easyGroup

Fly to Rome, eat pizza, catch a movie, go on a cruise, listen to music, surf the net, whatever you want to do, do it for less!!!

This is possible if you use easyGrop services!. The “easyGroup” founded in 1998, is the holding company controlling the “easy” ventures.

The easyGroup brand relies on a low cost format, with stripped down service and internet reservation.

Thanks to easyGroup, many people with low budgets can enjoy travelling with affordable air ticket fairs within Europe. Not to mention the other bunch of services offered to the customers with less costs than the market price. In fact the company has made what it sees as expensive or elitist products available to budget conscious consumers. So in another words, easyGroup has solved a problem for those people whom are price sensitive and looking for lower affordable prices that match their budgets.

The success of easyGroup has pushed the company’s brand beyond the national borders and created a global brand name. All the company’s suppliers ranging from the huge one like Boeing and Airbus to the smallest one like Pizza suppliers, all are benefiting from the company’s success and are receiving more orders in bulks.

The easyGroup has conducted many partnership deals with so many successful businesses like Avis (easyCar), Burger King and Macdonald (easy internetcCafe), LIoyds TSB Group PLC (easyMoney), Monester.com (easyJob), Zeon (easyWatch) and Love film (easyCinema DVD rental). From my point of view all those partners have succeeded to reach out to more and different customers than their own because of easy brand name.

Stelios Haji Loannou the “serial entrepreneur” is the dynamo behind the fame and success of easyGroup. He was 28 years old when founded easyJet, so young and so rich as well. He believes that taken a product or a service and makes it significantly cheaper than the competitors; as a result, a lot more people will use it. The sky seemed to be the limit for this self proclaimed entrepreneurial Robin Hood. EasyJet grew now into the largest no-frills airline in Europe

The easyGroup brand tends to target budget conscious consumers who care more about price than perks. In fact, easyJet grew to attract even business travellers as well, those who travel frequently within Europe as well as people who travel to holiday homes frequently. Add to that, easyCruise is targeting those footloose travellers in their 20s, 30s and 40s, a younger market than many cruises attract.

How easyGroup makes money if they are offering their services with less cost? To answer this question we should understand the company’s pricing strategy.

EasyGroup is an internet based Service Company and is known of its no-frills services. They offer discounts based on the flexible management of supply and demand. The more customers want a service at a particular time and place the more they are charged.
The Customers who buy early and choose slack times of day, get better deals out of the services offered by the company. For example:
• The more people that hire the company’s car, the greater the cost will be to the remaining customers
• The first seats sold on easyJet flights are cheap, while the last few are the most expensive
• Charges for internet cafes rise as the seat fill up.

Many businesses failed to apply the yield management role correctly as easyGroup did. So many of these businesses turn away customers when, say, the cinema showing or flight is full. They might end up as well losing money at peak times when they buy extra capacity to provide customers with services they want at promised price. On the other hand, easyGroup model is different; they milk the demand curve for every penny they can get. They can pocket the extra that the impatient and spendthrift are willing to pay to have just what they want, when they want it.

The company’s sources of revenues vary as following:
• Sale out of products/services offered.
• Advertisements
• Commission per sale (e.g. easy value)
• Franchising (e.g easyInternetcafe)
• Selling the easy brand name (e.g. easyCar)
• Sale of out extra demanded services (e.g. easyHotel, easyCruise)

The easy Group is not immune from competitors whether in UK or on the global market an example could be Ryanair and Virgin Group.

Ryanair is the most successful budget airline in Europe. Ryanair is an Irish low cost carrier, headquartered in Dublin and its biggest operational base at London Standsted airport. As easyJet, Ryanair business model is based on low fares and no-frills models. www.ryanair.com

Virgin Group is a conglomeration of separately run companies. It’s a private company founded in UK, headquartered in London. Virgin brand is the group’s greatest single assets exactly as easyGroup. We can say that Virgin Group is a brand franchising organisation. The group product varies from aviation industry to wine products. Virgin could be considered as a competitor to easGroup because of the following reasons:
• Both companies are services companies
• Both are providing financial services on a competitive cost
• Both offer music on line
• Both run internet cafes
• Both are involved on the aviation industry.
www.virgin.com

The easyGroup business model is truly unique to the web and cannot be applied offline because basically it’s a web based business. Beside it’s a sustainable and scalable business model.

Two factors would surely enhance the sustainability of this business model, quality and excellent customer relation. Low budgets customers will always exist for sure but to keep them as loyal customers to the company that’s could be a challenging task especially with the price reduction war among the competitors.

We have witnessed how easyGroup and Virgin Group have extended their business models to other type of products and services and this is by itself reflect the scalability of the business model. Of course not all of their new ventures were that successful, they had their ups and downs but by end of the day it works. I truly liked what easyGroup did when they venture with MacDonald’s and Burger kings to set up their computers for internet surf when they realized that there is no enough demand on their internet cafes. It’s a very smart move; they decided to follow the customers instead of waiting for them at the shops.

Sources used: http://www.fastcompany.com/magazine/64/ioannou.html
http://www.iht.com/articles/2003/08/09/easy_ed3_.php

If I were the owner of the business

I found it very exciting to own a business like easyGroup because it’s challenging and so many constraints could be faced in order to succeed.

If I owned the business, I would concentrate first on the most profitable businesses like easyJet and easyHotel because from my point of view they form the core businesses for easyGroup.

EasyJet can attract more customers if they select their route carefully by targeting the served or un-served routes of the existing carriers with high fares. Of course they are going to stimulate demand by undercutting them keeping in mind that the new routs selected have large leisure and attraction for the travellers.

Acquisition of other low cost airline/hotels could be a way to increase the number of customers.

easyJet can expand their revenue sources through different ways as following:
• Fly to and from secondary airports to reduce the landing and the ground handling fees. (if this is not against their overall strategy).
• Take over certain promising routes (after doing the proper forecast study of the future demand on a route)
• Develop more continental operating bases (e.g. Geneva). easyGroup should stimulate demand in continental market segment that have little overlap with incumbents’ route.
• Start to serve packaged tour market by offering for example scheduled no-frills service to holiday destinations.
• They could expand on the international routes.
• Use the web site to earn commissions on travel related services and insurance.
• Cabin crew can sell more products and services like tickets for ground transportation, tourist attraction and other entertainments during flights.
• Credit card fees could be a source of revenue

As to the other easyGroup businesses like easyValue, easyCar, easyMoney, easyJob, and the other businesses, from my point of view they are not as profitable as easyJet or let say their value has not been materialize. They can be kept for the brand name sake.