Comprehensive holiday services
In times of a downturn in the economy, businesses need to find ways of boosting falling profits by expanding the products or services they offer the buying public. Thomas Cook, which started in 1874 as one of the first package holiday suppliers, is no exception and is looking to expand its financial services as the package holiday trade stagnates.
Manny Fontenla-Novoa, Chief Executive of Thomas Cook said: Travellers are waking up to the fact that using a cash machine to get money when they are overseas is an expensive way of buying foreign currency. Over the past 10 years, 19 million people have gone on package holidays every year. That number has stayed consistent all through those 10 years. The industry may not be recession-proof, but it's resilient.' (The Sunday Times, 16 March 2008)
Thomas Cook has one of the three contracts to run a bureau de change at Heathrow's new Terminal 5 which opened in mid-March. The company is also looking to boost sales of travel insurance after a change in the law which allows it to sell stand-alone insurance products. The company's revenue from financial services in the period 2005-2006 was £165 million and it hopes to almost double this by the end of 2009-2010. Revenues from mainstream package holidays are expected to shrink from 80% of total income to 72% over the same period. (The Sunday Times, 16 March 2008)
In 2007 Thomas Cook launched a branded credit card in a joint venture with Barclaycard. The Card Awards, which recognise excellence and best practice in the card payments industry, awarded Thomas Cook with the Best Credit Card Design of the Year on 31st January 2008. Mark Nancarrow, Managing Director of Thomas Cook Financial Services said: 'The Card Awards are highly regarded in the card payment industry, so we are delighted to be given this accolade for our card designs. Our credit card is a daily reminder for customers that they are collecting Travel Pounds reward points every time they use their card that can be redeemed against holidays and travel at Thomas Cook.' (Thomas Cook website)
Financial services companies also have to look at expanding their services and products to attract new customers. See two Times 100 case studies on different financial services companies which demonstrate how they are managing to compete for new business in this competitive market:
1. Experian is a global information solutions company that runs one of the UK's leading credit reference agencies. It has developed a new product called CreditExpert for consumers which helps them check their credit reference level. This reflects its decision to look into the future and focus its thinking on its customers, existing and potential.
2. Egg is the largest pure online bank in the world. Its enduring purpose demonstrates that it believes in the 'power of people'. First-rate performances by Egg people mean a first-rate service to customers. When customers receive a great service, they will tend to buy more.
The Sunday Times, 16 March 2008 (print edition)
Potential Study Questions:
- Define the term 'marketing mix' and expand on the four Ps which it covers.
- Explain the marketing benefits for a company of having motivated staff.
- Thomas Cook has increased its 'capacity utilisation' by expanding the range of services its counter staff can sell. In what other ways can a company increase capacity utilisation?