EasyGroup Business Model

This is a concept of low-cost living, turning a large array of generic goods and services on cheap prices applying principles of yield management and no-frills service for being rentable.
The inventor of this concept is Stelios Haji-Ioannou the EasyGroup owner , who founded in 1995 the low-cost airline EasyJet at the age of 28.
The EasyGroup, founded in 1998, is the holding company controlling the "easy" ventures, such as they are. The company develops all azimuths of the brand: EasyJet, EasyInternetcafe, EasyCar, EasyValue, EasyMoney, EasyCinema, EasyBus, EasyHotel, EasyJobs, EasyPizza, Easy4me, EasyMusic, EasyCruise, EasyWatch, EasyMobile, EasyVan, EasyOffice.

EasyGroup became the biggest low- cost brand in Europe, creating the first lifestyle brand for the masses that offers taste of the high life to lowbrows everywhere. It offers low-cost products to a large public, earning money by yield management and technology innovation.

The customers are people that can not or don’t want to pay a high price for a good or service and don’t care about services included in their purchases.
The owner Stelios Haji-Ioannou believes that concept can be applied "In any industry where consumers are being ripped off, if I can find a way to give them real value, I'm going to do it" because for him “it's about value for the many, not the few” .

The brand values:
1. great value
2. taking on the big boys
3. for the many not the few
4. relentless innovation
5. keep it simple
6. entrepreneurial
7. making a difference in people’s lives honest, open, caring and fun

Some EasyGroup subsidiaries have been more successful than others.
For that reason and to expand, and cut down costs, EasyGroup decides that’s better don’t go on alone in big projects. So, the company has started to cumulate partnerships deals ( EasyCar, EasyWatch, EasyMobile) and to franchise the businesses (EasyHotel, EasyCruise, EasyInternetcafe).
Some of them are: Avis (EasyCar), Burger King and Macdonald (EasyInternetcafe), LIoyds TSB Group PLC (EasyMoney), Monester.com (EasyJob), Zeon (EasyWatch) and Love film (EasyCinema DVD rental).

Revenue Sources
The EasyGroup profits by either selling shares in the businesses or by licensing or franchising the brand to reputable partners.
The easy brand currently operates more than a dozen industries mainly in travel, leisure, telecoms and personal finance.
The company follow the "easy" format of taking away the frills in something to make it cheaper overall, plus using the yield management system of supply and demand.
The strategy is based on combination of low cost with minimize the service and internet reservation.
EasyGroup minimize cost by reducing cost for labors, deleting additional services, exploiting the whole capacity of machines, fixed price in accordance under the date of order.

The company’s sources of revenues are:
• Sales of discount products or services
• Advertisements
• Franchising
• Selling the easy brand name
• Commission per saleCompetitors

The others companies use this business model long before EasyGroup like the Irish airline company Ryanair that was Europe's original low fares airline and is still Europe's largest low fares carrier applies the same concept of low prices and no- frills business models. http://www.ryanair.com/

Unique & Sustainable
I think that this “Easy” business model is unique to the web and cannot be applied offline because Internet is his main support of selling goods and services.
In my opinion it’s a sustainable business model for his flexibility of prices according demand and supply.

Yield Management
Many companies try to apply the principle of Yield Management system for optimize profit as EasyGroup did.
The term Yield Management describes the process of revenue optimization and demand management.
Three industries where yield management is used most heavily are passenger air transport, lodging and rental car.
Airlines monitor through the use of specialized software how seats are being reserved and react accordingly, as for example by offering discounts when it appears as if seats will otherwise be vacant.
Hotels use it in largely the same way, to calculate the rates, rooms and restrictions on sales in order to best maximize the return for the property.
In the rental car industry, Yield Management deals with the sale of optional insurance, damage waivers and vehicle upgrades. It accounts for a major portion of the rental company's profitability, and is monitored on a daily basis.

Optimization can help the firm adjust prices and to allocate capacity among market segments to maximize expected revenues.
This can be done at different levels of detail:

by goods (such as a seat on a flight or a seat at an opera production)
by group of goods (such as the entire opera house or all the seats on a flight)
by market (such as sales from Seattle and Minneapolis for a flight going Seattle-Minneapolis-Boston)

Overall (on all the routes an airline flies, or all the seats during an opera production season) Yield management is particularly suitable when selling perishable products, goods that become unsellable at a point in time (for example air tickets just after a flight takes off).
With an advance forecast of demand and pricing flexibility, buyers will self-sort based on their price sensitivity (using more power in off-peak hours or going to the theatre mid-week), their demand sensitivity (must have the higher cost early morning flight or must go to the Saturday night opera) or their time of purchase (usually paying a premium for the luxury of booking late).

In this way, yield management's overall aim is to provide an optimal mix of goods at a variety of price points at different points in time or for different baskets of features.

Good yield management maximizes revenue production for the same number of units, by taking advantage of the forecast of high demand/low demand periods, effectively shifting demand from high demand periods to low demand periods and by charging a premium for late bookings.
While yield management systems tend to generate higher revenues, the revenue streams tends to arrive later in the booking horizon as more capacity is held for late sale at premium prices.

Using yield management, many companies are surprised to discover they have actually lowered prices for the majority of their opera seats or hotel rooms or other products. That is, they offer far higher discounts more frequently for off-peak times, while raising prices only marginally for peak times, resulting in higher revenue overall.

EasyGroup & Yield Management
EasyGroup has created a criteria matrix to select lucrative occasion: Their satisfying formula essentially required consumer facing businesses that displayed significant price elasticity, required a high fixed-costs base and low marginal-cots to service additional customer - factors that would enable the group to effectively yield management.

Applying a pricing strategy based on principle of flexibility of demand and supply we can see that EasyGroup applies very successfully this system.
For example, the customer who buy early get the better price: The earlier passengers on EasyJet booked, the cheaper the fare would be.
Besides if the percentage of seats sold was higher than normal, then the price would go up to avoid selling out popular flights months in advance.

By doing this, the company have actually increased quantity demanded by selectively introducing many more price points, as they learn about and react to the diversity of interests and purchase drivers of their customers.

The most successful division of EasyGroup is EasyJet.
Let’s take a look at: