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TRANSCRIPT
CAVENDISH COLLEGE
Strategic Marketing Management
EasyJet
Assessment – Task Two
Lecturer: John Heather
Danilo Gomes de Matos – Group C – DMS/MBA
Date: 03/06/2008
List of Contents
Company selection and background..............................................................................4
Customer base................................................................................................................4
Product/Service..............................................................................................................4
Target market.................................................................................................................5
Financial information.....................................................................................................5
1. External Analysis – Macro Environment...................................................................6
1.1 PESTEL Analysis.................................................................................................6
2. External Analysis – Micro Environment..................................................................12
2.1 Porters Five Force..............................................................................................12
3. Segmentation............................................................................................................17
3.1 Target Market.....................................................................................................17
3.2 Products/Services...............................................................................................20
3.3 Competitors Analysis.........................................................................................20
3.4 Market................................................................................................................21
3.5 Brand..................................................................................................................21
4 Internal Analysis.......................................................................................................22
4.1 Resources Audit.................................................................................................22
4.1.1 Physical Resources......................................................................................22
4.1.2 Human Resources........................................................................................22
4.1.3 Intangibles...................................................................................................22
4.1.4 Financial Resources....................................................................................22
4.2 Competences......................................................................................................23
4.2.1 Core competence.........................................................................................23
4.2.2 Distinct competence....................................................................................23
2
4.3 Capabilities.........................................................................................................23
4.3.1 Men.............................................................................................................23
4.3.2 Money.........................................................................................................24
4.3.3. Market........................................................................................................24
4.3.4. Machines....................................................................................................24
4.3.5. Materials.....................................................................................................24
5 SWOT Analysis........................................................................................................24
6 Marketing Plan..........................................................................................................27
6.1 Objectives...........................................................................................................27
6.2 Strategies............................................................................................................27
6.3 GAP Analysis.....................................................................................................28
6.4 Marketing Mix...................................................................................................29
6.4.1 Product:.......................................................................................................29
6.4.2 Price.............................................................................................................30
6.4.3 Place............................................................................................................31
6.4.4 Promotion....................................................................................................31
6.4.5 People..........................................................................................................31
7 Monitoring and control.............................................................................................32
8 Budgets .....................................................................................................................32
8.1 Costs...................................................................................................................33
8.2 Break Even.........................................................................................................34
8.3 ROI…………………………………………………………………………….33
9 Conclusion.................................................................................................................35
Bibliography.................................................................................................................36
Appendix...............................................................................................................…...36
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4
Date: 01/07/2008
To: John Heather
From: Danilo Gomes de Matos
Title: Marketing Planning
Subject: EasyJet
Company selection and background
The company that I selected is easyJet. The company was founded in 1995. The
airline is based at Luton Airport U.K. EasyJet is the best low cost airline in Europe
and also is the second largest airline in U.K. The company won diverse awards on
customer service. In 2002 EasyJet got more than 90% of booking tickets using the
online service in the website of the company (www.easyjet.com).
The purpose of the company is to provide to the customers with safe, good value,
point-to-point air services. EasyJet provide flights around Europe and North Africa.
The company has almost 6,000 employees which operate internationally. EasyJet
operate using new aircrafts. The company has 131 aircrafts (Airbus A319 and Boeing
737-300) and the averages of the planes are 2.1 years old.
Customer base
The customer base at EasyJet is those who do not want to pay extra for luxury such as
business and first class service, food during the flight (EasyJet provide food, but not
for free) and so on.
People who use EasyJet services are usually those that want to pay less when
comparing to other companies.
Product/Service
EasyJet provide services as facilities with the Internet, EasyJet has a lot of Internet
shops around London for the customers, facilities with coach, easyJet provides
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transport from the centre to the airport and from the airport to the centre of London,
and the main product which is the low cost fares that the company offers for the
customers.
Target market
EasyJet is the second largest airline in U.K. (the first one is British Airways) and is
the leader in terms of passengers transported in U.K.
Other low cost airline, Ryanair, is behind EasyJet. EasyJet gained market because of
the customer services provided which won some awards and also because of the
attractive airports on the destiny of the flights.
Financial information
EasyJet is doing very well year by year. According to the financial report (2007) on
the website of the company (www.easyjet.com), they are increasing the performance
as we can compare in the final of the year of 2005, the company had £ 1,341.4 million
on revenue and in the final of the year of 2007 the company had £ 1,797,0 million, a
growth of 34%. The company has also other impressive growth of 48% of profit
(before tax) comparing 2006 and 2007, 18% of growth in cash flow from operations
comparing 2006 and 2007 and 30% of growth in profit per seat (before tax).
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1. External Analysis – Macro Environment
Macro environment has a great impact on aviation industry. The Macro environment
consists of Political, Legal, Economic, Socio-cultural, Technological and
Environmental factors.
1.1 PESTEL Analysis
Political factors
Factor Impact on Industry Implications
Tax policy New tax regulation
It can influence the
aviation market in terms of
rules to the business be
followed
Terrorism
The crisis that happened in
USA (September 11 2001)
and in London (2005) can
impact in number of
customers
It has an impact in terms
of number of customers
because they might have
fear of fly again and it can
reflect directly on profit
made by the company
Political instability
It can change the
agreement and even cancel
the routes that the airline
has with others countries
The company can be
forced to change the routes
and it is not good in terms
of logistics because the
company will have to
spend time to define
alternative routes
Election
Different point of view of
the politicians about
corporation tax between
the labour and
conservative
It can affect directly the
company because the
conservative can reduce
tax, which will increase
the profit, but the labour is
less open to make this
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change happens.
Economical factors
Factor Impact on Industry Implications
Inflation The current inflation is
3.3% and it is because of
the crisis of the fuel price
It is not good for the
company because with
expensive fuel price, the
company might have to
increase cost for the
customer
Exchange Rate Pound and Euro has more
value than US dollar
which can be easier to a
new entrant
EasyJet in a British
company which uses
pounds and can increase
the profit dealing with
suppliers, fuel price, etc
which have US dollar as
the currency
Oil Price Oil price is increasing and
it seems that will not
reduce the price, on
Wednesday (June 22 2008)
the barrel was $134,71,
according to www.oil-
price.net/
This can affect the final
price for the customers,
because the oil price
influences the price of the
air tickets.
Economic Growth U.K. has a slow economic
growth, it can be because
of the high price of oil
which increase the
inflation
The company which wants
expand the business or
explore new markets can
be very slow to do this
because of the economic
growth
8
Social Cultural factors
Factor Impact on Industry Implications
Lifestyle
The customers lifestyle
will decide if the customer
will travel by plane, car,
coach or train
It can affect all the strategy
of the company, if the
customer decides go by
other way of transportation
Media views
Media views has a high
impact on customers
because they can influence
the customer decisions
It can affect the strategy of
the company
Olympic Games 2012
This will be a high impact
on tourism of aviation
industry due the numbers
of people interested to
watch the Olympic Games
EasyJet will face a high
number of customers
because of the low cost
airline culture which will
attract a lot of customers
Demographic (Population) High number of population
can mean more customers
for the company
With a high population in
U.K. the company will
face each year a growth in
terms of passengers flying
Technological factors
Factor Impact on Industry Implications
Expansion potential In aviation market
technology evolves very
speed and this technology
is a differential of the
others companies
High technology for the
company can be very
useful in terms of expand
the business and explore
new routes
Research and
Development
R&D has a high impact on
industry. The company that
has a high R&D will have
less wastage, less time
spent and always will focus
R&D is having a high
impact on aviation
industry in terms of
develop a new product and
market opportunities, but it
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on the product to be
developed
needs additional money.
Online System It reduces paperwork,
queue, and is better for the
customer book the flight
from home.
It increases sales, profit
and reduce staff and the
company has to pay less
wages
Environmental factors
Factor Impact on Industry Implications
Environmental regulations The government decided
to reduce the emission of
carbon of 20% by 2020
EasyJet follows the rules
for the environmental
regulation and they
introduced a program
called Carbon Offsetting
which the company and
the passengers buy credits
from the Perlabi
Hydroelectric Project in
Ecuador
Ecological issues The company has to
reduce the materials which
can be hard for the
environment and recycling
as much as possible to
contribute to make a
“green” atmosphere
This will increase the
health and safety image of
EasyJet
Society The number of people
worry about the warm
global, wastage, recycling
and so on is increasing
EasyJet can has their
image affected by these
people if the company
does anything wrong
Use of environmentally
products
The major concern in
environment in aviation is
the fuel, but the company
The customers tend to
prefer health products.
EasyJet does not give any
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can use recycling and
health products to
minimize this concern
food during the flights but
they give an option to buy
food in the airplane during
the flights and the
customer have the option
to buy health food and the
company also use
recycling material as can,
plastics fork and knifes,
plastics glasses, etc.
Legal factors
Factors Impact on Industry Implications
International law The government set the
law and the standards, they
affect the business in
regard to international law
in air space
These law are very strict
and the company must
follow the rules to do not
loss any benefit
Agreements In aviation markets the
companies have
agreements in terms of
destiny, passenger with
ticket of other airline using
your flight, and so on.
The company can gain
more customers if the
company accept tickets
from other air company as
agreement for some
specifics destinations.
International trade The main material for an
air company which are the
airplanes are imported
from other country and
any change in this
international trade can
Change in international
trade can affect the
company’s profit.
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cause more cost for the
company.
Conclusion: These points of Political, Legal, Economic, Socio-cultural,
Technological and Environmental issues can affect the external environment of a
business which can affect the marketing plan process. It is important for EasyJet pay
attention on these concerns with a strategy and also an emergency strategy for the
changes that might occur.
The customer satisfaction is the key for EasyJet be successful and the company
always make the changes based on customers to provide the best low cost airlines.
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2. External Analysis – Micro Environment
The micro environmental consists in Suppliers, Distributors, Customers and
Competitors.
According to Michael Porter (1985), the theory of Porters five force can be used to
determine the intensity of competitors and hence the profitability and attractiveness of
a market segment.
2.1 Porters Five Force
Source: www.foodandretail.blogspot.com/2007/10/porter-5-forces-how-they-work-3.html
Bargaining Power of Suppliers
Factor Level of power Implications
Supplier market High
The supplier can increase
the price of the product
offered which can result in
more cost for the company
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Supplier concentration MediumIn aviation market there
are a lot of competitors in
different areas such as
handling, fuel supplier,
catering and so on
Substitute inputs Medium
The customer can decide
to go by train or by car
instead of going by air
plane
Switching costs Medium
Is very difficult for the
suppliers to switch the
costs because there are a
lot of competition between
the suppliers and the
companies have some
agreements with the
suppliers, some time long
term contract with a
specific price
Conclusion: The aviation supply market involves fuel, catering, cleaners, and many
others services and products. The main costs in aviation are: leasing and fuel. Both are
in powerful hands around the world. Banks are buying another banks and the power is
increasing a lot and concentrated in few hands. The fuel has direct impact from the oil
price which does not stop to increase day after day. The oil price can push the
development of alternative energy power suppliers more adapted to ground
transportation in the first beginning, like electricity to move the car. More suppliers
are better, because the competitiveness can result in less money to get services and
products which is the culture of EasyJet, low cost air line.
Threat of New Entrants
Factor Level of power Implications
Government policy HighThe laws can affect
directly the company in
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terms of change the way of
doing something
Brand High
EasyJet has a strong name
and is the second largest
air company in U.K. and
the company won several
awards of “the best low
cost air line”
Capital requirement Low
The new entrants have to
invest a lot of capital and
aviation market is a very
expensive market which
include oil price, leasing or
buying air planes, several
suppliers and also a new
entrant will have to
compete with the current
competitors
Product differentiation High
In aviation a product
differentiation can be first
class service, online
booking system, and
special foods during the
flight and so on. EasyJet
has as main differentiation
the low price against the
competitors
Market strategy Medium
The company has to have a
strong strategy to face the
new entrants
Conclusion: If a famous brand starts a business in aviation e.g. BT, it will make the
competitiveness increase because people already know this brand. The two key points
which are the most difficult to the new companies deal are the government and capital
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requirements. The aviation market has a lot of rules to be followed and it also
involves million of pounds. A company must have a very good strategy and also
something different to offer for the customers to try to get some advantage against the
competitors.
Bargaining Power of Customer
Factor Level of power Implications
Number of customer Medium
The number of customer
that EasyJet has influence
directly the profit that they
can make. Less customers
means less money for the
company
Product quality High
The product that EasyJet
provides is flight, and its
qualities can be
punctuality, facilities for
the customers, e.g. internet
facilities for the customers
waiting for the flight,
quality of service
organisation.
Brand value High
EasyJet has a strong brand
value due the good service
and product offered fro the
customers. The company
is recognized in Europe.
Conclusion: Customer is the key to the company be successful. High number of
customers means more flights, more money. But the competitiveness in aviation is
high and if the customer satisfaction is not good, a substitute can offer something
more attractive and steal the customer. EasyJet has a strong brand value in Europe due
the quality of products and services offered for the customers.
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Threat of Substitute Products
Factor Level of power Implications
Increase price High
If the company increase
the price, the customer can
move to other company in
other segment such as
train, coach, etc.
Luxury Low
Some people can be
affected by luxury offered
for some companies.
EasyJet does not provide
luxury for their customers
Quality Medium
EasyJet have a good
customer services and won
some awards of the best
customer service
Conclusion: if the company changes the price, their competitor will have to do
something about it, so it can affect the market. The customers always look for low
price and high quality, and EasyJet provides a very good quality as we can see the
high number of awards that the company won. A low price airline can change the
lifestyle of travellers usually go by coach, car, train, etc. because of the price of the air
tickets.
Competitive Rivalry
Factor Level of power Implications
Market growth High
With the growth of the
aviation market the
competition is high
because of the
opportunities that the
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companies found.
Brand identity High EasyJet has a very strong
identity but there are few
companies very strong in
the market such as British
Airways, Virgin Air lines
and Ryanair
Exit barriers Medium
It is not a problem to exit
the market if the company
doe not have any financial
problem
Cost values Medium
Companies/competitors
always try to get low cost
to increase the profit
margin
Conclusion: According to specialists in aviation, this market is growing and the
companies have an opportunity to start new business. There are a lot of services being
offering in aviation but anything unique. There are not so much in terms of exit
barriers so the company does not have difficult to finish the business, except if the
company has a large passive in its relationship programs, like mileage that is difficult
to negotiate with thirds.
3. Segmentation
3.1 Target Market
EasyJet products and services are for people who want to save money and can travel
without luxury as first class service, food included on the price of the tickets, etc.
The follow segmentation gives a clear picture of the company’s target markets.
FACTORS VARIABLE PROFILE
Geography All Europe and North Africa
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Socio Demography
Age
Life cycle
family
Social class
Events
From 2 to 60
Young, backpacking, single,
married with children, married
without children
B, C
Holydays, Business, Sporting
events (EURO 2008, Olympic
games 2012)
Psychographic
Lifestyle
Personality
Interested in Travelling
Relaxed (people which do not
want luxury during the flights)
Behaviourist
Frequency of
travelling
Ability and
experience
Weekly (Business men) and
monthly (holidays, special
events)
First time user and regular user
Benefit Sought
Price
Speedy
Best low cost air company
High online customer service
technology
After analysing the target market of EasyJet, it is identified two group of people as a
target, Business people and Tourist people travelling to U.K., Europe or other
continent as seen on the figure below.
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Unattractive Average Attractive
Wea
k
Business U.K.Family tourism
U.K.Backpacking tourism
Europe
Ave
rage Backpacking tourism
U.K.Old people tourism
EuropeFamily tourism other
continent
Stro
ng
Old people tourism U.K.
Business Europe Business other continent
Aviation Market
Business Tourism
U.K.
Europe
Other Continents
U.K.
Europe
Other Continents
Family
Old people
Backpacking
Family
Old people
Backpacking
Family
Old people
Backpacking
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The most attractive group to be explored for EasyJet is business people travelling to
other continent. There is one specific country which is China that will be the priority
because according to BBC website (http://news.bbc.co.uk), China has a massive
economic growth around 9% or more, and by 2020 it will be the country with more
purchasing buyer in the world, overtaking USA (Appendix 3).
3.2 Products/Services
EasyJet is a low cost airline and its products include:
flights to Europe and North Africa (in 2007 the company had 137 air planes,
107 Airbus A319, with 156 seats and 30 Boeing 737, with 149 seats)
car rental facilities
facilities to book hotels
facilities to Internet
holiday packages
Coach transfer
3.3 Competitors Analysis
Quality
Price
E
E=EasyJet
B
B=British Airways
C
C=Air China
R
R=Ryanair
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3.4 Market
The main competitor of EasyJet is Ryanair which is a low-cost airline and operates in
Europe (Appendix 2). British Airways which is one of the huge air companies in the
world and operates in all the continents. Air China is a very big company. According
to the website of the company (www.airchina.co.uk), the company has more than
25,000 employees. The company flies to Americas, Asia, Europe and Oceania.
Comparing to Ryanair, EasyJet has some advantages as better location in terms of
destiny (Appendix 1), the limit of hand baggage is double of the limit offered for
Ryanair, cheaper transfer to the airport of destiny to the centre of the city.
Comparing to British Airways, the advantage that EasyJet has is the price. Customer
from British Airways can have Business and First class as an option which EasyJet
does not offer and it is a disadvantage for EasyJet. British Airways also operates in
the main airports of the world in different continents. Comparing to Air China,
EasyJet, as it is now, cannot compete because the company is much bigger than
EasyJet and the only way that EasyJet can compete with Air China is offering a new
product approach getting benefits from the strong image EasyJet has as a quality and
low price company.
3.5 Brand
Over the past years EasyJet had worked focused on low cost and customer satisfaction
providing accessible prices to different destinies.
EasyJet believe that with low cost and investing in technology they can be profitable
as they are being over past years.
EasyJet has a great value. It is a large company and is recognized in all Europe.
Because of the high technology that EasyJet uses as online services, such as check in,
booking flights, etc. and the accessible pieces, the customers have an image as a
successful air company which they have an identity when they chose one company to
fly.
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4 Internal Analysis
The internal analysis assesses the company’s assets, resources, systems, procedures
and skills to determine and helps to identify the strengths and weaknesses in the
organisation.
4.1 Resources Audit
4.1.1 Physical Resources
1 head office at Luton Airport
20 EasyJet bases around Europe (France, Swiss, Germany, etc.)
137 airplanes, 107 Airbus A319, with 156 seats and 30 Boeing 737, with 149
seats.
4.1.2 Human Resources
EasyJet has almost 6.000 employees around Europe and North Africa
High technology for training staffs
Stronger Low Cost operation
4.1.3 Intangibles
EasyJet Plc
EasyJet Master Card
EasyJet coach
4.1.4 Financial Resources
2005 (£ Million) 2006 (£ Million) 2007 (£ Million)
Profit for the 59.0 94.1 152.3
23
year
Non Current
Assets
- 1,088.3 1.350,0
Currents
Assets
- 1,101.1 1,166.4
Net Assets 863.4 982.9 1,152.4
Revenue - 1,619.7 1,797.2
4.2 Competences
4.2.1 Core competence
EasyJet is the best low cost air line providing flights point to point.
4.2.2 Distinct competence
High technology online services, in 2002 EasyJet had an incredible mark of 90% of
the flights booked by the Internet.
4.3 Capabilities
Using the 5M`s is possible to analyse the competences and capabilities of the
company.
4.3.1 MenEasyJet has almost 6.000 employees around Europe and North Africa as pilots, crew
member, staffs, and employees from different departments.
4.3.2 Money
The company is increasing in terms of sales and profit as you can see above in the
financial resources.
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4.3.3. Market
EasyJet is the second biggest airline in U.K. EasyJet is recognized in all Europe and
the company won important awards as “best online booking”, “best online customer
service”.
4.3.4. Machines
EasyJet has a high technology system on the website to book the flights and others
services. The company has 137 airplanes, 107 Airbus A319, with 156 seats and 30
Boeing 737, with 149 seats.
4.3.5. Materials
EasyJet has always modern and new airplanes to maximize the performance of the
flights to reduce time and cost for the passengers. The company also invest a lot of
money in technology to reduce the paperwork and increase the speedy of the online
facilities.
5 SWOT Analysis
Strengths Level of implication
Culture of easyJet High
Employee’s satisfaction Medium
Good logistics High
Good administration High
Good reputation Medium
Brand identity High
Weaknesses Level of implication
Services offered Medium
Global position Medium
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Case of accidents High
Increase price fare due the high price of
fuel
High
Opportunities Level of implication
Explore continental flights High
Differentiated services Medium
Growth of market share High
Special flights to China High
Joint ventures, mergers, acquisition High
Threats Level of implication
Price of fuel High
New services offered High
Strong competitive market Medium
Growth of tax Medium
Terrorist attack High
Based on the marketing audit the objectives have been identified matching the
company’s strengths with the level of opportunity as you can see below:
Matrix SWOTfor EasyJet
Strengths (S)
Culture of easyJet Good administration Employee’s
satisfaction Good logistics Good reputation Brand identity
Weaknesses (W)
Global position
Case of accidents
Services offered
Increase price fare due the high price of fuel
Opportunities (O)
Growth of market share
Explore continental flights
Strategies SO use strengths to leverage
opportunities
Make a sub-company to offer services as first class.
Strategies WOtake advantage of the
opportunities to overcome weaknesses
Intercontinental rotas.
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Special flights to China Differentiated services Joint ventures,
mergers, acquisition
Make a special rota to China or Joint venture/Partnership with some air company in China
Make a specific strategy to steal potential customer from other transport service e.g. coach, trains.
Threats (T)
Growth of tax
Price of fuel
Strong competitive market
New services offered Terrorist attack
Strategies STuse strengths to avoid threats
Make agreements with fuel suppliers and government.
Strategies WTreduce losses and avoid threats
Focus on customer satisfaction
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6 Marketing Plan
6.1 Objectives
Short Term (1 year – Start July 2008) Medium Term (2 - 4 years)
Make a sub-company focused on
Business people
Increase global position
Begin routes to China offering first class
service
6.2 Strategies
According to Ansoff’s Strategy Model, it is proposed to the company implement
product development strategy.
EasyJet is responsible for more than 30 million people flying per year (Appendix 4),
with investment on logistic sector the company can achieve the objective of make a
new brand sub-company offering a new way for businessmen and women to fly to
China.
Based on the main characteristics of EasyJet: Low price with quality, a new company
specialized to transport executives in the first stage to Chine only can offer a new
attractive product to this target customer segment.
Once it becomes successful in the medium term, the new company can increase its
global position, one of the objectives to be achieved.
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Source: http://tutor2u.net/business/images/Ansoff%20Matrix%20w500.gif
6.3 GAP Analysis
The best strategy is to implement this new product under the umbrella of a new brand
airline but very close to the EasyJet brand and concept.
The concept of this new product is the “Office in the Air”.
A near First Class service as low price as a business class ticket in the other
companies.
The new company name will be ExecutiveJet.
ExecutiveJet will not attack the Economic and First Classes market which British
Airways and Air China are already. This new product will attract Executives that
usually travel by Business Class with these companies.
In the end of this marketing plan, ExecutiveJet will be positioned as in the figure
below.
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6.4 Marketing Mix
To implement the strategies above the follows points can be applied:
6.4.1 Product:
First EasyJet will create a sub-company called ExecutiveJet because the brand
EasyJet is linked with low cost and there is no differentiated service offered.
The product “Office in the Air” will not offer economic class low price, but will use
the concept of the low price to offer a new way for executives to go by plane in
business travels.
The new product will offer:
Flights to China in a special aircraft adapted to offer only one class, The
Office class.
Each “cockpit” will offer a comfortable seat with table large enough to
provide to the passenger the possibility to work with his/her laptop connected
online with the internet and free use of the mobile during the flight.
The seat can lie in a horizontal position to rest and sleep.
The timetable will offer flights to China based on executives needs as:
o Special hours to arrive in China. Arrives in the morning.
Quality
Price
E
E=Executive Jet
B
B=British Airways
C
C=Air China
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Only for the segment: Executive travelers
o Special facilities on arrival with cloakroom for the executive change
the clothes or even have a shower before leave the airport directly to
the appointments.
o Leaving London on Sunday and arriving in China on Monday
morning,
o Leaving China on Sunday arriving in London on Monday morning.
o Flying back to London with arrival at evening.
ExecutiveJet will need to lease one Boeing 747-400 to fly non-stop to Beijing.
Initially ExecutiveJet will offer flights:
Leave London Arriving in Beijing
Sunday 14:00 Monday 07:00
Tuesday 14:00 Wednesday 07:00
Thursday 20:00 Friday 13:00
Leave Beijing Arrive in London
Wednesday 10:00 Wednesday 14:00
Friday 17:00 Friday 21:00
Monday 14:00 Monday 18:00
The company will offer special check-in in London for the executives and will
provide special VIP rooms with Internet facilities, foods, drinks, cloakroom for them
to wait the flight.
ExecutiveJet will also offer transfer from the airport to the hotel that the executive is
hosted in China.
ExecutiveJet’s airplane will have only Office class service available and it will have
quality food and drinks, all included on the ticket fare.
6.4.2 Price
The price of the competitors of a round trip from London to Beijing on Economic,
Business and First Classes, according to the website of the companies www.ba.com
and www.airchina.co.uk, can be seem as follow.
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Economic Class (£) Business Class (£) First Class (£)
Air China 527.80 3.138,80 4.331,80
British Airways 820.40 3.723,40 7.020,40
Executive Jet - -
The price of ExecutiveJet is based on cost accounting and breakeven analysis.
6.4.3 Place
Beijing, China, will be the place which ExecutiveJet will build a new base in the
airport and also with one office in the down town to service and help the customers.
Find a good place to be established is vital for the company has an efficient and
effective customer service which every action in terms of flight or customer needs
must be monitored. Of course, a special portal in the internet will be offered to
support all customers’ needs as EasyJet has.
6.4.4 Promotion
The main and powerful customer will be business people (Men and Women). The
new company will need a lot of investment on advertisement such as on television,
specialised newspapers (Business newspapers), specialised magazines (Business
magazines, Financial magazines), and specialised websites (Business websites,
Financial websites) to become known.
6.4.5 People
ExecutiveJet will need many people working in different segments. In IT people will
need to develop a new website and monitor the services online.
People that work in operations (ground staff) in London and China such as check-in,
on the ground, with the baggage, etc.
Marketing department is the costly department and people will need to monitor and
evaluate the entire marketing plan.
Crew member, pilots, co-pilots, maintenance engineers
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7 Monitoring and control
There will be monthly marketing plan meetings to control the evolution of the
strategy. A summary of costs against budget and actual progress against the dead line
will be prepared for these meetings.
The planning control can be seemed as in the figure below.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
List of Activities
Build base in China
Acquisition of one Boeing 747-400 through leasing
Rent Office in China
Agreements with China suppliers
Training Employees
Develop new web site for ExecutiveJet
Launch the new web site
Create Advertisement
Review and approve Ad
Implement Advertisement
Evaluate Sales Performance
The red line shows that the critical period of the marketing plan implementation in
between January and April where most of the activities have to start and finish.
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8 Budgets
An investment of £10.000.000 will be needed to build a new base in Beijing, China, and also to make a big event on the day of the launch.
8.1 Costs
Fixed Cost (Monthly)
Wages 100.000,00
Rent (Office China) 1.000,00
Maintenance 40.000,00
Leasing 300.000,00
Airport Tax 15.000,00
Advertisement 300.000,00
756.000,00
75% per flight = 263 passenger per flight
263 passenger per flight x 24 flights per month
Variable cost per person Fixed cost per person1.902,86 119,77
Total passenger per month 6312
Cost per passenger 2.022,63Gross Margin (%) 25%Net Price 2.696,84VAT 17,50%End User Price 3.268,90
Revenue (monthly) 20.633.267,53 £Net Revenue (monthly) 17.022.445,71 £Total Cost (monthly) 10.346.400,00 £Others Costs 1.034.640,00 10%
EBIT 5.641.405,71 33%
Incoming Tax 1.692.421,71 30%
Variable costCatering 1.000,00Cleaning 600,00
Ground Handling charge 3.900,00
Insurance 8.000,00Navigation Charge 3.600,00
Airport Charges 7.700,00Fuel 175.000,00
Total cost one way 199.800,00
Total Cost round trip 399.600,00
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Net Profit 3.948.984,00 23%
First Year Result 47.387.808,00 £First Year Investments 10.000.000,00 £Final Balance First Year 37.387.808,00 £
8.2 Break Even
Total Variable Cost per flight (round trip)
399.600,00 £
Number of flights (monthly) 24
Total Fixed Cost (Monthly) 756.000,00 £
Total Variable Cost (monthly) 9.590.400,00 £
Total Cost (monthly) 10.346.400,00 £
Net price per ticket 2.696,84 £
minimum of passenger per month 3.836
minimum of passenger per flight 160
The minimum number of passenger to be carried by ExecutiveJet per month to cover
all the costs is 3836 people which are 160 people per flight.
8.3 ROI
1st Year 2nd Year 3rd Year TOTAL
Revenue 47.387.808
60.612.408
78.514.488
186.514.704
Investments 10.000.000
2.000.000
2.000.000
14.000.000
Final Result
37.387.808
58.612.408
76.514.488
172.514.704
ROI 2,5
months 1 month 1 month +10%pax
(289) +12%pax
(324)
-5% Fixed
Costs (£718.200,00)
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9 Conclusion
Aviation market is very costly but is also very profitable. According to he studies
made on marketing plan, the company can take the full amount which was invested in
a short period of time.
The new company (ExecutiveJet) is a new segment that EasyJet does not explore and
there is demand for the company implement this kind of service.
To conclude the marketing plan, is very advisable that the company starts to explore
new potential customers as a target such as executives. EasyJet can increase, as a
result of the successful implementation of the strategy, the market chare, profits and
become recognized around the world by the services offered.
36
Bibliography
Handouts from Mr. John Heather
Websites
http://www.easyjet.com/EN/Routemap/ (Accessed 19/05/2008)
http://www.ryanair.com/site/PT/dests.php?flash=chk&culture=PT&pos=HEAD
(Accessed 19/05/2008)
http://www.easyjet.com/EN/About/Information/ingopack_passengerstats.html
(Accessed 19/05/2008)
http://tutor2u.net/business/images/Ansoff%20Matrix%20w500.gif (Accessed
25/05/2008)
www.easyjet.co.uk/ (Accessed 25/05/2008)
www.news.bbc.co.uk/1/hi/business/6744255.stm (Accessed 08/06/2008)
www.ba.com (Accessed 08/06/2008)
www.foodandretail.blogspot.com/2007/10/porter-5-forces-how-they-work-3.html (Accessed 08/06/2008)
Books
CHISNALL, M.P. (1985) Marketing Behavioural Analysis, 2nd edition: Berkshire, Mc Graw Hill.
HUNGER, J. (2002) Strategic Management, 2nd edition, Rio de Janeiro: Reichmann &
Affonso.
COSTA, E. (2003) Strategic Management, 2nd edition, Sao Paulo: Saraiva.
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Appendix 1
All destiny of EasyJet
Source: www.easyjet.com/EN/Routemap/
38
Appendix 2
All destiny of Ryanair
Source: www.ryanair.com/site/PT/dests.php?flash=chk&culture=PT&pos=HEAD
39
Appendix 3
40
Appendix 4
41