The international airline industry is incumbent of massive competition with budget and non-budget airlines competing in the market based on quality service, price and innovations. The airline companies generate about £200 billion in revenues and employ 29 million people around the world and provide at least 28 million jobs around the world. There are about 270 airlines around the world which make this industry highly competitive. Marketing for airlines is just as tough and met with increasing challenges as any other industry. With Emirates introducing phone usage in the plane and built-in screens in seats, other airlines have had some serious concern towards embedding innovation in their services. Ryanair is a budget airline and British Airways is a non-budget airline, both though, are in different markets in the same industry, but apply different marketing philosophies and practices to cater to and capture their respective target audiences. Ryanair is a European airline that is known for its cheapest tickets, but that does not imply that its marketing strategies fall short of competitiveness and it is a great brand nonetheless. British Airways on the other hand is a luxury brand and is one of the top airlines of the world and its marketing strategies are benchmarks for other airlines to follow suite.
Marketing Management Philosophies
In this section the marketing philosophies of Ryanair and British Airways are compared and contrasted.
Ryanair faced an annual loss in 2009, which only has geared its strategy of cost reduction in production costs and expenses.
Product
- Ryanair provides low cost air travel to various destinations within Europe.
- Onboard additional services include food and drink purchases.
- Ryanair also offers services of car rentals (Hertz) and hotel accommodations for the customers, where it charges a commission of 16%.
Price
- Ryanair offers the cheapest rates on air fares.
- Low rates are for 70% of the seats, the rest of the 30% seats are charged comparatively higher.
Place
- Ryanair uses a direct marketing channel to sell its services. No agents are hired. It directly sells and deals with customers for air fares and other additional services. This is done to eliminate costs.
- Ryanair also offers dealing via the internet, which saves clients 15% of agent’s fees.
- Ryanair’s customer service office is in Stanstead, Essex. This location is chosen because it is comparatively cheaper to fly from Stanstead than either Heathrow or Gatwick.
- Ryanair opts to fly from secondary flying destinations. This allows it to maintain a faster turnover and keep the planes in air more than the competition, allowing it to reduce cost.
Promotion
- Rynair’s advertising expenditure is at a minimum.
- All of the advertising activities are done in house, by the company’s marketing department.
- Advertisements are simple and straight forward, focusing on the message of cheap air fares.
- Ryanair also uses controversy for promotion by charging more fat and chubby customers, and charging extra for toilets. They did this after reviewing what the majority of its customers actually wanted. For example, they did not want long lines in aisles for toilets and since larger passengers took up more room, for others these seems unfair as they being smaller pay the same rate and consume less space.
British Airlines is the largest international airline of the world and since it caters to the international market, its marketing philosophies and strategies are embedded with innovation and class, which reflects its target customers, and as opposed to Ryanair, British airways main focus is not to maintain its cost reduction strategy but to maintain its high class image in terms of customer service and comfort and innovation in services offered to customers.
Product
Over 220 aircraft owned by British Ariways including 56 Boeing 747s, 45 Boeing 777s, seven Concordes and 38 Airbus A319/320s which it uses to offer a mix of products and services to its highly valued customers, which are based on the changing dynamics of the international airline industry.
Price
British Airways, known for previously high fares, is now offering low rates but full service offering catering to more than the customers’ money worth. Fares now start from £59 on domestic flights and £69 for European destinations. This is part of its new promotional strategy to gain competitive edge.
Promotion
British Airways wants to offer its luxury and regular customers worth more than they pay, and to gain a competitive advantage it is offering lower rates so as to gain a higher customer share.
Place
British Airways hire agents, as well as direct customer service through offices in London, Heathrow and JFK.
4 Vs Approach
Ryanair and British Airways follow the following 4 Vs approach:
Validity
Ryanair’s service is valid for the target customers who seek lowest fares possible and high availability of flights at short notices, when they have to travel short distances. British Airways offer luxury air travel and offer the related and exact comfort and value for money that the target audiences is looking for which is up to date and follows the latest industry trends in customer services.
Value
Ryanair offers cheap prices, but opposed to that there lesser values than other airlines, as they give what is exactly the money’s worth, and since the company is currently facing a situation of financial loss, all of their strategies are based on cutting costs. Thus, customers are not getting higher value for what they are paying. British Airways latest marketing strategy is to offer to the customers more value for their money, as opposed to Ryanair. It is building a stronger brand image and a bigger customer share, to capture customers who are looking for luxury but are price conscious.
Venue
A direct channel via internet buying is a highly effective strategy of Ryanair which enables the customer to buy tickets and get them delivered to them while sitting at home. Similar is the case with British Airways, which offers direct as well as indirect channels for selling and dealing with customers. It offers e-tickets, which can only be made available to customers in just a matter of 30 minutes, making British Airways, promptly and highly accessible.
Vogue
The only promotional activity of Ryanair is to communicate in the cheapest way that the company is offering low and cheaper air fares. No innovation is being carried out for promotion. British Airways invests heavily in advertising and promotion, and offering lower rates, is changing its advertising and promotional strategy. Its advertisements are aired on international media, television, magazines and newspapers, with the message of luxury, experiences and comfort and more than money’s worth. British Airways is known for its ambience and innovation in advertising, such as projection on laser cash machines and striplines.
SWOT Analysis
Strengths
- Ryanair’s planes have the highest and fastest turnover, as they stay in the air more than the competition;
- Ryanair offers cheaper rates, which allows to attract more customers;
- Minimum cost on advertising.
- British Airways has a strong brand equity;
- British Airways has an international reputation and image for supreme quality and luxury airline experience;
- British Airways is the largest international airline, and has a loyal and long term customer base.
Weaknesses
- Ryanair will find it hard to alter its brand image which is strongly associated with cheap rates, thus, increasing its rates for higher sales revenue may be the toughest task;
- For Ryanair, lower promotional activity means low brand recall and less awareness among customers;
- Raising controversy as promotional may not be the best decision, as it only destroys the brand image not build it stronger.
- British Airways is playing a risky game with repositioning itself as a cheap fair company as it has previously been known as a luxury brand and offering lower price means challenging its previously held brand image;
- British Airways may face a serious downfall on profitability with lower air fares and higher set of services being offered to the customers;
- British Airways is now mass marketing and not focusing on a niche market, which can be custom made and tailored to specific needs, such focusing on luxury customers had previously created a good name for it in that market, but now it is focusing on a larger pool of customers, which is only affecting its brand image
Opportunities
- Ryanair can expand to other countries in Europe and cater to a larger pool of customers;
- Ryanair can advertise more as offering more services than the money’s worth to attract more customers;
- Ryanair can offer more services such as faster ticketing services to cater to the regular customers’ needs of faster access to air travelling.
- British Airways has the option of expanding to other nations offering not one-way but two way ticketing to Asian countries, which are a growing market for airlines today;
- British Airways can counter Emirates innovation in technology of using telephones inside the plane;
- It can sustain its image as a corporate and luxury class plane that caters to the luxury and quality air travel needs of the clients, rather than going for mass marketing.
Threats
- There are about 270 airlines in the airline industry which has only increased competition for both Ryanair and British Airways;
- Customers have become more price and value conscious and Ryanair offering less services for the less charges, is in serious threat from airlines which offer cheap rates as well as lower rates; (Keaveney, 1995);
- Ryanair may face more losses if it maintains lower rates of fares, as competition is increasing and countering heavily to capture the customers;
- British Airways faces stiff competition from Emirates, Qater, Swiss Airways and the top international airlines, which are employing and infusing out of the box and highly innovation marketing campaigns to keep their brands names on top;
- British Airways has to maintain and sustain its brand image and equity and involve less in risking its brand name and repositioning which may not guarantee future sustainability in the industry.
Conclusion
Ryanair and British Airways are currently employing succeeding marketing strategy in their respective markets, with the focus of cost reduction on one hand and supreme quality at low rates on the other. But both strategies are not without their weaknesses and room for improvements.