The low cost concept was first introduced in 1971 in the United States, with the launch of a new company called "Southwest Airlines". However, the concept only gained popularity and set the cash registers ringing with the creation of Ryanair in 1991. Backed by its pioneering pricing policy, the Irish company catapulted to the top ranks to become British Airways' most fearsome competitor. The reason for this success can partly be attributed to aviation deregulation package introduced by the European Commission.
From then on, the company has registered an explosive growth. In just ten tears, low-cost airline companies, also known as no-frills airlines have succeeded in capturing nearly one-fifth of the market, a figure that is likely to increase even more. Consequently, we can predict a bright future for these companies. This success involved the strong growth of two European companies: Ryanair and Easyjet.
To understand the success behind low-cost airline companies, we shall investigate their marketing tools and particularly their 4Ps marketing mix policy (which include Price, Product, Place and Promotion). Undoubtedly, their pricing policy forms the foundation sustaining the entire operations of these companies. Then, we have their products, distribution strategies and quality of the products/services.
This study was able to educate us on how these companies have been able to offer such a competitive offer. Indeed, it was pretty easy to define some advantages offered by these companies, for instance, the economic development engineered in the regions where these companies are established. These economic advantages have been two-pronged as in the companies themselves have also enjoyed substantial turnovers inclusive of huge profits. Drawbacks include the poor working conditions of the staff and poor airport infrastructure.
To differentiate between the differences of low-cost airlines and flag carriers, we have analyzed the marketing mix policies of both kinds of carriers. This has helped us discover the reasons behind low-cost airlines being more vulnerable to fluctuations in petrol price than national flag carriers when it comes to the determination of ticket prices. Another major difference is that low-cost airlines operate short and medium routes while national airlines primarily operate long haul flights which are more profitable.
In terms of benefits and potential of development, the low-cost industry is doing well and these airline companies can be assured of their future success provided they play their cards right. Market analysts have predicted a rosy future for these airline companies by estimating that 30% of the market by 2010 will be occupied by the no-frills airlines.
To complete our project, we will examine the meaning of marketing and how companies use low-cost tools in relation with that concept, in order to become more efficient and productive.
The marketing concept is associated with trade and aims to study the behavior of households by a company in order to adapt its marketing policy by different processes and better meet consumer expectations.
For a company to make effective use of the available marketing tools, it must be directly related to the 4P theory: Promotion, Product, Place, and Price. Since their creation, low cost airlines have taken advantage of these tools, given their development and this too in a few years. This statement poses some intriguing questions.
Tags: Strategic Principles of Air France-KLM , evolution of low cost airlines, marketing mix of Easyjet
[...] But faced with all this gains, we also found that there were limitations, as the crisis staff, poor airport structures, or as we discovered when administering the questionnaire (See Appendix 5 a mechanization of the low-cost counters II The marketing tools of low-cost airlines Overview To better understand the reason behind the success of low cost airlines, we must first have a better understanding of their marketing tools. Therefore, we will try to make the most of these tools, which are mostly in the form of the 4P marketing mix: Price, Product, Place and Promotion (price, product, distribution, communication) and then see how low-cost airlines reduce their costs and are able to use these tools wisely, to always remain efficient and to handle the significant competition in the aerospace market. [...]
[...] To clearly demonstrate the success of the low cost phenomenon, we will trace the evolution of these companies followed by an overview of the strategies adopted by these hugely successful firms: the marketing mix, including the 4Ps, coupled with an internal and external analysis. However, one can perceive the Achilles heel of these discount airlines regarding their relative inexperience in the aviation domain and the consequent wavering in consumer confidence. We will also compare these low-cost airlines with a traditional airline such as Air France in terms of limitations, advantages and marketing tools. [...]
[...] In the third part, we will see the difference between low cost marketing tools and those of traditional companies that have discounts, that companies use, not only compete and cross the boundaries between them, but also and especially as a major obstacle facing the most known traditional European airlines: Air France. Summary Part 3 To better account for the differences between the marketing tools of low- cost airlines and those of traditional airlines, we analyzed the strategic principles and the marketing mix of Air France and the strategic principles of the low price airlines, and EasyJet's marketing mix. [...]
[...] Benefits Within the concept: The advantage, or rather the main achievement of low cost airlines, is to minimize their costs to attract customers. Indeed, as we have seen in the case of low prices of discount airlines, officers are hunting for the lowest cost. It is thanks to the reduction of costs lower than the fare that low cost airlines could differentiate themselves from their main competition Air France, by offering more tickets at lower price has achieved significant success Paris Venice now cost more than 10 which has made it possible for them to distribute some tickets free. [...]
[...] As we have seen in this part on the differences between the marketing strategies of low cost airlines and those of traditional companies, these two types of companies are quite different. We thus saw the strategies of majors, or the traditional companies which are focused on business strategies, as well as a policy of rationalization of the fleet as efficiently as possible; a strategy of and a strategy of alliance between large companies, to form the three most important alliances in the history of civil aviation: SkyTeam, OneWorld and StarAlliance. [...]
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