UNIT 5
MARKETING AND PROMOTION
5.1 Role and function of marketing and promotion
a) Identify and explain why marketing and promotion are important to travel and tourism
providers:
• increased sales/usage/profitability/market share/customer base
• competitive advantage
• positive organisational and product image
• customer satisfaction/brand loyalty/repeat business
b) Describe the main marketing and promotion techniques used in travel and tourism:
Market research
• the use of primary market research techniques (such as self-completion questionnaires,
telephone surveys, face-to-face interviews, Internet surveys, postal surveys, focus groups)
and secondary market research techniques (such as internal information, e.g. sales records
and sources of external information, e.g. government reports)
• identifying customers’ needs and wants using qualitative and quantitative research data
Market analysis tools
• full situation analysis incorporating SWOT (strengths, weaknesses, opportunities and
threats) and PEST (political, economic, social and technological influences) analyses
• the development of an effective marketing mix (product, price, place and promotion)
5.2 Market segmentation and targeting
a) Identify the different market segments targeted by travel and tourism providers:
• geographic
• demographic
• lifestyle/psychographic
b) Explain how specific travel and tourism products are developed to cater for the needs and
expectations of different market segments:
• products (package holidays, transport including transfers, accommodation and catering,
tourist attractions, tourist information services, excursions and additional activities)
• the relationship with market segments: type of customer (families, singles, groups,
business, leisure, independent travellers); different ages/gender; specific needs; special
interest; quality/ economy/value for money, etc.
5.3 ’Product’ as part of the marketing mix
a) Identify and explain the differences between travel and tourism products and services:
• products (tangible, homogeneous, separable, storable) identified and explained
• services (intangible, heterogeneous, inseparable, incapable of being stored, perishable)
identified and explained
b) Investigate the development and modification of travel and tourism products and services
through:
•
•
•
the use of the product life cycle (research and development, introduction, growth,
maturity, saturation and decline)
the creation of brand image through product features, packaging, price, promotion, target
market segments and brand loyalty
the development of a product/service mix to appeal to different market segments and the
ways in which tourism organisations develop a product portfolio.
5.4 ’Price’ as part of the marketing mix
a) Investigate a range of common pricing policies used in the travel and tourism industry:
• market penetration
• market skimming
• discount pricing
• variable pricing
• loss leader pricing
• promotional pricing/special offers
• the going rate/competitive pricing (price makers/price takers)
• prestige pricing
• price bundling
b) Identify and explain the factors that determine pricing policies:
• fixed and variable costs
• profitability
• subsidies
• competitors
• customers’ expectations/likely number of customers
• seasonality
• economic factors (exchange rates, taxes and other levies)
5.5 ‘Place’ as part of the marketing mix
a) Investigate the factors that influence the selection of a location for travel and tourism
facilities:
• costs
• availability of suitable premises/land
• character and features of area
• local and transient population
• adjacent facilities
• access/transport links
• availability of staff
b) Identify and explain the range of distribution channels for travel and tourism products
and services:
• direct selling
• wholesalers
• retailers
• Internet
• Global Distribution Systems
5.6 ‘Promotion’ as part of the marketing mix
a) Explore the main methods of promotion used in the travel and tourism industry:
• advertising
• publicity/print material (brochures, leaflets, flyers)
• point of sale displays
• public relations (sponsorship, press release)
• direct marketing
• sales promotions (special offers, use of merchandising, mascots)
• personal selling
• videos/DVDs
• Internet (websites, pop-ups, e-brochures)
• electronic media including the use of mobile technology and social networks (e.g.
Facebook, Twitter, LinkedIn)
• trade promotions (trade fairs, familiarisation trips, incentives)
b) Identify and explore the factors that are considered when producing effective promotional
materials:
• costs
• stages of the promotional campaign
• target market segments
• timing
• brand image
• AIDA (attention, interest, desire, action) in designing effective promotional materials
Introduction
► Travel and tourism providers operate within a highly competitive market and because of
the vast number of organisations competing for business within the travel and tourism
industry.
► Organisations must constantly find new ways to promote themselves and to raise
awareness of the products and services they offer in the eyes of their customers and
potential customers.
► Therefore, the processes of marketing and promotion play an important role for all
organisations within the travel and tourism industry, whether they operate within the
public sector, the private sector or the voluntary sector.
Role and function of marketing and promotion
► The definition then goes on to explain how the process of marketing achieves these
things:
It does this by building brands, nurturing innovation, developing relationships,
creating good customer service and communicating benefits. With a customer-centric
view, marketing brings positive returns on investment, satisfies shareholders and
stakeholders from business and the community, and contributes to positive
behavioural change and a sustainable business future.
► The important thing to remember is that marketing should come from the thinking point
of the customer, rather than being totally product-centred. It should no longer just be a
case of putting together package holiday and then using ‘marketing’ to generate a demand
for it. Instead, marketing should be used to influence customers’ behaviour by suggesting
ways that customers can obtain the products they desire.
► Promotion, on the other hand, has been described as any form of communication or
activity carried out specifically to call attention to the products and services of a
particular organisation. It is important to consider the roles and functions of marketing
and promotion together in achieving the aims and objectives of travel and tourism
providers, i.e. in bringing customers’ attention to their products and services.
Identify and explain why marketing and promotion are important to travel and tourism
providers
► Marketing has four main functions within the travel and tourism industry.
1. Increased sales/usage/profitability
• Marketing is important to increase the number of sales (in the private sector) with a view
to increasing organisational profitability; or to increase the usage patterns of a facility (in
the public sector) with a view to maintaining the operating efficiency of the facility.
• This means that organisations in either sector use marketing in order to increase the size
of their customer base - i.e. to continue to attract previous customers as well as to try and
appeal to new customers. In a profit-seeking organisation, the larger the customer base,
the more likely the organisation will be in boosting the value and the volume of its sales.
• The more sales it makes, the more likely it is to make a profit. In non-profit-seeking
organisations, an increase in the number of users will assure the organisations continued
operation for the future.
• Like any other type of business, travel and tourism providers need to generate income,
irrespective of whether they are privately or publicly funded.
2. Competitive advantage
► We know that the travel and tourism industry is hugely competitive. There are many
destinations with very similar attractions and many different providers (tour operators,
hoteliers, airline companies) all offering a similar product or service.
► Marketing plays an important role, therefore, in helping organisations or destinations to
attract more customers than their rivals, in order to survive in this competitive business
environment.
3. Positive organisational and product image
► Customers like to use brands they are familiar with or which they perceive offers the best
quality and value for money. Thus, marketing is essential in creating an association of a
certain product or service in the essential in creating an association of a certain product
or service in the customer’s mind.
► Those organisations that can create a positive image for themselves through a range of
marketing and promotional techniques are likely to be most successful.
► Similarly, a product or service with a positive image will gain more customers than
products and services which are less well perceived.
4. Customer satisfaction
► A good way to achieve customer satisfaction is by offering products and services
which meet the needs and wants of the customers.
If customers are satisfied by what they receive, they are more likely to return for repeat business
purposes and are also more likely to tell their friends and family about their positive experiences.
These may in turn become a customer of the organisation.
► Thus, marketing plays an important function in helping to create customer satisfaction, by
allowing a customer to gauge whether the product will offer them exactly what they want
or not.
► With current changes to the global economy, political instability and safety concerns, the
travel industry has changed for both the consumer and for tourism professionals. Whether
in good times or bad, tourism marketing is a vital part of this business - it convinces
customers to travel.
Example
• Taiwan, with a population of approximately 22m people, has a booming outbound tourist
market, with a consistent growth over the recent years. Approximately, one third of
the Taiwanese population (around 7.3 million people) travels annually.
• Furthermore, the disposable income of the Taiwanese people is also relatively high, as it
is approximated that around 25% of their income is saved. This indicates a mobile
population with enough income to travel comfortably offering a viable outbound tourist
market. The Pacific Islands have, to date, not actively sought to gain a share of this
market.
• There is high competition for the Taiwanese tourist from closer and cheaper destinations
offering similar products to that of the ‘surf, sea and sun’ offered by the Pacific. The
Pacific’s main competitors include mainland China, Thailand, the Philippines, the
Maldives, Hawaii, Palau, Guam and Singapore.
• Around 110— 120 flights a week fly from Taipei airport to overseas destinations.
Competition for the outbound tourist from Taiwan is very keen, with many overseas
tourism destinations competing head on for a share in the market.
Describe the main marketing and promotion techniques used in travel and
tourism
► Marketing and promotion are complex processes which underpin tourism providers.
Marketing allows businesses to identify their position in the market from which travel
and tourism providers are able to set targets for future improvement and identify who
their competitors are.
► Given both the customer focus of this industry and its dynamic nature, it is important that
travel and tourism organisations understand the specific groups of customers at whom
their products and services are being targeted.
► There are many ‘tools’ that help guide travel and tourism providers in their decisionmaking processes, but one of the main methods the main business activities of many
travel and used to assess the current market position and the variations in demand for and
supply of travel and tourism products and services is the tool of market research.
Primary marketing research techniques and secondary marketing research
techniques
► We know that to achieve customer satisfaction, organisations must in some way meet the
needs and wants of their customers. However, it is not always easy to identify exactly
what these needs and wants are, especially for intangible products and services being
offered by the travel and tourism industry.
► The most common method used by any business, to determine not only what the
customers’ needs and wants are, but also to establish who the customers are, is to carry
out market research.
► According to the Chartered Institute of Marketing’s new definition of marketing,
organisations wish to ‘fulfil’ customers’ demands.
Primary marketing research techniques and secondary marketing research techniques
► Market research enables an organisation to know exactly what these demands are likely
to be and can result in travel and tourism providers putting together holiday products and
services that exactly match these demands.
► According to the Market Research Society, market research is:
the planned process of collecting, recording, analysing and evaluating data about
customers and the market itself.
► Market research can be carried out in a number of different ways. Some larger
organisations may decide to conduct the research themselves, using appropriately trained
professionals from the marketing department.
Primary marketing research techniques and secondary marketing research techniques
► Other organisations choose to commission or to pay for a market research project via a
market research agency or a market research consultancy service. There are usually five
stages to the market research process (Fig. 5.1).
The five stage market research process
❖ Locating or defining issues or problems
❖ Designing the research project
❖ Collecting data
❖ Interpreting research data
❖ Reporting research findings
Stage 1:Set the objectives
► This is sometimes also known as ‘identifying the problem’. This initial stage sets the
purpose for conducting the research and is often posed as a statement, which needs to be
proved or disproved. For example, the Maldives appeal only to the honeymoon and
diving segments.
Stage 2: Design the research
► During this stage, a detailed plan of action is drawn up, identifying the timescale and
resources required for the research as well as deciding the research methods that will be
used.
Stage 3: Data collection
► This is the stage when the main research activities are carried out. In stages 1 and 2, a
range of data collection techniques will have been selected, which are now put into
action. This could involve a combination of both primary and secondary research
techniques.
Stage 4: Analyse the data
► Once all of the data has been collected, this will need to be collated and interpreted.
Depending on the type of data collected, it may be possible to carry out statistical
analysis.
Stage 5: Report the results
► Overall findings from the research will be presented, drawing conclusions against the
original objectives. In the example mentioned, it may be the case that the market research
disproves the theory that the Maldives has a very narrow target market for tourism
purposes, finding instead that many families and elderly visitors are also attracted to the
area as well as the anticipated honeymooner and diving markets.
Primary market research
► It is also known as field research, as this type of research requires organisations to go out
into the market to find out about customers’ experiences and expectations. There are
many commercial organisations which will carry out primary research on behalf of other
organisations but this is particularly costly. Primary research could be done by conducting
a survey at the airport or within the reception area of a number of hotels.
► Primary research methods include self-completion questionnaires which are a series of
open-ended, closed or multiple choice questions which is given directly to the customer
or potential customer to fill in.
Primary market research
► Telephone surveys and Internet surveys are also common forms of primary research in
which existing or potential customers are contacted either by telephone or by email or are
randomly targeted when visiting a website on the Internet and asked questions relating to
travel and tourism products and services.
► Exit surveys are carried out as a visitor leaves an attraction in which opinions about the
overall visitor experience whilst at a particular facility are sought. This may be done
through a face-to-face interview with a member of staff at the facility, asking direct
questions of a visitor.
► Postal surveys are also still sometimes carried out, although the response rate for these is
often very poor; relying on the customer to fill them out in their own time and then take
responsibility for returning them. Focus groups are sometimes called together by an
organisation, where a number of customers are led by a member of staff to discuss their
views of a certain product or service. These are costly and take time to organise.
Secondary market research
► This is also known as desk research as it involves using existing information that has
been collected by a third party for a different purpose or using data from the organisations
own records. Much of this information may be in written or electronic formats; therefore,
the researcher is able to carry out the majority if this type of research on a desk in an
office.
► Secondary market research sources are many and varied. These sources tend to be
classified as internal, i.e. data from the organisation’s own sales records or a customer
database detailing how often a customer uses a particular facility or external which
might include government produced data or trade reports - most of which can be accessed
through membership accounts via the Internet. Academic research findings fall into this
category too; for example articles within journals such as the Journal of Travel Research.
► It is important to recognise that using secondary market research sources may not always
be reliable. The research was originally carried out with a different objective in mind;
therefore, the data may be irrelevant or outdated or may contain the author’s biased
opinion.
Qualitative and quantitative data
► Qualitative data refers to the information collected about customers’ opinions and
attitudes towards products and services, whereas quantitative data tends to be numeric or
statistical by nature - frequency of visits, cost and number of users etc.
► Quantitative data allows patterns and trends in the market to be displayed visually in
chart or graph forms; qualitative data on the other hand is more difficult to represented
graphically.
Case Study 1: Snaefell Visitor Centre
Case Study 1: Snaefell Visitor Centre
•
Snaefell Visitor Centre is a visitor attraction built at a gateway to one of Iceland’s
national parks. The Snaefell Glacier National Park is situated in an area of beautiful
glacial scenery with a volcanic mountain landscape sweeping down to the rugged
•
•
•
coastline. The visitor attraction has an exhibition centre with displays of local scenery,
plants and wildlife, a tea room, and a souvenir shop which sells locally produced crafts.
A recent customer survey has found that the majority of visitors to the Snaefell Visitor
Centre were middle aged and elderly couples on coach tour holidays. Although the
attraction is busy at
certain times of the year, visitor numbers are
declining and outdoor enthusiasts rarely visit
the attraction anymore.
As a result of the customer survey, the Snaefell
Visitor Centre has employed a consultancy firm
to carry out a review and give advice on ways
of improving the business.
SWOT and PEST analyses
•
•
•
•
Travel and tourism providers must be able to carry out an accurate assessment of the
business environment in which they currently operate or, in the case of a new business,
might operate. The process involved in carrying out this analysis is often referred to as a
situation analysis. The results of this assessment enables a travel and tourism provider to
identify the positive and negative influences on its business activities.
It also allows an organisation to recognise those influences which are within its own
control i.e., internal influences and those influences beyond its control i.e., external
influences.
A situation analysis usually consists of two components, the first of which is commonly
known as SWOT analysis.
SWOT Analysis is a marketing tool used in many business contexts. SWOT is an
acronym, which stands for:
SWOT and PEST analyses
•
•
•
•
These aspects are assessed in relation to a particular product, organisation or a destination
to understand its position in the market.
Strengths and weaknesses are internal factors i.e. things that the organisation can itself
control, while opportunities and threats are external factors i.e. things that are beyond the
control of the organisation.
Development within the travel and tourism industry relies heavily on the outcomes of
SWOT analysis. If the results show that an organisation has many weaknesses and the
market poses lots of threats, then it is unlikely that an organisation will choose to expand
the range of products and services it offers.
On the other hand, if the results of the SWOT analysis show that a particular tourism
destination has many strengths and the market situation presents lots of opportunities for
the destination to develop further, then it is highly likely that these developments will
take place.
Political Factors
Economic Factors
Social Factors
Technological Factors
SWOT analysis of tourism in Lake Wanaka, New Zealand
► Strengths
▪ Unique attractions: Warbirds / Puzzling, World / Snow, Farm / Festival of
Colour
▪ World Class Scenery
▪ Established ski industry
►
Lake Wanakas spectacular location at the foot of the Southern Alps with the
wilderness of the Mount Aspiring National Park nearby makes it a magnet for outdoor
lovers the world over. Many of the operators chose Lake Wanaka as a base to indulge in
activities such as boating, hiking, climbing, skiing or mountain biking to name a few.
► Weaknesses
▪ Limited direct air services;
▪ Infrastructure is under pressure to cope with tourism demand;
▪ Poor levels of customer service.
► Opportunities
▪ Increase number of visits from domestic tourism market;
▪ Increase levels of sustainability;
▪ Develop an ‘Events Calendar
’.
► Threats
▪ Rising costs of fuel impacts in air fares;
▪
Competition from other regions in New Zealand such as the Queenstown and
the Southern Lakes
► Political: Organisations within the travel and tourism industry are regulated by
government, through legislation and/or controlled by other regulatory bodies, in
order to protect the customers, suppliers and the environment. Civil unrest, acts of
international terrorism also exert political influence within this industry.
► Economic: Foreign exchange rates, periods of recession and the global economy all
play important roles in exerting positive or negative influences on tourism. In recent
years, the global economic downturn has led to less disposable income and thus
fewer travellers, having a heavy impact on the profitability of airline companies and
tour operators, for example.
► Social: The global threat of pandemic diseases such as H5N1 Avian Influenza,
SARS and H1N1 Swine Flu impacts on the industry as well, causing some
travellers to cancel holiday plans. The rates of crime in certain destinations and
local attitudes to tourists might also impact on the popularity of specific
destinations with tourists.
► Technological: Infrastructure development, including the construction of airports
with high carrying capacities and hotels with high numbers of bed spaces all
contribute to positive technological influences on tourism provision. The Internet
has transformed the way in which travel and tourism products and services are
marketed. Those destinations with under-developed infrastructure will lose
competitive advantage with those destinations which are more technologically
advanced.
Case Study 3: Results from PEST analysis of Indian
Tourism
Case Study 3: Results from PEST analysis of Indian Tourism
Political
▪ Threat of terrorism and issues of security;
▪ India’s role in international politics;
▪ Government has low spending on tourism promotion.
Economic
▪
▪
GDP of India;
Exchange rate fluctuations.
Social
▪
Demographic changes - ageing population travelling to more adventurous
destinations;
▪ Trend for more sustainable tourism and healthier lifestyles.
Technological
▪ Growth of E-tourism in India;
▪ New transportation methods as airports and railway infrastructure overloaded.
The development of an effective marketing mix
► Marketing mix is the term given to the four interlinked components which influence
a customer’s buying decision and the emphasis that a travel and tourism provider
places on these individual factors, when trying to influence the customer’s decision
to buy. The marketing mix (Fig. 5.2) has been described as:
getting the right product to the right people at the right price, at the right place,
using the right promotional methods ’. Out of this description was born the term ‘The
4 P’s’ of the marketing mix
.
The development of an effective marketing mix
•
It is essential that an organisation is able to select the most appropriate combination of
factors to establish its marketing mix.
1. It must choose the specific features and characteristics of the product and/or
service it offers;
2. it must decide how the price will be set for customers;
3. it must select the most convenient locations for distributing its products/services
- i.e. making it easy for customers to buy from the organisation, and lastly,
4. it must choose how to promote its products and services to ensure that potential
customers can be reached.
• These four elements of the marketing mix form the core of the learning content for
.
this module
Market segmentation and targeting
•
•
Market segmentation is the process through which a target market is selected for
the products and services being offered.
Customers are grouped or classified according to a number of pre-set characteristics
and the market is divided into a series of ‘segments’ based on these characteristics.
Identify the different market segments targeted by travel and tourism
providers
•
•
This process allows an organisation to identify one or more specific target market/s
upon which to focus its marketing efforts.
This means that a tourism provider can target only those customers who are likely
to be interested
in the product, thus
saving time and money.
Geographic, demographic and lifestyle segments
•
The following table (Fig. 5.3) identifies the three main forms of market
segmentation commonly used by travel and tourism providers. These are, however,
by no means the only forms of segmentation used.
Methods of market segmentation
Forms of market segmentation
Geographic segmentation
Demographic segmentation
Psychographic segmentation (segmentation
by life style)
Customers classified by these
characteristics
By locality, area, region etc. Domestic and
international tourism
By age, gender, religion, ethnicity or
disposable income
By socio-economic factors such level of
education, interests, attitudes or profession.
► The travel and tourism industry has worked at refining specific market segments;
example, the grey market - by age, sports tourists and medical tourists - by lifestyle.
It is common practice in the travel and tourism industry to use market segmentation
and the results of market research in order to build a customer profile, which sets
out the characteristics of a typical customer or product user.
Product as Part of the Marketing Mix
Forms of Market Segmentation
Explain how specific travel and tourism products are developed to cater for the needs and
expectations of different market segments
•
•
In order to remain competitive in this dynamic industry, providers create new and
exciting product packages to offer to customers, in order to fulfil their needs and
expectations.
However, as it is not possible to know exactly what every customer does need or
expect from a holiday or travel experience, organisations operating in the travel and
•
tourism industry often try to cater to the likely needs or expectations of the specific
market segments.
In order to be able to accomplish this, travel and tourism providers must understand
the different types of products that are already available within the market, and be
able to match different types of products with different types of customers. Market
research helps in this aim.
Products explained and the relationship with market segments
•
It would be impossible to list here all of the available types of travel and tourism
products. Instead, we must loosely classify some of the products available under
industry specific components
Forms of Market Segmentation
Type of product
Package holidays
Example of relationship with different
market segments
Families; Club 18-30; Groups - education;
Special interest; Luxury/Budget etc.
Transport
Families; Club 18-30; Groups - education;
Special interest; Luxury/Budget etc.
Accommodation and catering
Families; Singles; Groups;
Types of Customer - Business or Leisure;
Different Ages/Gender; Specific Needs;
Luxury/Budget;
Tourist attractions
Families; Groups; Ages/ Genders; Specific
Needs; Special Interest; Free Entrance;
Tourist information services
Families; Singles; Groups; Types of Customer
- Business or Leisure; Specific Needs; Special
Interest;
Specific travel and tourism products
Package Holidays
•
A package holiday consists of transport and accommodation advertised and sold
together by a tour operator. Other services may also be provided such as car rental
or activities/excursions during the holiday. The services of a holiday representative
are usually included in this example of product bundling.
•
•
•
Tour operators try to cater specifically for the needs and expectations of different
types of customers by offering a variety of different package holidays to
destinations around the world.
The type of accommodation included in a package can be varied to suit different
budgets ranging from luxury 5 star accommodation to low-cost backpacker hostels
or basic campsite facilities.
Alternatively, different forms of transport can be included in order to cater for the
needs of different customers.
Transport
• It is possible to use any mode of transport to appeal to different customer types
within the travel and tourism industry.
• Many tour operators specialise in niche markets using more unusual modes of
transportation such as motorcycle tours, luxury rail holidays., houseboat
experiences as well as luxury cruise liners, helicopter flights, hot air ballooning etc.
• But not all of these methods would suit everybody - this is how travel and tourism
provider select a specific target market for a specific product.
Accommodation and catering
•
•
•
In much the same way that any type of transport can feature as part of the travel and
tourism offering, so too can the type of accommodation and catering arrangements
differs enormously.
Accommodation can range from a luxury over-water bungalow within an island
resort in the French Polynesian Islands such as Bora Bora to a one man tent in the
Himalayas, to a Manhattan Skyscraper apartment block to a log cabin ski lodge in
the Alps.
The features, characteristics and amenities offered by each type of accommodation
will appeal to a variety of different types of customer.
Tourist attractions
• Each year an enormous number of tourist attractions are offered up for tourists to
visit during their recreational time within a destination.
• Attractions can be classified in a number of different ways such as manmade,
natural, historic, cultural, family fun etc.
• Museums offer new exhibits or special events with visiting speakers to attract the
special interest market; theme parks develop more exhilarating white-knuckle rides
or character-based themes; zoos and sea life centres try to entice customers with
more hands-on experiences such as feed the animals, walk amongst the bats etc.
• There are often special offers available for free entry to different types of visitor
attractions, example, Kids Go Free, to entice more customers, including ‘passport
tickets’ linking two or more attractions within a locality and deals which include
entrance tickets within the transport cost.
Tourist information services
•
•
•
•
Most countries offer tourism information service, either through an online research
facility and/or the provision of a Tourism Information Centre in the main
destinations within the country.
However, to remain competitive and to ensure maintaining a large enough customer
base in order to remain financially viable, tourist information service providers have
also begun to expand their range of products and services.
Many now make full use of advanced technology to offer 24 hour touch screen
facilities; most will arrange accommodation for travellers in their next destination
via the ‘Book a bed
ahead’ scheme.
Many such service providers offer theatre bookings and guided sightseeing tours as
well. A range of in-country souvenirs are offered for sale, in a further attempt to
cater for the needs and expectations of the different visitor types.
Different market segments
Family
•
We have already mentioned the range of market segments commonly targeted by
travel and tourism industry providers. These are often referred to by the term Visitor
type’. They can be classified in the following ways:
•
The family market has been traditionally viewed as the most important market
segment for package holidays. The ‘sun, sea and sand’ family-based offering has
formed the main feature of holiday brochures for the mass tourism market since the
1970’s.
Special offers centre around free places for children; family-room accommodation
is also commonly available as well as children’s menus to cater for the needs of this
market segment.
Many of the ‘newer’ destinations have also recognised the importance of this
market segment and tailor their provisions accordingly.
•
•
Singles
•
•
Groups
•
This market segment is much less publicised within the travel and tourism industry;
it is almost as if we do not associate the act of leisure travel with individuals. The
singles market is nonetheless an important one, with increased earnings being made
by accommodation providers who offer single rooms at a supplemented price.
Some tour operators also advertise additional security measures for lone female
travellers such as not allocating rooms directly next to the elevators, in an effort to
meet the level of expectation of these types of travellers.
This market segment plays an important part for transport providers and for tourist
attractions, both of which commonly offer discounted prices for groups of tourists.
•
Educational groups such as school trips etc., form the significant majority of this
segment. Therefore, it is hardly surprising that specialist tour operators have been
set up to meet the specific needs of this segment.
Types of customer
•
This segment refers to the purpose of the visit which determines the type of
customer. We have already read about business tourists, leisure tourists and those
visiting friends and relatives.
These are the broadest means of classifying tourists and are themselves often further subdivided.
For example:
Specific needs
• With an increased awareness in society today of the issues of equality and diversity,
many travel and tourism providers actively seek to cater for the specific needs of
any customers with a disability, a religious/ spiritual need or even something as
commonplace as a dietary need arising from vegetarianism falls into this segment.
Special interests
•
This market segment acts as a ‘catch-all’ for other sub-divisions of the market that
is difficult to categorise.
• Special interest customers can include eco-tourists/ responsible travellers, medical
tourists, sports tourists, cultural tourists, even those only interested in experiencing
a cruise could be classified in this segment.
It is therefore, not at all surprising that more and more tour operators try to cater for the very
diverse range of needs that arise from such a breadth of visitor types, recognising the high value
of sales that could be made from these tourists
Quality / economy / value for money
•
•
•
Travel and tourism customers are often described as being price sensitive. There are
certainly a high number of customers who must budget their travel plans carefully.
These tend to be those with young children, the student/backpacker market and to a
lesser extent the grey market.
Tour operators, transport and accommodation
providers cater for the needs and expectations
of this category of tourists, ensuring there is a
wide choice of low cost options - lodge and
hostel accommodation, low cost flights or
discounted rail passes etc.
Similarly, travel and tourism providers have also recognised the need to cater to the
upper end of the market, offering the most luxurious of travel experiences, such as
travelling on the Venice Simplon Orient Express and staying in the very best in
accommodation, such as the Jumeirah Burj Al Arab hotel in Dubai, the world’s first
7 star hotel.
•
It is now time to concentrate on each of the four component parts of the marketing
mix in much greater detail. The first element that we will explore is the travel and
tourism product itself.
Identify and explain the difference between travel and tourism products and services
•
•
•
According to the Oxford Dictionary of Business:
A product is anything that can be offered to a market that might satisfy a need. It
includes physical objects and services.
Whilst this definition shows us the scale of coverage of the term ‘product’, it does
not help us to identify the key differences between a product, a service or even a
brand. All of these are important aspects of the ‘product’ element of the marketing
mix.
Tourism product is particularly difficult to define, because it covers:
the complete experience from the time the tourist leaves home, to the time he
returns to it.
Products identified and explained
❖ In general terms, products are defined by four main characteristics as discussed
here.
▪ Tangible - you can see and physically hold a product (example, a meal in a
restaurant).
▪ Homogeneous - ‘like’ products are all standardised (example, one Ramada
hotel room is the same as another, irrespective of which country it is in).
▪ Separable - you can easily distinguish between one product and another
because of the features of each product.
▪ Storable - a product will last and is not perishable.
Services identified and explained
•
Services can also be described by their four main characteristics, which are the
opposite of the characteristics of a product:
▪ Intangible - services cannot be seen or physically held.
▪ Heterogeneous - services are not standardised; every experience is individual.
▪ Inseparable - it is not possible to
separate the service out of the
experience (example, being waited
upon is an integral part of the service
element of a meal).
▪ Incapable of being stored - services
are perishable and cannot be transferred for use at a later date.
❖ For travel and tourism products, these distinctions are not always easy to make. If
we consider the example of a typical package holiday as a product, we find many
similarities with a service, rather than a product.
Services identified and explained
•
•
•
A package holiday comprises of three main components - transportation,
accommodation and excursions. These components are in fact intangible at the time
of purchase; you do not get to sample the product and must rely upon the
description from the brochure.
It is impossible to separate out the components of a package holiday; they are
marketed and sold exactly as that - a package. Package holidays are not
homogeneous - two customers purchasing exactly the same package holiday will
have very different experiences because of a number of additional factors.
Lastly, package holidays are perishable: if the tour operator has not sold the same
amount of packages, as the number of reservations made with transport and
accommodation providers for a given period, then those packages will be lost and
that revenue cannot be made up again.
Investigate the development and modification of travel and tourism products and services
•
•
•
•
We already know that customers’ needs, wants and expectations change all the time,
taking into consideration the rapid pace of change that this industry undergoes.
As a result, travel and tourism providers must constantly seek to develop new
products and services which will appeal to their existing customer base as well as
attract new customers.
It is not always possible to develop something completely new; therefore,
organisations within this people-centred industry must find new ways of developing
their existing products through innovation.
We have already learnt that market research is one way of finding out customer’s
reactions to the product being offered. It is not the only way however, so let us
explore the alternative methods used by travel and tourism providers to develop and
modify products and services to meet the expectations of customers.
The use of the product life cycle
•
•
This marketing tool allows an organisation to evaluate the positioning of the
products and services it offers in the market. Product analysis in this way enables
travel and tourism providers to improve their competitive advantage and increase
their profitability, which is important within this competitive business environment
and especially where a large number of substitute products and services are
available.
The product life cycle model (Fig. 5.5) allows an organisation to identify whether
its products
or services are in a stage of
growth or decline.
•
Similarly, this model can be used
to ascertain the popularity of a
travel destination
The Product Life Cycle
The use of the product life cycle
•
•
•
Some products, services and destinations will be popular and will be highly
profitable. Others will struggle to maintain a hold in the market and will not be cost
effective for the organisations involved in their sale and promotion.
The product life cycle allows an organisation to plot the volume of sales for an
individual product from their product portfolio over a given period of time, in order
to determine at what stage on the cycle that product is positioned.
There are four main stages in the product life cycle. Any product at the same stage
will display similar market characteristics, in terms of the volume of sales and the
level of profitability for that stage.
Activity 1
List one travel and tourism product or service at each stage of the life cycle.
At which stage of the life cycle model would you place the following destinations? You must
give at least one reason for your choice of stage.
• Beijing • Paris • The Artic Circle • The Maldives • Singapore
The use of the product life cycle
These characteristics are described in the following table
Product Life Cycle Stage
Characteristics
Introduction
Product is launched into the market; period of
intense marketing to raise awareness and to attract
customer loyalty; limited volume of sales; high cost
of promotion; no competition.
Growth
Product is launched into the market; period of
intense marketing to raise awareness and to attract
customer loyalty; limited volume of sales; high cost
of promotion; no competition.
Maturity
Sales curve peaks within this stage; product
continuing to make a profit; competition is strong;
marketing is needed to extend the product’s appeal.
Decline
Number of sales falls sharply; organisation needs to
decide whether to discard the product or re-launch;
costly stage for the organisation.
The creation of brand image
•
•
•
•
•
•
The creation of brand image In an industry with many substitute products and
services branding and the creation of brand image is an important concept, which
enables the organisations to gain competitive advantage.
Branding is a way of clearly highlighting what makes one product or service
different from, and more attractive than, the competitors’ products and services. A
brand forms a set of associations that an existing or potential customer has of a
company, product, service or destination.
These associations can be the result of the organisation’s own efforts and may be
actively promoted through marketing. Branding can also be the result of the
customers’ experiences of a business.
Travel and tourism organisations can create a brand image through a variety of
means. The name that an organisation chooses for itself may become its brand
identity.
Sometimes, it is the unique selling point (USP) which is associated with the brand
image of an organisation that creates the image through actual product features. At
times, it is a slogan used with a destination.
For example, the Maldives use the slogan ‘Visit Maldives - The Sunny Side of
Life’, whereas Brunei Darussalam uses many such straplines, including ‘The Abode
of Peace’, ‘The Green Heart of Borneo’ and ‘A Kingdom of Unexpected Treasures’
Case Study 4: Branding Issues in Mauritius
Case Study 4: Branding Issues in Mauritius
Case Study 4: Branding Issues in Mauritius
Trouble in paradise as Mauritius re-brands
By James Hall October 27th, 2009
Trouble in paradise.
A new tourism slogan for the country of Mauritius is attracting considerable controversy in the
local press there.
Mauritius - an unforgettable pleasure?
The Mauritian tourist board has replaced its old strapline (‘Mauritius - Unforgettable
Experience’) with a new one: ‘Mauritius - C’est un plaisir’. The new branding, apparently
designed to reflect the island’s French cultural influence, has been
greeted locally with “perplexity and scepticism”, according to journalist Bhishmadev Seebaluck.
There is incredulity at the cost. The slogan was dreamt up by London-based marketing agency
Acanchi for a reported 31m Mauritian rupees (£625,000). That works out at almost £50,000 per
letter.
Apparently a director at Acanchi appeared on Mauritian TV to defend the branding. She said that
the actual slogan was just part of the entire marketing campaign, or “the tip of the branding
iceberg,” said Mr. Seebaluck.
Sean Carey, a writer about Mauritius, said that ‘C’est un plaisir’ is “weak and bland” and “too
slippery and ambiguous” to be effective.
But how does the Mauritius tagline compare with other countries’? A quick trot around the
Internet shows that Mauritius does not have a monopoly on meaningless straplines.
There are two distinct camps in the tourism slogan arena. The most common uses a two-word
structure, prefixing the country with a simple adjective or verb; ‘Amazing Thailand’, ‘Enjoy
England’ ‘Incredible India, ‘Magical Kenya. These words appear to be totally interchangeable. I
very much doubt, for example, that visitor numbers to India and Kenya would collapse if it was
India that was magical and Kenya that was incredible.
Then there is the ‘pithy phrase’ camp; ‘Brazil - Sensational!’, ‘Seychelles - Another world’,
‘Germany - Simply inspiring’, ‘The Kingdom of Swaziland - A royal experience’, ‘Hawaii - The
islands of Alohaj and (an oldie) ‘Australia - So where the bloody hell are you?’ Again, largely
meaningless. Some countries try too hard to be clever. New Zealand’s new slogan is ‘Go all the
way’, which is a clear attempt to sex up one of the world’s more staid countries. Others are
unintentionally hilarious. I am sure that the Colombian Tourism Ministry did not see the double
meaning when it settled on ‘Columbia - the only risk is wanting to
stay'.
Bearing all this in mind,
Mauritius’s little French
slogan doesn’t seem
so bad.
The creation of brand image
•
Brand image can also be created through the use of packaging. This is relatively
uncommon in the travel and tourism industry, given the nature of the products and
•
•
•
services, although hotel chains develop their own packaging for bathroom products
such as soap and shower gel.
Price is a more common method of creating brand image. This is demonstrated
through the association made with low cost airlines such as easyjet and Ryanair.
Promotion also creates brand image by the
use of billboards, TV advertising and even in-flight advertising which help make
customers remember specific brand identities.
Certain travel and tourism organisations use their specific target market segment,
in order to create a brand image such as the 2wentys - a brand used by the First
Choice tour operator to promote clubbing holidays to those aged 20+. There are
also brands targeted specifically at adventure travellers, eco-tourists, golf
enthusiasts, etc.
The development of a product/service mix and a product portfolio
•
•
One of the main aims of marketing and promotion is to raise awareness of a
company’s specific product range and to try to attract new customers to an
organisation.
• In other forms of business such as the manufacturing of goods, organisations offer a
product range. This refers to all of the different types of products ‘made’ by a
specific company.
In the travel and tourism industry, it is probably more appropriate to talk about the service
range that organisations offer. For example, a hotel group may provide a differentiated
product/service mix to various market segments. The core product/ service would be of
luxury accommodation, fine dining options, health club and spa facilities as well as high
quality personal service made available to all guests
• However, the hotel group may offer additional products and services matched to the
expectations of different market segments, such as access to the Executive Lounge
for breakfast and ‘happy hour’ drinks, free Wi-Fi broadband connectivity and one
piece of laundry at no additional cost for members of the hotel chain’s business club
etc.
The development of a product/service mix and a product portfolio
•
•
•
•
In the travel and tourism industry, the service range of organisations tends to be
quite limited, with two or three variations of the core product being common.
However, there often comes a point in time when an organisation must consider
developing its product/service mix.
Developing the product portfolio of an organisation i.e. adding more to the service
range, is a costly process and one which usually occurs in response to the need to
replace a product that has reached the end of its life cycle.
The majority of changes to product and service ranges in the travel and tourism
industry take the form of modifications being made to an existing product or service
offering.
There are a number of key reasons why organisations decide to develop the
product/service mix, including:
•
•
•
•
•
•
•
•
•
to gain recognition as innovator in the market;
to develop/stimulate the market in a specific destination;
to extend operations into new territories;
to defend market share when challenged by competitors;
to imitate the success of a more successful competitor;
to keep abreast of technological advances;
to re-position themselves in the market.
Thus, it is clear to see that developing or modifying a product/service mix can occur
either proactively or defensively. However, because of the intense competition in
this market, most of the industry’s growth results from imitation of competitors or
from the need to re-position, in order to appeal to a wider customer base.
Price as Part of the Marketing Mix
•
•
•
Let us now explore the second component part of the marketing mix - price. Given
the high number of substitute products/ destinations made available within the
travel and tourism market, price often plays a significant role in gaining the
customer’s attention.
Price is the term used to describe how much a customer actually pays to receive the
product or service upon purchase. It is not the same as cost, which is the term given
to the amount of expenditure required to put together the product or to offer the
service prior to it being released for the attention of the customer.
Clearly the two factors work hand in hand; an organisation will take into
consideration the actual costs before setting the final price for a product.
Investigate a range of common pricing policies used in the travel and tourism industry
•
•
There are numerous different approaches that organisations can take in setting a
price for products and services. This section covers some of the most commonly
used pricing policies used in the travel and tourism industry.
It is important that you can identify the differences in each policy and understand
when each policy might be the most appropriate choice.
1. Market Penetration
•
•
This is probably the most common pricing policy adopted in the world of tourism.
This policy is used to gain entry into the market and to attract market share.
When launching a new product into a highly competitive market, artificially low
prices are set initially to entice customers to ‘try’ the product. This policy is
sometimes also known as ‘trial pricing’ based on the assumption that most
•
customers are price sensitive and will be easily persuaded by something that
appears to be of good value.
• The aim is to win a large customer base and to generate revenue quickly from a
high sales volume. Once the place in the market has been established, organisations
tend to opt for a different pricing policy; usually one which allows the price to increase
without losing customer loyalty.
2. Market skimming
•
Market skimming is used when the tourism product is relatively new to the market
and the level of competition is low. It allows the provider to charge a high price,
attracting customers who are comfortable in the role of innovator - paying a
relatively high price to be one of the first to try something.
Once the market has adopted this product, it is described as having been ‘skimmed’.
Competitors enter the market with a number of substitute products; thus, forcing the
price down and making the product more affordable for a wider range of customers.
•
•
3. Discount pricing
•
•
Where products have not sold in sufficient quantity or when a product reaches
close to its expiry, the provider offers a discount on the original price.
This is usually a percentage decrease in the price. Examples may be half-price
theatre tickets bought on the day of the performance or heavily discounted
standby tickets sold just a few hours before the flight departure time.
4. Variable pricing
•
•
•
This policy is also known as price discrimination and it takes into account the
variability of demand. This policy is often adopted by organisations offering
differentiated products and services.
Different prices may be set for different seasons of the year - high prices are
charged during the peak season, when demand is high; prices are reduced during
low season, when demand decreases.
Prices can also vary according to customer types - full price entrance tickets to
tourist attractions for adults but reduced price tickets for children under 12, for
students and for the elderly.
5. Loss leader pricing
•
•
A ‘loss leader’ is a product that is sold at little or no profit, or even at a loss. It gives
customers the impression of goods being cheap and entices them to spend on other,
more profitable and linked items at the same time as picking up the loss leader item,
thus still benefiting the organisation.
Loss leader pricing is not often used in the travel and tourism industry.
6. Special offers
•
Special offers are a form of promotional pricing. This policy is sometimes used as a
form of competitor-based pricing, to pull customers away from a rival attraction, for
example. This policy persuades the customer that they are receiving value for
money or are getting something free.
Factors determining the prices of tourism products and services
Economic factors
•
•
The state of the global economy has an impact on the price being paid. In times of
recession, customers may change their holiday choices to more affordable
destinations closer to home. Organisations may select cheaper accommodation
options to cut down their initial outlay.
In times of economic boom, people tend to be willing to spend more on holidays
and tour operators are more confident of reaching their sales potential.
Place as Part of the Marketing Mix
•
Place is the third component of the marketing mix. The term ‘place’ is used in
relation to two different aspects of the mix for tourism products and services - the
physical location of destinations or tourist facilities and the chain of distribution
used by tourism providers to get their products to their customers.
Investigate the factors that influence the selection of a location for travel & tourism
•
Organisations must take into consideration a range of different factors, when
choosing where to site a new facility or attraction. These are known as locational
factors.
1. Costs
• Prime locations cost money. Landowners in areas
with potential for tourism development will charge
the highest possible rates to sell their land.
• As areas become more developed and land becomes less available, the cost of
acquiring land or premises will increase further. This will limit the choice of where
many travel and tourism providers are able to locate their travel and tourism
products and services.
2. Availability of suitable premises
•
Travel and tourism providers such as travel agents, bureaux de change and tourism
information centres require suitable premises in the central business district in
tourism destinations.
3. Character of area
• The character of the area plays a significant part in selecting an appropriate
location. Areas with political instability, high crime rates, and social deprivation do
not always make the best tourist destinations.
• Travel and tourism providers also consider standards of living and general living
costs in the areas they choose for tourism development.
4. Local and transient population
• It is important that there is easy access to local populations in terms of workforce
and a potential customer base for travel and tourism providers.
• There also needs to be a transient population to make full use of the facilities being
offered. This requires adequate infrastructure to be in place to accommodate this
.
Case Study 6: Poverty Tourism
transient population
Case Study 6: Poverty Tourism
Exploring the slums of India, Brazil and South Africa
•
•
•
•
•
•
•
Pick your way through a squatter settlement of Mumbai, India, where one million
people live in an area half the size of New Yorks Central Park.
Step over the rats in the shanty towns around Rio de Janeiro. Or meet local South
Africans living in a Soweto township near Johannesburg, dubbed the most
dangerous city outside of war zones.
These kinds of activities all fall under the heading of poverty tourism.
Poverty tourism, sometimes called ‘poorism, commonly refers to small organised
tours that you can take upon arriving in a city, and these tours will walk or drive
you through an area of extreme poverty.
While poverty tours exist in all parts of the world - even in developed countries,
there are tours of the immigrant zone of Rotterdam in the Netherlands, or around
poor areas of Houston or New York - the most common tours you’ll hear about are
those of the favelas in Rio de Janeiro, the shanty towns in South Africa, and of the
squatter settlements of India, particularly in large cities like Mumbai.
Some of these trips have been running for the best part of two decades, usually
quietly without heavy promotion.
In Mumbai, the effort is taken to keep the tours grounded in reality and to avoid the
possibilities of voyeurism as much as possible. Tourists are not allowed to take
photographs, and the groups are kept to a maximum of five people so it does not
look too intrusive. They also use guides who are very knowledgeable about the
area, so they can answer all your questions, and the company gives 80% of the after
tax profit from the tours to local NGOs to help alleviate poverty.
•
Adapted from: http://www.vagabondish.com/poverty-tourism-touring-the-slums-ofindia-brazil-and-south-africa/
5. Adjacent facilities
•
•
•
Travel and tourism providers consider what else there is in close proximity to a
selected site for tourism development.
It is beneficial to have linked tourism facilities close by - cafes near to tourist
attractions, restaurants and bars close to hotels etc., enabling customers to gain easy
access to a wide range of amenities.
Providers will also make an assessment of the proximity of any competitors. It is
quite common to find a cluster of travel agents on the high street; similarly in city
destinations it is not unusual for several tourist attractions to be located close
together.
6. Access/transport links
• It is important to ensure that there is the necessary level of infrastructure available
to support high volumes of visitors.
• There needs to be a satisfactory road and railway network, with sufficient carrying
capacity to deal with the expected number of visitors.
• There may be a need for park and ride schemes to ease any traffic congestion.
7. Availability of staff
•
•
•
We are aware of the need for a local population close to tourism centres to act as a
source of labour. Some organisations also bring in a skilled and experienced
workforce from other countries, when first establishing a presence in a new
destination, whilst the local workforce receives training.
• Some destinations recruit staff from different countries altogether because of a
skills shortage in their own country.
• There are issues with the likelihood of revenue leakage from destinations as the
workers send the money they earn back to their families in their respective
countries.
• If local employees are hired, the wages would re-circulate within that country as the
multiplier effect; with immigrant workers, this source of revenue is lost from the
local economy
altogether.
The process can involve a simple transaction between the provider and the customer
known as direct sales. However, there are also more complicated processes involving the
role of one or more intermediary. This is known as the chain of distribution linking
provider and customer through agents, retailers and the like.
The most common channels of distribution used in the travel and tourism industry are
discussed next.
Direct selling
•
This is the process whereby customers are able to obtain products and services they
require straight from the provider. The provider uses no intermediaries (middlemen) and
is able to reduce costs as there is no commission to be paid. However, the provider must
take sole responsibility for the marketing and promotion of their products and services.
Wholesalers
•
•
•
Tour operators act as wholesalers by buying products directly from the travel and tourism
principals (airlines, hoteliers etc.). They then sell these products onto retailers - the travel
agents, who in turn sell it to the customer.
This is a very costly chain of distribution, both for the provider, in terms of the
commission they must pay, and for the customer because the final price of the product
will reflect the fact that a wholesaler and a retailer also need to earn money from the
process.
However, using two intermediaries does enable travel and tourism providers to gain
access to a much wider customer base, with additional marketing and promotion efforts
being made on their behalf.
Retailers
•
•
Travel agents act as an intermediary for travel and tourism providers selling products and
services through high street and online outlets. They receive a commission fee for their
involvement in the process.
Some principals in the travel and tourism industry own their own travel agency
operations, but this limits the range of products and services that they sell, although saves
on costs in terms of commission payments.
Internet
• The Internet has revolutionised the way in which travel and tourism products and services
are made available to the customers. No longer must the customer travel to the physical
outlet to discover what is on the market.
• Instead, customers have 24 hour access from the comfort of their own homes and are just
a few clicks away from being able to research, select and make a confirmed booking,
without needing any assistance in the process.
• It is not only the principals who have made their products and services available in this
way; the intermediaries also promote their role in the distribution channel through the
Internet and tourist attractions, small guesthouses, and tourist guides are all available
online.
• The Internet offers discounted prices, because of the lack of intermediaries but there are
those who would still prefer to deal with a travel agent directly for the level of
professional service, product knowledge and advice that a travel agent can offer.
•
Not everyone has access to the Internet and some customers lack confidence in the
security of online payments, fearing the risk of identity theft etc.
Global distribution systems
• Travel agencies use technology to enable them to make accurate travel and hotel booking
being able to view real-time data about seat and room availability.
• This technology comes in the form of Global Distribution Systems (GDS) which uses
centralised processes to allow tickets to be produced instantly.
• There are different global distribution systems in operation across the world as has been
discussed earlier. Galileo and Worldspan are owned by the Travelport company.
Example
Galileo and Worldspan
► Travel suppliers and travel agencies worldwide are greatly empowered by Travelport’s
global GDS positions in the Americas and Asia Pacific, as well as our growing presence
in emerging markets, including the Middle East, Africa, Asia and Eastern Europe.
▪ Operating in 160 countries
▪ 67,000+ travel agencies (representing online and traditional travel agencies)
▪ 350 airlines
▪ Over 89,000 hotel properties, representing more than 310 hotel chains
▪ 30,000 car rental locations, representing more than 25 car rental companies
▪ Up to 1.8 billion messages per day
▪ 6 billion+ stored airfares
▪ 17 million car rental bookings annually
▪ 26 million hotel bookings annually
▪ 2 million rail bookings annually
▪ 304 million air segments annually
▪ Available in 30 languages.
► Over 295 million air segments are booked annually in the Travelport system. In one day,
this is enough to completely fill 1,539 Airbus A380 aircraft in one day.
Promotion as Part of the Marketing Mix
•
•
▪
▪
▪
▪
Promotion is the last of components in the marketing mix. We need to look at the many
different forms of promotion that are used in the travel and tourism industry and explore
the factors that organisations must consider when selecting which type of promotion to
engage in.
Promotion has four main interconnected purposes:
to raise and maintain customer awareness of products and services;
to inform customers of the product’s features;
to stimulate demand;
to encourage sales.
► In order to fulfil these purposes, organisations use a variety of methods of promotion, in
order to communicate with existing and potential customers.
Explore the main methods of promotion used in the travel and tourism
industry
Advertising
•
•
•
Advertising is a very visible means of communicating with customers which can itself
take on many different formats; however, it is also one of the most expensive forms of
promotion.
We are all probably most familiar with advertising as a form of promotion as it permeates
our everyday lives. Three different media can be used in advertising - broadcast media
(TV, radio, cinema), print media (newspapers, magazines, leaflets)
and display media (billboards, posters and signs).
Broadcast media can only be afforded by some of the leading travel and tourism roviders.
Small, independent organisations are more likely to use print media in promoting their
goods and services as their marketing budgets may not stretch to advertising on TV or via
billboards.
Case Study 7: Billboards as a marketing tool
Case Study 7: Billboards as a marketing tool
•
While internet marketing is currently seeing dramatic growth, it still pays to recognise the
immediate impact and potential instant
benefits offered by well executed, use of billboards - with
their equally instant, ‘on the road’ marketing messages.
• Internet versus Billboards? For destinations & attractions,
the issue is not so much one of competing promotional
choices, but using both to great complementary effect.
a) Multiple roles of Billboards - Billboards can serve to:
▪ Spark or prompt a spontaneous decision - during a travelers current trip. That
unplanned (and more often than not minor) detour to visit. The signage basically helps
them to ‘exit and experience’. The planning need: Identify the various logical entry ways,
but also the important functional & non-inhibiting entry and decision-making points, for
a destination or attraction. (Including - key junctions, borders, town bypass points,
alternative route options for same direction of travel, bridges, etc.) Factor this into
billboard selection, particularly their location and position in relation to vehicle flows and
direct driver/passenger sightlines.
▪ Remind and reinforce - keep a destination or attraction in the mind, increasing brand
awareness over time and influencing future decisions. Example: when used where people
live, or at a prominent location for a targeted geographic or) demographic market - to
influence their planning (or at least their set of considerations and factor more strongly in
their choice of alternative destinations.
▪ Provide direction - to people already heading your way, (Directional billboards are often
purchased for a 12-month period and placed within 50 to 100 miles from the attraction.)
Success with these roles is tied to issues such as:
▪ Location and visibility ; Design impact; Content impact, freshness.
At their best, billboard advertising campaigns aim to achieve reach and frequency in a
budget conscious way. And in theory at least, they can be viewed by thousands of
travelers in relatively short periods of time (See ‘Key considerations’ below.)
b) Key Considerations for Outdoor Advertising
Some criteria for use in evaluating your billboard:
▪ Car travelers normally have between 3 to 6 seconds to read a sign.
▪ Billboards need to be easily legible in less than 8 seconds at speeds over 65 mph.
▪ Because of the ‘drive-by time challenge’, design and content issues are paramount.
▪ Instant impact and immediate communication or impressions are needed.
▪ Include too much text and your sign’s content will be
either - not read or not absorbed.
▪ Good sightlines between the traveler and billboard’s
position (relative to the road) also matter.
▪ When more than one billboard is present on a
roadside site - each is competing for attention.
▪ Too many competing billboards on the one site can
mean failure to ‘see, read or absorb’ any!
▪ Under some circumstances, a seasonal approach may be necessary e.g. use of the
billboards during ski season to remind people in key markets/cities that the opportunity or
experience is now available, or will be in a month or so, to influence their advance
planning.
▪ At their best, billboard designs should not become ugly additions to the urban or natural
landscape. By reflecting some level of good art or aesthetics, they can increase their
appeal and impact.
▪
Publicity
•
Publicity is the name given to any activity that brings exposure to an organisation, a
product or a service, or in travel and tourism terms a destination. It can encompass many
of the other forms of promotion or marketing communications such as sponsorship,
public relations etc.
Point of sale displays
•
This is a specialised form of sales promotion used by travel and tourism providers to
bring linked products and services to the attention of customers at or close to a sales
counter. An example could include advertising local tours through display stands in hotel
reception areas.
Public relations
•
This is a form of publicity which involves creating a favourable impression of an
organisation and its products and services. Examples of public relations activities include,
using press releases or features on TV, the radio or in magazines, attending trade fairs,
organising familiarisation trips for travel trade representatives, and holding press
conferences.
Direct marketing
•
•
As its name implies, direct marketing occurs when the provider makes direct contact with
existing or potential customers either through the post, by email or by telephone.
This form of promotion enables organisations to target specific customers or market
segments. It is commonly used by hotel chains once a customer has registered their
details with them. Special offer emails or leaflets are sent on a regular basis to try and
entice customers to make a return visit.
Sales promotions
•
•
Sales promotion can take many forms and is a common method of promotion used by
travel and tourism providers.
It includes money off coupons/ vouchers (free entry to a theme park with a full paying
adult ticket; one meal free when three meals are purchased), competitions (win a holiday
by completing the slogan in your local newspaper), special offers (Buy One, Get One
Free), and loyalty incentives (frequent flyer programs, AirMiles).
Personal selling
•
This promotional method involves face to face communication with customers designed
to close a sale. Personal selling plays an important role for organisations such as tourist
attractions, trying to sell annual memberships or at hotels promoting the use of their spa
facilities and treatments.
Videos and the Internet
•
The advent of Internet has allowed organisations to demonstrate their products and
services through video clips on their own websites. Advanced technology allows video
clips to be shown on digital display boards at the airport, in tourist information centres
and even in hotel rooms.
•
Electronic media including the use of mobile technology
•
With the fast pace of changing technology, travel providers have recognised the value of
mobile technology in targeting potential customers. To this end, hotels, airports, and other
providers now offer the use of SMS to send travel and booking alerts to cell phones.
•
Many organisations now have Facebook and Twitter accounts as a means of
communicating with customers via these popular social media sites.
Identify and explore the factors that are considered when producing effective
promotional materials
•
Given the high cost involved in many forms of marketing and promotion, it is very
important that organisations plan their promotional campaign carefully, to gain maximum
benefit from any promotional material that they produce.
Costs
• Advertising can be a tremendous drain on an organisation’s limited budget. Therefore,
travel and tourism organisations must ensure that they select the most cost-effective
means of promotion and that the method they select matches the budget they have
available.
Stages of the promotional campaign
•
•
•
Carrying out each stage effectively will have a significant impact on the overall
effectiveness of promoting a specific product or service.
For example, if the wrong audience is selected, this could result in there being no interest
in the product at all.
Similarly, if the wrong media is selected, the messages may not be conveyed to the right
target audience.
There are normally six stages to a campaign:
• choosing an audience;
• establishing the message;
• selecting the appropriate media;
• setting the timing of the campaign;
• agreeing the advertising budget;
• measuring the results.
Target market segments
•
Ensuring that an advertisement is seen by the chosen target market for the products and
services being offered is an important factor in producing promotional materials.
•
A luxury health spa product will not appeal to the youth or student market; therefore, it
would not be beneficial to use social media such as Facebook or Twitter as the main
method of promotion. Instead, advertisements are more likely to be seen by the correct
target market segment, if they are placed in Beauty and Fitness magazines.
Timing
• Selecting an appropriate timescale in which to
run a promotional campaign is an important
point in ensuring the campaigns success.
• Advertising something too far in advance of
its availability may result in customers losing
interest in the product.
• Running a campaign too close to the expiry
date may not give customers sufficient notice in which to make a purchase.
Brand Image
•
•
We have already seen the benefits of branding and the creation of brand image earlier
within this chapter. Any promotional material should reinforce the association made with
the brand image for the product, service, organisation or destination.
Customers should be able to easily identify the brand from the materials, by recognising
the colours, logo, slogan of the brand within advertisements or other forms of publicity.
The AIDA principle
•
•
Once a piece of promotional material has been created, it is evaluated to see how
successfully it conveys the messages it has been designed to communicate. The main
method adopted, in evaluating the effectiveness of the promotional material, is the AIDA
principle.
AIDA is an acronym used to assess the appropriateness of any piece of marketing
communication or promotion in achieving the aim of raising awareness. The acronym
stands for the following.
Attention: Using bold fonts and headlines to grab the reader’s attention.
Interest: Using photographs and illustrations to create interest in the product. Clear pricing
information.
Desire: Using emotive language such as ‘beautiful’, ‘amazing’ etc. to make customers want to be
there.
Action: Providing contact details - telephone numbers, email addresses, website details so that
the customer can take action to access the product.
How your knowledge and understanding of the unit 5 content is likely to be
assessed
Question 1
a) Define the term brand loyalty.
(1 mark)
b) Identify and describe one method by which an airline influences the brand loyalty of its
existing customers.
(4 marks)
c) Explain, with examples from the travel industry, how customers are persuaded to switch
brands.
(6 marks)
Question 2
a) Define the term public relations.
(1 mark)
b) Describe two examples of how public relations may be used in the travel and tourism
industry.
(4 marks)
c) Discuss the advantages and disadvantages of the use of print and electronic media as
forms of promotional material for the business tourism industry.
(9 marks)
Question 3
a) Explain the difference between primary and secondary research.
(2 marks)
b) Give three reasons why it is important for tourism authorities such as the Ministry of
Tourism in X country to use SWOT analysis.
(6 marks)
Discuss how the Ministry of Tourism might use the marketing mix to maximise tourism
spending.