Archive for August, 2005
Reading this in conjunction with the last post, it looks to me that the strategy of adding value and stressing customer service elements in their marketing, Travelocity recently embarked on starts to pay off in their growth prospects. If they succeed in eating into Expedia’s market share and do so in the most profitable segment, packaged tours rather than commodity components, they could really end up with a very strong market position. This latter strategy is even more useful in their overseas markets, Europe and Asia where packages have already a higher penetration rate in the off-line world and are viewed more positively by the customer than in the U.S. An interesting development to watch. So, let’s stay tuned…..Read Full Post | Make a Comment ( None so far )
The growth prospects for online travel remain positive and considering the previous post, if online travel players manage to a) sell more of their product to an already converted buying public and b) can devise strategies to convert more browsers into becoming online buyers the figures look even more promising.Read Full Post | Make a Comment ( None so far )
Taking it as a given that no marketer can capture 100% of a potential audience, it seems to me looking at the demographics that online travel companies have been able to sell their products to the best segment of the market, people with higher income, higher propensity to travel, more trips per year. You name it, they have it. The question for a marketer here is: "do I spend my effort selling more to this group, or do I go after those who have so far resistet?" Applying the theory of going after the low hanging fruit, which has been the hallmark of the online travel industry since its inception, my guess is they’ll continue to achieve higher penetration among the existing market, with only a secondary effort to convert the sceptics to purchase online. An interesting study would be to ask those people specifically what would make them purchase travel online, and what kind of travel services. One thing is clear, the market potential for growth remains significant and by applying innovative tools can be mined for years to come.Read Full Post | Make a Comment ( None so far )
Not a surprising decision at all. Why would Travelocity be interested in supporting the trend to commoditization of the travel product which is the obvious result of the meta search engines !
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As Travel Weekly reported, Travelocity extended its contract one year, through 2006, as the exclusive air, car and hotel provider to Yahoo Travel, but will not participate in the Yahoo/FareChase metasearch.
Interesting strategy to differentiate a commodity product combined with an ingenious way to collect useful customer data and preferences to tailor future offers based on that knowledge. Could this become a model for other travel suppliers? Quite possibly.Read Full Post | Make a Comment ( None so far )
reads a headline in today’s Wall Street Journal about the acquisition by E*Trade a leading online broker of Harrisdirect one of their competitors. Among the reasons given is the opportunity to offer a wider choice of online financial products and services to their client base. Interesting to note is the shift of revenue at E*Trade derived from online trading from 100% in 2000 to 18% today, as the company has started to offer more and more banking products to their client base originally only looking for the lowest cost online trading opportunity.
A similar shift will have to take place in online travel if market players want to continue to expand not only market share but produce profitable long term growth.Read Full Post | Make a Comment ( None so far )
Both these articles show that the online industry is clearly looking for ways to move away from selling commodity type single travel components purely based on price to a more profitable model. Service enhancements and incentives to customers to book what Travelocity calls a “TotalTrip” are all strong indicators of this shift.
Another development supporting this shift is the introduction of more online travel booking tools that can be used by travel agents to better serve the market segment of people who prefer to take that route rather than planning their own packaged trips online. Either way, intermediaries have to add value to stay in the game.Read Full Post | Make a Comment ( 1 so far )
Another reality in a marketplace dominated by the constant search for the absolute lowest price….! What’s so surprising here? Nothing different than browsing around a department store, finding the lowest priced shirt, only two or three left but you decide not to buy it right away but walk around the mall a bit more, trying to find it at an even lower price and finding when you return that the lowest priced shirts are now gone, but you can buy a similar one at a higher price and there are twenty of those. So my answer is, we tolerate this when shopping off-line every time.Read Full Post | Make a Comment ( None so far )
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The online travel game got harder. Especially for Expedia. Not only is the company under pressure by airlines and hotels to lower its fees, it is also loosing market share to Travelocity and Priceline as it cuts advertising expenses to maintain profitability.