Chapter 8 Marketing Channel Strategy of Tourism Products

1. Chapter 8 Marketing Channel Strategy of Tourism Products • Learning Objectives: • 1. To be familiar with the concept and types of marketing channel of tourism products • 2. To be familiar with tourism middlemen • 3. To be familiar withmarketing channel strategy of tourism products • 4. To know the development tendency of marketing channel of tourism products

2. Section 1 Overview of Marketing Channel of Tourism Products Ⅰ. Definition of marketing channel of tourism products All intermediary organization and individual that obtain ownership or assist it to transfer during tourism products transfer from enterprises to tourism consumer.

3. Question: What is “Channel”? • Channel is an access; • Channel is a ration; • Channel is a resource.

4. Ⅱ.Types of Marketing Channel of Tourism Products Level 0 (M-C) Tourism Enterprises Level Ⅰ (M-R-C) Retailer Tourists Level Ⅱ (M-W-R-C) Retailer Wholesaler Level Ⅲ (M-W-J-R-C) Agency Wholesaler Retailer

5. Section 2 Tourism Middlemen

6. Question: Why do tourism middlemen exist? • To offer tourism products to target market more effectively. The profit which middlemen bring to tourism enterprises surpasses that by themselves: • Rations • Experience • Specialty • Scale of operation • To balance the supply and the demand

7. Ⅰ. Definition of tourism middlemen • The intermediary organization and individual, that specialize in marketing of tourism products, between tourism producers and tourism consumer. • Ⅱ. Types of tourism middlemen • 1. Marketing objects：tourism wholesaler and tourism retailer . • 2. Transfer of ownership：tourism dealer and tourism agency.

8. Wholesaler：Middlemen who specialize in wholesale and offer indirect service to consumer. • Retailer ：Middlemen who directly specialize in retail trade with tourists. • Dealer：Organization or individual that possess ownership during the transfer of tourism products. • Agency：Organization or individual that accept the commission of tourism producer and agent for its products in a certain area.

9. Ⅲ . Principle of Choosing Tourism Middlemen • Economic criteria: Different programmed of channel will lead to different level of sale and cost. • Control criteria: Evaluation must consider the control problem of channel. If selling agency is involved, more control problems will occurred. • Adaptive criteria: Although there is some pledge between channel members in a certain degree, this pledge usually affects manufactory’s versatility to cope with vagaries . As a result, at quick variety of market, produce company looks for the biggest control of channel structure and policy to adapt continuously changeable marketing strategy.

10. Profit and loss critical cost diagram of choosing sale team in tourism enterprises and tourism middlemen Tourism middlemen Selling cost（us$） Sale team in tourism enterprises S Selling level（US$）

11. Section 3 Marketing Channel Decision-Making of Tourism Products Ⅰ. Modifying factors of marketing channel decision-making of tourism products 1. Tourism products — Popularize, top grade and special features article 2. Tourism market---scale of target market/geographical distribution/purchase frequency 3. Enterprise---size of strength 4. Environment---policy

12. Ⅱ. The Dynamic Development Tendency of the Channel • 1. Vertical marketing channel transfers from trade type to colleague type • ①Tradition marketing channel is consist of individual manufacturer, wholesaler and retailer. Each member that conducts and actions as an independence of the business enterprise entity pursues maximize of own profits, even at the cost of the system whole benefits. There is no channel member who can own all or enough of control power than another member .

13. Discussion: • The flat tendency of channel • With the increase of enterprise’s direct supply to market (especially retailer) to decrease in the center link, lower retail cost, exaltation market reaction ability.

14. Discussion: • The reasons for the flat channel • Increasingly fierce competition; • The falling price causes the profits space contract; • Product technique content is higher and higher; • The management ability of the business enterprise weekends.

15. ②Vertical marketing system (VMS) is a kind of unify of consociation body, consist of manufacturer, wholesaler and the retailer. • The form of consociation body: • --Own the ownership of other member, • --A kind of special contract generation camp relation, • --A certain channel member own equal the real strength make other member with it cooperation. • Producer, wholesaler or retailer can dominate marketing system.

16. Vertical Marketing System (VMS) Producer Producer Dealer Re-seller Retailer Dealer Re-seller Retailer Consumer Consumer

17. 2. Level-type marketing channel transfers from alone existence to symbiosis change Cooperate to develop market from many business enterprise with the same kind and layer strategy allies. For example, the three greatest agencies cooperate to develop international tourism market, our tourism enterprise and Southeast Asia colleague consociation development Europe and America tour market.

18. 3.Multi-channel Marketing System • Multi-channel marketing means enterprise establishes two or more marketing channel to reach one or several target market. For example air ticketcan be bought not only in ticket book office, also in travel agency and hotel.

19. Ⅲ. Conflict and Management of Channel • Types of channel conflict: • Horizontal conflict (level conflict): Competition and conflict of middlemen at the same layer of the same kind products in enterprises. • Lengthways conflict (vertical conflict): the conflict of different middlemen when selling the sale same kind products in the face of same customer; (go-over sale) • Multi-channel conflict (cross conflict): Competition and conflict of the different channel.