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Chapter 1. Tourism Marketing

OBJECTIVES

 Define tourism marketing and its functions.

 Differentiate tourism product from consumer products.
 Explain marketing as a management product.
 Discuss the evolution of marketing and the integrated marketing approach.

INTRODUCTION

Tourism has become the buzzword in the world of business when the competition
to gain market share began among businesses. Marketing has evolved from a simple
trade to a production orientation and to a sales orientation.

Tourism is one of the leading industries of the future. Next to information

technologies and telecommunications, tourism contributes largely in terms of job
generation and strengthening of economy. Tourism has become the world’s largest and
fastest growing industry.

Marketing for Tourism covers several level, from the tourism destination as the
product itself, down to the specific tourism products and services that the tourist should
avail to complete the tourist experience.

UNIQUE CHARACTERISTICS OF THE TOURISM INDUSTRY

Unlike consumers’ product that can be availed off the shelf. Tourism product
have unique characteristics that make their marketing and promotions challenging, the
tourism product is intangible, inseparable, variable, perishable, seasonal, and
substitutional. Additionally, tourism is a high involvement product.

Intangible: Tourism products cannot be touched, smelled, tasted, felt, or heard

prior to purchased.

Inseparable: Tourism product cannot be separated from the consumer. When

tourist avail product and services, they personally go to where the products are.

Variable: The tourism experiences are likely to be different depending on when

the product id availed. It is how the service providers deliver the services at the time of
consumption.

Perishable: The tourism product is one of the most highly perishable. Products
become perishable when it can no longer be consume.

Seasonal: Refers to the behavioral pattern of travel market. This is also the reason
why Airlines and Resorts have different rates throughout the year.
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Substitutable: Competition in the tourism industry is intensifying. When new

destinations emerging and competing in the global marketplace. One destination can
easily be substituted with another destination.

TOURISM AS A HIGH INVOLVEMENT PRODUCT

Decision making in the purchase of tourism product is considered to be high

involvement. Tourism product of a high involvement means there is a greater degree of
thought or study involve prior to the purchase.

Purchased of expensive products is likely to trough a long detailed process of

canvassing and comparing of brands, supplier and product features.

Consumer may find complex product difficult to purchase. The difficulty may
arise from the features and details of the product.

Ex: Travel Packages

The unrepeatable nature of travel makes it “Ones-in-a-lifetime” purchased.

Philip Kotler: define marketing as the social process by which individuals and
groups obtain what the need and want through creating, exchanging product and value
with others.

Kotler, Bowens & Makens: Marketing as the art of science of finding and
retaining, and growing profitable costumers. finding and retaining, and growing
profitable costumer needs strategic planning to ensure costumer satisfaction of customer
loyalty.

The American Marketing Association: Marketing is the activity, set of

institution, and processes for creating, communicating, delivering and exchanging
offerings, that have value for costumer, clients, partners, and society at large.

MARKETING AS MANAGEMENT PROCESS

The marketing management process involves the following key processes.

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1. Marketing Information System: enables the organization to compile an

update set of information.
2. Marketing Planning: setting up objectives and an evaluation of milestones
that the company has reached.
3. Planning Tactical Campaigns: Tactical campaigns are conducted in support
of the comprehensive marketing strategy.
4. Marketing Operation: implementing the planned strategic tactical
campaigns.
5. Monitoring & Control: Involves the ongoing process of evaluating sales data
and financial performance versus marketing activities conducted.

CORE MARKETING FUNCTIONS

1. Marketing Information Management: gathering information about costumers to better

serve their needs and improved decision making.

2. Financing: ensure that resources are available to maintain and improve business.

3. Pricing: value and cost offer to costumers will be at the levels that costumers are
willing to pay.

4. Promotions: prepare the various promotional strategy.

5. Product/Service Management: acquiring products and services to meet the needs of the
consumers.

6. Distribution: bringing the products and services into the costumer in the best way
possible.

7. Selling: ultimate measures of marketing success.

THE MARKETING MIX

I. The product or service is what the company is offering.

II. The price is the value is what the seller puts on the product or services.
III. The place means by which the products or services reaches the consumer.
IV. The promotion is the strategic plan where costumers are informed about the
product.
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INTEGRATED MARKETING COMMUNICATIONS APPROACH

To enhance the demands of business to promote their products. Process of using

all forms of promotions to achieve maximum communications impacts while maintaining
a consistent image for the products and services.

FIGURE 1.2 USE THE INTEGRATED MARKETING APPROACH

HIGHLIGHTS OF THE CHAPTER:

 Tourism is one of the world’s leading industry.

 Tourism is not one single product it is a combination of products and services.
 Tourism products and services have unique characteristics.
 Tourism is a high involvement product.
 The seven core marketing functions.
 The marketing management process.
 The integrated management approach.
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• QUESTIONS

1. What is the important of marketing in selling tourism products and services?

2. Differentiate a need and a want.

3. Differentiate high involvement product from low involvement product.

4. What makes tourism a high involvement product?

5. Explain marketing as a management process using a hotel as an example.

6. What is integrated marketing approach and how it is evolved?

7. Give example of tourism product that you are familiar and explain how the
characteristics of the tourism product are evident to each.

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Marketing chapter 2 - THE TOURIST MARKET AND SEGMENTATION

OBJECTIVES

 Define what market is.

 State the three steps to target marketing.
 Identify the characteristics of good market segments.
 Discuss market coverage strategies and positioning.
 Distinguish new emerging market in the Philippines.

Definition of a Market

A set of actual and a “potential buyer of a product.” These buyer shares a

particular needs or wants that can be satisfied through exchange of relationship.

The tourism product is not for all. The tourism industry aims to target a specific
set of individuals. It is a particular set of a buyer.

There are three (3) steps to target marketing:

 Market segmentation
 Marketing targeting
 Market positioning

Market segmentation

A market is comprised of varied profiles and characteristics that can be further

segregated.

Characteristics of market segmentation:

1. Identifiable: the people who comprise the segment can be located and identified
such that targeting them very easy.
2. Cohesive: the consumer should be part of a whole whose specific qualities are
common at all.
3. Measurable: the marketer should able to estimate the size and potential spending
of the members of the market segment.
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4. Accessible: the members of the segment should be accessed by marketing efforts

and promotional activities to be conducted.
5. Substantial: segments should be large to be substantial.
6. Actionable: the company has enough resources and commitment to enable
effective penetration.

Variables for Segmentation

 Geographic: divides the market into different geographic units such as

nations, states, regions, countries, cities, neighborhood, barangays, and
etc.
 Demographic: market based on variables such as age, life cycle, gender,
income, occupation, education, religions and race.
 Psychographic: consumers based on different psychographic profiles
such as social class, life style and personality characteristics.
 Behavioral: dividing groups based on their knowledge, attitude, used of a
response to a product or services.
 Technographic: prevalence of the internet and the World Wide Web.
The more on technology the more information one will get.

Market Targeting: Shows the various market segment opportunities available for a
company.

Kotler suggest factors to consider in evaluating market segment.

1. Segment size: refers to the current sales volume.

2. Concentrated marketing: practice by companies with limited resources.

Kotler consider the following factors in choosing market coverage strategies:

1. Company’s resources
2. Degree pf product homogeneity
3. Market homogeneity
4. Competitor’s strategy

Market Positioning – developing competitive for the product and appropriate marketing
mix. Marketers would want to position their products in the consciousness of its
prospective customers.

3 positioning concepts are:

a. Unique selling proposition – use to identify what makes the product different
form others.
b. Competitive advantages – which is gained by offering greater value.
c. Top of mind – is the highest level of a recall that a brand receives.
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Some positioning strategies include the following:

1. Specific products attributes such as price and special features.

2. Benefits and the needs the product fills.
3. Based on certain classes or segments of a user.
4. A company can decide to position itself against an existing competitors and
present in edge over said competitor.

New and emerging markets - Cooper identify the growth of tourism market as
fueled by these factors:

a. Economic growth in major market sources

b. Increase in disposable leisure time a longer life expectancy with a sound health to
travel.
c. Rising educational level and increased access to information, simulating curiosity.
d. Changes in living conditions especially city dwellers becoming more inclined to
engage in tourism.
e. Increasing international integration of life.

Philippine source market in Asia

Country Characteristics Potential of a Challenging of

market tapping the market

India Worlds 2nd most Ranked 5th in number Up until today most of
populous country (1.21 of billion airs. the Indian population
billion) relies on traditional
Outbound travel media that is print.
Youngest country by growth in 2012 was at
2020 (64% of its 16.7 million Internet penetration is
population in the mostly metro centric.
working age group.)
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Vietnam Prefer independently They have 30.5 Language barrier is a

organized shorthand million interest big obstacle.
strips (younger
generation) Presence of big
shipping lines

Presence of big
shopping malls

France Demands of Philippines id Recent travel ban

personalized trips is generally elderly- affected visits.
increasing loving country and a
country of choice of
retirement.

Types of markets - Segmented using demographic and psychographic variables.

Family market: there are three types of vacation decision markers within the family
market;

a. Joint decision making family – families participate in a lot of leisure activities.

b. Husband making the decision – vacation destination is characterized by spouses
with greater age difference.
c. Wife making the decision – short planning duration and uses the fewest
information sources for planning.

Senior Market: also known as silver market or third-age tourism, senior market has
limitations and constraints to engage in travel.

The youth market: collecting new experiences that will serve to build their self-identity
narratives.

Youth market that is fueled by several factors:

1. Increase participation in higher educations.

2. Increased travel budget
3. Work and travel combinations
4. The rise to low cost/budget airlines
5. Shorter employment contacts leading to significant gaps in employment
6. The global rise of internet culture
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7. Growth of independence travel guide books.

The MICE Market and Business Tourism

The meeting, incentives, conference (convention), and exhibitions (MICE)

industry is extensively and rapidly growing, collectively known as the events industry.
This type of travel is connected but not limited to business travel.

Conference tourism refers to all activities associated with planning, travel to and
participation in conferences and meeting, both domestic and international.

Incentive travel is the most lucrative of the MICE Market. Incentive travel comes
in this form of a reward for employees or business partners.

HIGHLIGHTS OF THE CHAPTER

 A market id set of an actual and potential buyers of product.

 There are 3 steps to target market; market segmentation, market targeting,
market positioning.
 A market segment has to be; identifiable, cohesive, measurable, accessible,
substantial and actionable.
 Market can be segmented using different variables that are; geographic,
demographic, psychographic, and behavioral in nature.
 The factors to consider in evaluating which segments are to be targeted are;
segment size and growth,
 New and emerging markets include the family market, the senior market, the
youth market and the MICE market.
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QUESTIONS:

1. What is market?
2. What are the three steps to target marketing?
3. What are the characteristics of good market segment? Explain each.
4. What are the three positioning strategies and how can one use them effectively?

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CHAPTER 3- TOURISM AND CONSUMER BEHAVIOR

OBJECTIVES

 Identify the factors that influence customer behavior.

 Discuss the stages of buyer decision making.
 Explain the role of service quality in consumer satisfactions.
 Differentiate individual vs. organization buyer behavior.
 Enumerate the different models of consumer behavior.

Introduction

Consumer behavior is the process and activities people engage in when searching
for, selecting, purchasing, using, evaluating, and disposing products and services to
satisfy their needs and desires.

Factors that influence consumer behavior

Tourism marketing scholar identify key factors that have an influence over
consume behavior; as follows

1. Motivations 5. Life-style
2. Cultures 6. Life cycle
3. Age and gender 7. Reference group
4. Social class 8. Personality and self-concept

Motivations

An inner drive that makes people take a specific plan of action to satisfy their
needs. Maslow’s hierarchy of needs is the most popular theory of motivations. Maslow
rank them based on their level of importance.
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Maslow's Hierarchy of Needs

The traveler’s motives and behavior are self-oriented. Krippendorf classifies

these theories into eight explanations of travel which are:

1. Recuperation and regeneration

2. Compensation and social integration
3. Escape
4. Communications
5. Freedom and self-determination
6. Self-realizations
7. Happiness
8. Broadening of the mind

Culture – the impact of culture cannot be disregarded in the study of consumer behavior.
Researches have looked into how culture has affected consumer behavior. The cultural
framework of Hofstede can be used to explain the differences in consumer behavior
across the countries. And can be a guide in increasing efficiency in global marketing.

Hofstede disclose 5 dimensions of culture as follows;

1. Power distance
2. Individualism/collectivism
3. Masculinity and femininity
4. Uncertainty avoidance
5. Long term and short term orientation

Age & Gender – age traditional way of segmenting and also greatly influences
consumer behavior. Gender on the other hand, also influences consumer behavior. The
female market is steadily increasing and has been observe to be more discriminating than
male counterparts.

Social class – the socio economic of individual is still being considered as one of the
important external factors influencing consumer behavior.
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Life-style- a person’s pattern of living.

Life cycle- the family life cycle model. Suggest that travel patterns and destinations
differ as people move on through the life cycle.

Reference group- are known to be a set of people who have a direct or indirect
influence on other people’s attributes or behavior.

Personality & Self-concept- refers to distinguishing psychological characteristics

that lead to relatively consistent and enduring responses in the environment.

Need recognition- needs are triggered either by internal or external stimuli. Example:
on your way home, you felt hungry as your stomach grumbled. You see a restaurant and
grab a quick bite. This was a need triggered by internal stimuli. Another example you
smell the aroma of freshly baked breads as you passed by the bakeshop, it really smelled
very good and you decided to enter and buy a piece of it. The purchased was triggered by
the external stimuli.

Information Search- the eagerness for more information will depend on the strength
of the desire for more information.

Evaluation alternatives- this stage allows prospective customers to make detailed

comparison of different products and services.

Purchase decision- at these stage marketers should facilitate the speed and
convenience by which products or services reach the consumers.

Post-purchase evaluation- providers ensures that costumers have a good experience

with the product or services.

CUSTOMER SATISFACTION THROUGH GOOD SERVICE QUALITY

The marketers can be creative in reducing consumer post-purchased dissatisfaction by

keeping in touch even after the sale has been made and knows how to address consumer’s
complaints.

ORGANIZATIONAL BUYER BEHAVIOR

Commonly response to both economic and personal factors. Major influencers of

purchase would include cost and economic outlook.

Stages of buyer’s decision making:

1. Problem recognition
2. General need specifications
3. Product specifications
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4. Supplier search
5. Proposal solicitation
6. Supplier selection
7. Order routine specifications
8. Performance review

TYPOLOGY OF TOURISTS

Plog’s Tourist Motivation Model: Classifies traveler as

1. Allocentrics – exotic or unusual term of trips or destination choice.

2. Psychocentric – those who prefer the structured and familiar destinations.

Cohen’s Model: proposed 4 classifications of tourists

1. Organized mass tourist- buys all-inclusive tour packages and ensures that
everything goes as planned.
2. Individual mass tourist- refers travel independently.
3. The explorer- seeks new areas or destinations.
4. The drifter- free spirits who avoids any traditional tourist establishments.

Stewart’s Model of Holiday taking: Distinguish four phases of holiday taking.

1. Bubble traveler- low affluence. low travel experience. This gives basic confidence
to travel.
2. Idealized experience seeker- high affluence and a base of overseas travel
experience. Which gives them more confidents.
3. Wide Horizon Travel- greater confidence and more travel experience.
4. Total immerses- do not seek to merely observe but exposed fully to another
cultures language.

Highlights of the Chapter

 Consumer behavior is the process and activities people engage in when

searching, selecting and purchasing products and services.
 High quality service results in tourist satisfactions.
 The organization buying process complex were discussed.
 Various typologies of tourists were presented such as Plog’s Tourist
Motivation Model, Cohen’s Model, and Stewart’s Model of Holiday taking.

 
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Questions

1. What are the factors that influence consumer behavior?

2. What are the stages of the buyer decision making process?
3. What are the benefits of quality service? Explain.
4. Differentiate the types of tourists based on one of the models presented in this
chapter.

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CHAPTER 4 – TOURISM MARKETING AND THE COMMUNICATION

PROCESS

Objectives:

 Explain the communication process using models and theories and its
relationship to marketing.
 Identify communication models relevant to the marketing process.
 Explain the impacts of culture in the marketing process.
 Describe communication challenges and process.

Introduction

The marketing process seeks to inform, persuade, and bring consumers into
action. Information and persuasion are mainly achieved through communication.
Communication id defined as transmitting, giving or exchanging information using oral
or written means.

Communication is basic human need. Filipinos, in particular are very fond of

communicating with others. We are friendly race and most can strike a conversation with
just about everyone.

Communication Theories

Communication Theories can help us understand how to communicate better.

Some communication scholars have come up with theories that will enable marketing
practitioners to understand how to effectively communicate to their target market.

Models of Communication
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There are various communication models available and below are some of the
most to our area of study.

Harold Lasswell’s SMCRE Model

The communication process begins when the source selects words, symbols,
pictures, and the like to represent the message that will be delivered to the receivers. The
message can be verbal or non-verbal, oral or written, or in symbolic forms.

Shannon and Weaver’s Mathematical Model

Describe communication as a linear process. The process begins with the

information source, which produces a message or set of message to transmitted. The
signals are then adapted to the channel.

Berlo’s SMCR Communication Model

David Berlo (1960) introduces factors that may affect the process of
communication from source, message, channel and receiver (SMCR). The source and the
receiver of the message have different levels of communication skills, attitudes,
knowledge of the topic being discussed, and social system which covers various aspects
of society and culture.

Role of Opinion Leaders

 The two step flow model

According to Katz and Lazarsfeld (1955). “the flow of media message from radio
and print to opinion leaders and then the leaders lead the message to lesser active user in
that population.” Through this transformation of message, the leaders may add their
opinions in the actual contents which may affect low active user. In some cases, opinion
leaders filter the actual content.

Mostly the opinions of the leaders are selective as they pass the message to the
group. Opinion leaders are those that pass the message to others, less active members of
his group. Opinions are usually added to the opinion given; thus shaping the context by
which information is received.

Role of innovation in marketing

 Diffusion of innovation model

The model attempts to map out the materials process consumers go through in
purchase decision making similar to the AIDA (Attention Intense Desire Action) model
discussed in numerous costumer behavior books.
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Rogers further developed another theory known as Diffusion of Innovation where he

defined innovation as the spread of new ideas from its source to its user. Adopters move
at different rates. The front runners in product trial are labeled as “innovators” who
makes up approximately 25% of all buyers who eventually use the products.

The role of marketing communication

 Communication and its relationship to tourist satisfaction

Greater ease in communication leads to higher satisfaction level.

 Communication is influence

Communication has a lot to do with influence. The way we communicate with people
determines the level we have on others.

 Communication problems
1. Language Barriers – since the tourism industry is global industry. Communication
may be difficult due to differences in languages.
2. Varied Connotation of Words, Signs and Symbols – the thumps up sign for
instance, means differently depending on the culture or race. It means “The Best”
to Americans, “Money” to Japanese, but its vulgar to Latin American countries.
3. Culture Differences – the popular “beso-beso” is expressed differently in some
countries.
4. Faulty words choices – careful word of choice can improve communication.
5. Mistranslation – Faulty translation from one language to another may cause
misunderstanding.

Goal of marketing in communication

The goal of marketing communication is to achieve common grounds between the

sender and the receiver. The bigger the union of two circles, the easier it is to encourage
and influence the other person.

HIGHLIGHTS OF THE CHAPTER

 Communication theories can help us understand how we can communicate to

our target market better.
 Various models made by communication scholars shows how encoding and
decoding happen and how messages are transmitted through channel.
 Culture, noise and fields of experience are some variables that should be
considered when messages are crafted so that they can be easily understood by
the receiver.
 Communication problems arise due to language barriers, Varied Connotation
of Words, Signs and Symbols, Culture Differences, Faulty words choices and
Mistranslation.
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Guide Questions:

1. What is the goal of communication?

2. As a tourism marketer, why it is important to understand communication process?
3. What is the role of communication in the marketing process?
4. What is the impact of culture in the marketing communications?
5. What are the barriers to communications we should avoid? How can we overcome
these barriers?

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CHAPTER 5 - THE TOURISM PRODUCT

OBJECTIVES:

 Identify what is tourism product and components.

 Enumerate the stages of product life cycle and the destination life cycle.
 Recognize that Philippines has a lot of tourist-worthy attractions
 Discuss the product development process.

Introduction

The tourism product goes through a variety of stages to phase-out.

KKEY PLAYERS IN THE TOURISM INDUSTRY

The tourism industry is the conglomeration of various products and services,

individuals and organizations, each with specific economic and/or political
interest. Hudson (2008) enumerated these players:
1. Private and non-profit sectors – established to protect special interest groups, such
as travel agency associations. (Ex: PHILTOA Philippine Travel Agency
Associations).
2. Public sector services – cover either national, regional, or provincial tourism
organizations. They come up marketing programs to promote their destination to
both intermediaries and individual tourists.
3. Suppliers such as transportation, accommodations, food and beverage services,
attractions, and events.
a. Transportation industry – crucial to success of tourism. This industry
includes airlines, buses and railways.
b. Accommodation sector – covers a should part of tourist expenditure
during travel.
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c. Food and Beverage sector – these can range from establishments serving
local food to multinational franchise restaurants such as McDonalds’ and
Starbucks.
d. Attractions – these can be classified as man-made or natural.
e. Events and conferences – attracting both leisure and business to
destinations.
4. Travel intermediaries – help bring the tourism product to the customers.
5. The tourists themselves – the center of tourism industry.

The tourism product defined - In consumer marketing, a product is anything that can be
offered to the market.

Destination attraction – is the collection of attraction which is the elements of

tourism product that pulls people to the destinations.
Destination facilities – the wide range of tourist facilities within the destination
will help the tourist enjoy the destination attractions.
Accessibility – for tourism product to be highly successful, infrastructure services
(airports, roads, bridges, etc.) and transportation system should be put in place.
Image – central to the product is its image. Destination image help the visitor
form expectations of what they will experience.
Price – pricing is an important component of a tourism product. It allows
consumer to determine the level of services they might receive to the destinations.

Product types – in most destination facilities, products and services have different types;
these include

1. Core – are products that the costumer is really buying.

2. Facilitating – are goods and services that must be present for the guest to enjoy
the use of core products.
3. Supporting – add value to the core product and help differentiate it from
competitors.
4. Augmented products – are factors that help the consumer consider the product
over the other products.

A. Core products – hotel rooms.

B. Facilitating products – check in and check out services.
C. Supporting products – business center and room services.
D. Augmented products – interaction with service provider and other
consumer.
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Product consideration – in availing tourism products and services, consumer consider

several factors; accessibility, atmosphere, customer interaction with the service system,
customer interaction with other customer and co-production.

Product life cycle

A product life cycle in tourism and hospitality can be referred into two levels.
First is the specific products and services on a business or corporate level such as
hotels, restaurants, resorts, property, etc. second is the aggregate of offerings
within the whole destinations.

Product Development – the product development stage begins with an idea of new
product that could possibly satisfy an existing in or want in an specific market.

Introduction – the introduction phase is the period wherein the product is introduced to
the market.

Growth stage – a period of rapid market acceptance and increasing profits, as the
products become popular to the market.
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Maturity stage – the maturity stage is where sales plateau because the products has
achieved acceptance by most of its potential buyers.

A. Market modification
B. Product modification
C. Marketing mix modification

Decline stage – some successful products stay in the business for long period of time. The
decline is stage is the period when sales fall off quickly and profits drop.

Phase-out – this stage when the production of the product or availability of the service
will be shut down or deleted from the company’s product line.

Destination Life Cycle (DLC).

Butler (1980) develop the concept popularly known as the Destination Life Cycle
(DLC). The DLC provides the frame work for the marketing and management of
destination as it develops overtime.

HSU et al., discuss the six discrete stages of DLC.

1. Exploration – characterize by few adventurous tourists. Closed interaction with

local facilities are being used.
2. Involvement – characterize by an increase of tourist’s arrivals. Infrastructure
development begins.
3. Development – tourist arrivals are fast increasing. Loss local control and
promotion of artificial attractions.
4. Consolidation – tourism has become the major economic factor.
5. Stagnation – when the carrying capacity of the destination has been reached or
exceeded.
6. Decline – characterize by downward rate of tourist arrivals.

BUTLER'S LIFE CYCLE MODEL Destination Life Cycle (DLC).

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Product Development

Product Development

product development is an integral part of the success of any business. The

Philippines has reach natural resources and Filipinos are the warmest of hosts.
Tourism products and services should maximize these key strengths. The stages
of development adapt from Kotler is stated below.
1. Idea Generation – new products begin with an idea.
2. Idea Screening – idea generation leaves you with many ideas that needs to be
screen to see which one match the company’s objectives.
3. Concept Development and Testing - the products that pass through the screening
can now be develop further. A product concept id developed and tested.
4. Marketing Strategy – new product is introduced to the market.
5. Business Analysis – this stage looks more deeply into how much revenue a
product could generate.
6. Prototype Creation – presented to its target market for comments on which
adjustment and enhancements should be done.
7. Test Marketing – product is launched into small geographical area.
8. Commercialization – this is when the product is fully launched to the entire target
market either national or international.
9. Evaluation – wherein the company will know whether the product development is
fully observed, can merit market acceptance of the product.

HIGHLIGHTS OF THE CHAPTER

 The tourism product is the conglomeration of different product and services
both from the private and public sectors. It also covers products and services
in the transportation, accommodation, food and beverages, MICE and
attraction sector.
 The tourism product is not just single product; it is an overall experience.
 The components of tourism product include the destination attraction,
destination facilities, accessibility, image and price.
 Product types include core, facilitating, supporting and augmented products.
 Factors to consider in purchasing the products include accessibility,
atmosphere, customer interaction with service system and with other
customers and the involvement of customer in co-producing products.
 The product life cycle and the destination life cycle help the marketer
understand on how the product can remain competitive in the market and
apply intervention on depending on what stage the product is currently on.
 The stages of product life cycle include product development, introduction,
growth, maturity, decline and phase-out.
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Guide Questions

1. Using an example from the airline industry, explain the concept of core,
facilitating, supporting and augmented products.
2. What are the components of tourism product? Discuss each components and make
personal assessment on how Philippines fares on each component.
3. How does the company keep its product from going into the decline stage?
4. If you were the product developer manager of a big hotel chain, where will you
generate ideas for a new product?
5. Do you think can Philippines can come up with destination, attraction, product
and services that are at par with the rest of the world? What product and services
can you recommend that the country should develop.

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CHAPTER 6 – PRICING IN TOURISM

LEARNING OBJECTIVES:

 Discuss price and its role in tourism marketing.

 Enumerate the key factors affecting price.
 Identify the general pricing approaches and strategies.
 Explain the concept of revenue management and market recovery through
price.
 Explain how to deal with price changes.

What is price?

Price is the amount that customer pays for the product; the amount of money
exchange for something of value. Price makes product available to the target market and
reflects the value of the product.

Key concept relevant to pricing

1. Sales – total amount that the company gets based on quantity sold multiplied with
selling price.
2. Revenue – total income or profit the company keeps after all the expenses.
3. Fixed cost – costs incurred due to the company operation of the business.
4. Profit margin – level of income that is desired by the company.
5. Variable costs – costs that is vary based on the volume or quantity.
6. Break-even points – total cost is equal to total revenue.

Key factors affecting price

1. Cost – the setting of prices should incorporate a calculation of how much it cost
the organization to produce the product or service.
2. Organization and marketing objectives – companies get into business by survival,
profit maximization, high rate of return of investment, brand equity growth, and
an adequate share of market.
3. Other marketing mix variables – price is affected by the interplays of the other
variables in the marketing mix. High price should mean high quality of products
or services.
4. Buyer perception of value and price – buyers have different perception of product
quality and value based on branding and image.
5. Competition – knowing what competition offers is an important factor on the
success of the business.
6. Government regulation and taxes – caused a company to maintain its low prices
or increase its prices.
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7. Nature of the market and demand - tourism caters to a highly segmented

marketplace. Pricing needs to address the differences in the nature of such
markets as well as the differences in the demand of each markets.
8. Pricing in different market – a one price fits all market would not be
recommended.
9. Price elasticity of demand - increases or decreases normally have an effect of the
levels of sales on the products.
10. Other environmental factors – other environmental factors that may be beyond the
company’s control can affect pricing. Ex., calamities.

Price and its relationship to marketing objectives

1. Survival – the company may be experiencing deep crisis that the most basic
reason for its marketing effort to barely survive.
2. Current profit maximization – improved cash flows and swift returns on
investment.
3. Market share leadership – some companies build on marketing strategies that will
help the company gain a huge market share and become a market leader in its
product category.
4. Brand equity growth – establishing a positive brand image.
5. Product-quality leadership – marketing strategies seek to make some brand known
as the best service provider.

General Pricing Approaches

1. Cost-based pricing
2. Break-even analysis and target profit pricing
3. Buyer-based pricing (value-based)
4. Competition-based pricing

Pricing strategies – are ways by which tourism businesses offer product and services at
the right price.

Prestige pricing – used when the product or service is positioned to be luxurious and
elegant.

Market skimming pricing – strategy when the market is price in sensitive. Consumer
becomes price insensitive when demand is high and supply is low.

Market penetration pricing – used when setting a low initial selling price to penetrate
the market quickly and to attract many buyers for a large market share.

Product bundling pricing – used to attract buyers to purchase because of the reduce rate
of the bundle compared to the total cost of the items if purchased individually.

Volume discounts – rates are given to frequent or high volume users to attract them to
purchase the products.
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Discount based on time of purchase – addresses the seasonality aspect of the tourism
products.

Discriminatory pricing – segmentation of market and pricing differences based on price

elasticity characteristics of the segment.

Psychological pricing – psychological aspects like prestige, reference prices, round

figures, and ignoring end figures are used in pricing.

Promotional pricing – offers discounts and short term incentives.

Revenue management – a systematic approach to matching demand for services with an

appropriate supply in order to maximize revenues.

Market recovery through price – price can represent a significant incentive to

encourage visitors to offset their fears and to return.

Dealing with price changes – know when to initiate a price cut or price increase.

HIGHLIGHTS OF THE CHAPTER

 Price is the amount a customer pays for product or services. It is the value
placed on something that is measured on monetary theme.
 Key factors affecting price include Cost, Organization and marketing
objectives, Other marketing mix variables, Buyer perception of value and
price, Competition Government regulation and taxes, Nature of the market and
demand, Pricing in different market and Price elasticity of demand.
 General pricing approaches used in marketing are Cost-based pricing, Break-
even analysis and target profit pricing, Buyer-based pricing (value-based),
Competition-based pricing.
 Commonly used pricing strategies include Prestige Pricing, Prestige pricing,
Market skimming pricing, Market penetration pricing, Product bundling
pricing and Volume discounts
 Revenue management is used by tourism establishments to maximize revenues
by matching demand and supply.
 Price can be used as market recovery strategy.
 Price changes, increase or decrease, should be handled well to address
customer’s perception and buyer acceptance.
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Guide Questions

1. What is price and its role in marketing process?

2. What are the key factors affecting price?
3. Enumerate the different key pricing strategies discussed in this chapter.
4. If the company experiencing an oversupply of products, what pricing strategy is
best to adopt?
5. How does revenue management address the fact that tourism products are
perishable?
6. What are possible negative and positive effect of cutting prices?
7. What are possible negative and positive effect of increasing prices?

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CHAPTER 7 – TOURISM PROMOTIONS

OBJECTIVES

 Explain the role of promotion in Tourism Marketing.

 Identify the uses, advantage and disadvantage of advertising, direct marketing and
personal seller.

Introduction

 Direct marketing, advertising, personal selling, sales promotion, public relation,

and internet marketing are known as phenomenal mix. Putting the elements
together based on the available resources to meet the company’s objectives are the
tourism marketer’s task.

What is the promotion?

 The coordination of all seller-initiated efforts to set up channels of information

and persuasion to sell goods and services or to promote an idea. The end goal of
the promotional activity is to close the sale.

Advertising

 Any paid form non-personal communication about an organization, products,

service or idea by an identified sponsor. It can reach the largest number in
prospect quickly. Advertising covers television, radio, flyers, magazine, billboard,
and online options that includes advertising.

Objectives of advertising

 An advertising objective is a specific communication task to be accomplished

with specific target audience during an specific period of time.

Classification of advertising objectives

1) Informative advertising – introducing new products to build up primary demand

for product.
2) Persuasive advertising – used when competition is stiff. Companies rely on
persuasive advertising to be able to keep its market share.
3) Reminder advertising – very important for products that have reached the
maturity stage.

Types of advertising execution

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 For advertising to achieve its objectives of differentiation, tangibilizing the

product and having positive effects on employees and customer, Kotler at al,
present different execution styles:
1. Slice of life – shows how people use the product in normal setting.
2. Lifestyle – shows how the product fits on one’s way of life.
3. Fantasy – creates a wonder world around the product.
4. Mood or images – builds positive images or moods around the product
such as beauty.
5. Musical – use simple but catchy music to attract buyers.
6. Personality – creates the character that represent the product.
7. Technical expertise – reveals the company’s expertise.
8. Scientific evidence – presents research on scientific evidences.
9. Testimonial evidence – features a highly credible person.

Use of celebrity endorsers

 Plays an important role in helping products become more tangible and create
differentiation.

Three main aspects to consider in choosing celebrity endorsers;

1. Attractiveness of the celebrity to create a positive impact on the product.

2. Credibility of the celebrity expressed through expertise and trustworthiness.
3. Meaning transfer between brand and celebrity which refers to the compatibility of
brand and celebrity in terms of identity, personality, market positioning and
lifestyle.

Direct marketing

 An interactive system of marketing that uses one or more advertising media to

affect a measureable response.

Advantages of Direct Marketing

1. Precious targeting – having a good database can help pinpoint prospect based on
prospect lifestyle.
2. Personal message – a person’s name is the sweetest word in the world.
Prospective customers will definitely read through material when their name is on
it.
3. Privacy – company’s offer is not visible to competitors.
4. Faster sales – direct marketing can yield to faster sales since it is targeted to actual
user.
5. Variety of packaging opinion – available for direct mail campaigns.
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6. Less competition – a letter or package that is opened by the prospects will have
less competition.
7. Immediate result – respond or action is normally solicited from the prospective
costumer.
8. Measurability – the company knows the number of direct mailers.

Elements of Direct Marketing campaigns

1. The list – contains all the name and contact information of target market.
2. The message – message is important customized and personalized.
3. The offer – interesting and worthy to the costumer to consider making a purchase.

Measures of success

 One of the advantages of direct marketing as a promotional tool is its

measurability.
 A properly executed direct marketing campaign can be measured in several ways;
1. The number of inquiries generated.
2. The ration of conversation or purchases realized from inquiries generated.
3. Its communication impact.

Personal selling

1. Can be define as person-to-person communication between sales person and the

prospective costumer.

Primary tasks sales professionals perform for their companies are as follows;

1. Prospecting
2. Targeting
3. Communicating
4. Selling
5. Servicing
6. Information gathering
7. Allocating

Selecting sales strategy

1. Prevent erosion of key accounts.

2. Grow key accounts.
3. Grow selected marginal accounts.
4. Eliminate selected marginal accounts.
5. Retain selected marginal accounts with lower cost sales support.
6. Obtain new business from selected prospects.

Steps of the sale process

1. Prospecting and qualifying prospects.

2. Pre-approach
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3. Approach
4. Presentation and demonstration
5. Negotiation and overcoming objections
6. Closing the sales.
7. Follow-up & maintenance.

HIGHLIGHTS OF THE CHAPTER

 Promotion is defined as seller initiated efforts to set up channels of information
to promote ideas.
 Advertising is any paid form of non-personal communication of the
organizations.
 Advertising aims to perform and remind.
 Direct marketing sends regular communications to customer who are able,
willing and most ready to buy.
 Direct marketing Can be defined as person-to-person communication between
sales person and the prospective costumer.
 Primary task of sales professionals includes Prospecting Targeting,
Communicating, Selling, Servicing, Information gathering and Allocating.
 Direct sales strategies that can be employed includes Prevent erosion of key
accounts. Grow key accounts. Grow selected marginal accounts. Eliminate
selected marginal accounts. Retain selected marginal accounts with lower cost
sales support. Obtain new business from selected prospects.
 Steps of the sale process includes Prospecting and qualifying prospects. Pre-
approach. Approach. Presentation and demonstration. Negotiation and
overcoming objections. Closing the sales. Follow-up & maintenance.
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Guide Questions

1. What is the importance of promoting tourism product and services?

2. What are the advantages and disadvantages of using advertising for hotel?
3. What are the advantages and disadvantages of using direct marketing for hotel?
4. What are the advantages and disadvantages of using personal selling for hotel?

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CHAPTER8 - DISTRIBUTION CHANNEL IN THE TOURISM

INDUSTRY

OBJECTIVES

 Discuss the importance of distribution in the marketing mix.

 Identify various distribution channel that can be used in the tourism industry.
 Discuss the roles and functions of these distribution channel.
 Identify the different marketing intermediaries.
 Describe how to select members.
 Evaluate the use of franchising.
 Examine when to use strategic alliances and delivery system.

Introduction

 Creating a distribution system that will provide the best scheme for the product is
a challenge to many tourism products and services.

Distribution System

Nature and Importance

A distribution system is a place aspects of companies marketing mix. It provides an

adequate framework for making a company’s product or services available to the
customers. It is a set of different organization, independent or not, that are involved in the
process of making products and services available for use or consumption.

Factors that increased its importance

1. Competition
2. Globalization
3. Electronic distribution techniques
4. Perishability of the products

Distribution channel and its functions

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Disclose functions of distribution channel, as follows;

1. Information 8. Risk taking

2. Promotion
3. Contact
4. Matching
5. Negotiations
6. Physical distribution
7. Financing

The Role of the Internet

 Some are the advantages of using online platform for distributing travel product
and services are;
1. Reservation, payment, and purchases can be made online.
2. Companies are not subject to office hours, can be access 24/7.
3. It is able to access the wider market who are money rich but time poor, they are
the ones who has access to technologies.
4. It is bale to cut the queuing or waiting time.
5. It saves a lot of costs.
6. Product comparison and evaluation of alternative can be facilitated using internet.

Marketing intermediaries

 Types of indirect distribution channel which are independent organizations that

help distribute products and services.
1. Travel Agent – those are widely use marketing intermediaries in the tourism
industry. They offer wide array of products and services from transportations to
accommodation and tour packages.
 Travel agents are able to perform four distinct functions as follows;
Distribution and sales network
Reservation and ticketing
Information provision and travel counselling
Design of individual itineraries

2. Tour Operator / Wholesalers – these are organization that offers packaged

vacation tours to the general public targeting the leisure market. Tour package
includes transportations and accommodations as well as meals, entertainment and
services.

3. Travel Specialist – organization that focus on one or more functions of the

distribution system.
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4. Hotel and sales representatives - sell hotel rooms, function rooms, and other
services in a particular market area.

5. Government tourists’ associations – national, regional and local tourism

agencies or offices are an excellent way to bring information to the market and
gain bookings.

6. Consortia – a consortium is a group of hospitality organizations that is allied for

mutual benefits of the member. It allows a property to be independent in
ownership and management while gaining advantages of group marketing.

7. Reservation system - are entities that provide a central reservation system for
hotels. They provide the system for small chains by providing overseas reservation
service through local number.

8. Global distribution system – computerized reservation system.

9. Concierges – the hotel front office staff are usually the most frequently asked
hotel employees about the nearest restaurants or attractions.

Channel Conflict

 May arise between channel members when one member of the distribution
channel perceives another to be engage in behavior that may hinder the other
member from achieving their goals.

Selecting Channel Member

1. Knowing the needs of your customers.

2. Attracting channel members.
3. Studying economic feasibility.
4. Maintaining control

Business Location and its Importance

Kotler (2010) 4 general steps in choosing location and these are as follows;

1. Understand the strategy and target market of the company.

2. Analyze the regional location and analyze the geographic area.
3. Select an area within the chosen geographic region taking into consideration the
demographic and psychographic characteristics of the market in area,
competition, and growth potential.
4. Chose an individual site that is compatible with the business.

Franchising
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 Franchising is a method of doing business by which the franchise is granted the

rights to engaged in offering, selling, or distributing of goods and services.

Franchisee

 Franchisee is an organization or person that purchases a brand name to distribute

the product or services.

Strategic Alliances

 Strategic alliances is another form of distribution channel.

“an arrangement of two companies that have decided to share resources to undertake a
specific, mutually beneficial projects.”

Delivery systems

 The delivery system is an easy way for consumer to have food conveniently
brought to where they are because of the delivery system.

HIGHLIGHTS OF THE CHAPTER

 Distribution system provide adequate framework for making the company’s
product and services available to the consumer.
 Distribution channel are set of independent organizations involved in the
process of making the product or services available to the customers.
 Competition, globalization, electronic distribution system, and the feasibility
of the tourism product increase the importance of the distribution system.
1. Promotion
2. Contact
3. Matching
4. Negotiations
5. Physical distribution
6. Financing
7. Risk taking
 Marketing intermediaries. Types of indirect distribution channel which are
independent organizations that help distribute products and services.
 Location is critical to business success.
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Guide Questions

1. What is the importance of distribution channel?

2. Discuss the distribution channel or marketing intermediaries that is suitable in the
distribution of the following types of products.
 Airline tickets
 Hotel rooms
 Restaurants
 Conference facilities
 Theme parks
 Resorts
3. How do you think will the technology changes distribution channel in the
hospitality and travel industries over the next 5 years?
4. If you are to put a restaurant, would you go for a franchise or out up your own
brand? Why?
5. What is the advantage of having delivery system in a restaurant?

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