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TOURISM & TRAVEL SECTOR UNDERSTANDING DESTINATION DEVELOPMENT COLBOURNE COLLEGE PRESENTED BY SADEKE SMITH Introduction • Today’s international tourism market place can be best described as a changing business environment: • Destinations are faced with increased competition from – ‘old’, established destinations that have been re-branded with vastly improved product features, as well as from – new entrants to the market.. Introduction • Furthermore, today’s ‘consumers’ (leisure and business travellers) have wider access to information about destinations and can be more eclectic in their choices. Introduction • Tourism destinations must be able to develop and use their competitive advantages and be prepared to deal with sudden changes and threats (e.g. September 11th 2001, Asian tsunami etc.), • as well as cease technological and other opportunities to their strategic advantage Introduction • Threats in the external environment and changes in the industry’s markets and structures have challenged destination marketing organizations to change in fundamental ways. Introduction • The strategic responses to these developments are essentially decisions to proactively shape, adapt to, or passively struggle through a crisis. Introduction • Envisioning the future of tourism and examining possible ways of reaching various future scenarios are essential exercises in this process of deciding which strategic approach to adopt to market destination effectively What is a Destination? A destination is the specific location to which a traveller decides to go. •Destinations can be defined variously and can include: >Towns, Villages and Cities >Historical Sites, Heritage Sites >Self-Contained Resorts, Holiday Villages >Amusement and Theme Parks >Regions or Groups of Countries (e.g The Caribbean) A TOURIST DESTINATION • A premier Tourist Destination that provides a high quality tourist experience is defined by: • • • • • Distinctive Core Attractions Quality and Critical Mass Satisfaction and Value Accessibility An Accommodations Base. A destination must contain the “critical mass” of elements to meet consumer requirements The Five ‘A’s of a Tourist Destination Attraction – A unique product offering that will entice the visitor to come. Access – to both to the destination and the attraction, whether by land, air, water or rail. Amenities – such as water, food, electricity, telecommunications, security and acess to healthcare must be in place. Accommodation- A place to stay during the visit that offers convenience and comfort to suit her budget and taste. Activities- Shopping, Dining, Snorkeling, and Gambling are but few of the activities that can be made available to the visitor during his stay. Components of Destination Development Destination audit Partnership building Vision SWOT analysis Resource analysis Marketing Planning • • • • • Critical Lessons (C.R.O.P.S) Consultation – The lead agency must consult with the stakeholders to uncover the major issues affecting the industry, as well as to discuss solutions and ideas for developing the destination Research - No Plan makes sense without proper research. Research must include but is not limited to Market Research – (Defining target markets, scoping demand and devising the best strategy for meeting the demand). Other kinds of research include Financial Risk Assessment and Environmental Impact Assessment among others. Organization - Information must be organized in a logical way that addresses the overall vision for the destination. This is critical as stakeholders have to be sold on the idea before they can accept it. Presentation – The findings must be presented to the stakeholders, it is simply the best way of reaching a consensus. The presentation must emphasize the value being created for the stakeholders, both in terms of financial benefits, assurances that social and cultural values will be adhered to, and reassurance that the idea is sustainable and does not pose a hazardous threat to the environment Soliciting Feedback – Feedback is a key component in the developmental process, it ensures that all angles are covered and alternative ideas and solutions are discovered. It also ensures that the influential majority commit their support to the venture. Keys to Successful Destination Development !! Engaging local people in partnerships Planning based on business principles that share the burden Identifying common long-term objectives with positive impact in remote tourism locations Focusing marketing opportunities Destination Development emphasizes sustainable development based on business principles The Two Phases of Destination Development Phase 1. Consumer Research Analyse Destinations Identify Hierarchy Local Plans Community Local Plans NT Tourism Strategic Plan Regional Associations Chamber of Commerce Govt Depts Select Priorities Other Strategies NT Tourism Strategic Plan Destination Development uses a Partnership approach to guide incremental steps toward a goal Consumer Research Local Industry Phase 2 Analyse Resources NT Tourism Strategic Plan Form Project Team Govt Depts Write Business Plan Vision/Mission Industry Objectives Resources SWOT Marketing Capacity Audit Govt Depts Local Government Community Contractors Project Proceeds Identifying Key Stakeholders • • • • • • • • • • Local authorities Accommodation providers of many sorts and sizes Attractions, events and cultural organisations National Park authorities and AONBs Restaurant, leisure and retail operators Transport providers Intermediaries (for example tour operators and conference organisers) Local tourism consortia and partnerships Business support and skills agencies. Craft vendors Respecting the Stakeholder Underlying Principles: Cultural and environmental respect Economic development Social return Community Values: Lifestyle Demography Identity Destination Systems Destination Marketing Systems (DMS), or parts of them, may be referred to elsewhere as Destination Databases or Destination Management Systems. On the demand side they cater for multiple forms of access by potential visitors - directly or through travel agents and tour operators, to call-centres, visitor information centres and the like and increasingly by distribution through airline GDS, home shopping networks (both on TV and computer) and the Internet. Potential visitors can be logged into a client database and tracked through their purchase life-cycle. Destination Systems There is clear value to the private sector in access to targeted information about potential and actual visitors to a destination. Some tourist boards face legislation which restricts their ability to market this information to the private sector. Outsourcing of the destination marketing system may be one method of circumventing this. Destinations have been slow to follow the successful trends of affinity marketing and the creation of frequent flyer/ visitor programs in the private sector of the travel industry. This is a clear opportunity for the private and public sector to work together. By storing information about enquiries and any bookings the tourist board is able to measure its marketing effectiveness clearly-an option not easily open to it without DMS. Destination Systems On the supply side DMS provide a comprehensive database of products and services that the destination has to offer. Destinations developing products and services databases today need to be aware of the many changes in distribution technology, and the rapid introduction of multimedia, and include the ability to store text, still and moving images and sound in their database• . (Source: www.infocentre.com) Destination Systems (contd) • • • • • How can information systems be used to attract, service and retain the growing numbers of higher spending, independent travellers? How can tourist boards leverage private sector initiatives (GDS, hotel Computer Reservation Systems (CRS)) to create a seamless marketing system that will give a sustainable competitive advantage in attracting incremental bookings and deliver more profit to tourism businesses? Where should public sector activities end and the private sector take over? Can entities be created where they can work together? How can marketing be improved the ability to identify the need for, and help bring new products to market quickly and efficiently, especially in destinations where there is diverse accommodations base within the constraints of ever more limited central marketing budgets? Are there not other major barriers be considered before investment information systems which would counteract their effectiveness, example, organizational, cultural a political? Features of Successful Systems Features of Failed Systems Comprehensive Database Incomplete Database High quality, accurate, reliable information Out of date, inaccurate data Targeted at independent travellers Seen to compete with the travel trade Effective call centre operation Difficult to book Run by marketing driven organizations Run by bureaucratic organizations Copyright 1999 Infocentre Travelling Systems Ltd. All Rights Reserved Framework for Strategic Destination Management "Any road will take you there if you don't know where you're going", Determining the Vision • What do you hope to achieve – For the country – Key stakeholders – Communities affected by tourism Key Stakeholders • • • • • • • • • • Local authorities Accommodation providers of many sorts and sizes Attractions, events and cultural organisations National Park authorities and AONBs Restaurant, leisure and retail operators Transport providers Intermediaries (for example tour operators and conference organisers) Local tourism consortia and partnerships Business support and skills agencies. Craft vendors Identify key principles • Core values guiding the process • Design, Innovation, marketing approaches needed to build on core values • Linkages with other strategic industries Elements of the Process • Engage in a comprehensive destination assessment • Encourage community participation in process • creating easy to follow action steps to win local support • Enable the generation of increased revenue and opportunities for partners. A proposed Framework Customer perception of destination Brand image Country image Satisfaction Brand value - quality - price Brand identity Positioning strategy Marketing programs Marketing strategic plan Developing the identityDeveloping positioning statements Creating brand meaning Creating brand awareness Model of Consumer Perception of Destinations Quality Destination Value Destination Satisfaction Price Intention to Return Country Image Destination Image Buhalis • Buhalis (2000) highlights that whereas destinations were historically defined geographically such as an island or city, it is argued that destinations can be a ‘perceptual concept’ that can be different for different tourists. Buhalis • Buhalis (2000) only considers the destination in its geographical definition as this is simpler and allows for the determination of accountability. • This shows the difficulty of marketing destinations in their most basic format because if the destination cannot be defined or the definition changes from organisation to organisation then the marketing implications and subsequent difficulties both geographically and politically are essentially endless. • Buhalis does however raise a particular problem of traditional branding and marketing strategy which concentrates on increased visitor numbers and repeat purchases stating, Buhalis • “This approach fails to recognise the unique needs and limitations of each destination as well as their particular geographical, environmental and socio-cultural characteristics.” Buhalis (2000 pg 98) Understanding Service Marketing (Adapted from Philip Kotler Chapter 11, Marketing Management Millennium Edition, Prentice Hall 2001) • A Service is any act or performance that one party can offer to another that is essentially intangible and does not result in ownership of anything. Its production may or may not be tied to a physical product. • In addition to the four P’s of Marketing, service marketing strategy covers three additional P’s: People, Physical Evidence and Process • Five others-partnership, packaging, positioning, programming, people • Because services are generally high in experience and credence qualities, there is more risk in their purchase. Characteristics of Services • Intangibility – Unlike physical products, services cannot be felt, heard ,smelled or tasted, rather it is an experience. The person booking a room for the first time does not know the service he/she will actually receive until it is received. People will infer quality from the people, place, equipment, communication material, symbols and price that they see • Inseparability – Services are typically produced and consumed simultaneously. If a person renders the service then the provider is part of the service. Because the customer is present when the service is produced ,the client-provider interaction is a special feature of service marketing • Variability – Because services depend on who provides them, and when and where they are provided, services are highly variable • Perishability – Services cannot be stored, once a flight takes off, any unsold seats cannot be held for future sales. However, firms do not have to readily deal with this issue if demand for the service is steady. • Service marketing is founded upon the fundamental Principles of Marketing and have been developed in accordance with the philosophy of customer orientation • Marketing Theory and Practice developed initially in connection with physical products such as toothpaste and cars. • More and More market offerings now contain a service component targeted at customer’s needs in a segment to create a distinctive differentiation for competitive reasons. • Successful Services Marketing calls not only for external marketing , but also internal marketing to motivate employees and interactive marketing to emphasize both high-tech and high-touch elements. • The Service Organization must focus on these primary marketing tasks: • It must differentiate its offer, delivery and image • It must manage service quality to meet or exceed customer expectations • It must manage worker productivity by getting its employees to work more skillfully • Use technology to save time and money Three Kinds of Service Marketing (Kotler 2002, Prentice Hall) Service Marketing Strategy The alternative to price competition in services marketing is to develop a differentiated offer, delivery, or image. Offer. The service offering can include innovative features. The customer expects the primary service package; to this secondary service features can be added. Marriott, for example, offers hotel rooms (primary service package) with connections for computers, fax machines, and e-mail (secondary service features). Although most service innovations are easily copied, the company that regularly introduces new features will gain a succession of temporary competitive advantages and earn a reputation for innovation. Delivery. A service company can hire and train better people to deliver its service Delivery thus enhances the firm’s differentiation. Image. Service companies can also differentiate their image through symbols and branding. 5 Categories of Service Mix 1. Pure tangible good: The offering is a tangible good such as soap; no services accompany the product. 2. Tangible good with accompanying services: The offering consists of a tangible good, maintenance, warranty fulfillment, and other services along with its cars and trucks. 3. Hybrid: The offering consists of equal parts of goods and services. For example, people patronize restaurants for both food and service. 4. Major service with accompanying minor goods and services: The offering consists of a major service along with additional services or supporting goods. For example, airline passengers are buying transportation service, but they get food and drinks, as well. 5. Pure service: The offering consists primarily of a service; examples include baby-sitting and psychotherapy. Keys to Successful Service Marketing • • • • • • Using the Strategic Concept Top-Management Commitment Setting High Standards Monitoring Systems Satisfying Customer Complaints Satisfying Both Employees and Customers • Managing Productivity Summary • Services are intangible, inseparable, variable, and perishable. • Each characteristic poses challenges and requires certain strategies. • Marketers must find ways to give tangibility to intangibles, to increase the productivity of service providers, to increase and standardize the quality of the service provided, and to match the supply of services during peak and non peak periods with market demand. • Service marketing strategy covers three additional Ps: people, physical evidence, and process. Types of Tourist • 4 main types of tourists according to individual choices of experience (Erik Cohen) – – – – the organized mass tourist the individual mass tourist the explorer the drifter Tourist Typologies • The Explorer Typically, the explorer’s purpose for visiting a destination is for a specific attraction. For example a tourist who visits Switzerland specifically to climb Swiss Alps, a tourist who goes to Peru to visit Machu Pichu or to China to visit the Great Wall. • The Drifter Known as the skip from destination to destination, this visitor usually makes short stop overs. • Mass Tourist This is the category under which most visitors to the Caribbean fall. These visitors usually come for Sun, Sand, Sex, Sea and the usual frills that come along with a destination such as the Caribbean. They usually occupy the all-inclusive hotels and have access to various forms of entertainment , in-house attractions and duty-free shopping. The organized mass tourists • The organized mass tourists are the least adventurous and spend most of their time in their comfortable "environmental bubble" throughout their trip. • "Environmental bubble" means the tourist is surrounded by his/her similar living environment while he/she is abroad. The organized mass tourist • A guided tour in an air-conditioned bus traveling through the countryside is a typical example of the organised mass tourist. • The itinerary is decided in advance, and all the attractions and stopping points are well fixed and guided. Tourists have almost no decisions on their trip. The Individual Mass Tourist • This type of tourists is similar to the organised mass tourist, except that the tour is not entirely fixed. • The tourist has a certain amount of control over his/her time and itinerary, and is not bound to a group. The Individual Mass Tourist • All the major arrangements are still made through a tour agency. • The tour does not bring them much further afield than the organized mass tourists do. • They are still confined by their "environmental bubble". How Target Markets Choose • Consumers respond to a market offering based on several factors. For customers to part with their cash, Marketers have to be aware of the influences which determine if consumers choose their brand over another. • In addition to the Four Ps: (Product, Place, Price, Promotion), things such as the consumer’s economic, technological, political and cultural environment have to be taken into consideration. How Consumers Choose • There are Several Factors which influence consumer behaviour and ultimately their purchase decision. These Factors can be : • Cultural • Social • Personal • Psychological “The Black Box” Consider that all these environmental stimuli enter the consumer’s mind or “Black Box”, where they are interpreted and transmitted as observable purchasing habits, product and brand choices, purchase time and purchase amount. What does the destination marketer do? • A successful marketer will obtain this information through market research and from that determine what service to offer and how to position the offering to the target market. • For example, research shows that the European Tourist typically enjoys exploring the destination, mixing with the locals and experiencing authentic local culture. • A marketer for an all-inclusive property would have to devise strategy to attract this customer by offering, say, the option of a guided tour around the island, access to various local events or perhaps access to rent-a car facilities. Factors Influencing Consumer Behaviour • • • • • • • • • • • • • • Cultural >Culture >Sub-Culture >Social-Classes Social >Reference Group >Family > Role and Status Personal > Age and Life Cycle Stage >Occupation >Economic Situation >Lifestyle >Personality and Self Concept Psychological > Motivation ( Maslow & Herzberg) > Perception > Learning > Beliefs and Attitudes Buyer Decision Process Purchase Decision Evaluation of Alternatives Information Search Problem Recognition PostPurchase Behaviour Reference • Buhalis, Demetrius. (2000) Conceptual Model of Tourism. • Kotler, Phillip:(2002) Marketing Management Millennium Edition, Prentice Hall • (http://www.infocentre.com).