Download Tour Operations Management

Tour Operations Management
Distribution Strategies for Tour Ops
The Tourism Industry
Attractions
Accommodation
Internal
Transport
International
Transport
Facilities
Incoming Tour Operators
‘Ground-handling agents’
Tour
Operators
National Tourist Office
Travel
Agents
C
u
s
t
o
m
e
r
s
Criteria for Channel Choice
•
•
•
•
Coverage of target market
Consumer preference
Comparative Cost
Control of the channel
Coverage
Over 8,000 travel agency shops in UK
• offering local purchase
• comparison
• local reputation/brand image
• promotion and selling
• ‘late-booking centre’
(Welburn)
Consumer Preference
• Information stage of the PIECE process
• Where do people look for this type of
product?
• 80% of package holidays in UK are bought from
retail travel agents (Ujma)
• Travel agency brands are better known and
command higher brand loyalty than T. Os (Salt)
but does your target segment use Travel Agencies?
Comparative Costs
Morgan (1996) p191
Direct selling
Using agents
• consumer advertising
• consumer promotions
• staff for customer service
lines
• postage of brochures
• wastage of brochures in
direct mailing
• trade advertising
• trade promotions
• sales force and agency
sales lines
• computer links to CRS
• wastage of brochures not
racked by Agents
• educational/incentive trips
• commission
See Broadbent (1984) Tjaereborg case study
Channel control theory
Leadership = power to influence the way the
end product is marketed
This can stem from
• economic power -> reward for co-operation
• brand ownership
• access to/influence over markets
(Walters and Bergeil 1982)
Where do these sources of power lie in the TO/TA channel?
Do they change over time?
Dependency
Ujma (2002) in Buhalis and Laws
• Sales and profit
– dependency on one firm for most of your business
• Role performance
– co-operation, communication, service
• Assets and investment
– required to switch to another supplier (eg CRS)
• Trust
– leading to favourable credit terms
Distribution strategy options
Selection of agencies
• Exclusive
• Selective
• Intensive
(Kotler)
See the Kuoni example in Morgan (1996)
Direct sell versus retailer channels
New media channels
Channel control in practice
• Horizontal and vertical integration
strategies of the T.O.s leads to a
consolidation of Travel Agencies (Ujma p49)
• These ‘multiples’ are characterised by
– strong retail brands commanding customer loyalty
– uniform store design reflecting corporate identity
– central purchasing policy
– directional selling in favour of their group’s products
(Hudson et al in Buhalis& Laws)
– limited rack space for other products
• This creates ‘retailer power’ to dictate terms to
independent tour operators
What T.A.s need from T.Os
Morgan (1996) p 193
• Maximum profits per shelf space from
– product brands with high consumer demand
• available in all branches
• a year-round range
– additional commission for sales targets reached
– support for joint promotions
• Good service performance
– on-line bookings, ticketing and accounts
– regular brochure supplies
– efficient help-lines for queries and problems
Smaller T.Os will find it difficult to meet these criteria
The multiples become holiday shops with a limited
mainstream range
Distribution strategies for small
specialist tour operators
• Independent travel agencies
• Direct response advertising
– Database marketing
• Relationship marketing based on retention
and referrals
• Co-operative marketing (AITO)
Changing channels?
See Cooper and Lewis in Buhalis and Laws
• New tourists (Poon 1993)
– opportunity or threat for tour operators?
• New carriers
– budget airlines and hotels as an alternative to
the traditional package
• New media
– disintermediation?
– new virtual travel agents?
– or the same vertically integrated operators
offering mass customisation
Reading
Wen Pan and Laws in Buhalis and Laws (2000)
• What are the consumer preferences of the
Chinese tourists when booking a foreign
trip?
• What are the distribution channels (business
networks) in marketing Australian holidays
to China?
• How does culture influence the way these
channels operate?