Easy "Model" of Yield Management

Easy Group success story:

The easyGroup, used buy million of consumers all around the world, was founded in 1995 by the Greek entrepreneur Stelios Haji-Ioannou, well-known as the pioneer who changed the European aviation scene for the benefit of millions of consumers.

The company was based on a basic principle:
I) Pick a market where pricing is high and low cost service.
II) Delete all extra-services: No reception, no printed tickets, no free services on board, one single class.
III) “Out-source to the consumer” (ex. book yourself easily online).
IV) Use the cost savings to make advertising by offering real cheap prices (ex: New York- Paris for 199$).

The company started it activity with a low-cost airline company called easyJet, offering flights between Luton and Scotland. 1997 is the year of creation of the easyjet.com. The successful process is in motion.
In 1998, as the airline company becomes a brand, Stelios has the idea to franchise other businesses using the same format.
He works on brand extensions and founds many subsidiaries of the EasyGroup:
easyinternetcafé, easyCar, easyCinema,easyHotel, easyBus.co.uk, easy4men, easyPizza, easyJobs, easyMobile, easyCruiseOne, easyCruiseTwo, easyWatch, easyVan…

The EasyGroup concept based on the Yield management principles:

Stelios Haji-Ioannou adapted the Yield Management principles to his company by rationing the availability of lower-priced units in order to maximize gross revenue.
The Low Cost Company adopted a hard-line strategy to face Full Services companies. Their stratagem has a specific constitution, adapted to the majority: bookings by telephone or internet, offering dynamic prices reflecting the demand at the moment, without limitation for a targeted clientele, looking for low price rates for a "unique" service - with “no” extra.


How? Predict demand for a given date to sell the most possible units for the highest possible rate

The easy model’s purpose: Democratize services that were once only accessible to a minority, to most customers. Thus, the brand targets the mass: More, more, always more!

The easyGroup Brand manual: http://www.easy.com/PDFs/easyGroup_Brand_Manual.pdf


Advantages

For customers
- lower prices. All prices are quoted one way to all customers.

-Possibility to pay only for the service.

-Flexibility: If a customer is willing to pay in advance, he can find attractive prices.
This gives him the opportunity to save money.


For Suppliers

-Fair quality of service: you pay for what you get.

For Partners
Becoming partner of easyGroup gives the advantage of being part of a famous Group. It is possible to buy shares of a business, or buy a franchise of the group.
But the partner has to show some financial requirements:
- Have unit cost-saving of the order of 50% compared with the best in the market;
- be possible to yield manage the price;
- Have the potential to increase utilisation rates compared with the business.

For the owner of the business
For Stelios Haji-Ioannou, the business gives him plenty advantages. He invested 5 million pounds of sterling in easyJet, but he extended his business and his companies won in value.
For example, every cybercafé requires 4 in 6 months before it begins to bring back some money. All the companies of easyGroup are independent in term of financing and management. EasyJet is already profitable and is introduced in stock exchange.

Type of buying situation:

EasyGroup adapted its commercial methods to the new technologies, in particular the Internet, to gain in competitiveness and surpass his competitors. Web allows the group to decrease appreciably the price of the goods and the services which they propose Services are selt through the internet media that reduces costs and increase customer flexibility.


Revenues of the Group come from several sources:

-First selling services and making benefit from the merge won buy selling a huge quantity of services;
- Than it comes from selling shares, licensees or franchisees of the easy brand to selected partners.


Is EasyGroup a sustainable brand? Not sure…

EasyGroup is nowadays more than a simple brand, it became through its 17 extensions, a real empire! Although the best success of the brand remains the first launch of easyJet, the group became increasingly self-sufficient.
But in my opinion of consumer, my first impression of this group left me sceptical. I’ve kind of felt that we (consumers) were taken for dumps. Some extensions of the concept worked quite well for all businesses related to tourism & travel: easyCar, easyCruise and easyHotel.
But it quickly became a phenomenon of cloning for others businesses: easyPizza, easyWatch, easy4men…What else? Who would seriously like to buy those awful watches even if the price is cheap? http://www.easywatch.com/

In my opinion, the group should avoid launching new businesses so quickly and try to keep the seriousness of the brand to be sustainable.

easyHotels, how they increase profit by offering reduced prices

Stelios used the acceleration of needs and possibilities of movement and accommodation of the clients to apply the Yield management principle to easyHotels: In July 2005, Stelios launched his first easyHotel in London, offering rooms as cheap as $35 per night. According to Stelios, the rooms are small and sparse, similar to an Amtrak sleeper car or a berth on a yacht.

- Maximize the space: Ranging in size from 25 to 75 guestrooms, easyGroup is pursuing opportunities at various city centers.
- Offering no "extra" service: There is no bar or lounge or any shared public areas, except for a reception desk, and only one member of staff will be permanently on site.
- Having a booking system, allowing to anticipate the demand and to book maximum of rooms (anticipate vacant rooms).

easyHotels definitely target people in need of a cheap bed … and only a bed! They offer a low cost budget for a hotel but there are obviously hostels (with more services) that could compete with this rate.

http://en.wikipedia.org/wiki/EasyGroup#EasyHotel