Of the five competitive forces discussed in this case, which do you think TUI’s system affects?
The bargaining power of customers in the market is the prominent force that affects the system of TUI. The management of the company intends to consider the customer habits and preferences in the market, as it can help to make pricing decisions accordingly. Setting the pricing according to the customer expectations and buying power is a competitive action, which can lead towards the sustainable competitive advantage. For facilities, room services, and other demands, there is a need to set a pertinent price to make customer responsive and assertive in the competitive market. As far as the TUI’s system is concerned, the integration among all key stakeholders or departments is essential. When knowing the bargaining power of the customer regarding price, the system of the company combines the knowledge and help the management make decisions, which suit the customers in the tourism industry. To meet with the buying power of customers, TUI’s system provides pertinent information to different price specialists. Thus, the effect on the system is positive, as the company seems aggressive to play with prices to justify the customer power. In the competitive market, the TUI’s system must be triggered by the pricing decision, as it looks customer oriented and advantageous.
Has TUI’s new information system made pricing fairer for its customers? Why or why not?
TUI’s new information system demonstrates fair price for its customers, and it is possible due to different factors. For Instance, the system is helping to conduct effective marketing intelligence, which facilitates to gather customer data and competitive actions. Based on the customer data such as buying behavior, income level, buying power, attitudes, preferences, and intentions of customers, the management sets the prices, which contain high chances of acceptance. Through relevant marketing information, the management depicts fair pricing of different services. TUI’s new information system intends to forecast the demand of customers regarding the specific accommodations. Accordingly, despite having immense demand, the company sets the price, which portrays low margins for the company. Of course, if the company sets the high prices, depending on data derived from the system, the customers can be converted. For Instance, the system also combines the data regarding business level. Despite having the highest quality and differentiated services, the management has to keep the pricing standards. Thus, the information system of the company combines both, market and customer data; it enables the fair prices for customers. It also makes the role of new information system visible, as, through fair pricing, the company can attract customers.
Consider a bookstore that gives customers a card to be punched for each book they buy. With ten punches, they get a free paperback of their choice. This low-tech system leverages the force of customer power: By promising customers future benefits, it reduces their motivation to switch suppliers even if another store sells books for less. How could a bookstore use technology make this loyalty program more effective in retaining customers?
First, there is a need to adopt the modern technology to keep everything in the loop. Tracking the customers to obtain the buying behavior, power and intention through the system are effective for the bookstore management to make future decisions. To justify the purpose, there is a need to adapt the customer relationship management software to keep the records of the customer, and base on the data after the certain time, give rewards. It seems an automatic process, which keeps the customers satisfied and loyal. The bookstore can make the technology pertinent not only to the process, but also for the customers as well. Obviously, the management has to set the goals to make this loyalty program more effective. To retain customers, appropriate training should be given to employees to use the software and interpret the data. Moreover, effective retention needs the positive and attractive customer engagement or interactions a, and it can also be taught in the training process of this particular bookstore. Interestingly, even if the competitor is selling at low prices, this technology enables remarkable retention of customers for a long run. However, the change is necessary to the passage of time to amalgamate with new customer trends.
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