Introduction to the
Sample Plan
The following document is a sample of a finished business plan. In your final plan, you have the opportunity to elaborate on those ideas in your outline that you feel are most integral to your business. In composing your business plan, you can follow your outline as loosely or closely as you choose. For instance, in the sample plan, the Executive Summary, which is the last section of the Business Planning Wizard, is presented first in order to emphasize the most impressive features of the business. Your goal in composing a finished business plan is to construct the most comprehensive, thorough document possible, in order to attract investors and to confirm that you have taken the time to explore as many potential issues for your business as may arise.
Mr.
Richard Carey
Canton
Street
Seattle,
Washington 22222
Dear
Mr. Carey:
My
attorney, Mr. William Hollands, suggested I write to you regarding my business,
Northwind Traders. I am currently seeking funding, and I
believe that my company would coincide with your interest in
businesses relating to the travel industry makes my company a
great investment for you.
Northwind
Traders is positioned to take advantage of the significant market opportunities
available in the customized travel-planning field. Through a professional approach to marketing,
experienced management, and an emphasis on outstanding customer support and
service, Northwind
Traders can become the Greater Seattle area’s premier provider of planning
services for European adventure travel through a strong
marketing campaign, experienced management, and an emphasis on outstanding
customer support and service. From that base, the company will expand to
become a regional force.
We
are seeking $83,500 in funding, and
anticipate this to be the extent of the funds required. The funds will be used
to refurbish the shop, to expand the staff, and to developincrease
marketing activities, primarily our Web site and
databasee development.
I
appreciate your consideration of the business plan for Northwind Traders. I will contact you next week
in approximately ten days to see if you have any
questions andor to
discuss how we may proceed. Thank you.
Sincerely,
Heather
Mitchell
President
EXECUTIVE SUMMARY............................................................. 1
Description of the Company..................................... 1
Mission Statement......................................................... 1
Products and Services................................................. 1
Financial Forecast........................................................ 2
Financing Requirements............................................. 2
HISTORY AND POSITION TO
DATE..................................... 4
The Company’s Mission................................................. 4
Management Team and Key Personnel............. 4
Services.................................................................................. 6
Transportation............................................................... 7
Company History............................................................. 7
Guarantees and Warranties.................................. 8
Business Structure........................................................ 8
MARKET RESEARCH................................................................. 8
Economic and Social Factors................................ 9
Competitive Environment.......................................... 9
Long-Term Opportunities............................................ 9
Geographic Area............................................................ 10
Market Description..................................................... 10
Target Customers........................................................ 10
Market Definition........................................................ 10
Market Opportunities................................................ 11
Competitive Analysis.................................................. 12
Competitive Advantages.......................................... 13
Competitors’ Positions.............................................. 14
Potential Future Competition............................. 14
BUSINESS STRATEGY............................................................. 15
Customer Incentives................................................... 15
Advertising and Promotion................................... 15
Sales and Marketing.................................................. 16
Commission........................................................................ 17
OPERATIONS............................................................................. 17
Premises............................................................................... 17
Choice of Location and Premises........................ 17
Hours of Operation...................................................... 17
Equipment........................................................................... 18
Staffing............................................................................... 18
FORECASTING.......................................................................... 18
Sales Forecast................................................................ 18
Cash Flow Projections.............................................. 20
Income Statement........................................................ 20
Balance Sheet................................................................. 21
Performance Ratios.................................................... 21
Break-Even......................................................................... 21
Funds Required and Timing..................................... 21
Funding Options.............................................................. 22
BUSINESS CONTROLS........................................................... 23
Accounting System...................................................... 23
Quality Control............................................................ 23
New Tour Operators................................................... 23
Capacity.............................................................................. 23
Long-Term Goals............................................................ 24
Steps for Achieving Goals........................................ 24
Position................................................................................ 25
Risks Associated with Growth............................ 25
APPENDIX 1: MARKET
RESEARCH.................................... 26
APPENDIX 2: FINANCIAL
FORECASTS............................. 35
EXECUTIVE SUMMARY... 6
The Company... 6
The Company’s Mission... 6
Products and Services... 6
Marketing and Sales
Techniques... 6
The Competition... 7
Target Market... 7
Operations... 8
Management... 8
Financials... 8
Funding... 9
HISTORY AND POSITION TO
DATE... 10
The Company’s Mission... 10
Management Team and Key
Personnel... 10
Services... 12
Transportation... 13
Company History... 13
Guarantees and
Warranties... 14
Business Structure... 14
MARKET RESEARCH... 14
Economic and Social
Factors... 15
Competitive Environment... 15
Long-Term Opportunities... 15
Geographic Area... 16
Market Description... 16
Target Customers... 17
Market Definition... 17
Market Opportunities... 18
Competitive Analysis... 19
Competitive Advantages... 22
Competitors’ Positions... 22
Potential Future
Competition... 23
BUSINESS STRATEGY... 23
Customer Incentives... 23
Advertising and Promotion... 24
Sales and Marketing... 25
Commission... 25
OPERATIONS... 25
Premises... 25
Choice of Location and
Premises... 26
Hours of Operation... 26
Equipment... 26
Staffing... 26
FORECASTING... 27
Sales Forecast... 27
Cash Flow Projections... 28
Income Statement... 28
Balance Sheet... 29
Performance Ratios... 29
Break-Even... 29
Funds Required and
Timing... 30
Funding Options... 31
BUSINESS CONTROLS... 31
Accounting System... 31
Quality Control... 31
New Tour Operators... 32
Capacity... 32
Long-Term Goals... 32
Steps for Achieving
Goals... 32
Position... 33
Risks Associated with
Growth... 34
APPENDIX 1: MARKET
RESEARCH... 35
International Arrivals
by World Region... 35
Indications of Tourism
Demand in 1997... 36
Summary of Findings
from Market Research Survey... 37
Northwind Traders
Questionnaire... 41
Internet Growth and the
Sale of Travel Services... 44
APPENDIX 2: FINANCIAL
FORECASTS... 46
Cash Flow Projection
Year One... 46
Income Statement, Years
One to Three... 48
Balance Sheet at end of
Year One... 51
Sources and Uses of
Funds... 53
Northwind Traders, Inc. provides travel-planning services
for European adventure vacations to residents ofindividuals in
the Ggreater
SeattleRedmond area. The service industry, including travel
agencies, is one of the fastest growing business sectorsareas
of the economy, and Northwind Traders intends to capitalize on the success of
this industry by taking advantage of travel planning opportunities in the
Pacific Northwest region.
President Heather
Mitchell and Vice President of Sales and Marketing Jim Kim currently hold the
company’s
stock. Prior to starting the Northwind Traders travel agency, Ms. Mitchell
cofounded, co-owned, and operated the Northwind Traders clothing store. She has
selected a small team with extensive travel, sales, and computer skills, all of
whom will be invaluable to the new venture. Her coworkers bring a combined
total of 35 years of travel industry experience to the agency.
President Heather Mitchell and Vice President of
Sales and Marketing Jim Kim currently hold the company’s stock.
The mission of Northwind Traders is to become the premier
provider of adventure vacations for 25- to 35- year-old
professionals. Northwind Traders is dedicated to building long-term relationships
with customers through quality training and customer support, and wants to be
recognized as the leading adventure vacation company in the Ggreater SeattleRedmond area. The company’s goal
is to grow steadilyy
expansion, becoming profitable by the secondthird year of
operations.
Northwind Traders recently became the appointed agents for
Margie’s Travel, one of the largest and most respected tour operators in the
market. With virtually no marketing effort, Northwind Traders has sold
some 200 adventure vacations in the past six months, netting $66,800 in
commissions. Sales of insurance policies and other services have added to this
total,
and could potentially add much more. Northwind Traders offers a comprehensive
range of services to support the adventurous traveler, including pre- and
postvacation briefings, travel insurance, and a directory of services specific
to each destination and activity.
Northwind Traders believes that by concentrating on
one market segment and one geographic destination, it will be able to deliver a
service that is superior to anything currently on the market. Published research shows that tourism is a
fast-growing business sector and that Europe is the favored location for most
travelers. Adventure vacations, while a relatively new
and small market, looks set for explosive growth.
In addition to targeting adventure travelers and
working as the appointed agents for established travel tour firms, Northwind
Traders plans to leverage its relationship with its sister business, Northwind
Traders outdoor clothing shop, by offering discount services to shop customers.
From desk and field market research carried out on
300 clients, it is clear that there is considerable potential in the adventure
travel business. Research indicates that Northwind Traders’ target market finds
it difficult to obtain reliable and authoritative advice on destinations and
activities. Research also suggests that the customers in this market are
unlikely to purchase their vacations again from the firm who provided their
last vacation due to a lack of informative sales personnel. Northwind Traders
will cater to these needs and develop a strong return-customer base.
Because
they are currently the only travel agency focused on European adventure
vacations that is located in the SeattleRedmond
area, Northwind Traders has a substantial opportunity to dominate the region.
In order to maintain and improve their current position in the region, they
will need to invest in a Web site, as well as database software and systems,
and in refurbishing the shop premises. Northwind Traders maintains the following
advantages over existing competition:
ongoing support to clients;
extensive knowledge of the European adventure vacation
field;
superior customer service;
specialized training programs for staff; informative Web site;
competitive rates.
informative
Web site
competitive
rates
From desk and field market research carried out on
300 clients, it is clear that there is considerable potential in the adventure
travel business. Research indicates that Northwind Traders’
target market finds it difficult to obtain reliable and authoritative advice on
destinations and activities. Research also suggests that the customers in
this market are unlikely to purchase their vacations again from the firm who
provided their last vacation due to a lack of informative sales personnel. Northwind Traders will cater to these needs
and develop a strong return-customer base.
The Northwind Traders travel agency business will
operate from a self-contained facility within the existing clothing shop, with
its own shop window and entrance from the main street. The business will benefit both from its
accessible location in the heart of SeattleRedmond’s
downtown shopping district, as well as from the clientele it will gain through
its proximity to the already established Northwind Traders clothing store.
Prior to starting the Northwind Traders travel
agency, Ms. Mitchell cofounded, co-owned, and operated the Northwind Traders
clothing store. She has selected a small team with extensive travel, sales, and
computer skills, all of whom will be invaluable to the new venture. Her coworkers bring a combined total of 35
years of travel industry experience to the agency.
Northwind Traders started as a clothing store and has expanded into the travel agency business, with its focus on adventure travel in Europe. Last year, Northwind Traders clothing store made $200,400 profit on sales of $1,419,500 and employed seven people.
Northwind Traders expects that by concentrating full-time
on selling adventure vacations, clients will increase from the present level of
200 (achieved over a six-month period with only a part-time effort), to at
least 660 in the first year, 1400 in the second, and 2100 in the third. To help achieve this growth, Ms. Mitchell has
identified three other tour operators she wishes to represent and has begun
negotiations with them.
Selling between two and three vacations a day will allow
the business to reach cash flow break-even in Year One, while makeing a modest
profit in Year One. By the
Year Two posttax profits should be $3040,0600, and will increase to nearly $496501,000 by Year
Three.
Ms. Mitchell plans to sell her shares in the clothing shop
and invest the proceeds in the new travel business, Northwind Traders. In addition, she will be investing $41,750 of
her own money in the business, and seeking $83,500 from outside
sources. Return on shareholders capital by Year Three is projected to be close
to 100 percent. The purpose of the business plan is to communicate this highly
profitable opportunity to Ms. Mitchell’s partners in the clothing shop and to
outside investors, and to attract interest in the venture.
Alternatively, Ms. Mitchell is considering loan finance
made up of a $41,750 two-year loan and a credit line of $58,450. In total, about $125,250 will be needed to
fund the business during the initial months.
Northwind Traders, Inc. provides travel-planning services
to individuals and businesses in the Ggreater SeattleRedmond area. The business is located at 1234 Franklin
Street, SeattleRedmond, Washington.
The goal of Northwind Traders is to be the leading
provider of hassle-free European adventure vacations to the 25- to 35-year-old
business professional market. Initially operating in the SeattleRedmond area inoutside of Seattle,
Washington, Northwind Traders is rapidly expanding to sell its services
worldwide via the Internet. Travel service sales is the fastest growing
category of business to consumer activity on the Internet, and by the year
2000, the value of this market is estimated at $4.500M
billion (see
Appendix 1, Internet Growth and the Sale of Travel Services).
Our emphasis will be on providing a complete specialized
service based on having a detailed knowledge of the vacation destination and
adventure activities being offered. Market research indicates that the major
criticism our type of client has of existing travel agencies is that their
agents “know nothing about their products, they just open the catalogue and
read,” to quote one of many disappointed travelers.
By capitalizing on our experience in the Northwind Traders clothing shop, we will be able to both advise and direct our clients to the type of travel equipment they will need to get the very best out of their vacation.
Heather
Mitchell, President and CEO. Before founding Northwind Traders, Ms. Mitchell
owned and operated Northwind Traders, an outdoor clothing shop in the Seattle
area. Prior to that, she managed the Olympia branch of one of the larger
regional chains of general travel agencies operating throughout western
Washington, where she was responsible for managing the office systems and a
staff of four. She has a degree in travel and tourism from State University.
In
addition to Ms. Mitchell, team members Jim Kim and Richard Bready will be
moving into the new venture on a full-time basis, and Amy Egert has been
recently recruited to cover Saturdays and vacations. Freelance business
consultant Jae Pak will be advising during the business’s changeover from
clothing shop to adventure travel agency.
Jim
Kim, Vice President Sales and Marketing. Prior to joining Northwind Traders, Mr. Kim
worked for the marketing department of a major airline. His current
responsibilities include the company’s direct marketing campaign and all
sales-related issues.
Richard
Bready, Office Manager. Twenty years as a travel agent has given Mr.
Bready the ideal background for Northwind Traders. A knowledgeable salesperson,
Mr. Bready’s expertise in the area of European travel enables him to entice the
adventure traveler.
Amy
Egert, Sales Assistant. After completing her undergraduate degree at the Institute of Art, Ms. Egert spent a year
traveling abroad and joined the staff at Northwind Traders recently as a sales
assistant.
Jae
Pak, Business Consultant. With over 20 years of consulting experience in
industries ranging from aerospace to technology to retail, Mr. Pak’s knowledge
and guidance will be instrumental to the success of Northwind Traders.
The
volunteer members of the Board of Directors provide guidance to the management
and staff of Northwind Traders. The board meets twice yearly to discuss policy
changes, review the mission statement, and update the business plan if needed.
Members include
Lisa
Jacobson, retail store owner
Holly
Barrett, CPA
Jo
Brown, former travel agent
William
Hollands, lawyer
Lisa
Garmaise, retail store owner
Tony
Chor, human resource manager
Prasanna
Samarawickrama, caterer
We are currently the appointed agents for Margie’s Travel, a major supplier in the market.
Currently, Margie’s Travel offers some 40
different adventure vacation packages throughout Europe, including horse
trekking in Iceland; above-the-clouds trekking on islands and in remote regions
in such areas as Corsica and Norway; van-supported inn-to-inn bicycling;
mountain biking and hiking adventure tours throughout France, Germany, Italy,
and Austria; and ballooning across the Alps.
We intend to be appointed agents by three other major adventure travel tour firms with whom we are currently in negotiation:
Enchantment Lakes Corporation. Offers rafting, sea kayaking, and yachting trips around remote European rivers and coastline areas, covering such areas as the Adriatic, the Black Sea, and Turkey.
West Coast Sales. Offers adventure vacation packages to
corporate clients to use as incentives and rewards, and as part of management
development programs. They are particularly strong in France, Italy, and Germany.
Exploration Air. Specializes in adventure vacations in Eastern Europe and former Soviet countries, covering Bulgaria, Romania, Poland, and Latvia.
These are three relatively new and small tour operators, but they have acquired a reputation for innovation and reliability–and they are currently underrepresented.
In addition, we will offer a comprehensive range of
complementary services to support the adventurous traveler, ensuring that they
will have a safe, enjoyable, and memorable experience. These services will include insurance, pre-
and postvacation briefing packs, and a directory of advice and information
services particular to each destination and adventure activity.
The vacations we will offer will use all principal travel systems, including planes, trains, buses, and where appropriate, taxis. We will aim for a standard of travel higher than that offered by the general travel industry. The feeling we are looking for is definitely not that which is engendered by the backpacker market.
Five years ago Heather Mitchell cofounded Northwind
Traders, an outdoor clothing shop in SeattleRedmond,
Washington. Over the years, Northwind Traders has extended its product range
to include everything the adventurous traveler could want, from tents and
sleeping bags to maps, guidebooks, and insurance. The clothing shop has sales of $1,420,000 per
year (see Table 1), makes a gross profit of $202,400, and employs seven people,
either full- or part-time. A mail-order service is now provided by catalogue and via a new
Web site.
Table 1. Northwind
Traders Clothing Shop Performance Over Past Five Years
|
Year |
1 |
2 |
3 |
4 |
Last Year |
|
Sales |
$183,700 |
$422,510 |
$669,670 |
$1,023,710 |
$1,421,170 |
|
|
$62,625 |
$167 |
$100,701 |
$133,602 |
$201,916 |
Increasingly, shop customers have asked for advice on adventurous places to go on vacation.
Last year Northwind Traders acquired an agency from Margie’s Travel, one of the largest and most respected tour operators in this market, and began to promote and sell their products.
In the six months that we have been selling travel agency
products, some 200 vacation packages, at an average cost of $3340, have been
sold.
Northwind Traders’
commission on the sales has been $66,800 (10 percent commission). In addition, 35 insurance policies have been
sold at an average price of $167, yielding $1754 (30 percent commission).
Heather Mitchell, one of Northwind Traders’s founding partners, intends to sell her shares in the store and to concentrate on setting up the new travel business, Northwind Traders.
Our
clients will be protected financially against either our own or our tour
operator’s failure, by virtue of the ARC bonding held by our principals. We
will only use vacation providers who can
provide 24-hour emergency support services for clients while on vacation.
Northwind Traders is incorporated under the laws of the
state of Washington. The company has authorized 10,000 shares, 6000 of
which are owned by President and CEO Heather Mitchell. Vice President of Sales
and Marketing Jim Kim owns 1000 shares, and the remaining shares are held by
the company for future distribution.
In the next few weeks, the business will be set up as an
operation independent from the clothing store. This structure will clearly separate the
travel business from the clothing shop and make it possible to attract the risk
capital that will be required when the business starts to grow.
At a later stage the business may wish to sell and issue
airline tickets and to create its own charter vacations. This will require membership in the ARC
(Airline Reporting Corporation) and IATAN (International Airlines Travel Agency
Network). These organizations regulate the collection of money and
distribution to the appropriate airlines. However, in the period covered by this
Business Plan we intend to operate only as the appointed agents for a number of
tour operators. As such we can “shelter” under their licenses and bonds.
During the current period of strong economic growth, Northwind Traders can capitalize on the many significant opportunities in the travel industry.
Service industries represent the fastest growing sector of the national economy, and travel and tourism agencies are poised to flourish in the midst of today’s economic boom. These services are projected to grow at an average annual growth rate of 4.1 percent over the period from 1990 to 2010 (Appendix 1). The travel and tourism industry thrives in a vital economy.
The general economic climate in the city of SeattleRedmond is very strong. An influx of new businesses has added to the
area’s prosperity, and the already large population of young professionals is
growing. Nearby, tThe city of Seattle is the center for
business in King County, with over 400,000 people employed in industries such
as aerospace, transportation equipment, health services, tourism, computer
software, and biotechnology.
Currently, tThe qualitylevel
of service and
the number of providers in the travel industry constantly fluctuatebroadly
uneven, and providers enter and leave the field rapidly. Our competitive edge will be in attracting
and retaining our customers with the most highly trained and well-informed individuals
we can recruit. With our expertise in European adventure vacations, we will be
able to provide the most accurate, up-to-date information possible.
Tourism in general is on the rise (Appendix 1), Europe looks like it will continue to be the
major destination, and the Internet will be an important channel into this
market. The state of the economy will be the most influential factor in
how many people travel. Other
driving forces for travel will include the cost of tickets, fuel prices, the
threat of terrorism,
and currency rates.
Northwind Traders Can
Develop Strong Position in Region
The current lack of industry
leaders in the
European adventure travel industry represents an exceptional opportunity
for Northwind Traders to develop a dominant presence in the European
adventure travel industry in the Ggreater SeattleRedmond area. With their exceptional knowledge of the
adventure travel industry, strong customer base, and competitive prices, the
company will be well situated to take advantage of the region’s current
economic prosperity.
Northwind Traders is basedoperates
in the SeattleRedmond,
Washington, area, and targets
individuals interested in adventure vacations in Europe. The region comprisesgeographic
area includes the incorporated cities ofof Redmond, Bellevue,
and Tacoma
and the encompassing counties of King, Snohomish, and Pierce.
RedmondSeattle
Bellevue
Tacoma
and the encompassing counties of
·King
·Snohomish
Pierce
The Ggreater
Seattle area—including all of King, Pierce, and Snohomish counties—is home to
approximately 3 million people (1994 figure), half of whom fall within our
target market. Seattle’s job rate is climbing at a rate of 10 percent each year,
and new jobs and growth are expected through the year 2007. Seattle has become
a world-class destination, and the downtown retail and shopping core has grown
steadily over the last decade. The following major facilities reside in the Ggreater Seattle
area: an international airport, several major medical centers, and
a state university, and four other colleges and universities.
The percentages of employment by industry are as follows: 28 percent services, 25 percent wholesale and retail, 16 percent manufacturing, 14 percent government, 6 percent transportation and communication, 6 percent finance and insurance, and 5 percent construction.
Seattle/King County's labor force is highly educated, skilled, productive, and stable. It consists of individuals who are deeply attached to the area and have tended to stay and wait out past periods of economic downturn. The vital economy, the Northwest lifestyle, and its unique environmental qualities attract people. Both public officials and business leaders recognize the need to keep our labor force well equipped with marketable skills.
From within this population, our target customers are
individuals who are professionals with incomes of $40,000+,, ages
25 to 35, with
incomes of $40,000+, single or married, without children, and
college educated.
The world travel market is forecast to expand at a 4.1
percent average annual growth rate until 2010. This is faster than the general economic
growth rate, which is expected to be around 2.4 percent per year.
The European market, while not the fastest growing, will be the most important destination, accounting for over 50 percent of all international arrivals (see Appendix 1). Within Europe, France, Italy, and Spain are the most popular destinations. This is why we have selected tour operators with appropriate products in these areas as our initial partners.
Figures for the size and projected growth of adventure vacations are sketchy, but the figures from one recent study (World Adventure Travel Data Corp.) are in Table 2.
Table 2. Adventure
Travel Vacations - World forecast (Million Arrivals): 1990 - 2010
|
Destination |
1990 |
1997 |
2003 |
2010 |
|
Europe |
0.25 |
0.60 |
1.60 |
2.35 |
|
N. America |
0.45 |
0.60 |
1.40 |
2.20 |
|
Rest of World |
0.10 |
0.25 |
0.95 |
1.10 |
|
Total |
0.80 |
1.45 |
3.95 |
5.65 |
|
Age |
|
1990 % |
|
2010 % |
|
16 - 24 |
|
61 |
|
38 |
|
25 - 35 |
|
20 |
|
31 |
|
36 - 45 |
|
15 |
|
25 |
|
46+ |
|
4 |
|
6 |
|
|
|
100 |
|
100 |
Source: WATD Corp. 1997
We believe that by concentrating on the European travel market, offering a limited but extensive range of vacation packages, and targeting our service at affluent professionals, we can meet the needs of our clients. Our specialized knowledge of Europe and adventure travel will allow us both to satisfy our customers and to surpass the services offered by our competitors.
Our market study (see Appendix 1) has shown that theis group composed of affluent
professionals has specific needs that are not currently being met, as 65
percent of those planning vacations would not purchase them from the same
source again! Specifically, they want their travel agent to have comprehensive
knowledge of the destination (87 percent); to have an efficient administration
system in which they can have confidence (84 percent); to go on vacation with
similar professional people (81 percent); and to be offered useful advice and
ancillary services such as insurance (79 percent).
In addition, our market study confirms that Europe is
likely to be the largest destination market for adventure vacations. Our study shows only 30 percent of adventure
travelers to be under 24
years of age, while the World Adventure Travel Data study claims 61
percent is under 24. We feel the difference is because our survey
sample is confined to relatively affluent people who had spent at least $350 on
adventure clothing (see Appendix 1).
One further emerging market segment for adventure
vacations is that of corporate
clients. Our research suggests that up to one in five adventure vacations
is at this top price end of the market.
Northwind Traders is the only travel agency located in the
Seattle area that is focused on European adventure vacations. However, there are many adventure travel agents
in capital and secondary cities such as RedmondSeattle,
Bellevue, and Tacoma that compete with Northwind Traders to provide adventure
vacation packages. These agencies are described below:
· General Travel Agents
These agents have added
adventure vacations to their services, but often
have little or no knowledge of adventure destinations or activities. They sell literally from the page, offering
limited advice, information, and support. According to our market study, 40 percent of
adventure vacations are booked through these general travel agents, but only a
third of clients would use them again.
· Adventure Tour Operators
These tour operators who
advertise their vacations in the press attract about a quarter of all adventure
vacation clients. However, clients have to shop around several tour operators to
find what they want, and clientsthey
cannot get unbiased advice or much help with information. Only 45 percent would go back to a tour
operator for their next vacation.
· Independent Travelers
These travelers comprise about
15 percent of those going on adventure vacations, of whom 65 percent would
travel that way again. We need to persuade this group that our superior product
knowledge and service is worth their consideration.
· Internet Providers
These providers sell only 5
percent of adventure travel vacations; however, 70 percent of adventure travelers would
buy their next vacation via the Internet.
There is plenty of scope to offer a superior Web site. We believe that by
having daily face-to-face contact with clients, we will be better able to manage a fresh,
vital, and relevant Web site aimed at the specific needs of our market segment.
· Specialist Adventure Travel Agencies
These agencies sell only about
15 percent of travel packages at present, but we feel this is partially due to
lack of client awareness and to the comparative rarity of such outlets. We will
differentiate ourselves from our competitors by offering the most extensive
material available from the most up-to-date, well-informed staff. Clients will return for our service,
knowledge and competitive prices.
These findings are some of the most powerful results of
our research. While general travel agents may be the most likely resource for
those travelers taking
an adventure vacation, they are in fact the least likely place those clients
will return to. And tAlthough specialist adventure travel agents,
such as the business we are setting up, account for only 15 percent of the
market, 65 percent of clients would use them again. We aim to increase this
percentage through our superior service.
Some 65 percent of those clients using specialist adventure vacation
travel agents would use them again—many more than would use either a direct tour operator direct
or a general travel agent.
However, these agents were criticized for having such a wide range of
activities and destinations that their sales agents knew little about them. Our research shows that while 41 percent of
clients take adventure vacations in Europe, only 23 percent of the 5000
adventure tours offered are for European destinations.
We feel that by concentrating on European destinations, which is the largest
market for both vacations in general and adventure vacations in particular, we
will be able to have superior product knowledge. We will need to know only
perhaps 100 destinations and activities well, rather than have only a passing
knowledge of the 5000 adventure vacations available.
Our market research has also shown that many adventure travel agents are
catering to the backpacker market, consisting mostly of individuals who are
under 24 years of age and are generally very cost conscious. This can lead to
very different types of clients ending up at the same destination, with some
consequent dissatisfaction. It is also noteworthy that t The backpacker market
requires a much lower level of service and information than does the market for the more
affluent 25- to
35-year-old professional. 25–35 year old
market.
The two major competitors of Northwind Traders are Lakes
& Sons and Ferguson and Bardell, and Lakes & Sons. Ferguson and Bardell is the strongest competitor of Northwind Traders,
due to its strong client base and experienced owner. However, itstheir press
releases are of a very low quality, and itstheir location
is undesirable, with difficult parking and limited customer service space. In
addition, Ferguson and Bardell lacks the knowledge and expertise in the field of
European adventure travel that is valued so highly by the clientele of
Northwind Traders.
Lakes & Sons will be a formidable competitor for
Northwind Traders because of itstheir prime
location, well-established business, and extensive training program.
With Northwind Traders’ expertise in European adventure travel, we can create customized travel itineraries for our clients and provide the most thorough, informative adventure travel service available. By offering superior customer service, Northwind Traders can distinguish itself from its competitors.
Our market research shows that publicity has the greatest
impact on people’s choice of an adventure vacation travel agent, followed
closely by having the right location, and having a
recommendation from a friend, relative, or colleague.
General press advertising seems to be fairly ineffective
in this sector, and event specialist press advertising only brings in one out
of seven clients. (See Appendix 1, Summary of Findings from Market Research.)
Our advertising and promotions will pivot around six key strategies: public relations, our shop front, an Internet Web site, customer relations, press advertising, and our association with the Northwind Traders clothing store.
Public relations. We will put considerable effort into
preparing and disseminating a regular flow of press releases. These will be based on stories
about our destinations, activities, corporate clients, and our staff. We will employuse a freelance
public relations adviser to help us write copy and locate publications editors.
Shop front. We plan to have an exciting, informative, and
actively managed display window. There will be a video display showing adventure vacations in
progress. Different destinations can be selected from outside the window via
a control panel;,
otherwise, the
scenes will rotate on a random basis.
Internet Web site. This is fast becoming a major
promotional channel,
and we believe it will increase in importance over time. Also, it is the most convenient way for us to
have a global presence at the outset. (See Appendix 1, Internet Growth and the
Sale of Travel Services.)
Customer relations. We will keep records of every sales
contact. Data such as source of inquiry, client needs, previous vacation,
job, and income will be included. By having superior information on our clients and prospects, we
intend to offer a truly personalized service. Our database will contain full details on all
our clients, including the vacations they have taken and their postvacation
appraisal data. We will use this data to encourage our satisfied customers to
recommend our services to friends, relatives, colleagues, and employers.
Press advertising. We will undertake a small amount of specialist press advertising in order to
enhance our public relations activity. There is considerable research to
support the argument that the more often a potential client hears about you, the more likely they
are to approach you when they have a need for your type of service.
Northwind Traders association. We will write to all past shop clients announcing the establishment of the travel business and offer them a special introductory adventure vacation package.
Excellent selling skills are vital in our type of
business. Therefore,
everyone will be fully trained in sales. Additionally, every month we will “audit”
each other by observing half-a-day’s selling activity and giving feedback on
strengths and weaknesses in skills.
We will also be using a “contact management” system that will allow us to monitor the effectiveness of different promotional strategies and of different marketing messages.
The key to our strategic advantage lies in having superior data on prospects and clients.
The normal commission paid to travel agents for this type
of vacation is in the 10 percent to 15 percent range. While Margie’s Travel, the first agency we
have been appointed to, pays us at the lower end of the scale, they are a
prestigious firm to represent. Having them in our portfolio will enable us to negotiate much
higher commissions from our new principals. Accordingly, we are planning on an average
travel agency commission of 11 percent, rising to 13 percent by the end of Year
Three.
Commission on insurance
and other services will be 30 percent, throughout.
Guarantees and Customer
Protection
Our clients will be protected financially against
either our own or our tour operator’s failure, by virtue of the ARC bonding
held by our principals. We will only use vacation providers who can provide
24-hour emergency support services for clients while on vacation.
It is vital that the travel business has both a storefront
facing onto the main street and a visible separate entrance. The goal is for clothing shop clients to be
able to move between the premises without going outside. We will be renting 2000 square meters of fully serviced space
at a cost of $30,060 per year fully serviced. We will need to spend $25,050 on internal
refurbishing. We plan to do some of this work ourselves. An additional $4175 will be needed for desks,
chairs, and other office furnishings.
We intend to locate within the existing Northwind Traders
shop, sinceas
this is close to the city center with a high density of both residential and
business premises. The pavement is wide, so people can stand and look in the window
without being in the way of other pedestrians.
The telephone lines will be staffed 24 hours a day by live
operators. During the period from 9 am to 6 pm, this will be done mostly by our staff. However, overload calls during the day and afterout-of-hours
calls will go to our live telemarketing bureau. People consider vacation
decisions at home in the evenings after discussion with friends and partners.
We want to be available as their first point of contact with an informed, friendly service.
We believe that since our clients will mostly be busy
professional people, off-peak- hours access
to our services is also a key way in which we can differentiate ourselves from
other travel agencies.
We will be renting an integrated telephone/data-base
system from the outset. This will allow up to ten sales staff to answer calls and have
full on-screen data on clients and products.
As service is one of our key components, it is essential that we have full access to all relevant data speedily and efficiently.
From the outset all staff will have job descriptions, a career and training history file, and a record of employee reviews.
New staff will take the travel agency Psychometric
Aptitude Test, and then spend time with each member
of the Northwind Traders team.
All staff will undergo full product training,
and will spend at least four weeks a year on-site at key travel destinations.
Our dress code will require us to look as though we are on
our way to one of our adventure vacations. We plan to start with a staff of three
full-time employees, including the founder, and one part-timer. We plan to be operating with a staff of thirteen
during the fifth year of business.
We will be developing
outline scripts to help the sales staff manage inquiries. This will ensure that all incoming phone
calls are dealt with in the same way and meet a high standard.
We will encourage people inquiring about vacations
to give us feedback on:
·Our ability to handle their
inquiry
·The amount of time from the
client’s first inquiry to the date of actual travel
·The client’s reactions to
the vacation in terms of whether it meets their expectations
Heather
Mitchell will be responsible for reviewing the range of tour operators that we
seek to represent, and negotiating with
prospective new principals.
Our offices can accommodate five sales desks. Each sales desk has a capacity to handle four
clients per hour, which means over the year we could handle up to 40,000
inquiries. With our average sales rate of one in five, we could service 9600 clients
from our present facilities. This is well above the numbers we are
anticipating in the business plan.
In addition to Ms. Mitchell, team members Jim Kim
and Richard Bready will be moving into the new venture on a full-time basis,
and Amy Egert has been recently recruited to cover Saturdays and vacations. Freelance business consultant Jae Pak will be
advising during the business’s changeover from clothing shop to adventure
travel agency.
Jim Kim, Vice President Sales and Marketing. Prior to joining Northwind Traders, Mr. Kim
worked for the marketing department of a major airline. His current
responsibilities include the company’s direct marketing campaign and all sales related
issues.
Richard Bready, Office Manager. Twenty years as a travel
agent has given Mr. Bready the ideal background for Northwind Traders. A knowledgeable salesperson, Mr. Bready’s
expertise in the area of European travel enables him to entice the adventure
traveler.
Amy Egert, Sales Assistant. After
completing her undergraduate degree at the Institute
of Art, Ms. Egert spent a year traveling abroad and joined the staff at
Northwind Traders recently as a sales assistant.
(Heather
Mitchell’s CV is in Appendix 3)
The volunteer members of the Board of Directors
provide guidance to the management and staff of Northwind Traders. The board
meets twice yearly to discuss policy changes, review the mission statement, and
update the business plan if needed.
Members include:
Lisa
Jacobson, retail store owner
Holly
Barrett, CPA
Jo Brown, former
travel agent
William
Hollands, Lawyer
Lisa
Garmaise, retail store owner
Tony Chor,
human resource manager
Prasanna Samarawickrama, caterer
Northwind Traders plans to grow steadily over the
next five years, becoming the premier provider of European adventure vacations
in the greater Redmond area. Our financial objectives are
to be operating at or close to break-even cash flow by the end of the first
year. We aim to be profitable from Year One onward; our goal is to earn at
least $300,000 post tax profit
in the Year Two, and
nearly $500,000 in Year Three. Our profit margin on sales by Year Three will
be a respectable 7 percent.
·Extensive public relations
campaign
·Recruit well-trained,
enthusiastic staff
·Deliver superior product
knowledge
·Provide high quality
customer service
·Create library of
tools/reference materials for clients
·Offer competitive pricing on
vacation packages
The first priority is to hire a competent public
relations consultant. This
individual will be the key to producing state-of-the art
publicity materials and determining where these materials should be placed for
optimum visibility.
The second priority will be to increase the staff. The individuals recruited will go through an
extensive training program to ensure that they will be able to provide superior
product knowledge in the field of European adventure travel. The present staff
is passionate about adventure vacations, and we intend to maintain their
enthusiasm through constant product development and skill training. We will only recruit those
individuals who share our vision. We also want the business to have an
enjoyable atmosphere.
The third priority is to install a library of
reference works in the shop. These materials will be available for clients
to browse through while in the shop, or to
“check out” and peruse at home. An agent will be on hand at all times to
answer any questions.
While at
present we are offering only other company’s adventure vacations, we have
protected our position in a number of ways.
First, we
have a two-year agency agreement with Margie’s Travel, which gives us access to
all their existing vacation products as well as any new ones. This contract is dependent
on Northwind Traders achieving sales of at least 250 vacation packages a year. We intend to negotiate similar agreements
with future suppliers, although sales targets with them will be lower to
reflect their relative market position.
Second, we
intend to maintain a high service element to our business, extending our range
of value added services such as
vacation insurance, individualized prevacation booklets, postvacation
follow-up, and continually updating our client database. In this way, we will seek to
build up a high level of repeat business. Customer loyalty is vital to our
profitable growth.
·Losing touch with customers
·Loss of clientele to other
providers
·Quality of services
diminished
·New businesses
The risks
facing the expansion of Northwind Traders can be summed up in one word:
competition. In order to sustain our position in the area as the premiere
European adventure travel business, Northwind Traders needs to outshine our
competition. By maintaining our focus on superior product knowledge and
outstanding customer service, we will be able to uphold our position in the
industry, thereby retaining current clients and attracting new clients.
Our ratio
of sales to inquiries ofn the adventure
travel vacations sold to date, while operating within the outdoor clothing
shop, has been one in three. For the purposes of our sales forecast, we are assuming that
only one in five inquiries will actually result in an adventure vacation being
booked. This
is a very conservative estimate.
We expect there to be a steady buildup of clients coming
from the clothing shop to talk to us about vacations
(see Table 3 below). However, the number of new inquiries generated by our promotional
activity will also build up during the year, gradually overtaking inquiries
from the clothinges
shop.
This is a trend we expect
to continue. Based on the projection below, we are forecasting to sell 660 adventure
travel vacations next year at an average price of $3549. Once insurance and other service sales are added in, we expect to
generate a
gross profitn income of $268,783 over the first 12 months.
Table 3. Sales
Forecast Projection
|
|
Q1 |
Q2 |
Q3 |
Q4 |
Year Total |
|
Inquiries generated through promotion |
200 |
425 |
425 |
750 |
1800 |
|
Shop inquiries |
300 |
300 |
450 |
450 |
1500 |
|
Total inquiries |
500 |
725 |
875 |
1200 |
3300 |
|
Vacations sold |
100 |
145 |
175 |
240 |
660 |
|
Average vacations cost |
$3340 |
$3340 |
$3758 |
$3758 |
$3549 |
|
Commission received |
$33,400 |
$48,430 |
$72,331 |
$98,757 |
$252,918 |
|
Commission on insurance
& other services received |
$1670 |
$3340 |
$5010 |
$5845 |
$15,865 |
|
Total commission & fees
earned |
$35,070 |
$51,770 |
$77,341 |
$104,602 |
$268,783 |
In Year Two we are forecasting a gross profitcommissions
of $624,318, and in Year Three we plan to reach $986,846.
The Cash Flow projections for Year One (see Appendix 2)
show that after the owner has put in $41,750, the business will need additional
short-term financing of about $83,500. For the last two months of the year, we are forecasting a
positive cumulative cash flow and a year-end cash surplus of $19,935.
In our Cash Flow projection, we have assumed the whole $83,500
additional financing has come from a bank loan. We have allowed for interest on the full
amount for the whole period. In
practice we would hope to finance part of this at least by a line of credit
equal to the money actually required. In this way we believe we have made a
prudent, conservative provision.
We expect to make a small after- tax profit of $34,901 in the
first year of $34,901 (see Appendix 2 and Table 4
below). This is before the owner’s drawings. Any owner’s drawings will be contingent on
performance being better than that expected in the Plan.
Table 4. Profits in
Years One to Three will be
|
|
Year One |
Year Two |
Year Three |
|
Sales |
2,364,839 |
5,202,645 |
7,591,132 |
|
Less cost of sales |
2,096,056 |
4,578,327 |
6,604,286 |
|
Gross profit |
268,783 |
624,318 |
986,846 |
|
Less expenses |
224,740 |
243,404 |
345,690 |
|
Net income before taxes |
44,043 |
380,914 |
641,156 |
|
Provision for taxes |
9142 |
76,184 |
145,751 |
|
Net income after taxes |
$34,901 |
$304,730 |
$495,405 |
The Balance Sheet at the end of Year One (see Appendix 2)
shows a healthy surplus of current assets over current liabilities. We have shown a conservative
funding position, which does not include any of the additional capital that we
hope to secure.
We plan to move our gross profit up from 11 percent in
Year One, to 13 percent in Year Three. These
figures look quite low, but it should be remembered that our gross profitincome
is really the sales commission we earn, not the full price of an adventure
vacation. Our
net income before taxes is a more accurate measure of performance. This we
expect to move from 2 percent at the outset, up to 8
percent by Year Three. Commission
generated and profit per employee will be among the highest in the industry.
Table 5. Commission
Generated and Profit per Employee
|
|
Year One |
Year Two |
Year Three |
|
Gross profit % |
11 |
12 |
13 |
|
Net income before taxes % |
2 |
7 |
8 |
|
Commission generated per
employee |
$76,795 |
$138,737 |
$164,473 |
|
Profit per employee |
$12,584 |
$69,257 |
$106,858 |
To break even we will need to sell between 2 and 3 vacations per day. This compares with our present sales of 1.3 vacations per day, based on our part-time effort out of the clothing shop. We feel confident that the break-even point can be attained within a reasonable period of time.
We plan to make two major investments: one in Web site and database development and one in shop premises development.
make are the:
·
Web site and data base
development - this will cost $41,325750. The data base system is
one of our key differentiators. It will allow us to offer superior service and ensure a high level
of repeat business and referrals.
The Web site is vital if we are to reach this wide and disparate global market.
The group of potential clients
we have chosen as our target market—, affluent,
professional 25- to 35- year olds—, are prime
users of the Internet. Even
those people in our locality will expect to be able to research our offers on
the Internet before coming to the shop. (See Appendix 1, Internet Growth and
the Sale of Travel Services )
·
Shop premises development - this will cost us $29,225. We have to look professional and to
have an efficient work environment. If our staff do not have the right tools, we can hardly expect
them to deliver superior performance. If clients see “amateur” premises, they will
not be inspired to spend thousands of dollars and entrust their adventure
vacation plans to us.
Both these investments need to be made at the outset to
ensure that the
business creates the right impression from the start. We get only one chance to make a first
impression.
We have decided to lease our telephone and computer
systems, sinceas
this is a rapidly changing area and we need to have access to the very latest
technology. Financing packages from equipment suppliers are currently very
attractive.
The owner plans to invest $41,750 of her own money (the
proceeds of the sale of her share of the clothing shop business). The cash flow projections show that the business will require
$83,500 of working capital during the early months of the first year’s
operations. We think we should provide an additional
$10,020 for unforeseen eventualities. We are considering In the event that
additional funds prove necessary, we have identified two options for
raising further
fundsthis $93,520:
Option 1: The
sale of equity, perhaps to the original shop partners, could raise between
$41,750 and $167,000. This would provide some capital to allow for growth. Any shortfall could be funded
either by a line of credit or a bank loan.
Option 2:
Approach our bank with a view to raising a medium- term loan of
$41,750 and a line of credit of $58,450. Heather Mitchell could, with family
help, provide any lender with security for part, if not all, of this facility.
We will be using a computer-based financial
management system. This will allow us to analyze the profitability of sales of
different vacations through each tour operator.
In this way we can review our sales and marketing
activities on a regular basis. It will also allow us to reward staff on the
basis of profit achieved rather than just on sales.
We
will be using a computer-based financial management system. With this system we
can review our sales and marketing activities on a regular basis. This will
allow us to analyze the profitability of sales of different vacations through
each tour operator. Thus we will be able to reward staff on the basis of profit
achieved rather than just on sales.
We
will be developing outline scripts to help the sales staff manage inquiries.
This will ensure that all incoming phone calls are dealt with in the same way
and meet a high standard.
We will encourage people inquiring about vacations to give us feedback on our service:
·
Our
ability to handle their inquiry
·
The
amount of time from the client’s first inquiry to the date of actual travel
·
The
client’s reactions to the vacation in terms of whether it meets their
expectations
Heather
Mitchell will be responsible for reviewing the range of tour operators that we
seek to represent and negotiating with prospective new principals.
Our offices can accommodate
five sales desks. Each sales desk has a capacity to handle four clients per
hour, which means over the course of a year, we could handle up to 40,000
inquiries. With our average sales rate of one in five, we could service 9600
clients from our present facilities. This is well above the numbers we are
anticipating in the business plan.
Northwind
Traders plans to grow steadily over the next five years, becoming the premier
provider of European adventure vacations in the Greater Seattle area. OurThe financial objectives of Northwind Traders are to be operating at or
close to break-even cash flow by the end of the first year, with steady growth
over the next five years. We aim to be profitable from Year One onward; our
goal is to earn at least $304,000 posttax profit in Year Two and nearly
$496,000 in Year Three. Our profit margin on sales by Year Three will be a
respectable 7 percent.
Northwind Traders’ strategy for achieving our goals consists of six major points:
Establish an extensive public relations campaign
Recruit
well-trained, enthusiastic staff
Deliver
superior product knowledge
Provide
high-quality customer service
Create
a library of
tools/reference materials for clients
Offer
competitive pricing on vacation packages
The
first step to achieving our goals is to hire a competent public relations agency.
This will be the key to producing state-of-the art publicity materials and
determining where these materials should be placed for optimum visibility.
The
second step will
be to increase the staff. The individuals recruited will go through an extensive
training program to ensure that they will be able to provide superior product
knowledge in the field of European adventure travel. The present staff is
passionate about adventure vacations, and we intend to maintain their
enthusiasm through constant product development and skill training. We will
only recruit those individuals who share our vision. We also want the business
to have an enjoyable atmosphere.
The
third step is to
install a library of reference works in the shop. These materials will be available
for clients to browse through while in the shop or to “check out” and peruse at
home. An agent will be on hand at all times to answer any questions.
While
at present we are offering only other company’s adventure vacations, we have
protected our position in a number of ways.
First,
we have a two-year agency agreement with Margie’s Travel, which gives us access
to all their existing vacation products as well as any new ones. This contract
is dependent on Northwind Traders achieving sales of at least 250 vacation
packages a year. We intend to negotiate similar agreements with future
suppliers, although sales targets with them will be lower to reflect their
relative market position.
Second,
we intend to maintain a high service element to our business, extending our
range of value-added services such as vacation insurance, individualized
prevacation booklets, postvacation follow-up, and continually updating our
client database. In this way, we will seek to build up a high level of repeat
business. Customer loyalty is vital to our profitable growth.
We see some risks associated with our expected growth:
·
Losing
touch with customers
·
Loss
of clientele to other providers
·
Quality
of services diminished
·
New
businesses
The
risks facing the expansion of Northwind Traders can be summed up in one word:
competition. In order to sustain our position in the area as the premier agency for European adventure travel,
Northwind Traders needs to outshine its competition. By maintaining our focus
on superior product knowledge and outstanding customer service, we will be able
to uphold our position in the industry, thereby retaining current clients and
attracting new clients.
Updated forecast
for the years 2000 and 2010 (millions)
|
|
1975 |
1995 |
1996 |
2000 |
2010 |
Average annual growth rate (%) 1990 - 2010 |
|
Europe |
153.8 |
338.2 |
347.4 |
397 |
525 |
3.1 |
|
East Asia/Pacific |
8.7 |
84.5 |
90.1 |
122 |
229 |
7.6 |
|
Americas |
50.0 |
110.1 |
115.5 |
138 |
195 |
3.7 |
|
Africa |
4.7 |
18.7 |
19.4 |
25 |
37 |
4.6 |
|
Middle East |
3.6 |
11.3 |
15.1 |
14 |
21 |
4.9 |
|
South Asia |
1.6 |
4.5 |
4.5 |
6 |
11 |
6.7 |
|
World total |
222.3 |
567.4 |
592.1 |
702 |
1,018 |
4.1 |
Source: Global Stats. Corp. 1997
|
|
International tourist arrivals (x 1,000) |
Nights spent by foreign tourists (Mill) |
International tourism receipts (Mill. ECU) |
|
Austria |
17,173 |
63.8 |
11,168 |
|
Belgium |
5560 |
12.8 |
4776 |
|
Denmark |
1614 |
10.8 |
2814 |
|
Finland |
835 |
3.3 |
1320 |
|
France |
60,110 |
54.3 |
20,742 |
|
Germany |
14,847 |
35.5 |
12,408 |
|
Greece |
10,130 |
39.6 |
3138 |
|
Ireland |
4231 |
14.0 |
2059 |
|
Italy |
31,052 |
113.0 |
20,993 |
|
Luxembourg |
767 |
2.3 |
4776 |
|
Netherlands |
6574 |
19.7 |
4946 |
|
Portugal |
9706 |
22.2 |
3330 |
|
Spain |
44,886 |
107.8 |
19,431 |
|
Sweden |
683 |
7.9 |
2652 |
|
United Kingdom |
22,700 |
164.9 |
14,366 |
|
EU |
230,868 |
672.0 |
124,143 |
|
Iceland |
190 |
0.8 |
127 |
|
Liechtenstein |
59 |
0.1 |
n/a |
|
Norway |
2880 |
7.1 |
1826 |
|
EEA |
233,997 |
680.0 |
126,096 |
|
Switzerland |
11,500 |
34.0 |
7236 |
|
Europe-19 |
245,497 |
714.0 |
133,332 |
Source: Global Stats. Corp. 1997
Three hundred clients of Northwind Traders who had made purchases in excess of $350 in the past six months were surveyed.
Percentage of Sample Customers Taking and Not Taking Adventure
Vacations
According to our research, only 20 percent of our sample customers had never
taken or considered taking an adventure vacation. Thirty percent, while they
had not yet taken such a vacation, had at least actively considered doing so.
Fifty percent of our sample are regular adventure travelersusers, taking
at least one adventure vacation each year.
Information About
150 Respondents Who Took At Least One travel Vacation Per Year
Gender: Male 65% Female 35%
Status: Married 21% Single 79%
Adventure Vacation
Travelers, by Age and Percent
According to our study, the percentages of adventure vacation travelers in fall into various age groups as follows:
· 5% are under the age of 16
·
25% are between the ages of 16 toand 24
·
40% are between the ages of 25 toand 35
·
20% are between the ages of 36 toand 45
· 10% are over the age of 45
Percentage of
Adventure Vacation Travelers by Income Group
According to our research, the percentages of adventure vacation travelers in various income brackets are as follows:
·
6% earn less than $16,700 or less annually
· 22% earn between $16,701 and $25,050 annually
· 28% earn between $25,051 and $33,400 annually
· 25% earn between $33,401 and $41,750 annually
· 19% earn more than $41,750 annually
Forty-five percent of respondents taking adventure
vacations spend in excess of $3340 per person per vacation. Twenty percent of the respondents, who tend to be
professionals in the 25-
to 35-year age
range, typically spend over $5010 per person. Those respondents spending under $3340 are both in
the lower income and lower age groups and represent 10 percent of the
respondents.
Percentage by Destination of 5000 Major Adventure Tours Available on the Market
A study by destination of approximately 5000 major adventure tours on the market reveals the following:
·
1200 of the 5000 offered are for destinations
in Europe
·
1000 of the 5000 offered are for
destinations in North America
·
600 of the 5000 offered are for
destinations in India
·
810 of the 5000 offered are for
destinations in Africa
·
675 of the 5000 offered are for
destinations in the Far East
·
675 of the 5000 offered are for other
destinations
By contrast,
the percentages of the market adventure travelers devoted purchasing vacation
packages to each of these regions destinations is are as follows:
·
Europe - 41% of
adventure travelers purchase vacation packages for destinations in Europe
·
North America - 30%
of adventure travelers purchase vacation packages
for destinations in North America
·
India - 10% of
adventure travelers purchase vacation packages for destinations in India
·
Africa 7% of
adventure travelers purchase vacation packages for destinations in Africa
·
Far East - 7% of
adventure travelers purchase vacation packages for destinations in the Far East
·
other destinations - 5%
of adventure travelers purchase vacation packages
for destinations in other regions
Our research shows that Europe is the most popular
destination for adventure vacation travelersakers. However, only 1200 of the
5000 adventure tours on the market are for European destinations. Africa, which
only attracts 7 percent of the market, has 16 percent of the tours aimed at it.
It follows that the European market has scope for expansion and that if we
concentrate on that market, we only need to have detailed knowledge of
upmarket European tours, rather than all 5000. In that way we can have the advantage of
superior knowledge in our chosen market.
Our research reveals the following about the source from which adventure travelers originally found out about the last adventure vacation they purchased:
·
publicity activity - 30% heard about their
vacation package through publicity
activity
·
travel agent -
25% heard about their vacation package through
a travel agent
·
friend - 18% heard about their
vacation package through a friend
·
adventure press - 15% heard about their
vacation package through adventure
press
·
press advertising - 8% heard about their
vacation package through press
advertising
·
Internet - 4% heard
about their vacation package through the
Internet
These findings demonstrate the power of publicity. The next most effective way to
reach potential clients is via the travel agent’s shop window. Both the press
in general and the adventure travel press do not appear to have much effect on
buyers in this market.
The percentagemajority
of respondents who have not been on an adventure vacation organized by their
employer far outnumbers those who have been on a vacation planned by their
employer. There is a significant minority of corporate clients who buy adventure
vacations to use as rewards, motivation, or as a part of a
management development program. These corporate customers are also those
clients who spend over $5010 per person per tour.
(Your replies are anonymous so confidentiality is assured)
1. Gender: †Male †Female
Married: †Yes †No
Children † Yes † No
Age: † Under 16 Income: † Under $16,700
† 16 - 24 † $16,701-$25,050
† 25 - 35 † $25,051-$33,400
† 36 - 45 † $33,401-$41,750 † 45+ † over $41,750
Occupation: Self:...................................................................
Partner:.............................................................
2. How many adventure vacations have you
taken in the past three years?
† None - never considered taking one
† Considered, but not yet taken a vacation
† Taken one adventure vacation
† Taken two adventure vacations
† Take at least one adventure vacation every year
3.
If
you take adventure vacations, how much do you spend per head per vacation?
† Under $1670
† $1671-$3340
† $3341-$5010
† Over $5010
4. Who did you buy your last adventure
vacation from? Would you use that
source again?
† Traveled independently † Yes † No
† Directly from the tour
operator † Yes † No
† Via the Internet † Yes † No
† From a specialist adventure
travel agent † Yes † No
† From a general travel agent † Yes † No
5. How did you hear about the last
adventure vacation that you took?
† From a friend/colleague/relative
† Via an advertisement in general press
† Via the Internet
† Saw it in the travel agent’s window
† Via an advertisement in specialist adventure travel press
† Editorial in press/TV/radio
6. What impressed you most about the people you bought your
last adventure vacation from?
|
Ranking for level of
impression (1 = excellent, 4 = useless) |
|
Ranking for importance of
factor (1 = very high, 4 = quite unimportant) |
|
† |
Knowledge
of activity |
† |
|
† |
Knowledge
of destination |
† |
|
† |
Range
of helpful advice |
† |
|
† |
Additional
services, such as insurance |
† |
7. What did you dislike most about the last adventure travel
vacation that you took?
† The other people on the
vacation were not compatible (e.g. much
older, /younger,
or had very different competence levels)
† Too expensive
† The travel agent/tour
operator did not properly explain the true
nature of the vacation
† The administrative arrangements were poor - I had to do all the
chasing!
8. What was the destination of your last
adventure travel vacation?
† Europe † Asia
† N. America † Other
† Africa † India
9. If you have never taken an adventure vacation would you
consider taking one from a reputable travel agent with proven expertise in this
market?
† Yes † No
10. Have you ever been on an adventure vacation organized by your
employer?
† Yes † No
Thank you for
your help with our research. We hope thisit will help
Northwind Traders to bring you more exciting adventure
vacations.
Sales of travel services on the Internet have risen
steadily over the past several years and look to continue increasing through
the year 2000. These
sales far outweigh other Internet sales, including PC sales of software and
hardware, clothing sales, and book sales. For example, in 1998,
sales of travel services totaled $1.4 billion00M, while PC
products equaled $1.0 billion00M,
books $400 million0M,
and clothing $250 million0M.
It is also evident that the European
users of the Internet are growing rapidly. The United Kingdom is the second
largest Internet user market after Germany, followed in decreasing order by the
Netherlands, France, Finland, Italy, and Spain.
Percentage of
Internet Users Who Have Shopped Online, 1998, in Millions
When it comes to actually using the Internet for online shopping, Finland leads the way, with Germany and the United Kingdom sitting squarely in the middle, close to the European average. The percentage of Internet users, by region, who have shopped online in 1998 are as follows:
·
Finland - 69%
of Internet users in Finland have shopped online%
·
the Netherlands - 43%
of Internet users in the Netherlands have shopped
online
·
Germany - 41% of
Internet users in Germany have
shopped online
·
United Kingdom -
38% of Internet users in the United Kingdom have
shopped online
·
Italy - 33% of Internet users in Italy have shopped online
·
Spain - 31% of Internet users in Spain have shopped online
·
France - 29% of Internet users in France have shopped online
The average percentage of European Internet users who have shopped online in 1998 is 41 percent.
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