How does marketing fit into your business?
Assignment 1 - How does marketing fit into your business?
INTRODUCTION
This assignment is designed to look at areas of marketing and how they fit into a business. It will define the concept of marketing and look in detail at the changing nature of sustainable marketing. I will look at the marketing research process and its importance in identifying and analysing customer needs. The assignment will explain strategic marketing segmentation and the effects of segmentation on the marketing mix. It will overall analyse the marketing environment and relate all theoretical concepts to a work environment. The work environment I am going to link with this marketing assignment is the company I work for, TD Travel Group.
TD Travel Group is an independent corporate travel organisation that takes the frustration and confusion out of business and group travel arrangements using one or all three of its specialised services. TD Business Travel Management co-ordinate air travel worldwide as well as catering for car rental, rail tickets and sea crossings. They also offer a number of specialist facilities including organising currency, the procurement of passports and visas and running a 24-hour emergency help line. The Special Events department takes a fresh approach on every brief in order to deliver a perfectly organised event, whether it is a conference or a skiing trip. TD Roomfinder use their years of experience in the business of dealing with hotels in order to ensure the best deal for their clients looking at both cost and suitability to the individual. These three areas of TD Travel Group work together to save their clients both time and money and making TD the most professional and comprehensive business travel service around.
Marketing is the all-embracing function that links the company with the customer to get the right product to the right place at the right time. Marketing decisions are made through the marketing model, based on the findings of market research, and carried out through the marketing mix. At all stages in the marketing process, the firm needs to work closely with the production department and research and development to ensure that what is promised is delivered. Marketing activities are all the actions an organisation can take to achieve its marketing objectives. These would include market research, product mapping, market positioning and carrying out the different elements of the marketing mix.
Task 1
To what extent does TD Travel Group demonstrate a sustainable marketing orientation in relation to its customers?
Sustainable marketing is "the establishment, maintenance and enhancement of customer relationships so that the objectives of the parties involved are met without compromising the ability of future generations to achieve their own objectives" Brassington & Pettitt, 2002.
Corporate and social responsibility is an emergent and growing marketing philosophy. Today it is particularly important that companies operate in a socially responsible way, not just because companies are striving to find effective ways to attract and retain customers but also because investors and other key stakeholders in companies are increasingly concerned that the companies in which they are involved behave in an ethical way. There are links between good ethics, market share and profitability.
TD Travel Group appreciates this and in turn operates in a socially responsible way by adhering to health and safety policies, recycling waste paper and in many other ways; this is shown in more detail in task 5. For this task I am going to use one of TD Travel Groups stakeholders who we work closely with on a day-to-day basis as it is a much bigger company and therefore there are many more issues to discuss. The company is Manchester Airport.
Manchester Airport was one of the first in Europe to establish an environment programme, and has taken a leading role in developing an understanding of the concept of sustainability. The Airport has a reputation for environmental innovation that has resulted in strategies, processes and technologies that are now standard practice at most of the UK's major airports.
The Airport's Sustainability Strategy outlines how they will balance the social and economic benefits of the Airports development with the adverse social and environmental effects. Sustainability makes sound business sense and is becoming an integral part of the planning and decision making process. Existing policies and targets will be updated and new ones developed to support the strategy.
Environment Plan
The Airport's Environment Plan was published in July 1996. The Plan describes all of the environmental impacts associated with our operation and sets out the policies we will follow and targets to be achieved. Together, these will limit the impact of the Airport and help strike the balance between growth and effect on the environment, which is inherent in the concept of sustainable development. In total, 97 individual environmental policies and 88 action plan items are detailed. A new Environment Plan is currently being developed which will identify new policies and targets for the Airport.
Green Charter
Some of the existing policies and targets have been given weight by their inclusion in legal agreements and planning conditions arising from the Second Runway development. In some cases, the obligations placed on the Company run until 2011, but the agreement also contains provision for its further extension into the foreseeable future.
The mitigation package sets guarantees covering the following:
Community relations
Noise control
Night flying
Ultimate capacity
Environmental works
Highway improvements
Public transport initiatives
Social policy
Making a Corporate Commitment 2 (MACC2)
MACC2 is a UK Government initiative to encourage companies to make a public pledge with targets to improve environmental performance and resource use efficiency, and to publicly report performance against these targets. The Airport Company became a signatory to MACC2 in October 2001, and reports progress against all environmental targets in the annual sustainability reports.
Transport Minister John Spellar MP has congratulated Manchester Airport on its track record in environmental performance. The Minister recognised the airport's achievements regarding the environmental targets set when it signed up to the government's MACC2 programme for sustainable development in October 2001.
The airport has already exceeded one of those targets, achieving a 27% reduction in water consumption per passenger (from the 1995/6 level) - the target had been a 20% reduction by 2005. And it is well on course to meet its other environmental objectives within the timeframe of 2005.
Signatories to MACC2, or 'Making a Corporate Commitment 2', make a public pledge to set themselves targets for improving their environmental performance and using resources more efficiently. They also commit to open reporting of the results.
The Transport Minister today confirmed that the airport is making good those promises to the environment when he presented Manchester Airport Board Director Councilor Bill Risby with a MACC2 certificate.
When it signed to MACC2, the airport's targets were:
Water consumption - a 20% reduction from the 1995/6 level by 2005, measured as consumption per passenger
Recycling - increasing the rate of recycling to 15% by 2005
Emissions - to compile an emissions inventory and monitor air quality
Green transport - to achieve a target of 25% public transport share for all airport journeys by 2005
Biodiversity - to implement measures that protect biodiversity and the local environment
The airport has currently achieved:
Water consumption - a 27% reduction from 1995/6 levels
Recycling - rate of recycling of 11%
Emissions - a complete emissions inventory is now compiled every two years and monitoring is undertaken on a weekly basis
Green transport - public transport now accounts for 21% of all airport journeys
Biodiversity - the airport has a comprehensive Landscape and Habitat Management Plan, including a £17m package to improve over 850 acres of countryside. It has also successfully implemented an innovative programme to relocate trees, grass and protected species, including more than 1,500 amphibians, as part of the Runway 2 project
Transport Minister John Spellar said: "This certificate demonstrates how seriously Manchester Airport takes its environmental responsibilities. In signing up to MACC2, the airport has shown vision, leadership and a belief in corporate social responsibility. It is only right that MACC2 should secure the airport wider recognition for its efforts."
Manchester Airport Board Director Councilor Bill Risby said: "We pride ourselves on our commitment to the environment and the people of Greater Manchester. By publicly committing ourselves to these targets, we are investing in the region's future. That meant we pursued our environmental targets with real vigour and determination. I am delighted that we are achieving these goals and hope it encourages other organisations to make similar commitments by signing up to MACC2."
Sustainability is increasingly influencing Government thinking and policy, and it is clear that Manchester Airport should continue to be at the forefront of best practice.
In 1999, the Airport Company undertook a fundamental review of its long-term business strategy. This strategy has set out the Company's principal business purpose to:
"Maximise the profitable growth of its Airport-related and other businesses in a manner that brings sustainable economic, financial and social benefits to the North West Region."
Sustainability is about achieving a balance between the social and economic benefits of the Airport's growth and the social and environmental costs. It is clear that the sustainability issues are not solely environmental, but cover a range of economic and social factors related to the Company's business. Some of these factors are shown below:
Waste Minimisation and Recycling
Sources of waste at Manchester Airport include aircraft, terminal and office ...
This is a preview of the whole essay
"Maximise the profitable growth of its Airport-related and other businesses in a manner that brings sustainable economic, financial and social benefits to the North West Region."
Sustainability is about achieving a balance between the social and economic benefits of the Airport's growth and the social and environmental costs. It is clear that the sustainability issues are not solely environmental, but cover a range of economic and social factors related to the Company's business. Some of these factors are shown below:
Waste Minimisation and Recycling
Sources of waste at Manchester Airport include aircraft, terminal and office cleaning, retail packaging waste, aircraft and terminal catering, engineering waste and construction activities.
Manchester Airport's policy is to control waste through purchasing policy, reduction of wastage, reuse of materials where possible, segregation and recycling - and responsible disposal. As MA Plc is only one of the 270 companies on site generating waste, the progress made to date has been due to the active involvement and support of all these companies with MA Plc providing a co-ordination, management and information role.
The main materials recycled are paper, card, glass, newspaper, wood and scrap metal plus smaller amounts of fluorescent lighting tubes, clothing, electrical equipment, printer toner cartridges, waste oil and tyres. Aluminium and steel is also removed from the waste at the local Refuse Treatment Plant prior to processing and landfill.
Ensuring Airport noise is kept to a minimum
Aircraft noise will be kept less than it was in 1992, until at least 2011
Airlines fined for aircraft that exceed set noise levels
No more than 20 aircraft engine tests at night each year
Limit track deviations to 5% of all standard instrument departures
Monitoring of aircraft noise and tracking
Energy Conservation Policies
Reduce energy consumption per square meter of building by 20% between 1990 and 2000 (new target being developed)
Ensure all new buildings, electric motors and major plant are of energy efficient design
Provide training to staff to conserve energy
In a year, Manchester Airport uses roughly the same amount of electricity as a town the size of Buxton, with a base load of 20MW. The introduction by the Government of a Climate Change Levy or Energy Tax has provided an additional incentive to reduce energy.
Manchester Airport operates a Combined Heat and Power (CHP) plant, which provides approximately 50% of the Airport's total electrical energy needs. The heat generated is fed to both Terminal 1 and Terminal 2 to provide heating. In summer, absorption chillers convert the waste heat into cold air for air conditioning in the Terminals.
Most energy conservation arises from new more energy efficient developments, built to the standards of the Energy Policy and Standards Guide, through the introduction of new equipment and procedures, and by management using the Building Management System (BMS) and monitoring and targeting systems.
The BMS is a computer-controlled system linked to all mechanical equipment including heating and ventilation plant, auto walks and escalators, pumps and meters. As well as monitoring and controlling equipment, the BMS system also includes the facility for remote electronic metering of most of the 680 meters on the site and is linked to both the TEAM energy target and monitoring system and to the Airport's billing system. This allows accurate assessment of energy consumption and prompt billing, and also identifies areas for efficiency improvement.
Aircraft Emissions Policies
Reduce airport emissions where practicable
Increase fixed electrical ground power use by 33.3% between 1992 and 1998 (new target being developed)
Monitor air quality at and around the Airport 24 hours per day and publish the results
Maintain links with the Local Health Authorities to address air quality together
Ground level aircraft engine emissions occur during aircraft auxiliary power unit (APU) operation, aircraft engine start-up, taxiing, and take-off. These are all essential parts of the aircraft operation.
The main improvements in ground emissions derive from the introduction of new aircraft with their improved engines. The banning of Chapter 2 aircraft since 2002 has reduced emissions as well as reducing noise levels.
Taxiing times are minimised through efficient ground movement by air traffic control, as part of good airport operation - and the use of APUs is discouraged, where practicable, in favour of fixed electrical ground power.
Fixed Electrical Ground Power
Use of Fixed Electrical Ground Power (FEGP - mains electricity supply for aircraft on stand) reduces the use of a jet aircraft's Auxiliary Power Unit (APU) and mobile diesel Ground Power Units (GPUs). Ground noise and on site air emissions are therefore greatly reduced. This enhances the environment for the staff working at the airport and for people living in neighbouring communities. Considerable efforts have been made into encouraging use of FEGP both on environmental grounds and reduced costs for airlines and also into improving reliability of the system.
Vehicle Emissions
The Civil Aviation Publication 642 (CAP 642), which covers all aspects of standards and safety on the airfield, was amended in 1997 and now includes a requirement for all airside vehicles to comply with MoT certificate emission standards. Vehicles producing excessive emissions, such as smoke, are prohibited from the airfield until improvements are made. Additionally, the Airfield Infringement Scheme, developed in 1999/2000, includes provision to levy fines for vehicles' engines left running whilst unattended.
A fleet of new low emission airside buses have been purchased and trials undertaken of two liquefied petroleum gas fuelled vehicles.
By complying with all these policies Manchester Airport keeps all its stakeholders, including TD Travel Group happy, showing fantastic sustainable marketing.
Task 2
Describe the ways in which TD Travel Group develops products to meet customer and organisational needs
TD Travel Group is a great example of Perfect Competition with all the cost cutting that goes on in the travel industry. This exists when there are so many people in the market and other conditions are such, that no one can influence the price, all other things being equal. Any business charging more than the market price will lose all its customers to rivals, and any business charging less than the market price will be swamped with customers whom it cannot satisfy.
In a free market economy the allocation of most scarce resources is determined by the price mechanism. Price is determined by the interaction of supply and demand. Demand is the amount of a good that consumers are willing and able to buy at a given price. Supply is how much of a given product the sellers are prepared to supply to the market at any given price. Supply and demand is only effective if backed up with the ability to pay.
Given the current situation and lack of demand for flights at this time TD Travel Group have to continue to supply a professional service to keep existing customers. They also have to gain new customers both through the demise of the weaker less professional business travel organisations and through the professionalism and marketing of our organisation.
TD Travel Group has to supply what the customer needs i.e. the best travel options at the best possible price. If they continue to supply this then clients will be happy with their service and demand more. If they fail to supply this then demand from customers will reduce, as they will be getting a better service from elsewhere.
A perfect example of a factor affecting demand for TD Travel Groups products and services is the terrorist attacks of September 11th. This has caused less demand for people traveling especially to America, which is a large percentage of our business. This coupled with suggested worldwide recession has instigated a major upheaval in the whole travel industry. As a result of this airlines and aircraft manufacturers have announced whole scale job losses, business travel industry leaders have predicted huge cuts in travel spend and closer to home initial feedback from TD Travel Groups own customers points to a general review of travel patterns and budgets.
Just as the travel industry had almost recovered from the terrorist attacks, there has been the Iraqi War, limiting flights to the Middle East by airlines due to lack of demand for them and putting off both business and leisure travelers. The most current issue is SARS; nobody wants to travel to the Far East or to Canada with the situation as it is at the moment. TD has had to tighten its belt to try and minimise costs as much as possible.
Other factors that affect the demand for TD Travel Groups services are:
The time of year - With being a business travel organisation there is much less demand for travel in the holiday seasons such as July and August, or Christmas and Easter. This is due to the fact that most business travelers would rather be spending that time at home or on personal holidays with their families.
Clients winning or tendering for new contracts - If an existing client gains a new contract in Dubai then it will mean a lot more travel by them to that destination, therefore increasing demand. If this be the case TD Travel Group would strive to get a corporate deal with an airline to that destination to lower costs considerably for their client.
Major sporting events / Conferences worldwide - This obviously increases demand to a certain area, TD would try to block off airline seats or hotel rooms etc to guarantee their customer a place.
Client's travel budgets - if these budgets rise or fall then demand for our services will also rise or fall. For most companies, corporate travel is their second largest expenditure.
TD Travel makes sure that whether demand is high or low we always offer the best service to our clients. TD Travel Group has identified customers' objectives and managed them by employing the best travel consultants in the business that provide fast efficient response times and professional, unbiased consultancy.
TD Travel group also provides 24-hour service, efficient ticket deliveries or dispatch, fast refund processing, account management, management information reports and centralised accounts control. On top of all this we provide unlimited fare saving opportunities guaranteeing overall better value for money and cost saving.
The marketing manager is constantly meeting with clients, both new and old, to research the clients needs and to discuss the service we provide and make sure there are no problems. Our job is no longer to sell flights / hotels / car hire etc, it is to provide a service. Companies can book most of their travel needs on the Internet now; it is the service we give that they are paying for. All our clients agree that the services we provide, amongst many more are worth paying service fees for. The Marketing manager will also discuss our service fees and come to an agreement with new or existing clients on their specific tailor made fees and services. This process is only used for companies with a high usage / spend with us. For smaller usage companies or individuals who get our number from yellow pages etc or new clients, we have a set service fee band (band B), which we use. Most companies understand the service fees and are happy paying them, for the smaller companies, the service fees will only get changed to tailor made service fees if they are unhappy about any aspect of the normal Band B fees. The service fees then become Band T (tailor made), for these fees we have to check in the company profiles every time we make a booking to see what fee to charge. It may be that a high usage / spend client may be happy with the band B fees and they will stay on that level, or it may be that an individual who only travels four times a year may get put on band T service fee, it depends on all the above factors, and most importantly in the service industry - what the customer wants.
TD is a firm believer of customer care. This emphasises the importance of an organisations attitude to, and covers every aspect of its relationship with, its customers. It aims to close the gap between customers' expectations and their experience.
The Boston Matrix is a method of analysing the product portfolio of a business (the number and range of products a business produces at a particular point in time). This model was developed by a group of management consultants called the Boston Consulting Group. And it divides the products that are produced by a business into four categories, according to their market share and the level of market growth. The categories are:
Problem child - This is a product that has a low market share in a high growth industry - often newly launched products. They will require a significant amount of money to be spent on their promotion in order to achieve a healthy market share. These products are at the 'introduction' stage of the product life cycle.
Stars - These products have high market share in a high growth market. They are very successful products that create a large amount of revenue for the business. They still require money to be spent on their promotion in order to keep ahead of rival products in the marketplace. These products are at the 'growth' stage of the product life cycle.
Cash Cows - High market share in a stable market (i.e. market growth is low), at the maturity / saturation stages of their product life cycle and produce a large amount of revenue for the business.
Dogs - These products have a very low market share in a low growth market. They produce very little revenue for the business and are at the decline stage of the product life cycle. The business has to decide whether to try and extend the life cycle and boost sales revenues, or whether to delete the product from the portfolio.
Task 3
Explain what is meant by the term 'market segmentation' and provide examples of the methods by which TD Travel Group segments the market.
Market segmentation is analysing a market to identify the different types of consumer. By matching the consumer categories to the types of product on offer, unfilled market niches may emerge. The potential profitability of filling these gaps can then be assessed, defining and targeting customers. It defines potential customers by:
What they want - e.g. just flights or flights and hotels
What they will accept
What kind of distribution will be most convenient to them?
The communication channels that can be used to reach them
Segmentation is a customer-orientated concept - based on understanding the customers. It is practical, breaking large markets down into manageable parts or groups. It is a proactive part of developing a marketing strategy. Consumer markets and B2B markets are segmented differently.
Wind and Cardozo (1974) suggests that segmenting a B2B market involves 2 stages:
Identifying subgroups within the whole market that share common characteristics - macro segments
Select target segments from within the macro segments based on different specific buying characteristics - micro segments
B2B macro segmentation bases are based on the characteristics of organisations and the broader purchasing context in which they operate. Bases for macro segmentations tend to be observable or obtainable from secondary information. They can be divided into three different organisational characteristics:
Size of the organisation - this does not matter to TD Travel Group because any size organisation can have some sort of travel needs, whether it be a twice yearly second class rail ticket to London or a once a month business class ticket to America.
Location, e.g. geographical concentration - this is the main segmentation used by TD Travel Group. It only sends out mail shots to companies in the North West Region as this is the area which our two dedicated drivers can deliver tickets / visas and currency to daily. We do have companies all over the UK which we send tickets etc to by special delivery, or arrange electronic tickets, these companies generally also have branches in the North West region aswell.
Usage Rate, e.g. usage of the product - this is a micro segmentation for TD Travel Group. Once a company begins to use our services, depending on the usage rate and what services they use us for we segment our corporate clients into service fee bands.
B2B micro segmentation bases may exist within a macro segment. A detailed understanding of individual members of the macro segment is needed (management philosophy, decision making structures, purchasing policies, etc). Starting with broad characteristics and then developing increasingly fine detail (from understanding the industry to an organisation's operating variables, purchasing approach, and finally personal characteristics). Micro segmentation bases include:
Product
Applications
Technology
Purchasing policies
DMU Structure
Decision-making process
Buyer-seller relationships
TD Travel Group uses all of the above to segment the market aswell as Usage Rate. Once we have segmented the market by usage rate, the clients that use our services and spend a lot of money with us will be monitored on a weekly / monthly basis by the marketing manager. The manager will then find out all the above information about the new client and arrange a meeting to discuss their travel needs and suggest ways we can improve our service to them. He will also discuss our service fees and come to an agreement with the new client on their specific tailor made fees and services. This process is only used for companies with a high usage / spend with us. For smaller usage companies or individuals who get our number from yellow pages etc or new clients, we have a set service fee band (band B), which we use. Most companies understand the service fees and are happy paying them, for the smaller companies, the service fees will only get changed to tailor made service fees if they are unhappy about any aspect of the normal Band B fees. The service fees then become Band T (tailor made), for these fees we have to check in the company profiles every time we make a booking to see what fee to charge. It may be that a high usage / spend client may be happy with the band B fees and they will stay on that level, or it may be that an individual who only travels four times a year may get put on band T service fee, it depends on all the above factors, and most importantly in the service industry - what the customer wants.
Consumer segmentation bases places more emphasis on buyers lifestyles and purchasing context, this can include:
Geographic segmentation - defining customers according to their location
Demographic segmentation - age, sex, race, income, occupation, socio-economic status, family structure etc
Geo-demographic segmentation - combination of the above two
Psychographic segmentation - intangible variables e.g. beliefs or attitudes
Behavior segmentation - the individual's relationship with the product, how the product will be used, benefits sought etc
Multivariable segmentation - using several segmentation variables
TD Travel Group uses the AIDA model for its marketing purposes:
Awareness - It raises awareness by sending out mail shots
Interest - Mail shots generate interest
Desire - Once an interest has been shown in TD, it is followed up by personal introduction letters
Action - Action is then taken by TD Travel Group to set up a company profile and find out more / arrange to visit the interested company. The company will then take action to use TD Travel Group as their business travel provider.
The segmentation process includes defining the boundaries of the market - what business are we in? looking at the world through the customers' eyes, and targeting customers.
There are three targeting strategies:
Undifferentiated strategy
This is the least demanding targeting strategy. It assumes that the market is one homogenous unit with no significant differences. It has one single marketing mix serving all needs and is relatively inexpensive. This is the style of marketing that TD Travel Group uses. It does not matter about the size or nature of a business, as most companies have some sort of travel needs, even an individual businessperson. TD targets any company within the North West region with mail shots to raise awareness of our services.
Differentiated strategy
This involves the development of a number of different marketing mixes for different segments. It requires a detailed overview of the market and its development potential. It allows businesses to tailor their offerings to suit different segments. It spreads the risk across market segments but it can dilute a company's efforts.
Concentrated strategy
This is the most focused approach and involves specialising on serving one specific segment. It can lead to very detailed knowledge of the target segment's needs and wants. This strategy can help to keep costs down, as there is only one marketing mix to manage, it also helps to develop a niche market.
The benefits of segmentation include:
Customers can find products / services that fit more closely to their wants and needs
Customers can feel more responsive and loyal to organisations that speak directly to them and tailor their products accordingly
Enables organisations to target its marketing mix more closely on potential customers thus matching their needs more accurately
Enables organisations to define shopping habits
Places the customer at the core of all decisions
Enables the organisation to achieve a better understanding of itself and its environment
The Dangers of segmentation include:
Risk of poor definition and implementation of psychographic segmentation
Knowing where to stop
Fragmentation of the market
Customer confusion
The main criteria for successful segmentation is:
Distinctive
Tangible
Accessible
Differential advantage
Task 4
Identify the ways in which TD Travel Group utilises the marketing mix to target various segments of their customer base.
Successful organisations in the late twentieth century focus on marketing rather than selling. They realise that the organisation as a whole needs to direct its efforts at providing the customer with what is required (the product) at the right time (place), the right price and in the right manner (promotion). In this way a customer is likely to be satisfied; they will keep the product, pay the bill, buy again and recommend to others. An organisation that thinks solely in terms of selling may find itself unable to compete in the marketplace.
A target market consists of a group of customers (people or organisations) at whom the seller directs a marketing program. Target market selection must be based on careful analysis of market opportunities. Usually the selection process involves some form of research and market segmentation. When target markets have been selected, the company can then proceed to the next step in strategic marketing planning - designing an appealing Marketing Mix. TD Travel Groups target market is any business in the North West area with any sort of travel needs.
The combination of the four primary elements that comprise a company's marketing program is termed the marketing mix. The design, implementation and evaluation of the marketing mix constitute the bulk of a firms marketing effort. The four elements of the marketing mix are:
Product - Managing the product ingredient includes planning and developing the right goods/services to be marketed by the company. Strategies are needed for changing existing products, adding new ones, and taking other actions that affect the assortment of products carried. Strategic decisions are also needed regarding branding, packaging and various other product features. These features can include new product development, product management, product features and benefits, branding, packaging and after sales service.
Price - Management must determine the right base price for its products by considering the demand for the service, the production, marketing and administration costs, and influence of the competition. It must then decide upon strategies concerning discounts and other price-related factors. These factors can include costs, profitability and value for money, competitiveness and incentives. TD has a set service fee band for most clients; every ticket we issue has a service fee added onto it. TD sets these prices by determining what profit we need to make and what customers are prepared to pay. For example service fees for any booking done with BA are more than the service fees with any other airline as BA pay us less commission than any other airline. Easyjet and Ryanair bookings that are made on the Internet we charge £25.00 per booking, as we don't make any commission on these bookings. Certain companies have bespoke tailor made service fees to better suit their needs, these are decided on by the travel manager of the company and our marketing manager. Our job is to supply customer needs as profitably as possible.
Place - Managements responsibility is to select and manage the trade channels through which the product will reach the right market at the right time. They must also develop a distribution system for physically handling and transporting the products through these channels. Features can include access to target market, channel structure & management, retailer image & logistics. TD Travel Group provides same day delivery of any travel products or we can arrange for tickets to be collected at the airport electronically, we send tickets special delivery or we will even meet clients at the airport to ensure they have their travel documents with them when they need them. There is no extra charge for these services as they are all included in the price of the service fees. Service channels in general are simpler and more direct than those for products - this is largely because of the intangibility of services.
Promotion - Management needs to inform and persuade the market regarding a company's products. Advertising, personal selling, sales promotion and publicity are the major promotional activities. Features can include developing promotional mixes, advertising management, sales promotion management, sales management, PR management and direct marketing. Strategies for promotion in the service sector include:
* Making the service tangible by linking it to concrete images
* Creating a favourable image for the service or service provider
* Show the tangible benefits of purchasing an intangible service
* Personal selling
* Publicity campaigns
* Internal Marketing
TD Travel obtains databases of companies in the North West from the chamber of commerce, or company names from Yell.com or from TD's own database that has built up over 18 years, and sends out mail shots, approx 3000 at a time and 2-4 times a year. We also have TD Travel Group desk pads which we give out to existing clients every Christmas. Our website is another form of promotion of TD. We send out email shots and have an electronic newsletter going out to clients.
The four ingredients in the marketing mix are interrelated; decisions in one area usually affect decisions in another. Each of the four also contains countless variables. A company may market one item or several, related or unrelated. The item may be distributed through wholesalers or directly to retailers, and so on. Ultimately, from the multitude of variables, management must select the combination that will best adapt to the environment, satisfy target markets, and still meet marketing and organisational goals.
Booms & Pitner specific to the services sector proposed an extended marketing mix, this is known as the 7P's. The first four P's are as above; the additional 3 are as follows:
People - Add value and dimension to the marketing package way beyond the basic product offering. Customers like the fact that we are an independent business travel agency - they can speak to the same person every time they call and clients become friends.
Processes - 'Manufactured' and consumed live on the spot - consistency can be more difficult that with manufacturing. At TD we strive to always give the best service and therefore provide consistency.
Physical evidence - Of particular relevance to retailers e.g. atmosphere, ambience, image, & design of premises (environment and surroundings). TD is situated in a perfect place for a business travel company, close to the airport and the city center. The offices we are based in are good quality offices and there is always a good atmosphere in the office which radiates out to clients who only contact us by telephone or email.
The above 3P's add value and provide competitive advantage. Relationship marketing in any type of market is increasingly throwing the emphasis on adding value to products through service; inevitably the 3P's impinge on this.
Task 5
Consider the complexity of TD Travel Groups operating environment. How does it identify and manage these groups?
TD's operating environment includes all its stakeholders. Stakeholders are any person or party that can be affected by the activities and policies of an organisation. There are many groups of people who have an interest, financial or otherwise, in the performance of a business - these different groups of people are known as stakeholders. The different kinds of Stakeholder are shown below:
Internal Stakeholders External Stakeholders
Employees Customers
Management Banks
Directors Suppliers
Shareholders
Other Stakeholders (passive)
Local Community
The Government
Competitors
The Media
The objectives of Customers as stakeholders in TD Travel Group are:
To receive a professional service
To get value for money
Fast response times
Efficient ticket deliveries
TD Travel Group has identified customers' objectives and managed them by employing the best travel consultants in the business that provide fast efficient response times and professional, unbiased consultancy.
TD Travel group also provides 24-hour service, efficient ticket deliveries or dispatch, fast refund processing, account management, management information reports and centralised accounts control. On top of all this we provide unlimited fare saving opportunities guaranteeing overall better value for money and cost saving.
For proof of TD Travel Group providing customer satisfaction, take a look at our website: WWW.TDTRAVELGROUP.COM, which has a section of customer comments about our company.
The objectives of employees as stakeholders in TD Travel Group are:
Income security and growth
Safe and comfortable working environment
A sense of community
Skill and career development / Training
Job satisfaction
TD has identified and managed these objectives by:
Offering the best salaries in this area of work, annual pay review and bonus scheme, pension and private health care
Adhering to health and safety legislation, providing kitchen facilities and air conditioning
Making employees feel part of a team both during work hours and socially e.g. organising Christmas parties and other social events
Constant updates with airlines, hotel chains and rail companies both in and out of work time, e.g. Fam trips, airline parties etc
Providing job satisfaction by all of the above
TD Travel Group's responsibilities to its employees are:
Equal opportunities
Discrimination at work (sex, marital status, race or disability)
Health and Safety at work act 1974
Employment contracts
Disputes
Unions and collective bargaining
Termination of Employment
Out of the above responsibilities TD Travel Group has specific policy on Health and safety at work act 1974, Employment contracts and termination of employment. Our Health and Safety at Work information is displayed on the office wall with fire / bomb evacuation procedures. When employees are offered a job they are given a small contract with the conditions of employment, termination of employment procedure and sickness policy. Another policy TD Travel group has in place is an email/internet policy.
As far as equal opportunities and discrimination goes, TD Travel Group say "we are so equal we do not even believe in having any sort of policy. We employ anyone who can do the job. We don't need a piece of paper to say so." These policies and practices are also proof of TD's sustainable marketing.
TD Travel Group is a small company with approximately 30 employees. For an independent office of this size and structure there is no real need to have a trade Union or dispute / disciplinary procedures. TD Travel group does have a complaints procedure in place in the form of line managers. In the first instance a complaint should be taken up with a team leader, then onto the general manager and then to the managing director who will discuss it with the board.
There is no handbook as such with all this information in it because of the size and nature of the business. I think that in time all companies (small and large) will have to have a formal handbook with all this information at hand for its employees. As TD Travel is still growing I don't think it will be long before this happens.
TD's competition is any independent business travel company. There is no main rival or competitor; all business travel agencies are our competitors. We gain competitive advantage by providing better service than any of our competitors to maintain customers and to introduce new customers. The threat of substitute products such as internet booking companies like expedia.co.uk and opodo.co.uk can also be looked upon as a benefit as it is an extra tool for us to use to ensure we obtain the best possible prices for the clients. Some clients may prefer to book direct on the Internet, but at some point we know these clients will come back to us respecting the service we provide them with as no internet booking company can match with the personalised service we can offer. Technological change is rapid, TD prides itself on making the right decisions early thus giving us competitive advantage as by having the best computer systems we can provide the best service.
There are some things, which TD cannot control such as the economic state of the world. A perfect example of this is the terrorist attacks of September 11th. This has caused less demand for people traveling especially to America, which is a large percentage of our business. This coupled with suggested worldwide recession has instigated a major upheaval in the whole travel industry. As a result of this airlines and aircraft manufacturers have announced whole scale job losses, business travel industry leaders have predicted huge cuts in travel spend and closer to home initial feedback from TD Travel Groups own customers points to a general review of travel patterns and budgets.
As a response to this TD Travel Group has to take certain steps to control costs. New policies have been put in place and it is hoped that these policies will hold off more serious cutbacks, until a clearer picture emerges of the full affect these events will have on TD Travel group. The new policies include a total ban on all overtime, including Saturday opening hours where time off in lieu is to be taken as opposed to pay, thus creating a better balance by distribution of the work we have. Telephone calls have to be cut considerably by making greater use of the computerised systems we have available to us, making quotations when clients initially call the office rather than ringing them back and reducing personal calls and calls to mobile phones and 0870 prefixed numbers as these are the most expensive calls. Just as the travel industry had almost recovered from the terrorist attacks, there has been the Iraqi War, limiting flights to the Middle East and putting off both business and leisure travelers. The most current issue is SARS; nobody wants to travel to the Far East or to Canada with the situation as it is at the moment. TD has again had to tighten its belt to try and minimise costs as much as possible. As well as the above policies, TD has also offered all employees the option to take unpaid leave whilst it is quiet, instead of using up their holidays.
The national environment affects all practically all businesses. Growth inflation unemployment, interest rates, taxation rates and the level of personal saving are all relevant. Another factor which affects the long-term national economic prospects is the makeup of the population. In some countries the retired population is increasing faster than the working population, because people are living longer but having fewer children. This may mean that economic growth will slow down, because too small a proportion of the population is making things to sell.
The political environment can also affect businesses like TD travel group. Businesses, like everyone else, have to work within the law. Laws are made by parliament for the good of the society as a whole. What laws are made depends on which political party holds power. Therefore the political environment is important to businesses. Ways in which it can affect companies such as TD Travel group are:
Dealings with customers - can be affected by laws on the sale of goods and services, on advertising and on trade descriptions.
How a business treats its employees - is affected by employment legislation and trade union law, largely designed to protect employee's rights.
Dealings with shareholders - are affected by the Companies Acts, which law down how information must be given in published accounts and what dividends may be paid.
The criminal law - can affect companies. Companies as separate legal persons distinct from their directors and employees can commit some offences.
Macclesfield College
By Amy Jackson
