Marketing Strategy and Competitive Positioning pdf ebook

No-frills Ryanair faces test with Business Plus
By Vincent Boland in Dublin and Jane Wild in London

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252
CHAPTER 9 SELECTING MARKET TARGETS
But Michael O’Leary, chief executive, says 
Ryanair will not fly to Europe’s three main business 
hub airports – London Heathrow, Paris Charles de 
Gaulle and Frankfurt. The toughest challenge then 
for Ryanair may be to make its business product 
work even if it does not serve Europe’s main busi-
ness airports.
Oliver Sleath, airlines analyst at Barclays, says: 
‘Ryanair is coming at this with a brand that will 
take some time to improve, and a network/fre-
quency offering that is fundamentally less attrac-
tive, although evolving quickly.’
‘Wait and see if easyJet can materially drive up 
their share of business passengers before assuming 
Ryanair will be successful.’
Mr O’Leary does not sound entirely convinced 
that being nice will make Ryanair more money, but 
he is willing to give it a try. In Dublin last week to 
announce new routes, he said his staff had assured 
him that if he kept up his efforts to be ‘caring, cud-
dly and sharing’, Ryanair would win more business 
passengers from Aer Lingus, its local rival.
‘So I am doing my level best, and funnily enough 
it’s working,’ he said.
That boast is about to be put to the test.
Ride of private equity heavyweight 
Bonderman
David Bonderman, the 71-year-old chairman of 
Ryanair, has been an ever-present figure at the Irish 
low-cost airline.
The co-founder of Texas-based buyout group TPG 
Capital, who has chaired the company for 18 years, 
personally invested £1m for a 20 per cent stake in 
the low-cost airline in 1996, when the founding Ryan 
family was looking for a partner to boost the com-
pany’s expansion internationally.
Airlines have always been the sweet spot of the 
private equity financier. The former lawyer rose to 
prominence in the US with the turnround of Conti-
nental Airlines in 1993, making almost 12 times his 
original investment.
Back in 1996, Ryanair’s founders managed to get 
Mr Bonderman to drop a planned venture he was 
negotiating with Richard Branson to back their com-
pany instead, writes Siobhan Creaton in her book, 
‘Ryanair: How a small Irish airline conquered the 
world’. The financier participated in a refinancing 
of the company and bought a stake alongside the 
family and the management.
A year later, Ryanair became a public company 
and Mr Bonderman’s stake was worth £60m. Since 
then the company’s share price has surged from €0.4 
to €7.1, bringing its market capitalisation to €9.6bn. 
The US financier, whose private equity firm is now 
seeking $10bn for a new leveraged buyout fund, has 
since sold down his stake to 0.55 per cent, which is 
worth €54m.
However, addressing the International Air 
Transport Association in 2006, Mr Bonderman said: 
‘It’s time to sell, ladies and gentlemen,’ he told his 
audience in Paris. ‘This is as good as it gets in the 
airline industry. It’s only going to get worse.’
Source
: from ‘No-frills Ryanair faces test with Business Plus’, Financial Times, 27/08/14 (Boland, V. and Wild, J.).
Discussion questions
1 
What is the rationale behind Ryanair’s decision to compete in the business segment?
2 
How attractive do you assess the business segment to be to Ryanair and why?
3 
What targeting strategy is Ryanair trying to pursue? What difficulties do you anticipate Ryanair will face in 
following such a strategy?

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PART 4
COMPETITIVE 
POSITIONING 
STRATEGIES
Part 4 looks at the main ways in which firms strive to create a competitive advantage.
Chapter 10 discusses ways of creating sustainable competitive advantage once the 
target market has been decided. Routes to achieving cost leadership and differen-
tiation are examined, both as alternative and as complementary strategies. The dan-
gers of falling between these strategies, and not executing either effectively, are also 
addressed. The chapter then goes on to discuss how competitive positions can be 
communicated effectively to customers, as well as the characteristics of sustainable 
competitive advantage through positioning. It concludes by examining strategies for 
building position, holding position, harvesting, niching and divesting.
Chapter 11 considers the new marketing mix, including recent developments in 
e-business and e-marketing and their impact on marketing strategies. Following the 
early hype of the dot.com boom, and the equally spectacular dot.com bust (or dot.
bomb as it is being referred to), the chapter takes a more measured view of the oppor-
tunities and threats Internet-based technologies have to offer organisations, and looks 
at how they integrate with the more traditional elements of the marketing mix.
Chapter 12 assesses the role of innovation and new product/service development in 
creating competitive positions. The critical factors for success in new product devel-
opment are identified, together with common reasons for failure. The processes of 
new product development are discussed along with suggestions for speeding up and 
enhancing the likelihood of success. The chapter concludes by considering organisa-
tional issues in new product development and innovation.
Chapter 13 looks at the role of service and relationship marketing in building stronger 
competitive positions. The goods and services spectrum is introduced to show the 
increasing importance of the service element in the marketing implementation mix, even 
for goods marketers. Relationship marketing is discussed in the context of building and 
maintaining long-term relationships with key customers and customer groups. Tech-
niques for monitoring and measuring customer satisfaction are presented, with particular 
emphasis on the use of gap analysis to track problems in customer satisfaction back to 
their root causes.

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‘Competitive Strategy is the search for a favourable competitive position in an 
industry. Competitive Strategy aims to establish a profitable and sustainable 
position against the forces that determine industry competition.’
Michael Porter (1985)
CREATING SUSTAINABLE 
COMPETITIVE ADVANTAGE