TOURISM MARKETING WEEK 1- introduction to tourism marketing

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1 TOURISM MARKETING WEEK 1- introduction to tourism marketing Tourism in a global economy - Travel industry is world s largest industry and most international in nature - Receipts of over $1 trillion and over 1 billion travellers Marketing in the Tourism industry - Two main industries- travel and hospitality - Successful hospitality marketing is highly dependent on the entire travel industry - Nowadays get travel-hospitality packages which are combined. Purchase include airfare, ground transportation, hotel accommodation, site seeing. The marketing process 1. Understand the marketplace and customer needs and wants 2. Design a customer-driven marketing strategy 3. Construct an integrated marketing program that delivers superior value 4. Build profitable relationships and create customer delight 5. Capture value from customers to create profits and customer equity Understanding the marketplace and customer needs - Most basic concept underlying marketing is that of human needs. - 2 nd concept is that of human wants, shaped by culture and individual personality - Wants are how people communicate their needs - Wants are described in terms of objectives that will satisfy needs - When backed by buying power, wants become demands Products, services and experiences - consumer needs and wants are fulfilled through a market offering - in hospitality, the intangible product such as customer service and experiences are more important than tangible products - a market offering includes much more than physical goods or services Customer value and satisfaction - customer value is the difference between benefits the customer gains from owning or using a product and the costs of obtaining the product - costs can be monetary or nonmonetary such as time - Customer expectations are based on past buying experiences, the opinions of friends and market information - Marketers must set the right level of expectations. Too high= buyers disappointed. Too low= fail to attract new customers Exchanges and relationships - Exchange= act of obtaining a desired object from someone by offering something in return - Marketers take actions to build and maintain relationships with target markets - Goal is to retain customer and grow their business with the company Markets - A market is a set of actual and potential buyers of a product - Buyers share a particular need or want Designing customer-driven marketing strategy - Marketing management= the art and science of choosing target markets and building profitable relationships with them - To design a marketing strategy need to ask: what customers will we serve and how can we serve these customers best? Choosing a value proposition

2 - Value proposition= set of benefits or values it promises to deliver to consumers to satisfy their needs - Company must decide how it will serve targeted customers and how it will differentiate and position itself in the marketplace - Must design strong value propositions that give them the greatest advantage in their target markets The Production Concept - Consumers will favour products that are available and highly affordable - Therefore focus on production and distribution efficiency however don t forget about the customer The product concept - Consumers will favour products which offer the most in quality, performance and innovative features The selling concept - Consumers will not buy enough products unless the organization undertakes a large selling and promotion effort - Aim is to get every possible sale, not worry about satisfaction - Does not establish long-term relationship with the customer - Concept exists within the hospitality industry with overcapacity being a major contributing factor The marketing concept - Achieving goals depends on determining needs and wants of target markets and delivering the desire satisfaction more effectively and efficiently than competitors - Adopted by the hospitality industry- four seasons hotel, McDonald s. - Ignores possible conflicts between short run consumer wants and long run societal needs The societal marketing concept - Determine needs, wants and interests of target markets, deliver desired satisfactions more effectively and efficiently than competitors but in a way that maintains or improves the consumer s and society s wellbeing. - Sustainable tourism considers environmental problems, resource shortages, population growth, inflation Preparing an integrated marketing plan - First need to create a need-satisfying market offering, a product. - Decide how much to charge for the offer: price. - How will it make the offer available to target consumers, place - Finally, communicate with customers about the offer and persuade them of its merits, promotion. Building Profitable Customer Relationships - Should develop relationships selectively and determine which customers are worth cultivating - Customers who are high on profitability and frequency deserve management attention - Those high on profitability but low on frequency can sometimes be developed in higher frequency customers Customer relationship management - Managing detailed information about individual customers, carefully managing customer touch points in order to maximise loyalty - Touch points= any occasion a customer encounters the brand and product, in actual person, communication or casual observation - For hotels this includes reservations, check in and out, room service, amenities, bars and restaurants Capturing Value from customers - Good relationship management creates delighted customers, who remain loyal and talk favourably to others about the company. - Losing a customer can mean losing the entire stream of purchases the customer would make over a lifetime of patronage Lifetime value - The stream of profits a customer will create in the life of a business relationship

3 - Measures how much a member of a market segment produces per year, multiplied by the average life of a member of that segment. Ritz Carlton= $100,000 over lifetime. Building customer equity - Customer equity= the discounted lifetime values of all the company s current and potential customers - The more loyal the firms customers, the higher the customer equity - Customer equity may be a better measure of a firms performance than current sales or market share as it suggests the future WEEK 2- Service Characteristics and Internal Marketing Characteristics of Service Marketing - Intangibility- services cannot be seen tasted, felt, heard or smelled before purchase - Inseparability- services cannot be separated from their providers - Variability- quality of services depends on who provides them and when, where and how. - Perishability- services cannot be stored for later sale or use. E.g. a 100 room hotel that sells only 60 rooms can t inventory 40 unused rooms and sell 140 rooms the next night. Service Marketing - Requires more than external marketing using the four P s. Requires internal marketing and interactive marketing also Internal Marketing - Service firm must effectively train and motivate its customer-contact employees and all the supporting service people to work as a team to provide customer satisfaction Establishing of a service culture - Management must develop a service culture; a culture that supports customer service through policies, procedures, reward systems and actions - Organizational culture= a pattern of shared values and beliefs giving members of an organisation meaning, providing them with rules for behaviour in the organisation. - A strong culture helps organisations by: o It directs behaviour o It gives employees a sense of purpose and makes them feel good about their company Turning the Organizational structure upside down - Conventional structure is triangular. E.g. CEO at the peak, general manager next level followed by department heads, employees and customers. - Service- orientated structure has customers up the top, then employees, then department heads, general managers and CEOS. NEED THIS IS THE HOSPITALITY SECTOR Non-routine Transactions Weird requests from customers - Advantage of strong culture is that it prepares employees to handle non-routine transactions - A service culture provides employees with the right attitude, knowledge, communication skills and authority to deal with non-routine transactions - Whatever a guest asks for, you should be saying yes as the customer is more important than procedures The Hiring Process - The service product is the attitude employee s display as they deliver the service experience. - Unlikely to be able to teach this therefore finding employees who are good at creating a service experience is vital and a major criteria - Careful selection can have a positive effect on the employees that are hired because they feel special Teamwork - Organizations that lack teamwork create an uncomfortable environment for the guest - The first employee contacted should take care of the customer s request and pass it along to the appropriate person, referred to as ownership of the problem - Customers shouldn t have to redirect a request to another employee - Hiring needs to identify those who are team players

4 Managing Emotional Labor - Need to understand the needs of our customers as well as employees - Friendliness, courtesy, empathy and responsiveness all require amounts of emotional labor - Display of emotions can influence the customer s perception of service quality Implementation of a reward and recognition system - To sustain a service culture, a reward system should be created which rewards and recognizes employees and managers that provide good customer service - Internal marketing program= service standards and methods of measuring how well the orgo is meeting these standards Dissemination of Marketing Information to Employees - Ongoing communication between management and employees is essential- need regular individual meetings, not always group meetings - Managers should meet with customer-contact employees to gain customer need insights and determine how the company can make it easier for the employee to serve the customer Uniforms - Study found relationship between employees perceptions of their uniforms and their overall job attitude - Management looks for uniforms that represent the property and use it as a marketing tool to enhance the image of the orgo - Parmount to allow employee involvement in uniform choices Interactive Marketing - Perceived service quality depends heavily on the quality of the buyer-seller interaction during the service encounter - Service companies face the task of increasing 3 major marketing areas: Competitive differentiation, service quality and productivity Managing Differentiation - Service companies can differentiate their service delivery in 3 ways; people, physical environment and process - By having more able, reliable customer-contact people (people) - By having a superior physical environment and process in which the service product is delivered (physical environment) - By images through symbols and branding (process) Resolving Customer Complaints - Cannot always prevent, but can learn from them - Good service recovery can turn an angry customer into loyal ones, can win more customer purchasing and loyalty than if things had gone well in the first place - Companies need to have steps in place to recover from service mistakes - If resolved quickly, 82% of those will return Tangibilising the Product - Promotional material, employees appearance and the service firm s physical environment all help tangibilise service - A banquet salesperson for fine-dining can make the product tangible by taking pastry samples on morning sales calls- creates goodwill and some knowledge about the restaurants food quality. Managing Employees as Part of the Product - Employees are a critical part of the product and marketing mix - HR and marketing departments must work closely together - Must hire friendly, capable employees and formulate policies that support positive relations between employees and guests Managing Capacity and Demand - Management is responsible for matching capacity with demand on a long-term basis

5 - Have two major options for matching capacity with demand- change capacity or change demand - Airlines swap small aircraft for larger aircraft on flights that are selling out faster than normal - If larger plane isn t available, they can reduce demand by eliminating discounted fares or charging a higher fare Capacity Management- involving the customer in the service delivery - Getting the customer involved in service operations expands the number of people one employee can serve, increasing the capacity of the operation. - Self-service technologies (SSTs) allow the customer to serve as the company s employee - Adoption of SSTs represent one of the biggest opportunities for the travel and hospitality industry Demand Management- Using Price to create or reduce demand - Pricing is one method used to manage demand. - To create demand, restaurants offer specials on slow days, resorts lower prices during the off-season - Managers must make sure that the market segments attracted by the lower price are their desired targets - When demand exceeds capacity, managers raise prices to lower demand - New Year s Eve, many restaurants and venues offer set menus and packages that exceed a normal average spend. - They realise that even with higher prices, demand remains sufficient to fill to capacity. Demand Management- Using reservations - Hotels and restaurants use reservations to monitor demand - When it appears demand will exceed capacity, managers can save capcity for the more profitable segments - Reservations in restaurants can help manage demand but can also decrease capacity - Estimated times of customer arrival/departure may not fit precisely, resulting in empty tables for 20 minutes or more Demand Management- Deposits - In cases where demand is greater than capacity, guests can prepay or make a deposit - By requiring an advanced payment, managers help ensure that revenue matches capacity - Some NYE parties at hotels require guests to purchase their tickets in advance - Resorts often require a non-refundable deposit so if a customer fails to arrive, the resort does not lose revenue Demand Management- Overbooking - Managers who limit reservations to the number of available rooms are often left with empty rooms - Not everyone shows up, plans change - Overbooking is a method hotels, restaurants and airlines use to match demand with capacity - It is better to leave a room unoccupied than to fail to honor a reservation and risk losing future business of guests whose reservations are not honored Revenue Management - Price is inversely related to demand for most products - Managers create more demand by lowering price and lower demand by raising price - Managers are using price, reservation history and overbooking to develop a sophisticated approach to demand management called revenue management Queuing - When capacity exceeds demand and guests are willing to wait, queues form - Voluntary queues such as waits at restaurants are a common and effective way of managing demand - Good management of the queue makes the wait tolerable, always overestimate the wait. - Entertainment parks have characters who talk to kids in waiting lines, making time go faster - Restaurants send customers waiting for a table to the bar to make time go quicker WEEK 3- the marketing environment Microenvironment- factors close to the company that affect its ability to serve customers (the company itself, marketing channel firms, customer markets

6 Macroenvironment- larger societal forces- domographic, economic, natural, technological, political, competitors and cultural forces The company - Under the marketing concept, all managers, supervisors and crew should work in harmony to provide superior customer value and satisfaction - All departments impact marketing plans and actions - Top management sets the mission, objectives and policies Existing competitors Need to monitor 3 variables when anaylysing competitors - Share of the market - Share of mind- % of customers who named the competitor in responding to the statement name 1 st company that comes to mind - Share of heart- who is your preferred choice. - 4 levels- budget competition (food and entertainment), general competition (prepared food), product category competition (fast food restaurants), product form competition (fast food hamburgers). The further out you get it becomes less specific to your business, the other things you can spend money on. Suppliers - Firms and individuals providing resource s needed by the company to produce goods and services - Trends and developments affecting suppliers can seriously affect a company s marketing plans - Outsourcing food and beverage operations allows the hotel to concentrate on accommodation - Some hotels have contracts with restaurant companies to supply their food and beverages services - Bringing branded restaurants to their hotels creates value for their guests and exposes restaurants guests to the hotel. Marketing intermediaries - Help company promote, sell and distribute goods to the final buyers - Travel agents, wholesale tour operators, hotel representatives - A wholesale creates packages including air fare, transportation and hotel accommodation The internet and marketing intermediaries - Has created disintermediation (elimination of intermediaries) and pricing transparency - Hotels have created their own internet reservation systems, making them less dependent on travel agents and other intermediaries - Perishability of hotel rooms means that most hotels still need help from intermediaries Financial intermediaires - Banks, insurance and credit companies - Firms that help finance transactions or insure risks - Rising credit costs and limited credit affect a company s marketing performance - Rising insurance costs have forced some firms out of business - Has to develop strong relationships with important financial institutions Customers - Consumer markets- purchase hospitality for leisure, medical needs and gatherings - Business markets- individual rooms for travellers representing the company, conventions - Government markets- similar to business but have more restrictions - Resellers Market- purchase products and resell them- tour operators buy airline tickets, hotel rooms, etc - International markets- all of the above from other countries Publics- 7 types. Any group that has an actual or potential interest in or impact on a firm s ability to achieve its objectives. - Financial publics- influence ability to obtain funds- banks, stockholders - Media publics- carry news and editorial opinions- newspapers, magazines, tv - Government publics- must take government projects into account. - Citizen-action publics- minority groups, environmental groups - Local publics- neighbourhood residents and community organizations.

7 - General public- anybody who has an opinion about your business. - Internal publics includes workers, managers, volunteers and board of directors. Future competitors - Two forces that affect the competition are the ability of companies to enter and exit markets - Takes a relative small amount of capital to get started in the restaurant business (low barrier) - This makes it hard to predict future competition as a large pool of people can open restaurants - Hotels have high barriers of entry due to cost of building a hotel and scarcity of good locations - High barriers to exit from the industry present a different set of problems - A large capital investment to enter, rather than close a business down, they still run not making a profit as it costs too much to close them down. The demographic environment - Changing age structure of population- population is aging, Australia has low population density- all clustered around coast (23.55million), baby boom, gen Y, gen X ( ), look for something different in holidays, more cautious economic wise. Gen Y , highly influential in family spending, grown up with technology - The changing family- no longer traditional, marrying later, fewer children, more woman in workforce - Geographic shifts in population- movement between states, rural to urban, city to suburbs - Increasing ethnic diversity- different buying patterns, - A better educated and more white collar population Economic environment - Affect consumer purchasing power and spending patterns - Changes in income - Global financial crisis Natural Environment - Natural resources needed as inputs by marketers or that are affected by marketing activities - Shortages of raw materials - Increased pollution - Tourism and hospitality companies must be good corporate citizens and embrace corporate responsibility - Natural environment attracts many tourists such as forests, beaches, streams and wildlife - Concern for sustainability is increasing and has led schemes such as eco-friendly star accreditation - Increased government intervention in natural resource management Technological Environment - Products taken for granted today were uncommon or did not exist 30 years ago - Wireless internet, ability to send documents around the globe electronically and inexpensive worldwide transportation - Also released horrors such as nuclear missiles - Mobile phones, copiers, fast food chains, personal computers, jet airplanes, all-suite hotels and tablet device - Rapidly growing - Enabling better processes - Computerised video check in and out services- guests can check out on their tv when leaving the room, checking in at an airport - Electronic guest room locking systems tell housekeepers which rooms are occupied - The minibar lock tells which guests accessed their minibar making restocking easier - Machines receive orders at restaurants and print them in the kitchen - The internet- can be monitored to see what others are saying about your business, WOM no longer restricted to people we know but can now spread to large numbers of people over the internet- facebook, trip advisor, twitter Cultural Environment - Institutions and other forces that affect society s basic values, perceptions, preferences and behaviours - Core beliefs and values passed on from parents to children and reinforced by schools, etc - Secondary beliefs and values more open to change. Belief in marriage is core, belief in people getting married early is secondary.