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Marketing Of A Premium Product In A Price Sensitive Market.
Posted By: khanvwj* on 7/21/2004 9:18 AM (CST) 250 Points
I have been recently appointed by the general sales agent of one of the leading international airlines which flies to a huge number of destinations around the world. The product has got a very strong brand identity.

This airline does not operate from our station and therefore we need to use another carrier to take the passenger to another station and then from there onwards, we take them on our carrier. Now the main problem is that our market is extremely price sensitive and the main area of competition here is prices. We represent a premium product and therefore we cannot reduce our prices to match the other airlines. Besides prices, the other airlines also provide a lot of incentives to the travel agents to get sales whereas our management believes in providing benefit to the customer and not the agent.

Currently, all the sales that we are getting are from our frequent flyers and otherwise the passengers who need to go to places where only our airline operates or where we have unmatchable connections. Otherwise, the agents keep our product as the last option.

The GSA has a very limited budget so we cannot afford to launch huge promotional campaigns. Now, what I need is a cost effective plan to increase sales and gain the favor of the agents.

I tried a “weekend quiz” program to educate the agents and set a little prize for the winner. This turned out to be quite fruitful, but now I need something more.
People already know that our product is superior but it is the agents who are to be stimulated to sell us. I hope you get my point.

Posted by: kwinters* Accepted Answer
7/21/2004 9:40 AM (CST)
I hear some incongruency in your answer:

"our management believes in providing benefit to the customer and not the agent"

"People already know that our product is superior but it is the agents who are to be stimulated to sell us"

Maybe I am not reading you correctly, but it sounds like your management doesn't want to reward the agents but you wanting to stimulate them to sell?

I am not very familiar with the travel agent/airline relationship but it looks to me like if you have not enough budget to reach the consumer directly the agent is the only way to do it....................

Now the question is what incentive does the agent have in promoting my airline as opposed to the others.........

In other words what can you do to make the agent not keep your product as the 'last' option?

So is the problem that you need to reward the agents for booking your airline but management doesnt' want to go that route in exchange for more benefit to the consumer?

I don't know how else you will gain favor of the agents without providing $$, but that might not be what you can do because rewarding with $$ is expensive..............

What about free flights, vacation packages, outings for the agents/and family?

I am interested to see what the other khe members say..................sorry I couldn't be of more help, I will keep up with the conversation and chime in if I think I can help.........
 
Posted by: NuCoPro Accepted Answer
7/21/2004 11:54 AM (CST)
kwinters makes some excellent points. You do seem to be on both sides of the fence at the same time.

"What's in it for me?" is the primary motivator for this and just about every other thing. You have to offer the agents either money or something they perceive as value, or they have NO incentive to book your airline.

You might want to consider progressive rewarding, so that the more business they book, the greater the reward they receive.

The problem you are facing is the same for all airlines the world over.
 
Posted by: Jim Deveau/Catalyst* Accepted Answer
7/21/2004 9:37 PM (CST)
Hi:

I concur with my colleagues. If you want to be represented by your agents - you have to incent them. Suggestions include:

Lowest Cost - Sweepstakes - for every flight they book - they get a sweepstakes ticket - the more flights they book - the more chances to win. Awards are chosen monthly and publicized within your travel agent community. Why not have your carrier contibute free flights as prizes?

Next Idea: Sliding incentives - travel agents get a higher commission which scales up based on bookings per month/quarter.

Next idea: co-op advertising contest. The agent with the highest bookings gets $XXX of advertising in your market that is co-op (meaning Fly XXX Carrier - book your tickets with XXX travle agent). This can work well.

I hope this helps.
 
Posted by: vikrant* Accepted Answer
7/22/2004 12:02 AM (CST)
i endorse what other members of KHE have said. u seem to contradict urself by saying that u need to incentivise the agents but without withdraawing the benefits extended to the customers. No gains without pains.

u could think of luring the agents by coming up with some award scheme like Excellence Award for agents to keep up their motivation. this mind u would not entail heavy cost & will not burn a hole in ur pocket.

another way to incentivise them in kind would be to initiate periodic trips to exotic locations with their families.

monetray incentives with right slabs will also go a long way in gaining favour with ur agents.

i hope this answers ur question.
cheers
 
Posted by: eugene Accepted Answer
7/22/2004 7:54 AM (CST)
Hi khanvwj,

Quite a situation you're in there. Perhaps I could share some thoughts.

I had the privilege of working closely with one of our partners (an airline) which has done pretty well for itself.

One of the challenges they faced was support from agents, similar to what you're facing now. They also believed in passing back the benefits to their passengers (what this means is that benefits to agents were reduced).

What you can and might want to consider adopting is going direct to your passengers via internet booking. There are many success stories (most are from no frills airlines though) from RyanAir and Easyjet in Europe to Airasia in Malaysia.

The cost of managing internet bookings are definitely much lower than incentives for agents (of course credit card chargebacks are something to consider but should be manageable with 3D secure; VBV / Securecode).

This can be supplemented by appointing dedicated agents (or portrayed that way by having the same look and feel of the brand at the agents' offices - you can subsidise the signage, provide buntings and posters for example). These agents might even be able to charge a small service fee for the personalised service offered etc...

Lastly, why not consider ticketless check-ins, replaced by a set of reference numbers? It definitely reduces cost and if positioned well, can be perceived as moving forward with technology...

Hope this helps...
 
Posted by: khanvwj* Author Response
7/22/2004 9:00 AM (CST)
I’m sorry for using confusing content in my question.

Actually, what I wanted to say was that our management does not want to give MONETARY incentives to the agents and enter into the $$ war that is already going on between the airlines in the market.

We want to stimulate the agents by gaining their interest and creating some kind of special association between us and the agents. I need some tactics that involve no or very little expenditure. For Example, something to do with e-mail marketing.
 
Posted by: khanvwj* Author Response
7/22/2004 9:11 AM (CST)
Eugene has got a very valid point but our problem is that the airline is offline from our station. So we are forced to depend upon the agents for most of our sales.
 
Posted by: Dano* Accepted Answer
7/22/2004 8:04 PM (CST)
Maybe you play the prestige card with the agents rather than $ to incentivise them, meaning you tell them 'our airline is the best, it is a priviledge to work with us and we'll let you if you bring us x amount of business'. It is close to the vikrant's Excellence Award idea, but at lower costs. Also, send out a press release saying that you are limiting the amount of agents who can sell seats (if you can) and those agents get their top commission if they sell quotas. You have to have quota based commissions so they don't pass on savings to the passengers.
 
Posted by: mbarber Accepted Answer
7/22/2004 8:46 PM (CST)
Gidday Khan - you have a couple of challenges.

So can you ensure that your product offerings to consumers are so well regarded that they DEMAND and agent use you?

Can you make your offerings so highly sought after that the customer will come to you direct?

Can you management buy out an existing chain of agents (or a handful of well placed agents) so that you can start directing traffic?

Is the reason there is a challenge is because the tranfer process is clumsy? Can you change that by having luxury coaches/taxis pick passengers up?

Can you do a deal with quality hotels in the area to use them as a base station for pick ups and drop off?

Can you deal incetive deals with NON agents who have you target market - joint campaigns that act as a referral centre?
 
Posted by: jaccog* Accepted Answer
7/27/2004 7:06 PM (CST)
Hmm... you've been given good thoughts on the matter .

To throw in one of my own experiences:

Give them attention (and foremost their personnel)
Make the personnel in your agents-office love you. Drop by and make kind remarks, leave a cake when they ordered in the previous week, leave candy or other goodies they might enjoy. Drop some selling points and client-situations (how to recoqnize what your customer is looking for etc..) to make their sale easy.
Give your best clients a direct line to the best people in your customer service dept so whenever there's an issue they know it will be sorted out in a jiffy.
Hassle-free service is still worth a lot these days
It has helped us tremendously to grow in the insurance business !
(and ofcourse extra $$ will still help quite a bit!)

Jacco
 
Posted by: Mushfique Manzoor Accepted Answer
7/31/2004 5:07 AM (CST)
Dear Khan

I am sure you are an expert in airline/GSA business whereas i am a starter. Then again i try to relate what i have learnt so far in this regard.

you market an Offline carrier on the basis of its certain benefits. There are certain destinations where online carriers and your offline carrier flies. for example to NewYork (JFK) any online carrier i.e. Emirates or British Airways will fly from your city. For this destination your offline carrier has to rely on other carriers and that means travel agents.

usually with online carriers(to most frequented destinations), the total travel time is longer than combined carriers (your offline and teh online carrier that takes passengers to the place from where your offline is actually online). THIS is your selling point for the Offline carrier at your city and the target consumers can be the business people who want to be in NY as soon as possible, to whom the slight premium is not more important than being in destination at the earliest.

regarding the agent management, agents will sell that carrier which gives more commission(both cash & non-cash). your combined carrier ticket commission to travel agents must at least match the amount currently online carriers are providing. If you can provide more commission then the agents will love you :-) As you have said you are the last option in agents list, is it because of your commission amount?? pls clarify that. if you give commission less than market rate then agents will not promote you, for sure.

commission doesn't mean cash always, it can be free tickets for selling certain slabs of tickets mentioned by Jim and Vevolutions or Excellence Award mentioned by vikrant or a combination of other options. those are great ideas.

Premium price always relegates you to niche markets. this also has its advantages. some ideas:

- develop a cosumer database by listing the corporate executives, businessmen who have to fly a lot. find out which travel agents they use and tap them to sell your carrier. (this you can do by offering them some cash/non-cash incentives).

- also develop a potential consumer of the same category database and contact them via email and tell them about services/product selling points. You send them brochures that depicts the services they will get when they fly your carrier.

- You CAN also share this new potential database with some top travel agent who are currently selling you carrier. THese travel agents will contact them and sell (this has to be very closely monitored, mind you). This may be a win-win for both you and travel agents.

hope this will help you. will get back if something new pops up. cheers !!

Mushfique
 
Posted by: Sharon Moderator Response
8/12/2004 10:14 PM (CST)
Hello all. I am closing this question, since it's more than 2 weeks old. We do this to make sure members' contributions are rewarded in a timely manner and to improve the visibility of newer questions. Thanks so much for participating!
 
Posted by: anilvijay Member Response
3/10/2006 11:01 PM (CST)
I have gone through a similar situation and just started to get positive signals from my market.

I'm also working for an offline airline but the only difference is that ours was a low cost carrier. But we also faced majority of your problems and plus a few more.

We also could not give incentives to agents and didn't have a big fund for Sales Promotion. What I did was to start a program called "Triple A ( AAA), where first two A's stands for first letters of airline name and the third A for Ally. This ally program was based on 3 R's - Rewards,Recognition and Relationships.

To start with, we identified key persons in all the travel agencies and made them our airlines ally. Then we collected his personal and family details like DOB, anniversary date,kids birthdays etc. We used very small amount to send greeting cards for important days and some small gifts for his family. Every month we used to announce the "Ally of the month" and give a half day sponsored outing for him and his family . This really created an emotional bonding and our business started to increase. All that we spend per month for this was $100 per month.

Try this out or any similar promotional activity to create an emotional bonding with your agents, definitely your business will improve.

Give more stress on Relationship and Recognition than Rewards.

Anil Vijayan
 


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