Professional Documents
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Surname Ferry
Student ID 2015013973
Assignment No. 1
(If Applicable)
(Including cover) 32
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GBE: 804 BUSINESS ENTERPRISE OPERATIONS: MARKETING
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GBE: 804 BUSINESS ENTERPRISE OPERATIONS: MARKETING
Group Members
Name Student Id
Word count is 3002 (excluding cover sheet, group member page, table of contents,
glossary and references)
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No Index Page
Introduction 4
Purpose 4
1 Marketing Opportunity 5
A. Business Opportunities for AAI 5
B. Business Objectives for AAI 5
C. Intended Marketing Strategy of AAI along 5
Figure 1 6
2 AAI’s Key Macro and Micro Environment Factors 6
A.1. Macro Environment 6
Figure 2 7
A.2. Micro Environment 7
Figure 3 8
B. Implications of the Macro Environmental factors for AAI’s entry into the Indian Market 8
Table 1 9
Table 2 11
3 Environmental Factors experienced by Ryanair and AirAsia India 12
A. Impact of the environmental factors experienced by Ryanair on AAI 9
Table 3 13
B. Influence of external environmental factors on the marketing strategies of Ryanair 14
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INTRODUCTION
Marketing Environment plays a major role in all the business of this modern competitive
world. AirAsia India, the India-Malaysian low cost carrier (LCC), was a joint venture
between AirAsia Berhad, Tata Sons Limited and Telstra Tradeplace Private Limited.
Ryanair started its venture as a full service conventional budget airline. AAI is an
emerging low cost carrier, whereas, Ryanair is a successful LCC in the Aviation
industry. Though the target market of these two companies is different but they maintain
various similar marketing strategies.
Purpose
The main purpose of this research is to analyse the marketing environment of two
aviation companies AAI and Ryanair. The study also involves critical analysis of how
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AAI can implement some of the capabilities and core competencies of Ryanair and
move on to establish itself in the Indian aviation industry.
Chapter 1
1. MARKETING OPPORTUNITY
AirAsia received its Indian Aviation permit on 7th May 2014 and commenced operation
from 7thJune 2014. Tony Fernandez, the Chief Executive Officer of AA LCC saw the
potential of a billion travelers in the Indian market. The business opportunities that AA
perceived in the Indian market are
● Affordability of travel
● The gradual upturn in the Indian economy resulted in higher national income
which came from the continuous growth of the Gross Domestic Product at 9.6
percent
● By 2020, India has the potential to become the third largest civil aviation industry
in the world
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The business objectives of AAI for its entry into the Indian market are outlined below:
The marketing strategy that Air Asia intended AAI to pursue within the new market is
represented in the Figure 1:
Figure 1
Implications
For the cost effective utilisation and different lean processes used by AAI help for a
comprehensive and aggressive marketing approach. Streamlined operations and
self-tagging baggage services were the Unique Selling Propositions. For a low cost
carrier model low price with efficient processors have always been a crowd puller and
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the use of fuel efficient aircraft helped in ways of managing the ever increasing high
taxes on aviation fuel. Secondary connecting destinations are going to help AAI to
compact competition as well as tap potential markets though out the country.
Chapter 2
2. AAI’s KEY MACRO AND MICRO ENVIRONMENTAL FACTORS
The key macro environmental factors for AAI’s success in the Indian market are
diagrammatically represented in Figure 2:
Figure 2
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The key micro environmental factors for AAI’s success in the Indian market are
diagrammatically represented in Figure 3.
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Figure 3
B. Implications of the Macro Environmental Factors for AAI’s entry into the
Indian market
Assessing the market potential is important to identify and justify the entry of the
company into specific markets (Kotler, 2013, pp.116-141). Assessment can be in two
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levels, at the macro and micro levels. The table 1 shows the implications of key macro
environmental factors (academia.edu, n.d.) on AAI’s success in Indian market.
Table 1
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The table 2 shows the implications of key micro environmental factors on AAI’s success
in Indian market
Table 2
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Chapter 3
3. ENVIRONMENTAL FACTORS EXPERIENCED BY RYANAIR AND AIRASIA
INDIA
Table 3
Operating Environment of Ryanair and AAI
RYANAIR AAI
Political
● Increased trade union Pressure • FDI limits
● Strict Health and safety regulations • Unstable government policies
● Climate Protection charge
Economic
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Social
● Increasing travelling life styles • Domestic leisure travel
● Increasing business travelling • Foreign tourist
• Status symbol
• Security issue and terrorism
Technological
Legal
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Porter’s Five Forces analysis (slide share, 2014) has been done to assess the
influences of external environmental factors on the marketing strategies pursued by
Ryanair.
Porter’s five forces
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Internal capabilities give a company an added advantage over its competitors in the
same industry. Following are the internal capabilities of Ryanair.
● Decision-maker characteristics
o Prior business experience and international orientation
o Good leadership insight
- Positive impact on its international expansion.
● Internal resources
o physical assets
▪ aircraft/fleet
▪ machinery
o intangible assets
▪ unique business processes
▪ licenses and patents
▪ Reputation
o Human resources
▪ Talented and knowledgeable employees
o Financial resources
▪ Ryan family
▪ Share holders
▪ Investors and creditors
o Intellectual resources
▪ Knowledge, skills, abilities and talents
- lead to competitive advantage through the alignment of
✓ Creating superior value and equity for their customers
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Internal Analysis help firms to achieve competitive advantage and superior economic
performance. Internal analysis provides a comparative look at a firm’s capabilities, its
strengths and weaknesses (Scribd.com, 2009). It also helps to compare these strengths
& weaknesses to competitors. The Internal analysis has been done in two steps –
Resource based and Situation based to assess and rate the capabilities in accordance
with relative importance to market response.
Figure 4
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We are analyzing the above mentioned resource based view with the help of figure 5.
Figure 5
VRIO Framework
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From the resource based analysis and VRIO Framework, we can understand that if the
internal resources are valuable, rare, costly to imitate and organised to exploit, then the
organisation can attain competitive advantage.
SWOT analysis has been done to rate the internal capabilities of Ryanair in accordance
with relative importance to market response. Figure 6 represents the situational analysis
against Ryanair’s marketing environment.
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Figure 6
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Chapter 4
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Airport charges and AAI should choose interesting category 2 and 3 secondary
route policy airports to decrease on various airport terminal related fees to
make their market penetration worthwhile.
Staff costs and To reduce cost for human resource performance oriented pay
productivity structure is to be devised to control employee consumption
expenses.
Marketing costs Reducing on incentive and commission rates for
intermediaries like agents will help to reduce marketing costs
as alternative forms like print, media and online is being used
in full swing (O’Higgins, 2011, pp.622-625).
Chapter 5
5. AAI’s INTENDED MARKETING FOCUS
A. Critical Assessment of AAI’s Marketing Intentions
AAI’s marketing intensions aimed to create a revolution in the Indian Aviation market by
pursuing its characteristic aggressive pricing strategies, together with extremely
competitive operational targets (Jayakumar, 2014, pp.4-8).
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If we analytically measure the TOWS matrix, then it provides us not only a SWOT but
also critically accesses the AAI’s situation. Figure 7 shows the diagrammatic
representation of TOWS matrix
Figure 7
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STREANGTH / OPPORTUNITIES
● In the ASEAN region, it is a well know name in aviation services. The good track
record except one or two hiccups have made it a valuable brand among
customers. All these success stories along with efficient aircraft ultilisation will
help AAI to make inroads into the Indian skies.
● Initially it has started with maybe two aircrafts but the LCC has a supporting fleet
of over 120 aircrafts which it already inherits from the parent company.
● It has expansive connectivity and numerous networked hubs and subsidiaries
internationally which helps its global image in India.
● It’s trying to establish itself as a market nicher by concentrating specifically the so
called ultra-low cost segment of the market as the existing domestic LCC players
have moved up the value chain creating this void.
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● AAI has the capacity to undertake long trail flights due to its streamlined
operative and aircraft utilisation measures.
WEAKNESSES / OPPORTUNITIES
STRENGTH / THREATS
WEAKNESSES / THREATS
● AAI should continuously support its claim for over 30% lower fares than market
so that it can avoid the threat of competitor cost leadership.
● It should always try to achieve the turnaround time of 20 minutes which AAI have
promoted extensively as its objectives. If they fail frequently to get this right, then
customer sentiments will be hit and they might get dissatisfied immediately.
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From case studies’ perspective India was likely to be major growth market in the future.
AAI planning to offering fares 35% cheaper than the competition. They have set their
own challenge and being “low cost” was no guarantor of success (Jayakumar, 2014,
pp.4-6).
Strategy must compete successfully in short and long term, so AAI has to understand
their operations, but also frequently reinvent their strategies, differentiated and relevant.
Then only they can compete with the ever changing environment. I would suggest AAI
to do “SWOT” analysis to understand company’s situation.
Marketing Mix will always be essential for a new entrant like AAI in a new market.
Recommending on this we highlight on these points.
As Airasia India is supposedly in the growth portion of product life cycle and it’s trying
penetrate more markets with its existing products and services. The product/market
expansion grid is represented diagrammatically in figure 8. So the recommended
marketing mix will incorporate minor extensions and modifications (Kotler, 2013. p.68).
Lowering down prices and heavy advertising are the basic strategies taken by AAI to
increase volume and margins in the Indian market.
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Figure 8
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Recommending on the marketing mix, we feel that the 4Ps have always been the centre
stage for the target market analysis. But in new age marketing concept we place this
customer centric 4Cs in place of seller oriented 4Ps. Figure 9 is the diagrammatic
representation of the proposed Market Mix response for AAI.
Figure 9
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Chapter 6
6. EVALUATION OF THE MARKETING ISSUES APPLICABLE TO RYANAIR
Figure 10
Diagrammatic Representation of Ryanair’s Marketing Mix
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The similarities and the differences between Ryanair’s Marketing Mix and AirAsia
India’s proposed Marketing Mix has been presented in the Table 4.
Table 4
Comparison between Ryanair’s Marketing Mix and the AAI’s recommended Marketing
Mix
Place
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1. Direct marketing techniques to recruit 1. Should need to continue with the use of
and retain customers, and to extend secondary airports.
products and services to them.
2. Online booking 2. Should add more destinations
3. Choice of location (e.g. Stansted Airport)
Resulted in cost savings
4. Use of secondary airports - Can turn
aircraft around more quickly.
Promotion
1. Spend little on advertising. 1. Improve on advertisement –guerrilla
2. O’Leary (CEO) himself oversees much of marketing and promotion
the promotion of Ryanair. 2. Giving extra luggage allowances
3. Use simple adverts that tell passengers 3. Expand business sponsorship to
that Ryanair has low fares. increase income
4. Employs controversy to promote its 4. Expose and maintain the brand in future
business.
5. Some of their aircraft are decorated in
the costume of advertisers e.g. News of the
World, Jaguar and Kilkenny (beer).
Conclusion
We have not only critically analysed the marketing environments of AA India in
conjunction with Ryanair but also recommended future marketing strategies for AAI to
implement within the Indian subcontinent.
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Glossary
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AA AirAsia
AAI AirAsia India
FDI Foreign Direct Investment
ATF Aviation Turbine Fuel
LCC Low Cost Carrier
ASEAN Asia and South East Asian
GDP Gross Domestic Product
NRI Non Resident Indian
EU European Union
TOWS Threat Opportunity Weakness and Strength
SWOT Strength Weakness Opportunity and Threat
VRIO Valuable Rare Inimitable and Organised
References
Jayakumar, T. (2014). AAI: Clash for the Indian Skies. Ivey Business School.
Kotler et.al. (2013). Marketing (9th ed). Frenchs Forest NSW: Australia: Pearson.
O.Higgins, E. (2011). Ryanair: The low fare airlines – future destinations? Harlow:
Pearson Education Ltd.
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