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Marketing in Travel&TourismYawei Wang,Ph.D.Montclair State UniversityCourse Outline1.The meaning of marketing in travel and tourism2.The marketing mix for tourism services3.Market segmentation for tourism market4.Product what do we market?5.Place accessibility or convenience6.Promotion communication 7.Price cost to the consumer8.People-Consumer buying behavior in tourism9.Planning tourism planning and research10.Case studiesWhat is Marketing?nThe performance of individual and organizational activities that facilitate the flow of goods&services from producer to consumerTravel Sales Distribution SystemDemand vs.SupplynInternationalInbound tourismOutbound tourismnDomestic tourism nMeasurement?nMain sectors of the T&T industryAccommodation AttractionTransportationTravel organizerDestination organizationThe Main Determinants of DemandnEconomic factors and comparative pricesnDemographic,including educationnGeographicnSocio-cultural attitudes to tourismnMobilitynGovernment/regulatorynMedia communicationsnInformation and communications technology The Influence of the Main DeterminantsnPropensity Define the extent of participation in travel activity in a given populationnHoliday/vacation propensityA measure of the proportion of a population that takes holidays in a yearThe Evolution of the Marketing Concept“Three Pillars of the Marketing Conceptn1.Consumer SatisfactionnBusinesses must constantly scan or monitor the environment for changes in consumers needs&wants.Componentsof Strategic MarketingFIGURE 1.1Marketing EnvironmentThree Pillarsn2.Long-run Profit OrientationnA willingness to take short-term losses for long-term benefits.nSignals a commitment to customers.Three Pillarsn3.System ApproachnWhat is a system?nA set of interrelated parts working together to produce a meaningful whole.nPlace organizational needs ahead of departmental or personal needsMarketing Mix VariablesProductProductPricingPricingDistributionDistributionPromotionPromotionGoods,services,or ideas that satisfy customer needsDecisions and actions that establish pricing objectives and policies and set product pricesThe ready,convenient,and timely availability of productsActivities that inform customers about the organization and its productsFour CsnCustomer valuenCost to the consumernCommunicationnConvenienceService MarketingMarketing MixProduct PricePlace Participants Promotion Process PhysicalEvidencePersonnelCustomersEnvironmentPoliciesProceduresCustomer involvementFlow of customers(Booms&Bitner,1981)Marketing Deals with Products,Price,Distribution,and PromotionnThe Marketing MixFour marketing activitiesproduct,pricing,distribution,and promotionthat a firm can control to meet the needs of customers within its target marketProductProductPricingPricingDistributionDistributionPromotionPromotionTargetTargetMarketMarketCreativity MARKETMARKET SHAREADVERTISINGSP PRSCMPRICE SKIMMINGDISTRIBUTIONConvergent ThinkingDivergent ThinkingThink-out-of-the-box ExercisenAim:Bind them together by drawing a straight linenRequirement:You are not to lift you pen from the paper and you may not change direction more than three times.Brainstorming Business PlanService MarketingWhere do Americans work?ServiceAgricultureMfrToday19801940190078%2.0%20%69%3.5%27%47%21%33%25%41%33%Why has the service grown?n1.Export of manufacturing jobsn2.Farm&mfg.efficienciesn3.Lifestyle changes-working womenn4.Dual Income familiesService(def.)nAny task or work performed for another and/or the provision of any facility,product,or activity for anothers use and no ownership which arises from an exchange transaction.nThree emphasis:To other peopleProvision of facility,product,or activityNo ownership transfer Characteristics of Servicesn1.Intangibilityn“Tangible Capabilities(def.)nEvidence that the service provider will be able to satisfy your needs.nExamples:n1.People/credentials of personneln2.Equipmentn3.Facilitiesn4.Examples of work/referencesCharacteristics of Servicesn2.Perishability(def.)nUnused capacity in one time period cannot be stockpiled or inventoried for future time periods.nImportant to match supply and demand carefully.Ways to increase service capacity1.Temporary help2.Extended hours3.Improve flow-through ratenFlow-through rate(def.)nThe number of customers you can process/serve per hour.Ways to adjust demand1.Off-peak pricing2.Promote off-peak3.Schedule appointmentsCharacteristics of Servicesn3.Heterogeneity nPeople perform services and people do not always perform consistentlynTraining is the key to reducing heterogeneityCharacteristics of Servicesn4.Inseparability of Production&ConsumptionnPrimarily a problem for“high contact servicesnCustomer must participate in the productionnOther customers may affect the service outcomenTraining the key to handling inseparability issueDimensions of Service Qualityn1.Appearance of Tangiblesn2.Reliability service performed consistently and dependably3.Responsiveness willingness or readiness of employees to provide servicen4.Assurance Knowledge/competence to do the task and inspire trust/confidencen5.EmpathyCharacteristics of T&T ServicesnSeasonality and other variations in the pattern of demandnThe high fixed costs of operations,allied to fixed capacity at any point in timenThe interdependence of tourism productsConsumer Buying BehaviornWhat are the possible influences on customers buying decision?nCan marketers have any influence on the buying decision process?Consumer Buying Decision Process and Possible Influences on the ProcessFIGURE 8.1Consumer Buying Decision ProcessnAt each stage in the process marketers can intervene to increase the likelihood of a purchase.1.Problem RecognitionnDifference between“Ideal state and where you are now.Creates disequilibrium.nProblem recognition can be triggered by a need or a situation/event.What do marketers do in this stage of the buying process?nCreate dissatisfaction and/or awaken a latent need via promotional effortsnWhat is a latent need?nA need that you have,but of which you are not consciously aware.2.Information SearchnInternal Search MemoriesnExternal Search Friends,Ads,Consumer Reports,Shopping,etc.nConsideration/Evoked Set(def.)The brands/stores that come to mind for a particular product category.Implications for Marketers/RetailersnPosition your brand/product carefully.nTreat shoppers and buyers equally.(Todays shopper may be tomorrows buyer)nProvide product information via displays,website,salespeople,etc.What factors determine how much time people will spend in the search process?n1.Expense of itemn2.Familiarity with the itemn3.How critical is the needn4.Ego involvement3.Evaluation of AlternativesnEvaluate the products in the Consideration/Evoked Set.nIndividual identifies criteria that he/she will use to judge the products in the Consideration/Evoked Set.What do marketers do in this stage of buying process?nFraming(def.)nHighlight a particular attribute of a product,educate consumers about its importance and associate it with your company.4.Purchase Decisionn What and Where?nPeople dont buy until the benefits of purchasing outweigh the risks.nDivisibility(def.)nHow easy is it for a person to try an item before purchaseDivisibilitynDivisibility contributes to the perception of risk.nHigh Divisibility means an item is easy to try before purchase.Ex.Cars,ShoesnLow Divisibility means an item is hard to try before purchase.Ex.Washing Machine,hotel roomWhat things can a marketer/retailer do to reduce consumers perception of risk?n1.Samplesn2.Liberal Return Policyn3.Trial Policyn4.Generous Warrantiesn5.Carry Well Known Brandsn6.Virtual tours Transaction InterferencenA situation or event that blocks or hinders a purchase.nExs.long lines,out-of-stock,poor help,etc.5.Post-Purchase DissonancenCognitive Dissonance(def.)nDoubts in the buyers mind about whether the right decision was made in purchasing the product.nWhat can a marketer do here?nExs.Callbacks,thank you letters,newsletter,adDo we follow all these steps for every purchase decision?nDepends on situation.n1.Extended Problem Solving Ex.Purchasing unfamiliar,expensive or infrequently bought item.Follow all steps.n2.Limited Problem SolvingnEx.Encounter difficulty buying a previously purchased product.Dont follow all steps.n3.Routinized Response BehaviornEx.Buying frequently purchased,low-cost items.Dont follow all steps.Social Influences on Buying Decision ProcessnReference GroupsnAny group that positively or negatively affects a persons values,attitudes,or behavior.nA group which an individual uses as a behavioral modelnExs.Job associates,neighbors,family,clubs,etc.Opinion-LeadernA reference group member who provides information about a specific sphere that interests reference group participants.nAn individual who others look up to.nSet norms and influence group members.Other Social InfluencesnRoles work statusnFamily influencesnSocial classesnCulture and subculturesPsychological Influences on Buying Decision Processn1.PerceptionnPerceptual Field(def.)nThe accumulation of all our experiences and perceptions of the environmentnEmpathy is essential for a marketer.Must see things from the consumers P.O.V.nSelective Exposure/Perceptual Selectivity(def.)nPeople only attend or listen to those things that have meaning to them.nEx.“Cocktail Party PhenomenonPsychological Influences on Buying Decision Processn2.MotivesnAn internal energizing force that directs a persons behavior towards satisfying needs or achieving goals.Maslows Hierarchy of NeedsWhy do we buy clothes?nEmotional Motives(def.)nThe reason for buying is based primarily on a psychological need.nRational Motives(def.)nThe reason for buying is primarily based on physical well-being and/or the outcome of a long-term cost benefit analysis.The Main Motives for T&TnBusiness/work-related nPhysical/physiologicalnCultural/psychological/personal educationnSocial/interpersonal and ethnicnEntertainment/amusement/pleasure/pastimenReligiousOther Psychological InfluencesnLearningChanges in an individuals thought processes and behavior caused by information and experiencenAttitudesAn individuals enduring evaluation of,feelings about,and behavioral tendencies toward an object or ideanPersonality and self-conceptA set of internal traits and distinct behavioral tendencies that result in consistent patterns of behaviornLifestylesAn individuals pattern of living expressed through activities,interests,and opinionsChapter Outlinen5 stages-Consumer Buying Decision Processn3 Levels of Consumer Problem-Solving Processesn3 types of influence Target MarketsWhat is a market?Market(def.)nA group of people with a need for a product or service.In addition,they possessnthe ability to buynthe willingness to buy&nthe authority to buyTypes of Marketsn1.Consumer Market(def.)nComposed of individuals purchasing for personal or household needs/wants.n2.Organizational or B2B Market(def.)nComposed of individuals or organizations purchasing for one of three reasons:nA.ResalenB.Use in productionnC.Use in daily operationsTypes of Marketsn1.Consumer Marketindividuals purchasing for personal or household needs/wants.n2.Organizational or B2B Marketindividuals or organizations purchasing for one of three reasons:nA.ResalenB.Use in productionnC.Use in daily operationsTypes of Market nObservations:nThe reason for the purchase is what distinguishes consumer and B2B markets.nSome businesses sell to both markets.Market SegmentationnMarket Segmentation(def.)nThe process of subdividing a market into groups of potential customers who have similar needs and wants.Why segment a market?nMarket may be heterogeneousi.e.,people may have different needs&wants within the product category.nMaximizes consumer satisfaction.nGuides design of marketing mix.content of messagewhere to promote product wastewhere to sell producthow to package productetc.Tourism Mass Consumption?nThe marketing of large-scale,widely distributed,quality-controlled products nThe mass production of undifferentiated products for mass marketsTarget Market Selection ProcessFIGURE 7.1Step 1:Targeting Strategiesn1.Concentratedn2.Differentiatedn3.UndifferentiatedTargeting Strategies1.Concentrated StrategynTarget a single market segment using one marketing mix.+Develop expertise,credibility+Minimize marketing costs+Minimize production costs-Putting all eggs in one basket-May lack credibility when entering other segmentsnConcentrated strategy is useful for new businesses.Targeting Strategies2.Differentiated StrategynTarget two or more segments by developing a marketing mix for each+Greater growth opportunities+Spread risk-Increased marketing/production costs-May have credibility problemsTargeting Strategies3.Undifferentiated StrategynAn organization defines an entire market for a particular product as its target marketno segmentation.nMakes sense when market is HomogeneousSegments are not economically viableSegments are not accessibleStep 2:Determine Which Segmentation Variables to UsenSegmentation VariablesCharacteristics of individuals,groups,or organizations used to divide a market into segmentsSegmentation Variables for Consumer MarketsFIGURE 7.3Segmentation VariablesnPurpose of travelnBuyer needs and benefits soughtnBuyer behaviornDemographic,economic,geographic and lifecycle characteristicsgeodemographicnPsychographic characteristics and lifestylenPriceStep 3:Develop Market Segment ProfilesnMarket Segment ProfileDescribes the similarities among potential customers within a segmentCovers demographic characteristics,geographic factors,benefits sought,lifestyles,brand preferences,and usage ratesStep 4:Evaluate Relevant Market SegmentsnFurther analysisSales EstimatesnMarket potentialnCompany sales potentialCompetitive AssessmentCost EstimatesStep 5:Select Specific Target MarketsnGood segments are:Measurable:size,purchasing power,&profilesAccessible:distribution and communications channelsDifferentialStable Substantial enough to serveActionable:designing effective programs
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