Homework help, You have recently secured a graduate role with top management consultant
You have recently secured a graduate role with top management consultant. The company has just acquired a new client, which they would like you to work with. The new client is Ryanair low cost airline, the company has been criticise for bad customer service for a number of years and they are looking to change the consumer’s perception of the brand.
You should demonstrate an exceptional knowledge of customer management theory and models including extensive reading around the subject in the relevant business management and academic journals. Equally important will be an understanding of how to put theoretical plans into practice. This means acquiring an excellent understanding of all aspects of airline and travel industry operations.
To succeed in your first assignment please complete a written report outlining how RYANAIR can best engage with and manage their customer to become even more profitable.
The Ryanair fleet
Ryanair operate a fleet of over 300 Boeing 737-800 aircraft with an average age of 5.5 years. They have another 183 Boeing 737-800 on order and with an option for 100 Boeing 737 MAX 200. Ryanair estimate that by 2024 they will have over 520 aircraft in operation, (Ryanair, 2017).
• Airline type: Low-cost/budget/no-frills
• Distances flown: Medium- and short-haul
• Passenger uplift: 117 million, up 15.4% on 2015. In the financial year to 31 March 2017, it carried 120 million passengers, up 13% on the year to 31 March 2016
• Revenue: €6.6 billion in the year to 31 March 2017, up 2% on the year to 31 March 2016
• Profit after tax: €1.3 billion in the year to 31 March 2017, up 6% on the year to 31 March 2016
• Load factor: 94%.
According to Ryanair, average fares fell by 13% to €41 in the year to 31 March 2017. The budget carrier also expanded, taking delivery of 52 new Boeing 737s. By March 2018, Ryanair hopes to grow its fleet to 427 aircraft, to reach its target of 130 million customers. Last year it launched 206 new routes, and opened 10 new bases at primary airports in Bucharest, Corfu, Frankfurt Main, Hamburg, Ibiza, Nuremburg, Prague, Sofia, Timisoara and Vilnius.
The airline is currently into half way its ‘Always Getting Better’ (AGB) campaign, aimed at improving the public’s perception of the brand. As part of the AGB campaign, it began selling long-haul flights from Madrid with Air Europa.
In the past, the airline has expressed a desire to become the “Amazon of Travel”, by developing better search tools, travel guides, and express booking, auto check-in and onward transport partnerships.
Ryanair also intends to extend its Ryanair Holidays to new markets; Ryanair Holidays allows consumers to book packaged holidays, comprised of flights and accommodation, along with other extras like all-inclusive, half-board, car hire etc.
Ryanair continues to use its Ryanair Labs to develop and transform the customer experience. In turn, it hopes to boost ancillary revenues by making it easier for customers to add on extra services like reserve seating etc. According to Ryanair, its website is Europe’s most visited travel website with over 50 million views a month. The company says that its Labs aims to develop more functional software by focusing on UX (user experience) and design, and uses various forms of data analytics, including Big Data technologies, Predicative Analytics and Machine Learning to improve its technological ecosystem.
The Brand Perception
British Airways and Virgin Atlantic brands associated with high quality, whilst Ryanair is associated with low trust (Mintel, 2017)
Brand personality: Low-cost carrier EasyJet seen as most accessible brand, while Ryanair viewed in a negative light, (Mintel, 2017)
The Ryanair brand has the worst reputation out of all selected airlines. Just 59% say they would recommend it to a friend. By comparison, 76% said they would recommend budget rival easyJet. While Ryanair’s main positive trait is value, its brand is also perceived as unappealing and boring.
However, despite the broadly negative connotations, its global passenger uplift in 2016 was nearly twice as large as easyJet; in 2016 Ryanair carried 117 million passengers compared to EasyJet’s 63.3 million. Indeed, it carried more passengers than easyJet and British Airways combined. This is perhaps the best example of how air travel has become a commoditised product and how low base fares drive mass-market bookings.
Having said that in the last three years the company have focused on improving its image with launch of ‘Always Getting Better’ programme in 2014. This campaign aims to improve the airline’s negative image with a range of customer service improvements and digital enhancements like a new website and app, new uniforms, cabin interiors, allocated seating, and new business, leisure and family products.
The recent issues the company had
Ryanair came under scrutiny after announcing earlier in September that it would scrap 18,000 flights on 34 routes between November 2017 and March 2018, affecting nearly 400,000 passengers. The statement came a week after a first wave of cancellations was announced, (Guardian, 2017).
According to the BBC (2017) Ryanair customers have today branded the budget airline a ‘disgrace’ after being forced to spend up to £1,500 of their own money on new flights to get home – with some even having to pay twice.
Please visit this link for information about the customer reviews of Ryanair: https://www.essaybishop.com/write-my-essay/independent.co.uk/travel/news-and-advice/ryanair-easyjet-worst-airlines-in-world-new-rankings-research-airhelp-quality-service-delay-a7791151.html
1 Introduction (200 words maximum)
Explain very briefly the
a) Context, i.e. your report has been prepared for RYANAIR, a leading LCC (low cost carrier)
b) Outline the structure/content of the report3.1
2 Develop an appropriate value proposition for RYANAIR (approx. 350 words)
Advise them on an appropriate customer value proposition
This should clearly identify
A. The main elements of their current value proposition and indicate whether this is alignment with customer needs or not.
B. A proposed new value proposition which is alignment with customer needs
Advice Note: Before making recommendations for a new value proposition you should carefully study the VPs of other leading LCCs in Europe, North America, Asia and companies involved in the transportation business as part of your research to advise Ryanair how they can provide value to the customer whilst maintaining their position as a leading LCC.
3 Using the SCHEMA data spread sheet (350 words)
We cannot provide any data on customer value segments (e.g. quintile or decile analysis) for confidentiality reasons. Instead you should use the EXCEL spreadsheet Schema data on BB to demonstrate and explain how you can increase the value of this fictitious customer base.
This data is merely used to enable you to demonstrate your understanding of customer value. You should also indicate realistic time frame over which your increase in value will take place. For example is it one year or two years?
There is enough data for you to write 3,000 to 5,000, however Michael O’Leary doesn’t have time to read longwinded reports and want you to demonstrate you understand how to increase customer value on 350 words.
3.1 Using one or two element of REAP factors; suggest how Ryanair could increase profitability from customers. Also use other relevant frameworks or models such as customer pyramid by J Curry to support your recommendations.
4 How could Ryanair provide an outstanding customer experience? (350 words)
Using one or more customer experience models suggests how Ryanair as a LCC could provide an outstanding customer experience. Think about the social CRM as well.
5 Conclusions (250 words maximum)
Provide a brief and concise conclusion that will persuade RYANAIR to accept your report in full.
• Your report should be supported by a minimum of 15 references.
• These should be cited in the text Harvard style and listed Harvard style i.e. alphabetically without bullet points or numbers
• Careless incorrect citation within the text or list is the easiest way to loose marks
• The Case study should be referenced in the text as Harrison (2017) and listed in the references as
Harrison, N., (2017), RYANAIR case study.
How to avoid bad academic practice and plagiarism
Ryanair’s Customer Management
Customer management is an approach which is used by firm’s interactions with potential and current customers (Goetsch & Davis, 2014). It makes use of data analysis about the clients’ history with the organization so as to improve its business relationships with customers, majorly focusing on customer satisfaction and customer retention as well as growth in sales. There are various means used to ensure the retention of customers in the long run. Customer segmentation is first done. Every customer niche or segment has specific needs or demands. Based on this, a firm implements various strategies to satisfy the customers in a specific segment which ensures their retention in the long run. Ryanair is an airline company which usually aims at enhancing their customer relations. Despite this, over the years, the firm has been facing various challenges about customer satisfaction. In September 2017, the company canceled various flights on short notice. This highly impacted over 315,000 passengers. The cancellation was attributed to an error in the pilot holidays. This report is prepared to analyze various customer management approaches used by Ryanair Airline Company as well as analyzing their strategies effectiveness. SCHEMA value estimator is used to categorize customer segments into diverse groups such as high value, low value, medium value, and critical few customers amongst others. Basing in the SCHEMA one customer segments is chosen then tow elements of the REAP factors are used to give recommendations on how Ryanair can increase their profitability.
The value proposition is a statement which indicates how a firm’s services or products will benefit customers (Goetsch & Davis, 2014). It stipulates how the services of a firm are better than its competitors. The 21st Century is an era characterized by technological innovations. The airline industry has been revolutionized by the technological innovations. To keep track of the current inventions is mandatory to ensure continued profitability and also customer satisfaction as well as customer retention. The value proposition for Ryanair is offering low-cost flight services. The core advantage drawn from the low-cost flight is the ability of the customer to save money, meet the needs of economically unstable customers. Their price-expectations aligns with its customer needs.
“Unique and Low Cost Flights” is the new proposed value preposition for the firm. To differentiate itself from its competitors, Ryanair uses the price differentiation strategy. The low prices offered by the firm as opposed to its competitors for basic services ensures that the customers come regardless of their low performance or expectations (Goetsch & Davis, 2014). Thus, the low price is a core differentiation strategy used by the airline company to ensure continued performance in the market.
Offering unique services including customer transportation within a radius of 10 miles will act as another differentiation strategy for the firm. For instance, in September 2017, several flights were canceled as a result of an error in scheduling pilot holidays. The cancellation impacted over 315,000 passengers. The company further emphasized that they would cut 40 to 50 flights per day till the end of October 2017. The cancellation highly impacted passengers who got angered and confused. To bring back the angered customers, the firm ought to introduce new customer vehicles which will ensure transportation of the customers. This will boost their morale. The Ryanair’s pilots and cabin crew were also pushing for favorable employment contracts or terms. Despite all the impacts and negative outcomes of the cancellations and pilot demands, the firm has continued to succeed and also thrive in the airline industry. However, if it would have been other airline industries such as the Emirates of Etihad Airways, the consequences would have been depressing or fatal. The customer dependency on their price-expectations tradeoffs has highly ensured successful thriving in the industry.
Assimilation theory of customer satisfaction fits with Ryanair’s management strategy. Assimilation theory is based on dissonance theory which was proposed by Festinger (Zboja, Laird, & Bouchet, 2016). According to dissonance theory, a customer will make a cognitive comparison between perceived product or service outcomes and their exceptions. The customers try or seek to avoid dissonance through the adjustment of their perceptions about a particular service or product to bring it in line with their expectations. As for Ryanair Airline industry, their customer segments have adjusted their expectations so that their expectations lines with their price expectations. Their low price expectations drive them to cognitively develop expectations of low quality as well as flights cancellation.
The core REAP factor is the ability of the company to understand the marketplace as well as their customer needs (Wall & Paltiel, 2016). In the airline industry, Ryanair’s customers are the passengers who are willing to travel at cheaper costs while also enjoying some basic needs. These customers are financially disadvantaged thus would travel with Ryanair despite their frequent cancellation of flights. This ability to understand the customer’s needs makes the airline company formulates its low-cost carrier services.
Creating Increased Value from Customer Base
According to the firm’s SCHEMA, the medium high-value customer value segment is the most vital segment of the firm’s success. On an annual basis, the firm serves 299,876 with each customer generating a revenue totaling $2,122.26which equates to $636,415,739 annually. This is the segment which generates more revenue for the company on an annual basis. This segment sees a total of 19,987 new customers on a yearly basis. These figures are realistic as well as the time frame of 4.5 years.
To create increased customer satisfaction and also improve their customer retention, the firm ought to implement various strategies such as; proper scheduling of pilots holidays and offer better employment contracts to the employees. Also, avoid the cancellation of flights but if unavoidable circumstance such as volcanic eruptions, floods, or tsunamis have interfered with the flights they cancel. Cancelling 10 hours before the time of travel will give the customers’ time to reschedule their flights and also look for alternatives. Through this, the customers will be more satisfied which will improve their retention in the long run.
The affected customers also ought to be compensated by the firm. Through this, the company will enhance its customer satisfaction which will lead to buffered customer retention in the long run.
Working Towards Providing an Outstand Customer Satisfaction
According to Servqual model, customer perception and expectations are core in determining their satisfaction (Wang, Luor, Luarn, & Lu, 2015). Communication is the key strategy in obtaining customer retention. For the Ryanair Airline Company, their communication, security, competence, and reliability is core in retaining customers. The medium-high level customer segment generates more revenue for the company. Concentrating on retaining more customers in this segment is the ultimate aim of the firm. Customer satisfaction is the core to business success and also the retention of the customers in the long run. The frequent cancellation of flights triggers anger from the customers. There is a high chance of losing unsatisfied customers in the market. Thus to attain enhanced customer satisfaction, the firm ought to change its business scheduling. The management of a firm is tasked with planning, organizing, and also directing fellow employees. With poor management, server outcomes will be incurred which might lead to the failure of the firm. Thus to prevent against these loses a company ought to change its business strategies. The firm management ought to establish proper timeline frames, proper planning and also directing of the employees. With this, the issue of pilot holidays affecting flights will not be incurred hence leading to enhanced customer satisfaction.
Reduced flights cancellation will lead to the improved firm reputation and also enhanced customer expectations which will, in turn, improve its competitive advantage thus increasing its market share in the long run. Compensation of the affected employees is also another strategy. Compensating the affected employees will lead to enhanced reputation also thus increasing customer retention which directly translates to increased profits in the long run.
In conclusion, the airline industries are among the most dynamic global sectors. Ryanair company frequent cancellation of flights emanate from its managerial errors which leads to colliding pilot holiday with flights. Their price-expectation strategy, however, has kept them on track of success. They offer low [riced flights. Their market segmentation has helped them win their customer back. To further improve their customer satisfaction which will translate to more profits, the firm ought to compensate affected customers, proper scheduling of flights, and also minimize the cancelation of flights, with this, the firm will succeed in the long run.
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper Saddle River, NJ: pearson.
Wall, S., & Paltiel, D. (2016). U.S. Patent Application No. 14/449,989.
Zboja, J. J., Laird, M. D., & Bouchet, A. (2016). The moderating role of consumer entitlement on the relationship of value with customer satisfaction. Journal of Consumer Behaviour, 15(3), 216-224.
Wang, Y. L., Luor, T., Luarn, P., & Lu, H. P. (2015). Contribution and Trend to Quality Research-a literature review of SERVQUAL model from 1998 to 2013. Informatica Economica, 19(1), 34.