Future Strategy of Ryanair to increase market share in USA To: The Director, Ryanair From: The marketing consultant Date

: Subject: Strategic Marketing Planning For Ryanair To Start Business In USA Future Strategy of Ryanair to increase market share in USA 1 1.0 Introduction 4 1.1 Briefly explain the strategic marketing planning process and importance of conducting a strategic marketing plan for Ryanair. 5 1.2 Strategic marketing 5 1.3 Why Ryanair needs a strategic marketing plan? 5 1.4 Strategic marketing Plan: 6 1.5 Situation Analysis: 6 1.6 Objectives: 7 1.7 Strategies: 7 1.8 Tactics: 8 1.9 Action 8 1.9.0 Control: 8 2.0 Marketing audit using SWOT, Porter s 5 Forces and PESTLE analysis. 9 2.1 Marketing audit 9 2.1.0 SWOT Analysis of Ryanair 9 2.1.1 Strength of Ryanair 9 2.1.2 Weakness of Ryanair 10 2.1.3 Opportunities 10 2.1.4 Threats 10 2.2 Porters 5 forces Model 11 2.2.1 Bargaining Power of buyers 11 2.2.2 Bargaining Power of Suppliers 12 2.2.3 Availability of Substitutes 12 2.2.4 The threat of New Entrants 12

2 Economic Factors 14 2. explain how will employ and apply the marketing mix to support the chosen strategy.3 Market development 18 3.3.000 people.0 PESTLE Analysis 14 2.3 Placement 21 4. 19 4. 16 3.1 Ansoff s Matrix 16 3. It is the third largest airline in Europe in terms of passenger numbers.3.4 Promotion 21 References: 22 1.3. The company has the world s youngest fleet of Boeing 737- . has 24 European bases and employs a team of 5.3. comprising over 25 different nationalities.6 Ecological factors 16 3.1 Political Factors 14 2.0 Identify the range of strategic options open to Ryanair and then recommend and justify the most appropriate for the company in order to achieve the objective of growing its market share.3.3.0 Introduction Ryanair operates around 610 routes to 26 European countries.6 Reason for choosing Market Penetration strategy: 19 4.5 Competitive Rivalry 13 2.1 Product 20 Legal Factors 16 2.5 Diversification 19 3.2 Pricing 20 4.2 Market penetration 17 3.4 Technological Factors 15 2. It has been characterized by rapid expansion and has evolved into one of the world s most profitable airlines.0 Based on your recommended strategy.4 New Product development 18 3.2.3 Social-cultural Factors 15 2.

and basing long-term strategic decisions on that data without the stray distractions of day-to-day marketing and sales activities. and the corporation. the marketing planning process. But incommensurate with the gravity of these decisions. even daily decisions could be worked out in keeping with the company's . with an average age of around 4 years (as of December 2008). Marketing strategies focus on ways in which the corporation can differentiate itself effectively from its competitors. the competition. For this reason. strategy development as well as the application of the marketing mix for Ryanair. capitalizing on its distinctive strengths to deliver better value to its customers (Jain SC 1999). If such a strategy is adopted. Ryanair plans to double its fleets to 262 planes by 2012. a far better approach is to be prepared for such contingencies by performing annual comprehensive reviews of markets and opportunities. it is usual for CEOs and marketing executives to be confronted with sudden but urgent marketing challenges that often have the potential to determine or affect the future of the company for many years. 1. Such strategic decisions taken on the spur of the moment are driven by contingency and seldom turn out to have been the best or the most ideal one possible to address the circumstances. 2 Briefly explain the strategic marketing planning process and importance of conducting a strategic marketing plan for Ryanair.2 Strategic marketing It is a managerial process of developing and maintaining a viable fit among the organization s objectives.3 Why Ryanair needs a strategic marketing plan? In the field of strategic marketing. skills. P 1999). the marketing audit.800s. most of these crucial emergency decisions have to be taken without the opportunity to study the situation and make a thoroughly informed and considered decision. and resources and its changing market opportunities to shape the company s businesses and products so that they yield target profits and growth and keep the company healthy despite any unexpected threats that may arise ( Kotlar. 1. Marketing strategy deals essentially with the interplay of three forces known as the strategic three Cs: the customer. This report is prepared to cover the strategic marketing planning process.

As a straightforward model.6 Objectives: It means Ryanair s expectation thorough their operational activities. which are explained in the next section. which is comprehensive and periodic examination of Ryanair s marketing activities so as to identify problem areas and then proper solutions for overcoming problems.5 Situation Analysis: This answers the question where are we now? It involves conducting a marketing audit. Porters 5 forces model and PESTLE analysis.4 Strategic marketing Plan: The strategic Marketing process involves the SOSTAC model which is also known as a best model for the strategic marketing plan. The model then continues to look at the practical issues of putting the plan into practice. Specific (with numbers) Measurable (to monitor progress and confirm achievement) Actionable (can Ryanair do it?) Reasonable (realistically attainable) Timed (incorporate deadlines) . it goes systematically through the steps to build a marketing plan.overall strategic marketing goals. without the need to go into excessive and expensive detail. measure and develop the process? Each of the every letter stands for in the SOSTAC model is explained here: 1. The SMART Test for objectives may be considered here to make sure that the objectives are practical and measurable. SOSTAC is an Acronym for the 6 basic elements of the Marketing Plan: Situation: Where is Ryanair now? Objectives: Where do Ryanair want to get to? Strategy: How are Ryanair going to get there? Tactics: How are Ryanair going to get there? Actions: Who is going to do what and when? Control: How can Ryanair control. 1. 1. The situation analysis can be done using SWOT. and helps to ensure that all relevant factors are considered.

8 Tactics: Its measures or techniques that help the organization to achieve the strategies or goal. This is categorised as Growth and competitive oriented strategies. allocating tasks and responsibilities to planning team members. The outcome of actions: .9 Action Action means setting the budget all Ryanair can afford. Tactics usually include the use and manipulation of the 7 P s Product Price Place Promotion People Process Physical evidence 1.One main objective of Ryanair is to increase their market share in US airline industry and thus make more profit. scheduling of marketing activities. Growth strategies include The Ansoff matrix The BCG matrix Gap Analysis The GE matrix The outcome of strategy objectives: Segmentation How does Ryanair want to divide up the market(s)? Targeting Which segments of the market does Ryanair wish to focus upon? Positioning How do Ryanair want to be perceived in each different target segment? 1. 1.7 Strategies: Strategy may be defined as means to achieve the organization s stated objectives.

Weaknesses. Opportunities. 2.Who is going to do what? When are they going to do it? What is the resource allocation for the action? What are the key performance measurements? How is performance going to be recorded? 1.1 Strength of Ryanair . It assesses firm s internal strengths and weaknesses as well as firm s external opportunities and threats (Stone MA and McCall JB 2004).0 SWOT Analysis of Ryanair SWOT Analysis is a very popular method to understand the internal strengths of a company to determine future strategy. 2.1.0 Control: It means monitoring everything whether it is going according to the plan and taking corrective actions as early as possible if anything goes wrong. Porter s 5 Forces and PESTLE analysis.1. and Threats of an organization. A SWOT Analysis is a method for examining the Strengths. | | | | | | 2.9. providing relative position of the organization within the total market. The outcome of control: Do action performance measurements relate to objectives? Responsibility for measurement? Frequency of measurement? Resources for measurement? Review of measurements? Actions on variance? 2.1 Marketing audit Marketing audit analyses competitor activity.0 Marketing audit using SWOT.

The most important factors that may be considered as strength for Ryanair are as follows: Europe s largest low-cost airline Annual turnover of Ryanair is remarkable and in 2005 there was a 28% increase of revenue with £253 million of pretax profit.3 Opportunities A marketing opportunity is an area of buyer need in which a company can perform profitably (Kotlar.rather than airlines.1. and cabin crew so this would need to be looked into before expanding. Transatlantic open air pact has opened a new era for low cost airline to enter USA and this will allow extensive expansion of the budget airlines.1.Strengths refer to the competitive advantages and other distinctive competencies that a company can exert in the marketplace (Jain SC 1999). The carrier now likens itself to budget-conscious consumer brands like Ikea. 2. Aldi and McDonald's . as is the dollar. Previously with its European flights Ryanair has relied on a high number of seats sold to leisure travelers (those visiting family or taking a short trip away) but its proven that events such as SARS and 9/11 have a massive effect on air travel especially with that of leisure travelers. especially if someone has a problem of issue with booking.S. P 1999) or possibilities in the firm s environment that it can capitalize upon by entering in new market or developing new product (Willan. M 2010). 2. So Ryanair may start new service by targeting business people and being as business people who some often require long haul to locations such as China and America.The value of the euro is falling.4 Threats . Ryanair has enhanced its position as the leading brand for low fares in Europe during the current downturn. Being Ryanair an European airline it might be difficult to develop a market in the U.A.2 Weakness of Ryanair Weaknesses are constraints that hinder movements in certain directions (Jain SC 1999). 2.1. Ryanair (like all low cost airlines) is extremely sensitive to changes in charges (increase in fare value). They are known for having poor service/people skills.

Customers of USA have many choices of air bargaining. Infact customers are price sensitive.1 Bargaining Power of buyers Buyers are the customers who use the services or products of the company. 2. The airlines sector has been highly competitive now a days as some companies are trying to consolidate through mergers and acquisitions. Nevertheless Ryanair has got a number of rivals both in scheduled and non scheduled service. Availability of substitutes 4. 2010). P 1999). Threat of new entrants 5.2. These five forces can affect all the firms in the industry (Stone MA and McCall JB 2004). Bargaining power of suppliers 3. On the other hand airlines has been forced to increase their prices or absorbs the additional costs. 2.2 Bargaining Power of Suppliers .A threat is a challenge posed by an unfavorable external trend or development that would lead. Bargaining power of buyers refers to the choices that buyers have as regards which company s product they buy. Threats to this dynamic industry are ever-changing and everchallenging. competitive rivalry 2. to deterioration in sales or profit (Kotlar. Recently terrorism in transport has imposed stricter measures passengers checking causing significant delay. (Willan M.2. These five forces are: 1. Bargaining power of buyers 2. It has indirectly has lead to the thought of taking alternative means of transport like high speed rails. in the absence of defensive marketing action.2 Porters 5 forces Model This model is used to analyse and better understand the industry in which Ryanair operates. Switching to another airline is relatively simple and is not related to high cost as all airlines of USA are online. As a result non scheduled airlines sector are expected to dominate in years to come. Environmental campaign may force the industry to adopt carbon offsetting technology mandatory and which ultimately may cause price hike and development of pressure to create fuel efficient aircraft.

In fact there is no brand loyalty of customers and no close customer relationship. certification procedures. 2010). M 2010). train.4 The threat of New Entrants This refers to how easy or difficult it is for new competitors to enter the firm s industry. Regional Airports of USA have wide range of bargaining power as they are not heavily dependant on one airline. In USA there are many substitute airlines including buses. Boeing is the main supplier of carrier to Ryanair.Suppliers provide the necessary inputs needed by Ryanair to provide its services. Ground transportation. Actually Boeing has more power to bargain as there is only one supplier left in the market other than Boeing. Its very easy for customers to find out direct substitute airlines and the cost of switching is not high. airline safety and service standards may make less chance for a new airline to start (Electronic code of federal regulation. Switching costs from one supplier to the other is high because all mechanics and pilots would have to be retrained. In case of fuel supply Ryanair has got a strong position to bargain as there are many fuel suppliers in USA. Substitutes could be direct or indirect (Willan. and walking.2. 2. US government has deregulated airlines industry and no longer had any state owned . The propensity to make substitutes will tend to be greater among leisure travelers who are generally more price sensitive than their business counterpart. 2.3 Availability of Substitutes Substitutes are alternative products that can satisfy the same consumer needs. for example. Level of expertise required Demand and profits levels Exit cash US Government regulations like airworthiness. How easy or difficult for new entrants to enter the US airlines market depends on such factors as: Government regulation. will lose its appeal as a substitute the greater the journey length. fuel venting and exhaust emission requirements. Cost of capital on investment needed.2.

5 Competitive Rivalry This refers to the level of the intensity of competition in the airlines industry. It is also a negative factor for a new start. margins.1 Political Factors . Exit cash is also extremely high in airline business.0 PESTLE Analysis PESTLE analysis is a planning tool for identifying the external/legal. 2008). A and Rieple.3. Demand of a new airlines is not dire and its not unlikely to face loss after huge investment. social and technological issues that could affect the strategic planning of an organization (Kotler P 1999). 2. Price is the main differentiating factor 2. and hence on profitability Not much differentiation between services. In order to run a new airlines the company will need skilled expertise and some times its more difficult to find skilled technical support than huge capital investment.3. M 2010).Cost of capitals to start a new airline is extremely high and its not like other business. friendly and hostile (Cut-throat) (Willna. The firms has no control over these factors and should therefore change and adapt changes to PESTLE factors. Foreign firm are blocked from owning 50% of US airline (Haberberg. This helps in analyzing and better understanding the firms external or macro environment. economical. Competitive rivalry is high in US market for Ryanair for the following reasons: The LCC market is highly competitive Most cost advantages can be copied immediately High levels of existing rivalry in USA However if any company does decide to compete on the same basis as Ryanair there will be heavy pressure on prices.carriers.2. There are mainly two types of competition namely. So its more tough to exit than a start. PESTLE stands for: P= Political factors E= Economic factor S= Socio-cultural factors T= Technological factors L= Legal factors E= Ecological factors 2.

This may affect r Ryanair adversely because naturally people will reduce their traveling attitudes for a while. demand and employment status are basically interlinked in terms of people s buying attitude. demand.3. M 2010). 2. Specially the situation has been exacerbated after September 11. But level of taxation in USA is one of the world highest. In USA Ryanair may not need to employ agents as nearly half of Americans who travel prefer to use an airline's Web site to all other booking methods (Goliath 2010). Incidence of strikes by union is low.2 Economic Factors Economic factors like recession. exchange rates. More over threat of terrorism has an intense impact in terms of government regulation and customers choice of air route.Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate(Willan. 2. These are as follows: Education level of people Population demographics Religion Beliefs Aesthetics Ethics Education level of customers affect service facilitation of airline industry and it is directly related to cost.3 Social-cultural Factors Social factors include the demographic and cultural aspects of the external macroenvironment. employment and security anxieties are buoying the hopes of people in the travel . interest rates of banks inflation rate. employment status and disposable income of people of a country greatly affect customers purchasing behavior. If Ryanair wants to set up their business in USA then Political factors will not be such a barrier for them to grow because USA has got exemplary stability in politics. Last recession has left many Americans unemployed and it has directly forced to reduce demand of luxary and nonessential living cost.3. American travelers who remain defiant in the face of health. US domestic transportation tax is 7. Recession. 2010).5% (US department of state.

This will have a positive effect on Ryanair business. 2.3. 2.0 Identify the range of strategic options open to Ryanair and then recommend and justify the most appropriate for the company in order to achieve the objective of growing its market share. There are different existing models of strategic marketing which are suitable depending on business type or service or geographical variations. 3. 3. reduce minimum efficient production levels.industry (CNN travel 2003). and influence outsourcing decisions.1 Ansoff s Matrix .6 Ecological factors Certain ecological factors like emission of carbon di oxide and other green house gases by air industry may impose legislation to adopt carbon offsetting technology and its an extra pressure on Ryanair to use bigger and more fuel-efficient aircraft. Technological factors include the following: Communication infrastructure availability Transport infrastructure availability Peoples it skills Rate of new product development USA has got most developed communication infrastructure in the world. the model of Ansoff which is widely known as Ansoff s Matrix got widespread popularity. In fact it harbors eminent IT personnel s of the world.3. monopoly legislation law and investment laws in USA is strict this may restrict more the growth of the company than any other countries. This is a plus point for Ryanair to expand their business in USA.4 Technological Factors Technological factors can lower barriers to entry.5 Legal Factors legal factors like employment laws.3. Among the models. health and safety laws. Number of both domestic and international airports is satisfactory and all has got equipped air navigation system. 2.

2 Market penetration Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets. sales promotion and perhaps more resources dedicated to personal selling. Ryanair as an existing aviation service provider may increase their share in American market by combination of competitive pricing strategies.3 Market development Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets.Ansoff s product/market growth matrix suggests that a business attempts to grow depend on whether it markets new or existing products in new or existing markets. There are some low cost airlines in USA but definitely they may not offer as aggressively as Ryanair can do but in this case the service quality may be compromised. [pic] Source: Tutor2u. These are described below: 3. Based on the objectives those are expected to achieve through market penetration. including: New geographical markets. 2010 The output from the Ansoff product/market matrix is a series of suggested growth strategies depending on the prevailing shape of the service or product. . Ryanair has already been this stage partially. 3. for example exporting the product to a new country like Ryanair trying to start business in USA New distribution channels-incase of Ryanair they can employ some regional agents who may uphold the service facility to the US the us citizens more efficiently. There are many possible ways of approaching this strategy. advertising. But still it can be overcome by increasing personal selling. Each customer may have their personal choices of services among some set facilities available. Ryanair must be more aggressive in terms of promotional campaign and pricing strategy which will make the market very much unattractive for the other airlines and this is how Ryanair is going to restructure the already mature market by increasing usage of service by existing customers.

explain how will employ and apply the . or launching alternative transport service for tourists like fancy buses. This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience.6 Reason for choosing Market Penetration strategy: I will prefer Market Penetration for Ryanair in USA because this strategy implies that Ryanair will grow its business by ramifying its aviation service in the existing market.5 Diversification Diversification is the name given to the growth strategy where a business markets new products in new markets. Incase of Ryanair they can add some new fleet or change their packages for special group of people by categorizing on the basis of income . like building hotels for passengers. therefore. It will be an easier task for them to merge in the existing competitive business environment in USA. They have the essential knowledge and skills to run a low cost airline in Europe. They can also develop new products that are not exactly related to airlines business. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets. it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks. It is likely that they will face some problems of different magnitude but they can use their own knowledge and experience that they have gathered from Europe. socio-economic status and ethnicity. 3. Among the four key strategies I would like to use Market Penetration strategy for Ryanair in USA. For a business to adopt a diversification strategy.0 Based on your recommended strategy. 4. In a country like USA its actually impractical to think about a new product. 3.4 New Product development Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets.Different pricing policies to attract different customers or create new market segments 3.

2010) but none gained such popularity like of Ryanair has achieved in Europe . If Ryanair want to achieve its objectives by marketing by its products or services effectively to a particular marketing or customer group. 4. 4. Of course the selection of place will depend on many factors like . ATA. Ryanair can set their business in the particular region of America where the concept of low cost airlines may get popularity. In the case of physical products. Pricing includes not only the list price. etc. namely AirTran. JetBlue (ETN.marketing mix to support the chosen strategy. logistical. and other options such as leasing. place.3 Placement Place (or placement) decisions are those associated with channels of distribution that serve as the means for getting the product to the target customers. financing.2 Pricing Pricing decisions should take into account profit margins and the probable pricing response of competitors. Based on the above discussion Ryanair can take the following marketing mix to boost their market in USA to become no 1 low cost airline company. Its elements are the basic. but also discounts. In USA competition is very high so they must set their price according to the context of local market and as well satisfy the customer needs.. Product decisions include aspects such as function. Also known as the Four P's. and facilitating functions. it also refers to any services or conveniences that are part of the offering. it is also referred to as 4 P s. packaging. The distribution system performs transactional. 2008). The marketing mix is probably the most famous marketing term. In USA there are many low cost airlines. product. service. warranty. and promotion. appearance. So if Ryanair wants to keep their brand name then they should provide a comparable services with a competitive price. tactical components of a marketing plan.1 Product The product is the physical product or service offered to the consumer. the marketing mix elements are price. [pic] Source: Learn marketing (2010) 4. Placement under marketing mix involves all company activities that make the product available to the targeted customer (Kotler et al.

2010) Availbale from Stone MA and McCall JB (2004) International Strategic Marketing: A European Perspective. public relations.4 Promotion Promotion decisions are those related to communicating and selling to potential consumers. London Tutor2u (2010) Ansoff s product / market matrix (online) (cited April 22. 2010) Available from Electronic code of federal regulation (2010) Aeronautics and Space (online) (cited April 24. Routledge.PEST Analysis (online)(cited April 20. For expansion of Marketing and to popularize their brand name. Moreover they can sponsor youth friendly TV programs or different types of events to boost up their sales. A and Rieple. (2008) Strategic Management: Theory and Application. P (1999) Marketing Management. etc. 2010). Cengage south-eastern. USA Kotlar. a break-even analysis should be performed when making promotion decisions. they must go for mass media campaign. Since these costs can be large in proportion to the product price. Available from Goliath (2010) More Americans opt to book air travel online (online) (cited April 24. targeting new customers through both electronic and print media. media types. 2010) Available from Haberberg. 2010) Available from . ethnic preponderance. Sales promotion plays a vital role in attracting customers by giving discounts or vouchers to the existing or new customer when they launch new services like while opening a new route. USA Learn marketing (2010) Marketing Environment . 4. Inc. References: CNN Travel (2003) Travel expert: Nothing will deter Americans' travel plans (online) (cited April 24. 2010) Available from US department of state (2010) Taxes and Fees Associated with Air Travel as of 2006 (online) (cited April 24. Promotion decisions involve advertising. and number of young people living. Oxford university press. UK Jain SC (1999) MARKETING: planning and strategy (6th edn). (10th Edition). It is useful to know the value of a customer in order to determine whether additional customers are worth the cost of acquiring them.the socioeconomic condition of inhabitants. Prentice-Hall.

Willan. London. . M (2010) Strategic Marketing. Icon college of Technology and Management.

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