Objectives

2. 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

3. 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

4. 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

5. 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.)

6. 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 Introduction (cont’d.)

7. 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 Introduction (cont’d.)

8. 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

9. The Marketing System (cont’d.) Figure 3–1 • The Marketing System

10. 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

11. 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.)

12. 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 Importance of Marketing (cont’d.)

13. 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 Importance of Marketing (cont’d.)

14. 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

15. Sound strategy starts with sound research Successful tourism entities continually scan for: New market opportunities Emerging threats Internal and competitive environments Strategic Planning

16. 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.)

17. 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

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

19. 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.)

20. 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) Situation Analysis (cont’d.)

21. 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 Situation Analysis (cont’d.)

22. 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

23. 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

24. 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.)

25. 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.)

26. 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

27. 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

28. 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

29. 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.)

30. 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

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

32. Product life cycle Introduction Destination becomes readily accessible Growth Destination grows in popularity Marketing Management (cont’d.)

33. 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 Marketing Management (cont’d.)

34. Marketing Management (cont’d.) Figure 3–4 • A Destination’s Product Life Cycle

35. 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 Marketing Management (cont’d.)

36. 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 Marketing Management (cont’d.)

37. 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 Marketing Management (cont’d.)

38. 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 Marketing Management (cont’d.)

39. 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.)

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

41. Marketing Management (cont’d.) Figure 3–6 • The Effect That Promotion Has on the Buying Process

42. Frequently used tools for promotion: Sales promotion Advertising Magazines Personal selling Public relations Direct mail and e-mail Websites, television, and radio Marketing Management (cont’d.)

43. 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

44. 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.)

45. 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

46. 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.)

47. Outline for a marketing action plan: Overall marketing objective Target market description Strategic actions Product Price Promotion Marketing Action Plan (cont’d.)

48. Marketing plan sections: Executive Summary Corporate Connection Positioning Statement Environmental Analysis and Forecasting Segmentation and Targeting Next Year’s Goals Marketing Action Plan (cont’d.)

49. 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 Action Plan (cont’d.)

50. 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