For an organization of your choice, critically assess whether the marketing mix contributes to the success of the organization: Does the Marketing Mix contribute to the success of Ryanair? Student ID: 8392312 Course Code: BMAN70441 1. Introduction The marketing mix is an essential perspective in both marketing research and implementation. As the most common concept of the marketing mix, the classification of four Ps (Product, Price, Promotion and Place) is generally considered the synonym of the marketing mix and has been used by marketers throughout the globe since it was first advanced by E. Jerome McCarthy in 1960s (Reid,1980; Waterschoot and Bulte,1992).
However, with the development and complication of marketing domain in recent years, people argue that the four Ps theory may not be comprehensive enough for the present business circumstance (Kluyver and Brodie, 1987; Grönroos, 1997; Chartered Institution of Marketing, 2009). This essay is aimed to examine the effectiveness of the four Ps theory through Ryanair’s case as well as exploring other factors contributing to the success of this company. 2.
Introduction to Ryanair Since its establishment in 1984, Ryanair has grown into the largest budget airline providing air transport service across the Europe (Sakle, 2010). In the last fiscal year, Ryanair achieved a revenue of 4. 325 billion Euros and a 25% increase of full year profits (Ryanair, 2012, p. 1). On this premise, a question is raised from marketing perspective: does the marketing mix contribute to the rapid growth of Ryanair? 3. Classical definition of the marketing mix The marketing mix has been defined in various ways in the past decades.
The concept was first created by Neil Borden, who was inspired by Culliton that marketing executive should be considered “mixer of ingredients” (1948,cited in Goi, 2009, p. 2). Borden originally claimed that the marketing mix had 12 components: product planning, pricing, branding, channels of distribution, personal selling, advertising, promotions, packaging, display, servicing, physical handling, and fact finding and analysis (1964). McCarthy (1964,cited in Goi, 2009, p. ) refined those components as four Ps: product, place, promotion and price, which ought to be combined as a mixture of resources that applied to achieve the expected marketing objectives. In despite of some criticisms toward the four Ps classification afterwards (Judd,1987; Kotler, 1986; Boom and Bitner, 1980), companies’ marketing strategies still encompass some or all of these four factors and Ryanair can be taken as an example. 4. Marketing mix application of Ryanair 4. 1. Product Involving in the aviation industry, Ryanair ought to be categorised as a service provider.
Generally, the air transportation service is the core product of an airline. Ryanair conducts 165 routes between major cities in Europe by a fleet of 275 aircrafts (Ryanair, 2012) with a relatively higher turnaround frequency than its rivals (Datar, 2003). These capacity and performance help Ryanair remain on the advantage in competition with small-scale airlines by better satisfying the consumers’ requirements for the destination accessibility and the time flexibility (Alderighi, et al. , 2012).
However, Ryanair charges the consumers for in-flight service, check-in luggage and other additional services whereas those services are free as added value provided by traditional airlines such as British Airways (Datar, 2003; Kasper, Helsdingen and Gabbott, 2006), making Ryanair less likely to be attractive to those service-orientated or high-end consumers. According to the previous discussion, the overall effect of Ryanair’s product planning cannot be considered an absolute advantage in competitions. 4. 2. Place Referring to channels of distribution, place is how consumers purchase the product of their choice (Jobber, 2007).
Since 2000, Ryanair has launched its website which later turned to be the only channel of ticket sale (Sakle, 2010). Ryanair chooses not to corporate with any travel agents for efficiency and cost reasons, which saves a 15% on price of every ticket sold (Datar, 2003). This type of distribution channel can be categorised as direct distribution which normally is involved with digital technology (Danaher, et al. , 2010). By using this type of distribution, Ryanair enhances its power on channel management and cost control; establishes a direct communication with consumers for its direct marketing. 4. 3.
Promotion Ryanair uses a promotion mix containing various promotion components such as advertisement, sales promotion, direct marketing and public relation (Colder, 2003). The principle of the promotion mix is to create an economic and efficient image of Ryanair and to increase its brand awareness to the new market. The promotion campaign of Ryanair is pragmatic: once a new route is conducted, Ryanair posts advertisements on the local media of the destination; releases some extremely low price ticket on the new route as sales promotion; send email promotions to its subscribers as direct marketing (Sakle, 2010).
These efforts help Ryanair quickly entre the new markets as promoting its low price brand images to take the initial edge. 4. 4. Price As a budget airline, Ryanair applies low price as the core factor of its marketing strategy (Clark, 2005). Price is the only tool in the marketing mix to earn revenues directly while the rest components are costs (Jobber, 2007). Although the aviation industry requires huge expenditures, Ryanair is still able to provide the cheapest air ticket to the market. In 2005, the average price of Ryanair ticket was £27, compared with a £41 for Easyjet and a £178 for British Airways (Clark, 2005).
As the largest segmentation of air transport market is the price-orientated consumers, Ryanair’s pricing strategy best satisfies the demand of market. There are two reasons that Ryanair can carry on the low price strategy constantly: first, from the internal perspective, Ryanair’s excellent cost control balances the conflict between the low price ticket and the grand outlays of airlines (Kasper, Helsdingen and Gabbott, 2006); second, from the external perspective, the global financial crisis turns more consumers to be price-orientated, directly increasing the volume of the target market for Ryanair (Sakle, 2010). .
The inadequacy of the marketing mix Although the four Ps mix is widely applied in marketing strategy of most companies, the criticisms have been raised for the past decades as some significant changes happened to the marketing environment (Little and Marandi, 2003). Grönroos (1997) argues that the concept of the marketing mix was limited to the background of the Borden’s time, which may not fit the changes in marketing environment. This point of view was supported by Gummensson that the development of service marketing has proved the inadequacy of the marketing mix(1994).
Because the marketing mix is supplier-orientated instead of consumer-orientated that the profitability is the motivation of this type of marketing strategy with the consumer interest being underestimate (Gummensson, 1999). In the present service marketing, long-term relationship between the company and the consumer is usually based on relationship marketing that the company ought to focus on and satisfy the real demand of consumer by appropriate communication techniques (Little and Marandi, 2003).
However, in Ryanair’s implementation of the marketing mix, the company locates itself in a powerful position against the consumer with rare added value of the product, limited bargaining range and even some misleading information (Anonymous, 2007). What can be concluded from the above discussion is that the applicability of marketing mix is limited by specific situations especially in service marketing. Some adjustments are needed to improve the effectiveness of the marketing mix. . Other factors contributing to the success of Ryanair Due to the special features of service marketing, some other components are added to consummate the marketing mix: people, process and physical evidence, forming the seven Ps mix along with the traditional four factors (Boom and Bitner, 1980). The people factor refers to that the quality of service is determined by the people who contact directly with the consumers, requiring well trained employees to provide the service.
However, this is not what Ryanair focus on because manual service will increase the labour cost of the company so that on Ryanair’s flight there are fewer attendants (Kasper, Helsdingen and Gabbott, 2006), which reduces the quality of its in-flight service. But Ryanair has designed a efficient service process to diminish the negative impact of the people factor.
This service process consists of online purchase, self-service check-in and random seating allocation, which is more simplified than those regular airlines’ process and makes it more easier for the consumer to receive the service. Basically, the core benefit of service is intangible but it is transmitted to consumers through the tangible resource (Kasper, Helsdingen and Gabbott, 2006). The condition of these tangible resources influences the consumption experience (Chartered Institution of Marketing, 2009).
For Ryanair, it provides air transport service to consumers through the fleet of aircrafts. Ryanair standardizes its fleet with the most excellent airplanes in the industry: the Boeing 737-800s, because of the comfort and safety. Besides, the standardization can reduce maintaining cost and the reliability secures the function of the aircrafts. As mentioned above, the marketing strategic approaches of Ryanair relies on a strict cost control, which financially supports the marketing strategy of Ryanair.
The cost control directly influences the product approach and the pricing approach: in the product approach, Ryanair reduces almost every additional value attached to the core product of air transport service; it purchases aircrafts for a relatively low price by taking over those aircraft orders that had been cancelled by the original buyers for the depression of aviation industry after 9/11; it also hires those secondary airports in the destination cities for lower admission fares (Datar, 2003). These tactics have achieved a considerable reduction on Ryanair’s cost. While in the pricing aspect, ompanies often use cost-orientated methods (Jobber, 2007). Ryanair uses direct cost pricing tactic that calculates those costs which are likely to increase with the rise of output (Jobber, 2007). For instance, the unused seats in aircraft lose revenue because they cannot be stored. In this case, pricing to cover direct costs add a contribution to overheads that make sense. 7. Conclusion The applicability of the marketing mix has been controversial for a long time. On one hand, some companies are still applying this approach to the marketing strategy because the four Ps are really the fundamental components.
On the other hand, however, with the development and complication of the marketing environment, more factors are involved in the consideration of marketing strategy. This two sides can both be seen in the case of Ryanair. Therefore, there is a conclusion that the classical marketing mix (the four Ps), based on the excellent cost control effort, has been contributing to the foundation of Ryanair’s success in terms of the company orientation, while other elements such as the service process and the physical resources create competitive advantages for Ryanair by satisfying the consumer needs.
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