Objectives
• Learn to distinguish the different points in time for the employment of instruments
• To recognize the different factors influencing the determination of the budget in crisis situations
• To understand the pros and cons of a standardized or differentiated strategy of employment of instruments
Key terms and concepts
• Timing aspects
• Marketing budget
• Employment strategies
7.1.1 Different points in time
The temporal dimension of the use of the instruments has an important function. Even under normal circumstances, the effect of the marketing instruments differs depending on the time factor.
The onset of a negative event strongly influences the different points in time when the marketing instruments are to be employed. This external influence is a very important difference compared to the normal situation, when time plays a far less important role.
In a first step, the crisis has to be identified. This is accompanied by the previously discussed problems of perception and assessment. From the point in time a negative event is noticed, the employment of each instrument has to be seen from a changed point of view, even if it only concerns the continuation of marketing decisions taken previously. From then on, all the organization’s activities are interpreted and understood as the result of conscious decision-making. At the same time, however, it becomes clear that the point at which instruments are employed in crisis management is divided in at least two parts.
A first pre-active point in time can be seen where decisions are taken about the interruption of the marketing measures that were initiated under normal circumstances. In the first place, this has to do with the assessment as to whether the use of instruments is still appropriate. Therefore, the important variables of the communication policy – advertising, type of exhibition participation, etc. – and also of the product policy – for example, the introduction of new products – have to be checked against the negative event for contradictions.
A second, active point in time comes when the instruments are selected and knowingly employed as the result of a negative event. The determination of this moment is particularly influenced by the chosen reaction strategy. In this active phase of the instrument’s employment, market and environmental conditions change constantly and to a far greater extent than usual. For this reason, instruments should be put in place during a crisis, which constantly monitor such changes and indicate whether strategy changes and/or corrections might be necessary (see the explanations in Section 7.5.6.4).
A post-active point in time can also be observed where the event is no longer of general public interest.
Nevertheless, the negative event is still present as long as it can be remembered. The employment of instruments in this phase can trigger undesired memories and, therefore, cause intensified negative effects such as contradictions. Also in this case, the chosen reaction strategy determines how seriously the problem will be dealt with or whether it is preferred that the events should be buried in oblivion.
The seasonal aspect of the affected product has the strongest influence on the time that lies between the negative event and the different points in time. The overall period of time available for the employment of the instruments has to be defined in relation to the traditional peaks of the product’s demand curve. Within this time span, the individual points in time must be determined. It is absolutely possible that the post-active point in time must be placed in a phase in which irritation cannot be avoided, that is, the product presentation is in contradiction with the negative event. This instrument employment must consider this inconsistency and aim at minimizing it.
Another peculiarity of marketing in times of negative events is the micro-level of the point in time.
This describes the determination of instrument employment within the course of the day. Changing consumer attentions and product-technical peculiarities of the mass media show, for instance, that this micro-level is more important in times of negative events than under normal circumstances.
Active point
Post-active point
Seasonal aspect
Micro-level of the point in time
Macro-level Affected by the seasonal aspect
Affected by changing consumer attentions Micro-level within the day and product-technical
peculiarities
Diagram 38: Points in time
The moment the negative event is noticed
7.1.2 Duration of employment and budget determination
Besides the determination of the point in time of a particular marketing activity, the duration is another important influential factor for the marketing mix. Normally, the duration of the marketing activity is marked by the improvement of the actual situation and the achievement of new objectives, such as higher sales, etc. In a situation of crisis, the main aim is the regaining of the positions kept before the crisis. Because the majority of marketing activities are related to cost, the available budget imposes an essential restriction when determining the duration of instrument employment.
Due to the crisis situation, the determination of the marketing budget must take cost and profit into account from a changed point of view. In the present case, no additional profit is gained by the investment of a particular amount but a loss of profit is avoided. This means that the estimation of future losses is an important criterion when determining the budget. Therefore, it must be the uppermost aim of company management to analyse medium- and long-term consequences as quickly as possible. This should describe the loss that would be expected if counteractive instruments were not employed.
The estimation of the loss of earnings, determination of the budget and actual allocation of financial resources is in practise one of the biggest challenges.
On one hand, as the resources and positions of the budget are generally determined for mid- and long- term and even if earmarked positions of the marketing budgets are reallocated, they would only last for a short period of time. On the other hand, they require a thorough knowledge of crisis management, as without it an estimation of the losses, strategy selection and a suitable determination of the
instruments and their costs are hardly possible. The process of determination of the budget must be carried out fast, as only after completion can it be ensured that a chosen strategy can be carried out successfully, that the instruments can be employed consistently and that future activities can be
Normal Pre-active Active Post-active
circumstances point point point
Budget
Analyse of medium- and long-term consequences Points
Estimation of the loss of revenue LR = (ETA * ADS * ADE) – MC
LR = Loss of revenue for the destination ETA= Expected change of tourist arrivals ADS = Average duration of stay ADE = Average daily expenditure MC = Material cost
financed against stabilizing revenues. In practise it can be observed that destinations and companies which had undergone this process once and gained experience with crisis management, are completing this process of budget determination faster than those affected for the first time.
Furthermore, the time at which a negative event occurs has an influence on the determination of the overall duration of instrument employment. The duration is longer, the further away the onset of the negative event is from the normal booking time. As there is more time available, the emphasis of instrument employment can be placed on the post-active phase. Thus, potential consistency problems are avoided. Conversely, the duration of instrument employment decreases if the negative event occurs in temporal proximity to concrete travel decision and, therefore, demands a quick reaction.
7.1.3 Standardization and differentiation aspects
The decision whether to target a market in a standardized or differentiated form is taken by the company under normal circumstances in view of markets with their current and potential customers.
Whilst a standardized approach targets all spheres of activity, similarly, differentiation aims at the differences between segments. In times of a crisis this question has to be answered again. This comes because of the different reactions towards the negative event but also as the marketing activities will now be observed by a much larger audience.
Low costs are an argument in favour of standardization, even in times of crisis. Because instruments are used in the same way towards all spheres of activity, no additional planning or adjustment costs and quantity advantages can be obtained. There is also the fact that time advantage can be gained by a standardized use of instruments. Furthermore, the employment of instruments is less complicated because the segments must not be dealt with individually. The non-optimal satisfaction of needs of the different spheres of activity is of disadvantage. This way, an important opportunity for crisis management, which is based on differing needs and reactions to a negative event, is wasted.
The necessity of differentiation first arises in the area of operative activity. Here, it is important to ensure the protection of the individuals’ sphere. In concrete terms, this means that those directly affected by the negative event and their relatives, especially if so desired, are kept separate from the uninvolved. For this reason, generally the distinction between: those affected (uninjured), injured, collecting relatives and media representatives are made. This operative aspect of differentiation follows a strategic one. With regard to the segments of the sales market, a revision of differentiation criteria appears to be appropriate. Depending on the type of event, segmenting characteristics used under normal circumstances should be extended to risk-relevant behavioural characteristics. Various individual factors with influence over different reactions have already been determined.
The cultural circle membership factor through which differing reactions to one and the same event can be explained is particularly noticeable. It suggests that segments should be targeted differently depending on their risk perception. This means that, in the initial phase, those markets that react less sensitively and have a more stable image of the service should be concentrated on. In other segments, the employment of the marketing instruments should be planned and carried out with a medium- to long-term perspective. At the same time, other influential factors discussed previously, such as the dismay of a national group, can be useful differentiation characteristics.
Furthermore, travel decision phases were identified as important criteria. Within these periods of time, the tourist goes through various stages of involvement and, therefore, has different information needs.
Consequently, it would seem to be sensible to differentiate the employment of the instruments over these phases. This poses a particular challenge as it must be ensured that no contradictions arise.
Apart from this segment differentiation aspect within the consumer sphere of activity, it should be assessed whether the remaining spheres of activity should be handled differently. In the first place, it must be ascertained what ranking the other spheres of activity should be granted and what their specific needs are. The resulting differentiation refers predominantly to the scope of information made available and less to the differentiation of the instruments themselves.
It generally applies both under normal circumstances and for crisis management that only as much differentiation as necessary but as much standardization as possible should be practised. This is not simply due to high costs that are the consequence of differentiation but also the risk of the different strategies interacting. The latter means that differentiation, especially when used in crisis management, must be carefully thought and applied. In practice, the use of personalized instruments, which offer certain differentiation possibilities, must be taken into account more often than in normal situations.
It should also not be forgotten that differentiation, an essential influential factor for crisis management, takes more time to implement. Therefore, standardized behaviour is to be recommended at the start of a situation.
Example 43: Egypt’s Marketing Plan
Egypt’s marketing budget amounted to 586 000 US$in 1991, which, if converted, equals to 0.28 US$per international visitor. The Ministry of Tourism asked, even before the first negative events occurred, to increase this relatively low international marketing budget to at least 1–3 per cent of the tourism receipts generated.
The budget, which was step-by-step adjusted to 815 000 US$, was later extended to 21 million US$for 1994 and 1995 due to the events of 1992/93. It was to be distributed among the following source markets: USA, Great Britain, Germany, France, Italy and Japan.
In this way, there was no fundamental change in the selection of contending countries as these markets already existed in the selection of 1991, before the first negative events took place. There were changes, however, in the selection of Egypt’s contending product areas. In 1994 and 1995, activities concentrated on the independently perceived beach destinations of the Sinai and the Red Sea. These alone received 25 million out of the 42 million US$budget for advertising.
The distribution of financial resources was divided as follows:
Advertising campaigns in the general and specialist press of the 6 core markets 7 million US$
TV spots in the 6 core countries 22.4 million US$
Conventional advertising in the remaining source markets 2.6 million US$
Trade shows, conferences, Egyptian nights and receptions 3 million US$
Road shows 1.2 million US$
The increase in the budget was maintained the same way as with the concentration on electronic media. This end consumer advertising was to continue the newly trodden paths of advertising for the new beach resorts on the Red Sea. In addition, the diminished cultural tourism of Nile cruises was strongly encouraged once again. Tour operators welcomed this form of marketing which stimulated demand.
The period of time which went by until financial resources were made available and which, as a result, formed the starting point of a new marketing offensive, progressively decreased over the various events which shook the tourism industry in Egypt.
If the events of Luxor in 1997 are considered, estimations of the expected costs were made available in the shortest possible time. The International Monetary Fund (IMF) estimated this at a maximum of 500-700 million US$, which proved to be extraordinarily precise. It can be assumed that, under the circumstances, the decision for an early post-active point of employment of the marketing instruments, scarcely three and a half months after the event, was encouraged.
Without doubt, this was also influenced by the traditional purchasing period for trips to Egypt in its most important source markets which begins in March and ends in May.
With its stronger orientation of the marketing activities since 1994 directly towards consumers, where Egypt itself saw its biggest mistake in the past, the most standardized market treatment was aimed for. A differentiation took place only between the European and the American market, on the one hand, and the Arab market, on the other.
Sources: Sayed (1997), Wahab (1995), Peymani and Felger (1997), WTO (1996a)
Questions for review and discussion
• What are the factors influencing the determination of the budget in times of crisis?
• Explain the concept of the ‘pre-active point in time’.
• Name the advantages of targeting the market in a standardized form.
• What has to be taken into account when using an approach of differentiated form?
Suggestions for further reading
World Tourism Organization (1994), Marketing Plans &Strategies of National Tourism Administrations, WTO, Madrid.
World Tourism Organization (1996), Budgets of National Tourism Administrations, WTO, Madrid.
World Tourism Organization (2003), Evaluating NTO Marketing Activities, WTO, Madrid.