HNC Business (Edexcel Level 4 Diploma)

Unit No. And Title

Unit 4: Marketing Principles

Semester

December 1st intake

QCF Level

4

Hand out date

03rd December 2014

Hand in Date

End of week 8 – 26th January 2015

Assessor’s Name

Abiola Babatunde

Word count

1,500-2,000 words NB this is a guideline only

The learning outcomes and assessment criteria to be assessed in this assignment:

Learning outcomes Assessment criteria Task in which the LO and criteria are to be assessed

Outcome 1: Understand the concept and process of marketing

1.1 explain the various elements of the marketing process 1.2 evaluate the benefits and costs of a marketing orientation for a selected organisation

Question 1 & 3 Question 2

Outcome 2: Be able to use concepts of segmentation, targeting and positioning

2.1 show macro and micro environmental factors which influence marketing decisions 2.2 propose segmentation criteria to be used for products in different markets 2.3 choose a targeting strategy for a selected product/service 2.4 demonstrate how buyer behaviour affects marketing activities in different buying situations 2.5 propose new positioning for a selected product/service

Question 3, 4 & 5 Question 6 Question 7 Question 8 Question 7

You are required to submit your assignment to the HN E Learning portal. If you experience any issues please email a copy to your tutor

Case Study: Ryanair Airline

(This is not a fictitious company; however dates may have changed to accommodate

the assessment criteria for HND Marketing Principles Module)

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).

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

2009/10. 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 were looking good for Ryanair and its budget operation - since

the business had aimed to fly double the amount of passengers in 2012 from Birmingham

International Airport to European destinations; currently this goal has not been met.

Product or Service

Low cost, no frills air travel to European destinations.

There is no free food or drink onboard. Food and drink are income streams. Passengers buy

them onboard, or they don't – passengers can take their own food and drink if they like.

There are other income streams - or ancillary revenue. The company has deals with Hertz

car rental, and a number of hotel businesses. So Ryanair takes a commission on 'up selling'

i.e. ancillary revenue. Other examples include phone cards and bus tickets. About 16% of

profit is made this way. This keeps costs lower.

1

Price

Ryanair has low fares.

70% of seats are sold at the lowest two fares.30% of seats are charged at higher fares. The

last 6% are sold at the highest fare. Ryanair occasionally get in trouble with bodies such as

the Advertising Standards Authority (ASA) in the UK over differences between advertised

and actual price - in fairness to Ryanair these are rare mistakes.

Promotion

They spend as little as possible on advertising. They do not employ an advertising agency.

Instead all of the advertising is done in-house. In fact O'Leary himself overseas much of the

promotion of Ryanair. They use simple adverts that tell passengers that Ryanair has low

fares.

Ryanair employs controversy to promote its business. For example in 2009, the company

reasoned that passengers would be charged £1 to use the toilets on board. O'Leary

reasoned that passengers could use the terminals at either the destination or arrival airport.

This would speed things up. It was reasoned that this is what passengers wanted - since

they did not want other passengers leaving their seats and walking the aisles to go to the

toilet. O'Leary also argued that larger passengers should be charged more since they took

up more room - again it was reasoned that this is what the majority of passengers wanted.

Place

Ryanair does not use travel agents so it does not pay agency commissions. It uses direct

marketing techniques to recruit and retain customers, and to extend products and services to

them (i.e. Customer Relationship Management). This reduces costs.

You book online over the Internet. This saves them 15% on agency fees.

They are based in Stanstead in Essex - which is known as a secondary airport. It is new and

accessible. It is cheaper to fly from Stanstead than either Heathrow or Gatwick, and since it

is less busy Ryanair can turn aircraft around more quickly.

Many of Ryanair's destination airports are secondary. For example if you fly to Copenhagen

(Denmark) you arrive in Malmo (Sweden) - although it is only a short coach trip over the

border. Secondary airports, which tend to be smaller regional airports, depend upon this

single carrier - some (it is rumoured) paying up to £100, 000 for each additional new route.

Costs are lower and aircraft can be turned around faster.

Keeping aircraft in the air as much as possible is another important part of the low cost

jigsaw. However, the company has been challenged by the European Union in relation to

anti-competition laws.

2

People

Pilots are recruited when they are young as pilot cadets. They work hard and take early

promotions and then move on after 10-years or so to further their careers.

Cabin crew pay for their own uniforms to be cleaned. They invest in their own training. They

are mainly responsible for passenger safety as well as ancillary revenues onboard.

Physical Evidence

They pay as little as possible for their aircraft. Planes are the most expensive asset that an

airline can make. They get big discounts on aircraft because they buy them when other

airlines don't want them, for example after September 11th, or on the invasion of Iraq and

Afghanistan. Aircraft manufacturers cannot simply stop a supply chain in minutes. If orders

are being cancelled or delayed, this is when to buy. It was rumoured within the industry that

Ryanair was buying Boeing 737s - list price around £40,000,000 (forty million pounds) - with

up to a 50% discount.

Process

There is no check in. You simply show your passport and supply your reference number.

You cannot select a preferred seat. It is first come, first served. This aids speed.

There are no air bridges (the tunnel that connects to the side of the aircraft when to board it).

You walk or are bussed to the aircraft.

Baggage is deposited directly onto the terminal - it's quick. However if your bag is broken

don't expect high levels of customer service.

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 remould the industry and customer expectations in a

unique way. This is how Ryanair has applied the marketing mix.

Scenario

You are the newly appointed Assistant Marketing Manager and are responsible for

Birmingham International Airport. The Senior Marketing Manager has decided that the whole

marketing operation for the airline is in need of an overhaul due to their rivals coming in and

out of the airport, and has assigned the following tasks to you in order to increase market

share of the company.

You are required to submit a report to the Senior Manager including following areas:-

3

1. Provide definitions of Marketing and explain the elements of the marketing process

providing examples which are appropriate to Ryanair’s approach to its customers. (1.1)

2. Explain the concept of marketing orientation and to evaluate the benefits and costs of

to Ryanair. (1.2)

3. Produce a SWOT Analysis for Ryanair with an overall analysis of your findings. (1.1, 2.1)

4. Produce a Stakeholder Analysis on Ryanair, with an overall analysis of your findings. (2.1)

5. Produce a PESTEL Analysis on Ryanair, with an overall analysis of your findings

including information useful for a new market within the airline industry. To carry out

research it is suggested information from Broadsheet newspapers and Government

reports are used to assess the aviation sector and its relevance to Ryanair. (2.1)

6. Explain the concept of market segmentation and how each variable could be use in

targeting customers in different markets (2.2)

How does Ryanair currently target their market with the use of segmentation

variables? (Refer to the case study scenario)

7. Choose a new product or service for Ryanair and explain your choice of a targeting

strategy for your new product or service. Propose new positioning for the new

product or service (2.3, 2.5)

8. How does buyer behaviour affect Ryanair’s marketing activities in different buying

situations? (2.4)

Please Note: You are required to write a report using 1 ½ or

double line spacing and use Harvard Referencing.

HNC Business (Edexcel Level 4 Diploma)

Module: Marketing Principles Student Name: Assessment Title: Submission date:

Pass Criteria

Learning Outcomes Assessment Criteria Feedback

Outcome 1: Understand the concept and process of marketing

1.1 explain the various elements of the marketing process 1.2 evaluate the benefits and costs of a marketing orientation for a selected organisation

Outcome 2: Be able to use concepts of segmentation, targeting and positioning

2.1 show macro and micro environmental factors which influence marketing decisions 2.2 propose segmentation criteria to be used for products in different markets 2.3 choose a targeting strategy for a selected product/service 2.4 demonstrate how buyer behaviour affects marketing activities in different buying situations 2.5 propose new positioning for a selected product/service

Criteria achieved on this assessment

LO1 LO2 LO3 LO4 M1 M2 M3 D1 D2 D3

Merit Descriptors – In order to achieve a merit grade for this assessment you must:

Descriptors Contextualised Criteria Feedback

Identify and apply strategies to

find appropriate solutions

(MERIT 1)

An effective approach to study and research has been applied and the assignment has been submitted by the

assignment deadline

Select/Design and apply

appropriate

methods/techniques

(MERIT 2)

Appropriate marketing concepts and principles have been

applied to the company including a good analysis of the airline

industry demonstrating a sound understanding of the subject

Present and communicate

appropriate findings

(MERIT 3)

An appropriate structure and approach has been used with

ideas expressed clearly and confidently. There is evidence of

wider research and the assignment is referenced accurately

with few errors using Harvard referencing and a reference list

(bibliography) is included.

Distinction Descriptors – In order to achieve a distinction grade for this assessment you must:

Descriptors Contextualised Criteria Feedback

Use critical reflection to

evaluate own work and justify

valid conclusions

(DISTINCTION 1)

Conclusions have been arrived at through synthesis of ideas

with the validity of findings justified through using secondary

research relevant to Ryanair and the assignment demonstrates

a comprehensive use of marketing concepts has been used in

terms of segmentation, targeting and positioning of Ryanair

Airline

Take responsibility for

managing and organising

activities

(DISTINCTION 2)

the importance of interdependence of marketing principles has

been recognised and effective links have been made in the

assignment there are assured, original and informed

explanations of complex ideas demonstrating a competent

understanding of these complex ideas

Demonstrate

convergent/lateral/creative

thinking

(DISTINCTION 3)

The assignment demonstrates convergent and lateral thinking

have been applied, there is a clear, effective and coherent

argument in the discussion of marketing principles with an

understanding of and evaluation of alternative viewpoints or a

variety of perspectives; clear evidence of independent thought

and insight.

General Feedback