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Monday, July 12, 2010

Why differentiate?

The more competition you face, the greater the need to highlight the differentiation -- the unique advantage of your product or service -- in order to succeed in the marketplace.
Evan Carmichael, entrepreneur and speaker

Industry leaders do not get where they are by deciding to commoditize their products and services.
Successful companies in all industries have long engaged in head-to-head competition in search of sustained, profitable growth. They have fought for competitive advantage, battled over market share, and struggled to balance differentiation with both risk and available resources for development.
The companies in the travel industry are no different.

Over the course of the last 30 years, the various constituents of the travel industry have knitted together an amazing distribution ecosystem, marrying members of the value chain with consumers to support both business and leisure travel, serving individuals and groups alike.

The value chain includes a wide range of travel suppliers [air, car, hotel, tour, cruise, rail, attractions, insurance, destinations and content companies], marketing products and services to consumers through wholesalers, consolidators and retailers, both offline and online.

Travel is sold through retail establishments, call centers, through catalogs and newsletters, online, mobile and even via social media tools. By and large, the consumer is the one who decides how they elect to buy (e.g. through which channel) and from whom. Billions of dollars are spent annually using traditional and online advertising and marketing methods to try to sway that decision.

A host of technology, service and content companies provide a wide set of tools and aggregation services to assist in the marketing and sales of the travel products and services over a number of channels.

The model for the industry is largely the commerce model or stated more simply, the sale of products and services for a fee. Various constituents benefit from that transaction, from the retailer that typically earns a percentage based commission on the sales price, to the GDS company that earns a booking fee for putting the supplier’s product on their global “shelf” in front of thousands of retailers, to the supplier themselves who earn the net of those fees.

Destinations make money from bed and restaurant taxes and membership in their destination marketing organizations.

Technology companies make license fees and service fees from the provision of the tools needed to support the value chain.

Online players enjoy commissions, as well as augmenting those revenues with advertising.

I could go on and on, but while the models in our industry could use retooling, the model itself is not currently a source of differentiation.

But it could be.

Sustained, profitable growth often comes from stepping outside the status quo and looking for new opportunities for differentiation, including new models and new markets.

- an excerpt from DARE TO DIFFERENTIATE -  Register HERE to download FREE
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