Business Plan Market Research
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During the current period
of strong economic growth, Northwind Traders can
capitalize on the many significant opportunities
in the travel industry.
Economic and Social Factors
Service industries represent the fastest growing
sector of the national economy, and travel and
tourism agencies are poised to flourish in the
midst of today’s economic boom. These services are
projected to grow at an average annual growth rate
of 4.1 percent over the period from 1990 to 2010
(Appendix 1). The travel and tourism industry
thrives in a vital economy.
The general economic climate in the city of
SeattleRedmond is very strong. An influx of new
businesses has added to the area’s prosperity, and
the already large population of young
professionals is growing. Nearby, tThe city of
Seattle is the center for business in King County,
with over 400,000 people employed in industries
such as aerospace, transportation equipment,
health services, tourism, computer software, and
Currently, tThe qualitylevel of service and the
number of providers in the travel industry
constantly fluctuatebroadly uneven, and providers
enter and leave the field rapidly. Our
competitive edge will be in attracting and
retaining our customers with the most highly
trained and well-informed individuals we can
recruit. With our expertise in European adventure
vacations, we will be able to provide the most
accurate, up-to-date information possible.
Tourism in general is on the rise (Appendix 1),
Europe looks like it will continue to be the major
destination, and the Internet will be an important
channel into this market. The state of the
economy will be the most influential factor in how
many people travel. Other driving forces for
travel will include the cost of tickets, fuel
prices, the threat of terrorism, and currency
Northwind Traders Can Develop Strong Position in
The current lack of industry leaders in the
European adventure travel industry represents an
exceptional opportunity for Northwind Traders to
develop a dominant presence in the European
adventure travel industry in the Ggreater
SeattleRedmond area. With their exceptional
knowledge of the adventure travel industry, strong
customer base, and competitive prices, the company
will be well situated to take advantage of the
region’s current economic prosperity.
TARGET MARKET ANALYSIS
Northwind Traders is basedoperates in the
SeattleRedmond, Washington, area, and targets
individuals interested in adventure vacations in
Europe. The region comprisesgeographic area
includes the incorporated cities ofof Redmond,
Bellevue, and Tacoma and the encompassing counties
of King, Snohomish, and Pierce.
and the encompassing counties of
Market Size and Description
The Ggreater Seattle area—including all of King,
Pierce, and Snohomish counties—is home to
approximately 3 million people (1994 figure), half
of whom fall within our target market. Seattle’s
job rate is climbing at a rate of 10 percent each
year, and new jobs and growth are expected through
the year 2007. Seattle has become a world-class
destination, and the downtown retail and shopping
core has grown steadily over the last decade. The
following major facilities reside in the Ggreater
Seattle area: an international airport, several
major medical centers, and a state university, and
four other colleges and universities.
The percentages of employment by industry are as
follows: 28 percent services, 25 percent wholesale
and retail, 16 percent manufacturing, 14 percent
government, 6 percent transportation and
communication, 6 percent finance and insurance,
and 5 percent construction.
Seattle/King County's labor force is highly
educated, skilled, productive, and stable. It
consists of individuals who are deeply attached to
the area and have tended to stay and wait out past
periods of economic downturn. The vital economy,
the Northwest lifestyle, and its unique
environmental qualities attract people. Both
public officials and business leaders recognize
the need to keep our labor force well equipped
with marketable skills.
From within this population, our target customers
are individuals who are professionals with incomes
of $40,000+,, ages 25 to 35, with incomes of
$40,000+, single or married, without children, and
The world travel market is forecast to expand at a
4.1 percent average annual growth rate until 2010.
This is faster than the general economic growth
rate, which is expected to be around 2.4 percent
The European market, while not the fastest
growing, will be the most important destination,
accounting for over 50 percent of all
international arrivals (see Appendix 1). Within
Europe, France, Italy, and Spain are the most
popular destinations. This is why we have selected
tour operators with appropriate products in these
areas as our initial partners.
Figures for the size and projected growth of
adventure vacations are sketchy, but the figures
from one recent study (World Adventure Travel Data
Corp.) are in Table 2.
Table 2. Adventure Travel Vacations - World
forecast (Million Arrivals): 1990 - 2010
Rest of World
16 - 24
25 - 35
36 - 45
Source: WATD Corp. 1997
We believe that by concentrating on the European travel market, offering a
limited but extensive range of vacation packages, and targeting our service
at affluent professionals, we can meet the needs of our clients. Our
specialized knowledge of Europe and adventure travel will allow us both to
satisfy our customers and to surpass the services offered by our
Our market study (see Appendix 1) has shown that theis group composed of
affluent professionals has specific needs that are not currently being met,
as 65 percent of those planning vacations would not purchase them from the
same source again! Specifically, they want their travel agent to have
comprehensive knowledge of the destination (87 percent); to have an
efficient administration system in which they can have confidence (84
percent); to go on vacation with similar professional people (81 percent);
and to be offered useful advice and ancillary services such as insurance (79
In addition, our market study confirms that Europe is likely to be the
largest destination market for adventure vacations. Our study shows only 30
percent of adventure travelers to be under 24 years of age, while the World
Adventure Travel Data study claims 61 percent is under 24. We feel the
difference is because our survey sample is confined to relatively affluent
people who had spent at least $350 on adventure clothing (see Appendix 1).
One further emerging market segment for adventure vacations is that of
corporate clients. Our research suggests that up to one in five adventure
vacations is at this top price end of the market.
Northwind Traders is the only travel agency located in the Seattle area that
is focused on European adventure vacations. However, there are many
adventure travel agents in capital and secondary cities such as
RedmondSeattle, Bellevue, and Tacoma that compete with Northwind Traders to
provide adventure vacation packages. These agencies are described below:
ˇ General Travel Agents
These agents have added adventure vacations to their services, but often
have little or no knowledge of adventure destinations or activities. They
sell literally from the page, offering limited advice, information, and
support. According to our market study, 40 percent of adventure vacations
are booked through these general travel agents, but only a third of clients
would use them again.
ˇ Adventure Tour Operators
These tour operators who advertise their vacations in the press attract
about a quarter of all adventure vacation clients. However, clients have to
shop around several tour operators to find what they want, and clientsthey
cannot get unbiased advice or much help with information. Only 45 percent
would go back to a tour operator for their next vacation.
ˇ Independent Travelers
These travelers comprise about 15 percent of those going on adventure
vacations, of whom 65 percent would travel that way again. We need to
persuade this group that our superior product knowledge and service is worth
ˇ Internet Providers
These providers sell only 5 percent of adventure travel vacations; however,
70 percent of adventure travelers would buy their next vacation via the
Internet. There is plenty of scope to offer a superior Web site. We believe
that by having daily face-to-face contact with clients, we will be better
able to manage a fresh, vital, and relevant Web site aimed at the specific
needs of our market segment.
ˇ Specialist Adventure Travel Agencies
These agencies sell only about 15 percent of travel packages at present, but
we feel this is partially due to lack of client awareness and to the
comparative rarity of such outlets. We will differentiate ourselves from our
competitors by offering the most extensive material available from the most
up-to-date, well-informed staff. Clients will return for our service,
knowledge and competitive prices.
These findings are some of the most powerful results of our research. While
general travel agents may be the most likely resource for those travelers
taking an adventure vacation, they are in fact the least likely place those
clients will return to. And tAlthough specialist adventure travel agents,
such as the business we are setting up, account for only 15 percent of the
market, 65 percent of clients would use them again. We aim to increase this
percentage through our superior service.
Some 65 percent of those clients using specialist adventure vacation travel
agents would use them again—many more than would use either a direct tour
operator direct or a general travel agent.
However, these agents were criticized for having such a wide range of
activities and destinations that their sales agents knew little about them.
Our research shows that while 41 percent of clients take adventure
vacations in Europe, only 23 percent of the 5000 adventure tours offered are
for European destinations.
We feel that by concentrating on European destinations, which is the largest
market for both vacations in general and adventure vacations in particular,
we will be able to have superior product knowledge. We will need to know
only perhaps 100 destinations and activities well, rather than have only a
passing knowledge of the 5000 adventure vacations available.
Our market research has also shown that many adventure travel agents are
catering to the backpacker market, consisting mostly of individuals who are
under 24 years of age and are generally very cost conscious. This can lead
to very different types of clients ending up at the same destination, with
some consequent dissatisfaction. It is also noteworthy that t The
backpacker market requires a much lower level of service and information
than does the market for the more affluent 25- to 35-year-old professional.
25–35 year old market.
The two major competitors of Northwind Traders are Lakes & Sons and Ferguson
and Bardell, and Lakes & Sons. Ferguson and Bardell is the strongest
competitor of Northwind Traders, due to its strong client base and
experienced owner. However, itstheir press releases are of a very low
quality, and itstheir location is undesirable, with difficult parking and
limited customer service space. In addition, Ferguson and Bardell lacks the
knowledge and expertise in the field of European adventure travel that is
valued so highly by the clientele of Northwind Traders.
Lakes & Sons will be a formidable competitor for Northwind Traders because
of itstheir prime location, well-established business, and extensive
Potential Future Competition
Northwind Traders will occupy a specialized niche in the travel industry,
with its focus on adventure vacations in Europe. Although they areit is
currently the only European adventure travel agency located in the
SeattleRedmond area, there are competitors do exist in nearby areas (see
above). In order to stay competitive, Northwind Traders will need to
establish itself as the leader in adventure travel planning for Europe with
its superior product knowledge and high-quality service. The lack of current
adventure travel providers in the area represents a unique opportunity for
Northwind Traders to expand in a rapidly growing market.