Business Plan Sample: Competitive Analysis

Competitive Analysis

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 Redmond, 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 clients 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. Although 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 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. 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.

Competitors' Positions

The two major competitors of Northwind Traders are 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, its press releases are of a very low quality, and its 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 its prime location, well-established business, and extensive training program.

Potential Future Competition

Northwind Traders will occupy a specialized niche in the travel industry, with its focus on adventure vacations in Europe. Although it is currently the only European adventure travel agency located in the Seattle area, competitors do exist in nearby areas (see above). In order to stay competitive, Northwind Traders will need to establish itself as the leader in adventure travel planning for Europe with its superior product knowledge and high-quality service. The lack of current adventure travel providers in the area represents a unique opportunity for Northwind Traders to expand in a rapidly growing market.