Tourism Marketing

Management
Chaper 3
 1. Factors in the Tourism Marketing Environment

Even if tourism enterprises plan and control the marketing process very dili-
gently, they may still be affected or hindered by unavoidable environmental
factors.
When such situations arise, tourism enterprises must exhibit sufficient flexibility
to cope with them.
Through market research, tourism enterprises should anticipate and prepare for
such situations.

The marketing environment is divided into internal and external environmental

factors, with the latter further divided into business and non-business environ-
ments.
1) Internal Environmental Factors

Internal environmental factors refer to management functions or departments

outside of marketing functions, such as production, human resources, finance,
accounting, purchase, and research and development.

The top management of tourism enterprises consists of general managers of

business units, executive committees, presidents, chairpersons, and boards of
directors.

These top management members establish the company's mission, objectives,

overall strategies, and policies.
◆ Tourism companies

1) Marketing managers must not only make decisions within the scope set by the
top management but also obtain approval from the CEO before implementing
their marketing plans.

Marketing managers must also closely cooperate with other functional depart-
ments.

2) Finance managers will be interested in the feasibility of financing the market-

ing plan and operations, while R&D managers will focus on designing safe and at-
tractive resorts.
◆ Tourism companies

3)The purchasing department will be interested in securing enough raw materi-

als and ingredients to provide meals or services for the anticipated number of
customers, and the customer service department will be responsible for ensuring
adequate customer service capabilities and workforce to achieve product deliv-
ery goals.

4) The accounting department is responsible for periodically measuring profits

and costs to inform the marketing department whether the company's objectives
are being achieved.
Thus, all departments directly or indirectly influence the marketing department's
plans and activities.
(2) External Business Environment Factors

Customers, travel agents, advertising agencies, suppliers, labor unions, and

shareholders are among the factors that directly constrain or assist marketing
activities in the external business environment.

Especially customers and tourists are important in market-centric management.

(3) External Non-Business Environment
Factors

Many external factors influence marketing.

These non-business environmental factors include social, cultural, political, le-
gal, ecological, economic, technological competitiveness.
Political instability abroad can deter people from traveling to that country.
Legal constraints can diminish the willingness of citizens to travel abroad.
Economic conditions like inflation, exchange rates, and costs will significantly
impact tourists' spending.
The rise of consumer movements, which clearly demand management of airline
passengers and other reforms, has a significant impact on marketing strategies.
(3) External Non-Business Environment
Factors

In fact, technological and social changes affect the very nature of travel and all
methods of trading and selling tourism products.

Non-business environmental factors, though indirectly affecting marketing from

the periphery, must not be overlooked for their strategic importance as they pro-
vide direct threats and opportunities to management.
2. Tourism Marketing Mix

Another element for tourism marketing is the marketing mix.

The marketing mix refers to all the controllable variables a company uses to
plan, implement, and achieve marketing objectives, similar to ingredients in a
prescription that must be used in the right amounts for success.

In consumer goods marketing, the traditional four variables (4Ps) are product,
place (distribution), price, and promotion.
Recently, some tourism marketing experts have added three more marketing
mixes: physical evidence, process, and people, collectively called the 7P’s.
2. Tourism Marketing Mix

The marketing mix is likened to the controls of a car, such as the accelerator,
brakes, and steering wheel, which must be used considering road conditions
(market) and the actions of other drivers (competition).
Like a car's controls, the marketing mix must be constantly adjusted to reach the
destination or goal.
2. Tourism Marketing Mix

Marketing Mix Defination of Mix Elements Example

What the company offer to

Product Cruise
customers

Place(Distribution) Channel of distribution Travel agency

The amount of money set by

Price the seller based on some factor 990,000 won round trip
for the product

Figure 1-1
2. Tourism Marketing Mix

Marketing Mix Defination of Mix Elements Example

Activities that stimulate inter-

Promotion Advertising, PR, etc
est in the product

The environment where sales

Travel agency or Hotel rooms,
Physical Environment occur or where the product is
etc
produced and consumed

Marketing & Information Selection of product and in-

Process
searching formation

Participants in the transaction

People or experience of the tourism Buyer and Seller
product

Figure 1-1
(1) Product

The product is everything that a company sells and provides to meet the cus-
tomer's needs.
Decisions on product characteristics are based on the verification of tangible and
intangible aspects and the demands of potential customers.
This includes services accompanying the product.
As many cases show, the main thing sold in the tourism business is services.
For example, transporting passengers from one destination to another, the trans-
portation company is essentially selling a service.
(1) Product
(1) Product

Developing an image for the product or service and selecting a brand name are
very important in presenting the product to the public.
Another role of this product is to select and develop the exact number and range
of products and services.
Most companies sell more than one product.
Travel agencies must decide whether to offer a wide range of products or spe-
cialize in a type of travel, such as vacation trips.
Transport companies need to decide on the available routes and service levels
(first class, economy class), and tour operators must determine the number of
available tours and the schedule for each tour.
(2) Place (Distribution)

Distribution (place or delivery process) refers to all activities involved in deliver-

ing the service or product to the customer.
This includes both the place of distribution and the distribution channels.
The seller must decide on the method and place of sale for the product or ser-
vice.
For example, a resort that is part of a large chain can access customers in sev-
eral ways.
(2) Place (Distribution)

Travelers can make reservations through distribution channels established by the

resort's marketing department in various ways, including internet reservations,
using travel agencies or tour operators, calling the resort's reservation desk or
another resort in the group, or using the airline reservation system.
Sellers try to establish distribution points where they are most likely to attract
customers.
For example, a travel agency specializing in holiday tourism may realize that it is
better to locate branches in suburban shopping centers rather than in urban
commercial areas.
(2) Place (Distribution)

Of course, the number of distribution points a tourism company can directly op-
erate may be limited.
For example, if an airline decides that distributing its products through travel
agencies is more cost-effective than using its own ticket offices, it might reduce
its own agencies and increase the number of dealing travel agencies.
(3) Price

Price is the total amount of money that a customer must pay to receive a prod-
uct or service.

In setting prices, a company considers many factors including the actual cost of
producing and distributing the product or service, the company's profit margin,
the current demand for the product, and the prices of similar products and ser-
vices offered by competitors.

At the same time, pricing strategies should appeal to each of the target seg-
ments intended by the product or service.
(3) Price
(3) Price

This is because the product must be perceived as providing value equivalent to

the amount paid by tourists.
Like products in other industries, tourism products typically have a standard
price range.
However, there may be instances when discount or promotional pricing is offered
to stimulate sales.
Discount pricing is often presented during the off-peak seasons for leisure
travel.
For example, from September to May, Amtrak (the American railway company)
implemented the 'All Aboard America' fare plan, providing substantial discounts
off the regular ticket prices.
(4) Promotion

Promotion is perhaps the most visible element of the marketing mix to cus-
tomers.
Promotional activities stimulate interest in and provide information about the
product and service, offering incentives to persuade consumers to purchase the
product and service.
There are countless ways for a company to promote its services and itself.
Promotions primarily use magazines, newspapers, TV, radio, and billboards.
Other methods include editorial reviews in newspapers, customer interviews,
reader opinions, and free publicity through news releases.
(4) Promotion
(4) Promotion

Several techniques used by salespeople in dealing with customers are a form of

sales promotion.
Special gifts and souvenirs, model airplanes, brochures, discount coupons,
printed letters, business cards, newsletters, direct mail, and other promotional
items greatly help in making tourists aware of the tourism products and services.
An interesting promotional program in the history of the tourism industry is the
frequent-flier program devised by American Airlines in 1981.
Since then, other airlines, hotels, and car rental agencies have developed pro-
grams to attract frequent users and build brand loyalty.
(4) Promotion
(4) Promotion

Tourism companies also use advertising slogans to implant a clear company im-
age.
Well-known advertising campaigns include United Airlines' ‘fly the friendly skies’,
Avis Rent a Car's ‘We try harder’, Carnival Cruise's ‘The fun ships’, and Tourism
Canada's ‘The world next door’.
(5) Physical Environment

The physical environment is extremely important in the tourism industry.

The mix of physical environment is especially crucial in two aspects: first, as the
environment where sales occur, and second, as the environment where the ser-
vice is produced and consumed.
Customers are more likely to make purchases in a pleasant and comfortable envi-
ronment, so marketing strategies should focus on considering the physical envi-
ronment where products and services are sold.
When purchasing products like TVs or recliners, people are very interested in
how the product looks, feels, and operates.
(5) Physical Environment

Their attention is more on the product than the surrounding environment.

However, when purchasing tourism products, customers cannot be sure of the
outcome until the trip is over.
Meanwhile, customer expectations and emotions can be influenced by factors
such as the layout of the room, furniture, soundproofing, temperature, and even
the landscape.
In the tourism industry, the physical environment is particularly important for the
repeat stability of the business.
(5) Physical Environment

For example, a customer who has stayed in a room with an unattractive and un-
comfortable design and decoration is unlikely to make a reservation there again.
A resort's messy shore or pool, poorly maintained ski slopes, or a disappointing
view from a hotel balcony are examples of how the physical environment can
ruin a trip.
In conclusion, tourism companies must make every possible effort to improve the
physical environment of their products.
(6) Purchasing Process

The purchasing process involves considering the psychological motivations and

decision-making methods of people when buying tourism products.
Why do people choose to spend their money on tourism products instead of
boats, cottages, or furniture? And why select a specific product among hundreds
of tourism options?
People travel to elevate their status, seek adventure, learn about other cultures.
Some travel to improve their health, trace their ancestral roots, or simply enjoy
time with family and friends.
(6) Purchasing Process

Customers' desires, personal characteristics, and socio-economic status help form

their motivations.
Therefore, a company that can identify the buyer's motivation can organize
products and promotions that align with these motivations.
Providing appropriate information to potential customers is crucial in the pur-
chasing process.
Customers seek to know the sources of information about tourism products, how
to access this information, and how to proceed with the purchase.
(6) Purchasing Process

Tourism marketers should strive to provide this information to facilitate the pur-
chasing process.
The perception of the product in the purchasing process is not always perceived
and interpreted as intended by the company.
Therefore, sometimes it's necessary to overcome misinformation or negative per-
ceptions about the product.
For example, in the 1980s, the cruise industry significantly increased cruise sales
by convincing the public that cruises were not just for wealthy millionaires but
were accessible to a broader audience.
(6) Purchasing Process

Ultimately, marketers realized that customers do not think of each tourism prod-
uct they purchase in the same way.
Tourism products like car rentals or hotels can be chosen more casually, similar
to buying items at a convenience store, while choosing tourism products like
overseas resorts or cruises requires much more thought. This element of the pur-
chasing process influences how products are marketed.
(7) Participants

Participants refer to all individuals directly or indirectly involved in the transac-

tion.
Participants include the seller, the buyer, and other customers.
This 'participants' element is crucial in the tourism industry because of the close
interaction between the seller and the buyer and the formation of the buyer's
tourism experience.
The quality of a tourism experience varies based on the behavior and actions of
the buyer during the trip.
(7) Participants
(7) Participants

The buyer's perception of the transaction sometimes decides whether they will
repurchase the product or service.
Especially in the tourism business, repeat purchases are common, making partic-
ipation an extremely important part of the marketing mix.
The attitudes and behaviors of participants in the transaction can enhance or de-
stroy the customer's experience.
A passenger who receives rude treatment from the crew or indifferent service is
likely to have an unpleasant flight and probably will not book with that airline
again.
(7) Participants
(7) Participants

Conversely, a passenger who is sick or disappointed will not enjoy the trip, re-
gardless of the service quality.
While participants are a variable difficult to control, companies must try to man-
age the behavior of their employees.
Completing training programs and wearing uniforms are two ways to manage em-
ployees.
The training program known as Disney University, run by Walt Disney, is famous
for transforming employees into polite, well-mannered, and happy individuals.
(7) Participants
(7) Participants

Many companies offer free trips or bonuses to employees as a reward for good
performance.
This is an example of internal marketing.
The purpose of offering incentives is to make employees feel good about the
company and perform their duties better.
Meanwhile, companies should also try to manage the behavior of customers.
In tourism, tourists' preferences, expectations, and behaviors intensely shape
their tourism experiences.
(7) Participants
(7) Participants

Factors affecting the quality of the travel experience include where the travelers
want to go, what they want to do, and which attractions they prefer.
Therefore, the image and benefits of the tourism destination projects pursued by
the buyer play a crucial role in this process.
Those involved in marketing and sales in the tourism industry need to recognize
and harmonize the interaction between customers and products.
Travel agents helping customers plan their trip and choose between alternatives
must develop specialized skills to meet the expectations of their clients.
Quiz
1. For marketing environment factors, what can it be divided?
▶ It can be divided into internal environment and external environment.

2. What do internal environmental factors refer to?

▶They refer to management functions or departments outside of marketing
functions, such as production, human resources, finance, accounting, purchase,
and research and development.

3. What do external business environment factors refer to?

▶They refer to customers, travel agents, advertising agencies, suppliers, labor
unions, and shareholders that directly constrain or assist marketing activities in
the external business environment.

4. What do external non-business environment factors refer to?

▶They refer to social, cultural, political, legal, ecological, economic, and
technological competitiveness.
Quiz
5. What does ‘Tourism Marketing Mix’ mean?
▶It means all the controllable variables a company uses to plan, implement,
and achieve marketing objectives.
6. What are 4 Ps in the traditional consumer goods marketing?
▶They are product, place(distribution), price, and promotion.
7. What are the 7 Ps in tourism marketing?
▶They are product, place(distribution), price, promotion, physical
environment, process, and people.
8. What does ‘Price’ mean in tourism marketing?
▶It means everything that a company sells and provides to meet the customer’s
needs.
Quiz
9.What does ‘Place(distribution) mean in tourism marketing?
▶It means all activities involved in delivering the service or product to the
customer.
10. What does ‘price’ mean in tourism marketing?
▶It means the total amount of money that a customer must pay to receive a
product or service.
11. What does ‘promotion’ mean in tourism marketing?
▶It means the activities stimulate interest in and provide information about
the product and service, offering incentives to persuade consumers or purchase
the product and service.
12. What does ‘Physical environment’ mean in tourism marketing?
▶It means external environment and it is important in two aspects: first, as the
environment where sales occur, and second, the environment where the service
is produced and consumed.
Quiz
13. What does ‘Purchasing Process’ mean in tourism marketing?
▶It means the psychological motivations and decision-making methods of
people when buying tourism products.
14. What does ‘Participants’ mean in tourism marketing?
▶It means all individuals directly or indirectly involved in the transaction.
Participants include the seller, the buyer, and other customers.
Thank you