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Purpose of this assignment: The task will help the learner to understand the individual elements of the extended marketing mix, which is widely applicable in the service context, over and above four conventional P’s.
Scenario: From the given case study of Ryan Air, proceed to answer the questions 3.1, 3.2 3.3 and 3.4.
Marketing Mix of Ryanair
Its charismatic boss Michael O’Leary has a business model with a central focus on cost reduction (and making money of course!). In around 20 years he has taken Ryanair from a single plane company to become the largest airline in Europe. He had a vision and achieved it through masterful leadership. So how did he do it? How does Michael O’Leary retain his narrow cost focus niche strategy in the face of intense competition? The business simply has lower costs and those costs are passed on to their passengers in the form of low fares.
The branded airlines argue that passengers are willing to pay more for a better level of service. You can pre-assign seats. You get food and drink onboard, and can choose a higher level of service e.g. business class. However the large flag carriers have taken notice of the low-cost model and have employed it as part of their own more differentiated business model. In 2009 the company settled for 30% of its local Irish rival Aer Lingus after a prolonged takeover bid. Tough trading conditions meant that Ryanair made its first annual loss in 2008/09. O’Leary put
this down firmly to rising fuel costs (as did British Airways in the same year). The company also needed to take into account the burden of purchasing its stake in Air Lingus. So in reality things are looking good for Ryanair and its budget operation – since the business aimed to fly double the amount of passengers 2009/10.
For a better understanding of the present situation of the organization, following is the excerpts
”Ryanair. You know who we are. You know what we do. You know that when you travel with Ryanair you’ll get where you want to go cheaply, reliably and without any fuss. Our no frills, low cost model revolutionized the air travel industry and opened up Europe to the masses. And we continue to lead the way in great value travel, doing whatever it takes to guarantee that our fares are the lowest out there. But our fares aren’t the only thing that sets us apart. We can also boast the most on-time flights of any airline in Europe, an industry leading 30-year safety record, first class punctuality, near perfect baggage handling and an innovative, cutting edge green policy. Want the cold hard facts? Take a look at the numbers:
1,600 flights daily
300 new Boeing 737-800 in operation
283 new Boeing 737 on order
9,500 aviation professionals employed.
103,000,000 customers this year.
A projected 160,000,000 passengers in 2024
But let’s face it, at the end of the day, the only number that really matters is the fare price and one thing’s for certain, Ryanair’s will always be the lowest out there.”
3.1 Explain how Ryan Air has developed its product/service to sustain competitive advantage and explain how the products/services are developed and priced to reflect organizations objectives and market conditions which is allowing the company to sustain its competitive advantage. (AC 3.1 Explain how products are developed to sustain competitive advantage, AC 3.3 Explain how prices are set to reflect an organization’s objectives and market conditions)
3.2 Explain how Ryan Air manages their various locations/routes/sectors and market coverage for customer convenience. (AC 3.2 Explain how distribution is arranged to provide customer convenience)
3.3 Identify and explain how promotional activities are integrated by Ryan Air to achieve their marketing objectives. (AC 3.4 Illustrate how promotional activity is integrated to achieve marketing objectives)
3.4 Identify the additional 3 P’s pertaining to Service Marketing in the light of the given case study of Ryan Air. Compare and analyze the impact of the extended marketing mix in meeting the overall marketing objectives of Ryan Air. (AC 3.5 Analyze the additional elements of the extended marketing mix)
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