ETRIP Case summary

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Etrip Case

Summary :

On February 2008, Oz Har Adir is working on the business plan of Etrip, a startup in European travel market. With €100.000 of equity, Etrip is promising an attractive return on capital. The startup is designed to be a search engine, both manual and automatic, for better-priced flights. This research tool which adds competition between operators, can offer up to 10% reduction on tickets.

The online travel industry stands for $49,4 billions in Europe, one of the largest-spending segments on the Internet. When focusing on Europe, Har Adir discovered that the airline industry was very diverse, country-based with over 120 companies. Besides, the reservation market is still far from being mature and efficient. Indeed, the customer has two purchase channels: the suppliers’ websites or the travel agencies websites. The CEO of Etrip was convinced that a clear and comprehensive picture could lead to customer savings.

The main weakness of the existing websites is that they offer an overwhelming multitude of options. Besides, it is very time-consuming to find the best deal. Etrip offers an unbiased scan of all sources needed and gather all the needs of the potential customer in one place. For turning Etrip into a profitable project, Har Adir designed a range of services and products through a pay-as-you-go method.

However, the online travel industry is very competitive. Etrip has to develop a marketing plan with a low budget. The three options are social networking, affiliate marketing and buzz marketing. In consultation with Slavin, chief technical officer and senior developer of a social networking site, founder and managing director of an e-commerce development and management firm, and Refaeli, expert in electronic communication, from his advisory board, Har Adir decided to go for the three of them.

Last but not least, he decided to start with Benelux, but willing to expand to Italy, Germany and France when the website will be fully operational.

Intellectual Property

Regarding the domain sharks issue, must Har Adir by all means keep Etrip for his different websites, or can he give different names in different countries?

The discussion on this first question ranged mainly over two important points: that of domain cost and that of brand recognition.

Costs: Changing the brand and domain is too expensive.
• Changing domain and design elements in webpages means incurring in different costs, both direct operating costs and indirect management costs. Given the low-budget profile of the firm posters highly discouraged this option. There is a direct tradeoff between spending investments globally or selectively.

Brand Recognition: Recognition will not be possible if different brands are applied.
• Posters agreed on the incoherence between the current marketing strategy and the option to change the brand mix. Majority agreed that an identical brand should be sustained thorough all operations to ensure brand recognition, although some argued the domain was least important than the brand name.

Other Strategies: Partnerships offer a competitive advantage.
• Other strategies were suggested, partnerships with airline companies to deliver up-to-date information this gaining competitive advantages. Also, offer partnerships with information giants such as NOKIA or Siemens making flight information available in other formats such as through mobile devices i.e. create a wider varying media approach.

Your purchasing experience

Would you go on this website? How do you usually book your flight tickets? Is it stressful for you?
Would you rely more on a human-based research or on a computer-based one? Why?

To try to find the cheapest flight available on the market, the majority of the students book their flights on-line. Yet, a distinction has to be made between long haul flights and short haul flights. As long haul flights tend to be more expensive, booking at a travel agency could reduce the risk perceived by customers. Actually, two kind of stressful aspects related to on-line booking have been mentioned in the discussion. The first one is about payment security while the second one is about the proof of purchase, the e-ticket being actually anything but a simple email.

The question of whether or not students would use Etrip’s website is quite controversial. On one hand it would be less time-consuming than searching by yourself, you would have the certitude to have someone to talk to in case of problem and it would be easier to find exactly what you are looking for. On the other hand there are some disadvantages: such websites might not feature the latest prices; it might take two to six hours to get an answer, this is too long if you want to compare different options and last but not least Etrip might not be able to check all possibilities or have access to all distribution channels and as a consequence they might not be offering the cheapest tickets.

The question of the exit strategy

In your opinion, if it proves to be a failure, which exit would be the best for ETRIP : The acquisition by a supplier, such as an airline, the acquisition of or the merger with another travel gateway search engine, the acquisition by a customer or the issuing of public shares?

In case of a failure two different exit strategies has been discussed on the board.

For the plan of an acquisition, either by a supplier or by another travel agency, our classmates had different opinions. On the one hand it might be a good idea to sell the search engine or the idea itself, to make the most out of the situation and to earn a lot of money. Hardly anyone forecasted ETRIP any success in the future so selling would be the best choice. On the other hand some classmates wondered if there is any value ETRIP can offer to a possible acquirer. The competitive advantage might be too small to be interesting for an already developed company. They would rather develop such a system on their own.

The second exit strategy was the merger with a travel agency. Again there have been two parties. The one said merging would improve the customer database and since ETRIP does not overlap with its competitors, it won’t lose any of its value. The partner could be a developed company with enough experience and capital to make the idea become successful. The other party argued that a merger would change the concept of ETRIP and it won’t be the same idea anymore. There also might be some right issues by merging the customer databases. And furthermore there would not be any competitive advantage and to many competitors who are almost doing the same.[i]

MARKETING PLAN
➢ Is Har Adir’s marketing plan efficient? Should he rather go for a bigger initial investment?

For this forum question, students argued the cost/effectiveness implications of the various marketing models, given the low-budget profile of the company: buzz marketing became the dominant strategy, debate followed on with pros and cons including an interesting variant on how buzz marketing worked better in Asia than in Europe. Other non-conventional marketing methods were discussed, such as variants of 3G, apps and widgets, this discussions surfaced given the statement that the main marketing channels are already very intensively occupied by competitors.

• Given the low-budget profile, buzz marketing is more effective.
• Should work better in Asia than in Europe though.
• Other methods such as 3G, apps and widgets must not be underestimated.
• Many students have never heard of E-Trip before.

This is the summary of the forum that we discuss about the topic Business Model:

Which Business Model is e-trip?

1) Content provider:

Pros	Cons:
Field market research project: compare flight prices in online reservation channels - Additional services rely on information quantity and accuracy.	- Only 15% of Advertisements income of its total revenue. - More than a search engine: all-in-one online travel purchasing experience and charge customers (pay-as-you-go method and purchase assistance tools)

- Field market research project: compare flight prices in online reservation channels

- Additional services rely on information quantity and accuracy.

- Only 15% of Advertisements income of its total revenue.

- More than a search engine: all-in-one online travel purchasing experience and charge customers (pay-as-you-go method and purchase assistance tools)



2) Intermediaries between airlines and customers and online market place

3) Full service providers

- Generate direct revenues from its services. (40% of its total revenue)

- Etrip business plan => its ultimate aspiration = a full service provider.

- Value driver = add services to an initial request from the customer.

4) Virtual community

- Active 2.0 community. (rating, experience sharing etc...)

- Etrip's potential products list include "User-generated content”

5) Shared Infrastructure

- Provide the market actors with an effective distribution channel.



Suggestions: Improve value for the user => find new opportunities

➢This is the summary of the forum that we discuss about the launching zone of e-trip:

Is Benelux a good starting point for launching his website? Are his restrictions to these countries arguable?

Pros:	Cons:
- New technologies well implemented - High demand for low cost flights - Holland has 1 of the highest internet penetration rate of Europe. - .nl considered as safe & confident - Familiar market = info about competitors	- No consideration for french culture - Consumers behaviors are different between countries - Panel not representative ( 2% of dutch speakers in Europe ) - Only dutch contact phone number

-

Main target: Dutch and German people from the Benelux

Suggestions:

- Localize the website and hire local employees to understand customers’ needs.- website should be reach by French people = expensive extension.