Detailed report – Wave 2 ( 4 th quarter of 2011 ) Ad Effectiveness campaign - Germany

1. Detailed report – Wave 2 (4th quarter of 2011)Ad Effectiveness campaign - Germany Prepared for the Cyprus Tourism Organisation

2. Content • Background, Objectives, Methodology & Sample structure p. 3 • Summary of Findings p. 8 • Detailed Findings p. 17 • Spontaneous mentions p. 18 • Overall Measures p. 22 • Ideal holiday destination & Image perceptions p. 30 • Attitudinal Brand Equity p. 39 • Prompted Ad awareness p. 50 • CY Ad Evaluation p. 58 • Conclusions & Implications p. 69

3. Background, Research Objectives, Methodology & Sample Structure

4. 1a. Background, Research objectives & Methodology • Background • CTO’s new communication initiative in Germany was launched with a TV campaign during the 1st quarter of 2011, followed by an outdoor campaign during the 2nd quarter and with the second wave of airing (without TV campaign) in the 4th quarter of 2011. • In line with CTO’s campaign evaluation protocol, its management initiated a marketing research program, in order to measure the impact of the campaign in shaping perceptions and generating interest to visit Cyprus, as well as to assess the communication materials on a series of Ad effectiveness dimensions. • In view of that Venaque was commissioned to carry out this investigation to address the above and provide a detailed account of the findings, as well as to offer the necessary insights and guidelines (if any) for possible improvements of the communication campaign in the future! • It should be noted that initially the aim was to capture perceptions before and after the launch of the campaign (i.e. In December of 2010 and May of 2011), however the timelines were revised, with both waves carried out after the communication campaign was aired; the 1st wave was conducted in June/July and the 2nd wave in December of 2011. • The fielding of the 2nd wave was carried out between the 24th of November and the 12h of December. • Research objectives • The core research objectives and thus the info sought were the following: • Spontaneous country awareness & Ad awareness of holiday destinations • Countries visited in the past 5 years • Consideration of countries (Key countries) to visit in the next 3 years • Familiarity with holiday destinations (Key countries)

5. 1a. Background, Research objectives & Methodology • Research Objectives (cont.) • Characteristics sough in the Ideal holiday destination (category/industry drivers) • Image perceptions towards holiday destinations (Key countries) • Overall opinions of holiday destinations (Key countries) and category involvement • Attitudinal brand (country) equity share and Attitudinal equity segments (Key countries) • Drivers of Cyprus Attitudinal equity share and Priority Improvement Matrix • Prompted Ad awareness, media Ad was seen and impact of Ad in generating interest to visit (for key countries) • Unbranded CY Ad campaign recognition • Evaluation of CY Ad campaign in terms of Likeability, Uniqueness, Credibility, Relevance, Interest and Engagement; as well as determine the main message(s) communicated • Impact of Ad campaign on perceptions towards Cyprus • Ad effectiveness score & Ad Needs-Fit Score (coefficient) • Comparison of the results between Wave 2 with Wave 1 • Research Methodology • This exercise was achieved by means of F2F interviews amongst people aged 20yo+ who live in households with a minimum net income of €3,500. The interview sessions took place in central locations which were located in the main retail/commercial areas of each city, in attempt to capture as dispersed sample as possible (from a city district point of view). A screener determined the eligibility criteria, followed by an invitation to partake in the exercise once eligibility was established (with a participation rate close to 20% was achieved).

6. 1a. Background, Research objectives & Methodology Research Methodology (cont.) Recruitment was achieved through street intercepts, while the recruitment process followed a predefined rule – i.e. By screening every 15th person passing from a specified point! The recruitment and interviewing were conducted from Mon-Sat, between the hours of 10am-7pm As a minimum number of 100 CY considerers were needed to perform the anticipated analysis, the sample was originally split to “open & purposive” cells (with the first 700 interviews constituting the open sample, while the remaining, targeting CY considerers until the desired sample is reached), however as it proved the activation of the purposive sample was never exercised, as the desired number of CY considerers was achieved prior of completing the interviews of initial open sample, thus all 802 interviews were completed through an open sample approach. Quotas were set at city level, with the minimum sample per city set at n=40 (again for analysis purpose), with the final results post-weighted (rim weighting) to the actual city population levels and national age . The interviewing length of this exercise ranged from 25 to 30 minutes, while the field agency in Germany was Forester & ThelenTeststudio GmbH.

7. 1b. Sample structure In total 802 interviews were completed.

8. 2. Summary of Findings

9. 2. Summary of Findings Overall measures Cyprus’ acknowledgement as a holiday destination remained unchanged from wave 1 (at 9%), while countries which have reported notable gains appear to be those which are considered to have either warmer climate during the winter or countries which are well established as winter/ski destinations. Past 5 years visit claims for Cyprus have dropped to 3.6%, while Germany’s high visit incidence even increased (55%), whereas Spain, Italy, France and Austria remained the most visited countries abroad. Consideration to visit Cyprus in the next 3 years was reported at 20% (a drop of 3.1% from wave 1, probably because CY is not considered a winter destination as strongly as other countries), while the number of respondents who wouldn’t visit the country even dropped slightly to 10% and ranked 4th overall behind only to Spain, Italy and Portugal. Familiarity remains a key problem for Cyprus and although has achieved the same score as in W1, its ranking plunged to 10th (implying other countries increased their familiarity). CY considerers’ familiarity though was significantly higher, it was also true for all key markets! Overall opinions towards Cyprus could be considered as positive, as CY was ranked 4th overall behind Italy, Spain, and Portugal and once again better than well established holiday destinations such as Turkey, Greece and Egypt, while higher opinions were cited by those who have recalled CY’s Ad campaigns.

10. 2. Summary of Findings • Characteristics of the Ideal holiday destination • The incidence of a characteristic (an underlying need) in the Ideal holiday destination, denotes how important the characteristic/need is when considering to visit a holiday destination. Furthermore, the acknowledgment of a characteristic/need as part of the Ideal HD and its association with a country, indicates if a need is met (refer to as Need-Fit score or coefficient), thus the higher the N-F score the higher the probability of that country being visited in the future (assuming external factors don’t influence that choice). • The main characteristics sought in the Ideal HD, cover a range of contrasting needs, which include culture & natural beauties, hospitality & safety, comfort, beautiful beaches but also offered at a reasonable cost. • Nine of the ten most important characteristics sought in the Ideal HD were the same in both waves (the exception of high quality service which dropped to 12th place), while similar sets of characteristics are sough by CY’s considerers. • The overall Needs-Fit score for CY was reported at 37.6%, (same as in wave 1) and once again was amongst the lowest of all key countries. • The N-F score for CY considerers though notably higher at 50.9% it was particularly lower than W1’s score, however in some of the attributes identified as key drivers of CY’s AE share the N-F score was improved; having said that considerers’ lower N-F score could be also attributed to CY’s lower Ad spending in the 2nd half of the year!

11. 2. Summary of Findings Image Perceptions In terms of attribute image associations, the total incidences reported for Cyprus’ could be considered as average (same picture as in wave 1), as CY received notably lower mentions from the majority of the key countries assessed – it was ranked 9th overall. The attribute for which CY received the highest score was for having “natural beauties” (but still 6 other countries were better associated with the attribute), while offering“comfort and pampering” was the attribute for which CY was better recognised relative to competition (only Thailand’s score was higher). CY considerers’ perceptions are significantly higher in all domains, indicative of their more positive views, and thus justification for consideration. The same patterns re-emerged at relative attribute performance level (i.e. how distinctive an attribute is for a country in relation to all other countries) as in wave 1, with CY being somewhat more distinctive for “comfort & pampering” and for “beautiful beaches”, and not at all recognised for having “reasonable prices” or “vivid night life”, connoting that CY is more of a summer destination and aimed for those who seek relaxation, wellness and comfort - thus potentially appealing to more affluent and senior citizens!

12. 2. Summary of Findings Attitudinal Brand Equity Attitudinal brand Equity (refer to as share of mind or attitudinal equity share) is a reflection of what customers would like to do, while brand behaviour (refer to as share of wallet or market share) is what customers end up doing! In an “ideal” market environment equity share and market share should be equal, however specific market and/or personal customer factors (i.e. price; past visit etc.) either decrease or increase a country’s chances of being visited. Attitudinal Equity (AE) share is a better predictor of consideration, thus better enables marketers to identify the unmet needs of those customers who are easier to persuade and thus increase the probability of a country being visited. The AE share for CY dropped to 6.1 (from 7.2) and to the 10th place amongst the 12 key markets investigated. This drop could be attributed partly to the lower communication exposure (in wave 2) and/or to the fact that CY is not a prominent player in winter tourism! Spain & Italy dominate the AE shares (with 19 each), followed by Thailand, which further confirms its growing role in tourism with an AE share of 10. As in wave 1, 26% of CY’s considerers belong in the High AE segment and contribute 61% of the country’s AE share, thus identifying what would increase the AE share of Considerers belonging to the Medium & Low AE segments could improve Cyprus chances of attracting more Tourists! Drivers of Attitudinal Brand Equity (attributes which would force a bigger AE share increase) The core drivers of CY considerers’ AE share which emerged were: High quality service, having Clean & beautiful beaches and natural beauties, offering contrasting experiences including comfort & pampering, and for being a friendly & hospitable place.

13. 2. Summary of Findings • Taking into consideration the competitive environment, as well as and the industry drivers (i.e. what holiday makers seek from holiday destinations) the analysis introduces a strategic road map of what should be improved to maximise Cyprus potential as it prioritises the efforts required and provides guidelines where improvements should be focused. • Attributes for which CY is performing well in relation to competition and their impact (of CY & Industry) is relatively high are classified as Leverageable strengths thus should be maintained (especially those identified drivers of AE), whereas attributes for which CY is not performing well in relation to competition and their impact is relatively high they become Priority improvement areas, and should be aimed to improve first! • Leverageable strengths: Natural beauties, Clean & beautiful beaches, Luxury accommodation and Comfort & Pampering. • Priority Improvement areas: Vivid nightlife, Reasonable prices, High quality service, Sights to visit, Friendly & hospitable and Variety of recreational activities. • The above directions indicate the communication efforts which should be aimed to convey, so long the aim is to increase the number of visitors (any type); else efforts should concentrate on those areas where CTO’s strategy is aligned with!

14. 2. Summary of Findings CY’s Ad awareness Unaided Ad awareness for Cyprus was reported at 10% (slight increase from W1) and ranked 8th overall with only Turkey, Egypt and Germany reporting significantly higher scores from those achieved for CY. CY’s aided Ad awareness incidence remained at similar levels as in wave 1, both at overall and CY considerers levels, with 24% and 34% respectively, while CY ads were seen on average 4-5 months ago and only 1 in 10 stating to have seen them a month ago (i.e. during the airing of the campaign). The Ads were seen on average in 1.5 media channels, with the TV recall incidence reported at 50%, followed by print at 36% and then by Outdoor at 28% (again the highest reported of all countries); Internet, leaflet and WoM claims were all with significantly lower claims. In terms of Ad likability, Cyprus’ Malaysia’s and Italy’s Ads received the highest scores (same average mean), however they were close to those reported for the majority of the other countries (the exceptions were Bulgaria & Malta where their Ad likability scores were significantly lower). CÝ’s Ad impact in initiating the desire to visit the country has increased significantly from wave 1 (from 34% to 49%) but still not as high as those reported for Italy, Spain or Malaysia.

15. 2. Summary of Findings • Ad Evaluation of CY’s Campaign • Though the unbranded Ad recognition for both Print and TV executions were low, they were higher from wave 1, with incidences at 22% and 31% respectively, and the executions were again mostly mistaken for being Ads of other Mediterranean countries, mainly those of Greece, Turkey and Egypt. • The branded communication materials (Print/TV) influenced positively respondents’ opinions towards Cyprus (the T2B score on “overall opinions” after the Ad exposure increased by 24%) and helped improved certain perceptions, thus the continuation of the campaign airing appears to help CY’s chances for attracting more visitors! • At a campaign level, the overall Ad effectiveness score (73 – similar to W1) achieved indicates again an “average” campaign, meaning the executions (print/TV) were neither bad nor very good – please note that we classify campaigns in 3 bands; below average, average and above average! • Ad Likeability & Ad Engagement once again received the highest scores, followed by the scores of Ad Credibility & Ad Interest, while Ad Relevance’s score was the only to report notable increase from W1. The only dimension which remained at a low level was Ad Uniqueness (meaning the campaign is lacking a distinct USP), thus a potential area which if improved could increase consideration & AE share.

16. 2. Summary of Findings • Ad Evaluation of CY’s Campaign (continue) • The Needs-Fit analysis (another measure of Ad effectiveness), revealed a N-F score of 49.5 (slightly lower than W1), which again classifies the campaign as “average”; having said that the N-F score after the campaign was exposed increased from the score Pre Ad exposure (37.6). • The most notable N-F score increases were reported for some of the attributes considered as Leverageable strengths or areas of Primary improvementsuch as “clean & beautiful beaches”, “comfort & pampering”, “natural beauties” and for being “friendly & hospitable”place. The attribute though with the highest N-F score was “Mediterranean Cuisine” (71), while the attribute with the lowest N-F score was once again reported for “having reasonable prices” (20)!

17. 2. Detailed Findings Spontaneous mentions Overall Measures Ideal holiday destination & Image perceptions Attitudinal Brand Equity Prompted Ad awareness CY Ad Evaluation

18. 2.1 Spontaneous mentions Holiday destinations that come to mind Recalling an Ad of Holiday destinations in the P6Ms Holiday destinations visited in P5Ys

19. 2.1.1 Spontaneous mentionsHoliday Destinations that come to mind (unprompted) • The overall incidence was higher than wave 1 (mentioning on average 7.7 countries from 6.7 reported in wave 1) with the USA, Germany, Spain, Australia, Italy and France appear to be the most common holiday destinations coming to mind (with 25-35% claims), while Egypt, Austria, Greece and Turkey follow with incidences around 20%. • Cyprus comes 31st overall, down 4 places from wave 1, however with a similar incidence reported at 9%. Once again significantly higher mentions were cited by respondents in Dresden, and as expected amongst those who have visited CY in the past, have seen a CY Ad and those who consider visiting CY in the future. • When compared to the results of wave 1, countries which have reported notable gains appear to be those considered having warmer climate (during Germany’s winter period) such as Australia, New Zealand, Thailand, Mexico, Brazil , UAE etc., or countries which are well established as winter/ski destinations such as Austria, Switzerland, Sweden and Finland.

20. 2.1.2 Spontaneous mentionsRecalling an Ad of Holiday destinations in the P6Ms • The highest unprompted Ad recall claims were reported for Turkey and Egypt, followed by Germany and Spain – all were the top 4 countries for which Ad was recalled in wave 1 as well. Dubai, Greece, Austria and Cyprus followed the claims. • Although Cyprus lost a place from last wave (from 7th to 8th) its’ Ad recall incidence appears to be unchanged – at 9.6%. • Only respondents in Stuttgart reported significantly higher Ad recall for CY, while larger families cited significantly lower claims. • Of the 12 key markets (those considered as CY’s main competitors), 10 have been in the top 30 countries in terms of Ad recall incidence, with 6 of them ranked in the top 10.

21. 2.1.3 Spontaneous mentionsHoliday destinations visited in P5Ys • More than half of the respondents reported to have spent vacations in Germany, while Spain, Austria, Italy and France have been holiday destinations for almost 1 in 3 Germans over the past 5 years – the same countries have also topped the list of countries visited in wave 1. • Cyprus has been visited by 3.6% of the respondents and it was ranked 35 down from the 29th place achieved in wave 1 (in W1 was visited by 4.2% of the sample)! • The countries which reported the biggest gains from wave 1 are Germany, Poland, Italy and France.

22. 2.2 Overall measures Familiarity with Key holiday destinations Holiday destinations consider visiting in the next 3 years & HD definitely not consider visiting Reasons for not considering to visit Cyprus Profile of CY considerers Cross consideration Overall opinions Overall opinions amongst considerers

23. 2.2.1 Overall measuresFamiliarity • Italy and Spain lead the familiarity scale with 75% of the respondents claiming fairly good knowledge (top 3 box scores) of these countries. Greece, Turkey and Portugal followed but with significantly lower scores – the same familiarity ranking order was observed in wave 1 as well. • Looking at improvements on familiarity from wave 1, only Malaysia has increased its score significantly! • Cyprus is ranked 10th overall (of the 12 key markets) dropping two places from wave 1, however it maintained its average score (implying others have improved their familiarity scores). • Amongst “considerers”, their familiarity scores are significantly higher (true for all markets); CY’s considerers are still ranked 10th overall!

24. 2.2.2 Overall measures Holiday destinations consider visiting (N3Ys) vs non consider visiting • Spain and Italy once again lead the consideration list with claims to visit (as in wave 1) at 46% and 45% respectively, followed by Thailand, Greece, Portugal and Turkey (with claims just below 25%). Cyprus is ranked 7th overall on the “consideration scale” with 20% claims (down 3.1% from wave 1); of significance was CY’s low objections to visit, which was close to the scores of well know holiday destinations such as Spain, Italy & Portugal. • With the exception of Malaysia, Thailand and Egypt which reported higher consideration scores from wave 1, the majority of the key markets have seen their scores dropped from those achieved in wave 1. The aforementioned countries appear to be more relevant for those who seek sunny holidays during the winter, whereas countries such as Italy and Bulgaria which are known for both their summer and winter holiday offering reported the same consideration scores as in wave 1. • Greece on the other appears to be the biggest looser (lost 5% from wave 1) and this could be attributed (to a degree) to the ill filling of Germans towards Greece (since Germany is expected to pay the biggest share of Greece’s “bail out” bill)!

25. 2.2.3 Overall measuresReasons for not considering to visit Cyprus • Similar to wave 1, the most prominent reason cited for not considering Cyprus as a tourist destination is ‘lack of awareness’about the country – this wave’s score was 20% higher than wave 1. • The preference towards other countries’, and ‘CY similarity to other destinations’ followed in claims, while the Cyprus ‘political situation’was also another major reason cited. • For some, CY’s unappealing culture and its limited & uninteresting offering were also key reasons for not considered visiting – it should be noted the incidence of these reasons was reduced considerably (by 15%) from wave 1. • Only 1 in 10 cited cost (too expensive) as a reason for not wanting to visit, while a similar number of respondents claim distance and safety to be also preventers of consideration.

26. 2.2.4 Overall measuresProfile of CY considerers • The number of CY considerers in wave 2 dropped 15%; most likely this is attributed to CY’s seasonality effect – i.e. CY is not a dominant winter holiday destination! • The profile of people who consider visiting Cyprus follows to a great extend the norms of the total sample! • Having said that, some differences have surfaced, with the most notable appearing to be in Gender, Marital status and Age. • Married people/living with partner again demonstrated higher CY consideration than the overall average. • Although singles are the least likely to consider visiting Cyprus, they have increased significantly when compared to the results of wave 1. • It also appears that Cyprus as a HD appeals more to females and senior Germans!

27. 2.2.5 Overall measuresCross consideration • CY considerers exhibit the desire to visit other markets (in fact 4-5 other destinations are considered), with Spain and Italy being the main benefactors. Greece, Turkey and Portugal followed CY considerers’ desire to visit and they are less likely to visit Malaysia or Bulgaria – similar results were reported in wave 1 as well. • Looking at considerers of other countries, almost half of those who are considering to visit Malta also consider visiting CY, followed by considerers of Turkey, Malaysia, Greece and Croatia. Having said that overall the incidence of considerers of other countries who also consider Cyprus, has dropped from wave 1 - possibly an indication of CY’s differentiating offering AND/OR other destinations being better value for money AND/OR other destinations being more appealing for a winter break!

28. 2.2.6 Overall measuresOverall Opinion (amongst all interviewed) • Similar to wave 1, Spain and Italy continue to enjoy the lead over other key markets by achieving the highest overall opinion scores, with Portugal following in 3rd place. • Cyprus comes 4th (in terms of Av. Mean scores), with similar score to those reported for Croatia and Malta. CY’s score was similar to that of wave 1. • Egypt’s OO score continues to be low (11th overall) and this could be attributed to the continuing social unrest and the concerns on safety cited! Similarly relatively low scores have been reported for Turkey (9th). • Though CY’s OO scores varied somewhat amongst demographics, they were not significant enough with the exception those who visited CY and those who recalled a CY Ad where significantly better scores were observed.

29. 2.2.87Overall measuresOverall Opinion (amongst all consider visiting the countries) • As expected the overall opinion scores of the core markets increase significantly amongst their respective “considerers”, with the differences between countries (at T2B and Av. Mean scores) diminishing notably. • Though CY’s overall ranking has drop to 6th, its high average mean score somehow minimises the signification of the actual rankings. • Having said that there is always a room for improvement especially at Top box level!

30. 2.3 Ideal holiday destination and Image Perceptions • The characteristics of the Ideal holiday destination • Top 10 characteristics of Ideal holiday destination vs perceptions of key markets • Ideal holiday destination for CY considerers • Country attribute associations • Country attribute associations – Relative performance • Cyprus attribute associations • CY considerers vs overall sample • CY Ad recall vs overall sample • Comparisons with the results of wave 1

31. 2.3.1 Ideal holiday destination and Image PerceptionsIdeal Holiday destination • The rational of determining the ideal holiday destination is twofold; • to identify the dimensions considered important when choosing a destination (stated needs) and • to be used as reference point for determining the “Needs-Fit” coefficient when testing communication executions – a powerful measure/score of a communication’s and thus a brand’s ability to deliver on actual customer needs . • The main requirements in an “ideal” holiday destination cover a range of contrasting needs, which include • culture & natural beauties, • Hospitality & safety • clean & beautiful beaches • comfort but at reasonable cost • thus giving a direction as to what holiday destinations ought to provide! • Almost identical needs have been reported by CY considerers – by also elevating “contrasting experiences” and “quality service”.

32. 2.3.2 Ideal holiday destination and Image PerceptionsIdeal Holiday destination vs perceptions of key markets • Looking at the 10 most important dimensions identified as key tourist needs, Spain and Italy justify their lead as mostly visited and mostly considered to visit destinations, as they are in the top 3 spots (in terms of perceptual incidence) in most dimensions. • Cyprus on the other hand figures prominently only in the area of comfort and pampering (was 2nd overall). • Greece is noted for its natural beauties, beaches and contrasting experiences on offer. and along with Egypt is recognised for its rich history & antiquities, while Turkey for its low prices and for being friendly & hospitable. • In terms of attribute/need importance, the top ones were almost the same in both waves. The attribute which significantly dropped in importance (in wave 2) was “high quality service” and the ones which significantly gained were “rich cultural identity” and “vivid nigh life” - the latter though is still low on the importance scale!

33. 2.3.3 Ideal holiday destination and Image PerceptionsIdeal HD for CY considerers vs their perceptions towards CY • Perceptions towards Cyprus amongst CY considerers are notably closer to the key characteristics desired in their ideal holiday destination. • There is a close incidence match (on the important characteristics sought in the ideal HD) on attributes referring to CY’s comfort & pampering for offering contrasting experiences, as well as on the islands natural beauties. • Having said that there is still a room for improvement especially on the top 3 needs, namely clean/beautiful beaches, for being friendly & hospitable and for being a safe destination – areas for which communication should better address! • Again the area for which CY is not delivering is on pricing!

34. 2.3.4 Ideal holiday destination and Image Perceptions Brand associations – Key performing (at image level) countries and their attribute incidence ranking

35. 2.3.5 Ideal holiday destination and Image PerceptionsBrand perceptions – Relative attribute performance (deviation from expected values) • Relative performance is aiming to indicate which attributes are more recognisable for a given country and the figure/score produced is the difference of the observed from the expected value (i.e. potentially what the attribute score for a given country could have been). The figure could be +ve or –ve, where +ve means the attribute is more positively recognised in relation to other countries and the opposite for the –ve score. The darker colours denote the strongest and weakest recognitions, whereas the magnitude (the actual score) indicates how distinctive the attribute is for a given country. • Cyprus is better recognised (against competition) for its comfort & pamperingand its clean and beautiful beaches (forboth not very distinctively though)and it is not recognised neither for its vivid night lifenor for having reasonable prices!

36. 2.3.6.1 Ideal holiday destination and Image Perceptions Brand associations – Overall CY vs CY considerers • Overall perceptions towards Cyprus are considered to be average, with a relatively high score (when compared to the score achieved by the competition) reported only for the attribute comfort and pampering. • For the majority of the attributes assessed, CY was ranked 6th-9th, while in terms of reasonable pricesand vivid night life was ranked for both 11th of the 12 countries evaluated. • The attribute scores (in their entirety) of CY considerers are significantly higher than those achieved by the total sample, while for the attributes comfort & pampering, natural beauties, clean beaches, contrasting experiences and Mediterranean cuisine , CY scores were 60%+, which were amongst the highest reported for any country.

37. 2.3.6.2 Ideal holiday destination and Image Perceptions Brand associations – Overall CY vs those recalling a CY Ad (prompted) • It has been also evident that those recalling a CY Ad demonstrated higher attribute scores than those achieved by the total sample. • Higher differences were cited in those dimensions that exemplify CY’s heritage, history & culture, the islands natural beauties and clean beaches, the comfort and pampering offering and its Mediterranean gastronomy - most likely driven by the recent outdoor & print campaign.

38. 2.3.6.3 Ideal holiday destination and Image Perceptions Brand associations – Comparison of Wave 1 & Wave 2 • Looking at the results of the two waves , at overall level (i.e. total sample) no notable differences are observed – in fact the scores were almost the same. • Amongst CY considerers the majority of the image attributes scores are similar in both waves; with higher scores reported in (in wave 2) for the attributes referring to Cyprus’ rich history and antiquities.

39. 2.4 Attitudinal Brand Equity Introduction to Attitudinal Equity Relation of Attitudinal Brand Equity & Consideration Attitudinal brand equity Shares & Segments Analysis of CY’s Attitudinal brand equity Segments Drivers of CY’s Attitudinal Brand Equity share Priority Improvement Matrix

40. 2.4.1 Attitudinal Brand EquityIntroduction to Attitudinal Brand Equity • Attitudinal dispositions tend to precede brand behaviours (the likelihood of buying a brand or visiting a country), meaning one should first change customers’ attitudinal dispositions towards a country/holiday destination before they demonstrate the desire to visit it. • Attitudinal brand Equity (which we refer to as share of mind or equity share) is in fact a reflection of what customers would like to do, while brand behaviour (which we refer to as share of wallet or market share) is what customers end up doing! • In an “ideal” market environment equity share and market share should be equal, however specific market and/or personal customer factors (i.e. availability; price; past visit etc.) either decrease (prevent) or increase (enable) a country’s chances of being visited. • It should be noted that Venaque’s brand equity model produces a number which reflects brand business shares and not a usage incidence number or a standalone score dissociated from market realities; therefore it is a rather useful and relevant figure as it could estimate future purchase/usage/visit behaviour, all things being equal! • Venaque’s AE model • It considers brand (i.e. country) experiences but also the image relevance of brands to customers. • It can be linked to usage/visit motivations • It contemplates brand involvement but also considerations of alternative offerings. • It uses brand opinions in conjunction with the above as a measure of customers desire to use the brand/country but can also estimate how market realities shape final brand choices which could be higher or lower then the AE score/share for a given country! (the latter aspect of the model was not incorporated in this exercise as the project’s core objective was mainly to assess CTO Ad effectiveness)! • It is a respondent specific model, therefore it is not prone to the limitations of other techniques which are sample size sensitive. As the estimation of the (attitudinal) equity share is based on relative and not on absolute scores, it allows the equity shares estimated to be comparable across geographies or even across categories.

41. 2.4.1 Attitudinal Brand EquityIntroduction to Attitudinal Brand Equity • Finally, VQ’s brand equity model is a predictive tool as any improvement on attitudinal brand equity share translates accordingly (based on the effect of external factors) to an increase of the brand’s (i.e. Country’s) market share! • The model produces a score (attitudinal brand equity share)for each brand/country and the sum of the AE scores of all brands/countries is equal to 100 – i.e. reflecting the total market share if all things being equal! • As the model is respondent specific, we can group individuals into attitudinal brand equity segments based on their brand equity shares; can ascertain their profile, their needs as well as the drivers of brand equity (at segment level), thus help devise relevant brand strategies. In our case for each country their considerers are classified into 3 equity segments based on the level of equity share achieved; therefore for a given country a respondent is classified/grouped in either the low, the mediumor the high equity segment. It should be noted a respondent will be classified in each country’s attitudinal brand equity (and segments) he/she is considering to visit; i.e. could be classified in the low equity segment of country X and the high equity segment of country Y. • Customers which are classified in the high equity segment are usually the most likely believers of the brand, they tend to be less prone to brand/country price increases and usually are less receptive to competitive communication activities or promotions etc. They are strong advocates of the brand and in our case are usually the most likely future visitors of the country (assuming are not prevented from external factors to do so). • Within the medium equity segment considerers tend to be either attracted to more than one countries (thus their equity is split) or they don’t ponder the country as favourable as others! Customers will still pay attention to brand communication and promotional activities; however they have a lower probability visiting that country, with market or personal factors (i.e. Cost; the family wants to visit etc.) usually forcing that choice! • Customers belonging in the low equity segment, have either limited familiarity with the country and/or they are coerced to consider visiting (if they ever visit), thus brand bonding is trivial. They certainly view more favourable other destinations and are less likely to pay attention to the communications of that country!

42. 2.4.2 Attitudinal Brand EquityRelationbetweenAttitudinal brand equity & Consideration • Though the model fit (R²) in this chart is at an aggregated level, its almost perfect fit indicates that consideration could be better explained by the attitudinal brand equity shares (and segments) – the actual fit is even better than the results of wave 1!

43. 2.4.3 Attitudinal Brand Equity Attitudinal brand equity Shares (amongst considerers - adjusted) • Cyprus Attitudinal equity share has dropped to 6.1 from the 7.2 achieved in wave 1, and it is ranked 10th of the 12 key markets. This drop could be attributed partly to the lower communication exposure in wave 2 and/or to the fact that CY is not a prominent player in winter tourism. This figure denotes the potential CY has to be visited (i.e. by 6.1% of the target audience, assuming the choice was restricted to the 12 key markets and external factors couldn’t influence that choice)! • How to read: CY’s High AE segment accounts for 61% (i.e. 3.7÷6.1) of CY’s AE share and is contributed from 26% of its considerers (i.e. 4.6÷22.6). Similarly 28% of CY considerers (Medium AE segment) contribute 29% of CY’s AE share, while the Low AE segment contributes the remaining 11% (by 43% of CY considerers).

44. 2.4.4 Attitudinal Brand Equity Analysis of CY’s Attitudinal brand equity Segments The aim of the profiling is to determine on the one hand if demo differences are evident and on the other hand to highlight the signification of the attitudinal brand equity share and AE segments in identifying true intentions – in a way the segmentation acts as a filtering medium to determine (in our case) which of the considerers are more likely to visit CY. • At demographics level, age, gender and income appear to have the biggest variation between the segments – i.e. bigger proportion of the 50yo+, males and HH with net income over €5.5K are clustered in the High - this could be logical as older in age males are more likely to have higher income! • A strong indication of considerers’ belonging in the High AE segment more likely intentions to visit CY, is demonstrated by their cross consideration claims, where the number of countries considered visiting (other then CY) was just over 1 – thus they have a higher probability of visiting CY as they consider significantly less alternatives!

45. 2.4.4 Attitudinal Brand Equity Analysis of CY’s Attitudinal brand equity Segments • Considerers’ (in the High AE segment) stronger advocacy towards Cyprus is further confirmed with the higher scores reported for recalling a CY’s Ad – it further supports the theory on brand equity, where customers demonstrating a stronger bonding with a brand (i.e. reporting higher attitudinal brand equity share) tend to be less receptive to competitive communication efforts! • They also reported significantly higher incidence scores in all the attributes identified as key drivers of CY’s attitudinal brand equity share – basically they perceive more positively the country!

46. 2.4.4 Attitudinal Brand Equity Analysis of CY’s Attitudinal brand equity Segments • Similar patterns also emerge when looking at the Ad recognition results, where more High AE considerers (proportionally) recognized that the ads shown where in fact CY’s. • At Ad evaluation measure level (the components the Ad campaign was evaluated against), overall the respondents belonging to the High AE segment were more critical of the campaign, probably because they were expecting a campaign more relevant for the winter season! • Estimated potential • Supposing external factors couldn’t influence choice for visiting any country and assuming the target audience represents 30% of Germany’s population (24.6 mil. of 82 mil.), and visiting the 12 key markets would represent 40% of the total holidays abroad, then based on the AE share of the segments computed, the total number of German visitors which could be potentially expected to visit Cyprus in the next 3 years is estimated to be 543,000(this figure is lower than the calculated figure of wave 1; the average of the 2 results could probably indicate a more accurate figure as it takes in account seasonality as well i.e. 597,000). • Since though external factors (market or personal) do influence choice and assuming these would have influenced negatively CY’s potential (low familiarity; expensive destination, family members prefer other destinations etc.), with a negative impact of lets say 20%, then the estimated number of visitors in the next 3 years could be 435,000 (the average of the calculated results of both waves comes to 478,000).

47. 2.4.5 Attitudinal Brand Equity Driver Analysis of CY’s AE share • The driver analysis was carried out using CY’s attitudinal equity as the dependant variable and the imagery attributes (Q10) as the independent ones! • The driver analysis and importance coefficients estimated, provide the first step determining where strategic efforts should be channelled (in terms of changing perceptions). • How is read: If the imagery score on High quality service increases by 10% i.e. from 49.2% goes to 54.1%, then CY’s AE share could increase by 3.1% i.e. from 6.10 would go to6.29 and so on! • Assuming external factors are more difficult to alleviate, increasing the AE share appears to be a credible mean to increase the number of visitors! • The attributes that would impact more CY’s AE share are: • High quality service • Clean and beautiful beaches • contrasting experiences • Natural beauties • Comfort & pampering • Friendly and hospitable • All year round destination • Comparing the drivers of CY’s AE share with wave 1, attributes natural beauties and an offering with contrasting experienceshave increased in importance, while CY’s rich culture, history and antiquities have dramatically decreased!

48. 2.4.6 Attitudinal Brand Equity CY’s Priority Improvement Matrix

49. 2.4.6 Attitudinal Brand Equity CY’s Priority Improvement Matrix • The Priority Improvement Matrix takes into account not only the attribute importance coefficients (i.e. what drives CY considerers’ Attitudinal Equity share), but also the attribute performance of competitors and the industry drivers (IDEAL holiday destination), thus introducing a strategic road map of prioritisation by identifying what should be improved to maximise Cyprus potential in a competitive environment. • The equation that estimates CY’s attributeimprovement priority score it includes • The attribute score achieved by CY’s considerers • the gap between CY and the “best of Class”, • CY’s derived attribute importance and • the category’s stated attribute importance (as denoted from the Ideal HD), • The equation is quite straight forward: a X c (standardised) - b X d (standardised); with the actual resultant denoting if an attribute is a Leverageable Strength, Priority or Secondary Improvement area, based on certain cut off points – a score below 17 could be classified as a LS, 18-26 as a SI and a score over 26 as a PI areas – these cut off points can vary based on the range of the scores achieved. • The attributes identified as priority improvement areaswere Vivid nightlife, Reasonable prices, High quality service, Sights to visit, Friendly & hospitableand Variety of recreational activities. Certainly the additional attributes (not bolded) identified as priority improvement areas would enable the capture of a wider audience of potential visitors if improved, and allow CY to compete with destinations in areas it finds currently hard to do so; having said that these areas should be viewed in line with CTO’s strategy and improve only if desired (i.e. does CY wants to promote a vivid night life and attract probably younger tourists etc.) • It should be noted other attributes which were identified as key drivers of CY’s AE are now leverageable strengths or secondary improvement areas mainly because their importance at a category level is rather low and/or their score in relation to competition is rather high!

50. 2.5 Prompted Ad Awareness Prompted vs Unprompted Ad Awareness When Ad was seen Media Ad was seen What it was recalled Main message communicated in the Cyprus Ad Ad likability Ad Impact