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(Including cover) 32
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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 AAI can
implement some of the capabilities and core competencies of Ryanair and move on to
establish itself in the Indian aviation industry.
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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
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:
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GBE: 804 BUSINESS ENTERPRISE OPERATIONS: MARKETING
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 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:
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Figure 2
Demographic
Economic Natural Technological Political/Legal Cultural
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
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.
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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
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Table 3
Operating Environment of Ryanair and AAI
RYANAIR AAI
Political
Increased trade union Pressure • FDI limits
Strict Health and safety • Unstable government policies
regulations
Climate Protection charge
Economic
Fuel Price instability • Expected GDP growth
Regional subsidies • Hike in average income
• Growth in tourism 9%
• Rising ATF price
• Affordability of travel as a result of
an increase in the national income
• High airport fees
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
Supplying their better value-adding activities in an effective manner
Possessing over the resource base which is essential to perform the
value-adding activities
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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
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& 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
We are analyzing the above mentioned resource based view with the help of figure 5.
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Figure 5
VRIO Framework
VRIO FRAMEWORK
Competitive
Valuable Rare Organized
Inimitable Advantage
If the resources of the firm are valuable, rare, costly to imitate and the firm is
organised to make use of these resources, then the firm can expect to have the
benefit of competitive advantage
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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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).
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
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Figure 7
Weaknesses
Strenght to
to avoid to
gain
again
opportunities
opportunities
Eradicating
Using
weaknesses
strengths to
which can
shut out
become
threats
threats
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.
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
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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
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.
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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
MARKETING MIX
Ryanair
PROMOTION
PRICE
Spend little on advertising.
Low fares, no frills.
Use simple adverts that tell passengers that Ryanair has
70% of seats are sold at the lowest two fares, 30% at low fares.
higher fares and the last 6% at the highest fare.
Employs controversy to promote its business.
Predatory pricing - drive the competitors from the
market to open up the opportunity for prices to be Some of their aircraft are decorated in the costume of
raised and the profits to be earned. advertisers e.g. News of the World, Jaguar and Kilkenny
(beer).
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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
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
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Glossary
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
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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.
http://www.slideshare.net/joostnarraina/ryanair-strategic-management , Ryanair
Strategic Management & Marketing Strategy, 24 February, 2014.
http://www.slideshare.net/vipulaurange/airasia-india-strategies-for-next-3-years, AirAsia
India: Strategies for Next 3 Years, 09 January, 2014.
https://prezi.com/vtt4c0emtjs3/copy-of-case-study-on-air-asia/,
Case Study on Air Asia, Wong Pui Lam, 19 February 2014
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