Brand Management of Ryanair and EasyJet - Research Paper Example

Ryanair and easyJet Contents 3 Research Hypotheses 5 Findings and Discussion 5 Closed-Ended Survey Results 5 Closed Ended Survey Result Analysis 17 Conclusion and Recommendations 24 Reference List 27 Abstract Aims and Objective To appraise the significance of brand management in the present dynamic business world To analyze the requirement of brand organization in the low cost airline industry To recognize the potential customers of low cost airlines To evaluate the brand image of Ryanair and easyJet Boundaries The current research work has focussed on the market reputation of Ryanair and easyJet. Although the research is based on the low cost airline sector, it does not elaborate on other low cost airline companies, apart from Ryanair and easyJet. Methodology The dissertation research was completed with the help of interpretive research philosophy. The researcher had followed an inductive approach of research. The research design was cross-sectional in nature. The researcher had utilized a triangulation research strategy for accomplishing the entire research process. The qualitative research was performed by incorporating a literature review and the quantitative analysis was done through a closed-ended questionnaire survey. The sampling process was simple random in nature and the sample size was 142. Results Ryanair experiences highest revenue and profitability within the industry. The organization lowers selling price of the services delivered by way of providing negligible in-flight frill services. It aims to capture the demand shaped by leisure travellers in the market. easyJet offers its low cost aviation services along with basic in-flight frill facilities. The research proves that easyJet enjoys a better brand value than Ryanair, in terms of in-flight additional comfort facilities and service quality. Conclusion The current research proves that brand value is very important in the low cost aviation sector. The airline service prices of easyJet are higher than that of Ryanair; but its overall brand image is comparatively better. The consumers perceive that easyJet is able to proficiently mitigate the gap between expensive and low cost airline companies. Recommendations Both Ryanair and easyJet are popular low cost airline companies in the market. Then again, the two firms can experience greater profitability in the long run by way of implementing improved marketing and operational strategies. Research Hypotheses The following hypotheses will be resolved at the end of the research: H01: EasyJet is not known to have a better brand image than Ryanair H11: EasyJet is known to have a better brand image than Ryanair H02: Ryanair is not preferred by consumers mostly because of low cost rates  H12: Ryanair is not preferred by consumers mostly because of low cost rates  H03: EasyJet does not enjoys a better position in the market and in the consumers mind than Ryanair H13: EasyJet does not enjoys a better position in the market and in the consumers mind than Ryanair Findings and Discussion Closed-Ended Survey Results The closed ended sample survey was conducted for 142 respondents. These respondents were selected randomly from the University of Scotland. Figure 1: Gender Composition The above graph shows that the composition of male and female respondents within the sample was almost proportional to each other. Thus it is empirically proved that, the random sample is not biased towards any particular gender. Figure 2: Age Composition The above horizontal bar graph shows that majority (102) of the respondents within the sample are individuals between age group 18 to 29 years. The age related demographic composition of the sample was appropriate for the current research. This is because the researcher had purposely selected the respondents from the Scottish University. Hence, a majority of the respondents within the sample were young university students between 18 to 29 years. The researcher had chosen the sample through random sampling approach; the respondents pertaining to senior age were the lecturers, professors and office workers in the University. It was rational to select this sample because (as stated in the literature review) the most potential low cost airline consumers are leisure travellers such as, university students (Aaker and Keller, 2000). Thus, in terms of age composition, the selected sample was appropriate for meeting the desired research objectives. Figure 3: Student Enrolment The above result empirically proves that above 50% of the respondents within the random sample were full time students of the Scottish University. However a certain percentage of respondents were also part time students of the university. The 23.79% of individuals not enrolled as students were probably the lecturers, professors and office workers of the university. Figure 4: Educational Level According to the percentage composition of the above bar graph it can be stated that most of the respondents within the sample were Master degree students of the Scottish university. Figure 5: Place and Tenure of Study From the above bar graph it is found that a considerable share of respondents within the sample (44) was linked up with other universities of Europe. Figure 6: Frequency of Low Cost Airline Travel The above graph shows that 70 respondents within the sample were availed low cost airline services 2 to 4 times within a year. Even so, the strength of very frequent travellers was 30.77% within the sample. Majority participants were found to travel by low cost airlines once or twice in a year as it is the probable tenure for each quarterly semester in the Scottish University. The students travel by airlines when they visit homes during semester gaps (Burmann and Zeplin, 2005. The ones who travelled once a year were the foreign students studying in the university. Even so, majority of the respondents (approximately 80%) within the sample were loyal customers of low cost airlines. Figure 7: Typical Reason for Travelling The results of the above graph prove that most of the individuals within the sample travelled in low cost airlines for visiting their friends and family or spending time in leisure. Figure 8: Brand Image Perception The individuals within the sample stated that a company having good brand value should always satisfy their purchasing decisions of its potential clientele. Furthermore the respondents stated that service quality and differentiation of the services, provided by an organization enjoying high brand value in the market should also be superior in nature. Majority (above 50%) of the individuals perceived that an organization sharing high brand value in the market should always provide good quality services to its customers and these services should comprise intrinsic qualities of status symbol, class and style. Figure 9: Frequency of Low Cost Airline Usage The results of the above figure prove that most of the participants within the sample were loyal customers of Ryanair and easyJet. However, the strength of Ryanair’s customers (72) was more than that of easyJet (63). Figure 10: Importance of the Next Features The above graph proves that factors such as staff helpfulness, ticket price, in-flight seat comfort, legroom and online booking facility are the most significant factors influencing the purchasing intentions of the airline travellers. Figure 11: easyJet and Ryanair Comparison The result of the above bar graph proves that among all the factors, in-flight entertainment, meal and other frill facilities are weaker for Ryanair and easyJet. This is because; the low cost airline companies offer less pricy services at the cost of minimal frill facilities. Figure 12: Strength of the Statements The above result proves that most of the respondents within the sample had provided their statements through verbal and postal communication means. This proves that the possibility of generating faulty results from the sample survey is minimal. Figure 13: Cost Efficiency The above graph shows that 92% of the respondents within the sample are potential customers of Ryanair and the rest 8% are the loyal customers of easyJet. Figure 14: Future Perceptions According to the above percentage table, it is proved that consumers within the sample feel that Ryanair should improve its frill facilities in the long run. The consumers also state that the company should enhance the efficiency of its travelling time and try to land its aircrafts in primary airports of Europe. Closed Ended Survey Result Analysis Majority of the participants believed that brand image of an airline company is a vital attribute or causal factor influencing their purchasing decision. This perception of the sample respondents matches with statements in the literature review that elaborated on the importance of brand image in the airline industry. Airline services are one of the most expensive means of transportation. Consumers pay relatively larger amount of money for travelling by air (Calderon, Cervera and Molla, 1997). Hence, before placing the final demand or experiencing the quality of an airline service, individuals tend to scrutinize brand value of the service providing company. Superior brand reputation is a type of intangible asset resource of an organization (Sarina and Lansbury, 2013). This is because good brand value of a firm is built over a considerable period of time (Fisher, 2010). Consequently, prior making actual purchase, airline travellers always consider the brand value of an airline company in the market. According to the respondents, superior brand value is an important requisite for small, mid-level and large profit making organizations (Clark and Melancon, 2013). Brand image consideration is an important decision making component for any commercial transaction. Most of the students prefer to travel in low cost airlines because they are leisure travellers by nature. The characteristic features of demand created by business and leisure travellers are largely different. Travelling time is the most important causal factor that determines the demand created by business airline travellers (Liou, et al., 2011). On the contrary, the most important factor affecting the demand of leisure airline travellers is cost. The sample respondents are mostly non-working university students. These students try to maximize utility subject to their disposable budget constraint and minimize travelling cost due to restricted income (Gudmundsson, De Boer and Lechner, 2002). Furthermore, the results in figure 2 prove that most of the respondents are frequent airline travellers. Thus, the individuals prefer to utilize less expensive aviation services of the low cost airlines compared to the pricy services offered by expensive airline companies. It is proved that young consumers consider differentiated strategies of the companies to be credible. Presently, the extent of business rivalry in each industrial segment has increased greatly. Companies operating in each industry experience monopolistic competitive threats in the market (EasyJet, 2013). As stated in the literature review, organizations offering airline services within the global aviation industry are monopolistically competitive in nature. These firms try to enhance their core competencies in business and lead the market competition by way of offering differentiated, rare and non-imitable services to the customers. Increased differentiated services popularize the offerings and brand reputation of airline companies in the market (Klophaus, 2005). All respondents within the sample regarded brand value as an important component for small as well as large corporations. Hence, most of the loyal low cost airline travellers within the sample focused upon a company’s brand image while purchasing airline tickets (Ryanair, 2014). These consumers claimed to evaluate the brand value in terms of success of its differentiation strategy. As a result, the company providing rare and unique services to customers was considered to have the best brand image. If the services provided by an airline company are sophisticated and status symbolic in nature, then the consumers consider its brand value to be high. The proportion of such consumers is low within the sample because most university students are loyal low cost airline travellers. These rational leisure travellers do not prefer display of status and concentrate more upon availing good quality services at relatively lower market prices. Hence, majority of the individuals gains high confidence while making purchases from an airline company that has high brand value (The Economist, 2011). Good quality service is the most important attribute of an aviation company. The quality of service provided by a low cost airline company is regarded to be good, when the ticket prices are affordable, aircraft timings are accurate, safety measures are well-incorporated, staff services are efficient and frill benefits are adequate. Most respondents in the random sample are potential consumers of Ryanair Airlines. The percentage of easyJet travellers was relatively less. However, a small section of individuals stated that they preferred to consume the services of other low cost airline companies. The above empirical results prove that easyJet and Ryanair are the two most popular low cost airline companies among the university students. Then again, (as viewed in the literature review) European low cost aviation industry is highly competitive in nature. Companies such as, Air Berlin, Wizz Air and Norwegian airlines, are also well-known for offering inexpensive airline services (Young, et al., 2011). Consequently, a small proportion of respondents within the sample are potential consumers of these airline companies. The proportion of Ryanair’s loyal customers was greater than that of easyJet. This is because Ryanair provides cheaper airline services in comparison with the ones of easyJet. As stated in the literature review, easyJet Airlines bridges the gap between British Airways and Ryanair Airlines. As per the demographic segmentation analysis, the potential customers of easyJet are business as well as leisure travellers. On the other hand, the loyal customers of Ryanair are primarily non-working leisure travellers. Ryanair is a revenue maximizing organization, where price reduction is the primary business level strategy. The company cuts down on additional frill benefits at the cost of the less expensive services provided. Ryanair’s aircrafts lands on the secondary airports of Europe and hence, the operational business cost is also low. Most of the respondents chosen are young leisure university students. Low price is the strongest determining factor related to their airline service purchasing decision. Although the service prices of Ryanair are lower than that of easyJet, their brand value has little difference in the market. These are the probable reasons for which majority of the respondents are found to be potential customers of Ryanair. This empirically resolves the second hypotheses of the research. The alternative hypothesis (H12) is accepted. Respondents preferred a low cost airline company over the other because the services provided was comparatively more cost efficient. They sample stated that they made their selection after considering the service efficiency and timeliness. A very small proportion of individuals stated that they make their choices according to the frill benefits provided. Considering the above responses, price appears to score over quality, as far as low cost aviation service market is concerned. The loyal and rational consumers of low cost airline companies are cost minimizing buyers whose utility level is not determined in terms of additional in-flight frill benefits. Also, travelling time is not a very significant factor influencing their airline service purchasing decision as opposed to that of business travellers. Basic safety and price are two most important factors affecting the low cost airline service purchase decision. The literature review has proved that aggregate revenue and profitability of these two airline companies are highest in the market. These organizations share moderately good brand image and the services provided ensure the required level of safety to travellers. These are the probable causes for which the sample respondents are found to be loyal customers of Ryanair and easyJet. Nonetheless, owing to lower service prices, Ryanair has a larger number of potential customers in comparison to easyJet. Most respondents of the survey believed that low cost airlines are better than the expensive airline companies. However, a considerable proportion of individuals stated that the low cost airline services are inferior to those offered by the expensive aviation firms. A majority of the university students within the sample were potential customers of the low cost airline companies such as, Ryanair and easyJet. These individuals claimed to avail the services of economic aviation firms due to the relatively lower prices offered. The utility thresholds of low cost airline travellers are significantly dependent on cost efficiency. The travelling welfare levels of these individuals are not dependent on luxury service provided by the expensive airline companies. Most of these students are frequent airline travellers and non-earning individuals. Their disposable income levels are low and they do not have the purchasing power to avail comfort airline services very often. As a result, they obtain greater utility by availing services of the low cost aviation firms, which adequately reason their airlines preference. Nonetheless, a considerable percentage of travellers stated that the services of low cost airline companies are inferior to those of the expensive aviation firms. Price is not the most important decision determining factor for these consumers as they consider service quality, amenities, status and comfort to be essential aspects related to demand for an aviation service. According to views of these respondents, the services provided by expensive airline companies are better than those of the low cost airline firms. A considerable proportion of these students are unable to experience the services of expensive aviation companies due to the high prices associated. This particular finding corresponds to a view in the literature review stating that low cost aviation sector is experiencing increased demand because of declining purchasing power of the airline travellers. Most of the sample university students derive higher utility while consuming the services of low cost airline companies such as, Ryanair and easyJet, because they are unable to avail expensive airlines services due to inadequate purchasing power. The respondents in the sample perceive that the meals and other frill services provided in the low cost airlines are of poor quality. Even so, a considerable proportion of individuals stated that they also face issues pertaining to luggage space in the low cost airlines. The individuals opined that seat selection and other services of the low cost airline companies are not of inferior quality. Meal and other facilities provided by low cost airline companies, such as, Ryanair and easyJet, are not of high quality. This is because these companies offer services at lowest market prices compared to that of the industry competitors. Owing to the low price offered, these firms compensate on quality of the frill services and comfort provided to the travellers. Additionally, such companies perceive that utility level and purchasing decision of their potential clientele depends on selling prices of the services (Treanor, et al., 2014). Thus, the companies choose to offer cheaper aviation tickets at the cost of minimal comfort. As per the literature review, the level of competition among low cost airline companies such as, Ryanair and easyJet, have considerably increased, which is why special measures are being undertaken so as to enhance quality of the in-flight frill and other amenities. As increased differentiation can enhance the brand value of low cost airline companies, it is reckoned that such measures incorporated by easyJet are responsible for its increasing profitability and loss of Ryanair’s business. Many respondents within the sample preferred to utilize the services of low cost airlines in order to experience cost efficiency in travel. This finding corresponds to the above analysis, thereby claiming that price is more important than quality in context of the low cost aviation market. Individuals, especially the leisure travellers, prefer to travel in low cost airlines because they lack the purchasing power to avail expensive aviation services. Their utility level is primarily maximized by lower air ticket prices as opposed to the additional comfort services provided. However, if the low cost aviation organizations are able to improve their frill services, then aggregate demand for the services can increase (Steven, Dong and Dresner, 2012). easyJet is experiencing greater demand for its services compared to Ryanair because of the additional in-flight comfort facilities. Majority respondents within the sample were non-earning students of Scottish University. They were leisure travellers and mostly loyal customers of Ryanair. The literature review has already proved that the prospective customers of Ryanair are leisure travellers and those of easyJet airlines are leisure as well as business travellers (Orlov, 2011). A greater strength of individuals considered the flight fairs of Ryanair to be more cost efficient than that of easyJet. This view of the respondents matches with analysis made in the literature review, which stated Ryanair as the most affordable low cost airline company in the market. The above segmented bar graph reflects that the proportion of in-flight travelling problems faced by the potential customers of Ryanair is more than that of easyJet. Despite being the most cost efficient airline company in the market, Ryanair is losing its popularity because of such issues. On the contrary, the brand image of easyJet is rapidly improving over time owing to high quality of services provided (Cowper-Smith and De-Grosbois, 2011). As stated in the literature review, the consumers are facing problems while travelling in Ryanair flights because of inefficient staff services, inadequate frill facilities, unpunctual flight schedules and poor in-flight spacing provisions. The last closed-ended question of the survey attempted to compare the brand image of Ryanair and easyJet in terms of price, frill facilities, travelling time and place efficiency (Kan Tsui, et al., 2014). The respondents claimed that easyJet should lower the price of its aviation services and Ryanair should improve its in-flight frill facilities. The respondents opined that services of the two companies, evaluated in terms of travelling time and space efficiency, are almost equivalent. Thus the above analysis empirically shows that the third (H13) and first (H11) alternative hypotheses of the research should be feasibly accepted. Conclusion and Recommendations The dissertation research thoroughly analyzes the importance of brand value in the contemporary business world. The research topic is based on the low cost aviation sector of Europe. It was rational to conduct an academic investigation on the low cost airline sector as it is rapidly growing over time. The researcher tried to evaluate the brand image of Ryanair and easyJet in the market. Although both the companies are popular low cost airline firms in the European market, their brand reputations are completely different in views of the travellers. Ryanair is the most low cost aviation company. The organization offers airline services at a minimal cost compared to that of other market rivals (Amankwah‐Amoah and Debrah, 2011). It experiences highest revenue and profit in the low cost aviation sector. The company lowers the expenses of services provided by way of providing minimal in-flight frill services to customers. The company targets to acquire the demand created by leisure aviation travellers. On the other hand, despite being a low cost airline company, easyJet provides its aviation services in many primary airports of Europe (Barney, 1991). The company offers basic in-flight frill facilities at the minimal possible cost price to potential customers who are both leisure and business travellers. easyJet is known to bridge the gap between expensive and low cost airline companies. Thus, the research proves that easyJet enjoys a superior brand value compared to Ryanair, in terms of service quality and in-flight additional comfort facilities. However, leisure travellers prefer to avail the services of Ryanair owing to affordable service prices. Even so, considering the above qualitative and quantitative research work, there are few ways whereby Ryanair and easyJet should improve brand value in the long run. The companies should make their staff more efficient and productive by conducting regular training and knowledge building sessions. They should provide adequate in-flight frill facilities in order to gain increased competencies in the market. In future, they can plan to enter into a strategic alliance whereby they can become a joint global leader. The companies should try to reduce fixed cost in business and initiate more frequent flight programs. Improved promotional activities can help to augment aggregate demand for the services delivered in the long run. Few first class cabins can also be maintained for capturing demand of the rich travellers in the market. All the above recommendations will contribute towards improving the brand image of Ryanair and easyJet in the long run. Reference List Aaker, D. and Keller, K., 2000. Consumer evaluations of brand extensions. Business Horizons, 48, pp. 317-324. Amankwah‐Amoah, J. and Debrah, Y. A., 2011. The evolution of alliances in the global airline industry: A review of the African experience. Thunderbird International Business Review, 53(1), pp. 37-50. Barney, J. B., 1991. Firm resources and sustained competitive advantage. Journal of Management, 17 (1), p. 99-120. 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