Discuss about the Modern Business Environment and Markets.
In modern business environment, the markets and marketing are becoming more global and today’s businesses are running in multi-cultural world. So, it is very important for the companies and marketers to understand the diversity and complexity of international markets. There is a need to adopt more appropriate strategies and positioning to ensure that they remain beneficial and attain sustainable growth. There are various organizations which are going global to expand their business and increase their brand presence in international countries. EasyJet is one of them and it is operating its business in more than 30 nations. The company was established in the year 1995 by Stelios Haji-loannou. It was founded as a low-cost airline to offer affordable travel and services to fulfill the needs and demands of travellers in Eastern and Western Europe.
This report is totally focused on analyzing the case study named as “EasyJet in India: Low-Frill Airline Travel”. The given case study shows that EasyJet is planning to expand its business in Indian market. It includes the analysis of the case study and external environmental analysis by using PESTLE analysis of international marketing research. This analysis focuses on the external and competitive environments in Europe. Moreover, it analyses and researches the Indian market in context of EasyJet airlines. On the basis of the research in India, target market, segment and positioning is identified for EasyJet within Indian market that will allow the organization to grow and maintain the competitive advantage in Indian airline industry.
The given case study is about the current position of EasyJet Airlines in European market and its international expansion in Indian market. It takes into account the British organization EasyJet and opportunities to expand the operations in Indian market. For an airline organization, it is very important to introduce its flights in different countries. It assists the organization to increase its revenues and profits over its competing airlines. In the case study, two countries are chosen for the discussion. The major reason behind this is that the main hub of EasyJet is situated in London (Luton Airport). India was selected due to its significance as an emerging market with a population of 1.21 billion as per the Indian Census 2011 and a significant growth rate of over 8% in the year 2009. The case study indicates that EasyJet has moderate position in European country i.e. United Kingdom. The economy of this country is dominated by service industries including airline sector (Dobruszkes, 2006). The company has a profitable business in Europe as there is an increase in the number of air travellers in 2005. It is expected to increase in the future as well. Additionally, United Kingdom has a well-built infrastructure in rural areas. Furthermore, EasyJet has planned to expand its business in India considering it as a nation with significant growth potential. The given case indicates that Indian airline industry can provide a profitable market to EasyJet Airlines. Economic growth of India has reduced the poverty level in the county. India’s well educated population continues to increase that has a positive impact on the development of airline companies. The case analyzes that there is a considerable growth in Indian transportation sector due to low cost carriers. Currently, Indian Airline industry has 35% share of total sales for transportation. During last 3 years, many low cost airlines have founded in India. Apart from this, there are some problems which can affect this business expansion of EasyJet like lack of basic services and poor infrastructure. It shows the lack the investment in both private and public industries and infrastructure of country.
As per the given case study, Easy Jet is a British low-cost carrier that is headquartered in London Luton Airport. The organization operates both international and domestic scheduled services on more than 820 routes in over 30 nations. The company is listed on London Stock Exchange. It employs approximately 11,000 people based across Europe but primarily in United Kingdom. Since its establishment, EasyJet is operating its business successfully in European market and it provides a profitable and competitive environment to EasyJet (EasyJet, 2017). The external environment of Europe can be analyzed by using PEST analysis framework of international marketing research. It includes different factors which affect the growth and success of EasyJet in Europe (Molle, 2017). External environmental analysis of EasyJet in European market is given below:
Political factors have a huge impact on the growth of EasyJet in Europe. EasyJet is operating its business in challenging political environment. In Europe, the pressure from trade unions is increasing continuously. Political environment is featured by major terrorist attacks in its primary destinations like Brussels, Paris, Turkey and Nice on top of Brexit. Moreover, the government of European Union has created various regulations for the reduction of carbon emission from airlines (Coale & Hoover, 2015). In addition to this, government has introduced higher taxation rules on the operations of flights. On a positive note, the government has made the decision to approve a 3rd runway at Heathrow that was good news for EasyJet and other airline companies in Europe. There are some conflicts in the Middle East that has strong effect on oil price. The laws and regulations in Europe are against monopolization of airports. EasyJet needs to advertise the ticket prices to customers with the transparency. It indicates that Europe has offered a threatening political and legal environment to EasyJet Airline Company.
EasyJet is a UK based airline and UK is the 5th largest economy across the world and second largest economy in European Union (Martin, Pike, Tyler & Gardiner, 2016). The country has experienced the economic growth in the year 2009 due to low interest rates, robust labor market and increasing housing wealth. According to the current figures, it can be stated that uncertainty following the Brexit had an economic influence on various airlines running in Europe including EasyJet (Jasper, 2016). Despite of international recession, EasyJet is able to make profits in European airline sector. This airline was able to balance the impact of increased fuel cost and generate pre-tax profits of £123m (Fouquet & Broadberry, 2015). On the positive note, the company has gained various benefits from low interest rates and fuel prices. These economic factors assisted EasyJet to enhance growth in competition and market capacity. Moreover, single currency introduction in Europe is expected to develop more business opportunities to this airline as this region is becoming more integrated.
By conducting the research, it is founded that there is an identifiable changes in the lifestyle and standard of European people during past few years. Nowadays, they prefer to travel more for businesses and holidays. The introduction of low cost airline of EasyJet has nurtured various changes within travel sector. It has a significant impact on the behavior of travellers. This rise in travelling has a positive effect on the development of many airlines including EasyJet. The government of European Union provides higher security procedures and measures due to terrorist attack threats. So, people feel it very secure to travel by air. By offering low frill airline services, the organization is able to attract both middle and lower class people.
Currently, the airline sector is going under digital disruption. European Union has various countries which are expert in installing and using modern technology. EasyJet has taken many benefits from the technologies to offer better airline services to its potential travellers. In airline industry, digital revolution has been accompanied in by internet and it plays a huge role in how the customers travel. Due to technological development in Europe, there were material changes in the airline sector’s cost structure, allowing the low cost entrant like EasyJet. The company is continuously making investment in the digital and data technologies which assist it in maintaining cost and competitive advantage over other brands. Thus, the fast development in technology has a great impact on operations and growth of airlines.
EasyJet is one of the largest intra-European airlines in the terms of travellers. This is the second major low-cost carrier after RyanAir that is its key competitor. In Europe, the competitors of EasyJet are both direct and indirect. The company is facing direct competition from low cost airlines which offer same services on similar range of prices. The major competitors are such as FlyBe and RyanAir. According to the research conducted by Mintel in 2007, RyanAir is the market leader and 42 million passengers were travelled in 2006 (Powley, 2017). This figure is followed by EasyJet with 34 million travellers in the same year. Apart from FlyBe and RyanAir, other competitors are like Zoom Airlines, Monarch, Bmibaby etc. Additionally, there are traditional airlines like British Airways and AirFrance, which are posing indirect competition on EasyJet. These brands are indirect competitors as they focus on different targeted market. In this way, EasyJet is facing intense competition in European airline industry (Forgas, Moliner, Sánchez and Palau, 2016).
Thus, the above external environmental analysis of EasyJet states that Europe offers a competitive and wider environment to EasyJet. Considering the competition, EasyJet is continuously implementing effective strategies. The above environmental analysis shows that external environment and its factors are very important for the growth of EasyJet. There are some factors which have positive impact on its development. After developing its business in United Kingdom and other European Countries, now it is planning to expand the operations in other continents (Sumberg & Jonathan, 2011).
When a company plans to expand the operations in any new and emerging market, it needs to conduct an international marketing research to know about different aspects which can affect its business in new market (Babin & Zikmund, 2015). The process of international marketing research includes the differences between countries arising out of economic, political, cultural, legal and social differences. In the given case, EasyJet is planning to expand its business operations in India that is one of the largest emerging markets in the world. By researching the Indian market, it can be analyzed what factors will affect the business of EasyJet in the country (Morschett, Schramm-Klein & Zentes, 2015). There are some major factors of international market research theory which can assist in analyzing growth potential of Indian market for EasyJet’s business. The marketing research of Indian market is given below:
Like European Union, India is also a Union of different states. India is the country that is considered to become a country with higher growth potential. However, the country has not gained the economic growth as China but its economy has made great development since it started to present liberalization and reforms in 1990s. Gross Domestic Product (GDP) has approached to 9.4% because of these reforms (US Energy Information Administration, 2013). About Indian economy, it can be stated that economic development of nation has also faced the decrease in poverty levels (Jha, 2018). Large and well-educated public of India is continuously growing with the population of over 1.2 billion people. It could be considered as one of the largest asset of India, demonstrating an unlimited demand and supply of consumer (Ahuja, 2015).
Indian economy is an emerging mixed economy that is the 6th largest economy all over the world. Indian market can offer a profitable economy to EasyJet as it transport and logistics are always the critical areas for its economy. In India, air transport is one of the major contributors to its economy. It can be stated that Indian market has been larger economies than European nations. It is estimated that this year, India will exceed the United Kingdom to become the fifth biggest economy in the world. As a key economic sector, EasyJet will be able to improve the growth of economy, tourism, trade within countries and foreign direct investment. Thus, EasyJet can be a great contributor to globalization across the world (Kenwood, Lougheed & Graff, 2014).
There are various social and cultural factors in Indian market which will have significant impact on the business of EasyJet in India. Under social and cultural differences, one of the major factors is language that EasyJet needs to consider. However, Hindi is the mother tongue in India but English enjoys a considerable status for political, commercial and national communication. It will offer better opportunities to EasyJet in India. Moreover, the literacy rate in the country in increasing and it has reached to 74.04% and they prefer to travel by air rather than other modes of transportation (Hopkins, 2017). India is shifted to a customer society due to increase in the connectivity to the telephones and mobile phones, TV, internet as well as because of advertising becoming an important part of people’s lives specifically in metro cities and among higher and middle class people. By conducting an international research in India, it has been identified Indian population is very much concerned with the brand reputation and corporate social responsibility of businesses so EasyJet needs to make investment in sustainability and corporate social responsibility activities (Eteokleous, Leonidou & Katsikeas, 2016). The survey in case study indicates that 68% of the Indian population thinks that they will utilize the services of low frill airlines in future. The business expansion of EasyJet to India can generate more employment opportunities in the country.
According to a report, it can be stated that Indian airline industry is the fastest growing industry across the world. It is the ninth largest airline market in the world with the size of US$16 billion and expected to become third largest by the year 2020. This market commits a great growth potential because of growing middle class people, increased disposable income, quick economic growth and low penetration levels. It is identified that development of Indian transportation sector is mainly driven by the great success of low cost carriers that is led by airline sector with more than 17% (India Brand Equity Foundation, 2018). In 2006, low cost carriers had attained the growth of over 114% in the year 2006. Still, scheduled airlines dominate the industry but low cost carriers are making efforts to gain competitive advantage over them. Indian market has various players in the airline sector who have the benefits that they not only understand the market trends and country culture but they are also able to establish powerful brands because of their long term presence (Gebauer, Saul, Halidmann & Kramer, 2014).
As mentioned above, India is a fastest growing airline market in the world. It is the major reason behind the competition in this industry. There are various airlines which can pose competition in India. These airline companies are such as Indigo Airlines, Spice Jet, Jet Airways, Air India, Go-Air etc. Among them, Spice Jet, Indigo Airlines and Go-Air are the direct competitor to EasyJet in India as they also offer low-cost airline services to passengers (Fu, Lei, Wang &Yan, 2015). In this market, there are some low cost carriers which have imitated the business model of European low cost airlines. For example, Air Deccan has copied the model of no-frills carriers of Europe i.e. EasyJet and Ryanair. In Indian airline market, the people can compare the prices of different airlines with the enhancing ability to use the internet.
In this way, the above international marketing research of Indian market states that this market will be profitable for the business operations of EasyJet. It is an emerging economy that can support the airline business in the country. People have increased disposable income and prefer to travel by air than other modes. Marketing trends and conditions will also be favorable for this organization (Harvey, 2007). The company should make this strategic decision to expand its business outside the European countries so that EasyJet can enhance its brand presence in Asian countries as well. Considering the market and demographics in Indian market, EasyJet will target and segment the most appropriate customers that will enable the organization to attain and maintain competitive edge.
On the basis of above marketing research in India, EasyJet will segment and position itself within this market to enable it to attain and maintain competitive advantage. In India, EasyJet will segment its customers considering different characteristics of market segmentation like demographic, geographic, psychographic and behavioral characteristics. Under geographic segmentation, EasyJet will segment the people within urban and rural categories. The major focus of the company will be on the metro cities and neighboring countries of Indian in Asian region (Pyo, 2015). Moreover, it will focus on the people on the basis of their income and age. The survey indicates that students are using low-cost carriers so it will better for EasyJet to target. EasyJet will emphasize on age group of 18 to 30 year. Additionally, EasyJet will offer its airline services by focusing on lower and middle class people and mid-ranged income people in India. In context of behavioral segmentation, EasyJet will introduce the short distance flights that don’t need more benefits which scheduled airlines offer like meals, business class seats etc.
Looking at the above segmentation characteristics, EasyJet will target the lower and middle income and under-served customers of India. In India, the organization will be offering low cost airline so it will focus on the middle income level population (Lawton, 2017). It will target the major Indian states which are more wealthy and populous. In these states, it will focus on the people who love to travel for education and leisure purpose. By introducing its low cost carriers in Indian market, EasyJet will focus on the people who are not able to afford the travelling expenses of airlines with higher fare. The below-given graph reflects that middle class covers a large segment of Indian population so it will be beneficial for Easyjet to target this segment as its potential customers (Bhattacharya, 2013).
For an expanding organization, it is very important to position itself in such a way that it can affect the customers’ perception positively. In Indian market, EasyJet will place itself as a low cost no frill carrier so that it can attract the middle class people towards its services (Kachaner, Lindgardt & Michael, 2011). It will operate the business with the vision to empower each and every Indian to fly and to elucidate the air travel in this country by offering low cost and safe travel experience to the people. The company will establish effective mission and vision statement so that it can grab the attention of Indian people towards its airline services. It will enable the organization to grow in Indian market and gain more competitive advantage over already established competing brands in the country (Lei & Moon, 2015).
However, it will be profitable for EasyJet to expand its business in Indian Market but still there are some recommendations on which company should focus. Firstly, the company should make a strategic decision regarding the marketing entry decision for India. It should choose an effective market entry option for Indian market so that it can establish its business successfully. EasyJet should enter in this market by using joint venture or any other entry mode (Kleymann, & Seristö, 2017). Secondly, the EasyJet should introduce its services considering the information of international marketing research of India. This international marketing research will assist the organization to understand the current market trends and preferences of customers. In addition to this, EasyJet should use effective strategies for its marketing and promotion process so that it can approach each and every Indian. In order to promote its services, this low cost airline can use both online and offline media. Today, people are actively using social media sites so it will be the best way to reach to large population of India.
In Europe, the company should make more efforts so that it can contribute to European economy. With its low cost strategy, the organization should also focus on generating profits and revenues from its airline services. It should introduce business class flights for business professionals. It will help EasyJet to increase its brand presence and revenues in European airline industry. While expanding the operations in India, it should focus on different negative aspects which can influence its business. For EasyJet, it is very important to consider that it is not a single company that is planning to expand the business in emerging market like India but there are various other competitors like Bmibaby, Ryan Air, Buzz etc. Thus, the company should formulate and implement its marketing and business strategies accordingly.
Conclusion
From the above case study analysis, it can be concluded that EasyJet is successfully operating its business in European countries. It is a low cost carrier that makes it different from its direct and indirect competitors. These differences make a significant contribution to the comparative advantage of EasyJet. The above report includes the external environmental analysis of EasyJet in Europe. Moreover, it includes the international marketing research of Indian market. From the analysis, it can be found that EasyJet is able to gain effective competitive advantage in European airline industry. Apart from this, it is identified that Indian market can offer various business opportunities to this low cost carrier. India has an emerging economy that can contribute to the growth and success of EasyJet. Thus, the business environment of Indian market will prove profitable for EasyJet’s low cost carrier.
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