Bmibaby

Executive Summary

The purpose of this report was to analyse Bmibaby's competitive position by looking at the company's market environment in order to recommend a future generic marketing strategy. The report undertakes a PEST analysis, company analysis and a competitor analysis in order to examine Bmibaby's position within the market and to provide a SWOT analysis for Bmibaby which considers internal and external issues for the company. It continues by recommending Ansoff's Market Extension strategy as generic future marketing strategy for bmibaby to position themselves in the competitive market for low cost airlines.

Contents page

1.Executive Summary 1

2. Contents Page 2

3. Introduction 3

4. Methodology 3

5. Findings and Analysis 3

5.1 PEST ANAYLSIS 3

5.2 COMPANY ANALYSIS 4

5.3 COMPETITOR ANALYSIS 5

5.4 SWOT ANALYSIS 6

6.Conclusion 7

7. Recommendations 7

8. References 9

9. Appendices

Tables

1.SWOT Analysis

2. Ansoff's Product/Market Matrix

3.Introduction/background

Over the last twenty years the success of low cost airlines (LCAs) has soared and they now represent 25% of total air travel in Europe (Mintel, 2006). Ryanair and Easyjet are the market leaders for LCAs and due to their success BMI decided to follow suit in 2002 launching their own LCA, Bmibaby (www.bmibaby.com a). Bmibaby is now the UKs fastest growing LCA and is offers the biggest LCA network at London Gatwick. The LCA report, November 2006, declares that the LCA industry has been growing at a rate of 35% a year and is expected to continue to increase.

4.Methodology

This report is based on an analysis of secondary information from a number of sources including the 2006 Mintel report "Low-cost airlines-International-2006". The search engine "Google" was used to provide links to websites and online newspapers and a variety of textbooks and journals were also used for definitions and to add information about the LCA market.

5.Findings/analysis

5.1Pest Analysis

A Pest analysis is a systematic means of analysing the external factors that may present opportunities or threats to a business. (Lines et al, 2003)

Political

The increase of Green Tax in December 2006 to Ð'Ј10 may mean airlines have to increase fares in order to cover costs. This could effect demand as flying is a price elastic industry. Moreover, Governments in times of economic problems may control levels of travel overseas by limiting the foreign currency that can be taken out of a country. (Cooper et al, 2005). The expansion of the EU may positively affect Bmibaby. On 1st of May 2004 10 new countries, including Poland, joined the EU, giving 75 million people the right to work in the UK (Smith, 2004). This increase in immigrants has been reflected by Bmibaby adding Poland as a destination in 2008 (www.bmibaby.com). The risk of terrorism is an external factor which could affect LCAs similar to the effect that September 11th meaning customers may be anxious to fly.

Economic

Over the last decade there has been a huge increase in gross household income from to Ð'Ј53,835 in 2007 (Wallop, H 2007) Increases in taxes, housing costs, insurance and petrol means that disposable incomes in the UK are at the lowest ever. If levels continue to slow people will have less cash to spend on holidays. However, as it is now easier than ever to obtain credit this means customers can pay even if they don't have the cash available. Apacs said that spending on cards has risen by almost 10% compared to this time last year. (O'Connor & Gilmore, 2007).

Socio-cultural

National Statistics online reveal that 16% of the UK population is comprised of over 65 year olds which the Visit Scotland estimates will increase to 20% over the next 20 years. This suggests that there will be a boost in the number of retired people who will free to travel. The increase in the trend of DIY holidays could have a positive effect on bmibaby.

Technology

Technology acts to increase access to tourism by lowering the cost or by making the product more accessible. (Cooper et al, 2005). The internet has become a vital distribution tool for not only booking holidays online (98% of all Ryanair's bookings are done online report) but for enabling customers to research holidays and have full transparency on pricing (www.redcmarketing.com) A MORI survey completed in 2002 stated "50% of the respondents said that they were Ð''likely to book a holiday on the Internet over the next two years". (www.redcmarketing.com). Broadband enables quick access to holiday pages making it easier to research and book holidays. Fast download speeds facilitates easy use of virtual tours and video links which Bmibaby can use as when selling accommodation to holidaymakers. Advances in technology and mobile phones means that the way holidays are researched and booked could be revolutionized.

Environmental issues

Although The undertaking of multiple holidays which we have adapted to means that it is unlikely that holidaymakers will wish to abandon this standard of living and therefore unless laws are put in place cutting the number of flights to lower emissions is improbably. Any shift towards greener travel modes will be impelled by economics rather than ethics (Mintel, 2006).

5.2.Company analysis

Bmibaby is the UK's fastest growing LCA, operating services within the UK and Europe (www.bmibaby.com a ). It was formed