Chapter Ten Understanding Tourism Markets

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 2 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Importance of Travel and Tourism United Nations World Tourism Organization (UNWTO) defines tourism as the activities of people traveling to and from places outside their usual environment for not more than one consecutive year Affects the economy of every country, city and community in the world

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 3 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Importance of Travel and Tourism Tangible and intangible components are all interrelated and sensitive to environmental trends including: The tourist The tourist-generating region Transportation systems Tourist destinations Hospitality services The tourism industry

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 4 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Importance of Travel and Tourism The multiplier effect The impact the tourist dollar has on a destination’s economy in that wage earners working in hospitality and tourism also spend earnings in the local community

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 5 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Exhibit 10-1; The Multiplier Effect

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 6 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Importance of Travel and Tourism Growth since World War II and 1960 Fastest growing destinations have been Asia, the Pacific and Middle East Competition among destinations is fierce Travelers wants and needs constantly change Tourism is susceptible to changes in the macro environment

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 7 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Local Residents’ Attitudes Towards Tourism Success and sustainability of tourism depends on the attitudes of local residents towards tourism Hospitality of local residents is important Will support tourism when the expected benefits exceed the costs Residents of depressed economies are likely to support tourism for its perceived benefits Ultimately there must be a fit between what the market wants and the destination offers

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 8 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw National Tourism Organizations (NTOs) Governments promote their countries with NTOs via: Publicity campaigns Research Plans for destinations US is the only major country without a federally funded NTO

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 9 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw National Tourism Organizations (NTOs) Traditionally NTOs marketing goals have been to create and communicate overall appealing destinations images and messages to the target market Today marketing programs are more collaborative with the private sector NTOs are focused mainly on marketing the county as a whole

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 10 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw National Tourism Organizations (NTOs) NTOs also facilitate: Collecting analyzing and decimating market research data Establishing a representation in the markets of origin Participating in trade shows Organizing and coordinating familiarization trips Supporting the private sector in the production and distribution of literature

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 11 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 12 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw How Hotels and Tourist Destinations Work Together A critical issue for the hotel is how to maintain it’s identity and not get lost in the promotion of the destination Interview with Leanne Pletcher of the Hilton Waikoloa on Hawaii

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 13 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Destination Marketing Strategy Before strategy must come an assessment of opportunities and threats Examine the major forces in the macro environment Identify factors that that are likely to influence the business and future business Should include a brief review of major forces like market acceptance, social perceptions, and consumer trends

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 14 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Five Forces Model Risk of Entry by Potential Competitors Bargaining Power Of Buyers Rivalry Among Established Firms Threat of Substitute Products Bargaining Power of Suppliers Ecological Environment Economic Environment Political Environment Sociocultural Environment Regulatory Environment Technological Environment

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 15 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Forces in the Macro Environment Economic environment International tourism is largely dependent on the economic conditions in areas where the prospective visitors live Technological environment Technology has helped foster the rapid growth of travel and tourism in the last 20 years Advent of computer technology has assisted the travel industry

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 16 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Forces in the Macro Environment Political/Legal Environment Government interest largely due to the economic significance of tourism Restrictions or changes in international travel policy can greatly affect tourism September 11, 2001 Air transportation increasing international flights in the 1980’s In 2004 the Chinese government expanded its list of approved countries its residents are able to visit

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 17 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Forces in the Macro Environment Ecological environment Impact of travel on a destination’s ecology has brought the issue to the forefront for both travelers and host communities Measures such as limiting tour operators or increasing visitors’ fees may help Sociocultural environment Involves the beliefs, values, attitudes, opinions, and lifestyles Demographic shifts of age in the population Shrinking population due to lower fertility rates Rising education levels Increasing economic role of women

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 18 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Forces In the Macro Environment There is rivalry among destinations Must have sound understanding of the market to compete Destinations are mutually dependent in that competitive moves will be addressed also by competitors in the same market Identifying competition is crucial as it provides a basis for competitive analysis Context and situation influence a traveler’s consideration set

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 19 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Segmenting the Tourist Market Destinations cannot be everything to every traveler Identify groups Travelers who have common interests and share common values Travelers that may be interested in the kinds of attractions, services and facilities that the destination offers

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 20 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Segmenting the Tourist Market Understand the destinations capabilities and resources and use them to attract tourist segments Services the destination offers What customers make purchases and why Meeting customer needs Core competencies

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 21 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Segmenting the Tourist Market How to describe markets: Demographics The travelers’ wants and preferences and the frequency of their purchases which are associated with demographic characteristics Psychographics Describes psychographic information, such as lifestyle or personality attributes, which is usually subjective Behavior Categorize based on knowledge, attitude, use, motivation, or response to an attraction, facility, or service

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 22 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Communicating with the Tourist Market Importance of image promotion Every communication related to a destination helps the potential tourist form and image Negative images can also have a profound effect on tourism Countries spend millions of dollars to create positive images

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 23 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Communicating with the Tourist Market Choosing a destination: College student traveling to Cancun as an example Image, actual travel, recollection Experiences live up to expectations  satisfaction Decision to return Word-of-mouth

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 24 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Travelers’ Information Search Behavior Part of the decision making process Understanding can aid marketers to develop effective communication Consumers prior knowledge: Expertise Familiarity

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 25 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Expertise As familiarity increases, so does expertise Product related experiences influence expertise Advertising exposure Interactions with sales people Purchase Product usage Exposure to brand name Need understanding of consumer’s external information source utilization Travelers’ involvement is likely to have a positive effect

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 26 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Familiarity Familiarity has been determined to be an important factor in consumer decision making Gained from ongoing information search Guidebooks or books Advertising and newspaper write-ups TV and radio advertisements

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 27 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Familiarity Learning is likely to influence consumers’ decisions Intentional Learning through active cognitive processing of information Likely to increase traveler’s expertise and familiarity Incidental Learning that occurs unintentionally Likely to increase only a traveler’s familiarity

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 28 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Familiarity Importance of perceived cost Make external searches inexpensive and time efficient Clearly identify the unique selling points of the destination to differentiate the destination and make it easier for potential travelers to understand Word of mouth communication

© 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. 29 Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw Discussion Give an example to illustrate what is meant by “destination marketing.”