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Marketing
DESTINATION MARKETING
IMPORTANCE OF MARKETING TO TRAVEL AND TOURISM
ORGANISATIONS
Marketing- the management process responsible for identifying , anticipating and satisfying
customer requirements profitably.
Importance of marketing
More customers- marketing brings more customers to travel and tourism organisations. More
customers increases sales of the tourism organisations. These organisations will in return
become more profitable.
Competitive advantage- marketing plays an importance role in helping destinations or
organisations to attract more customers than their rivals, in order to survive in this competitive
business environment.
Positive image and reputation for sustainable practices
Marketing promotes what is good about a travel and tourism organisation’s product, price and
place. Promotional material creates a positive image of the organisation in the minds of
potential customers. Positive images of organisations help to attract customers. More
customers bring more sales hence, more profit.
Greater customer satisfaction
Marketing plays an important function in helping create customer satisfaction, by allowing a
customer to gauge whether the product will offer them exactly what they want or not. Greater
customer satisfaction encourages brand loyalty and repeat business. The choice of customers to
continue buying the same product from the same organisation brings more profitability.
FACTORS AFFECTING MARKETING
Target market
The type of customer a travel and tourism organisation tries to attract, for example families
with children
Appropriate timing
Planning when to market products and services, considering the most suitable time to attract
customers
Costs
There is always a need to consider cost for example costs of promotion and place.
Organisation’s reputation
For example, any Industry Award that can featured in a promotion
Brand image
The impression potential customers have of an organisation
Monitoring
Checking the organisation’s performance for example sales, usage, profitability and quality.
This can be achieved through customers feedback and reviews.
THE MARKETING MIX
The marketing mix includes the 4P’s of product, promotion, price and place.
It can be described as; getting the right product, to the right people at the right place using
the right promotional methods.
Product as part of the marketing mix
A product is anything that can be offered to a market that might satisfy a need. It includes
physical objects and services.
Characteristics of products
Tangible- you can see and physically hold a product e.g a meal in a restaurant.
Homogenous- ‘like’ products are all standardized ( 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
Storage- a product will last and is not perishable.
Characteristics of services
Intangible- services cannot be seen or physically held
Heterogenous- services are not standardized; 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)
Perishable- cannot be transferred for use at a later date. Cannot be stored.
For example, holiday packages are perishable: if a 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.
Development and modification of travel & tourism products
Customer needs, wants and expectations change all the time , taking into consideration the
rapid pace of change that the industry undergoes. As a result, travel and tourism providers
must constantly seek to develop new products and services that will appeal to their existing
customer base as well as attract new customers.
There are several ways used by travel and tourism providers to develop and modify products
and services to meet the expectation of customers
Product life cycle
INTRODUCTION STAGE
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 STAGE
Demand rising steadily
Competitors working on substitute products
Sales volume increasing
Levels of profitability increasing
This stage is critical to the success of the product
MATURITY STAGE
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 STAGE
Number of sales falls sharply
Organisation needs to decide whether to discard the product or re-launch
Costly stage for the organisation
Uses of the product life cycle for travel and tourism organisations.
Evaluate its products and services in the market to know the changes that can be made if
necessary
Identify which stage they are at growth. They can act on findings as some products are
popular and grow while others decline.
Improve competitive advantage. Enables the organisation to change promotional methods
to attract new market.
Helps the organisation to know the popularity of the destination
Helps in future planning since it provides information about expected future growth.
2. The creation of a brand image
Branding is a way of highlighting what makes one product or service different from and more
attractive than the competitors’.
Brand image is the perception customers have on the organisations products and services.
Importance of creating a brand image for travel and tourism organisations.
Raises awareness of the product- brand image raises awareness and encourage new
customers by showing potential customers what the product is.
Competitive advantage- brand image make the organisation easily recognizable and
memorable to potential customers. This can lead to increased visibility and considerations
in a highly competitive industry.
Building trust among customers- when tourists associate a tourism organisation with
positive experiences and reliable services, they are more likely to choose that organisation
due to increased customer satisfaction.
Highlights USP- brand image can effectively communicate the unique selling point and
values of the organisation. This helps in attracting potential customers and customers that
align with these values leading to a sense of connection and loyalty.
If the brand image is good, it can be used as a powerful tool to change the perception of an
organisation. If the brand looks polished and legitimate, it can influence and attract the
attention of potential customers and encourage repeat business.
Ways in which organisations can create a brand image
Use of unique selling point
Product features
Logo
Name
Slogan
Packaging
Price
PROMOTION AS PART OF MARKETING MIX
Promotion has four main interconnected purposes
Raise and maintain customer awareness of products and services
To inform customers of the product’s features
To stimulate demand
To encourage sales
METHODS OF PROMOTIONS
1. Advertising- this is a visible means of communicating with customers. It is one of the most
expensive forms of promotion.
Three different media can be used in advertising
Broadcast media- including TV, radio, cinema etc.
Print media- including newspapers, magazines, leaflets, brochures
Display media- billboards, posters and signs
2. Publicity
Publicity is the name given to any activity that brings exposure to an organisation, a product
or a service. It may include sponsorship and public relations.
3. Point of sale displays
This is specialised form of promotion used by travel and tourism providers to bring linked
products and services to the attention of customers. An example could include advertising
local tours through display stands in hotel reception areas.
4. Public relations
It’s a form of publicity that involves creating a favorable impression of an organisation and its
products and services. Examples include;
Press releases
Features on TV, radio or magazine
Attending trade fairs
Organizing familiarization trips
Holding press conferences
5. Direct marketing
The provider makes direct contact with the existing or potential customers either through
post, by email or telephone. This form of promotion enables organisations to target specific
market segments. This is commonly used by hotel chains once a customer has registered their
details with them. Special offer emails or leaflets are sent to them on a regular basis to entice
them into a repeat visit.
6. Sales promotion
It includes money off coupons, one meal free when three meals are purchased, competitions (
win a holiday by completing the slogan in a newspaper), special offers and loyalty incentives.
7. Personal selling
This involves face-to-face communication with customers designed to close a deal.
Videos and internet
Organisations demonstrate their products and services through video clips on their own
websites. Advanced technology allows video clips to be shown on digital display boards.
8. Electronic media including use of mobile technology
Travel providers have recognized the value of mobile technology in targeting potential
customers. Many providers now offer the use of SMS to send booking alerts to cell phones.
Many organisations have Facebook and Twitter as means of communicating with customers via
popular social media sites.
9. Trade promotions
Raising awareness of specific products and services with other industry partners ( travel agents,
tour operators) is a vital way of gaining word of mouth promotion. Attending a trade fair raises
the profile of all of the participating organisations. Familiarisation trips are held in order to
show off destinations to travel agents, with the hope that increased knowledge of the
destination at first hand will have a beneficial impact on future sales.
Factors to consider when producing an effective promotional material
1. Costs- travel and tourism organisations must ensure that they select the most cost-effective
means of promotion and ensure that it matches the budget they have available.
2. Stages of promotional campaign
Choosing an audience
Establishing the message
Selecting the appropriate media
Selecting the timing of the campaign
Agreeing the budget
Measuring results
Carrying out each stage effectively will have a significant impact on the effectiveness of the
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.
3. Target market segments
Ensuring that the advertisement is seen by the chosen target market for the products and
services being offered is an important factor in producing promotional materials.
4. Brand image
Any promotional material should reinforce the association made with the brand image for the
product, service, organisation or destination.
5. The AIDA principle
This is an acronym used to assess the appropriateness of any 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.
PRICE AS PART OF MARKETING MIX
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.
Costs and price work hand in hand; an organisation will take into consideration the actual cost
before setting the final price for a product.
PRICING POLICIES USED IN TRAVEL AND TOURISM IDUSTRY
Market penetration
This policy is used to gain entry into the market. When launching a new product into a highly
competitive market, artificially low prices are set initially to entice customers to try the
product. The aim of this strategy is to win a large customer base and generate revenue quickly
from a high sales volume.
Market skimming
This policy 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 high pieces, attracting customers who are
comfortable in the role of innovator-paying a relatively high price to be one of the first to try
the product. When the competitors enter the market with a number of substitute product,
this forces the price down making the product more affordable for a wider range of
customers.
Discount pricing
It is when the provider offers a discount on the original price; usually a percentage decrease in
price. For example when the provider reduces some prices such as for groups of more than six
tourists or offering half-price theatre tickets bought on the day of the performance. Many
providers would use this strategy when the product reaches close to its expiry.
Variable pricing
This policy is also known as price discrimination. Different prices may be set for different
seasons- high prices charged during high peak and low prices set when the demand is low.
Prices can also vary according to customer types. For example, full price entrance tickets to
tourists attractions for adults but reduced prices for children under 12.
Loss leader pricing
This policy involves setting a low price for one product to raise customer interest in other
products. For example, a free introductory tour to promote other available tours.
Premium pricing.
Setting high prices to make products seem special to create demand. This is set based on the
assumption that people will associate high prices with high quality.
Promotional pricing
Attracting customers by setting a temporary low price for a promoted product. This policy is
used to pull customer away from a rival. It persuades customers that they are getting value
for money or getting something free.
Competitive pricing
When there is a high degree of similarity between products offered by different
organisations, the price may be determined by the going rate. Tourism organisations may
offer to price match their competitors.
Price bundling
This involves pricing a few items of related products into a bundle and sold at a reduced
price. This is normally done by providers so as to sell their lesser popular products with the
popular ones.
Factors that determine pricing policies
Fixed and variable costs
This refers to all the expenses a business pays to buy or to produce its products and services.
All organisations will take into consideration the actual cost before setting the final price for a
product.
Profitability
Profit seeking organisations will adopt a policy that add value to the product to such an
extent that profit is generated, which is essential for survival within the market. Public sector
organisations are normally funded by the government and they will adopt a more relaxed
approach in setting the price as their main aim is to break even.
Subsidies and taxation
When markets are thought to be failing, governments or governing bodies tend to intervene
to put things right. They provide financial incentive to work in an area of regeneration or to
help improve basic infrastructure within a destination. The benefit of this to the customer is a
reduction in price.
Taxation is the opposite of a subsidy. When taxes are imposed on tourism providers, then
they are likely to pass on some of the tax charges to customers in form of high prices.
Competitors
If no substitute products are available, a higher price may be set. If the competition is high, a
provider may undercut the price set by price maker, in an attempt to gain new customers and
improve market share.
Customer expectations
Customer perception exerts one of the greatest influences on price. A customer has to have
confidence that the product or service presents value for money, otherwise thy will not buy it.
Seasonality
Products offered in high peak tend to be more expensive than those offered in off peak
season. This is a simple case of supply and demand.
Economic factors
In times of recession, customer may change their choices to more affordable ones forcing the
providers to reduce their prices. In times of economic boom, people tend to be willing to
spend more and tour operators are more confident of reaching their sales potential.
PLACE AS PART OF MARKETING MIX
The term place can be used in relation to the physical location and the distribution channels
used by tourism providers to get their products to their customers
Factors that influence choice of a location
Costs
Prime locations costs money. Areas with potential for tourism development will be costly. As
the area become more developed and land becomes less available, the cost of acquiring land
increases further. This limits the choice of where many providers are able to locate their
products.
Availability of suitable premises
Travel and tourism providers such as bureau de change and TIC’s require suitable premises in
the central business district. Similarly hotel chains require suitable premises with enough
space and visibility from which to operate.
Character of the area
Areas with political instability, high crime rates and social deprivation do not always make the
best tourist destinations. Travel and tourism providers also consider the standards of living
and cost of living in the area they choose for tourism development.
Local and transient population
Easy access to local population is important for workforce and potential customer base for
tourism providers. Transient population is also important to make full use of facilities being
offered
Adjacent facilities
It is beneficial to have linked tourism facilities close by- cafes near to tourist attractions,
restaurants and bars close to restaurants, enabling customer to have access to a wide range
of amenities. Providers will also assess the proximity of any competitors. Some providers will
opt for a location with less competitions to increase their customer base while others might
consider competition to allow customers make comparisons before making a purchase.
Access / transport links
It is important to ensure there is necessary level of infrastructure available to support high
volumes of tourists. Infrastructure should have enough carrying capacity to deal with
expected number of tourists. Also there is need for park and ride schemes to ease traffic
congestion.
Availability of staff
There is need for local population close to tourism centres to act as source of labour. Some
organisations also bring in a skilled workforce from other countries, when first establishing
presence in a new destination, whilst the local population receives training. There are issues
with likelihood of revenue leakage from destinations as these foreign workers will send the
money back to their countries. If local employees are hired, the wages would re-circulate
within that country as the multiplier effect.
DISTRIBUTION CHANNELS
This are ways in which the providers make their products and services available to customers.
This include:
Wholesalers and Retailers
Direct selling
Online selling
Wholesalers and Retailers
This is a very costly distribution channel both for the provider, in terms of the commission
they have to pay and for the customer because the final price of the product will reflect the
fact that a wholesaler and retailer need to earn money from the process. However using the
intermediaries enable the travel and tourism providers to gain access to a much wider
customer base. Through this channel, customers enjoy the level of professional service,
product knowledge and advice that a travel agent may offer.
Direct selling
This is the process where customers are able to obtain products and services direct from the
provider. The provider uses no intermediaries and is able to reduce costs as there is no
commission to be paid. However, the provide must take sole responsibility for marketing and
promotion of their products which is very expensive.
Online selling
This include the use of internet and the GDS.
This is an efficient channel of distribution as it allows customers to have a 24/7 access from
the comfort of their homes. Customers can be able to search, select and make a booking,
without needing any assistance in the process. The internet offers discounted prices because
of the lack of intermediaries.
GDS also enables the travel agencies to make accurate travel and hotel booking by being
able to view real-time data about seat and room availability. This technology uses
centralized processes to allow tickets to be produced instantly.
However internet has its limitation:
Not everyone has access to internet
Risk of identity theft
Lack of confidence in the security of online payments
No one to complain to incase anything goes wrong
MARKET RESEARCH
It is the planned process of collecting, recording, analysing and evaluating data about
customers and the market itself.
Reasons for market research
Identify the needs and wants of customers and potential customers
Understand the organisation’s position in the market
Analyse competitors
Create marketing plans
Identify the needs and wants of customers
To be able to identify customer needs and wants, travel and tourism organisations research
on:
What products customers want
The prices customers are willing to pay
The marketing places that customers find attractive
Understand the organisation’s position in the market
Travel and tourism organisations understand their market position by asking key questions
like;
Does the organisation has a key position in the market?
Is the organisation the market leader?
Are the competitors overtaking the organisation’s position in the market?
Analyse competitors
Travel and tourism organisations must analyse competitors to be able to understand
whether:
Other organisations are out-competing or overtaking the organisation in the market
The marketing mix of the competitor is stronger than theirs.
Create a marketing plan
Travel and tourism organisations reflect on market research findings to create a marketing
plan by asking the following questions;
What has the organisation learned from the market research?
