PARADISE VACATIONS – CASE Problem Statement
Paradise Vacations, Quebec’s market leader, is faced with an anticipated threat and potential severe competition from FunTours, one of the successful tour operators in Ontario. FunTours is known for its notorious low-price strategy and wants to penetrate into the Quebec market. FunTours has also incorporated an in-house airline of three planes (FunAir). Paradise Vacations’ success is depending on the selection of the most efficient pricing strategy. In addition, it is crucial for Paradise Vacations to decide whether to renegotiate seat allotment with their existing alliance with Benoix Air or to agree to Air India’s offer to lease aircraft to launch its own airline.
Situational Analysis S.W.O.T.
* Paradise Vacations established itself as Quebec’s market leader in the tour operating industry. It had 39% market share in Quebec. It maintained a strong leadership position in Quebec market by its’ strong reputation among customers and suppliers and price positioning. * In addition to Paradise Vacations’ strong market positioning in Quebec’s tour operating industry, Paradise Vacations has strong relationship with both sources of supply. It had almost 90% seat allotment from Benoix Air. Due to its highest market share, Paradise Vacations received preferential rates from Benoix Air. * Paradise vacations also received preferential terms from the hotel chains such as Iberostar, Bahia Principe and Oasis. Paradise Vacations was instrumental in helping these hotels to establish strong market presence in the Quebec market. * Paradise vacations utilized market segmentation for its travel packages. It introduced three travel packages to focus three segments based on the hotel rating. Premium segment included all five-star luxurious hotels. Mid segment included all four-star hotels and the base segment included three-star or under...
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