The Marketing Of Tourism Industry

Published Date: 02 Nov 2017

Problem definition

The author was quite interested in the marketing of tourism industry. After deciding my research topics, the author had sent some emails to several major travel service providers in China. The author told them he needs to write a dissertation and he was quite interesting in the marketing of honeymoon tourists and would like to do a free market research for them. Several days later, the author received a reply from CITS. It was from Ms. Nina Fan, who is the manager of Marketing and Promotion department. She told him CITS had observed the market potential in honeymoon tourists and intends to launch products targeted at these customers to maintain its leading position in this market segment; she really appreciated my idea to put theory into practice and are willing to provide me some support and guidance. She would be really glad if this research can facilitate their product development and marketing campaigns. The assignment for the author is to develop a business plan to help CITS expand their business in Guangzhou China by honeymoon tourism.

Thesis objectives

According to the report released by National Wedding Industry Survey Center of China in Mar. 2011, there are 8.11 millions couples in average registering for marriage every year for the past 5 years. As the spread of western wedding culture in China, the concept of honeymoon and honeymoon tour is gradually recognized by Chinese couples. The market segment of honeymoon tour has been expanding year by year. However, most tourist service providers do not realize the special demand of this unique consumer groups. There is lack of systematic consideration in resources, route design and special services targeting on honey tourists. As the leading travel providers of China, CITS has observed this potential opportunities and seeks to maintain its leading position in this market segment. This thesis is a research assignment for CITS to help it expand their business in Guangzhou China by honeymoon tourism. Therefore, the research aims of this thesis develop a business plan to help CITS expand their business in Guangzhou China by honeymoon tourism.

Chapter’s summary

Chapter 1 of the research has set out the aims and objectives. It also introduced the concept and the outline of the research. Based on the discussion in chapter one the second part will review the existing literature in the subject area. Firstly Concept and definition of Honeymoon tour will be highlighted followed by Tourists’ purchase decision model. The next section reviews the External environment analysis, internal environment analyses and marketing theories developed by scholar.

Chapter 2 Literature Review

In this section, a brief account of the theories business planning, marketing and customer behavior are presented to offer a better understanding and theoretic framework of the study.

2.1 Tourists’ purchase decision model

For a long period of time, marketers and behaviorists have been committed to the studies of purchase behavior of tangible goods. Due to the rapid development of tourism industry worldwide, scholars gradually understand that general customer behavior theories cannot be fully applied to tourism product purchase process. Therefore, more and more researchers have looked into the purchase decision behavior of tourists.

On the basis of the theoretical analyses of sociology, psychology and marketing, foreign scholars such as Nicosia (1966) and Engel (1968) introduced a great amount of variables that affect purchase behavior. Then the first consumer purchase decision model (see Figure 2-7) came into existence. Subsequently, according to their theoretical results, scholars like Schmoll (1977) and Mayo and Jarvis (1981) analyzed and classified the variables, and also took consideration into the characteristics of travel products and the consuming characteristics of tourists. In this process, they built the model of travel decision process (see Figure 2-8) and the model of major factors influencing individual tourist behavior (see Figure 2-9) separately. These typical purchase decision models demonstrate the purchase decision behavior of tourist consumption from a variety of aspects.

2.1.1 The Engel-Kollat-Blackwell Model

The Engel-Kollat-Blackwell Model, also referred to as the E-K-B model, is a well-known model of consuming purchase decision model. From the vertical perspective, this model consists of three parts, viz. information processing, decision-making process, and variables influencing the decision process. From the horizontal point of view, when contemplating a buying decision and starting to search information, the consumers start from the link of internal information search first because of the environment they are exposed to. After further recognizing the buying needs, they enter into the link of external information search. Next, consumers process incoming information through stimuli like exposure, attention, comprehension, acceptance, and retention. Under the influence of the above-mentioned stimuli and consumers’ individual psychology and the social influence factors, alternative offers and buying decisions are formed. In the end, during the process of forming buying intention, consumers’ individual factors become especially prominent. It is thus clear that the Engel-Kollat-Blackwell Model presents research paradigms of diversified consuming behaviors. It also incorporates the two basic models of consuming behavior research, which has comprehensively and completely demonstrated the whole process and the influential factors of consumers’ purchase decision. However, in terms of more uncertain, more subjective and more complicated tourist consuming behavior process, researchers have further built tourist purchase decision behavior models on the basis of the existing models. These models present the process and the influential factors of tourist purchase decision in a more vivid manner.

2.1.2 Schmoll’s model of tourist travel decision process

Schmoll (1977) developed a travel decision-making process model based on models from Howard and Sheth in 1969 and Nicosia in 1966. This model of tourist travel decision process divides tourist purchase decision process into four stages, namely, tourism need, information gathering and deliberation, travel preparation and evaluation, and decision. The buying decision of tourists is the combined action of the following four dimensions, viz. travel stimuli, personal and social determinants of travel behavior, external variables, and characteristics and features of service destination. Personal and social determinants include personality features of tourists, their attitudes and values, and socio-economic status, etc. These determinants will influence travel motivations and desires, and further influence the travel needs of tourists. Travel stimuli and external variables involve advertising of travel products, travel literature, suggestions reports from other travelers, and also the confidence in travel intermediary, image of destination, existed travel experience, perceived risks, time and costs. These elements will have an effect on the four stages mentioned above, which are tourism need, information gathering and deliberation, travel program evaluation and buying decision. Last but not least, both the travel destinations selected and the travel services purchased will affect travelers’ next buying decision behaviors. Schmoll’s tourist decision process model summarizes in detail the influential factors of the entire tourist buying decision process. This model has the advantage of providing particular influential factors of consumers’ buying decision for travel destinations and travel intermediaries. However, it falls short of information search methods and also the buying intention stimuli of travelers. Hudson and Gilbert (2000) have criticized this model as it cannot be used as a tool for prediction, although the model emphasizes many of the attributes that influence the travel decision-making process. But the author believes It can however be used as marketing planning tool and to indicate where marketing action can be used to influence the decision-making process.

2.1.3 Mayo and Jarvis’s model of major influences on tourist decision

Mayo and Jarvis’s model of major influences on tourist decision is the representative of situational influence paradigm. According to Mayo and Jarvis, in the process of influencing tourists’ making the buying decision, tourists are easily affected by both internal and external situational influences. These influences mainly fall into two parts, psychological factors and social factors. The internal psychological factors consist of motives, learning, perception, attitudes, and personality features of tourists. The motives of tourists drive them into the process of acquiring travel information. Through continuous learning, absorption and verifications of personal experience, buying intention is formed. In the process, consumers’ personality features, such as consuming habits and consuming preferences, as well exert considerable influence on the formation of buying intention. Meanwhile, role and family influence, reference groups, culture background and social classes of travel purchase decision makers will further affect the choices of tourists. In addition, family influence, restraints of individual culture background and social environment, others’ experience exercises great influence on tourist consuming process with uncertainty. Mayo and Jarvis have highly summarized the major influences on travel buying decision making. They ignore, however, the stimulating effect of external enterprise marketing. In the meantime, they overemphasize the effect of behaviors, which fails to combine the buying decision process of tourists and provide effective suggestions on the specific consuming behavior process for travel decision marketers.

Fig.2. Major Influences on Individual Travel Behavior

Taken together, the construction of the model systemizes and clarifies the complicated buying decision-making behavior. This allows both the author and the operators to see clearly the entire process and also the influential factors of travel buying decision-making. Despite the strengths, there are some limitations in the above models. In theory, the above models still fail to make a distinction of the purchase behaviors between three different stages of travel (pre-travel, in-travel and post-travel) in the definition of travel purchase decision process. Thus the differences of purchase decisions made by different travel consumer groups can be hardly reflected. Analyzing from the perspective of actual application, all of the foregoing models haven’t told marketers precisely that, in the buying decision process, in which link or at what time intervening measures should be taken so as to influence the buying decisions of travel consumers. Find out the corresponding characteristics and rules of travel consumer purchase behaviors in the link of purchase decision behavior. That is to say, it answers the question of 5WWIH in the travel marketing link, for example, "(who) who need to buy", "(why) why need to buy it", "(what) what products or services are in need of", "(when) when will buy it", "(where) where to buy it", and "(how) how to buy it". If operators in travel intermediaries have an insight into the characteristics of every link in the buying decision process, they would really open the so-called "black box" of consuming behavior. In this case they would understand thoroughly how to change potential consumers into real consumers.

The study of Bronner and de Hoog (1985) points out apparently that the whole process of travel decision can be better understood if dividing the decision-making process into stages or tasks. In this thesis, it aims to study the purchase decision process of potential travelers, and thus make an in-depth exploration and analysis into the first stage of travel consuming behavior, which is the pre-travel purchase decision behavior. Meanwhile, considering the integrity of purchase buying decision behavior, the author takes travel consuming behavior as the basic framework of the research. Also, the author makes comprehensive decision directive paradigm, empiricism paradigm and situational influence paradigm as the research perspectives. That is, this thesis takes the potential travel consumers as the rational decision-makers that have gone through the whole purchase decision process, and then undertakes research into the pre-travel purchase decision process and the relevant factors that stimulate the formation of buying intention. Therefore, all tourist buying decision behaviors hereinafter refer to the pre-travel buying decision stage while all of the purchase decision subjects are potential travel consumers.

Motivation

One part of our research questions aims to understand customer segmentation of honeymoon Tourist, including their key features, their demand and their purchase decision making. With support above theories, the study are able to study the feature of purchase decision makers and their process, as well as to study on the factors that simulate and impact them to make a rational or irrational purchase decision. On this basis, the author seeks to further answer questions such as: what kind of product do honeymoon consumers need, how do they choose the products, how do they purchase the product so that provide valuable suggestions to tourism marketers CITS on honeymoon product design, marketing activities and methods to simulate customer demand.

PEST analysis stands for "Political, Economic, Social, and Technological analysis"， which is used as a framework of macro-environmental factors in the environmental scanning component of strategic management. It is a important part of the external analysis of a company when it is conducting a strategic analysis or doing market research. A successful PEST analysis provides an overview of various different macro-environmental factors that the company has to take into consideration in market activities. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. Due to the growing importance of environmental or ecological factors in the first decade of the 21st century, some scholars have proposed the use and encouraged widespread use of an updated version of the PESTE framework. (Bensoussan, et al., 2008)

Political factors refer to how and to what degree a government intervenes in the economy. Typical political factors include tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability. Specially, merit goods and demerit goods/ merit bads could also be considered as a kind of political factors. In addition, governments’ great influence on the health, education, and infrastructure of a nation may also play as a political factor in market activities. (Bensoussan, et al., 2008)

Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Exchange rates may affect the costs of exporting goods and the supply and price of imported goods in an economy (Bensoussan, et al., 2008),

Social factors include aspects such as cultural aspects, health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors may affect customers’ demand for a company's products and how that company operates. (Bensoussan, et al., 2008).

Technological factors refer to technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry an industry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological development can affect costs, quality, and lead to innovation. (Bensoussan, et al., 2008).

Environmental factors include ecological and environmental aspects such as weather, climate, and climate change. They may have great affect in industries such as tourism, farming, and insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones. (Bensoussan, et al., 2008)

SWOT analysis is a strategic planning method used in a project or in a business venture, which stands for Strengths, Weaknesses, Opportunities, and Threats. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. (Humphrey, 2005)

Strengths: characteristics of the business, or project team that give it an advantage over others

Weaknesses (or Limitations): are characteristics that place the team at a disadvantage relative to others

Opportunities: external chances to improve performance (e.g. make greater profits) in the environment

Threats: external elements in the environment that could cause trouble for the business or project

Motivation

The use of PEST analysis is an important part of the external analysis when conducting a strategic analysis and doing market research for the study. this analysis gives an overview of the different macro-environmental factors the target company CITS has to take into consideration. It is a useful strategic tool for understanding its market growth or decline, business position, potential and direction for operations. SWOT analysis is also essential. Though this analysis, an achievable objective can be developed and evaluated from this analysis. In addition, though this analysis, the author are able to understand strengths, weaknesses, opportunities, and threats for CITS so as to maximize the benefits of this evaluation and find their competitive advantage

Michael Porter first brought forward the concept of value chain in business management in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance. A value chain is defined as a chain of activities that a firm operating in a specific industry performs in order to deliver something valuable, usually a product or service. A business unit is appropriate level for construction of a value chain, not divisional or corporate level. Products pass through activities of a chain in order, and at each activity the product gains some value. Chain of activities gives the product more added value than sum of the independent activities' values. The value chain categorizes the generic value-adding activities of an organization. The "primary activities" include: inbound logistics, operations (production), outbound logistics, marketing & sales, service .support. (Porter, 1996)

2.3.2 IFE matrix

IFE matrix refers Internal Factor Evaluation Matrix, which is a popular strategic management tool for auditing or evaluating major internal strengths and internal weaknesses in functional areas of an organization or a business. IFE matrix also provides a basis for identifying or evaluating relationships among those areas. The IFE matrix comprises factors (strengths and weaknesses), weight (0.0 to 1.0), rating (0.0 to 4.00) and finally the weighted score after multiplying weight with rating. The IFE Matrix together with the EFE matrix is a strategy-formulation tool that can be used to evaluate how an organization or a company is performing in regards to identified internal strengths and weaknesses of an organization or a company.

Motivation

By using these tools to conduct an internal analysis, the author is able to grasp the historical and current status of the company, indentify its strength and weakness. It will facilitate the company to compile a targeted strategy, and take effective use of its resources and advantages, as well as to avoid its weakness and thus proactively improve its weakness and make use of its strength.

2.4 Marketing mix

In the beginning of 1960s, Professor Neil Borden has identified a number of company performance actions that can influence the consumer decision when they are purchasing products or services. He presented a model called "Marketing Mix" which represents all the actions of the company that will take effect in this process. Later Professor E. Jerome McCarthy, also at the Harvard Business School suggested that the Marketing Mix contained 4 elements: product, price, place and promotion. These four elements are often referred to as the marketing mix, which a marketer can use to craft a marketing plan.

Product: The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user's needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and support. Product here can be both tangible and intangible. Intangible products are often service like the tourism industry, while tangible object are something such as a car or a house. The product has to have the right features - for example, it must look good and work well. (Hartley & Rudelius, 2002)

Price – The price is the amount a customer pays for the product. It is determined by a number of factors including market share, competition, material costs, product identity and the customer's perceived value of the product. The business may increase or decrease the price of product if other stores have the same product. The price need not be monetary; it can simply be what is exchanged for the product or services, e.g. time, energy, or attention. Pricing refers to the process of setting a price for a product, including discounts.. Methods of setting prices optimally are in the domain of pricing science. The price must be right. Consumer will need to buy in large numbers to produce a healthy profit. (Hartley & Rudelius, 2002)

Or in other word, it is distribution, which refers to how the product gets to the customer; for example, point-of-sale placement or retailing. This third P has also sometimes been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales. Place – Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet. The goods must be in the right place at the right time. Making sure that the goods arrive when and where they are wanted is an important operation. (Hartley & Rudelius, 2002)

Promotion is extremely necessary because the target group needs to be made aware of the existence and availability of the product through promotion. Successful promotion helps a firm to spread costs over a larger output. Promotion includes advertising, sales promotion, publicity, and personal selling, branding and refers to the various methods of promoting the product, brand, or company. (Hartley & Rudelius, 2002)

Motivation

Marketing mix is the foundation for making a marketing strategy. It is a precondition for a company to conduct marketing; an appropriate marketing mix can be a forceful measure for sever competition; besides with this marketing mix, CITS can also have a better allocation and coordination on the resources and internal functions. It can also shorten the decision making procedure of the company.

This chapter has discussed the existing literature on tourist customer behavior, internal and external business environment analysis models, as well as marketing tools. A thorough understanding of the concepts discussed in the chapter could provide a strong theoretical support for the whole research. In the following chapter, the author attempts to describe the methodologies used for the research, which maybe determinant of the validity and reliability of the findings.

Chapter 3: Methodology

This chapter describes the research methodology used for the study, which would be used to help CITS expand their business in Guangzhou China by honeymoon tourism. It explains how the research is designed, pilot study, the sampling method and sample size, field work, and how the data will be analyzed.

Qualitative and quantitative researchers are two distinctive types of researches. First of all, they have different focuses. Qualitative researchers concentrate on understanding, exploring new ideas and discovering patterns of behaviors. Quantitative researches always try to develop and test their hypothesis as well as generate models and theories to explain behavior (Hoy, 2009). According to Proctor & Capaldi (2006), qualitative research emphasizes on in-depth understanding of social and human behaviors, and seeks to explore the reasons behind such behaviors. Quantitative research, on the other hand, is usually considered as scientific investigation using both experiments and other systematic methods which focuses on control and quantified measures of performance. Moreover, they rely on different methods. The qualitative method depends on the reported experiences of individuals through ethnographic analyses, fieldwork, and case studies. The quantitative research depends heavily on measurement and statistics for they are the connection connections between empirical observation and mathematical expressions of relations. This study has adopted inductive approach (Bryman & Bell, 2003). For this study, the author will adopt a multi-strategy research that combines both qualitative and quantitative approaches. The benefit of this strategy is to bring together different aspects of an investigation and to fill the gaps of either method by using the other to cross check the findings. (Bryman and Bell, 2003)