The Marketing of its Initial Public Offering - PowerPoint PPT Presentation

paul2
slide1 l.
Skip this Video
Loading SlideShow in 5 Seconds..
The Marketing of its Initial Public Offering PowerPoint Presentation
Download Presentation
The Marketing of its Initial Public Offering

play fullscreen
1 / 34
Download Presentation
The Marketing of its Initial Public Offering
675 Views
Download Presentation

The Marketing of its Initial Public Offering

- - - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

  1. Orbitz.com The Marketing of its Initial Public Offering Mona Habib Justin Gold Aleksandar Tomic Subra Achanta Hiroyuki Araki Regan Richardson Will Moss

  2. On May 20, 2002, the Company filed a registration statement with the Securities and Exchange Commission for an initial public offering. Is the market ready to revisit the woolly world of the Internet IPOs?

  3. The Alliance Orbitz Founded by : American Airlines Continental Airlines Delta Airlines Northwest Airlines United Airlines

  4. Orbitz History • Orbitz website officially launched on June 4, 2001 • Giving customers access to 450 airlines, over 39,000 hotels, and 25 car rental companies • Gross bookings of more than $1 million on its first day and more than $3.3 million by its third day • Within 90 days, Orbitz was the 3rd largest travel website • Over 8 million current registered users (2001)

  5. Orbitz Mission & Goals • Initial Mission Statement: “Develop a travel web site that would serve people better.” • Orbitz’ ultimate goal is “to help better serve the interest of the traveling public.”

  6. Orbitz Objectives • Expand customer base through efficient marketing • Increase the mix of non-air travel products • Retain customers through superior buying experience and customer care activities • Establish and maintain the lowest cost structure in the industry • Pursue new business opportunities

  7. Orbitz SWOT Analysis • STRENGTHS • User-friendly web site • Low rates and fares for the general public • Customer-oriented • WEAKNESSES • Web site may not attract customers’ attention (bland) • Slow response to corporate inquiries

  8. Orbitz SWOT Analysis • OPPORTUNITIES • Expand the target market • Expand resources • Attract other partners • Improve upon website recognition – promote on t.v. and radio • THREATS • Competitors may offer better incentives to the consumers • Travel disruptions • Government regulation • Market volatility

  9. Orbitz Buzz • “booking page with non-stop/multiple stops and price ranges pictured on one graph is excellent!” • “ease of use, the most friendly web site” • “this site is versatile, allows for change in itinerary (i.e., date, departure time, etc), with instant quotes.” • “speed of (Travel Alerts) is impressive… and great prices.” • “this site is simple, concise, and with prices that are actually fare.”

  10. Orbitz Marketing Strategy Overall cost leadership “To tell as many customers as possible that it has more low airfares than anyone else .” Differentiation -- meeting customers needs in a new and an unique way. Pervasive Brand Awareness Creating Comprehensive Product and Service Offering To develop a Sustainable Competitive Advantage and Increase Market Share

  11. Orbitz Marketing Strategy • Incremental Sales through ad hoc e-mails • Orbitz within a few hours created an e-mail notifying subscribers of low fares initiated by Delta, $31 one-way • Attracted tremendous volume to its website • 1/3 to 1/2 transaction bookings on Delta that day • Transactions averaged more than $70 each • Low fare attracted customers who then bought more expensive fares

  12. Orbitz Marketing Mix • The 4 Ps • Product - intangible travel services that a customer receives through online booking • Promotion - e-marketing initiatives, i.e., pop-up ads, pop-under ads; online storefront; partnerships • - print, TV, and radio; sweepstakes and giveaways • Place - services sold through Internet • - Orbitz Traveler Care Alert, via mobile phone, text pager, email, PDA, “My Orbitz” voice mail box • Price - lowest price on the planet

  13. Orbitz Target Population • Median age — 39 • Median household income — $60,000 • 51% have a college or post college degree • Average 3 leisure trips per year • Purchasers of family vacations, romantic getaways, guided tours, cruises, etc. • Over 2.5 years of online experience • Source: Nielsen Netratings - October 2001 Forrester Research

  14. $24,230 ONLINE TRAVEL AGENCY AIRLINE WEB SITES HOTEL WEB SITES CAR RENTAL WEB SITES OTHER WEB SITES $12,887 $6,974 $2,556 Online Travel Market - US Distribution Channels (US$M) 1998 1999 2000 2001 Source: PhoCusWright, Inc., Sherman, CT USA, 2001

  15. The Online Travel Buyer • 60% male • 32% 18-34 years of age • 23% have incomes over $100,000 • 33% have children • 80% use Internet daily Source: PhoCusWright, Inc., Sherman, CT USA, 2001

  16. The Online Traveler Which is the Most Important? Price Reliability Service Ease of Use Source: PhoCusWright, Inc., Sherman, CT USA, 2001

  17. The Online Traveler Who has the Best Price? Source: PhoCusWright, Inc., Sherman, CT USA, 2001

  18. Expedia Travelocity Orbitz Southwest Airlines CheapTickets.com Other Leading US Travel Services Online March Bookings 2002

  19. Top Three Online Travel Agencies

  20. The Competitive Environment • The 4 Ps • Product - Travelocity and Expedia offer traditional style of travel booking services similar to Orbitz • - also offer complementary products (cars, hotels, etc.) • Price - Priceline offers the lowest price with several major restrictions • - Other companies offer similar or somewhat higher price

  21. The Competitive Environment • Promotion - competitors offer similar promotions such as special price offers, and prize-type promotions • Place - draw customers by adding banners on several web sites as their portals • - Expedia has an advantage of having MSN, Excite and Amazon as their portal • - Travelocity has affiliated itself with LookSmart, Prodigy and Price.com • - Priceline has its portal on Ebates and 247malls, both discounts-coupon sites

  22. Comparison Pricing

  23. The Competitive Environment • Traditional Travel Agencies • Being squeezed by airlines as they cut commissions • Monopoly on travel information has been eroded • Fine-tuning efforts to target specific segments • Main Advantage : Emphasis on the personal touch • “Recommendations are what travel agents do”

  24. Online Travel Agencies Perceptual Map Multiple Orbitz Expedia Travelocity Trip.com Priceline Services Provided OAG AirGorilla Hotwire CheapTickets Southwest Airlines Few Worst Value Best Value Value for Money

  25. The History for Internet Stocks • Great hype machine, if it sounds too good to be true... • The pursuit of Internet gold • Initial Public Offering • accelerated appreciation • stock options, well “in the money” • the newest profession, “day trader” • Business Models built on advertising, not profits • As the Bubble Bursts

  26. E-Loan (NASD:EELN)

  27. The NASDAQ Had A Great Fall

  28. The Dot-Com Demise Yahoo Amazon

  29. The Current Market • Is the market ready for an Internet IPO? • Investors more skeptical having been burned by the dotcoms, Enrons and Worldcoms of our day • PayPal launched the first successful dot-com IPO in many months (IPO priced at $13.00)

  30. PayPal (NASD:PYPL)

  31. Orbitz IPO Launch • Initial Public Offering • Raise $125 Million for Operating expenses and Acquisitions • Plan to trade on NASDAQ under symbol ORBZ • Number of shares, not yet determined

  32. Orbitz Stock Demand & Opportunities • Online travel booking accounts for $24 billion out of $220 billion of the travel industry • Expected to double in 5 years to $64 billion • Demand for online travel stocks, “Hot Issues” • Expedia stock rose more than 330% since 9/11 • Orbitz’ balance sheet stronger than Expedia’s at its time of IPO • 75% of Orbitz’ entire revenue in last 3 months

  33. Revenue $43.4 mill. 75% of all revenue ever collected in 1Q02 Demand for online travel stock Twice sales, marketing and administration overhead Stronger balance sheet $39 mill. cash $59 mill. current assets $52 mill. equity Backed by 5 airlines Revenue $38.6 mill., IPO 11/99 Growth spanned 3 yrs before IPO Weaker balance sheet $ 0 cash $ 7 mill. current assets $ 0 mill. equity Comparison Orbitz Expedia

  34. Orbitz IPO Launch Strategy • Continued popularity of online travel industry • Timing relative to market conditions and activity • Comparability to other online travel companies • Growth potential • Reputation and expertise of the underwriter • - Goldman Sachs & Co., Credit Suisse First Boston (CSFB)