E-Business in the Airline Ticketing Industry (E-Business)

Category: Education

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[ non-animated presentation at: http://bit.ly/mmt-slide ] Presentation on "E-Business in the Airline Ticketing Industry -- Make My Trip Case Study" by Shabbir Akhtar (PGPM 10, Globsyn Business School - Global Campus) for the subject "E-Business"


Presentation Transcript

E-Business in the Airline Ticketing Industry:

E-Business in the Airline Ticketing Industry

I am amazed to see the way in which the Indian online travel market is taking off. The market for buying travel online is ripe and shift from offline to online booking is getting accelerated. We intend to seize this opportunity by launching our site well before the competition — this would enable us to take a sizable lead. :

I am amazed to see the way in which the Indian online travel market is taking off. The market for buying travel online is ripe and shift from offline to online booking is getting accelerated. We intend to seize this opportunity by launching our site well before the competition — this would enable us to take a sizable lead. – Deep Kalra , Founder and Chief Executive Officer


History Launched in the US in 2000 to cater to the niche US-to-India travel market Survived the dotcom bust and the 9/11 tragedy break- even in 2002 By 2004, it had garnered 3.5 per cent share of the NRI market Over 100,000 customers and 130,000 registered users Company had offices in New York and Sydney Employees were given opportunity to be owners of the company by holding stocks

India Operations:

India Operations A decision was taken to launch the India website in September 2005 A time when low-cost carriers (LCCs) had made air travel cheaper There was a need to provide a platform for buying and selling travel products/services Identified the gap between demand and supply Decided to offer a user-friendly and convenient online interactive interface to the consumer Received an investment of US $8 million (Rs. 352 million) from SB Asia Infrastructure Fund Was the first comprehensive online travel site with real time booking for flights, hotels, holidays, and cars

Business Model:

Business Model A simple B2C business model

Business Model:

Business Model Model Adapted from Service Design Offering by Dr. Daniela Sangiorgi , LancasterUniversity UK

Business Model:

Business Model There were key enabling components: supplier relations, technology , process and people The earlier experience in the US indicated that strong relationship with suppliers run the business model MMT had already developed proprietary technology which would help it link all supplier sites to check the inventory and compare prices The company’s own products would generate adequate revenue without depending on revenue generated from selling advertisement space The other key component would be employees having domain-specific skills

MMT’s Technology Platform:

MMT’s Technology Platform MakeMyTrip.com is fully powered by Amadeus MMT had been operating its international bookings engine on Amadeus’ platform MMT decided to move its domestic airline booking engine onto the Amadeus platform as well The website uses Amadeus Web Services 2.0 - a second-generation, state-of-the-art global technology platform that provides full access to Amadeus’ content Amadeus Master Pricer , a cutting-edge low fare search tool, helps customers to quickly and easily find options that suit their travel needs and budget Amadeus also provides a dedicated 24x7 service team in India which is backed up regionally by an Asia Pacific support structure Source: http://www.amadeus.com/au/x157420.html

Travel and Tourism Market:

Travel and Tourism Market In 2004, foreign tourist arrival in India grew at 23.5 per cent to reach 3.46 million and was projected to reach 3.92 million at the end of 2005 Visitors to India spent Rs. 222.5 billion (US $4.9 billion) during their stay in 2004, with an average spend of Rs. 65,460 (US $1,451) per person According to industry sources, 50 million airline seats were expected to be available for sale in India in 2006 In 2005, around 98 per cent of the outbound travel from India was by air Indians travelled abroad for three main reasons: business, leisure, and visiting friends and relatives - link Indians made almost 391 million domestic trips in 2005; this was about 12.7 per cent higher than that in 2004

Travel and Tourism Market:

Travel and Tourism Market 2000 2001 2002 2003 2004 2005 Business 1,154.80 1,179.40 1,340.00 1,355.20 1,495.40 1,731.20 Leisure 679.9 691.4 750.5 767.5 853.1 1,032.60 Visiting friends/relatives 807 823.4 959.1 1,019.80 1,082.10 1,310.80 Others 1,773.80 1,870.30 1,890.60 1,357.50 1,969.40 2,108.40 Total 4,415.50 4,564.50 4,940.20 4,500.00 5,400.00 6,183.00 International departures from India by Purpose of Visit: 2000-2005 Source: http://www.gmid.euromonitor.com/Reports.aspx [accessed in October 2007]

Segmentation of Travelers:

Segmentation of Travelers Travel & Tourism Segments 2000 2001 2002 2003 2004 2005 2015 Personal Travel and Tourism 596.4 651.0 708.0 791.0 908.1 1034.0 3748.7 Business Travel and Tourism 101.6 94.2 86.8 96.0 114.0 134.0 402.2 -- Corporate 90.0 83.6 76.8 84.8 101.1 118.9 361.3 -- Government 11.7 10.7 10.0 11.2 12.8 15.1 40.9 Govt. Expenditures - Individual 7.4 8.0 8.7 9.9 10.7 12.2 37.6 Visitor Exports 142.4 143.5 142.0 141.5 159.5 175.8 697.3 Total Travel and Tourism Consumption 847.8 896.8 945.5 1038.4 1192.3 1355.9 4885.7 Source: World Travel and Tourism Council (WTTC) Report on Travel and Tourism in India, 2005

Online Travel and Tourism Market:

Online Travel and Tourism Market Internet User Base -- by 2004, the internet user base grew to 39.2 million from just 1.4 million in 1998 -- Link Online Travel Market -- online leisure/unmanaged business travel in India totalled US $295 million (Rs. 12,980 million) in 2005 -- Link Online Hotel Booking -- online sales in travel accommodation in India were valued at Rs. 6 billion in 2005, up by 29 per cent in current value terms from 2004 -- Link

Internet User Base:

Internet User Base Year Users (million) Population (million) Penetration (%) 1998 1.4 997 0.14 1999 2.8 993 0.28 2000 5.5 1010 0.54 2001 7.0 1027 0.68 2002 16.5 1047 1.58 2003 22.5 1086 2.07 2004 39.5 1106 3.54 2005 50.6 1131 4.47 Source: http://www.internetworldstats.com/asia/in.htm and www.sebi.gov.in/dp/infodraft.pdf back

Online Travel and Tourism Market:

Online Travel and Tourism Market 2005 2006 2007 2008 2009 2010 Internet 23,173.0 35,501.0 53,287.0 78,918.0 114,746.8 159,612.7 -- Direct suppliers 21,597.2 32,660.9 48,491.1 70,237.0 98,682.2 134,074.7 -- Intermediaries 1,575.8 2,840.1 4,795.8 8,681.0 16,064.5 25,538.0 Others 1,080,301.2 1,239,225.1 1,421,031.7 1,632,244.8 1,871,420.6 2,148,976.8 Total 1,103,474.2 1,274,726.1 1,474,318.7 1,711,162.8 1,986,167.4 2,308,589.6 Projected Internet Sales by Sector: Internet Transaction Value in India, 2005-2010 Source: http://www.gmid.euromonitor.com/Reports.aspx back

Online Travel and Tourism Market:

Online Travel and Tourism Market 2000 2001 2002 2003 2004 2005 Internet 890.2 1259.6 2300 3939.8 4696.3 6034.7 -- Direct suppliers 761.7 1056.5 1712.6 2711 3123 3590.7 -- Intermediaries 128.5 203.1 587.4 1228.9 1573.3 2444.1 Others 104401 116034.7 124847 142406.4 162138.4 189666.9 Total 105291.1 117294.3 127147 146346.2 166834.7 195701.6 Travel Accommodation: Internet Sales by Direct Suppliers and Intermediaries: Internet Transaction Value in India, 2000-2005 Source: http://www.gmid.euromonitor.com/Reports.aspx back

Competitive Environment:

Competitive Environment Yatra.com: was expected to be launched by August 2006 Cleartrip.com: was planning to enter the market by August 2006 Suppliers’ Web Sites: 75 per cent of the airlines tickets were sold from airlines’ websites Travel Agents and Tour Operators: In 2004, there were 23,450 outlets of travel agents and 4,450 outlets of tour operators in India

Present Market Share:

Present Market Share Source: PhoCusWright , 2010

MMT’s View of the Consumer:

MMT’s View of the Consumer Short lead-time for booking holidays (3-6 weeks) Preference for pre-planned travel Attitude towards travel: giving importance to status Specific needs (e.g., dietary) because of their social/ religious background No specific language problems: many Indians spoke English Preference for familiar Indian food Preference for travel agents or tour operators for buying travel products even though they offered limited choices

MMT’s View of the Consumer:

MMT’s View of the Consumer Virtuous Cycle

Branding and Positioning:

Branding and Positioning Value Propositions Empowering the travelers with rich information Offering travel superstore: buy multiple products across multiple brands Providing opportunity for instant booking with real time purchase of all travel products, tickets delivered at doorstep Ensuring transparency and reliability Ensuring convenience of buying anytime and anywhere Offering 24x7 customer service Anticipated Outcomes Redefining travel products distribution network Building efficiency in sales and distribution to pass on benefits to the customer Providing technology that brings about convenience between offline and online processes Enhancing the reach of the travel and tourism market to remote locations Tension-free travel-related product buying Hassle free service experience Lowest Air Fare Provider Source: MMT

Choice of Target Customer:

Choice of Target Customer Males living in metros of the age group 24-44 years who are married with a monthly household income of over Rs.30,000 from families which were Internet-savvy with usage beyond e-mail transacted on the Internet before deal hunters and early adopters

Product Offerings:

Product Offerings Air tickets : Customers would get the opportunity to search, compare, and book tickets on any airline, including LCCs and full service airlines Hotel reservations : Customers would have the option of real-time booking of rooms in over 1,500 hotels at discounted tariffs Car/Taxi bookings : Customers would be provided opportunity to book car at special prices for airport transfers and other trips Holiday packages : Facility to buy holiday packages within India or foreign holidays at great prices Road-trips : Myriad options would be available for motorable trips from all large cities in India with interactive maps Weekend breaks : Would offer great opportunity with thousands of options for short stay holidays at all price points B2B services . Local agents around the world would be able to access the above products through its extranet, IndiaAhoy.com

Revenue Share from Offerings:

Revenue Share from Offerings Source: PhoCusWright , 2010

Launch Plan:

Launch Plan Communicate that MMT offers online one-stop-shop solution to travel consumers Build excitement through every customer contact Communicate a strong proposition and deliver consistently on the promise Build empathy via relevance

Campaign Design:

Campaign Design Mission: Grab the attention of the consumer and inform about MMT’s USP – “lowest air fare provider” Message: The underlying factors behind the advertising campaign were that customers were deal hunters and looked for the cheapest price with assurance The campaign focused on the lowest airfare guarantee to push trials “If you find a lower fare we pay the difference” —campaign was designed to serve the purpose of grabbing the attention

Campaign Design:

Campaign Design Money: Rs. 30 million on advertising and marketing activities during the three months launch phase

Campaign Design:

Campaign Design Media: TV: medium chosen to build on “Nothing is more attractive than MMT offer” Print: medium was chosen to continue the excitement created through TV advertisements. Internet : launch with high visibility properties like frame-spot at the bottom of the page, shoshkele , and page-tear Outdoors: Airports being the most important and critical place for promoting travel-related websites, live promotion themes were planned with the help of people with banners to send out the message

Television Advertisement:

Television Advertisement Channels: English news channels: NDTV, CNBC Infotainment channels: National Geographic, Discovery, Discovery Travel and Living, AXN English movie channels: Star Movies, HBO Hinglish entertainment: Star One Hindi movie channel: Zee Cinema Timings: evening prime time (6 to 12 pm): 60% RODP (run of the day programming): 40% Of the 40 per cent of RODP spots, around 50% were during weekends Slots: The commercials were planned to be shown for 20 seconds

Television Advertisement:

Television Advertisement Celebrity TVC Beach TVC

Other Advertisement:

Other Advertisement

Viral Campaigns:

Viral Campaigns The primary goal of the viral campaigns was to promote the lowest airfare guarantee offered by MMT and generate excitement in the market The emphasis was on the most competitive airfare offers in India and the assurance of paying back the difference to the customer if he found a fare lower than that offered by MMT The campaign was aimed at creating a new breed of air travelers Viral campaigns were planned to be online with very low investment in either production or media Each viral was estimated to cost around Rs. 2-3 lakh , which included production and initial media push

Viral Campaigns:

Viral Campaigns

Thank you:

Thank you


Questions? Shabbir Akhtar PGPM 10, School of Marketing, Globsyn Business School – Global Campus Email: shabbir.pm10k@globsynbchool.com | Twitter: @strategian

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