Australian Travel Agencys Target Market - Term Paper Example

Business Plan Executive summary Evidently, there has been a tremendous growth on the retail distribution network for the last 10 years. In Australia there are around 4,500 travel agencies. Travel agents are very vital in any distribution chain. This is due to the fact that they attract customers through their shop fronts and the websites which are highly trusted by their customers. Australian’s large retail networks include the Jetset travel world, Travellers Choice, Harvey World Travel, Flight center as well as Travelscene American Express. This report has focused on developing a business plan for a new company that wants to venture in to the very competitive retail business environment in Australia as well as establish an innovative new chain of travel agencies around Australia. It has covered such areas as the target markets for the new company. As is evident in the report the company will target both men and women in both the professional jobs and non-professional jobs. It will also target couples and families. The company will acquire its license der the Australian Federation of Travel Agents. In addition it will source its funds from the sale of tours and travel products as well as the sale of products. Moreover the company will have operations management and human resources systems planned to enable the company achieve its goals and objectives effectively. The new company will locate its business at the heart of the cities of Australia where the pull factors are more than the push factors enabling it to maximize on revenues while minimizing the costs. In its operations, the company will use the equity model for it will allow the members to exercise voting. This way the company will be able to choose the leaders they deem right to run the business. In conclusion, the company will also ensure anti-dilution opportunities making sure that the company has long-term stability. Introduction Travel agency refers to a retail business which sells products and services which are related to travel to customers on behalf of suppliers who include the airlines, cruise lines, car rentals, sightseeing tours, hotels and package holidays (Tourism Victoria, 2011). The travel agency target people on holiday or recreation travel, those attending music festivals, people attending events for sporting contests, arts as well as cultural performances(Tourism Victoria, 2011). In addition their market also includes people who are travelling to visit their friends or relatives or on a business plan. Evidently, there has been a tremendous growth on the retail distribution network for the last 10 years. In Australia there are around 4,500 travel agencies(Tourism Victoria, 2011). Travel agents are very vital in any distribution chain. This is due to the fact that they attract customers through their shop fronts and the websites which are highly trusted by their customers. Australian’s large retail networks include the Jetset travel world, Travellers Choice, Harvey World Travel, Flight center as well as Travelscene American Express(Tourism Victoria, 2011). It is apparent that the travel agencies work in collaboration with the wholesale as well as the airline partners this is so as they could come up with marketing campaigns that are highly competitive. It is evident that domestic bookings play an important part in the business travel agency in Australia(Tourism Victoria, 2011). This report will focus on developing a business plan for a new company that wants to venture in to the very competitive retail business environment in Australia as well as establish an innovative new chain of travel agencies around Australia. Target market Basically, target market involves subdividing the market or the prospective customers into various groups so that the company is able to reach these groups. In addition it involves concentrating on the marketing efforts that will enable such a company reach to one or all the groups. This is a very effective marketing strategy for marketing the travel and tourism product as the products will get to the targeted groups(Kotler and Kevin, 2006). There are various ways of dividing the customers and this is based on market segmentation. For instance, in this case, the potential customers will be grouped on the basis of demographic and psychological segmentation. Demographic segmentation involves grouping the customers in terms of income, age, gender, social standing, and needs (Kotler and Kevin, 2006). The new company’s travel and tourism products will target the working and corporate class who earn a substantial amount of income and furthermore appreciates quality lifestyle. These working classes who include both men and women will range from the administrative personnel to the managerial class who are aware of their reputation and image. However, the company will also target blue collar workers with low income.On the other hand psychological segmentation entails grouping the customers in terms of their lifestyle preferences for instance being urban dwellers (Ward,2012). Tour and travel products appeal different kinds of markets and people with each having different budgets and tastes (Australian Bureau of Statistics, 1998). These people include spending their time in modern resorts where they will have their every need pampered, or the backpackers whose interests are in discovering Australian’s ruggedness rather than spending a good time in the most luxurious accommodations.The new company will be keen to ensure that its products are developed in a way that meets their customers’ needs and preferences. In addition, the marketing will express a sense of quality and segment strategy in every promotion, every picture and every publication. The company will choose to compete in markets with low competition, and channel areas which match its strengths. In conclusion the new company will make sure that it visits the selected areas from time to time to ensure that they are meeting the expectations of their target groups(Kotler and Kevin, 2006). Business registration Apparently, the travel agents of Australia are represented by the Australian Federation of Travel Agents (AFTA). The body has a membership of approximately 2500 retail outlets and more than 100 hotels, wholesalers, allied industry organizations, tour operators among others. This results to more than 2600 members(Tourism Victoria, 2011). The Australian Federation of Travel Agents’ constitution necessitates that all members operate under licensed premises. In addition the members should be in possession of a professional indemnity insurance policy(Tourism Victoria, 2011). Licensing The new company will make sure to acquire a permit for operating the business under the requirements of the Australian Federation of Travel Agents. With the license the company will be able to meet its goals within the industry since it will have applied for the certificate of operation. Sources of funds It is apparent that most of the funds for the retail travel agencies are usually from the sale of tickets. In Australia, the sale of tickets by the retail travel agencies accounts for about 1334.4m US dollars(Australian Bureau of Statistics, 1998). This represents around 93.5 % of all the income generated by the travel agencies. The new company will also get most of its funds from the sale of its products besides the investment of the management as startup capital. The owner will invest around 58, 500 US dollars. In addition the company will not focus on retail only but wholesale too so that it is able to raise more money for operation. The company will incur such expenses as labor costs, $ 600, the costs of hiring and leasing as well as the rent for the premises $ 750, advertising and promotion $670. Other major expenses that the new company will incur include the brochure expenses and computer reservation expenses, $ 450. Financial projections The new company forecasts that there will be a tremendous growth of the business from a steady buildup of clients from the global market. This is due to the marketing strategies that the company will employ so as to be effective and maintain a competitive advantage over its rivals. Year one Year two Year three Sales 2400700 5,302,645 7,591,131 Less the cost of sales 2100096 4,588,327 6,606,286 Gross profit 300604 714318 984845 Less the expenses 225741 245,405 355,692 Net income before tax 74863 468913 629153 Provision for taxes 9304 86,184 155,752 Net income after the taxes $65559 $382729 $4734401 Potential markets Tourism in Australia operates in more than 20 markets across the globe(Australian Bureau of Statistics, 1998). Apparently, the most active markets for Australia include the Europe which consists of such countries as Germany, Netherlands and Switzerland, the United Kingdom, china, Japan, Singapore, South Africa, United Arab Emirates, Korea, Malaysia a d Gulf States. , therefore the new company will aim at this potential market bearing in mind that different customers have different tastes and budgets(Australian Bureau of Statistics, 1998). The company will hence choose the right marketing strategy that takes into consideration the different kinds of people and markets al together. In addition the company will ensure that it understands the markets perfectly well and that it produces the products that meet the needs of its customers. Besides, the company will be keen to observe the seasonal fluctuations so that they could make the right decisions based on the annual trends. It will also develop the best marketing tactics to retain and attract more customers during the off season and shoulder periods. This they will achieve by offering special offers such as get one free and stay two nights. Marketing strategy It is evident that marketing is of paramount to any running business(Kotler and Kevin, 2006). New companies need to understand what marketing initiatives it is going to apply to be successful in any chosen international market. The new market intends to sell its products to the right people, at the right price, at the right location, with the right promotion and at a profit. The new company intends to do this by carrying out a research to understand its customers and their needs. This way they will be in a position to offer the customers the products and services that will meet their needs. Moreover it will enable them provide the goods to their customers at a price that they will be able to pay for. Besides, the company will ensure to develop the right tactics that will ensure their products get to the market place and their customers know about them(Kotler and Kevin, 2006). This will include the advertising and promotion programs, use of brochures, business magazines as well as employing consumer promotions(Kotler and Kevin, 2006). Operations management Operations management is an aspect in the field of management that is responsible for designing, redesigning as well as overseeing the business operations in the development of the goods and services (Wilson,1995). It entails ensuring that the operations of the business are efficient by making sure that the resources are used effectively in fulfilling the needs and want s of the customers(Wilson, 1995). In addition it is also concerned with the processes that convert the inputs such as labor, energy and those in the forms of material into outputs. It is evident that the top management always concerned with the making of the strategy as well as revising it over time. On the other hand, the line officers are concerned with ensuring that they make tactical decisions to support the implementation of the strategy. In business, individual people often move between their different roles over time(Wilson, 1995). The new company will be by a body of employees who will be headed by the company’s president. In addition the company will have a board of directors who will comprise of highly qualified personnel who have worked in the tour and travel industry for a couple of years. This is because having such people will help boost the operations of the new company as this people understands this field and they will be able to easily identify new opportunities for the company as well as be able to understand what decisions work best for the company. Each of the travel agents or the company will have its own management to ensure efficiency and effectiveness. In addition it has supervisors who will always oversee that the various activities within the organization are running as planned in the strategy. The company also has a management team that is responsible for determining the location and size of their retail travel outlets, deciding the structure of their service and designing their technology supply chains to enable them to capture a wide market (Cohen, 2005). Staffing The company will ensure that their staffs have job descriptions as well as a career and training history. In addition the company will keep a record of the employees’ reviews. Moreover the company will have highly trained consultants who will be in a position to handle the customer’s business travel requirements appropriately. Most of its professional travel agents have the expertise needed to be successful in the industry for having worked within the industry for a number of years. The staff will be responsible of operational issues which include quality control and inspection of the customer service so as to ensure that they offer personal as well as efficient service that surpasses its customer’s expectations (Wilson, 1995). Human resources systems Human resources systems are electronic tools that help people access the human resources related information as well as perform the human resources related functions (Heathfield, 2012). The new company has the human resources systems planned. The systems range from the Human resources software technology to human resources information systems. The human resources systems are of paramount to the company as it ensures the management of all its employee information; it benefits the administration including status changes and enrollment. Moreover the human resources systems will ensure the company’s long-term stability(Heathfield, 2012). They will also ensure that the company works at a close partnership with its customers to identify what products they like most. In conclusion with the help of the human resources systems, the new company will be able to carry out data conversion, system consulting and training as well as customization(Heathfield, 2012). Preferred target market and business location The new company’s preferred market target is men and women covering the couples and families(Kotler and Kevin, 2006). The company has also carried out a research to identify the targetmarket and make a customer profile which informs them of what the market thinks as well as well as what they like. In addition the kind of newspapers they read in order for them to be able to reach out to the customers effectively. The target market also includes both the professional and non- professionals, those who enjoy staying in luxurious resorts as well as those interested in the ruggedness of Australia(Kotler and Kevin, 2006). A business location is where a business is located. Where a business is to be located requires making an important decision as the choice of a business location always have a vital impact on the success of the business. Basically, businesses will seek to locate their premises in strategic locations that minimize costs and enhance revenues(Kotler and Kevin, 2006). The choice of business locations is determined by a number of factors which range from the pull factors such as low labor costs, developing markets as well as good communicating systems and government incentives to the push factors which include rising costs, falling demand, poor communicating systems and rising competition in the area. The new company aims at locating its business at the heart of the major cities in Australia which include Melbourne, Brisbane and Sydney. The new chain of national retail travel agencies will be located at these cities because there is good communicating systems, there is a ready market and almost all the targeted group visits the cities (Australian Bureau of Statistics, 1998). Locating the travel agencies at the cities will be a benefit to the company as they will be able to acquire cheap labor and as a result they will maximize on the revenues and reduce on the expenses (Mills, 2002). Type of market to engage in The new company will not only engage in retail markets abut also in inbound markets. An inbound tour operator acts on behalf of the international and national tour wholesalers. They organize ground content of tour programs in Australia. Basically, the inbound tour operators act as intermediaries between the tourism operators and the wholesalers. Evidently, inbound tour operators are able to negotiate good rates to the volume as well as the tourism products they book (Mills, 2002). The inbound tour operator combines different tourism products to generate packages that suit the needs of the various inbound markets. It is apparent that the inbound tour operators conduct several activities that attract a variety of customers and ensure that their products sell extensively(Mills, 2002. The new company will benefit greatly if they operated as an inbound operator. Inbound operators create individually tailored packages. Moreover they provide an international exposure to the product. Therefore the company’s new product will have an advantage as it will be known internationally and this will mean an expanded market for the company. Internet Generally, the public access to the internet forces many airlines to sell their products to passengers directly(Australian Bureau of Statistics, 1998). As a result of this, it becomes unnecessary for the airlines to pay commissions to the travel agents for the tickets sold. The internet will enable the new company to sell and book airline tickets, car rentals, hotels as well as other related travel products and services. The internet will also ensure that the potential clients of the company are able to sort their travel packages by amenities, proximity to a city and price(Australian Bureau of Statistics, 1998). It is apparent that the online travel websites sell their products at a lower price and his therefore means that the internet will be a threat to the new company as it will be forced to sell its products at a lower price to attract more customers. Ownership of the travel agencies It is apparent that the company will have travel agents in different cities. These forces the company to manage multiple locations as well oversees employees located in distant locations which is a challenging task(Kotler and Kevin, 2006). However, the company will have only one company managing the different locations. This is because the company will ensure it works hard to retain its team cohesion as well as the philosophy that all the employees are on one team irrespective of their job locations. The company has systems in place to standardize the quality of their communications and products (Kotler and Kevin, 2006). These systems will help reduce the supervisions. In addition, the company has adopted for its operations. Franchise or alternative equitymodels The alternative equity models provide alternative measures of equity to the relational partner. The Fairness Model thus allows for the perceived equity/inequity of the overarching system be incorporated into individuals' evaluations of their relationships (Carrell and Dittrich, 1978). Its benefits range from diversification, equity build up, replication after established among others. The Franchise model on the other hand provides benefits to both the buyers and the sellers(Goldberg, 2012). With franchising the primary benefit is the ability to use people’s money to expand the brand more rapidly as compared to when they are doing it alone (Goldberg, 2012). The new company will use the equity model as this covers such issues as limiting the percentage of ownership and hence the company will have a high level of management involvement. The model will also allow the members to exercise voting(Carrell and Dittrich, 1978). This way the company will be able to choose the leaders they deem right to run the business. Moreover the company will also ensure anti-dilution opportunities making sure that the company has long-term stability(Carrell and Dittrich, 1978). Conclusion This report has focused on developing a business plan for a new company that wants to venture in to the very competitive retail business environment in Australia as well as establish an innovative new chain of travel agencies around Australia. It has covered such areas as the target markets for the new company. As is evident in the report the company will target both men and women in both the professional jobs and non-professional jobs. It will also target couples and families. The company will acquire its license der the Australian Federation of Travel Agents. In addition it will source its funds from the sale of tours and travel products as well as the sale of products. Moreover the company will have operations management and human resources systems planned to enable the company achieve its goals and objectives effectively. The new company will locate its business at the heart of the cities of Australia where the pull factors are more than the push factors enabling it to maximize on revenues while minimizing the costs. In its operations, the company will use the equity model for it will allow the members to exercise voting. This way the company will be able to choose the leaders they deem right to run the business. In conclusion, the company will also ensure anti-dilution opportunities making sure that the company has long-term stability. References Australian Bureau of Statistics. 1998. Year book, Australia, Issue 80. Aust. Bureau of Statistics, Carrell, M.R., and Dittrich, J.E. 1978. Equity Theory: The Recent Literature, Methodological Considerations, and New Directions. The Academy of Management Review, vol. 3, no. 2, pp. 202-210. Cohen A. W. 2005. The Marketing Plan. New York: John Wiley & Sons, Inc. Goldberg, E. 2012. The Benefits of the Franchise Model. Available at http://www.franchising.com/opportunities/hot_franchises.html Heathfield, S. M. 2012. Human Resources Information System (HRIS). Available at http://humanresources.about.com/od/glossaryh/a/hris.htm Kotler, P., and Kevin, L. 2006. Marketing Management, 12th Ed. New Jersey, Prentice Hall. Mills, G. 2002. Retail pricing strategies and market power. Melbourne: Melbourne Univ. Publishing Tourism Victoria. 2011. What is Wholesaling? Available at http://www.tourism.vic.gov.au/marketing/marketing/what-is-wholesaling%3F/ Ward, S. 2012. Target Marketing. Available at http://sbinfocanada.about.com/od/marketing/g/targetmarketing.htm Wilson, J. M. 1995. An historical perspective on Operations Management, Production and Inventory Management Journal, vol. 36, pp. 61-66 Read More