Executive Summary
Expansion to a new location creates many important concerns for the business that could threaten its success if they remain unaddressed. Indonesian culture and market differ a lot from those of Europe and the United States, and thus it is necessary to create a specific marketing plan suitable for Indonesia to succeed at expansion. The present paper lists various considerations that could impact the planned expansion both positively and negatively, including legal constraints, government policies, language, and many others.
Based on this information, the paper proposes a marketing plan that will help to differentiate the service from alternatives, establish its value, and raise awareness of the brand. Implementing the proposed plan would help the company to expand to Indonesia successfully and earn a significant market share in this competitive tourism market.
Introduction
When expanding into a foreign market, companies need to adjust their marketing in accordance with cultural values, attitudes, and trends that prevail in the target market. To do that, it is critical to research the country of potential expansion to gain awareness of various considerations and opportunities. In the present case, the company is a web-based services developer, and the product is an online travel aggregator. The company is considering introducing this product in Indonesia, and thus requires an understanding of cultural impacts and an effective marketing strategy.
Cultural Analysis
Indonesia has a favorable geographic location and has a warm climate, which attracts many international tourists to the country each year. However, Indonesian people also enjoy traveling and usually choose other locations in the country as their destination (Pramoto, 2017). When preparing for a trip people need to select hotels or apartments, book flights, and compare prices in advance. Travel aggregators are the quickest and easiest way to do that because they allow travelers to get the service provided by travel agents at a fraction of the price and in the comfort of their home. Thus, the product fits the target market due to its relevance and the opportunities it provides.
Geographic Research
Indonesia is an archipelago country, which means that it stretches over a series of islands. Indonesia features a mixture of urban and rural areas, with most islands having at least one central town or city. This creates opportunities for domestic tourism, which normally involves people from urban areas spending their vacation by the ocean (Pramoto, 2017). Thus, the geographic characteristics of Indonesia contribute to the tourism industry in the area by attracting international tourists and increasing domestic tourism.
Target Market Population and Demographics
The target market population includes international travelers to Indonesia, as well as domestic travelers who live in the country. Since the service already has a broad collection of hotels in other destinations, people from Indonesia who travel to different locations may also be targeted. The demographic population would include working professionals aged 25-45 with medium to high income (Pramoto, 2017; Srihadi, Hartoyo, Sukandar, & Soehadi, 2016).
Economic Research
According to the 2017 Index of Economic Freedom, Indonesia has an economic freedom score of 65.8 points, which makes it the 56th freest economy in the world (“Indonesia,” 2019). This means that Indonesian customers have a relatively good buying capacity compared to some other countries in the region. The economy of Indonesia is growing at an average pace, with a GDP of $3.2 trillion and an average annual growth of 5.1% over the past five years (“Indonesia,” 2019). Given that tourism is among the key industries in Indonesia, this shows that the market is booming and the expansion could be potentially beneficial.
Legal Research
There are three fundamental laws in Indonesia that apply to the travel industry: the Tourism Law of 2009, Law 17 on Standard of Business Tourism Area of 2014, and the law on Business Certification in Tourism Sector of 2012. According to these laws, both foreign and domestic businesses in the travel sector are required to register with the Government and obtain a certificate of tourism business (“Open a travel agency,” 2018). Additionally, certification requires all travel businesses to have a business entity and legal entity in Indonesia, as well as an auditor (“Open a travel agency,” 2018). It is critical for the company to conform to these regulations in order to expand its operations to this country.
Political Research
Indonesia has a pleasant political environment that allows it to attract foreign investors and businesses. The president of the country is Joko Widodo, who is a former businessman with a strong focus on developing the country’s infrastructure, economy, and international business collaboration (“Indonesia,” 2019). Tourism is among the government’s main focal areas for development, which means that the government aims to support both domestic and international tourism businesses.
Government Considerations
The critical government considerations in Indonesia are taxation and regulatory efficiency. As mentioned in the 2019 Index of Economic Freedom, Indonesia has moderate taxes for businesses, and the top corporate tax rate is 25% (“Indonesia,” 2019). Since taxes depend on the size and revenues of a business, it is likely that the company will pay lower taxes and will thus retain more profits. The regulatory environment in Indonesia is also positive, with increasing business freedom and decreasing corruption (“Indonesia,” 2019). As a result, it is unlikely that the government will create challenges for expanding the business to Indonesia.
Language Considerations
Indonesia has two official languages: Bahasa Indonesia and Malay, although most local people speak both languages (Fettling, 2018). In addition to official languages, there are hundreds of different languages spoken by various populations of the archipelago, with Javanese, Sundanese, and Madurese being the most common non-official languages (Fettling, 2018). This might create difficulties for companies and products targeting Indonesian people due to the necessity to translate materials into at least several languages.
Competitive Analysis
The tourism industry in Indonesia is very competitive due to its popularity among international tourists. With regards to travel aggregators, international travelers and Indonesian people have a variety of options. Most large and popular travel aggregator services, including Booking.com, Travolta, and others offer customers to search and book trips to various locations in Indonesia. Pratomo (2017) mentions that there are also many small travel agencies in Indonesia that serve domestic populations planning a trip within the country or abroad. Hence, it is critical for the company to create an effective strategy for differentiating its product from the ones offered by competitors and marketing it to both Indonesian and international markets.
The 4 Ps of Marketing
The 4 Ps of Marketing is the foundational concepts in marketing strategy, which include product, place, promotion, and price. The product is the service that helps travelers to search and book hotels and flights in their preferred destination in accordance with their needs, preferences, and budget. The place is online because the service is web-based, but there are three distribution outlets: the main website, search widgets on partners’ websites, and a smartphone application.
With regards to the price, it would be possible to generate revenue by offering advertisements on the websites while also creating paid subscriptions for users, which will remove the ads and provide additional features, such as discounts and exclusive services. Lastly, the promotion will require the use of both online and offline strategies, including ad posters, commercials, and targeted ads on social media.
Industry Information
The tourism industry in Indonesia seeks to cater to the needs of all tourists, regardless of their needs and preferences. Depending on the location, travelers can experience local foods, shopping, outdoor activities, or a conventional beach vacation. Because of its versatility, the travel industry in Indonesia is booming. As mentioned by Guild (2018), the country welcomed over 14 million visitors from other countries in 2018, and further growth is expected in the future.
This growth will be facilitated with the help of the government, which is sponsoring projects to attract more tourists to the country by creating new locations for luxury accommodation, expanding airport capacity, and attracting international tourism companies, such as popular hotel chains (Guild, 2018). Although this means that the tourism industry in Indonesia is highly competitive, it also shows significant potential for profits if a practical approach to expansion is used.
Marketing Plan
Marketing Objectives
The ultimate goal of any marketing strategy is to attract customers to use a product or service. In the present case, the marketing strategy should focus on three core objectives. First, it is necessary to raise awareness of the service in the target market. Secondly, marketing should establish the value of the service, thus encouraging people to use it. Lastly, marketing should seek to differentiate the service from the ones offered by competitors to help acquire a larger market share.
Global Positioning Strategy
In the global context, the company should position the brand as a cheap and easy-to-use tool that helps travelers to plan their ideal vacation. In order to achieve this goal, the company should use advertising and promotions to show the benefits of the service compared to its competitors while also emphasizing the value of the service. For instance, a global positioning strategy would involve advertising features that differentiate the service from other similar ones and portray the benefits that the service provides. Emphasizing the versatility of the service and its suitability for travelers with varying needs and preferences would be helpful.
Product Differentiation
Product differentiation helps to concentrate marketing efforts by highlighting the qualities or features that distinguish the products from their alternatives. In the case of travel aggregators, it would be useful to add features that are not offered by other similar services and focus on them while creating ads. One particular feature that could be added to the chosen service is the opportunity to find accommodation and flights suitable for each customer.
For example, the travel aggregator could offer each client to complete a short questionnaire to find out more about their ideal vacation. Then, the service should analyze the customer’s responses and offer hotels and flight tickets based on them. Implementing this feature would enable to differentiate the service from other travel aggregators and increase its perceived value, thus encouraging customers to use it again and recommend it to others.
Pricing Strategy
While basic hotel and flight search services will be free of charge, the customization tool described above will be available through a paid subscription. The best pricing strategy is adjusting prices in accordance with the multinational concept, which takes into account income and market differences across countries. This would help to ensure that both Indonesian people and international travelers could afford the subscription, thus tailoring the price to the consumers’ needs (Bentley-Goode, Omer, & Twedt, 2017).
It is suggested that the subscription price should be based not on time periods but on the number of trips booked through the service. For instance, a customer could book just one trip through the service for the price of $4.99, but if they buy a subscription for three trips, it will cost them $11.99, which is a more attractive price per trip. A subscription for ten trips should be even more advantageous, priced at $29.99. The prices offered here would be suitable for both target markets, thus constituting an effective pricing strategy.
Advertising and Promotional Strategy
Advertising should include both offline and online ads to increase brand awareness and attract attention. There are three main types of ads that the company should consider. Firstly, video commercials played on TV or on YouTube should show how various groups of travelers (e.g., families, students, working professionals) use the customization tool on the website to find their ideal vacation. Secondly, targeted ads on Facebook or alternative social media sites would be useful. These ads should focus on people who recently searched for hotels or flights to Indonesia, thus establishing the relevance of the service to them.
Lastly, poster ads in minimalist style including only the most essential information could be placed in airports, on bus stops, and in other popular public locations. A suggested poster design is plain light background imitating a computer or a mobile phone screen with a search engine site open. The input field should say “book a perfect holiday”, and there should be a suggestion field below with the service name and website as the only suggestion.
The story behind the ad is that a person wants to plan and book an ideal vacation and once they type it in the search box, the search engine suggests the advertised service. This ad would be useful because it contains both a problem and a solution, thus making the audience associate the service with their ideal holiday. The minimalist style of the ad is also useful because it makes the viewer wonder what the service is, and thus they are more likely to visit the website out of curiosity.
The company should also create some promotions that would encourage more users to book through the service. One excellent example is a friend invite promotion, which could offer free use of customization tools for one trip if a user invites a friend and they pay for any subscription. This promotion would be effective in attracting new users to test the service’s unique features and increasing the probability of them buying a paid subscription in the future.
Distribution Strategy
Because the service is web-based, it should be provided via the main website, the official application, and widgets on partners’ sites offering basic search features. To realize this distribution plan for expansion to Indonesia, it would be crucial to translate the website and all information into the main languages of Indonesia, including Bahasa Indonesia, Malay, Javanese, Sundanese, and Madurese. An official application should be developed for iOS and Android operating systems, thus enabling all smartphone users to access it. Finally, the company should partner with tourism-related organizations in Indonesia and install its search widget on their websites. This would enable the company to deliver the service to all members of the target population while remaining cost-effective.
References
Fettling, D. (2018). Why no-one speaks Indonesia’s language. BBC. Web.
Guild, J. (2018). Indonesia’s booming tourism industry. The Diplomat. Web.
Indonesia. (2019). Web.
Open a travel agency in Indonesia. (2018). Web.
Pratomo, D. S. (2017). The analysis of domestic travelers in Indonesia. JEJAK: Jurnal Ekonomi dan Kebijakan, 10(2), 317-329.
Srihadi, T. F., Sukandar, D., & Soehadi, A. W. (2016). Segmentation of the tourism market for Jakarta: Classification of foreign visitors’ lifestyle typologies. Tourism Management Perspectives, 19, 32-39.