Tourism

Management:
An Introduction
© Clare Inkson & Lynn
Minnaert
 Chapter 11

Tourism marketing
‘Today marketing isn’t simply a business function: it’s a
philosophy, a way of thinking, and a way of structuring your
business and your mind’ (Kotler et al., 2017: 27)
What is marketing?

• Derived from the principle that companies and organisations

achieve their objectives most successfully by focusing on
satisfying customers’ needs more effectively than competitors do

• Collection and analysis of evidence about:

– Consumers’ motivations, needs, expectations and the way they

purchase products

– Groups of consumers to target as potential customers

– Design of products and services

What is marketing?
– How to make them available for sale to consumers
– Prices to charge
– How to communicate with consumers and message to
convey
– How to keep customers loyal
• Understanding of the external environment and how this
may affect demand:
– Changes to political, economic, social, technological, and
legal conditions
– Activities by competitors
What is marketing?

• Process of research to gather evidence on which to make

decisions

• Research to monitor the effectiveness of those decisions in

order to inform future decision making.
Marketing services

• ‘services can be defined as deeds, efforts or performances’ (Berry,

1980, in Hoffman et al., 2009: 6)

• Often no physical evidence after a service has been performed

• 4 key characteristics of services:

– Intangibility

– Heterogeneity

– Perishability

– Inseparability
Intangibility

• Cannot be touched or seen:

– Core benefit of the service is linked to motivation – e.g.

relaxation, relationships, status and prestige

– Tourism services cannot be inspected before the

purchase decision, and often travelling to, and paying for,
it

– Tourism marketers need to assure potential consumers

that the service matches their needs and expectations
Heterogeneity
• Differences between each consumers’ experience of the
same service provider
• Differences between one consumer’s experience of service
encounters delivered by one company or organisation
• In tourism creates quality control and quality management
challenges – delivering consistent quality in all service
encounters, either within the same company with different
members of staff, or across a number of suppliers within the
same destination
Perishability
• Limited life of each unit of capacity, after which it is no
longer available and revenue opportunities are lost
• Creates difficulties matching supply with demand and
ensuring adequate revenue for each unit of capacity before
it expires
• In tourism, seasonal, daily or hourly demand variations add
to pressures to earn enough revenue during periods of peak
demand to compensate for lower revenues when that
demand falls
• Marketers need to find effective ways to optimise revenue
and to smooth seasonality by managing demand.
Inseparability
• Production and consumption are simultaneous – creating
service encounters
• Consumers influence the outcome of the service production
process
• Difficult to ensure consistency across all service encounters
• Highlights importance of service providers’ skills
• Provides opportunities to gather feedback from consumers
• Facilitates customisation of the product and service to each
customer, e.g.
– Offering upgrades
– Allowing customers to select elements of the tangible
product – airline seat or hotel room
The services marketing triangle
3 types of marketing in services
• External marketing
– Activities communicating promises to customers, e.g.
tangible product design, promotional messages, the
channels through which capacity is sold, and prices
charged. Often the responsibility of a marketing
department
• Interactive marketing
– The process, or systems, by which services are produced
and delivered; Involves customer interaction with the
organization's resources, often staff
– Not limited to customer-facing staff – involves the whole
organization.
3 types of marketing in services
• Internal marketing
– The process by which systems and resources support
employees: equipment, technology, knowledge and
attitudes and skills to enable promises to be kept

– Relationship between an organization and its employees

– satisfied staff = satisfied customers
Segmenting the tourist market
• The whole tourism consumer market consists of hundreds
of millions of consumers in generating regions around the
world with varying needs, expectations, budgets and buying
behaviours
• Marketers divide this total market into segments which are
most likely to desire and consume their products and
services
• Each segment is defined by specific characteristics shared
by all consumers within that segment
Target markets

• Segment identified as a potential source of customers

• All marketing activities are then directed towards the target

market, or markets
Segmentation criteria

• Kotler et al. (2017) identify four main criteria by which

tourism suppliers can segment their markets:

– Geographic

– Demographic

– Psychographic

– Behavioural
Geographic segmentation
• Focuses on consumers within a specified national, regional
or local geographic region
• Known in the industry as market regions
Demographic segmentation

• One or more of the following: age, sex, occupation, income,

life cycle stage, education, religion, ethnicity and generation

• In western markets, generation includes Baby Boomers,

Generation X, Generation Y/Millennials, Generation Z
Psychographic segmentation

• Social class

• Lifestyle

• Personality

– Reveal consumers’ attitudes, opinions

– Psychological dimensions of their consumer behavior

– Helps companies to understand the core benefits sought

by consumers
Behavioural segmentation

• Consumers’ knowledge of a product

• Consumer’s use of a product
• Purpose of purchase
• Benefits sought
• How the product is purchased and consumed
– Purpose of travel
– Lead-in time
– Frequency of consumption
Behavioural segmentation

– Level of brand loyalty

– Expenditure per head

– Use of intermediaries

– Level of booking flexibility required

– Party size and composition

 Using segmentation criteria

• No single correct approach

• Some easier to implement

• Common to use multi-segmentation criteria

• Geodemographic segmentation:
http://www.experian.co.uk/marketing-services/products/mosaic-
uk.html
The marketing mix

• A blend of actions taken by marketers to manage and

manipulate demand for their products and services (Inkson
and Minnaert, 2018: xx)

• 4 Ps: product, price, promotion, place (McCarthy 1960)

• Extended marketing mix: product, price, promotion, place,

people, physical evidence, process (Booms and Bitner,
1981)
Product – 4 levels

AUGMENTED
PRODUCT

SUPPORTING
PRODUCT

FACILITATING
PRODCUT

CORE
PRODUCT
Product levels

• Core – intangible benefits sought by customer

• Facilitating – physical (tangible) product essential for service to

be delivered

• Supporting – non-essential extras that add value to facilitating

level by differentiating it from competitors’ products

• Augmented – how core, facilitating and supporting are received

by customers

(Grönroos, 1987, cited in Kotler et al. 2017: 255)

Branding

• The process of developing, communicating and maintaining

a particular identity and image for an organization, as
perceived by the consumer

• Branding aims to position the company in the consumer’s

mind in relation to its competitors

• Image is reinforced through the messages that are

communicated about it, and by the consumer’s experience
of it during the consumption process
Advantages of branding
• Creates a distinct identity for an organization to stand out
from its competitors
• Reduces intangibility by creating familiarity and signaling
quality and reliability
• Facilitates market segmentation by attracting some and
putting off other market segments
• Clarifies employees’ understanding of consumers’
expectations, and create greater consistency in service
encounters
• May encourage customer loyalty
Price

• Only marketing mix activity that directly affects a company

or organisation’s revenue; all the others represent costs

• For commercial enterprises, determines profitability

• For public and voluntary sector organisations, can help

achieve societal benefits

– Free of charge or low prices to encourage access

– High prices to restrict demand to protect or conserve a

fragile environment
Pricing in tourism is complex
• Data about consumers’ willingness to pay is not easily
available
• May be a long lead-in time between setting prices and
selling the product
• Demand from international markets may be increased or
reduced by exchange rate fluctuations
• High fixed to variable cost ratio creates opportunities to sell
capacity at different prices to different market segments –
known as price discrimination
• Pricing is often used to manipulate demand and smooth
seasonal, daily or hourly variations by charging higher
prices for capacity at peak times, and lower prices at off-
peak times
• Kotler et al. (2017) stress that effective segmentation requires
each segment to be:
– Measurable: its size and purchasing power must be
measurable in order to monitor the effectiveness of marketing
activities
– Substantial: the revenue generated from each segment will
exceed the cost of targeting it, in line with financial objectives
– Actionable: it must be possible to develop effective campaigns
and activities to influence the segment
– Accessible: the extent to which data about the segment can be
gathered, and the needs of the segment can be met
– In addition Middleton et al. (2009) stress that long-term
sustainability of the segment is also crucial – that it will it endure
into the future
Pricing strategies (Hudson &
Hudson, 2017) (1/4)
• Cost-plus pricing: addition of a fixed percentage mark-up
on costs. Does not account for competitors’ prices or levels
of demand
• Value-based pricing: prices are based on the target
market’s perceived value of the product. Different segments
may perceive different values. Continual monitoring of
market perception and satisfaction is required, plus
competitors’ actions
• Competition-based pricing: prices are set to match
competitors’ prices
Pricing strategies (Hudson &
Hudson 2017) (2/4)

• Differential (or demand-based) pricing: different prices

charged depending on the consumer’s willingness to pay.
This approach may be combined with discriminatory pricing
• Price skimming: a strategy used for some new, innovative
products. Charging the highest possible price until demand
falls, then reducing the price to attract the next segment,
and so on
• Penetration pricing: undercutting competitors’ prices to
gain market share
Pricing strategies (Hudson &
Hudson 2017) (3/4)
• Portfolio pricing: pricing products in the same range differently
by including different features
• Prestige (or premium) pricing: maintaining high prices to reflect
the exclusivity of the product
• Discriminatory pricing: charging different prices to customers
who will consume the same product at the same time.
Sophisticated software is used to calculate the highest price that
should be charged at the time of booking in order to optimize the
yield – in a process known as yield management. Lowest prices
may only cover the variable cost of the product plus a profit
margin; fixed costs are met by charging higher prices to other
customers. Marketers add conditions to the lowest prices to
discourage consumers who are willing to pay more
Pricing strategies (Hudson &
Hudson 2017) (4/4)
• Price bundling: combining products at a special price
• Discount (promotional) pricing: short-term measures to
stimulate demand through price reductions, special offers,
early booking discounts. Used to shift excess capacity,
improve cash-flow, or undermine competitors
Place
• Types of point of sale at which the product is purchased
• In tourism this is particularly important because the point of
sale is often in the generating region while consumption is in
the generating region
• in tourism marketing ‘place’ more commonly called
‘distribution’
• Different types of points of sale are known as distribution
channels
• Distribution channels can be direct or indirect
Tourism distribution channels
Advantages and disadvantages of
direct and indirect distribution
Promotion
• Known as marketing communications
• Common methods of communication:
– Word of mouth
– Advertising
– Public relations (PR)
– Personal selling
– Sponsorship
• Marketing communications transformed by internet and
mobile technologies
Word-of-mouth communications
(C2C)
• Discussion of a company or organization between people
who appear to have no personal interest in promoting them
• Useful to help overcome perceived risk of unknown tourism
services and intangibility
• Methods of C2C communications include:
– Social networking sites such as Facebook, Snapchat,
Twitter and Instagram
– Online communities of individuals with shared interests
using wikis, chat rooms, message boards and forums
– Blogs – online diaries or video diaries produced by
individuals and available for invited users to view.
Bloggers with a large following as known as digital
influencers
Word-of-mouth communications
(C2C)
• Reviews where consumers share their experiences of a
supplier, with reviews, photographs, and information
• Information sharing sites such as YouTube and Instagram
where content can be posted for worldwide audiences to
view
Advertising
• Paid-for promotion of products to large audiences (Hudson
& Hudson, 2017). It includes:
– Print adverts in newspapers and magazine
– Broadcast advertising on TV, cinema and radio
– Outdoor advertising on transport and billboard
– Online advertising on search engines, aggregator sites,
social media and on the websites of other companies and
organisations
• Adverts must be positioned in places where the target
market is most likely to be exposed to it
Online advertising can be closely
targeted
• Pay-per-click (PPC) and Pay-per-Acquisition (PPA) enable
the advertiser to pay only when the viewer takes action –
either by clicking through to the advertiser’s website (PPC)
or by clicking through and making a purchase (PPA)

• Adverts displayed as pop-ups and banners and appear to

viewers identified as the advertiser’s target market
Benefits of online advertising
• Cost of advertising only incurred when a potential customer
clicks through to the website, or makes a purchase
• Expenditure is controlled through setting a budget, allowing
a quota of advert displays based on the financial resources
of the company
• Action is immediate because the advert is displayed when
the potential customer is actively seeking information, rather
than requiring them to remember the advert and take action
at another time
Benefits of online advertising

• The customer can be tracked from enquiry to purchase,

which provides valuable information about consumer
behavior and allows for retargeting at a later date by
redisplaying adverts to prompt action

• Advertising is targeted more accurately at potential

consumers who are seeking related information
Search engine optimization (SEO)

• The manipulation of search engine results

• Key search terms input by consumer are matched to

websites – the greater the match, the higher up the list the
website will appear

• Effective website design and content affect a website’s

position on search engine results pages
Public relations (PR)
• The acquisition of unpaid media coverage
• ‘the aim of marketing PR is to obtain favourable publicity for
an organization and its products in the media’ (Middleton et
al., 2009: 306)
• Includes
– Press releases and press conferences
– Feature stories in the press
– Familiarisation (fam) trips for journalists and
intermediaries
– Celebrity endorsement
– Product placement in films or TV programmes
– Provision of resources for media to access
(Hudson and Hudson, 2017)
Personal selling
• The use of personalised communication with potential
consumers to:
– Establish and maintain relationships
– Gather marketing intelligence
– Provide sales support and generate sales
(Hudson & Hudson, 2017)
In tourism personal selling is
implemented through
• Exhibiting at a trade or consumer travel exhibitions

• Employing sales managers or account managers to liaise

with travel trade intermediaries or corporate customers and
maintain a relationship with them

• Workshops organised by tourism destination organizations

for producers and trade intermediaries to meet face-to-face,
either at the destination or in the generating region
In tourism personal selling is
implemented through
• Telephone or face-to-face contact with customers via sales
offices or sales desks

• Chatbots – computerized sales assistants that support an

online enquiry by asking questions of the viewer and
presenting offers or providing advice that match the viewers’
needs
Content marketing

• The creation and sharing of stories digitally via videos, blogs

and social media posts

• Designed to stimulate interest rather than explicitly promote

• Effective content marketing captures attention and is shared

by the viewer with their own networks

• Encourages interaction with the brand to create a two-way

conversation and develop relationships
Integrated marketing
communications (IMC)

• The transmission of clear, consistent and engaging

messages across a range of communications channels

• Should be the objective of all campaigns that use more than

one communications channel to ensure that a consistent

message is conveyed.
(Kotler et al., 2017)
Interactive and internal marketing –
extended marketing mix for services

• 4 Ps framework omits heterogeneity and inseparability of

services

• Bitner (1981) added 3 more marketing mix variables for

services marketing:

– People

– Processes

– Physical evidence
People

• Importance in the delivery and consumption of the tourism

experience

• Includes:

– Employees who interact with customers

– Other customers consuming the product at the same time

– Local community in destinations with whom the tourist

may come into contact
Employees
• Grönroos (2015) highlights importance of employees’
attitude, commitment and performance in the service
process
• Frontline employees’ behaviour, appearance and service
skills affect customer’s perception of the company or
organisation
• Interact with customers in stressful situations
– At peak times with long queues, in the event of a delay or
technical problem
– When customers are dissatisfied and complaining
• Level of support provided to frontline staff by other
colleagues, management and technology, and the rewards
influence the quality of service they provide
• Services marketing triangle sees a direct link between
employee satisfaction and customer satisfaction

• Recruitment and training processes, benefits and support

provided, and management style influences the quality of
service experienced by the customer, at all stages of the
service delivery

• Internal marketing manages the relationship between

employer and employees – often called talent management
Other customers consuming the
product at the same time
• Can enhance or reduce the quality of each customer’s
experience

• Kotler et al. (2017) stress segmentation in achieving

compatibility between

• If more than one segment is targeted, product and

processes must be designed to reduce or avoid interaction
between them to reduce potential for conflict
The local community
• Often tourists’ interactions with local people are commercial
– in restaurants, attractions, shops, hotels
• Some interactions may be non-commercial – the tourist
shares facilities with local people, engages in conversation
with them, or seeks assistance from them
• The attitude of the local community can positively or
negatively affect the tourist’s experience and perception of
the destination
• Destination marketing organizations can educate local
people about the value of tourism to the community
Physical evidence
• Tangible cues provided in the location where consumption
of the service occurs, where the organisation and the
consumer interact
• Bitner (1992, cited in Hoffman et al., 2009: 371) describes
this as ‘servicescape’
– A stage upon which the service is performed and
consumed – it is visible to customers and easily evaluated
– Its design influences customer expectations before a
purchase, their satisfaction during the service, and
influences customer and employee behaviour and actions
during service encounters (Hudson & Hudson, 2017)
Servicescape consists of

• Ambient conditions – environmental conditions that affect

the senses: sound, visual appeal, scent, air temperature.
Influence how comfortable customers feel in a space, and
should be designed to match target market’s preferences

• Spatial layout and functionality – layout of the space, the

design and arrangement of furniture, desks and equipment
to facilitate the performance and consumption of the service
Servicescape consists of

• Signs, symbols and artefacts – visual guides lead the

customer through the service process to reduce anxiety,
confusion and conflict (Zeithaml et al., 2013)

• 4th dimension added by Hudson and Hudson (2017): staff

and customer behaviour and image . Social aspects of the
service-scape influence perceptions of employees’
competence, credibility and commitment to customer
satisfaction
Process

• ‘procedures, mechanisms, and flow of activities by which

the service is delivered’ (Zeithaml et al., 2013: 27)

• ‘moments of truth’ in the production and consumption of the

service

• Design and management of processes affects customer

satisfaction and retention, and positive WOM
communications
Standardised service processes

• Sequences of activities that are replicated for each customer:

interactions with employees and technology are almost identical
(Zeithaml et al., 2013)

• In tourism some routine service processes can be controlled

stepped procedures, automation and scripts

• Scripted processes determine the sequence of actions, words and

equipment to ensure consistent, satisfactory service encounters

• May be appropriate for short, straightforward interactions

BUT…

• Complex service encounters may involve long interactions

and require clear understanding of the customer’s needs

• Outcome of complex service encounters relies on

communication skills and emotional intelligence of staff
involved

• Interactions and processes may need to be customised to

individual customers
 Service blueprints (1/2)
• Formal flowchart illustrating the service system and
clarifying roles of those involved in customer interactions
throughout the process (Shostack, 1977, cited in Grönroos,
2015: 393)
• Includes:
– Activities of all participants
– Activities visible to the customer and support activities
behind the scenes
– The standards for each activity, such as time allowed,
information to be gathered or imparted, plus the targets to
be met
Service blueprints (2/2)
– The stage in the process where customers are required to
wait the longest
– Stages in the process where visible moments of truth are
vulnerable to service failure
– Physical evidence of the quality of service
– Allows companies to calculate employees’ productivity
and specifies how the service delivery process should
take place
– Identifies back-stage procedures invisible to the customer
and considers the implementation of the customer journey
from the suppliers’ perspective
Customer journey mapping
• Also called customer experience mapping
• Captures the customers’ experience of a service from the
beginning and at every stage
• Identifies strengths and weaknesses of processes from the
customers’ view
– Uses qualitative research, e.g. interviewing customers,
mapping customers’ perceptions, actions, interactions,
feelings and emotions at each touch point of the service
to identify high and low points.
– Enables organisations to empathise with their customers
and redesign stages of the process that cause stress or
dissatisfaction
Service errors and service
recovery
• When things go wrong, and customers are dissatisfied

• Should ‘constantly monitor service processes to identify

problems, solve problems effectively, and learn from
problems and the recovery process’ (Grönroos, 2015: 146)

• Customers expect: an apology, empathy, compensation,

value-added extras and reliable information about the
service recovery
Service guarantees

• Offer money back if a customer is dissatisfied

• Requires customer to inform staff at the time and enable

recovery

• Helps to differentiate between competitors as a product

augmentation

• Example: https://www.premierinn.com/gb/en/why/sleep/good-
night-guarantee.html
Extended marketing mix

• Highlights the role of a whole company and all employees,

processes and systems, in delivering customer satisfaction

• Demonstrate external, interactive and internal marketing in

actin

• Grönroos (2015): interactive and internal marketing requires

actions beyond the marketing department – involves a
company-wide focus on customer satisfaction and
developing long-term relationships with customer