Tourism Market and Target Selection

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TECHNICAL NOTES:

MARKET SEGMENTATION AND

TARGET MARKET SELECTION

The determinants of tourism demand: i.e. economic, technological, political, regulatory,demographic; the globalisation vs localisation continuum; socio-environmental awareness;living & working environments; safety of travel; marketing.

The most appropriate methods of analysis & forecasting for tourism marketing planpreparation. Why is forecasting necessary in tourism planning:

tourism product is perishablepeople are inseparable from the production-consumption processcustomer satisfaction depends on complementary servicessensitivity to natural & man-made disasters

large, long lead-time investments needed Qualitative vs. quantitative methods: Different tourism entities with different needs in

respect of analysis & forecasting related to type, level of detail, and time scale

Market and marketing research, different consumer behavioural models and motivationalpatterns

Market segmentation criteria: (discrete, measurable, viable, appropriate) and the range of

market segmentation variables relevant to tourism analysis (purpose of travel; buyerneeds/motivations/benefits sought; buyer characteristics; demographic, geographic oreconomic characteristics; lifestyle-psychographic characteristics; geo-demographiccharacteristics; price

The value of different market segments in achieving optimal benefits for the destination:focusing on the 3 Es experience, entertainment, education using examples such asgeotourism/ecotourism, adventure/sports, culture, short breaks. Emergent markets egChina. Importance of domestic tourism.

The process of developing marketing strategy and plans to realise the objectives adestination has for the tourism sector requires a great deal of research and analysis. Not onlyis it necessary to understand prevailing perceptions of the destination and the techniques bywhich these can be influenced, it is also vital that trends in the tourist consumers travelexpectations, desires, values and behaviour are measured and monitored. The importance of

both market research and motivational, attitudinal and behavioural marketing research ishigh. This enables tourist consumer groups to be identified by common characteristics andtargeted through packages of communications. The growing sophistication of electronic databases greatly facilitates this process leading to the ultimate market segment the individual!

Tourisms scale and shape is determined by a range of factors. Some continue to exert aninfluence decade after decade, albeit in different manifestations; others have an effect for alimited period only.

The continuing influences - the foundations for tourism - include

factors.

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Post war economic recovery in the industrialised countries led to rising personal incomes andfree time availability - the fundamentals to engage in tourism which are money and time.There will be the regular fluctuations in economic performance - some periods of stronggrowth, some of low growth/recession but overall we work on the basis of average 2 to 3%annual growth. If we take it that each 1% growth in GDP produces 2 to 2.5 % rise in

discretionary travel spending, then an average annual 2.5% rise in global GDP will result in atwo-and-a-half-fold growth in leisure tourism spending by 2020. This is only a guideline butnonetheless a useful indicator of the frame of possibility.

Looking at the recent past and present situation in the key tourist generating regions we cansee the two of the most recent disturbances were the collapse in the late 1990s of the

Asian financial markets and currencies, and the terrorist attacks of September 11 2001. Theformer devastated populations accustomed to high rates of economic growth, while the lattercreated huge uncertainty in virtually all aspects of life, including the economy. The Asianfinancial and economic crisis of the late 1990s had a devastating effect in the short term andeven now the recovery in consumer confidence in that region particularly in Japan - islagging behind overall economic recovery in Asian countries as it was a balance sheet

collapse and many consumers are still trying to get their personal and household finances inbalance again before they indulge in a major resumption of spending. This is a particularproblem among the older age groups, accustomed to strong economic growth and for whomthe collapse was a rude shock. The Asahi Evening News of 24 October 2000 encapsulates theproblem in its headline Fear of future deters seniors from opening their wallets, the articlestating that the nations ability to stimulate consumption depends on whether businesses -including of course leisure and tourism businesses - can persuade these seniors to spendmore - more, that is, of the 54% held by the over 60s of the countrys 1,300 trillion yen.

The relevance of these developments to travel and tourism are readily apparent. The growthin the Japanese market which had expanded in response to its Governments initiation in thelate 1980s of the the aim of which was to encourage more

Japanese people to travel overseas in order to reduce the countrys trade surplus to almost17 million outbound departures by the end of the 1990s suddenly stopped, with one of themain motors for growth the elderly being the worst affected by the economic problemswhich continued through into 2003/4.

The escalation of oil prices as a consequence of the Iraq war is still moving through thesystem and impacting on travel (through air fuel surcharges) and travel intentions in 2005.The uncertainty arising from this and continuing concerns about terrorism has affected globaleconomies in recent years with countries like Germany teetering on recession and all othermajor economies recording lower growth rates than in recent years. The tourism plannerignores these factors at his peril there is no point in developing and marketing tourism forconsumers who cannot afford to travel!!

Nonetheless, certain fundamental truths remain. People will continue to attach a growingimportance to discretionary travel and tourism in their choices in spending their personaldiscretionary disposable income. Future growth in tourism will be fuelled through theunderlying strength of the Asian regions economy and its potential for outbound tourismremains. The old tigers will recover; and the new tigers are emerging rapidly (led by Chinaand India).

China outbound travel tripled between 2000 and 2004 to 30mn (albeit the bulk of visits are tothe semi autonomous regions of Hong Kong and Macau), with 50 countries around the worldplus the whole of the European Union (except the UK, Ireland and Denmark) now havingbeen granted approved destination status by the Chinese Government. Indians generatedbetween 4.5 and 4.6mn overseas trips in 2003, compared to 4mn in 2001. Significantly in

respect of future growth the real per capita income of the urban Chinese is forecast to rise

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from US$1,037 in 2003 to US$1,758 by 2013, three times higher than in India (ie 2003 -US$512 and 2013 - US$647).

Technological progress has already contributed enormously to the growth of travel andtourism through the application of the jet aircraft to commercial air transport, and thedevelopment of electronic technology via computerised reservations systems. Development ininformation technology systems is so rapid that anything reported one month is outdated thenext. These increasingly sophisticated successive generations of systems are providing instantand interactive access to tourism product offerings. The growth of the usage of the web toresearch and book travel is rapid. Figures released by the Association of British Travel Agents(ABTA) to coincide with its November 2004 annual convention showed that 15% of Britishholidaymakers book their package holidays online, up from 6% in just two years and a

fivefold rise over 2000 (see www.abtamembers.org/research/morisummary.pdf).

Mintel research (2005 British Lifestyle) shows that the number of overseas holidays bookedonline has increased by 60% in the past 6 years as against a zero change in bookings viatravel agents. That said, the travel agent will remain a favoured medium for booking at leastsome of the publics travel requirements (particularly among electronic-resistant older marketsegments - the over 60s will make up 30% of the British population by 2020). Travel agentsstill offer choice and reassurance and those which embrace electronic technology and marrythis to personal service will survive and prosper. Nonetheless the advances and applicationsof electronic technology in travel and tourism product design and distribution will be a majorinfluence in coming years. More consumers will use online systems in their own homes or inholiday superstores to test and design their individual holidays.

Aircraft development is another key technological influence on tourism. The new Airbus A380is capable of carrying from 500+ passengers (in a multi class set up) up to 850 passengers ina single class configuration and will commence service in summer 2006; while Boeings 787Dreamliner, due to be launched in 2008, will have fewer seats at 250 but will offer fasterflights travelling longer distances non-stop. Though Airbus is already developing itscompetitor aircraft to the 7E7 in the A350 which it hopes to have in service by the end of thepresent decade, the A380 and B787 developments reflect differing views on the growth of airtravel demand will it be for bulk travel to hubs and smaller planes to the ultimatedestination (such as the A380 will provide) or for direct travel to the destination as Boeingbelieves. The new aircraft will be more economic to operate, Boeing claiming 20% fuelefficiency for the B787.

In the past this played a key role as national controls on travel through visas wereprogressively eased as tourism was recognised as an economic sector to be encouraged. Thisprocess continued into the 1990s with the breaking down of the Iron Curtain and the removalof the apartheid system in South Africa; and the first part of the C21 has seen the Chineseopening up outbound travel for its populations. Though there will undoubtedly be hiccups inthe process, the signs are for less and less formal requirements in travelling from country tocountry. Though the change to treating all intra-EU country travel as domestic sends horrorshocks through the trend forecaster (and will throw WTOs figures into chaos), such adevelopment is inevitable. Passports may ultimately be replaced by technology-drivensystems of personal check based on hand geometry or retina inspection.

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The ageing of the population of industrialised countries is already a well-establisheddemographic trend. It will continue and pick up in pace. Associated with this trend is thecontracting workforce in those countries. There will be less young people to feed into thesystem. In response to this there will be more south-north migration, something which isalready taking place though it is a matter for particularly delicate handling by governments to

avoid possible racial conflict arising from the perception of the some of the host populationthat immigrants are taking our jobs. The implications of these two developments are thatthere will be increased travel by older market segments - though there is a counter viewpointthat the shortfall in young people entering the workforce will lead to the raising of retirementage and less freedom among older populations to engage in leisure pursuits - and alsoincreased VFR travel between the north and the south by the large volumes of migrants inindustrialised countries.

Another demographic factor is the further erosion of the traditional western householdthrough rising divorce rates and later marriage and families. The implications of this fortourism is that there are more different types of households/household segments for thetravel and tourism industry to cater for. Apart from the gay segment and singles, we now

have the single parent (with child/children) with their own particular requirements from traveland tourism service suppliers.

The growing power of international economic and market forces and the consequent declinein the ability of individual states to control their economies and of the private corporation inlimited geographic spheres of operation to dominate domestic markets - the process ofglobalisation. The impact on tourism is increased power in the hands of a small number ofglobal travel and tourism networks achieving their globalisation not only through vertical andhorizontal integration but through diagonal integration, economies of both scale and scope,and their huge investment in electronic databases and marketing. The pan-European travelgroup Touristik Union International (TUI), for example, has 80 tour operators, 3,700 travel

agencies, 7 airlines, 56,000 employees and 18mn customers; and recorded sales andoperating profits of Euros18bn and Euros490mn respectively in 2004.

Populations are responding - and not just in developing countries - to this globalisation ofeconomies, markets, systems and cultures by looking to their own identities. In developingcountries the conflict between identity and modernity is intensifying. More groups defined onethnicity, religion and social structure will demand to be recognised and treated as importantwith their own special rights. Tourism is centre stage. There are two consequences: theincreased questioning of the form and scale of tourism development and marketing in thesesocieties whether at country, county, province, town or village level; but, on the upside, thislocal level resistance and introverted response to globalisation provides opportunities andfocus for the development of tourist experiences related to the cultural and natural resourcesof these subsets of society.

The travel and tourism sectors are mirroring the global/local polarisation process in theirsystems and structures. There are few fully global networks - though it might take many toexert a stranglehold on world markets. These mega-groups cater for a large volume of touristmovements, accommodation, mainstream or mass tourism; at the other end of the scale areniche operators offering special products and services, experiences to individuals andcollections of tourists with eclectic tastes. So, if we look at the UK tour-operating sector thereare four companies which account for 55% of the market and a further 1,440 fully bondedoperators who make up the remainder of the 21mn inclusive tours sold.

Research by organisations like the Stanford Research Institute and Angus Reid, reported by

the WTO in its reports (1999a), consistently find that between 10 and15% of discretionary travellers want the unusual - these are the alternative or new tourists,

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and demand growth from these groups is outpacing that of mainstream segments. Thesetourists, typically highly educated, mature, affluent, well travelled, environmentally aware andsensitive to the social and cultural traditions, systems and mores of the destinations theyvisit, are responding to the demands of local groups to be heard, recognised and valued.

Of course, the divide is not as simple as suggested. Multinational and transnational

corporations do not only cater for the mass beach resort market with the niche marketoperators focusing on the educated traveller. Much tourism demand is now characterised bycustomisation based on the use of electronic technology. You can now go into a holidayhypermarket or superstore and access the sort of audio-visual presentation which puts the lieto the adage that you cannot test drive a holiday while you can utilise flatscreen technologyto print out tailor-made brochures. The airline or tour operator is able through the availabletechnology to develop what appears to be, and in many instances is, a bespoke product orservice. In other words, thinking global, acting local.

Having had a growing impact in the 1980s up to the Rio Earth Summit of 1992,environmental issues went off the boil until the build up to the Millennium when much media

attention was devoted to mans treatment of the planet in the past thousand years.Consumer awareness was also increased by NGO campaigns and media reporting onenvironmental issues like the smog which enveloped much of SE Asia in late 1997, globalwarming, ozone layer depletion, rain forest destruction, dwindling water supplies (resulting inthe proportion of the worlds population living under stress conditions rising from a quarter totwo thirds by 2025), and by the displacement of populations through development projects,whether by dams or tourism projects - it does not matter.

This build up of consumers socio environmental awareness of tourism development is leadingto increased scrutiny on the part of the public in destination decision-making and a growingrequirement for new tourism developments to be sustainable and fair to the destination.Research in the UK by Tearfund finds that the awareness and concern of British

holidaymakers towards the destinations they visit if increasing. Its 2002 report Worlds Apart:a Call to Responsible Global Tourism found that between 2000 and 2002 the proportion ofBritish stating they would be more likely to book a holiday with a company with a writtencode to guarantee good working conditions, protect the environment and support localcharities in the tourist destination had risen from 45 to 52% while almost two-thirds wantedto know how to support local the local economy, preserve the environment and behaveresponsibly when they go on holiday.

The three burning questions are: do the publics actions match its avowed intentions - willconsumers walk the talk? will the conversion rate between intention and action grow in theway Tearfund indicates or remain limited to a minority? and will the private sector embraceand support sustainable socio environmental practices, or only do what they have to? Thesigns are modestly positive through trade actions like the Tour Operators Initiative and mostrecently the widespread media coverage which led directly to the greater sensitisation of thewestern consumer about the importance and impact of tourism on the regions affected bythe December 26 2004 tsunami.

We are now realising that rather than being a liberator and freeing up our time the computerand electronic technology acts both to isolate us from each other, reducing direct humancontact, and ties us to our work - there is no good excuse not to be in constant contact withthe office!! Our urban lifestyles, traffic congestion etc - in both the industrialised anddeveloping worlds - leads to the increased felt need to engage in discretionary tourism toescape and/or to indulge. As the WTOs Executive Summary states: Itwill become possible to live ones life without exposure to other people with automated

service the norm and full access to, and exchange of, information on everything possible from

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ones own home...In consequence, people will crave the human touch: and tourism will be aprincipal means through which they seek to achieve this (WTO 1999a).

The nature of employment is changing. The World Tourism Organizations Business Councilstudy coined the phrase time poor but money rich (WTO 1999b)to describe the process. The pressure on free time comes from changes in patterns of work

allied to the evolution of the computer for business applications. Gone are the days of jobsfor life, a development which has been particularly difficult for the Japanese, with theirstrong sense of corporate loyalty, to accept. Contract employment will become increasinglycommon. This creates the need for people in all occupations/professions to keep in touchwith the marketplace. We will lead a highly pressured life moving one contract to another.There will be little time to take time off during a contract and we will need to be in constantcontact with the marketplace for our next contract.

We may, however, take more holidays. There is occurring a switch from a single, mainholiday of one week (in the case of most Asian markets) or two or more weeks (in the caseof European and American tourists) to two, three or four holidays each of lesser duration e.g.three to four days for the Asian tourist, and three to ten days (depending on whether the

destination is short or long haul) for western market tourists.

It is significant to note that the studys conclusion was that thereare sound grounds for anticipating that average expenditure per tourist day will show a riseas the trend towards shorter, multiple holidays grows. It is unlikely that the aggregatenumber of days a consumer spends on holidays will grow but his/her spending, particularlyon a per diem basis, will probably increase (WTO 1999b).

That does not mean, however, that long haul holidays will suffer from lower rates of growth.Mintels 2005 British Lifestyle report expects long haul to grow from less than one fifth of allUK outbound travel to a quarter within 10-15 years. This apparent paradox will be achievedthrough the rise of shorter duration long haul holidays. Already three, four and five night

holidays are being offered from Europe to Hawaii (four nights from just over 700 from theUK), the Caribbean and the Far East see special offers on www.expedia.com.

Futurologists like John Naisbitt and Patricia Aburdene (1990) contend that the industrialisedworld is in transition from the service to the experience economy, with the peaking of theservice economy in such countries already achieved. The focus is switching to deliveringunique experiences that personally engage the consumer. The very clear implication of thischange for tourism is the need to differentiate tourism product development and marketing,both by destination and operator.

For the very reason that few prospective visitors have first hand knowledge of destinationsvying for their business, the onus is on the destination to seek to attract the consumerthrough informational and persuasive marketing. A major influence will be the application ofhighly personalised relationship, or one-to-one, marketing techniques using electronictechnology to readily and accurately identify micro market segments and niches, and tocommunicate with them more effectively. Marketing - both by destinations and by operators -will increase and become more focussed and competitive. Over three-out-of-four NTOrespondents to the WTOs (1999a) survey believe that their marketingapproach will need to take a more aggressive stance. At the same time, recognising that - inthe developing world at least - there are insufficient funds for significantly increasedmarketing budgets, 90% of NTOs are actively pursuing cooperative marketing campaigns -both on a regional basis and with the private sector.

It is noteworthy that many of the factors identified exert their influence in combination andare going to produce polarisation of tourist tastes and supply, with the result that there will

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be two broad groupings: large scale, mainstream tourism involving the movement of largevolumes to extensively developed destinations: and, on a smaller scale, individualisedtourism. Both are likely to prosper.

Tourism will not flourish to destinations in civil turmoil, at war, or where tourists health or

security is perceived to be under threat from terrorism, health scares, natural disasters etc.This is the fundamental problem facing Africa, the Middle East and South Asia in achievingthe major growth in tourism which their potential could support and their economies need.The events sparked off by the terrorist attacks of September 11 2001 and subsequent tourist-directed bombings in Bali, Mombasa, Casablanca and Madrid created and sustained greatuncertainty in tourist markets, as did the SARS and avian flu outbreaks and the unparalleledIndian Ocean tsunami. Tourists opt for destinations closer-to-home and/or those perceived tobe safer though the evidence from established tourist destinations like Egypt is that thesedips are short-lived and can be reduced through publicity about measures taken to ensuretourists safety and advertising that reassures tourists about their security

The topic of research and analysis in respect of tourism is as broad and as long as one cares tomake it reflecting the fact that tourism activity takes place in locations where other people live,involves interaction between different groups of people (expressed simply as hostsand guests),and creates demands and impacts on all elements of the society and environment of the hostcommunity. Tourism means very different things to an economist, a social anthropologist, aspecialist in any of the fields related to the natural environment, a local resident of a tourist area,an airline executive, a hotelier, a restaurateur and so on.

Just take the concept oftourism demandand think of the difference in what it means to:

a national tourism office marketing executive whose goal is to attract the largestvolumes of the target segments identified as providing the maximum benefits to the

destination; a parks manager who has to balance visitor flows (and the benefits these bring)

with maintaining the integrity of the natural and cultural fabric of the park;

a transport operator whose focus is maximising passenger yield (ie passengervolume and fares), irrespective of how long they stay in the destination to whichthey are being taken;

a hotel operator whose aim is threefold ie volume, rate and length of stay;

a community through which tourists pass and which has much of the nuisancefactor of tourism without many of the benefits; and

a community in which tourist activity takes place which has to balance theeconomic benefits with possible negative consequences in respect of theirenvironment and social disruption, cultural erosion etc.

The common link between all these diverse tourism stakeholders is that they cannot achievewhat they are looking for from tourism, or establish how tourism might be better managed,without information to enable them to understand the market its size, profile, characteristicsand trends and how marketingactivity can change the market thus creating the need forknowledge on what influences and determines tourists attitudes, motivations and behaviour.

A prerequisite to the development and encouragement of responsible tourism is a full, well-conceived and effectively-executed market(ing) research and information system structured:

to provide understanding of tourist demand,

to quantify and forecast accurately,

to identify trends and changes enabling us to anticipate, and

to monitor performance both of competitors and ourselves.

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The primary reason for the urgency of having a good marketing information system is the longlead times (and consequent need for forward planning) for the infrastructure and facilities intourism development. Many key elements of tourism supply cannot be swiftly adjusted in linewith changes in demand: there is a rigidity of supply. Getting it right two, three, five or even - asin the case of airport development - ten or more years ahead is therefore of the essence.

The types of information systems internal & external - needed to provide the requisiteknowledge for marketing decision makers are explored more fully in a later session dealingwith market segmentation and target marketing. One of the key links in the chain ismarketing research in both continuous form and designed to tackle specific tasksfor which thedecision-maker needs a focussed and detailed set of answers to a rapid timeframe.

The purpose of all forecasting is to reduce the risk of decisions. Where there is some degreeof certainty of the outcome of a particular course of events, the forecasts made are almost anautomatic process: but where there are many variables which are themselves difficult topredict and which determine the outcome for a particular decision the difficulty of making,BUT also the need for, good forecasts increases. Frechtling (2001) makes the case fortourism being a sector in especial need of reliable forecasts on the grounds that it is shackledby five constraints on decision-making:

- the tourism product is perishable

- people are inseparable from the production-consumption process

- customer satisfaction depends on complementary services

- leisure tourism demand is extremely sensitive to natural and manmade disasters

- tourism supply requires large, long lead-time investments in plant, equipment

and infrastructure

The application by tourism managers of forecasts in seeking to reduce risk varies according tothe type of tourism operation. Forecasts can be used to:

set marketing goals, either strategic or for the annual marketing plan

explore potential markets to determine the prospects and methods of successfulpenetration with their products/services

assess the way in which future events - known or possible might impact ondemand so that alternative, contingency plans can be prepared

determine operational requirements

assess project feasibility

predict the economic, socio-cultural, and environmental consequences of visitors

assess the potential impact of regulatory policies, such as tax increases andenvironmental policy controls

project public revenues from tourism

ensure adequate capacity and infrastructure

The following list adapted from Frechtling (2001) indicates the consequences of poorforecasting in respect of each of these areas:

Uses of demand forecasts Consequences of poor forecastingSet marketing goals Over- or under-budgeting for marketing

Explore potential markets Marketing to wrong segments, ignoring the right ones

Simulate impacts on demand Incorrect marketing mix, poor preparedness for negativeevents

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Determine operational Excess labour, or customer disquiet requirementswith limited service

Assess feasibility of project Wasted financial resources, difficulty investmentin financing interest payments

Predict economic, Inflation, unemployment;socio-cultural and environmental degradation; socio- environmental impacts

cultural disruption and damage

Assess regulatory change Business losses, unemployment, price inflation

Project public revenue Budget deficits

Planning adequate capacity Traffic congestion, delays,and Infrastructure accidents

The nature of tourism demand poses challenges for the forecaster: historical data are often lacking

tourism demand can be volatile

tourism demand is sensitive to catastrophic influences

tourism behaviour is complex

there is a wide choice of forecast variables

There are many different methods of forecasting ranging from the extension of historic timeseries trends into the future to complex, computer-based models. They fall into two basiccategories: quantitativeand qualitative.

Quantitative methods divide into two subcategories: extrapolative (or time series) whichassume that the key to predicting the future of any variable lies in its past performance iewithout consideration of causal relationships; and causal models which mathematicallysimulate cause and effect relationships, the central objective being to determine the causalvariables that affect the forecast variable and the appropriate mathematical expression of thisrelationship. The constant change in factors determining and influencing tourism (eg aviation,computer reservations and communications) make reliance on past relationships unrealistic,while the large number of variables affecting tourism demand and the way these interplaywith each other make causal models hugely complex and subject to being totally flawed if theway in which only a few of the variables interact is wrongly inputted.

Qualitative methods (or judgemental methods) rely on the experts manipulation of pastinformation about the forecast variable. The various qualitative methods include: jury ofexecutive opinion, subjective probability assessment, Delphi method and consumer intentionssurvey. These methods are used where there is insufficient historical data, the time seriesavailable are unreliable, there is a rapidly changing macro environment, major disturbancesare expected and the planning horizon is a long term one. The World Tourism Organizations

series of forecasts (1999a) relied extensively on qualitative methodsthough, as in many destination tourism forecasts, a combination of methods was employed.The benefits of qualitative methods are that:

they are inexpensive

there is no requirement for a high level of statistical skills, and

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in many instances the use of qualitative methods is the only way of producingforecasts.

Against this, there exists:

the possible flawed selection of experts

a danger that experts can confuse forecasts with desires

a predisposition to be anchored in the present no control on the assertion of the experts own views

Frechtling (2001) demonstrates the process of choosing the most appropriate forecastingmethod.

Step 1: are objective data available? If not, then only qualitative methods can be employedIF YESStep 2: is the forecast horizon more than two years? If not, then extrapolation methods willbe best suited.IF YESStep 3: are large changes expected in the environment? If not, then extrapolation methods

are still likely to be best.IF YESStep 4: is there good information available on the relationship between variables? If not, thendespite the longer time horizon and many changes anticipated extrapolation methods remainthe preferred forecasting option.IF YESStep 5: are there many data on causal variables? If not, then regression analysis models arebest.IF YESStructural causal models are indicated

Managers have different information needs at different times. These needs can be met in partby an ongoing, continuous flow of information on certain key subjects and throughtailormade research studies to investigate a specific issue.

Kotler, Bowen and Makens (2003) define a marketing information system as consisting ofpeople, equipment and procedures to gather, sort, analyse, evaluate and distribute needed,timely, and accurate information to marketing decision makers. The word marketing couldequally be replaced by development planning the principles would remain the same. Inessence an information system is a collection of tourism statistics organised in such a way as toprovide the user with a readily available and accessible source of information relevant to theentity and the decisions to be made. The system first interacts with managers in differentfunctional capacities to assess their information needs. Next, it develops needed informationfrom:

- internal recordsand resources, and through

- intelligencegatheringactivities and

- marketing research (on target markets, competitors, marketing channels and both

macro- and micro-environmental determinants).The data is analysed and then distributed to decision makers in the right form and at the righttime to help in planning, implementation and control.

Any organisation operating in tourism generates a lot of information, much of which is not usedproductively. The key is to know what data are available internally, which of it can be of use inplanning and then ensuring such information flows through the information system to the

managers who need it. In determining management information needs, Kotler et al suggest thefollowing list of questions:

- what types of decisions do you make regularly?

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- what types of information do you need to make these decisions?

- what types of useful information do you get regularly?

- what types of information would you like to get that you are not getting now?

- what types of information do you get now that you dont really need?

- what information would you want daily? weekly? monthly? yearly?

- what topics would you like to be kept informed about?

- what databases would be useful to you?- what types of information analysis programmes would you like to have?

- what would be the four most helpful improvements that could be made to thepresent information system?

Examination can then be made of the data collected by the organisation to assess what meetsthe identified needs of decision-making managers. Taking the example of a hotel: its dailyrecords can include reports on occupancy, the number of guests by party size, the volume ofgroups in residence, average daily rate, no-shows etc. Reservations records can reveal valuableinformation on productive travel agents and guide the timing of advertising and sales calls tocoincide with the main booking periods. Guest history information collected on registration cardscan embrace demographics and other personal details, type of room purchased, cross-

purchases, length of stay, specific dates of stay, method of payment method of arrival,membership of frequent guest programmes etc. This information can be analysed to betterunderstand who the customers are and how to communicate most effectively to them agrowing need in the age of relationship marketing (also termed direct, or one-to-one,marketing).

Marketing intelligence comprises two types: that which can be generated by the organisationsown people through conversation and observation during the course of their activities; and thatdeveloped through external sources. Kotler et al present a long list of types of externalinformation relevant to the hotel sectors marketing needs:

Visitor Marketing Information

TYPE OF INFORMATIONVisitor profileVisitor trendsVisitor spendingVisitor daysPurpose of visitRecreational facilities used/desiredLodging used/desiredFood & beverage facilities used/desiredRetail shopping used/desired

EXTERNAL SOURCESTourist offices at various levelsOther government departmentsChambers of commerceColleges/universitiesPublic utility companiesBanks and financial institutionsResortsMedia TV, radio, printParks, forests etc administrationsEnvironmental groupsMuseums

Travel and tourism operators associationsTransport operators

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Excursion operators

Competitive Information

TYPES OF INFORMATIONDevelopment strategies

Product/service mixPlanned expansion, renovation etcProduct line extensions etcCustomer mixPricing strategyOccupancy rates, discounts

Advertising/promotional thrustEmployee satisfaction levels

New Innovations and Trends

TYPES OF INFORMATION

Technological improvements in products/servicesPricing technology, such as yield managementTechnological advances in equipment

EXTERNAL SOURCES FOR BOTH COMPETITIVE AND INNOVATION/TREND INFORMATIONSuppliers/vendorsConsultantsTravel agenciesTour operatorsTransport companiesCompetitors publicationsTrade publications

Representatives and publications of travel and tourism operators associationsMeetings/conventionsEmployees of competitors

The final link in the information system is marketing research though this is can take both acontinuous form and be designed to tackle specific tasks for which the decision-maker needs afocussed and detailed set of answers to a rapid timeframe.

The goals of marketing research applicable to the public sector as well as to operators are:

to maximise economic contribution/return whether in the form of jobs, businesscreation, foreign exchange earnings or direct contribution to the government purseor as profit and return on investment for private sector operators;

to ensure the longevity/extension of the destination or product range;

to match or exceed the offering of competitors a purpose which again hasapplication in respect of locations (ie a region comprising more than one country, acountry, an area within a country, or at the individual resort, town or village level)and for operators in the different sub-sectors that make up the tourism industry;and

to prevent avoidable disasters in the supply, distribution and marketing of tourismproducts and services in other words to ensure the right products/services at theright price at the right time using the right forms of distribution and communicatingthe product/service offering to the market in the most effective manner.

The American Marketing Associations definition for marketing research is a process that

identifies and defines marketing opportunities and problems, monitors and evaluates marketing

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actions and performance, and communicates the findings and implications to management. themarketing research process consists of four steps:

defining the problem and research objectives

developing the research plan

implementing the research plan, and

interpreting and reporting the findings.

Definition of the research problem is best done through consultation between the manager (whobest understands the problem or decision to be addressed) and the researcher (who knows howto obtain the requisite information). A marketing research project can have one of three types ofobjective:

exploratory research information to help define the problem and suggest

hypotheses

descriptive research to descried the size, composition and characteristics of the

market

causalresearch to test hypotheses about cause-and-effect relationships.

Before launching into a major programme of primary research, it is always important for theresearch team to examine the secondary data available ie information collected for another

purpose but which has relevance to the purpose at hand. Secondary data can be gleaned fromseveral categories of resources: internal, government publications, periodicals and books,commercial data and electronic databases. Such data provide a good starting point for marketingresearch and can serve to focus the primary research required.Observational research methods are employed for most exploratory research exercises. Thisinvolves the gathering of primary data by observing relevant people, actions and situations; andcan yield information people may be unwilling or unable to provide. However, this method hasits limitations since observation cannot the feelings, beliefs and attitudes that constitute buyerbehaviour cannot be observed. Observation research is often a preliminary step to surveyresearch.

Survey research is the approach best suited to gathering descriptive information. It can bestructured or unstructured; direct or indirect. Its strength is its flexibility, capable of obtainingmany different kinds of information in a wide variety of marketing situations.

Experimental research is best suited for gathering causal information. Experiments involveselecting matched groups of subjects, giving them different treatments, controlling unrelatedfactors, and checking the differences in the responses of the groups.

There are four basic contact methods for conducting marketing research: mail, telephone, in-person, and email. The strengths and weakness of these are summarised in a table taken fromKotler et al.

Flexibility Poor Good Excellent FairCollectable dataquantity Good Fair Excellent GoodControl of interviewereffects Excellent Fair Poor ExcellentControl of sample Fair Excellent Fair FairSpeed of datacollection Poor Excellent Good ExcellentResponse rate Poor Good Good FairCost Good Fair Poor ExcellentIf the research problem requires quantitative results, the optimal means of research areindividual or household surveys conducted by means of street, phone, mail or email interviews;

but where qualitative information is the main need then in-depth focus group discussions andparticipant observation are the preferred means.

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In carrying out the research plan, the two key elements are the sampling planand the researchinstrument. Designing the sample plan calls for four decisions:

who will be surveyed? This is based on what type of information is needed and whowill be most able to provide it.

how many people should be surveyed? If well chosen, samples of less than 1% ofthe population can give good reliability.

how should the sample be chosen? There are probability and non-probabilitysamples, the former comprising random selection which can be simple (ie of thewhole population) or stratified for mutually exclusive groups of the population. Non-probability samples can involve selection based on willingness to participate (orconvenience), or can comprise a set number of interviews of people in each of anumber of demographic groups (quota sample).

when the survey be undertaken? This is especially important for in-person surveyswhen the timing should be representative of the flow of traffic relevant to thesurveys purpose.

In collecting primary data, marketing researchers have to select the most appropriate researchinstrument:

interview structured using a questionnaire, or unstructured

mechanical devices

structured models, such as a test market

The questionnaire is by far the most common survey instrument. In preparing a questionnaire,decisions have to be made on what questions to ask, what form the questions should take, howthey should be worded, the layout, the sequence and the length. A common failing is to excludequestions that should be asked and to include those that cannot, will not and need not beanswered. For this reason a questionnaire should be tested before being used on a large scale.

The objectives of a questionnaire can be summarised as: to suit the nature of the target population in terms of its style, wording, sequence

etc;

to suit the research methods being employed ie whether it is being administeredthrough interviewer or interviewee completion;

to suit the research objectives through ensuring the questions being posed arecentral to the purpose of the research;

to collect the right kind of data through focussing on the information which isessential and cutting out that which is superfluous;

to aid data analysis through designing the questions in a format to make it easyfor the responses to be inputted into an analytical framework;

to minimise error and bias through careful wording; and

to encourage accurate and full responses through using a style which intereststhe respondent and uses wording which is clear.

A key consideration in designing a questionnaire is whether the questions should be open-endedor closed. Open-ended questions do not give a range of potential responses to choose from.They are used where insights into respondents values and attitudes are sought but do not lendthemselves to ready statistical analysis since responses can be long and show wide variation.Closed questions can be of two types: dichotomous where there are only two choices eg yes or

no; and multiple-choice where the respondent selects from a list of possible answers. Closedquestions are easier to analyses but restrict the ability of the respondent to explain or elaborateon the answer given. Many questionnaires combine open-ended and closed questions toovercome this problem.

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As an example of how the wording of questions can harm a research exercise, consider thefollowing by a tourism office wanting to discover how to attract more visitors. In a survey of thepopulation of a target catchment area, it started its questionnaire with:

Where did you go on holiday last year?

This question might seem a perfectly reasonable starting point BUT it ignores the fact that a

significant proportion of the population do not take holidays away from home, while others takeseveral holiday breaks. How are the differences in these two categories of the population takeninto account in this question?

The correct way to address the question of the level of holidaytaking and destinations chosenwould be for a sequence of questions as follows:

Did you go on holiday last year?YESNO

IF YES

How many holidays did you take last year?

Which place(s) did you visit on holiday last year?

There are two main scaling methods for rating responses from attitudinal and motivationalresearch: Likert summated ratingsand semantic differential scales.

In the Likert system various statements built up from preliminary research and piloting are givento respondents who are asked to indicate their view on a five-or seven-point scale. Typical wouldbe a scale which asks for responses ranging from strongly agree at one extreme to stronglydisagree at the other.

Semantic differential scales were developed to measure differences in the meaning of words orconcepts, and are valuable in developing brand image positioning and advertising. This methodinvolves a bipolar five-or seven-point rating scale, with each extreme defined by carefullyselected adjectives representing opposite extremes of feeling. A destination might test how it isperceived by having a series of scales including safe unsafe, friendly unfriendly, goodvalue-for-money poor value-for-money.

The management of any tourist destination whether a country, a resort or an individualattraction or facility (eg park, hotel) - can collect statistics about visitors to aid futureplanning. Visitor flows and patterns can be measured at point of entry (or registration) orthrough sample interviews or self-completion questionnaires. For a hotel, registration is themost effective source of collecting useful information if the system employed is sufficientlydetailed (without comprising an administrative hassle for the customer). For an individualfacility like a park, the entry point where the ticket sale takes place is a less effective waybecause less information can be collected from the customer as routine or with justificationas compared with a hotel. Sample surveying is necessary.

The hotel operator has a varied room stock, caters for a range of different markets andsegments, and may have many variations in the rates charged to each of these. Overall roomor bed occupancy levels may not tell a meaningful story. The operator will normally setbudget targets for each of the hotels customer groups so sales will need to measure againstthese targets rather than overall. The data collected by the hotel from and about its customergroups must enable those assessments to be made. A typical resort hotel may divide its

customers into the following categories:DOMESTIC

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- individual

- corporate accounts individual, group; meetings large/small

- functions large/small groups separatelyINTERNATIONAL

- individual business, holiday

- tour operators allocations typically by operator and source country

- corporate accounts individual, group; meetings large/small- functions large/small groups separately

By measuring achievement against budget, the hotel management can assess whichmarkets/segments are performing best and what changes are needed to next yearsallocations, rates etc

The decisions on these factors have to take account of the fact that typically the averageroom occupancy for business travellers is 1.25 persons since most business travellers are notaccompanied by their spouses while for holiday travellers it is typically between 1.5 and 2.This higher level of room density for holiday than for business travel has to be assessedagainst the room rates and the level of non-room spending in the hotel. If the business guestspends 50% more than the holiday guest, then the lower room density is more than

compensated for.

Take the following example - simplified for the purposes of ease of illustration - of a hotelwhich has 50 standard rooms, 40 superior rooms and 10 suites. The figures relate to a giventime period.

Standard 5/$100 10/$120 20/$75 Superior 20/$125 10/$150 10/$100 Suites 7/$200 2/$250 Zero

A straightforward analysis would indicate that the hotel achieved a room occupancy of 84%.This would mask the fact that the standard rooms only achieved 70% while the superiorrooms were fully occupied indicating a possible upgrading of the standard rooms or alowering of the tariff for them. Then, of course, decisions would have to made as to theextent a heavier reliance on tour operator custom might have on the hotels more up-marketbusiness clients who patronise the superior rooms and the suites.

In planning the hotel stock for a given location, a model can be used on a Microsoft Excel orLotus spreadsheet programme taking account of:

- grade of hotel (low, mid, high)

- mix of custom (holiday independent, tour operator; business independent,

corporate; other)

- average persons per occupied room differentiated by category of guest

- average length of stay important since business guests tend to have shorter

stays than holidaymakers- number of different hotels stayed in during course of visit important where a

destination comprises a circuit that visitors travel around

- average year round occupancy, again possibly differentiated according to

category of guest (eg reflecting the fact that business travel is likely to be moreconsistent throughout the year as compared with holiday travel which will bemore seasonal related to climate etc).

To calculate total room requirements, the total volume of visitors should be divided bynumber of establishments stayed in timesaverage length of stay divided by365 days to geteven spread over the year divided byaverage occupants per room adjusted bya factor to

produce a realistic year round occupancy level. Then the more detailed analysis by type of (orspecific) location, grade of accommodation and type of guest can be conducted.

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In interpreting and reporting research results the researcher should avoid over-reliance onstatistics but focus on those findings that aid decision-making. Since findings can be interpretedin different ways, detailed discussion between research and management personnel should takeplace to check that the research was executed properly and to examine the results and findings

through dialogue. The research data should also be made available to managers for their ownanalysis. The need is to eliminate bias in interpretation, and to avoid unquestioning acceptanceof research results. The commissioning manger and the researcher share responsibility for theresearch process and the resulting decisions. Some of the problems areas that can occur duringa research project as identified by Kotler et al are:

making invalid assumptions

lack of qualitative data

failing to look at different segments within a sample

improper use of sophisticated statistical analysis methods

failing to have the research sample representative of the population

Successful marketing research depends on:

the setting of clear objectives

the selection of an appropriate method of research

limiting the scope of the survey to the collection of valid data only

undertaking research over a sufficient time scale, with ongoing surveys likely toyield better results than one-off, snapshot ones

a thorough but clear and concise briefing to the research team

the provision of sufficient resources to carry out the research most efficaciously iehuman and financial

a speedy analysis mechanism

ability both within the research team and in the commissioning body to interpret the

results with insight a user friendly presentation of the results

Matching the research objectives to the methods is central to successful research

The five key areas of challenge for marketing research which need to be addressed in order togain the maximum benefits are:

a greater amount of reliable research into why consumers do what they do and howthey arrive at their purchasing decisions

finding out about non-users of the product/service type in question eg why do non-tourists stay at home?

identifying real trends from the analysis of the research data

obtaining greater knowledge about the behaviour of individuals

increasing marketing research funding

Marketing strategy is implemented through a sequential process of segmentation targetingand positioning by identifying the different groups within the total market according tospecific characteristics or other variables, isolate those with most compatibility with the goals

of the destination of organisation, and use marketing and promotional tools to communicatea specific position to these targeted segments thereby creating an identity and image in theminds of these targets which will converted into purchase.

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Market segmentationis the process whereby producers organise their knowledge of customergroups and select for particular attention those whose needs and wants they are best able tosupply with their products. It is a process of dividing a total market such as all visitors, or amarket sector such as holiday travel, into subgroups or segments of the total for marketingmanagement purposes. Its purpose is to facilitate more cost effective marketing through the

design, promotion and delivery of purpose-designed products, aimed at satisfying theidentified needs of the target groups.

Market segmentation is the necessary first stage in the process of setting precise marketingobjectives and targets, and the basis for effective planning, budgeting and control ofmarketing activities. Apart from national tourism organisations (NTOs), no individual produceris likely to be concerned with the whole of a countrys tourist markets, usually beingconcerned with particular sub-groups of visitors, or segments, within the total market. A five-star city hotel will target business guests and the top end of the discretionary target marketswith budget travellers and family groups unlikely to be prime targets; while self-cateringfacilities will be likely to attract these latter groups. NTOs also find it necessary to segmentthe total market of potential tourists in order to carry out targeted marketing campaigns,

though their information services need to cater for all visitors.

The process of segmentation starts with understanding peoples motivations. Maslow (1954)developed what he terms a hierarchy of needs. This is relevant to travel and tourism sincedemand is largely shaped by mental concepts and felt needs. Maslow sees a sequence ofneeds which move from basic needs to sophisticated desires. The word need is commonlyused to cover all these but I need to eat represents a clearly different needthan I need toa new television. Where does I need a holiday fit into the scale?

(e.g. self-fulfilment etc)

(e.g. self-respect, status)

(e.g. affection, love, friendship)

(e.g. security, protection)

(e.g. food, water, air)

The countries of industrialised countries have evolved over the past two centuries from being

predominantly needs-driven (that is, all activity geared to survival) to the strong growthsparked by the industrial revolution of being outer-directed (that is, geared to satisfying anemployer in return for which a better standard of living is obtained). With the development ofthe railways starting in the middle of the nineteenth century, discretionary travel began to bepossible for those who had spare time and money having satisfied basic and outer-directedneeds. These people could address their inner-directedneeds (that is, activities which theyenjoy and which make them feel better about their lives). As economies grew, more strata ofsociety used an increasing proportion of their time and money to satisfying inner-directedneeds and the provision of travel and tourist products (such as holiday camps from the1930s, and package tours from the 1950s) enabled them to do so. Present day society inindustrialised countries divides broadly 40:40:20 between inner-directed, outer-directed andbasic needs.

The translation of needs into motivations and into actionable market segments depends ondetailed, accurate and up-to-date information on the market. With the development of

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electronic databases and other sophisticated means of generating consumer information, thishas become increasingly possible during the last few decades.

There are four main criteria to be applied to any segment if it is to be usable in marketing.Each segment has to be:

Discrete

Measurable

Viable

Appropriate

Discrete means it must be possible to separately identify, or ring fence, the segmentaccording to specific characteristics or variables like those listed later in this Unit.Measurablemeans that the characteristics distinguishing the sub-groups must be measurableby means of available market/marketing research data, or via new such data as can beobtained within available budgets. Segments that cannot be measured accurately or in

sufficient detail cannot be properly targeted. If targeting is not sufficiently precise, theeffectiveness of marketing activities cannot be evaluated with any degree of accuracy.

Viablemeans for a market segment to be viable the revenue it generates over the long runmust exceed the full cost of the marketing mix (ie product, promotion, place and price) toachieve such revenue by a margin in line with the organisations objectives. Viability,therefore, is a function of the costs of designing products for the target customers, promotingto such groups, and ensuring they can find convenient access to the products, at prices theyfind attractive.

Appropriatemeans it is essential that segments to be supplied are mutually compatible andcontribute to the image or position in the market adopted by a producer. An economy car

with a Rolls Royce label would be inappropriate, while destinations that have the aim ofestablishing an upmarket quality image worry about the impact of attracting backpackers orbudget tourists.

Other criteria can be added to this core list.

Defendable means that unless a producer has distinct market advantages in supplying, orcatering for, the identified segment which make it immune to the marketing activities ofcompetitors it is not likely to warrant targeting.

Stablemeans that segments that exhibit volatile demand patterns or have short product lifecycles are not attractive to the marketer.

There are many ways of segmenting markets, the only limit being the needs of the producerand the availability of market/marketing research information. These methods are notmutually exclusive but overlap and are complementary, enabling the marketer to build up adetailed view of the market and its needs. Many travel and tourism suppliers use three (ormore) of the main seven methods of:

Purpose of travel

Buyer needs, motivations and benefits sought

Buyer or user characteristics

Demographic, economic and geographic characteristics

Psychographic characteristic

Geo-demographic characteristics

Price

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Details and examples of these variables are included in the recommended reading fromMiddleton and Clarke (2001).

There is growing emphasis among tourism marketers at trying to understand an individualsmental attitudes and psychological make-up through lifestyle segmentation. Stanley Plogpioneered what he called psychographic segmentation over three decades ago, and hasupdated his analysis constantly over the period see paper (2002) and book listed in thereferences to this unit. Psychographic analysis is relevant in travel and tourism wheredestinations and products are perceived as mental concepts prior to purchase. If commonvalues among groups of consumers translate into purchasing patterns, these can be targetedthrough marketing. Some individuals are predisposed to seek adventure, enjoy risks and

active holidays; while others are risk-avoiders, choosing passive and unstressful trips. Thesesegments cut across the traditional objective dimensions of demographic segmentation likeage, gender, income and life-cycle. Age and income do not determine whether an individualprefers to stay by the hotel pool-side or trek through the bush, though clearly these physicaldimensions set the boundaries of choice. By way of example, research undertaken by theauthor in Mauritius found adjacent guests in a luxury resort hotel to be British tourists onea merchant banker from an affluent suburb of London, the other a plumber from a primarilyworking class town in Essex. Conventional segmentation methods would not have identifiedthe latter as a possible buyer for this type of product.

The measurement of consumer attitudes and values lifestyle is possible through computerprogrammes that identify and measure the extent and strength of correlations between these

factors and consumers travel and tourism purchasing behaviour. Such measurement can befurther refined by probing attitudes towards, and perceptions of, individual destinations (andtheir attractions) and companies (and their products). This type of research supports thetechnique ofproduct positioning.

Understanding the lifestyle of target customers has advantages when formulating newproducts or creating messages designed to motivate people. Lifestyle segmentation reflectsan understanding of individuals needs, benefits sought, and motivations. It requires asignificant market/marketing research spend. One of the earliest commercial developers oflifestyle segmentation in travel and tourism was Club Mediterranee which designed andpresented (through their promotional campaigns) their villages at individuals with, or whoaspired to, a clearly-defined, pleasure-oriented life-style.

Psychographic research divides the population between psychocentric (inward looking) andallocentric (outward looking) extremes. The shape of the psychographic breakdown of anypopulation is bell-shaped, with most individuals exhibiting a combination of psychoand allocharacteristics - that is, mid-centric. Destinations can be placed along the continuum betweenthe extremes. Their placement varies according to source market being researched andchanges over time. For example, Hawaii Waikiki is near psychocentric for the bulk of the USmarket but still mid-centric for most Europeans. Asian destinations like Thailand have movedover the past two decades from being allocentric/near-allocentric for Europeans to near-allocentric/mid-centric.

The travel and tourism characteristics of extreme psycho and allo-centric individuals can beillustrated as follows:

Psychocentric

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Prefer the familiar in travel destinations

Like commonplace activities at places visited

Prefer sun and fun spots, with a focus on relaxation

Low activity level

Prefer destinations they can drive to (giving a sense of being in control)

Prefer developed tourist areas, with a range of hotels, family type restaurantsand tourist shops

Prefer familiar atmosphere - manifested through international fast-food, familiarentertainment with minimal interest in exposure to the people or culture of theplace visited

Customer for full tour packaging, with heavy advanced scheduling of activitiesAllocentric

Prefer non-touristy areas

Enjoy the sense of discovery and delight in new experiences, visiting placesbefore others

Prefer novel and different destinations

High activity level

Prefer flying to destinations

Tour accommodations should include adequate-to-good hotels and food, but notmodern or chain hotels, and few tourist-type attractions

Enjoy meeting the people of the destination and gaining access to their customsand culture

Tour arrangements should include the basics but allow for considerable freedomand flexibility

The National Geographic Society broadly classifies tourism intothree destination styles: touring rest and recreation, and

entertainment.

The style depends on both the human and physical character of a place. It is typifiedby, but not limited to, the early stages of tourism development before it becomesindustrialised. Typical activities include sightseeing, history, hiking, photography, and eatinglocal cuisine. The tourism style is characterised by diffuse impacts and support for smallbusiness. The key characteristic of this destination style is that it requires protection of natureand heritage and needs architecture, landscapes, cuisine, etc., distinctive of the locale. Itsbased on the particular features of a place that differentiate it from elsewhere. Typically,therefore, it is not just, for example, a beautiful lagoon but the way the local people in relateto this aspect of the environment. There are lots of lagoons - differentiation in large partcomes from the elements of local economy, culture, and heritage of human occupation.

The style depends on the physical character of a place but does notgenerally depend much on the human character of a place - human culture or heritage.

Activities coastal resorts, walking round a golf course (rather than in the bush), downhillskiing (rather than the low tech. cross-country skiing), water sports, and vacation homes.

Associated with it are a risk of sprawl, environmental impacts, and opportunities forarchitecture, landscaping, cuisine, that suit the locale.

The third destination style, National Geographic termed , does not depend onthe character of a place at all. This style is typified by theme parks, outlet malls, amusementparks, convention centres, sports arenas, and casinos. Entertainment style tourism changesthe nature of the locale; it is high impact, and a high employment generator (although many

jobs are menial). This is mass tourism with high traffic. The critical lesson that the NationalGeographic draws from this is that if development is unchecked and unguided, then thedestination style will drift from touring to rest and recreation and towards

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entertainment. This is because the path of development is determined by a large number ofindividual commercial decisions rather than a collective vision anda plan for tourism.

National Geographic has developed the concept of geotourism to connote tourism thatsustains or enhances the geographical character of a place - its environment, culture,

aesthetics, heritage,and the well-being of its residents. Geotourism is therefore widerthan the (as yet) better known concept of ecotourism as it includesboth people and their environment. This is reflected in the range of resources for geotourism: flora and fauna; heritage; scenic places; traditional architecture; local crafts; arts; cuisine; and dance.

A striking aspect of the work on geotourism is the results of a combined study the NationalGeographic did in 2002 with the Tourism Industry Association of America. This identified 53million people in the US who had traveled in the past three years as candidates forgeotourism those fitting within the geo-savvys, urban sophisticates and good citizenssegment categories identified in the survey (see Executive Summary onwww.tia.org/survey.pdf). Clearly geotourism-type experiences are already a major driver fortravel, even if most of the travel to date has been domestic in the US; and equally clearly thevalues of geotourists are closely aligned to the tenets of responsible tourism.

A common oversight among destination tourism planning departments anxious to achieve

expansion of their competitive standing and recognition of their tourism attractions is toconcentrate on international tourist source markets rather than those closer to hand. Incountries with developed economies, tourism grew based on domestic demand but there aremutual benefits from having a combined national and international market 70% ofLondons theatre income is derived from British audiences with foreign visitors contributingthe remainder, thereby enabling price levels to be lower than if totally dependent on localdemand.

The recent UNEP workshop on found that over-ambitious new tourism projects with limited resources to attract hard-to-reach internationaltourists should be deferred in favour of promoting to the domestic market, and theextension of current products.

South Africa is an example of a country that has recognised both the need to cater for localtourists and the significant economic contribution they can make. A South African Tourismreport states hat the domestic tourism market is comparable with the international tourismmarket in terms of size and value even with only a small proportion of the domesticpopulation currently taking trips for holiday purposes (

p.3).

In 2002/3 the domestic South African market amounted to almost 50mn trips and involvedexpenditure of Rands47billion, with considerable potential for sustained growth. The South

African Tourism report, op cit, states the opportunity exists to grow the domestic market,increase the value of the market and combat issues of seasonality, geographic spread andlimited trip expenditureThis reduces the exposure of the tourism industry to fluctuations in

international demand, which is extremely sensitive to global, political and economic issues.In consequence, South African Tourism has a fully-segmented marketing strategy and plan

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for the domestic market seven segments ie young and up-coming, independent youngcouples and families, striving families, well-off homely couples, home-based low incomecouples, basic needs older families, and golden active couples.

Electronic technology facilitates the growth of what is known as relationship or one-to-onemarketing. The essence of this is that market segmentation becomes so refined that eachperson is a separate target. Instead of selling one product at a time to as many customers aspossible, relationship marketing is about selling as many products and services as possible toone customer using databases and interactive communication. It involves getting to know thecustomer by posing questions of existing and potential clients, then adapting to thecustomers needs by making suggestions, guiding the customer and adding a personal touch.It creates markets of individual customers with diverse needs and leads to increasedcustomer retention and business per customer when all other forces are operating againstbrand loyalty, as argued by Olsen (2001) see reading below.

Database profiling tells you:

Who are my best customers?

Where can I find more like them?

What are their common characteristics?

How can I reach and motivate them most effectively?

How can I achieve the greatest return on investment with my marketing budget?

With changing industry structure and new technology, destinations themselves, throughdestination marketing organisations, and tour operators are encouraging direct businessrelationships. Destination marketing systems allow centralisation of all information, includingof customers, onto one central database, accessible through various channels. Tour andtravel operators are increasingly establishing their own call centres.

The principles of one-to-one marketing are:

Meeting customer needs individually;

Knowing your customers and their value to you the life time value (LTV)concept that is, the stream of expected future profits, net of costs, on acustomers transactions, discounted at some appropriate rate back to its netpresent value. Forecasts are made based on probabilities, and some account istaken of the added benefit of referrals of other customers;

Investing in customers with high value LTVs, encouraging medium value ones tobuy other company/destination products, and dropping those with low LTVs; and

Defining the right strategy aimed at improving the capabilities needed to turn the

business into more of a one-to-one enterprise.

For a destination, a backpacker will have different needs from an elderly couple orhoneymooners or a family group. The destination is the same but the offering is varied andis customised to the individuals needs. In calculating LTV, it is noteworthy that while theshort term value of the honeymooning couple may be greater than of a backpacker, the latterare often the opinion formers who will travel repeatedly in future.

Implementing one-to-one marketing entails: customer tracking, interactive dialogue,customisation of products and processes to customer needs, and the use of loyaltyprogrammes. It is expensive requiring the differentiation of customers (not products), theexploitation of economies of scope (not scale), and a focus on increasing the share of eachcustomers business (not on market share).

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REFERENCES

Font, X. & Carey, B. (2005) Marketing Sustainable Tourism Products. Report on Workshop.United Nations, Environment Programme, Nairobi.

Frechtling, D.C. (2001) Practical Tourism Forecasting: methods & strategies. Butterworth &Heinemann, Oxford.

Kotler, P., Bowen, J. and Makens, J (2003) Marketing for Hospitality and Tourism. PrenticeHall Pearson Education, New Jersey

Kotler. P., Hamlin, M.A., Rein, I. and Haider, D.H (2002) Marketing Asian Places: attractinginvestment, industry, and tourism to cities, states & nations. John Wiley & Sons (Asia) Pte.Ltd., Singapore

Kotler, P., Haider, D.H. and Rein, I (1993) Place Marketing. Free Press, New York

Maslow. A. (1954) Motivation and Personality. Harper & Row, New York

Middleton, V.T.C. & Clarke, J. (2001) Marketing in Travel & Tourism. Butterworth Heinemann,Oxford

Millington. K. & Cleverdon, R., (1999) National Tourist Offices: their Budgets andPerformance. Insights. September 1999. pp B-1-19 London: English Tourism Council

Mintel (2005) British Lifestyle. Mintel, London.

Naisbitt, J. and Aburdene, P. (1990) Megatrends 2000. Sidgwick and Jackson, London

National Geographic (2003). Geotourism survey shows millions of travelers care.http://news.nationalgeographic.com/news/2003/10/1024_031024_travelsurvey.html .

Olsen, M. D. (2001) Hospitality and the Tourist of the Future in Lockwood, A. & Medlik, S.(eds) Tourism and Hospitality in the 21stCentury. Butterworth Heinemann, Oxford

Plog, S. (2002) The Power of Psychographics & the Concept of Venturesomeness. Journal ofTravel Research 40:244-251. Sage Publications, London.

Plog, S. (2003) Leisure Travel: a Marketing Handbook. Sections II The Psychographics ofTravel, and III Marketing Leisure Travel. Prentice Hall, New Jersey.

Semone, P. (2005). South Pacific Tourism within a Regional Perspective. Paper at TourismInvestment Conference: Creating Partnerships.www.profitpacific.com/site_en/partnership_meeting/papers_speeches.php.

South African Tourism (2004) Domestic Tourism Growth Strategy, 2004 to 2007. Departmentof Environmental Affairs, Pretoria.http://www.info.gov.za/otherdocs/2004/growthstra.pdf.

Travel Industry Association of America - TIA (2002). The Geotourism Study. TIA/NationalGeographic Traveler, Washington DC. (www.tia.org/survey.pdf)

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