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Copyright ©2011 by Pearson Education, Inc.publishing as Pearson [imprint]

It’s Tourism: Concepts and PracticesJohn Walker

Tourism Marketing

Chapter 3



Objectives• After reading and studying this chapter,

you should be able to:– Describe the steps in the marketing system

• Explain why marketing is important for companies in the tourism industry

– Explain the role of a market situation analysis • Name four aspects of the SWOT analysis

and how they can be used for strategic planning



Objectives (cont’d.)– Identify steps in the marketing

segmentation process– Name and describe tourism marketing

Ps – Outline significant trends in tourism

marketing– Explain how sales are conducted and

managed in the tourism business



• Marketing – Critically important to success of tourism

organizations– All about tourists’ needs and wants

• Providing them at a reasonable cost and profit

– Begins with a philosophy, vision, and mission statement

Introduction



• Creating great tourist experiences– Means finding a product or service that a

number of people need or want

• Many people believe marketing is the same as sales– Sales is one of the tools of marketing

used to promote and build business

Introduction (cont’d.)



• Marketing orientation – Philosophy of understanding what

tourists want and need– Developing products and services that

best meet their needs– Communicating with them to generate

awareness, interest, and purchases




• Sales orientation – A company develops products and

services that it thinks tourists would like and then sells the services

• Marketing orientation listens to tourists– Ensures tourists will like and buy products

• Sales orientation dictates to tourists




• Businesses market on a continual basis– Systematic and continuing activity – Must be constantly involved in all steps

of the purchase process • Offering different products and services

meaningful and relevant ways

The Marketing System



The Marketing System (cont’d.)

Figure 3–1 • The Marketing System



• Marketing is about:– Attracting the right tourists– Delivering superior service quality and

value– Exceeding tourist expectations – Establishing a relationship that ensures

continuous loyalty

Importance of Marketing



• Tourist loyalty– Very important concept in tourism

• Measured in several ways

– Loyal tourists: • Use/visit the same place/business more

frequently• Spend more there• Recommend the business to others• All decisions and actions should improve

tourist service

Importance of Marketing (cont’d.)



• Tourists pay salaries of tourism employees– The tourist is really our boss

• We should look at things through tourists’ eyes

• Leading tourism corporations have a strong marketing orientation– Philosophy of providing value and

exceptional service for tourists




• Marketing is important for any business that wishes to sell a product or service– A way to find out what tourists want– Informs of an available product and

encourages use– Explains product advantages and

distinct characteristics– Makes it easier to exchange products,

services, and money




• Tourism product– Perishable

• Cannot be stored for later sale at a later date

– Intangible• Destination cannot be experienced until

arrival

– Variable• Heavy human element• Service quality and output are subject to

extreme variability

Tourism’s Unique Product



• Sound strategy starts with sound research– Successful tourism entities continually

scan for:• New market opportunities • Emerging threats• Internal and competitive environments

Strategic Planning



• Market situation analysis is composed of the:– Industry in which business is conducted– Macroenvironmental factors (e.g.,

sociocultural, economic, and technological, and political-legal)

– Competition– Internal business environment

Strategic Planning (cont’d.)



• SWOT analysis– Strengths and weaknesses

• Factors within the organization• Positive impacts• May be controlled internally

– Opportunities and threats • External factors• Negative impacts• Out of ownership/management’s control

Market Situation Analysis



Situation Analysis (cont’d.)Figure 3–2 • Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis



• Strengths – Positive internal characteristics of the

entity (e.g., good employees)

• Weaknesses– Within the control of the

ownership/management• Typically, organizations evaluate a list of

factors on an internal and competitive basis

Situation Analysis (cont’d.)



• Opportunities – Positive possibilities

• Originate in outside environment (e.g., strong economy)

• Threats– Negative factors in the outside

environment• Out of the management’s control (e.g., high

gas prices)




• Competitive analysis – Done utilizing information from strengths

and weaknesses of SWOT analysis• More detailed analysis of key competitors• Leads to an action plan of how to increase

market share

• Market potential– Estimation of potential market

• Total available demand




• More complex due to shrinking markets– Generalization: people will take shorter,

less costly vacations to destinations closer to home

– Solution: offer greater value for the money (e.g., airline promotion packages, destinations pairing packages)

Marketing in a Recession



• Process of market segmentation– Market is divided into different groups

with similar characteristics– Tourism entity creates a profile of each

segment– Entity analyzes which segments it

should target based on size, profit potential, accessibility, and desire of each group

Marketing Segmentation



• Geographic segmentation– Focuses on segmenting the market

based on where people live or are from• Often done by zip code

• Demographic segmentation – Market is sliced into groups of people

who exhibit similar demographic characteristics (e.g., age, income, gender, ethnicity, and educational)

Segmentation (cont’d.)



• Psychographic segmentation – Focuses on attitudes of tourists in terms

of social values and lifestyles (e.g., attitude towards technology)

• Behavioral segmentation– Slices market into groups of people with

similar consumption behavior (e.g., regular versus first-time visitors, or special occasion versus get away)

Segmentation (cont’d.)



• Identifying target markets– Segments are reviewed regarding

attractiveness in terms of size and value• People who are visiting friends and family,

domestic and international• Leisure travelers, domestic and international• Business travelers, domestic and

international• Group tours travelers, domestic and

international

Targeting



• Market positioning– Most look to position product in tourists

minds ahead of the competition• Better than the competition• Different from the competition• Opposite of the competition

– Creating an image for the product that will make people desire it and hopefully buy it

Positioning



• Most important considerations when developing a brand:– It must be easy to remember– It must have a positive connotation– It must be graphically shaped in a way

that it can be easily recognized on different kinds of packages and in different sizes

Brands and Brand Marketing



– It should look good in color and black and white

– It must be easily seen so that it will catch tourists’ eyes wherever it is

– It must be usable, positive, and inoffensive

Brands (cont’d.)



• Professor Neil Borden: six elements– Product, price, place, promotion,

servicing, and marketing research

• McCarthy: reduced to four elements (four Ps) – Product, price, place (distribution), and

promotion• Additional Ps were added: process, physical

attributes, and people

Marketing Management



• Product– Items sold by companies in the tourism

and hospitality industries • Services• Tourism destinations

– Tourist expectations are central

Marketing Management (cont’d.)



• Product life cycle– Introduction

• Destination becomes readily accessible

– Growth• Destination grows in popularity




– Maturity• Number of tourists levels off and growth and

market share flatten

– Decline• Number of tourists visiting a destination

declines as well as use of the tourism-related businesses





Figure 3–4 • A Destination’s Product Life Cycle



• Methods for pricing– Cost-plus pricing

• Company calculates fixed and variable costs for one unit of the product and desired profit is added

– Price-floor pricing• Used when demand is low• Some products are sold lower than target

price




– Demand-based pricing• Based on demand and not production costs

– Penetration pricing• Low price is charged from the beginning

– Trial pricing• Low initial price is raised after trial period

– Parity pricing or price matching• Follows competitors pricing




– Value pricing• Focuses on how much tourists value the

product

– Negotiated pricing• Price is open for negotiation

– Quantity pricing• Discounts are given for large orders




– Cash and seasonal discounts– Two-part pricing

• Two components of the total price

– Pricing by priority• Those who pay the most have first priority

– Price bundling• Products are sold as a package




• Place/location/distribution– Availability in traditional marketing means

the market can access the product• In tourism, place is often discussed as location

• Promotion – Several ways of promoting

• The best way depends on the product, target market, and other factors




Marketing Management (cont’d.)Figure 3–5 • The Distribution System for Tourism




Figure 3–6 • The Effect That Promotion Has on the Buying Process



• Frequently used tools for promotion:– Sales promotion– Advertising– Magazines– Personal selling– Public relations– Direct mail and e-mail– Websites, television, and radio




• Successful marketers understand differences and need for proper research– A product may be the best available, or

give the the best value• No guarantee tourists will buy it

– A product popular in one area may not raise much interest in another

• People have different interests and preferences

Understanding Markets



• Destination marketing– Business of marketing a country, state,

or city is still marketing– Basic principles of creating value still

apply• Product: features of the destination• Price: total cost to the target market• Place: may refer to accessibility• Promotion: value for the money

– Use of marketing tools

Markets (cont’d.)



• Extension of how each tool will be used to construct a strategy to achieve goals– Who the competitors are – How the entity fares in the marketplace– In the case of a new entity, how it can be

expected to fare in comparison to the competition

Marketing Action Plan



• Once the target market is identified:– An entity can decide what is to be

accomplished by marketing– Next, the questions flow

• Action plan provides answers

Marketing Action Plan (cont’d.)



• Outline for a marketing action plan:– Overall marketing objective– Target market description– Strategic actions

• Product• Price• Promotion




• Marketing plan sections:– Executive Summary– Corporate Connection– Positioning Statement– Environmental Analysis and Forecasting– Segmentation and Targeting– Next Year’s Goals




– Action Plans: Strategies and Tactics– Resources Needed to Support

Strategies and Meet Goals– Marketing Control– Presenting and Selling the Plan– Preparing for the Future




• Marketing focuses on the tourist• Sales focuses on the product or service

– Sales department is responsible for making sales to tourists in the target market

• Increases market share

– Sales team may be split up according to various target markets

• Maintains account files with follow-up ticklers

Sales



• Important trends:– Likely be a strong potential for growth in

terms of tourism marketing• Consequence of pent up demand for tourism

resulting from the economic downturn

– Tourism and hospitality market is becoming increasingly more global

• Issues such as cultural diversity and ethical responsibility become more important

Trends in Tourism Marketing



– More tourism entities are realizing the true importance of retaining tourists

• Companies are marketing heavily to current and previous tourists

– There will continue to be tremendous growth in marketing and sales over the Internet

Trends (cont’d.)

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