Paradise Vacation Case

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Key Decisions:
* Should Leduc agree to Air India’s offer?
* What’s the company’s competitive strategy for 2008/2009? * How to respond to FunTours’ expansion and aggressive pricing strategy? SWOT Analysis: Paradise holds strong buyer power which enables it to bargain for lower price and discount. As market leader and Quebec company, Paradise can promote itself through reminding customer about company hisotry to strength their preference and loyalty . The weakness lands at that Quebec is the only market in Canada; the collapse of one location will damage the entire business. The threat mainly lands at pricing competition from FunTours. Competitive Analysis and Consumer Analysis: Because Paradise has its main market in Quebec, Benoix is the main competitor. However, the biggest threat comes from FunTours’ expansion currently. The competitive advantage of FunTours is its low pricing strategy. Travelling is has an elastic demand. With price being the most important determination, FunTours' strategy could drive Paradise out of the market. This strategy targets at mid and base segment of the market. It creates threat to the same segments for Paradise, which represent 90% of the revenue. Nonetheless, Quebec is a brand new market where FunTours does not have supplier connections or customer loyalty yet. FunTours serves no premium market where 10% of the revenue comes from for Paradise. Therefore, Paradise can utilize its bargain power with its suppliers to ask for lower prices, also lower its retail price to keep customers from switching to new brand, and advertise to strengthen brand loyalty. Segment| Focus| Conclusion|

Base| Low price| Lower price than FunTours offers|
Mid| Best value| Lower price than FunTours offers, and special promotion with higher value.| Premium| Luxury service| Lower price to prevent customer from downgrading to Mid segment. Keep agents as partial distributors for better services.| Recommendation : Base and Mid package will be sold through internet solely; Premium package will be sold through both agent and internet by 50/50; at the same time lowering wholesale price by 5%, and asking Benoix Air for 5% discount on the flight. Implementation Plan: Paradise will reject the offer from Air India. We will stay with the original segments of consumers, and lower price to stop FunTours from entering the market; at the same time, keep the package unchanged to ensure customer experiences; use promotional strategy to re-enforce brand name and loyalty. Product| Travel package provides both service and product. Paradise includes 3 packages targeting at base, mid and premium market. | Price (See Exhibit 4 for detail)| We will be using Value-based pricing strategy. We will set lower retail price to stop FunTours from entering the market, and to provide lowest price for Base segment, best value for Mid, and both luxury service and low price for Premium segment.| | Retail| Base: 89| Mid: 134| Premium: 193(Agent) 178 (Internet)| | Wholesale| 88| 132| 176|

| Tactics| Markdowns| Seasonal discount, coupons.| Markdowns.| Place| Indirect Distribution: -100% of base and mid, 50% of premium package through internet distributor -50% of premium package through travel agents with 10% commission| | Exclusive Distribution: Distribute through good reputation internet distributors only for the purpose of keeping professional brand image, and high-end travel agents to keep Premium customer privileged.| Promotion| Objective: To re-enforce the brand image as a local and experienced travel operator who always respond to Quebec travellers' needs beyond expectation.| | Reminder Advertising: TV advertising and internet ad to re-enforce the brand image.Sales promotion: (1)Price promotion is mentioned above at Price section. (2)Loyalty points-collection program to encourage repurchase and creates loyalty; (3)Contests to win trips in order to increase consumer involvements and...
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