COLLEGE OF COMMERCE

DEPARTMENT OF HOSPITALITY MANAGEMENT

MODULE 4 PACKET
THM 6 – TOURISM AND HOSPITALITY MARKETING
MODULE 4 OVERVIEW:

Welcome to Module 4 – THE TOURISM PRODUCT!

In this module, we will discuss about the tourism product. This chapter expounds on what a
tourism product is and its components. The tourism product goes through a variety of stages
from development to phase-out. At the end of this module, you are going to submit a research
output and written assessments specifying how you apply the lessons you learned from this
module in reality.

You are set for an incredible journey! Have fun in the world of tourism and hospitality marketing!

CONSULTATION HOURS :
Phone or Messenger: 8-11 AM Mondays | 8-10 AM Thursdays BSTM 2A
Virtual time: 8-9 AM Mondays
Phone or Messenger: 11-2 PM Mondays | 11-12 PM Thursdays BSTM 2B
Virtual time: 11-2 PM Mondays
Phone or Messenger: 8-11 PM Mondays | 8-10 AM Thursdays BSHM 3A
Virtual time: 8-9 AM Mondays

MODULE 4 LEARNING OBJECTIVES:

By the end of this module, the students will be able to:
1. Define what a tourism product is and its components
2. Exemplify the stages of the product life cycle and the destination life cycle
3. Present that the Philippine has a lot of tourist-worthy attraction
4. Explain the product development process

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COURSE CONTENT FOR MODULE 4:
THE TOURISM PRODUCT
ACTIVITY DESCRIPTION TIME TO COMPLETE
Lecture discussion Key Players in the Tourism Industry 30 minutes
Lecture discussion Product Life Cycle 1 hour
Review Quick review 15 minutes
Lecture discussion Destination Life Cycle 1 hour
Lecture discussion Product Development 1 hour
Giving instructions for the activity:
Activity 15 minutes
Written Assessments
Quiz Summative quiz/Research Activity for module 4 1 hour
Presentation Presentation of selected outputs 1 hour
Deadline for module 4 output: 28 May 2021, at strictly 5:00 in the afternoon

LECTURE DISCUSSIONS
4.1 KEY PLAYERS IN THE TOURISM INDUSTRY
The tourism industry is a conglomeration of various products and services, individuals and
organizations, each with specific economic and/or political interests. Hudson (2008) enumerated
these players: (1) private and non-profit sectors, (2) public sector services, (3) suppliers such as
transportation, accommodation, food and beverage services, attractions and events, (4) travel
intermediaries, and (5) the tourists themselves.

1. Private and non-profit sectors. Include industry

associations which have been established to protect
special interest groups, such as travel agency
associations (e.g., Philippine Travel Agency
Association and PHILTOA), financial services (e.g,
credit card companies), academe, media, and

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insurance Image Source: https://inbusinessphx.com/partner-section/continued-advocacy-needed-for-nonprofit-sector#.YIVCxJAzaM8

companies.
2. Public sector services. cover either national, regional,
or provincial tourism organizations. They come up with
marketing programs to promote their destinations to both
intermediaries and individual tourists. The Department of
Tourism and provincial tourism offices fall under this
Image Source: https://tekyantra.com/government -services/ category.
3. Suppliers

Image Source: https://globallycool.nl/2018/12/05/how -does-the-new-package-travel-directive-affect-non-european-tourism-suppliers/

a. Transportation industry- crucial to the success of tourism. Without an efficient transport

system and road networks, tourists would not be encouraged to come to destinations that
have lengthy, tiresome, and costly travel. This industry includes airlines, cruises, buses,
and railways.
b. Accommodation sector- covers a huge part of a tourist's expenditure during travel. There
are a variety of accommodation facilities to meet the customer's needs, preferences, and
budget. Types of accommodation facilities range from five-star to economy hotels,
apartelles, inns, lodges, motels, bed and breakfasts, timeshare apartments, and
campsites.
c. Food and beverage sector - another important supplier of the tourism industry.
Restaurants, bars, food stalls and coffee shops help shape the total travel experience of

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tourists. These can range from establishments serving local food to multinational
franchise restaurants such as McDonalds and Starbucks.
d. Attractions - basic requirements in having a successful tourist destination. These can be
classified as natural or man-made. Tourists are drawn to attractions for various reasons
such as entertainment, leisure and recreation, education, adventure, etc. A variety of
attractions should be made available in destinations for tourists to keep coming back to
your destination.
e. Events and conferences – play a key role in attracting both leisure and business travelers
to a destination. Huge sporting events such as the Olympics and the World Cup attract
tourists from all over the world either as participants or spectators in the event. Festivals
such as the Sinulog Festival in Cebu and Panagbenga Festival in Baguio are able to
attract thousands of tourists, both local and foreign.
4. Travel intermediaries. help bring the tourism
product to the customer. These are also known as
channels of distribution. Travel intermediaries
include travel agents, tour operators, web-based
distributors, etc. They normally offer travel packages
that make the experience less complicated to the
tourists. These packages include transportation
(both inbound and inland), accommodations, food,
city tours, etc. the center of the tourism industry.
Image Source: https://canustech.com/industries/travel-and-hospitality/

5. Tourists. the center of the tourism industry. Being

the main consumers of tourism products, they
choose where they want to go, what they want to eat,
and what they want to do. The tourist's satisfaction is
the utmost goal of all other key players in this
industry. For the tourism industry to grow, more
people need to be attracted to travel.
Image Source: https://www.businessinsider.com/travel-scam-around-the-world-2018-3

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THE TOURISM PRODUCT DEFINED
In consumer marketing, a product is anything that can be offered to a market for attention,
acquisition, use or consumption that might satisfy a want or need. It may include physical
objects, services, places, organizations, and ideas. In tourism marketing, products have different
components that make up the over-all tourism product but there are many products and services
that form the entire tourism experience. Hsu et al. (2008) discuss these components as
destination attractions, destination facilities, accessibility, image, and price.

1. Destination Attractions. A destination is a collection of attractions, which is the element of

the tourism product that pulls people to a destination. These are what the visitors want to
see. Philippine attractions mainly fall under the "sun, sand, and sea" category but they also
include our old churches, historical and cultural artifacts, festivals, and many others. The
Filipinos, known to be the friendliest people in the world, are also a major tourist attraction.

Image Source: https://www.zenrooms.com/blog/post/bohol-tourist-spots/

2. Destination Facilities. A wide of tourist facilities within the destination will range help the
tourist enjoy the destination attractions. These include accommodation facilities (hotels,
inns, and apartelles), transportation (taxi and rent-a-car), food and beverage (restaurants
and bars), shopping centers, and many other support facilities.

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Image Source: http://www.kosamui.com/destination-beach-resort/facilities.htm

3. Accessibility. For a tourism product to be highly successful, infrastructure services (airports,

roads, bridges, etc.) and transportation systems (direct flights of airplanes, trains, buses,
etc.) should be put in place.

Image Source: https://www.wiinnova.com/blog/the-importance-of-accessibility-in-mobile-app-development/

4. Image. Central to the product is its image. Destination image helps the visitor form
expectations of what they will experience. It also motivates them to make a decision to
visit the said destination.

Image Source: https://www.lonelyplanet.com/articles/egypt -worlds-fastest-growing-tourist-destination

5. Price. Pricing is an important component of the tourism product. It allows consumers to

determine the level of services they may receive in the destination. Pricing products highly
will create an expectation of excellence and high standards while pricing it too low might

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give consumers doubts on the product's quality. Factors such as seasonality, distance,
product classification, and length of time may affect pricing.

Image Source: https://www.shopify.com/blog/how -to-price-your-product

Product Types

Image Source: http://lokatourconsultant.blogspot.com/2013/04/tourism-product-definition.html

In most destination facilities, products and services have different types. These include (1)
core, (2) facilitating, (3) supporting, and (4) augmented products. Core products are products
that the consumer is really buying. Facilitating products are goods and services that must be
present for the guest to enjoy and use the core product. Supporting products, on the other hand,
add value to the core product and help differentiate it from its competitors. If properly planned,

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they offer the product's competitive advantage. Augmented products are factors that help the
consumer consider the product over other products because these include product accessibility,
geographical location, operating hours, atmosphere, customer satisfaction, and customer
interaction with each other.

For instance, if a businessman travels and stays in a hotel, the product that he is really
paying for would be the hotel room that will be his home for a few days, including the bed and
everything else inside the room. But for him to enjoy the core product, facilitating products such
as the check-in and check-out services should be available. The business traveler cannot get
into the hotel room without checking in. Facilities that would be helpful to a businessman such as
a business center and room service are supporting products. The presence of these services
adds value to the traveler's comfort and convenience during his business trip. His interaction
with the service organization and with other customers form augmented products because these
offerings enhance the delivery of the products and services. In these scenario, we are able to
classify the products as:
 core product – hotel room;
 facilitating product - check-in and check-out service;
 supporting products - business center and room service; and
 augmented products - interaction with service provider and other customers.

Product Considerations
In availing of tourism products and services, consumers consider several factors. These
factors include accessibility, atmosphere, customer interactions with the service system,
Customer interactions with other customers, and co-production. Consumers get attracted to
purchase if these considerations meet the standards of the customers.

Accessibility refers to how available the product is to the consumer, in terms of location,
hours of operation, and ease of availing the products and services. Atmosphere is the over-a
feel of the place. This is much appreciated through the five senses. The product or service
should be appealing to the eye, soft to the ears, gentle to the touch, and smelling sweetly.

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Another term for this is the ambiance of the place. Customer interactions with the service
system is inevitable for the tourism product. Consumption happens within the destination.
Hence,
customer interaction with service staff should be pleasant and memorable. Customers interact
with other customers consuming the product or service along with them. The experience
becomes
highly variable depending on how customers behave and interact with each other. Customers
also do co-production of the product or service. As such, involving the guest in the delivery of the
service can actually improve customer satisfaction, reduce expenses, and increase capacity.
The presence of self-service counters, for instance, is aimed at making customers become co-
producers of value.

Image Source: https://www.travelpulse.com/news/hotels -and-resorts/how-will-the-us-hotel-experience-change-post-covid-19.html

4.2 PRODUCT LIFE CYCLE

In tourism and hospitality, product life cycle can be referred to in two levels. First is
specific product and service on a business or corporate level such as hotels, restaurants, resort
property, etc. Second is as an aggregate of offerings within a whole destination.

Understanding the concept of the product life cycle will help a marketer analyze the kind
of promotional tools and activities that will be most effective. Introducing a new product entails a
more aggressive information drive than a product that is at its maturity stage. The following are
the stages of the product life cycle.

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Product Development
The product development stage begins with an idea of a new product that could possibly
satisfy an existing need or want in a specific market. The product idea is further developed
through market research and product testing to determine the feasibility of the product. A
business plan with a sound financial and marketing strategy is also prepared during this stage.

Introduction
The introduction phase is the period wherein the product is introduced to the market. It
may be a period of rapid or slow sales growth depending on market acceptability of the new
product. As the product is being introduced into the market, profits may be non-existent on this
stage since investments have been made during the product development stage. An aggressive
marketing strategy should be implemented to ensure market awareness and penetration. Since
the product is new, the features of the product should be introduced extensively to its target
market.

Growth Stage
The growth stage is a period of rapid market acceptance and increasing profits. As the
product becomes popular with its target market, an increase in sales is projected at this stage.
Return on investments will materialize at this stage of the product life cycle.

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Maturity Stage
The maturity stage is a period where sales plateau because the product has achieved
acceptance by most of its potential buyers. It is also likely that competition has come in and
attempts to grab the product's market share. At this stage, to prevent decline, the company can
introduce some innovations, as follows:

1. Market Modification. The company may introduce innovations to the product in order to
attract a related segment of the market and increase consumption further. For
example, a restaurant serves lunch and dinner menus and opts for market
modification by offering breakfast or merienda in the hope of attracting another type
of market and increasing consumption of existing market.
2. Product Modification. The company can opt to change product characteristics such as
product quality, features, and style to attract new users and stimulate more usage. An
example is offering sugar-free drinks to attract health-conscious customers.
3. Marketing Mix Modification. This is when the company attempts to improve sales by
changing one or more of the marketing mix elements to attract new customers and
prevent consumers from switching brands. Examples of marketing mix modification
strategies include using sales coupons and price cuts or revitalizing an advertising
campaign.

Decline Stage
Some successful products stay in the business for a long period of time, By employing
product modification, market modification, and marketing mix modification, some products stay
in the market and avoid decline. The decline stage is the period when sales fall off quickly and
profits drop.

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Phase-out
Without a shift in strategy to adapt to the prevailing business environment, phase-out may
be inevitable. This is the stage when the production of the product or availability of the service
will be shut down or deleted from the company's product line.

4.3 DESTINATION LIFE CYCLE

Butler (1980) developed a concept popularly known as the Destination Life Cycle (DLC)
which uses the product life cycle as its foundation. The DLC provides a framework for the
marketing and management of destinations as it develops over time (Hsu et al. 2007).

Hsu et al. discuss the six discrete stages of the DLC, as follows:
1. Exploration – characterized by a few adventurous tourists, close interaction with locals,
minimal effect on social, cultural, and physical environments, and local facilities are used.
2. Involvement – characterized by an increase in tourist arrivals, interaction with locals still high,
some changes in social, cultural, and physical environment. Infrastructure development
begins.
3. Development – tourist arrivals are fast increasing, loss of local control, rise of foreign owned
facilities, migrant laborers, and promotion of artificial attractions.
4. Consolidation – tourism has become a major economic factor. There is heavy advertising and
promotions. Facilities begin to deteriorate and growth rates decline.
5.Stagnation – when the carrying capacity of the destination has been reached or exceeded. It is
also characterized by social, environmental, and economic problems. Inflow of tourists
comes from repeat visits and conventions.
6. 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.
Improvements in the destination such as changes in attractions, development of more
exciting products, and market modification strategies may be applied to rejuvenate the
decline of a destination.

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When modifications and innovations are introduced to the destination, rejuvenation takes
place. With rejuvenation, a destination may experience continued growth, stability, or slower
decline rate.

Image Source: https://www.researchgate.net/figure/Tourism-destination-life-cycle-Source-Butler-1980_fig1_268818059

4.4 PRODUCT DEVELOPMENT

Image Source: https://sustainabletravel.org/our-work/sustainable-destination-development/

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 market always tries to find exciting new products for their changing lifestyles and trends.

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Customers have become more discriminating and quality conscious as they use products and
services. They can get tired of using the same thing over and over again. As the products go
through the product life cycle and reach maturity point, it is best that product development
becomes an ongoing process to ensure profitability and sustain interest on the product line.

The Philippines has rich natural resources and Filipinos are the warmest of hosts. Tourism
products and services should maximize these key strengths. Coming up with a new product is
risky; hence, companies need to ensure that they practice strong product planning and have a
systematic approach to product development. The stages in product development, adapted from
Kotler et al. (2010), are as follows:

1. Idea Generation
New products begin with an idea. Idea generation is a systematic coming up with new ideas.
Sources of new product ideas include the external environment, internal sources, customers,
competitors, distributors and suppliers, way of and other sources.

The external environment refers to the awareness of what happens in the real world.
Through one's actual experiences in the outside world, new can be generated. Internal sources
include your employees, especially the ones in guest contact positions, who could give feedback
on what customers are for. Brainstorming sessions with employees can be a good source of new
ideas. By analyzing competitors' products and services, new ideas can be generated (hopefully
not copied!). Other sources include trade magazines, websites, blogs, shows, seminars, product
consultants, marketing research firms, advertising agencies, media, and inventors.

2. Idea 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. A new product committee
can screen the ideas generated in a logical and objective manner.

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3. Concept Development and Testing
The products that pass through the screening can now be developed further. A product
concept is developed and tested. The customers should be consulted on which product
concepts are actually helpful to them because they are the primary users of the product.
Successful products are usually those that address specific needs and issues of the end users.

4. 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. How will the product be launched to the market? A new product should
be developed to match the company's image and resources, which in turn should be what its
existing and potential markets need. In short, there should be a product-company-market fit.
5. 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).

6. Prototype Creation
When the concept has been developed, when marketing seems to be feasible and the
product financially viable, a prototype of the product is created. The prototype is then presented
to its target market for comments on which adjustments and enhancements should be done.

7. Test Marketing
The product is then launched in a small geographical area to test the components of the
marketing mix. There may be a need to adjust any of the marketing mix components before it is
launched in a larger scope.

8. Commercialization

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This is when the product is fully launched to the entire target market either nationally or
internationally. It is expected that the stages of the new product development, if fully observed,
can merit market acceptance of the product.

9. Evaluation
This is the stage wherein the company will know whether the product has gained market
acceptance; hence, if production will be continued or be stopped.

Image Source: https://theintactone.com/2019/03/07/mm2-u2-topic-8-new-product-develop ment-process/

Flowchart of New Product Development Process

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Checklist for New Product Appraisal
A company should be able to assess the product-company-market fit of a new product
if it can favorably answer the following questions (adapted from Shoemaker et al. 2007):
 Is the product compatible with the current product line?
 Do we have the know-how and appropriate skills?
 Will it be stable?
 Will the target market grow?
 What is the size of the target market?
 How can we reach the target market?
 What is the price-value relationship?
 How will we fare against competitors?
 Will there be loyalty impact?
 How is the product different from other products in the market?
 What are the copy possibilities?
 What is the product's market life?
 How is customer acceptance?
 Is marketing made easy?
 What are the measures of success?
 Is there capital available?
 What are the continuing costs?
 What is the speed of Return on Investment?
 What are the profit margins?
 What is the expected impact on the current consumers?

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