Unit 05 - Marketing and Promotion

Travel and Tourism - iGCSE
2017-19
Year 11
Unit 05 - Marketing and

Promotion
3 - Learning Outcomes
1 – Role of Marketing 2 - Segmentation 3 - Product 4 - Place 5 - Price 6 - Promotion
2.1 – LEARNING OUTCOMES

 ALL WILL – Have at least a clear idea of
what is business staffing, is and why it is
necessary.
 MOST WILL – Be able to recognise the
characteristics of good staff and what to look
for in employees.
 SOME WILL – Use this knowledge to discuss
the benefits and disadvantages of staffing,
how to get the most from staff and how to
lead a team.
1 – Assessment Objectives
AO1 Knowledge with understanding

 Candidates should be able to:
A. Recall, select and present relevant factual information.
B. Demonstrate and apply knowledge with understanding of the correct use
of the following in the travel and tourism industry:
i. commonplace terms, definitions and facts
ii. major concepts, models, patterns, principles and theories.
AO2 Investigation and analysis of evidence
A. Collect evidence from both primary and secondary sources, under
guidance or independently, and be aware of the limitations of the various
collection methods.
B. Record, classify and organise relevant evidence from an investigation in
a clear and coherent form.
C. Present the evidence in an appropriate form and effective manner, using
a wide range of appropriate skills and techniques, including verbal,
numerical, diagrammatic, cartographic, pictorial and graphical methods.
D. Apply knowledge and understanding to select relevant data, recognise
patterns and analyse evidence.
AO3 Interpretation and evaluation

A. Communicate their ideas and opinions in an
accurate, concise and logical manner.
B. Present reasoned explanations for phenomena,
patterns and relationships.
C. Understand the implications of, and draw
inferences from, data and evidence.
D. Discuss and evaluate choices, and make
reasoned decisions, recommendations and
judgements.
E. Draw valid conclusions by a reasoned
consideration of evidence.
Relationship between assessment objectives and components
Assessment Paper 1 Paper 2 Paper 3 Approx. %

objective Core Paper Alternative to Coursework total
% Coursework % Qualification
%
AO1
Knowledge with 40 40 40 40
understanding
AO2
Investigation
and analysis of 35 35 35 35
evidence
AO3
Interpretation 25 25 25 25
and evaluation
1 – Grade Descriptors – Grade A
To achieve a Grade A, a candidate will be able to:

• Recall, select and present relevant factual information and
communicate ideas and opinions in an effective, accurate, concise
and logical manner
• Demonstrate consistently accurate use of travel and tourism
industry terminology, including commonly used definitions,
concepts, models and patterns
• Use knowledge and understanding to select relevant examples,
recognise patterns and trends, and to analyse evidence
• Present thoroughly reasoned explanations for phenomena,
patterns and relationships
• Understand the implications and draw valid inferences from data
and source materials
• Discuss and evaluate choices, and make reasoned decisions,
recommendations and judgements
• Draw valid conclusions by a reasoned consideration of evidence
1 – Grade Descriptors – Grade C
To achieve a Grade C, a candidate will be able to:

• Recall, select and present relevant factual information and
communicate ideas and opinions in a mostly accurate and logical
manner
• Demonstrate sound use of travel and tourism industry terminology,
including commonly used definitions, concepts, models and
patterns, although with some omissions
• Use knowledge and understanding to select some relevant
examples, to recognise some patterns and to attempt analysis of
some evidence
• Present valid explanations for phenomena, patterns and
relationships
• Understand some implications and draw some valid inferences from
data and source materials
• Discuss and evaluate some choices, and attempt reasoned
decisions, recommendations and judgements
• Draw sound conclusions by a consideration of some of the evidence
1 – Grade Descriptors – Grade F
To achieve a Grade F, a candidate will be able to:

• Recall, select and present some factual information and
communicate ideas and opinions with some accuracy and structure
• Demonstrate some use of travel and tourism industry terminology,
including commonly used definitions, concepts, models and
patterns, although with significant omissions
• Use knowledge and understanding to select some examples, to
recognise some patterns and to attempt limited analysis of evidence
• Present limited explanations for phenomena, patterns and
relationships
• Understand some implications and draw some inferences from data
and source materials
• Discuss or evaluate a limited number of choices, and attempt
decisions, recommendations and judgements which may not always
be fully appropriate
• Draw limited conclusions by a superficial consideration of some of
the evidence
1 – Scheme of Assessment
Candidates take:
Paper 1 2 hours
This question paper comprises four scenario-based questions which require candidates to provide short answers.
The scenarios are set in an international travel and tourism environment, although some provision is made for
candidates to refer to local examples.
(60% of total marks)
and either: or:
Paper 2 2½ hours Paper 3

Alternative to Coursework Coursework Investigation* (Centre-based assessment) This is an
This question paper comprises scenario- investigation which is directed towards the contents of Unit 6, and
based questions, which require should allow candidates to apply their knowledge and skills of this
candidates to provide short answers. area of the travel and tourism industry.
It is based primarily on the contents of It requires a basic understanding of the principles of the marketing
Unit 5. and promotion of visitor services. It explores the ways in which the
Candidates should have a broad services that are available to visitors and tourism providers, through
understanding of the principles of tourist boards and tourist information centres, can be promoted and
marketing and promotion, and of the ways developed for international travel and tourism.
in which marketing and promotion are The candidate’s report should be no more than 3000 words, in
used within the travel and tourism addition to relevant annotation and illustrative material. Candidates
industry. will be expected to: demonstrate the ability to collect both primary
and secondary evidence; analyse, investigate and draw conclusions
from this; and present their findings in a structured report.
5 – Marketing and Promotion
5.1 Role and function of marketing and promotion

a) Identify and explain why marketing and promotion are important to travel and tourism
providers:
• increased sales/usage/profitability/market share/customer base
• competitive advantage
• positive organisational and product image
• customer satisfaction/brand loyalty/repeat business
b) Describe the main marketing and promotion techniques used in travel and tourism:
Market research
• the use of primary market research techniques (such as self-completion
questionnaires, telephone surveys, face-to-face interviews, Internet surveys, postal
surveys, focus groups) and secondary market research techniques (such as
internal information, e.g. sales records and sources of external information, e.g.
government reports)
• identifying customers’ needs and wants using qualitative and quantitative research
data
Market analysis tools
• full situation analysis incorporating SWOT (strengths, weaknesses, opportunities
and threats) and PEST (political, economic, social and technological influences)
analyses
• the development of an effective marketing mix (product, price, place and
promotion)
5.2 Market segmentation and targeting

a) Identify the different market segments targeted by travel and
tourism providers:
• geographic
• demographic
• lifestyle/psychographic
b) Explain how specific travel and tourism products are developed
to cater for the needs and expectations of different market
segments:
• products (package holidays, transport including transfers,
accommodation and catering, tourist attractions, tourist
information services, excursions and additional activities)
• the relationship with market segments: type of customer
(families, singles, groups, business, leisure, independent
travellers); different ages/gender; specific needs; special
interest; quality/ economy/value for money, etc.
5.3 ’Product’ as part of the marketing mix

a) Identify and explain the differences between travel and tourism
products and services:
• products (tangible, homogeneous, separable, storable) identified
and explained
• services (intangible, heterogeneous, inseparable, incapable of
being stored, perishable) identified and explained
b) Investigate the development and modification of travel and tourism
products and services through:
• the use of the product life cycle (research and development,
introduction, growth, maturity, saturation and decline)
• the creation of brand image through product features, packaging,
price, promotion, target market segments and brand loyalty
• the development of a product/service mix to appeal to different
market segments and the ways in which tourism organisations
develop a product portfolio
5.4 ’Price’ as part of the marketing mix

a) Investigate a range of common pricing policies used in the travel and tourism
industry:
• market penetration
• market skimming
• discount pricing
• variable pricing
• loss leader pricing
• promotional pricing/special offers
• the going rate/competitive pricing (price makers/price takers)
• prestige pricing
• price bundling
b) Identify and explain the factors that determine pricing policies:
• fixed and variable costs
• profitability
• subsidies
• competitors
• customers’ expectations/likely number of customers
• seasonality
• economic factors (exchange rates, taxes and other levies)
5.5 ‘Place’ as part of the marketing mix

a) Investigate the factors that influence the selection of a location for
travel and tourism facilities:
• costs
• availability of suitable premises/land
• character and features of area
• local and transient population
• adjacent facilities
• access/transport links
• availability of staff
b) Identify and explain the range of distribution channels for travel and
tourism products and services:
• direct selling
• wholesalers
• retailers
• Internet
• Global Distribution Systems
5.6 ‘Promotion’ as part of the marketing mix

a) Explore the main methods of promotion used in the travel and tourism industry:
• advertising
• publicity/print material (brochures, leaflets, flyers)
• point of sale displays
• public relations (sponsorship, press release)
• direct marketing
• sales promotions (special offers, use of merchandising, mascots)
• personal selling
• videos/DVDs
• Internet (websites, pop-ups, e-brochures)
• electronic media including the use of mobile technology and social networks (e.g.
Facebook, Twitter, LinkedIn)
• trade promotions (trade fairs, familiarisation trips, incentives)
b) Identify and explore the factors that are considered when producing effective promotional
materials:
• costs
• stages of the promotional campaign
• target market segments
• timing
• brand image
• AIDA (attention, interest, desire, action) in designing effective promotional materials
1 – Role of Marketing 2 - Segmentation 3 - Product 4 - Place 5 - Price 6 - Promotion Page 179
Introduction
► Travel and tourism providers operate
within a highly competitive market and
because of the vast number of
organisations competing for business
within the travel and tourism industry.
► Organisations must constantly find new
ways to promote themselves and to
raise awareness of the products and
services they offer in the eyes of their
customers and potential customers.
► Therefore, the processes of marketing
and promotion play an important role
for all organisations within the travel
and tourism industry, whether they
operate within the public sector, the
private sector or the voluntary sector.
Introduction
► Within this unit, we shall identify and explain
why marketing and promotion are important to
travel and tourism providers and we shall also
explore the main marketing and promotion
techniques used within the industry.
► You will need to understand some of the key
principles of marketing, including market
segmentation and targeting, and the use of the
marketing mix.
► You will get the opportunity to use some key
marketing tools within an industry context,
including SWOT and PEST analyses, the
product lifecycle model, the creation of a brand
image and the use of product portfolios.
► The external examination for this unit also
uses a case study approach, so it is important
that you develop the appropriate skills to allow
you to demonstrate your understanding of
these marketing concepts within an applied
context.
5.1 - Role and Function of Marketing and Promotion
Role and function of marketing and promotion

► In 1976, the Chartered Institute of Marketing defined marketing as:
the management process responsible for identifying, anticipating and
satisfying customer requirements profitably.
► While this definition still holds true, with massive technological changes, the
impacts of globalisation, and the spread of marketing techniques into new areas,
such as the public sector, the process of marketing has undergone enormous
changes over the last three decades.
► Customers now have far more control over relationships with travel and tourism
providers and more choice over how to access the products and services. With
increased choice comes greater demand for quality service. To reflect these
changes, the Chartered Institute of Marketing’s Research and Information team
produced a new definition of marketing in 2007, as follows:
Marketing is the strategic business function that creates value by stimulating,
facilitating and fulfilling customer demand.
Role and function of marketing and promotion

► The definition then goes on to explain how the process of marketing achieves these
things:
It does this by building brands, nurturing innovation, developing relationships,
creating good customer service and communicating benefits. With a customer-
centric view, marketing brings positive returns on investment, satisfies
shareholders and stakeholders from business and the community, and
contributes to positive behavioural change and a sustainable business future.
► The important thing to remember is that marketing should come from the thinking
point of the customer, rather than being totally product-centred. It should no longer
just be a case of putting together package holiday and then using ‘marketing’ to
generate a demand for it. Instead, marketing should be used to influence
customers’ behaviour by suggesting ways that customers can obtain the products
they desire.
► Promotion, on the other hand, has been described as any form of communication
or activity carried out specifically to call attention to the products and services of a
particular organisation. It is important to consider the roles and functions of
marketing and promotion together in achieving the aims and objectives of travel
and tourism providers, i.e. in bringing customers’ attention to their products and
services.
Identify and explain why marketing and promotion are important to travel and
tourism providers
► Marketing has four main functions within the travel and tourism industry.
Increased sales/usage/profitability
► Marketing is important to increase the number of sales (in the private sector) with a
view to increasing organisational profitability; or to increase the usage patterns of a
facility (in the public sector) with a view to maintaining the operating efficiency of
the facility.
► This means that organisations in either sector use marketing in order to increase
the size of their customer base - i.e. to continue to attract previous customers as
well as to try and appeal to new customers. In a profit-seeking organisation, the
larger the customer base, the more likely the organisation will be in boosting the
value and the volume of its sales.
► The more sales it makes, the more likely it is to make
a profit. In non-profit-seeking organisations, an
increase in the number of users will assure the
organisations continued operation for the future.
► Like any other type of business, travel and tourism
providers need to generate income, irrespective of
whether they are privately or publicly funded.
Competitive advantage
► We know that the travel and
tourism industry is hugely
competitive. There are many
destinations with very similar
attractions and many different
providers (tour operators, hoteliers,
airline companies) all offering a
similar product or service.
► Marketing plays an important role,
therefore, in helping organisations
or destinations to attract more
customers than their rivals, in order
to survive in this competitive
business environment.
Positive organisational and product image

► Customers like to use brands they are
familiar with or which they perceive offers the
best quality and value for money. Thus,
marketing is essential in creating an
association of a certain product or service in
the essential in creating an association of a
certain product or service in the customer’s
mind.
► Those organisations that can create a
positive image for themselves through a
range of marketing and promotional
techniques are likely to be most successful.
► Similarly, a product or service with a positive
image will gain more customers than
products and services which are less well
perceived.
Customer satisfaction
► A good way to achieve customer satisfaction is by offering products and
services which meet the needs and wants of the customers.
► If customers are satisfied by what they receive, they are more likely to return
for repeat business purposes and are also more likely to tell their friends and
family about their positive experiences. These may in turn become a
customer of the organisation.
► Thus, marketing plays an important
function in helping to create customer
satisfaction, by allowing a customer to
gauge whether the product will offer them
exactly what they want or not.
► With current changes to the global
economy, political instability and safety
concerns, the travel industry has changed
for both the consumer and for tourism
professionals. Whether in good times or
bad, tourism marketing is a vital part of this
business - it convinces customers to travel.
E
Example
► Taiwan, with a population of approximately 22m people,
has a booming outbound tourist market, with a consistent
growth over the recent years. Approximately, one third of
the Taiwanese population (around 7.3 million people)
travels annually.
► Furthermore, the disposable income of the Taiwanese people
is also relatively high, as it is approximated that around 25%
of their income is saved. This indicates a mobile population
with enough income to travel comfortably offering a viable
outbound tourist market. The Pacific Islands have, to date,
not actively sought to gain a share of this market.
► There is high competition for the Taiwanese tourist from
closer and cheaper destinations offering similar products
to that of the ‘surf, sea and sun’ offered by the Pacific. The
Pacific’s main competitors include mainland China, Thailand, the Philippines, the
Maldives, Hawaii, Palau, Guam and Singapore.
► Around 110— 120 flights a week fly from Taipei airport to overseas destinations.
Competition for the outbound tourist from Taiwan is very keen, with many overseas
tourism destinations competing head on for a share in the market.
Describe the main marketing and promotion techniques used in

travel and tourism
► Marketing and promotion are complex processes which underpin
tourism providers. Marketing allows businesses to identify their
position in the market from which travel and tourism providers are
able to set targets for future improvement and identify who their
competitors are.
► Given both the customer focus of this industry and its dynamic
nature, it is important that travel and tourism organisations
understand the specific groups of customers at whom their products
and services are being targeted.
► There are many ‘tools’ that help guide travel and tourism providers in
their decision-making processes, but one of the main methods the
main business activities of many travel and used to assess the
current market position and the variations in demand for and supply
of travel and tourism products and services is the tool of market
research.
Primary marketing research techniques and secondary marketing

research techniques
► We know that to achieve customer satisfaction, organisations must in
some way meet the needs and wants of their customers. However, it is
not always easy to identify exactly what these needs and wants are,
especially for intangible products and services being offered by the
travel and tourism industry.
► The most common method used
by any business, to determine
not only what the customers’
needs and wants are, but also to
establish who the customers are,
is to carry out market research.
► According to the Chartered
Institute of Marketing’s new
definition of marketing,
organisations wish to ‘fulfil’
customers’ demands.
Primary marketing research techniques and secondary marketing

research techniques
► Market research enables an organisation to know exactly what these
demands are likely to be and can result in travel and tourism providers
putting together holiday products and services that exactly match these
demands.
► According to the Market Research Society, market research is:
the planned process of collecting, recording, analysing and
evaluating data about customers and the market itself.
► Market research can be carried out in
a number of different ways. Some
larger organisations may decide to
conduct the research themselves,
using appropriately trained
professionals from the marketing
department.
Primary marketing research techniques and

secondary marketing research techniques
► Other organisations choose to commission or to
pay for a market research project via a market
research agency or a market research consultancy
service. There are usually five stages to the market
research process (Fig. 5.1).
The five stage market research process
▲ Fig 5.1 – Stages of Market Research Process

Stage 1:Set the objectives

► This is sometimes also known as ‘identifying the problem’. This initial stage
sets the purpose for conducting the research and is often posed as a
statement, which needs to be proved or disproved. For example, the
Maldives appeal only to the honeymoon and diving segments.
Stage 2: Design the research
► During this stage, a detailed plan of action is drawn up, identifying the
timescale and resources required for the research as well as deciding the
research methods that will be used.
Stage 3: Data collection
► This is the stage when the main research activities are carried out. In stages
1 and 2, a range of data collection techniques will have been selected, which
are now put into action. This could involve a combination of both primary and
secondary research techniques.
Stage 4: Analyse the data

► Once all of the data has been collected, this will need to be
collated and interpreted. Depending on the type of data collected,
it may be possible to carry out statistical analysis.
Stage 5: Report the results
► Overall findings from the research will be presented, drawing
conclusions against the original objectives. In the example
mentioned, it may be the case that the market research disproves
the theory that the Maldives has a very narrow target market for
tourism purposes, finding instead that many families and elderly
visitors are also attracted to the area as well as the anticipated
honeymooner and diving markets.
Primary market research

► It is also known as field research, as this
type of research requires organisations to go
out into the market to find out about
customers’ experiences and expectations.
There are many commercial organisations
which will carry out primary research on
behalf of other organisations but this is
particularly costly. Primary research could be
done by conducting a survey at the airport or
within the reception area of a number of
hotels.
► Primary research methods include self-
completion questionnaires which are a
series of open-ended, closed or multiple
choice questions which is given directly to
the customer or potential customer to fill in.
Primary market research

► Telephone surveys and Internet surveys are also common forms of
primary research in which existing or potential customers are contacted
either by telephone or by email or are randomly targeted when visiting a
website on the Internet and asked questions relating to travel and
tourism products and services.
► Exit surveys are carried out as a visitor leaves an attraction in which
opinions about the overall visitor experience whilst at a particular facility
are sought. This may be done through a face-to-face interview with a
member of staff at the facility, asking direct questions of a visitor.
► Postal surveys are also still sometimes carried out, although the
response rate for these is often very poor; relying on the customer to fill
them out in their own time and then take responsibility for returning
them. Focus groups are sometimes called together by an organisation,
where a number of customers are led by a member of staff to discuss
their views of a certain product or service. These are costly and take
time to organise.
Secondary market research

► This is also known as desk research as it involves using existing
information that has been collected by a third party for a different purpose
or using data from the organisations own records. Much of this information
may be in written or electronic formats; therefore, the researcher is able
to carry out the majority if this type of research on a desk in an office.
► Secondary market research sources are many and varied. These sources
tend to be classified as internal, i.e. data from the organisation’s own
sales records or a customer database detailing how often a customer
uses a particular facility or external which might include government
produced data or trade reports - most of which can be accessed through
membership accounts via the Internet. Academic research findings fall into
this category too; for example articles within journals such as the Journal
of Travel Research.
► It is important to recognise that using secondary market research sources
may not always be reliable. The research was originally carried out with a
different objective in mind; therefore, the data may be irrelevant or
outdated or may contain the author’s biased opinion.
Secondary market research

► This is also known as desk research as it involves using existing
information that has been collected by a third party for a different purpose
or using data from the organisations own records. Much of this information
may be in written or electronic formats; therefore, the researcher is able
to carry out the majority if this type of research on a desk in an office.
► Secondary market research sources are many and varied. These sources
tend to be classified as internal, i.e. data from the organisation’s own
sales records or a customer database detailing how often a customer
uses a particular facility or external which might include government
produced data or trade reports - most of which can be accessed through
membership accounts via the Internet. Academic research findings fall into
this category too; for example articles within journals such as the Journal
of Travel Research.
► It is important to recognise that using secondary market research sources
may not always be reliable. The research was originally carried out with a
different objective in mind; therefore, the data may be irrelevant or
outdated or may contain the author’s biased opinion.
Qualitative and quantitative data

► Qualitative data refers to the information collected about
customers’ opinions and attitudes towards products and
services, whereas quantitative data tends to be numeric or
statistical by nature - frequency of visits, cost and number of
users etc.
► Quantitative data allows patterns and trends in the market to
be displayed visually in chart or graph forms; qualitative data
on the other hand is more difficult to represented graphically.
Case Study 1: Snaefell Visitor Centre

► Snaefell Visitor Centre is a visitor attraction built at a gateway to one of
Iceland’s national parks. The Snaefell Glacier National Park is situated in
an area of beautiful glacial scenery with a volcanic mountain landscape
sweeping down to the rugged coastline. The visitor attraction has an
exhibition centre with displays of local scenery, plants and wildlife, a tea
room, and a souvenir shop which sells locally produced crafts.
► A recent customer survey has found that the majority of visitors to the
Snaefell Visitor Centre were middle aged and elderly couples on coach
tour holidays. Although the attraction is busy at
certain times of the year, visitor numbers are
declining and outdoor enthusiasts rarely visit
the attraction anymore.
► As a result of the customer survey, the Snaefell
Visitor Centre has employed a consultancy firm
to carry out a review and give advice on ways
of improving the business.
SWOT and PEST analyses

► Travel and tourism providers must be able to carry out an accurate
assessment of the business environment in which they currently operate
or, in the case of a new business, might operate. The process involved
in carrying out this analysis is often referred to as a situation analysis.
The results of this assessment enables a travel and tourism provider to
identify the positive and negative influences on its business activities.
► It also allows an organisation to recognise those influences which are
within its own control i.e., internal influences and those influences
beyond its control i.e., external influences.
► A situation analysis usually consists
of two components, the first of which
is commonly known as SWOT
analysis.
► SWOT Analysis is a marketing tool
used in many business contexts.
SWOT is an acronym, which stands
for:

► These aspects are assessed in relation to a particular product, organisation
or a destination to understand its position in the market.
► Strengths and weaknesses are internal factors i.e. things that the
organisation can itself control, while opportunities and threats are external
factors i.e. things that are beyond the control of the organisation.
► Development within the travel and tourism industry relies heavily on the
outcomes of SWOT analysis. If the results show that an organisation has
many weaknesses and the market poses lots of threats, then it is unlikely
that an organisation will choose to expand the range of products and
services it offers.
► On the other hand, if the results of the
SWOT analysis show that a particular
tourism destination has many strengths
and the market situation presents lots of
opportunities for the destination to
develop further, then it is highly likely
that these developments will take place.
Case Study 2: SWOT analysis of tourism in Lake Wanaka, New Zealand

► Lake Wanakas spectacular location at  Limited direct air services;
the foot of the Southern Alps with the  Infrastructure is under pressure to
wilderness of the Mount Aspiring cope with tourism demand;
National Park nearby makes it a  Poor levels of customer service.
magnet for outdoor lovers the world ► Opportunities
over. Many of the operators chose  Increase number of visits from
Lake Wanaka as a base to indulge in domestic tourism market;
activities such as boating, hiking,  Increase levels of sustainability;
climbing, skiing or mountain biking to  Develop an ‘Events Calendar’.
name a few. ► Threats
SWOT analysis of tourism in Lake  Rising costs of fuel impacts in air
Wanaka, New Zealand fares;
► Strengths  Competition from other regions in
 Unique attractions: Warbirds / New Zealand such as the
Puzzling, World / Snow, Farm / Queenstown and the Southern
Festival of Colour Lakes
 World Class Scenery
 Established ski industry
► Weaknesses

► The second part of a situation analysis usually takes the form of a
PEST analysis. This is another marketing tool used to assess the
external influences on the business environment and is also known
by its acronym:
► A PEST analysis allows an organisation to identify any influences
on the market, which are beyond its control. By understanding what
these forces may be, a tourism provider is better placed to assess
how great a risk these external factors pose to the market, and
consequently to the business itself.
► Although these influences remain
outside the control of the travel or
tourism provider, this does not
necessarily mean that their impact
upon the business cannot be
minimised.

► Political: Organisations within the travel and
tourism industry are regulated by government,
through legislation and/or controlled by other
regulatory bodies, in order to protect the
customers, suppliers and the environment. Civil
unrest, acts of international terrorism also exert
political influence within this industry.
► Economic: Foreign exchange rates, periods of
recession and the global economy all play
important roles in exerting positive or negative
influences on tourism. In recent years, the
global economic downturn has led to less
disposable income and thus fewer travellers,
having a heavy impact on the profitability of
airline companies and tour operators, for
example.

► Social: The global threat of pandemic diseases such
as H5N1 Avian Influenza, SARS and H1N1 Swine
Flu impacts on the industry as well, causing some
travellers to cancel holiday plans. The rates of crime
in certain destinations and local attitudes to tourists
might also impact on the popularity of specific
destinations with tourists.
► Technological: Infrastructure development,
including the construction of airports with high
carrying capacities and hotels with high numbers of
bed spaces all contribute to positive technological
influences on tourism provision. The Internet has
transformed the way in which travel and tourism
products and services are marketed. Those
destinations with under-developed infrastructure will
lose competitive advantage with those destinations
which are more technologically advanced.
Case Study 3: Results from PEST analysis of Indian Tourism

Political  Demographic changes - ageing
 Threat of terrorism and issues population travelling to more
of security; adventurous destinations;
 India’s role in international  Trend for more sustainable
politics; tourism and healthier lifestyles.
 Government has low spending Technological
on tourism promotion.  Growth of E-tourism in India;
Economic  New transportation methods as
 GDP of India; airports and railway
 Exchange rate fluctuations. infrastructure overloaded.
Social
The development of an effective

marketing mix
► Marketing mix is the term given to
the four interlinked components
which influence a customer’s buying
decision and the emphasis that a
travel and tourism provider places
on these individual factors, when Source: http://business-science.blogspot.
com/2009/01/marketing-mix.html
trying to influence the customer’s
decision to buy. The marketing mix ▲ Fig 5.2 – The Marketing Mix
(Fig. 5.2) has been described as:
getting the right product to the
right people at the right price, at
the right place, using the right
promotional methods ’. Out of
this description was born the
term ‘The 4 P’s’ of the marketing
mix.
The development of an effective marketing mix

► It is essential that an organisation is able to
select the most appropriate combination of
factors to establish its marketing mix.
1. It must choose the specific features and
characteristics of the product and/or service it
offers;
2. it must decide how the price will be set for Source: http://business-science.blogspot.
com/2009/01/marketing-mix.html
customers; ▲ Fig 5.2 – The Marketing
3. it must select the most convenient locations Mix
for distributing its products/services - i.e.
making it easy for customers to buy from the
organisation, and lastly,
4. it must choose how to promote its products
and services to ensure that potential
customers can be reached.
► These four elements of the marketing mix form
the core of the learning content for this module.
5.2 – Market Segmentation and Targeting
Market segmentation and targeting

► Market segmentation is the process through which a target market is
selected for the products and services being offered.
► Customers are grouped or classified according to a number of pre-set
characteristics and the market is divided into a series of ‘segments’
based on these characteristics.
Identify the different market segments targeted by travel and tourism
providers
► This process allows an organisation to identify one or more specific
target market/s upon which to focus its marketing efforts.
► This means that a tourism provider can target only those customers who
are likely to be interested
in the product, thus
saving time and money.
► Costa Daurada
tourists per
season
Geographic, demographic and lifestyle segments

► The following table (Fig. 5.3) identifies the three main forms of market
segmentation commonly used by travel and tourism providers. These are,
however, by no means the only forms of segmentation used.
Forms of Market Customers ‘classified’ by these typical characteristics
Segmentation
Geographic segment By locality, area, region, etc. This includes domestic
versus overseas visitors.
Demographic segment By age, gender, ethnicity, levels of disposable income etc.
Lifestyle segment (also known By socio-economic factors such as level of education or
as psychographic segment) profession as well as interests and attitudes.
▲ Fig 5.2 – Forms of market segmentation
► The travel and tourism industry has worked at refining specific market
segments; example, the grey market - by age, sports tourists and medical
tourists - by lifestyle. It is common practice in the travel and tourism industry
to use market segmentation and the results of market research in order to
build a customer profile, which sets out the characteristics of a typical
customer or product user.
Explain how specific travel and tourism products are

developed to cater for the needs and expectations of
different market segments
► In order to remain competitive in this dynamic industry,
providers create new and exciting product packages to offer
to customers, in order to fulfil their needs and expectations.
► However, as it is not possible to know exactly what every
customer does need or expect from a holiday or travel
experience, organisations operating in the travel and
tourism industry often try to cater to the likely needs or
expectations of the specific market segments.
► In order to be able to accomplish this, travel and tourism
providers must understand the different types of products
that are already available within the market, and be able to
match different types of products with different types of
customers. Market research helps in this aim.
►Dubai Visitors
Products explained and the relationship with market segments

► It would be impossible to list here all of the available types of travel and
tourism products. Instead, we must loosely classify some of the products
available under industry specific components (Fig. 5.4).
Type of product Example of relationship with different market segments
Package Families; Club 18-30;

holidays Groups - education; Special
interest; Luxury/Budget etc.
Transport Age; Specific Needs -

mobility; Families; Type of
Customer - Business or
Leisure; Luxury/ Budget;
▲ Fig 5.4 – Product types and their relationship

Type of product Example of relationship with different market segments

Accommoda Families; Singles; Groups;
tion and Types of Customer -
catering Business or Leisure;
Different Ages/Gender;
Specific Needs;
Luxury/Budget;
Tourist Families; Groups; Ages/

attractions Genders; Specific Needs;
Special Interest; Free
Entrance;
Tourist Families; Singles; Groups;

information Types of Customer -
services Business or Leisure; Specific
Needs; Special Interest;
▲ Fig 5.4 – Product types and their relationship
Specific travel and tourism products

Package Holidays
► A package holiday consists of transport and accommodation
advertised and sold together by a tour operator. Other services
may also be provided such as car rental or activities/excursions
during the holiday. The services of a holiday representative are
usually included in this example of product bundling.
► Tour operators try to cater specifically for the needs and
expectations of different types of customers by offering a variety
of different package holidays to destinations around the world.
► The type of accommodation included in a package can be varied
to suit different budgets ranging from luxury 5 star
accommodation to low-cost backpacker hostels or basic campsite
facilities.
► Alternatively, different forms of transport can be included in order
to cater for the needs of different customers.
Transport
► It is possible to use any mode of
transport to appeal to different customer
types within the travel and tourism
industry.
► Many tour operators specialise in niche
markets using more unusual modes of
transportation such as motorcycle tours,
luxury rail holidays., houseboat
experiences as well as luxury cruise
liners, helicopter flights, hot air ballooning
etc.
► But not all of these methods would suit
everybody - this is how travel and
tourism provider select a specific target
market for a specific product.
Accommodation and catering

► In much the same way that any type of
transport can feature as part of the travel
and tourism offering, so too can the type of
accommodation and catering arrangements
differs enormously.
► Accommodation can range from a luxury
over-water bungalow within an island resort
in the French Polynesian Islands such as
Bora Bora to a one man tent in the
Himalayas, to a Manhattan Skyscraper
apartment block to a log cabin ski lodge in
the Alps.
► The features, characteristics and amenities
offered by each type of accommodation will
appeal to a variety of different types of
customer.
Tourist attractions
► Each year an enormous number of tourist attractions are offered up for
tourists to visit during their recreational time within a destination.
► Attractions can be classified in a number of different ways such as
manmade, natural, historic, cultural, family fun etc.
► Museums offer new exhibits or special events with
visiting speakers to attract the special interest
market; theme parks develop more exhilarating
white knuckle rides or character-based themes;
zoos and sea life centres try to entice customers
with more hands-on experiences such as feed the
animals, walk amongst the bats etc.
► There are often special offers available for free
entry to different types of visitor attractions,
example, Kids Go Free, to entice more customers,
including ‘passport tickets’ linking two or more
attractions within a locality and deals which include
entrance tickets within the transport cost.
Tourist information services

► Most countries offer tourism information service, either through an online
research facility and/or the provision of a Tourism Information Centre in
the main destinations within the country.
► However, to remain competitive and to ensure maintaining a large
enough customer base in order to remain financially viable, tourist
information service providers have also begun to expand their range of
products and services.
► Many now make full use of advanced technology to offer 24 hour touch
screen facilities; most will arrange accommodation for travellers in their
next destination via the ‘Book a bed
ahead’ scheme.
► Many such service providers offer
theatre bookings and guided sightseeing
tours as well. A range of in-country
souvenirs are offered for sale, in a further
attempt to cater for the needs and
expectations of the different visitor types.
Different market segments

► We have already mentioned the range of market segments commonly
targeted by travel and tourism industry providers. These are often referred
to by the term Visitor type’. They can be classified in the following ways:
Family
► The family market has been traditionally viewed as the most important
market segment for package holidays. The ‘sun, sea and sand’ family-
based offering has formed the main feature of holiday brochures for the
mass tourism market since the 1970’s.
► Special offers centre around free places for
children; family-room accommodation is also
commonly available as well as children’s
menus to cater for the needs of this market
segment.
► Many of the ‘newer’ destinations have also
recognised the importance of this market
segment and tailor their provisions
accordingly.
Singles
► This market segment is much less publicised within the travel and tourism
industry; it is almost as if we do not associate the act of leisure travel with
individuals. The singles market is nonetheless an important one, with
increased earnings being made by accommodation providers who offer
single rooms at a supplemented price.
► Some tour operators also advertise additional security measures for lone
female travellers such as not allocating rooms directly next to the
elevators, in an effort to meet the level of expectation of these types of
travellers.
Groups
► This market segment plays an important part for transport
providers and for tourist attractions, both of which commonly
offer discounted prices for groups of tourists.
► Educational groups such as school trips etc., form the
significant majority of this segment. Therefore, it is hardly
surprising that specialist tour operators have been set up to
meet the specific needs of this segment.
E
Example
► PGL School Trips, Children’s Adventure
Holidays & Group Residential Courses
► PGL is the UK’s leading provider of school trips and
children’s adventure holidays - offering outdoor education
and adventures of a lifetime to children since 1957.
► PGL offers the best in school trips - activity adventure trips
in the UK and Europe, subject study courses, ski trips,
outdoor education and school trips to France.
Types of customer
► This segment refers to the purpose of the visit which
determines the type of customer. We have already read
about business tourists, leisure tourists and those visiting
friends and relatives.
► These are the broadest means of classifying tourists and are
themselves often further subdivided. For example, the
leisure tourism market
could be sub-divided into
honeymooners; whilst the
business tourism market
could be subdivided into
the MICE categories –
Meetings, Incentives,
Conventions and Exhibitions.
Specific needs
► With an increased awareness in
society today of the issues of
equality and diversity, many
travel and tourism providers
actively seek to cater for the
specific needs of any customers
with a disability, a religious/
spiritual need or even
something as commonplace as
a dietary need arising from
vegetarianism falls into this
segment.
Special interests
► This market segment acts as a ‘catch-all’
for other sub-divisions of the market that
is difficult to categorise.
► Special interest customers can include
eco-tourists/ responsible travellers,
medical tourists, sports tourists, cultural
tourists, even those only interested in
experiencing a cruise could be classified
in this segment.
► It is therefore, not at all surprising that
more and more tour operators try to cater
for the very diverse range of needs that
arise from such a breadth of visitor types,
recognising the high value of sales that
could be made from these tourists.
Quality / economy / value for money

► Travel and tourism customers are often described as being price
sensitive. There are certainly a high number of customers who must
budget their travel plans carefully. These tend to be those with young
children, the student/backpacker market and to a lesser extent the grey
market.
► Tour operators, transport and accommodation
providers cater for the needs and expectations
of this category of tourists, ensuring there is a
wide choice of low cost options - lodge and
hostel accommodation, low cost flights or
discounted rail passes etc.
► Similarly, travel and tourism providers have also recognised the need to
cater to the upper end of the market, offering the most luxurious of travel
experiences, such as travelling on the Venice Simplon Orient Express
and staying in the very best in accommodation, such as the Jumeirah
Burj Al Arab hotel in Dubai, the world’s first 7 star hotel.
5.3 – Product as Part of the Marketing Mix
► It is now time to concentrate on each of the four component parts

of the marketing mix in much greater detail. The first element that
we will explore is the travel and tourism product itself.
Identify and explain the difference between travel and tourism
products and services
► According to the Oxford Dictionary of Business:
A product is anything that can be offered to a market that might
satisfy a need. It includes physical objects and services.
► Whilst this definition shows us the scale of coverage of the term
‘product’, it does not help us to identify the key differences
between a product, a service or even a brand. All of these are
important aspects of the ‘product’ element of the marketing mix.
► Tourism product is particularly difficult to define, because it covers:
the complete experience from the time the tourist leaves
home, to the time he returns to it.
(Medlik and Middleton, 1973, p. 85)
Products identified and explained

► In general terms, products are defined by
four main characteristics as discussed
here.
 Tangible - you can see and physically
hold a product (example, a meal in a
restaurant).
 Homogeneous - ‘like’ products are all
standardised (example, one Ramada
hotel room is the same as another,
irrespective of which country it is in).
 Separable - you can easily distinguish
between one product and another
because of the features of each product.
 Storable - a product will last and is not
perishable.
Services identified and explained

► Services can also be described by their four main characteristics,
which are the opposite of the characteristics of a product:
 Intangible - services cannot be seen or physically held.
 Heterogeneous - services are not standardised; every experience
is individual.
 Inseparable - it is not possible to
separate the service out of the
experience (example, being waited
upon is an integral part of the service
element of a meal).
 Incapable of being stored - services
are perishable and cannot be transferred for use at a later date.
► For travel and tourism products, these distinctions are not always
easy to make. If we consider the example of a typical package
holiday as a product, we find many similarities with a service, rather
than a product.

► A package holiday comprises of three main components - transportation,
accommodation and excursions. These components are in fact
intangible at the time of purchase; you do not get to sample the product
and must rely upon the description from the brochure.
► It is impossible to separate out the components of a package holiday;
they are marketed and sold exactly as that - a package. Package
holidays are not homogeneous - two customers purchasing exactly the
same package holiday will have very different experiences because of a
number of additional factors.
► Lastly, package holidays are
perishable: if the tour operator has not
sold the same amount of packages,
as the number of reservations made
with transport and accommodation
providers for a given period, then
those packages will be lost and that
revenue cannot be made up again.

► Many tourism products are very similar in characteristic to
services. They form an invisible and integral part of the overall
customer experience.
► Also, many tourism products are dependent upon a series of
services, for example, staying at a hotel. The hotel room forms
the tourism product but the experience of staying at a hotel is
dependent upon the services of reception staff, the housekeeping
and concierge staff, the chef,
kitchen and waiting staff and
so on.
► This seamless amalgamation
of products and services is
often referred to as ‘the total
tourism product’.
Investigate the development and modification of travel and

tourism products and services
► We already know that customers’ needs, wants and expectations
change all the time, taking into consideration the rapid pace of
change that this industry undergoes.
► As a result, travel and tourism providers must constantly seek to
develop new products and services which will appeal to their existing
customer base as well as attract new customers.
► It is not always possible to develop something completely new;
therefore, organisations within this people-centred industry must find
new ways of developing their existing products through innovation.
► We have already learnt that market research is one way of finding
out customer’s reactions to the product being offered. It is not the
only way however, so let us explore the alternative methods used by
travel and tourism providers to develop and modify products and
services to meet the expectations of customers.
The use of the product life cycle

► This marketing tool allows an organisation to evaluate the positioning
of the products and services it offers in the market. Product analysis
in this way enables travel and tourism providers to improve their
competitive advantage and increase their profitability, which is
important within this competitive business environment and
especially where a large number of substitute products and services
are available.
► The product life cycle model (Fig. 5.5) allows an organisation to
identify whether its products
or services are in a stage of
growth or decline.
► Similarly, this model can be used
to ascertain the popularity of a
travel destination.
►Fig 5.5 – Product Life


► Some products, services and destinations will be popular and will be
highly profitable. Others will struggle to maintain a hold in the market
and will not be cost effective for the organisations involved in their sale
and promotion.
► The product life cycle allows an organisation to plot the volume of sales
for an individual product from their product portfolio over a given period
of time, in order to determine at what stage on the cycle that product is
positioned.
► There are four main stages in the product life cycle. Any product at the
same stage will display similar market characteristics, in terms of the
volume of sales and the level of profitability for that stage.
Activity 1 A
List one travel and tourism product or service at each stage of the life
cycle.
At which stage of the life cycle model would you place the following
destinations? You must give at least one reason for your choice of stage.
• Beijing • Paris • The Artic Circle • The Maldives • Singapore

► These characteristics are described in the following table (Fig. 5.6).
Product life Characteristics

cycle Stage
Introduction Product is launched into the market; period of intense marketing
to raise awareness and to attract customer loyalty; limited
volume of sales; high cost of promotion; no competition.
Growth Demand rising steadily; competitors working on substitute
products; sales volume increasing; levels of profitability
increasing; this stage is critical to the success of the product.
Maturity Sales curve peaks within this stage; product continuing to make
a profit; competition is strong; marketing is needed to extend the
product’s appeal.
Decline Number of sales falls sharply; organisation needs to decide
whether to discard the product or re-launch; costly stage for the
organisation.
▲Fig 5.6 – Characteristics of the product life cycle

The creation of brand image

► The creation of brand image In an industry with many substitute
products and services branding and the creation of brand image is an
important concept, which enables the organisations to gain
competitive advantage.
► Branding is a way of clearly highlighting what makes one product or
service different from, and more attractive than, the competitors’
products and services. A brand forms a set of associations that an
existing or potential customer has of a company, product, service or
destination.
► These associations can be the result of the organisation’s own efforts
and may be actively promoted through marketing. Branding can also
be the result of the customers’ experiences of a business.
The creation of brand image

► Travel and tourism organisations can create a brand image through
a variety of means. The name that an organisation chooses for
itself may become its brand identity.
► Sometimes, it is the unique selling point (USP) which is associated
with the brand image of an organisation that creates the image
through actual product features. At times, it is a slogan used with a
destination.
► For example, the Maldives use the slogan ‘Visit Maldives - The
Sunny Side of Life’, whereas Brunei Darussalam uses many such
straplines, including ‘The Abode of Peace’, ‘The Green Heart of
Borneo’ and ‘A Kingdom of Unexpected Treasures’
Case Study 4: Branding Issues in Mauritius

Trouble in paradise as Mauritius re- French cultural influence, has been
brands greeted locally with “perplexity and
By James Hall October 27th, 2009 scepticism”, according to journalist
Trouble in paradise. A new tourism slogan Bhishmadev Seebaluck.
for the country of Mauritius is attracting There is incredulity at the cost. The slogan
considerable controversy in the local press was dreamt up by London-based marketing
there. agency Acanchi for a reported 31m
Mauritian rupees (£625,000). That works
out at almost £50,000 per letter.
Apparently a director at Acanchi appeared
on Mauritian TV to defend the branding.
She said that the actual slogan was just
part of the entire marketing campaign, or
“the tip of the branding iceberg,” said Mr.
Mauritius - an unforgettable pleasure?
Seebaluck.
The Mauritian tourist board has replaced its
Sean Carey, a writer about Mauritius, said
old strapline (‘Mauritius - Unforgettable
that ‘C’est un plaisir’ is “weak and bland”
Experience’) with a new one: ‘Mauritius -
and “too slippery and ambiguous” to be
C’est un plaisir’. The new branding,
effective.
apparently designed to reflect the island’s
Case Study 4: Branding Issues in Mauritius

But how does the Mauritius tagline experience’, ‘Hawaii - The islands of Alohaj
compare with other countries’? A quick trot and (an oldie) ‘Australia - So where the
around the Internet shows that Mauritius bloody hell are you?’ Again, largely
does not have a monopoly on meaningless meaningless. Some countries try too hard
straplines. to be clever. New Zealand’s new slogan is
There are two distinct camps in the tourism ‘Go all the way’, which is a clear attempt to
slogan arena. The most common uses a sex up one of the world’s more staid
two-word structure, prefixing the country countries. Others are unintentionally
with a simple adjective or verb; ‘Amazing hilarious. I am sure that the Colombian
Thailand’, ‘Enjoy England’ ‘Incredible India, Tourism Ministry did not see the double
‘Magical Kenya. These words appear to be meaning when it settled on ‘Columbia - the
totally interchangeable. I very much doubt, only risk is wanting to
for example, that visitor numbers to India stay'.
and Kenya would collapse if it was India Bearing all this in mind,
that was magical and Kenya that was Mauritius’s little French
incredible. slogan doesn’t seem
Then there is the ‘pithy phrase’ camp; so bad.
‘Brazil - Sensational!’, ‘Seychelles - Another
world’, ‘Germany - Simply inspiring’, ‘The
Kingdom of Swaziland - A royal
The creation of brand image Think of the logos and

► Brand image can also be created through the
colours used by airline
use of packaging. This is relatively companies on their fleets of
THINK ABOUT
uncommon in the travel and tourism industry, planes and staff uniforms or
given the nature of the products and services, consider the associated
although hotel chains develop their own features of the leading high
packaging for bathroom products such as street travel agency chain.
soap and shower gel. These are all connections or
► Price is a more common method of creating
associations that the
brand image. This is demonstrated through organisation wants
the association made with low cost airlines customers to make with their
such as easyjet and Ryanair. product.
► Promotion also creates brand image by the
use of billboards, TV advertising and even in-flight advertising which help make
customers remember specific brand identities.
► Certain travel and tourism organisations use their specific target market
segment, in order to create a brand image such as the 2wentys - a brand used by
the First Choice tour operator to promote clubbing holidays to those aged 20+.
There are also brands targeted specifically at adventure travellers, eco-tourists,
golf enthusiasts, etc.
The development of a product/service mix and a product portfolio

► One of the main aims of marketing and promotion is to raise awareness of a
company’s specific product range and to try to attract new customers to an
organisation.
► In other forms of business such as the manufacturing of goods, organisations
offer a product range. This refers to all of the different types of products ‘made’ by
a specific company.
► In the travel and tourism industry, it is probably more appropriate to talk about the
service range that organisations offer. For example, a hotel group may provide a
differentiated product/service mix to various market segments. The core product/
service would be of luxury accommodation, fine dining options, health club and
spa facilities as well as high quality personal service made available to all guests.
► However, the hotel group may offer additional
products and services matched to the
expectations of different market segments,
such as access to the Executive Lounge for
breakfast and ‘happy hour’ drinks, free Wi-Fi
broadband connectivity and one piece of
laundry at no additional cost for members of
the hotel chain’s business club etc.
The development of a product/service mix and

a product portfolio
► In the travel and tourism industry, the service
range of organisations tends to be quite limited,
with two or three variations of the core product
being common. However, there often comes a
Jumeriah Dubai cheapest room
point in time when an organisation must
consider developing its product/service mix.
► Developing the product portfolio of an
organisation i.e. adding more to the service
range, is a costly process and one which
usually occurs in response to the need to Jumeriah Dubai standard room
replace a product that has reached the end of
its life cycle.
► The majority of changes to product and service
ranges in the travel and tourism industry take
the form of modifications being made to an
existing product or service offering. Jumeriah Dubai executive room
The development of a product/service mix and a product portfolio

► There are a number of key reasons why organisations decide to
develop the product/service mix, including:
 to gain recognition as innovator in the market;
 to develop/stimulate the market in a specific destination;
 to extend operations into new territories;
 to defend market share when challenged by competitors;
 to imitate the success of a more successful competitor;
 to keep abreast of technological advances;
 to re-position themselves in the market.
► Thus, it is clear to see that developing or modifying a
product/service mix can occur either proactively or defensively.
However, because of the intense competition in this market, most
of the industry’s growth results from imitation of competitors or from
the need to re-position, in order to appeal to a wider customer
base.
5.4 – Price as Part of the Marketing Mix
Price as part of the marketing mix

► Let us now explore the second component part of
the marketing mix - price. Given the high number
of substitute products/ destinations made
available within the travel and tourism market,
price often plays a significant role in gaining the
customer’s attention.
► Price is the term used to describe how much a
customer actually pays to receive the product or
service upon purchase. It is not the same as cost,
which is the term given to the amount of
expenditure required to put together the product
or to offer the service prior to it being released for
the attention of the customer.
► Clearly the two factors work hand in hand; an
organisation will take into consideration the actual
costs before setting the final price for a product.
Investigate a range of common

pricing policies used in the travel
and tourism industry
► There are numerous different
approaches that organisations can
take in setting a price for products
and services. This section covers
some of the most commonly used
pricing policies used in the travel
and tourism industry.
► It is important that you can identify
the differences in each policy and
understand when each policy might
be the most appropriate choice.
Market Penetration
► This is probably the most common pricing policy
adopted in the world of tourism. This policy is used
to gain entry into the market and to attract market
share.
► When launching a new product into a highly
competitive market, artificially low prices are set
initially to entice customers to ‘try’ the product. This
policy is sometimes also known as ‘trial pricing’
based on the assumption that most customers are
price sensitive and will be easily persuaded by
something that appears to be of good value.
► The aim is to win a large customer base and to
generate revenue quickly from a high sales volume.
Once the place in the market has been established,
organisations tend to opt for a different pricing
policy; usually one which allows the price to
increase without losing customer loyalty.
Market skimming
► Market skimming is used when the tourism product is relatively
new to the market and the level of competition is low. It allows the
provider to charge a high price, attracting customers who are
comfortable in the role of innovator - paying a relatively high price
to be one of the first to try something.
► Once the market has adopted this product, it is described as
having been ‘skimmed’.
Competitors enter the
market with a number of
substitute products; thus,
forcing the price down and
making the product more
affordable for a wider range
of customers.
► Moscow hotel prices during World Cup
Discount pricing
► Where products have not sold in
sufficient quantity or when a
product reaches close to its
expiry, the provider offers a
discount on the original price.
► This is usually a percentage
decrease in the price. Examples
may be half-price theatre tickets
bought on the day of the
performance or heavily
discounted standby tickets sold
just a few hours before the flight
departure time.
Variable pricing
► This policy is also known as price discrimination and it takes into account
the variability of demand. This policy is often adopted by organisations
offering differentiated products and services.
► Different prices may be set for different seasons of the year - high prices
are charged during the peak season, when demand is high; prices are
reduced during low season, when demand decreases.
► Prices can also vary according to customer types - full price entrance
tickets to tourist attractions for adults but reduced price tickets for
children under 12, for students and for the elderly.
Loss leader pricing

► A ‘loss leader’ is a product that is sold at little or
no profit, or even at a loss. It gives customers the
impression of goods being cheap and entices
them to spend on other, more profitable and
linked items at the same time as picking up the
loss leader item, thus still benefiting the
organisation.
► Loss leader pricing is not often used in the travel
and tourism industry.
Special offers
► Special offers are a form of promotional pricing.
This policy is sometimes used as a form of
competitor-based pricing, to pull customers away
from a rival attraction, for example. This policy
persuades the customer that they are receiving
value for money or are getting something free.
The going rate/competitive pricing

► Where there is a high degree of similarity between
products offered by different organisation, the price
may be determined by ‘the going rate’. This is also
known as competitor-based pricing. Tour operators
sometimes offer to ‘price match’ their competitors.
Prestige pricing
► This is also known as premium pricing. Where
products have an exclusive appeal or are of an
exceptional quality, high prices are often set
based on the assumption that people will
associate high prices with high quality.
Price bundling
► Also known as product-bundle pricing, this involves
pricing a few items of related products into a
bundle. An example from travel and tourism is a
product bundle at a special reduced rate for bed,
breakfast and dinner at a hotel, rather than the rate
charged on a room only basis.
Identify and explain the factors that determine pricing policies

► There are a number of factors which determine the final price
that a customer will pay for a travel and tourism product or
service. We have already mentioned the actual cost of providing
the product allowing for the cost of any associated overheads.
Within this section, we will look at internal and external
influences on price.
Fixed and variable costs
► These refer to all of the expenses a business pays to buy or to
produce its products or services. This includes the amount of
money spent on overheads.
► The lowest price that providers should charge is ‘at cost’ - the
same as it actually costs to produce something, but this allows
no room for profit.
► The majority of pricing policies use ‘cost plus’ pricing, the plus
being the profit needed to be made.
Identify and explain the factors that determine pricing policies

► There are a number of factors which determine the final price
that a customer will pay for a travel and tourism product or
service. We have already mentioned the actual cost of providing
the product allowing for the cost of any associated overheads.
Within this section, we will look at internal and external
influences on price.
Fixed and variable costs
► These refer to all of the expenses a business pays to buy or to
produce its products or services. This includes the amount of
money spent on overheads.
► The lowest price that providers should charge is ‘at cost’ - the
same as it actually costs to produce something, but this allows
no room for profit.
► The majority of pricing policies use ‘cost plus’ pricing, the plus
being the profit needed to be made.
Profitability
► The business orientation of an organisation
will affect the final price charged. This means
that profit-seeking organisations operating ▲Government
within the private sector will take a much improving infrastructure
different approach in determining price
compared with those organisations financed
through public sources.
► A key issue for profit seeking organisations is
the ability to add value to the product to such ▲New airport
an extent that profit can be generated, which terminals to meet
demand
is essential for survival within the market.
► Public sector organisations are driven only by
the need to break even, so tend to adopt a
more relaxed approach in setting a price for
their products and services. ▲National Trust entrance
Subsidies, taxation and surcharges

► When markets are thought to be failing, governments or governing bodies
tend to intervene to put things right. A subsidy is essentially a simple idea -
give a provider a financial incentive to work in an area of regeneration or to
help improve the basic infrastructure within a destination. The benefit of this
to the customer is a reduction in price.
► Taxation can be seen as the opposite of a subsidy; in this context we are
referring to the taxes that are imposed on travel and tourism providers to
change their behaviour or, so that they will pass on some of the tax charges
to customer in the form of higher prices, change the behaviour of customers.
► Fuel taxes are of major concern worldwide
as the duty paid on aviation fuel increases
so too does the price of travel, because of
hidden fuel surcharges. A fuel surcharge is
an additional per-ticket fee added to a fare
by an airline or other carrier, ostensibly to
cover the increased cost of fuel to the
carrier. Fuel surcharges are seldom quoted
in the fare.
E
Example
Record US Airline Surcharges Due To Higher Jet Fuel Prices
► Airline surcharges have become a hot issue within the past few months. The US
Government is even looking into forcing airlines to become more transparent
when it comes to their surcharges.
► Now, controversy is boiling again. As oil prices climb, Delta Air Lines Inc., United
Continental Holdings Inc. and other US airlines have set a record by adding
$420 in fuel surcharges for European fares round-trip.
► Across the airline industry, according to air-travel website BestFares.com, there
has been about a 50% increase to surcharges against those that were in place
when fuel prices climbed 3 years ago to a then all-time record.
► During the first quarter of 2011, jet fuel became
the largest operating expense for airlines –
surpassing labour cost. Jet fuel rose to $2.96
per gallon in the first quarter, which is up 41%
from the first quarter of 2010. To preserve
profitability, US air carriers had raised their
fares and surcharges as well as cut back on
expansion plans.
Source: http://ewireinformer.com/record-us-airline-surcharges-due-to-higher-jet-fuel-prices-342168.html
Competitors
► If no substitute products are available, a
higher price can be set. This is a simple
case of supply and demand.
► It also reflects the practice of price
making; the innovator in the market sets
the price, with other providers who
imitate the initial product becoming price
takers. This means that competitors in
the market usually adopt a ‘going rate
policy.
► However, price wars are common within
the travel and tourism industry. This
occurs when a competitor undercuts the
price set by the price maker, in an
attempt to gain new customers and to ▲Disneyland competitor free
Customers’ expectations/likely number of customers

► To a large extent, customer perception exerts one of the greatest
influences on price. A customer has to have confidence that the product or
service presents value for money, otherwise the customer will choose not
to buy.
► Price and quality perceptions are closely linked. Most customers, getting
value for money is actually a more important need than the price itself.
However, a customer’s perception of value for money is very subjective.
Seasonality
► Products offered in high season tend to be more expensive than those
offered
► This is ainsimple
off-peak times.
case of supply and
demand - in peak season, demand is
high, therefore organisations do not
have to entice the customers to use
their products and services, but in off
peak season, demand is low, and
supply is high, so special offers may
be used to gain more customers.
Case Study 5: Price as a factor in determining holiday choices

Price ‘still dominant factor’ in Brits’ holiday choices
► A survey of more than 2,000 British adults found more than
half identified price as their main consideration when
choosing a summer 2010 holiday - ahead of destination, the
weather in resort, accommodation or trip dates.
► Market data on sales suggests prices for the
summer are holding up, with an average
selling price in the week to August 14 just £2
below the average for the season to date, and
£41 up on the same week a year ago.
► However, average online prices look rather
different when examined separately. Latest
figures suggested the total value of online
travel sales in July was 18% up on July 2009
and 32% up on June 2009 this year. But this
masked a fall of more than £120 in the value
of the average “basket” - or holiday price –
between July 2009 and 2010.
Economic factors
► The state of the global economy has
an impact on the price being paid. In
times of recession, customers may
change their holiday choices to more
affordable destinations closer to
home. Organisations may select
cheaper accommodation options to
cut down their initial outlay.
► In times of economic boom, people
tend to be willing to spend more on
holidays and tour operators are
more confident of reaching their
sales potential.
5.5 – Place as Part of the Marketing Mix
Place as part of the marketing mix

► Place is the third component of the
marketing mix. The term ‘place’ is used in
relation to two different aspects of the mix
for tourism products and services - the
physical location of destinations or tourist
facilities and the chain of distribution used
by tourism providers to get their products
to their customers.
Investigate the factors that influence the
selection of a location for travel & tourism
► Organisations must take into consideration
a range of different factors, when choosing
where to site a new facility or attraction.
These are known as locational factors.
Costs
► Prime locations cost money. Landowners in areas
with potential for tourism development will charge
the highest possible rates to sell their land.
► As areas become more developed and land becomes less available, the
cost of acquiring land or premises will increase further. This will limit the
choice of where many travel and tourism providers are able to locate
their travel and tourism products and services.
Availability of suitable premises
► Travel and tourism providers such as travel agents, bureaux de change
and tourism information centres require suitable premises in the central
business district in tourism destinations.
► Similarly, hotel chains, restaurants and tourist
attractions require suitable premises from which to
operate. International organisations plan with
precision the global distribution of their facilities
using locational analysis to determine the best
sites for their premises.
Character of area
► The character of the area plays a significant part
in selecting an appropriate location. Areas with
political instability, high crime rates, and social
deprivation do not always make the best tourist
destinations.
► Travel and tourism providers also consider
standards of living and general living costs in the
areas they choose for tourism development.
Local and transient population
► It is important that there is easy access to local
populations in terms of workforce and a potential
customer base for travel and tourism providers.
► There also needs to be a transient population to
make full use of the facilities being offered. This
requires adequate infrastructure to be in place to
accommodate this transient population.
Case Study 6: Poverty Tourism

Exploring the slums of India, Brazil and South Africa
► Pick your way through a squatter settlement of Mumbai, India, where one
million people live in an area half the size of New Yorks Central Park.
► Step over the rats in the shanty towns around Rio de Janeiro. Or meet
local South Africans living in a Soweto township near Johannesburg,
dubbed the most dangerous city outside of war zones.
► These kinds of activities all fall under the heading of poverty tourism.
► Poverty tourism, sometimes called ‘poorism, commonly refers to small
organised tours that you can take upon arriving in a city, and these tours
will walk or drive you through an area of extreme poverty.
► While poverty tours exist in all parts of the world - even in developed
countries, there are tours of the immigrant zone of Rotterdam in the
Netherlands, or around poor areas of Houston or New York - the most
common tours you’ll hear about are those of the favelas in Rio de Janeiro,
the shanty towns in South Africa, and of the squatter settlements of India,
particularly in large cities like Mumbai.
Case Study 6: Poverty Tourism

Exploring the slums of India, Brazil & South Africa
► Some of these trips have been running for the best
part of two decades, usually quietly without heavy
promotion.
► In Mumbai, the effort is taken to keep the tours
grounded in reality and to avoid the possibilities of
voyeurism as much as possible. Tourists are not
allowed to take photographs, and the groups are
kept to a maximum of five people so it does not look
too intrusive. They also use guides who are very
knowledgeable about the area, so they can answer
all your questions, and the company gives 80% of
the after tax profit from the tours to local NGOs to
help alleviate poverty.
► Adapted from: http://
www.vagabondish.com/poverty-tourism-touring-the-slums
-of-india-brazil-and-south-africa/
Adjacent facilities
► Travel and tourism providers consider what
else there is in close proximity to a selected
site for tourism development.
► It is beneficial to have linked tourism
facilities close by - cafes near to tourist
attractions, restaurants and bars close to
hotels etc., enabling customers to gain
easy access to a wide range of amenities.
► Providers will also make an assessment of
the proximity of any competitors. It is quite
common to find a cluster of travel agents on
the high street; similarly in city destinations
it is not unusual for several tourist
attractions to be located close together.
Access/transport links
► It is important to ensure that
there is the necessary level of
infrastructure available to
support high volumes of visitors.
► There needs to be a satisfactory
road and railway network, with
sufficient carrying capacity to
deal with the expected number
of visitors.
► There may be a need for park
and ride schemes to ease any
traffic congestion.
Availability of staff
► We are aware of the need for a local population close to tourism centres to
act as a source of labour. Some organisations also bring in a skilled and
experienced workforce from other countries, when first establishing a
presence in a new destination, whilst the local workforce receives training.
► Some destinations recruit staff from
different countries altogether because of
a skills shortage in their own country.
► There are issues with the likelihood of
revenue leakage from destinations as the
workers send the money they earn back
to their families in their respective
countries.
► If local employees are hired, the wages
would re-circulate within that country as
the multiplier effect; with immigrant
workers, this source of revenue is lost
from the local economy
Multiplier effect
altogether.
Example
E
Headhunting Overseas
► Headhunter Jane Zimmerman of South Dennis started
pairing Jamaican housekeepers with Nantucket resorts in
1989. One-hundred and twenty workforce visas for Cape
Cod and Nantucket businesses in that year have grown
now into 3,000 visas in 2010 for workers headed to resort
destinations all over the US.
► The growth in Ms Zimmermans business allowed her to
open year-round offices in Jamaica, Bulgaria and Nepal
and her business brought 750 immigrant workers to
Nantucket in 2010 – 90% of these were from the
Caribbean.
► “The workforce program has completely changed the way
we staff seasonal restaurant employees. The restaurant
industry on Nantucket could not survive without the quality
of people coming from Jamaica. That’s just reality,” said
Mr Morris, whose kitchen staff in two restaurants is
composed almost entirely of Jamaican immigrants.
Adapted from: http://h2bworkforcecoalition.com/
Availability of staff
► Identify and explain the range of distribution channels for travel and tourism
products and services It is important that organisations ensure that their
customers are able to obtain their products and services effectively.
► There are many different ways in which providers are able to make their
products and services available to customers - this is commonly known as the
distribution process, involving a variety of different distribution channels (Fig.
5.7).
► The process can involve a simple
transaction between the provider and the
customer known as direct sales. However,
there are also more complicated processes
involving the role of one or more
intermediary. This is known as the chain of
distribution linking provider and customer
through agents, retailers and the like.
► The most common channels of distribution
used in the travel and tourism industry are
discussed next. ▲Fig 5.7 – Chain of
Distribution
Direct selling
► This is the process whereby customers are able to obtain products and
services they require straight from the provider. The provider uses no
intermediaries (middlemen) and is able to reduce costs as there is no
commission to be paid. However, the provider must take sole responsibility
for the marketing and promotion of their products and services.
Wholesalers
► Tour operators act as wholesalers by buying products directly from the
travel and tourism principals (airlines, hoteliers etc.). They then sell these
products onto retailers - the travel agents, who in turn sell it to the
customer.
► This is a very costly chain of distribution, both for the provider, in terms of
the commission they must pay, and for the customer because the final
price of the product will reflect the fact that a wholesaler and a retailer also
need to earn money from the process.
► However, using two intermediaries does enable travel and tourism
providers to gain access to a much wider customer base, with additional
marketing and promotion efforts being made on their behalf.
Retailers
► Travel agents act as an
intermediary for travel and
tourism providers selling
products and services
through high street and
online outlets. They receive a
commission fee for their
involvement in the process.
► Some principals in the travel and
tourism industry own their own
travel agency operations, but this
limits the range of products and
services that they sell, although
saves on costs in terms of
commission payments.
Internet
► The Internet has revolutionised the
way in which travel and tourism
products and services are made
available to the customers. No longer
must the customer travel to the
physical outlet to discover what is on
the market.
► Instead, customers have 24 hour
access from the comfort of their own
homes and are just a few clicks away
from being able to research, select and
make a confirmed booking, without
needing any assistance in the process.
Internet
► It is not only the principals who have made
their products and services available in this
way; the intermediaries also promote their role
in the distribution channel through the Internet
and tourist attractions, small guesthouses,
and tourist guides are all available online.
► The Internet offers discounted prices,
because of the lack of intermediaries but
there are those who would still prefer to deal
with a travel agent directly for the level of
professional service, product knowledge and
advice that a travel agent can offer.
► Not everyone has access to the Internet and
some customers lack confidence in the
security of online payments, fearing the risk of
identity theft etc.
Global distribution systems

► Travel agencies use technology to
enable them to make accurate travel
and hotel booking being able to view
real-time data about seat and room
availability.
► This technology comes in the form of
Global Distribution Systems
(GDS) which uses centralised
processes to allow tickets to be
produced instantly.
► There are different global distribution
systems in operation across the
world as has been discussed earlier.
Galileo and Worldspan are owned by
the Travelport company.
Example
E
Galileo and Worldspan
► Travel suppliers and travel agencies worldwide are greatly empowered by
Travelport’s global GDS positions in the Americas and Asia Pacific, as well as our
growing presence in emerging markets, including the Middle East, Africa, Asia and
Eastern Europe.
 Operating in 160 countries
 67,000+ travel agencies (representing online and traditional travel agencies)
 350 airlines
 Over 89,000 hotel properties, representing more than 310 hotel chains
 30,000 car rental locations, representing more than 25 car rental companies
 Up to 1.8 billion messages per day
 6 billion+ stored airfares
 17 million car rental bookings annually
 26 million hotel bookings annually
 2 million rail bookings annually
 304 million air segments annually
 Available in 30 languages.
► Over 295 million air segments are booked annually in the Travelport system. In one
day, this is enough to completely fill 1,539 Airbus A380 aircraft in one day.
Source: http://www.travelport.com/about/Global%20Statistics.aspx
5.6 – Promotion as Part of the Marketing Mix
Promotion as part of the marketing mix

► Promotion is the last of components in the
marketing mix. We need to look at the many
different forms of promotion that are used in the
travel and tourism industry and explore the factors
that organisations must consider when selecting
which type of promotion to engage in.
► Promotion has four main interconnected purposes:
 to raise and maintain customer awareness of
products and services;
 to inform customers of the product’s features;
 to stimulate demand;
 to encourage sales.
► In order to fulfil these purposes, organisations use
a variety of methods of promotion, in order to
communicate with existing and potential
customers.
Explore the main methods of promotion used in the travel and

tourism industry
Advertising
► Advertising is a very visible means of communicating with customers
which can itself take on many different formats; however, it is also one
of the most expensive forms of promotion.
► We are all probably most familiar with advertising as a form of
promotion as it permeates our everyday lives. Three different media
can be used in advertising - broadcast media (TV, radio, cinema),
print media (newspapers, magazines, leaflets)
and display media (billboards, posters and signs).
► Broadcast media can only be afforded by some of
the leading travel and tourism providers. Small,
independent organisations are more likely to use
print media in promoting their goods and services
as their marketing budgets may not stretch to
advertising on TV or via billboards.
Case Study 7: Billboards as a marketing tool

► While internet marketing is currently seeing dramatic growth, it still pays to
recognise the immediate impact and potential instant
benefits offered by well executed, use of billboards - with
their equally instant, ‘on the road’ marketing messages.
► Internet versus Billboards? For destinations & attractions,
the issue is not so much one of competing promotional
choices, but using both to great complementary effect.
a) Multiple roles of Billboards - Billboards can serve to:
 Spark or prompt a spontaneous decision - during a travelers current
trip. That unplanned (and more often than not minor) detour to visit. The
signage basically helps them to ‘exit and experience’. The planning need:
Identify the various logical entry ways, but also the important functional &
non-inhibiting entry and decision-making points, for a destination or
attraction. (Including - key junctions, borders, town bypass points,
alternative route options for same direction of travel, bridges, etc.) Factor
this into billboard selection, particularly their location and position in
relation to vehicle flows and direct driver/passenger sightlines.

 Remind and reinforce - keep a destination or attraction in the mind, increasing
brand awareness over time and influencing future decisions. Example: when
used where people live, or at a prominent location for a targeted geographic or)
demographic market - to influence their planning (or at least their set of
considerations and factor more strongly in their choice of alternative destinations.
 Provide direction - to people already heading your way, (Directional billboards
are often purchased for a 12-month period and placed within 50 to 100 miles
from the attraction.)
Success with these roles is tied to issues such as:
 Location and visibility ; Design impact; Content impact, freshness.
At their best, billboard advertising campaigns aim to
achieve reach and frequency in a budget conscious
way. And in theory at least, they can be viewed by
thousands of travelers in relatively short periods of
time (See ‘Key considerations’ below.)
b) Key Considerations for Outdoor Advertising
Some criteria for use in evaluating your billboard:
 Car travelers normally have between 3 to 6 seconds to read a sign.

 Billboards need to be easily legible in less than 8 seconds at speeds over 65 mph.
 Because of the ‘drive-by time challenge’, design and content issues are
paramount.
 Instant impact and immediate communication or impressions are needed.
 Include too much text and your sign’s content will be
either - not read or not absorbed.
 Good sightlines between the traveler and billboard’s
position (relative to the road) also matter.
 When more than one billboard is present on a
roadside site - each is competing for attention.
 Too many competing billboards on the one site can
mean failure to ‘see, read or absorb’ any!
 Under some circumstances, a seasonal approach may be necessary e.g. use of the
billboards during ski season to remind people in key markets/cities that the
opportunity or experience is now available, or will be in a month or so, to influence
their advance planning.
 At their best, billboard designs should not become ugly additions to the urban or
natural landscape. By reflecting some level of good art or aesthetics, they can
increase their appeal and impact.
Publicity
► Publicity is the name given to any activity
that brings exposure to an organisation, a
product or a service, or in travel and
tourism terms a destination. It can
encompass many of the other forms of
promotion or marketing communications
such as sponsorship, public relations etc.
Point of sale displays
► This is a specialised form of sales
promotion used by travel and tourism
providers to bring linked products and
services to the attention of customers at or
close to a sales counter. An example could
include advertising local tours through
display stands in hotel reception areas.
Public relations
► This is a form of publicity which involves creating a favourable impression
of an organisation and its products and services. Examples of public
relations activities include, using press releases or features on TV, the
radio or in magazines, attending trade fairs, organising familiarisation
trips for travel trade representatives, and holding press conferences.
Direct marketing
► As its name implies, direct marketing occurs when the provider makes
direct contact with existing or potential customers either through the post,
by email or by telephone.
► This form of promotion enables
organisations to target specific customers
or market segments. It is commonly used
by hotel chains once a customer has
registered their details with them. Special
offer emails or leaflets are sent on a
regular basis to try and entice customers
to make a return visit.
Sales promotions
► Sales promotion can take many forms and is a
common method of promotion used by travel and
tourism providers.
► It includes money off coupons/ vouchers (free
entry to a theme park with a full paying adult ticket;
one meal free when three meals are purchased),
competitions (win a holiday by completing the
slogan in your local newspaper), special offers
(Buy One, Get One Free), and loyalty incentives
(frequent flyer programs, AirMiles).
Personal selling
► This promotional method involves face to face
communication with customers designed to close a
sale. Personal selling plays an important role for
organisations such as tourist attractions, trying to
sell annual memberships or at hotels promoting
the use of their spa facilities and treatments.
Videos and the Internet Jumeriah Hotel

► The advent of Internet has allowed organisations to
Promo Video
demonstrate their products and services through
video clips on their own websites. Advanced
technology allows video clips to be shown on digital
display boards at the airport, in tourist information
centres and even in hotel rooms.
Electronic media including the use of mobile
technology
► With the fast pace of changing technology, travel
providers have recognised the value of mobile
technology in targeting potential customers. To this
end, hotels, airports, and other providers now offer
the use of SMS to send travel and booking alerts to
cell phones.
► Many organisations now have Facebook and Twitter
accounts as a means of communicating with
customers via these popular social media sites.
Identify and explore the factors that are considered

when producing effective promotional materials
► Given the high cost involved in many forms of marketing
and promotion, it is very important that organisations
plan their promotional campaign carefully, to gain
maximum benefit from any promotional material that
they produce.
Costs
► Advertising can be a tremendous drain on an
organisation’s limited budget. Therefore, travel and
tourism organisations must ensure that they select the
most cost-effective means of promotion and that the
method they select matches the budget they have
available.
Stages of the promotional There are normally

six stages to a
campaign
campaign:
► Carrying out each stage effectively
• choosing an
will have a significant impact on the audience;
overall effectiveness of promoting a • establishing the
specific product or service. message;
► For example, if the wrong audience • selecting the
is selected, this could result in appropriate media;
there being no interest in the • setting the timing
product at all. of the campaign;
► Similarly, if the wrong media is • agreeing the
selected, the messages may not be advertising
budget;
conveyed to the right target
• measuring the
audience.
results.
Target market segments

► Ensuring that an advertisement is seen
by the chosen target market for the
products and services being offered is
an important factor in producing
promotional materials.
► A luxury health spa product will not
appeal to the youth or student market;
therefore, it would not be beneficial to
use social media such as Facebook or
Twitter as the main method of promotion.
Instead, advertisements are more likely
to be seen by the correct target market
segment, if they are placed in Beauty
and Fitness magazines.
Timing
► Selecting an appropriate timescale in which to
run a promotional campaign is an important
point in ensuring the campaigns success.
► Advertising something too far in advance of
its availability may result in customers losing
interest in the product.
► Running a campaign too close to the expiry
date may not give customers sufficient notice in which to make a
purchase.
Brand Image
► We have already seen the benefits of branding and the creation of
brand image earlier within this chapter. Any promotional material should
reinforce the association made with the brand image for the product,
service, organisation or destination.
► Customers should be able to easily identify the brand from the
materials, by recognising the colours, logo, slogan of the brand within
advertisements or other forms of publicity.
The AIDA principle

► Once a piece of promotional material has been created, it is evaluated
to see how successfully it conveys the messages it has been designed
to communicate. The main method adopted, in evaluating the
effectiveness of the promotional material, is the AIDA principle.
► AIDA is an acronym used to assess the appropriateness of any piece
of marketing communication or promotion in achieving the aim of
raising awareness. The acronym stands for the following.
Attention: Using bold fonts and headlines to grab the reader’s attention.
Interest: Using photographs and illustrations to create interest in the
product. Clear pricing information.
Desire: Using emotive language such as ‘beautiful’, ‘amazing’ etc. to
make customers want to be there.
Action: Providing contact details - telephone numbers, email addresses,
website details so that the customer can take action to access the
product.
How your knowledge and understanding of the unit 5 content is likely to be

assessed
Question 1
a) Define the term brand loyalty.
?
(1 mark)
b) Identify and describe one method by which an airline influences the brand loyalty
of its existing customers.
(4 marks)
c) Explain, with examples from the travel industry, how customers are persuaded to
switch brands.
(6 marks)
Question 2
d) Define the term public relations.
(1 mark)
e) Describe two examples of how public relations may be used in the travel and
tourism industry.

Unit 05 - Marketing and Promotion

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Travel and Tourism - iGCSE

Unit 05 - Marketing and

2.1 – LEARNING OUTCOMES

AO1 Knowledge with understanding

AO3 Interpretation and evaluation

Relationship between assessment objectives and components

Assessment Paper 1 Paper 2 Paper 3 Approx. %

To achieve a Grade A, a candidate will be able to:

To achieve a Grade C, a candidate will be able to:

To achieve a Grade F, a candidate will be able to:

and either: or:

Paper 2 2½ hours Paper 3

5.1 Role and function of marketing and promotion

5.2 Market segmentation and targeting

5.3 ’Product’ as part of the marketing mix

5.4 ’Price’ as part of the marketing mix

5.5 ‘Place’ as part of the marketing mix

5.6 ‘Promotion’ as part of the marketing mix

Role and function of marketing and promotion

Role and function of marketing and promotion

Positive organisational and product image

Describe the main marketing and promotion techniques used in

Primary marketing research techniques and secondary marketing

Primary marketing research techniques and secondary marketing

Primary marketing research techniques and

▲ Fig 5.1 – Stages of Market Research Process

The five stage market research process

Stage 1:Set the objectives

The five stage market research process

Stage 4: Analyse the data

Primary market research

Primary market research

Secondary market research

Secondary market research

Qualitative and quantitative data

Case Study 1: Snaefell Visitor Centre

SWOT and PEST analyses

SWOT and PEST analyses

Case Study 2: SWOT analysis of tourism in Lake Wanaka, New Zealand

SWOT and PEST analyses

SWOT and PEST analyses

SWOT and PEST analyses

Case Study 3: Results from PEST analysis of Indian Tourism

The development of an effective

The development of an effective marketing mix

Market segmentation and targeting

Geographic, demographic and lifestyle segments

Explain how specific travel and tourism products are

Products explained and the relationship with market segments

Package Families; Club 18-30;

Transport Age; Specific Needs -

▲ Fig 5.4 – Product types and their relationship

Type of product Example of relationship with different market segments

Tourist Families; Groups; Ages/

Tourist Families; Singles; Groups;

Specific travel and tourism products

Accommodation and catering

Tourist information services

Different market segments