Marketing_Trends

Introduction Understanding the process of transition from a traditional business, brick and mortar, to an e-commerce business is not as simple as it may seem. This paper will follow a small business that successfully transitioned from brick and mortar to e-commerce. This is the story of the transition of Borgsmiller Travel (1962-1996). History/Travel industry background The World Wide Web (www) was a mystery to most small businesses in the 1970’s. Most did not understand what the advantages were or how to use it. The traditional role of a travel agent in the 1970-1990’s was to mediate between the airlines, hotels, and the consumer. At that time it was difficult for a travel agency to differentiate themselves for their competition. Basically most provided destination expertise or quality service. So, the impact of the internet gave travel agencies the ability to reach worldwide markets, but it also gave the airlines the ability to deal with customers directly. This cut substantially into the earnings of travel agencies and reduced their commissions from 20-25% to a mere 5% per ticket. Some airlines even imposed a cap on commissions. This gave the airlines substantial savings and a better knowledge of consumer behavior. In light of these dramatic environmental changes, major changes were needed by travel agencies to remain in business. Frederick Borgsmiller opened Borgsmiller Travel in 1982. It was a full service agency serving Southern Illinois. This area was mostly rural but it also included a large state university and a community college. St. Louis’s Lambert Field, an international airport was about one hundred miles away and there were two regional airports in the area. Borgsmiller Travel started with one office and one agent in Murphysboro. In 1983 an office was opened in the Southern Illinois Airport with one agent. By 1985, Borgsmiller Travel had three offices and a satellite office and over six employees. By now technology was on the rise and like most travel agencies, Borgsmiller used a Computerized Reservation System (CRS), which was affiliated with Delta Airlines. Again there was no competitive edge, only the necessity of doing business. In 1985 Borgsmiller signed with Sabre systems developed by American Airlines. The CRS was still standard, so agencies competed on price, access to various airlines and system reliability. The Sabre was the leading CRS performer at that time. 1986 brought a lot of changes to the Borgsmiller agency. They opened an office at the Williamson County Airport and closed the Southern Illinois Airport office due to lack of commercial flights. By 1987 the satellite office was closed and an office opened an office in DuQuoin and at the DuQuoin State Bank. Borgsmiller Travel had started to carve out a niche by becoming a consolidator for Malaysia Airlines. There were over eight hundred Malaysian students attending the local colleges. This change in focus allowed Borgsmiller to have a position in the international airfare arena. This was Dirk Borgsmiller’s new strategy and he brought out his father’s interest in the travel agency in late 1988. Another CRS provider was used by the new Borgsmiller, World Span which was affiliated with Trans World Airlines (TWA), who was based in St. Louis. In 1990 the DuQuoin operation was sold because of the company’s change in strategy. The same happened to the Williamson County Airport operation. This left only one office in Carbondale with four agents. During this time Dirk continued to focus on the Malaysian market and expanding the company’s focus from transportation to destination management by selling packages and tours. This included city tours, adventure tours and dive tours. So, by 2001 the Borgsmiller Travel Agency became extent and the Malaysia Travel Advisors (MTA) was formed. The internet had become popular with businesses and Borgsmiller wanted to establish a presence. He felt that he could reach an international market that was very difficult to reach otherwise. This internet advertising had to be outsourced. To improve the reliability of his CRS, Borgsmiller introduced desktop computing to the company. This also provided the agency with e-mail and access to the internet. Now instead of so many telephone calls, faxes and traditional mail the customer could be contacted by email. However, the Malaysian suppliers did not have or had limited access to email. By the late 1997, Borgsmiller wanted his own designed and developed database system to speed up and make it easier for him to put together tours and packages. He hired a consultant to do the work. Now, he no longer had to sell prepackaged tours, he had custom tours. Borgsmiller added YTL Enterprises to his growing line of products. YTL owned several resorts and E&O Railroad. Things were beginning to come together for MTA. It had become apparent that there was a need for at least a part-time technical person because of the growing dependence on technology. This person designed and developed several web sites for MTA, who had now an e-commerce business. By 2000, MTA had five sites with three more by the end of summer. After the part-time consultant quit, Dirk hired a web developer and an IT manager, this brought his IT functions in-house. The end of 2000 for MTA was amazing. Customers were able to make requests for tours, packages, hotels and resorts through the web sites. So, by fall of 2000 Borgsmiller added a secured server so that payments could be made via the internet. Now Borgsmiller’s long range plans needed to be put into effect. He hired the consultant full-time as Operations Manager. He could see things were getting more departmentalized. By the end of 2000, MTA had nine employees, three supported technology adoption within the organization. His senior agent handled marketing and sales functions thus freeing up Borgsmiller’s time to focus on developing supplier relationships, creating new products and environmental scanning. Borgsmiller also encouraged a personal touch because of the travel experiences he and his agents had, they could relate easily to the customer’s needs. They felt this was a competitive edge. Marketing took a leap for MTA when they posted their first web site. Now advertising was much cheaper and reach many more people. Now, the marketing is directed at search engine placement, creating links to other pertinent product lines offered by the company. This also opened doors for e-mail registration and the ability to send out special offers, newsletters and even a site to serve other travel agents. Going to e-commerce added expenses for MTA, such as human resources, when investing in technology the better trained people you need. Another expense was desktop computers, which also included software, licensing and the expense of networking. This included the expense of marketing and sales brochures that now required software and printing. It is very clear without top management support the move to e-commerce would not have been possible. One benefit that Borgsmiller added to this story is that he was an entrepreneur and with that background, he continually sought out new opportunities for his company. He first carved out a niche for his organization and then used the internet to reach his target market. Conclusion This paper shows the transition of a small business to e-commerce. It tells the strategy, structure and processes of how a very small business competing in a local market transitioned to a small business competing in a global market. With the transition to e-commerce, we all noticed that the business became less human resource intensive as they became automated. There is a downside to going e-commerce not only does your customers and suppliers get to see your pricing, so does your competitors. So a competitive edge will be short lived in cyberspace compared to a traditional market. Let’s not leave out web site maintenance. People want to see fresh information at least monthly. But no matter how automated an organization becomes, the customer has a need to know that there is someone at the other end they can talk to. Before taking the leap to e-commerce, it is very important that you know your business and know the industry but most of all be ready for change. References Ader, J.N., R.A. LaFleur, and M.J. Falcone, Internet Travel, 2000, Bear Stearns-Equity Research. Fink, D., Guidelines for the Successful Adoption of Information Technology in Small and Medium Enterprises, International Journal of Information Management, 1998. 18 (4): p. 243-253. Lewis, I., J. Semeijn, and A. Talalalyevsky, The impact of Information Technology on Travel Agents, Transportation Journal, 1998. 37 (4): p. 20-25.