Brainy 7

Tourism and Hospitality Marketing: A Global Perspective

Developing a Marketing Plan

Contributors: By: Simon Hudson

Book Title: Tourism and Hospitality Marketing: A Global Perspective

Chapter Title: "Developing a Marketing Plan"

Pub. Date: 2008

Access Date: June 21, 2018

Publishing Company: SAGE Publications Ltd

City: London

Print ISBN: 9781412946872

Online ISBN: 9781446280140

DOI: http://dx.doi.org/10.4135/9781446280140.n3

Print pages: 75-109

©2008 SAGE Publications Ltd. All Rights Reserved.

This PDF has been generated from SAGE Knowledge. Please note that the pagination of

the online version will vary from the pagination of the print book.

Developing a Marketing Plan

An Adventure with Bruce Poon Tip

In 1990, Bruce Poon Tip withdrew every last penny in his bank account to open his own travel company specializing in taking tourists to emerging countries in Central and South America. Due to the risky nature of the travel industry at that time, caused by the persistent Gulf War, the banks were unwilling to lend him any money. Poon Tip would not be discouraged and, as a result, he stretched the limit of his credit card to follow his vision. Today, G.A.P Adventures is one of the largest adventure companies in the world. At 21, Poon Tip found his G.A.P concept when he travelled in Thailand for $10 a day and stayed with the hill tribes. ‘It wasn't my first visit, but it was my most genuine,’ says Poon Tip, who has consulted on Survivor. ‘That was when I knew others would want authentic travel experiences.’ Just as baby boomers were maturing and realizing the detrimental effects of their hedonistic youth, Poon Tip positioned his company as a vehicle to do some good while travelling via environmentally friendly, experience- and adventure-oriented tourism.

Born in Trinidad, Poon Tip runs his company based on his ethical commitment to developing mutually beneficial international relationships, incorporating values and respect for local cultures, and promoting ecotourism. His $100 million business, which sells 1000 different trips to 100 destinations through its many offices worldwide, does more to promote sustainable tourism than any other company in the business.

Toronto-based G.A.P Adventures and Bruce Poon Tip himself have been recognized by many organizations as leaders in business practices and leadership. In 2006, Poon Tip won Entrepreneur of the Year in Canada for the second time at the 13th Annual Ernst & Young Entrepreneur of the Year Awards. In addition to receiving an award as one of Canada's top 40 Canadians Under 40, Poon Tip has also been honoured as one of Canada's top five entrepreneurs by Canadian Business and as one of Canada's 100 leaders of tomorrow. Poon Tip also received the Global Traders Leadership award from the government for his groundbreaking ideas in exporting services. He has spearheaded a postgraduate diploma programme for Humber College on Ecotourism and Adventure Travel; recently, he was asked by the World Bank and UNESCO to be on a team visit ing the People's Republic of China to lecture on sustainable development. In January 2002, Poon Tip was the only Canadian operator invited to attend the United Nations' launch of the Year of Ecotourism in New York.

Bruce Poon Tip, G.A.P. Adventures

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In 2005 and 2006, G.A.P was selected as one of Canada's Best Managed Companies as well as Canada's Top 100 Employers and one of the Top 10 Employers for Young People. The company's enthusiasm for the product is instrumental, too, in creating customer and staff loyalty. Poon Tip explains: ‘We are a company of travellers and our employees share a true passion for the industry. We are a work hard/play hard company that is dedicated to our entrepreneurial spirit.’

In a world where people are living longer and staying fit and healthier later in life, the company is targeting those who are ‘young at heart’. For ‘adventure with a bit of comfort’, G.A.P offers the traveller small group excursions throughout South and Central America, Africa, Asia, North America and Europe, plus expeditions to the Antarctic, the Arctic and the Panama Canal onboard the ship M/S Explorer. With a slant towards wildlife, culture, history and the environment, these expeditions are putting leisure and entertainment in an educational package rather than offering the indulgence of typical cruise holidays. G.A.P uses small-scale lodging and local transportation. The company also supports locally owned businesses and incorporates community-based ecotourism projects into the majority of tours.

Newspaper advertising focuses attention on the company's differentiation within the travel industry. No glossy photos of perfect hotels or idyllic beaches, but instead, pictures of indigenous people and text that says ‘our impact is low and sustainable tourism is at the forefront of our agenda’. Instead of listing resorts, the ads promote adventures in every corner of the globe for the ‘New Traveller’ in small groups. Accommodation is advertised not as a star rating, but as ‘local’ and ‘full of character’, with activities described as ‘unique and off the beaten track’. This innovative targeting stresses the company's authenticity and experience-based, cultural tourism.

Poon Tip believes that ecotourism does not have to be small scale. ‘Most people say ecotourism means “leave only footprints”,’ he says. ‘I disagree with that. I think that we've got to get those 10,000 people off the cruise ships and into 200 small groups. I think that tourists can leave behind a huge impact.’ To that end, Poon Tip has worked

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with the World Bank to help impoverished villages finance tourist lodges and teach communities to profit through tourism. Six communities in Bolivia, for example, now sustain themselves through such initiatives, which helps reduce their dependence on logging and the drug trade. This aspect of G.A.P's philosophy puts the company into the cause-related tourism category as well as making a stand against typical profit- oriented tourism operations. G.A.P Adventures was recently included in Conde Nast Traveller's 12th annual Green List. Top candidates are chosen for their commitment to environmental initiatives, contributions to local communities and quality of guest experience.

Despite the obvious advantages to ecotourism, which brings sustainable prosperity to locals as well as cultural exchanges between the travellers and the inhabitants, there are detractors to this concept. Some think that ecotourists travel on low budgets (and Poon Tip emphasizes good value for the traveller's dollar in the company's advertising) and contribute less to local economies. However, Poon Tip contends that ecotourists generally stay longer than five-star hotel guests and that the money they spend goes directly to the community, rather than into the coffers of a Western-run hotel chain.

Sources: Baginski, M. (2002) ‘GC acquisition fil ls large G.A.P’, retrieved from http://www.canadatourism.com/en/ctc/ctx/ctxnews/search/newsbydateform.cfm; G.A.P Adventures website: http://www.gapadventures.com; B . P o o n T i p , p e r s o n a l communication, 15 December 2006; Anon. (26 May 2005) ‘Travel for the fifty plus’, Travelweek, 16.

OBJECTIVES

On completion of this chapter, you should understand:

▸ the eight key steps in the marketing planning process;

▸ the importance of the corporate connection;

▸ analysis and forecasting;

▸ setting goals and objectives;

▸ targeting and positioning;

▸ tactics and action plans; and

▸ how marketing planning is conducted in various sectors of the tourism industry.

Introduction

The Opening Vignette highlights the importance of successful positioning and planning in today's marketing environment. Through careful planning, G.A.P Adventures has become one of the largest adventure companies in the world. In its principles, marketing planning is no

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more than a logical thought process in which all businesses should engage. It is an application of common sense, as relevant to a small bed and breakfast as it is to an international airline. However, not all companies do follow a marketing plan, as can be seen in the end of chapter Case Study on Roots Air.

STRATEGIC MARKETING PLAN

a written plan for an organization covering a period of three or more years into the future

MARKETING PLAN

a written, short-term plan that details how an organization will use its marketing mix to achieve its marketing objectives

The term marketing plan is widely used to mean a short-term plan for two years or less. This chapter is devoted to the development of such plans. A strategic marketing plan, on the other hand, is different, as it covers three or more years. A marketing plan serves a number of purposes within any tourism organization. It provides a road map for all future marketing activities of the firm; it ensures that marketing activities are aligned with the corporate strategic plan; it forces marketing managers to review and think through all steps in the marketing process objectively; it assists in the budgeting process to match resources with marketing objectives; and it creates a process to monitor actual against expected results.

Figure 3.1 Marketing Planning: An Eight-Step Process

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A systematic marketing planning process consists of eight logical steps, as outlined in Figure 3.1. For the strategic marketing plan, the first four stages may be more detailed, but any short-term marketing plan should also include an assessment of these steps. Each step feeds into the next one. A marketing plan is not a stand-alone tool, so the first stage is examining the goals and objectives of the organization as a whole and then developing a marketing plan that will support the company's mission statement, corporate philosophy, and corporate goals. Once the corporate connection has been clarified, the next stage is defining the current situation, reviewing the effectiveness of current activities, and identifying opportunities. This is the ‘analysis and forecasting’ stage. The third stage is concerned with defining marketing goals and objectives derived logically from the previous stages of the planning process.

At the fourth stage, target markets should be selected from the previously developed list of available segments, and once the market has been segmented and a target market identified, the next step is positioning. Market positioning is ultimately how the consumer perceives the good or service in a given market, and is used to achieve a sustainable competitive advantage over competitors. The fifth stage involves selecting and developing a series of strategies that effectively bring about the required results. This part of the plan shows how the organization intends to use the 7 Ps. The marketing plan needs to address the resources required to support the strategies and meet the objectives, and resource requirements are the focus of the plan's sixth stage. The seventh stage is concerned with marketing control and how objectives will be achieved in the required time, using the funds and resources requested. Finally, at the eighth stage, the plan should be communicated both internally and externally to achieve maximum impact. Most marketing plans will contain an executive summary of the whole, and this should be no more than a few pages in length. A good approach is to sum up each section and present them in the order in which they appear.

EXECUTIVE SUMMARY

a few pages, usually positioned at the beginning of the marketing plan, that sum up the plan's main sections

The role played by each section of the marketing plan will now be discussed in more detail.

The Corporate Connection

A good marketing plan begins with the fact that the only purpose of marketing is to support the enterprise. Marketing planning should therefore reflect the goals and objectives of the organization as a whole. The mission or vision statement reflects the organization's philosophy, and the goals and objectives as set out in the business plan become the basis of planning for all departments. Marketing's responsibilities in relation to the corporate vision are usually outlined in one or more separate marketing-specific documents.

Goals can be defined in terms such as sales growth, increased profitability and market leadership, whereas objectives are the activities that will accomplish the goals. A vision statement usually answers the question, ‘What do we want to be?’, whilst the mission

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statement will answer the question, ‘What business are we in?’ Whereas the vision describes where the organization wants to be in some future time, the mission is a broader statement about an organization's business and scope, goods or services, markets served and overall philosophy.

GOALS

the primary aims of the organization

OBJECTIVES

the specific aims that managers accomplish to attain organizational goals

MISSION STATEMENT

a brief simple phrase or sentence that summarizes the organization's direction and communicates its ethos to internal and external audiences. It also answers the question, ‘What business are we in?’

Vision and mission statements can vary. G.A.P Adventures (see the Opening Vignette) has the following mission statement that focuses on service: ‘Our priority is to satisfy every customer, every time, through outstanding, personalized service! We are dedicated to the customer experience and are constantly evaluating how we can improve this experience.’ Cheddar Caves & Gorge in the UK (see Chapter 8), however, has a mission statement based on social values and sustainability: ‘To make the Caves accessible to visitors in a way which increases visitor awareness of their value, while responding to the social needs of our visitors and protecting the natural environment for future generations.’

Analysis and Forecasting

The next stage of the marketing plan is defining the current situation. It is essential that each component of the business be reviewed in order to ensure that resources can be allocated efficiently. Several models exist for reviewing effectiveness and identifying opportunities but those proven by time and practical application across a range of industries include portfolio analysis, competitor analysis, segmentation analysis, SWOT (strengths, weaknesses, opportunities and threats) analysis, and forecasting.

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Portfolio Analysis

Portfolio analysis first became popular in the 1960s, when many organizations sought to improve their profitability by diversifying their activities so as not to keep all their eggs in one basket. The Boston Consulting Group (BCG) model was one of the most popular approaches to evaluating a very diverse group of goods and services, based on long-term planning and economic forecasts. The model adopts the view that every product of an organization can be plotted on a two-by-two matrix to identify those offering high potential and those that are drains on the organization's resources.

PORTFOLIO ANALYSIS

an approach to evaluating a very diverse group of goods and services, based on long- term planning and economic forecasts

BOSTON CONSULTING GROUP (BCG) MODEL

a technique designed to show the performance of an individual product in relation to its major competitors and the rate of growth in its market

In Figure 3.2, the horizontal axis represents market share, and the vertical axis represents anticipated market growth. High market share means that a business is a leader in that good or service; low market share indicates that either the marketplace is heavily competitive or a good or service has not had widespread market acceptance. A good or service can then take up one of four theoretical positions within the model. A cash cow is a product that generates cash and turnover, but has limited long-term prospects. The company in Figure 3.2 operates two cash-cow businesses. A dog provides neither cash flow nor long-term opportunities and does not hold great promise for improved performance. In the illustration, the company has three dogs.

MARKET SHARE

the percentage relationship of an organization's sales to total industry sales

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CASH COW

a product that generates a high volume of income in relation to the cost of maintaining its market share

Figure 3.2 The Boston Consulting Group (BCG) Model

DOG

a product that provides neither cash flow nor long-term opportunities and does not hold great promise for improved performance

Stars are products that have a dominant share of a fast-growing market. Although they may not generate a large amount of cash at present, they have potential for high returns in the future. Question marks are fairly speculative products that have high-risk potential. They may be profitable, but because they hold a small market share, they may be vulnerable to competition. Goods or services go through the product life cycle, which can affect where they are positioned within the BCG model. A new product may be in the ‘question mark’ cell; as it becomes successful it moves into the ‘star’ category, and then moves on to become a ‘cash cow’ before starting to decline and becoming a ‘dog’.

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STARS

products that have a dominant share of a fast-growing market

QUESTION MARKS

fairly speculative products that have high-risk potential. They may be profitable, but because they hold a small market share, they may be vulnerable to competition

A good example of a tourism product that has taken up all four positions in the BCG model is the Concorde jet airplane (see the Opening Vignette in Chapter 5). Beginning as a question mark, the delta-winged marvel, a product of 1960s technology and optimism, quickly became a star as business executives and famous stars asserted their status by happily spending thousands of dollars to save a few hours' travelling time. The product soon became a cash cow, and more than 2.5 million passengers flew on British Airways' Concordes after they entered service in 1976. However, filling the 100 seats on a Concorde became increasingly difficult, and between 2000 and 2003, Concorde could be classified as a dog. In April 2003 it was announced that the supersonic airline run by British Airways and Air France would be retired that year because of slumping ticket sales.

As part of a portfolio analysis, an organization should assess each good and service in terms of its position on the product life cycle. This concept is discussed in Chapter 5.

Competitor Analysis

Information on the number and type of competitors, their relative market shares, the things they do well and things they do badly all assist in the planning process. Competitor analysis also highlights market trends and the level of loyalty of consumers. Competitors can be divided into four broad categories: direct competitors offer similar goods and services to the same consumer at a similar price; product category competitors make the same product or class of products; general competitors provide the same service; and budget competitors compete for the same consumer dollars. In addition to the existing competition, there is also

the threat of potential competition in the form of new entrants (Porter, 1980).1

COMPETITOR ANALYSIS

a review of competitors that allows the organization to identify and highlight the market trends and the level of loyalty of consumers

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DIRECT COMPETITORS

companies that offer similar goods and services to the same consumer at a similar price

PRODUCT CATEGORY COMPETITORS

companies that produce the same product or class of products

GENERAL COMPETITORS

companies that provide the same service

BUDGET COMPETITORS

companies that compete for the same consumer dollars

In China recently, a number of new foreign entrants has led to a very competitive hotel sector, particularly in the budget inn category. Ambitious players like US-based Wyndham Worldwide Corp.'s Super 8 chain entered China in 2004, and by 2006 had 33 hotels. It plans to increase that to 110 hotels by 2009. Local players in this sector, like Home Inns & Hotels Management Inc., and Jinjiang International, are also expanding aggressively. The Snapshot later in this chapter describes how other organizations are planning for the growing Chinese travel market.

Michael Porter (1980) suggests that there are only three generic strategies for dealing with

competition: low-cost leadership, differentiation, and focus.2Low-cost leadership i s t he simplest and most effective strategy, but it requires large resources and strong management to sustain. A low-cost leadership strategy is used when a firm sets out to become the low-cost producer in its industry. Low-cost producers typically sell a standard, or no-frills, product and

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place considerable emphasis on reaping scale or absolute cost advantages from all sources. It may be short lived, as it is easy for competitors to match a low price in an attempt to drive off the challenge. The low-cost airlines that are springing up all over the world are examples of companies following such a strategy. These airlines are profiled in Chapter 6.

LOW-COST LEADERSHIP

the simplest and most effective strategy for dealing with competition, but one requiring large resources and strong management to sustain. It may be short lived, as it is easy for competitors to match a low price in an attempt to drive off the challenge

Differentiation is a strategy that consists of an innovative technological breakthrough, which can take competitors a long time to imitate. A competitive advantage can be gained with a product that is newer, better and/or faster. The improvement can be in performance, durability, reliability, or service features. Airbus's new 560-tonne jet, the A380, carries up to 800 passengers and has differentiated itself from competitors by becoming the world's biggest commercial airliner.

DIFFERENTIATION

a strategy that consists of an innovative technological breakthrough, which can take competitors a long time to imitate. A competitive advantage can be gained with a product that is newer, better, and/or faster

A focus strategy concentrates on designing a good or service to meet the needs of one segment of the market better than the competition does. Bruce Poon Tip from GA.P Adventures (see Opening Vignette) follows such a strategy in the adventure tourism business.

FOCUS

a strategy that concentrates on designing a good or service to meet the needs of one segment of the market better than the competition does

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All three of these generic strategies are based on the organization's creation of a unique position for itself, which distinguishes its offerings from those of its competitors by price, product features, or the way in which it serves the needs of a particular segment. This process, known as ‘positioning’, is discussed later in this chapter. The Global Spotlight below shows how a Mexican resort is differentiating itself from other all-inclusive resorts by targeting the overweight tourist.

Global Spotlight

Targeting the Overweight: Size-friendly Vacations at Freedom Paradise

‘Live Large – Live Free, At Any Size, At Any Age’ is Freedom Paradise's motto. Dutchman Jurriaan Klink opened the ‘size-friendly’ resort in the Mexican Riviera in June 2003 after observing that overweight holidaymakers did not seem comfortable in traditional resorts, and discovering that no other specific facilities existed for this growing niche market – despite the fact that an estimated 61 per cent of the US adult population is considered overweight by the Centres for Disease Control.

The former Cancun hotel manager spent three years researching the plus-size community to determine both needs and concerns. With over 300 million obese people worldwide, and, in particular, over 60 per cent of his target American customers overweight, the market was ripe. Klink, along with General Director Julio Rincon was amazed that no one else had tapped into this lucrative niche and set about developing the resort from two existing bankrupt hotels. The project was kept secret while US$2 million of renovations were completed at the Riviera Maya site, near Tulum, Mexico, about 70 miles south of Cancun. Its close proximity to the US was paramount in choosing the site, as Americans were to be the key target market for the 112-room resort.

In order to cater for the needs of the larger consumer, walls were ripped out and doorways were widened; constricting bath tubs were removed and bathrooms were reconstructed with benches in the showers and hand-held nozzles; furniture was custom-designed with larger sizes in mind. Dining chairs, for example, are twice the standard 26-inch size and without restricting arms. The king-sized beds were reinforced to encourage uninhibited romance. Sturdy wooden, four-foot wide loungers plus thick benches with tree trunk legs were produced for poolside comfort and gradual inclines with grab bars were added to the pools, rather than flimsy ladders. In the hibiscus- and palm-filled gardens, wider and flatter walking spaces were created. Three restaurants were also added to the existing two, featuring different themes: Mexican, Italian, international, a steak-house and a Hawaiian-style seafood room. Menus were created with healthy eating as well as plentiful, good quality food in mind, all of which is included in the resort tariff.

A large mural in the reception area depicts the ‘King and Queen of Paradise’, a large couple feasting on a picnic rug in a beautiful tropical setting, designed to make larger

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visitors feel welcome. Staff are hired in all sizes and given sensitivity training by psychologist and human resources director Martha Bueno, who emphasizes that size acceptance goes beyond physical accommodations. Klink's creed is that oversized people should not ‘postpone their lives’ because of their size, always putting off fun until they manage to lose weight. All resort activities, including snorkelling, scuba diving, beach volleyball, fishing and sailing, have been customized to be safe and comfortable for the guests. There are also cultural tours to nearby ruins and beauty spots plus a wellness centre that promotes yoga, meditation and Tai Chi without pressurizing weight loss programmes. A children's club, bird-feeding, flower and astrology workshops are also featured. Pricing ranges from US$125 to $195 per person per night depending on season and based on double occupancy.

Klink gained huge media attention prior to opening his innovative resort, resulting in a flood of potential plus-size customer inquiries. With a plethora of TV and newspaper articles and features, even negative publicity such as crude jokes made by late night television show hosts did not deter people from making reservations. Bookings could be made directly or through tour wholesalers and travel agencies. Travel agent orientation trips were also arranged to enlighten sales forces about the differentiation of the product and to help them assess and advertise the new concept. Cross- promotions were also eventually established with fashionable, plus-size clothing company, Lane Bryant and Figure magazine. Competitions were set up with the two partners, offering an all-expenses-paid holiday at Freedom Paradise for the winners. Figure magazine also featured articles and ads for the resort. These partnerships enabled Freedom Paradise to reach target market customer databases for further promotions.

Klink intends to open more size-friendly resorts in North America if the market permits. He is concerned that some oversized individuals who have already been put off travelling because of hardship and mental and physical discomfort will not easily be convinced to try another beach vacation. However, brand awareness was created quickly for the first resort due to its uniqueness as well as its humanitarian aspects. Says Klink, ‘From a business standpoint, this is a smart idea. From a humanity standpoint, it's really beautiful.’

Sources: Kadane, L. (23 October 2004). ‘Size-friendly vacations a growing trend’, Calgary Herald, Travel, H1–H2; Davidson, P. (10 June 2003) ‘Freedom Paradise resort picks a target market’, retrieved from http://www.peterthink.blogs.com; Savage, B. (2004) ‘The queen of paradise’, Alberta Views, 36–37; Sullivan, K. (21 July 2003) ‘ H a v i n g X X L f u n i n M e x i c o s u n ’ , Washington Post, r e t r i e v e d f r o m http://www.mindfully.org.

Segmentation Analysis

Segmentation analysis refers to the way in which organizations identify and categorize customers into groups defined by similar characteristics and similar needs or desires. The Global Spotlight above showed how the owner of Freedom Paradise spent three years researching the plus-size community to determine both the needs and concerns of his target market. The concept of segmentation is widely adopted in tourism marketing, as few companies in the industry attempt to appeal to an entire market. The core advantage of segmentation is that customers will be more satisfied

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1.

2.

3.

4.

5.

with the product because it has been designed with their needs in mind. Their social needs are also satisfied because they will be mixing with people like themselves and avoiding incompatible types. If an organization knows exactly which segments it wishes to reach, it can select the media most likely to be read, heard, or seen by those consumers, and so spend less on general mass-market advertising. If it knows the lifestyles and attitudes of that segment and the benefits they are seeking from the product, the advertising message can be made more persuasive. Figure 3.3 is an example of segmentation in the tour operating sector of Europe. It shows the major European customer travel segments, their characteristics, and the tour operators that serve each segment.

SEGMENTATION ANALYSIS

the practice of dividing total markets up into groups on the basis of similar characteristics

The criteria used most often by tourism and hospitality suppliers to segment the market are as follows:

Demographic segmentation uses the primary variables of age, gender, family life cycle, and ethnicity to segment the markets. Club 18–30, for example, uses age and lifestyle stage variables to attract young singles interested in a vibrant night life (see Case Study in Chapter 8). Psychographic segmentation divides buyers into different groups based on social class, l ifestyle and personality characteristics. Psychographics and lifestyle segmentation are based on personality traits, attitudes, motivations, and activities, and are discussed in more detail in Chapter 2. People in the same demographic group can have very different psychographic profiles. Geographic segmentation is the division of markets according to geographical boundaries, such as countries, provinces/states, regions, cities, or neighbourhoods. In the past, for most destination marketing organizations (DMOs), market segmentation was often limited to understanding the more lucrative international tourist market. However, since the terrorist attacks of 11 September 2001, destination marketers have recognized the significance of local and provincial residents and the impact that they

have on tourism receipts (Hudson and Ritchie, 2002).3

Benefit segmentation divides customers based on the benefits they desire, such as education, entertainment, luxury, or low cost. Customers weigh different features of a service, and these are evaluated to form the basis of benefit segmentation. Customers of Freedom Paradise (see Global Spotlight above) would value benefits such as large walking spaces and large dinner portions, whereas for most sport tourists these services would be irrelevant. Behaviour segmentation divides the market into groups based on the various types of buying behaviour. Common bases include usage rate (light, medium, and heavy), user

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status (former users, non-users, potential users, first-time users, and regular users of a product), loyalty status (many people stay in five-star hotels as much for the status it confers on them as for the additional comfort), buyer-readiness stage, and occasions. On special occasions, people are prepared to pay more for special treatment, so many restaurants now have deals for children's birthday parties, while hotels and cruise lines have special honeymoon suites.

Figure 3.3 Major European Customer Travel Segments

In sum, the heart of any marketing plan is careful analysis of available market segments and the selection of the appropriate target markets. A common mistake within tourism and hospitality is the selection of inappropriate segments. The Opening Vignette in Chapter 8 mentions how Las Vegas tried unsuccessfully to rebrand itself as a family destination, providing pirate- and circus-themed hotels, funfairs, rides, amusement and games arcades, and animal attractions. They have since reverted to attracting more appropriate market segments, with the help of their ‘What Happens in Vegas, Stays in Vegas’ advertising campaign. When developing a marketing plan, marketers can gather information concerning market segments from two sources. Internal data can be analysed by looking at business cards, guest registrations, credit card receipts, customer surveys, direct observations and staff perceptions. External data can be gathered from published industry information, marketing research, or by making guesstimates after talking with competitors, vendors, and others in the industry.

Market segmentation is a dynamic process because customer trends are not static. It is thus important to carry out regular – preferably continuous – tracking studies to monitor changes happening in the market. One of the most recent trends in tourism and hospitality has been a ‘demassification’ of the market, in which a greater number of niche markets are replacing the

mass ones of the past (Crawford-Welch, 1991).4 As a result, niche marketing is increasing,

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whereby products are tailored to meet the needs and wants of narrowly defined geographic, demographic, or psychographic segments. The Snapshot below highlights how an Australian wine tourism company has successfully targeted the Generation X market.

NICHE MARKETING

the tailoring of products to meet the needs and wants of narrowly defined geographic, demographic, or psychographic segments

Snapshot

Wine for Dudes

Wine tourism is hot. Nearly five million people who travel in Australia visit a winery, generating over AUS$4.6 billion in tourism expenditure. These wine tourists are generally over 45 years old and travel as couples. But how about wine tourism for Generation X? Generation X, also known as the Baby Busters, were born between 1965 and 1979. Now adults, they grew up with television and have been described as independent-minded and somewhat cynical. They are concerned with their physical health (they grew up during the AIDS outbreak) and financial future (they suffered the most from the http://dot.com bust).

Until a few years ago, wine tours targeted at this generation were almost non-existent. Then Cathy Willcock came along and set up Wine for Dudes. Willcock was no novice to the wine industry. Her parents owned a hobby vineyard when she was young, and she had spent time after university working in an Italian winery and for a London-based food and beverage company. When she returned to Australia, she moved to Western Australia's Margaret River region, home to over 90 vineyards. ‘I realized Generation X were being neglected. I couldn't understand why because this age group have got cash, their eyes are wide open and they like drinking’, she said. ‘I know this cynical generation. All they want is a no-bull attitude. I could see this niche emerging.’ So she set up Wine for Dudes, providing a number of different wine tours styled for a younger market, taking out on average 40–50 people a week.

It took Willcock nearly two years to write the business plan and she brought her brother on board as an investor to help her keep an eye on the finances. ‘That's what he is good at. I knew my downfall was in number crunching and finance,’ she said. Business was brisk right from the beginning, helped along by a feature on one of Australia's largest travel shows. The locality was also a helping feature, and Willcock has been impressed with the amount of community support. ‘A lot of the winemakers here are supportive of me pitching wine tours to the Generation X market because traditionally it has been a hard one for them to market to.’

Willcock, named South West Young Business Achiever for the second year in a row in 2005, says that running the wine tours is a pretty simple business. ‘We're trying to pull back the restraints from people enjoying wine. People think they can't enjoy wine unless they know about it and that's not true.’ One of the ways Wine for Dudes helps people overcome their nervousness about wine-tasting is by letting them blend up their own wines. ‘It gives them confidence in their own palette and what they like and don't like.’ In 2007, Wine for Dudes'

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tours, promising to ‘demystify wine and wine culture in a refreshing, intimidation-free environment’ were selling at about AUS$55. The tours were available seven days a week and included lunch at a winery, pick up and drop off, wine tastings all day and a tour in a working winery. The company also produces its own brand of ‘Wine for Dudes’ wine, including a shiraz cabernet merlot and a chard sem sauv blend. ‘It's well priced at $14 a bottle, and easy drinking, available at any local restaurant with any kind of street cred!’ said manager John O'Connor.

Source: M a r t i n , R . ( 3 0 D e c e m b e r 2 0 0 5 ) . ‘ T a s t i n g S u c c e s s ’ , r e t r i e v e d f r o m http://www.abc.net.au; O'Connor, J. (12 April 2007) Manager for Wine for Dudes, personal communication.

SWOT Analysis

SWOT is an acronym for strengths, weaknesses, opportunities and threats. A SWOT analysis provides scope for an organization to list all its strengths (those things it does best and its positive product features) and its weaknesses (problems that affect its success). These factors are always internally focused. For hotels and visitor attractions, location may be a major strength, or the strength may lie in the skills of certain staff members. Strength may also lie in historical artifacts or architectural style, or having a particularly favourable consumer image. Once identified, strengths are the basis of corporate positions and can be promoted to potential customers, enhanced through product augmentation, or developed within a strategic framework. In the Snapshot profiling Four Seasons in this chapter, several strengths of the Four Seasons Hotels and Resorts can be identified, including their reputation, brand equity and global positioning.

Weaknesses, ranging from aging products and declining markets to surly customer contact staff, must also be identified. Once identified, they may be subject to management action designed to minimize their impact or to remove them where possible. Weaknesses and strengths are often matters of perception rather than ‘fact’, and may be recognized only through consumer research. Again, using Four Seasons as an example, weaknesses could include not being diversified enough and therefore being vulnerable to negative external environmental impacts.

Opportunities are events that can affect a business, either through its reaction to external forces or through its addressing of its own weaknesses. An opportunity identified recently by Four Seasons Hotels and Resorts is in private charters and general cruises, a move that may improve the group's weakness of not being diversified enough.

Threats are those elements, both internal and external, that could have a serious detrimental effect on a business. After 11 September 2001, the subsequent downturn in the economy had a devastating impact on tourism and by the end of 2002, Four Seasons had not recovered. The subsequent Iraq war and concerns about sudden acute respiratory syndrome (SARS) led to a huge number of cancelled trips to North America and to thousands of dollars in lost tourism revenue for all hotels, including Four Seasons.

SWOT ANALYSIS

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a technique that provides scope for an organization to l ist al l i ts strengths, weaknesses, opportunities, and threats

A SWOT analysis is usually best undertaken early in the planning process, and in large organizations a SWOT is often carried out for each division. For example, a convention hotel would conduct a SWOT on the property as a whole, but might also undertake a separate exercise for the functions area, restaurants, retail outlets and recreation facilities. To enhance their own foresight and bring to bear an independent, fresh vision, it is common practice in large market-oriented businesses for managers to commission consultants to carry out regular audits of all aspects of their business, including a SWOT analysis.

Forecasting

Because information is never perfect and the future is always unknown, no one right conclusion can ever be drawn from the evidence gathered in the SWOT process. As a result, forecasting becomes an important stage in the planning process to support a SWOT. Forecasting is market research based but future oriented, and it relies on expectations, vision, judgement, and projections for factors such as sales volume and revenue trends, consumer profiles, product profiles, price trends, and trends in the external environment. The Snapshot below provides forecasts for the growing Chinese travel market based on reports by several market research companies. Because the future for tourism and hospitality products is subject to volatile, unpredictable factors and competitors' decisions, the goal of forecasting is not accuracy but careful and continuous assessment of probabilities and options, with a focus on future choices. Forecasting recognizes that most marketing-mix expenditure is invested months ahead of targeted revenue flows. Since marketing planning is focused on future revenue achievement, it is necessarily dependent upon skill, judgement, foresight and realism in the forecasting process.

FORECASTING

a market research-based but future-oriented process that relies on expectations, vision, judgement, and projections for factors such as sales volume and revenue trends, consumer profi les, product profi les, price trends, and trends in the external environment

There are two main sets of forecasting techniques: qualitative and quantitative. Qualitative techniques are those that seek to estimate future levels of demand, based on detailed subjective analysis. They include sales staff estimates, senior management opinions and buyers' intention surveys. Two more sophisticated qualitative techniques are the Delphi technique and scenario planning. The Delphi technique involves obtaining expert opinions about the future prospects for a particular market without the experts actually meeting or

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necessarily knowing at any stage the composition of the panel. Long-term scenario planning is undertaken by larger organizations such as hotel or airline companies. This is a systematic attempt to predict the composition of the future market environment in 10–25 years' time, and the likely impacts on the company.

Quantitative techniques rely on analysis of past and current data. In some instances this implies the simple projecting of future demand in terms of past trends; in other instances, unravelling causal determinants needs to be considered. A number of well-tested methods are used, but most require a degree of statistical ability. Time-series (non-causal) techniques involve the forecasting of future demand on the basis of past trends. Causal methods attempt to show, by using regression analysis, how some measure of tourism demand is influenced by selected variables other than time. Finally, computer simulations are becoming more popular – trend-curve analysis and multiple regressions are combined mathematically to generate a computer model that simulates tourism demand.

Snapshot

Planning for the Growing Chinese Travel Market

According to many reports, China's tourism industry holds massive potential. Due to the rising levels of affluence, particularly among the expanding middle class, the number of outbound tourists from China grew nearly 50 per cent in 2004 to reach 28.85 million. In the same year, 15 European countries were granted Approved Destination Status (ADS) by China, which is predicted to lead to a sharp increase in the number of Chinese nationals visiting the continent. At the end of 2005, the number of countries granted ADS by China was over 90. It is predicted that China's outbound sector will grow 20 per cent annually. According to the Economic Intelligence Unit, the number of Chinese travellers is forecast to rise to 49 million by 2008, 60 million by 2010 and 100 million by 2015. At that point, China will be the world's biggest source of outbound tourism.

Chinese travellers are somewhat conservative in their travel behaviours. Most travel with tour groups, making the trip as comfortable as possible. Not until they have embarked on multiple trips do they shun the tour group and take on more individual travel itineraries. A recent study of Chinese travellers by Synovate Hong Kong showed that they were technologically up to date, with most owning computers, mobile phones and MP3 players. Sightseeing, visiting friends and relatives and shopping were the main purposes for leisure travel and the average leisure visit lasted about five days. The study also showed the need for international hotels to build brand loyalty in the Chinese market. Very few hotels obtained an overwhelming percentage of unaided awareness amongst Chinese travellers. Synovate suggests that the best way to build such loyalty amongst the younger generation of future Chinese travellers may be through the internet.

According to a survey by Goldman Sachs Global Investment Research, Chinese travellers spend twice as much on luxury items abroad as they do at home. In the short term, Hong Kong is likely to attract most of this spending by mainland tourists due to its proximity and attractive prices. However, Europe, particularly France and Italy, will lure an increasing number of Chinese tourists in the future. ‘Travelling overseas has already become the hot new lifestyle choice for modern Chinese,’ said Willie Fung, senior vice president and general manager, Greater China, for Mastercard International. From research, his firm has concluded that the Chinese regard travel overseas as a way of expressing pride in their achievements, improvements and social status, and proving that they are indeed becoming ‘world travellers’.

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In anticipation of the influx of Chinese tourists, tourism industry leaders are carving into their marketing budgets in order to capture a share of the market. NYC and Company, for example, employs a multi-pronged approach to the Chinese market. The bureau participated in the China International Travel Mart for the first time in 2005, but earlier sent sales missions to Shanghai and Beijing to meet with tour operators, airl ines, government, and trade organizations. Additional components of the programme include relationship building with both US and Chinese news media, and cultivating the large Chinese population in New York City. The bureau has also added Chinese language pages to its website and provides market intelligence and educational seminars for its members. A specialist in Asia tourism development was brought on board to address the market in 2001.

Sources: Alberta Economic Development. (15 April 2005) ‘Tourism trends’, Tourism Issues; In: Fact, Synovate Research. (29 September 2005) ‘Study shows Chinese travelers are a market force to be reckoned with’, Business Wire.

Setting Marketing Goals and Objectives

Goals are the primary aims of the organization, and objectives the specific aims that managers try to accomplish to achieve organizational goals. Goals can be defined in terms of sales growth, increased profitability, and market leadership. Objectives are the activities that will accomplish the goals. For example, the goal of sales growth for a hotel could be reached via the objectives of a 20 per cent increase in accommodation sales and a 30 per cent increase in food and beverage sales. The goal of increased profitability could be translated into objectives of a 15 per cent increase in profits across the board, and a goal of market leadership could be translated into objectives for each city in which a hotel chain operates. The Case Study at the end of this chapter shows that the goals of the new airline Roots Air were too ambitious, and the company had unrealistic expectations.

Marketing objectives at the tactical level derive logically from the previous stages of the planning process.

To be effective and actionable in practice, Middleton and Clarke (2001) assert that tactical marketing objectives must be:

integrated with long-term corporate goals and strategy; precise and quantified in terms of sales volume, sales revenue, or market share; specific in terms of which products and which segments they apply to; specific in terms of the time period in which they are to be achieved; realistic and aggressive in terms of market trends (revealed in the situation analysis) and in relation to budgets available; agreed and endorsed by the managers responsible for the programmes of activity designed to achieve results; and

measurable directly or indirectly.5

If these criteria are not fully met, the objectives will be less than adequate for achieving the success of the business, and the marketing programmes will be harder to specify and evaluate. The more thorough the previous stages of the marketing plan, the easier the task of specifying precise objectives. To ensure profitability and to remain competitive in today's marketplace, it has become necessary to establish several sub-objectives. For instance, a 1,000-room hotel will undoubtedly have two broad objectives: average occupancy and

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average room rate. By themselves, these objectives do not serve as sufficient guides for developing marketing strategies. A set of sub-objectives might therefore include occupancy per period of time, the average room rate by type of room, and annual sales by each salesperson. Each marketing support area needs to be guided by a set of sub-objectives. This includes areas such as advertising, promotion, public relations, market research and sales. It is important to acknowledge that objectives may not always be profit-based. The main objective for Cheddar Caves & Gorge, for example, is to protect the fragile environment rather than to make money (see Chapter 8).

Marketing Strategy: Targeting and Positioning

Targeting

No area of the marketing plan surpasses the selection of target markets in importance. If inappropriate markets are selected, marketing resources will be wasted, as was the case for Roots Air in the end of chapter Case Study. High-level expenditures on advertising or sales will not compensate for misdirected marketing effort. Target markets should be selected from a previously developed list of available segments. These include segments currently served by the organization and newly recognized markets. A target market is simply the segment at which the organization aims its marketing message. Implicitly, the non-profitable customers should be given less attention. A target market generally has four characteristics. It should comprise groups of people or businesses that are well defined, identifiable and accessible; members should have common characteristics; they should have a networking system so that they can readily refer the organization to one another; and they should have common needs and similar reasons to purchase the product or service. The target market for Wine for Dudes (Generation X) fulfils these characteristics (see Snapshot above).

TARGET MARKET

a clearly defined group of customers whose needs the company plans to satisfy

The family market is a popular target market for many tourism organizations. Family travel is growing as more parents are choosing to share travel experiences with their children. Club Med is a good example. Once known for its ability to cater to young singles, it now has more than 60 family-friendly holiday villages worldwide. Adventure tours for families are also on the increase. A family-oriented, 13-day tour of South Africa offered by Explore is one example. Other tour operators are choosing to target the baby boomers. This sector, born between 1947 and 1966, generates the highest travel volume in North America, and is a very attractive market for the tourism and hospitality industry. Two other target markets growing in attractiveness for the tourism industry are the gay market and the senior market.

The gay tourism market offers enormous growth for the tourism industry. The British Tourist Authority's (BTA) campaign to attract gay and lesbian travellers from the United States is evidenced by the launch of the 2002 edition of its gay travel guide, as well as by new

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strategies for building a market niche that it says has already produced ‘gratifying’ results. The decision to begin targeting gay and lesbian travellers from the United States was made in 1997. The BTA has subsequently expanded the campaign, with the introduction of a larger

travel guide and a dedicated gay and lesbian website.6

Positioning

Once the market has been segmented and a target market identified, the next step in the marketing plan is positioning. Positioning is a communications strategy that is a natural follow-through from market segmentation and target marketing. Market positioning is ultimately how the consumer perceives the product or service in a given market, and is used to achieve a sustainable advantage over competitors. The Snapshot below on Four Seasons Hotels and Resorts is an excellent example of distinctive positioning leading to global competitive success. Best Western recently changed its positioning strategy in China in the hope of going beyond its traditional image as a purveyor of budget hotels. In 2006, the Phoenix-based chain scrapped plans to build a network of 100 three-star hotels in China by 2007. Instead, it plans to triple the number of its four- and five-star hotels in the country to 60

by 2009 (Fong, 2006).7

POSITIONING

establishing an image for a product or service in relation to others in the marketplace

Three steps are necessary to develop an effective position in the target market segment: product differentiation; priorit izing and selecting the competit ive advantage; and communicating and delivering the position.

Step One: Product Differentiation

Product differentiation, a phrase coined by Michael Porter, describes a technique that enables organizations to gain competitive advantage by offering a product that has features not offered by its competitors. Product differentiation can give companies a competitive edge and competitive advantages, which offer greater value to the consumer by providing benefits that justify a higher price. These advantages can be established through product attributes, features, services, level of quality, style and image, and price range. The key elements will shape how the consumer perceives the product. Physical attribute differentiation is achieved by enhancing or creating an image in the consumer's mind through tangible evidence. For example, Quality Inn offers a very simple physical appearance, communicating a clean, safe, cheap place to sleep. Fairmont Hotels & Resorts, on the other hand, combines an elaborate exterior with a luxurious interior to inspire feelings of comfort, relaxation, and prestige.

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PRODUCT DIFFERENTIATION

a technique that enables organizations to gain competitive advantage by offering a product that has features not offered by its competitors

Service differentiation is an increasingly important way of gaining competitive advantage. The process by which customers evaluate a purchase, thereby determining satisfaction and likelihood of repurchase, is important to all marketers, but especially to services marketers because, unlike their manufacturing counterparts, they have fewer objective measures of

quality by which to judge their production (Zeithaml et al., 1988).8 Several studies have examined the association between service quality and more specific behavioural intentions, and there is a positive and significant relationship between customers' perceptions of service quality and their willingness to recommend the company or destination (Zeithaml et al.,

1996).9 Likewise, research on service quality and retaining customers suggests that willingness to purchase again declines considerably once services are rated below good

(Gale, 1992).10

Step Two: Prioritizing and Selecting the Competitive Advantage

Positioning is much like a ranking system, and an organization must decide where it wants to be in the hierarchy. Some companies have an image of high quality, service, and price; others, of being low budget. Neither image is better or worse. However, once the position is established, it is very difficult to change it in the consumer's mind. Therefore, companies must be very cautious in selecting the most effective combination of competitive advantages to promote.

It is important to promote not only one benefit to the target market, but to develop a unique selling proposition (USP), a feature of a product that is so unique that it distinguishes the product from all other products. The goal of a USP is for a company to establish itself as the number one provider of a specific attribute in the mind of the target market. The attribute chosen should be desired and highly valued by target consumers. If the marketing mix elements build the brand and help it to connect with the customer year after year, the total personality of the brand, rather than the trivial product differences, will decide its ultimate position in the market. Although it is difficult in the tourism industry to find an effective USP in such a competitive and free market, it is essential to offer something new, as Freedom Paradise in Mexico has done. Package holidays tend to offer similar deals, with only minor differences. Therefore, it is important for a company to create a new good, service, or benefit that can be offered to consumers by that company alone. An example of a company offering a unique transportation service to tourists is TucTuc Ltd in the UK. The company imports motorized rickshaws from Delhi to Brighton, England. Owner Dominic Ponniah says,‘I guess they're so popular because they have a certain romance and because, running on natural

gas, they're environmentally sound.’11

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UNIQUE SELLING PROPOSITION (USP)

a feature of a product that is so unique that it distinguishes the product from all other products

Step Three: Communicating and Delivering the Position

The final goal of an organization in the positioning process is to build and maintain a consistent positioning strategy. The overall aim of tourism providers is to attract attention from potential customers and to delight them with product offerings that cannot be beaten by competitors. Programmes and slogans that support the organizations position must be continuously developed and promoted in order to establish and maintain the organizations desired position in the consumer's mind. Quality, frequency, and exposure in the media will determine how successful the positioning strategy will be.

Tourism and hospitality providers try to differentiate their products by using branding, a method of establishing a distinctive identity for a product based on competitive differentiation from other products. Branded products are those whose name conjures up certain images – preferably positive ones – in consumers' minds. These images may relate to fashion, value, prestige, quality, or reliability. Image is an important element of customer perception. If a hotel chain has an image of quality, staying at the hotel will provide benefits to business customers who want to project a successful image to their clients or colleagues. Some brands are recognized for their reliability. It is comforting for many travellers, for example, to know that a Best Western property will meet certain standards, and that selecting one will be a reliable choice, even if the traveller is unfamiliar with the specific property or region. Hotels, in particular, brand specific properties within their group to identify different categories of product. (See Chapter 5 for a more detailed discussion of branding.)

BRANDING

a method of establishing a distinctive identity for a product based on competitive differentiation from other products

Snapshot

Positioning ‘Four’ Success: Four Seasons Hotels and Resorts

Toronto-based Four Seasons Hotels and Resorts is an excellent example of distinctive positioning leading to global competitive success. In 2006 Four Seasons was operating 73 luxury hotels and resorts in 31 countries around the world, turning over more than US$290 million a year. It wins awards at an unprecedented level in industry publications as the leading

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player in the luxury hotel and resort business worldwide. Ten or more of its hotels routinely make lists of the top 100 hotels in the world, and the company often appears on the Fortune list of best places to work. Its revenue per available room (RevPAR) in the highly competitive US market is more than 30 per cent higher than that of its closest chain competitor, Ritz- Carlton. Countries and cities around the world encourage Four Seasons to build hotels in their jurisdiction because the presence of a Four Seasons signals a high-quality location.

The success of the company has been derived from making an integrated set of choices that are highly distinctive from those of competitors. Its goal was to develop a brand name synonymous with an unparalleled customer experience, and to meet these aspirations it chose to focus exclusively on serving high-end travellers. This is in direct contrast to large competitors such as Hyatt, Marriott, Hilton and Westin, all of which compete across the spectrum of hotel classes, thereby struggling to establish consistent high-end service and branding.

Using high prices as a means of positioning, Four Seasons hotels raise their prices when competitors come near them. Even when September 11, 2001, and the SARS outbreak of 2003 led to increased costs and lower occupancy levels, Four Seasons decided to maintain its room rates despite moves by competitors to slash prices. CEO Isadore Sharp believes the room rates are easily justified. ‘It isn't what you might call a discretionary expense, as most luxury items are,’ he says. ‘We provide a service. When travellers can rely on prompt room service, their suit being properly pressed, and their messages actually reaching them,’ says Sharp, ‘they realize this is a great value.’

Another key early strategic choice for Four Seasons was to pursue a truly global strategy by developing an ever-growing portfolio of hotels and resorts in key destinations around the world. This distinguished Four Seasons from the bulk of smaller high-end competitors. The final key strategy was to specialize as a hotel manager, not a developer and owner. This was a distinct choice in the industry until Marriott divided its business into hotel ownership and hotel management companies. Because its business model means Four Seasons doesn't own most of its hotels, the capital risk is low, and the company boasts a sound balance sheet. Indeed, even in punishing economic cycles, the brand remains highly valued by investors – unusual for a place that often charges three or four times the price of a typical Sheraton.

Because the Four Seasons strategy is unique and is ensconced in an activity system that would force competitors to make unacceptable trade-offs, its competitors have been disinclined to imitate Four Seasons, despite its obvious success. The result is a Canadian global leader with attractive growth prospects for the future.

Sources: ‘The unseen precondition of long-term success’, presentation by Isadore Sharp at the World Tourism Education & Research Center's Air Canada Distinguished Lecture Series, University of Calgary, Calgary, AB. Thursday, 27 April 2000.

Tactics and Action Plans

Although no single strategy will be suitable for all organizations, marketing planning provides the opportunity to understand the operating environment and to choose options that will meet the organization's goals and objectives. Planning involves selecting and developing a series of strategies that effectively bring about the required results.

Among the types of strategies that can be considered are:

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making good investment decisions. Selecting the best, most effective use of financial resources is crucial. This will include reviewing the product's life cycle and doing a portfolio analysis; diversifying. While it is important to ensure that resources are allocated to those markets showing the best potential yields, the possibility of disruptions to markets must also be taken into account. Diversification can provide an important cushion; planning for the long term. Tourism marketing campaigns can have long lead times. The cumulative effect of promotions may take a while to produce measurable results. Building effectiveness over time is just as important as generating instant results; seizing new opportunities. Being aware of consumer trends, fads, fashions, and attitudinal shifts will also help an organization to identify opportunities. Being flexible enough to respond to market developments will give an organization a strong competitive edge; developing strategic partnerships. It is important to identify customers, suppliers, and competitors with whom it is possible to develop an enhanced working relationship. Strategic alliances offer the opportunity to increase profits for all participants.

Applying the Marketing Mix

Marketing strategies are designed as the vehicle to achieve marketing objectives. In turn, marketing tactics are tools to support strategies. Action programmes comprise a mix of marketing activities that are undertaken to influence and motivate buyers to choose targeted volumes of particular products. This part of the marketing plan shows how the organization intends to use the 7 Ps introduced in Chapter 1. Table 3.1 shows the activities that should be included in this section of the marketing plan. The third column lists the chapters in this book where these topics are covered in detail. A marketing mix programme or marketing campaign expresses exactly what activities will take place in support of each identified product/market subgroup on a week-by-week basis. The Case Study at the end of the chapter discusses how Roots Air implemented a major advertising campaign to win new customers, with a jazzy website, large banners inside and outside major airports, and moody, black-and-white print ads in major daily newspapers. However, the airline did not forge a clear marketing message – one of the reasons it eventually failed.

Resource Requirements

The marketing plan needs to address the resources required to support the marketing strategies and meet the objectives. Such resources include personnel, equipment and space, budgets, intra-organizational support, research, consultation and training. A common error in writing a marketing plan is developing strategies that may well be highly workable, but for which there is insufficient support. Generally, the most costly and difficult resource needed to ensure the success of marketing/sales strategies in tourism and hospitality businesses is personnel. Management commonly views the addition of personnel as unnecessary, impractical or unwise, given budgetary restrictions.

Table 3.1 Specific Strategies Included in the Action Plan

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Of prime importance in analysing resource requirements is the budget. Setting a budget that provides the marketing department with sufficient resources to deliver its plan is essential. However, in most organizations, various departments compete for funds, and it is not always easy to convince management that the marketing budget should have a priority claim on limited funds. Although this is less of an issue in commercially oriented organizations, it can be a major problem in arts and entertainment organizations and non-profit groups. The idea of spending money on marketing (which is frequently not viewed as a core activity) at the expense of collections, maintenance, acquisitions, or expanding performance programmes is often a very contentious issue.

Marketing Control

The penultimate step in the planning process is to ensure that objectives will be achieved in the required t ime, using the funds and resources requested. In order to measure effectiveness, evaluation programmes have to be put in place, and regular monitoring needs to occur. There is little value in preparing a one-year marketing plan and including an evaluation methodology that commences toward the end of the operating year. This will not allow enough time to identify potential problems or initiate remedial action.

Because objectives have been set in quantifiable terms, regular reviews of sales forecasts and quotas, assessments of expenditure against budget, and data collection and analysis will provide guidance on how well objectives are being met. If a problem arises, contingency plans can be activated. Effective contingency plans are considered long before emergencies or problems arise. Reacting under pressure is rarely as effective as preplanning. If, as part of the original process, alternatives are considered, it is more likely that they will be successful. The most important reason for insisting on precision in setting objectives is to make it possible to measure results. Such results for a tourism business might be flow of bookings against planned capacity, enquiry and sales response related to any advertising, customer awareness of advertising messages measured by research surveys, sales response to any price discounts and sales promotions, sales response to any merchandising efforts by travel agents, consumer use of websites and flow of bookings achieved, and customer satisfaction measurements.

Most marketing plans are written to cover a one-year action plan in detail, with references made to the longer term – traditionally three years and five years. While the corporate goals

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may be longer term (often as long as ten or 20 years), the actual objectives are usually defined in terms of a much shorter time frame. Some organizations base their marketing plans on their funding cycles. Some art organizations or government departments on three-year funding cycles prepare business and marketing plans that cover the full funding period. Even these, however, stress the importance of regular reviews, and re-evaluate their action plan sections on a 12-month basis.

Communicating the Plan

Involving as many staff members as possible in the process of setting objectives and drawing up plans that communicate well is an important aspect of motivating staff at all levels and securing enthusiastic participation in the implementation process. This involvement is a subject of increasing attention in many tourism and hospitality organizations (Middleton and

Clarke, 2001).12 It is especially important for service businesses, in which so many staff members have direct contact with customers on the premises. It is a good idea to time the stages in marketing planning so that managers and as many staff as possible in all departments can take some part in initiating or commenting on draft objectives and plans. Motivation can be damaged if objectives are continuously changed or if there is no opportunity to debate their practicality in operation. While marketing planning is conducted primarily to achieve more efficient business decisions, its secondary benefit is to provide a means of internal participation and communication, vital in creating and sustaining a high level of organizational morale.

Marketing plans must be sold to many people. Internally, these include members of the marketing and sales department, vendors and advertising agencies, and top management. Marketing plans are also important in communicating with stakeholders outside the company. Approaching banks or other investors – for example, in tourism projects funded by government sources – invariably requires a business plan in which marketing is a primary component. Where money is granted, evidence of results will be required through a formal evaluation process. In terms of presenting the report, many readers, both inside and outside the organization, will be impatient and will want the conclusions immediately. The executive summary is therefore a key section of the report. Indeed, it can be assumed that some staff – and perhaps senior executives and board members – will read only the executive summary. In general, an executive summary should be between two and six pages. It should avoid the use of jargon, and it should highlight the key objectives and action aspects of the plan and budget, leaving the analysis of current situations and detailed market analyses for the main document.

Chapter Summary

A marketing plan serves a number of purposes within any tourism organization: it provides a road map for all marketing activities of the firm for the future; it ensures that marketing activities are in agreement with the corporate strategic plan; it forces marketing managers to review and think objectively through all steps in the marketing process; it assists in the budgeting process to match resources with marketing objectives; and it creates a process to monitor actual against expected results. There are eight logical steps in a systematic marketing planning process:

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Corporate connection. Marketing planning should reflect the goals and objectives of the organization as a whole.

Analysis and forecasting. This includes portfolio analysis, competitor analysis, segmentation analysis, and SWOT analysis. Forecasting becomes an important stage in the planning process to support a SWOT.

Setting marketing goals and objectives. Goals are the primary aims of the organization, and objectives are the specific aims that managers accomplish to achieve organizational goals.

Marketing strategy: targeting and positioning. Target markets should be selected from the previously developed list of available segments. Positioning is a natural follow-through from market segmentation and target marketing.

Tactics and action plans. This part of the marketing plan shows how the organization intends to use the 7 Ps.

Resource requirements. The marketing plan needs to address the resources required to support the strategies and meet the objectives.

Marketing control. This step in the planning process is to ensure that objectives will be achieved in the required time, using the funds and resources requested.

Communicating the plan. This is an important aspect of motivating staff at all levels and securing participation in the implementation process.

Key Terms

Boston Consulting Group (BCG) model p. 82

branding p. 98

budget competitors p. 85

cash cow p. 82

competitor analysis p. 84

differentiation, p. 86

direct competitors, p. 84

dog, p. 83

executive summary, p. 80

focus, p. 86

forecasting, p. 93

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1.

2.

3.

general competitors, p. 85

goals, p. 81

low-cost leadership, p. 85

marketing plan, p. 78

market share, p. 82

mission statement, p. 81

niche marketing. p. 90

objectives, p. 81

portfolio analysis, p. 82

positioning, p. 96

product category competitors, p. 84

product differentiation, p. 97

question marks, p. 84

segmentation analysis, p. 88

stars, p. 83

strategic marketing plan, p. 78

SWOT analysis, p. 92

target market, p. 96

unique selling proposition (USP), p. 98

Discussion Questions and Exercises

Examine the mission statement for a local tourism or hospitality organization. Does it reflect the ‘smart’ rule described in this chapter? If not, try to redefine the statement.

Choose a large tourism or hospitality enterprise in your country and apply the BCG matrix to the various products and services on offer. Does the organization have a balanced portfolio?

Four Seasons has achieved success through distinctive positioning. Think of another three examples of tourism organizations that have clearly understood

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6.

the significance of positioning. Describe their target markets.

It is suggested in this chapter that competitors can be divided into four broad categories. Take an example from the tourism industry in your country (a hotel chain perhaps) and list its competitors under the four categories.

The chapter highlights a number of target markets growing in attractiveness for the tourism industry. Segment the tourists that your region attracts. Are there any segments of the travel market that are not being targeted? Why not?

Go out and find a marketing plan from a tourism organization in your area. Does it follow the eight steps of the planning process outlined in this chapter? How is it different?

Case Study

The Failure of Roots Air

The story of Roots Air began early in 2000, with a cryptic voicemail message from Ted Shetzen, the man behind Roots Air, to Leo Desrochers, the chief operating officer of Skyservice Airlines Inc., a Toronto-based charter carrier that mostly ferried travellers south in the winter. Mr Desrochers's acquaintance with Mr Shetzen went way back, to the days when both worked at Air Canada. Shetzen's message was brief and to the point, saying only, ‘It's time.’

From those two words emerged a plan to steal away a small portion of Air Canada's most profitable customers – business flyers – by enticing them with celebrity pitchmen and promises of great food, plush lounges, and excellent service, all at lower prices. A main attraction of the new venture was its branding agreement with Roots, the clothing empire founded by Michael Budman and Don Green. Roots invested $5 million for the right to put its name on the carrier and design the uniforms, lounges, and other promotional items. Trading on the trendy image of the apparel retailer, the timing of the new airline seemed encouraging. The merger of Air Canada and Canadian Airlines was not going well, and there was reason to believe there were a lot of disgruntled travellers looking for an alternative.

A key element of the Roots Air strategy was to use brand-new A320 and A330 aircraft but exploit Skyservice's existing infrastructure to operate at low cost. ‘We basically saw an opportunity to carve a place out for ourselves in the business market, not with high expectations of market share, not competing with Air Canada everywhere, but enough to allow us an adequate return on capital,’ recalled Desrochers. Roots had two service tiers: gold and silver. Gold included luxury items such as leather-covered seats, whereas silver service was tailored for the more price-sensitive business traveller. In March 2001, a Roots silver-class fare was about $800 one way from Vancouver to Toronto. Air Canada's fare was almost $2,000 for the same journey.

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As well as targeting the business traveller, Roots Air was looking to attract consumers who wanted to associate themselves with the cachet of the retailer, Roots Canada. But apart from outfitting its cabin staff and baggage personnel in the hip designs that have made Roots famous from Hollywood to the Olympics, Roots Air did not forge a clear marketing message. A major advertising campaign by Grey Worldwide of Toronto touted the Roots Air image with a jazzy website, large banners inside and outside major airports, and print ads in major daily newspapers. The agency tried to entice customers and executives and travel agents with moody, black-and-white photos unconventional for the airline industry. This led to further criticisms that the Roots message was unclear.

Roots Air – a short history

As far as public relations were concerned, Michael Budman and Don Green, co- founders of the Roots apparel phenomenon, were conspicuously absent in the airline's development phase, choosing not to play the Richard Branson role of playful, ubiquitous promoters – probably the only chance Roots Air had of making an impression on jaded air travellers. If they deferred to Russell Payson, CEO of Skyservice, it was perhaps with the knowledge that the Roots owners' previous non- retail fling with a Roots hotel in Colorado in the early 1990s was a flop.

But in general, the goals of the new airline were too ambitious. An offering circular was sent out in June 2000, by Research Capital Corp., to raise $35 million to fund the venture. It included a pro forma statement showing that Skyservice's revenue would increase to $548.3 million from $228.9 million in the first year of Roots Air's operation, starting with four planes and adding two more by the end of the year. By comparison, WestJet, arguably Canada's most successful airline ever, took five years to attain those numbers, reaching them only in 2000 after it had grown to 22 aircraft. ‘The expectations were not realistic, particularly for a start-up airline in its first year of operations,’ says Kobus Dietzsch, who worked in marketing planning and analysis in Roots Air. ‘A more realistic expectation would have been for $175 million in revenue the first year’.

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Other assumptions made at the outset were also dubious. For example, the plan was based on a 50/50 mix of business and leisure customers, whereas 20 per cent business class is considered good by most industry standards. In estimating traffic, the original plan was premised on having 71 per cent of its silver and 78 per cent of its gold business seats filled during August, a time when such traffic tapers off. ‘The real problem was that we had too many business-class seats on airplanes,’ says Russel Payson, president of Skyservice.

Confusion was rampant within Skyservice leading up to and beyond its first Roots Air flight on 26 March 2001. ‘Despite the excitement of launching a new airline, there is a feeling of being overwhelmed by the enormity of the task and compressed timeline,’ said a consultant's study done by Marketing Matters for Skyservice in mid-January. Even basic scheduling decisions raised intractable problems. The airline did not know 11 days before 26 March whether or not it would be flying Calgary–Toronto on the first day. The flight was ultimately cancelled. Only one interline agreement (despite plans for many more) with other carriers to receive and hand off passengers was signed by the launch date. Even that deal with Air Tahiti fell apart after Roots Air announced on the first day that it would not fly to Los Angeles, where it was to connect with the Pacific Island carrier. This further hurt earnings projections, since initial expectations were that a significant portion of revenue would come from arrangements with other airlines. Desrochers states that it was difficult to negotiate such agreements because potential partners wanted to see Roots Air up and running before signing.

Perhaps the biggest fiasco came on launch day, when the carrier was forced to cancel two of its inaugural flights because one of its planes had not arrived on time. Compounding the problem was a mistaken entry in the travel agent computer reservation system, showing Roots Air operating a 316-seat Airbus A330 when in fact the plane was a 120-seat A320. As a result, the aircraft was oversold and Roots' Mr Budman and his guests found themselves bumped.

Other problems ran deeper, and included internal disorganization and in-fighting between the low-end charter side of Skyservice, which operated the Roots Air scheduled flights, and the Roots Air people who aimed to be high end. Skyservice operational people began referring derogatorily to those in the Roots Air marketing arm as the ‘hangar people’ because they were holed up in a different building. Cultural differences also had a negative effect on the advertising, which was crucial to attracting customers and of prime importance to the Roots clothing partners, for whom marketing has always been fundamental. Mark Stoiber, creative director of the Roots Air account at Grey Advertising says, ‘With two very different cultures coming together, understandably there was tension and the stakes were very high. Is it a price-driven thing or a style-driven thing?’

One month after launching, it was clear that a host of assumptions on which Roots Air had been based were incorrect. It was now clear that Air Canada did in fact have a hammerlock on corporate Canada, and business traffic was not materializing. Calgary passengers in particular were not as disaffected with Air Canada as had been believed, and the Roots Air brand was not resonating with the public as expected. Finally, the Roots Air's service aspirations were being thwarted by the charter mentality of Skyservice. Promising more legroom, shorter line-ups, better food, and real china in the promotional material, the airline found that it just could not deliver on promises. There were simply too few passengers to sustain the business. During its short life,

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2. 3.

4.

Roots Air flew on average less than 60 per cent full. While some flights had 80 per cent loads, others were much worse, such as the Calgary–Toronto run on 3 May 2001, the day the airline announced it would shut, when the 120-seat plane had only five people on board. The low loads overturned the economics of the operation, with the result that Roots Air lost money on virtually every flight. Payson says the carrier was losing $1 million a week, a significant expense for a company the size of Skyservice, which had revenue of about $110 million in the fiscal year ending April 30, 2000. In the end, having lost about $7.5. million, Skyservice opted for a deal with Air Canada that called for shutting down Roots Air on 4 May 2001, and for the two to collaborate on running a new low-cost carrier. The low-cost plan fell apart, but the deal allowed for an orderly closure with no passengers left stranded and no creditors left unpaid.

Sources: Bramham, D. (27 March 2001) ‘Roots Air: not quite flight of fancy’, Vancouver Sun, F1; Fitzpatrick, P. (31 January 2002) ‘Up, up … and down: Roots, a short history’, Financial Post, 1, 14; Laucius, J. (5 May 2001) ‘Roots air couldn't compete with frequent fights’, Ottawa Citizen, D1.

Questions

What went wrong with Roots Air? Were there elements of the marketing plan outlined in this chapter that did not receive sufficient attention? What can new start-up airlines learn from the experiences of Roots Air? The text lists the criteria used most often by tourism and hospitality suppliers to segment the market. What particular segments was Roots Air trying to attract and what methods did it use to segment the market? Was it successful? The Roots brand has never travelled very far beyond its established position in leisure apparel. Why do you think that is?

Websites http://www.gapadventures.com G.A.P. Adventures

http://www.fourseasons.com Four Seasons Hotels and Resorts

http://www.freedomparadise.com Freedom Paradise

http://www.winefordudes.com Wine For Dudes

References 1 Porter, M.E. (1980) Competitive Strategy: Techniques for Analyzing Industry and Competitors. New York: Free Press, 4. http://dx.doi.org/10.1108/eb025476 2 Porter, M.E. (1980) Competitive Strategy: Techniques for Analyzing Industry and Competitors. New York: Free Press, 4. 3 Hudson, S. and Ritchie, J.R. B. (2002) ‘Understanding the domestic market using cluster analysis: A case study of the marketing efforts of Travel Alberta’, Journal of Vacation Marketing, 8(3), 263–276. http://dx.doi.org/10.1177/135676670200800305 4 Crawford-Welch, S. (1991) ‘Marketing hospitality in the 21st Century’, International Journal of Contemporary Hospitality Management, 3(3), 21–27 5 Middleton, V.T. C. and Clarke, J. (2001) Marketing in Travel and Tourism. Oxford: Butterworth-Heinemann, 209. 6 BTA launches 2002 edition of gay and lesbian campaign (2002). Canadian Tourism C o m m i s s i o n p r e s s r e l e a s e , r e t r i e v e d f r o m

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http://www.canadatourism.com/en/ctc/ctx/ctxnews/search/newsbydateform.cfm. 7 Fong, M. (23 November 2006) ‘Best Western strategy in China goes upscale’, Globe & Mail, B19. 8 Zeithaml, V.A., Berry, L.L. and Parasuraman, A. (1988) ‘Communication and control processes in the del ivery of serv ice qual i ty’, Journal of Marketing, 52, 35–48. http://dx.doi.org/10.2307/1251263 9 Zeithaml, V.A., Berry, L.L. and Parasuraman, A. (1996) ‘The behavioral consequences of service quality’, Journal of Marketing, 60, 31–46. http://dx.doi.org/10.2307/1251929 10 Gale, B. (1992) ‘Monitoring customer satisfaction and market-perceived quality’, American Marketing Association Worth Repeating Series, No. 922CSO 1. Chicago: American Marketing Association. 11 Anon. (29 July 2006) ‘Where I'd rather be’, Guardian Travel, 2. 12 Middleton, V.T. C. and Clarke, J. (2001) Marketing in Travel and Tourism. Oxford: Butterworth-Heinemann, 213.

marketing plan tourism target markets hotels travelers markets/marketing wine

http://dx.doi.org/10.4135/9781446280140.n3

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