8. Question 1
How do easyJet’s marketing objectives and
its marketing mix strategy affect its pricing
decisions?
9. easyJet’s Mission Statement:
“To provide our customers with safe, good value, point-
to-point air services . To effect and to offer a
consistent and reliable product and fares
appealing to leisure and business markets on a range of
European routes. To achieve this we will develop our people
10. OBJECTIVES
Low fares and high frequency between major
European airports
Consumers willing to pay ( a little ) more for value-
added proposition
Growth based on joining the dots and adding
frequency
11. Segmentation and Targeting:
•Business and Leisure Consumers
Differentiation and Positioning:
•Flies to all the primary airports in
Europe
•Commitment to customer service
12. With recognition for providing more efficient, low-cost flights,
whilst maintaining as a high quality of service as possible,
easyJet is positioning itself to its consumer base as the best
form of budget travel in Europe.
Price is a crucial positioning factor
13. •Therefore, the marketing mix is based on keeping
costs to a minimum to allow the airline to offer
the lowest fares possible
14. Product / Customer solution:
‣Features: Punctual and no-frills
‣Brand name: EASY to pronounce, recognise, and
remember
‣Packaging: ORANGE
15. Place / Convenience:
• easyJet’s website acts as a main distribution channel for
e-ticketing
• Can be viewed in 18 languages
17. Question 2
Discuss factors that have affected the nature
of costs in the airline industry since 2000.
How have these factors affected pricing
decisions?
19. HEIGHTENED ENVIRONMENTAL
CONSCIOUSNESS
2002's World Summit on Sustainable
Development
Environmental Taxes
Cleaner plane models/engines
20. INFORMATION AGE
Broadband mainstream since
2000s
Introduction of advanced
technology
Less cost for labour and
infrastructure and less time
incurred to complete the same
job
22. ENERGY CRISIS
2000s energy crisis
Rising cost of crude oil
Higher costs are translated to
airline industry as jet fuel is
processed from crude oil
Hedging policy reduces fuel cost
increase to a limited extent
24. AIRFARE PRICING TRENDS
Low enough to attract demand, high enough to offset increases in
cost
Airfare price range depends dramatically on the following variables
listed in order of importance:
Competition on Route
Seat Demand
Distance of Route
Seat Supply
Fuel Prices
29. Question 3
How do the nature of the airline market
and the demand for airline service affect
easyJet’s decisions?
30. NATURE OF AIRLINE MARKET
Oligopolistic competition
Consists of some older and major
conventional airlines
A few up and coming low cost
carriers
Rival consciousness prevalent
31. DEMAND FOR AIRLINE SERVICE
(FROM EASYJET’S VIEWPOINT)
The price-demand relationship: lower the
price, the higher the demand
easyJet has positioned itself as low-cost
airline
Its pricing strategy is based on Good
Value Pricing
32. PRICE ELASTICITY OF DEMAND
(FOR EASYJET SERVICES)
easyJet faces a consumer DD that is highly elastic
i.e. There will be a large change in Qd for a small
change in price
33. REASONS FOR HIGH PED
Its services are no-frills airplane
flights. These are not unique.
Relatively easy to find similar
substitutes
Total expenditure of airline tickets is a
significant proportion of Yd
39. FULL SERVICE CARRIERS
Price Discrimination
Based on fare classes
Charge each customers
as much as they are
willing to pay
40. Value-Added Pricing
Offering passengers a
superior range of ground
and onboard services
In return for a much
HIGHER fare
41. “Fences”
Must be built to prevent passengers from
substituting higher fares for discounted tickets
In the form of minimum stay requirements, date and/
or route change penalties
42. Different Class of Services
First, Business, Economy Plus,
Economy
Business class may cost 5-10 times
more than Economy but the
service costs much lesser than that
43. LOW COST CARRIERS
Reverse Price System
The further the date of
departure, the cheaper the ticket
Encourages customers to book
early
Able to gauge demand for every
flight
44. No “Frills”
No free meals and beverages
onboard, no frequent fliers
program etc
More seats are available in one
flight to maximise profits
45. One-way Ticketing Policy
Customers only required to buy
one-way ticket
Need to purchase two one-way
tickets for a round trip
Gives full flexibility to plan their
trip as they please
Appeal to the business travellers
46. Question 5
Do you think that EasyJet will be able to
continue to maintain a competitive
advantage based on price? What will happen
if other carriers match the low-price leader?
47. CURRENT COMPETITIVE
ADVANTAGES BASED ON PRICES
No frills
Lower operating costs
High productivity of resources
Increasing revenue
Reduced distribution costs
48. ARGUMENTS AGAINST MAINTAINING
COMPETITIVE ADVANTAGES BASED ON
PRICES
Low cost airline industry increasingly competitive
Competitors serving secondary airports (More cost savings)
Natural limitations on price; Increases in fuel price and
airport charges
49. Competitors imitate online booking process and
offer competitive flight rates
Low cost airline industry characterized by mergers
and acquisitions
57. Profile #1: Winston
Background:
★Businessman
★Age: 25-39
★Middle Income
★High reliance on information technology
★Independent
★Work for SMEs (size of the company price sensitive)
★Job scope requires them to fly frequently
Needs:
★Punctuality of flights
★Adequate amount of comfort
★Flexible reservation systems
★Affordability
61. BUSINESS-SELECT SEATS
Implementation of business-
select seats/tickets
Provide front row seats with
more leg rooms
62. FREQUENT FLYER PROGRAM
Implementation of frequent
flyer program-loyalty based
benefits to ensure continued
revenue
Eg. KrisFlyer
Current easyJet card has only
membership-based benefits
70. EASYJET BACKPACKER FORUM (EBF)
Provide a common platform for
exchange of information and
preferences on tourist destinations
Inform backpackers of upcoming
EasyJet promotions
Tourists with common interest can
travel together
71. EasyJet Merchandise
Partner with an established baggage
brand (eg, Crumpler, Timbuk2)
Allow members to accumulate flyer
points to redeem such merchandize
This can create a sense of belonging
73. GENERIC
RECOMMENDATIONS
Sequence of boarding
To minimise obstruction
74. Implement full refund for cancellations within 24 hrs
Abolish cancellation fee
Psychological comfort – peace of mind
Eg, For Businessmen- meeting time changes
For Backpackers – Unforeseen circumstances such as
weather conditions / political situations
