Strategic Marketing Management of the Traveling Agency Industry in the UK - Research Paper Example

? No. 12345 BUSINESS PLAN ABC of XYZ Department of LMN 29 April, Table of Contents Contents Page No EXECUTIVE SUMMARY 03 1. BUSINESS DESCRIPTION 04 1.1 Mission Statement 04 1.2 Vision 04 1.3 Objectives 04 2. INDUSTRY AND MARKET ANALYSIS 05 2.1 External Factors on Travel Agencies 05 2.2 Political Factors 05 2.3 Economic Factors 05 2.4 Social and Cultural Factors 06 2.5 Technological Factors 06 3. TARGET MARKET 07 4. COMPETITIVE ANALYSIS 07 4.1 Primary Competitive 07 4.2 Secondary Competitors 07 5. MARKETING STRATEGY 08 5.1 Products and Services 08 5.2 Pricing 09 5.3 Placing 09 5.4 Promotion 10 6. HUMAN RESOURCE 10 7. OPERATIONAL ISSUES 11 8. FINANCIAL PROJECTION 12 8.1 Estimate of Startup Cost 12 8.2 Projected Balance Sheet 13 8.3 Projected Cash Flow 13 Works Cited 16 EXECUTIVE SUMMARY This feasibility study has been made after making a comprehensive research and evaluating a variety of issues concerning traveling agency industry in UK. The main purpose and scope of this business plan is to provide general information about the said industry and to highlight the critical areas for successful launching of a new ticket selling point at Brent Street London. The data discussed in this study is based on some certain assumptions and has been collected through number of sources. A careful attempt has been made to present real time data in the study, however, this information may change at any time due to occurrence of any changes in associated factors, and thus the actual outcomes may differ from the projected results. 1. BUSINESS DESCRIPTION Doramex Ltd. is a famous travel agency located at 136 Brent Street, London. The small company has a vast experience of 64 years as working in the business since 1947. The average annual income of the company is around $54, 80,738. Doramex deals with customers belong to entire Europe, North American countries, and China from Asia (Company Profile Page). The company has decided to expand its area of operations and for this it intends to set up an outlet ‘Express Ticketline’ in London. The new outlet will mainly deal with the selling of airline tickets to the customers at prices lower than the market rate. Although, Express Ticketline will expand its sphere of operations as well as target markets in future, however, initially it will operate as a ticket selling point for local population and the passengers of airline companies like British Airways, Virgin Atlantic Airways, EasyJet, and Atlantic Airlines etc. 1.1 Mission Statement To entertain our customers in terms of their budget, desire, and skill level. To ensure the sustaining of our customers through attractive packages and arrangements 1.2 Vision To go outshine in the field of selling cheap ticket by setting up strategic agreements with airlines, travel agencies, ground transport companies, and entertainment industry. 1.3 Objectives Express Ticketline is intended to meet the following objectives by the end of first financial year. Revenue (through selling of tickets) of $725,000. 25% of tickets will be sold online Maintain a margin of 08% on all airline tickets. 2. INDUSTRY AND MARKET ANALYSIS 2.1 External Factors on Travel Agencies The competitive marketing environment continuously changes, therefore a well thought-out, composed, detailed and consistent analysis is necessary for best evaluation. PEST analysis is considered as the best way to describe those external factors which cannot be directly catered by an organization. Despite of the fact that PEST analysis is used on the basis of previous data, interestingly it can be used as a forecast model (Wilson and Gilligan, 1998).  2.2 Political Factors Express Ticketline is a travel agency which is directly related to airline industry. Any internal or external change in the airline industry will directly affect our agency. The distressing incidents at the start of 21st century have turned out as the most difficult times for the travel agencies. These incidents included the terrorist attacks in New York on September 11, 2001 and in London on July 7, 2005. Moreover, wars in Iraq and Afghanistan have caused an extraordinary political instability in different parts of the world. Due to such political instability and security situation, European Union and United States revised new security and legal regulations which came into effect in summer 2006. Although governments have taken essential safety and security measures and controlled the activities at the airports effectively along with pricing and planning policies but even then the new political strategies reduced the customers’ confidence level for traveling by air. As far as, UK political environment is concerned, that is good. There is no threat of political instability. Government institutions are strong and reliable. In current scenario, there is no such situation or government agreement that has a negative effect on traveling agencies or selling ticket outlets. 2.3 Economic Factors The travel industry is always characterized by peaceful environment and high earning elasticity. Therefore, the traveling industry is directly proportional to the peace and stable economy. At global level, a political instability occurred due to war in Iraq and war against terrorism, therefore during last few years, fuel cost has risen tremendously throughout the world. In response of fuel cost, traveling and tourism industries have been affected a lot. Further the decline of GDP is a serious concern for new entrants as it dropped significantly from 3.9% in 2000 to 0.7% in 2008. However, later on, UK government took necessary action, therefore, situation is improving. 2.4 Social and Cultural Factors The social and cultural environments vary in different societies. They mainly depend on the nature of business, demographic aspects and custom values. These factors highlight the customer’s trends and the strength of the potential markets. UK people especially residents of London, have diversified cultures and therefore have a direct effect on traveling agencies. There is a huge contrast between these nationalities and their cultures and it may cause problems of communications and understanding. Previously, the demand of travel agencies was based on their facilities but due to global economic downturn, the trend has been changed and now it is primarily associated with the prices. Express Ticketline will be required to rebuild the confidence of customers of Brent Street as it will provide them cheap traveling tickets. . 2.5 Technological Factors A growing pressure on costs and prices builds up by the influence of technological advancements. It includes the online reservations and cost synergies from the industry consolidation. In order to a competitive advantage on its competitors, Express Ticketline will have to specifically emphasize on the field of e-commerce. 3. TARGET MARKET The primary target of Express Ticketline will be the local population of Brent Street London. It is located in the northern parts of London. According to the Census of 2001, the total population of the area was 263,464 which have been increased by 312,200 (Wikipedia). The population is of diversified nature and consists of multi-nation ethnicity. A large number of people used to travel inland or outside the Europe. Almost 27% population consists of Asians which is a very good sign of Express Ticketline as these people used to travel to their countries quite frequently. 4. COMPETITIVE ANALYSIS 4.1 Primary Competitive Multinational organizations related to traveling and tourism industry, transportation, and major airline companies will be our primary competitors. Some of the major travel and tourism agencies are TUI, Thomas Cook Group, and First Choice Holidays. Very strong strategic assets and widespread infrastructure of these companies are major threats to Express Ticketline. For example, TUI is strongly adhering to persevere with its position as world’s No. 1 tourism and travel organization in all aspects along with a customer oriented vision. TUI as well as its affiliates like Thompson Travels, Portland Direct, Lunn Poly, and Skydeals are accredited as most trusted and professional organizations throughout the Europe. The inventory of this company is decorated with more than 120 aircraft, 10 cruise liners, and more than 3500 travel agencies across the world (TUI Official Website). Similarly Thomas Cook Group, and First Choice Holiday (earlier it was part of TUI) have also strong dominance in the travel industry. 4.2 Secondary Competitors Exploratours Colletts Travels Travelcare These travel agencies are our secondary competitors because they are located in our vicinity. Exploratours Ltd. And Colletts Travels are located within Brent Street, London while Travelacre is situated at Queen’s Road, close to Brent Street. Although these companies have not strong strategic support, however, since they are more experienced, therefore, they have greater dominance on primary target market. Further, they have better PR with local community and better customer service. 5. MARKETING STRATEGY The major point of marketing strategy of Express Ticketline is to let the task on the agency to speak for itself. However, strategy of detailing outdoor human billboard is necessary to keep on as this strategy is very much beneficial for most of the companies. The major source of our revenue will come as a commission from airline companies. Although we have limited budget from Doramex, even then we will invest a little in research to discover the trends of consumers about tourism and traveling. Online medium will be used to find out the trend. It will assist us to maintain a record of information based on demographics, interests and comments of general users about our tickets and customer service. 5.1 Products and Services Express Ticketline has made some exclusive agreements with various airline companies to provide cheap traveling tickets to air travellers. According to our parent company Doramex, the smooth delivery of cheap tickets will improve the quantity of passengers a lot to these airlines. Either at our outlet or online, at both places we will provide best and instant customer support to our valuable customers. We will follow the old slogan i.e. ‘customer is always right’. Within six months of our operations, we will also start home delivery of the tickets. Within a radius of 15 kilometer, we will sell our traveling tickets at the same standard price; however, after 15 kilometers, $5 will be cost for every kilometer. We will also establish a distributing outlet just in the vicinity of airports to deliver the tickets. In terms of payment, customer will be offered plenty of options. At our agency, customers will pay to our account compartment while online ticket purchaser would have the options to deposit their funds to our PayPal account, our bank accounts through ATM cards, credit cards, or wire transfer. Meeting the deadline will be our competitive advantage because we will ensure the in time delivery of tickets to our customers. 5.2 Pricing The marketing strategy of Express Ticketline will follow the low cost leadership strategy. Since we are a new entry in selling the traveling tickets, therefore, we will set low prices for our traveling tickets associated with economy class. For all airlines, we have planned to maintain a margin of 08%. Depending upon the services and products of the provider company, our all traveling tickets will have prices 08 to 15% less than company prices. Beside this service, we have also done certain agreements with airline companies to offer 5% special discount to the children of age under 10 as well as to old citizens of above 80. However, in terms of executive and business classes, we will set competitive prices because airline companies are not willing to compromise on their high quality products. On Easter and Christmas, we will have 15% seats in certain airlines where we will give special discount up to 10% for all age groups. 5.3 Placing The main aim of Express Ticketline is to facilitate the customers up to the maximum level. We will establish a distributing center near the airport where customers will collect their tickets for which they would have given online orders. However, after two to three years, Express Ticketline will be able to establish few more outlets and distributing points. Express Ticketline will put a special focus on the selection of location which must be easily accessible to the customers. 5.4 Promotion Express Ticketline will put its best efforts to enhance the customers’ awareness about its traveling tickets and related services. In order to gain its initial short terms goals, Express Ticketline will highly depend on its communication strategy to its target markets. During the initial phase of new marketing plan, it will emphasize to keep itself present on local basis. An electronic campaign will be launched that will include newspapers, radio, television, and online medium to advertise the new selling outlet. In order to monitor and observe the services, products, and market position, we will arrange a program to receive the feedback from the customers. Different techniques will be applied for this purpose such as telephonic conversation, direct mail, opinion through public surveys and online comments. Since internet is the most ready and widely used medium to communicate, therefore Express Ticketline will keep its website up-to-date for all activities related to the business. 6. HUMAN RESOURCE Express Ticketline is located in Brent Street of London where numbers of foreign students are also studying in different colleges and universities. We have the options to manage our full time vacancies through online and newspapers advertising while part-time jobs can be offered to the foreign students. In such situation, we would apply polycentric staffing policy for the first year of the marketing. In this approach parent-country nationals hold key positions at company headquarters while foreign citizens are employed as subsidiaries (Hamblin, 1974). Bob Willis is the General Manager of our selling agency. He has a degree of MBA in marketing form a reputable University and 14 years of experience in travelling agencies. He will be responsible for all operational activities like selling and delivery of traveling tickets, customer service, and managing necessary operational requirements. Rest of the staff will consist of 02 attendants, 01 accountant, and 01 peon. Due to shortage of manpower and resources, our working hours will start from 8am till 8pm. Express Ticketline will not increase its staff substantially till the end of first financial year, however, staff will be increased gradually after one year when new outlets would be planned to establish. The following table depicts detailed information about our human resource. Staff Numbers Qualification Manager 01 MBA (Marketing) Accountant 01 Master’s degree in accounting Attendants 02 Graduate Distributor (part time or as and when required) 02 Foreign students Peon 01 School level Total 07 7. OPERATIONAL ISSUES We recognizes that risks involve in the filed of selling of traveling tickets are conditional on both industry and market risks. The major risk comes from the impacts of government security regulations on the airline companies. Express Ticketline will have to evaluate the customers with respect to existing security regulations. Our risk management strategies include the organizational controlling and observing systems. The manager will be responsible to regularly evaluate, assess and organize the business developments and associated risks. Late delivery of any tickets could be the leading risk for our ticket selling outlet. The manager will have to foresee any late delivery well-in-time to minimize this risk. For this, a standby transport will always be kept reserved to cater this issue. In case of some other contingency, any mode of transportation will be utilized to deliver the ticket to the customers by any mean. We aim to deliver 25% of our traveling tickets online. For this installation of computers and sophisticated internet will be installed at the selling point. Taking of orders, processing, purchasing and selling, and execution of payments, all will be done through internet. Since, we will be highly dependent on our computers; therefore, in order to rectify any technical problems, we will contract with an IT company to seek their instant support in any contingency. 8. FINANCIAL PROJECTION 8.1 Estimate of Startup Cost Start-up Requirements Start-up Expenses Rent $755 Insurance $275 Legal $200 Furniture $3,130 Computers/accessories $3,365 Brochures $425 Miscellaneous $500 Total Start-up Overheads $8,650 Start-up Assets Cash required $14,000 Other current assets $5,482 Long-term assets $9,130 Total assets $28,612 Total Requirements (Total start-up overheads + Total assets) $37,262 8.2 Projected Balance Sheet Cash $23,690 Accounts Receivable $4,440 Other current assets $5,482 Total Current Assets $33,612 Long-term Assets Long-term Assets $9,130 Depreciation $0 Total Long-term Assets 9130 Total Assets $42,742 Liabilities and Capital Year 1 Current Liabilities Accounts Payable $18,240 Current Borrowing $0 Other Current Liabilities 0 Subtotal Current Liabilities 18240 Long-term Liabilities 650 Total Liabilities 18890 Total Capital $23,852 8.3 Projected Cash Flow May, 2013 to Oct, 2013 Months May Jun Jul Aug Sep Oct Cash from operations Cash sales $6,225 $6,970 $7,360 $8,240 $11,295 $10,039 Cash from receivables $0 $80 $2,843 $3,325 $2,451 $2,230 Subtotal cash from operations $6,225 $7,050 $10,203 $11,565 $13,746 $12,269 Sales tax, VAT, HST. GST, new current borrowing, other liabilities, long-term liabilities, Sales of other current assets, Sales of long-term assets etc. $0 $0 $0 $0 $0 $0 Subtotal cash received $6,225 $7,050 $10,203 $11,565 $13,746 $12,269 Expenditures Cash spending $1,220 $1,220 $1,220 $1,220 $1,220 $1,220 Bill payments $245 $7,695 $8,615 $9,156 $10,948 $10,114 Subtotal spent on operations $1,465 $8,915 $9,835 $10,376 $12,648 $11,334 Sales tax, VAT, HST. GST, new current borrowing, other liabilities, long-term liabilities, purchase of other current liabilities, purchase of long-term assets, dividends etc. $0 $0 $0 $0 $0 $0 Long-term liabilities principal repayment $650 $650 $650 $650 $650 $650 Subtotal cash spent $2,115 $9,565 $10,485 $11,026 $13,298 $11,984 Net cash flow $4,110 ($2,515) ($282) $539 $448 $285 Cash balance $18,110 $15,595 $15,313 $15,852 $16,300 $16,585 Nov, 2013 to Apr, 2014 Months Nov Dec Jan Feb Mar Apr Cash from operations Cash sales $10,886 $12,418 $13,145 $14,258 $16,510 $17,954 Cash from receivables $3,090 $3,020 $3,140 $4,125 $4,258 $4,440 Subtotal cash from operations $13,976 $15,438 $16,285 $18,383 $20,768 $22,394 Sales tax, VAT, HST. GST, new current borrowing, other liabilities, long-term liabilities, Sales of other current assets, Sales of long-term assets etc. $0 $0 $0 $0 $0 $0 Subtotal cash received $13,976 $15,438 $16,285 $18,383 $20,768 $22,394 Expenditures Cash spending $1,220 $1,220 $1,220 $1,220 $1,220 $1,220 Bill payments $11,856 $13,123 $13,265 $15,235 $17,200 $18,240 Subtotal spent on operations $13,076 $14,343 $14,485 $16,455 $18,420 $19,460 Sales tax, VAT, HST. GST, new current borrowing, other liabilities, long-term liabilities, purchase of other current liabilities, purchase of long-term assets, dividends etc. $0 $0 $0 $0 $0 $0 Long-term liabilities principal repayment $650 $650 $650 $650 $650 $650 Subtotal cash spent $13,726 $14,993 $15,135 $17,105 $19,070 $20,110 Net cash flow $250 $445 $1,150 $1,278 $1,698 $2,284 Cash balance $16,835 $17,280 $18,430 $19,708 $21,406 $23,690 Works Cited Company Profile Page. Retrieved on 27 April, 2013 from Hamblin, A. C. (1974). Evaluation and Control of Training. Maidenhead: McGraw-Hill Book Company TUI Official Website, Wikipedia, Retrieved on 27 April, 2013 from < http://en.wikipedia.org/wiki/London_Borough_of_Brent> Wilson, R.M.S., and Gilligan, C. (1998). Strategic Marketing Management, 2nd edition, Butterwoth Heinemann, Oxford Read More