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MARKETING OF GROUP 2
SERVICES- F
The complete study revolves around the online travel sector, which was chosen by the group.
The study tells about the nature of the sector, present scenario and various factors significant
for the industry, various drivers of the industry and what could be the future prospects for the
major players. This was mainly based on the secondary data collected through different
sources.
The scope of the study includes understanding the working of the OTA industry, the growth of
the sector and the working of various existing business models in the industry.
2. ENVIRONMENT SCAN
PEST ANALYSIS
Political
1. India has a stable democratic government. This ensures stability for the tourism
industry.
2. The centre has a specific ministry of tourism whose prime purpose is to device plans
and strategies for the welfare of Indian tourism industry.
3. India as a nation is divided into various smaller state and every state has its own
tourism department. These departments often fight with each other in ensuring higher
tourist inflow into their respective states. Though this competitiveness ensures efficiency
in the individual states but is detrimental for overall tourism as a whole. Since India is a
diverse nation with every state having something to offer along with competition what is
really essential is proper coordination between various states.
Economic
1. India is among the fastest growing economies of the world. In the last decade its GDP
has grown with almost 7% per annum. A higher economic growth ensures rise in annual
income hence increase in domestic tourism.
2. A higher economic growth also ensures increase, in investments in the infrastructure,
promotional expenditures, construction of newer tourist avenues, beautification of cities
and towns etc. These ensure a boost to the tourism industry.
3. High growth results in higher number of business visits.
Social- Cultural
1. India a diverse nation with end numbers of different languages, cultures, traditions, cuisines; make it
an ideal destination of cultural tourism. The depth of diversity can be concluded from the fact that India
has more than 22 constitutional languages and 1600 dialects.
2. Indian culture has always emphasized on respecting and entertaining their guests very well. The
Sanskrit Shloka “ATHITHI DEVO BAHVAH” (guest is god) is the essence of Indian tradition. This
warmth and love for their guests has always been appreciated by tourists in general and foreign ones in
particular.
3. India has a vibrant and rich history of cultures that can also attract many culture lovers and scholars
for further studies and exploration.
4. Due to 200 years of British rule English is an integral part of Indian education system. Most of the
people at India can communicate in and understand English. This gives an added advantage to India in
comparison to its neighbouring counterparts in attracting foreign tourist.
Technological
1. At present Information Technology plays a very important role in tour planning and its
implementation. Starting from searching the tourist spots to booking hotels and transportation to
transferring money everywhere web based platforms are used. In the Indian context there are
plenty of such web based portals such as makemytrip.com, yatra.com etc. India being an IT
superpower is capable enough for future development of such avenues in a very cost efficient and
technologically superior way.
2. In spite of India being an IT superpower the overall home pc penetration is still low at just 26%.
This disassociates a very large chunk of domestic users from using such web based portals.
3. For the success of tourism it is essential that a country must be equipped with state of the art
transportation facilities. It must have very efficient transportation system that can help in
transporting both large volume of people and goods in a very cost effective, fast and comfortable
fashion. Thanks to its huge population and late opening up of economy its transportation system
still not of international standard.
Closely Connected Sectors
Transportation
Accommodation
Food and Beverage
Entertainment (Casino, Adventure Sports, Activities, Shopping)
Travel Agents
Financial Services (Travel Insurance, Travel Medical Plans, Currency Conversion)
Merchant Model: In this model, hotels sell rooms to OTAs in bulk at discounted or
wholesale prices. The OTAs then sell them to customers at a markup price. This is
the most commonly used model, and it benefits both parties.
Ex: Expedia
• Also, along with them is the thriving transportation industry which majorly
includes cab services like Ola and Uber and map services like Google Maps,
MapmyIndia, etc.
• The another category includes startups like OYO Rooms, Treebo, Airbnb,
Travel Triangle, Expedia, Trivago, TripShelf, DeyorCamps, and more.
BASES OF COMPETITION
The competition is majorly on the basis of price that is offered by the various
OTA’s. Other bases could be promotional offers such as discounts and loyalty
points which are common in this industry.
VARYING STRATEGIES
OTAs are exploring the advertising model and even buying their own marketing channels. A few examples
include
• Expedia’s acquisition of Trivago,
• Travelocity North America and Orbitz Worldwide;
• Priceline’s link with KAYAK; and,
• Chinese OTA CTrip’s share swap deal with Baidu, which owns OTA Qunar, taking control of around 80% of
the Chinese hotel and air ticket market. CTrip also took a stake in Travelfusion, which links low-cost airlines
and hotels with OTAs, booking tools, travel search, and mobile services.
Traffic monetisation with online advertising has become a great commercial opportunity for OTAs, which are
largely dependent on Search Engine Marketing (SEM) and therefore need to optimise costs.
OTAs and metasearch companies are converging – and to a powerful effect. While metasearch companies
move on to assisted booking (metabooking), OTAs are now advertising to customers to increase revenues,
and these huge entities allow customers to search, book and pay all in one place. They have become Online
Travel Retailers (OTR).
CURRENT EMPLOYMENT POTENTIAL
The travel & tourism sector in India accounted for 8 per cent of the total employment opportunities
generated in the country in 2019, providing employment to around 43.3 million people during the same
year. The number is expected to rise by 2 per cent per annum to create 52.3 million jobs by 2028.
SKILL REQUIREMENTS
• It includes creating an online web platform which is user friendly and provides customer with the best
experience.
• Personal selling and B2B selling skills.
• Expertise in the latest technology.
Current Specific bottlenecks/issues infrastructure
Competition in the Travel industry fuelled by Web Crawling
Voice technology a digital novelty disrupting the travel and hospitality sector
Online booking — the service experiencing constant growth so there is lack of infrastructure
RESOURCES
Airlines
Travel Packages
Trains
Transport companies
Hotels
POLICY RELATED
• Schemes like the issuance of visa on arrival to visitors from over 180 countries, the UDAN regional
connectivity rollout, the impetus to digital payments, and the focus on infrastructure, have all given a big
boost to the travel and tourism industry
• In the hotel and tourism sector, 100 per cent FDI is allowed through the automatic route. A five-year tax
holiday has been offered for 2, 3 and 4 star category hotels located around UNESCO World Heritage sites
(except Delhi and Mumbai). Total FDI received by Indian hotel & tourism sector was US$ 12.35 billion
between April 2000 and March 2019.
• The launch of several branding and marketing initiatives by the Government of India such as ‘Incredible
India!’ and ‘Athiti Devo Bhava’ has provided a focused impetus to growth.
• The Indian government has also released a fresh category of visa - the medical visa or M visa, to encourage
medical tourism in the country.
• Incredible India 2.0 campaign was launched in September 2017. In September 2018, the Indian government
launched the ‘Incredible India Mobile App’ to assist the traveller to India and showcase major experiences for
travelling.
• Schemes, such as Swadesh Darshan, PRASHAD, and Adopt a Heritage, are expected to gain momentum
and boost the overall growth in travel sector.
4. FUTURE PROSPECTS
TRENDS, DIRECTION AND GROWTH PROSPECTS
Indian Online Travel Market 2020
Air travel will reach $30 Bn by 2020 growing at 15%. It continues to be the
dominating category. It will be closely followed by hotels ($13 Bn)
and railways($5 Bn).
With the increase in smartphone penetration and digital payments usage,
India’s online hotel market will grow to $4 Bn with 31% penetration at a
CAGR of 25%.
By 2020, one in three hotel rooms will be booked online – a clear
indicator of the growing importance of digital in travel research, planning,
and booking
TECHNOLOGY FORECAST, INNOVATIONS,
GAME-CHANGERS
1. Personalization — the biggest priority among the modern travel
industry trends
2. Recognition Technology — a great potential for the travel industry
3. Robots — helpful machines in the sphere of tourism and hospitality
4. Mobile Applications — the digital trend easiest to implement
5. Chatbots and Artificial Intelligence — the top 2019 digital trends in the
travel industry
6. Augmented and Virtual Reality — mainstream consumer technologies
of the present
Revenue
No. of Users
Revenue Growth
Topics for future research
• In the areas of consumer behavior‐market segmentation, brand management, e‐marketing‐use of new
technologies.
• Due to the changing nature of the global hotel industry the future research should discuss in more
depth how consumers' decision making processes are changing.
• Another research avenue for consumer behavior studies in tourism marketing is to further analyze the
cross‐cultural differences of the global travel market.
• Future research on tourism needs to identify the changing consumer habits of various segments of the
population from baby boomers to generation Y.
Online travel booking sector
SERVICE CONCEPT
Core Product – Providing convenience of online booking of tickets for various services such as flights,
trains etc.
Supplementary service
Enhancing elements
• 24*7 support – They have a 24*7 helpline which is available through various mediums including
phone, email and whatsapp.
• MMT wallet – Make my trip has his own wallet where you can add money and pay from there.
• Chatbot – To increase the quality of their service, they also have a chatbot available on their
website.
• MMT Double black – Once you avail this feature, it provides you free cancellation on flights and
hotels.
• Visa processing
• Blog
SERVICE CONCEPT
Facilitating elements
• Payment gateways – Without the integration of a payment gateway, a customer won’t be able
to pay for the ticket booking.
Delivery Processes – Delivery of almost all services takes place online except the customer
support which is also available online through phone.
COMPETITORS
• Yatra - Yatra’s brand positioning is that of India’s travel partner. Their major appeal is to
the value conscious people of India which is apparent through their communication.
• Cleartrip – It is positioned as a simple and comprehensive online booking portal. Their
strength is their tie ups with other organizations. In 2017, they got a tie up with google
flights which MMT and yatra don’t have.
• IRCTC - Their major advantage is the trust that some people still have in booking directly
from a government website rather than another third party.
• Individual airline websites - A go-to option for those who are loyalists of a particular
airline. Generally those who are sure about which airline they want to travel from may
choose this method.
• Travel agents and tour operators – Still a preferred choice for many people who prefer
actual physical interaction with their travel agent before booking their flight. Another
factor in their favour is that people are still wary of spending big amount of money online
and as a result they still continue to get customers.
MARKETING MIX
• Product – The product strategy of OTA’s is to serve all. All of them offer products including flights,
buses, trains, activities, hotels, holidays with Yatra even going to the extent of offering cruise tickets.
• Price – The commission charged by MMT and Cleartrip are almost same whereas Yatra’s
commission charges are a little less. For ticket prices, all operators use dynamic pricing.
• Promotion – Sales promotion are common among all websites. Discounts and Loyalty points are
two of the frequent promotion types. MMT, Cleartrip and Yatra all do digital and tv advertisement
both. While the purpose of digital ads is majorly to get conversions, while tv ads are helping the
companies to become recognized as a brand.
• Place - The place of delivering their service is majorly through e-market for all the OTA’s. MMT also
has 65 offline stores across 50 different cities in India through which they deliver their service.
Process – The ticket booking process is quite simple and easy. You can just log onto their
websites and app and proceed with the booking. The payment can be made by any bank’s card
or most of the available digital wallets.
People –There’s no direct interaction with people unless someone goes to their store or gets in
touch with their customer service.
Physical Evidence – Major chunk of the service is delivered through online website and apps in
which all the companies have invested substantially and are able to deliver a good user
experience. They also have offline retail stores for booking and grievance redressal.
Productivity and Quality – Innovation is the order of the day at Make my Trip. To tackle the
issue of slow internet connectivity in majority of India, MMT launched a Progressive Web App.
This upgrade alone made a first time shopper 3X more likely to convert.
MARKET SEGMENTATION
• On basis of Income – Mid to High segment and Low segment
• On basis of Age – 18-30 years old and Above 30 years
• On basis of travel behaviour – International traveller and Domestic Traveller
• On basis of type of Customer – Businesses and Individuals. Businesses can be further segmented into Corporates and
SME’s.
TARGETING
• Mid to premium segment - Make my trip has made more focus on the premium category of hotels. They have
increased their inventory in the luxury segment. They are targeting specific high end customer segment who are
interested in luxury villas and hotels for their stay.
• Age group above 30 years – MMT is focuses more on this age group whereas Go Ibibo, which they acquired, is
focused more on the younger age group.
• Domestic Travelers - Their major target is domestic travelers since 80% of their booking comes from them. The
competition is very stiff in international sector with competitors such as Booking.com and Expedia taking the lead.
• SME’s - Big corporates usually are covered by travel management companies so they are not mmt’s primary target.
SME’s cant get the services of TMC since they will require minimum amount of travel as a guarantee to be of interest to
TMC.
Service Design framework
Slogan- “Iss bar is foreign trip/ business trip par Often changes depending to the segment
nhi, Make my trip par jaiye” targeted and to communicate new services.
REVENUE MANAGEMENT
Working as third party, MMT has limited control on the inventory and the allocated rooms/contracted hotels form part of a
perishable inventory.
Thus variable demand and fixed supple make revenue management important for online travel industry.
The percentage of commission is maximum incase of airline tickets and least in case of railway tickets.
A portion of revenue comes from e-banners/ advertisements on its website and app.
Avenues of revenue management:
Price- Take into account the historical rates and occupancy levels for a particular Hotel/Flight route and set prices
accordingly.
Demand Management-Since demand varies it is important for the company to understand how badly and individual
customer wants a service. A through study of visitor study followed by personalization strategy will help get the maximum
value out of the customer.
Demand Forecasting- A correct forecast make revenue management significantly easier. Thus the company should have a
dynamic forecasting system that takes into account the current alterations in the marketplace, company’s strategic moves
and historical trends
Service Process
Central
Database
BRAND CUSTOMER
AMBASSADOR EMPLOYEE SERVICE PROVIDER
Only physical interface between the ROLE Key in customer experience and service
brand and customer and thus should delivery. This has a huge significance as
convey the brand essence to the customer service is the core value of
customer. MMT.
03 02
DEMAND
• Google India – BCG Report:
• Projected – overall Indian travel market to reach $48
Bn by 2020 at a CAGR of 11%-11.5%.
• India Brand Equity Foundation Report:
• Online Travel Market – est. 40% to 50% of total
transactions by 2020.
SUPPLY
• MMT leads – narrowing its losses.
• ~3 more years to achieve enough market power as in established countries.
• Largest online seller of international outbound airfare by the number of transactions.
• Has two-thirds of domestic air tickets sold online.
• Has about half of online travel agency sales of hotels, the industry’s product with the richest
commissions.
• Foreign Visitors to India – prefer booking.com
• Most sales domestic.
• ~80% of air tickets for intra-India routes.
• 3 out of 4 are domestic hotel bookings
• ~60% of vacation package revenue – from domestic travel.
500 million • Have Internet
access
Indians (IAMAI)