Tourism Marketing - Finally, list the attraction’s strengths and weak- nesses and describe poss

Section 2: Disciplines and Areas of Study

7. Finally, list the attraction’s strengths and weak- nesses and describe possibilities for innovative

2.17 Tourism Marketing

121

(http://ama.org), marketing can be defined as an organizational function and a set of processes involving the creation, communication and delivery of value to customers, and managing the relationship with them, in ways that benefit the organization and its interested public. For Kotler (2003), marketing is not just a short-term sales activity, it is a long- term effort that requires investment. It is a process that should begin even before the company or product enters the market and should extend until long after the sale. Peter Drucker (1973), known as the father of modern management, stated that marketing should make the act of selling superfluous.

To facilitate understanding, McCarthy (1960) created the ‘4Ps’ approach to marketing, which act as its foundations:

● Product: the object in question that will be subject to the marketing activities; it will be placed and promoted in a particular market at a particular price.

● Place: defines the location at which the marketing activities are developed and the distribution channels through which the products will reach customers. There may be a primary location and secondary locations.

● Price: the application of a monetary value to something that will be put on sale in the market.

● Promotion: the actions that are designed to encourage the spread and commercialization of the product that is now being made available on the market.

Lovelock and Wirtz (2006) found that the 4Ps of marketing were inadequate for the service sector in which tourism and leisure are located. This is because the products that are most commonly mar- keted in tourism and leisure are services (e.g. an airline ticket, a night at a hotel, an artistic show), not necessarily goods. They thus suggested expanding the list to the 8Ps of service management:

● Product/service: physical characteristics, pack- aging and labels of products supporting or com- plementing services. This does not only refer to goods; service is part of this item because it becomes the product when it is consumed.

● Place and time (moment): location of service delivery and when it will be performed, including business hours.

● Process: organization of the sequence of activities necessary for service delivery.

● Productivity and quality: the establishment of adequate levels to offer in service delivery.

● People: the management of relationships between everyone involved in service delivery:

customers, employees, etc.

● Promotion and education: although more diffi- cult to understand, the service must be promoted and the customer taught the best way to use what they are receiving, etc.

● Physical environment: all physical evidence related to the service delivery and perceived by the customer, from the visual aspects of the façade, window and uniforms, to the decoration, fleet, and spaces for moving, circulating, wait- ing and so on, which become more important because of the intangibility of the service itself.

● Price and other service costs: the amount to be received depending on the type of service delivery, credit and financing conditions, and the value perceived by the customer.

Other authors no longer accept the idea of the 4Ps (Wymer et al., 2006; Morrison, 2013) and have proposed expanding this number to up to 20Ps (Pearson, 2014).

In tourism, the topic has gained such importance that 30% of the articles published between 2008 and 2012 in three of the area’s most important English- language journals (Journal of Travel Research, Annals of Tourism Research and Tourism Management) are about tourism marketing (Dolnicar and Ring, 2014).

122 Chapter 2.17 One subtopic that has been attracting greater interest

from researchers and business owners in the tourism sector is the use of information technology by consumers of touristic products (Filieri and Mcleay, 2014; Wang et al., 2014).

Tourism marketing opens up an important chan- nel of communication between companies and those interested in them, whether they are part of the inter- nal or external audience. Thus, starting with the philosophy of marketing and the marketing decisions adopted, tourism companies can define their product, the location where they will operate, their specific audience and the price of their products, among other aspects. Buhalis (2000) stated that the marketing of destinations favours the implementation of a tourism policy that should be co-coordinated with the regional plan for strategic development. For Buhalis, tourism destinations are an amalgam of tourist services and experiences and thus should be managed through a marketing strategy.

The concepts of marketing and market are inex- tricably linked because the exchanges that character- ize marketing take place in the market: this is where supply and demand meet. Although the concept of market refers to a geographical location at which vendors display their products and consumers ana- lyse, bargain and decide whether to purchase, a more complex and detailed analysis based on economic

concepts leads to the understanding that the tourist market does not exist in a particular location. It can be defined as the relationship between tourism demand and supply, i.e. between the customers (tourists) and tourist goods and services.

Because it is impossible to reach the entire audience that would be willing to consume a touristic product, tourism companies use market segmentation to reach potential consumers in a more reliable and effective way. Segmentation is a marketing strategy that divides consumers into segments and subsegments, according to pre-established criteria, to optimize the resources available between demand and supply.

According to the bases for segmentation offered by Seaton and Bennett (1996), Hudson (2000), Wedel and Kamakura (2000), Chen (2003), the World Tourism Organization and the European Travel Commission (WTO and ETC, 2007) and Panosso Netto and Ansarah (2015), it is possible to establish numerous segments of the tourist market, as shown in Table 14. A brief explanation of the meaning of some segments is provided. Note that this relationship is open to criticism because a single segment may have two or more bases for segmentation, as in the case of roots tourism (in which the tourist visits places where their ancestors lived), which is classified as cultural tourism but can also be classified as the motivation for travel.

Table 14. Segments of the tourist market and bases for segmentation. (Compiled from websites, the authors’ own experience and numerous sources, including Seaton and Bennett, 1996; Hudson, 2000; Wedel and Kamakura, 2000;

Chen, 2003; WTO and ETC, 2007; Panosso Netto and Ansarah, 2015.)

Segments Bases for segmentation

Children; youths; middle-aged; elderly; the oldest old (older than 80 years) Age

Social; popular; middle class; luxury Economics

Walking; cycling; air; road; rail; ocean; river/lake Means of transport Short term or itinerant (the tourist stays at the location visited for a short amount of

time); medium term; long term (slow travel)

Length of stay Local; regional; national; continental; intercontinental Distance from the

consumer market

Singles; couples; families; groups Type of group

Outbound; inbound Direction of tourism flow

Agritourism (the attraction is new planting and harvesting technologies and new ways of working on farms; the property’s primary income is not from tourism, which is supplemental income or used as a marketing strategy for large agricultural producers); ecotourism; beach; mountain; countryside; snow; ecological; climate/

hydrothermal; landscape or scenic (by those who want to observe a natural or artificial landscape); second home (at a location where the tourist has a second home or a timeshare); heritage (where the tourist chooses to stay in historic residences, palaces or buildings that have become famous for a special event); rural (spending time in the countryside or in nature on ranches and farms whose primary income is from tourism); urban (in the city by people from other cities)

Geographic condition of the tourism destination

Continued

Tourism Marketing 123 By delimiting various groups, segmentation can

be used to better meet demand. Therefore, by iden- tifying each type of tourist’s specific characteristics, interests and needs, organizations can tailor their offering to their target audience.

As seen, the marketing of destinations and tourism companies is extremely important not only for attracting new visitors and selling services but also for building a relationship between clients and

managers of destinations and service providers. It is thus possible to create loyal customers and stimu- late the spread by word of mouth.

Operationalizing

In 2009, the official tourism agency of the Australian state of Queensland ran one of the most successful tourism marketing campaigns in history.

Segments Bases for segmentation

Scientific; congressional; cultural; student (by students seeking places to participate in different courses); exchange; mega-events; ornithological (by bird-watchers, i.e. people who want to study the birds at the destination); roots or genealogical (visiting the places where people’s ancestors come from or seeking to understand the origin of their surnames); educational (seeking to learn about a particular topic);

esoteric; mystical (desire to visit places connected with the occult, the supernatural, the unknown or ghostly); ethnic; folkloric and artisanal; historic; linguistic (travelling abroad to learn a language); literary (seeking places that have become famous because they are described in world-famous literary works or places where works of a recognized literary value were created); pedagogical (study tour organized by a school); religious

Cultural aspect

Community (small communities); large cities; small cities; in natural areas Degree of urbanization of the tourism destination Backpacker; wine tourism (visiting vineyards and wineries); alternative (as opposed to

traditional sun-and-sand tourism); active (an alternative to traditional tourism, whose primary motivation lies in having some sort of interaction with the environment, whether physical or recreational); bariatric (done for plastic surgery purposes (body aesthetics), when the person visits attractions at the surgery destination); biblical (visiting religious sites); brewery (more widespread in Eastern Europe; people travel to sample many different types of beers and understand the production process);

cynegetic (for people who like to hunt); institutional civic (done at civic locations to see monuments and buildings related to the history of a region, country, state, municipality or nation); commercial (by businessmen and dealers who travel from their residence to buy and sell products in other places in a manner that resembles business tourism);

creative (by people who want to learn specialized activities during their trip, such as painting, music and theatre); adventure; social contact (to meet friends or family or to make new friends and meet new people); winter sports; events; eccentricities;

experience; golf; incentives; special interest (in protected areas, such as parks and nature reserves); games or casinos; leisure; necrophiliac (visiting places related to death or disasters); business; heritage (in places with an important historical heritage);

fishing; recreation and entertainment; rest (by people who want to relax and rest); ruins or war (in areas that were the scene of past wars); health; ecological; space; sports;

ethno-historical and family; philanthropic (by those who wish to help people in need, either because of natural disasters such as earthquakes, tidal waves and tsunamis, or because of social issues, such as refugee camps, wars or political problems);

gastronomic; hedonistic; industrial (in industrial areas to learn about the production process of a particular product and the technology used to produce it); insular (on islands); people with special needs; residential (by families or groups staying in a rented house, not to be confused with second homes); romantic; socio-familial;

surprise; thematic; urban; virtual (travel without any geographical displacement that can be done at home, if there is a computer connected to the Internet); corporate travel (by business owners and employees for professional reasons, whose expenses are paid by the company of which the employee is part)

Motivation for travel Table 14. Continued

124 Chapter 2.17 Entitled ‘Best Job in the World’, the campaign drew

the world media’s attention to the natural beauty of the state of Queensland. It offered a job as the caretaker of an island for a period of 6 months, with a salary of AUS$150,000 and accommodation in a luxury home overlooking the Great Barrier Reef. The candidate was required to explore the island and report their experiences on a blog, care for the pool and feed the fish. The campaign’s real objective was to publicize Queensland as a destination through user-generated content. Nearly 35,000 people entered a 1-minute video as part of the job application process. It is estimated that exposure in the international media was equivalent to more than AUS$350 million.

Exercise

Find out whether your city has a tourism marketing plan. If it does, evaluate the results that have been achieved. If not, suggest actions that could be developed.

References

Buhalis, D. (2000) Marketing the competitive destination of the future. Tourism Management 21, 97–116.

Chen, J.S. (2003) Developing a travel segmentation methodology: a criterion-based approach. Journal of Hospitality and Tourism Research 27, 310–327.

Dolnicar, S. and Ring, A. (2014) Tourism marketing research: past, present and future. Annals of Tourism Research 47, 31–47.

Drucker, P.F. (1973) Management: Tasks, Responsibilities, Practices. Harper & Row, New York.

Filieri, R. and Mcleay, F. (2014) E-WOM and accommodation: an analysis of the factors that influence travel- ers’ adoption of information from online reviews.

Journal of Travel Research 53, 44–57.

Hudson, S. (2000) The segmentation of potential tourists:

constraint differences between men and women.

Journal of Travel Research 38, 363–368.

Kotler, P. (2003) Marketing Insights from A to Z: 80 Concepts Every Manager Needs to Know. Wiley, Hoboken, New Jersey.

Lovelock, C. and Wirtz, J. (2006) Marketing de Serviços:

Pessoas, Tecnologia e Resultados, 5th edn. Pearson Education do Brasil, São Paulo, Brazil.

McCarthy, E.J. (1960) Basic Marketing: a Managerial Approach. Richard D. Irwin, Homewood, Illinois.

Morrison, A.M. (2013) Marketing and Managing Tourism Destination. Routledge, London.

Panosso Netto, A. and Ansarah, M.G.R. (eds) (2015) Produtos Turísticos e Novos Segmentos de Mercado.

Planejamento, Criação e Comercialização. Manole, Barueri, São Paulo, Brazil.

Pearson, D. (2014) The 20 Ps of Marketing: a Complete Guide to Marketing Strategy. Kogan Page, London and Philadelphia.

Seaton, A.V. and Bennett, M.M. (1996) Marketing of Tourism Products: Concepts, Issues and Cases.

Cengage Learning, London.

Wang, D., Xiang, Z. and Fesenmaier, D.R. (2014) Adapting to the mobile world: a model of smartphone use.

Annals of Tourism Research 48, 11–26.

Wedel, M. and Kamakura, W.A. (2000) Market Segmentation:

Conceptual and Methodological Foundations. Kluwer Academic, Norwell, Massachusetts.

WTO and ETC (2007) Handbook on Tourism Market Segmentation: Maximizing Marketing Effectiveness.

World Tourism Organization, Madrid.

Wymer, W., Knowles, P. and Gomes, R. (2006) Nonprofit Marketing: Marketing Management for Charitable and Nongovernmental Organizations. Sage Publications, Thousand Oaks, California.

Further Reading

Bloom, J.Z. (2005) Market Segmentation: A Neural Network Application. Annals of Tourism Research 32, 93–111.

Czinkota, M.R. (ed.) (2000) Marketing: Best Practices.

Dryden, Fort Worth, Texas.

Hutt, M. and Speh, T. (2012) Business Marketing Management: B2B, 11th edn. Cengage Learning, London.

Kotler, P. and Armstrong, G. (2013) Principles of Marketing, 15th edn. Pearson Education, Harlow, UK.

Kotler, P. and Keller, K.L. (2012) Marketing Management, 14th edn. Pearson Education, Harlow, UK.

Marketing Research Association. Available at: http://www.

mra-net.org.

McCabe, S. (ed.) (2014) The Routledge Handbook of Tourism Marketing. Routledge, Oxford and New York.

Middleton, V. and Clarke, J.R. (2001) Marketing in Travel and Tourism, 3rd edn. Butterworth-Heinemann, Oxford, UK.

The following journals provide useful articles on this subject: Journal of Travel and Tourism Marketing (Taylor & Francis); Journal of Vacation Marketing (Sage) and Journal of Destination Marketing &

Management (Elsevier).

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explain the behaviour of these market agents. The primary questions of interest are related to production size and price. How do tourist companies decide how much of each service should be offered and at what price? This explanation usually assumes that companies aim to maximize their profits. The profit maximization principle has long been used to explain companies’ decisions, and it is currently the most widespread pivotal and intro- ductory assumption of the theory of the firm (Beattie et al., 2009; Varian, 2010; Mankiw, 2015).

Although other reasons may exist for the companies’ decisions, the principle of seeking maximum profit explains a vast part of the problem. It should be considered from this perspective that profit not only refers to the company’s present income but also to the company’s future income.

As with any financial asset, the evaluation of future profit should discount the time and uncer- tainty involved in the operation. In short, every decision to provide a service is made based on an evaluation of its contribution to the company’s profit, discounting time and risk. If the profit is expected to increase, the decision is made.

Otherwise, the idea is rejected. Because a company’s profit is the difference between all income and all costs, each side of the balance will be examined in detail below.

Costs

A tourism company’s costs can be divided into fixed costs (FC) and variable costs (VC). Thus, a company’s total costs (TC) equals the sum of the fixed and variable costs (TC = FC + VC). Fixed costs are those that are independent of the quantity of services provided by the company during the period. Some examples of fixed costs include expenditures on rental properties, salaries of per- manent staff, cable TV subscriptions, the company’s

website hosting and insurance. Variable costs are those that vary depending on the quantity produced, such as fuel consumed in the delivery of transport services, ingredients for preparing meals and amenities offered by hotels to guests.

Some tourism company costs have both fixed and variable portions. A good example is the case of hotel water bills. Guests’ water consump- tion is a variable cost. In contrast, the water used in cleaning the hotel’s common areas is a fixed cost because cleaning is done regardless of the occupancy rate.

An important measurement for cost analysis is the average variable cost (AVC), which is the result of dividing variable costs by the quantity (Q) of services produced (AVC = VC/Q). This value is often assumed to be constant, such that a company’s total costs are taken as a linear function of the quantity produced, as illustrated in the left graph of Fig. 35. If this were true, each unit of service would generate the same quantity of costs for the company, regardless of how many units had been produced before. For example, if the cost of a pizza was $25, it is assumed that this is the cost of both the first and the 100th pizzas produced. The hypothesis of constant average variable cost is rea- sonable for representing the costs of many busi- nesses but not all of them. In many cases, the cost of the first units is much higher than the cost of the subsequent units. To produce a single pizza in a wood-burning oven, a certain quantity of firewood must be burned. To cook the second pizza, only a bit more firewood needs to be added because the oven is already hot. The additional quantity of wood necessary to cook the second pizza is smaller than the quantity required to prepare the first pizza. Therefore, in this case, the greater the quantity produced, the less the average variable cost. In other words, instead of growing in a linear fashion as a function of the quantity produced, the total cost grows increasingly more slowly, as illustrated

2.18 The Economics of Tourism

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