Obscuro Business in the Tourism Market

Introduction

Tourism development is a vast contributor to the growing economy. Obscuro is a business that takes advantage of the affordable alternative destinations niche in the tourism market by targeting travelers between 18-35 years of age. The business plan serves to show how feasible, viable, and profitable this business is. A business plan is analyzed to find out whether the company is fit and feasible for financial investment. The following is an analysis of Obscuro’s business plan.

Structure of Business Plan

The first theme this report will analyze is the structure, format, and presentation of Obscuro’s business plan. A business plan is a written document that describes the work, the goals of a business, and the methods used to achieve them (Ekanem 2017). While there is no standard way to structure a business plan, some common elements should not miss. These elements are the cover sheet, the executive summary, the business definition, the market study, the technical study, the business organization, the financial study, the income study, and the financial evaluation.

The executive summary is the summary of the business plan contents. It outlines the purpose of the business plan, the description of the services products offered, and an overview of the business viability. Obscuro’s executive summary is well-detailed, providing summaries for everything covered in the business plan. From the start, we can know the leading service the company is offering its customer. It is then followed by how the company plans on making profits. The executive summary is organized in a way that attracts investors. First, the business plan identifies the market niche, the competitive advantage, the target market, and then the finances and investment projections are outlined. Hierarchically, the executive summary gives investors an outline of why the business is both a viable and a lucrative venture to invest in. This type of summary is more of a synopsis of the overall business plan than a narrative type of outline. The business focuses on alternative tourist destinations, which the company’s founders have had experience with. It would therefore help to incorporate some relevant experiences that would help explain the company’s inspiration better.

The business plan describes Obscuro as a business entirely. It has stipulated the company’s legal form as a private limited company that considers itself an export business. The plan also states the company’s location as Leeds. However, the website domain name and the brand name are not given. The mission statement of any business communicates the business the company is in. Obscuro’s mission statement captures the tourism niche it wishes to occupy the market it is targeting. The plan then gives the reader information about the industry it is entering. Obscuro is venturing into alternative destinations for tourism. The content is organized to enable the reader to see how the product will enter the market, how it will be marketed, and the marketing strategy that the company will use. The reader is then presented with the financial plan, including the risks, costs, and returns the business expects to garner.

Feasibility of the Planned Venture

For a business to be feasible, it has to be successful. A feasibility analysis is a study conducted to determine whether a business venture will succeed or fail (Cadena 2017, p.16). As mentioned above, Obscuro is an online-based travel business looking to enter the alternative destinations market. To conduct this analysis, we will look at three things:

  1. Does the market exist for this service?
  2. Does the company have the people necessary to run things?
  3. Will the company get the return on investment projected?

Market Feasibility

Travelers are looking for more alternative tourist destinations. The number of tourists globally is projected to reach an estimated 1.8 Billion people in 2030 (Iflazoglu and Can, 2021). The classic destinations like Venice, Italy, Bali, and Paris have started experiencing the effects of over-tourism as some of these countries are reaching their 2030 projected numbers pre-maturely (Iflazoglu and Can, 2021). Obscuro wants to serve the tourists looking for alternative destinations and the younger travelers between the ages of 18 and 35. To start with, the age group Obscuro is targeting is one of the fastest-growing age groups in the tourism industry (Kireova, 2018, p. 268). According to UNWTO, the number of youth tourists makes up 23% of the total tourists traveling each year internationally. With the need for alternative destinations, there arises the necessity for travel agencies to organize trips for youth travelers.

Several companies that offer alternative destinations to their customers already exist. However, they are either too expensive or offer a small selection of alternative destinations. A market gap therefore exists. Obscuro seeks to cater to this gap by providing cheaper options and a more comprehensive choice of alternative destinations. A customer would consequently opt for Obscuro instead of its competitors because of their low cost as other companies such as Regent and Wild Frontiers already offer diverse destinations. Obscuro’s pricing strategy has to be attractive enough to sway customers from already established companies. The low pricing efforts, therefore, translate to their market entry strategy.

Organizational Feasibility

The business plan lists several people responsible for the success of Obscuro. Having the proper management can make a start-up business. The management team consisting of three partners has one thing in common. They all have experienced alternative destinations in one form or another. Additionally, each member has qualifications that make them the best fit for the company and have held similar positions in the past. A manager with experience is more likely to perform best at their job than a manager without prior knowledge (Dedeoglu et al., 2018, p.10). The CEO brings a network of contacts to the company and holds experience working for the competitor, STA Travel, and therefore knows a lot about the market. The marketing manager also has vast experience in the marketing channels the company aims to use, like social media and email marketing. Lastly, the financial director can handle Obscuro’s finances considering their experience working in the finance department of a tour company and having knowledge in pricing strategies.

The company is going to outsource a software team for the development of their business. Obscuro’s founders will also be expected to learn about maintaining the website and apps of the company. The work that goes into code maintenance is a lot. With the company heavily relying on its app to get customers, it would make more sense to bring on a Chief Technology Officer (CTO) as a permanent member. The CTO would then be responsible for hiring the software engineering team to work on the app and its maintenance. Compared to the option presented in the business plan to leave all the software maintenance work to the three managers with no developing experience, having a permanent CTO is more likely to be successful.

Financial Feasibility

A financial feasibility analysis determines how economically viable the venture is. The feasibility analysis looks at how attractive the product being offered is to the market, its level of competitiveness, and the projected profits that Obscuro can gain (Galankanshi and Refaeli, 2021). Obscuro’s founder invested 20000 Euros into the company and is looking for an extra investment of 130 000 Euros to be divided into 80000 Euros for the first year and 50,000 to cover the running costs the following year. The investors can get their money back through the 25% of shares allocated to them. During the first year, the start-up business is expected to run on credit and post a loss. Obscuro states that this would be because of the low pricing strategy that it will adopt to attract customers. The first year will record approximately 300 bookings that are expected to increase the following year.

Further, investors are expected to get their money back from the company by the middle of the fourth year in business, with profits expected to be generated from the third year, albeit in small percentages at first. Obscuro’s business plan offers all the data that an investor would be looking for when deciding whether to invest in the company. By basing their estimated values on the financial numbers of their competitors, Obscuro is giving its potential investors reliable estimations of how Obscuro will use their money and how it will pay it back.

Marketing Strategy Analysis

The primary marketing strategy that Obscuro will be using is digital marketing. Digital marketing is the perfect choice for an online travel agency like Obscuro. Digital marketing is how marketers use the Internet to create value for products and interchange them, usually for money (Visser, Sikkenga and Berry, 2019). Marketers can do digital marketing through any device with access to the Internet and are not restricted to only one channel. Obscuro uses social media and email marketing coupled with Search Engine Marketing (SEM). Each of these methods plays a role in selling Obscuro to customers.

Social Media Marketing

Obscuro plans to have a presence on the three major social media platforms, Instagram, Facebook, and Twitter, as soon as it starts operating. These three platforms were a good choice as the campaigns run on them will likely reach the demographic of 18-35-year-olds that Obscuro is targeting (Vinerean, 2017). For instance, Facebook’s primary demographic is aged 24 to 35 and with 34% of its total users between the ages18 and 34, well within the target market age (Kireove et al., 2018, p. 267). Obscuro’s business plan fails to differentiate between these three platforms and investigate their effect on the return on investments of the marketing expenses (Alalwan et al., 2017, p.1178). Although they all can generate leads, they perform differently, and one content strategy cannot fit them all.

Obscuro should consider that the consumer engagement rate on Instagram is higher than Facebook, but Twitter is more elevated than Facebook (Kircova et al., 2018). Therefore, the efforts targeted towards these three platforms should reflect the potential engagement they can generate. Apart from posting on social media, Obscuro has a responsibility to encourage customers to interact with their content. It can do this by using either task-based or experiential events (Harmeling et al., 2017, p.312). Task-based motivations can use monetary motivators to engage customers, while experiential concentrates on creating great content that draws customers to engage with the content themselves (Harmeling et al., 2017, p.315). The customer engagement rate is essential as it reflects how famous the company is among its target market.

In the business plan, Obscuro does not mention how it will measure the success of its social media marketing strategy. Social media monitoring refers to a firm’s involvement with customer behaviors on social media to gain market insights to help its marketing plans (Moe and Schweidel, 2017, p.698). By carefully listening to customer’s feedback, Obscuro can better understand their customer needs and gain insights on how to improve the services it offers. Monitoring social media content will also help Obscuro carefully respond to any customer complaints made online and avoid any backlash that may result from it, such as a comment going viral and costing it its business (Li et al., 2021, p.58). With a social media strategy, Obscuro has to strategize on creating content for the three platforms, monitoring it, and using the insight data to improve the business.

Email Marketing

Emails are among the digital marketing channels with higher ROIs. Because of this, Obscuro states that it will allocate up to 40% of its marketing budget to email marketing. Considering that emails have a 122% ROI, investing the 40% in creating a powerful email campaign is viable. The company plans on using segregation and personalization in their emails in later campaigns. Segregation is the splitting of email lists according to likes and preferences to provide the customer with a more personalized ad experience (Bala and Velma, 2018, p.325). Segmenting the lists will increase the conversion rates for Obscuro to up to 3.5 times more than without (Gunelius, 2018). A great email strategy should include the company’s goals to reach the Key Performance Indicators like increased subscribers, increased open rates, and higher click-through rates (CTRs). Obscuro plans on using an enticing sign-up process to increase subscribers then use personalized emails to engage them.

As with the social media campaign, it is not enough for Obscuro to just dispatch emails. There should be a plan to follow up, evaluate and collect data that will help improve the campaign further. Most email service providers will have an analytics dashboard. The dashboard provides valuable data that the managers can use to measure the performance of the campaign. Since email marketing is a convenient method that works to increase the customer base, Obscuro should have ways to dispatch quality crafted emails, monitor said emails, and continuously improve to grow their email list organically.

Search Engine Marketing

The third marketing strategy Obscuro will use is Search Engine Marketing. With the increased reliance on technology in the tourism industry, the barrier of entry is lowered. Therefore, there is fierce competition on the agency that will appear in the search results first (Hassan and Dadwal, 2018, p.43). Search engine marketing is marketing aimed at improving the visibility of the company’s website in search results. Obscuro will be using Search Engine Optimization and Pay per Click to increase traffic. The sponsor searches will help publicize the company and access search data to Obscuro (Bhandari, 2017, p.9). It is essentially a way of buying website visitors as you pay for each time a visitor clicks through the ad. (Hassan and Dadwal, 2018, p.48) Obscuro will allocate 40% of the marketing budget to SEM, meaning that social media marketing will have less than 20% considering other forms of marketing. As explained above, social media marketing plays a massive role in creating the brand of the company. Therefore, a more significant percentage of the budget should be allocated to it during the first months of operations to create a buzz around the company.

Start-Up Operational Issues Identified

Obscuro is a company that will work by preparing alternative destinations for its customers. It plans on operating from Leeds in the UK but will be sending tourists to unusual and sometimes remote areas. One issue they identified was how to organize the stay of their customers in these countries without having offices in them. Obscuro opted to work with the local tour agencies to craft extraordinary trips. After creating these trips, Obscuro will then order them and resell them to their customers. In doing this, the company reduces any costs that it would have incurred in setting up offices in the alternative destinations. To reduce operational costs, the company has partnered with a flight selling company. Therefore, Obscuro does not have to waste time booking flights for its customers. Instead, Obscuro can rely on this company to supply the flights necessary for each of its customer’s products.

Another operational issue identified is the fierce competition that it will face. As pointed out in the business plan, there are already companies offering the same services it is offering. The only difference is whether a slight reduction in the price or a difference in the destinations. Obscuro will handle this by gaining the trust of the consumer. The low pricing strategy will make consumers feel like Obscuro is not after their money but only wants them to enjoy a stay in an unusual place. Once trust has been generated, the customers are then likely to become recurrent.

The business plan did not address the safety precautions that Obscuro will take on behalf of its consumers. The destinations offered are alternative, like Palestine and Jordan, surrounded by prejudice and assumptions because of their rough past. The question is how Obscuro will increase its customer base by neutralizing these prejudices. Even with an increased level of travelers wanting to travel to unusual destinations, the company should remove the stigma surrounding some other countries.

Performance Measures Incorporated

The primary measure of performance in the business plan is financial measures. Financial measures commonly include a measure of the return on investments, payback period, profit margins, market share, and cash flow, all indicators that Obscuro uses in its business plan. (Galakanshi and Refaeli, 2021). Understanding these financial metrics helps the financial manager know how the company’s actions affect the set goals. However, other measures of performance are important indicators of how well the business is doing.

Measuring how well the website and company app are doing indicates the popularity level of the company among consumers. For instance, an increase in the number of unique visitors to the website or an increase in app downloads indicates that the company’s marketing efforts are paying off. Further, the ranking in search engines, an increase in social media followers, and growth in the email list indicate how well the business is doing customer engagement. The performance metrics do not have to be the amount of revenue generated and include the contributing data from marketing platforms. A combination of the performance data gives the company managers the way forward while making decisions.

Conclusion

The tourism industry is one of the fastest-growing industries today, and young tourists seek more sustainable forms of travel like alternative tourism. Obscuro identified a market niche where it offers alternative destination plans for an affordable price to young people. Obscuro’s business plan outlines the strategies that managers will undertake for the company to reach its goals. The structure and layout of the business plan are well done and flows to give the reader a comprehensive explanation of how the company will make money. The company’s marketing strategy covered three methods the company will use but failed to disclose the complete information on monitoring and creating content. Finally, this report analyzed the start-up operations presented in the business plan and addressed how Obscuro planned on handling them.

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