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It would seem logical to suppose that a business needs to be liked by the public if it wants them to buy their products or services. However, being adored is no guarantee for success. Your customers will kill you if you let them since they all want the same thing; a first-rate product or service at zero cost.
The art of strategy then is not just giving customers what they ask for, but understanding what they value and will be prepared to buy. Ryanair and the long forgotten Laker Airlines are both perfect illustrations of this.
The early years of Ryanair: loved and poor
"We were perceived by the public as heroes for making air travel economical and for battling government authorities" (Rivkin, 2000). Such was the assessment of a Ryanair employee of the early years of the airline. Far from the poor image that it has today, the Irish airline was greeted warmly in its early years as a David fighting off the colluding Goliaths in the aviation industry. The result of such adulation was near bankruptcy.
The launch strategy of Ryanair in April 1986 when it began its regular service from Dublin to London seemed too good to be true. It offered low-cost fares with no restrictions and a premium service on board. This included full meals and free drinks. One initiative even had the company using the same employee following the passengers from check in right onto the plane so that stronger bond would be created between clients and the company.
Ryanair's main competitors, Aer Lingus and British Airways, were swift to react. A price war ensued. This transformed the Ryan brothers' original forecasts of wafer thin margins into colossal losses. The company lost I£2 million in the first two years after its grand launch. In the first five years, the Ryan family were compelled to invest I£20 million to keep the airline going. Despite this, Ryanair found itself in January 1991 just two and a half hours from insolvency. The airline was making annual losses of I£5 million per year and the family did not have the resources to pay the I£34 000 it owed to Dublin Airport (Rivkin, 2000).
Ryanair...