Marketing Strategy of Ryanair
Category : Reward Systems in Organisations
Ryanair Company is an Irish low-cost airline with its headquarters at Dublin Airport, Ireland. It has also a base in London Stansted, Airport. Ryanair operates more than 200 Boeing 737-800 aircraft on over 1000 routes across Europe and Morocco from its 40 bases. The airline experienced rapid expansion because of its low-cost business model. Ryanair is the largest airline in terms of passenger numbers.
Ryanair is one of the most successful businesses in Europe over the past decade. The company has developed an effective communication strategy. It used media and advertising. Ryanair revolutionized European air travel. Ryanair was Europe’s original low-fares airline and it is still Europe’s largest low-fares carrier. Ryanair targets in the first instance, as the largest and most successful of Europe’s low fare airlines, leisure travellers and the visiting friends and relatives segment of the market. Low price, value for money and efficiency are core values for Ryanair. Those core values should not change regardless of environmental turbulences. This means that cost reduction and other profit sources than travel fares are important factors in Ryanair’s strategy since they cannot compensate its expenditure by increasing travel fares. For the low cost strategy prices of taxes, fuel, and governmental regulations are especially important. The airline deregulation not only helped Ryanair but also increased competition under different airlines and air traffic. The result of this is increased regulations by the European Union (EU) government in terms of safety and environmental rules. This again raises operating costs within the EU. Efficiency and low prices are due not the least to the company’s lower labor expenses.
The Ryanair Company controls these costs through a performance related pay structure. This special system is of course also dependant on EU social/employment legislation, which is always subject to change. A main problem is the uncertainty of the oil price, which is again tied to political developments. Since the political situation in most major oil producing countries will stay unstable for the foreseeable future, the oil prize will remain a main problem for airlines. The fuel cost difficulty is exacerbated by unpredictable currency exchange rate fluctuations because aircraft fuel prices are denominated in US dollar. Nonetheless the weak dollar has compared to sterling a positive impact for Ryanair.
Ryanair as a major European airline has to consider the travel regulations within the European Union. The falling obstacles of travel and trade have certainly had an influence on inter-European travel rates. Flying has become much easier, faster and convenient. This can be seen as an advantage for Ryanair operating in mainland Europe.
Although the company had encountered different problems, specifically in line with its cost structures, the company had been able to survive and grow in the marketplace. Ryanair implement different marketing strategy to make the company survive in the competition and to be able to gain competitive position in the airline market. It is said that the company was regarded recently as the most punctual airline between Dublin and London. And because of the strategy of the industry, Ryanair is now recognised as the second largest airline in United Kingdom and Europe’s largest low-fares airline having a network of over 57 routes in 11 countries and served by a fleet of 31 Boeing 737-200 and -800 aircraft with over 1,400 staffs and personnel.
In order to position itself in the marketplace the company continuously concentrates on driving own its costs to offer the lowest fares possible and remain profitable. In addition, Ryanair offer minimum standards of service and very low prices for point-to-point, short haul flights. The goal of Ryanair is to meet the needs of travelling at the lowest price. It is noted that low-cost companies concentrate on this first critical success factor by trying to offer the lowest prices. Although Ryanair has eliminated extras such as in-flight meals, advanced seat assignment, free drinks and other services, it still prioritized features which remain important to its target market. Such features include frequent departures, advance reservations, baggage handling and consistent on-time services.
Cost Reduction Strategy
To achieve its goal of being competitive in the airline market, Ryanair uses a cost reduction strategy. Such cost reduction strategy relies on five main aspects like fleet commonality, contracting out services, airport charges and route policies, managed staff costs and productivity and managed marketing costs.
Porter’s Generic Strategy
Ryanair has also been able to use Porter’s generic strategies to position itself in the marketplace. Accordingly, a company positions itself by leveraging its strengths. Today, more and more people and organization are striving to be recognized in the business arena. With this objective, these organizations had been able to competently and effectively adapt to the situation in the market place by using generic strategies that enhanced their competitiveness. There are five different generic strategies that a business can choose. These include cost leadership, differentiation, focused cost leadership and integrated cost leadership/differentiation. Each generic strategy helps the company to establish and exploit a competitive advantage within a particular competitive scope
Ryanair airlines used Total Quality Management (TQM) to meet both external and internal customer needs. The tasks of crafting, implementing, and executing company strategies are the heart and soul of managing business enterprise.
Ryanair especially to be used in its airline operations and services, the management of the airline company must be able to accept the whole concept of the improvement, which means that all the people of the airline company must agree that there is a need for a total transformation especially for the quality of operations and services that the industry will be offered. Furthermore, the management should be willing to participate to all the improvement, value each and every ones opinion in order to achieve total quality management and provide a total quality operations and services to satisfy their customers.
Total quality management is based on internal or self-control, which is embedded in every element of the work system (technology and people), the employees or the people behind the operation and services being offered to the passengers and customers of the airline must be able to determine the problems beforehand, to anticipate its occurrences.
1. Marketing Plan for Ryanair [Online] Available at: http://www.grin.com/e-book/55005/marketing-plan-for-ryanair [Accessed 24 Feb 2010]
2. Ryanair Airlines [Online] Available at: http://www.ryanair.com/en [Accessed 24 Feb 2010]