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Organizations in the Distribution System Functions of Intermediaries Provide info about tourism products Contact current & potential customers Make reservations & other arrangements Assemble services to meet customer needs Prepare tix & make confirmations

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organizations in the distribution system

in the Distribution System

functions of intermediaries
Functions of Intermediaries
  • Provide info about tourism products
  • Contact current & potential customers
  • Make reservations & other arrangements
  • Assemble services to meet customer needs
  • Prepare tix & make confirmations
  • Provide databases on customer behavior
  • Reduce cost of acquiring new customers
  • Market excess or distressed inventories
  • Take risks by buying (or reserving) products & then reselling them to individuals or groups
one level distribution channels
One-Level Distribution Channels
  • Simplest – straightforward, direct access to suppliers (Customer/Tourist – Supplier)
  • No intermediaries; the more people involved, the more chance for problems
  • Easy to deal directly with many suppliers:
  • Suppliers like direct –no commissions to pay
internet technology
Internet Technology
  • Internet enables potential tourists to surf websites of destinations & suppliers
  • Take virtual tours of attractions & properties
  • Compare prices & products
  • Make reservations, select airline seats, etc.
  • Has increased ease of one-level distribution channels, i.e. airline tix
2 level distribution channels
2-Level Distribution Channels
  • More complex – now 3 moving parts
  • Customer (tourist) – travel agent – supplier
  • Has intermediary (middleman) – travel agent
  • Using travel agent has many advantages for both customers & suppliers
travel agencies
Travel Agencies
  • Travel agent = person
  • Travel agency = company
  • Provide important info & sales links
  • Links between: tourists & tourism suppliers
  • Using TA, one of most common (popular) ways to buy tourism products\services
  • Many tourists now use Internet travel agencies: Travelocity, Expedia, & Orbitz
  • But also: Impersonal, inhuman, & in cyberland
commission payments
Commission Payments
  • Travel agencies receive payment in form of commissions (% of sales) from suppliers
  • TA act as sales offices (branch offices) for countless tourism suppliers
  • But no moneychanges hands until sales made
  • TA must work & sell products to make money
changes to travel agencies
Changes to Travel Agencies
  • TAs no longer paid to process transactions
  • Airlines lost huge, experienced sales force
  • TAs developed new sources of revenue
internet vs travel agents
Internet vs. Travel Agents
  • Consumers have choice in buying travel products
  • Internet is DC of choice for airline tix
  • Increases scope & reach of options
  • Open 24/7
  • But requires more work & knowledge by consumers
  • TA have expertise & human touch
  • Can save clients time, money, & energy
  • Can manage entire trip & its details
travel agencies10
Travel Agencies
  • Via websites & emails TA compete with each other regardless of their physical location
  • Do not own products they sell, so they have little or no inventory or cost of goods sold
  • As commissions dwindle, markups increase
  • Large volume agencies often earn override commissions (above the normal percentage)
  • Destinations experts; make recommendations
global distribution systems
Global Distribution Systems
  • Majority of TA business is done via GDS
  • GDS provide extensive data on suppliers:
  • Schedules
  • Rates & fares
  • Space availability
  • GDS can also:
  • Make reservations
  • Print itineraries, tix, & invoices
computer reservation systems
Computer Reservation Systems
  • TA are linked on-line via one or more computer reservation systems (CRS) built & operated by airlines
  • Among them are:
  • Amadeus
  • Sabre
  • Galileo
  • Worldspan

3. CRS make airline reservations, & serve as databases for tourism suppliers

ta 9 types characteristics
TA: 9 Types & Characteristics

1. Independent:

2. Agency chains (wholly owned):

3. Agency chains (franchised):

4. Consortium-affiliated agencies:

5. Specialty agencies:

6. Corporate Travel Agencies:

7. Corporate travel departments:

8. Home-based agencies:

9. Internet agencies:

3 level distribution channels
3-Level Distribution Channels
  • Most complex level
  • Adds another intermediary that facilitates:
  • Tour operators
  • CVB

3. Tourist – travel agent – TO/CVB - supplier

  • Tour Operators do not get commissions
  • TO markup prices of products they resell
  • Elements of Tour Packages
common tour packages
Common Tour Packages
  • Independent tour:
  • Hosted tour:
  • Escorted tour:
  • FIT (foreign independent travel):
  • DIT (domestic independent travel):
independent tour
Independent Tour
  • Un-hosted tour
  • Least structured package
  • Tourist sets own itinerary
  • Itinerary: schedule of times & places to visit
hosted tour
Hosted Tour
  • Includes tourism supplier elements provided in an independent tour & maybe even more
  • But also services of local host
  • Host gives advice and makes special arrangements for you
escorted tour
Escorted Tour
  • Most structured type of tour with most complete set of supplier elements
  • “All-inclusive” tour provides almost everything, i.e. meals
  • Begins/ends on fixed dates
fit foreign independent travel
FIT (Foreign Independent Travel)
  • Customized tour
  • Outbound to foreign countries
  • Includes some tourism supplier elements, depending on tourist’s requests
  • Often more expensive
dit domestic independent travel
DIT(Domestic Independent Travel)
  • Similar to FIT
  • Except travels within your home country
5 reasons to buy tour package
5 Reasons to Buy Tour Package

1. Convenience:

2. One-stop shopping:

3. Cost savings:

4. Special treatment:

5. Worry-free:

tour operators
Tour Operators
  • TO: business organizations engaged in planning, arranging, marketing, & operating vacation packages
  • AKA: tour wholesalers, tour companies
  • TO work with all sectors of tourism industry
  • They perform many functions:
tour operators risks
Tour Operators Risks
  • TO are unregulated
  • No entry requirements for:
  • Very susceptible to perishability
  • Must commit to place, products, & prices in advance
tour operators risks24
Tour Operators Risks
  • Currency fluctuations:
  • Natural disasters:
  • Changing consumer tastes:
  • Security & Safety Concerns:
receptive service operators
Receptive Service Operators
  • RSO are part of tourism distribution channel
  • AKA receptive tour operator, ground handler & inbound operator
  • RSO: a local company that specializes in handling needs of groups traveling to it destination
consolidators travel clubs
Consolidators & Travel Clubs
  • Are combinations of wholesalers & retailers
  • They perform a unique function within tourism distribution channels
  • Consolidators buy excess inventory of air tix, then resell them at reduced prices via TA or directly to travelers
meeting planners
Meeting Planners
  • AKA: event planners & convention planners
  • MP are intermediaries in meetings industry
  • MP are employed primarily by:
  • Corporations
  • Associations

4. Main function: detailed planning of business & corporate meetings, educational meetings, association meetings, conventions, trade shows, sales meetings, executive retreats, tournaments, reunions, incentive travel, etc.

meeting planners decisions
Meeting Planners’ Decisions
  • How many people will attend
  • Where to host the meeting (which destination)
  • Types of transportation needed
  • F&B functions needed
  • Support services needed
  • Facilities, equipment, & supplies needed
  • Ancillary activities
dual distribution
Dual Distribution
  • Suppliers often use more than one distribution channel in their marketing efforts
  • This is called dual distribution
tourist information sources
Tourist Information Sources
  • Travelers need info before, during, & after a trip about tourism product benefits, prices, & availability
  • Marketing communications provides this via:
  • Advertising, public relations, & personal selling
  • Information is available from national tourist offices (NTOs), convention & visitor bureaus (CVBs), and chambers of commerce
  • These sources have tool-free phone numbers, websites, & welcome centers/TICs
familiarization trips
Familiarization Trips
  • AKA “fam trip”, “fam tour”, “inspection tour”, “educational tour”
  • For tourism intermediaries & journalists
  • To educate them on destination & supplier products & services
  • They visit destination attractions & suppliers
  • Goal: increased business from target markets
  • Uses in-kind contributions from suppliers, so cost is minimal to all concerned – great ROI!
  • Organizer: NTO, airline, resort, tour operator,..
personal selling
Personal Selling
  • Creates customer satisfaction
  • Cultivates customer relationships
  • Missionary sales people: call on travel agencies, etc., to provide brochures, solicit business, answer questions, and educate about company products
  • Effective salespeople are:
  • Likeable
  • Dependable
  • Honest