Download The Meaning of Marketing in Travel and Tourism

The Meaning of Marketing
in Travel and Tourism
Objectives: Defining travel and tourism and the component
sectors of it. In addition, introducing and discussing the
meaning of marketing for travel and tourism organizations.
Travel and Tourism Demand
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Basically, there are three different categories of visitor
demand, each representing a different sector of the
total market:
Incoming visitors (international visitors) who are
traveling to a country but residents of other countries.
This type of travel may be called inbound tourism.
Outgoing visitors (international visitors), residents of a
country, who are traveling as visitors to other countries.
May be called outbound tourism.
Domestic visitors (residents), residents visiting
destinations within their own country’s boundaries.
May be called domestic tourism.
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In all definitions of tourism made by the World
Tourism Organization (WTO), we come across with the
following principle terms which are very important to
know.
Visitors; all travelers who fall within agreed definitions
of tourism.
Tourists or staying visitors; visitors who stay overnight
at a destination.
Same-day visitors, or excursionists; visitors who arrive
and depart on the same day.
International Tourism
People who travel to and stay in countries other
than their country of residence for less than a
year are classified as international tourists.
International tourism market is more important
than the domestic because international tourists;
spend more
 stay longer at the destination
 use more expensive transport and accommodation
 bring in foreign currency
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UNWTO Tourism Highlights
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http://mkt.unwto.org/sites/all/files/docpdf/un
wtohighlights11enlr_1.pdf
Domestic Tourism
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People who travel and stay overnight within the
boundaries of their own country are classified as
domestic tourists. Unfortunately, estimates of this
market is not adequately measured at present in
Turkey. In the USA, where good measurement does
exist, Americans take only one trip abroad for every
100 domestic trips reflecting the size of the USA
and the large distances . For the British, where the
statistics are also good, there are approximately four
domestic trips for every visit abroad.
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Statistics in the early 1990s indicates that in
Europe and North America between a half and
three quarters of the adult population took
holidays away from home every year. Besides,
over nine out of ten people take same-day visits
in most economically developed countries.
Definition of Travel and Tourism
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An acceptable definition of tourism should cover all
aspects of travel. Note that tourism is synonymous
with travel. There are no conceptual differences
between the two expressions. So tourism is used alone
covers travel at the same time.
The WTO defines tourism in 1991 as;
Tourism comprises the activities of persons traveling to and
staying in places outside their usual environment for not more
than one consecutive year for leisure, business and other purposes.
This definition pulls together the three basic elements of
tourism which are as follows;
 Visitor activity
 Travel
 Destination/facilities
The definition includes;
 same-day visits
 travel for several purposes such as business, social,
religious, educational, sports etc. There is no restriction
about the market for travel whether it is for pleasure or
business.
 all tourism includes an element of travel, but all travel is
not tourism. The definition excludes all routine
commuter travel, in other words local travel to, for
example, neighborhood shops, schools or hospitals.
 tourism includes individual leisure time and many
recreational activities, but it is not synonymous with
them.
 all travel and tourism trips are temporary movements.
The Component Sectors of the Tourism
Industry
The “industry” consists of the products of several
different
industry sectors. The five main component sectors of the
industry are as follows;
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accommodation: hotels/motels, guest houses/bed&breakfast,
apartments/villas, time share resorts, holiday villages,
conference/exhibition centers, camping sites, marinas etc.
attractions: theme parks, museums, national parks, wildlife parks,
gardens, heritage sites, sports/activity centers etc.
transport: airlines, shipping lines/ferries, railways, bus/coach
operators, car rental operators etc.
travel organizers: tour operators, tour wholesalers, retail travel
agents, conference organizers, booking agencies, incentive travel
organizers etc.
destination organization: national tourist offices (NTOs), regional
tourist offices, local tourist offices, tourist associations etc.
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Each of them is composed of several sub-sectors which
are concerned with marketing activities both in the
design of the products and the management of
demand. Some of the sub-sectors are fully commercial,
operated for profit (e.g. hotels); some are operated
commercially for objects other than profit (attractions
such as safari parks and heritage sites); and some are in
the public sector and operated mainly on a noncommercial basis (state-owned national museums,
national parks, and most of the operations undertaken
by tourist offices).
The Role of Marketing - Links between
Demand and Supply
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The central activity of marketing managers is to
create and supply the product that best fits the
needs and wants of the customers which is
known as the consumer (marketing) orientation
concept.
What is Marketing?
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Marketing is not selling or advertising.
Marketing is the management of creating and
exchanging products and value in order to satisfy
the needs and wants of the customers.
Marketing involves building profitable, longterm relationships with customers.
The goal of marketing is to satisfy customers at
a profit.
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If the marketer does a good job of
understanding consumer needs, develops
products that provide superior value, and prices,
distributes, and promotes them effectively, these
products will sell easily.
Thus, selling and advertising are only part of a
larger `marketing mix` - a set of marketing
tools that work together to affect the
marketplace.
Marketing, more than any other business
function, deals with customers. Creating
customer value and satisfaction are at the heart
of hospitality and travel industry marketing.
The Marketing Process
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Managers must realize that they cannot satisfy all
customers; they have to choose their customers
carefully.
Companies work to (1) understand consumers,
(2) construct marketing programs to create
superior value for the customer, (3) build
profitable relationships and create customer
delight, and in turn (4) capture value from
customers in the forms of sales, profits and
long-term customer equity.
Core Marketing Concepts
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Customer needs, wants & demands
Marketing offers – products, services and
experiences
Customer value and satisfaction
Exchanges and relationships
Markets
Needs, Wants, and Demands
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Consumers have needs (physical, social,
individual etc.) wants, and demands to be
satisfied. Consumers view products as bundles
of “benefits” and choose products that give
them the best value for their money and most
satisfaction. E.g. Fairfield Inn → comfortable
bed, clean room, low price; JW Marriott Hotels
& Resorts → fine dining, luxury, comfort and
productivity
Understanding needs and wants
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What are people looking for when they visit
different destinations?
Why would a tourist choose to holiday in Florida
rather than Spain – what variables are at work
apart from cost?
Why would he choose to travel with British
Airways, but not with Lufthansa?
Why would he buy an independent inclusive
tour, but not a group tour?
Need Satisfaction Theory
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All consumer purchases, including choice of
travel destination, are made to satisfy a need of
the consumer. The individual has a desire for
something?????
Do people travel just to travel?
People do not travel just to travel. Travel fills
some need in each consumer. Travelers’ needs
differ.
Do we really need?
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Often people talk about what they need, say a
new television set, a new dress, or a holiday. But
do they really need these things? Or are they just
expressing a desire for more?
Due to today’s increased material consumption
patterns, it is becoming difficult to distinguish
wants (e.g. reference group influence) from
needs.
Maslow’s hierarchy of needs
Self-actualization
(e.g. self-fulfillment, etc.)
Ego needs
(e.g. self-respect, status, success, etc.)
Social needs
(e.g. affection, love, friendship, etc.)
Safety needs
(e.g. security, protection, etc.)
Physiological needs
(e.g. food, water, air, etc.)
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According to Maslow, the more basic needs have
to be satisfied (satisfied according to the needs
of our cultural group) before our interest will
focus on higher level needs.
However, according to Alderfer, and his ERG
(existence, relatedness, and growth needs)
theory, (1) more than one need may be operative
at the same time, (2) if the satisfaction of a
higher level need is frustrated, the desire to
satisfy a lower level need increases.
The Main Motives for Travel and
Tourism
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Motivation for travel and tourism can be
categorized as;
 Physical motivations
 Cultural motivations
 Personal motivations
 Prestige and Status motivations
(Mathieson and Wall, 1993)
Physical motivations
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refreshment of body and mind (rest and
relaxation) – beach holidays, lakes and mountains,
etc.;
for health purposes (i.e. either medically
prescribed or undertaken voluntarily) – spas, etc.;
for participation in sports – skiing, canoeing,
safari parks, ponytrekking, etc.;
pleasure, - fun, excitement, romance and
entertainment, to shop.
Cultural motivations
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curiosity about foreign countries, people and
places;
interests in art, music, architecture, folklore –
music festivals, theatre visits, etc.;
interest in historical places (remains,
monuments, churches);
experiencing specific international and national
events - Olympic Games, Oktoberfest, etc.
Personal motivations
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visiting relatives and friends;
meeting new people and seeking new friendships;
seeking new and different experiences in different
environments – sailing etc.;
escaping from one’s own permanent social environment
(i.e. desire for a change)
personal excitement of traveling;
visiting places and people for spiritual reasons (i.e.
pilgrimages)
traveling for travel’s sake
Prestige and Status motivations
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pursuit of hobbies – craft or painting holidays
etc.;
continuation of education or learning- study
tours etc.;
seeking of business contacts and professional
goals – fairs, etc.;
conference and meetings;
ego enhancement and sensual indulgence;
fashion
Products
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A product (persons, places, organizations, activities,
ideas) is anything that can satisfy a need or want.
Producers must see themselves as providing a
solution to a need (benefits) rather than just selling a
product. Otherwise, when a new product satisfies
the needs better or less expensively, they would not
make money.
Research is a must to understand the needs and
wants of the customers to produce the right
product. E.g. At Disney World, each manager spends a day
in the park in a Mickey costume or work on the front line -
taking tickets, selling pop-corn.
Disney World, Orlando
Customer Value and Satisfaction
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How do customers choose among these many
products? Consumers make choices based on;
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Value; is the difference between owning the product
and the cost of obtaining the product, in a way
“profit” to the customer. Customers do not judge
product values objectively, on the contrary they act
on perceived value. E.g. Is Hilton really the best
hotel company?
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Satisfaction; is the difference between the
product’s performance and buyer’s expectations.
If the product’s performance falls short of
expectations, the buyer is dissatisfied. If the
performance matches or exceeds expectations,
the buyer is satisfied. Smart companies aim to
satisfy customers by promising only what they
can give, then giving more than they promise.
Benefits of satisfying customers: Customer
satisfaction create an emotional tie (customer
loyalty) to a product. Highly satisfied customers
make (1) repeat purchases, (2) are less price
sensitive, (3) talk positively to their friends.
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Quality; simply quality can be defined as
“freedom from defects”. Today, most companies
define quality in terms of customer satisfaction.
E.g. according to Motorola “if the customer
doesn’t like the product, it’s a defect”. Quality
starts with customer needs and ends with
customer satisfaction. The concept of “total
quality management” is in a away “total customer
satisfaction”. Improving the quality of a product
that customers want increases customer
satisfaction, therefore increases profit.
Exchanges and Relationships
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Marketing occurs when people decide to satisfy
needs and wants through exchange.
Exchange (transaction) is the act of getting a
desired object (product, service, idea …) from
someone by giving something in return.
Marketing should create mutually beneficial
relationships (good for both parties) to generate
profitable transactions.
Markets
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A market is the set of actual and potential
buyers of a product. These buyers share a
particular need or want that can be satisfied
through exchanges and relationships.
Marketing means managing markets to bring
about profitable customer relationships.
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Creating these relationships takes work. Sellers
must search for buyers, identify their needs,
design right marketing offers (products), set
right prices, promote and deliver (place) the
products in the right ways (4Ps of Marketing).
These are the core marketing activities.
Marketing Management
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Marketing management is the art and science of
choosing target markets and building profitable
relationships with them.
The marketing manager’s aim is to find, attract,
keep, and grow target customers by creating,
delivering, and communicating superior
customer value.
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Marketing management is in a way, demand
(customer) management.
A company’s demand comes from two groups:
new customers and repeat customers. Marketing
management deals with finding ways (1) to
attract new customers and create transactions
with them and also (2) to retain current
customers and build lasting customer
relationships.
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To design a winning marketing strategy, the
marketing manager must answer two important
questions:
What customers will we serve (what’s our target
market)?
 How can we serve these customers best (what’s our
value proposition)?
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Selecting Customers to Serve
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The company must first decide who it will serve.
It does this by diving the market into segments
of customers (market segmentation) and
selecting which segments it will go after (target
marketing).
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Some people think of marketing management as
finding as many customers as possible and
increasing demand. But marketing managers
should know that they cannot serve all
customers in every way. By trying to serve all
customers, they may not serve any customers
well. Instead, the company wants to select only
customers that it can serve well and profitably.
Methods Used to Segment Markets
in Travel and Tourism
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There are seven main ways of dividing up
markets for segmentation purposes, all of which
are used in practice in the travel and tourism
industry. The main methods of segmentation are:
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Purpose of travel
Buyer needs, motivations, and benefits sought
Buyer behavior (characteristics) of product usage
Demographic, economic, and geographic profile
Psychographic profile
Geodemographic profile
Price
Segmentation by purpose of travel
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E.g. Conference markets require different
products to those supplied to other business
travelers and meetings for groups of different
sizes require special provision.
For a tour operator, customer’s purpose and
product needs will differ according to whether
they are looking for; main summer holiday,
additional holidays and short breaks, winter sun,
winter sports.
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Within the broad categories of main and
additional holidays, typical subsidiary purposes
would include sea and beach holidays (with and
without children), cultural interests, walking and
other activity interests and an interest in exotic
destinations.
Segmentation by buyer needs and
benefits sought
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Within purpose of travel, the next logical
consideration for segmentation is to understand
the needs, wants and motivations of particular
customer groups (as discussed).
The range and perceived importance of benefits
sought by customer segments are not easy to
understand. They can only be discovered by
market research among identified target groups.
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Segmentation by benefits, makes it possible for
marketing managers to fine tune their products.
Focusing on promoting the benefits sought is a
logical objective for brochures and other
marketing communications.
Segmentation by buyer behavior
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Within purpose and benefits sought, there is
scope for refining the segmentation process
according to the types of behavior or
characteristics of use of products that
customers exhibit. E.g. frequency of usage of
products.
Frequent users (high frequency, high spending
high loyal); may represent only 10% of
individual customers in a year but up to 60% of
revenue for some hotel groups and airlines.
Segmentation by demographic, economic,
geographic and life-cycle characteristics
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By using previous segmentation processes,
considerable knowledge can be obtained.
However, for the purposes of efficient
promotion and distribution of products,
especially to prospective new customers rather
than to existing ones, it is important to know the
demographic profile (e.g. age, sex, occupation,
income, place of residence) and other defining
characteristics (life-cycle) of their target
customers, including potential users.
Segmentation by psychographic
characteristics and lifestyle
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Dependent on sophisticated market research
techniques.
Psychographics aims to define consumer on
attitudinal or psychological rather than physical
dimensions.
Geodemographic segmentation
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A very powerful and productive segmentation
tool; developed through combining an analysis
of census data with the postal area (zip) codes
that identify group of households in the
country.
Segmentation by price
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In leisure travel and tourism markets in all
countries, buyers are highly price-sensitive.
It is not a segmentation variable of the same
kind as the others.
There are segments of customers to be
identified and located who respond to different
price bands.
Yield management; segment targeted tactical
pricing.
Choosing a Value Proposition
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The company must also decide how it will serve
targeted customers – how it will differentiate
and position itself in the marketplace.
A company’s value proposition is the set of
benefits or values it promises to deliver to
customers to satisfy their needs. E.g. Northwest
Airlines punctual, friendly, fun flight; Singapore
Airlines luxurious, prestigious, special flight
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Such value propositions differentiate one brand
from another.
They answer the customer’s question “Why
should I buy your brand rather than a
competitor’s?”
Companies must design strong value
propositions that give them the greatest
advantage in their target markets.
Marketing Management
Philosophies
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There are five alternative concepts under which
organizations conduct their marketing activities:
the production, product, selling, marketing and societal
marketing concepts.
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The Production Concept; holds that consumers will
favor products that are available and highly
affordable. Here, the management focus on
improving production and distribution. This oldest
philosophy is useful in two types of
situation. (1) when the demand for a product
exceeds the supply (2) when the product’s cost is
too high and improved productivity is needed to
bring it down. E.g. Henry Ford’s “Model T”, TI
watches.
 The Product Concept; holds that consumers favor
products that offer the most quality,
performance and innovative features. Here, the
organization should focus on making continuous
product improvement.
 The Selling Concept; holds that consumers do not
buy enough products if there are not large-scale
selling and promotion effort. Most
companies use the selling concept when they have
overcapacity. This concept focuses on creating
sales transactions rather than on building longterm, profitable relationships with customers.
 The Marketing Concept; holds that achieving
organizational goals (making profit) depends on
understanding the needs and wants of target
markets and delivering the desired satisfactions
more effectively and efficiently than competitors
do. Relies heavily on research. E.g. Disney,
McDonald’s, Ritz-Carlton Hotels… are customerdriven companies.
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The Societal Marketing Concept; holds that the
organization should not only satisfy the needs
and wants but also improve both customer’s and
society’s well-being. This newest philosophy
focus on customer long-term welfare, since today
we have environmental problems, resource
shortages, population growth etc. E.g. Critics
against fast-food restaurants that food has a lot
of fat and salt harmful for health, a lot of
packaging increasing waste and pollution. Here,
the companies try to balance (1) company profits,
(2) consumer wants, (3) society’s interests.
Customer Relationship Management
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CRM is perhaps the most important concept of
modern marketing.
Until recently, CRM has been defined narrowly
as a customer data management activity. It
involves managing detailed information about
individual customers in order to maximize
customer loyalty.
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More recently, CRM is defined as the overall
process of building and maintaining profitable
customer relationships by delivering superior
value and satisfaction. It deals with all aspects of
acquiring, keeping and growing customers.
Relationship building blocks: customer
perceived value and satisfaction.
A company can always increase customer
satisfaction by lowering its price or increasing its
services. But this may result in lower profits.
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Companies can build customer relationships at
many levels. E.g. frequent-flier programs, club
marketing programs.
Yesterday’s companies focused on mass
marketing to all customers at arm’s length.
Today’s companies are building more direct and
lasting relationships with more carefully selected
customers.
Today’s companies do not want relationships
with every customer. Companies are targeting
fewer, more profitable customers.
Capturing Value from Customers
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By creating superior customer value, the firms
creates highly satisfied customers who stay loyal
and buy more. This, in turn, means greater longrun returns for the firm.
Good customer relationship management
creates customer delight. In turn, delighted
customers remain loyal and talk favorable to
others about the company and its products.
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Customer life-time value: the value of the entire
stream of purchases that the customer would
make over a lifetime of patronage.
Losing a customer means losing more than a
single sale. It means losing the entire stream of
purchases that the customer would make over a
lifetime of patronage.
Customer equity: The total combined customer
lifetime values of all of the company’s
customers.
Useful Links and Sources
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Kotler, P.; Bowen, J. and Makens, J. (1999).
Marketing for Hospitality and Tourism (2nd ed.).
Prentice Hall. NJ.
Kotler, P. and Armstrong, G. (2006) Principles
of Marketing (11th ed.). Prentice Hall. NJ.
Middleton, V.T.C. (2004) Marketing in Travel
and Tourism (3rd ed). Elsevier. Oxford.
http://www.hotelsmag.com
http://www.tourism.bilkent.edu.tr/~eda