KUONI

MARKETENTRYSTRATEGIESININDIA
KuoniTravelHolding Ltd.,established in1906andheadquartered inZurich, Switzerland,isoneof
Europe's largest travel companies. The Kuoni Group has subsidiaries and, joint ventures in 22
countries,employs8300professionalsworldwideandhasaturnoverofCHF4.1billion.
WiththeopeningupoftheIndianeconomyalittlemorein1991,Kuoniperceivedanopportunityfor
marketentry.Itsoughttoanalyse.

ThetravelbusinessenvironmentinIndia

Thedegreeofcontrolandinfluenceofeachofthem.

Thechangingconsumerpreferencesandleisureconsumption

Thedifferenttypesofcompetition,andtherulesandregulationisIndiaofthetrade.
Tourism in India : The tourism scene in India wasn't exactly an E1 dorado Kuoni discovered.
Infrastructurewaspathetic andcreaking,neighboringASEANcountrieswerewayahead. Travel
managementthroughtrain,roadandairwasanightmareespeciallyduringholidaysandvacations.
Theforeigntouristtrafficin1995waslessthantwomillion(Singaporeaveraged6million)andstayed
inIndiaforanaverage13days(itwas3daysinSingapore).Thedomestictrafficwasencouraging
100million,butmostlyintheeconomysegment.Indiahasmystery,historyandculture,butalsohad
theimageofbeinghot,dustyandunhygienic. TourismwasverylowinthetotempoleofIndia's
planners,whoseemedtohavemissedallpossiblebuses.
Competition: ThiswasonefactorthatworriedKuoniimmensely,butforthewrongreasons. The
scenewassodifferentfromwhattheyknewinEurope.Itwasworriedabouttoomanymiddlemenin
the service distribution chain : India was the only country which continued with the services of
GeneralSalesAgentsinairlinemarketing,whiletheworldovertheyhadbeenfossilised.Inthemid
nineties,therewasreluctanceintheadoptionoftechnologyinComputerisedReservationSystems
(CRS)andtbebillingSettlementPlan(BSP).BSPwasdevisedfortheeaseofcollectionofpayments
butthetravelagentswereupinarmsagainstthem,fearingagradualphaseoutoftheirservices.They
wereborrifiedtofindrampantunethicalpracticesamongsttheintermediariesofpayingbacktravel
agencycommissionstocustomerscorporateorindividual.Thisreducedtheprofitmarginsoftravel
trade.Customerswerebecomingcynicalandtalkingonlyprice.Therewasalackofprofessionalism
inthetradeandthemarketwasgreatlyfragmented,populatedwithtoomanysmallplayers.
OutboundleaderwasSOTC;SITA,TravelCorporationofIndia(TCI)andThomasCookdominated
inbound,businessandincentive.ThomasCookhasthebestnationalcoverage,withover55branches,
internationalconnection,professionalmanagement,alistedcompanybutseemedtomakemostofits
moneythroughforeigncurrencydealings.TherewereotherplayerslikeCoxandKings(anerstwjile
subsidiaryofTajGroupofHotelsbutwhichitsCEOAjitKerkarsurreptitiouslytransferredtohisson
PeterKerkarandpromptlylosthisjob)andRajTours.Thereweretoomanysmallplayers,having
narrowvisionwithnoeconomicsofscale.
Howdidoneentersuchamarket?Whatweretheopportunitiesandtherisks?HowshouldKuoni
positionitselfinthemindsofanotoriouslycannymarketthatconstantlysoughtvalue(readdiscounts)
?Howshoulditensureprofitability;swiftandwidespreadmarketpenetration;maintainquality;bring
inworldclasspracticesandprofessionalism,andyetavoidthetrapofmarketingmyopiathatmany
MNCserviceprovidershadfalleninto?
MarketEntry: EntryintotheIndianmarket,in1996,wasthroughtheacquisitionroute:Kuoni
TravelHoldingacquireda51%stakeinSOTC.India'slargestoutboundtouroperator,headquartered

inMumbai.OnMay22nd,thenextyear,Kuoniincreaseditsshareholdingto100%,convertingitinto
afullyownedsubsidiarymakingitatrueMultinationalCompany(MNC),SOTCbecameavalue
brand, andthedefactooutbounddivisionofKunoni. In2000,todiversifyitsbusiness,Kuoni
acquiredSITAWorldTravel,leadersininbound,BusinessTravelandIncentiveTravel. Withthe
latest merger, Kuoni India became India's largest travel company. It strengthened its leadership
positionintheinboundmarketin2001,byacquiringTourClub,India'sleadingdestinationmanager
intheMiddleEast.
1)WhatservicestrategyshouldKuonifollowforconsolidationofitsmarketentry?
2)Howisservicesdifferentfromproducts,especiallyinthetravel&leisureindustry?
3)DefinethemomentoftruthforthecustomerintheservicesprovidedbyKuoni.
4)Howwouldyougoaboutthebusinessofservicesincontextwiththeabovecase?