Flight Centre's Situation Analysis, SWOT Analysis and Marketing Strategy - Case Study Example

TABLE OF CONTENTS EXECUTIVE SUMMARY 1 SITUATION ANALYSIS 4 Market Summary 4 SWOT Analysis 4 MARKETING STRATEGY 9 Objectives 10 Target Market 10 Positioning 11 Marketing Mix 11 REFERENCES 15 EXECUTIVE SUMMARY Flight Centre was founded in 1981 by Graham Turner. It is the largest travel company in Australia and listed on the Australian Stock Exchange. It has over 2000 stores in 11 different countries with over 13,500 staff. According to its SWOT Analysis its strengths include having a strong brand and slogan, over 2,500 stores, variety of products, and motivated staff. Its weaknesses are advertising problems and dependency on Australians. Its opportunities include acquisitions and e-commerce while its threats are economic conditions and online competition. Flight Centre’s competitors are Jetset Travelworld Ltd and Corporate Travel Management. Its services include travel service for business and leisure travelers and its brands are Student Flights, Travel Associates, quickbeds.com and Escape Travel (Flight Centre, 2013). Flight Centre serves its customers through both in-stores and online. The marketing objective of Flight Centre include increase of market share by 20% in three years, diversification of its products and entering international market, and increase of revenue by 20% yearly. Its target market will be high end business and leisure customers and will position itself as an unbeatable market leader. The marketing mix of Flight Centre will include place, promotion, product and price. It will have both in stores and online services to serve its customers. Flight Centre will use publicity, direct marketing and advertising as its promotion strategy. Its retailing, wholesaling and corporate services will include travel insurance, traveler’s cheques, hotels, cruises, coach tours, car hire, holidays, flights and many more. Flight Centre will use penetration strategy and bundle pricing to price its services. SITUATION ANALYSIS Market Summary Flight Centre dominates the market in its industry in Australia. According to Flight Centre Annual Report 2011-2012, it commands about 50% of the market share and operates consistently and profitably. It has great growth prospects, competitive advantages, and able and experienced management (Flight Centre, 2013). SWOT Analysis SWOT Analysis is a method used to evaluate a company’s strengths, Weaknesses, Opportunities and Threats (Bohm, 2008). Strengths Over 2,500 stores Variety of products and services Strong Brand Motivated staff Strong slogan Weaknesses Dependency on Australians Advertising problems Opportunities Acquisitions E-commerce Threats Economic Conditions Online Competition Lack of flexibility in wages Strengths Geographic diversity – Flight Centre operates directly in 11 countries with 2,500 stores. It also has licensing agreements in 75 nations, giving it a geographic advantage over its key competitors. Product and services diversity – Flight Centre provides various products and services including travel retailing, wholesaling and corporate management, organizing car hire, flights, cruises, visas, coach tours, holidays and many more. This enhances increase in the company revenue and the ability to serve a wide range of customers with different needs. Strong Brand Awareness- A recent survey reported Flight Centre to be among the top15 recognized brand in Australia. Awareness of this brand in Australia provides the company with a growth opportunity into more global markets. Productive Staff- The number of staff grow at 10% per annum with many of them in sales roles. Flight Centre has the right incentives mix for staff performance. This creates momentum in the business as more staff are willing to sell more thus naturally growing the business. For over 5 years Flight Centre has won New Zealand Best Workplace Award Winner. In 2011 “Unbeatable” Slogan – This slogan applies to Flight Centre’s prices which are unbeatable. The company charges low prices for its services. . Weaknesses Dishonest advertising Flight Centre has been accused of dishonest advertising to customers and five years ago it was banned from advertising ‘guaranteed cheapest flights’. Depending on Australia Flight Centre depends a lot on Australian travelers. Many Australians have invested abroad and they travel a lot for vacations and holidays. Flight Centre focuses more on Australians and its stores are located almost everywhere in Australia. This is dangerous because in case Australia is caught in economic crisis then the company will highly be affected. The country should try to counter this by investing in other promising markets overseas so that in case economic crisis emerges in the home country, they are still able to survive. Opportunities Strategic Acquisitions A corporate travel management business has been acquired by Flight Centre. This will enhance the company’s FCm Travel Solutions network globally. It has also acquired Bannockburn Travel Management (BTM) in North America which has enabled it to double its presence in its corporate travel. BTM is known to be very profitable with a record of healthy growth. BTM operates alongside profitable operations of FCm networks in Los Angeles, Chicago and Canada (Flight Centre Travel Group, 2013). This acquisition will create a strong presence in these areas and become a footprint for expanding to other US locations in future. Flight Centre has also decided to acquire Friends Globe Travels Ltd (FGTL) a nationally owned corporate travel business in India. This will enable the development of the company’s global FCm Travel Solutions management network of corporate travel. This acquisition will provide a strong network to FCm Travel Solutions in the region of Asia-Pacific. This network will cover New Zealand corporate travel hubs as well as those of Singapore, China, Australia, India and Hong Kong. E-commerce Every year over seven million Australians venture abroad which is almost a third of the country’s population. This makes Flight Centre the most successful travel agencies in the world. The company is located all over in Australia. The investment in E-commerce will facilitate easy online bookings, sale hotel accommodation, tours, activities, car rentals and many more. This will enhance Flight Centre’s sells growth. Threats Economic Conditions Flight Centre will be affected by volatile economic conditions. These conditions may be felt intensely in the USA and the UK where the company is trying to grow. Recently economic reports commented that UK has dipped triple into a recession that may affect business. Lack of flexibility in wages Lack of flexibility in wages is a challenge for Australian retail businesses. This will make it hard for Flight Centre to run its business as well as in retail. Online Competition The internet giant Google bought data provider ITA of US airline. This is a concern for the travel airline as Google’s online experience and influence may affect Flight Centre. Competition Flight Centre faces stiff competition from other wholesale travel agencies such as Corporate Travel Management and Jetset Travel world Ltd (IBISworld, 2013). Its stiff competitor is Jetset Travelworld Ltd which operates in the same countries as Flight Centre including Australia, UK, New Zealand, South Africa and USA. It has over 2000 franchisees, affiliates and members. Flight Centre also faces competition from rapid grow of online-only travel agents such as Lastminute.com, Webjet and Wotif.com. However, Flight Centre dominates the market in Australia and has increasingly maintained its customer base for many years. Unlike some of its competitors who trade solely online Flight Centre operates website bookings, telephone bookings and traditional shop front outlets. This gives it a high leverage in the market as it gets a chance to serve customers from all channels, therefore increasing its revenue. Its customer loyalty base is strong keeping it ahead of its competitors. Its unbeatable prices prevent new competitors from entering the market as the company is not easy to compete with. For over five years Flight Centre was awarded New Zealand Best Workplace Award Winner. It attracts best qualified staff even from its competitors. Product Offerings Flight Centre Limited is involved in travel services in wholesaling, retailing and management of corporate travel businesses in Australia, UK, USA and other countries. The company organizes visas, car hire, hotels, flights, frequent flier points redemption, cruises, traveler’s cheques, coach tours, travel tours, holidays, and many more. Flight Centre’s wholesale, corporate and leisure brands comprise Corporate Traveller, Campus Travel, Travel Associates, FCM Travel Solutions, Stage& Screen, CiEvents, Student Flights, Flight Centre Business Travel and Travel Associates. Distribution Flight Centre has traditional shops all over Australia and some in United Kingdom, United states, India, New Zealand, Canada , Singapore, China, United Arab Emirates and South Africa. The company also has an online booking service as well as telephone booking service. Stores will be open from Monday to Friday 09:00 am to 06:00, Saturday 10:00 am to 06:00 am\Sunday 11:00 am - 05:00 am. Online services will operate 24 hours a day. MARKETING STRATEGY Objectives Marketing Objectives of Flight Centre are as follows: To increase market share by 20% in three years. To diversify its products and enter international market Increase revenue growth by 20% yearly. Target Market According to Kurtz (2010), a business aims its market efforts towards a group of customers called target market and eventually its products or services. A target market that is well defined is the first marketing strategy element (William, 2005). Flight Centre’s target market is high end customers with main focus on premium and corporate customers. Corporate customers travel frequently for leisure business and meetings. Premium customers travel for business, vacation, holidays or to study. These customers have high income and are willing to spend more. Flight market will implement its ‘blended model’ to provide flexibility to customers to move between shopping travel packages and flights in-store and online. Positioning Positioning is a way by which a distinct impression is created by marketers in the mind of customers (Levi, 2007). According to Jayachandran (2004), positioning a product or service is creating an image in the mind of consumers because consumers buy brand images rather than actual products or services. Flight Centre will position itself as the leader in providing travel services at a lower price. It will present itself to a customer as unbeatable in prices, product and services and as an employee. The slogan ‘Unbeatable’ sums up what Flight Centre is all about and will enable it stand out from other competitors. It is unbeatable in quality, prices and services. Marketing Mix The concept of marketing mix is a list of important ingredients or elements that compose a marketing program. They are also known as the four Ps of marketing including product or service, place, promotion and price (Kotler, 2000). Place According to Kotler, Keller and Burton (2009), place or distribution is the process of availing the product or service for consumption or use by a consumer using either direct or indirect means. Flight Centre will sell its products and services directly to consumers. It will have in-stores almost everywhere in Australia and many more stores over-seas. The company will also provide on-line services where it serves customers who cannot come physically to the in-store. 50% of Australians book their trips in person while 49% of them book through internet websites and this online booking continues to grow. An IT system will therefore be implemented to enable customers to book online. Online services will reduce the time spent for the paper work in the in-store. Promotion Elements of promotional mix include sales promotion, publicity, personal selling, direct marketing and advertising (Rajagopal, 2007). Flight Centre will use direct marketing, advertising and publicity in its promotion strategy. It will advertise its services using a cheaper medium. With leading online marketing solutions like Strong View Systems, Flight Centre will implement marketing and email solutions in improving its campaign performance. With over 2,000 shops in 11 countries and online-stores, relying on email is the best way to inform customers on localized services and products depending on their travel businesses. Promotions can be run on the company’s website as well as on social Media to increase sales and reach new audience. ‘Buy an airline ticket to New Zealand and get one night accommodation free’ is a short term strategy to increase sales. Flight Centre targets different customers making mass advertising channels such as Newspapers, TV and radio ideal. Using this media will enable the company to reach most of its potential customers both during and out of season. During high season a competition will be run where a customer who buys a bundle of services worth £1,000 will be eligible to enter in order to win £10,000. This will increase sales and revenue for the company. Product/Services According to Kotler, Brown and Adam (2006), a product is anything whether tangible or intangible that might satisfy customers’ needs and wants. Without this element the other three elements cannot exist (Brumbaugh, Grier and Trickle, 2000). Flight Centre provides travel retailing and wholesaling as well as corporate travel business in Australia and internationally. Its services include selling travel insurance, traveler’s cheques, hotels, cruises, coach tours, car hire, holidays, flights and many more. The company will also provide information, social network and products to target the youth travel market by buying gapyear.com based in Britain. These young travelers take a long break from work or study and travel a lot for leisure. The website will provide links to services and products like travel insurance, transport, money and accommodation. Discounts can be provided to customers during low season when traveling is less done. When the competition becomes higher at a particular season Flight Centre can provide discounts to attract customers. Price Price is the amount of money paid for the product by a customer (Kotler, 2010). Price adjustment has impact on the marketing strategy, and the demand and sales are affected by price elasticity. The company profit and survival is determined by the price and price should complement other marketing mix elements (Thomas and Reed, 2000). Flight Centre will use penetration strategy by charging a lower price than the market price to attract many customers. There are many travel agents in the world and a customer is always looking for good quality at a fair price. Since Flight Centre provides a wide variety of services including selling activities, tours, flights, cars and so on, it can bundle its prices in order to attract a customer and allow them to buy all services from them. If a customer buys tours, flight and accommodation the prices could be cheaper by 20% compared to if the services were sold separately. REFERENCES Brumbaugh, A., Grier, A & Trickle, Dick. (2000). Non-target Markets and Viewer Distinctiveness: The Impact of Target Marketing on Advertising. Journal of Consumer Psychology (Lawrence Erlbaum Associates), 9(3), 127. Flight Centre Travel Group. About Us. Retrieved on September 14, 2013 from Flight Centre. (2013). Flight Centre Annual Report 11-12. Retrieved on September 14, 2013 from Flight Centre. (2013). Flight Centre: Our Story. Retrieved on September 14, 2013 from Flight Centre Travel Group. (2013). Flight Centre Limited Completes US Acquisition. Retrieved on September 14, 2013 from < http://www.flightcentrelimited.com/investor-and-media/media-releases/flight-centre- limited-completes-us-acquisition IBISworld.(2013). Wholesale Travel Agencies in Australia: Market Research Report. IBISworld. Jayachandran, S.(2004). Marketing Management. Excel Books India, p. 118 Kotler, P. (2000). Principles of Marketing (8thh ed). Prentice Hall, p.19 Kotler , P & Amstrong, G. (2010). Principles of Marketing (13ed). Pearson Prentice Hall, p.293 Kotler, P., Armstrong, G., Brown, L & Adam, S. (2006) Marketing, 7th Ed. Pearson Education Australia/Prentice Hall. Kotler, K & Burton. (2009). Marketing Management, Pearson Education Australia: Frenchs Forest Kurtz, D. (2010). Contemporary Marketing Mason, OH: South-Western Cengage Learning. Levi, K. (2007). Differentiate or Diminish: The Art and Necessity of Business Positioning. p. 9 Rajagopal. (2007). Marketing Dynamics: Theory and Practice. New Delhi, India: New Age International. Thomas, N &, Reed, H. (2002) . The Strategy and Tactics of Pricing. Prentice Hall, Pages 84-104. William, C., A. (2005). The Marketing Plan. John Wiley & Sons, Inc. Read More