User:Emiliaiug

Emilia Akulenko, Iryna Ryabchenko, Natalia Pisarenko

PORTERS ANALYSIS OF THE ONLINE TICKET SALES MARKET

1.	Bargaining power of suppliers  high, due to the dependence on the airlines as they set the minimal price charged per ticket. We do not have our own carriers therefore will be highly dependant on the airport taxes and airline limitations.

2.	Bargaining power of buyers  High, since price is the main factor on which the customers base their decision making, and since the competition is high, the price ranges and the customer loyalty is quite weak as the customer follows the best offers and low prices. Each market segment, although different is looking for the best value for their money, or the cheapest fares. Our main market segments: Main Segments: 	young/students 18-25 years old 	business travelers 25-55 years old (fast travel in reasonable comfort, must have hotel and car booked in advance, price is not a main issue) 	elderly travel 55+, (look for cruises and vacation homes, value for money and range of services is vital for the decision making) 	family travel, ( looking for cheap fares and complete travel packages, including facilities and activities for the children, price and value for money are essential factors for decision making) 	Group travel (school trips, group vacations and so on where the customers look for cheapest and fastest way to travel in big groups, saving costs on the flights and accommodations) – usually is school students and young people in their early 20s.

3.	Competitors  very high, there is a vast number of competitors in the market each offering different price ranges and package deals and fighting for the same customers.

The competitors are: •	 online travel agencies •	 traditional travel agencies •	 low-cost airlines (e.g. Easyjet, Go, Rynair) In Europe for example access to EasyJet and Rynair presents a significant challenge for an online agency to deliver better deals/offers. •	 airlines with own website •	 portals •	alternative means of travel (such as train, bus, ferry, cars etc)

The main competitors in the online travel market are: Opodo.com, ebookers.com, lastminute.com, priceline.com and expedia.com. The price is the main factor that customer takes into consideration when buying/booking travel online, the customer will not necessarily go for the cheapest but will definitely go for the one that provide greater value for money, thus the more additional services we can offer the better. We must ensure that the travel booked leaves nothing more to be desired if we decide to add more services besides the cheap airfares. The market share of each is stated below. Here is a brief description of each competitor, the services they offer and their strengths and weaknesses

(Table of competitors ) Name .com + type of ownership;Market Share;Services;Global Presence;Strengths;Weaknesses

EXPEDIA (public)21% market share •      airline tickets •	hotel reservation •	car rental •	cruises •	corporate travel •	activities •	vacation packages 7 EU markets: France, Germany, Italy Japan Netherlands Norway Denmark + UK + USA + Australia + Canada

Strengths:  market leader  global presence  strong brand image and recognition  range of services  strong brand portfolio local and international Weaknesses more known in the USA than Europe is dependant on the airline demand and environment once the demand there goes down has little to offer in order to stay competitive  brand recognition and awareness do not guarantee bookings, thus too much advertising does not create brand loyalty or creates additional bookings, necessarily

LASTMINUTE (private) 18% market share •      Travel •	Flights •	Hotels •	Holidays •	City breaks •	“Ski and snow” •	UK breaks •	Eurostar deals •	Car hire •	Ferry •	Trains •	Travel insurance •	Travel cash

Going out •	Theatre tickets •	Restaurants •	Concert tickets •	Days out •	Comedy tickets •	Sports tickets •	Cinema tickets •	Dating 9 EU markets: Spain France Germany Italy Sweden Belgium Netherlands Denmark Norway + UK + Ireland + USA + Japan + Australia + New Zealand Strengths  second in market share  strong and diversified service portfolio – (good risk management, once the demand for one falls, the company can always fall back on the other offers, i.e. a fall in demand for air travel, the company can boost its sales in railway and ferry travels etc)  strong brand recognition and presence worldwide  offers deals outside the journey sector (i.e. offers tickets for the offers on restaurants, tickets for entertainment and day out planning), thus creating superior customer value Weaknesses  too diversified, may lead to loss of focus on the core business  brand awareness does not necessarily create additional bookings, thus costly promotion and advertisement is less effective in online business.

OPODO (private)	11% •	Flights •	Hotel bookings •	Car Hire •	Travel Insurance AIG •	Online package holiday 9 EU markets: Germany France   Italy Spain Denmark Sweden Norway  Finland Austria + UK	Strengths:  owned by 9 top European airlines: Lufthansa, Alitalia, KLM, Austrian Airlines, Finnair, Iberia, British Airways, Aer Lingus, Air France and Amdeus  strong travel insurance partnership  creates superior customer value Weaknesses  dependant on the dynamic of the airline-owners, must follow their strategy and not necessarily the market trends.

PRICELINE (public) 10% market share •	Flights •	Hotels •	Cars •	Packages •	Cruises •	Tours & Attractions •	Price-Breakers •	Financing services (mortgage loans etc) UK USA Hong Kong Taiwan Singapore Strengths  diversified service portfolio, including financial services  fastest hotel locator, low prices  partnerships with hotel industry  strong customer relations base where customer is the boss ( Priceline Products offer visitors a choice Name Your Own Price®- . service, which delivers the lowest prices available after the customer posts his offer. Fixed-price retail travel products clients can shop, compare, and select the final price on the service in advance. 	Weaknesses  limited presence in Europe  dependant on the stock exchange and exchange rates, thus a sudden decline could lead to financial problems  has limited alternative travel and transportation offers to fall back on once air travel declines (no train fares etc)

EBOOKERS (private) 7% •	Flights •	Hotels •	Holiday homes •	Car rental •	Dynamic packages •	Holiday packages •	Useful information (insurance, travel guides etc) Austria, Belgium Denmark Finland France Germany Ireland Italy Netherlands Norway UK Spain Sweden Switzerland (total =140 countries)	Strengths: - belongs to the American co. travelport.com (Travelport is one of the world’s largest and most geographically diverse travel companies with presence in 140 countries) - strong brand image and recognition in Europe -individual approach to each client, negotiates price with 120 airlines Weaknesses: - dependant on the environmental changes in the travel industry (i.e. war, terrorists actions 9/11, etc) that lead to decline in travel in general, has no other alternative transportation offers to fall back on once air travel declines (no train fares, no cruises etc)

4.	Barriers to entry/exit  low to medium, since to set up and online trading company is not difficult nor there is a constraint to do so, however the main barrier would be set by the competitors, since they have an already established relationship/partnership with the airlines and may have negotiated the best and exclusive deals. Access into the market is easier than previously because the barriers to entry are lower. With the removal of regulation in many countries either in place or relaxed the customer is spoilt for choice from direct and indirect sources. The barrier to exit would be the lack of alternative, and the high dependency on the environment of the airline tourist industry when the demand would decline we may not be able to break even and obtain profits.

5.	Threat of substitute  medium-high, although there is no direct substitute to air travel there is a substitute in alternative means of transportation and travel. Since airline industry is very dependant on the environment the demand fluctuates accordingly (e.g. after September 11th the demand for air flights has declined drastically, all the terrorist threats, natural disaster, political unrest and so on has a strong impact and influence on the demand for air travel). The main threat of substitute is the alternative means of travel, such as travel by train, buses, ferries/boats, by car and so on.