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Tourism and Hospitality Marketing: A Global Perspective

The Tourism and Hospitality Product

Contributors: By: Simon Hudson

Book Title: Tourism and Hospitality Marketing: A Global Perspective

Chapter Title: "The Tourism and Hospitality Product"

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.n5

Print pages: 145-175

©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.

The Tourism and Hospitality Product

Concorde: A Journey through the Product Life Cycle

At a cost of US$12,000 per round trip, passengers used to be able to travel at supersonic Mach 2 speed, in the company of superstars and royalty, from London to New York in less than 3 ½ hours. Since the demise of Concorde in 2003, however, emphasis has been on size rather than speed and on low-cost aviation rather than premium pricing.

After 27 years, the legendary needle-nosed, delta-winged product of 1960s technology was finally grounded and the 14-strong fleet donated to museums around the world. The end of this supersonic aviation era was caused by a combination of soaring repair costs, declining global economy, rising fuel costs, confidence failure after a tragic crash in Paris in 2000 which killed 113 and the resultant downturn in bookings.

Concorde was first launched, amidst both acclaim and criticism, in Toulouse, France in March 1969. It broke the sound barrier for the first time in October the same year. Eight years later, the first commercial flights began from London and Paris to New York. After that, only 20 models were built despite initial overseas orders for 200, because of high fuel and maintenance costs and noise protests from the environmental lobby.

By building Concorde, with its famous Rolls-Royce Snecma Olympus 593 engines (the most powerful jet engines in commercial use), Europe gambled on speed. It also targeted wealthy passengers, indulging stars of music and film, diplomats and top businessmen, with the finest champagne and caviar during their trans-Atlantic crossings. At the same time, having failed to make their own reliable supersonic rival, the Americans opted for size, which, in the long term, has proved to be the winner.

From the outset, Concorde differentiated itself in its appearance (both beautiful and useful), its high pricing, its unmatched speed and its luxury. Appealing to the rich and famous, it featured in the media constantly throughout its 27-year reign. Pop star Phil Collins performed for the Live Aid concert in London in 1985, then jumped on the Concorde and resumed his globally televised act in Philadelphia a few hours later. Allying itself with such larger-than-life characters, whose lives are assiduously followed in all the glossy media magazines, Concorde became a household name synonymous with prosperity, fame and technological innovation.

Concorde differentiated itself in its Appearance

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Concorde's death knoll was presaged by a fatal crash in Paris in 2000, which led to all planes being withdrawn for 15 months to be refitted at a cost in excess of US$36 million. Subsequently, Concorde was unable to lure back passengers in sufficient numbers.

Aviation today is being taken over by slower, roomier, steadier aircraft. The latest jet on the runway is the Airbus 380, a double-decker for 555 passengers, with sleeper cabins, crew quarters and business centres.

Sources: Wallace, B. (24 October 2003) ‘Concorde era on final approach’, Calgary Herald, A3; Stokes, D. (10 October 2003) ‘Farewell Concorde and thanks for the pearl caviar spoon’, National Post, A5; Bertin, O. (11 April 2003) ‘The Concorde: first the boom, now the bust’, Globe and Mail, A1 & A9; Fitzgerald, J. (2 October 2003) ‘Thrill Seekers Pack Concorde’, Globe and Mail, A7; Webster, B. (10 April 2003) ‘Concorde may be retired by year-end’, Calgary Herald, A17.

OBJECTIVES

On completion of this chapter, you should understand:

▸ the components of the tourism and hospitality product;

▸ the various levels of products or services;

▸ the tools used in product planning;

▸ the concepts of packaging and branding; and

▸ new product development in the tourism and hospitality sector.

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Introduction

The Opening Vignette provides a classic example of the journey of one tourism product – Concorde – through the product life cycle, one of the most basic product analysis tools. This chapter begins by introducing the peculiarities of the tourism product and the idea that tourism and hospitality products are a selected group of components or elements brought together in a ‘bundle’ to satisfy needs and wants. The next section looks at the three levels of tourism products – the core product, the tangible product, and the augmented product – and these product levels are then applied to theme parks. Product planning is the focus of the next section, which begins by describing the five basic market/product options, and then discusses the usefulness of a features/benefits analysis. A critique of the product life cycle model is then followed by a discussion of various positioning strategies available to organizations in the tourism and hospitality fields. An in-depth analysis of branding in tourism is supported by a case discussing the growth of chefs as brands. The next section gives attention to the concept of packaging, and the final part of the chapter looks at new product development and the various theoretical stages a company can follow in developing a new product or service.

TOURISM AND HOSPITALITY PRODUCTS

a group of selected components or elements brought together in a ‘bundle’ to satisfy needs and wants

Product decisions, with all their implications for the management of tourism and hospitality operations, influence not only the marketing mix, but also a firm's long-term growth strategy and its policies for investment and human resources. Product specifications largely determine the corporate image and branding an organization is able to create in the minds of its existing

and prospective customers (Middleton and Clarke, 2001).1 Tourism constitutes such a wide span of products that it has to be considered in terms of sectors rather than as a single industry, as discussed in Chapter 1. These sectors include accommodations, attractions, transportation, travel organizers and destination organizations, among others (see Figure 1.6). This diversity is matched by an even greater diversity of component features specific to each tourism product sector, which need to be considered and managed in providing individual products for particular markets. The conceptualization of tourism and hospitality products as a group of selected components or elements brought together in a ‘bundle’ to satisfy needs and wants is a vital image for marketing managers.

From the standpoint of a potential customer considering any form of tourist visit, the product may be defined as a bundle or package of tangible and intangible components, based on activity at a destination. The package is perceived by the tourist as an experience that is available for a price. There are five main components in the overall product: destination attractions and environment; destination facilities and services; accessibility of the destination;

images of the destination; and price (ibid).2 Although these components are combined and integrated in the visitor's overall experience, they are capable of extensive and more or less independent variation over time. Intrawest, for example, has transformed the natural

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environment in North America and created popular purpose-built tourist winter destinations (see end-of-chapter Case Study). But it is in the promotional field of images and perceptions that some of the most interesting planned changes occur, and these are based on marketing decisions (see Chapter 12 for examples).

Product Levels

For many years, marketing theory has differentiated between three levels of product offering. The three levels can be seen as a continuum, with the product's most basic benefit at one end, and a range of add-on benefits, not directly related to the product's essential purpose, at the opposite end.

These three levels are:

core product: the basic need function served by the generic product. In the Opening Vignette the core product for Concorde was transportation; tangible product: these are the specific features and benefits residing in the product itself – styling, quality, brand name, design, etc. Concorde differentiated itself in its appearance with its legendary needle-nose and unusual delta-wings; augmented product: the add-ons that are extrinsic to the product itself but may influence the decision to purchase. Augmented features may include credit terms, after-sales guarantees, car parking, etc. For Concorde, add-ons included the finest champagne and caviar served during trans-Atlantic crossings.

CORE PRODUCT

the basic need function served by the generic product

TANGIBLE PRODUCT

the specific features and benefits residing in the product itself – styling, quality, brand name, design, etc.

AUGMENTED PRODUCT

the add-ons that are extrinsic to the product itself but may influence the decision to purchase

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Although these levels were defined with manufactured products in mind, they do apply, with modifications, to tourism and hospitality goods and services. For example, Swarbrooke has applied the three levels to theme parks (see Figure 5.1).

Figure 5.1 The Three Levels of Product – Example of a Theme Park

Conceptualizing the product in these three areas allows the tourism marketer to appraise the comparative advantages and consumer appeal of his or her product versus those of others. In a highly competitive market, it is unlikely that any supplier will have an advantage in terms of its core benefits, and differentiation is instead likely to reside in the second and third levels. For example, most theme parks offer excitement and thrills for consumers, but will compete with each other in the variety and quality of rides, or the quality of the surrounding environment.

Physical Evidence and the Servicescape

An important part of the augmented product is the physical environment. Because many tourism and hospitality services are intangible, customers often rely on tangible cues, or physical evidence, to evaluate the service before its purchase and to assess their satisfaction with the service during and after consumption. As explained in Chapter 1, the physical evidence is the environment in which the service is delivered and in which the firm and customer interact, and any tangible components that facilitate performance or communication

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of the service. The physical facility is often referred to as the servicescape, and is very important for tourism and hospitality products such as hotels, restaurants and theme parks, which are dominated by experience attributes. Disney, for example, effectively uses the servicescape to excite its customers. The brightly coloured displays, the music, the rides, and the costumed characters all reinforce the feelings of fun and excitement that Disney seeks to generate in its customers. The Global Spotlight on Sweden's Icehotel shows how important the servicescape is for accommodations. In this case, the hotel is made entirely of ice and snow, and provides a unique experience for tourists.

SERVICESCAPE

the environment in which the service is delivered and in which the firm and customer interact, and any tangible components that facilitate performance or communication of the service

General elements of physical evidence are shown in Table 5.1. They include all aspects of the organization's servicescape that affect customers, including both exterior attributes (such as parking and landscape) and interior attributes (such as design, layout, equipment and décor). Signage is also part of the physical evidence; in 2007, Beijing attempted to stamp out embarrassingly bad English on bilingual signs in the run-up to the 2008 Olympics. The municipal government issued translation guidelines for signs in hotels, shopping malls, public transport and tourist attractions. At the time, the Park of Ethnic Minorities was identified as ‘Racist Park’, while the emergency exits at Beijing's international airport read, ‘No entry on peacetime’. Consumer researchers know that the design of the servicescape can influence customer choices, expectations, satisfaction and other behaviours. Retailers know that customers are influenced by smell, décor, music and layout. Arby's, a fast-food chain in North America, uses the servicescape to position its restaurants as a step above other quick-service outlets. With carpeted floors, cushioned seating and a décor ‘superior’ to other fast-food chains, the company asserts that the interior ambience of Arby's outlets contributes to attracting diners. Design of work environments can also affect employees' productivity, motivation and satisfaction. The challenge in many tourism and hospitality settings is to design the physical space in a way that supports the needs and preferences of customers and employees simultaneously.

Table 5.1 Elements of Physical Evidence

Employees and customers in service firms respond to their physical surroundings in three

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ways – cognitively, emotionally, and physiologically – and these responses influence their behaviours in that environment. First, the perceived servicescape may elicit cognitive responses, including people's beliefs about a place and their beliefs about the people and products found there. For example, a consumer study found that a travel agent's office décor

affected customer understanding of the travel agent's behaviour (Bitner, 1990).3 In addition to influencing cognitions, the perceived servicescape may elicit emotional responses that in turn influence behaviours. The colours, décor, music, and other elements of the atmosphere can have an unexplained and sometimes subconscious affect on the moods of people in the place. According to Russell et al. (1981), servicescapes that are both pleasant and arousing are ‘exciting’, while those that are pleasant and non-arousing, or sleepy, are ‘relaxing’. Unpleasant servicescapes that are arousing are ‘distressing’, while unpleasant, sleepy

servicescapes are ‘gloomy’.4 F i n a l l y , t h e s e r v i c e s c a p e m a y a f f e c t p e o p l e i n p u r e l y physiological ways. Noise that is too loud may cause physical discomfort, the temperature of a room may cause people to shiver or perspire, the air quality may make it difficult to breathe, and the glare of lighting may decrease ability to see and may cause physical pain. All of these physical responses will influence whether people remain in and enjoy a particular environment. In 2004, a Vancouver-based company, Enhanced Air Technologies, developed Commercaire pheromone, a synthetic compound that mimics the maternal sense of comfort piped to children when they are crying or unhappy. Filtered into a store, the odourless

substance is meant to relax customers so they stay longer and buy more (Brieger, 2004).5

The firm claims retailers can expect revenue growth of between 9 per cent and 20 per cent when using the product. While Enhanced Air's sales-stimulating pheromone may be a first, there is a long history of retailers using fake sawdust or fresh bread smells to foster favourable emotions in patrons.

In Chapter 2, the discussion of consumer trends pointed out that today's consumer desires experiences, and more and more businesses are responding by explicitly designing experiences with themed servicescapes. At themed restaurants such as the Hard Rock Café, Planet Hollywood or the Rainforest Café, the food is just a prop for what's known as ‘eatertainment’. Retailers are also creating themes that tie merchandising presentations together in a staged experience. A popular tourist attraction in Las Vegas is the Forum, a mall that displays its distinctive theme – an ancient Roman marketplace – in every detail. The Simon DeBartolo Group, which developed the mall, disperses this motif through a panoply of architectural effects. These include marble floors, stark white pillars, ‘outdoor’ cafes, living trees, flowing fountains – and even a painted blue sky with fluffy white clouds that yield regularly to simulated storm, complete with lighting and thunder. Every mall entrance and every storefront is an elaborate Roman replica. Hourly, inside the main entrance, statues of Julius Caesar and other Roman luminaries come to life and speak. ‘Hail, Caesar!’ is a frequent cry, and Roman centurions periodically march through on their way to the adjacent Caesar's Palace casino.

Despite the increased emphasis on the servicescape in designing experiences, companies that fail to provide consistently engaging experiences, overprice their experiences relative to the value perceived, or overbuild their capacity to stage them will see pressure on demand, pricing, or both. The Rainforest Café and Planet Hollywood have both encountered trouble because they have failed to refresh their experiences. Guests find nothing different from one visit to the next. Disney, on the other hand, avoids staleness by frequently adding new attractions and even whole parks, such as the Animal Kingdom in 1998 and California Adventure in 2001. The latter US$1.4 billion project, which also included construction of a first-class hotel, was designed to accommodate 30,000 people a day, to add to the 70,000

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visitors that come to Disneyland across the street. Covering 55 acres, California Adventure is a high-energy park, celebrating the dreams of the many Americans who came to California and reflecting the highlights and the pop culture of the state today. It features attractions a little wilder and a lot more grown up than the original Disneyland. These attractions are situated in three themed areas: Paradise Pier, Golden State and Hollywood Pictures Backlot.

The Snapshot below about the new Churchill Museum in London shows how designers of a museum have used technology to enhance the servicescape, creating an interactive educational experience for visitors.

Snapshot

The Greatest Briton Ever: The New Churchill Museum in London

‘A benchmark for personality museums in the twenty-first century.’

Forty years after his death, and shortly after being named the greatest Briton ever in a 2002 BBC Poll, the World War – leader – as well as renowned journalist, author, artist, soldier and even bricklayer – has finally been immortalized in his own museum in the historic Cabinet War Rooms in the basement of the Treasury building in London's Whitehall.

Her Majesty Queen Elizabeth II, who was present at Sir Winston Churchill's state funeral, opened the world's first major museum dedicated to his life in February 2005. The Cabinet War Rooms had already been preserved in their 1945 state and also extended at a cost of £8 million with the assistance of a major grant from the National Heritage Memorial Fund. The further £6 million needed for the adjacent Churchill Museum's high-tech facilities was provided through donations from private individuals and trusts in the UK and USA. The whole project took over ten years to come to fruition.

The ten-year project, spearheaded by Phil Reed, now director of the new exhibition, celebrates the achievements of the wartime icon in a 850-square metre facility combining cutting-edge technology, rare and significant historical objects, and thousands of images, film and sound recordings to chronicle Churchill's 90-year life. With no-holds-barred realism, visitors can follow the successes and controversies, highs and lows, and joys and sorrows of the pre-eminent and multi-talented writer, historian, soldier and politician.

One ground-breaking feature of the museum is a unique electronic ‘Lifeline’ table that allows visitors to journey through his extraordinary life. The 18-metre-long Lifeline is a computerized filing cabinet with a virtual file containing items relating to each year, and in many cases each month and day, of Churchill's career. Touching the strip at the edge of the Lifeline brings up contextual data, documents, films, photographs and even sound tracks that relate to his life while providing historical context. The Lifeline includes 4,600 pages, 200,000 words, 100 documents, 1,150 images and 206 animations.

Exhibit designers Casson Mann, are proud of their technological and interactive advances, calling it ‘a 21st-century museum about a 20th-century giant’. Designers of the British Galleries at the Victoria & Albert Museum in London, Casson Mann are exhibition, museum and interior designers. Their specialty is thoughtful and expert communication. They communicate through all the senses by telling interesting stories in intelligent spaces. They aim, through design, to make people feel wanted and comfortable so that they can do what they came to do. This might be to look at art, take in information, to entertain the children, or

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to have a discussion, to learn, concentrate or relax.

Promotional materials dub the museum ‘a benchmark for personality museums in the twenty- first century’ and as such it also celebrates Churchill's unique quirks, with items of clothing such as his signature red siren suit, iconic spotted bow tie, school reports, love letters and the ransom note for his escape from a South African prisoner-of-war camp. Such personal artifacts have been lent or given by the Churchill family and private individuals and benefactors from around the world.

Sources: Renzetti, E. (2 March 2005) ‘In a Bunker with Churchill’, Globe & Mail, Travel, T1 & T4; Churchill Museum and Cabinet War Rooms Press Pack.

Product Planning

Product Mix

The most basic decisions a tourism organization has to make are what business it is in and what product mix is appropriate to it. The product mix is the portfolio of products that an organization offers to one market or several.

PRODUCT MIX

the portfolio of products that an organization offers to one market or several

According to Seaton and Bennett (1996), five basic market/product options exist:6

several markets with multi-product mixes for each (e.g., mass tour operators that offer a wide range of multi-destination packages to a variety of market segments); several markets with a single product for each (e.g., airlines with a product for business and economy class travellers); several markets with a single product for all (e.g., a national tourist organization promoting a country); single market with a multi-product mix (e.g., a specialist tour operator with a range of cultural tours aimed at a wealthy, educated market); and single market with a single product (e.g., a heli-skiing operator targeting the very rich).

The decision as to which product mix option to adopt depends upon many factors, including the strength and value of consumer demand in the different markets, the level of competition in each market, and the distinctive competence of the organization to service the markets adequately. The starting point in product analysis and planning is thus an analysis of the consumer and competitive offerings in relation to the goals and product capacity of the tourism organization. The most successful products emerge when the marketing planning steps outlined in Chapter 3 are followed. Portfolio and SWOT analysis are discussed there; another useful method of analysing the tourism product is by considering its features and

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benefits. Features consist of the objective attributes of a tourism product; benefits are the rewards the product gives the consumer. The difference between the two is shown in Table 5.2. Hong Kong International Airport was recently named the world's best airport in a survey

of over 50,000 frequent travellers.7 Part of the reason is the features of the airport and the benefits they offer passengers. As well as shops that sell everything from rare white tea to cell phones, there are free plasma televisions to watch, a children's play area, wireless broadband, internet cafés, a prayer room, a pharmacy, nap rooms, a beauty salon, shower facilities, a medical centre (complete with on-site vaccinations and x-ray machines) and displays from Hong Kong museums.

FEATURES

the objective attributes of a tourism product

BENEFITS

the rewards the product gives the consumer

Table 5.2 Features and Benefits Analysis for Tourism and Hospitality Products

Product Life Cycle

One of the most basic product analysis tools is the product life cycle (PLC) analysis (see Figure 5.2), the Opening Vignette described the journey of Concorde through this life cycle. Plotting products or services to identify what stage they are at in their PLC is a valuable way of reviewing a product's past and current position and making predictions about its future. As part of a portfolio analysis (see Chapter 3), an organization should access each good and service in terms of its position in the product life cycle. Product development begins when the company finds and develops a new product idea. The Snapshot later in this chapter about the Sydney BridgeClimb describes how its founder conceived the idea nine years before it was put into action. The introduction phase is a period of slow sales and low profits because of the investment required for product introduction. The new Churchill Museum in London (see

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Snapshot above) could be considered to be in this phase. The growth phase is characterized by increasing market acceptance and substantial improvement in profits. This is the case for the Sydney BridgeClimb, as it now takes tourists on the climb 12 hours a day, 363 days a year. The maturity phase is a period of slow sales marked by high profits, as the product is well entrenched in the marketplace and has an acceptable market share. An example would be Sweden's Icehotel (see Global Spotlight). However, when sales begin to drop because competitors are moving into the marketplace, the product enters the decline stage. Profits and market share decline, and major costs may be involved in redeveloping, refurbishing, or maintaining the product. This is the case for many small ski resorts around the world (see Case Study at the end of the chapter).

PRODUCT LIFE CYCLE (PLC) ANALYSIS

a way of plotting products or services to identify what stage they are at in their life cycle; a valuable way of reviewing a product's past and current position and making predictions about its future

Using the PLC concept to develop marketing strategy can be difficult. Strategy is both a cause and a result of the PLC. At the introduction stage, promotion spending is likely to be high in order to inform consumers about the new product and encourage them to buy it. A company will focus on selling to buyers who are ready to buy, usually higher-income groups. Prices tend to be on the high side because of low output, production problems, high promotion costs and other expenses. At the growth stage, the early adopters will continue to buy, and later buyers will start following their lead, encouraged by favourable word of mouth. Competitors will enter the market, attracted by the opportunity for profit, and they will introduce more product features that will expand the market. In the growth stage, the organization faces a tradeoff between high market share and high current profit. By investing heavily in product improvement, promotion and distribution, it can capture a dominant position. But it sacrifices maximum current profit in the hope of making this up in the next stage.

Figure 5.2 Sales and Profits Over the Product's Life from Inception to Demise

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When sales start to slow down, the product will enter the maturity stage; this lasts longer than the previous two stages and poses stronger challenges to marketing management. Most products or services are in this stage, and it is a phase that is characterized by heavy competition. The only way to increase sales is to lure customers away from competition, and so price wars and heavy advertising are common. At this stage, an aggressive product manager will seek to increase consumption by modifying markets and/or products. The product manager may also try to improve sales by changing one or more of the marketing mix elements.

In the decline stage, some firms will withdraw from the market. Those that remain may reduce the number of their product offerings or the number of market segments they are targeting. They may also reduce the promotion budget, and prices. For each declining product, management must decide whether to maintain, harvest, or drop it.

However, the PLC is not as simple as it sounds in theory, and according to Mercer (1992), ‘its

supposed universal applicability is largely a myth’.8 The study of the PLC pattern for a particular product has to take into account the market the product is in. For example, if a product is showing no growth or decline, it may still be very successful if the market as a whole is in decline. Another complication of the PLC is that a product that is in overall decline may be losing its customers from one market segment but increasing appeal or holding steady with another. Ski areas, for example, have been very successful in attracting an increasing number of snowboarders over the past decade, despite a drop in the number of downhill skiers. In addition, although the PLC concept is neat on paper, it is often difficult to determine what particular stage a product is at. Finally, even assuming that a product's life cycle position can be determined, it may not be obvious what action should be taken.

Despite these problems, the PLC is a valuable concept, since it forces the organization to analyse trends for its product in relation to the overall market and the segments within it, in order to assess future marketing requirements. Ski areas have adapted to the growth in

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snowboarders (referred to above) by changing the products they offer; most successful ski areas these days have designated areas for snowboarders (see end-of-chapter Case Study). A related concept for analysing destinations is that of the tourism area life cycle, which is discussed in Chapter 12.

Positioning

Positioning is the bedrock of product management. Chapter 3 introduces the concept as the natural follow-through of market segmentation and market targeting, and highlights the three steps necessary to develop an effective position in the target market segment. The objective of positioning is to create a distinctive place in the minds of potential customers. Positioning in tourism should evoke images of a destination or product in the customer's mind – images that differentiate the product from the competition and also convey that it can satisfy their needs and wants. Effective positioning should direct all the marketing functions of a business. Advertising and promotions, as well as decisions on price, product and distribution channels must all be consistent with positioning goals. Often, these marketing functions will be driven by a positioning statement, which is a phrase that reflects the image the organization wants to create. The positioning statement for the Churchill Museum, for example (see Snapshot), is: ‘A benchmark for personality museums in the twenty-first century’. This statement encapsulates what the Museum stands for, the essence of what the museum does, and how it stands out from competitors.

POSITIONING

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

POSITIONING STATEMENT

a phrase that reflects the image an organization wants to create

There is an endless number of positioning strategies, and selection of the appropriate approach is vital to the success of a tourism organization.

Burke and Resnick (1991) have identified four key positioning strategies that are not mutually exclusive and may therefore be used individually or in combination:

positioning relative to target market (e.g. business travellers, families with children under ten, etc.); positioning by price and quality (e.g. a premium product such as the Concorde); positioning relative to a product class (e.g. a tour operator positioning its products

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4. within a winter sports tourism category); and positioning relative to competitors (e.g. the Hertz Rental Car campaign ‘We try harder’, which drew attention to the fact that Hertz was not market leader but would work harder

to catch up with its competitors).9

Boutique hotels use a combination of these positioning strategies to succeed in the very competitive hotel market. Loosely defined as small, specialized accommodations, mainly in prime city locations, boutique hotels offer high standards of service, style and comfort which suit the corporate jet-setter. The main challenge for boutiques is how to keep ahead in such a fiercely competitive market. Ian Schrager, owner of the Sanderson and St Martin's Lane hotels in London, has managed to stay ahead of the game by attracting a celebrity clientele and introducing luxurious spas at his properties. In Spain, Sorat Hotels and Sol Melia have tried to differentiate themselves by emphasizing the quality of their personal service, while the UK group Hotel du Vin has made its name with the high standard of food on offer at its stylish

bistros (Goff, 2003).10 The Global Spotlight below is an example of an unusual tourism product that has positioned itself as a unique, one-off hotel; one that has been rebuilt every year since 1990.

Global Spotlight

The Coolest Place in Town: Sweden's Icehotel

Icehotel, the world's first and biggest hotel made entirely of ice and snow, was created in 1990, and is situated in the village of Jukkasjärvi, 200 kilometres north of the Arctic Circle in Sweden. The company that runs Icehotel has been a tourist operator in the region since the 1970s, and for many years the focus was on the summer season and the outdoor experiences offered by the land of the midnight sun. During the dark winters the river was frozen and the people of the small village of Jukkasjärvi went into hibernation.

But at the end of the 1980s it was decided to turn things around. Instead of viewing the dark and cold winter as a disadvantage, the unique elements of the Arctic were to be exploited as an asset. In 1990 the French ice artist Jannot Derit was invited to have the opening of his exhibition in a specially built igloo on the frozen Torne River. The 60- square metre building, named Arctic Hall, attracted many curious visitors to the area. One night a group of foreign guests, equipped with reindeer hides and sleeping bags, decided it would be a good idea to use the cylindrical-shaped igloo as accommodation. The following morning the brave group raved about the unique sensation of sleeping in an igloo. Hence, the concept of Icehotel was born, and today Icehotel is world-famous for its unique concept and its fantastic works of art.

The Icehotel has been rebuilt every year since 1990, and what started off as a 60- square metre igloo has grown to an almost 5,000-square metre hotel, using more than 30,000 tons of snow and 4,000 tons of ice. Snow cannons help to form the snow over arched steel sections. The ice pillars are then put in place to give extra strength to the self-supporting snow arches. In March, ice is harvested from the River Torne with the

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help of tractors and special ice saws. The blocks are then stored and used to build the hotel in the winter.

The hotel is never more than six months old, because in summer it melts. As a result, the exact number of rooms varies, but during the winter of 2004/2005 it had 85. The hotel also has a reception, hall of pillars, ice art exhibition, cinema, and a church. About 14,000 guests a year spend the night in the hotel, with over 40,000 day visitors walking through the reindeer-skin covered doors. In April, the entire hotel literally trickles into the Torne River, to be resurrected during November and December the following winter, with a new architecture and new works of art. So visitors can experience a new Icehotel every year.

The temperature in the Icehotel varies between −4 and −9 degrees centigrade, depending on the temperature outside, which can dip to −40. At night, guests are supplied with a specially made sleeping bag, and are given a talk on ‘how to survive in the Icehotel’. For some, this may mean sampling the wonderfully coloured cocktails served in ice glasses at the Absolut Ice Bar. Others may want to try the food at the Icehotel Restaurant which serves Laplandic gourmet food on plates of ice from the Torne River. During the daytime there are plenty of activities for visitors such as snowmobiling, dog-sledding, moose safaris and ice sculpting. Visitors can also attend concerts in an open-air venue inspired by Shakespeare's Globe Theatre in London. The 520-person theatre is a marvel of ice engineering, carefully crafted by technicians in just three weeks. However, staying at the Icehotel doesn't come cheap. A deluxe suite costs about 6,000SKr a night (£440).

Sources: http://www.icehotel.com; Thorne, P. (1 October 2005) ‘Snow Traveller’, The Independent, 6.

Branding

The practice of branding was developed in the field of packaged goods, as a method of establishing a distinctive identity for a product based on competitive differentiation from other products. Branding was commonly achieved through naming, trademarking, packaging, product design and promotion. Successful branding gave a unique identity to what might otherwise have been a generic product. This identity produced a consistent image in the consumer's mind, which facilitated recognition and quality assurance. In the 19th century, products such as Beecham's Pills, Cadbury's Chocolate and Eno's Salts were early users of branding. These days, the market in packaged goods is dominated by brands, and in the last few decades branding has also been widely recognized in services marketing. A ‘brand’, in the modern marketing sense, offers the consumer relevant added value – a superior proposition that is distinctive from competitors' and that imparts meaning above and beyond the product's functional aspects. There is even a Museum of Brands in London, where visitors can view 10,000 consumer products covering 200 years of packaging, branding and advertising.

BRANDING

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

Branding offers a solution to some of the problems in services marketing discussed in Chapter 1 – in particular those of consistency and product standardization. Branding can be a way of unifying services, which is why it has been particularly developed in hotel marketing. Research shows that nearly 90 per cent of bookings are made with branded hotel chains, and nine out of ten consumers can distinguish between chains, franchise operators and

independents (Gilpin, 1994).11

For large hotel companies that have a wide variety of properties, grouping them into brands can:

unify them into more easily recognizable smaller groups; enable each branded group to be targeted at defined market segments; and enable product delivery, including human resource management, to be focused on creating a specific set of benefits for a specific market.

North America has over 200 hotel brands competing for business, and many hotel chains offer a family of sub-brands or endorsed brands. For example, Hilton Hotels Corporation, Intercontinental and Starwood each has seven sub-brands, while Marriott International has 12 (as well as the Ritz-Carlton chain which, to protect its exclusive image, is not normally

identified for marketing purposes as part of the Marriott Group) (Lovelock and Wortz, 2007).12

For a multi-brand strategy to succeed, each brand must promise a distinctive value proposition, targeted at a different customer segment. There are even branded hotel floors in some hotels. American Express and the Sheraton Vancouver Wall Centre Hotel have partnered to open a floor dedicated to business accommodations for American Express credit card holders. Located on the 27th floor, the ‘American Express Club Floor’ features a private lounge with business service centre, direct access to boardrooms and fitness facilities, dedicated front-desk check-in and a late 4.00 p.m. check-out. According to officials, guests using the club floor pay the same price for their room as Amex's negotiated standard room rate and benefit from a host of value-added services and amenities. These include complimentary continental breakfast, all-day coffee and tea, evening hors d'oeuvres, international and local newspapers, and 24-hour room service.

In the past, branding was often seen mainly as a matter of promotion and of creating the right image through advertising and publicity. But marketing managers now recognize that successful branding involves the integrated deployment of product design, pricing policies, distribution selection and promotion. The case for branding is stronger for tourism products that offer the possibility for differentiation in several areas of the marketing mix. This is why branding has been particularly successful in hotel and restaurant marketing. Branding of restaurants, hotels and airlines developed extensively in the United States during the 1980s and 1990s, and companies in the rest of the world are following suit. The momentum is driven mainly by large organizations that recognize that, to remain competitive, they need to offer several products to different markets instead of relying upon a monolithic presence in one main one.

Apart from the advantages already mentioned, Middleton and Clarke (2001) suggest that

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branding in tourism offers other specific advantages:13

it helps reduce medium- and long-term vulnerability to the unforeseen external events that so beset the tourism industry. Recovery time after an event such as a terrorist attack or a natural disaster is likely to be shorter for a well-established brand; it reduces risk for the consumer at the point of purchase by signalling the expected quality and performance of an intangible product. It offers either an implicit or explicit guarantee to the consumer; it facilitates accurate marketing segmentation by attracting some consumer segments and repelling others. For an inseparable product, onsite segment compatibility is an important marketing issue; it provides the focus for the integration of stakeholder effort, especially for the employees of an organization or the individual tourism providers of a destination brand; and it is a strategic weapon for long-range planning in tourism, as can be seen in the Snapshot on Four Seasons in Chapter 3.

It should be recognized that a competitive brand is a live asset and not a fixture, and therefore its value may depreciate over time if starved of investment and marketing and management skill. Brand decay may begin if a brand is over-stretched into new products that damage its essence, or following a merger or takeover. Marketers sometimes use the term brandicide to describe the process of taking a well-known brand and extending it into a new area that will ‘kill’ the brand. Companies are increasingly attempting to stretch their proven expertise into new areas. Walt Disney Inc., for example, has recently entered the produce business. Disney's cartoon characters are popping up on fruit and vegetable packaging across the US, as growers clinch licensing deals with entertainment companies hungry to cultivate positive images among health-conscious parents and children. The Snapshot below describes how chefs – some of the most successful and fastest-growing consumer brands today – are stretching their brand names into a number of different areas.

BRANDICIDE

the process of taking a well-known brand and extending it into a new area that will ‘kill’ the brand

A combination of factors has made companies more eager than ever to stretch their brands further and more boldly. Advances in technology have reduced barriers to entry in new sectors. Companies have developed stronger and more knowledgeable relationships with customers, and the cost and difficulty of developing new brands is encouraging companies to exploit the brands they already have. But there can be a cost to leveraging brand equity. If a brand loses credibility in one sector, this tainted sector can contaminate everything else that bears the brand's name. So brandicide should be avoided.

The Case Study on Richard Branson in Chapter 11 shows how over the past 25 years, Branson has diversified his Virgin brand into a far-reaching empire, encompassing mobile

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phone services, a rail service and even wedding dresses, as well as his original record label and discount airline. The Snapshot below takes a look at the Jamie Oliver brand, and how, albeit on a smaller scale than Branson the celebrity chef has used his name to promote cookbooks, cookware, healthy school lunches, supermarkets, restaurants, and, of course, television shows.

Snapshot

Chefs as Brands: The Case of Jamie Oliver

Some of the most successful and fastest-growing consumer brands today are chefs. Chefs used to be limited to working in the back of restaurants and creating great meals that consumers loved to eat. Since the 1990s, they have moved to the forefront, becoming brands in their own right. Many chefs today have their names attached to multiple product lines and have a stake in a wealth of restaurants and businesses. They are a new breed of chef – one that understands how powerful a brand name can be in the marketplace. And they are following popular marketing theory, which states that if you find a product that works, you should create brand extensions from it.

One celebrity chef has differentiated himself drastically from all the others. Jamie Oliver, one of Britain's most loved TV personalities since his teenage debut as the ‘Naked Chef’, is a prime example of branding success as well as innovative positioning. Traditionally, chefs were equated with the stereotype of older, portly or balding men (and the equivalent women) who appealed to an older demographic. Oliver, however, gives male chefs a fresh, youthful, hip spin, appealing to young people with his casual clothes and no-nonsense cooking style. Moreover, he has aligned himself with underprivileged youth and also with schoolchildren through his television reality shows, and has even affected British politics with his successful campaign for healthy, government-funded school lunches.

From his early ‘Naked Chef’ bachelor image, Oliver has developed his brand alongside his personal life. Since marrying and having two children, he has portrayed the image of the devoted family man and extended this to his professional life by taking on the job of improving nutrition throughout Britain amongst children. In 2004 he used his celebrity status to launch a nationwide Feed Me Better campaign along with a documentary TV series called Jamie's School Dinners, which was aired in early 2005. His Feed Me Better petition secured over 72,000 signatures, became front-page news and inspired Tony Blair's government to respond with a vote-catching ‘children's manifesto’ as well as a substantial increase in funding for school meals. He also launched a set of Feed Me Better starter information packages for schools. Now he is expanding the campaign in the US. In 2006 British Education Secretary Alan Johnson said the Children's Food Bill, passed as a result of Oliver's lobbying, was aimed at improving school pupils' nutrition and undoing decades of neglect.

Oliver understands how powerful his name can be both in the marketplace and in society. His brand expansion is not only making him very wealthy but also furthering his altruistic approach to national and international healthy eating. He called his reform efforts ‘one of the biggest food revolutions England has ever seen’, explaining that, having achieved so much personally, he had two choices: ‘I could go two ways at this point. I could give back or I could be greedy.’ His chic restaurant, Fifteen London, combines his business acumen with his humanitarian tendencies. It is the result of another television show, in which he took a group of down-and-out youngsters and turned them into able kitchen staff. He has repeated this theme in Holland, too, at Fifteen Amsterdam.

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The internet is also furthering the successful branding of celebrity chefs like Oliver. The medium brings chefs a wide-reaching sales channel that they couldn't find elsewhere. Oliver's website provides all the same marketing components traditionally found in direct marketing. There are electronic updates of his shows and events plus information on recipes, new cookbook launch dates, and links to distributors of the Tefal cookware he sponsors. The site also serves as a customer service and relationship marketing tool, furthering brand loyalty. Fans can share ideas and information with him and with each other via an interactive messaging forum.

How far can you extend a chef's name as a brand without committing the ultimate brandicide? Jamie Oliver sensibly refused to pose naked for Nestle and Coca Cola ad campaigns, both of which would have compromised his healthy eating ethos. He has, amid some media criticism, agreed to promote the pro-organic British supermarket, Sainsburys, which he considers more in line with his business principles. Oliver receives an estimated £1 million a year for his Sainsbury advertisements.

For celebrity chefs – as for many consumer products – marketing is all about connecting with an audience. ‘These celebrity chefs are so hot because they are so touchable,’ says industry publicist Lisa Ekus. ‘Consumers can see them, taste their food, feel like they are really getting something from them. That intimacy is invaluable when it comes to marketing. It allows them to turn themselves into successful brands.’

Sources: Cohen, A. (December 2001) ‘Look who's cooking now’, Sales & Marketing Management, 152(12), 30–36; Turner, C. (31 March 2003) ‘Edible peep show’, The Globe and Mail, R3; Fernand, D. (2 April 2006) ‘School meals revolution hits home’, The Sunday Times, Focus; Eckler, R. (29 November 2004) ‘Bloody good’, National Post, B12; Renzetti, E. (22 March 2005) ‘St. Jamie serves up a cafeteria food fight’, Globe and Mail, R1 & R3; Fletcher, V. (20 May 2006) ‘Junk food ban is lesson in health’, Daily Express, 17.

Packaging

In the tourism and hospitality industry, packaging is the process of combining two or more related and complementary offerings into a single-price offering. A package may include a wide variety of services, such as lodging, meals, entrance fees for attractions, entertainment, transportation costs, guide services, or other similar activities. Travel packages have become increasingly popular over the years. They are attractive because they benefit both the consumer and participating businesses by providing convenience and value to the consumer and added revenue for businesses. An example of a package holiday is one on offer from Arctic Experience, a UK tour operator. In 2007, the operator was selling a three-night trip to the Icehotel in Sweden (see Global Spotlight) on a bed and breakfast basis for just over £1000 for a single person. This price included return flights from London.

PACKAGING

the process of combining two or more related and complementary offerings into a single-price offering

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Packaging provides several customer benefits, including:

easier budgeting for trips: the customer pays at one time and has a good idea of the trip's total cost; increased convenience, which saves time and prevents aggravation; greater economy, as the cost to the customer is usually more economical than purchasing the package components individually; the opportunity to experience previously unfamiliar activities and attractions; and the opportunity to design components of a package for specialized interests.

For tourism operations, packages are attractive for the following reasons:

they can improve profitability by allowing businesses to price at a premium by adding special good and services; they can streamline business patterns. Packaging during low demand periods may add attractive features to the service or product, thus generating additional business; they allow joint marketing opportunities, which can in turn reduce promotional costs; they can be an effective tool for tailoring tourism products for specific target markets.

The tourism industry is becoming increasingly sophisticated and innovative with its packaging. The Snapshot on http://weekendtrips.com in Chapter 7 is an example of the growing number of companies catering to the demand for short-break tourism experiences sold via the internet. Others are catering for the more sophisticated backpacker market (see Snapshot in Chapter 2). For example, Ho Chi Minh City-based Linh Nam Travel Co. has a 79-day tour of Vietnam with an itinerary of 8,000 kilometres through 59 cities and provinces nationwide. The programme runs twice a year and tourists can choose to stay at hotels of one to three stars or take a home-stay. Others are packaging holidays for the growing interest in wildlife tourism amongst older, more affluent tourists. Churchill, Manitoba in Canada, for example, attracts 2,500 tourists a year who take trips in tundra buggies to see wildlife, primarily polar bears, but also ptarmigan, Arctic fox, Arctic hare, snowy owls and lemmings. Tour packages range from CDN$2,200 to $7,000 for two nights including accommodation and transportation to and from Winnipeg. A 2004 study found that 75 per cent of Churchill's visitors were American, and about 15 per cent were from abroad, primarily Japan, Germany and France. About 10 per

cent of visitors were Canadian (Redekop, 2004).14

New Product Development

According to the Los Angeles Times, 700 new products are introduced every day.15 Many of them fail, and many new ideas take years before becoming a reality. The BridgeClimb in Sydney is a prime example of the latter, and the Snapshot below explains how it took nine years for the idea to become reality. Safety concerns and other issues kept the unique tourism product on hold for nearly a decade.

Developing new products is different from maintaining existing ones, and planning for both kinds of product will differ according to whether the products are targeted at existing markets

or new ones. According to Holloway and Plant16, a company has four alternatives when developing new products.

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Market Penetration

Firstly, the company can follow a market penetration strategy by modifying an existing product for the current market. Improvements to an existing product can transform it, so that prospective purchasers view it as a genuinely new product. The case study at the end of the chapter highlights a number of ways in which ski resorts are modifying their service offerings to provide new experiences for their customers.

MARKET PENETRATION

modifying an existing product for the current market

Market Development

The second strategy, market development, calls for identifying and developing new markets for current products. If an existing product is launched to a new market that is unfamiliar with it, that product is also, for all intents and purposes, a new product. When Banff Mount Norquay in Canada introduced hourly tickets, they attracted a new market of skiers – locals who would not normally ski due to lack of time (see Chapter 6).

MARKET DEVELOPMENT

identifying and developing new markets for current products

Product Development

The third strategy, product development, involves developing a genuinely new product to be sold to existing customers. Over the last few years, fast-food companies have developed new healthier products for existing customers. Subway, for example, has positioned itself as a healthy fast-food alternative, turning its low-fat, low-calorie food into a marketing coup. When the company learned that Jared Fogel, a once 425-pound (193 kg) college student, lost 245 pounds (111 kg) on a diet consisting of Subway turkey and veggie subs, Fogel was recruited to endorse Subway products in numerous (successful) promotions. The Snapshot below on Sydney BridgeClimb is an example of a genuinely new product sold to tourists visiting the Australian city.

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PRODUCT DEVELOPMENT

developing a genuinely new product to be sold to existing customers

Diversification

Diversification growth makes sense when good opportunities can be found outside the present business. Three types of diversification can be considered. Firstly, the company can seek new products that have technological or marketing synergies with existing product lines, even though the product may appeal to a new class of customers (concentric diversification). Secondly, the company may search for new products that could appeal to its current target market (horizontal diversification). Finally, the company can seek new businesses that have no relationship with the company's current technology, products or markets (conglomerate diversification). An example of diversification comes from Four Seasons, the hotel company that moved into new territory in 2003 with the launch of a luxury catamaran cruise in the Maldives.

DIVERSIFICATION

seeking opportunities outside the present business

Snapshot

Sydney BridgeClimb

In 1989, Paul Cave was involved in organizing a climb over the arch of Sydney Harbour Bridge as part of an international business convention. It was such a success that the dream of allowing all people to climb the bridge was born. Few could imagine the awesome challenge that this concept presented to BridgeClimb's founder and chairman. Cave's dream was to involve years of dealing with state and local government bodies, community groups and hundreds of experts on everything from safety and logistics to media, heritage and conservation issues. There were occasions when Cave was the only one who refused to let go of the dream. His vision, commitment, persistence and entrepreneurial skills were fundamental to BridgeClimb's creation.

Nine years later, on October 1, 1998, BridgeClimb was officially launched, and by August 2006 it had sold over 1,750,000 tickets, 360,000 gift certificates, and had become a major tourist attraction in Australia. It is estimated that BridgeClimb is a US$8,000-per-hour business that runs 12 hours a day, 363 days a year. The company takes small groups to the summit of the bridge, 134 metres (400 feet) above sea level. The experience offers climbers the chance to walk over catwalks and climb ladders and stairs while trained ClimbLeaders provide a full commentary on the history of Sydney and its harbour bridge. With the choice of climbing at dawn, day, twilight or night, climbers are rewarded with spectacular 360 degree views of one of most beautiful harbours in the world.

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Climber origins are 28 per cent locals, 17 per cent domestic visitors and 55 per cent international visitors, and it is estimated that over 1,700 couples have become engaged whilstinternational visitors, and it is estimated that over 1,700 couples have become engaged whilst on the BridgeClimb. Celebrities such as Will Smith, Matt Damon, Nicole Kidman, Kylie Minogue, Justin Timberlake and Cameron Diaz have all made the climb. Safety is BridgeClimb's number one priority. All climbers are breath-tested (and must register under 0 . 0 5 p e r c e n t b l o o d a l c o h o l l e v e l ) , a n d s i g n a m e d i c a l d e c l a r a t i o n f o r m t o s a t i s f y BridgeClimb's terms and conditions. No personal items are permitted on the bridge, and climbers have to pass through a metal detector.

BridgeClimb has won a number of awards, which recognize the impact the company has had on the tourism industry since commencing. These include the ‘Major Tourist Attraction’ category at the New South Wales Tourism Awards for Business Excellence which it has won four times. Cave himself won an Ernst & Young ‘National Entrepreneur of the Year’ award in 2001, and the Australian Export Heroes award in 2002/3. Paul Cave was not new to business. In 1974, following a career in marketing for B & D Roll-A-Door, he founded and created Amber group aged 29. Amber became Australia's largest tile and paving retailer, with 17 outlets. In 1996, 22 years later, he sold his 100 per cent interest in Amber to staff, via a management buy-out.

The Sydney Harbour Bridge is particularly special to Cave because his father-in-law, then just a teenager, purchased the first rail ticket ever sold to the public for crossing the bridge on March 20, 1932 – ticket number 0001 from Milson's Point to Wynyard Station. Having inherited this rail ticket (just one item from his 5,000-piece Sydney Harbour Bridge memorabilia collection), he will never forget its significance, or indeed that of the journey it has taken him on.

Sources: Karlgaard, R. (2 October 2005) ‘A can-do-country’, Forbes, 176(6), 37; Mediakit retrieved from http://www.bridgeclimb.com on 9 April 2007.

Approaches to New Product Development

A company must develop new products to survive. New products can be obtained through acquisition or through new product development (NPD). There is a reasonably established approach to NPD, but Scheuing and Johnson (1989) have proposed a model for new service development (NSD), based on a review of other models and research into 66 US-based

service firms.17 The model has 15 steps and four main stages.

The first stage (steps 1–3) of NSD focuses on how new ideas are generated and developed. The development process must begin with a precise formulation of objectives and strategy. A well-designed strategy drives and directs the entire innovation effort and imbues it with effectiveness and efficiency. The second step is for companies to ensure that they have organized or structured their plan in such a way as to enable innovation to take place. In large companies, this may involve setting up a research and development (R & D) department. The third step consists of idea generation and screening. New ideas can be drawn from external sources, or be generated internally through consultation and brainstorming. Often the most powerful idea source is customer feedback.

The idea generation and development stage of NSD is followed by the second stage – the ‘go/no-go’ stage – comprising four steps (steps 4–7) that enable the company to decide whether or not it will proceed with the new development. Concept development requires that the surviving ideas be expanded into fully fledged concepts, especially if there is a significant

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service element. Concept testing is a research technique designed to evaluate whether a prospective user understands the idea of the proposed good or service, reacts favourably to it, and feels it provides benefits that answer unmet needs. The sixth step, business analysis, should represent a comprehensive investigation into the business implications of each concept. The project authorization step occurs when top management commits corporate resources to the implementation of a new idea. In an industry such as tourism, which consists of many small organizations, it is likely that 90 per cent of companies have just one person or

department to authorize all innovative projects (Jones et al., 1997).18

Once the go-ahead has been given, the third stage of NSD – test design – is reached, in which detailed design and implementation of the innovation is carried out (steps 8–11). At this point, the new concept is converted into an operational entity. This requires design and testing. For a service, this activity should involve both the input of prospective users and the active co-operation of the operations personnel who will ultimately be delivering the service. It may also be necessary to design new production processes or develop new equipment. This stage also includes marketing design and testing. To complete the test design phase, all employees should be familiarized with the nature and operational details of the new service. For instance, research into flight catering has showed that 91 per cent of airlines engage in

personnel training, whereas only 68 per cent of food manufacturers do so (Jones, 1995).19

The final stage of NSD is the evaluation of the new innovation, comprising four steps (steps 12–15). Service testing should be used to determine potential customer acceptance of the new service, while a pilot run ensures its smooth functioning. Chapter 4 described how the Marriott Corporation designed a new chain of hotels for business travellers – Courtyard by Marriott – but tested the concept under real-world conditions before subsequently developing the large chain that filled a gap in the market.

The next step, test marketing, examines the saleability of the new service, and a field test should be carried out with a limited sample of customers. With the delivery system and marketing in place and with the service thoroughly tested, the company should next initiate the full-scale launch, introducing the service product to the entire market area. Different sectors tend to evaluate their new services/products in slightly different ways. For instance, fast-food operators use market surveys, whereas food service contractors rely more on after- sales customer feedback. The final step, post-launch review, should be aimed at determining whether the strategic objectives were achieved or whether further adjustments are needed.

Sheuing and Johnson suggest that firms should not rigidly follow this model but instead consider it as a framework from which to select those activities they deem necessary for a specific development. In fact, research studies have shown that tourism organizations do not

follow a systematic NSD process (Jones et al., 1997).20 It has been suggested that the systematic and formal approach to innovation is likely to be adopted only when one of the following is true: new products with major process impact are developed; a number of interrelated innovations are being developed simultaneously; product life cycles are long; competitors are unlikely to enter the market with a similar product or service; the new product is protected by license or patent; or the innovation is original or ‘new to the world’ (Jones et

al., 1997).21 The tourism and hospitality market clearly has few of these characteristics. Innovation is likely to follow a shorter, simplified development process when minor modifications are made to existing products or services; there is no license protection; the ‘new’ product is largely a copy of a competitor's product; innovation is not part of a major change programme; and competitors are actively innovating.

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An organization creates internal conditions that either foster or hinder innovation. Often, these are strongly influenced by the external environment. Conditions that may encourage a systematic but rigid approach to innovation are a bureaucratic culture, mature marketplace, the involvement of external consultants, and formal research and development departments. Conditions that encourage a dynamic and flexible approach to innovation are the following: growing supply chain integration; an organizational culture founded on innovation; industry association sponsorship; creative and entrepreneurial leadership; and deregulated markets. These conditions are likely to be more typical of organizations in tourism and hospitality, as there are many small, highly entrepreneurial firms, such as http://weekendtrips.com (see Snapshot in Chapter 7), operating in a largely deregulated marketplace. However, large companies can also encourage innovation. Virgin, profiled in Chapter 11 for example, has always been innovative, largely because of the entrepreneurial leadership of Richard Branson. His entrepreneurship has always led him to take on challenges, risks and new projects, which he calls ‘brand stretching’.

Chapter Summary

Tourism and hospitality products are a group of selected components or elements brought together in a ‘bundle’ to satisfy needs and wants. There are three levels of tourism products: the core product, the tangible product, and the augmented product. An important part of the augmented product is the physical environment – often referred to as the ‘servicescape’. This is very important for tourism and hospitality products such as hotels, restaurants and theme parks, which are dominated by experience attributes.

The product mix is the portfolio of products that an organization offers to one market or several. Another product analysis tool is the product life cycle (PLC); an organization should assess each product and service in terms of its position on the product life cycle. The final product planning tool is positioning, its purpose being to create a distinctive place in the minds of potential customers.

Branding has developed in the field of packaged goods as a method of establishing a distinctive identity for a product based on competitive differentiation from other products. The case for branding is stronger for tourism products that offer the possibility for differentiation in several areas of the marketing mix. This is why branding has been particularly successful in hotel and restaurant marketing.

In the tourism and hospitality industry, packaging is the process of combining two or more related and complementary offerings into a single-price offering. Packaging provides several customer benefits, including easier budgeting for trips; increased convenience; greater economy; the opportunity to experience previously unfamiliar activities and attractions; and the opportunity to design components of a package for specialized interests.

Developing new products is different from maintaining existing ones, and planning for both kinds of product will differ according to whether the products are targeted at existing markets or new ones. Holloway and Plant suggest that a company has four

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alternatives in developing new products: market penetration, market development, product development, and diversification.

Key Terms

augmented product, p. 149

benefits, p. 154

brandicide, p. 161

branding, p. 160

core product, p. 148

diversification, p. 166

features, p. 154

market development, p. 165

market penetration, p. 165

packaging, p. 164

positioning, p. 157

positioning statement, p. 158

product development, p. 166

product life cycle (PLC) analysis, p. 155

product mix, p. 154

servicescape, p. 150

tangible product, p. 149

tourism and hospitality products, p. 147

Discussion Questions and Exercises

Apart from the illustrations provided in this chapter, give some examples of businesses that are responding to consumer desires for experiences. How are they using the servicescape to deliver these experiences?

Think of a particular tourism or hospitality organization in which you believe physical evidence is particularly important in communicating with and satisfying

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c u s t o m e r s . W h a t i n f o r m a t i o n w o u l d y o u g i v e t o t h e m a n a g e r o f t h a t organization to convince him or her of the importance of physical evidence in the organization's marketing strategy?

Re-read the Snapshot on the Churchill Museum. Apply the three levels of product to the museum. Where would you place the attraction on the product life cycle (PLC), and how are the managers trying to position the museum? How important is the servicescape for the museum?

It has been suggested that companies can commit ‘brandicide’ by stretching a well-known brand too far. Think of a brand that has done this. What was it that killed it off? Take a tourism brand you are familiar with and keep stretching it. How far can you go?

Holloway and Plant suggest that a company has four alternatives in developing new products: market penetration, market development, product development, and diversification. Think of an example (not already given in the text) of each strategy use in the tourism industry.

Why is it that many research studies have found that services rarely follow the new service development (NSD) steps suggested by Scheuing and Johnson (1989)?

Case Study

Creating an Alpine Winter Experience

‘To create memories for our guests and staff as the best mountain and resort experience… again and again.’

This is the mission statement of Vancouver-based Intrawest – perhaps the most successful ski resort company in the world. Its success has been achieved by developing resort destinations as opposed to ski resorts. ‘Experience’ is a word used liberally by Intrawest in its marketing materials and by its staff. ‘Disney does an incredible job of delivering a terrific experience – they provide a consistent experience and that's what we strive for,’ says James Askew, former director of marketing and sales for the Pacific Northwest region of Intrawest. According to Askew, people are looking for an overall vacation experience when they go skiing, a holiday that offers more than skiing down the mountain. So to meet the demands of ever-fussier, more sophisticated winter enthusiasts, and to entice guests to stay longer, Intrawest offers a slew of services besides skiing. The resort village is at the core of this formula, and for Intrawest the most important ingredient of this has been the real estate at the base of the mountain. Such convenient access to the slopes attracts more guests and fuels further commercial development, creating a bustling off-slope atmosphere.

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The Resort Village at Whistler, Canada

Intrawest is not alone in revolutionizing the ski industry. Other resorts have followed suit, with property development and management becoming an important part of the ski business. For the operators, the most desirable visitors are what the trade calls ‘destination skiers’, the longer-stay tourists. Resort operators are increasingly banking on these visitors to fill hotels, townhouses and condominiums in the valleys below the slopes. The operators benefit not only from selling townhouses and condos, but also by helping the new owners rent their properties to visitors. Destination skiers tend to spend more, and it has been suggested that to defeat seasonality, destinations should focus on yield, rather than volume. In the Banff region of Canada, for example, the ski areas have been aggressively targeting European skiers over the last few decades. Although these destination skiers represent only 50 per cent of Banff's tourist market, they account for nearly 80 per cent of tourism expenditures.

There are many ingredients that combine to create a memorable alpine winter experience, but successful mountain operators appear to have followed one or more of three strategies to enhance the service experience: product diversification, product improvement, or product differentiation. Two factors are driving the diversification of winter sports. Firstly, winter resorts are losing customers. An analysis of market trends in North America and Europe suggests that an increasing proportion of those who take winter sports holidays on a regular basis do not ski at all. Secondly, even avid skiers are typically skiing less. On average they are somewhat older, and new high-speed lifts enable a skier to attain his/her physical stamina quotient much more quickly. As a result, winter resorts have realized that they have to offer more activities, both on-snow and off-snow. The more progressive resorts are now treating skiing as a form of entertainment by establishing more off-slope diversions. They are expanding the range of activities they offer to include ice-skating, snow-scooting, sledging and dog- sledging, ice-driving, paragliding, snowmobiling and tubing (the increasingly popular activity of sliding down the slope on the inner tube of a truck tyre). Many resorts – Verbier in Switzerland is an example – are also looking to enhance the efficiency, quality and profitability of their restaurants and shops.

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Mountain resorts have to evolve and improve continually to meet the new demands of the consumer. The ski-runs and related lift systems clearly represent a prime attraction and therefore have long been the object of continuous improvements. For example, the process of linking ski areas has now become commonplace in France, following the initial lead given by resorts such as Tignes and Val d'Isere, which combined to form ‘Espace Killy’; and Courchevel, Meribel, les Menuires and Val Thorens, which created the ‘Trois Vallées’. With these changes, skiing areas have been expanded to higher altitudes, giving better snow conditions, increasing resorts' capacities and extending their season. The customer service experience can also be enhanced by the training of instructors and guides, and by offering authentic and natural experiences.

A third strategy taken by ski areas to enhance the service experience is differentiation. Despite the trend towards large resort alpine villages, there is a future for the small, independently owned resorts with comparatively shallow pockets. Some local hills are often more accessible, making them perfect for day trips, especially when they are close to large urban areas. Lake Louise and Sunshine, for example, are based in a national park and cannot offer all the amenities of a bustling alpine village. However, the relative tranquillity and beauty of the preserved environment sets them apart from other more developed resorts. Smaller resorts can also differentiate in other respects. Crested Butte in Colorado, for example, is attempting to differentiate on customer service, and believes its small size is a selling point. ‘You don't have to be a huge mega-resort to offer a good ski vacation,’ says Tim Mueller, the resort owner. Tamarack, also in Colorado, is positioning itself as a ‘boutique’ resort, limiting the number of skiers and boarders to 3,500 a day, despite capacity to accommodate 7,000. The idea is to create a private resort, with a focus on yield rather than volume, catering for a more discerning customer. ‘This is not just a ski resort,’ says owner Jean-Pierre Boespflug, ‘but a unique place where homeowners, guests, and the public can take advantage of all there is to do here. We can send you into the wilderness, biking, skiing, golfing or boating.’

What is the future for the alpine winter experience? In most parts of the world, the ski industry has stagnated, with many resorts facing severe financial difficulties. If resorts are not to face inevitable decline, adaptation is essential. The trend to use winter sports as almost a ‘loss leader’ to bring in revenue from base operations continues to be the dominant financial model for resort operations. All the signs suggest that successful resorts of the next decades will be custom designed to meet the needs of every type of winter sports lover.

Sources: Hudson, S. (2000) Snow Business: A Study of the International Ski Industry. London: The Continuum International Publishing Group; Kadane, L. (30 November 2001) ‘Lasting resort’, Calgary Herald, SS1; Meyers, C. (February 2004) ‘Crested Butte on the brink’, Ski, 69–73. Hudson, S. (2006) ‘Creating memorable alpine winter experiences’, in Weiermair, K. and Brunner-Sperdin, A. (eds) Erlebnisinszenierung im Tourismus. Berlin: Erich Schmidt Verlag, pp 137–152.

Questions

The text suggests that companies that fail to provide consistently engaging experiences, overprice their experiences relative to the value perceived, or overbuild their capacity to stage them will see pressure on demand, pricing, or both. How can ski

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3.

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resorts avoid these pitfalls? With reference to Holloway and Plant's new product development options, what strategies have ski resorts followed in order to attract visitors? Take a look at Intrawest's website. Is it continuing to develop resort destinations or has it changed its strategy? Take a look at the marketing strategies of a ski resort near you. Is the resort following any of the three strategies mentioned in order to enhance the service experience?

Websites http://www.disney.com Disney

http://www.vegas.com/shopping/forumshops The Forum, Las Vegas

http://www.tourtrends.com/customtours Tour Trends

http://www.weekendtrips.com http://Weekendtrips.com

http://www.churchillmuseum.iwm.org.uk The Churchill Museum

http://www.fourseasons/maldives Four Seasons Catamaran

http://www.museumofbrands The Museum of Brands in London

http://www.bridgeclimb.com Sydney Harbour BridgeClimb

http://www.arctic-experience.co.uk Arctic Experience

http://www.jamieoliver.com Jamie Oliver's website

http://www.intrawest.com Intrawest

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Butterworth-Heinemann. 14 Redekop, B. (24 April 2004) ‘Bear facts about tourism’, National Post, FT4. 15 Anon. (3 January 2005) ‘What's new’, Globe & Mail, A8. 16 Holloway, J.C. and Plant, R.V. (1992) Marketing for Tourism. London. Pitman, 73. 17 Scheuing, E.E. a n d Johnson, E.M. (1989) ‘A p r o p o s e d m o d e l f o r n e w s e r v i c e development’, T h e J o u r n a l o f S e r v i c e s M a r k e t i n g, 3(2), 25–34. http://dx.doi.org/10.1108/EUM0000000002484 18 Jones, P., Hudson, S. and Costis, P. (1997) ‘New product development in the UK tour- operating industry’, Progress in Tourism and Hospitality Research, 3(4), 283–294. http://dx.doi.org/10.1002/%28SICI%291099-1603%28199712%293:4%3C283::AID- PTH82%3E3.0.CO;2-R 19 Jones, P. (1995) ‘Innovation in flight catering’, in P.Jones a n d M.Kipps (eds), Flight Catering. London: Longman, 163–175. 20 Jones, P., Hudson, S. and Costis, P. (1997) ‘New product development in the UK tour- operating industry’, Progress in Tourism and Hospitality Research, 3(4), 283–294; Easingwood, C. J. (1986) ‘New product development for service companies’, Journal of Product Innovation Management, 3(3), 296–312. 21 Jones, P., Hudson, S. and Costis, P. (1997) ‘New product development in the UK tour- operating industry’, Progress in Tourism and Hospitality Research, 3(4), 283–294. http://dx.doi.org/10.1002/%28SICI%291099-1603%28199712%293:4%3C283::AID- PTH82%3E3.0.CO;2-R

tourism skiing branding hotels resort product mix museums

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