The Meaning of The Meaning of Marketing in Marketing in

Travel and TourismTravel and TourismObjectives: Defining travel and tourism and the Objectives: Defining travel and tourism and the

component sectors of it. In addition, component sectors of it. In addition, introducing and discussing the meaning of introducing and discussing the meaning of

marketing for travel and tourism organizations.marketing for travel and tourism organizations.

Travel and Tourism Travel and Tourism DemandDemand

Basically, there are three different categories of Basically, there are three different categories of visitorvisitor demand, each representing a different demand, each representing a different sector of the total market:sector of the total market:

Incoming visitorsIncoming visitors ((international visitorsinternational visitors)) who are who are traveling to a country but residents of other traveling to a country but residents of other countries. This type of travel may be called countries. This type of travel may be called inbound tourism.inbound tourism.

Outgoing visitorsOutgoing visitors (international visitors)(international visitors),, residents residents of a country,of a country, who are traveling as visitors to other who are traveling as visitors to other countries. May be called outbound tourism.countries. May be called outbound tourism.

Domestic visitorsDomestic visitors (residents)(residents), residents visiting , residents visiting destinations within their own country’s destinations within their own country’s boundaries. May be called domestic tourism.boundaries. May be called domestic tourism.

In all definitions of tourism made by the In all definitions of tourism made by the World Tourism Organization (WTO), we World Tourism Organization (WTO), we come across with the following principle come across with the following principle terms which are very important to know.terms which are very important to know.

VisitorsVisitors; ; all travelers who fall within all travelers who fall within agreed definitions of tourism.agreed definitions of tourism.

Tourists or staying visitorsTourists or staying visitors; ; visitors who visitors who stay overnight at a destination.stay overnight at a destination.

Same-day visitors, or excursionistsSame-day visitors, or excursionists; ; visitors who arrive and depart on the visitors who arrive and depart on the same day.same day.

International TourismInternational Tourism

People who travel to and stay in countries People who travel to and stay in countries other than their country of residence for other than their country of residence for less than a year are classified as less than a year are classified as international tourists. International international tourists. International tourism market is more important than the tourism market is more important than the domestic because international tourists;domestic because international tourists; spend morespend more stay longer at the destinationstay longer at the destination use more expensive transport and use more expensive transport and

accommodationaccommodation bring in foreign currencybring in foreign currency

UNWTO Tourism UNWTO Tourism HighlightsHighlights

http://mkt.unwto.org/sites/all/files/dohttp://mkt.unwto.org/sites/all/files/docpdf/unwtohighlights11enlr_1.pdfcpdf/unwtohighlights11enlr_1.pdf

Domestic TourismDomestic Tourism

People who travel and stay overnight People who travel and stay overnight within the boundaries of their own within the boundaries of their own country are classified as domestic country are classified as domestic tourists. Unfortunately, estimates of tourists. Unfortunately, estimates of this market is not adequately measured this market is not adequately measured at presentat present in in TurkeyTurkey.. In the USA, where In the USA, where good measurement does exist, good measurement does exist, Americans take only one trip abroad for Americans take only one trip abroad for every 100 domestic trips reflecting the every 100 domestic trips reflecting the size of the USA and the large size of the USA and the large distances . For the British, where the distances . For the British, where the statistics are also good, there are statistics are also good, there are approximately four domestic trips for approximately four domestic trips for every visit abroad. every visit abroad.

Statistics in the early 1990s Statistics in the early 1990s indicates that in Europe and North indicates that in Europe and North America between a half and three America between a half and three quarters of the adult population took quarters of the adult population took holidays away from home every year. holidays away from home every year. Besides, over nine out of ten people Besides, over nine out of ten people take same-day visits in most take same-day visits in most economically developed countries.economically developed countries.

Definition of Travel and Definition of Travel and TourismTourism

An acceptable definition of tourism should cover An acceptable definition of tourism should cover all aspects of travel. Note that tourism is all aspects of travel. Note that tourism is synonymous with travel. There are no conceptual synonymous with travel. There are no conceptual differences between the two expressions. So differences between the two expressions. So tourism is used alone covers travel at the same tourism is used alone covers travel at the same time.time.

The WTO defines tourism in 1991 as;The WTO defines tourism in 1991 as;

Tourism comprises the activities of persons Tourism comprises the activities of persons traveling to and staying in places outside their traveling to and staying in places outside their usual environment for not more than one usual environment for not more than one consecutive year for leisure, business and other consecutive year for leisure, business and other purposes.purposes.

This definition pulls together the three This definition pulls together the three basic elements of tourism which are as basic elements of tourism which are as follows;follows; Visitor activityVisitor activity TravelTravel Destination/facilitiesDestination/facilities

TThe definition includes;he definition includes; same-day visitssame-day visits travel for several purposes such as travel for several purposes such as

business, social, religious, educational, business, social, religious, educational, sports etc. There is no restriction about the sports etc. There is no restriction about the market for travel whether it is for pleasure market for travel whether it is for pleasure or business.or business.

all tourism includes an element of travel, all tourism includes an element of travel, but all travel is not tourism. The definition but all travel is not tourism. The definition excludes all routine commuter travel, in excludes all routine commuter travel, in other words local travel to, for example, other words local travel to, for example, neighborhood shops, schools or hospitals.neighborhood shops, schools or hospitals.

tourism includes individual leisure time and tourism includes individual leisure time and many recreational activities, but it is not many recreational activities, but it is not synonymous with them.synonymous with them.

all travel and tourism trips are temporary all travel and tourism trips are temporary movements.movements.

The Component Sectors of the The Component Sectors of the Tourism IndustryTourism Industry

The “industry” consists of the products of several The “industry” consists of the products of several differentdifferent

industry sectors. The five main component sectors industry sectors. The five main component sectors of theof the

industry are as follows;industry are as follows; accommodation:accommodation: hotels/motels, guest houses/bed&breakfast, hotels/motels, guest houses/bed&breakfast,

apartments/villas, time share resorts, holiday villages, apartments/villas, time share resorts, holiday villages, conference/exhibition centers, camping sites, marinas etc.conference/exhibition centers, camping sites, marinas etc.

attractions:attractions: theme parks, museums, national parks, wildlife theme parks, museums, national parks, wildlife parks, gardens, heritage sites, sports/activity centers etc.parks, gardens, heritage sites, sports/activity centers etc.

transport:transport: airlines, shipping lines/ferries, railways, bus/coach airlines, shipping lines/ferries, railways, bus/coach operators, car rental operators etc.operators, car rental operators etc.

travel organizers:travel organizers: tour operators, tour wholesalers, retail tour operators, tour wholesalers, retail travel agents, conference organizers, booking agencies, travel agents, conference organizers, booking agencies, incentive travel organizers etc.incentive travel organizers etc.

destination organization:destination organization: national tourist officesnational tourist offices (NTOs), (NTOs), regional tourist offices, local tourist offices, tourist associations regional tourist offices, local tourist offices, tourist associations etc. etc.

EachEach of them is composed of several sub- of them is composed of several sub-sectors which are concerned with marketing sectors which are concerned with marketing activities both in the design of the products activities both in the design of the products and the management of demand. Some of and the management of demand. Some of the sub-sectors are fully commercial, the sub-sectors are fully commercial, operated for profit (e.g. hotels); some are operated for profit (e.g. hotels); some are operated commercially for objects other operated commercially for objects other than profit (attractions such as safari parks than profit (attractions such as safari parks and heritage sites); and some are in the and heritage sites); and some are in the public sector and operated mainly on a non-public sector and operated mainly on a non-commercial basis (state-owned national commercial basis (state-owned national museums, national parks, and most of the museums, national parks, and most of the operations undertaken by tourist offices).operations undertaken by tourist offices).

The Role of Marketing - Links The Role of Marketing - Links between Demand and Supplybetween Demand and Supply

The central activity of marketing The central activity of marketing managers is to create and supply the managers is to create and supply the product that best fits the needs and product that best fits the needs and wants of the customers which is wants of the customers which is known as the known as the consumer consumer (marketing) (marketing) orientation conceptorientation concept..

What is Marketing?What is Marketing?

Marketing is not selling or advertising. Marketing is not selling or advertising. Marketing is the management of Marketing is the management of

creating and exchanging products and creating and exchanging products and value in order to satisfy the needs and value in order to satisfy the needs and wants of the customers.wants of the customers.

Marketing involves building profitable, Marketing involves building profitable, long-term relationships with customers. long-term relationships with customers.

The goal of marketing is to satisfy The goal of marketing is to satisfy customers at a profit.customers at a profit.

If the marketer does a good job of If the marketer does a good job of understanding consumer needs, develops understanding consumer needs, develops products that provide superior value, and products that provide superior value, and prices, distributes, and promotes them prices, distributes, and promotes them effectively, these products will sell easily.effectively, these products will sell easily.

Thus, selling and advertising are only Thus, selling and advertising are only part of a larger `marketing mix` - a set of part of a larger `marketing mix` - a set of marketing tools that work together to marketing tools that work together to affect the marketplace.affect the marketplace.

Marketing, more than any other business Marketing, more than any other business function, deals with customers. function, deals with customers. Creating Creating customer value and satisfaction are at the customer value and satisfaction are at the heart of hospitality and travel industry heart of hospitality and travel industry marketingmarketing. .

The Marketing ProcessThe Marketing Process

Managers must realize that they cannot Managers must realize that they cannot satisfy all customers; they have to satisfy all customers; they have to choosechoose their customers carefully. their customers carefully.

Companies work to (1) understand Companies work to (1) understand consumers, (2) construct marketing consumers, (2) construct marketing programs to create superior value for programs to create superior value for the customer, (3) build the customer, (3) build profitable profitable relationships and create customer relationships and create customer delight, and in turn (4) capture value delight, and in turn (4) capture value from customers in the forms of sales, from customers in the forms of sales, profits and long-term customer equity. profits and long-term customer equity.

Core Marketing ConceptsCore Marketing Concepts

Customer needs, wants & demandsCustomer needs, wants & demands Marketing offers – products, services Marketing offers – products, services

and experiencesand experiences Customer value and satisfactionCustomer value and satisfaction Exchanges and relationshipsExchanges and relationships MarketsMarkets

Needs, Wants, and Needs, Wants, and DemandsDemands

Consumers have needs (physical, social, Consumers have needs (physical, social, individual etc.) wants, and demands to individual etc.) wants, and demands to be satisfied. Consumers view products be satisfied. Consumers view products as bundles of “benefits” and choose as bundles of “benefits” and choose products that give them the best value products that give them the best value for their money and most satisfaction. for their money and most satisfaction. E.g. Fairfield Inn → comfortable bed, E.g. Fairfield Inn → comfortable bed, clean room, low price; JW Marriott clean room, low price; JW Marriott Hotels & Resorts → fine dining, luxury, Hotels & Resorts → fine dining, luxury, comfort and productivity comfort and productivity

Understanding needs Understanding needs and wantsand wants

What are people looking for when they What are people looking for when they visit different destinations?visit different destinations?

Why would a tourist choose to holiday Why would a tourist choose to holiday in Florida rather than Spain – what in Florida rather than Spain – what variables are at work apart from cost?variables are at work apart from cost?

Why would he choose to travel with Why would he choose to travel with British Airways, but not with British Airways, but not with Lufthansa?Lufthansa?

Why would he buy an independent Why would he buy an independent inclusive tour, but not a group tour?inclusive tour, but not a group tour?

Need Satisfaction TheoryNeed Satisfaction Theory

All consumer purchases, including All consumer purchases, including choice of travel destination, are choice of travel destination, are made to satisfy made to satisfy aa need of the need of the consumer. The individual has a consumer. The individual has a desire for something?????desire for something?????

Do people travel just to travel?Do people travel just to travel? People do not travel just to travel. People do not travel just to travel.

Travel fills some need in each Travel fills some need in each consumer. Travelers’ needs differ.consumer. Travelers’ needs differ.

Do we really Do we really needneed??

Often people talk about what they need, Often people talk about what they need, say a new television set, a new dress, or say a new television set, a new dress, or a holiday. But do they really need these a holiday. But do they really need these things? Or are they just expressing a things? Or are they just expressing a desire for more?desire for more?

Due to today’s increased material Due to today’s increased material consumption patterns, it is becoming consumption patterns, it is becoming difficult to distinguish difficult to distinguish wants wants (e.g. (e.g. reference group influence)reference group influence) from needs. from needs.

Maslow’s hierarchy of Maslow’s hierarchy of needsneeds

Self-actualizationSelf-actualization(e.g. self-fulfillment, etc.)(e.g. self-fulfillment, etc.)

Ego needsEgo needs(e.g. self-respect, status, success, etc.)(e.g. self-respect, status, success, etc.)

Social needsSocial needs(e.g. affection, love, friendship, etc.)(e.g. affection, love, friendship, etc.)

Safety needsSafety needs(e.g. security, protection, etc.)(e.g. security, protection, etc.)

Physiological needsPhysiological needs(e.g. food, water, air, etc.)(e.g. food, water, air, etc.)

According to Maslow, the more basic According to Maslow, the more basic needs have to be satisfied (satisfied needs have to be satisfied (satisfied according to the needs of our cultural according to the needs of our cultural group) before our interest will focus on group) before our interest will focus on higher level needs.higher level needs.

However, according to Alderfer, and his However, according to Alderfer, and his ERG (existence, relatedness, and ERG (existence, relatedness, and growth needs) theory, (1) more than growth needs) theory, (1) more than one need may be operative at the same one need may be operative at the same time, (2) if the satisfaction of a higher time, (2) if the satisfaction of a higher level need is frustrated, the desire to level need is frustrated, the desire to satisfy a lower level need increases. satisfy a lower level need increases.

The Main Motives for The Main Motives for Travel and TourismTravel and Tourism

Motivation for travel and tourism Motivation for travel and tourism can be categorized as;can be categorized as; Physical motivationsPhysical motivations Cultural motivationsCultural motivations Personal motivationsPersonal motivations Prestige and Status motivationsPrestige and Status motivations

(Mathieson and (Mathieson and Wall, 1993)Wall, 1993)

Physical motivationsPhysical motivations

refreshment of body and mind (rest and refreshment of body and mind (rest and relaxation) – beach holidays, lakes and relaxation) – beach holidays, lakes and mountains, etc.;mountains, etc.;

for health purposes (i.e. either medically for health purposes (i.e. either medically prescribed or undertaken voluntarily) – prescribed or undertaken voluntarily) – spas, etc.;spas, etc.;

for participation in sports – skiing, for participation in sports – skiing, canoeing, safari parks, ponytrekking, etc.;canoeing, safari parks, ponytrekking, etc.;

pleasure, - fun, excitement, romance and pleasure, - fun, excitement, romance and entertainment, to shop. entertainment, to shop.

Cultural motivationsCultural motivations

curiosity about foreign countries, people curiosity about foreign countries, people and places;and places;

interests in art, music, architecture, interests in art, music, architecture, folklore – music festivals, theatre visits, folklore – music festivals, theatre visits, etc.;etc.;

interest in historical places (remains, interest in historical places (remains, monuments, churches);monuments, churches);

experiencing specific international and experiencing specific international and national events - Olympic Games, national events - Olympic Games, Oktoberfest, etc.Oktoberfest, etc.

Personal motivationsPersonal motivations

visiting relatives and friends;visiting relatives and friends; meeting new people and seeking new meeting new people and seeking new

friendships;friendships; seeking new and different experiences in seeking new and different experiences in

different environments – sailing etc.;different environments – sailing etc.; escaping from one’s own permanent social escaping from one’s own permanent social

environment (i.e. desire for a change)environment (i.e. desire for a change) personal excitement of traveling;personal excitement of traveling; visiting places and people for spiritual visiting places and people for spiritual

reasons (i.e. pilgrimages)reasons (i.e. pilgrimages) traveling for travel’s saketraveling for travel’s sake

Prestige and Status Prestige and Status motivationsmotivations pursuit of hobbies – craft or painting pursuit of hobbies – craft or painting

holidays etc.;holidays etc.; continuation of education or learning- continuation of education or learning-

study tours etc.;study tours etc.; seeking of business contacts and seeking of business contacts and

professional goals – fairs, etc.;professional goals – fairs, etc.; conference and meetings;conference and meetings; ego enhancement and sensual ego enhancement and sensual

indulgence;indulgence; fashion fashion

ProductsProducts A product (persons, places, organizations, A product (persons, places, organizations,

activities, ideas) is anything that can activities, ideas) is anything that can satisfy a need or want. Producers must satisfy a need or want. Producers must see themselves as see themselves as providing a solution to a providing a solution to a needneed (benefits) rather than just selling a (benefits) rather than just selling a product. Otherwise, when a new product product. Otherwise, when a new product satisfies the needs better or less satisfies the needs better or less expensively, they would not make money. expensively, they would not make money.

Research is a must to understand the Research is a must to understand the needs and wants of the customers to needs and wants of the customers to produce the right product.produce the right product. E.g. At Disney E.g. At Disney World, each manager spends a day in the park in World, each manager spends a day in the park in a Mickey costume or work on the front line - a Mickey costume or work on the front line -

taking tickets, selling pop-corn.taking tickets, selling pop-corn.

Disney World, Orlando

Customer Value and Customer Value and SatisfactionSatisfaction

How do customers choose among How do customers choose among these many products? Consumers these many products? Consumers make choices based on;make choices based on; ValueValue; is the difference between owning ; is the difference between owning

the product and the cost of obtaining the the product and the cost of obtaining the product, in a way “profit” to the product, in a way “profit” to the customer. Customers do not judge customer. Customers do not judge product values objectively, on the product values objectively, on the contrary they act on contrary they act on perceivedperceived value. E.g. value. E.g. Is Hilton really the best hotel company?Is Hilton really the best hotel company?

SatisfactionSatisfaction; is the difference between the ; is the difference between the product’s performance and buyer’s product’s performance and buyer’s expectations. If the product’s performance expectations. If the product’s performance falls short of expectations, the buyer is falls short of expectations, the buyer is dissatisfied. If the performance matches or dissatisfied. If the performance matches or exceeds expectations, the buyer is exceeds expectations, the buyer is satisfied. Smart companies aim to satisfy satisfied. Smart companies aim to satisfy customers by promising only what they can customers by promising only what they can give, then giving give, then giving moremore than they promise. than they promise. Benefits of satisfying customersBenefits of satisfying customers:: Customer satisfaction create an emotional Customer satisfaction create an emotional tie (customer loyalty) to a product. Highly tie (customer loyalty) to a product. Highly satisfied customers make (1) repeat satisfied customers make (1) repeat purchases, (2) are less price sensitive, (3) purchases, (2) are less price sensitive, (3) talk positively to their friends. talk positively to their friends.

QualityQuality; simply quality can be defined ; simply quality can be defined as “freedom from defects”. Today, as “freedom from defects”. Today, most companies define quality in terms most companies define quality in terms of of customer satisfactioncustomer satisfaction. E.g. . E.g. according to Motorola “if the customer according to Motorola “if the customer doesn’t like the product, it’s a defect”. doesn’t like the product, it’s a defect”. Quality starts with customer needs and Quality starts with customer needs and ends with customer satisfactionends with customer satisfaction. The . The concept of “total quality management” concept of “total quality management” is in a away “total customer is in a away “total customer satisfaction”. Improving the quality of satisfaction”. Improving the quality of a product that customers want a product that customers want increases customer satisfaction, increases customer satisfaction, therefore increases profit.therefore increases profit.

Exchanges and Exchanges and RelationshipsRelationships

Marketing occurs when people decide to Marketing occurs when people decide to satisfy needs and wants through exchange. satisfy needs and wants through exchange.

Exchange (transaction) is the act of getting Exchange (transaction) is the act of getting a desired object (product, service, idea …) a desired object (product, service, idea …) from someone by giving something in from someone by giving something in return. return.

Marketing should create mutually Marketing should create mutually beneficial relationships (good for both beneficial relationships (good for both parties) to generate profitable transactions. parties) to generate profitable transactions.

MarketsMarkets

A market is the set of actual and A market is the set of actual and potential buyers of a product. potential buyers of a product. These buyers share a particular These buyers share a particular need or want that can be satisfied need or want that can be satisfied through exchanges and through exchanges and relationships. relationships.

Marketing means managing Marketing means managing markets to bring about profitable markets to bring about profitable customer relationships. customer relationships.

Creating these relationships takes Creating these relationships takes work. Sellers must search for work. Sellers must search for buyers, identify their needs, design buyers, identify their needs, design right marketing offers (right marketing offers (products)products), , set right set right pricesprices, , promotepromote and and deliverdeliver (place) the products in the right (place) the products in the right ways (4Ps of Marketing). These are ways (4Ps of Marketing). These are the core marketing activities.the core marketing activities.

Marketing ManagementMarketing Management

Marketing management is the art Marketing management is the art and science of choosing target and science of choosing target markets and building profitable markets and building profitable relationships with them. relationships with them.

The marketing manager’s aim is to The marketing manager’s aim is to find, attract, keep, and grow target find, attract, keep, and grow target customers by creating, delivering, customers by creating, delivering, and communicating superior and communicating superior customer value.customer value.

Marketing management is in a way, Marketing management is in a way, demand (customer) management.demand (customer) management.

A company’s demand comes from two A company’s demand comes from two groups: new customers and repeat groups: new customers and repeat customers. Marketing management customers. Marketing management deals with finding ways (1) to attract deals with finding ways (1) to attract new customers and create transactions new customers and create transactions with them and also (2) to retain current with them and also (2) to retain current customers and build lasting customer customers and build lasting customer relationships.relationships.

To design a winning marketing To design a winning marketing strategy, the marketing manager strategy, the marketing manager must answer two important must answer two important questions: questions: What customers will we serve (what’s What customers will we serve (what’s

our target market)?our target market)? How can we serve these customers best How can we serve these customers best

(what’s our value proposition)?(what’s our value proposition)?

Selecting Customers to Selecting Customers to ServeServe

The company must first decide The company must first decide whowho it will serve. It does this by diving it will serve. It does this by diving the market into segments of the market into segments of customers (customers (market segmentationmarket segmentation) ) and selecting which segments it will and selecting which segments it will go after (go after (target marketingtarget marketing). ).

Some people think of marketing Some people think of marketing management as finding as many management as finding as many customers as possible and increasing customers as possible and increasing demand. But marketing managers should demand. But marketing managers should know that they cannot serve all know that they cannot serve all customers in every way. By trying to customers in every way. By trying to serve all customers, they may not serve serve all customers, they may not serve any customers well. Instead, the any customers well. Instead, the company wants to select only customers company wants to select only customers that it can serve well and profitably.that it can serve well and profitably.

Methods Used to Segment Methods Used to Segment Markets in Travel and Markets in Travel and

TourismTourism There are seven main ways of dividing There are seven main ways of dividing

up markets for segmentation purposes, up markets for segmentation purposes, all of which are used in practice in the all of which are used in practice in the travel and tourism industry. The main travel and tourism industry. The main methods of segmentation are:methods of segmentation are: Purpose of travelPurpose of travel Buyer needs, motivations, and benefits soughtBuyer needs, motivations, and benefits sought Buyer behavior (characteristics) of product usageBuyer behavior (characteristics) of product usage Demographic, economic, and geographic profileDemographic, economic, and geographic profile Psychographic profilePsychographic profile Geodemographic profileGeodemographic profile PricePrice

Segmentation by purpose of Segmentation by purpose of traveltravel

E.g. Conference markets require E.g. Conference markets require different products to those supplied to different products to those supplied to other business travelers and meetings other business travelers and meetings for groups of different sizes require for groups of different sizes require special provision.special provision.

For a tour operator, customer’s purpose For a tour operator, customer’s purpose and product needs will differ according and product needs will differ according to whether they are looking for; main to whether they are looking for; main summer holiday, additional holidays and summer holiday, additional holidays and short breaks, winter sun, winter sports. short breaks, winter sun, winter sports.

Within the broad categories of main Within the broad categories of main and additional holidays, typical and additional holidays, typical subsidiary purposes would include subsidiary purposes would include sea and beach holidays (with and sea and beach holidays (with and without children), cultural interests, without children), cultural interests, walking and other activity interests walking and other activity interests and an interest in exotic and an interest in exotic destinations. destinations.

Segmentation by buyer Segmentation by buyer needs and benefits soughtneeds and benefits sought

Within purpose of travel, the next logical Within purpose of travel, the next logical consideration for segmentation is to consideration for segmentation is to understand the needs, wants and understand the needs, wants and motivations of particular customer motivations of particular customer groups (as discussed).groups (as discussed).

The range and perceived importance of The range and perceived importance of benefits sought by customer segments benefits sought by customer segments are not easy to understand. They can only are not easy to understand. They can only be discovered by market research among be discovered by market research among identified target groups. identified target groups.

Segmentation by benefits, makes it Segmentation by benefits, makes it possible for marketing managers to possible for marketing managers to fine tune their products. fine tune their products.

Focusing on promoting the benefits Focusing on promoting the benefits sought is a logical objective for sought is a logical objective for brochures and other marketing brochures and other marketing communications. communications.

Segmentation by buyer Segmentation by buyer behaviorbehavior

Within purpose and benefits sought, Within purpose and benefits sought, there is scope for refining the there is scope for refining the segmentation process according to the segmentation process according to the types of behavior or characteristics of types of behavior or characteristics of use of products that customers exhibit. use of products that customers exhibit. E.g. frequency of usage of products.E.g. frequency of usage of products.

Frequent users (high frequency, high Frequent users (high frequency, high spending high loyal); may represent only spending high loyal); may represent only 10% of individual customers in a year 10% of individual customers in a year but up to 60% of revenue for some hotel but up to 60% of revenue for some hotel groups and airlines.groups and airlines.

Segmentation by demographic, Segmentation by demographic, economic, geographic and life-economic, geographic and life-

cycle characteristicscycle characteristics By using previous segmentation By using previous segmentation

processes, considerable knowledge can processes, considerable knowledge can be obtained. However, for the purposes be obtained. However, for the purposes of efficient promotion and distribution of of efficient promotion and distribution of products, especially to prospective new products, especially to prospective new customers rather than to existing ones, it customers rather than to existing ones, it is important to know the demographic is important to know the demographic profile (e.g. age, sex, occupation, income, profile (e.g. age, sex, occupation, income, place of residence) and other defining place of residence) and other defining characteristics (life-cycle) of their target characteristics (life-cycle) of their target customers, including potential users.customers, including potential users.

Segmentation by Segmentation by psychographic psychographic

characteristics and lifestylecharacteristics and lifestyle Dependent on sophisticated market Dependent on sophisticated market

research techniques.research techniques. Psychographics aims to define Psychographics aims to define

consumer on attitudinal or consumer on attitudinal or psychological rather than physical psychological rather than physical dimensions. dimensions.

Geodemographic Geodemographic segmentationsegmentation

A very powerful and productive A very powerful and productive segmentation tool; developed segmentation tool; developed through combining an analysis of through combining an analysis of census data with the postal area census data with the postal area (zip) codes that identify group of (zip) codes that identify group of households in the country.households in the country.

Segmentation by priceSegmentation by price

In leisure travel and tourism markets In leisure travel and tourism markets in all countries, buyers are highly in all countries, buyers are highly price-sensitive. price-sensitive.

It is not a segmentation variable of It is not a segmentation variable of the same kind as the others. the same kind as the others.

There are segments of customers to There are segments of customers to be identified and located who respond be identified and located who respond to different price bands. to different price bands.

Yield management; segment targeted Yield management; segment targeted tactical pricing.tactical pricing.

Choosing a Value Choosing a Value PropositionProposition

The company must also decide how it The company must also decide how it will serve targeted customers – how it will serve targeted customers – how it will will differentiate and positiondifferentiate and position itself in itself in the marketplace. the marketplace.

A company’s A company’s value propositionvalue proposition is the is the set of benefits or values it promises to set of benefits or values it promises to deliver to customers to satisfy their deliver to customers to satisfy their needs. E.g. Northwest Airlines punctual, needs. E.g. Northwest Airlines punctual, friendly, fun flight; Singapore Airlines friendly, fun flight; Singapore Airlines luxurious, prestigious, special flight luxurious, prestigious, special flight

Such value propositions differentiate Such value propositions differentiate one brand from another. one brand from another.

They answer the customer’s They answer the customer’s question “Why should I buy your question “Why should I buy your brand rather than a competitor’s?”brand rather than a competitor’s?”

Companies must design strong value Companies must design strong value propositions that give them the propositions that give them the greatest advantage in their target greatest advantage in their target markets. markets.

Marketing Management Marketing Management PhilosophiesPhilosophies

There are five alternative concepts under There are five alternative concepts under which organizations conduct their which organizations conduct their marketing activities: marketing activities: the production, the production, product, selling, marketing and societal product, selling, marketing and societal marketingmarketing concepts. concepts. The Production ConceptThe Production Concept; holds that consumers ; holds that consumers

will favor products that are available and will favor products that are available and highly affordable. Here, the management highly affordable. Here, the management focus on improving production and focus on improving production and distribution. This oldest philosophy is useful distribution. This oldest philosophy is useful in two types of in two types of

situation. (1) when the demand for a situation. (1) when the demand for a product exceeds the supply (2) when the product exceeds the supply (2) when the product’s cost is too high and improved product’s cost is too high and improved productivity is needed to bring it down. productivity is needed to bring it down. E.g. Henry Ford’s “Model T”, TI watches.E.g. Henry Ford’s “Model T”, TI watches.

The Product ConceptThe Product Concept; holds that ; holds that consumers favor products that offer the consumers favor products that offer the most quality, performance and innovative most quality, performance and innovative features. Here, the organization should features. Here, the organization should focus on making continuous product focus on making continuous product improvement. improvement.

The Selling ConceptThe Selling Concept; holds that ; holds that consumers do not buy enough products if consumers do not buy enough products if there are not large-scale selling and there are not large-scale selling and promotion effort. Mostpromotion effort. Most

companies use the selling concept when companies use the selling concept when they have overcapacity. This concept they have overcapacity. This concept focuses on creating sales transactions focuses on creating sales transactions rather than on building long-term, rather than on building long-term, profitable relationships with customers. profitable relationships with customers.

The Marketing ConceptThe Marketing Concept; holds that ; holds that achieving organizational goals (making achieving organizational goals (making profit) depends on profit) depends on understandingunderstanding the the needs and wants of target markets and needs and wants of target markets and delivering the desired satisfactions more delivering the desired satisfactions more effectively and efficiently than effectively and efficiently than competitors do. Relies heavily on competitors do. Relies heavily on researchresearch. E.g. Disney, McDonald’s, Ritz-. E.g. Disney, McDonald’s, Ritz-Carlton Hotels… are Carlton Hotels… are customer-drivencustomer-driven companies.companies.

The Societal Marketing ConceptThe Societal Marketing Concept; holds that ; holds that the organization should not only satisfy the the organization should not only satisfy the needs and wants but also improve both needs and wants but also improve both customer’s and society’s well-being. This customer’s and society’s well-being. This newest philosophy focus on customer long-newest philosophy focus on customer long-term welfare, since today we have term welfare, since today we have environmental problems, resource environmental problems, resource shortages, population growth etc. E.g. shortages, population growth etc. E.g. Critics against fast-food restaurants that Critics against fast-food restaurants that food has a lot of fat and salt harmful for food has a lot of fat and salt harmful for health, a lot of packaging increasing waste health, a lot of packaging increasing waste and pollution. Here, the companies try to and pollution. Here, the companies try to balance (1) company profits, (2) consumer balance (1) company profits, (2) consumer wants, (3) society’s interests. wants, (3) society’s interests.

Customer Relationship Customer Relationship ManagementManagement

CRM is perhaps the most important CRM is perhaps the most important concept of modern marketing. concept of modern marketing.

Until recently, CRM has been Until recently, CRM has been defined narrowly as a customer data defined narrowly as a customer data management activity. It involves management activity. It involves managing detailed information about managing detailed information about individual customers in order to individual customers in order to maximize customer loyalty. maximize customer loyalty.

More recently, CRM is defined as the More recently, CRM is defined as the overall process of building and overall process of building and maintaining profitable customer maintaining profitable customer relationships by delivering superior value relationships by delivering superior value and satisfaction. It deals with all aspects and satisfaction. It deals with all aspects of acquiring, keeping and growing of acquiring, keeping and growing customers. customers.

Relationship building blocks: customer Relationship building blocks: customer perceived value and satisfaction. perceived value and satisfaction.

A company can always increase customer A company can always increase customer satisfaction by lowering its price or satisfaction by lowering its price or increasing its services. But this may increasing its services. But this may result in lower profits. result in lower profits.

Companies can build customer Companies can build customer relationships at relationships at many levelsmany levels. E.g. . E.g. frequent-flier programs, club marketing frequent-flier programs, club marketing programs.programs.

Yesterday’s companies focused on mass Yesterday’s companies focused on mass marketing to all customers at arm’s marketing to all customers at arm’s length. Today’s companies are building length. Today’s companies are building more more directdirect and lasting relationships and lasting relationships with more carefully selected customers. with more carefully selected customers.

Today’s companies do not want Today’s companies do not want relationships with every customer. relationships with every customer. Companies are targeting fewer, more Companies are targeting fewer, more profitable customers. profitable customers.

Capturing Value from Capturing Value from CustomersCustomers

By creating superior customer value, the By creating superior customer value, the firms creates highly satisfied customers firms creates highly satisfied customers who stay loyal and buy more. This, in who stay loyal and buy more. This, in turn, means greater long-run returns for turn, means greater long-run returns for the firm. the firm.

Good customer relationship management Good customer relationship management creates customer delight. In turn, creates customer delight. In turn, delighted customers remain loyal and delighted customers remain loyal and talk favorable to others about the talk favorable to others about the company and its products.company and its products.

Customer life-time valueCustomer life-time value: the value of : the value of the entire stream of purchases that the the entire stream of purchases that the customer would make over a lifetime of customer would make over a lifetime of patronage. patronage.

Losing a customer means losing more Losing a customer means losing more than a single sale. It means losing than a single sale. It means losing tthe he entire stream of purchases that the entire stream of purchases that the customer would make over a lifetime of customer would make over a lifetime of patronage. patronage.

Customer equityCustomer equity: The total combined : The total combined customer lifetime values of all of the customer lifetime values of all of the company’s customers.company’s customers.

Useful Links and Useful Links and SourcesSources

Kotler, P.; Bowen, J. and Makens, J. (1999). Kotler, P.; Bowen, J. and Makens, J. (1999). Marketing for Hospitality and Tourism (2nd Marketing for Hospitality and Tourism (2nd ed.). Prentice Hall. NJ.ed.). Prentice Hall. NJ.

Kotler, P. and Armstrong, G. (2006) Kotler, P. and Armstrong, G. (2006) Principles of Marketing (11th ed.). Prentice Principles of Marketing (11th ed.). Prentice Hall. NJ. Hall. NJ.

Middleton, V.T.C. (2004) Marketing in Middleton, V.T.C. (2004) Marketing in Travel and Tourism (3rd ed). Elsevier. Travel and Tourism (3rd ed). Elsevier. Oxford.Oxford.

http://www.hotelsmag.comhttp://www.hotelsmag.com http://www.tourism.bilkent.edu.tr/~edahttp://www.tourism.bilkent.edu.tr/~eda