Retail Marketing and Distribution in Travel Agency - Case Study Example

Retail Marketing and Distribution (Insert Name of the Student) (Insert Name of the Instructor) (Insert Name of the Course) (Insert Code of the Course) (Insert Submission Date) Objectives Are We There Yet? Travel Agency is a customer oriented company and thus has adopted various objectives in line with the mission statement of the company. The agency aims to gain one percent market share in the first six months through an aggressive marketing campaign. This campaign will involve an interactive website, user blog site, social media marketing on Facebook and Twitter, brochures and flier distribution in social places such as student cafes and publicity through student magazines. We also have an objective to bring in around $50,000 in the first year. This will be achieved through competitive prices that are inclusive of flight fares, accommodation costs, and destination touring costs. The agency will therefore foster more quality oriented relations with host destinations and airlines that cater to low-budget travellers. The agency will satisfy customers by ensuring that they get value for their money through maintenance of high service quality from booking to travel to and fro. The agency will maintain customer loyalty by giving them a chance to share their experiences in the company’s blog site and in student magazine articles. Further satisfaction will be ensured by maintaining excellent employee relations as a happy employee implies a happy customer too. Overall Strategy The overall strategy will focus on the controllable variables that are under the control of the internal managerial environment and uncontrollable variables that are influenced by the external environment. Controllable variables Service strategy Service is an intangible quality and because of this every opportunity to interact with the customer should be a chance for the retailer to give the best. The SERVQUAL approach of service quality identifies two gaps relevant to a travel agency. Gap five explores the discrepancy between perceived and expected service. When the perceived service quality meets the expected service, it is rendered satisfactory. Likewise, if the perception fails to meet expectation it is considered unsatisfactory. Gap three identifies the discrepancy between service delivery and the service specifications (Shahin and Nassibeh 2011). Are We There Yet? travel agency therefore tries to bridge these two gaps for efficient quality service delivery. The agency has employed the services of student staff because they can easily tell what their colleagues need in terms of travel. The student customers also find it easier to relate with their colleagues and it makes it easier to predict trends. However the agency is embarking on finding more professional employees with an experience of over two years in a successful travel agency. The professionals will help identify host destinations that are student friendly so as to bridge gap five. They will also provide on-job training for the current employees so that they can be able to deliver adequately the service promises of the agency. Pricing strategy There are essentially three pricing strategies; competition-driven, customer-driven and cost-based pricing (Collins and Parsa, 2006). Competition-driven strategy involves price cuts so as to place products or services at a price lower than your competitors. Customer-driven strategy involves pricing the products or services according to the individual financial capability of the consumer. Cost-based strategy involves pricing the products or services above the production costs. The agency chooses to adopt the customer driven pricing strategy since the market segmentation is student exclusive and their budget is low. The agency proposes encouraging group travel through innovative marketing strategies whereby group travel is marketed as a chance to secure great relationships among friends. This is a win-win situation for both the student and the company. Group travel increases the propensity for discounted rates at destinations implying low costs for the agency and consequently low priced packages for the students. The agency will also seek new partnerships with airlines and tour operators so as to secure cheaper air tickets for the customers and affordable travel guides respectively. During semester breaks the agency will use mark down pricing to encourage more travels during this low season as well as cover the overhead fixed costs of the agency. Location Strategy Success in retail marketing is dependent on three factors; location, location and location (Zentes, Morschett and Schramm-Klein 2011). A good store location is said to cover a mediocre marketing mix emphasising the importance of getting a good store location. Since the agency’s target market is students, the agency will open shop within the campus with an expansion strategy targeting more campuses. This has various advantages such as lower rental costs compared to city locations, increases proximity to the target clientele, and enables student employment that provides cheaper labour while giving them experience in a travel agency. According to Buttle (1986) a travel agency store location should consider factors such as customer access to brochures, customer comfort, staff convenience and ambience. The agency will use attractive wall paintings such as graffiti, special lighting, brochures placement at eye level and large bean bags for seats. This provides a student-friendly atmosphere and the bean bags encourage a cosy interaction between the staff and students without appearing very professional and intimidating. Promotional strategy Are we there yet? will use promotional mix items of fliers, brochures, publicity and the internet. According to Rozier-Rich and Santos (2011) brochures increases the interest of potential tourists in visiting a destination through direct influence or gives them ideas of potential places to visit in the future. Andereck, Vogt and LeClerc in Rozier-Rich and Santos (2011) found out that 98% of travellers expect brochures for their use. The agency will hence provide the students with fliers that draw the attention to the agency in a quick, simple format and brochures detailing the various travel destinations supported. The agency will also partner with the campus magazines to sponsor travel articles by the students who have used the agency. This will not only aid in getting customer feedback but will also influence other students to travel. Williams and Shaw (1995) assert that travellers are increasingly influenced by writers through covert publicity. 87% of people between 18 and 32 years use the internet and 66% use it in planning their travel while 55% use it for online booking (Rozier-Rich Santos 2011). The agency will therefore maintain a blog spot in the website that is open to contribution of students with prior experience with the agency. It is expected that this will influence more customers to use the agency. Uncontrollable Variables Competitive environment The low entry and exit barriers in travel agencies have intensified the competition. There are many local agencies offering travel packages for students currently. Due to the uncertainty of the tourism industry Huang (2006) proposes that travel agencies form B2B strategies. Such alliances reduce the risk when entering foreign markets, gain economies of scale, improved and integrated distribution channel management, resource sharing, creating new entry barriers so as to control competition and access to new technologies. Are We There Yet? will therefore form such alliances with fellow competitors so as to share in these benefits. It is expected that the network that will be forged with other industry players will reduce the risk of an agency acting opportunistically to the demerit of the entire network. The alliance will also reduce the risk of turning away potential customers seeking products that the agency does not have. It will instead accept them and consequently transfer them to a relevant agency. The agency will also gain a certain percentage of commission from referral fees. Technological environment ICT development has had a positive and negative impact to the travel agency environment. According to Vasudavan and Standing in Mihajlović (2012) travel agents have a mandate to broker information from tourist destination hosts to potential travellers, advice clients, and act as the medium of transfer payments. However, technological advancement especially the internet has modified this. Travellers no longer have to rely exclusively on travel agents for travel information. In fact, many would be travellers compare information about travel destinations on their own via the internet before they actually visit a travel agency physically. The ability to make direct online bookings and pay host destinations has also decreased the need for travel agencies. Are We There Yet? will therefore provide an interactive website that provides as much information as possible about travel destinations, and use user blogs as discussed above. The website will also offer the option of online payments and direct links to other relevant websites and social media sites such as Facebook and Twitter. This will minimise the need for customers to visit many sites in such of travel information and it is expected that it will increase customer traffic on the website and translate into income. Economic environment The agency’s target market is the college students and this presents a challenge beyond the managerial influence on the impact of economy on the students. The students are low budget clients and by the end of the semester they have little change left for travel purposes. The agency will however introduce packages that do not require much expense. Since much of the travel expense is borne by the mode of travel such as flights, the agency will partner with local tourist destinations to avoid air travel and encourage use of coach or train which is cheaper. Other than the cost factor, it will also promote local tourism. According to the multinomial probit model low-income travellers choose cheaper modes of travel regardless of the utility implications as opposed to high-income travellers who are more concerned about the utility quality of their travel mode (Van 2013). Consumer environment According to Žnideršić (2011), the consumer environment is influenced by two factors; localisation and globalisation. Localisation attempts to preserve the local culture against the effects of globalisation whereas globalisation liberates the local culture as influenced by internet accessibility and travel. Firms are therefore adopting their products according to consumer demands as opposed to producing products that influence consumer demands (Žnideršić 2011). Operating in a campus environment is highly influenced by globalisation. The environment is also dependent on all the factors discussed previously and the agency will therefore embark on a strategy that will focus on developing greater customer relationships by tailoring products to match the students individual travel needs. The employment of students especially in marketing and customer care is expected to cater for this need too. The opening of other stores in other campuses will also help the agency predict the consumer trends and the factors influencing them. The agency will consequently factor in the lessons to give the students excellent products and services. Legal environment The legal environment affecting the agency is the low entry and exit barrier that has resulted to an increase in the number of travel agencies offering similar products. In addition, the store location is influenced by the campus administration. The stores are opened under contractual agreement of one year and this presents a challenge of contract renewal every year. It also creates an opening for other competitors to offer the administration a better deal than what Are We There Yet? offers. The agency is however trying to get lease agreements of five to ten years so as to create stability in its operations. References Buttle, Francis. 1986. “Travel Agency Merchandising.” International Journal of Hospitality Management 5(4): 171-175. Can, Vo, Van. 2013. “Estimation of Travel Mode Choice for Domestic Tourists to Nha Trang using the Multinomial Probit Model.” Transportation Research Part A 49: 149–159. Collins, Michael, and H.G. Parsa. 2006. “Pricing Strategies to Maximize Revenues in the Lodging Industry.” Hospitality Management 25: 91-107. Huang, Leo. 2006. “Building up a B2B E-Commerce Strategic Alliance Model under an Uncertain Environment for Taiwan’s Travel Agencies.” Tourism Management 27: 1308–1320. Mihajlović, Iris. 2012. “The Impact of Information and Communication Technology (ICT) as a Key Factor of Tourism Development on the Role of Croatian Travel Agencies.” International Journal of Business and Social Science 3(24): 151-159. Rozier-Rich, Samantha, and Carla Almeida Santos. 2011. “Processing Promotional Travel Narratives.” Tourism Management 32: 394-405. Shahin, Arash, and Nassibeh Janatyan. 2011. “Estimation of Customer Dissatisfaction Based on Service Quality Gaps by Correlation and Regression Analysis in a Travel Agency.” International Journal of Business and Management 6(3): 99-108. Williams, A and Shaw G. 1995. Tourism and Economic Development: Western European Experiences. West Sussex: John Wiley and Sons Ltd. Zentes, Joachim, Dirk Morschett and Hanna Schramm-Klein. 2011. Strategic Retail Management: Text and International Cases.2nd ed. New York City: Springer. Žnideršić, Suzana, Salai, Ružica, Kovač. 2011. “Marketing Research in the Contemporary Consumer Environment.” Management Information System 6(4): 15-22. Read More