indian-tourism-australia by ukessays

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Subject Area - Marketing

Indian Tourism Australia

International Marketing Opportunity Planning

Executive Summary

The proposed company is a tourism organization offering tour packages to the Indian tourists in order to increase
their visits to Australia. Before launching these products, a comprehensive research-study will be undertaken to assess
the feasibility of these markets. The company intends to use a variety of modes for entering the overseas market like
direct exports, franchising etc.. On the critical evaluation of various market factors as technological, legal, socio-cultural,
political etc., the company has opted India as its target-market. However, the company can also promote its product by
focusing on special interest segments, destination marketing etc.

Thus, it can be concluded that the company has a very bright future ahead, as the market has a huge potential and there
is a growing interest among Indians to travel abroad.

The Product and the firm

The service offered by the company is Tour Packages. The two most attractive countries to offer my product are United
States and India. The company is in the Tourism industry and offers tour packages for visiting Australia. It works as
a Limited Company controlled by its Board of Directors. It started its operations as a Travel Agency in 2005 and soon
established itself as a major player in the industry. At present, it operates in all the states of Australia and has branches
in Europe, Middle East, South Asia, U.S. and Africa. Its operations range from Private Tours to Fully escorted Tours
including Group Tours, Locally hosted Tours etc.

The company has been exporting its tour packages internationally, for about 3 years. With its presence in about 41
countries around the world, the company is competing with the top players of the Travel industry on a global level.
The company has a pool of international managers and an efficient marketing team which reflects its expertise in the
industry.

The tour package offered by this company comprises of accommodation facilities, visits to archeological sites, cultural
shows, Mountaineering & Trekking arrangements and Food-festivals. The recent market research reports show a
favorable response towards the services offered by the company.

Demographic/Physical Environment

India has a population of about 1.10 billion and ranks second in the world. People residing in rural areas are high in
number but urban population is increasing due to the migration. It has diverse cultures and customs. Literacy rate is
70% and gender ratio is 955 females per 1000 males. Growth rate of population is 1.38%. (Sharan, 2000)



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India is rich in natural gas, iron ore, Mica, Diamonds. Country has abundant energy resources as solar wind.
Infrastructure spending is increased as it was becoming hindrance in the growth of economy. There is high investment
in telecommunications, construction and transportation. This has resulted in growth rate of 10% and it ranks second in
roadways construction. Middle class population is very high in India and it is more than U.S. So, India has a powerful
consumer market.

In 2007, the U.S. population was 300,000,000. There is diverse population in U.S. and the largest group is of whites.
Population of Native Americans is 4.5 million. Main demographic trend is growth of Hispanic American population.
Immigrant is high in number constituting 12% of total population. Transportation system is highly developed in United
States. The country is leader in technological innovation.

Political Environment

Besides the regulation of trade and investment, it is also the political and legal environment that plays a crucial role in
export business. A firm cannot ignore the political situation and legal formalities either in the home country or in the
host country if it has to operate successfully abroad. (Sharan, 2000)

There is quasi-federal-form of government in India and official head is President of country. De facto head of government
is Prime Minister and possess highest powers. Before 1990’s there was a strict government control on investment and
foreign trade. But the situation is completely changed after the liberalization in 1991 and most of the sectors are opened
for foreign companies. Overall balance of payments is positive and India is a net importer. Foreign Direct Investment is
increasing rapidly. Country is preferred for FDI as it provides better scope for IT and has market potential. FDI policy is
liberalized and 100% investment is allowed. Government has reduced licensing requirements and there is no restriction
on expansion of business.

United States has a presidential form of government and is also based on parliamentary democracy but has the benefit
of a high degree of decentralization. There are two dominating parties-Democratic party and Republican Party. There
is a high degree of transparency in the country and parliament is called congress in US. There is two-party system in
United States politics. It has a free trade agreement with Canada and other countries and has a close relationship with
other nations of the world.

Economic Environment

U.S.

GDP (PPP) - $ 13.543 trillion

Currency – Dollar

Inflation – 4.1%

Unemployment – 4.9%


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GDP growth rate – 2.9%

Per capita income – $ 43, 444

India

GDP (PPP) – 4 5.21 trillion

Currency – rupee

Inflation – 3.5%

Unemployment- 7.8%

Per capita income - $4543

US has high growth rate and this leads to economic growth. The faster increasing growth in the productivity leads to the
higher living standards. There is a mixed type of economy in US that is objected towards attaining profits. Both private
organizations as well as the government, take part in economic activities. It makes more market oriented economy that
helps to improve the quality of life. The major disadvantages of the US economy are the requirement of high skilled work
force and bear high cost. There is more dynamic environment in US that supports to new product and technological
developments but sometimes it remains unproductive to the market and adversely affects the economy. (Sharan, 2000)
High distribution network and highly skilled labor creates high cost for consumers.

Social/Cultural Environment

There is high status in U. S. and people there believe in high social status. Social institutions form an integral part
of culture. They are concerned mainly with the size of family and social stratification. In U.S. the size of family is
small. Individuals and societies have different views about nature, as in U.S., individuals treat themselves as supreme;
entrepreneurial abilities and risk taking activities are common. There is western culture followed in the country. There
is much difference between the social classes which affects language and values. People have high earnings and they
believe in spending the money for enjoyment.

There is cultural pluralism in India. It is absorbing new traditions and customs but has retained it own values. Family
values are given high respect by the Indian people. It has diverse cultures and more than 21 languages are spoken.
Educational level is very high and most known in the world. Population of middle class exceeds the population of U.S.

Similarity between Australia and India is of diverse culture and large geographical area, rich biodiversity. Difference is
that Indian people have less disposable income while Australians have high. U.S. and Australia are similar in cultures,
religion and have high income. There is major difference in population of Australia and U.S.



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Trade Regulations

India’s market has easy access and there are no strict regulations for the trade. To export services to India, permission
have to be taken from ministry of tourism under the Government of India. Tariff means the duty levied by the government
on imports. The Indian government provides subsidies to states in order to boost tourism activities. India is giving
preference to imports through tariff cuts and reduction or abolition of quota and other non-tariff barriers. After the
liberalization in 1991, there is transparency and simplified procedures. Legal requirements have also been eased.

Legal considerations for investment

Taxation: Taxation is another aspect where efforts are taking place to standardize the rates. International firms move
to a country where, among other things, tax rate is low. In India, progressive tax is imposed on the taxable income of
companies. There is flat rate of 40% for foreign companies in India. In U.S. imposition of tax depends on income event.
Tax rates are 10% to 35% in the country.

Unemployment affects economy as a whole because individual is a part of society, and also has a relation with business
& government. Employment is increasing slowly which results in increasing productivity. Unemployment rate is falling
as economy is expanding and it will be continued because resources are utilized efficiently. In US, currently it is 4.8%.

India is one of the fastest growing economies in the world, having growth of more than 8%. Though there is unemployment
but it is decreasing at a rapid rate, due to boom in the job market.

The ratings show that India is a better target market and we will export to India.

Product Potential

The tour packages offered by the company have drawn a favorable response among Indian travelers. Thus, there is a
huge opportunity for company to make profits in India. The customers here prefer good quality and affordable packages.
At times, customized packages are also demanded. (Kotler, 2002)A large no. of local travel companies operates in the
country and offer different kind of tour packages, yet they are unable to match the customer’s needs. As a result, there
is a demand-supply mismatch which allows foreign companies to enter the market and make profits. With the constant
arrival of foreign travel companies, the customers are now ready to buy their packages. At the same time, competition
has also increased with the existence of a large no. of players offering numerous packages.

Attitude towards service of foreign origin

Tourism industry possesses lot of competition. Availability of intermediaries- like commission agents and tour operators
are available to provide effective services. Regional and local transport facilities are there to look after the smooth
transportation of tourists.

Industry specific demand indicators:



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Tourism spending.
Attitude towards Recreation and & entertainment activities.
Tourism employment.
Tourism GDP.
Transportation.
Food & Beverage services.
Market analysis decisions prior to entry

The company develops a comprehensive strategy before entering a new market. It assesses its decision to enter the target
market on the basis of-

Size
Potential/Growth
Accessibility
Profitability
Hence, it critically evaluates its new market on all parameters. However, the company should also assess the compatibility
of the market with the resources available with it. At the same time, it should also ensure that each market is differentiable
from others to obtain varied responses towards new packages.

Market research undertaken prior to market entry

This company undertakes comprehensive research before entering into a new market. Here, it studies about the market
trends, competitors, customer needs, existing potential and growth prospects. (Kotler, 2002)

Secondary Research: The Company uses secondary sources like government reports, industry journals, research articles,
tourism statistics, periodicals etc.

Primary Research: Here the company conducts research through questionnaires, market surveys and focus group
studies.

Market segmentation: A lot of research-work is done by the company before segmenting the markets on the basis of
geography, demographical factors, lifestyle, brand preference and social classes.

Market potential: Decisions related to services - where to offer them, how much to spend in support of them, how to set
revenue targets for them, are taken.

Hence, it can be concluded that the company conducts a through research as a part of its pre-market entry assessment.
However, the company can also invite the view of industry experts and the travel agencies to judge the market feasibility.

Evaluation of the market environment

The research shows that the company has to function in a multi-cultural and diversified market. It has to constantly


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modify its services according to the tastes of the customers.

Cultural: The target market consists of various cultures, languages, customs and traditions.

Economic: The economic environment of different countries results in differences in taxation policies, disposable
income-levels, and foreign trade policies of the governments.

Political/legal: The Company has to also deal with the different trade rules and regulations imposed by the host
governments, regarding their mode of entry in the market.

With the help of continuous research and by keeping a constant check on the geo-political environment of the world, the
company becomes aware of these factors and the potential threats caused by them.

Market Entry Method

There are a number of ways through which this company sells its packages in the international markets.

1. Direct export -The company designs its packages in the home market and then sell them to customers overseas.

2. Indirect export - In this method, the company sells its package to a third party who then sells it within the foreign
market.

3. Licensing - Here, this company will grant an organization in the foreign market a license to sell its packages, using the
brand name. In return, the company receives a royalty payment.

4. Franchising – Here, the organization puts together a package of the profitable components that made them a success in
their home market and then franchise this package to oversea businessmen. The Franchise holder helps out by providing
training and marketing these services.

All these methods are yielding good results for the company but in order to extend its operations in various other
countries, the company can adopt the route of alliances and partnerships with the foreign companies. In fact, to maintain
its position in this competitive environment, the company should also think about acquiring travel agencies of different
countries.

Marketing Mix

The local environment makes a significant impact on the Marketing Mix of the company. As it is a service-sector company,
its marketing mix also includes People, Process and Physical evidence, as additional factors. (Kotler, 2002)

Product- the Company is forced to design standardized packages in order to keep the costs low. However, it can increase
its customer base by offering customized packages in the new markets.



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Pricing- Due to the high cost of the packages, the company restricts its marketing efforts only to the elite customers. The
prices are usually set on the basis of the cumulative cost of all components of the tour package.

Advertising and Promotion- The services are promoted with the help of Direct Mails, Brochures, Conventions, Theme
tours and offering Incentive travels. As the operations are carried out on an international level, promotional strategies
are framed according to the local culture and taste.

Channel selection- These tour-packages are made available to the customers through various intermediaries like
commission agents, tour operators, franchisees and distributors. Personal selling becomes impossible due to large
scale of operations. The company is bound to obey the rules of the host country in order to sell its packages. Also, the
distribution-channel’s compatibility with the local market conditions is taken into consideration.

International Competitive Marketing Strategy

This company enjoys the following benefits, as a result of its international marketing efforts-

economies of scale
consistent brand image
global presence
high profitability
The company emphasizes on segmenting its markets and differentiating its packages as a part of its business strategy in
the international market. As a result, it channelizes its marketing efforts in a profitable manner.

It maintains its network by associating with franchisers, acquiring small travel agencies and building relationships with
the local tour operators.

Assessment of the viability of the present and future international marketing perspective

This company follows a geocentric model of decision-making, under which the local managers are given complete
autonomy to take the decisions. However, this at many times, can be harmful and so, the final decision-making authority
should be with the headquarters.

Since, the international business environment generally remains unstable; as a result the company should prepare itself
to deal with untimely crises and controversies.

At present, the company has a decent reputation in its existing markets and has a no. of opportunities ahead due to its
experience and encouraging market response towards such packages. (Kazmi, 2002)

In order to expand its operations in future, the company has to ensure availability of adequate resources (capital,
manpower), enter into new relationships and offer variety in its services. It can also adopt business strategies of
integrating and acquiring smaller companies in the industry.



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Customer identification in target market

Generally, the local tour operators, new travel agencies and commission agents show keen interest in buying these
packages to serve the needs of the customers of their region. As a result, the company directs its marketing efforts
towards these intermediaries in order to increase its sales. There are high sales in India of the tourism packages. Over
next five years, there will be projected growth rate of 10% in the industry.

Plan for future expansion

(Source: www.praxisadvisors.com. 2008)

Recommendations and Conclusions

The company will deliver high-quality service and will have a reliable brand identity. Due to its presence in many
countries, it will have a wide customer-base. However, the company should offer tailor-made packages for different type
of customers. The company should also design certain packages for low-income segments. It should also search for new
partners in different countries to utilize their local knowledge. At the same time, the company should adopt the best
practices of other well-known tourism organizations.

Reference

Kotler, P. (2002) Marketing Management. New Delhi: prentice Hall of India
Ramaswamy, V.S. & Namakumari, S. (2005) Marketing Management. Delhi: McMillan India. Ltd.
Kazmi, A. (2002) Business Policy and Strategic Management.
Boulton, W.R., (1984). Business policy: the art of strategic management. (pp. 18). New York: Macmillan
Czinkota, M.R. et al (1999). International Business. New York: Harcourt brace.
Gupta, N.S. (1988). Organization Theory and Behavior. New Delhi: Himalaya Publishing House.
Mathew, M. J. (2003). Fundamentals of Organizational Theory and Behavior. Jaipur: RBSA Publishers.
Sharan, V. (2000) International Business.

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