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 biotechnology.
Competitive Environment
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.
Long-Term Opportunities
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 rates.
Northwind Traders Can Develop Strong Position in Region
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
Geographic Area
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.
RedmondSeattle
Bellevue
Tacoma
and the encompassing counties of
·King
·Snohomish
Pierce
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.
Target Customers
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 college educated.
Market Definition
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 per year.
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
| Destination | 1990 | 1997 | 2003 | 2010 |
| Europe | 0.25 | 0.60 | 1.60 | 2.35 |
| N. America | 0.45 | 0.60 | 1.40 | 2.20 |
| Rest of World | 0.10 | 0.25 | 0.95 | 1.10 |
| Total | 0.80 | 1.45 | 3.95 | 5.65 |
| Age | 1990
% |
2010
% |
||
| 16 – 24 | 61 | 38 | ||
| 25 – 35 | 20 | 31 | ||
| 36 – 45 | 15 | 25 | ||
| 46+ | 4 | 6 | ||
| 100 | 100 |
Source: WATD Corp. 1997
Market Opportunities
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 competitors.
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 percent).
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.
CompetitiveOMPETITIVE AnalysisNALYSIS
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:
· 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.
· 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.
· 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 their consideration.
· 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.
· 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.
Competitive Advantages
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.
Competitors’ Positions
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 training program.
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.
