Unique Approaches in Travel and Tourism Marketing

1. Unique Approaches in Travel and Tourism Marketing Objective:Introducing the unique approaches required in marketing travel and tourism services in relation to their special characteristics.

2. Unique Approaches in Travel and Tourism Marketing • Services are different from tangible products, that is why, different marketing strategies are needed to market services. Those strategies are; • Managing Differentiation • Managing Service Quality • Tangibilizing the Service • Managing Employees • Managing Risk • Managing Capacity and Demand • Managing Consistency

3. Managing Differentiation • If the customers view the services of different providers as similar, they care less about the provider than the price. • The solution to price competition is to develop a differentiated offer, delivery and image. • Service companies can differentiate their service delivery in three ways, through; (use of more than 4Ps) • People • Physical evidence • Process

8. Four Seasons, Istanbul Ritz-Carlton, Istanbul

11. Managing Service Quality • Service quality will always vary, depending on the interactions between employees and customers. • Companies should take steps not only to provide good service every time but also to recover from service mistakes when they do occur. • If a customer has a major complaint, 91% will not buy again, if it is resolved quickly, 82% of those customers will return (study by Technical Research Programs Institute). • “Complaint is a Gift”.

12. Tangibilizing the Service Tangible evidences such as promotional materials (e.g. brochures), employees’ appearance, and the service firm’s physical environment help tangibilize the services. • trade dress; is the distinctive nature of a hospitality industry’s total visual image and overall appearance. For example, McDonald’s golden arch, restaurant décor… To compete effectively, marketing managers must design a distinctive trade dress.

13. employee uniform and costumes; have an important and useful role in differentiating one hospitality firm from another and create pride in the employees. • physical surroundings; should be designed to reinforce the product’s position in the customer’s mind. For example, the furniture in the lobby of a Four Seasons Hotel should be high quality and expensive looking. Every piece of tangible evidence must deliver the desired organization image to target customers.

16. Managing Employees • In service businesses, the customer and front-line service employees interact. Service providers must interact effectively with customers to satisfy them. That is why, companies take care of their employees to make profit. Because they believe that only satisfied and productive service employees can create satisfied and loyal customers. • Internal marketing: means that the service firm must effectively train and motivate its customer-contact employees to provide customer satisfaction.

18. Managing Risk • People, who will stay in an X hotel or travel with an X airline for the first time, perceive high risk. Because they don’t have any idea about the service quality before they pay the price. There is no guarantee that they will be satisfied. • As a result, (1) “image” and reputation of the organization,(2) “word-of-mouth advertising ” and (3) FAM trips become more important in hospitality and travel marketing.

20. Managing Capacity and Demand • Since services are perishable and can not be reserved and sold in later sale, marketing managers must manage capacity and demand. • If demand is less than capacity, hotel rooms and restaurant seats are empty. If demand is higher than capacity, there will be great difficulty in coping with customer numbers. For example, a restaurant must manage its capacity when there is high demand on Mother’s Day.

21. Managers have two major options for matching capacity with demand: change capacity or change demand. For example, an airline can change capacity on a heavily traveled route by assigning a larger plane to the route. If a larger plane is not available, they can reduce demand by eliminating discounted fares. First capacity then demand management will be discussed in the coming sections.

22. In order to cope with high demand, organizations must operate at a maximum capacity and remember that their goal is to create satisfied customers. Here, the problem is that research has shown that customer complaints increase when service firms operate above 80% of their capacity.

23. Managing Capacity In order to manage capacity with fluctuations in shortterm demand, the following actions are available; • Involve the customer in the service delivery system • Cross-train employees • Use part-time employees • Rent or share extra facilities and equipment • Schedule downtime during periods of low capacity • Extend service hours • Use technology • Use price

24. Involve the Customer in the Service Delivery System • Getting the customer involved in service operations increases the number of people that one employee can serve, as a result, increasing the capacity of the operation. This method is very useful especially during busy periods. • For example, some restaurants have self-service salad bars and vending machines for drinks e.g. Schlotzky Restaurant, or hotels have computerized check-in and -out e.g. Sheraton Hotels which enable the customers to serve themselves and make it possible for employees to handle more customers.

25. Cross-train Employees • Cross-training employees gives the operation flexibility, allowing the business to increase capacity by shifting employees, and can help to prevent the organization from reducing capacity when an employee calls in sick. For example, front-desk staff or banquet staff when cross-trained can be called on if demand is higher.

26. Use Part-time Employees • Managers can use part-time employees to increase capacity during an unusually busy day or meal period or during the busy months of the year for seasonal businesses. For example, summer resorts hire part-time staff to work during the summer period. Part-time banquet waiters are called in when there is a large banquet operation.

27. Rent or Share Extra Facilities and Equipment • Businesses do not have to have space or equipment limitations. When they have busy periods, they rent equipment or space. • In the hospitality industry, companies can work together and share their resources as well. For example, when X hotel does not have enough rooms, in order to prevent losing customers, it may refer the customers to the sister property. Or when there is not space for a large group in the restaurant, in Istanbul the alternative might be a dinner cruise on Bosphorus.

28. Schedule Downtime during Periods of Low Capacity • An organization also needs to decrease capacity when there is low demand. One way to do this is to schedule repairs and maintenance during the low season. Employees can take holidays or training programs can be scheduled during low demand.

29. Extend Service Hours • Restaurants and entertainment facilities can increase capacity by extending their hours. When there the demand is high, the restaurant operations may decide to open one hour early. For example, nowadays fast-food operations have extended their capacity by opening for breakfast.

30. Use Technology • Technology can be used to increase the capacity of systems. For example, the automatic wake-up call system in hotels that can make hundreds of wake-up calls in an hour.

31. Use Price • Price can be used to adjust capacity in companies which especially have mobile products such as car rental companies. Rent-a-car companies may offer low or no drop-off rates to areas where they need cars.

32. Managing Demand For managing demand (when demand exceeds capacity), the following strategies are available; • Use price to create or reduce demand • Use reservations • Overbook • Use queuing • Shift demand • Change the salesperson’s assignment • Create promotional events

33. Use Price to Create or Reduce Demand • Pricing is one method used to manage demand. • When demand is less than capacity, managers lower prices to create demand. For example, Pizza Hut offers “eat as much as you can” on weekdays between 15:00 to 18:00. • When demand is more than capacity, managers raise prices to lower demand. For example, on New Year’s Eve, many restaurants and hotels offer set menus and packages that exceeds the normal prices. Higher prices decrease demand but still be enough to fill the capacity.

34. Use Reservations • Hotels and restaurants use reservations to monitor demand. • When there will be more demand than capacity, managers can save capacity for the more profitable segments. For example, hotels do not except reservation requests of travel agencies when they expect high demand from the individual travelers. • When capacity meets demand, reservations can also limit demand by letting managers refuse any further reservations.

35. Overbook • Not everyone who makes reservations comes – no show. As a result hotel rooms remain empty. In order to prevent hotel rooms to remain empty, managers overbook – accept more reservations than capacity. For example,if in an X hotel 20% of the customers with reservations do not come, 10 rooms will be empty out of 50 reservations. If in this hotel, the average rate is $80, this means a potential loss of $292,000. • Overbooking must be carefully managed. Otherwise, customers would be walked to another hotel and this destroys the reputation of the hotel.

36. Use Queuing • When capacity exceeds demand and guests want to wait, queues will form. • Queues, such as waits at restaurants, are an effective way of managing demand. Good management of queuing can make the wait more tolerable for the guest. It is better to overestimate the wait and tell guests it will take 35 minutes, when the estimated wait is 30 minutes. • The following tips are useful for the management of a waiting line;

37. Unoccupied Time Feels Longer Than Occupied Time: Managers can create entertainment to prevent their guests to get bored from waiting. For example, Disney Land has employees who wear Mickey Mouse costumes talk to kids in waiting lines, occupying time and making the wait pass faster. • Unfair Waits are Longer Than Equitable Waits: Guests can become upset with a wait if they feel that they are being treated unfairly. For example, after waiting 20 minutes to check-in, one guests may have to wait for another 10 minutes because of a phone call which is supposed to be answered by the front desk clerk. In order to eliminate this problem, Marriott has started a policy of removing phones from the front desk.

38. Shift Demand • It is possible to shift demand for banquets and meetings. For example, if the date of a banquet or meeting is flexible, managers may offer to shift the date to a period (e.g. 3 days before or after the stated date) when the hotel is not forecasted to be full.

39. Change the Salesperson’s Assignment • In hotels, the director of sales assigns salespeople to specific segments. • If the hotel is trying to increase its short-term business, then the manager should shift the salespersons from the association market (which books a year or more out) to the corporate market (which can produce bookings in a month or less).

40. Create Promotional Events • During slow periods, creative promotions can be an effective way of building business. For example, hotels develop special packages and nights, casinos have slot and table game tournaments during their slow periods to build business.

41. Managing Consistency • Consistency means that customers will receive the same level of services every time they come to the service organization. For example, a cream mushroom soup will taste the same way it tasted 2 weeks ago, a hotel room will look the same way it looked a month ago. • In order to manage consistency, a clear company policy must be established. Training the employees the same way and standardizing the production with equipment as in McDonald’s would be helpful to provide consistent service.

42. Useful Links and Sources • Kotler, P.; Bowen, J. and Makens, J. (1999). Marketing for Hospitality and Tourism (2nd ed.). Prentice Hall. NJ. • Kotler, P. and Armstrong, G. (2006) Principles of Marketing (11th ed.). Prentice Hall. NJ. • Middleton, V.T.C. (2004) Marketing in Travel and Tourism (3rd ed). Elsevier. Oxford. • http://www.hotelsmag.com • http://www.tourism.bilkent.edu.tr/~eda