by: Joanna A.

Infante
 DISTRIBUTION CHANNELS IN THE TOURISM
INDUSTRY
DISTRIBUTION SYSTEMS
- is the “place” aspect of a company’s marketing mix. It
provides an adequate framework for making a company’s product or
services available to the consumer.
- often used to move the customer to the product

DISTRIBUTION CHANNELS
- are a set of independent organizations involved in the process
of making a product or service available to the consumer or business
user
- moves goods from producers to consumers or move
consumers to where the tourism products and services are
 Distribution Channels in the Tourism Industry
FACTORS THAT INCREASED ITS IMPORTANCE
These factors have led to the increased importance of selecting
channel members and coming up with an effective distribution system:

1. COMPETITION. There is a growth of both local and international

competitors.

2. GLOBALIZATION. With the globalization and the growth of foreign

partnerships, systematic distribution networks need to be developed to
enhance competitiveness in the global arena.
3. ELECTRONIC DISTRIBUTION TECHNIQUES. The growth of
technology has given rise to international reservation systems which give
consumers better access to travel products and services.

4. PERISHABILITY OF THE PRODUCT. The concern on tourism

product’s perishability may be addressed by easier access to its purchase
through the availability of distribution channels.
 Distribution Channels in the Tourism Industry
DISTRIBUTION CHANNELS AND ITS FUNCTIONS
1. Information – about what the market needs and wants
2. Promotions – company’s current offer
3. Contact – prospective and current buyers
4. Matching – fit the offers to the needs of the buyer
5. Negotiation – settle pricing and other terms for purchase
6. Physical Distribution – transport of goods and services to the consumers
7. Financing – cover all the costs involve in the distribution
8. Risk Taking – financial risks; full margin, losses, pilferage
 Distribution Channels in the Tourism Industry
MARKETING INTERMEDIARIES
-are types of indirect distribution channels which are independent
organizations that help distribute products and services

1. TRAVEL AGENTS
Most widely used marketing intermediary in the tourism industry. Travel
agents perform 4 distinct functions:
1. Distribution and sales of network
2. Reservation and ticketing
3. Information provision and travel counselling
4. Design of individual itineraries
 Distribution Channels in the Tourism Industry
MARKETING INTERMEDIARIES
-are types of indirect distribution channels which are independent
organizations that help distribute products and services

2. TOUR OPERATORS/ WHOLESALERS

Are organizations that offer packages vacation tours to the general public
targeting the leisure market

3. TRAVEL SPECIALISTS
Organizations that focus on one or more functions of the
distribution system

4. HOTEL SALES REPRESENTATIVES

sell hotel rooms, function rooms and other services in a particular
market area

5. GOVERNMENT TOURIST ASSOCIATIONS

are excellent way to bring information to the market and gain
bookings
 Distribution Channels in the Tourism Industry
MARKETING INTERMEDIARIES
6. CONSORTIA
group of hospitality organizations that is allied for mutual benefit of
the members

7. RESERVATION SYSTEMS
Entities that provide a central reservation system for hotels

8. GLOBALLY DISTRIBUTION SYSTEMS

GDS are computerized reservation systems that serve as product
catalog for travel agents and other distributors

9. CONCIERGES
Hotel front office staff are usually frequently asked hotel employees
 Distribution Channels in the Tourism Industry
CHANNEL CONFLICT
Conflict may arise between channel members when one member of the
distribution system perceives another to be engaged in behavior that may hinder
the other member from achieving their goals.
Horizontal conflict –arises with the same level of distribution channel

Vertical conflict – ensues between members at different levels of the same

distribution channel

SELECTING CHANNEL MEMBERS

1. Knowing the needs of your customers
2. Attracting channel members
3. Studying economic feasibility
4. Maintaining control
 Distribution Channels in the Tourism Industry

FRANCHISING
Is a method of doing business by which a franchise is granted the right to engage
in offering, selling or distributing goods or services under a marketing format
which is designed by the franchisor.
 Distribution Channels in the Tourism Industry
FRANCHISE AGREEMENT
is an authorization granted to someone to sell or distribute a
company’s goods or services in a certain area, or a business
established or operated under such authorization

FRANCHISEE
Is an organization or person that purchase a brand name to distribute a
product or a service.

FRANCHISOR
Is the parent company of a franchising distribution network
 Distribution Channels in the Tourism Industry
FRANCHISEE
Is an organization or person that purchase a brand name to distribute a
product or a service.

Advantages
Brand recognition
Minimizes financial risks
because of less chances of
business failure
National advertising and
marketing plan
Faster business growth
Disadvantages
Fees and royalties are required
Initial fees are quite steep
Limits products and recipes to
be sold
Limits the creativity of the
franchisee in all aspects of the
business
 Distribution Channels in the Tourism Industry
FRANCHISOR
Is the parent company of a franchising distribution network

Advantages
Receive a percentage of gross
sales
Expands the brand without
much capitalization
Can achieve rapid growth
through its franchisees
Gets support for national
advertising campaign
Disadvantages
Limits other options of
expanding distribution
Franchisees must be
monitored closely to ensure
product and service
consistency
Poorly run franchise units can
reflect negatively on the rntire
brand
Limited ability to require
franchisees to change
operations strategies