Marketing analysts noted at the turn of the century as consumers favoured the planning o publications such as the 'Lonely Planet' series of travel books. Lastminute.com and bookings.com have mergence of provided consumers with the flexibility of booking accommodation but being able to cancel at the last minute. This flexibility was lacking with New Frontiers Travel who have in place a strategy of block booking hotel rooms in sun destinations and making payments for these up to 6months in advance. Cash flow concerns alongside a fall in market share in the travel industry has led to many observers dubbing New Frontiers Travel as being 'dinosaurs in a habitat no longer suitable for them'. Henry James was appointed Chief Executive in March 2011 and sought to make immediate changes to the product portfolio of New Frontiers Travel. Package holidays were all changed to "all inclusive' holidays whereby convenience and abundance was the USP. However, these packages were not to be the focal point of the firm's new strategy. Henry James launched 'Experience Holidays' which centred around the Seven Wonders of the World and holidays to destinations within the emerging markets (i.e. Brazil, Russia, India, China, and South Korea). The greatest change however was the introduction of the 'pick n' mix' service whereby customers built their entire holiday around their preferences without assistance or support from a sales expert. This meant the movement of the firm from face to face sales to broadly E-Commerce sales with the business rebranding as 'NewFrontiers.com'. Mr. James said the core turnaround focus was then very simple - "managing our cash better and reducing costs". In November 2011, he unveiled his strategy. The company intends to save $350m by 2015, largely through cutting the number of its physical stores and focusing instead on internet sales. At the same time, non-core parts of the business will be sold. More than 2,500 jobs are going and 199 shops out of 1,069 in the UK are shutting. Henry James believes that the changes made to the product portfolio are simply extension strategies with the all-inclusive package holidays an example of this. He believes that the core principles of the business (variety & value) still remain, however, in a portfolio where there are many 'problem children' and 'dog" products, some experts argue that it is the new products and destinations that will help New Frontiers become the market leader in travel again. 

1. Analyse the reasons why New Frontiers Travel need to make changes to their product portfolio? 

 2. To what extent are extension strategies the most effective way for New Frontiers to boost falling profits?

Answer rating: 100% (QA)

Reasons for Changes in Product Portfolio a Market Dynamics The turn of the century witnessed a shift in consumer preferences towards more flexible and customizable travel options as seen with the popu... View the full answer