Swot Analysis Of One Of The Top Travel Service Provider Flight Centre Travel Group (Fctg)
Strength
Flight Centre Travel Group (FCTG) is considered to be one of the best travel service provider for travellers around the world. We are expanding our market in Nepal which is one of the top travel destinations for the people around the world, therefore FCTG has numerous advantages and strengths which will be beneficial in penetrating the new marketplace. The strengths of Flight Centre can be listed as: Can merge with the existing successful travel agents or acquire them and improve the operations of the company by streamlining the process and services through the use of technology and efficient manpower.
The use of technology and system in the travel operations will bring consistency, quality, and reliability in the services and products which will allow the FCTC to achieve more in less time. Highly skilled manpower such as the tour guides, expedition guides is available in Nepal at a low cost. Expanding the operation in Nepal can have a good return on investment in the long run because travel and tourism have always been a profitable business in Nepal. Tourism is one of the largest industry in Nepal so revenue growth and returns can be expected in a long run.
Weakness
Some of the factors that FCTG should consider and improve on while establishing its operations in Nepal are given below: Research and Development about products and services are hard to carry out as fewer facts and figures about the travel and tourism are available in Nepal. The lack of data and facts may result for a product or service to be tested every time when they are brought in the market, which may increase the overall cost. The organizational system and technology that FCTG uses can be new to the people over there, so it might be hard to switch from the present working condition to a new one.
More investment in technology and advanced systems are required to streamline the operations and work process as there is less use of advanced systems and technology in the travel and tourism. The return on investment and profitability is hard to achieve in the short run as we need to invest more in the resources, technology and infrastructures when establishing the business in Nepal. Opportunities The growth of rate of International Tourist with higher disposable incomes is high, so FCTG can serve these types of customers by selling travel packages to increase the market share and customers.
The growth in technology users is emerging at a rapid pace so the number of people who uses technology is increasing. So as a travel company who focuses on technology to integrate the business process and operations, we can benefit the most as compared to other competitors. The marketing of travel products and services are really easy so the growth in terms of sales and market positioning can be easily achieved if we focus on developing unique and clearly defined products and services.
The change in the trends of potential domestic customers also brings the possibility of entering into a new market which provides FCTG with the opportunity to diversify the product categories with new market and product segments. The year 2020 will be observed as Nepal Tourism Year 2020 and Nepal is expected to attract around 2 million foreign tourists (Nepali Times, 2017). Travel Agency like FCTG can seize this opportunity to enter a new emerging market and minimize the risks and uncertainties as the flow of customers can be seen during these periods.
Threats
The business model or workflow of FCTG can be easily imitated by other competitors because the travel industry in Nepal is emerging at a rapid pace. Other competitors may supply low-quality travel packages at a cheaper rate than FCTG which can be a serious threat as FCTG will have a a huge investment in the industry compared with other competitors. Instability in the political rules and regulations could also be a threat to certain products or services. The FCTG might be exposed to the currency fluctuations because the Currency Index of Nepal is relatively low. The operational cost also tends to be high for some time after establishment so the return on investment may not be achieved in a short period of time. Nepal is a country which is prone to natural calamities and disasters, so it always has been a major environmental threat for Travel and tourism industry.
Product Strategy
As FCTG is entering into an emerging market, we need to focus on certain aspects of the product so that we are able to connect the product with our potential customers. Some of the strategies that FCTG can take for the products to reach to the potential customers are explained below:
- Personalised Customer Engagement
- Omni-Channel Environment
- Customer-Specific Product Creation
A travel product must have a personalized customer engagement feature. It helps in strengthening the customer relationship by providing better engagement with the customers. As we engage with the customers and provide them with the opportunity to customize their travel holidays, we can also learn about the customer behaviours and trends which will be beneficial for future references to create product categories and segment new target markets.
While providing customized customer products, we also need to make sure that we are connecting our customers through the right channels and environment. As we are a travel company, our customers are not geographically determined and we must be able to serve customers residing in other countries from Nepal. Thus, a multichannel approach to improve the user experience is necessary so that they can book or purchase travel packages, tickets regardless of the places they are from or the device they are using through the use of advanced system and technologies. Omni-Channel helps customers to improve their experience and as a travel outlet it is also necessary to find the most suitable approach for a traveller.
It is necessary to change the supplier-driven approach to customer based product creation in order to penetrate the market in Nepal. “The difference really is a retailer controls their inventory and know their customers intimately whereas an agent represents wholesalers and airlines” (Stanley, General Manager - FCTG). So FCTG must establish themselves as a travel outlet selling travel products and services to understand the customer needs and demands. This will have a competitive advantage over other competitors as they work as an agent and we can focus on launching unique products and services.
Innovative and Automated Technology Segmentation and Positioning Strategy
The travel and tourism industry has a very large and diverse market, therefore it is necessary to segment the market to understand the consumer trend and behaviour. Market segmentation for FCTG can be done by understanding the demographics, behavioural patterns and trends. The market segments for FCTG can be created by one or a combination of the following:
- Demographics
- Behavioural Pattern
- Socioeconomic Status
Geography Our market segment won’t be bounded by geography because as a travel company we have a very diverse market. Thus, our main target consumers will be everyone who is interested in travelling Nepal, regardless of the place where they come from. They can be both international and domestic tourist.
FCTG should focus on those market segments where the consumer is seeking for leisure travel, adventure and expedition travel, wildlife excursion. We can offer a wide range of products in these categories with different price ranges. Thus, we can benefit the most by focusing on the market where the consumers are keen on exploring the unique destinations with adventure and expedition.
Since travelling and holidays are fun activities, we should focus on those consumers who have a greater disposable income.
The consumers can be Pricing Strategy
Travel and tourism products are unique and rarely identical from each other as travel holidays and packages can be personalized as per the consumer wants. So, basically, the pricing strategy for FCTG will be based on the consumers we have targeted and the marketing strategy we have set. For eg: Customer seeking luxury travel will have a high price charged for a product in comparison with a customer seeking for backpacking travel. Some of the pricing strategy that FCTG can adopt are explained below:
Pricing Skimming Strategy
The markup pricing strategy identifies all the cost associated with the travel such as transportation, hotel fees, resources used, time spent and so on. This type of pricing strategy ensures that FCTG can make a profit through every sale of the travel products to its customers.
Markdown Pricing Strategy / Competitive Strategy
Travel business in Nepal is a seasonal business where there is peak time for travellers visiting Nepal. So during the off seasons, FCTG must use markdown pricing strategy in order to remain competitive. FCTG can offer holidays deals and packages to the domestic tourist at a low price in such situations where the cost during offseason usually remains low as it is not a favourable time for travellers.
Package Deal Strategy
Consumers will be able to personalise their travel holidays, therefore, a total cost of a whole package that includes the airfare, hotel, tours and other activities can be set. This pricing strategy also helps in meeting the needs of niche markets. For eg: Tourist interested in rafting, bungy jumping, canyoning, zip line can be offered package deals. This type of pricing strategy is suitable for domestic tourist too.
Value-added Pricing Strategy
Value-added pricing can have a competitive advantage by enhancing the perceived value of a travel product. This type of pricing strategy is suitable for luxury travel as customer tend to spend their vacation or travel in an exquisite way.
Distribution Strategy
The distribution strategy for travel and tourism products offered by FCTG in Nepal will be mainly done through intensive distribution, selective distribution strategy and direct selling. The type of product we are selling is intangible so the best mediums of distribution will be the internet. The strategy that can be used by FCTG are explained below:
- Direct Distribution
- Intensive Distribution
- Selective Distribution
Direct distribution is the type of distribution strategy where the sales of the product are directly done to the customers. FCTG can directly sell the travel product and services to the customers through their retail outlets, online applications, websites, e-commerce or computer reservation systems. This strategy of distribution will help to take total control of the market as we interact with the customers directly. Since FCTG is a company that strongly focuses on the use of technology and advanced system, we can benefit from direct selling through the internet. Frost(2004) stated that the change in technology has changed the way of interaction and trade between customers and travel company. Furthermore, Frost(2004) has also identified telephone communications, use of credit cards, call centres and customer loyalty program as the four other methods of direct selling that the tourism industry can use to facilitate direct selling and interact with the customer.
Intensive distribution is a distribution strategy where all the possible sources of distribution channels are used for product distribution. Using all forms of distribution such as employing local travel agents in Nepal, hotels, visitors information centre, ecommerce, websites, social medias can be used for product distribution. Intensive distribution strategies can be more beneficial during off seasons when the business is low and we can offer the packages and holidays to the domestic customers at a low price.
Nepal is geographically a small country so, we can only set up small number of outlets at a selected areas and cities to distribute the product.
Promotions Strategy
With the emerging use of technology in the tourism industry, it is easier to share information about products and services. Some of the promotion mediums that FCTG can use in Nepal are explained below: Public Relation Strategy Public Relation is the most important most important parts of marketing tourism as it is defined as “to promote improved understanding between operators and their public” (Roberts, 1993). The tourism industry is competitive so it is necessary to maintain public relations with the consumers so that they turn into loyal customers. Public relations can be built through direct selling, internet, social medias. Internet are the fastest means of distributing tourism products nowadays. The awareness of new opportunities within the tourism distribution channels is essential for tourism professional in order to remain competitive and successful.
Advertisement Strategy
Awareness about the FCTG travel products and services can be created through Facebook Ads, Google ads, Youtube ads, Instagram where we can choose the target market and audience that the advertisement shows up to. We can create our own audience based on geography, demographics, interest that we can reach our products information to. Lee (2013) states that in the last 4 years, the biggest change within the tourism distribution channels was that social media connects with the online travel agencies and the suppliers’ website.
Thus Social media like facebook, youtube, Instagram is one of the most use promotional channel that FCTG should use to communicate and interact with the customers. Besides that, we can use Search Engine Optimization, Google Analytics so that whenever a potential consumer search for a travel booking or holiday, they can easily find FCTG on the list. In the tourism industry, the influence of the technology has affected traditional tour operators due to an increased demand for dynamic packaging (Paraskevi Fountoulaki, M. Claudia Leue, and Timothy Jung, 2015). The Internet has become the fastest, easiest and efficient way of distribution of travel-related products and services.
