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Background of the Company

Discuss about the leading tour operators in the UK for Thomson Holiday Group?

Background of the Company

Thomson Holiday Group is one of the leading tour operators in the UK. The organization provides accommodation facilities, travelling convenience, quality food and other services to its customer base. The destinations provided by the organization have exquisite reviews. The company was established in 1965 and has attained growth throughout the years (Thomson.co.uk 2016). Thomson is owned by the parent company Touristik Union International (TUI) Group (Thomson.co.uk 2016). The company manages over 18,000 employees to serve its customers effectively (Thomson.co.uk 2016). Thomson has the leading and biggest travel website in the UK (Thomson.co.uk 2016). The TUI Group, owner of Thomson Holidays posted earnings of around £740million in 2014 (Hopkins 2015). The selling price rose by 1 percent (Hopkins 2015).  The profit levels of the company rose by 4% to £612m in 2014 (Rojas 2014). Thomson Holiday Group reported an increase in the market share by 15% due to improved sales, decreased losses and increased direct distribution (Travelmole.com 2016).

Customers

Customers are the core and integral part of any business. Thomson aims at understanding the needs and wants of its customer base. The company aims to satisfy its customers by providing high quality products and services. The company attracts customers through both physical stores and online distribution network. The passengers are attracted from across the world through efficient distribution channels (Thomson.co.uk 2016).

Market

Thomson Holiday group is the market leader in the package holiday and caters millions of holiday makers annually. The primary market group that turn in to derive products and services of Thomson Holiday Group are the couples and the wealthier families. The company emphasizes on providing attractive lifestyle holidays to the customer base (Rankin 2013).

Values

The most desirable factor by the customers from Thomson is the overall holiday experience. Thomson values its customers by providing good holiday destinations, accommodations and travel experiences. The organization believes in teamwork and achieves brilliant results through development opportunities. The organization constantly looks for improvement to grow the business and spread smiles by creating exclusive holiday experiences (TUI 2016).

Macro-environment

Thomson Holiday Group is affected by political forces such as terrorist attacks (Ukinbound.org 2016). The economic factors such as unemployment and social forces such as price-sensitivity also affect the economy (Allen and Inman 2015). The cultural forces such as national culture, technological forces such as online distribution network, legal forces such as trade laws and environmental forces such as pollution affects the economy (Caa.co.uk 2016).

Customers

The threat of new entrants is low as it requires heavy investment. Threat of substitutes is low as there are no close substitutes to travelling. Bargaining power of suppliers is moderate as TUI acts as its own suppliers. Bargaining power of buyers is low as there is low product differentiation dismantling the switching cost. Intensity of rivalry is moderate as the competition has high fixed cost and high variations in market shares of incumbents (Page 2012).

Thomson group has a large product and service portfolio, efficient internal control systems, geographical divisions, goal-oriented strategy, market knowledge of staffs, transformative leadership and highly qualified staff (TUI Group 2013).

The organization has various strengths such as strong brand image and global reach of services. The organization has dissatisfied customers due to non-flexibility of packages. Thomson has opportunities to expand in other countries. It also experiences threat from other operators and increasing fuel costs.

The key issues faced by Thomson are:

Developing customer intimacy

Health of the brand

Innovation

(Refer Appendix 1, 2, 3 and 4).

The target size is 10 million customers and it targets middle-level income customers. Thomson Holiday Group is surrounded by competitors as there is intense rivalry in the tourism market. The major competitors as determined in the results by the Telegraph Travel Awards, 2014 are Trailfinders, HF Holidays, Scenic Tours and various others (The Telegraph 2014).

A set of SMART objectives are set for marketing Thomson Holiday Group as under:

To establish Thomson Holiday Group as a global travel operator and increase presence in other countries within 2 years.

To increase profitability by 15% within 1 year.

To increase market share by 15% within 1.5 years (Wedel and Kamakura 2012).

To expand the travel destination of airlines to Asian and African countries and increase revenue by 20% within 2 years.

To increase environmental sustainability by reducing pollution by 25% within 1 year.

To increase customer loyalty to 80% within 1 year (Hollensen 2015).

As identified in the presentation, the marketing plan must focus on three factors- customers, brand image and innovation. The above SMART targets would help in increasing global reach to customers. Currently, the physical stores are established in the UK. Thomson may target to expand its physical stores to Asian and African countries. The brand image can be enhanced by improving environmental concerns and using biodiesel fuel in the airlines. This would help in reducing pollution and increase sustainability. With innovative products and services, the product and service portfolio can be increased. With increase in packages available to customers, the market share can be enhanced (Weinman 2012).

Market

Thomson can utilize the exclusive market and research team to conduct customer assessment. Strategic decisions can be taken regarding reinventing the product and service portfolio. Customer loyalty can be enhanced and they can be retained through innovative products and services (Wedel and Kamakura 2012).

Ansoff Matrix

The Ansoff matrix can be used for reviewing other strategic alternatives available to the company. (Refer Appendix 6).

Market Penetration- A new market segment can be entered exclusively for men, women and solo travellers by adding related products and services. New geographical markets such as Asian and African countries can be penetrated (Taylor 2012).

Product Development- Products can be developed by increasing the range of portfolio with several packages for men, women and solo travellers (Schawel and Billing 2012).

Market Development- Thomson being a leader in the travel industry can provide consultancy services to other organizations in the same domain (Schawel and Billing 2012).

Diversification- Thomson with its rich experience in tourism sector can venture into the educational sector where they can establish colleges of hotel management, hospitality management, tourism management or marketing management (Taylor 2012).

Porter’s Generic Strategies

Thomson can create cost leadership by creating low-cost position with high accuracy in demand pattern.

Differentiation Strategy can be created by charging lower prices from the customers instead of premium prices.

Focus strategy can be used to target specific customers such as high income and middle income consumers. Thomson can charge lower prices from price sensitive customers and higher from rich ones.

Segmentation

Demographic Segmentation

Thomson Holiday group mostly has packages for luxurious holidays, family packages and couples. It can be concluded that the primary market segments focused by Thomson are upper income level consumers as the packages are wealthy. The packages are mostly meant for family and couples. It indicates that the product mainly attracts Thomson can consider designing holiday packages specifically for women and men or solo travellers with middle-income level (Wedel and Kamakura 2012).

Geographic Segmentation

Thomson provides services to people across the world online and there are physical stores established in the UK. However, the airline by Thomson provides services to various countries. The company can consider opening stores in Asian and African countries to serve a larger customer base. The flight destinations can be increased and diversified so that services can be provided according to the national culture (Hollensen 2015).

Psychographic Segmentation

Thomson 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, but that of the standard lifestyle can also afford the products and services (Ho Kim et al. 2013).

Values

Behavioural Segmentation

The customer base can be divided into groups of knowledge, uses and responses to a particular product or service. Thomson can revise its product portfolio and come up with packages that would suit needs of majority of customers. Different price slabs and destination can be made according to the behaviour of the customers (Guo et al. 2013).

Targeting

The primary target market of the brand is the wealthy income group, couples and family groups. The Cruise, Villas and hotels are expensive and it creates strong brand value for the company. Thomson Holiday group can consider targeting 10 million people annually (TUI Travel Plc 2013). The consumers targeting strategy can be adopted as differentiated strategy. Thomson can create multiple campaigns for appealing more than two market segments or target groups. Campaigns can be designed for various groups like men’s group, women’s group or solo travellers who are not willing to select a luxurious holiday. Destinations can be chosen for this group of people in a manner that appeals these target groups individually (Kapferer 2012).

Positioning

Thomson Holidays involves positioning of the group as luxurious holiday-makers. The company positions itself as a holiday solution provider and holiday destination manager. Currently, Thomson follows product characteristics and customer benefits currently. It may enhance and develop its strategy by providing them with a new portfolio for a group of men or women willing to spend a holiday. However, Thomson is designed for wealthy customers. It may consider pricing as a strategy where it may deliberately offer more number of services at the same price. The price-quality approach must be considered by the company for wealthy consumers and differentiated prices can be provided to the middle-income level consumers (Mahatoo 2015).

According to the STP Analysis, price-quality approach can be considered and new categories can be created for men and women to improve market share. The Marketing Mix would help in achieving the issues or ideas addressed in STP analysis.

Marketing mix is used as the business tool to determine the product and services offered by the brand. An extended marketing mix is presented using the 7P model as recommendation to Thomson Holiday Group for achieving the SMART target mentioned in earlier section. (Refer Appendix 5).

Product

As discussed earlier, the products and services offered by Thomson Holiday group are focused on couples, wealthy consumers and family groups. New products and service packages can be designed specifically for men, women and solo travellers.

Situation Analysis

Men

As men are fond of adventures, special packages can be introduced exclusively for a group of men willing to spend a holiday. Exclusive packages can be offered to them as they have a greater necessity of adventure sports and less of a luxurious holiday (Falzon 2012).

Women

As women are mostly fond of spending quality time together, exclusive packages including stylish restaurants, fantastic sightseeing can be offered to prospective customers who can afford to spend more. However, packages for women can be designed for adventurous women with convenient accommodation facilities (Falzon 2012).

Solo travellers

Solo travellers mostly seek adventure and are not fond of accommodation. Best packages can be designed for single travellers that involve more of adventure activities and dining, however, fewer options can be provided for accommodation to balance the cost (Sotiriadis and Apostolakis 2015).

Price

Thomson currently follows price-quality approach. The company has a tendency to charge more from the customers based on services provided. For penetrating into new markets such as Asian and African countries, Thomson can follow penetration pricing. It would help Thomson in entering into the foreign markets easily by establishing physical stores. Competitive pricing may also be followed for entering into the foreign markets as there are other travel operators who have reputational image for their pricing. Value-based pricing can be used for the above mentioned product segments designed for men, women and solo travellers. The consumers must not have a perception of quality compromise in new portfolio of products and services (Falzon 2012).

Place

The physical stores are currently established in the UK. The physical stores can be established in Asian and African countries as there is high scope of business. The online distribution channel may add new products and service packages designed for every country to match with the national culture. The customers would embrace making in the culture of destination country. The website can also be enhanced in the national language of each country so that it is easier for customers to understand the local language who are not fluent in English. Direct marketing strategy must be used so that there are no intermediaries and products are sold directly to the customers (Sotiriadis and Apostolakis 2015).

Promotion

The promotional mix is divided into various sub-parts as there are different strategies that can be used to market Thomson Holiday Group.

Advertising- Thomson can make use of elements such as radio, travel magazines, newspapers, billboards and other media sources for advertising the company.  Advertisements can help in gaining attention of customers. The advertisements can be made visually attractive so that customers can consider the brand in planning their future holidays (Sotiriadis and Apostolakis 2015).

Macro-environment

Personal Selling- Sales presentations, meetings and packages can be designed for tying-up with corporate such as restaurants, railways, airlines and other partners that would increase direct sales (Goodall and Ashworth 2013).

Sales promotion- Coupons, contest, rebates, trade shows and exhibitions can be designed to increase revenue and gain attention of the potential customer base. Special discounts can be offered based on seasonality of the destination (Falzon 2012).

Public Relations- Thomson must aim to improve relations with the public by corporate social responsibilities and taking initiatives to save the environment. The airlines must increase the usage of biodiesel fuel so as to reduce pollution and increase sustainability. Press releases can be made for the same (Falzon 2012).

Internet Marketing- Internet marketing tools such as search engine optimization, search engine marketing, blogging and various others can be used for increasing visibility of the company. Social media sites such as Facebook and YouTube can be used by posting visually attractive images, catchy slogans and videos to increase customer engagement (Goodall and Ashworth 2013).

Process

Thomson can allow better services by enhancing communication with the customers. The existing and potential customer base must be targeted by the company and reviews must be derived. Processes must be improved by providing customized service (Falzon 2012).

Physical Evidence

Physical evidence includes decors, brochures, furnishing and air-conditioning. The physical stores must ensure that they provide brochure to every single customer visiting them for inquiry. The internal decors must have different themes such as deserts, underwater and various others that may be appealing to the customers. High quality furnishing must be used in the stores and destinations (Goodall and Ashworth 2013).

People

People refer to the employees, customer and management that are involved with Thomson Holiday Group. Thomson must devise ways to retain their people by sustaining employees. Training, job enrichment and job motivation must be provided to the employees. With satisfied employees and management, better services can be provided to the customers (Ashworth and Goodall 2012).

The report represents various aspects and factors of the tourism industry in the UK. The discussion shows that the present economic, political, social and legal factors of the country are favourable to the tourism sector and in this context there are various opportunities for Thomson Group. The company today has become one of the market leaders by its strong strategic and financial support. This report shows that there is various diversified business opportunity for the company in near future. So, this report concludes that by leveraging social, economic, technological benefits and with the help of valuable market knowledge company can beat all its competitors in near future.

Micro-environment

Exclusive packages for men, women  and solo travellers can be designed. The physical stores can be established in Asian and African countries as there is high scope of business. Enter foreign markets through penetrative pricing, value-based pricing and competitive pricing. Training, job enrichment, recruitment of new talent and job motivation must be provided to the employees for better customer service.

References

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Baran, M., 2014. Technology presents challenges and opportunity for tour guides: Travel Weekly. [online] Travelweekly.com. Available at: <https://www.travelweekly.com//Travel-News/Tour-Operators/Tour-tech> [Accessed 1 Apr. 2016].

Caa.co.uk, 2016. Civil Aviation Authority. [online] Caa.co.uk. Available at: <https://www.caa.co.uk/home/> [Accessed 1 Apr. 2016].

Falzon, J., 2012. The price competitive position of Mediterranean countries in tourism: Evidence from the Thomson brochure. Tourism Management,33(5), pp.1080-1092.

Goodall, B. and Ashworth, G. eds., 2013. Marketing in the Tourism Industry (RLE Tourism): The Promotion of Destination Regions. Routledge.

Guo, X., Ling, L., Yang, C., Li, Z. and Liang, L., 2013. Optimal pricing strategy based on market segmentation for service products using online reservation systems: An application to hotel rooms.International Journal of Hospitality Management, 35, pp.274-281.

Ho Kim, T., Jae Ko, Y. and Min Park, C., 2013. The influence of event quality on revisit intention.Managing Service Quality, 23(3), pp.205-224.

Holland, J. and Holland, R., 2016. Non-Aviation-based Tourism: A UK-based Perspective. Tourism Enterprises and the Sustainability Agenda Across Europe, p.51.

Hollensen, S., 2015. Marketing management. Harlow: Pearson.

Hopkins, J., 2015. World's biggest travel firm, TUI Group on track for earnings of €1bn. [online] This is Money. Available at: <https://www.thisismoney.co.uk/money/markets/article-2947281/World-s-biggest-travel-firm-TUI-Group-track-earnings-1billion-euro-year.html> [Accessed 21 Apr. 2016].

Kapferer, J., 2012. The new strategic brand management. London: Kogan Page.

Mahatoo, W., 2015. Purchase Intentions and Brand-Positioning Strategy: An Exploratory Study.Proceedings of the 1983 Academy of Marketing Science (AMS) Annual Conference, pp.99-103.

Page, S., 2012. Tourism management. Amsterdam: Butterworth-Heinemann.

Rankin, J., 2013. Focus on wealthy travellers pays off for Tui Travel. [online] the Guardian. Available at: <https://www.theguardian.com/business/2013/aug/07/tui-profits-rise-thomson-first-choice> [Accessed 1 Apr. 2016].

Rojas, J., 2014. Thomson Holidays owner profit jump bucks the trends - BelfastTelegraph.co.uk. [online] BelfastTelegraph.co.uk. Available at: <https://www.belfasttelegraph.co.uk/business/news/thomson-holidays-owner-profit-jump-bucks-the-trends-30799459.html> [Accessed 21 Apr. 2016].

Schawel, C. and Billing, F., 2012. Ansoff-Matrix. In Top 100 Management Tools (pp. 22-24). Gabler Verlag.

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