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Undergraduate Thesis
Submitted to the Faculty of the
Cavite State University
Bacoor City, Cavite
In Partial fulfillment
Of the requirements for the degree
Bachelor of Science in Business Management
(Major in Marketing)
Estrada, Jacqueline V.
October 2014
Francisco, (2005) stated that travel agency acts an agent of the different
suppliers in the tourism industry, such as the transportation companies, hotels,
resorts, car rental companies, tour operators and sight-seeing companies. It also
provides assistance in securing travel documents, such as passports, visas and
immigration clearance. It processes travel arrangements by placing reservations,
obtaining confirmations and issuing corresponding tickets or tour vouchers on
behalf of the suppliers assists in cases of refunds and cancellations, acts as
agents of the different suppliers in the tourism industry
Nowadays, Travel Agency is the most common business that continuously
increases in the City of Paranaque. Undoubtedly, thats the reason why this study
was conducted to know their marketing strategies and business performance.
This study wants to determine the evaluation of marketing strategy and
business performance of selected travel agencies in Paranaque City.
Significance of Study
The following will benefit from the study.
Travel Agencies. The study will greatly help to provide more knowledge
and ideas regarding travel marketing strategies that they will be provided not only
with some alternatives but also the latest trends in business.
Entrepreneurs. It also help entrepreneurs who are planning to put up
travel agencies because the study would come up with the most effective
marketing strategies of the four Ps of Service Marketing (Product, Price, Place
and Promotion) that will guide them in the conduct of their business operation.
Researcher. This study will satisfy the curiosity with the marketing
strategies and business performance of travel agencies. This will also serve as
final requirement for the degree in BS Business Management Major in Marketing.
Future Researchers. The study is essential for future researchers to
make related studies about this topic. This study can help future researchers
since they can use as a guide in making study similar to this and help them to
have an idea to improve this study.
Definition of Terms
The term listed below were defining in a manner they are used in the study.
Business Characteristics. The characteristics of travel agency which
include years in the operation, and type of ownership.
Business Performance. In this study refers to the current status of travel
agencies in relation to their marketing strategies.
Evaluation. Refers to the assessment of the business performance of
travel agencies with regards to its operation. The evaluation focuses on the
inputs, processes and outputs of the said company.
Marketing. Is the process of planning and executing the conception,
pricing, promotion and distribution of ideas, goods and services to create
exchanges that satisfy individual and organizational objectives.
Marketing Strategy. Is the selection of course of action from arriving
several alternatives that involves specific customer groups, communication
methods, distribution channels and pricing structures. As most experts say, it is a
combination of target market and marketing mixes.
Marketing Mix. Includes all controllable factors that have been chosen to
satisfy customer needs. They comprise the product, promotion, price and place.
Conceptual Framework
This conceptual framework explain how marketing strategies and
business performance will be identified through giving of survey questionnaires
to the (30) thirty respondents of selected travel agencies in Paranaque City.
Using descriptive research and survey method, managers will answer questions
stated in questionnaire. Questionnaire will focus in factors, such as business
characteristics, marketing strategy and business performance of travel
agencies. The paradigm that guided the conduct study is presented in figure 1.
Illustrate the relationship between the Marketing Strategies and Business
Performance of Travel Agencies.
The input in the study is the marketing strategy used in travel
agencies, Product, Price, Place, and Promotion. The output in the study is the
business performance of travel agencies, Number of Clients (Monthly), Number
of Clients Travelled (Monthly) and Sales Income. This study will determine if
there is a relationship between marketing strategies and business performance
of travel agencies.
INPUT
Marketing
Strategies
OUTPUT
PROCESS
Survey
Product
Price
Place
Questionnaire
Business
Performance
a. Number of
clients (Monthly)
b. Number of
Clients Travelled
(Monthly)
c. Sales Income
Promotion
Marketing Mix
The 4ps of the marketing mix that a marketing manager can manage to
achieve companys target. Changes happening on these parameters are subject
to changes in companies inside or outside environment (Kotler & Armstrong
2002).
The marketing mix is like a recipe of a products strategic position in the
market. So to achieve success in a companys strategic approach the 4ps of
marketing are the main tools (Culliton, 2000).
In the Figure below, I have indicated the 4ps of the marketing mix:
PRODUCT
PRICE
PROMOTION
PLACE
Product
A product is a good or service or the combination of both which is made to
satisfy a group of people in a market where people can give a value in exchange
of any specific goods and services. Commercially, a product means something
that belongs to a company or a person who is produced a delivered for a certain
market with a certain process and in exchange of a value is called product. This
can be tangible or intangible.
specific market. Pricing also depends on corporate image, social value, market
condition and geographical condition or situation (Ricky & Ronald, 2004).
Profit-Maximizing Objectives
Maximizing profit is sometimes very tricky. Low prices sometimes give a
bad image about the company or on the other hand it can lead to high volume. A
high price sells low volume of products but keep a standard of quality and
company image. For example, low prices from Tale communication service
providers enable them to sell more, but places huge pressure on their network in
regards to volume. But high price can attract more customers with a high quality
of services and benefits. On the other hand high prices return a companys cost
and effort within a short time but low prices take time and often take longer than
expected. To reduce this kind of problem companies try to set a reasonable price
which can return minimum profits but will keep the value of the company and
customer (Ricky & Ronald, 2004).
Market Share Objectives
Establishing market share in different markets often differs from one
market to another. Sometimes its easier than expected and sometimes its take
time to achieve this objective. In the long run, a business must make profit to
keep it running. A new company can set their prices lower in the beginning to
attract more customers and to offer their customer to have a try, but they might
have to be ready to make losses too. But for some established and well-known
companies this is easier than new comers, because customers are more likely to
buy a product that they are used to regardless of prices (Ricky & Ronald, 2004).
Other objectives
In some conditions neither maximizing profit nor market share is the main
objective. For example, in the time recession in 2009 companies have tried to
stay in the market which with their maximum effort to keep company running and
overcome the situation.
Price Setting Segments and Tools
Regardless of the objectives, the companys managers measure the
potential impact on deciding the final pricing. This may include all cost of
producing a product and estimated profit of the company. Managers worldwide
normally use two tools for this purpose: cost-oriented pricing and breakeven
analysis (Ricky & Ronald, 2004).
Cost-oriented pricing
Cost oriented pricing considers the desire of making profit by covering
product costs. A travel manager will make their trip pricing by calculating cost of
fares, worker wages, etc. Managers may include also rent, utility costs, insurance
and other fixed and variable costs.
Breakeven analysis
To cover variables cost, a manager of a firm uses cost oriented pricing
that changes with every single unit of products produced and sold. It will also
produce money to cover firms fixed costs that are fixed regardless the number of
product produced or sold. Break-even analysis costs versus revenues of various
volumes. It shows, at any particular selling price, the financial result, the amount
of loss or profit for the company (Ricky & Ronald, 2004)
Place
Place refers to the channel of product distribution. It may be from factory
to outlet or from outlet to final customer or from factory to customer. Selecting an
appropriate distribution channel is a strategic process. This determines both the
amount and cost of a product and market demand. Normally marketers are
determined to keep the enough flow of their product.
Below there are three strategies: intensive, exclusive and selective distribution
that provide different forms of products distribution channels.
-
Moreover, internet based online shops are becoming very popular nowadays.
Customers feel very comfortable to order or purchase a product online shop
rather than going to supermarket. As online shops are a place where customers
from all over the world can visit and buy products and get information about any
product. It is getting popular for all types of products now a day. In addition to
this, it has low costs and set-up fees as well as low barriers to enter into the
market. The medium payment through credit cards or from direct bank accounts
is also raising the demand of internet based shops (Ricky & Ronald, 2004).
Competitor analysis
In this ever changing business environment competitor analysis in needed
in all levels of business. Some firms may find it difficult to cope up with their
competitors strategy and may form their own strategy targeting a certain group
of customers. On the other hand, some may think this is only the way that a firm
may bring business if they can complete with their competitors given prices in the
market. However, a company has two strategies to analyze whenever they
formulate a competitors approach: (a) Who are the competitors and (b) What are
their motives? (Li, 2002).
To find out who are the competitors of ones business you have to look at
the market and the similarities between products or services. Here they can
additionally look for the same manufacturer, service provider, what are their
value prices and the customers response to their products etc.
From customers loyalty and comments on another companys product, a
company can sort out the reason why their competitors are providing this or that
service. Also a company can identify what they want their pricing and how they
can achieve their breakeven point, along with what are the future changes
coming from any specific advertisement (Ricky & Ronald, 2004).
However, knowledge of competitors resources and capabilities is
necessary to perform competitively. Before starting a big change in acquiring an
additional resource there must be different modifications and advertisements in
operation. From analyzing the competitors SWOT we know the competitors
capabilities (HRM advice & NetMBA.com, 2008 online).
Finally, to analyze competitors future target and strategy, it is easier to
look on what are the upcoming new technologies and new product or services in
competitors product line is going to add. In addition with that, a company itself
should be stable with enough funds and financial stability, necessary resources
so that they can compete with competitors market strategy (HRM advice &
NetMBA.com, 2008 online).
Promotion
Promotion is a way to advertise, to attract and finally to sell a product to
customers. It is a part of the communication mix: the total message any company
sends to its future customer concerning any product development or to launch
any new product or to have some seasonal sale. For customers, this is nice to
have their expected product with a lower price but it is when prices so come
down and the amounts of products rise or come with some extra features (Ricky
& Ronald, 2004).
Promotion, the final variable of the marketing mix, is the coordination of
marketing communication efforts to influence the attitudes or behavior of the
consumers (Solomon & Stuart, 2000). Promotion is employed as a means of
creating awareness making your consumers learn of your products and the
benefits that go along with it. It is virtually everything an organization says and
does. The functions of promotion include the following, namely: Informs
consumers about new goods and where they can purchase them. Reminds
consumers to continue using certain products. Persuades consumers to choose
one product over others. Builds relationships with customers.
These functions are employed by marketers in such a manner that the
consumers will always remember to buy their products and that the marketers
are able to build and maintain brand image and goodwill as well. It is therefore
important for marketers to know what exactly to promote and why. If relayed
improperly, the communication that the marketer sends to the consumers may
generate a negative response and would shy them away from buying your
products instead. Relationship marketing is also needed in strengthening your
promotion; a good relationship with your customers can result to a long- standing
patronage of your products.
Promotional Mix
Within the marketing mix, marketing utilizes various promotional elements
for the purpose of effectively providing information to consumers about their
products, increase the demand, differentiate the products, accentuate the
products value and stabilize sales. A marketer achieves these objectives by
blending the personal and non-personal selling activities in the form of a
promotional mix (Solomon & Stuart, 2000). The promotional mix focuses on one
more than one element and works in harmony with the overall marketing mix.
The elements of the promotional mix include the following, namely: Personal
selling a direct interaction between a company representative and a customer
either in person, by phone or even an computer link. Advertising a paid nonpersonal communication from an identified sponsor that can establish and
reinforce a distinctive brand identity and inform or persuade members of a
particular audience using the mass media. Sales promotion programs that
marketers design to build interest in or encourage purchase of a product during a
specified period of time. It is also an action-focused marketing event whose
purpose is to have a direct impact on the behavior of a firms customer. Travel
industry develops consumer sales promotion as part of their objectives of
attracting the final consumers. The types of consumer promotions that are
generally employed by the said firms are as follows: Sampling consumers are
offered regular or trial sizes of the product, either free or at nominal price. Price
deals consumers are given discounts from the products regular price. Coupons
offered as cents- off or added value incentives for purchasing specific products.
This
definition
is
often
used
in management
research
studies. According to Bititci, Carrie & McDevitt, it is the objective of that process
to provide an integrated control system, where the corporate and functional
strategies are deployed to all business processes, activities, tasks and
personnel, and feedback is obtained through the performance measurement
system to enable appropriate management decisions. The ultimate purpose of
that process is to improve company performance.
Performance measurement is an essential part of the performance
management. By measuring, people transform complex reality into simplified
numerical concepts that can be easily communicated and acted upon (Lebas,
2008). According to Lebas, the simplification of reality by measuring is the
prerequisite of successful management. Similarly, Bititci et al., argue that
performance measurement is at the heart of the performance management
process and it is of critical importance to the effective and efficient functioning of
performance management. Performance measurement (PM) can be defined from
different perspectives (Lebas, 2008).
Methodology
This chapter explained the methods that the researcher used in order to
allocate and evaluate the data in accordance to the goal of the study. Relevant
data were gathered through internet sites, related thesis, and books which could
justify documents concerning the study.
Time and Place
The researcher will start to conduct the research on November 2014, the
data gathering will be conducted from December 2014 to February 2015 and the
end of the study will be on March 2015 in Paranaque City.
Sampling Procedure
The study will be using the purposive sampling technique to determine
the specific number of respondents in Paranaque City to ensure that the
populations were adequately in the study. The researcher has drawn using
Slovins formula with ten percent of margin error.
Where:
n = number of sample
N = total population
e = 10%, number of error
Collection of Data
The researcher will gather the data of the respondents in Paranaque
City. The main source of the study was to obtain information that relevant to the
evaluation of marketing strategy and business performance of travel agencies in
Paranaque City. The primary source of data was questionnaires that were given
to the respondents. The secondary sources of data were taken from books,
internet and thesis.
Methods of Analysis
The researcher will utilize the descriptive method in the study using
survey approach that will based on the true data that was collected and
analyzed. Descriptive statistical tools such as percentage, weighted mean, likert
scale and chi-square to assess the purpose of the study.
Percentage. This will utilize to describe the marketing strategy used by the travel
agencies.
Formula:
P=
x 100%
Where,
P = percentage
f = frequency
N = total number of respondents
Weighted mean. This will utilize to identify the business performance of the
travel agencies.
Formula:
WM=
Where,
W.M. = weighted mean
X = frequency
W = weight
Likert Scale. This will be used to determine the level of satisfaction of the
managers based on marketing strategies of the travel agencies.
RATE
EQUIVALENT
INTERPRETATION
4.20-5.00
Excellent
3.40-4.19
Very Good
2.60-3.39
Good
1.80-2.59
Fair
1.00-1.79
Poor
Chi-square. This will use to ascertain the relationship between the marketing
strategy and business performance of travel agencies.
Formula:
X2=
Where,
X2 = chi-square test
E = expected value
O = observed value
Dear Respondents,
Jacqueline V. Estrada
Researcher
Date: _________________
Direction: Please put a check (/) on the space provided in each item.
I.
Business Characteristics
II.
Marketing Strategies
Directions: Read the following questions and choose your answer by filling up the
blanks or putting a check beside the chosen answer. I encourage you to answer the
questions sincerely and truthfully.
5-Stong Agree
4-Agree
3-Neither agree nor Disagree
2-Disagree
1-Strongly Disagree
a.
b.
c.
d.
e.
A. PRODUCT
The agency offers package tours
The agency offers personalized tours
The agency offers hotel Reservations
The agency offers car Rentals
The agency offers sightseeing tours
D. PROMOTION
5
The agency have an advertising
The agency provides a communication materials about their
products
The agency have a effectiveness of promotion activities
The agency maintain the retention of promotion to the memory
of the customers
The agency give promo Packages
The agency give sales promotion programs
B. PRICE
a. The agency gives discounts to the customers
b. The agency provides travel insurance
c. The agency based the price to their competitors
a.
b.
c.
d.
e.
f.
g.
h.
i.
a.
b.
c.
d.
e.
f.
C. PLACE
The agency provides the accessibility of the business
The agency have an wide area space
The agency have availability of the parking space
The agency have a convenience location
The agency have overall look of waiting and receptions area
The agency provides safety and security
The agency provides Sanitation and Cleanliness
The agency have a good temperature
The agency provides visibility of entrance and exits
III.
Business Performance
( ) 40-60
( ) 80 Above
( ) 40-60
( ) 80 Above