NAGA COLLEGE FOUNDATION, INC.

COLLEGE OF BUSINESS AND MANAGEMENT

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT
MICRO PERSPECTIVE OF TOURISM AND HOSPITALITY

Module No. 9
TOURISM MARKETING

LEARNING OUTCOMES:

At the end of this chapter, you should be able to:

a. Define Marketing
b. Clarify the uniqueness of tourism marketing
c. Explain the importance of marketing orientation, market segmentation,
and product life cycle to tourism marketing
d. Discuss the elements of the strategic marketing process

Definition of Marketing

Marketing consists of all those activities necessary to bring a product or services

from the manufacturer to the end user. These activities include:

1. The product or service itself;

2. The methods of distribution;
3. The methods of pricing;
4. The methods of promotion;
5. The form of selling; and
6. The form of advertising.

In relation to tourism, marketing is the systematic process by which an organization

tries to maximize the satisfaction of tourist demand through research, forecasting, and
the selection of tourism products and services to meet that demand. Another definition is
it is a management philosophy which, in the light of tourist demand, makes it possible
through research, forecasting, and selection to place tourism products on the market in
line with the organization's purpose for the greatest benefit. This definition suggests
three things. First, it shows that marketing balances the needs of the tourist with the
needs of the organization or destination. This can be explained by an examination of the
development of an appropriate orientation. Second, it emphasizes tourism research
which leads to the selection of tourism demand. The concept of market segmentation is
useful at this point. Third, the concepts of the product life cycle and positioning are
useful to stress the proper placement of tourism products on the market and to suggest
the suitable marketing policy and strategies which result from that decision.

Uniqueness of Tourism Marketing

Although the theories and methods of marketing tourism are the same as those
of other products, there are some unique qualities. Tourism is a service. An intangible
experience is being sold, not a physical good that can be inspected before it is bought.
For example, a consumer does not buy a bed or a beach, but buys a night's lodging in a
hotel at the seashore. Because it is a service, production and consumption take place at
the same time. In manufacturing, goods are produced, stored, sold, shipped, and
delivered.

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The inventory for tourism is a seat on a plane, a hotel room, a nice beach or a beautiful
or an excellent place for scuba diving. Unlike manufactured goods, if the inventory is not
sold, it is not sold forever. Manufactured goods can be stored and while sometimes
perishable, they generally are not lost if not sold on a given day. Tourism supply cannot
be stored. Unlike a can of food which, if not sold one day, can be sold the next day.
Airline seats, hotel rooms, or restaurant seats not sold today lose that particular sale
forever. This means that market forecasting and research are extremely important.
Producers should effectively plan the proper amount of facilities and after developing
them, use them as completely as possible.

A second significant characteristic of tourism is that the service provided is

usually composed of several components such as transportation, lodging, food and
beverage, attractions, activities, and the like. The degree of success of any one
component influences the success of the other components. Travelers who have a poor
experience on an airline to a particular destination may choose a different airline next
time or suggest to friends and relatives that the trip was not worthwhile or the
destination is not worth visiting.

The third characteristic of the tourism product is that travel intermediaries are a
necessity. Because most tourist services are located far from their potential customers,
specialized intermediaries or organizations are necessary to bridge the gap between the
producer and the tourist. While in the most industries the producers exert much control
over every stage in the development and delivery of the product, in tourism, travel
intermediaries exercise much influence over the services offered, dictating to whom,
when, and at what price they are sold.

The fourth characteristic of tourism is that the demand is highly elastic, seasonal
in character, and subject to changes in taste and fashion. There are a number of options
available to consumers to satisfy a wide variety of tastes. Sun, sea, and sand, for
example, can be found in many places around the world. They offer many choices to the
prospective traveler.

Marketing Orientation

Before embarking on a program to market tourism in general or a specific tourism

product or service in particular, it is necessary to develop a philosophy or orientation to
guide one's marketing efforts. Some destination areas have marketing efforts that are
guided by product orientation. A product orientation emphasizes the products or services
that are available. It may be successful if there is a surplus of demand over supply.
Thus, the destination which offers the best product will get the tourist. The old adage
that reflects this is "build a better mousetrap, and the world will beat a path to your
door."

When there is more supply than demand, the consumer orientation is used.
Consumer orientation places the needs and wants of the tourist foremost in the mind of
the marketer who seeks to provide a product or service that will satisfy those needs and
wants. It involves serving breakfast when the tourist wants it rather than when it is
convenient for management, as well as providing an experience tourists need and want
rather than what the marketer feels they should need or want.

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 Another orientation is the societal-marketing approach or societal
orientation which focuses on the satisfaction of tourist needs and wants while respecting
the long-term interests of the community.

All marketing activities will be guided by the philosophy of those responsible for
the marketing campaign. It is essential that any marketing effort has an agreed-upon
philosophy to guide the further development and marketing efforts of any destination.

Marketing Segmentation

The second aspect of the definition of tourism marketing is the selection of

tourism demand. Market segmentation is a universally accepted way of analyzing
demand. It is the grouping together of people with similar needs and wants for the
purpose of serving the market better.

Segmentation is based on four assumptions. First, the market for a pro service,
such as a vacation, is made up of particular segments whose members have particular
needs and preferences related to the product or service being marketed. Second,
potential tourists can be grouped into segments whose members have similar
characteristics. Third, a single product offering such as a trip to Baguio WIII appeal to
some segments of the market more than others. Fourth, some firms and organizations
can improve their marketing efforts by developing specific product offerings to reach
specific segments of the market. A cruise package will be suitable to one part of the
market but a historical tour may be more suitable to another.

Table 6 shows the four criteria that have been developed by which a market
segment can be constructed. These are:

1. Socioeconomic;
2. Product-related;
3. Psychographic; and
4. Geographic

Table 6. Recreation and Tourism Market Segmentation Bases

Socioeconomic and Demographic Variables Product Related Variables

Age Recreation Activity
Education Equipment Type
Sex Volume Usage
Income Brand Loyalty
Family Size Benefit Expectations
Family Life Cycle Length of Stay
Social Class Transportation Mode
Home ownership Experience Preferences
Race or Ethnic Group Participation Patterns
Occupation
Psychographic Variables Geographic Variables
Personality Traits Region
Lifestyle Market Area
Attitude, Interests, Opinions Urban, Suburban, Rural
Motivations City Size
Population Density
Source: Stynes, Daniel J. “Market Segmentation in Recreation and Tourism,” 1997

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Socioeconomic or Demographic Segmentation

Socioeconomic criteria are the most commonly used at present due to the ease of
collecting data, the comparability of such information through census, as well as media
data, and the fact that such data is easy to understand and apply. Age and income are
very successful predictors of recreation participation. However, the changing nature of
society makes it impossible to rely only on demographic data as a means of devising
marketing strategy.

Product-Related Segmentation

A major advantage of product-related criteria is that the information gained is

directly related to the particular product in question. A major defect in some studies is
that the information is acquired from the potential tourist that deals with general
benefits obtained or, in the case of psychographic segmentation; from general attitudes
about types of products and services rather than specific products and services.

Psychographic Segmentation

This segmentation technique, although expensive and difficult, is useful in

describing segments. It can best be used in highly-specialized and extensively developed
markets to supplement the information gained from simpler analysis. Demographic data
may be likened to the bones of a skeleton while psychographic data is to the flesh. The
bones form the basis of the structure but it is only by covering the form with flesh that
the features become recognizable. Information about an individual's attitudes, interests,
and opinions give a much closer picture of the segment being described.

Geographic Segmentation

Geographic considerations are very important in tourism. At present

destinations use geographically-based studies to identity primary, secondary, and in
some cases, tertiary markets. State and national tourist offices use geographic
segmentation to determine the extent of their promotional efforts.

After identifying the market segments, it is necessary to select which segments

the destination would like to attract and serve. This decision can be made only after
analyzing which market segments will bring the greatest benefit to the destination. The
segments chosen become the target market. The process of selection and the
corresponding decisions to develop a marketing program suitable to meet the needs of
these segments is known as positioning.

Product Life Cycle

The concept of the product life cycle is useful to the markets as an additional
guide on what strategies should be used in choosing, attracting, and serving large
markets. It suggests that a product, service, or destination moves through distinct
stages. Specific marketing strategies on price, product, promotion, and distribution are
developed within the context of a market planning approach.

The stages that a new product goes from inception to decline. These are:

1. Introduction
2. Growth
3. Maturity

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 4. Saturation
5. Decline

Because of the rapid change of consumer lifestyle and technological changes, the life
cycle for products and services become shorter, but the product life cycle remains as a
useful concept for strategic planning. Each stage of the product life cycle has certain
marketing requirements.

1. Introduction

The introductory phase of the product life cycle requires high promotional expenses
and visibility. The most opportune time to advertise a product or service is when it is
new. Operation in this period is characterized by high cost, low sales volume, and an
advertising program which aims to encourage primary demand. At this stage of the life
cycle, there will be a high incidence of failures.

2. Growth

In the growth period, the product or service is accepted by consumers. Market

acceptance means that both sales and profits increase rapidly, making the market
attractive to competitors. Promotion emphasizes selective buying motives by trade
names rather than the number of outlets handling the product or service increase. More
competitors enter the market place.

3. Maturity

At this stage, the mature product is well-established in the market place. Sales
increase but at a slower. Many outlets are selling the product or service. They are very
competitive especially with regard to price. Companies try to find out ways to hold on to
their share of the market.

4. Saturation

At this stage, sales volume reaches its peak. The product or service has penetrated
the market place to its highest degree. Mass production lowered the prices to make it
available to everyone.

5. Decline

In the decline stage, advertising expenses are lower. There are few competitors.

Strategic Marketing Process

A strategic marketing process can be divided into three elements:

1. Market planning;
2. Target market selection; and
3. The marketing mix selection.

Market Planning Process

In market planning, the objectives are stated and the methods of attaining them
are identified. There are seven steps in the market planning process. These are:

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 1. Collection of data – Data can be collected in two ways—from secondary sources
and from primary sources. The second method is expensive and time-consuming:
Since many organizations are not skilled to do market research planning, they
usually ask the help of other organizations or people who are experts in it.
2. Analysis of data - Data is usually organized and interpreted. This requires a great
amount of skill and understanding. At present, computers shorten the process of
organizing and interpreting data.
3. Identification of alternative strategies for reaching the desired goal – In most
cases, there are several ways to arrive at a desired goal. For example, an airline
company wanting to increase its percentage of occupied seats may adopt several
alternatives. First, it can create a special fare with certain restrictions such as the
seven-day advance buying. Second, it can create a special fare based on age
such as discounted fare for those below 21 years of age. Third, special contracts
for surplus seats may be arranged with groups.
4. Cost-benefit analysis – The cost-benefit analysis of several methods for reaching
the goals would indicate which of the alternatives or combination of them would
be best from a financial standpoint. Some elements are not quantifiable such as
the goodwill and improved attitude toward the company that a program can
generate. Frequent flyer programs which airlines offer are quantifiable since
discounts for mileage flown can be computed.
5. Selecting alternatives and plan formation - After the variables and cost benefit for
each are identified, it is then decided which one should be carried out by the
other organizations. A plan of action, including the responsibilities of the
members of the organization, can then be established.
6. Control procedures – These are methods which analyze the progress made in
achieving the goals of the project.
7. Plan information - Putting into effect the plan of action and supervising it.

Target Markets

Tourism USA suggested four steps in identifying target markets. These are:

1. Estimate the approval of an area's attractions. This includes the degree of interest
of the tourist on the area and the length of time the tourist will spend visiting it.
For example, a three-day festival would be more important than a one day
festival. A Disney-type theme park would create more interest than a crocodile
farm;
2. Estimate the distance in both travel time and travel costs. The greater
the attraction, the longer the distance potential tourists will travel
3. Identify the potential target markets geographically by locating the population
clusters within the maximum distance determined from the estimated travel time
and lure of the attraction; and
4. Identify the actual and potential competition in the target market.

Behavioral Characteristics of Target Markets

The behavioral characteristic of potential travelers is very important in identifying

target markets. People travel for different reasons. Some people are interested in
historical or cultural activities such as museums and monuments; others prefer sports
events or entertainment, while still others prefer the sun, sea, and sand. Once the target
markets have been defined, the segments must be studied to know why these people
travel to a specific location. Research can determine the behavioral target markets that

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would be best suited for the particular product and match the attractions with those who
are most likely to enjoy them and let the tourists know their existence through
promotion.

Selecting a Marketing Strategy

There are six steps in determining a marketing strategy. These are:

1. Identifying the market segment;

2. Determining the preferences of the market segment;
3. Determining what influences the segment most-price, product, image, sales
persuasion, customer service, product availability, among others;
4. Realizing the importance of two clients-the traveler and the travel intermediary
such as the travel agent or tour operator:
5. Determining the marketing mix that will influence the segment identified; and
6. Establishing a price policy that will maximize profits by balancing the number of
tourists with the capacity of the attraction.

Marketing Mix

The marketing mix is the combination of elements-product, price, promotion and

distribution that interact and complement each other to attain the objectives of the
market plan.

1. Product

A vacation consists of several parts or products such as transportation,

accommodation, food and beverage sightseeing, entertainment, and souvenirs. Several
providers will offer one or more of these products on services. Thus, each provider is
interdependent upon the others to offer an attractive and satisfying vacation experience.
The philosophy of a consumer marketing orientation suggests that products should
satisfy the needs and wants of the customer. It is necessary to select a target market
and then provide products or services that will satisfy its needs.

There are several criteria that should be met in deciding to provide a product or
service. First, there should be a heavy demand for the product or service from at least
one important segment with the possibility of additional business from other segments of
the market. Second, new products and services should suit the general image of the
destination area and complement existing ones. Third, new products and services should
be offered in accordance with available supply of manpower, money, and natural
resources. Fourth, any added product or service should contribute to the profit and/or
growth of the entire destination.

2. Price

Price is the result of supply and demand. When supply exceeds demand, price tends
to decrease. When demand exceeds supply, price tends to increase. For example, higher
prices are charged during the peak seasons. While lower prices are changed during off-
seasons, prices are usually lower for destinations that are open the whole year while
destinations that are not open the whole year have higher price rates.

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 Price is influenced by competition. If products and services of an agency are similar
to those of its competitors, its price will be similar to theirs. However, if its products and
services are unique, it can charge more than its competitors.

Price is also related to the needs of the market segment that is served. If a
destination is perceived by the members of the market segment as serving their needs
and wants, they will be willing to pay a higher price.

The remaining two elements of the marketing mix which are promotion and
distribution will be discussed in the next two chapters.

Reference:

MICRO PERSPECTIVE OF TOURISM AND HOSPITALITY

Zenaida Lansangan-Cruz,Phd 2018

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