Collaborative Commerce Applications for Interactive Marketing in the Travel Industry - Coursework Example

Collaborative Commerce Applications for interactive marketing in the Travel Industry Introduction: It is being conceived by many analyststhat the process of globalization and the advancements in the field of technology are complimentary to each others and both of the factors are main the pillars of growth of this modern world. (Fyall, Garrod, 2005, p.12). The global industrial world is not an exception as the advancements in the fields of technology are now forcing these organizations to “act local and think global”. (Fyall, Garrod, 2005, p.12). Now as we talk about technology and its global reach, the center element which practically makes this possible is of course the Internet. The Internet is supposed to have over four hundred and fifty million users throughout the world and this number seems to be ever increasing. (Fyall, Garrod, 2005, p.12). These increased numbers of users have made way to the development of the collaborative strategies of marketing which are being readily accepted by many industries. These kind collaborative approaches are mainly prevalent in business-to-business (B2B) solutions. This new approach actually created new business-to-business exchanges over the Web and helps in maintaining sustainable relationships among the business partners. This collaboration of B2B marketing is mostly done along the supply chain of any organization where the various service or product suppliers interact to gain a level of understanding. (Turban, 2006, p.224) According to Lisa Williams, who is an analyst at The Yankee Group of Boston, this rapid process of Collaborative commerce will actually help the companies to build on successful long-term relationships, and eventually the extra costs of cooperation will get reduced as the process continues. (Alexander, 2000) Prior to that, the partners of the collaboration must agree upon some previously decided standards. The standard specification is desired so that less implementation time is required, cost optimization is achieved and also to make the business more responsive and reactive in nature. (Perini, 2007, p.4) This report will particularly focus on the effects of collaborative marketing in the travel industry, which is conventionally regarded as a non-technical industry by the experts. This report will give an idea about the hurdles the industry has so far came across and the problems they are yet to solve before successfully implanting the process into the system. Problem Statement: The main thesis question addressed in this report is “How successfully the travel industry has eliminated the critical obstacles and has made way for successful collaborative network?”. This paper carefully analyzes the agent-mediated collaborative network and negotiation framework adapted by the global travel industry. The unique feature which makes the use of collaborative commerce in travel industry different from the rest is that in this type of transactions, price is not the only factor on the basis of which negotiation is done, but there are other adjoining attributes like number of rooms, the desired level of facilities etc. This is what makes the study of collaborative marketing more interesting and complex in nature. Challenges to the growth of complete E-tourism solution: Prior to the actual analysis of the problems and issues faced by the travel companies or for that matter the travel agents, we must have a clear view about the participants and the process of transaction which is prevalent in the modern travel industry. The following diagram shows the complexity of travel booking in the traditional flow and how this level of complexity has been reduced by the use of the modern day technology. (Source: “Japan’s Travel Industry Towards Productive Improvement”, 2008). To properly understanding the shift the understanding of the participants is also very crucial. The primary level of interaction is always initiated by the customers and for that reason customers are the main participants in the process. Next segment of participants of the industry are the “Providers”. (Pollock, Benjamin, 2001, p.15). These providers are those enterprises which offer the final service. These elements of the industry can classified into core providers who provides the lodging, transport, dining, entertainment etc. while the ancillary providers are those who provides services like traveling insurance, currency exchanges, financial and retail services. (Pollock, Benjamin, 2001, p.15). The next level is occupied by the “intermediaries and the channel distribution partners”. They are mostly the tour operators or the traveling agents who mostly offers the complete package. These packages are mostly sold through the retail outlets and now more often the through the Internet. The following diagram shows common application form via which a customer books his or her ticket and also can search for agents for traveling, over the Internet. (Source: “E-commerce in India: have You shopped online yet?”, 2008). Thus we can see the form (available online) the customers now get to book airline tickets and also have the liberty of choosing the agent from the Internet. There are still few factors which are unsolved and it causes hindrances in adapting Internet as the main channel for marketing in the tourism industry. The primary issue is of course the level of security of transaction which involves the customers giving out their bank details over the Web. (Middleton, Fyall, Morgan. Ranchhod, 2009, p.253) There is a constant battle going on between the people who are developing more securing network option for the customers and the persons who are trying to break them. That is the reason why this problem is critical though not unique. It is a common problem for all those industries that chose the path of collaborative marketing. This issue is linked to a greater issue of customers’ acceptance level for the travel company. Thus for that reason establishing a successful brand name is more important when the company is choosing collaborative marketing over traditional marketing. With more conscious branding activity the customers get to know more about the company and eventually the level of trust will increase. As already mentioned earlier, this problem is not unique in nature. Now we would give much focus on the issues which are more industry specific (travel industry). Travel agency itself is a complex domain due to the fact that the industry is expanding in a drastic pace and over and all there are so many minute elements that the agencies have to deal with. The customers, who are looking for any kind of tour packages, generally depend on their respective travel agents to show them the various availabilities according to the interests and budget of the customers. (Velasquez, Rios, Howlett, Jain, 2009, p.103). The various aspects that the agent have to deal with are airlines, accommodation in the hotels, car rentals etc. For automating all these services it requires a very complex software solution. The software solution can involve multiple agents who can communicate within themselves and solve several issues by cooperating. (Velasquez, Rios, Howlett, Jain, 2009, p.103). For that matter such software packages aim at finding out multi level solutions like travel tickets, hotel accommodation, car rental etc. But as the scope of these factors are much higher and depending on the actual spread of the travel company, the complexity of these issues increases. If we distinctly identify the main issues we can categorize the problems in five different sectors. The first major problem is of course the information discovery problem and as the companies have to work in a very challenging atmosphere with maximum accuracy providing the right information to the customers becomes quite difficult at times. The second level of problem is the communication and coordination problem, as most of the big names in the travel industry compete to capture the markets of the major cities, most the agencies does not get a chance to coordinate among each other. For that reason the situation becomes more complex for them (the agencies). (Velasquez, Rios, Howlett, Jain, 2009, p.103). The third level of hindrance comes from the ontology problem. This is also a major issue as the scope of the parameters required for a travel experience is undetermined in most of the cases. The fourth challenge is the reasoning problem. (Velasquez, Rios, Howlett, Jain, 2009, p.103). The last and most crucial among these problems is the negotiation problem. As the price of most of the factors is out of their control (airlines, hotels, cars) the travel agents finds it quite difficult to negotiate with travelers. Potential solutions for the problems: Before suggesting on management level solution we must first analyze the different level of complexity of this industry. The first basic issue that the analysts pointed out is that this industry posses highly fragmented sources of supply. (Pollock, Benjamin, 2001, p.16). It has to be remembered that the core product that the customers bank upon is the overall trip experience. But the providers who provide the ultimate experience to the customers are not integrated and they carry out their operation independently. Also even if the service providers become interdependent they compete to gain the attention of the web browser. (Pollock, Benjamin, 2001, p.16). For that reason the situation becomes more complex in nature. But there are other issues adjoining to this factor. It should be remembered that the actual aim of any traveling company is to deliver the highest quality of customer experience, because it is the overall “trip experience” that the customers finally counts. But the critical factor determining this parameter is the variability of expectations from the customers. That means the measure of the “trip experience” actually depends on so many factors like occasions, purpose of visit etc. Each time the solution provider has to adjust to that extent so that the “trip experience” is up to the desired level of perception of the customers. (Pollock, Benjamin, 2001, p.16). Thus we can see that travel industry on a whole posses so many variability and for that very reason integrating all its operational activities is somewhat challenging. The question is where to start from. We if track the problem from a backward direction, we would see that the customers or the travelers mostly depend on the travel agents. For that reason an agent oriented solution is what can be meaningful. A multi-agent system is a combination of several independent agents who decides to combine and collaborate to solve the problems that was out of reach for one individual travel agent. (Velasquez, Rios, Howlett, Jain, 2009, p.103). In this kind of a system the agents work on the process of negotiation in order to communicate with one and another so that the conflicts are resolved and they can provide ultimate customer experience. The level of negotiation will influence the electronic business transactions to a significant level. (Velasquez, Rios, Howlett and Jain, 2009, p.103). This negotiation can be possible through a mediator agent who will work as the link between the service provider agent and the agent who deals with the customers directly. The main purpose of this personal level mediator agent would be to identify those set of services and match them accordingly with the customers’ requirements. (Velasquez, Rios, Howlett and Jain, 2009, p.103) These intermediate agents also should be very flexible in the case of any change and especially in cases of failures. The negotiation model is somewhat like bargaining game where the number of offer cycle will be the part of the iterative process where in both the set of agents (service provider agent and the customer agent) agrees upon the price and the quality of service to be provided in that particular tour. (Velasquez, Rios, Howlett, Jain, 2009, p.104). The mediator agent will request for a group service to the set of service provider who are connected with him. The service provider will reply back in terms of the agreement and disagreements in certain issue. The mediator then will report back to the customer’s agent, who will negotiate on his part. After the negotiation process is over the final deal will be done and communicated to the customers by the customer agent. (Velasquez, Rios, Howlett, Jain, 2009, p.104). With the help of the intermediary system the problem arising out of the fragmented sources of supply would be reduced to a great extent. The intermediary agent would have connection with a set of “customer agent” as well as “service providing agents” and for that reason the supply font will be some what be constant. Also as far as the flexibility of order and adaptability to customer’s expectation is concerned this process will also prove well as the negotiation will be there between a set of agents and not single agents fighting independently for the space in the Internet. As a result of this whenever the requirements are changed the intermediary agent would communicate the same to the service providers, so that the later can adjust accordingly according to the customers demand. This system is believed to sort out the travel industry related issues to a certain extent. A Business Case study: After having an estimate about the various factors influencing the travel marketing though the Internet, the report will focus on a real life business scenario. The business case study that we will discuss is about a travel company called the VisitScotland. On the way to their move towards shifting marketing base, the company initiated the launch of it website VisitScorland.com in the year 2002. (Page, 2007, p.269) The aim of this launching of the web based service is to increase the dynamicity in the system and with this the customer can make travel booking online. The partners of the firm wanted to link their inventory of traveling services through the net. (Page, 2007, p.269) The most of the advertising campaigns posted in the web page influenced the customers to search and book ticket online through their website only. As a result of this in the year 2004, VisitScotland.com recorded 18.7 million hits and about 317000 bookings and occupied a market share of 0.45 percent of the overall online market of the United Kingdom. (Page, 2007, p.269). The company’s success could be contributed to the major shift of marketing base they adapted in the year 2002. In their next move, VisitScotland has gone one step further as they aimed at removing the costs for smaller businesses of web design for the providers of accommodation. (Page, 2007, p.269). The concept used by them is called the “web in the box” whereby the company allowed the small business to use a template and system-made solution using a content tool for the website. This box will essentially contain a customer management system, a booking engine, a complete data base of all the customers and the different service providers etc. (Page, 2007, p.269). The bookings which is being made on the operators or the service provider’s website no commission is charged but if a booking is made through the website VisitScotland.com a commission of ten per cent is chargeable. (Page, 2007, p.269). In this way the company made some revenue apart from earning with the regular activities they are engaged into. This shows the new form of service collaboration which is in other word known as the “Collaborative Commerce”. The travel company is providing one click solution for all the travel related solutions and by that process earning extra revenue as well. Also by this process the smaller business associated with the traveling industry are gaining cost efficiency as they are able to reach more customers at a time. Conclusion: Understanding the complexity of the travel industry is quite a difficult task. This is because there is certain number of smaller businesses which is actually involved with the word “Tourism”. But interestingly enough these elements do not wok in tandem and often fails to collaborate. The process of collaborative commerce actually tries to bind these smaller elements and aims at finding a one time solution for the customers. It is both helpful for the customers and also for the agents who are working for them. The service providers will also find it cost effective and over and above it enables them to cover a wider market space. But once this system is introduced the smaller business or the service providers who are being involved into the system must be extremely cautious and should act in the desired level of customer expectation. With greater reach, more customers would be approaching these service providers and they should also concentrate on delivering the required service to the target mass, with maximum accuracy. References 1. Middleton VTC, Fyall A, Morgan M, Ranchhod A. 2009. Marketing in Travel and Tourism: Butterworth-Heinemann, UK. 2. “Japan’s Travel Industry Towards Productive Improvement”. 2008. website: < http://images.google.co.in/imgres?imgurl=http://www.tourism.jp/english/report/photo/jr_0808_15e.gif&imgrefurl=http://www.tourism.jp/english/report/2008/08/11/20088-2e.php&usg=__QkdeCW7zDB61dxGT1vAqC_09Jrc=&h=328&w=473&sz=20&hl=en&start=3&tbnid=3m8vGI-9mavmYM:&tbnh=89&tbnw=129&prev=/images%3Fq%3DCollborative%2Bmarketing%2Bin%2Btravel%2Bindustry%26gbv%3D2%26hl%3Den%26sa%3DG> (accessed on October 30, 2009). 3. “E-commerce in India: have You shopped online yet?”, 2008. 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Website: < http://www.desticorp.com/whitepapers/TourismEcosystemwhitepaperWTM.pdf> (accessed on October 30, 2009). 7. Velasquez JD, Rios SA, Howlett RJ, Jain LC. 2009. Knowledge-Based Intelligent Information and Engineering Systems: 13th International Conference. Springer, Germany 8. Page S. 2007. Tourism management: managing for change: Butterworth-Heinemann, UK. 9. Turban. 2006. Information Technology For Management: Transforming Organizations In The Digital Economy: Wiley, India 10. Perini V. 2007. Leveraging Open Standards for Collaborative Commerce”. Opentravel.com. website:< http://www.opentravel.org/resources/uploads/pdf/uic_2007.pdf> Read More