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Michelle_Michy
week7marketing3.pptx
The Nature of Marketing
Services Marketing
Managing Supply and Demand
Market Failure
Strategic Tourism Marketing
Marketing Mix
Key reference:
Weaver & Lawton Chapter 7
The nature of marketing
One definition of marketing
Marketing involves
the interaction and interrelationships
among consumers and producers of goods and services,
through which ideas, products, services and values are
created and exchanged
for the mutual benefit of both groups.
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Services marketing
Services marketing applies to service sector activities such as tourism - fundamentally different form the marketing of goods.
Goods are?
Services are?
On your last holidays, what goods and services did you buy and consume?
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What’s different about marketing goods and services? Four factors
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Intangible
Inseparable
Variable
Perishable
Intangible
Intangible = cannot be directly seen, tasted, felt or heard prior to purchase and consumption
Thus consumers cannot share experiences
Do you think this is true?
Products cannot be ‘returned’ once consumed
Unlike say clothing or a car
But compensation for an ‘unsatisfactory’ experience can be made
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Some implications of intangibility
Can’t experience the product until you actually experience it
Risk for first time customer – what’s it like? Will I enjoy it? Is it worth my time and money? What will my partner / kids think?
Some solutions
Service provider provides LOTS of information about the product to inform, encourage and make you feel more confident about purchase / consumption
Can also provide tangible clues e.g. Presentation, attractive brochures, website, uniformed personnel etc.
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Word of mouth also becomes very important – but:
Who is passing information along?
Do they have any biases?
What about psychographic (other segmentation) profile or tastes?
When were they there?
Was it just a bad day – or a good day?
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What are the intangibles that appeal / do not appeal to you?
Are you adventurous? (see Plog)
Do you ‘trust’ brochures, website etc?
How about feedback from a friend who’s been there?
Would these be influenced by:
Cost, e.g. It costs a lot?
Distance or difficulty e.g. It a long, hard trip to get there?
Visibility e.g. Sydney Bridge Climb vs. Tank Stream underground tour?
Other factors?
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Inseparability
Inseparability = production and consumption occur at the same time (simultaneously)
Some implications:
This can have a major impact on customer satisfaction because a supplier staff member (i.e. a person) is in frequent contact with customers
Both are people, with their own human characteristics
Thus emotional labour characteristics become very important in staff – reassurance, empathy, responsiveness
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Production ‘mistakes’ cannot be undone before consumption e.g. airline turbulence
But what about tourist behaviour?
Can impact on themselves and other tourists’ experience
And on staff, and on local communities
Should tourists be ‘trained’ or at least briefed on appropriate behaviours e.g. smoking, dress, use of alcohol
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Variability
Variability = each producer / consumer interaction is a unique experience, influenced by a large number of often unpredictable factors
These include ‘human element’ factors such as mood and tiredness (on either parties’ part)
Such uncertainties, added to simultaneous nature of production and consumption, make quality control much harder than with tangible goods, such as cars or clothes
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Perishability
Perishability = tourism services cannot be produced and stored today for consumption in the future
Introduces a particular demand for being able to match supply and demand, e.g. plane seats, accommodation
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Managing supply and demand
Need to understand fixed costs and variable costs; there is no set boundary, but in general:
Fixed costs = costs that the operation has little control over
Variable costs = costs that can be changed in the short term
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Tourism businesses tend to have a high proportion of their costs in fixed costs
Thus it costs a lot to keep the asset operating, even if there is no or little demand, e.g.
Canberra restaurants
Hotels
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Variations in demand
This situation is made harder by variations in demand; e.g. just as you may use your car more some days, or some weeks, or even some seasons, so it is with tourism assets
Variation in demand (= the number of people wanting your product changes over time):
Daily, or maybe even more frequently
Weekly
Monthly
Seasonal
Long term
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For the hotel
Weekly
Hotel could be aimed at a business market (=maximum demand Mon –Thurs)
Or aimed at the short holiday market (=maximum demand on Fri – Sunday, or holidays)
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Seasonal
High / low and ‘shoulder’ seasons
Will depend on climate and the nature of the destination
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Long term
Difficult to predict
Remember the factors acting on the tourism system – economic, environmental, political, etc. – will change and bring change over time
Also:
Butler’s product life cycle
Changing consumer preferences
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So what to do?
We’ve spent a lot of time and money building our hotel, how do we maximise our return?
We need to find ways to match supply to demand, through supply / demand matching strategies.
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If supply exceeds demand, we can
Increase demand
Discount price
Increase marketing
Strengthen distribution channels
Reduce supply
For example a hotel – close some rooms
Redistribute supply
For example, our hotel – change rooms into apartments and sell
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If demand exceeds supply, we can:
Reduce demand
Increase the price
Discourage demand through de-marketing (e.g. national parks)
Increase supply
Add new facilities e.g. In a hotel, new rooms
Redistribute demand
For resorts – use seasonal pricing
For attractions – have weekday discounts on tickets
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So, this should sort everything out?
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Not really........
Market failure = market forces do not produce equilibrium between supply and demand
Often happens in tourism
or
We want to make more money – sell more product
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Strategic tourism marketing
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Whether for an individual business, a destination, a country or other wise....
... marketing should take into account the mission (or objectives) and the operating environment of the business or destination or country, etc.
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Objectives
Mission statement = very basis statement about the business (or destination or ...) goals or objectives, e.g.
Our business will be the leading tourism operator in Canberra
Our destination, Canberra, will increase visitor nights by 10 % over the next two years;
Our nation, Australia, will increase Chinese visitation by 20% by 2018
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Marketing mix
Once we have our objectives, and understand our operating environment, how do we market our business, destination, nation etc.??
One simple approach is the marketing mix
There are several models of this, but one popular one is the 8P model
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8 P model
8 components
Need to come together in a mutually reinforcing (= each strengthens the others) way
This model is particularly useful in practice
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Place
Place is essential, because tourists travel to a specific destination to consume a desired product
Elements:
Relative location = how close are we to our actual & potential markets?
Coverage = other places identified as target markets, or not identified as target markets
Sense of place= something special about our business or destination or nation that brands it as a unique product offering, not available elsewhere
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Product
Product:
Range of goods and services offered to tourists
Quality
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People
People:
Tourism service personnel
Tourists
Local residents
How do each of thee impact on tourism marketing?
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Price
Pricing is critical – in general, tries to balance consumer affordability / supplier profit
Some approaches:
Profit-oriented = maximise profit
Sales oriented = maximise sales
Cost oriented = based on actual cost of production + a profit margin
Competitor oriented = based on what competitors are charging
What situations would each of these particularly suit?
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Packaging
Packaging = grouping of two or more elements of the tourism experience into a single product for sale
Works because it’s convenient for customers
A good example based on a business is a guided tour, bringing together transport, accommodation, visits to attractions, food and beverage
A good example for a destination could be bringing together several products into a single ‘package’
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Programming
Programming = adding events, activities or programs to a product to make it more attractive
Examples might include:
Guided tours in a national park;
A ‘free’ cabaret or other show at a resort; or
‘Free’ sports broadcasts at sports bars
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Promotion
Often the one element we think of when we think of marketing
Aims to increase demand...
... by selling an attractive image of the product to
... potential customers
... through appeals to
... perceived demands, needs, tastes, values, and attitudes of
... the market, or a particular target market
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Consists of :
Presentation
Personal selling
Sales promotion
Publicity
Merchandising
Advertising
Rifle or shotgun approach = specific, or mass market
Outlets (=media) : internet, tv, radio, newspapers and magazines, brochures
Each will have benefits and costs
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