Throughout her career in travel to date, Firebird Director Safia Bhutta has instigated and overseen the launch of many new products for tour operators. She passes on some of the lessons she’s learned on how and why to diversify.
Within the travel sector, creating a new product is always the sexy thing everyone wants to do. Launching new destinations, courting new audiences, revamping brochures and websites… It’s exciting. But is it always the best next step for a business that wants new growth? And what can be done to minimise risk when that next step is being taken?
“The riskiest corner of strategy holds the highest potential return”
Whatever you’re planning in terms of changing (or supplementing) your product range, the Ansoff Matrix is a helpful starting point. This is a tool that can be used to analyse, identify and plan what exactly you’re aiming for. Comprising a simple four-square grid – see below – one axis relates to products while the other relates to markets; with existing versus new in both sides. Together they represent all sorts of different combinations with varied levels of risk.
The furthest corner of the matrix holds the highest potential return: creating a new product for a new market. This is also the riskiest corner, as it means creating something new that people haven’t seen before for a market you don’t yet sell to; think Tesla for an example outside travel.
Striking out with a brand new product in a brand new market is enormously expensive. To succeed you need a lot of money, an exceptionally good idea – and also a lot of luck. Yet sometimes companies do get lucky: Firebird client Artisan, for instance, almost stumbled into selling a Northern Lights product. It was something they’d not previously offered, targeted at a brand new customer base. The team struck gold: it was a massive hit, and they unlocked high rewards.
“The lowest risk corner of product development is essentially a marketing strategy”
At the opposite corner of Ansoff’s Matrix is launching an existing product to a market you’re already in. Essentially, this is a marketing strategy: trying to get more people to know about something you already sell. You’re unlikely to get an enormous return here unless it’s a brilliant product you’ve only been telling, say, six people about!
Most product developers in travel are focusing on the other two quadrants of the matrix. Either they have an existing product and want to find a new market for it (e.g. tours that may attract interest from other countries where the business is not yet selling), or they have a new product to launch to a market in which they already have reach.
“Gather as much information as you can before a launch”
The process of selling a product that’s already proven to be popular is not as simple as some might think when it comes to approaching a new market/audience. There won’t be an enormous amount of product development needed, sure. It’s also fairly simple to adapt websites and flights to accommodate different types of customers – e.g. those from other countries. But businesses should still undertake a lot of market research before heading down this route.
That can involve:
Embarking on qualitative and quantitative research via focus groups, surveys, etc, to assess demand and how much your new clients are likely to pay for the product.
Undertaking a comprehensive review of what’s already available in that market.
Mystery shopping your competitors.
Planning a soft launch first.
Plus all the normal marketing preparation you would do for your existing audience, in terms of both online and offline campaigns.
You primarily need to check that the market you’re aiming for is not already saturated. It might be a new market for you, but is it a new product for that market? On the flip side, if you are the first to offer the product to this market, how can you be sure there’s any demand for it – and/or how will you create that demand?
Ideally teams will gather as much information as they can before a launch, though sometimes a “suck it and see” strategy is the only way to move forward. It’s impossible to know everything before you get going, after all. And there is also the risk with unknown markets that no amount of planning will make it any easier to succeed there.
The McCabe Story: “Sometimes diversifying a range can save the company”
Let’s also look at the other common route many travel businesses take: launching a new product to an existing market. (Note: by this I don’t mean only launching something new to existing customers, but to an overall market you’re already in.)
For this I’ll use a case study from McCabe Pilgrimages, a Firebird client since 2020. Founded in the early eighties, McCabe’s positioning is as “the UK’s foremost specialist in pilgrimages and faith-based tours”. The company sells to Christian pilgrims who are relatively affluent people of faith, or who want to explore their faith further.
After years of trading it became apparent that many customers buying McCabe’s flagship product – i.e. tours to the Holy Land, encompassing Israel and Palestine – were keen to use the company again for other trips. But the business offered very few alternatives, which meant that nascent demand wasn’t being met. Customers were being under-served.
Recognising the clear potential for growth, in 2022 we began to research the possibilities of expansion, with the aim of launching a new range of direct tours. This research process included a customer survey conducted via an external company, to determine what was most important for existing customers. Was it the tour leader, the destination, the quality of accommodation, something else, or a combination? We also looked at what had been popular on existing tours in the past.
Turning to the loyal subscribers of McCabe’s mailing list, we sent out a tour vote email with a list of possible destinations, so customers could tell us where they would most like to go. The results were illuminating, though we analysed them with some wariness. It’s important to be mindful that just because 50 people say they want to go somewhere, it doesn’t mean they will actually pay to book!
Building from what we’d learned to that point, we then began to offer a few new products, carefully following the uptake – and noticing the occasional surprise. For example, Poland hadn’t been a big hit in our survey, but with a popular tour leader running that product, the destination sold out fast.
In fairly quick time we found success by getting to grips with what the current McCabe customer base really wanted, understanding the needs that weren’t being met, then working to meet them.
And while there was initially some worry that these new tours would temper the success of McCabe’s flagship Holy Land product, this proved not to be the case. Instead people were turning to the new range for their second departure. And with Israel and Palestine deeply ensnared in conflict since October 2023, it wouldn’t be an exaggeration to say that diversifying the range has almost certainly saved the company.
“Creativity goes a long way”
What these experiences with McCabe also underline is that there are no guarantees something will work. You can be data-driven, but there’s no exact science behind success. None of us can know something will work before it does. To diversify successfully, a team must be prepared to take risks and feel OK with themselves if those risks don’t pay off.
Creativity goes a long way in that process. One of our product developers at McCabe was very into music, so suggested we follow that pathway, adapting music tours to include faith-based elements. Those were hugely popular, but we would not have known it without taking a leap.
At some point, you either try to diversify or you don’t. And each failure can help to nudge a business on to a more successful, more profitable path.
Safia Bhutta is a Director of the Firebird Partnership, specialising in marketing, sales and commercial strategy – from pricing to product planning, margin analysis and yield management. Since joining Firebird, she has also become involved in M&A: working with companies to formulate and present their story, and preparing them to pitch to potential buyers and/or investors.
Learn all about Firebird and get in touch at www.firebirdpartnership.com
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