7/29/2010

Final Project : Strategic Marketing Planning

@ UC Berkeley by Paninee Putwanphen 1

Industry: SIC NAICS Code

Category
4724 561510
• Online travel • Travel Agencies, • Selling travel,
agent (OTA) furnishing travel tour, and
providing information and accommodation
consumers with acting as agents services to the
travel booking general public
services through and commercial
the Internet clients.

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Airline
(Suppliers)

OTA Travelers

GDS
Satisfies the customers' need
to find and build the right trip
(adventure, leisure, business)
according to their own set of
standards and criteria.

MARKET FACTOR DESCRIPTION Evaluation of

Attractiveness

Size $797 billion Travel (-)Large market but

$303 billion Online Booking dominate by big brand

Growth* 3% in US (+)(Opportunity out side

21% Europe & APAC USA)
Cyclicity High (-) High influence from
recessions
Seasonality High (-) High influence from
summer vacation and
holiday spending
Life Cycle State Growth (+) 12% Growth World wide

*Growth, According to PhoCusWright, a marketing research company

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MARKET FACTOR DESCRIPTION ATTRAC

TIVENE
SS
Power of customer Buyer aware of competitive offering (-)

Power of Supplier Some degree of control but still need OTA (+/-)
to fill up the room space.
Rivalry Intense; Heavy competition (-)

Threat of New Entrants High capital requirement and Fixed cost (+)

Power of Substitutes High (-)

• New laws, rules and regulations relating to the internet and

online commerce
• State , City, Country Tax law
Political and Legal • Regulation relating to the gathering of personal information
Environment from consumers

• Exchange rate has a negative effect due to the weaker dollar

• Economics recession ,reduction of overall number for traveler
Economic transaction
Environment • Higher fuel prices, Less margin in plane ticket

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•
Globalization
•
Sensitive to safety concerns
•
Threatened terrorism,
•
Struggle to conform their international operations to local standards
Social and Cultural and customs
Environment • Health-related risks, such as avian flu or H1N1 flu.

• Intense Technological change : Web model (web 2.0 then 3.0?? Or

Mobile)
Technological • Innovative In the name of game .
Environment

World's largest and most

intelligent travel marketplace
Identity
&Focus

Internet and its

various brands
Go-to-
Vibrant,
Culture
Market energetic,
and dynamic

Expedia is not just any online Value

travel. It offers information Proposition
trough their website

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Etc.
2%

Travelocity
22%
Expedia
43%

Orbitz
26%

Priceline
7%

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♠ Reliable Brand ♦ Heavily rely on US

♠ Successful business model
♠ strong relationship with
leading supplier
♠ Strong Business and brand
mix
♠ Bears No inventory risk
♠ Solid financials
♠ Functional and easy to use
websites
♠ Technology and diversity.
market
♦ Expedia’s business is
seasonal
♦ No backup systems or
contingency plans
♦ Low revenue margin
(10%)

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♠ International market ♦ Growing market share of

growth
♠ Develop relationship with
the suppliers
♠ Trade and cultural barriers
♠ Receding in many
countries and increased
outsourcing activity, the
number of travelers
♠ Increase in online buying
behavior
♦ Foreign exchange risk.
♦ Online cyber hacker or any
system failure
♦ Swine Flu or any disease
♦ Terrorist
♦ Increase in oil price and
declining of the revenue per
air ticket
♦ Tax Law
♦ Local Culture and social
concern

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Direct • Travelocity, Priceline, Orbitz and another

Competitor online travel agency site

Indirect • Travel suppliers , Traditional Travel Agency

Competitor
Need-Based • Staycation, Travel by own cars, train or bus,
Competitors Bed and Breakfast, vacation rental by owner

Budget • Another recreation that make them relax

and happy
Competitors
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Analysis Expedia Orbitz Travelocity Priceline

Objectives #1 world wide Change Create Increase

perception of customer Market share
the brand loyalty
Strategies Portal , Discount Portal, Comparison-
Shopping Mall Pricing Shopping Mall Pricing

Differential Choice and Price Insure Service and Name your

Adv. Info. leader lance Price own Price
guarantee

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Online Purchased
Adult Online Consumer
Category

24% Airline
Ticket
Travel
Hotel/tour 38% Purchased
60% 16% reservation
62% others
others

WHO? WHAT?

Traveler who are active airline tickets, reserve hotel rooms ,rental
information seeker cars ,vacation packages

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Where ? How ?
♥Competitive prices
Internet
♥ Easy to use

♥ Good customer service

In ♥ Broad selection
Phone
Person
♥ Flexibility to make itinerary
changes

♥ Detailed hotel/destination
Agencies information and photos

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The highest in the first three quarters : spring,

summer and holiday travel.

The number of bookings typically decreases in

the fourth quarter.

When?

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Why ?

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Cultural

Social

Psycho graphics

Personality

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Problem • Travel or business

Recognition • Transportation, hotel even activities

Information • Price
Search • Recommendation

Evaluation • The lowest price

of • Hotel location
• Flight time
Alternative
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• Competitive price
Purchase
• Ease of use
Decision
• Customer service

• Excellence customer
Post purchase service
Behavior • Smoot Cooperate with
supplier

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Demographic Online Domestic Travel

Spending

Bought Airline
Women
Men 11% Ticket
49% 51% 25%
Made Hotel
64%
Reservation

Made Car
Rental
Purchase
Monthly Unique Visitors: 19,266,000

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Socioeconomic
• Middle to upper-middle
• Vacationers/Leisure travelers
• Unmanaged business travelers

Psychographic
• Achiever
• People who love adventure

Behavioral
• Information-seeking
• Savvy Shopper / Best price-hunting
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Targeting General Positioning

Approach
Active online
travel searcher

Best customer
Has booked a
trip within the service
past year

Cooperate
Worldwide
leader in
travel

Good experience
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Point of difference

Customize your planning

Largest inventory

Technology
innovation

Superior interface

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Point of parity

Expedia have parity with suppliers

which is help customer save more on
package

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• “Becoming the largest and most profitable

Corporate seller of travel in the world, by helping
everyone everywhere plan and purchase
Mission everything in travel”

• Defend its position in an existing market from

attack by a competitive
Corporate • Investing and grow international points of sale
• Supporting and invest in brand portfolio
Objective • Innovating on behalf of our travelers and create
customer loyalty.

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Gross Booking (figures in millions)

$7,000.00

$6,000.00

$5,000.00
Gross Booking

$4,000.00

$3,000.00 Gross Booking (figures in millions)

$2,000.00

$1,000.00

$-
Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310
Time (quarter)
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Total Available Market, Served Market

Online Booking,
139
140

120

100

80
OTA, 54.21
60 OTA
Online Booking
40
2007 2008 2009 2010E

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Easiest-to-use

Most
No comprehen
booking sive online
travel
Fee service

The biggest
inventory

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Expedia
, Inc

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Expedia
Master Card
“We make it
“Priceless vacation”
easy for you to
booked”

Build Customer royalty by having Point Reward

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Objectives Perceived Value Setting Price

• To offer the • #1 in the • Price Leader

best value market • No booking Fee
price. • Various Choice
and Package

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Distribution
Channel partners

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Suppliers Affiliate Partner

• Monitoring the action of • Selecting and

the distribution monitoring qualify
affiliate partner
• Strategic account
managers and local • Improve and adept
market managers who partner incentive
work directly with travel
suppliers to cooperate
marketing program

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Media Mix
Print

Internet TV

Event Radio

Press
Outdoor
Release
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• Holiday KickBack” with no fee on flight booking when

booking with Expedia
Consumer • Expedia offers traveler loyalty programs including the
Thank You Rewards promotion on its website.
promotions • Customize Occasional sale promotion such as
Anniversary, birthday, Retirement.

Trade • partner with Event Planning, Event Management and

Conference Management Services.
promotions

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YouTube

FaceBook Flicker

Search&SEO
Expedia Twitter
website

MySpace RSS

Blog

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Site Name Message Site purpose

FaceBook Expedia Experience Fans-page, feed status
update
Twitter How can we help you to plan Communication site,
your trips? Customers service
Channel

WordPress, Blogger Share your vacation story and Show and tell, Real
how we make your life easier . people story

MySpace My Amazing vacation Community for Teenage

group
Flicker Imagine of dream vacation Photo sharing
YouTube Expedia AD. VDO Podcasting

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Revenue

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Income Statement 13.4% of booking

Gross bookings 20,282

Revenue 2,860
Cost of revenue 606
Selling and marketing 1,014
General and administrative 240 Selling and
Technology and content 284 marketing =
OIBA (Operating Income Before Amortization) 710 35.45% of
OIBA margin 25% revenue
Stock based compensation 61
Amortization of intangible 51
Occ tax, legal & restructuring 89
Goodwill of intangible 2,996
Operating loss -2482
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Revenue = Fixed cost + Variable cost

(O.65)Revenue = Fixed cost

Revenue = 1,130/0.65 Fixed Cost

Cost of revenue 606
General and Administrative 240
Revenue = 1,738 Technology and content 284
Total Fixed Cost 1,130

From Revenue = 13.4% of Gross booking

Break-Even = 1,738/0.134 12,970

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Historical Projected

2005 2006 2007 2008 2009 2010 2011

Gross Booking 15,336 16,882 19,632 21,269 21,907 22,783 24,150

%growth 10% 16% 8% 3% 4% 6%

Revenue 2,119 2,238 2,665 2,937 3,025 3,146 3,335

%margin 6% 19% 10% 3% 4% 6%

Cost of good sold operating
expense 1,492 1,639 1,996 2,239 2,172 2,280 2,280

%matgin 10% 22% 12% -3% 5% 0%

Income before Tax 627 599 669 698 853 866 1,054

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Social
Blog Media/Email
Sites/Banner 10%
Ads/websites
10% Events
25%
SEM/SEO
10%

PR
10%
Travel
Magazine TV Commercial
15% 15%

Billboard
5% 47

Expedia’s market
share versus
competitors

Effectiveness of Brand recognition

promotions in new market

Customer feedback
and customer
satisfaction

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Events Trigger Action

The supplier does not Cannot make good deal with Build new deal with another
maintain the relationship supplier supplier

Decrease in market share 3% Competitors analysis by

understanding competitors
and then change strategy
Failure in US market Continuously decreasing Go to new market
sales
Failure in expanding to Global Cannot expand market and More advertising and build
cannot increase market share new relationship with local
in another regions suppliers
Changes in external Difficult to deal with CRM Change marketing strategy to
environment (e.g. legal communicate to customer in
changes to privacy internet another channel
information) 49

Build
relationship with
Expand to
local supplier
Europe and Asia
(more margin
Pacific Market
and improve
choice variety)

Business mix
Web 2.0 and
shifting to hotel
Social Network
& advertising,
Modal for
increasingly
Advertising
global

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$$$$

$$$$
+ + =
$$$$

Worldwide Influent, Engaged Loyal, Satisfied

Audiences Customer Experience Customers

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