BSc (Hons) in Computing - eCommerce Assignment - EasyJet Case Study

Easy Jet Case Study

The coursework is based on the case study 8.1 available in E‐Business and E‐Commerce Management by

Dave Chaffey. 3rd Edition. Page 352.

The evolution of easy Jet’s online revenue contribution

EasyJet was founded by Stelios Haji‐Ioannou, the son of a Greek shipping tycoon who reputedly used to

'hate the Internet'. In the mid 1990s Haji‐Ioannou reportedly denounced the Internet as something 'for

nerds', and swore that it wouldn't do anything for his business. This is no longer the case since by August

1999, the site accounted for 38 per cent of ticket sales or over 135,000 seats.

This was past the company's original Internet contribution target at launch of 30 per cent of sales by

2000. In the period from launch, the site had taken more than 800,000 bookings since it was set up in

April 1998 after a shaky start of two sales in the first week and one thousand within the first month. In

March 2000 EasyJet increased its online discount to £2.50 for a single trip ‐ a higher level of permanent

discount than any other airline. By September 2000, Internet sales reached 85% of total sales. Since this

time, the growth in proportion of online sales has decreased. By 2003, over 90% of all sales were online.

The articles relate the tale of the owner's office being graced by a photo of the owner with horns on his

head and a Mexican moustache on his upper lip. The image was contributed as a complaint by an

aggrieved customer. The nature of the entrepreneur was indicated since he sent the customer two free

tickets.

The company was originally set up in 1994. As a low‐cost airline, looking to undercut traditional carriers

such as British Airways, it needed to create a lean operation. To achieve this, Haji‐Ioannou decided on a

single sales channel in order to survive. He chose the phone. At the time this was groundbreaking, but

the owner was encouraged by companies such as Direct Line insurance, and the savings, which direct

selling, would bring.

Although Haji‐Ioannou thought at the time that there was no time to worry about the Internet and that

one risk was enough, he was adaptable enough to change. When a basic trial site was launched, he kept

a close eye on how popular the dedicated information and booking phone line was (having a webspecific

phone number advertised on the site can be used to trace the volume of users on the site). A

steady rise in the number of calls occurred every week. This early success coincided with the company

running out of space at its call centre due to easy jet’s growth. Haji‐Ioannou related, 'We either had to

start selling over the Internet or build a new call centre. So our transactional site became a £10 million

decision.'

Although the success of EasyJet could be put down solely to the founder's adaptability and vision, the

company was helped by the market it operated in and its chosen business model ‐ it was already a 100

per cent direct phone sales operation. This meant it was relatively easy to integrate the web into the

central booking system. There were also no potential channel conflicts with intermediaries such as travel

agents. The web also fitted in with the low‐cost EasyJet proposition of no tickets, no travel agents, no

network tie‐ups and no in‐flight meals. Customers are given a PIN number for each order on the web

site, which they give when they get to the airport.

Sales over the Internet began in April 1998, and although easy jet’s new‐media operations were then

handled by Tableau, a few months ago easy jet took them in‐house.

The Internet is important to EasyJet since it helps it to reduce running costs, important for a company

where each passenger generates a profit of only £1.50. Savings to EasyJet made through customers

booking online enable it to offer at least £1 off to passengers who book online ‐ this is part of the online

proposition. Online buyers also benefit from paying the price of a local call, instead of the standard

national rate of easy jet’s booking line. The owner says that 'the savings on the Internet might seem

small compared to not serving a meal on a plane, which saves between £5 and £10, but when you think

how much it would cost to build a new call centre, pay every easy jet reservation agent 80 pence for

each seat sold ‐ not to mention all the middlemen ‐ you're talking much more than the £1 off we give

online buyers'. What about the risks of alienating customers who don't want to book online? This doesn't

worry the owner. He says 'I'm sure there are people who live in the middle of nowhere who say they

can't use the Internet and will fly Ryanair instead. But I'm more worried about keeping my cost base

down, and finding enough people to fill my aeroplanes. I only need six million people a year, not all 56

million.'

Promotion

The Internet marketing gurus say 'put the company URL everywhere'. EasyJet has taken this literally with

its web address alongside its Boeing 737s.

EasyJet frequently varies the mix by running Internet‐only promotions in newspapers. easy jet ran its first

Internet‐only promotion in a newspaper in The Times in February 1999, with impressive results. Some

50,000 seats were offered to readers and 20,000 of them were sold on the first day, rising to 40,000

within three days. And, according to the marketing director, Tony Anderson, most of these were seats

that otherwise would have been flying along at 600 mph ‐ empty. The scalability of the Internet helped

deal with demand since everyone was directed to the web site rather than the company needing to

employ an extra 250 telephone operators. However, risk management did occur with a micro site built

for Times readers (www.times.easyjet.com) to avoid putting a strain on easy jet’s main site.

Anderson says, 'The airline promotions are basically designed to get rid of empty seats'. He adds, 'If we

have a flight going to Nice that's leaving in 20 minutes' time, it costs us very little to put some extra

people on board, and we can get, say, £15 a head for it'. Flight promotions are intended to avoid

attracting people who'd fly with EasyJet, so advanced booking schemes are intended to achieve that.

A later five‐week promotion within The Times and The Sunday Times newspapers offered cheap flights to a choice of all EasyJet destinations when 18 tokens were collected. In total, 100,000 seats were sold during the promotion, which was worth more than £2m to the airline. Thirty per cent of the seats were

sold online, with the rest of the transactions being completed by phone; 13,000 orders were taken over

the Internet in the first day alone with over 15,000 people on the site at one point.

The web site also acts as a PR tool. Haji‐Ioannou uses its immediacy to keep newspapers informed about

new promotions and offers by phoning and e‐mailing journalists and referring them to the web site

rather than faxing.

The web site is also used as an aggressive tool in what is a very competitive marketplace. Haji‐Ioannou

says 'Once we had all these people coming to our site, I asked myself: "Why pay a PR company to

publicise what we think when we have a captive audience on the site?'" For example, easy jet ran a

competition in which people had to guess what BA's losses would be on 'Go', its budget rival to EasyJet

(the figure turned out to be £20m). Within minutes of the BA results being announced on 7 September,

the EasyJet site had the 50 flight‐ticket winners from an incredible 65,000 people who had entered. In a

similar vein a section of the site was entitled 'Battle with Swissair', giving easy jet's view that Swissair's

head had persuaded the Swiss government to stop EasyJet being granted a commercial scheduled

licence on the Geneva‐Barcelona route. EasyJet also called itself 'The web's favourite airline', in 1999, a

direct counterpoint to British Airways slogan of 'The world's favourite airline' for which it enjoyed a court

battle.

easyEverything

Following the brand extension success of Virgin, EasyJet has used the 'easy' prefix to offer additional

services as part of the easyGroup:

• easyEverything, a chain of 400‐seat capacity Internet cafes originally offering access at £1 an

hour. This is run as an independent company and will charge EasyJet for banner ads, but clearly

the synergy will help with click through between two to three per cent. The only concession

easyEverything makes towards EasyJet is that cafe customers can spend time on the easyjet site

for free.

• easyRentacar, a low‐cost car rental business offering car rental at £9 a day. These costs are

possible through offering a single car type and being an

Internet‐only business.

Implementation

The articles report that Russell Sheffield, head of new‐media agency Tableau, who initially worked with

EasyJet had an initial problem of colour! 'He says there was a battle to stop him putting his favourite

colour all over the site.' The site was intended to be highly functional, simply designed and without any

excess baggage. He says 'the home page (orange) only had four options ‐ buy online, news, info, and a

topic of the moment such as BA "go" losses ‐ and the site's booking system is simpler to use than some

of its competitors'. He adds: 'great effort was put into making the navigation intuitive ‐ for example,

users can move directly from the timetables to the booking area, without having to go via the home

page'. The site was designed to be well integrated into easy jet’s existing business processes and systems. For example, press releases are fed through an electronic feed into the site, and new destinations appear

automatically once they are fed into the company's information system.

Measurement of the effectiveness of the site occurred through the dedicated phone number on the site,

which showed exactly how many calls the site generated, and the six‐month target within six weeks.

Web site log file analysis showed that people were spending an average of eight minutes a time on the

site, and better still, almost everyone who called bought a ticket, whereas with the normal phone line,

only about one in six callers buys. Instead of having to answer questions, phone operators were doing

nothing but sell tickets.

Once the web site generated two‐fifths of EasyJet business, it was taken in‐house and Tableau now acts

solely as a strategic advisor.

Coursework Specification

You are invited, as an experienced consultant, to put together a strategic plan based on the information

supplied in the Easy Jet Case Study. The strategic plan should include the following deliverables which

should be presented as sections in your technical report:

Introduction

Background – briefly describe the background context of the organisation. This can include, for

example, historic information on the company’s formation, the financial performance, and the

key products and services.

Situation Analysis

Present Position and Industry Analysis: You should consider analysing the organisation's current

position using both of the following tools: SWOT and PEST

eMarketing Strategy

eMarketing strategy

What eMarketing strategy has the organisation adopted or is planning to adopt?

What is the value proposition and differential advantage of this strategy?

In this section you should build upon your Situation Analysis (You should also evaluate the

organisations’ ‘marketing mix’).

Implementation

How is the management creating new core and extended value for customers?

How is the management balancing their online and offline promotion methods?

What impact is the implementation of strategy having upon the performance of the business?

Legal and ethical issues

What legal and ethical issues does the organisation need to consider with regard to the

gathering, processing, distribution and use of information on the Internet?

Technical Report

In addition to the strategic plan, your report entitled, “An eMarketing Consultation Document for

Easy Jet" should include the following:

Management Summary

Summarises the approach taken and the key findings.

Background

Describes the background context of the organisation. This can include, for example, historical

information on the company’s formation, the financial performance, and the key products and

services.

Conclusion

Presents the conclusions that you have reached based upon your findings and the

recommendations to the management of Easy Jet.

The report should be between 4,000 and 5,000 words in length and all references to other sources of

information must be properly acknowledged using the Harvard Referencing System.

==========================================

Strategic Plan for Easy Jet

Table of Contents

Introduction............................................................2

           Background.................................................2

Situation Analysis....................................................4

           SWOT Analysis...........................................4

           PEST Analysis.............................................5

eMarketing Strategy.................................................6

           eMarketing Strategy......................................6

           Implementation.............................................7

Legal and Ethical Issues............................................8

Technical Report......................................................8

          Management Summary...................................8

          Background...................................................8

          Conclusion....................................................8

References..............................................................9

 

Introduction

This strategic plan is developed with an assistance of Easy Jet. It provides with a roadmap for a company development, customer-oriented support and services. Easy Jet provided all the information we needed to complete this strategic plan.

This strategic plan addresses some of the general fundamental problems like finding customers to fill the airline’s planes, how to stay in the market while other budget airlines are also growing fast and how to be ahead of everyone in the innovation curve. 

This strategic plan also addresses some of the problems that occur while dealing with day-to-day business processes and some of the problems that need to be kept under control and some of the problems might have been ignored by the current airline management.

During a development of this strategic plan some of the alternative or possible market growth areas also observed. We tried to find answers to questions like: “Is current Easy Jet management giving enough attention to keeping the website technologically up-to-date?” and “Is current Easy Jet management benefiting from one of the fastest growing and very effective marketing platforms like social media, blogging and twitting?”

SWOT Analysis and PEST Analysis tools are used to analyse the Easy Jet’s current market position. With an assistance of this strategic plan Easy Jet will be able to assess their strong sides, problems they encounter during a daily business processes, opportunities they have and possible future threats and coordinate themselves according to the choices which are revealed in this strategic plan.

Background

Budget airline EasyJet was founded by Greek-Cypriot businessman Stelios Haji-Ioannou in 1994. In the beginning Haji-Ioannou was ignorant towards the internet. He thought the internet would never make money for his airline.

The airline started selling travel tickets online in April 1998. It could only sell two tickets online in the first week and only one thousand in whole month. But after the slow start ticket selling online has grown very fast reaching 38% of all ticket sales or 135,000 seats total by August 1999. EasyJet introduced the biggest permanent discount of £2.50 for a single trip in March 2000. 

Online ticket sales didn’t stop there. If it was 85% of total sales in September, it climbed to 90% of total sales by year 2003. 

The airline founder saw the opportunity of using phone lines as a sales channel. It was groundbreaking at the time, because it helped Easy Jet to cut the operational costs and it would enable the airline to compete with existing airlines.

Haji-Ioannou had to be convinced to sell tickets online. Trial site was launched and a web specific phone line was allocated to track the volume of online users. Number of calls kept rising every week. This early success led the budget airline to focus on selling tickets online. New website easily integrated to the airline’s already existing central booking system. Prior to this the company’s business model was selling tickets through direct phone lines. Introducing a web based sales system enabled the airline keep costs low. With the introduction of a new system customers who book their flights online are given a PIN number per order. The only thing the customers need to do was to give the PIN number at the airport. Customers didn’t have to pay the price of a local call when they book their flights online. 

Easy Jet was saving through selling tickets online and not serving food on planes. 

Easy Jet was running Internet only promotions in The Times and The Sunday Times. They even introduced a macro site Times readers to avoid the scalability problem on the site. First promotion which was offered in the Times newspaper in February 1999 was 50,000 seats and 20,000 of them sold in a first day. This helped the airline to fill the empty seats. 

Another promotion which was offered in The Times and The Sunday Times sold 100,000 seats and made £2million for the airline. 

Easy Jet started using the website as powerful PR tool as well. Newspapers and journalists were informed about the promotions and updates and were referred to the website. They started running competitions on the website. Guessing British Airways losses questionnaire was a great successful PR action attracting 65,000 people answering the question and giving away 50 tickets. 

Easy Jet later added easyEverything, a chain of internet cafes and easyRentacar, a low cost car rental business to its existing travel flights business. 

Easy Jet’s website was designed and operated by a new-media agency Tableau, but when the online ticket sales reached the two-fifths of the total sales, they decided to take it in-house and Tableau would become a strategic advisor.

 

Situation Analysis

SWOT Analysis is used to analyse the current market position of the Easy Jet. Whole diagram is shown below.

Strengths of the airline help them to take an advantage on the opportunities. On the other hand weaknesses make them weak when they face threats. 

STRENGTH

• Having a visionary company founder

• Relatively cheap ticket prices

• Responding to customer complaints quickly

• Ready to change to adapt into the new business environment

• Already having a central booking system

• Having no middle man in ticket selling

• Using a website a strong PR tool

• Saving on advertisement expenses mainly sticking to the website centred advertising

• Having a strong brand image/colour WEAKNESS

• Being overcautious about using new technological opportunities for a company growth

• Alienating some customers who may not want to book their tickets online

• Being content with the existing number of customers

OPPORTUNITIES

• Could observe more new business areas using “easy” branding like easyHotels, easyClubs and etc.,

• Could do more promotions using all the media tools available including newspapers

• Could engage with the existing and potential new customers using social media

• Could create smart phone and all other handheld device apps and create opportunities for people to buy tickets using their smart phones and handheld devices THREATS

• Business model could be copied by other budget airlines

• Existing budget airlines like Ryanair could steal customers from Easy Jet

 

PEST Analysis

PEST analysis stands for Political, Economical, Social and Technological Analysis. PEST Analysis is a very useful tool to identify external environment factors like opportunities and threats to the organisation. PEST Analysis for Easy Jet is shown below.

Political Environment

• Specific governments might provide obstacles for Easy Jet to protect their national airlines

• Governments increase ecology related taxes raising the issue of air pollution or non-ecology friendly plain engines

• Home country or foreign governments might get more protectionist as it happens quite often these days in many industries because of an effect of a recent financial crisis Economical Environment

• Current economic situation might put people off from travelling

• Travellers might consider buying cheaper options and keen on hunting promotional offers

• Easy Jet’s major destination countries like Greece, Portugal, Spain and Ireland are in deep recession

• Holidays being seasonal brings many difficulties like filling the plains when it is not a holiday season and adding more flights and hiring more staff on holiday season time

• Rising foul prices

• Interest rate changes on major European currencies like Euro and Pound

Social Environment

• Protecting brand image is a very important factor for Easy Jet, actually for any organisation. It is also fragile. If anything goes wrong with the plains or bad customer service or because of the similar sort of issues brand image could be destroyed and it would hurt the company in a big time.

• Having a good relationship with the media is an important aspect of staying in business

• Changes in the demographics of some countries in a long term might affect the Easy Jet’s business Technological Environment

• Benefitting from the social media is a very important. Social Media (Facebook, Twitter and etc.) provides an incredible platform for advertising and selling tickets online directly using the services they offer. If Easy Jet can’t stay ahead of that curve, it might affect the Easy Jet’s business

• Acquiring the environmentally friendly plains and other facilitating technologies are very important

• Being up-to-date with the latest technology and browsers on the website to sell online is very important

 

eMarketing Strategy

eMarketing Strategy

Easy Jet has adopted many eMarketing strategies. They are:

• Selling through phone calls

• Selling tickets online

• Using their official website as a PR tool

• Going green

Phone Lines: From the first day of it is foundation Easy Jet had its unique way selling tickets. It started with selling tickets through phone calls.  They stick to their selling technique for a while. 

Selling tickets online: When they tried the internet for selling tickets they saw the great potential of internet as another sales channel. Sales increased rapidly over the years and internet became the main selling channel.

Website as a PR tool: Later Easy Jet founder saw the potential of the website as a PR tool. They started organising questionnaires and giving away some free tickets for the lucky contestants. They organised promotions in the newspapers. This method helped them to sell the empty seats. Official website of the airline kept up-to-date with all the information. Journalists and newspapers were informed about any changes and referred to the website.

Going green: Lately Easy Jet set a target for itself on going green. According the Easy Jet’s official website they have an environmental code based on 3 promises:

“

1. To be environmentally efficient in the air

2. To be environmentally efficient on the ground

3. To lead in shaping a greener future for aviation, for example:

o carbon offsetting

o shaping future aircraft design - for example, the ecoJet

“

(http://www.easyjet.com/EN/Environment/index.shtml, [Accessed: 25 November 2010])

Using Social Media: According to the article “Easy Jet wants to sell flights on Facebook” published on netsparsh.com on 1 April 2010: 

“European budget airline easyJet is poised to become the first airline company to enable users to plan and book flights entirely on Facebook.

easyJet currently offers a “Holiday Planner” Facebook app that helps fans plan trips with their friends through Facebook and email. Users can coordinate destinations and dates, propose a range of budget options and then invite friends along for the trip.

However, users must go to a destination website to complete the transaction — a step easyJet wants to remove altogether by adding booking functionality to their Facebook app.” 

(http://netsparsh.com/wp/blog/2010/04/01/easyjet-wants-to-sell-flights-on-facebook/#axzz16GWcw4A8, [Accessed: 25 November 2010])

When we checked Easy Jet’s Facebook site, we see that airline already started selling tickets on Facebook. http://www.facebook.com/easyJet?v=app_10442206389 Clicking on this link travellers can book their tickets on Easy Jet’s Facebook page.

Future Plans: Easy Jet should definitely create iPhone and iPad application. Easy Jet should definitely create Android applications. These applications should be used as an information tool for customers. Easy Jet could certainly be able to sell tickets through those apps mentioned. Smart phone and hand-held device sales are rocketing for the last year especially. Millions of users in UK as well as in all the major destinations of the Easy Jet are already using those devices. This could create a major selling channel for Easy Jet. 

What are the advantages of these strategies?

 There are many advantages of the strategies Easy Jet adopted. Some of them are listed below:

• Being the first airline company that introduced the online sales made them to capture the big share in the travel flights market

• Using Social Media tools and attracting lots of potential customers through those tools and using them as strong Marketing tool and selling channels

• Introducing cheap tickets and direct flights

• Having a catchy and attractive company slogan

eMarketing Strategy Implementation

According to the Easy Jet’s official website (http://www.easyjet.com/EN/Environment/index.shtml, [Accessed: 25 November 2010]) 

“

• Easy Jet uses only the main airports with good public transport in holiday destination countries

• No flight changes. Direct flights only.

• Easy Jet offers cheap tickets, quick and simple online booking system.

• Customers saves on phone call charges

• Customers can make a comment, access to the other’s comments on Facebook and Twitter

• Through Facebook and Twitter Easy Jet establishes a good communication with their existing customers and gain access to the potential new customers. These tools also provide a valuable feedback for the airline company

• Easy Jet organises questionnaires online and online promotions. They award many lucky customers

Legal and Ethical Issues

  

 

References: 

1. http://www.easyjet.com/asp/en/book/index.asp?lang=en

                Easy Jet’s official website where you can book flights, hotels and holidays

2. http://twitter.com/#search?q=easyJet

               “easyJet” search results on Twitter

3. http://www.facebook.com/easyJet

               Easy Jet’s Facebook site

4. http://twitter.com/easyjet

               Easy Jet’s Twitter site

5. http://www.youtube.com/easyjetbroadcast

               Easy Jet’s YouTube site

6. http://www.advanced-web-metrics.com/blog/2010/11/17/how-much-money-does-easyjet-loose/

               This is a website where you can find information about Easy Jet’s Google Chrome problem

7. http://corporate.easyjet.com/about-easyjet/industry-awards/2009.aspx

              Easy Jet’s Industry Awards. List of awards are very impressive.

8. http://en.wikipedia.org/wiki/EasyJet

               Easy Jet’s on Wikipedia

9. http://netsparsh.com/wp/blog/2010/04/20/virgin-america-announces-expansion-via-twitter/#axzz16GX4UIWp

               “Virgin Atlantic expands via Twitter” article

10. http://netsparsh.com/wp/blog/2010/04/01/easyjet-wants-to-sell-flights-on-facebook/#axzz16GWcw4A8

               Easy Jet introduces ticket selling on Facebook

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