chapter 6

1. chapter6 Marketing, Promotions, and Communications

2. Chapter Objectives • Understand the concept of marketing. • Explain the marketing mix of product, price, place, and promotion. • Summarize the promotional elements of advertising, personal sales, publicity, and sales promotion. • Identify basic and cost-effective promotional media for small recreation, event, and tourism businesses. • Describe applications and tactics for marketing through the Internet.

3. Need for Marketing • Without effective marketing and a fully integrated promotions strategy . . . • Your company is invisible to most potential buyers. • Sales lag. • Promotional effectiveness is not measured. • Organizations with effective marketing . . . • Have seen amazing resultant sales • Evaluate their promotional efforts • Make changes based on evaluations

4. What Is Marketing? • Marketing is much more than just advertisements. • It’s a process of identifying consumers’ wants. • It involves developing products or services to satisfy wants. • Promote, sell, distribute the service. • Evaluate your efforts. • Marketing mix is product, price, place, and promotion.

5. Marketing Mix

6. Products and Services • Product is the tangible and intangible elements of a good or service. • Must have technical and operational experts to offer quality services. • Create and improve services in these ways: • Improve the facility. • Change instructors. • Provide new program content. • Modify the program duration. • Change the atmosphere through new décor. • Add new food dishes to the menu. • Conduct programs in a new location.

7. Many Facets to Pricing • Price has many connotations: • Direct (advertised) and indirect (other related costs) • Explicit (listed price) and implicit (status or implied value) • Only admission fee or most basic costs are shown in promotions • Other indirect costs can greatly increase total cost: • Transportation to program site • Equipment needed • Taxes • Surcharges • Indirect costs not shown in promotions: May make you uncompetitive relative to the price point • Price point is the price at which consumers are familiar with such products and at which your competitors price similar services

8. Ethical and Legal Aspects to Pricing • Truth in advertising laws require disclosure of other charges and fees: Port charges and fuel surcharges can add 25% cost to cruise. • Questionable ethics of suggesting, but not actually stating clearly, what the price includes: Is resort room price per person or per room? • “Bait and switch” is illegal: A lower-priced trip is advertised but not available when a buyer goes to make a reservation, and only alternatives are higher-priced services.

9. Pricing Strategies • Must be a clear strategy behind setting price. • Full cost price is amount that must be charged to break even on direct costs and indirect (overhead) costs. • Introductory price is meant to get attention, with trade-off of breaking even or possibly incurring a small loss. Often appropriate at the start-up of a company. • Profit maximization is pricing used during high-demand season. • Yield management systems are being used to set price. • Computerized system relies on databases with 3 to 5 years of sales. • Identify and set highest price for a room or program on a specific night with a high probability that it will be sold. • Has been done by airlines for many years. • Can confuse and upset long-time customers.

10. Place of Sale and Distribution • It involves where, when, and how you sell your services and products. • Distribution is the sale and delivery of either product or proof of purchase to ultimate consumer. • Distributor is independent middleperson or agent between the supplier and final customer, such as travel agent. • Your office should not be the only place where sales are made. • Physical locations are where your company sells its services. • Catalogs with toll-free phone lines are another sales outlet. • Partner organizations sell your services through travel distribution system and at nontraditional places. • Internet or e-commerce increases channel of distribution.

11. The Internet as a Travel Distribution Channel • More than half of all travel of consumers in United States is purchased online (PhoCusWright 2007). • Online travel sales are expected to top US$136 billion in 2007. • Every RET business in the United States and Canada must have its own Web site. Content, presence, and sophistication vary widely. • It’s essential for almost every RET business to have a strong presence on the Internet, including direct sales e-commerce capabilities.

12. Partners in Sales • Sales by other partner organizations often make a significant contribution to the bottom line. • Partners (intermediaries) expand your sales reach: • Travel consultants located in every city and have regular customers. • Travel distributors sold more cruise cabins than were sold directly by cruise lines themselves in 2006. • Travel intermediaries include travel agencies, event planners, sales representatives, destination management companies, and visitors bureaus. (continued)

13. Partners in Sales (continued) • Partners require some type of benefit for their efforts: • A commission or a booking fee • Additional benefits for their clients or staff • Nontraditional partners: • Grocery stores selling lift tickets • Local theme parks selling through human resource departments

14. Promotion Fundamentals • Average citizen is bombarded by hundreds of promotional messages every day: Billboards, banner ads, Web sites, newspapers, telephone solicitors calling at dinner hour, e-mail, magazine advitorials, TV, taxis, and sponsored listings on Internet search engine. • Most messages are ignored. Only a very few are processed and lead person to take action. • Promotions compete for consumer attention. • A small RET business with very limited funds must carefully determine and accurately use the best promotional messages and media. • Promotion is to inform, persuade, or remind.

15. Promotional Mix

16. Advertising • Any form of paid nonpersonal communications placed in media. • Usually ads are placed in mass media, such as radio, TV, Internet, newspapers, or magazines. • Alternative locations include taxis, billboards, signs towed behind airplanes. • Paid either in currency or in barter. • You can say almost anything you want, within truth-in-advertising law limits. • You decide where and when an ad will be placed. • It is nonpersonal because neither the sponsors nor their representatives are present. • Communication is strictly one way. • A coordinated ad campaign can be much more effective than several individual ads.

17. Ad Campaigns • An element of promotion • Integrates several types of media ads around a common goal and theme • Synergistically creates a coordinated and more-effective promotion than can be done with individual ads • Advertisements combined with other forms of promotion, such as publicity, to enhance effectiveness

18. Seven Components of an Ad Campaign • Set campaign objectives. • Establish a budget. • Develop a theme. • Select media. • Create advertisements. • Decide on number and timing of placements. • Evaluate the response.

19. Advantages and Disadvantages of Advertising Advantages • Potential low cost per impression • Ability to present images and reach locations a salesperson cannot • Video and color images effective in conveying a message 24/7 (continued)

20. Advantages and Disadvantages of Advertising (continued) Disadvantages • Total expense of ad: Media frequently priced so only the largest companies can afford it • A great deal of waste: Traditional media charge for all potential viewers and listeners of an ad even if a significant portion are not interested in the service • Inability to close the sale • Repeat exposures needed

21. Basic Advertising Media for Small RET Companies • Yellow Pages: Print and electronic versions • Internet advertising • Industry co-op advertising • Small firms from one type of business get together on a co-op brochure and ad campaign • By combining ad dollars, can purchase bigger and better-placed ads, thus leveraging their contributions (e.g., Colorado River Outfitters Association) (continued)

22. Basic Advertising Media for Small RET Companies (continued) • Convention and visitors bureaus: Local businesses cooperate to compete against other destinations • Billboards: Effective if large number of impulse buyers see it • Brochure distribution • Low tech, but low cost with place relevance • Brochure distribution racks serviced by a company

23. Evaluation of Advertising • Must objectively evaluate effectiveness of all promotions • Techniques for evaluating • Cash registers programmed to record promotional codes • Reservationists and online reservation forms ask how inquirer heard about company or offer • Campaign-exclusive coupon • Campaign-specific toll-free telephone • Measure return on advertising investment (ROI) • ROI = ad-generated sales / total ad media + creation costs • ROI should be above 1.5

24. Personal Sales: Presentations With One or More Buyers Methods • In-person sales call • Teleconferencing • Telephone sales • Personal sales most effective with high-priced purchases and businesses that sell to groups • In contrast, advertising often used to contact the mass market or consumer making moderate- to low-cost purchases

25. Personal Sales Process • Prospecting and qualifying customers • Preplanning the sales call • Making an approach: Arranging appointment, making introductions, briefly describing services, listening carefully to client • Making the presentation • Handling objections and questions • Closing the sale • Following up after the sale

26. Advantages and Disadvantages of Personal Sales Advantages of personal sales • Highly persuasive • Great way to start a relationship • Powerful means of closing a sale; two-way communication • Provide up-to-date information Potential disadvantages • Expense • Limited reach

27. Publicity for RET Businesses • Publicity is nonpaid, nonpersonal stimulation of demand by obtaining favorable coverage in media. • Media are always looking for news and human interest stories. • Can be a ready promotional partner if you have truly newsworthy information • But media very wary of ads couched as news • Publicity can be extremely important to small RET businesses: low cost and high potential returns • Many RET businesses depend more on publicity • Risk: No control over what media says

28. Obtaining Publicity • Favorable publicity doesn’t happen on its own • Fostered and cultivated by an organization • Must seek out and respond to publicity opportunities Basic needs for generating publicity: • Issue press releases. • Develop a media kit. • Create a familiarization (FAM) tour. • Distribute press releases and media kits. • Get to know local media editors. • Hire a professional publicist.

29. Sales Promotion • Promotional activities that do not fall into previous promotional categories where the consumer is given short-term incentives to make an immediate purchase • Types of sales promotions: • Trade and consumer shows, demos • Coupons, contests, frequent-buyer programs • Travel clubs, direct mail, money-back guarantees • Magnets and other giveaways • Sponsorship of events • Merchandising and point-of-purchase display in store

30. Enhancing Word-of-Mouth Promotion • Two biggest sources of sales are returning customers and persons they referred. • Providing incentives for past customers to tell others can be the most effective form of promotion for RET companies. (continued)

31. Enhancing Word-of-Mouth Promotion (continued) Get customers talking to others about your services: • Offer referral incentives, such as discounted future trips. • Send invitations to a presale. • Give group discounts so they can easily bring friends. • E-mail a set of digital photos or a video of a participant. • Hire independent photographers to sell photos of clients. • Give out free postcards with stamps after a trip. • Forward an electronic postcard to a friend via the company Web site. • Offer frequent-buyer benefits, including discounts and special offers. • Provide parties or movie showings for past clients, with invitations to bring guests.

32. Marketing Via the Internet • Strong, effective presence on Internet is absolutely critical to an RET business. • Majority of new inquiries and sales now come via Internet. • Relatively low cost of Internet promotions compared to other media. • Search engines by far most frequently used means of finding new Web sites. • But competitive to be placed highly on most frequently used Internet search engines. • The Internet alone is not enough: • Missing many other sales opportunities if just using Internet. • Must use other promotional media to get persons to your Web site.

33. More Than a Medium for Advertising Internet offers far more opportunities than just an electronic brochure or advertising: • Online sales • Direct e-mail promotion • Web-based sales promotions • Publicity • Low-cost research

34. Direct Mail Via Internet • Messages and offers sent via e-mail. • E-mail in 2005 was second only to telemarketing in media revenue. • It’s low in cost. E-mail has some challenges: • It is easily ignored and often unwanted (spam). • Spam-filtering programs block messages. • Government is now starting to regulate e-mail.

35. E-Mail Promotion Fundamentals • Always ask first: The consumer should “opt in” (choose to receive future e-mails from you). • Personalize the e-mail: Use personal names or products of interest. • Identify yourself: Use the subject line to identify company. • Remind consumers that you know them: Early in the message tell the recipients, “You’re receiving this e-mail because . . .” • Get to know them better: Ask for their preferences. • Help them tell their friends: Provide the option to forward this information to a friend. • Don’t send too often: Monthly e-mails are more likely to be opened. • Remember what they said: Store preferences and other consumer information in database linked to e-mail program. • Capture e-mail addresses used to communicate with company.

36. Publicity Through the Internet • Create a robust Web site pressroom: A media link on your home page links to a page with press releases, photos, and company information. • Don’t forget e-zines: Internet-based magazines need stories and news. • Use an Internet publicist: Specialize in announcing your information or new content to Internet-based editors, writers, and bloggers (e.g., www.urlwire.com). • Use the right format, with no attachments: Use e-mail programs properly. Don’t send attachments (because of virus concerns). Provide a link instead.

37. Banner Ads Small ad space at top or sides of search engine page that can be purchased. • Limited space for text and a small image (often with animation) are linked to a page with more content or home page. • Cost of banner ad based on number of times it is seen (views) or times a Web site visitor actually selects (clicks) on ad. • Search engine provides many metrics, such as number of ad clicks and characteristics of viewers’ Internet connection or URL.

38. Buying Keywords • Advertisers can bid on keywords they believe potential clients would type into the search bar related to their services and location. • When keyword is entered into search engine, a sponsored ad or link appears with your message. • Sponsored ads appear next to and sometimes above the organic results of the search. • See Google AdWords (www.adwords.google.com) and Yahoo! Search Marketing (www.searchmarketing.yahoo.com). • Excellent option if you cannot get good organic search engine placement. • Challenge: Purchase of keywords is through a continuous online auction where the price changes constantly and often is high.

39. Social Media • Web sites facilitate social interaction between friends and build online communities where opinions and photos are easily exchanged (e.g., MySpace.com and Tripadvisor.com). • Site users generate the content. The info is considered more credible than advertisement copy. • RET company cannot directly control what is said about them on the social media. • RET company can enhance likelihood of positive responses. • Can appropriately reply to negative statements about them in order to minimize damage. • Referred to as managing online reputation.

40. Optimizing Social Media • Set up a blog on the company Web site for clients to comment about their experiences (without editing by company). • Provide RSS (really simple syndication) feeds. • Incorporate third-party communities to exchange information about your company. Examples are Flickr.com for photos and slides, YouTube.com for videos. • Many companies now have videos on YouTube and photos on Flickr and encourage guests to place their own materials on these sites. • The results of social media optimization can be dramatic and achieved at relatively low cost.

41. Sales Promotion Through the Internet The Internet can be a fertile ground for promoting your business through sales promotion tactics: • Online coupons • Contests • Virtual tours • Sponsorships • Trial offers • Giveaways

42. Considerations for Location of Sales and Workplace Office Location of your business office can affect these issues: • Encouraging clients to make purchases • Your employees • Your family, if you want a home office Considerations for locations: • Visibility, client access, safe neighborhood, proximity to trails or rivers, adequate parking and public transportation nearby • Access to educated workforce • Regulatory restrictions and zoning • Adequate space in the short- and long-term expansion • Cost is most fundamental location factor • Perfect location is different for every business

43. Marketing Element in Business Plan • Marketing is important component of a business plan • Components of an RET-focused marketing plan • Industry overview • Products, services, and market analysis: • Business concept • Types of products, services, or experiences you will offer • Size of market and description of market segments within a geographic region you intend to serve • Description of unique benefits sought by each market segment • Which segments will you target for your business and why? • Profile your primary customers in each segment (continued)

44. Marketing Element in Business Plan (continued) • Location • Primary competition for target segments • Develop a competitors matrix • How you will position your company • Entrance strategies you might employ • Marketing mix and promotions • Itemized promotional budget for the year • How you will evaluate your promotional efforts