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Marketing in Travel & Tourism: The Role of Marketing as a Tool

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Marketing in Travel & Tourism: The Role of Marketing as a Tool

  1. 1. Marketing in Travel & Tourism Unit #5 – Learning Outcome 2 Understanding the role of marketing as a management tool in travel and tourism The International Travel College of New Zealand 1
  2. 2. Strategic Marketing Planning Strategic marketing planning involves careful analysis of an organizations environment, its competitors and its internal strengths, in order to develop a sustainable plan of action which will develop the organization’s competitive advantage and maximize its performance within given resource availability. Ranchhod and Gurau, 2008 The International Travel College of New Zealand 2
  3. 3. A strategy is a plan for an organization that sets the overall direction to be taken • It is broad in scope and takes a long term perspective. • In marketing, strategy involves directing all of a company’s resources to meet customers’ needs. This is achieved through: • Market analysis • An understanding of competitor actions, governmental actions and the global business environment • An understanding of the implications of technological and environmental changes. • Also need to consider the ethical and ecological implications of the company’s actions, and to be flexible enough to adapt to rapid changes in the business and social environment. • Strategic marketing planning is one of the core business functions contributing to an organization’s corporate strategy. • In a customer-oriented organization marketing is a dominant element because of its focus on balancing the delivery of customer satisfaction and value with the generation of sales revenue. • Marketing has a vital contribution to make in the formation of the corporate vision for the future, through its role in interpreting customers needs’ and market trends. The International Travel College of New Zealand 3
  4. 4. The Need for Strategic Planning • Changes in market trends, unpredictable economic recessions and declines in markets have reminded the travel and tourism sectors of the need for planning. • Current issues for the sector are resulting in mergers, strategic alliances and investment in new developments and markets. • Just ‘doing what you’ve always done’ is no longer viable for travel and tourism companies, and change is essential if they are to continue. • The need to change direction or repositioning in the market heightens the focus on the strategic decision process. The International Travel College of New Zealand 4
  5. 5. Strategic Planning Process All forms of strategic corporate planning processes attempt to answer four questions: 1. Where are we now, in the industry and market spaces we occupy? 2. What opportunities are emerging in a changing world, which we could develop and aim to lead? 3. Where do we want our organization to be in 5 or more years’ time? 4. What decisions do we have to make now to get to where we want to be? The International Travel College of New Zealand 5
  6. 6. The International Travel College of New Zealand 6
  7. 7. Ansoff’s Matrix • A business has the potential to grow by using one of four strategies. • These strategies involve making the most of existing markets and products, introducing new products, or entering new target markets. The International Travel College of New Zealand 7
  8. 8. The Boston Matrix • A portfolio of products can be analysed using the Boston Matrix. which categorises the products into one of four different areas, based on: • Market share – does the product being sold have a low or high market share? • Market growth – are the numbers of potential customers in the market growing or not The International Travel College of New Zealand 8
  9. 9. Competitive Advantage • Cost leadership – a company that seeks, finds and exploits all sources of cost advantage providing for a standard, no-frills package • Differentiation – a company seeks something distinctive to set it apart from others than can bring in good profit returns. • Focus strategy – a company selects a segment of the market and targets that to the extent of excluding other segments. The International Travel College of New Zealand 9
  10. 10. Product Life Cycle • • • • Introduction Growth Maturity Decline • Product extension strategies may help extend the life of a product Source: tutor2u The International Travel College of New Zealand 10
  11. 11. Marketing Research and Market Information • • • • • • Marketing research is an organized information process which deals with the gathering, processing, analyzing, storage and communication of information to facilitate marketing decision making. Most marketing decisions require answers as to ‘who, what, when, where, how and why’? Marketing research typically starts with information held on customer databases and flows of ‘intelligence’ data gathered through Business-toBusiness networks, websites and destination management organizations. Data gathering includes regular analysis of website traffic and call centre data. Information gathering has been hugely facilitated through developments in technology making it possible to gather data readily via email, online systems and through telephone research. External marketing uses focus groups and full scale sample surveys on a national scale. The International Travel College of New Zealand 11
  12. 12. What is a focus group? • • • • • • A form of qualitative research in which a group of people are asked about their perceptions, opinions, beliefs, and attitudes towards a product, service, concept, advertisement, idea, or packaging. Questions are asked in an interactive group setting where participants are free to talk with other group members. Focus groups are an important tool for acquiring feedback regarding new products, as well as various topics and often used in the early stages of product or concept development. Focus groups allow companies wishing to develop, package, name, or test market a new product, to discuss, view, and/or test the new product before it is made available to the public. This can provide valuable information about the potential market acceptance of the product. Participants are recruited on the basis of similar demographics psychographics, buying attitudes, or behaviors. Today, using audience response keypads to collect questionnaire answers is the new industry trend. The International Travel College of New Zealand 12
  13. 13. What is ‘Survey Sampling’? • Survey sampling describes the process of selecting a sample of elements from a target population in order to conduct a survey. • A survey may refer to many different types or techniques of observation, but most often involves a questionnaire used to measure the characteristics and/or attitudes of people. • Different ways of contacting members of a sample once they have been selected is the subject of survey data collection. • The purpose of sampling is to reduce the cost and/or the amount of work that it would take to survey the entire target population. • A survey that measures the entire target population is called a census. The International Travel College of New Zealand 13
  14. 14. Six Main Categories of Market Research • Market Analysis and Forecasting • Consumer Research • Products and Price Studies • Promotions and Sales Research • Distribution Research • Evaluation and Performance Monitoring Studies The International Travel College of New Zealand 14
  15. 15. Types of Research Methods Continuous and ad hoc • Continuous meaning a regular research cycle, such as daily, weekly or monthly, depending on the needs of the business. • Ad hoc is research undertaken ‘as needed’ Quantitative and Qualitative • Quantitative research measure volumes or percentages of people, for example, who take coach tours, or who are aged between 60-70, or who live in a particular city. • Qualitative studies explore, for example, feelings about products, or levels of personal satisfaction with a product or service. Primary and secondary • Primary data specifically commissioned by a business to contribute to its decisions. • Secondary data is information gathered originally for a purpose not related to the needs of a particular business but which may be used by it as part of its market information system. Omnibus and syndicated • Large market research companies operate their own regular sample surveys and sell space in them to a range of other businesses. Such surveys are known as ‘omnibus surveys. • Syndicated surveys are usually commissioned by a group of clients on a cost-sharing basis. Occupancy studies • A common system used to establish occupancy levels (eg hotels) in destinations in order to establish trends, peaks and troughs. • In an area a small but representative sample of businesses maintain daily records of arrivals and departures and rates paid for the segment of the market they deal with. • Data analysed to provide a rich source of data for marketing planning purposes and can be measured on a weekly, monthly or quarterly • The data can be communicated to the sector as a whole to help their own decision-making. The International Travel College of New Zealand 15
  16. 16. Research Methods for Travel and Tourism A. Desk Research (secondary sources) • Sales/bookings/reservation records; daily, weekly etc, by type of customer, type of product etc • Visitor information record, eg guest registration cards, booking form data, call centre or website data. • Government publications/trade association data/national tourist office data, abstracts and libraries • Commercial analyses available on subscription or purchase of reports • Previous research studies conducted; internal data bank • Press cuttings of competitor activities, market environment changes B. Qualitative or exploratory research • Organized marketing intelligence, such as staff feedback, sales-force reports, attendance at exhibitions and trade shows. • Focus group discussions and individual interviews with targeted customers/non-users, especially to identify the perceptions and attitudes of key users and non-user groups. • Observational studies of visitor behaviour using cameras, electronic beams or trained observers. • Marketing experiments with monitored results. C. Quantitative research (syndicated) • Omnibus questions to targeted respondents • Syndicated surveys, including audits D. Quantitative research (ad hoc and continuous) • Studies of travel and tourism behaviour and usage/activity patterns • Attitude, image, perception and awareness studies • Advertising and other media response studies • Customer satisfaction, value for money and product monitoring studies • Distribution studies amongst the range of distribution channels being used or investigated for future use. The International Travel College of New Zealand 16
  17. 17. Measuring demand and tourism trends The International Travel College of New Zealand 17
  18. 18. Forecasting Tourism Demand A National Activity • • • • • • • • • In an industry as volatile as tourism and in times as uncertain as today it is important for both governments and the tourism industry to have reliable and accurate forecasts to allow them to plan and make decisions for the future. The accuracy of a forecast is an essential consideration in any tourism management or investment decision. Too high a forecast and hotel beds will lie empty, theme park rides will be unused, staff will be laid off. Too low a forecast and opportunities will be missed, too few beds will be provided and theme parks and other tourism attractions will be congested – leading to low customer satisfaction levels. These problems arise from the nature of tourism as a ‘perishable’ product: aircraft seats, hotel beds, theme park rides and restaurants cannot be stored. Three key reasons why tourism demand forecasting is important: The inseparability of the production and consumption of tourism means that enterprises have to be aware in advance of the level of demand for their products. The tourism product comprises a range of complementary providers – forecasts ensure that these are available when they are needed. The tourism product needs large investment in fixed costs meaning that accurate forecasts of demand are essential The International Travel College of New Zealand 18
  19. 19. Why measure market demand? • Measuring market demands helps you keep on top of trends so that you can gear up ‘production’ (in travel and tourism, this might mean adding more flights or tours, changing departure dates to cope with demand) or slow it down, (reduce capacity on an unpopular tour or route) • Tourism operators need to keep on top of demand in order to be ready to raise or lower selling prices as needed in order to maintain optimum occupancy levels or load factors. • Anticipating market demand also helps with labour force planning and helps project forward for peaks in demand or troughs due to lack of demand. The International Travel College of New Zealand 19
  20. 20. Forecasting Factors + Methods in Travel & Tourism Forecasting Factors: Forecasting methods: • Purpose of the forecast • The time period required • Level of accuracy required • Availability of information • The cost of the forecast and available budget • Quantitative approach • Qualitative approach The International Travel College of New Zealand 20
  21. 21. Marketing Information Systems • A marketing information system is a management information system designed to support marketing decision making. • “A system in which marketing data is formally gathered, stored, analysed and distributed to managers in accordance with their informational needs on a regular basis.” Jobber (2007) • “People, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.” Kotler, et al. (2006) The International Travel College of New Zealand 21
  22. 22. Components of Marketing Information System Source: Kalyan-City.Blogspot.com The International Travel College of New Zealand 22
  23. 23. Market information used in a travel or tourism business • Previous periods actual sales results measured against product availability • Profitability of individual products over typical operating periods (a season, a year, a month) • Numbers of staff required to operate a product or service • Numbers of enquiries by product over a given period • Conversion rates of enquiries to sales • Cancellation rates over a given period • Customer satisfaction levels by product The International Travel College of New Zealand 23
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