Transcript Marketing Inclusive Tours and Product Packages Objective

Marketing Inclusive Tours
and Product Packages
Objective: Introducing the meaning and applications in the
practice of marketing inclusive tours and product packages.
The Nature of the Marketing Task
for Tour Operators
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The marketing task of the tour operators give
emphasis on short-run tactical considerations
because of the nature of tour operation where
daily fluctuations are enormous.
However, strategic decisions are also important
and will be more important in the coming 30
years when the markets reach maturity.
Strategic Marketing
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Five strategies are worth mentioning here;
Interpreting the strength and direction of change in
the external environment.
 Strategic decisions on volume and pricing.
 Choice of product/customer portfolio.
 Positioning and image.
 Choice and maintenance of distribution systems.
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The external environment
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External influences are more powerful when
tour operation is concerned because of the
international nature of their business.
The total market demand fluctuates as the result
of economic events which therefore affects
employment, levels of wages, real income, and
the impact of international exchange-rate
movements on prices.
In addition, the actions of the competitors is
another external factor.
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In order to minimize the effects of these
external factors, tour operators, first, they
prepare the tour packages 18 months in advance
the actual delivery of the product to the
customers. Second, tour operators have started
to take the advantage of using new information
technology for reservations and bookings.
Strategic decisions on volume and
pricing
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For tour operators, decisions on capacity and
average price levels are strategic decisions
because of the unpredictable external business
environment. This means that annual decisions
on volume and average price levels are strategic
rather than tactical issues.
If the initial estimates of capacity and pricing are
proved wrong by events, the marketing tactics
can be used to correct the problem and get a
market share among the competitors.
Product/market portfolios
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The other strategic consideration for operators
is concerned with the content and balance of
the product portfolio, as represented in their
program packages. A product portfolio is a mix
of destinations, accommodation types, and
range of elements to be included in the product.
It is always profitable to offer products in
demand.
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Segmentation of tour-operator products is
facilitated today due to the growing use of data
mining. As a result, tour companies strategically
publish different brochures to appeal different
market segments.
Positioning and image
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Competition between tour operators has
primarily focused on price and on product.
Image and positioning have taken second place
to price competition. At the moment, the
market is highly price-elastic, mostly favoring the
low prices. However, when the market reaches
maturity, the competition will switch from price
to branding and images. Hotels in developed
countries already operate in mature markets in
the 1990s, branding has become a major element
in their marketing strategies.
Distribution
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The fifth strategic issue is distribution or
providing access for customers. For all tour
operators the cost of distribution is normally
the largest item of their total marketing
expenditures. There are heavy fixed costs in
distribution, including the printing and
distribution of brochures, installing computer
links with retail outlets, regular sales promotion
and merchandising efforts.
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For all operators there is a strategic choice to be
made between marketing direct to customers or
achieving sales through travel retails. Some tour
operators have direct-response marketing policy
with no retail agency involvement. On the other
hand, others sell their packages through retailers.
However new web-based distribution channel
outlets are expected to replace traditional retail
travel outlets.
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Apart from the basic choice, direct or retail sales,
some other strategic decisions are, for example,
should particular retailers get extra support?
Should extra commission be paid in some
circumstances?
Tactical Marketing
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As discussed previously, strategic decisions
determine the product/market portfolio, the
product image and positioning, the capacity of
the program, the price range, and the structure
of distribution system to be used. In other
words, all the four Ps are strategic decisions.
The principle role for marketing tactics is to
secure a continuous flow of bookings for the
program from the day it is offered for sale.
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It is almost inevitable that every year operators
find themselves with too much or too little
capacity in relation to the available demand.
Because long planning periods are required to
prepare the tour programs and because it is
impossible to know the competitors’ prices and
capacity of their programs in advance.
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If sales are slow, customers should be
encouraged with the help of the aggressive
tactical actions in order to reach the targeted
break-even occupancy level. On the other hand,
If bookings are higher than predicted in
favorable market conditions, the tactical
response will be to look for additional capacity
and to reduce promotional spending.
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When operators’ prices and products are
competitive, it is probable that all operators in
the same market field will experience similar
reduces in their bookings. They will all have to
react, but they have to decide how quickly, and
how much.
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For tour operators, the choices for tactical
promotion are;
Increased advertising
 Sales promotions aimed at consumers, such as
competitions, free children’s’ places (assuming these
are not part of the original product), special
discounts for bookings received by a certain date.
 Sales promotion aimed at retailers.
 Price-cutting to increase sales for targeted weeks
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If such tactical effort did not succeed, the
operator would have no choice but to
consolidate his program in order to avoid a
heavy loss. Consolidation is the technical term
used in charter airlines to cancel the specified
flights that would be uneconomic to operate at
the load factors available. Consolidation flights
result into canceled accommodation allocations.
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The operators’ link with retailers, especially
where on-line computers can be used to
communicate the late availability of products
and handle bookings, are very helpful in the
tactical process of selling last minute discounted
offers.
Merchandising of a retailer distribution system
to secure last-minute sales, often just days before
departure, is one of most powerful advantage to
operators.
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No other form of marketing in the industry
works as fast and cost-effectively as the
combined operator and retailer promotion
focused on price. It is recognized that the first
60 percent of bookings are easy to achieve on a
well-designed program. The next 30 percent,
and especially 10 percent, on which so much of
the profit depends, are more difficult to achieve.
These sales are the main target of tactical
marketing.
Sources
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Kotler, P.; Bowen, J. and Makens, J. (1999). Marketing for
Hospitality and Tourism (2nd ed.). Prentice Hall: NJ.
Kotler, P. and Armstrong, G. (2006) Principles of
Marketing (11th ed.). Prentice Hall: NJ.
Middleton, V. T. C. (2004) Marketing in Travel and
Tourism (3rd ed). Elsevier: Oxford.
Middleton, V. T. C.; Fyall, A.; Morgan, M. And
Ranchhod A. (2009). Marketing in Travel and Tourism
(4th ed). Butterworth-Heinemann: Oxford.