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


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[ animated presentation at: http://bit.ly/mmt-ppt ] 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" online travel market

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

  1. 1. E-Business in theAirline Ticketing Industry
  2. 2. I am amazed to see the way in which the Indian onlinetravel market is taking off. The market for buying travelonline is ripe and shift from offline to online booking isgetting accelerated. We intend to seize this opportunityby launching our site well before the competition — thiswould enable us to take a sizable lead. – Deep Kalra, Founder and Chief Executive Officer
  3. 3. 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.
  4. 4. 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
  5. 5. Business ModelA simple B2C business model
  6. 6. Business ModelModel Adapted from Service Design Offering by Dr. Daniela Sangiorgi, LancasterUniversity UK
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. Travel and Tourism Market International departures from India by Purpose of Visit: 2000-2005 2000 2001 2002 2003 2004 2005Business 1,154.80 1,179.40 1,340.00 1,355.20 1,495.40 1,731.20Leisure 679.9 691.4 750.5 767.5 853.1 1,032.60Visiting friends/relatives 807 823.4 959.1 1,019.80 1,082.10 1,310.80Others 1,773.80 1,870.30 1,890.60 1,357.50 1,969.40 2,108.40Total 4,415.50 4,564.50 4,940.20 4,500.00 5,400.00 6,183.00 Source: http://www.gmid.euromonitor.com/Reports.aspx [accessed in October 2007]
  11. 11. Segmentation of TravelersTravel & TourismSegments 2000 2001 2002 2003 2004 2005 2015Personal Travel andTourism 596.4 651.0 708.0 791.0 908.1 1034.0 3748.7Business Travel andTourism 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 40.9Govt. Expenditures -Individual 7.4 8.0 8.7 9.9 10.7 12.2 37.6Visitor Exports 142.4 143.5 142.0 141.5 159.5 175.8 697.3Total Travel andTourism 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
  12. 12. 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
  13. 13. Internet User BaseYear Users (million) Population (million) Penetration (%)1998 1.4 997 0.141999 2.8 993 0.282000 5.5 1010 0.542001 7.0 1027 0.682002 16.5 1047 1.582003 22.5 1086 2.072004 39.5 1106 3.542005 50.6 1131 4.47 Source: http://www.internetworldstats.com/asia/in.htm and www.sebi.gov.in/dp/infodraft.pdf back
  14. 14. Online Travel and Tourism MarketProjected Internet Sales by Sector: Internet Transaction Value in India, 2005-2010 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 Source: http://www.gmid.euromonitor.com/Reports.aspx back
  15. 15. Online Travel and Tourism MarketTravel Accommodation: Internet Sales by Direct Suppliers and Intermediaries: Internet Transaction Value in India, 2000-2005 2000 2001 2002 2003 2004 2005Internet 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 2444.1Others 104401 116034.7 124847 142406.4 162138.4 189666.9Total 105291.1 117294.3 127147 146346.2 166834.7 195701.6 Source: http://www.gmid.euromonitor.com/Reports.aspx back
  16. 16. 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
  17. 17. Present Market Share Source: PhoCusWright, 2010
  18. 18. 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
  19. 19. MMT’s View of the Consumer Virtuous Cycle
  20. 20. Branding and Positioning Lowest Air Fare ProviderValue Propositions Anticipated Outcomes• Empowering the travellers with • Redefining travel products rich information distribution network• Offering travel superstore: buy • Building efficiency in sales and multiple products across multiple distribution to pass on benefits to brands the customer• Providing opportunity for instant • Providing technology that brings booking with real time purchase about convenience between of all travel products, tickets offline and online processes delivered at doorstep • Enhancing the reach of the travel• Ensuring transparency and and tourism market to remote reliability locations• Ensuring convenience of buying • Tension-free travel-related anytime and anywhere product buying• Offering 24x7 customer service • Hassle free service experience Source: MMT
  21. 21. 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
  22. 22. 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.
  23. 23. Revenue Share from Offerings Source: PhoCusWright, 2010
  24. 24. 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
  25. 25. 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
  26. 26. Campaign Design• Money: – Rs. 30 million on advertising and marketing activities during the three months launch phase PR and others, 15 BTL, 5 TV, 40 Outdoor, 5 Print, 5 Web, 30
  27. 27. 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
  28. 28. 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
  29. 29. Television AdvertisementCelebrity TVC Beach TVC
  30. 30. Other Advertisement
  31. 31. 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
  32. 32. Viral Campaigns
  33. 33. Thank you
  34. 34. Questions? Shabbir AkhtarPGPM 10, School of Marketing, Globsyn Business School – Global Campus Email: shabbir.pm10k@globsynbchool.com | Twitter: @strategian