Module 16 Company’s Macroenvironment

SHEILA MCCARTHY’S COACH The growth in short-break trips in recent years and the opening of the Channel Tunnel had always seemed to offer a good opportunity for Sheila McCarthy's coach travel firm. Sheila had worked hard to establish her business selling coach holidays in the UK. She and her former business partner Ellie Longhurst had found that coach holidays proved to be especially attractive to the over-50s segment of the market.

But when Ellie decided to quit the partnership with Sheila, the firm became a limited company, with shares split between Sheila, her family, Ellie's family and the firm's staff. The additional capital that this change in ownership provided allowed Sheila to expand the firm and focus on developing new travel services. So now SMT Ltd (Sheila McCarthy Travel Limited) wanted to offer short breaks over the Channel for her core market segment. She had a hunch that the business could profit from the increased demand for short breaks and that there were sufficient potential customers in her main market segment.

Sheila thought that demand would be high from previous customers for this new service and that she would also be able to attract business from new customers. She reasoned that people over 50 would be very interested in short trips by coach over the Channel for the following reasons: –desire to experience a holiday on the Continent –need for door-to-door return transport to northern France, Belgium and the Netherlands –reluctance to travel by air due to inconvenient airport locations –growing interest in visiting the battlefields of the two World Wars –keenness to use the Channel Tunnel

She also reckoned that the firm could succeed in making this new service a success as a result of its ability to: exploit its loyal customer base employ new drivers and onboard staff to run the new service make arrangements with agencies offering discounted Channel Tunnel access set prices at such a level as to attract sufficient customers from other coach operators

These were Sheila's thoughts as she set about making plans for SMT's new service. But could she rely on hunches and educated guesses? She realised that her marketing team would have to carry out some research to find out whether the cross-Channel service would be successful. In one of her first meetings with the team, she highlighted some of the key areas of research that would be required. Among the market research methods discussed were the following: using questionnaires with current UK tour customers to assess likely demand for cross-Channel services

analysing previous customer feedback on new services they would be keen on using evaluating statements made on feedback forms to assess likely demand calculating the number of potential customers based on previous tour numbers studying data from the Coach Operators Federation, a trade body of which SMT Ltd was now a member telephone calls to previous UK tour customers to assess likely demand assessing the number of existing operators of cross-Channel coach tours

gathering information on what the competition charges for its tours, where they visit, the route they use to cross the Channel and the quality of the tour experience offered by existing operators analysing data from the Office for National Statistics, the government's statistics service using the knowledge of SMT's existing staff

TASK Why is it important for Sheila to recognise that SMT should carry out market research before deciding to offer the new tour service? What additional competition other than coach tours will SMT face if they do go ahead with their new service? What other areas of the new market will SMT have to research into if they decide to go ahead? Look through the list of market research methods considered by Sheila and her marketing team at their meeting. Classify each research method according to whether it is, firstly, using a primary or secondary source of information and secondly, whether the information produced from the source is likely to be qualitative or quantitative. Assess the value of each research source bearing in mind the following objectives: cost, time, validity, reliability, accessibility. Given the number of sources of market research available, when do you think SMT Ltd would first be able to offer their new cross- Channel tour service to potential customers?