Strategic Issues & Challenges

Market Dynamics – Business Goals

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The travel reservation market in India

Online

Public Services

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Source: IAMAI Report - 2012

Offline

Fast growing market with huge potential

But highly fragmented, cluttered and complex…Getting more competitive by the day

Largely driven by flight bookings

Commoditisized offerings with low margins….

1618

2023

0

5

10

15

20

25

2009 2010 2011 2012

USD

(B

n)

Gross Travel Bookings – by Revenue

Need to move beyond flightFlight booking space had become too cluttered with thin margins. It was getting increasingly difficult to sustain growth and profitability.

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Client wished to explore alternate travel booking services - one that had potential for being transitioned to the online space.

Client selected online bus booking as a prospective expansion avenue…

…a non traditional online booking area but with high

potential of growth.

Client wished to develop targeted strategies of service offerings and communications…

- with the overall objective of maximizing sales growth.

Specifically client wished to understand :

Business Objectives

Max

imiz

e G

row

th

Which opportunities to pursue?Identifying growth opportunities based on actual

bus travel and booking behavior

Who to target?What are the types of bus booking travelers? Which ones to target?

How to target them?What are drivers of bus usage and online bus bookings?

Special packages, loyalty schemes, etc.

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Ensured Actionability

Ensured Targetability

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Challenge was to come up with a holistic analysis plan that took care of both targetabilityand actionability.

Need for a holistic approach

Ensuring Actionability

Capturing Growth

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This scheme works in many cases, but it wasn’t the most appropriate approach in our case.

Growth is NOT the focus

Emphasis is on identifying well defined

segments - Targetability,

NOT Actionability

Prioritizing segments is a hit and trialmethod of secondary importance

Why?

Traditional Segmentation Analysis

Step 3: Prioritizing segments - identifying relatively more profitable segments

Step 2: Profiling segments

Step 1: Segmentation (Cluster Analysis)

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Evaluating methodology to capture growth

Step 1: Goal SettingGrowth goals were identified. Growth variables were defined which formed inputs into the segmentation algorithm.

Step 2: Growth Driven SegmentationIdentification of segments that were differentiated in terms of growth, thus making the results highly actionable and impactful.

Step 3: Opportunity Mapping‘Where to play’ analysis based on opportunity size and winnability.

Growth

Seg 1 Seg 3

Seg 2

We tossed the traditional approach upside-down to have growth goals at the forefront of our segmentation scheme.

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New Approach 180⁰

Several growth opportunities were considered and evaluated. Finally, two growth goals were identified.

Category Conversion:

Converting offline bookers to online bookers

Stealing from Competition:

Converting non client-brand users to client-brand users

Premiumization:

Encouraging premium services like Volvo coaches, Wi-Fi

Increasing Travel Frequency:

Encouraging more travels

Increasing Travel Distance:

Encouraging longer travels

Potential OpportunityFeasibility

How workable is the opportunity?

SizeHow big is the opportunity?

High

Medium

Low

Low

Low

High

High

Medium

Low

Low

Final Selection

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Defining growth goals

Ensuring Targetability

Focus Correction

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Mr. Shiv and familyOver-night holiday trip in summer break

Convenience and comfort (AC)

Safety

Ample luggage space

Sleeper/ semi-sleeper coach

Entertainment facilities

Mr. SundarShort business trip in December

Punctuality

Online booking facility

Easy cancellation/ refund policy

Wi-Fi/ Charging points

Incidently, Mr. Shiv and Mr. Sundar is the same person –

Mr. Shiv Sundaram !

What is different is the

Travel Occasion

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‘Occasion’ to think different

‘Occasion’ to think different

Hence to derive meaningful and holistic segmentation solution, we decided in favor of segmenting occasions (trips) rather than the respondents.

Occasion level segmentation was a more realistic approach enabling us to identify sharp, well defined and distinguishing segments rather than fuzzy overlapping respondent groups.

Travel for a respondent is multifaceted, and needs/ attitudes/ behavior are dependent on the travel occasion.

Initial ideations had suggested that individual preferences vary by travel occasion

This hypothesis was further validated through pilot tests

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Execution

Marrying Actionability with Targetability

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Our approach: Combining the best of both worlds

CHAID 2 Step Cluster Analysis

Multilevel Hybrid

Mapping dependence relationship:

Growth goals as dependent variable

Identifying key differentiators:

Selecting variables which differentiated growth.

Accommodating mixed scales:

Includes both numeric and categorical segmenting variables.

Developing well defined segments:

2 step algorithm of Preclustering feeding into Final Clustering produces well defined segments for effective targeting.

The key operational challenge was to devise a methodology that would address the growth goals and simultaneously produce well defined targetable segments.

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Growth Opportunity

Business Religious

Holiday

Level 1:

Level 2:

Level 3:

KD1* KD2 KD3 KD4 KD5

Final Segments

* Key differentiators (e.g. price sensitivity, travel frequency etc.)

Mu

ltile

vel A

pp

roac

h

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CHAID with pre-defined growth objective as the dependent variable. Purpose of visit came out to

be the 1st key differentiator of growth goal.

Second level CHAID analysis within each purpose to identify the key differentiating variables. These

served as final segmenting variables in the next step.

Final 2 Step Cluster Analysis with key differentiating variables as identified in Level 2.

Using key differentiators as segmenting variables produced clean segments differentiated by growth potential.

Key Insights

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Segmentation solution yielded a comprehensive set of 15 occasion segments – across the 4 purposes of visit.

For e.g. we had 4 business segments – these were business trips in routes like Mumbai-Pune, Chennai-Hyderabad etc. Similarly, we had 4 segments for holiday and religious trips, and 3 for visiting family/ friends.

Key differentiators across segments were identified which included (but not limited to) frequency of travel, spend, price elasticity, mode of booking etc.

Need/ attitude mapping of segments provided key inputs in establishing target strategies and customizing offerings.

For e.g. A business segment was largely comprised of trips booked by office, with little/ no say of the individual traveler. This insight helped client design packages focused on key corporate needs like last minute availability, booking assistance, quick confirmation etc.

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Winnability Analysis helped evaluate actionability across segments.

This enabled informed decisions of ‘where to play’.

For e.g. Segment 2.4 though high in growth potential had low fitment. These were largely offline trips made by SEC B who preferred booking at the bus stop.

Winnability Analysis - Sample

Winnability(Feasibility of targeting and converting)

Op

po

rtu

nit

y Si

ze

High

High

Low

Segment 2.4 Segment 1.2Segment 1.1

Segment 4.1

Segment 2.3

Segment 4.2 Segment 4.3

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(Ho

w b

ig is

th

e o

pp

ort

un

ity?

)

Implications for MR Industry

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Occasion based segmentation is effective in identifying distinguishingpatterns among online shoppers, who otherwise have a predominantlyhomogenous socio-economic footprint.

This segmentation approach can be suitably implemented acrossindustries like Hospitality, Food & Beverage etc. which arefundamentally occasion oriented.

Given the segmentation scheme works at the occasion/ trip level, it’seasier to integrate/ validate results from transactional CRM databases.This enables extrapolating study findings to realistic market estimates.

The segmentation scheme is driven by growth objectives. This makes ita highly actionable segmentation solution when client has a pre-defined growth strategies.

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