Chapter 7 Tourism Marketing

Learning Objectives        Describe the differences between

the marketing of tourism services

and traditional product marketing. Compare and contrast the different approaches to marketing associated with production, selling, marketing, and societal

marketing orientations

.

Explain the concept of

market segmentation markets

are selected.

and how

target

Define

positioning

and explain how it is used in tourism.

Explain

the product life cycle

tourism.

concept and how it applies to Describe each of the steps of

the marketing planning process

in tourism.

List and describe the elements of

the marketing mix

.

Overview

       Tourism marketing is unique; Tourism marketing defined; Marketing orientation; Market segmentation; Positioning; Product life cycle; Marketing planning process;

Tourism marketing is unique

   Tourism is a mixture of several services and some facilities and products.

Package -

Interdependence

 DMOs have

little control over the qualities and quantities,

and must rely on the other tourism organizations.

  Tourism is a combination of personal services and certain physical facilities and products.

An intangible experience

is offered. Tourism is highly

perishable

commodity. Tourism consumption and production take place at same time. Tourism supply can’t be stored. Not easy to provide consistent quality of service.

Tourism demand is highly elastic, seasonal in nature.

Definitions of Tourism Marketing

 The French School / Robert Lanquard  Swiss School / Jost Krippendorf  The American School / J.J. Swarchz  The American Marketing Association/AMA  A popular definition in the United States

Definitions of Tourism Marketing

 French School ( Robert Lanquard): Is an attitude of permanent research to satisfy the social- psychological needs of the tourist, the host community and tourism organizations (private and public sectors).

Swiss School (Jost Krippendorf):

 Is a systematic adoption of policies by the public & private sector at all levels for the satisfaction of a pre-determined group of consumers.

The American School / J.J. Swartchz

Is the mix and in-depth research of the four elements: Product, Place, Promotion and Price, to obtain the wanted sales volume.

The American Marketing Association

Is a planning process for the execution of concepts and strategies on the ‘ 4P ’ s to create exchanges and satisfy the needs of the clients, the destination or the organizations ’ objectives.

Marketing

 A popular definition in the United States Is all the stuff you do to make money!

Marketing VS Sales

The objective of marketing is “ to please and serve the needs of the clients while making business ” To sale is an attitude geared to success in the fundamental objective to sale not matter what!!

Tourism Marketing Definition

 A systematic process of planning, researching,implementing,controlling and evaluating the “ 10 Ps ” as components of the marketing mix.

 Five key functions of marketing

– Marketing Orientation Tourism Marketing Historical Evolution 20 ’ s >>>> USA 50 ’ s to 60 ’ s – Production Era 70 ’ s to 80 ’ s – Sales Era 80 ’ s to 90 ’ s – Marketing Era 2001 … Societal & Sustainable Marketing

Marketing Orientation – Tourism Marketing Historical Evolution 

Production Era

: The demand exceeded the supply; the emphasis is placed on the services and products.

Sales Era

: The capacity met the demand; focus on the need of the seller.

Marketing Era

: The supply exceeded the demand; focus on the needs and wants of the visitors.

Societal Marketing Era

:Destinations & businesses / social responsibility

Marketing Orientation – Societal and Sustainable Marketing  Recognizes the need for:      New products (designed with sustainable principles) Fresh services Customer ’ s satisfaction Standards of quality Sustainable practices  Social responsibility of business (examples)  Businesses as part of society

Market Segmentation

 Is a process through which people with similar needs, wants, and characteristics are grouped together so that a tourism organization can use greater precision in serving and communicating with these  It is a two step process:  market segments and target markets.

Reasons for Market Segmentation

 Not possible to serve the total market   Total market is not homogeneous Customers react differently to 4 P ’ s  To properly identify target markets  To better position the product  To better serve the customer  To compete more effectively  To achieve organizational goals such as higher profitability, effectiveness, service quality

Segment Marketing

Targeting a group of customers who share a similar set of needs and wants

Criteria for Marketing

       

Segmentation

Measurable: potential customer number can be estimated Substantial: sufficient numbers of visitors in a segment Accessible: can be reached and influenced Defensible: characteristics different enough Durable and Sustainable: maintain its uniqueness Competitive Homogeneous: similar enough in the same segment Compatible: between segments

Bases for Segmentation

 What characteristics or bases should be used to divide a tourism market into segments?

 The alternatives are numerous, including the following 7 broad categories (for some authors 8).

Categories or Types of Segmentation

1. Geographic (location) 2. Demographics (age, sex) 3. Purpose of Trip (business, pleasure) 4. Psychographics (lifestyle) 5. Behavior (brand loyalty) 6. Product-Related (appeal to service) 7. Channels of Distribution (dividing travel intermediaries) 8. Price (for some authors)

Four approaches to market segmentation



Undifferentiated marketing

demand is homogeneous) (Assuming the 

Differentiated marketing

(could be really different segments or different promotional approaches) 

Concentrated marketing

market or niche marketing) (focus on a single 

Customized marketing

(for each individual)

Positioning



Is the development of a service and marketing mix to occupy a specific place in the minds of customers within target markets.

Reasons for Positioning

There are three main reasons for positioning: 1. Perceptual Processes 2. Intensified Competition 3. Volume of Commercial Messages

Advantages of Positioning

 Helps reduce vulnerability to external events  Reduces risk for the consumer at the point of purchase by showing the expected quality  May attract other segments  Provides focus to all stakeholders (strong brands benefit everyone)  Key to repositioning in case needed

The Five D ’ s for Effective Positioning 1. Documenting

: Identifying the benefits important to customers who buy your type of service.

2. Deciding:

Deciding on the image that you want customers to have within target market

The Five D ’ s for Effective Positioning

3.

Differentiating:

Pinpointing the competitors you want to appear different from.

4.

Designing:

Providing product or service differences and communicating these in positioning statements and other aspects of the marketing mix 5.

Delivering

: Making good on your promises!

Branding

 “ A name, symbol, design or some combination which identifies the “ product ” of a particular organization as having differential advantage ”  Powerful corporate brands can override weaker destination brands

Product Life Cycle

Sales and Profits Over the Product’s Life From Inception to Demise Sales and Profits ($) Sales Profits Growth Maturity Time Decline Product Develop ment Losses/ Investments ($) Introduction

New Product Development

    Sales are zero The company’s investment costs add up Most expenditures Financial losses

Introduction

           Small variations Distribution, technical problems Difficult to sell Slow sales growth as the product is being introduced into the market High promotional expenditures Profits nonexistent due to high product introduction expenses Only a few competitors Focus on sales to the higher income groups High price to cover expenses High production, marketing costs At this stage – even many years

Introduction

      Tasks: Establish positive image Develop customer loyalty Gain good marketing intelligence Increase market share Develop primary demand   Strategy: Expansion: increase annual growth, market share, number of target markets

Growth

           Rapid market acceptance Increasing distribution Spreading costs over the increasing number of outputs Increasing sales and profits Early adopters continue to buy Developing customer trust and loyalty Later buyers start following Positive word-of-mouth More competitors Prices remain high Higher promotional expenses

     

Growth

Tasks: Maximize sales and profit Create new 4 P’s Promote uniqueness Launch new brands Cut prices    Strategy: Penetration of a new market: redefine market segments, find new markets, extend the existing markets, Use positioning to the full, improve quality, modify product, increase volume of the product

Maturity

               The product has achieved acceptance by most of its potential buyers Distribution is maintained Promotional expenses high Greater competition Market highly segmented Product quality at the highest level Sales growth slows down Supply exceeds demand Overcapacity Price war Increased advertising, sales promotion Stealing customers Hard sales Profits level off or decline Increased marketing outlays to defend the product against competition

Maturity

        Tasks: Differentiate product Differentiate packaging Find new use, attributes Stress price, discounts Further segment the market/s Take over the market share from competitors Increase promotion

Maturity Strategies

        Increase the use among present customers (e.g. salads in McDonald) Look for new market segments Change the marketing mix for new segments (price, better ads) Change the product mix (length, width, depth) Modify and, differentiate Focus on durability, quality, peed, taste, style Reposition Maintain growth

Decline

       Aging product Sales fall off quickly (new products, new preferences, advances in technology, increased competition) Many replacements and substitutes No incentives to buy Decrease in demand Increase in production costs Profits drop

    

Decline

Tasks: Increase productivity Search for new products Search for new opportunities Review sales, profitability      Strategy: Keep the markets Develop new products Maintain, harvest (reduce cost), terminate Shopping malls and tourists

Product Deletion Process ( Martin Bell, Marketing Concepts and Strategy, 3rd ed., p.267, 1979, Houghton Mifflin Company; used by permission, Mrs.. Marcellette (Bell) Chapman. )

How to design a Marketing Plan?

Marketing Plans

Meticulous study of

Political Social Economic Demographics Technological and Physical Environments

Incorporates sustainable tourism principles and practices

Marketing Plan

 A written document containing description and guidelines for an organization ’ s or destination ’ s product ’ s marketing strategies and programs for offering their products and services over the defined planning period, often a year.

Marketing planning process Five Key Questions To Answer 1. Where are we now? 2.

Where we will like to be? 3. How do we get there? 4. How do we make sure we get there?

5. How do we know if we got there?

Marketing planning process 1. Where are we now?

1.

Where are we now? / Situation or Market Analysis

1.1. Customer Behavior 1.2. The Buying Process 1.3. Analysis (SWOT) 1.3.1 Market Environment A.

1.3.2 Community Analysis 1.3.3 Primary Competitor Analysis 1.3.4 Market Potential Analysis

Marketing planning process 2. Where would we like to be?

2. Where we will like to be? / Market Research

2.1. Market Segmentation, Size and Trends 2.2. Positioning Service Analysis, Design & Formulation 2.3. Market Strategies

Marketing planning process 3. How do we get there?

3.1. Marketing plan

3.1.1 Objectives, goals and strategies, positioning

3.2. Programs and activities

3.2.1. Promotional Mix (select tools) 3.2.2. Advertising Campaign (media selection)

3.3. Final Budget

Marketing planning process 4. How do we make sure we get there?

4. How do we make sure we get there?

— Control

Marketing planning process 5. How do we know we get there?

5. How do we know if we got there?

— Evaluation

The End

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