Situational Analysis

Discuss about the E-Marketing Mix on the Tourists?

Roy Thomson established Thomson travel in an effort to diversify its existing business in 1965. From the beginning, Thomson Holiday has owned the charter airline – Britannia that allowed them to ensure supply of flights for its holidays. Thomson Travels acquired the travel agency Lunn Poly in1972 that allowed it to ensure its products are found at every high street of UK (Thomson Holidays 2016). Thomson Holidays is based at UK and is the subsidiary of TUI group. Thomson Travel Group was owned by the Thomson Corporation of Canada but was floated on the London Stock Exchange in 1998. In 2000 Thomson Holiday Group was acquired by Preussag AG. In 2002 Pressuag AG was renamed TUI AG (Thomson Holidays 2016). The company manages over 18,000 employees to serve its customers effectively (Thomson Holidays 2016). The operating profit of the company is £612million. The total revenue of the company is £14.6.

Customers

Thomas Holiday Group works under the umbrella brand of TUI, which carters to a range of customers in the UK market. Holidaymaking is one of the biggest reasons for people in UK to travel abroad. The Thomson Holiday Group sells packaged holiday services to a range of customers such as youths, young couples, families, and older people in different destinations around the world (Thomson Holidays 2016). Any individual who wants to go on a holiday is the potential customer for the company.

Traditionally, the demographics of customers included families with children and older people; but the recent trends of the industry indicate that a large number of customers are single travelers and youths.    The travel and holiday market is changing due to the changing demographics and preferences of the customers. The customers are becoming more demanding; they no longer prefer the routine holidays. The focus is on the getting a unique experience which involves a particular activity. Customers are seeking for value of their money where they can get more customized and individual experiences.

Values

The values of the company are embedded in the philosophy of providing a holistic experience to the customers; by how the company functions as a business and the way it behaves as a people (Hollensen 2015). Thomson Holiday has always strived to satisfy the need of customers from every segment at an affordable rate. Customer satisfaction drives the company vision and mission. Customers form the center for any decision of the company and providing unique experiences for the customers is the core of organization’s values.

Macro Environment

The environmental analysis of a company consists of macro environment analysis, microenvironment analysis and internal environment analysis. With the help of PESTLE analysis, the macro environment of an organization can be measured. According to Alon et al. (2013), political factors have a moderate impact on the growth and performance of tourism industry. Recently terrorist attacks like Paris attack have an adverse impact on the global tourism business. Currently, the recession has impacted the business of Thomson Holiday in UK. It has handicapped the level of fixed asset of the organization.  The fluctuation of fuel costs, currency fluctuation, and the exchange rate has increased the marketing risk of the tourism industry. In addition, the growth of low cost airlines has grown the economic risk of the tourism sector (Veseli et al. 2012). Presently the tourists of UK are becoming very conscious about their safety and security. Hence, Thomson Holiday has to enhance its focus on improving safety in their Hotels. Thomson Holiday has developed its website, where tourists can book their rooms in advance (Taylor 2012). There are various other acts like health and safety regulations, labor act and environmental protection act have an adverse impact on the tourism business. For PESTLE analysis refer to appendix-1.

The threat of new entrants in the tourism market is medium. When a new hotel has to enter the market, it needs to invest high in the market.  Bargaining power of customers in tourism market is considered as high. As Evans (2012) mentioned that the changing needs of tourists have a substantial impact on the tourism industry. Bargaining power of suppliers of Thomson Holiday is considered as low. Thomson Holiday uses the technique named as “backward integration.” It means that Thomson Holiday has their own suppliers (Sotiriadis et al. 2014). The threat of substitution is considered high in the tourism industry. Presently, the necessity of service differentiation is increasing in the global tourism industry (Schawel and Billing 2012). The threat of competitive rivalry is considered medium for Thomson Holiday hotel. This hotel is regarded as the market leaders of UK tourism industry (Veseli et al. 2012). There are many other rival hotel chains like Britannia Hotel, Premier Inn; Travelodge UK is capable of giving a tight competition to Thomson Holiday. For porter’s five force analyses refer to appendix-2.

Mckinsey 7S analysis

Strategy:  (High) The Thomson Holiday has followed the strategy of cost leadership.

Structure: (high) The Company uses integrated and cross platform information technology to provide better services to the customers.

Micro Environment

Systems: (high) System used by the staffs to perform their job is very efficient and goal oriented. It provides clients multiple options to choose from and delivers solutions to queries in efficient manner (Alshaher 2013).

Shared Values: (high) The customer forms the epicenter if business values. The company believes in innovation, competitiveness and goal oriented strategy to provide customers with value added and unique holiday experience (FitzRoy et al. 2012).

Staff: (low) The Company does not concentrate very much on the training and development of staffs as they are the individuals who have direct contact with the customers.

Skills: (low) Average skills of employees of the organization are low. The employees of the Thomson holiday are competent as provides a strong support to the company in achieving its objectives (Evans 2015).

Style:  (High) Style refers to the behavior of key individuals in the organization. The management style of the Thomson Holiday is to become market leader by excelling in customer service delivery process. For Mckinsey 7S analysis, refer to appendix-3.

SWOT analysis has been done on the company to analyze the strength and weakness of Thomson. Thomson is a well organized and highly recognized brand. It has a superior management team, who are very much capable of doing their operations effectively. The major flaw of the hotel is that it is highly dependent on technology. Hence, if there is any fault occurs in the technology, then it can interrupt the whole business activity. The hotel industry has to increase their focus on eco-tourism. They have to develop new tourism related products and services such as bed and breakfast hotels (Prud’homme and Raymond 2016). The major threat to tourism industry is the recession (Sotiriadis et al. 2014). The economic fluctuation of UK market has a high impact on the stability of the company. For SWOT analysis refer to appendix-4.

From the appendix-1,2,3,4 the major challenges of the company have been found.  Tourism industry is facing recession. It also has impact on the market of Thomson Holiday. The hotel is that it is highly dependent on technology. Hence, if there is any fault occurs in the technology, then it can interrupt the whole business activity. Increasing concern of tourists about terrorism is another major issue of hotel industry.

The market of travel and holiday industry in UK is in the state of perfect competition. There are many different buyers and sellers. The travel and holiday market has become aggressively competitive. The major competitors of Thomson Holidays are the Thomas Cook, Virgin Holidays, First Choice and Expedia. The market share of Thomas Cook is 31%, First choice is 7%, Expedia is 9% and Virgin Holidays is 13% (Alshaher 2013).

Internal

Depending on the information gathered from the SWOT analysis, there are some specific objectives set for the Thomson Holiday. They are set with the help of SMART model.

Increasing safety measures

Increase the company market share by 5% at the end of 2016 due to the opportunity of expanding our holiday package to Africa.

Increasing promotional activity

To improve profitability by 10% within 1 year.

To increase revenue by 20% within 2 years.

To increase environmental sustainability by reducing pollution by 20% within 6 months. 

(Source: Created by author)

There are mainly two strategies are used Ansoff’s matrix and Porter generic strategies to evaluate the necessary strategies used by the organization.

With the help of Ansoff’s matrix, strategic choice of the organizations can be determined. There are four major strategies used by the Thomson Holiday for their business operation. The Company can use price reduction technique in order to gain attraction of new customers of UK.  The Company can develop new services for their customers such as eco-tourism and medical tourism. As Schawelm and Billing (2012) mentioned that eco-tourism is the major attraction of global customers presently. They also can plan to expand their market outside of UK, like UAE, India and China. The company can diversify into other similar business to continue making profits. For Ansoff’s matrix, refer to appendix-6.

There are mainly three strategies mentioned in the Porter’s generic strategy. They are such as cost leadership, differentiation or focus. A company needs to use any one of the mentioned strategies to improve its business performance. With the help of Porter’s generic strategy, the company can use product differentiation strategy, in order to take advantage of the market.  The product is further divided into the Adult holiday, family holiday and also Luxury Holiday. The company mainly targets customers who have high life style. They are less sensitive to price. Hence, this product differentiation strategy is best suited for the organization. For Porter’s generic strategy refer to appendix-7.

Thomson Organization enjoys a prominent position in the business domain due to its prestigious credentials. In this regard, it is important to note the segmentation process of the firm. Segmentation refers to a process of dividing a big unit into small groups that are the market segmentation. Customers can be divided into various subgroups depending on the demography, geography and psychographic.  

Demography- The Company mainly serves customers with luxurious lifestyle and high social class. Thomson can consider price designing so that not only the people with luxurious lifestyle can be involved. (La 2014).

SWOT Analysis

Geography- Thomson provides services to customers across the world online. There are physical stores established in the UK. However, Thomson provides airline services to various countries. The company can target Asian and African countries to increase customer base (Pyo 2015).

Psychographic- Thomson always strives to learn about lifestyle aspects of country’s people, where it functions. The fact of the matter is that if the lifestyle and attitudes of the people are quite good, then company’s prospects are bright (Alon et al. 2013).

Behavioral aspects- Thomson must delve into the behavioral pattern of consumers. For instance, Thomson has holidays’ packages of varied types and categories, so the company needs to find out which packages will attract the attention of the customers and which may not be lucrative to its consumers (Al-Hadidi and Shannak 2013).

The people of Thomson are hospitable and form the essential part of the organization. They are extremely gracious in marketing activities which help the consumers and clients to have a long lasting post-service experience in their psyche. The company needs to develop differentiated profiling for targeting customers. The product is further divided into the Adult holiday, family holiday and also Luxury Holiday. Another scheme in this regard includes holidays like, Florida and Walt Disney, Disneyland Paris, Lapland and Florida holiday (Wu et al. 2016).

Positioning is the process of creating brand image in the mind of the customers for different segments of customer that is being targeted. Positioning is required due to the different needs or expectations of the target market (Alon et al. 2013). Thomson intends to market its service and products in both rural and urban areas of the UK. It is important to know, that the firm has engaged in various schemes to position itself in its chosen geographies. Further to this, it is worthwhile to learn about the accessibility of the product and distribution channels. Thomson Holiday has some of the major travel agents selling its products all across the UK. Also, the online presence has enabled the company to be accessible at anytime and anywhere (Al-Hadidi  and Shannak 2013).

Marketing Mix (7 Ps)

Is the set of actions or techniques that a company uses in order create brand image for the product or services. Marketing mix consists of following elements- product, price, place, promotion, people, physical evidence and process (Wu et al. 2016).

Product: In the context of Thomson Holiday, products are the packaged holiday deals, flights, hotels, etc. Each product has plenty of sub divisions that make the product endless (Huang and Sarigöllü 2012).

Key Issues and Challenges

Price: Pricing strategy of Thomas Holiday has always been of cost leadership. It has applied penetrative prices to reach the maximum number of customers. In addition, it has pricing policy as per the product or packages (Ispas and Marinescu 2013).  Price differentiation is used to address the spectrum of its customers. Competitive prices are used to undercut the pricing model of competitors. Promotional pricing strategies are used while launching new products or to boost off-season sales (Al-Hadidi  and Shannak 2013).

Place: Place refers to the accessibility of the product and distribution channels. Thomson Holiday has some of the major travel agents selling its products all across the UK. In addition, the online presence has enabled the company to be accessible at anytime anywhere (Benur and Bramwell 2015).

Promotion: Thomson Holiday promotes itself under the umbrella brand, TUI. The advertising is mainly concentrated in the mediums such as travel magazines, business magazines, newspapers, hoardings, etc. The company has recently started promoting itself over the internet. Other promotion methods used are giving discount and promotional vouchers (Hollensen  and Opresnik 2015).

People: People refer to the employees of the Thomson Holiday who involved in delivery of services to the customers. The company provides special training to the front desk managers and executives who interact with the customers. Employees are the brand ambassadors of the organization; therefore, Thomson Holiday provides job satisfaction to its employees by incorporating the job-rotation, flexible timing, job-enrichment and motivation strategies in its organization structure (Morrison 2013).

Physical evidence: Physical evidence is the ambience of the service delivery outlet. Thomson Holiday pays special attention to its branch office that creates the atmosphere holidaymaking. The air-conditioning, lightening, decorations, furniture, are all the components of physical evidence on which Thomson Holiday pays special attention to create favorable impression. 

Process: Process refers to the mode of service delivery i.e. how the company engages with the customer at the time of service delivery. Thomson Holiday provides a unique experience to its customers by providing high-speed service delivery. Thomson Holiday maintains good rapport its customers and keeps the customer updated of new deals and discounts. For 7Ps Marketing mix refer to appendix-5.

From the above discussion it can be concluded that the Thomson Holiday Group has utilized all its energy in the organization development and starting from a humble beginning has become the market leader in UK travel and tourism industry. The company has used cost leadership strategies, backward integration, market penetrative pricing strategies. Customer oriented policies and catered to the demands of the customers to assume the role of market leader. Thomson Holiday has analyzed and acted as per the conditions of macro-economic factors such as political, economical, social and technological factors. From the Porter’s five factor analyses it can be concluded that the company is in strong position in the industry. In addition from the McKinsey’s 7-S model it is clear that the company’s internal environment is strong.

The company is focused on achieving its objectives and the combination of marketing mix tools used by the company is as per the requirements of the UK market. The company has been successful in positioning itself a brand of choice for the UK customers due to its cost-leadership strategies, product differentiation for different customer segments and its ability to provide complete holiday packages because of backward integration model. The company financial condition is strong and it enjoys the highest market share in the UK travel and tourism industry. To continue its legacy and as a part of its strategic decision the company is expanding its operations in different countries across the globe.

The company has to increase its safety measures, as customers of hotel industry are more concern about their safety. In addition, the company needs to increase its promotional activity in order to attract their customers. The company needs to target new markets. The company must look to expand its market in Asia and Africa. As the company has ample knowledge about the tourism industry, it can look to move into the educational sector. The company can develop colleges for marketing management, tourism management and hotel management.

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