Ryanair generates more revenues from selling “priority options” since it does not have seat allocations. Customers occupy seats on a first-served basis. More revenues come from selling advertising space in the planes (Müller 2011).

Price

This element is concerned with the determination of service prices that Ryanair charges. For quite a long time, Ryanair has adopted a very aggressive pricing strategy (Handley, 2010). It has maintained the lowest fares in the industry like its major rival, EasyJet without fuel surcharges (‘Ryanair closes its check-ins’ 2009). Despite being known to push the hardest low fares for its flight services, the airline’s chief executive Mr. M. O’Leary reported that the company may in the near future depart from this aggressive strategy.

The statement was made in September 2010 to Observer where he stated that it was not tenable for the brand to continue selling seats for £33 on average (Handley 2010). According to his statement, the company would be better off moving away from this strategy over the next few years. The benefits of the obsession with charging the lowest flight charges were established to be diminishing.

Place

The pace element encompasses each and every activity or channel which the company relies upon to avail products to the targeted consumers. The newest channel nowadays is the internet. With its e-commerce site, Ryanair receives approximately 15 million visitors on a monthly basis who generate 5 billion page impressions per year (Lovett, 2010). Most of Ryanair’s flight bookings are made online which gives customers the chance to book from anywhere without having to travel to the company’s offices. This also supports its cost-cutting objective by eliminating agency fees. There is not much dependence on agents whose commissions would mean extra expenses by the company.

Ryanair also avoids primary airports to concentrate its operations in the secondary ones. The secondary airports happen to be small local airports in which Ryanair is in most cases the main carrier relied upon for flight services. The major benefits of operating in those airports are the low-cost benefits as well as the quick turnaround time. Primary airports are run by the industry’s flag carriers who have very high activity levels (Poulsen & Fowler 2012). Surviving the competition in primary airports may be tough because customer service is crucial and Ryanair does not invest a lot in it.

Promotion

The promotion covers all of the actions undertaken by Ryanair’s marketers to enlighten consumers about the services and to persuade prospective customers to purchase the same products. For this airline, promotion has not been a major element of its marketing strategy because it strives to keep the advertising budget at a minimum. Most of its promotional works are performed in-house and not a lot has been outsourced from advertising agencies. Simple ads have been used to familiarise customers with their low fares. Although the company owns a website, it has tried to manage its costs in such a way that none of them is transferred to the customers.

To ensure this, it recently decided to introduce third-party advertising and appointed Ad2One, an ad sales house, to take care of sales and also ensure to maintain costs as low as possible. The revenue generated from third-party advertising is meant to cover the costs of running the website (Bearne 2009). The website’s re-designing, which offered a clean fresh look to all of them, was also done in-house. Besides the company’s websites, the company strongly values its boarding-card advertising. The management believes that this strategy will result into minimal wastage considering that it is mandatory for a passenger to carry the card as they board their planes (Lovett 2010).

As mentioned by Poulsen & Fowler (2012), the airline is doing pretty well without much emphasis on social media marketing. Ryanair is also facing the fury of ASA (Advertising Standards Authority) where some of its advertising activities have been criticized. As a result of this, the company has been seeking a reliable ad agency to oversee its £4 million accounts. It is intending to reduce in-house advertising and find an agency instead (Lee 2012) to avoid incidences such as the ASA-ordered investigations of 2011 and banning inappropriate ads such as the 2012 calendar which featured a scantily dressed cabin crew lady. Other ads have also been banned for claims of being misleading.

People

The major force for positioning Ryanair is the public image, which is influenced by the quality of customer service provided by the personnel. The employees’ friendliness and promptness in responding to customer demands and minimize delays, their ability to maintain enthusiasm and calmness even when they encounter angry customers, and so on. The employees working for this company are more than 8,560 and include pilots, cabin crews, and others.

The cabin crew is more involved in customer service while onboard though the company does not invest much in their training. Pilots are hired as young plot cadets, after which their advancement in the job depends on their hard work. Issues with the pilots such as a drunk and disorderly pilot incident have also emerged (Niamh 2011). These are some of the problems which may negatively affect the company.

Process

This P is used to refer to the routines, task schedules, as well as management activities that are involved in providing passenger services to the target market. The processes demand much planning and contemplation for them to work perfectly. Ryanair made a decision to run no-frill services and with time decided to scrap airport check-ins. After their removal, every passenger wishing to fly with the airline has been required to check-in online.

The confirmation for the last check-in removal was made in 2009. This move was seen as able to save the airline a lot of money for customer service. Most of the passengers are intimidated by the full automation of the check-in system together with the other charges such as payment handling fees, check-in fees, charge for bringing a baby on-board, charge for the hold luggage, second luggage and the extra luggage carried on-board. These fees have been a major source of revenue for the company (‘Ryanair closes its check-ins’ 2009).

Physical Evidence

The most important feature of services is their intangibility. With Ryanair operating in the services industry, it must place a lot of importance on physical facilities because they are the most important determinants of convenience achieved in service delivery. Physical facilities also determine how a customer enjoys the flight and also the efficiency with which the company serves its customers even during peak seasons. Airplanes are the priciest assets that Ryanair owns. It relies on Boeing 737s to keep up its low-cost operations considering the plane model’s great reliability and low operating overheads.

It is in October 2007 the delivery of the company’s 150th Boeing Next-Generation 737-800 was made by Boeing. The majority of the old 737 classics have already been replaced with the newer next-generation 737s which are more efficient and with lower carbon emissions. The company has flown to success with a fleet of 737-800s, totaling 200 planes in July 2009 to all its destinations (‘Ryanair Holdings plc Swot Analysis’ 2012, ‘Ryanair closes its check-ins’ 2009).

Recommendations

Considering its success in the industry and the objective to operate a low-cost airline, Ryanair can be said to have the perfect marketing mix. However, there are few improvements, which can result in better customer service and increased profitability for the company. For instance, the company realizes that it operates in a rapidly changing environment that requires effective decision making; which is usually based on information.

The accuracy of this information is very important if the decisions made are to be right. In that case, the company has to set aside enough resources for carrying out continuous market research. There are several approaches to this research which include analysis of the focus group, observation, individual interviews, experiments, and inquiries (Toma et al. 2012). The research findings may be relied upon to develop a very strong marketing mix that most certainly satisfies all the customers. Below are recommendations provided for four Ps of marketing: Price, physical evidence, product, and promotion.

Product

If Ryanair is positively committed to maintaining low flight costs, it has an opportunity to generate extra revenues by requiring passengers to pay for any extra services they request (Klein, Stiel & Brands 2007). Including some charges on a ticket price could lead to high prices, which most price-conscious travelers will not be willing to pay. Therefore, the best move would be to let them pay for meals, drinks, snacks, or entertainment if they need them.

Through marketing research, Ryanair will be able to establish what customers exactly want as well as their transport needs which require satisfaction. bearing it in mind Ryanair’s managers will go ahead and determine the most appropriate way through which customers can experience the services. The research information could also be a very strong basis for differentiation which in turn creates competitive advantages for the company (Toma et al. 2012).

Price

Considering the statement by Michael O’Leary concerning low fares becoming infeasible and unsustainable, it might be correct to say that the time has come for the airline to consider altering its pricing strategy. For the past two or so decades, the company has derived a strong competitive edge from its low-cost flights. However, it should understand that its rival brands in the industry are dropping price-led strategies and adopting different ones. Consumers are turning out to be choosier when it comes to deciding where they want to spend their money (Handley 2010). As a result, the price has become less of a determinant considering many prices offers available in the market.

EasyJet, with its similar low-cost strategy, and other competitors with their attractive packages have resulted in high price offer saturation which has driven consumers to seek alternative differentiating factors other than price. The company must strive to be as sustainable as possible especially at this time when the prices of fuel are skyrocketing. Marketing research also avails a foundation for the improvement of the price element (Toma et al. 2012).

It provides information about the sensitivity of customers to price changes, the prices charged by competition, the feasibility of price-oriented market segmentation, and so on. Considering it, the key decision-makers will most certainly find the right pricing procedure for the company’s services. They will understand what they can do or not do in order to influence the profit margin.

Promotion

To avoid further conflict with ASA, the company should choose its ads’ content very carefully and avoid any provocative materials. A lesson has been learned in the past from the banning of some of its ads by the organization. In addition, the company ought to realize the opportunity missed by neglecting social media. Social networks hold a lot of marketing potential, which most of the companies have exploited for their benefit.

Therefore, Ryanair would most definitely reach more customers through social networks such as Facebook, Twitter, and other popular ones (Poulsen & Fowler 2012). As mentioned earlier, marketing research works for the entire marketing mix. With the promotion, it is the most reliable way through which Ryanair can be able to establish the best solutions to some of the advertising-related questions such as what influences the choice of promotional tactic, how each approach to advertising will impact the audience, and so forth (Toma et al. 2012). Possessing sufficient information manager will decide which approach is effective whether direct marketing through the internet, billboards, the press, or other digital media.

Physical Evidence

Physical Evidence is one of the most important elements because any service rendered by Ryanair is packed with it. These are the things that make the experience of flying with the airline memorable to customers. It is a big deal for the planes’ interiors to be as comfortable and beautiful as possible. Interior decor creates a positive mood which makes a traveler want to return in the future or recommend the airline to a friend. The dress code of the cabin crew and the rest of the employees ought to be very good.

Other than the mentioned, there are many other tangible offerings that can be provided by the company to ensure the customer experience as memorable as possible. Technology plays a very crucial role when it comes to physical evidence. It is important to invest in modern equipment, planes, and other things, which will enhance the customer experience.

The company should invest more in a larger fleet of the plane to enable it to transport more passengers than before. In addition to that, it should invest more in acquiring the newest generation Boeing 737-800 which has been found to be more reliable with fewer carbon emissions (‘Ryanair Grows 13% with 65million Passengers In 2009 7 Million Additional Passengers Opted For Ryanair’s Lowest Fares And Guaranteed No Fuel Surcharges’ 2010). The world of today is giving more attention to environmental issues so trying to be sustainable is the only way the company will be able to make it to the future.

Conclusion

Above is an analysis of Ryanair’s marketing strategy that has been implemented to position itself in the market. It has managed to promote its brand name with its low-cost no-frills strategy. This strategy has managed to make flying more affordable for most people in UK, Ireland, Morocco, and Continental Europe. By reading the report, one will be able to understand how the 7 Ps have been balanced by Ryanair so as to succeed in the competitive airline industry.

The low-cost strategy is seen as very effective and working in favor of the airline. For more than two decades, the company has been providing transport service; it has managed to satisfy its customers in an exceptional way. With its over 250 plane fleet, flying over 1100 routes to various destinations, the company remains to be one of the biggest players in the industry. It has grown significantly ever since its establishment, but the recommendations provided offer the company opportunities for increasing its revenues in the future.

If properly implemented, there is no doubt that a more effective marketing mix will be developed which guarantees a better market position for Ryanair in the airline industry. As suggested, the performance can be increased through a number of ways, for example, avoiding high ticket prices by letting passengers pay for extra services they need; launching operations in primary airports to avoid neglecting some customer groups, and reducing the reliance on price-led strategies to consider sustainability.

Others include avoiding the conflicts which have been witnessed earlier in advertising and focusing on social media advertising; putting the necessary effort into hiring and training workers; ensuring clearly defined process policies, and enlarging the fleet as well as investing in more reliable and low carbon-emitting newer generation planes. Assuming that the company is keen to implement the recommended strategies effectively, it is guaranteed that it will achieve more success in the future.

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