Transcript The business environment and visitor attractions

The business environment and
visitor attractions
Chapter 5
• Like any other organization, visitor
attractions exist within a business
environment, that is, they are affected by
a range of factors.
• The business environment has two main
components, namely, the
macroenvironment and the
microenvironment.
• The macroenvironment is made up of
general societal forces that may be on a
national or international scale. They
exercise a very strong influence on
organizations but cannot be controlled
by the organization. They are usually
split into four main types, with the
initials PEST – political, economic,
sociocultural and technological.
• The microenvironment covers the
specific key systems and players within
the immediate environment of the
organization, over which it has either
considerable influence or control. These
include the structure of the organization
itself, its suppliers and marketing
intermediaries, existing customers and its
competitors.
• In reality the business environment is a
complex web involving all these factors,
and it changes constantly over time.
• Overall the business environment of
tourism organizations is considered to be
one of the most volatile of all.
The macroenvironment:
Political factors
• These cover all the actions of
governmental bodies, including
organizations like the European
Commission, national government and
local authorities. They can be broken
down into a number of types as follows.
Legislation
• Laws passed by governmental
organizations can affect attractions in a
number of ways. Some affect the
management of the human resources in
terms of working conditions and health
and safety, for example. Consumer
protection legislation affects the
management of the attraction product
and the way in which the attraction is
marketed.
Public sector policy and
attractions market
Governmental bodies influence attractions
through their policies. The most
important element of policy that affects
attractions is economic policy.
– Transport policy (accessibility)
– Education policy (school field trips)
– Social policy (amount of vacation available)
Public sector policy and
attractions product
• The public sector policy does affect the
attraction product. First, there is the role
of government in conserving the
resources on which the attraction
product depends, such as the natural
environment or historic buildings.
• Second, there is the question of the
policy of government and local
authorities towards the management of
the attractions they own, like castles and
museums. In many cases publicly owned
attractions are the major attraction in a
destination. Therefore, how they are
managed will have a major impact on
the other attractions in the area.
• Attractions are also directly affected by
public sector policy towards tourism itself,
for example: whether or not governmental
bodies offer grant aid for the development
of new attractions or product improvement
at existing ones; also to what extent the
government markets its country as a tourist
destination, domestically and
internationally; and what types of attraction
it chooses to focus on in its marketing
campaigns.
• The roll call of publicly owned attractions
reads like a ‘Who’s Who’ of top
attractions and includes places like the
Tower of London in the UK, and the
Louvre and Pompidou Centre in France,
and also events, such as the Trooping of
the Colour in the UK.
Economic factors
• Governmental bodies also play a major
role in the economic factors affecting
attractions through their economic policy.
The economic factors can again be split
into those that affect the market and
those that affect the attraction product,
as follows.
Economic factors and the
attraction market
• The attraction market is affected by a
number of economic factors given that
its success depends on people having
disposable income which they are willing
to spend, and leisure time. Actual
disposable income is affected by the
other calls which are made on people’s
incomes, such as accommodation and
food.
• Therefore, mortgage interest rates and
inflation are important factors for
attraction operators. Equally important,
though, is the issue of perceived
disposable income. People may have
money but feel they should not dispose
of it and so save it in case they become
unemployed, or use it to pay off credit
they have accumulated.
• So far we have focused on the individual
but the other crucial economic issue for
the attraction market is how income is
distributed throughout society as a
whole. This is influenced by a number of
factors, including:
– the level of unemployment
– the number of people on pensions and
social security benefits and the relative
generosity or otherwise of these benefits
– taxation policy
– relative wage levels and the differential
between industries and between manual
workers, white-collar workers, professionals
and managers.
• Finally, there are a number of economic
factors that affect the market such as
gasoline prices and public transport
charges. In terms of the international
market, currency exchange rates are also
an important determinant of market
demand for certain types of attractions
with international catchment areas.
Economic factors and the
attraction product
• The development and management of
the attraction product is heavily
influenced by economic factors. New
product development is adversely
affected by high interest rates, and the
fall in demand caused by recessions.
Likewise, the operation of attractions is
affected by economic phenomena like
inflation and wage rates.
Sociocultural factors
• A number of sociocultural factors are
crucial to attractions, the most important
of which are described below.
Demographic trends
• A number of aspects of demography are
of interest to attractions, including:
– the age structure and class structure, given
that certain types of attractions appeal
mainly to particular age groups and classes
– the structure of the family and the number
of children in households, given that many
attractions specifically target the family
market
– the number of young people in full-time
education, who constitute another important
market segment
– the geographical location of people, which
determines the potential catchment area of
an attraction
– the existence of a diversity of ethnic
minorities with their own traditional patterns
of leisure activities.
• The changing nature of the so-called ‘family
life cycle’ is of crucial importance for
attractions. The traditional model was based
on the idea that one followed a clear path
through life: Child–Young adult–Young
couple–Young couple with baby–Growing
family–Empty-nesters–Elderly.
• As we have seen, this highly stereotypical
model does not fully reflect the reality of
the early twenty-first century.
Who is the target market for
these ads?
• Philadelphia:
http://www.youtube.com/watch?v=3Uo15DMmbwk
• Key West: http://www.youtube.com/watch?v=wpo2sS6PzlA
• Story
• http://www.youtube.com/watch?v=jwGXdKIoiDY
•
•
•
•
More stories if you are interested:
Tel Aviv: http://www.youtube.com/watch?v=SklIj5MBces
Argentina: http://www.youtube.com/watch?v=iaVGVHoICdY
NYC: http://www.youtube.com/watch?v=CkTegYrwBF8
Technological factors
• The attractions business is being
increasingly affected by technological
factors, in three main ways, namely:
technology and the attraction product;
technology and the management of
attractions; and technological
development as competition for
attractions.
Technology and the attraction
products
• Technology has always been important
for the attraction product but at the
present time exciting new developments
are making its role even more crucial
(artificial reality, lasers, etc.)
• Compare your experience at amusement
parks with this Kodak commercial:
http://www.youtube.com/watch?v=tsT7PmkBJTk
Technology and the management
of attractions
• Technology is increasingly important in
the management of attractions to
improve efficiency (computer and
internet).
Technology as competition for
attractions
• However, just as technology can be
beneficial for attractions, it can also provide
competition for them. Technological
developments are making the home a
veritable entertainment centre, through
cable and satellite television, videos and
increasingly sophisticated computer games
for example. For some types of attraction
such home-based entertainment is a direct
competitor.
•
Build your own rollercoaster: http://www.youtube.com/watch?v=wMtAK5SZ4yU
Natural factors
• We have now completed our brief
summary of the key political, economic,
sociocultural and technological factors
that affect attractions. However, there are
commentators who would say that there
is a fifth set of influences, namely natural
factors. All attractions are to some extent
dependent on one natural factor, the
weather.
• We can also extend the concept of
natural factors to include the natural
environment as a whole. As this is often
an attraction in itself, its health and
conservation is clearly an important
consideration for some attraction
operators. Examples of this include
wildlife reserves in Africa and woodlands
such as the New Forest in southern
England.
The microenvironment
• There are, as we said earlier, five main
components of the microenvironment, in
other words, the organization itself, its
suppliers, its marketing intermediaries,
existing customers and its competitors.
The organization
• The effectiveness of the management
and marketing of an attraction is heavily
influenced by the nature of the
organization itself in terms of the
following characteristics:
– the management structure and whether or
not there is a rigid hierarchy or a flattened
hierarchy
– the management style, which may range
from highly supportive and encouraging
staff participation in decision-making to the
idea that managers give orders and staff
obey
– the culture of the organization, which can
be entrepreneurial or bureaucratic, risktaking or cautious, open or defensive, driven
by enthusiasm or fear
– the way in which functions are arranged
within the organization and which are the
most influential departments. In some
attractions marketing will dominate and all
staff will be told that they are part of
marketing. At other attractions financial
management will be all powerful and
marketing may be relegated to being a job
for just one or two people who live in an
office with ‘Sales and Marketing’ on the
door.
The suppliers
• Attractions like other sectors of the
tourism industry and industry generally
are becoming increasingly concerned
with the activities of their suppliers for
two main reasons. First, the attraction is
often judged by customers on the
quality of goods and services provided
by the supplier.
• Second, legislation such as the UK Food
Safety Act 1991, with its underlying
principle of product liability, is making
attractions want to control their suppliers
to prevent possible criminal charges and
civil lawsuits arising from defects in
goods and services originating from their
suppliers.
•
http://www.youtube.com/watch?v=a-QN1PwuKiw
• Attractions can have a bewildering
variety of suppliers, depending on how
one defines ‘supplier’. Any list of
suppliers would include the people and
organizations who provide the attraction
with:
– food to be sold in the on-site catering
outlets; these may well be small local
suppliers
– souvenirs to be sold in the museum shop,
which will often be made by lots of different
individuals and companies
– museum artifacts, which could come from
other museums, commercial dealers or as
donations from members of the public
– goods such as cash registers and kitchen
equipment
– staff uniforms
– specialist services such as the restoration of
old machinery; some of these people could
be voluntary helpers
– the suppliers of education and training for
the museum staff.
• Some attractions do try to buy from
local suppliers wherever possible to help
maximize the local benefits of tourism
and to generate goodwill in the local
community.
The marketing intermediaries
• Organizations are also becoming
increasingly concerned with the activities
of their marketing intermediaries; in
other words, the people who are the
interface between them and their
customers, the people who distribute the
product to the customers on their behalf
and those who provide messages about
the product to the customer.
• On the face of it, attractions have few
marketing intermediaries but on further
investigation it is clear that there are
several, including the following examples:
– tourist information centres which display
brochures and sometimes offer tickets for
sale
– tour operators who include attraction visits
in their package holidays which they then
sell to their customers
– group visit organizers who have to ‘sell’ the
attraction to the members of the group
– travel writers in the media who provide
information about attractions for the public.
Customers
• When considering customers as a factor
in the microenvironment one should
distinguish between existing customers
and those who are currently non-users.
• With regard to existing customers again
there are two main types – regular visitors
and first-time visitors. With the regular
customer the attraction may wish to use
their wide experience of the attraction by
carefully monitoring their level of
satisfaction and by tackling the problems
they identify. Perhaps they should be given
rewards for their loyalty such as ‘season
tickets’, and special events, exclusively for
regular customers.
• The challenge with first-time visitors is to
impress them so much at the first
attempt with the quality of the product
and the service that they will become
regular customers. Incentives may be
required to encourage ‘brand loyalty’.
• Non-users, too, are of two types – exusers and those who have never used
the product. Ex-users are very important
because the reasons they give for no
longer being users of the attraction can
help attraction operators recognize
problems that may not otherwise come
to light. Incentives may be needed to
tempt these people back to using the
attraction.
• Finally, attention should be paid to those
who have never used the attraction, to
find out why. Incentives may help to
convert some into first-time users, but it
may be that no amount of effort will
persuade some non-users as the
attraction simply does not appeal to
them.
• Only existing customers are generally
considered to be part of the
microenvironment as only they are really
capable of being influenced or controlled
by the attraction, rather than non-users
over which the attraction has much less
influence.
Competitors
• An organization’s relationship with its
competitors is a two-way link, in that
you influence your competitors and they
influence you. Organizations are either
trying to catch up with their competitors
or are trying to stay one step ahead of
them.
• Most industries have no difficulty in
identifying their main competitors on the
basis of identifying who else offers
similar products to similar target markets.
For attractions, however, it is often far
more difficult to identify competitors, for
competitors exist on several levels. There
are the other attractions, which offer a
similar product to a similar market.
• There are also all the other uses of
leisure time and expenditure which are
not part of tourism, such as gardening,
reading, home entertaining and so on. It
could be argued that competition for
attractions is virtually anything that
potential customers might be doing with
their leisure time and disposable income
when they could otherwise be visiting
the attraction.
• Once competitors have been identified it
is important to investigate them with
regard to:
– the main product they offer and their target
market
– their strengths and weaknesses
– their future plans.
• The key to successful visitor attraction
management lies in anticipating changes
in the factors and responding to them in
a proactive rather than a reactive way.
This implies a crucial role for market
research and constant scanning of the
environment.
Discussion questions
• 1. Discuss the ways in which economic
factors can affect visitor numbers,
development plans, and operations at an
attraction.
• 2. Discuss the importance of suppliers
for visitor attractions, using examples.
• 3. Evaluate the importance for the
attractions sector of public and
governmental concerns over
environmental issues.