Thomas Cook Project

SUMMER PROJECT REPORT

ON

STUDY AND RECOMMENDATIONS FOR EFFECTIVE DISTRIBUTION MODEL FOR FOREIGN EXCHANGE BUSINESS AT THOMAS COOK BRANCHES

For

Under the Guidance of

Mr.Vinoth Kumar,

Chennai Area Manager,

Thomas Cook Foreign Exchange Services

Submitted in partial fulfillment of the requirement for the award of Degree of

Master of Business Administration

By

Student’s Name :NIVAS R

Roll No: 29034

BHARATHIDASAN INSTITUTE OF MANAGEMENT

(School of Excellence of Bharathidasan University),TIRUCHIRAPPALLI 620 014

SUMMER INTERNSHIP PROJECT-THOMAS COOK FOREIGN EXCHANGE SERVICES

Study and recommendations for effective distribution channel for foreign exchange services at Thomas cook branches

ACKNOWLEDGEMENT

I sincerely thank Asian Paints for providing me with an opportunity to pursue my internship

at their organization. I extend my thanks to my mentor Mr.Vinoth Kumar , Area Manager ,

Chennaifor providing me the necessary guidance and road map for successful completion of

the project.

I am thankful to Mr. Haridas Menon, Branch Manager Spencer’s for facilitating all

convenience throughout my project.

Most importantly I would like to thank Mrs. Aishvariya , Ms Niveditha and Mr. Uma

Mageshvaran for their valuable inputs and support

I am grateful to the Director and all the Faculty members of BIM, Trichy, for supporting

me and providing valuable guidance in all my endeavors.

Nivas.R



CONTENTS

1 Company overview 4

1.1Foreign Exchange Services 4

2 Scope of the project 4

3 Study on the existing distribution model of Thomas Cook Foreign Exchange Services 5

3.1Market research 6

4 Feasibility study on the Online Forex Store 8

4.1Market research 8

4.2 Threats 10

5 Increasing Consumer Walk-ins at Spencer’s Plaza Branch 10

5.1 Market Research on the Shopkeepers of Spencer’s Plaza 11

5.2Promotional activities done in regions around Spencer’s 12

5.3 Recommendations for the future 13

6 Recommendations for an Effective Distribution model 14

7 Appendices 17



1.Company overview

Thomas Cook is one of the largest integrated travel and travel related financial services company in the country offering a broad spectrum of services that include Foreign Exchange, Corporate Travel, MICE, Leisure Travel, Insurance, Visa & Passport services and E-Business. The Company set up its first office in India in 1881, and has been providing world-class travel service for 132 years.

TCIL’s footprint currently extends to over 251 locations (including 28 airport counters) in 101 cities across India, Mauritius & Sri Lanka and is supported by a strong partner network of 131 Gold Circle Partners and 162 Preferred Sales Agents in over 100 cities pan India.

Thomas Cook (India) Limited is promoted by Fairfax Financial Holdings Limited through its wholly-owned subsidiary, Fairbridge Capital. Fairbridge is responsible for the execution of acquisition and investment opportunities in the Indian subcontinent on behalf of the Fairfax family of companies.

1.1Foreign Exchange Services

All over the world Thomas Cook is well represented by its travel business, but in the case of India it is the other way around. The forex division brings in more revenue than the travel business close to 60%. Thomas Cook was one of the first companies to secure the AD-2 licence from the RBI. It was one of the first company to foray into such a segment and had a huge market share and was almost a monopoly, but the situations have changed with competitors making a tough competition to Thomascook. By AD-2 license category it could provide foreign exchange services only to certain restrictions and they cannot deal with forex requirements related to business which the banks alone could do. The Products that the Company deal with is as follows

1. Currency2. Multi-currency cards3. Traveller’s Cheque4. Remittances5. Demand Drafts6. Money transfers (Moneygram and Express money)

Bulk of the transactions happen through currencies , but from the firm’s perspective they prefer to sell through cashless means as it prevents importing currencies and gets backend revenue from the third-parties .

2. Scope of the project

The project mainly deals with the below mentioned objectives

Study on the existing distribution model of Thomas Cook Foreign Exchange Services Feasibility of the Online Forex Store of Thomas Cook Foreign Exchange Services Increasing Consumer Walk-ins at Spencer’s Plaza Branch Recommendations for Effective Distribution model of Thomas Cook

SUMMER INTERNSHIP PR


3. Study on the existing distribution model of Thomas Cook Foreign Exchange Services

Pictorial Representation Of Thomas Cook Distribution network

In addition to this , the branches areinquiries and to them and transactions

The relations with the NSA’s will vary as they share their profits on the transactions made and sharing basis is left to the satisfaction of these travel agents .

There is also franchise model at Thomas Cook where the franchisee is termed as Partners (GCP’s)TCIL is supported by a strong partner network of 131 Gold Circle Partnersthe country. In Chennai region GCP’s are located in OMR and T.Nagarthe future of TCIL as it gaining popularity in the metros and profits could be reaped without any costs.

In order to make a study on the preference of these conducted with the educational consultants in the city. It was more like interview sessions with these consultants to identify what Forex requirements are there for them and their students

. In order to understand the market better, a visit was made to the Education fair at HYATT regency conducted by EDWISE. Bigger consultants like LYCup and requires the support of the head office to strike a deal with these consult

While these consultants are also well segmented ,at egmore and Educhannel at Annanagar deal with UK universities and Mancomp at egmore deal with Australian universities .Most of the consultants preferrequirements happens only for those students who pay with their savings or Father’s money , hence it is a niche segment with huge volumes though which the company could never neglect.


Study and recommendations for effective distribution channel for foreign exchange services at

Study on the existing distribution model of Thomas Cook Foreign Exchange Services

Pictorial Representation Of Thomas Cook Distribution network

es are also well networked with JUST DIAL which directs customer inquiries and to them and transactions are also through in-house LT(Leisure travel) Conversions

The relations with the NSA’s will vary as they share their profits on the transactions made and ing basis is left to the satisfaction of these travel agents .

There is also franchise model at Thomas Cook where the franchisee is termed as Gold circle is supported by a strong partner network of 131 Gold Circle Partners

the country. In Chennai region GCP’s are located in OMR and T.Nagar. Franchise model seems to be the future of TCIL as it gaining popularity in the metros and profits could be reaped without any

In order to make a study on the preference of these channel partners, an exploratory research was conducted with the educational consultants in the city. It was more like interview sessions with these consultants to identify what Forex requirements are there for them and their students

and the market better, a visit was made to the Education fair at HYATT regency conducted by EDWISE. Bigger consultants like LYCEUM, PRINCETEN , EDWISE requires PAN INDIA tie

the support of the head office to strike a deal with these consultants.

are also well segmented ,some of the consultants like Halycon consultancy t Annanagar deal with UK universities and Mancomp at egmore deal

with Australian universities .Most of the consultants prefer bank loans for their students and Forex requirements happens only for those students who pay with their savings or Father’s money , hence it is a niche segment with huge volumes though which the company could never neglect.

EXCHANGE SERVICES


Study on the existing distribution model of Thomas Cook Foreign Exchange Services

also well networked with JUST DIAL which directs customer (Leisure travel) Conversions.

The relations with the NSA’s will vary as they share their profits on the transactions made and

Gold circle is supported by a strong partner network of 131 Gold Circle Partners all over

. Franchise model seems to be the future of TCIL as it gaining popularity in the metros and profits could be reaped without any

tners, an exploratory research was conducted with the educational consultants in the city. It was more like interview sessions with these consultants to identify what Forex requirements are there for them and their students

and the market better, a visit was made to the Education fair at HYATT regency EUM, PRINCETEN , EDWISE requires PAN INDIA tie-

Halycon consultancy t Annanagar deal with UK universities and Mancomp at egmore deal

bank loans for their students and Forex requirements happens only for those students who pay with their savings or Father’s money , hence it is a niche segment with huge volumes though which the company could never neglect.



3.1.Market research

A market research was conducted to identify why people choose a particular forex store and to check the awareness level of the brand Thomas Cook.The survey was conducted among the internet users and mall visitors.

Sample Size -81

Sampling technique – Convenient sampling

The results obtained were as follows with regards to Brand Awareness.

On rating Thomas cook in its service effectiveness the results were as follows

An analysis with respect to why a people choose a particular forex store. The following factors were considered and respondents were asked to rate on a likert scale (5 point scale)

Availability of stores nearby Cost Effectiveness Service and Store atmosphere Trust and security

On making co-relation among these factors the output from SPSS is as follows.



This indicates that there is a strong correlation between Cost and Trust & security with value of 0.637 and significance level is at 0.01 level and also there is a co-relation of 0.57 between Availability and Trust and security. This indicates that as the cost reduces , the Trust and security increases in the services of a particular Forex store and the making the store Omnipresent will also increase the trust and security.

Partial Correlations

By keeping Trust and security as a control variable , the co-relation among the other factors become weak. This indicates that Trust and security seems to be an important factor why a customer goes to a particular forex store.

Hence ensuring the Trust and security will make a customer go to a particular store and the trust & security will be enhanced by reducing cost and increasing the Store availability.

On the feedback of how they came to know about Thomas Cook , the following results were obtained,



4. Feasibility study on the Online Forex Store

Thomas Cook (India) Ltd, one of India’s largest integrated travel and travel related financial services companies, has launched its Online Forex Store offering its comprehensive range of foreignexchange products and services via its portal thomascook.in, making it the first company in India to offer all customers the convenience and security of transacting foreign exchange services online.

USP’s:

Dynamic and real-time display of foreign exchange rates for 26 global currencies available online

Range of products: Multi-currency forex prepaid cards (Borderless Prepaid), currency notes, travellers

cheques No additional credit card convenience charge Free doorstep delivery or collection at over 213 locations, pan India Request for Money Transfers and University fee remittance

Mr. Mahesh Iyer, Head – Foreign Exchange, Thomas Cook (India) Ltd said, “Thomas Cook India’s internal research had revealed that for today’s traveler who is always on the go, easy access, speed and convenience for his foreign exchange transactions was a critical requirement, as also for the youth who are always looking online for their needs. Hence, we launched our Online Forex Store, to empower customers with the ease and convenience of booking at home without compromising on the famed Thomas Cook India experience & offline compliance. While banks offer online services for their customers only, we have reiterated our consumer-centric approach by offering forex to everyone – existing as well as potential customers.”

4.1Market research

In order to find how the awareness level is and to find whether such a service will make customers buy currencies ,a survey was conducted among the internet users and online shoppers



Sample Size -81

Sampling technique – Convenient sampling

The results obtained were as follows with regards to Awareness.

As expected for a new service, the awareness level is low, when asked a customer if he is willing to go online , the following results were obtained

This indicates that people are still reluctant to move online and more people prefer going to the store to get currencies. It is understandable that for a new product there will be resistance among the customers. TCIL could target the Innovators and Early adopters who are generally the onlineshoppers like EBAY, Jabong , etc and it is a right move to start in the online medium and to shift into Click and mortar business but aggressive advertisements to create popularity for the service .

An analysis with respect to why a people prefer the online medium. The following factors were considered and respondents were asked to rate on a likert scale (5 point scale)

Affinity to travel to store Better security Ease of use

On making co-relation among these factors the output from SPSS is as follows.



The Table indicates that all factors are interdependent and cannot be isolated and these are the reasons why a customer goes to an online store.

But there are certain issues that have to be addressed before going into the online medium.

4.2 Threats

Delay in delivery (5 days).

Loss due to exchange fluctuations between transaction time and delivery.

Channel Conflict –between Retailers & online platform

(Transactions charges differ).

Confusion may lead to lack of trust in the brand.

5. Increasing Consumer Walk-ins at Spencer’s Plaza Branch

Spencer’s Plaza is the sole branch operating in the Mall in the entire city. The mall concept was envisaged to tap the shopping customers, especially the NRI’s and foreigners who look for encashment. The branch is operating for a reasonably long time and it used to be cashbox in the city as Spencer’s was the only mall around 7-8 years ago, but the time has changed now , with Malls in the city have sprung up at various locations and Mall market has become too cluttered with footfalls drastically reducing in Spencer’s and brands have also started moving out.

Thomas Cook’s branch at Spencer’s was also not spared due to the spurt in the Malls in the city , with its walk-ins coming down drastically in comparison to the previous years. There has been huge debate among the management whether to shift the branch or not. To add fuel to the woes of the Staff , Leisure travel (LT) has been shifted and the branch is left alone with its FOREX business.

In order to increase the Customer walk-ins , a number of promotional activities and market research on the store shopkeepers and banks surrounding the branch was done.



5.1 Market Research on the Shopkeepers of Spencer’s Plaza

An exploratory research was done on the shopkeepers of Spencer’s . A convenience sampling technique was used

Sample Size: 103

Questions were generally open-ended to identify the core needs in terms of forex for these Shopkeepers and their customers.

The following results were obtained ,

The stores that do Forex transactions are mainly the , whereas the branded stores and famous retail outlets generally don’t deal with forex as they accept international debit cards. This is huge target market for Forex business which you cannot find in the other urbane malls.

No55%

Stores doing Forex Transactions in



Market Research on the Shopkeepers of Spencer’s Plaza

An exploratory research was done on the shopkeepers of Spencer’s . A convenience sampling

ended to identify the core needs in terms of forex for these

ollowing results were obtained ,

The stores that do Forex transactions are mainly the handicrafts , Jewellery and Indigenous shops, whereas the branded stores and famous retail outlets generally don’t deal with forex as they accept international debit cards. This is huge target market for Forex business which you cannot find in the

Yes40%

Rarely5%

Stores doing Forex Transactions in Mall

EXCHANGE SERVICES


An exploratory research was done on the shopkeepers of Spencer’s . A convenience sampling

ended to identify the core needs in terms of forex for these

and Indigenous shops, whereas the branded stores and famous retail outlets generally don’t deal with forex as they accept international debit cards. This is huge target market for Forex business which you cannot find in the



Among the shopkeepers that deal with Forex business, 54% deal with other money changers inside the mall and only 18 % deal with TCIL which is indeed a hard fact to digest. TCIL could try to convert such shop owners .

The general perception among the shopkeepers iother moneychangers in the mall and they also commented on the reducing footfalls in the mall that has reduced the transactions within the mall.

Firms like SM and Petronax have very well networked with thedifficult to tap this market as Thomas Cook has to abide by the Legal provisions of the RBI ,since the shopkeepers look for flexibility in their transaction and find the policies of TCIL to be stringent in comparison to the other Forex agencies.

But at least 38% of the shopkeepers showed interest in referring the customers to TCILand the result of such an activity could be found the very next daythe feedback form that he was referred by the shop in the mall.

5.2Promotional activities done in regions around Spencer’s

As a part of increasing brand awareness of were visited and pamphlet distribution was done across HNI flats and Villas in areas like Venugopal avenue , Subha rao avenue and Harrington avenues . These areas were concentrated on the purview that people living in these areas belong to the elite class

The following flats were approached to distribute pamphlets to individual apartments and permission to put up posters was also sought.

Vijayshanti – strawberry Sarvakalyan apartments Kenwith Garden Dr.Thoma Bhavan Harrington apartment

Outside the Mall28%

TCIL18%

Agents Dealt by the shopkeepers



e shopkeepers that deal with Forex business, 54% deal with other money changers inside the mall and only 18 % deal with TCIL which is indeed a hard fact to digest. TCIL could try to convert

The general perception among the shopkeepers is that TCIL rates are much expensive than that of changers in the mall and they also commented on the reducing footfalls in the mall that

has reduced the transactions within the mall.

Firms like SM and Petronax have very well networked with these shopkeepers . TCIL also finds it difficult to tap this market as Thomas Cook has to abide by the Legal provisions of the RBI ,since the shopkeepers look for flexibility in their transaction and find the policies of TCIL to be stringent in

the other Forex agencies.

least 38% of the shopkeepers showed interest in referring the customers to TCILactivity could be found the very next day with a customer mentioning in

the feedback form that he was referred by the shop in the mall.

Promotional activities done in regions around Spencer’s

ncreasing brand awareness of Thomas cook Spencer’s branch, the following areas visited and pamphlet distribution was done across HNI flats and Villas in areas like Venugopal

avenue , Subha rao avenue and Harrington avenues . These areas were concentrated on the purview that people living in these areas belong to the elite class

The following flats were approached to distribute pamphlets to individual apartments and permission to put up posters was also sought.

Inside the mall (Petronas, BPM,

Newway,etc54%

TCIL18%

Agents Dealt by the shopkeepers

EXCHANGE SERVICES


e shopkeepers that deal with Forex business, 54% deal with other money changers inside the mall and only 18 % deal with TCIL which is indeed a hard fact to digest. TCIL could try to convert

s that TCIL rates are much expensive than that of changers in the mall and they also commented on the reducing footfalls in the mall that

se shopkeepers . TCIL also finds it difficult to tap this market as Thomas Cook has to abide by the Legal provisions of the RBI ,since the shopkeepers look for flexibility in their transaction and find the policies of TCIL to be stringent in

least 38% of the shopkeepers showed interest in referring the customers to TCIL in futurewith a customer mentioning in

branch, the following areas visited and pamphlet distribution was done across HNI flats and Villas in areas like Venugopal

avenue , Subha rao avenue and Harrington avenues . These areas were concentrated on the purview

The following flats were approached to distribute pamphlets to individual apartments and



Mist apartment Rosemere apartments

These apartments were chosen on the context that the residents of the flats could be our target segment.

Pamphlets were also distributed to the individual homes / Villas across these streets mentioned above.

Creating branding space within the famous retail outlets was also approached and the following Retail outlets were willing to promote Thomas Cook Brand in their stores, (despite many of the other stores turned down the offer).

Ibaco icecream parlour - New No 2 Old No 73, Casa Major Road, Egmore, Chennai – 600008. Kovai Pazhammudhir nilayam No 74, Near Prasanth Hospital, Harrington Road, Chetpet,

Chennai – 600031Manager Ganesan -9789977869

These retail outlets are at prime locations and the shoppers spend considerable time in these stores, thereby placing up Thomas Cook posters over there will create greater visibility to the brand.

Advertisements were also posted in the free listing websites like Quikr and OLX which is the next generation revolution of marketing that gives a better reach to the target consumers at free of cost.

Tele-calling and e-mails were sent to the existing customers in order to maintain relationships with the customers who usually make bulk of the transactions in the branch. The responses varied with some of them were linked via LT and some were student related transactions and the customers were generally happy with the services done by TCIL and this makes them to come back to TCIL

A set of 29 banks were approached for referrals relating to forex requirements coming to their banks and requesting to divert all transactions which the banks are unable to perform. Most of the banks in these localities don’t have a separate forex department and hence approaching the banks could provide useful business to the branch. The localities include Anna salai, Whites Road, Natesan Road and Triplicane Road. Appointments were fixed with the branch managers and they were briefed about the products of Thomas Cook and a request for referral was put forward to them.

5.3 Recommendations for the future

The perception among the people has to be changed that TCIL is expensive, During the tenure of 2 months the branch has been giving rates at par with competitors for large volumes , but rates are higher for smaller volumes . As research indicated that there is a strong Co-relation between Trust & security and Cost effectiveness. This indicates that to bring in fresh walk-ins, gaining revenues has to be sacrificed for the sake of increasing market share in the mall.

In order to gain in trust of the customer, the Rate board display has to be done which would give a sense of security to these customers.

Tracking the existing customer has to be done, which is been done currently in the branch but more emphasis could be done to ensure repeat business.



For encashment , brand awareness has to be ensured at all touch points of the foreigners . The foreigners usually go for encashment on the advice of the influencers who are generally the cab drivers , Hotels they stay and shops in the mall. Creating brand awareness through them could increase footfalls of foreigners. While interviewing a group of foreigners , some of them mentioned that they could recollect the name Thomas cook through mall Posters in the country elsewhere. Except in the store space no posters , Wall hangings could be found in the mall (Spencer’s). By placing the posters near the entrance or on the central atrium, better visibility of the brand could be ensured.

Shifting the branch to other malls cannot ensure transactions and revenues to go high , as the malls in the city have become cluttered and similar to the Mumbai city the footfalls are expected to become moderate in all malls and as per times real estate special report says that though many malls have sprung up, still the foreigners visit the spencer’s as they feel that the Mall is economical and they are here to buy the indigenous products and not the branded ones which they could find in their country itself. The Spencer’s branch is still a Cash cow and the management could look to milk the cow for a couple of years and then try to make amendments.

6. Recommendations for an Effective Distribution model

Designing a marketing channel system involves analyzing customer needs, establishing channel objectives, identifying major channel alternatives, and evaluating major channel alternatives. it could be better analysed by using the Value Adds versus Costs of different channels.

As it could be seen, the cost per transaction is less in the case of Online Forex store and through Just dial customers but the revenues decrease as we move into retail segment and is costlier when



channel partners are added. Hence TCIL should look for cost effective ways in increasing the channel network, since the Forex business is a low-margin business where adding value to the product is extremely difficult. The strategy so far has been Selective distribution which relies on more than a few but less than all of the intermediaries willing to carry a particular product, but in order to sustain such a heavy competition the strategy has to shift to intensive distribution where the firm places the services in as many outlets as possible.

The firm could look to open outlets to spread its network all over the city , the firm could look for cheaper alternatives like opening counters in fuel stations or look for Kiosk type counters in big retail outlets or malls.

While in the case of GCP’s the firm will have the following advantages and disadvantages

Advantages

Financial: Franchising creates another source of income for the franchisor, through payment of franchise fees, royalty & levies in addition to the possibility of sourcing private label products to franchisees. This capital injection provides an improved cash flow, a higher return on investment and higher profits. Other financial benefits that the franchisor enjoys are reduced operating, distribution and advertising costs. Of course that also means more allocated funds for research and development. Additionally, there will always be economies of scale with regard to purchasing power.

Operational: The franchisor can have a smaller central organization when compared to developing and owning locations themselves. Franchising also means uniformity of procedures, which reflects on consistency, enhanced productivity levels and better quality. Effective quality control is another advantage of the franchise system. The franchisee is usually self motivated since he has invested much time and money in the business, which means working hard to bring in better organizational and monetary results. This also reflects on more satisfied customers and improved sales effectiveness.

Strategic: To the franchisor, franchising means the spreading of risks by multiplying the number of locations through other people’s investment. That means faster network expansion and a better opportunity to focus on changing market needs, which in its turn means reduced effect from competitors.

Administrative: With a smaller central organization, the business maintains a more cost effective labour force, reduction of key staff turnover and more effective recruitment.

Disadvantages

The requirement to pay the franchise fees and royalty to the franchisor, which in some cases can be exaggerated.

The transfer of all goodwill built in the local market to the franchisor upon expiration or termination of the franchise contract.

The necessity of abiding by the franchisor’s operating systems, standards, policies and procedures.

Reduced corporate profit margin due to payment of royalties and levies.



Considering the present scenario TCIL could look for more GCP’s as it reduces running cost and since Thomas cook is an established brand hence getting franchisees will also not be a difficult task.

In order to maintain relationships with the channel partners ,the following steps could be implemented

NSA’s and Educational consultant could be given targets and their commissions will be based on the numbers shown rather than by negotiations as it would streamline and integrate the channel partners.

Events for these channel partners can be held like a dinner or High tea once in a year or before the start of the business season apart from these commissions as it would create long time relationships with these channel partners.

Rewards and recognitions can be given for those channel partners who perform exceptionally well.

At the retail level, existing customer list should be tracked and a membership program can be started by giving membership cards and points re-imbursement could be done on repeat purchases just like how the banking sector started in the Credit card and now such a facility could be seen in even a Saloon like Naturals or Green Trends.

Seasonal discounts or offers could be given to select currencies at off-season times . Generally the trend in the BTQ customers will be get currencies for INR worth 30,000 to 35,000 but if lured they can buy still around 50,000. These customers have the willingness to buy and have considerable buying power. A small gift can also be given to them for buying for 50,000 , thereby creating a customer delight and could make them to come back to the same store

A facebook page could be created for every branch and customers may be instructed to like the page and any updates on Price, Offers, etc could be given. For example, consider the current situation where the dollar prices are on a historical rise , dollar purchasing customers could be updated with a sudden price decrease or similar kind of service. Such services would make TCIL differentiated from its competitors.

Selling BPC in other FFMC’s and banks could be an option which would create a new platform for growth.

Moneygram sub-agents could be scouted by converting big retailers and jewellers at prime locations as Moneygram provides commissions to TCIL and creates greater visibility for the brand .

Newer market segments like NRI services and NRI guest houses could be targeted. A database was created during the tenure of the project and even mails were sent , though there wasn’t much response, the sales team could work in converting them into channel partners.

Thomas Cook Project

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