Keppel Ltd. 1Q 2024 Business Update Presentation Slides
Imc lecture 2
1. IC 364 Integrated Marketing Communication
for Tourism
Lecture 2: Basic Marketing for Tourism Part I: Marketing
Mix for Tourism, Organisational Strategy Segmentation,
Targeting and Positioning
By Paradee Yasothornsrikul, PhD.
2. Scope
Part I: Tourism Marketing: From Organisation Side
1. Market vs. Marketing
2. Special Characteristics of Services marketing
3. Tourism and Hospitality Marketing- Marketing Orientation
- Marketing Strategy: Segmentation, Targeting and Positioning
- The Marketing Mix for Tourism Cross-Cultural Marketing
Part II: Tourism Marketing: Tourist Behaviour
1. Human Behaviour Maslow’s Hierarchy of Needs
2. Consumer Behaviour Factor Influencing Decision Making Process
4. A Market:
Originally, a market was a meeting place where people could buy and sell produce, and of
course this type of market still exists today.
5. A modern concept of the market is based on groups of people who have similar needs and
wants, and companies that aim to satisfy the consumers’ needs and wants better than their
competitors. Interestingly, not everyone wants the same bundle of benefits, and this creates
sub-markets, or market segments, within the overall market.
Needs can range from the basic requirements for survival - food, shelter, safety - to much
more complex social needs, such as belonging and recognition.
Wants are how different people choose to satisfy their needs, and are shaped by culture and
personality.
6. In hospitality markets, luxury, mid-market and budget market segments represent
different bundles of benefits sought by different groups of customers. Needs and wants
create demand and market demand in hospitality can be broadly described under four
keys headings:
1. Business travel demand includes all those journeys business people make to meet
customers and suppliers and attend conferences, exhibitions and seminars.
2. Leisure travel demand includes journeys where people travel away from home for
amusement, entertainment or relaxation e.g. holidays, weekend breaks or a day trip.
3. Domestic travel demand includes all the travel generated within a country by people
living in that country.
4. International travel demand includes all the journeys generated to a country from
people living in other countries.
8. Marketing is primarily a business philosophy that puts the customer first. The primary goal of
hospitality business should be to create and retain satisfied customers. Consequently, the centre
of an organisation’s decision making process is to satisfy customers’ needs and wants.
Kotler (2000) claimed that the definitions of marketing centred on the exchange/transaction
process. In order to satisfy people’s needs and wants, products and services are exchanged in
mutually rewarding transactions generally, but not exclusively, using the monetary system.
Kotlet suggested that this exchange process is known as transaction marketing that is a core
concept in marketing and is a ‘value -creating process which leaves both parties better off than
before the exchange took place.
In other words, marketing is a management process aimed at delivering customer
satisfaction.
Marketing activities are based on five key principles:
1. identifying customers’ needs and wants;
2. Satisfying customers needs and wants;
3. Finding new markets for the organisation’s products or services;
4. Influencing customers’ busying attitudes; and
5. Getting the products and services into the right markets.
Definition of Marketing
The philosophy of marketing
Principles of Marketing
9. The marketing concept
✦ Marketing is the business philosophy that places the customer at the centre of
a hospitality organisation s purpose;
✦ There is an exchange activity between hospitality organisations and their
customers, which should be mutually rewarding;
✦ The central purpose of marketing is to manage demand;
✦ Marketing is a management process that focuses on planning for the future
success of the organisation; and
✦ There are a set of marketing tools which marketers utilise in understanding
customer needs and wants, and in developing appropriate products and
services to satisfy customers.
In other words, companies that place the customer at the centre of their thinking are said
to have adopted marketing concept.
10. The Role of Marketing Management in
Tourism and Hospitality
✦ Understand the drivers of demand;
✦ Understand consumers and customers;
✦ Increase the volume of transactions;
✦ Increase the value of transactions;
✦ Increase both the volume and the value of transaction; and
✦ Shift demand from periods where there is too much demand.
Marketers aim to:
11. Special Characteristics of Services marketing
✦ Seasonality and demand fluctuation - refers to the fluctuations and
demand in any given period e.g. seasons of the year, months of the
year, times of the week and times of the day.
✦ Intangibility - the challenge for marketers is how to encourage
customers to choose the offers without raising customer expectations
too high, and then failing to deliver customer satisfaction.
✦ Perishability - the key marketing principle is to ensure that the price at
peak demand times is set to deliver the maximum return to the
company, providing it is compatible with customer satisfaction. In low
season periods, the aim is to generate additional sales by developing
attractive promotions.
✦ Inseparability - customers have to be present to consume the hospitality
product. This means that customer interaction with hospitality staff
and other hospitality guests provides a variety of opportunities to
influence customer satisfaction positively or negatively.
12. ✦ Variability - hospitality operations suffer from considerable fluctuations in the
standards of delivery of the service. Every service performance is a unique event
and human interaction cannot be standardised. Consequently, it is impossible for
service companies to deliver a totally non-variable experience.
✦ Interdependence - tourists make a variety of travel purchase decisions in one trip and
their overall satisfaction with a visit is based upon a complex set of evaluations of
different elements include: travel arrangement, accommodation, attractions and
facilities of a destination. This means that regardless of the tourism sector they
operate in, their size or ownership, have to cooperate in the promotion of their
destination. Destination marketing organisations work closely together with local
government and tourism authorities to promote demand for tourism in their own
particular area.
✦ Supply exceeds demand - the hospitality industry is frequently describe as a
fragmented industry with low barriers to entry. Despite record numbers of people
travelling for business and leisure purpose, the growth inhospitality capacity has
not always been matched by a sufficient growth in demand. When supply exceeds
demand, the competitive environment becomes more intense and price
competition can affect all firms profitability.
✦ High fixed costs - typical hospitality firms have high properly costs and also employ
large numbers of staff, many of whom are full-time, permanent employees.
Companies, hence, need to generate sales to help make a contribution towards the
fixed costs.
13. Tourism and Hospitality Marketing
Marketing
Orientation
Marketing Strategy:
Segmentation, Targeting and
Positioning
The Marketing Mix
- Product
- Pice
- Place
- Promotional
- People
- Process
- Physical Evidence
Cross-cultural
Marketing
15. Management orientations
There are five different competing management philosophies have been identified in free
market economies.
Starting point! Focus! Means ! Ends!
Production Orientation!
Innovative, strong,hospitality
products
Satisfying
High demand
New technology generating
mass production at low prices
Profit through mass sales
Product Orientation!
Existing hospitality product/
service
Maintain and improve existing
product concept
Minor improvements and
adaptations of exiting marketing
mix
Profit dependent upon stable
market conditions
Selling Orientation!
Existing hospitality product/
service
Existing and new facilities Aggressive selling and
promotional tactics
Profit through sales volume
Marketing Orientation!
Business and leisure markets Business and leisure
customer needs and wants
Integrated marketing (including
marketing research)
Profit through customer
satisfaction
Societal-marketing orientation!
Business and leisure markets
AND the needs and wants of
the community and
environment
Socially concerned hospitality
business activities
Integrated marketing which
takes into account the needs
and wants of consumers and
society
Profit through enhanced
image and customer
satisfaction
Table 2: Marketing orientations
Source: Bowie and Buttle, 2004 (Adapted from Kotler, Bowen and Makens, 2003)
16. Operations or production orientation (mass
marketing)
✦ The production orientation is based on conditions of mass
production and limited consumer choice.
✦ This leads to an inward-looking focus as management strives to
control costs, improve quality and efficiency and increase volume.
✦ This approach, the needs and wants of customers can be
forgotten in the interests of organisational efficiency. However, in
case of the customers who are satisfied with the low-cost, mass-
produced product, then a production orientation is appropriate.
17. Product or service orientation
✦ Companies adopting a product orientation believe that their customers
can only be satisfied with a particular type of product.
✦ Management concentrates on developing better versions of the existing
product, but fails to recognise that customers could be satisfied better by
different types of products.
✦ This product management focus is an inward-looking. Whilst a company
can prosper with a product orientation, changes in consumer tastes and
fashion can quickly undermine a product led company
18. Selling orientation
✦ The selling orientation was developed in the 1920s, when American
companies developed efficient production systems and needed to generate
more sales to maintain profitability.
✦ Companies adopt the selling orientation when their products are competing
in market where supply exceeds demand, and growth is low or declining.
✦ This approach is concentrates on selling hte product to potential customers
and is not focusing on satisfying customer needs and wants.
✦ Companies with the selling orientation tend to accept every possible sale or
booking regardless of its suitability for the business or other customers.
✦ A sales orientation is endemic in the hospitality industry, as many
marketing programmes are really only sales promotions aimed at filling
bedrooms, bars, and restaurants - regardless of customers needs and
wants.
19. Marketing orientation
✦ This is an alternative strategy to the selling orientation, to cope with similar
economic condition.
✦ Companies adopting the marketing orientation recognise that customers have
considerable choice in the marketplace. Hence, for companies to maintain
long-term profitability, they need to understand and serve customers better
than their competitors.
✦ To achieve superior business performance companies therefore, need to
identify what customer needs and wants are, and to satisfy them better than
competitors. This mean that companies need to carry out marketing research
and to develop an integrated approach to marketing, to ensure that all
marketing activities are coordinated and help to deliver customer satisfaction.
✦ A marketing orientation is an outward-looking management philosophy, which
responds to changes in the environment and considers the business from a
customer perspective.
20. The differences between marketing and selling
✦ The sales concept focuses on products and uses selling and promotion
to achieve profit through sales volume. The underlying weakness is
that the sales concept does not necessarily satisfy the consumer and
may only culminate in short-term, rather than long term, company
success.
✦ The marketing concept focuses on customer needs and utilities
integrated marketing to achieve profits through customer satisfaction.
Sales
concept
Focus
Selling/products
Means
Promotion
End
Profit through sales volume
Marketing
concept
Customer needs
Integrated marketing
to specific segments
Profits through
customer satisfaction
Figure 7: The sales and Marketing concepts compared
Source: Cooper et al., 2008
21. Societal marketing orientation
✦ The societal marketing orientation was a response to these
criticisms and recognises that commercial organisations have a
wider responsibility than simply looking after customers and
staff.
✦ A societal marketing orientation suggests that companies should
become proactive in the community, adopting a good neighbour
policy in their company s best interest.
http://www.starbucks.com/responsibility
23. Most authors writing on the subject of segmentation, targeting and positioning process
identify that it is a staged process consisting of three main activities: market
segmentation, marketing targeting and market positioning (see figure 7). Within each of
the stages is a set of actions.
Figure 8: The segmentation, targeting and positioning process
Source: Adapted from Kotlet et al., 2006: 263
Market Segmentation
1. Identify bases for
segmenting the market
2. Develop profiles of
resulting segments
Market Targeting
Market Positioning
3. Develop measures of
segment attractiveness
4. Select the target
segments
5. Develop positioning for
each segment
6. Develop marketing mix
for each target segment
24. Segmentation
Market Segmentation
1. Identify bases for
segmenting the market
2. Develop profiles of
resulting segments
Market Targeting
Market Positioning
3. Develop measures of
segment attractiveness
4. Select the target
segments
5. Develop positioning for
each segment
6. Develop marketing mix
for each target segment
25. Initially, marketers tended to view markets as single homogeneous entities. However,
recently, one must realise that every population or market is subdivided into segments or
subgroups with shared buying characteristics. Segmentation then, has become a very
important technique for marketers today.
Target market can be divided into segments like this:
Target Market
Age
Gender
Social group
Geographical
location
Lifestyle
Ethnicity
Figure 9: Market segment
Source: Adapted from Oxford GNVQ, 2000
26. Marketing segmentation is the process of dividing up the total market (all the people the
organisation can sell its products or services to) into identifiable, measurable and discrete groups
who share some common characteristics or needs and whose attitudes or reactions towards
communications messages about products or services might be similar.
Chisnall suggested that market segmentation ‘recognises that people differ in their tastes, needs
attitudes, lifestyles, family size and composition, etc...It is a deliberate policy or maximising
market demand by directing marketing efforts at significant sub-groups of customers or
consumers’ (Chisnall, 1995: 264).
Common methods used to segment tourism and hospitality markets are by demographic,
behavioural and psychographic approaches (see table 2).
27. Demographic
Behavioural
Psychographic
Age
Gender
Geographic region
Stage in the family life cycle
Education
Race, ethnicity, culture
Occupation or social class
Sexual orientation
Motivation/purpose of travel
Frequency of use/purchase
Decision-making processes
Benefits sought from the
experience
Usage
Attitudes, perceptions, values,
beliefs
Personality
Identity
Lifestyle (activities, interests,
opinions)
Table 3: Bases of Marketing Segmentation
Source: Adapted from McCabe, 2009: 148
29. Young Single Person!
-Reasonable disposable income
-Enjoy pubs, bars, clubs, music,
Likely to take short haul package holidays or travel independently, e.g. backpacking
Young Couple!
-Higher disposable income
-Enjoy cinema, eating out, more exotic holiday
Young Couple with baby (full nest 1)!
-Enjoy family activities: parks, visitor attractions
-More likely to take self-catering holidays
Young Couple with Children (full nest 2)!
-Falling disposable income
-Spend less money on travel
-Likely to take self-catering or family-orientated package holidays
Couple with older children (full nest 3)!
-Low disposable income
-Likely to take less expensive domestic holidays
Older couples, children left home (empty nest 1)!
-Higher disposable income
-Enjoy eating out, short breaks, overseas travel
Older couples, chief breadwinner retired (empty nest 2)!
-Restricted income
-More likely to take coach tours or package holidays during low season
Single/widowed person in work (solitary survivor 1)!
-Restricted income
-More likely to take coach tours or package holidays during low season
Retired single person (solitary survivor 2)!
-Low income
-Little to spend on travel
-More likely to take coach tours
Table 4: Segment by Age
Source: Adapted from Oxford GNVQ, 2000
Divided by Age
30. Divided by Gender
- Men and women don’t always enjoy the same activities
-Traditionally, men and women have different tastes in sytle and decoration and need
different facilities
-Sometimes people prefer to be in single-sex groups
http://www.smh.com.au/travel/girls-allowed-hotel-offers-manban-floor-20110309-1bnsj.html
31. Divided by Sexual orientation
- Sexual orientation is becoming a key segmentation variable as tourism and hospitality
organisations - and destinations - realise that their offers may appeal distinctly to lesbian and
gay audiences. Some destinations have a long association for attracting these groups. Lesbian
and gay markets have been targeted as a lucrative market segment for toruism as the
consumers are often high spenders, frequent users and adventurous.
Divided by ethnicity
- Usually it would be considered discriminatory to target a particular market segment by
ethnicity. However, travel and tourism organisations sometimes need to consider food, dress,
language and religious customs when developing products and services to meet all their
customers’ needs.
32. Divided by Socio-economic variables
- These variables include occupation and income, education and social class.
- Men and women don’t always enjoy the same activities
-Traditionally, men and women have different tastes in style and decoration and need
different facilities
-Sometimes people prefer to be in single-sex groups
Social grade! Social class! Typical occupation!
A Upper middle Higher managerial, administrative and professional (e.g.
Judges, surgeons)
B Middle Intermediate managerial and administrative (e.g. lawyers,
teachers, doctors)
C1 Lower middle Supervisory, clerical, junior management (e.g. bank clerk,
estate agent)
C2 Skilled working Skilled manual workers (e.g. joiner, welder)
D Working Semi-skilled and unskilled manual workers (e.g. driver,
postman, porter)
E Those at lowest level of
subsistence
Pensioners, casual workers, students, the unemployed)
Table 5: Segment by Social class
Source: Adapted from Oxford GNVQ, 2000
33. Divided by geographical location
- The geographical area or areas in which its target market lives e.g. a major airline
corporation may consider its geographical market segment to consist of all the countries in
which it operates flight.
35. Divided by purpose of travel
Business Traveller -Less price sensitive
-Likely to stay for one night, or only a few, on each
trip
-Stay at establishments that are within a reasonable
travel time of their place of work
-Less seasonal as their travel patterns are less
dependent upon weather and holiday schedules
Leisure -Price sensitive
-Likely to stay longer on each trip
-Less frequent users of hotel accommodation
-Stay at establishments that are close to leisure
amenities and tourist attractions
-More seasonal, both in terms of climate and the time
of the year
Visiting friends and relatives (VFR) -This segment does not generate significant volumes
of business for hotels since they tend to stay in the
homes of their friends and relatives.
-This segment is more important to tourism
establishments in the day-visitor leisure and
recreation sectors, and to restaurants and bars.
Table 6: Purposes of travelling
Source: Bowie and Buttle, 2004
36. Divided by Attitudes, Perceptions, Values, Beliefs
- Attitudes, perceptions, values and beliefs are strongly linked to behaviour (Jobber, 1995).
These types of segmentation analyses contribute to an understanding of how particular
groups view services in the marketplace. A good example of this is the market for
backpacker travel experiences. The backpacker market can be segmented in terms of their
perceptions and beliefs about the world around them including attitudes to politics, the
organisation of society and attitudes towards other cultures.
37. Divided by Patterns/Frequency of use
- Purchases occasions and usage are also critical aspects of segmentation variables for
tourism and hospitality services. Special occasion users have different values to frequent,
heavy users of hotel and/or restaurant services.
Divided by Decision-making Processes
- Purchase behaviour is another method of categorising markets. Issues covered in terms of
decision-making behaviour are in relation to brand loyalty, risk, adoption of new innovations as
well as choice criteria and selection variables and so on.
39. Divided by Personality and identity
- These types of approaches are useful for tourism and hospitality services because of the
inherent link between consumption of these discretionary services as an expression of self-
identity or as an expression of individualism or other aspect of personality. Marketing
communications based on status and on personality characteristics is prevalent in many
tourism and hotel chain marketing strategies. Also, travel in itself becomes an expression
about who we are and how we would like to be seen by other people. This is particularly
useful in relation to niche market behaviours in travel, such as adventure holidays and sports
and activity holidays. But it can also relate to brands, particularly where brands take on a
public personality. An example of this is branded restaurants and hotels. The name Ritz in
the context of hotels is synonymous with the rich and famous. Consumption of the Ritz as
your hotel of choice says something about your personality.
40. Divided by lifestyle
- Lifestyle refers to the values and actions aspired to by people
Individuals
Independent people
with their own lifestyle
Succeeders
People who have
achieved their
ambitions and are in
powerful position
Reformers
Well educated people
who value quality.
Often buy natural and
own-brand products
Aspirers
People who value status and money. They like
status symbols such as expensive cars and
jewellery. They use credit cards and are interested
in the latest sports and hobbies
Mainstreamers
40% of the population. People who live in a
conventional way and are attracted to the
security of branded products
Figure 7: Segment by lifestyle
Source: Adapted from Oxford GNVQ, 2000
41. Target Marketing
Market Segmentation
1. Identify bases for
segmenting the market
2. Develop profiles of
resulting segments
Market Targeting
Market Positioning
3. Develop measures of
segment attractiveness
4. Select the target
segments
5. Develop positioning for
each segment
6. Develop marketing mix
for each target segment
42. Tourism Hospitality Target Markets
Target markets are groups of consumers, with similar needs and wants, for whom a
marketing programme is specifically developed to satisfy those needs and wants.
Hospitality companies target several different market segments at the same time, but
each target market should have its own marketing mix programme. Examples of
hospitality organisations targeting market segments are:
1. Consumer target markets
2. International markets
3. Restaurant and bar target markets
4. Singles market
5. Organisational markets
6. Corporate travel
7. Corporate meetings
8. Association meetings
9. Conventions, exhibitions and trade fairs
10. Aircrews
11. Tour groups
12. SMERF
13. Intermediaries
43. Criteria for Assessing Segment
Once an organisation has identified a range of possible segments within the market, it
begins the targeting process. This consists of developing measures of the
attractiveness of the segments and selection of the segments to target. This process is
a re-evaluation of the segments and the profiles matched against the core
competencies and resources (what the organisation actually offers from the service or
the experience) to identify which are the most attractive segments to target.
In developing the measures of attractiveness of each segment it is useful to deploy
criteria against which the organisation can assess the contribution that each segment
of the market could potentially deliver. These criteria can be defined as a series of
questions to ask for the segment:
- Is it attainable?
- Is it measurable?
- Is it large enough?
- Is it defendable?
- Is is sustainable?
44. Targeting Criteria
Middleton and Clarke (2001) suggest five main criteria that must be applied to any
segment if it is to be usable or actionable in marketing:
1. Selected segments must be distinctly identifiable by criteria such as purpose of
visit, income, location of residence or motivation. In other words, there must be clear
boundaries between the segments.
2. The criteria used to distinguish between segments must be measurable via
marketing research data. If the segment cannot be measured, it cannot be targeted.
3. The projected revenue exceeds the full cost of designing the marketing mix to
achieve it by margins that meet the organisation’s financial objectives.
4. The chosen segments reflect the inseparability of production and consumption for
tourism and hospitality services, and measures are put in place to recognise or
manage the potential for conflict of interest and potential for complaint.
5. In this context, assessing the extent to which segments contribute either positively
or negatively to the environmental mission of the organisation or destination.
45. Market Positioning
Market Segmentation
1. Identify bases for
segmenting the market
2. Develop profiles of
resulting segments
Market Targeting
Market Positioning
3. Develop measures of
segment attractiveness
4. Select the target
segments
5. Develop positioning for
each segment
6. Develop marketing mix
for each target segment
46. The product positioning process consists of making any fine adjustments to the
service offering in the light of research conducted in the marketing planning process
and then the creation of an ‘image’ of the service which meets the target market
values. This position can be made up of the core competencies or the specific value
requirements of the target group.
Market positioning in this sense relates to the place the service occupies in the minds
of the consumers. Because consumers are continually referring back to product
evaluations when they come into contact with new messages about products and
services, they classify them according to what they already know about these and
related, competitor, products. The marketing communications strategy is based up on
these positioning statements about the image of the service in relation to target
market values and needs.
47. In the context of tourism destination marketing organisations (DMO), positioning
can be based on the physical qualities or attributes of the destination which includes
consideration of all the touristic resource types:
- Culture and society (e.g. food and drink, pastimes and dress, traditon, work, leisure
and social organisation)
- Heritage (e.g. built and natural heritage, archaeological or industrial, cultural)
- Wildlife (e.g. marine, birdlife, farming, flora and fauna)
- Climate (e.g. sunshine, rains, snows)
- Landscape and physical attributes (e.g. mountains, lakes, beaches and seasinde,
countryside and nature, cityscapes and architecture).
49. Marketing in business travel and tourism
Figure 4: The nature of marketing in business travel and tourism
Source: Swarbrooke and Horner, 2001 (p.123)
50. The marketing mix and business tourism
(the basic 4Ps)
The product
The diversity of business travel and tourism makes it difficult to generalise about the
nature of the product. It should be noted that, for business traveller, the hotel bedroom
is not simply a place to sleep, it is instead an extension of the office.
Figure 5: Elements of the business tourism product
Source: Adapted from Horner and Swarbrooke (1996) in Swarbrookes and Horner, 2001 (p.124)
51. Price
Price is a crucial issue in any market but it is a complex matter in business travel and
tourism for the following reasons:
1. There are direct and indirect costs for traveller. Direct costs include: fees for
attending conferences or the price of an air ticket. Indirect costs, on the other hand,
are the need to apply for a visa when travelling to some destination.
2. Prices for a similar product vary dramatically around the world, even within one
country, prices can vary significantly.
3. For many purchasers/users, price is perhaps less important than perceived value
for money. Rather, they concern with the relationship between benefits received and
price paid.
4. Negotiation is common place, which creates real challenges in terms of revenue
planning and yield management.
5. Discounting is also rife based on criteria such as seasonality, volume of business or
whether the customer is a regular user of a particular product or service.
6. Some elements of the business tourism product are sold below their market value
for various reasons.
7. Destinations usually make no direct charge for entry to the resort, city or region or
for use of its facilities such as beaches or parks.
8. Some costs are compulsory, such as travel costs, while others are voluntary, like
having a drink at the end of the working day.
52. Place
Place or distribution is concerned with how business travellers or tourists actually
purchase the products they need. There are:
1. Customers can buy a whole package such as an incentive travel package or
individual elements such as air tickets, venues and accommodation.
2. Customers can purchase products directly or make use of the services of specialist
intermediaries.
In addition to this, the Internet has played a key role in distributing business travel
and tourism products.
53. Promotion
Figure 6: The methods of promotion in business travel and tourism
Source: Swarbrooke and Horner, 2001 (p.129)
54. The tourism hospitality marketing mix (7Ps)
Figure 1: The hospitality marketing mix
Source: Bowie and Buttle, 2004
55. Product/service offer:
-Accommodation
-Food and beverage
-Business services
-Leisure
Location (Place) - location decisions are incorporated with distribution under the heading
‘Place’ in the generic marketing mix. This is because of location is the first and crucial marketing
decision for hospitality companies. Location decisions focus on where the hospitality business
should build, buy, franchise or rent the site(s) from which it operates.
Price:
-Setting the tariff or rack rates
-Agreeing the level of discounts for key accounts
-Pricing all-inclusive packages (conferences, functions and leisure breaks)
-Developing special priced promotions to increase sales during low season periods
Distribution (Place) - in general, distributions are discussed with location under ‘Place’.
Distribution in hospitality, however, concerned with how a company can make it timely and
convenient for a potential customer to book hospitality products directly from the hospitality
company or through intermediaries.
56. Marketing communication (Promotion) - originally called ‘Promotion’ and no
popularly described as ‘marcom’. Marketing communication covers all the tools
that hospitality firms can use to communicate with customers, employees and
other stakeholders.
Physical environment - consists of the tangible features of the hospitality offer,
the external appearance of the premises and the internal layout.
Process - the processes through which customers buy and consume hospitality
products are crucial to marketers include: booking, checking in and checking out,
queuing systems and service operations. Marketers need to ensure that the
organisation’s service delivery processes are efficient, customer friendly and
competitive.
People - include both customers and employees.
58. ✦ Cultural is an umbrella word that encompasses a whole set of implicit, widely
shared beliefs, traditions, values and expectations that characterise a particular
group of people. It identifies the uniqueness of the social units, its values and
beliefs (Leavitt and Bahrami, 1988).
✦ The elements of culture such as language, tradition, family structure, society
norms, gender role and time orientation impact consumers behaviour (Usunier,
2000, Hofstede, 2001).
✦ Cultural change, hence, has significant implications on cross-cultural marketing
and makes it imperative to adjust marketing strategies over time.
59. Cross-cultural marketing
International marketing
Cross-cultural marketing
-Take one or two different approaches
to market a product or service,
standardisation or adaptation.
-The marketing manager of the
company that adopt this approach will
focus on standardisation . Otherwise,
the product and service must be
modified for each market with
considerations of the host country s
cultural influences
-Focus on the use of knowledge and
information for the purpose of
customising products/services and
strategies according to national and
ethnic cultural characteristics.
-Cross-cultural marketing utilise the
product/service adaptation approach for
cross-national borders market,
domestic-ethnic markets, or both.
-It focus on the differences between
ethnic minority groups within the host
nations majority.
Table 1: International marketing and cross cultural marketing
Source: Adapted from Buhalis and Costa, 2006
60. Cross-cultural marketing mix
In cross-cultural marketing, the marketing mix consists of a set of tools or strategies
designed to meet customers’ expected values in a manner that is congruent with their
culture.
These strategies must match the customers’ cultural preferences and expectations. The
marketing mix designers have to understand not only the cultural characteristics of their
intended customers but also the differences and similarities between the intended customers
and the product/service provider.
It is essential to remember that cultures are dynamic and change over time, the marketing
mix should periodically reviewed and modified to meet new challenges.
61. Product and service strategy
✦ In cross-cultural context,
elements of product/service
strategy include the decisions
on product/service physical
attributes such as the size,
shape and colours of the guest
room, the service attributes.
✦ Product/service must adapt to
local preferences and ways of
using the product and must
meet the national and local
legal requirement
62. Pricing
✦ Pricing products and services is a
complex process. The perceived
value determines the price the
consumer is willing to pay.
✦ A cross-cultural product/service
price strategy should not be just
based on what the market can bear
but also include other factors such
as GDP per capita, taxation levels,
available discretionary income and
the standard of living.
✦ Cross-cultural consumers
attitudes toward price negotiations
are important factors in cross-
cultural price strategies.
63. Promotion
✦ Marketing across cultures faces many
communication barriers such as cultural
barriers and source effects.
✦ Using the language that the target
consumers understand is vital in
communication.
✦ In terms of advertising, the forms, styles
and frequencies of advertising are
important for effective cross-cultural
advertising.
✦ Personal selling processes will vary from
culture to culture.
✦ Public and public relations - most
hospitality and travel companies engage
in sponsorships of goodwill activities in
communities and host countries.
64. Distribution strategy
✦ Many companies such as
hotels or airlines use their
central reservation systems to
facilitate sales directly to
customers.
✦ Customers may use toll-free
telephone numbers to make
reservation or access the
company s website through
the Internet.
65. Further reading
✦ Bowie, D. and Buttle, F. (2004). Hospitality Marketing: An Introduction.
Oxford: Elsevier.
✦ Buhalis, D. and Costa, C. (2006). Tourism Management Dynamics: Trends,
Management and Tools. Oxford: Elsvier
✦ Cooper, C., Fletcher, J. Fyall, A. Gilber, D. and Wanhill, S. (2008). Tourism:
Principles and Practice. Essex: prentice Hall
✦ McCABE, S. (2009). Marketing Communications in Tourism and Hospitality:
Concepts, Strategies and Cases. Oxford: Butterworth Heinemann
✦ Middleton, V., Fyall, A., Morgan, M. and Ranchhod, A. (2009). Marketing in
Travel and Tourism. Oxford: Butterworth Heinemann.
✦ Oxford GNVQ (2000). Advance Travel and Tourism. Oxford: Oxford University
Press.
✦ Swarbrooke, J. and Horner, S. (2001). Business Travel and Tourism. Oxford:
Butterworth-Heinemann
