Analysis of external factor



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

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

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 ().

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 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 (), 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).

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 |

| | |It can influence the aviation market in |

|Tax policy |New tax regulation |terms of rules to the business be |

| | |followed |

| |The crisis that happened in USA |It has an impact in terms of number of |

| |(September 11 2001) and in London (2005) |customers because they might have fear of|

|Terrorism |can impact in number of customers |fly again and it can reflect directly on |

| | |profit made by the company |

| |It can change the agreement and even |The company can be forced to change the |

| |cancel the routes that the airline has |routes and it is not good in terms of |

| |with others countries |logistics because the company will have |

|Political instability | |to spend time to define alternative |

| | |routes |

| |Different point of view of the |It can affect directly the company |

| |politicians about corporation tax between|because the conservative can reduce tax, |

| |the labour and conservative |which will increase the profit, but the |

|Election | |labour is less open to make this change |

| | |happens. |

Economical factors

|Factor |Impact on Industry |Implications |

|Inflation |The current inflation is 3.3% and it is |It is not good for the company because |

| |because of the crisis of the fuel price |with expensive fuel price, the company |

| | |might have to increase cost for the |

| | |customer |

|Exchange Rate |Pound and Euro has more value than US |EasyJet in a British company which uses |

| |dollar which can be easier to a new |pounds and can increase the profit |

| |entrant |dealing with suppliers, fuel price, etc |

| | |which have US dollar as the currency |

|Oil Price |Oil price is increasing and it seems that|This can affect the final price for the |

| |will not reduce the price, on Wednesday |customers, because the oil price |

| |(June 22 2008) the barrel was $134,71, |influences the price of the air tickets. |

| |according to | |

|Economic Growth |U.K. has a slow economic growth, it can |The company which wants expand the |

| |be because of the high price of oil which|business or explore new markets can be |

| |increase the inflation |very slow to do this because of the |

| | |economic growth |

Social Cultural factors

|Factor |Impact on Industry |Implications |

| |The customers lifestyle will decide if |It can affect all the strategy of the |

|Lifestyle |the customer will travel by plane, car, |company, if the customer decides go by |

| |coach or train |other way of transportation |

| |Media views has a high impact on |It can affect the strategy of the company|

| |customers because they can influence the | |

|Media views |customer decisions | |

| |This will be a high impact on tourism of |EasyJet will face a high number of |

| |aviation industry due the numbers of |customers because of the low cost airline|

| |people interested to watch the Olympic |culture which will attract a lot of |

|Olympic Games 2012 |Games |customers |

|Demographic (Population) |High number of population can mean more |With a high population in U.K. the |

| |customers for the company |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|High technology for the company can be |

| |speed and this technology is a |very useful in terms of expand the |

| |differential of the others companies |business and explore new routes |

|Research and Development |R&D has a high impact on industry. The |R&D is having a high impact on aviation |

| |company that has a high R&D will have less|industry in terms of develop a new |

| |wastage, less time spent and always will |product and market opportunities, but it |

| |focus on the product to be developed |needs additional money. |

|Online System |It reduces paperwork, queue, and is better|It increases sales, profit and reduce |

| |for the customer book the flight from |staff and the company has to pay less |

| |home. |wages |

Environmental factors

|Factor |Impact on Industry |Implications |

|Environmental regulations |The government decided to reduce the |EasyJet follows the rules for the |

| |emission of carbon of 20% by 2020 |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 |This will increase the health and safety |

| |which can be hard for the environment and|image of EasyJet |

| |recycling as much as possible to | |

| |contribute to make a “green” atmosphere | |

|Society |The number of people worry about the warm|EasyJet can has their image affected by |

| |global, wastage, recycling and so on is |these people if the company does anything|

| |increasing |wrong |

|Use of environmentally products |The major concern in environment in |The customers tend to prefer health |

| |aviation is the fuel, but the company can|products. EasyJet does not give any food |

| |use recycling and health products to |during the flights but they give an |

| |minimize this concern |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 |These law are very strict and the company|

| |standards, they affect the business in |must follow the rules to do not loss any |

| |regard to international law in air space |benefit |

|Agreements |In aviation markets the companies have |The company can gain more customers if |

| |agreements in terms of destiny, passenger|the company accept tickets from other air|

| |with ticket of other airline using your |company as agreement for some specifics |

| |flight, and so on. |destinations. |

|International trade |The main material for an air company |Change in international trade can affect |

| |which are the airplanes are imported from|the company’s profit. |

| |other country and any change in this | |

| |international trade can 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.

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

[pic]

Source: foodandretail.2007/10/porter-5-forces-how-they-work-3.html

Bargaining Power of Suppliers

|Factor |Level of power |Implications |

| | |The supplier can increase the price of |

| | |the product offered which can result in |

|Supplier market |High |more cost for the company |

| | |In aviation market there are a lot of |

|Supplier concentration |Medium |competitors in different areas such as |

| | |handling, fuel supplier, catering and so |

| | |on |

| | |The customer can decide to go by train or|

| | |by car instead of going by air plane |

|Substitute inputs |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 |

|Switching costs |Medium | |

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 |

| | |The laws can affect directly the company |

|Government policy |High |in terms of change the way of doing |

| | |something |

| | |EasyJet has a strong name and is the |

| | |second largest air company in U.K. and |

|Brand |High |the company won several awards of “the |

| | |best low cost air line” |

| | |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 |

|Capital requirement |Low |suppliers and also a new entrant will |

| | |have to compete with the current |

| | |competitors |

| | |In aviation a product differentiation can|

| | |be first class service, online booking |

| | |system, and special foods during the |

|Product differentiation |High |flight and so on. EasyJet has as main |

| | |differentiation the low price against the|

| | |competitors |

| | |The company has to have a strong strategy|

|Market strategy |Medium |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 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 |

| | |The number of customer that EasyJet has |

| | |influence directly the profit that they |

| | |can make. Less customers means less money|

|Number of customer |Medium |for the company |

| | |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, |

|Product quality |High |quality of service organisation. |

| | |EasyJet has a strong brand value due the |

| | |good service and product offered fro the |

| | |customers. The company is recognized in |

|Brand value |High |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.

Threat of Substitute Products

|Factor |Level of power |Implications |

| | |If the company increase the price, the |

| | |customer can move to other company in |

| | |other segment such as train, coach, etc. |

|Increase price |High | |

| | |Some people can be affected by luxury |

| | |offered for some companies. EasyJet does |

|Luxury |Low |not provide luxury for their customers |

| | |EasyJet have a good customer services and|

|Quality |Medium |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 |

| | |With the growth of the aviation market |

| | |the competition is high because of the |

| | |opportunities that the companies found. |

|Market growth |High | |

|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 |

| | |It is not a problem to exit the market if|

| | |the company doe not have any financial |

|Exit barriers |Medium |problem |

| | |Companies/competitors always try to get |

| | |low cost to increase the profit margin |

|Cost values |Medium | |

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 |

| |Age |From 2 to 60 |

|Socio Demography |Life cycle family |Young, backpacking, single, married with children, married |

| | |without children |

| |Social class |B, C |

| |Events |Holydays, Business, Sporting events (EURO 2008, Olympic |

| | |games 2012) |

| |Lifestyle |Interested in Travelling |

|Psychographic |Personality |Relaxed (people which do not want luxury during the flights)|

| |Frequency of travelling |Weekly (Business men) and monthly (holidays, special events)|

|Behaviourist |Ability and experience |First time user and regular user |

| |Price |Best low cost air company |

|Benefit Sought |Speedy |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.

[pic]

| |Unattractive |Average |Attractive |

|Weak | | | |

| | |Family tourism U.K. |Backpacking tourism Europe |

| |Business U.K. | | |

|Average | | | |

| |Backpacking tourism U.K. |Old people tourism Europe |Family tourism other |

| | | |continent |

|Strong | | | |

| | | | |

| |Old people tourism U.K. |Business Europe |Business other continent |

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 (), 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

[pic]

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 (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.

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 year |59.0 |94.1 |152.3 |

|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 Men

EasyJet 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.

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 |

|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:

| |Strengths (S) |Weaknesses (W) |

| | | |

| |Culture of easyJet |Global position |

|Matrix SWOT |Good administration | |

|for EasyJet |Employee’s satisfaction |Case of accidents |

| |Good logistics | |

| |Good reputation |Services offered |

| |Brand identity | |

| | |Increase price fare due the high price of|

| | |fuel |

|Opportunities (O) |Strategies SO |Strategies WO |

| |use strengths to leverage opportunities |take advantage of the opportunities to |

|Growth of market share | |overcome weaknesses |

|Explore continental flights |Make a sub-company to offer services as | |

|Special flights to China |first class. |Intercontinental rotas. |

|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) |Strategies ST |Strategies WT |

| |use strengths to avoid threats |reduce losses and avoid threats |

|Growth of tax | | |

| | | |

|Price of fuel |Make agreements with fuel suppliers and |Focus on customer satisfaction |

| |government. | |

|Strong competitive market | | |

|New services offered | | |

|Terrorist attack | | |

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.

[pic]

Source:

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.

[pic]

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.

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 and airchina.co.uk, can be seem as follow.

| |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

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.

|  |

|Catering |1.000,00 |

|Cleaning |600,00 |

|Ground Handling charge |3.900,00 |

|Insurance |8.000,00 |

|Navigation Charge |3.600,00 |

|Airport Charges |7.700,00 |

|Fuel |175.000,00 |

|Total cost one way |199.800,00 |

|Total Cost round trip | 399.600,00 |

|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 person |

|1.902,86 |119,77 |

| | |

|Total passenger per month |6312 |

|Cost per passenger |2.022,63 | |

|Gross Margin (%) |25% | |

|Net Price |2.696,84 | |

|VAT |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% |

|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 | +12%pax |  |

| | |(289) |(324) | |

|  |  | | |  |

|  |  | -5% Fixed Costs |  |  |

| | |(£718.200,00) | | |

| |  | | |  |

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.

Bibliography

Handouts from Mr. John Heather

Websites

(Accessed 19/05/2008)

(Accessed 19/05/2008)

(Accessed 19/05/2008)

(Accessed 25/05/2008)

easyjet.co.uk/ (Accessed 25/05/2008)

news.bbc.co.uk/1/hi/business/6744255.stm (Accessed 08/06/2008)

(Accessed 08/06/2008)

foodandretail.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.

Appendix 1

All destiny of EasyJet

[pic]

Source: EN/Routemap/

Appendix 2

All destiny of Ryanair

[pic]

Source: site/PT/dests.php?flash=chk&culture=PT&pos=HEAD

Appendix 3

[pic]

Appendix 4

[pic]

-----------------------

Europe

U.K.

Tourism

Business

R

Aviation Market

C=Air China

C

B=British Airways

B

E=EasyJet

E

Other Continents

U.K.

Europe

Other Continents

Family

Old people

Backpacking

Family

Old people

Backpacking

Family

Old people

Backpacking

Price

Quality

R=Ryanair

Only for the segment: Executive travelers

C=Air China

C

B=British Airways

B

E=Executive Jet

E

Price

Quality

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