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 2008/9. 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.
Let’s take a closer look at Ryanair’s marketing mix:
Ryanair is the European low cost airline. Low cost or no frills marketing strategies are of great interest to marketers since the marketing mix employed tends to run in opposition to what makes a great brand – and Ryanair is a great brand and a very successful business. In a nutshell Ryanair sells the cheapest tickets that you can buy (on most occasions). If you’d like to learn more about this topic then take a look at our marketing mix lesson. Otherwise please read on. Would you like to take a lesson on the marketing mix?
Beyond any doubt, Ryanair is one of the strategic marketing successes of the last decade. Undoubtedly synergized by Michael O’Leary – the low cost strategy that it employs is remarkable and industry changing. In many ways the business has looked closely at all aspects of it markets and operations to remold the industry and customer expectations in a unique way. This is how Ryanair has applied the marketing mix.
Ryanair is the World’s favourite airline with 44 bases and 1100+ low fare routes across 26 countries, connecting 157 destinations. Ryanair operates a fleet of 250 new Boeing 737-800 aircraft with firm orders for a further 64 new aircraft (before taking account of planned disposals), which will be delivered over the next 2 years. Ryanair currently has a team of more than 8,000 people and expects to carry approximately 73.5 million passengers in the current fiscal year. More . . .
Ryanair’s route to riches, BBC The Money Programme, First transmitted 4th June 2003.
Ryanair reports first annual loss – BBC New Online – 2nd June 2009.
Aer Lingus to vote on board pay – BBC News Online – 5th June 2009.
Disclaimer:
This case study has been compiled from information freely available from public sources. It is merely intended to be used for educational purposes only.
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