TOURISM MARKETING

( Chapter 1 )

Tourism has become one of the world’s largest and fastest growing industries

Tourism marketing
 is the collective name given to the various marketing strategies used by businesses within
the tourism industry.

These product include transportation

 Airline, Cruise ship, Bus, etc.

Accommodation
 Hotels, Inns, Apartelles, Bed and breakfast

Food and beverage

 Restaurant, Catering, Bars

Attractions
 Amusement parks, Museums, Zoos, Marine sanctuaries, etc.

Unique characteristics of the tourism industries:

1. Intangible – Tourism products cannot be touched, smelled, tasted, felt nor heard prior to
purchase.

2. Inseparable - The tourism product cannot be separated from the consumer. When tourism
avail of product and services, they have to personally go to where the products are.

3. Variable - The tourism experience is likely to be different depending on when the product is
availed, who one is with, and how the service providers deliver the service at the time of
consumption

4. Perishable - Products become perishable when it can no longer be consumed today even
when no one consumed it the day before.
- The tourism product is one of the most highly perishable of products.

5. Seasonal - Seasonality does not only refer to seasons of the year or the weather
conditions. It also refers to behavioral patterns of the travel market. The seasonality of the
tourism product hinders it from maximizing its profits all year round.

6. Substitutable - Competition on the tourism industry is intensifying. With new destination

emerging and competing in the global marketplace, one destination can easily be
substituted for another destination.

Tourism as a High Involvement Product

 Purchase of expensive product is likely to go through a long and detailed process of
canvassing and comparing of brands, suppliers, and product features.
 Consumers may find complex product difficult to purchase.
 The unrepeatable nature of travel makes it a “once-in-a-lifetime” purchase.

Tourism Marketing Defined

 Philip Kotler (2002) defines marketing as a social process by which individuals and groups
obtain what they need and want through creating and exchanging products and value with
others.

 Kotler, Bowens, and Makens (2010) define marketing as the art and science of finding,
retaining, and growing profitable customers. Finding, retaining, and growing profitable
customers need strategic planning to ensure customer satisfaction and building of
customer’s loyalty.
Marketing as a Management Process
1. Marketing Information System - With the advent of technology, the provision for marketing
information system enables the organization to compile an updated set of information
about its customers.

2. Marketing Planning - This involves an analysis of the marketing environment in relation to

the potential of one’s business.

3. Planning Tactical Campaigns - This step ensures that practical and realistic tactical
campaigns are conducted in support of the comprehensive marketing strategy.

4. Marketing Operations - This process involves the challenging part of implementing the
planned strategic and tactical campaigns by coordinating with all stakeholders.

5. Monitoring and Control - This involves the ongoing process of evaluating sales data and
financial performance versus marketing activities conducted.

Core Marketing Functions

1. Marketing information management - entails gathering information about customers to be
better serve their needs and improve decision making.

2. Financing - involves planning to ensure that resources are available to maintain and
improve the business.

3. Pricing - ensures that the value and cost of goods and services offered to customers will
be at the level that the customers are willing to pay.

4. Promotion - prepares the various promotional strategies that will enable the products to be
introduced and sold to the customers.

5. Product/ Service Management - involves designing, developing, improving, and acquiring

products and services to meet the needs of the customers.

6. Distribution - involves bringing the products and services to the customers in the best way
possible.

7. Selling - is the ultimate measure of marketing success.

The Marketing Mix

 A well-planned and executed marketing mix will enable marketers to move their products
or services successfully to the customers

Integrated Marketing Communications Approach

 IMC approach was born out of a need to enhance the demands of businesses to promote
their product.
 What is IMC? It is the process of using all forms of promotion to achieve maximum
communications impact while maintaining consistent image for the products or services.
 THE TOURIST MARKET AND SEGMENTATION
( Chapter 2 )

A market is a set of actual and potential buyers of a product. Exchange relationships satisfy these
buyers' needs (Kotler et al. 2010).

Three Steps to Target Marketing 

Market segmentation
 Marketing strategy that uses well-defined criteria to divide a brand's total addressable
market share into smaller groups.

Market Targeting
 Marketing strategy that breaks a market into segments and then concentrates your
marketing efforts on one or a few key segments consisting of the customers whose needs
and desires most closely match your product or service offerings.

Market Positioning
 Refers to the ability to influence consumer perception regarding a brand or product relative
to competitors. The objective of market positioning is to establish the image or identity of a
brand or product so that consumers perceive it in a certain way. 

CHARACTERISTICS OF MARKET SEGMENT

1. Identifiable- the people who comprise a segment can be located and identified such that
targeting them would be easy.
2. Cohesive- the consumers should be part of a whole whose specific qualities are common to all.
3. Measurable- the marketer should be able to estimate the size and potential spending of the
members of the market segment.
4. Accessible- the members of the members should be accessed by marketing efforts and
promotional activities to be conducted.
5.Substantial- segments should be large in order to be substantial.
6. Actionable- the company has enough resources and commitment to enable effective penetration
of the identified segment to ensure effective positioning.

Variables for Segmentation

 GEOGRAPHIC- Geographic segmentation divides the market into different geographic
units such as nations, states, regions, countries, barangays, cities, towns, etc.,
 DEMOGRAPHIC- Demographic segmentation refers to segmenting the market based on
variables such as age, life cycle, gender, income, occupation, religion, education and race.
 PSYCHOGRAPHIC- Psychographic segmentation divides consumers based on different
psychographic profile such as social class, lifestyle, and personality characteristics.
 BEHAVIORAL- Behavioral segmentation refers to dividing groups based on their
knowledge, attitude, use of or response to a product or service.  
 TECHNOGRAPHIC- Cooper (2006) suggests that there is a fifth variable for market  
segmentation which he calls technographic segments

MARKET TARGETING
 Is evaluating each segment's attractiveness and selecting one or more of these market
segments in which to operate one's business.

Kotler suggests three factors to consider in evaluating which segments should be targeted. These
factors are:

 Segment size - refers to the current sales volume, growth rate, and high profit margin.
 Attractiveness - refers to the potential impact of the segment to the company. One that is
not saturated and has few aggressive competitors would be structurally attractive
company.
 Objectives and availability of resources - refer to the main reasons for its decision making
and the available resources the company will use to make its objectives a reality.

 
Market Coverage Strategies
 In the selection of specific market segments, a company decides on a market coverage
strategy that is in line with its objectives and resources. Kotler et al. suggest that it can
adopt any of three market coverage strategies: 
1. undifferentiated marketing
2. differentiated marketing
3. concentrated marketing

Company's Resources
 This refers to how much money and resources the company has which can be allocated to
marketing. If the company has limited resources, it is logical to use concentrated
marketing.

Degree of Product Homogeneity

 If products are standardized and identical, it is more advisable to go for undifferentiated or
concentrated marketing.

Market Homogeneity
 If there is a diverse market, differentiated marketing is advisable. If the market has a lot of
similarities, undifferentiated marketing may be used.

Competitor's Strategy
 It is important to assess the strategy competitors are using so that the correct strategy can
be implemented to counter their marketing efforts.

MARKET POSITIONING
Market positioning
 is developing competitive positioning for the product and an appropriate marketing mix
(Kotler et al. 2010).
 Three positioning concepts will help reinforce the idea of market position:

UNIQUE SELLING PROPOSITION (USP) 

 Is a term used to identify what makes the product or service different from others. This US
may occur due to the product's physical attributes, added services, personnel, location, or
image.

COMPETITIVE ADVANTAGES 
 Is the product's advantage over competitors, which is gained by offering greater value
either by offering lower prices or providing more benefits to justify higher prices.

TOP OF MIND 
 is the highest level of recall that a brand receives. It means that the brand occupies the top
spot in a consumer's mind. The ultimate top of mind level a brand can reach is when it
becomes synonymous to the generic. 

YOUTH MARKET
 Research has shown that long-distance youth travelers are primarily experience-seekers,
collecting unique experiences that will serve to build their self-identify narratives (Richards
& Wilson 2006)

THE SENIOR MARKET 

 The senior market is also known as the silver market or third-age tourism. There was even
a campaign known as SKI which encourages the elderly to go on vacation to Spend Kid's
Inheritance.

THE MICE MARKET AND BUSINESS TOURISM 

 The meetings Incentives, Conferences (Conventions), and Exhibitions (MICE) industry is
extensively rapidly/growing (Ladkin 2006). Collectively) known as the events industry, this
type of travel is connected but not limited to business travel.
 TOURISM AND CONSUMER BEHAVIOUR
( Chapter 3 )

Consumer behavior
 is the process and activities people engage in when searching for, selecting purchasing,
using, evaluating and disposing products and services to satisfy their needs and desires.
      
Factors That Influence customer Behavior
MOTIVATION
 are inner drives that make people take a specific plan of action to
satisfy their needs.

CULTURE
 The impact of culture cannot be disregarded in the study of consumer
behavior.
Hofstede discloses the five dimensions of culture, as follows:
(1) power distance,
(2) individualism/collectivism,
(3) masculinity and femininity,
(4) uncertainty avoidance, and
(5) long-term and short-term orientation. A sixth dimension was recently added, that is,
indulgence versus restraint.

AGE AND GENDER

 Age pertains to the number of years a person has been living, Age is a traditional way of
segmenting the market and also greatly influences consumer behavior. Likes and
preferences of consumers are normally dependent on their ages. Travel packages are
normally tailor-fit depending on the generation of the target market.
 Gender, on the other hand, also influences consumer behavior. The female market is
steadily increasing and has been observed to be more discriminating than its male
counter-parts. The gay market is also being seen by marketers as having a set of
preferences different from the male and female markets.

SOCIAL CLASS
 The socio-economic status of individuals is still being considered as one of the most
important external factors influencing consumer behavior (Hudson 2008).
 Social class is one’s position within the society and is determined by factors such as
income, wealth, education, occupation, family prestige, and value of home or
neighborhood (Kotler et al. 2010).
 
LIFESTYLE
 A lifestyle is a person's pattern of living as expressed in one’s activities, interests, and
opinions (Kotler et al. 2010). It portrays the whole person interacting with external forces.
Lifestyles are by no means universal since it also interacts with culture, economic situation,
and personality. Marketers are in search of relationships between their products and
people’s lifestyles.

LIFECYCLE
 Life cycle refers to the stages an individual goes through in their lifetime.

REFERENCE GROUP 
 Reference groups are known to be a set of people who have a direct or indirect influence
another people's attitudes or behavior.

PERSONALITY AND SELF CONCEPT

 Personality refers to distinguishing psychological characteristics that lead to relatively
consistent and enduring responses to the environment.
 A consumer’s self-concept refers to his personal mental picture (Kotler et al. 2010).
Consumer tend to go for product brands that reflect their personality.
The Buyers Decision Making Process

 Need Recognition- Marketers need to find out what people’s needs are, and they should
be there during the times these people need them.
 Information Search- Once a consumer recognizes specific need, he may not be prompted
to search for more.
 Evaluation of Alternatives- This stage allows perspective customers to make detailed
comparisons of different product.
 Purchase Decision- This is the stage most awaited by tourism marketers. This is when
consumers actually make the purchase decision.
 Post-Purchase Evaluation- It is extremely important for product and services providers to
ensure that customers have a good experience with the product.

Service quality
 as defined in businessdictionary.com is an assessment of how well a delivered service
conforms to the client's expectations.

BENEFITS OF SERVICE QUALITY

1. Customer Retention- Service quality helps build loyalty among customers and makes these
customers speak positively about the service provider.
2. Avoidance of Price Competition- Providing high quality service helps in maximizing potential
revenue and veers the company away from a price war.
3. Retention of Good Employees- When an operation is well run and produces high quality
products, recruitment, training, and retention of employees are easy
4. Reduction of Costs- Costs are minimized if there are repeat customers, absence of a price war,
and low turnover rate of employees.

ORGANIZATION BUYER BEHAVIOUR

 The organizational buying process is a more formal version of the consumer buying
process discussed earlier in the chapter.

TYPOLOGY OF TOURIST
 Allocentric - prefer what is new, unstructured, exotic or unusual in terms of trips or
destination choice.
 Psychocentric - are those who prefer the structured and familiar.
 midcentrism wherein a tourist could portray characteristics of both allocentrics

Cohen’s Model (1972) proposed four classifications of tourist:

 Organized mass tourist - is the type of tourist who buys all-inclusive tour packages and
ensures that everything goes as planned.
 Individual mass tourist is more autonomous than the organized mass tourist preferring to
travel independently, but still chooses popular destinations and activities.
 Explorer seeks new areas but would sometimes opt for the comfort of familiar
accommodations.
 Drifter is the free spirit who avoids any kind of traditional tourist establishments.

STEWART’S MODEL OF HOLIDAYTAKING

 Bubble travelers - have low affluence, low travel experience, and observe foreign culture
from a bubble. This gives them basic confidence to travel.
 Idealized-experience seekers - have more affluence and a base of overseas travel
experience, which gives them more confidence.
 Wide-horizon-travelers – have more affluence, greater confidence, and more travel
experience; now for more individually oriented travel to a wider range of destinations. 
 Total immersers – do not seek to merely observe but to be exposed fully to another
culture’s language, food, heritage, and lifestyle.
 Tourism Marketing and the Communication Process
( Chapter 4 )

Marketing Process
 Seeks to inform, persuade, and bring consumers into action. Information and persuasion
are mainly achieved through communication.

Communication
 is defined as transmitting. giving, or exchanging information using oral or written means.
Hence, marketing and communication go hand in hand.
 is a basic human need.

Communication Theories
 Help us understand how to communicate better. Some communication scholars have
come up with theories that will enable marketing practitioners to understand how to
effectively communicate with their target market.

Models of Communications
Harold Laswell’s SMCRE Model
 The communication process begins when the source selects words, symbols, pictures and
the like to represent the message that will be delivered in the receivers.

Encoding
 Is the process by which thoughts are expressed in the form of words, symbols, pictures,
and gestures.

Decoding
 is the process of transforming the senders message into the receivers thought.

Shannon and Weaver’s

 Describe communication as a linear process. The process begins with the information
source, which produce a message or a set of messages to be transmitted.

Berlo’s SMCR Communication Model

 Introduces factors that may affect the process of communication from the source,
message, channel, and receiver.

Model of Communication vis-a-vis Marketing Planning

Laswell Formula

Who? Says In which To whom? With what

what? Channel?
(Initiator (Receiver) Effect?
)

Marketing planning

The Creative Media The Effect

Type Defined (Respond
Advertise Message
Target or Not)
(TV,
Market
iNTERNET
Osgood and Schramm’s Model of Communication
 Osgood-Schramm's model of communication is dynamic in nature. It veers away from the
linear models of previous communication scholars. It looks into communication as circular
in nature.

Role of Culture in Tourism in Tourism Marketing

Hofstede's Cultural Framework
 he cultural variables that Hofstede's framework discusses include power distance,
individualism, masculinity, uncertainty avoidance, pragmatism and indulgent

ROLE OF OPINION LEADERS

The Two-step Flow Model
 According to Katz and Lazarsfeld. “The flow of media messages from radio and print to
opinion leaders and then the leaders lead the messages to lesser active users in the
population.

Opinion leaders
• Are those that pass on information to other, less active members of his group.
Opinions are usually added to the information given; thus, shaping the context by
which information is receive

Role of Innovation in Marketing

Diffusion of Innovation Model
 Rogers further developed another theory known as the Diffusion of Innovation where he
defined innovation as the spread of a new idea from its source to its users.

Role of Marketing Communication

Communication is Influence
 Communication has a lot to do with shaping influence. The way we communicate with
people determines the level of influence we have on others. Marketing is all about
communicating the best our products, services.

Communication Problems
 Language barriers
 Varied connotations of words, signs, and symbols
 Cultural differences
 Faulty word choices
 Mistranslations

GOAL OF MARKETING

COMMUNICATION

 The goal of marketing communication is to achieve common ground between the sender
and the receiver.
 Pricing In Marketing
( Chapter 5 )

Price
 Is the amount that the customer pays for the products, the amount of money
exchanged for something of value.
Key Concepts Relevant to Pricing
 This are a few terms that need to be defined in order to easily understand concepts in
pricing.
Sales
 total amount that a company gets based on quantity sold multiplied with selling price.
Revenue
 total income/profit that the company keeps after all the expenses have been paid for.
Simply put: sales minus expense equals revenue.
Fixed Costs
 costs incurred due to the operations of the business; do not fluctuate with volume of
sales.
Profit Margin
 level of income that is desired by the company. This usually comes out in percentage
form as the amount of mark-up placed on top of the fixed and variable cost of a
product.
Variable Costs
 costs that vary based on volume or quantity. Bigger quantities of the same order will
cost less than smaller quantities of the same specifications. This concept is commonly
known as economic of scale.
Break-even Point
 the point wherein total cost is equal to total revenue.

Key Factors Affecting Price

1. Costs
 The setting of prices should incorporate a calculation of how much it costs the
organization to produce the product or the service. Both variable and fixed costs
should be included in the price.
2. Organizational and Marketing Objectives
 Companies get into business for survival, profit maximization, high rate if return of
investment, brand equity growth, and an adequate share of the market.
3. Other Marketing Mix Variables
 Price is affected by the interplay if the other variables in the marketing mix. High prices
should mean higher quality products and services, elite distribution channels, and more
personalized promotions.
4. Buyers Perceptions of Value and Price
 Buyers have different perceptions of product quality and value based on branding and
image.
 Price affects buyers perceptions.
 The higher the price, the higher the buyer’s expectations of quality are.
5. Competition
 Knowing what competition offers is an important factor in the success of a
business. In highly price-sensitive markets, companies try to win customer s by
setting a lower price than that of competition.
6. Government Regulations and Taxes
 Some government regulations and taxes can either cause a company to maintain
its low prices or increase its prices.
7. Nature of the Market and Demand
 Tourism caters to a highly segmented marketplace. Pricing needs to address the
differences in the nature of such markets as well as the differences in the de-
mand of each market segment.
8. Pricing in Different Markets
 Different markets have different levels of price sensitivity. Hence, a one- price-fits-
all market would not be recommended.
9. Price Elasticity of Demand
 Price increases or decreases normally have an effect on the level of sales of the
product. The concept of plasticity of demand is shown in this formula:
Price elasticity of demand =change in quantity demanded % change in price

 If demand increases when price decreases, the product is elastic. If demand stays
the same even if there is a price cut, the product is inelastic.

10. Other Environmental Factors

 Other environmental factors that may be beyond the company’s control can affect
pricing. These factors that may include, but are not limited to, political instability,
calamities, environmental issues, etc.

Price And Its Relationship to Marketing Objectives

1. Survival
 A company may be experiencing a deep crisis that the most basic reason for its
marketing efforts is merely to survive.
2. Current Profits Maximization
 Some companies seek to use marketing for short term financial gains.
3. Marketing Share Leadership
 Some companies build on marketing strategies that will help the company gain a
huge market share and become a market leader in its product category.
4. Brand Equity Growth
 Establishing a positive brand image leads to high awareness and perception of
quality.
5. Product-Quality Leadership
 Some companies want their brands to be associated with high quality.

General Pricing Approaches

1. Cost-based Pricing
 Is an approach that aims to cover costs and make a profit.
2. Break-even Analysis and Target Profit Pricing
 This kind of pricing approach is when price is determined using break-even price
and projecting a target profit.
3. Buyer-based Pricing
 Some companies base their prices on the product’s value as perceived by the
consumers
4. Competition-based pricing
  This approach looks at what price competitors are putting on their products and
services.
Pricing Strategies
1. Prestige Pricing
2. Market Skimming Pricing
3. Market Penetration Pricing
4. Product Bundling Pricing
5. Volume Discounts
6. Discounts Based on Time of Purchase
7. Discriminatory Pricing
8. Psychological Pricing
9. Promotional Pricing

Revenue management
 is a systematic approach to matching demand for services with appropriate supply
in order to maximize revenues.
 Most hospitality establishments are able to juggle all bookings and rate quotations
in a way that maximum revenue potential is achieved at any given night.

Shoemaker Et. Al. (2007) cite that revenue management is beneficial to the hotel and airline
industry in particular because of the following reasons:
1. Product is perishable; thus, it is better to sell the room/ seat at a low price than have it
empty.
2. Capacity is fixed daily. In no way can rooms or seats be increased at a specific day to
meet demand.
3. Demand fluctuates and is uncertain depending on days of the week and seasons of the
year.
4. Different market segments have different lead times for purchase.
5. Flexibility in pricing hotel rooms and airline seats. The market accepts that hotel room
and airline seat rates may vary depending on purchase lead time and seasonality.

Yield management
 is a form of discriminatory pricing wherein some of the market segments pay
higher or lower prices that other tourist for the same tourism products and services
in order to ensure optimal yield from the available inventor. In aims to manage
revenue by controlling prices and capacity.

Calculating Yield
 A hotel has a fixed number of rooms per day and a variety of market segments
with different price ranges.

Market Recovery Through Price

 Some destinations that have lost market share through different external and
internal reasons may recover from their loss through price combined with effective
promotion
 Price can represent a significant incentive to encourage visitors to offset their fears
and to return.
Dealing with Price Changes
 Know when to initiate a price cut or a price increase.
 Companies normally adopt a strategy that works well with their company.
Companies need to be careful to employ price cut because doing so might lead to
a piece war where all the market players are affected negativel
 The Tourism Product
( Chapter 6 )

Key Players in the Tourism Industry According to Hudson ( 2008 )

1. Private and non-profit sector
 Include industry associations which have been established to protect special interest groups.
2. Public sectors services
 Cover either national, regional, or provincial tourism organizations.
3. Suppliers
 Transportation Industry
 Accommodation sector
 Food and beverage sector
 Attraction
 Events and conferences
4. Travel intermediaries
 Help bring the tourism product to customer. This also known as channel distribution.
5. Tourist
 The center of tourism industry.

The Tourism product Defined

 A product is anything that can be offered to a market for attention, acquisition, use or
consumption that might satisfy a want or need.

Product Components
1. Destination Attractions
 Is a collection of attractions, which is the elements of the tourism product that pulls people to a
destination.
2. Destination Facilities
 A wide range of tourist facilities within the destination will help the tourist enjoy the destination
attractions.
3. Accessibility
 For a tourism product to be highly successful infrastructure services should be put in place.
4. Image
 Control to the product is its image.
5. Price
 Is an important components of the tourism product.
Product Type
1. Core product
2. Facilitating product
3. Supporting product
4. Augmented product

Product Consideration
1. Accessibility
2. Atmosphere
3. Costumer interacts with other consumers
4. Co-production of the product or services

Product Life Cycle

 Product development
 Introduction
 Growth stage
 Maturity
Maturity Stage
1. Marketing Modification
2. Product Modification
3. Marketing Mix Modification

Decline Stage
 Is the period when sales fall off quickly and profits drop.
Phase-Out
 Without a shift in strategy to adopt to the prevailing business environment, phase-out.

Destination Life Cycle

Exploration
 characterized by a few adventurous tourists, close interaction with locals, minimal effect on
social, cultural, and physical environments, and local facilities are used.
Involvement
 characterized by an increase in tourist arrivals, interaction with locals still high, some changes
in social, cultural, and physical environment.
Development
 tourist arrivals are fast increasing, loss of local control, rise of foreign owned facilities, migrant
laborers, and promotion of artificial attractions.
Consolidation
 tourism has become a major economic factor. There is heavy advertising and promotions.
Stagnation
 when the carrying capacity of the destination has been reached or exceeded,
Decline
 characterized by a downward rate of tourist arrivals. The decline stage can be mitigated
depending on management and marketing efforts to uplift the destination.

PRODUCT DEVELOPMENT
 is an integral part of the success of any business. Competition can come up with a new and
innovative product that may affect the sales of your existing product.

The Stages Development

ldea Generation
 new product begins with an idea. ldea generation is a systematic way of coming up with new
idea.
ldea Screening
 idea generation leaves you with so many new ideas that need to be screened to see which
ones match the company's objectives and can be developed further.

Concept Development and Testing

 The products that pass through the screening can now be developed further. A product
concept is developed and tested.
Marketing Strategy
 A new product or service is developed to try to gain a marketing edge and to differentiate itself
from competitors
 A marketing strategy should be kept in mind as the new product is introduced to the market.
Business Analysis
 The business analysis stage looks more deeply into how much revenue the product could
generate, what the cost will be, how much market share the product may achieve and the
expected life of the product (Kotler et al. 2010).
Prototype Creation
 When the concept has been developed. The prototype is then presented to its target market for
comments on which adjustments and enhancements should be done.
Test Marketing
 The product is then launched in a small geographical area to test the components of the
marketing mix.