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MKTG3000- Final report...

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Strategic Market analysis of

Helloworld Travel Limited Submitted by the students of UNIVERSITY OF NEWCASTLE. UTSAV GUPTA - C3294562 • • • •

LEE JIAR WEI – C3314386 LU JIAN LUO – C3314396 BENEDICT TANG JUN KAI – C3314384 BRYAN TAN WEE SIANG - C3311342

Executive Summary The purpose of this report is mainly to applying the strategic marketing theory and analysis to the activities of Helloworld Travel Limited. This report has been analysis and presents with the data on the target market, product, distribution, competition and the macro environment which to identify the major strengths, weakness, opportunities and threats (S.W.O.T) that Helloworld Limited had faced. Most of the sources to produce this report by the examination of journal articles, books and websites with the aim to comprehensively cover mostly all the information. The starts of the report will be provide the information about the market and customer situation that also provide the information about the target markets, size and growth; industry competition; target market by using of the STP theory to show the information; consumer behaviour issues. Marketing mix will then having a strategy to differentiating its company from competitors by using the 7 Ps (Product, Price, Place, Promotion, Process, People, Physical Evidence) to have the information where the Helloworld Limited members will drive up an excellent and innovative strategy to

differentiate with its competitors. Next, the competitor situation is to identify and having more information about its competitors to remain competitive with existing and potential firm and macro-environment is to know the environment of its company-based country with the use of PESTLE analysis. Finally, the S.W.O.T analysis identified the Helloworld Travel Limited Strengths as their strong brand portfolio and its biggest opportunities the new trends in the consumer behaviour can improve new market for the Helloworld travel Limited.

Table of Contents Executive Summary 1.Introduction 2.Market/ Customer Situation ● 2.1 Information about target market/s, size and growth ● 2.2 Industry and competition ● 2.3 Target Markets – use S.T.P. theory i. Segmentation ii. Targeting iii. Positioning ● 2.4 Consumer behavior issues 3.Marketing Mix Situation ● 3.1 Product ● 3.2 Price ● 3.3 Promotion ● 3.4 Place ● 3.5 Process ● 3.6 People ● 3.7 Physical Evidence 4.Competitive Situation ● 4.1 Direct comparison ● 4.2 Market comparison 5.Macro-environment ● 5.1 Political ● 5.2 Economic ● 5.3 Social ● 5.4 Technological ● 5.5 Legal ● 5.6 Environmental ● 5.7 Summary 6.SWOT Analysis ● 6.1 Strength ● 6.2 Weakness ● 6.3 Opportunities ● 6.4 Threats

7.Conclusion and Recommendation References

Introduction Helloworld Travel Limited is a travel-distribution organization headquartered in Australia, giving worldwide and household venture out travel products and administrations to customers around the globe. Helloworld was propelled in 2013 after the union of inheritance brands Harvey World Travel, Travelscene, Jetset, and Travelworld. A merger with The AOT Group followed in 2016 and the business name was changed to Helloworld Travel in 2017. Through top-notch strategic approaches and useful associations with the two clients and providers, the organization has developed and developed into the dynamic association that it is today, offering incorporated travel arrangements over all divisions of the business. With generous worldwide activities, HLO's amazing purchasing structure conveys advertise driving outcomes to the two its individuals and its customers. Remarkable administration and customized corporate and relaxation head out arrangements add to Helloworld Travel Limited's extraordinary notoriety and results. The purpose of this report is to analyse through the research on the Helloworld Travel Limited identified in the market situation and marketing mix situation. Competitive situation is to find out the best competitors and having to know about its competitor’s situation and then macro-environment is identified by the PESTLE framework, this will lead to the S.W.O.T analysis that opportunities will be identified before the recommendation being provided.

Market/Customer Situation Weighting 2.1 Information about target market/s, size and growth Figure 1 shows the newest information about travel market in Australia in April 2018 and 2019. It shows an increase of inbound and outbound travellers. For the inbound travel, which means that the foreign tourists travel in Australia, the total number of inbound tourists increased from 9.004 million to 9.286 million with a growth rate of 3.13%. China, New Zealand and the USA are three main sources of tourists. Then, for outbound travel, the total tourists number increased from 10.669 million to 11.138 million with a growth rate of 4.4%. New Zealand, USA and Indonesia are three main destinations of Australian tourists. These figures show the large size of Australia market and a favourable situation.

Figure 1 Australia travel market For New Zealand market where HelloWorld travel also operates business, according to figure 2, the monthly visitor arrivals from 2009 to 2019 maintained an increased tendency. This means that the foreign visitors travelling in New Zealand rise consistently in past ten years. Moreover, according to Stats NZ (2019), the number of New Zealand outbound travellers in March 2019 increased by 11 900 compared with the same month in past year and reached 195 000. This means that the demand of local residents on traveling in foreign countries increased. According to the analysis above, it can be seen that both Australia and New Zealand have increased and great attractiveness for foreign travellers. Meanwhile the local residents also have increased demand for traveling outside of countries. The market size for HelloWorld Travel Limited in these two countries is large and has great potential.

Figure 2 New Zealand travel market 2.2 Industry and competition In 2017, more than 7.9 million international travellers came to Australia for a total of 266 million nights, injecting about $51 billion into the Australian economy (Tornos, 2018). Visitors travel to Australia and New Zealand for a variety of reasons, including business reasons, vacations, visiting friends and family, and sightseeing, etc. Australia's tourism industry has acquired the support from different industries including aviation (eg Australian Airlines, Jetstar Australia and Virgin Australia), arts and culture (eg Opera, Art Gallery), hospitality industry, MICE industry, outdoor entertainment industry, etc. However, the competition in this industry is fierce. Helloworld Travel Limited faces the competition from traditional physical travel agencies and online travel agencies. There are totally 6951 businesses in Australia tourism industry (IBIS World, 2019). The large number of travel agency can indicate a strong competition in this industry. Traditional physical travel agencies typically charge high commission rates and service fees. Although they are challenged by online booking platforms, they still have huge competitive advantages, such as rich industry experience, a large number of consumers, brands, and reputation. Moreover, there are many online booking facilities such as Webjet, Booking.com and Expedia. Thanks to the development of internet, they have become more and more popular in the past five years.

Figure 3 Industry statistics In addition, these different travel agencies diversify their travel products or service. They provide different services such as international and domestic airline reservations, travel and package travel booking, accommodation reservation, cruise booking, car rental and other service (IBIS World, 2018). The new technology is also introduced by these travel agencies such as e-commerce, e-payment, algorithm technology for matching the travel products to the different consumers, etc. This makes the competition fiercer. 2.3 Target Markets – uses S.T.P. theory Segmentation, targeting and positioning (STP) is used to identify the target markets of HelloWorld Travel Limited. Segmentation Geographical segmentation: HelloWorld Travel aims to provide the best travel experience for Australia and New Zealand travellers (HelloWorld Travel, 2019). Its business includes inbound travel products and outbound travel products. For the inbound market, its target consumers are people who have the intention to travel in Australia and New Zealand or foreign countries such as Canada, Fiji, France etc. as well as organizations who have need for business travel, award travel either in these two countries or in foreign countries. Psychological segmentation: The target consumers have intention to travel for different reasons including business travel, relaxing, holiday etc. They like travelling. They accept the travel product and service designed by travel agency but not by themselves. Behavioural segmentation:  The target consumers seek to have a good travel experience through enjoying the deigned travel products and service. The individuals seek to relax themselves or achieve the personal aims. The organizations seek to organize a perfect travel for their consumers, employees etc. Targeting

HelloWorld Travel Limited targets on the individuals who have a high income level and afford the travel products and services. These people should have middle- or high-income level. Then, the organizations should have good financial situation and enough financial ability to support the employees' reward travel, business travel, etc. Positioning HelloWorld Travel Limited provides the travel products and service with high price and high quality.

Figure 4 Positioning of HelloWorld Travel Limited 2.4 Consumer behaviour issues Motivation can influence the consumer behaviour of tourists. Travellers’ motivations include enriching their horizons through life's unique and interesting experiences, enriching their understanding of the world; making the most of their lives; sharing special moments with their loved ones; experiencing local culture and so on (Desai & Eric, 2015). This result emphasizes the importance of the concept of travel experience. Therefore, HelloWorld Travel Limited should consider improving the travel experience of tourists. Then, the tourists can be influenced by influencers including celebrity, online influencer etc. In particular, the last one has stronger and stronger influence on travel decision of consumers. In the travel sector, social networks are quickly becoming a source of complementary information, such as Twitter, Instagram, YouTube etc. Influencers, media, brands or users, each bringing their views on travel to the web and having a real impact on the choice of vacation destinations (Zivkovic, Gajic & Brdar, 2014). If HelloWorld Travel Limited provides the travel product or line recommended by these influencers, the consumer does not hesitate to imitate the influencers' travel decisions and purchase the product or service of this company. In addition, the family, relatives, and friends can also influence the travel decision of consumers (Sotiriadis, 2017). Their comments on the tourist’s destination (positive or negative) can easily promote the consumers to make a decision on using or not the service provided by HelloWorld Travel Limited.

Marketing Mix Situation A marketing mix situation is an analysis used by businesses and marketers to identify what a brand is offering. Helloworld has used these elements of marketing mix to help process a strategy where team members are appreciated for their individual and collective efforts, by driving efforts of excellence and innovation, differentiating the company from its competitors. 3. 1 Product Helloworld travel focuses on intangible domestic and international based travel services and not a physical product. The organisation operates as a franchised network of experienced travel agents worldwide. The company’s market offerings are Wholesale, Retail and Travel management, for which it uses different tactics. Each offering demonstrates three levels of travelling, ranging from booking of tickets to accommodations and travel insurance, which are designed to meet the needs, wants and demands of the customers (Jones, S. 2014). The Retail segment acts as the core product allowing associated travel agency networks/ Inbound brands (AOT INBOUND, ATS PACIFIC, EXPERIENCE TOURS AUSTRALIA, My Travel Group) to procure air, cruise and land products for Sales and packagings, and to act as a franchisor to the main Helloworld Travel Wholesale Brand. The actual product mainly shows tangibility, but since the brand is intangible, customers pay for the benefits received from travel management (Helloworld,:2018) . The participation of users, a positive atmosphere, encouraging new employees by means of sharing knowledge and responsibility and a work-life balance, is the augmented product. 3.2 Price The market capital for Helloworld travel limited is A$572 million, whereas it has outperformed the hospitality industry by (-8.4%) and underperformed the Australian market by (5.1%) as compared to the shares last year. Pricing competes with Tabcorp Holdings and webjet limited ; The prices offered to customers are quite similar, but the capital of the company is higher than the rest. Its intrinsic value based on future cash flows is A$8.73 million, which is about right if compared to its current share price which is undervalued at A$4.59 million. As indicated by my valuation, the natural incentive for the stock is A$6.5 million, which is above what the market’s price ceiling for the organization right now. This direction is liable to no material and sudden compounding in operating or financial conditions. (Simply Wall St. , 2018) 3.3 Promotion Helloworld uses an IMC strategy for promoting their products which includes Online and direct marketing, print and press, social media, emails and sales techniques (Helloworld, 2018) . Campaigns like #HelloworldRELAY, out-of-home advertising on bus stops and train stations (OOH partner - Adshel ) and digital advertisements were used to make people aware of what the company is offering. Whereas, their website promoted logos with ‘BOOK NOW PAY LATER’, which were interest free holidays with 12 months of flexibility and freedom, once applied as an add-on. Consistent monthly ads, delivered by Adroll and powered with Stackla UGC, helped to drive return visits to the site and drive purchase enquiries. (S  hilling, S, 2018) 3.4 Place The physical locations where Helloworld provides its services are Continent based, i.e. Australia, New Zealand, Asia and the South Pacific.The company uses the Traditional channel of distribution; Direct sales are targeted by major players like the companies own website ‘h  ttps://www.helloworld.com.au/’ or brokers, distributors, and interlinked wholesalers/ retailers/ travel agencies help with the supply chain (R  euters, T. 2019). The supply chain in this case focuses on the distribution strategy within Helloworld ltd, since it has resulted in a shift from travel agencies to online booking platforms placing pressure on high commision rates and service fee. (M  itchell, H. 2018)

3.6 Process The process element of the marketing mix is the means to achieve an outcome with all actions having an effect on the value chain. (Armstrong, Adam, Denize, & Kotler, 2015) There are many different process where Helloworld delivers their tourism packages to the customer. The process of integrating with stackla/ Cover-More / flight tutoring / Multi-Connect/ Invoicing, to suit customers needs, the technological process of setting up online platforms to purchase policies and make enquiries, the call centers to manage reports and alerts, the process to make a claim either in a store or on the phone and the electronic process of using Hicaps to make a claim. Each of these processes are either front of stage being what the customer comes into contact with and is aware of or back of stage which is what goes on behind the scenes to ensure the customer receives the service that is required. (Ostdick, N. 2016) 3.6 People Based on the results from the past year, the organisation has a total of 1,807 Full time Employees. Their goal is to ensure that services are inseparable and variable. The staff is ought to be inseparable because it understands that the travelers needs are important, and that the customer is investing a major amount of time and money; also that it is clearly committed to honesty in terms of the charges that may apply, more importantly all the needs and assistance follow up until your trip has ended. (Mitchell, H. 2018) Since the staff undergoes training, and is well aware of the insurance policies, it keeps you posted about your alternative travel options in case of unexpected events, natural disasters, health issues and man made events, making sure that the service is variable . However in case the outcomes did not meet your expectations, the management allows you to access the Customer service care @ ‘1300 722 501’. (Helloworld travel, 2018) 3.7 Physical Evidence The insights from helloworld’s website show the tangible aspects of service were fulfilled by the employees of the company, Refer - Gada and Ibi, serving the branch in Miranda are award winning agents with Scenic tours, Insight tours and Qantas Holidays .Since the two have travelled worldwide, they know the best accommodations and places to visit. This helps the company guide it’s staff to research on and make the best deals out of the places, in addition to launching fully escorted tours for its consumers (Gada, & Ibi. 2016) . Because of such employees, the positioning of Helloworld was higher if compared to its competitors. The perception of the company was unique because it looked to streamline all the operations of an ASX troubled company called Jetset Travelworld (consisted of four brands) and establish a unified network to create one instead of four marketing budgets. (Jones.S ,2014)

Competitive Situation Helloworld Travel survives in an industry where the competition is huge within the firms, barriers to entry are low, whereas the barriers to disruption are high. The potential and major competitors are FLIGHT CENTRE, TRAVELONLY INC, THOMAS COOK GROUP PLC, WORLDVIEW TRAVEL, TRAVEL COUNSELLORS LTD, EXPEDIA INC, WEBJET LTD, CORPORATE TRAVEL MANAGEMENT LTD, AND AMERICAN EXPRESS COMPANY (IBIS, W. 2018) . Since the competition within the industry can impact the results and revenue margins of the company, Helloworld Travel should strategize its pricing and focus on product differentiation and brand awareness to remain competitive with existing and potential firms. (R. E. White, 1986) 4.1 Direct comparison Two key competitors of Helloworld Travel Limited are : Flight centre Characteristics  - Focuses on taking CSR initiatives like Reducing of Energy consumption & Recycling of possible goods and organizes charity events to promote brand recognition and Business reputation. (Flight Centre, 2016) Strengths  - Using automation for various activities allows significant use of resources and reduces costs; The geographic location of the firm gives Flight centre a cost advantage and connection to both customers and the firm

itself; Following a low cost structure for production and selling, so that consumers can afford its services. (Williamson, D. 2018) Weaknesses  - The company has less assets and more liabilities, which can result in liquidity in the future; Acquires a large portion of rented property rather than buying a personal property, which adds large amount of rents to its costs; The decisions are made based on a two year old market research, while customers go with the trend which might have evolved. (Williamson, D. 2018) Capabilities - E  ntering E-commerce through Bibam’s scalable platforms and offering a 24 hour service. (Flight Centre Travel, 2017). Response strategies - I ncrease payrolls of employees to stop them from leaving the company since it runs on a low cost structure, and Integrate with new travel agencies to increase brand recognition. (Williamson, D. 2018) Webjet Ltd  ourism covers a wide geogra...