MGT 438 Ch03

Tourism
concepts and Practices
Chapter3
Tourism Marketing
Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

John Walker | Josielyn T. Walker All Rights Reserved
Introduction
• 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 (cont’d)
• 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

• 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

The Marketing System
• 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

Figure 3–1 The Marketing System

Importance of Marketing
• 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 (cont’d)
• Tourist loyalty
 Very important concept in tourism
• Measured in several ways

• Tourist loyalty
 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

• 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’s Unique Product
• Tourism product
 Perishable
• Cannot be stored for later sale at a later
date
 Intangible
• Destination cannot be experienced until
arrival

Tourism’s Unique Product (cont’d)
• Tourism product
 Variable
• Heavy human element
• Service quality and output are subject to
extreme variability

Strategic Planning
• Sound strategy starts with sound

research
 Successful tourism entities continually
scan for:
• New market opportunities
• Emerging threats
• Internal and competitive environments

Strategic Planning (cont’d)
• 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

Market Situation Analysis
• 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

Figure 3–2 Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis

Situation Analysis (cont’d)
• 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

• 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

Marketing in a Recession
• 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 Segmentation
• 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

Segmentation (cont’d)
• 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)

Targeting
• 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

Targeting (cont’d)
• Identifying target markets

 Segments are reviewed regarding
attractiveness in terms of size and value
• Business travelers, domestic and
international
• Group tours travelers, domestic and
international

Positioning
• 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

Marketing Management
• 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 (cont’d)
• Product
 Items sold by companies in the tourism
and hospitality industries
• Services
• Tourism destinations
 Tourist expectations are central

• 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

• Place/location/distribution
 Availability in traditional marketing
means the market can access the
product
• In tourism, place is often discussed as
location

Figure 3–5 The Distribution System for Tourism

• Promotion
 Several ways of promoting
• The best way depends on the product,
target market, and other factors

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

Understanding Markets
• 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

Understanding Markets (cont’d)
• Successful marketers understand

differences and need for proper
research
 A product popular in one area may not
raise much interest in another
• People have different interests and
preferences

• Destination marketing
 Business of marketing a country, state,
or city is still marketing

• Destination 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

Marketing Action Plan
• 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 (cont’d)
• 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

• 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

• Marketing plan sections:

 Action Plans: Strategies and Tactics
 Resources Needed to Support Strategies
and Meet Goals
 Marketing Control
 Presenting and Selling the Plan
 Preparing for the Future

Sales
• 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 (cont’d)
• Marketing focuses on the tourist

• Sales focuses on the product or service
 Sales team may be split up according to
various target markets
• Maintains account files with follow-up
ticklers

Trends in Tourism Marketing
• 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

(cont’d)
 Tourism and hospitality market is
becoming increasingly more global
• Issues such as cultural diversity and
ethical responsibility become more
important

(cont’d)
 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


MGT 438 Ch03

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Tourism

concepts and Practices

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Creating great tourist experiences

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Businesses market on a continual basis

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Tourists pay salaries of tourism

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Marketing is important for any business

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Sound strategy starts with sound

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Market situation analysis is composed

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• More complex due to shrinking markets

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Process of market segmentation

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Identifying target markets

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Identifying target markets

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Professor Neil Borden: six elements

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Product life cycle

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Methods for pricing

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Methods for pricing

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Methods for pricing

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Methods for pricing

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Frequently used tools for promotion:

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.

• Successful marketers understand

Tourism: Concepts and Practices Copyright © 2011 by Pearson Education, Inc.