Detailed report – Wave 1 - Ad Effectiveness campaign - Germany

1. Detailed report – Wave 1 - Ad Effectiveness campaign - Germany Prepared for Cyprus Tourism Organisation

2. Content • Background, Objectives, Methodology & Sample structure p. 3 • Summary of Findings p. 8 • Detailed Findings p. 16 • Spontaneous mentions p. 17 • Overall Measures p. 21 • Ideal holiday destination & Image perceptions p. 30 • Attitudinal Brand Equity p. 38 • 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 this year, followed by an outdoor campaign during the 2nd quarter and with the second wave of airing scheduled 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 1st wave was carried out between the 13th of June and the 12th of July. • 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 soughtin 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 order 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 the initial open sample, thus all 800 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), while the final results were post-weighted (rim weighting) to the actual city population and national age levels. The interviewing length of this exercise ranged from 25 to 30 minutes.

7. 1b. Sample structure In total 800 interviews were completed.

8. 2. Summary of Findings

9. 2. Summary of Findings Overall measures Overall Cyprus’ acknowledgement as a holiday destination has increased from the 2007 results with a 9% incidence claim (in 2007 this figure was 1%) – it should be noted though that the target audience’s purchasing power in 2007 was lower; while past 5 years visit claims were reported at 4%. Of interest is Germany’s high visit incidence (50% - possibly indicative of the economic situation!), whereas Spain, Austria, Italy, France and Turkey appear to be the most visited countries abroad. Consideration to visit Cyprus in the next 3 years was reported at 24% (ranked 5th overall from the 12 key markets assessed), while a further 11% were definitely not visiting Cyprus mainly on grounds of lack of knowledge/awareness, the political situation in Cyprus and its poorer offering when compared to other destinations. Spain and Italy are leading the consideration claims, with 48% & 45% respectively followed by Greece and Portugal. Familiarity appears to be a key problem for Cyprus, as the scores reported were significantly lower than the levels achieved by most key competitors – it was ranked 8th overall. Though familiarity is not as strong predictor of consideration as other measures, improving familiarity levels (either through communication and/or PR efforts) could be conducive in the long term as it improves perceptions. The familiarity levels of CY’s considerers was significantly, higher! Overall opinions towards Cyprus could be viewed as positive, as CY was ranked 4th overall behind Spain, Italy and Portugal and notably better than well known holiday destinations such as Turkey, Greece and Egypt! Higher opinions for Cyprus were cited by those who have already visited the country and those who recalled its Ad campaigns.

10. 2. Summary of Findings Characteristics of the Ideal holiday destination The incidence (%age) of the attributes of the Ideal holiday destination (HD) are considered as the importance coefficients of the underlying needs sought from a holiday destination. The higher the alignment between the attributes sought in the Ideal HD and their recognition/association with a country, the higher the probability of that country being visited (i.e. when an attribute is sought in the ideal HD and it is also recognised in a country),while the aggregated incidence is called the “Needs-Fit score”. The main attributes sought in the Ideal HD, revealed dimensions covering a diverse range of requirements, such as being friendly and hospitable, having natural beauties including beautiful beaches, rich cultural offering, providing comfort & pampering, being a safe place but also priced reasonably. Of the top 10 needs identified (in terms of importance), 9 were common to the considerers of each key country (i.e. difficult to differentiate), therefore countries delivering better on those needs (i.e. having a better Needs-Fit score) have a higher probability of attracting more visitors. Cyprus’ overall Needs-Fit score was reported at 37.6%, which was quite low when compared to the scores of countries such as Spain (60.3%), Italy (57.2%), Greece (50.9%) and Turkey (50.5%). It should be noted the N-F score for CY considerers was significantly higher at 59.8%; this was true though with the considerers of most key countries!

11. 2. Summary of Findings Image Perceptions In terms of attribute image associations, the total incidence reported for Cyprus’ could be considered as average, as it received (in aggregate terms) notably lower mentions from the majority of the key countries assessed – it was ranked 9th overall, with 6.4 (on average) attribute associations per respondent. Having said that for the attribute “offering comfort and pampering” Cyprus received the highest association claims of all countries with 46%, while for having “clean and beautiful beaches” was 3rd with 43% and for having “well preserved antiquities” and “has many natural beauties” was 5th with 39% and 48% respectively. Perceptions amongst CY’s considerers were significantly higher in all domains, indicative of their more positive beliefs, and thus justification for consideration. Spain and Italy received the majority of the mentions (incidence scores) followed by Greece and Turkey. In terms of relative attribute performance, (i.e. how distinctive an attribute is for a country in relation to all other countries and all other attributes), Cyprus is distinctive for “offering comfort and pampering” and “clean and beautiful beaches” and to a lesser extend for having “natural beauties”, while it is not at all recognised neither for having “reasonable prices” nor “vivid night life”! The above seem to suggest that Cyprus is seen more as a summer holiday destination, aimed for those who seek relaxation and comfort but also look to explore and discover the county’s natural beauties and secrets!

12. 2. Summary of Findings Attitudinal Brand Equity Attitudinal brand Equity (refer to as share of mind or attitudinal equity share) is in fact 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, and by being a respondent specific measurement, enables marketers to identify (and deliver) the unmet needs of those customers who are easier to persuade and thus increase the probability of a country being visited. With an AE share of 7.2 Cyprus is ranked 7th amongst the 12 key markets investigated, and appears that it has the potential to attract more visitors than Malaysia, Egypt or even Portugal. Spain and Italy achieved the highest AE shares (19.3 & 18.8 respectively), while traditionally popular destinations amongst Germans, such as Greece and Turkey reported AE shares just slightly over that of Cyprus (thus their current market shares must be favoured positively from external factors – i.e. better value for money, ethnically attached, year round destinations, family oriented offering etc.). The AE segments (which are based on the magnitude of individual respondents’ AE share), revealed that 26% of CY’s considerers contribute 60% of the country’s AE share (the most likely to visit), thus identifying what would increase the AE share of the remaining CY considerers (74%), could be instrumental for increasing Cyprus chances of converting more considerers to visitors!

13. 2. Summary of Findings • Drivers of Attitudinal Brand Equity • Since Attitudinal equity share is a good predictor of future behaviour, AE share was deemed as a better dependant variable than lets say overall opinion or familiarity, with the image attributes being the independent variables. Increasing the AE share for a country, would potentially increase the number of visitors. • The Priority Improvement analysis which incorporates CY’s AE drivers, CY’s & competitor’s attribute performance and the industry’s drivers, provides a strategic road map of what should be improved to maximise Cyprus potential in a truly competitive environment and prioritises effort as it provides guidelines where improvements should be focused. • The core drivers of CY’ AE share were: High quality service, being a friendly & hospitable place, clean & beautiful beaches, rich cultural offering with lots of sights to visit, offering comfort & pampering and catering for people with special needs. • The Priority Improvement matrix, revealed the following prioritisation guidelines: • Leverageable strengths (LS are areas for which delivery levels should be maintained): Comfort & Pampering; Clean & beautiful beaches, Natural beauties. • Priority Improvement areas (PIA areas for which delivery levels should be improved): Reasonable prices; Vivid nightlife; High quality service; Friendly & hospitable; Rich cultural identity; Lots of sights to visit, well preserved antiquities, variety of recreational activities and Catering for people with special needs. • The above directions indicate what communication efforts should aim to convey in order to improve perceptions (towards Cyprus) which in turn could be converted to an increase number of visitors! • An alternative (and more realistic) scenario, is to focused efforts on those areas identified LS & PIA and are also aligned with CTO’s communication strategy!

14. 2. Summary of Findings CY’s Ad awareness Unaided Ad awareness for Cyprus was reported at 9% and ranked 7th overall, with only Turkey, Egypt and Germany reporting significantly higher scores. CY’s aided Ad awareness incidence increased to 23%, with CY considerers’ Ad awareness reported even higher at 34%, while CY’s Ads were seen on average 3-4 months ago (Feb-Mar period). The Ads were seen on average in 1.6 media types, with the TV recall incidence reported at 55%, followed by print at 36%, by outdoor at 26% (which was the highest reported for all countries), Internet at 16%, leaflets at 13% and WoM at 7%. In terms of Ad likability, though Cyprus’ Ads received the highest score (both at top 2 box and average mean scores), they were not significantly higher to those reported for the majority of the Ads of other countries. CÝ’s Ad impact in initiating the desire to visit the country was quite high, as 2 in 3 claimed that the CY communication intrigued them and made them wanting to visit the country. With regards to what was recalled, CY’s natural beauties(i.e. sea, beaches, landscapes, places etc.) accounted for 55% of all comments cited, while comments referring to the actual Ad, Cypriots, hospitality, accommodation, food/cuisine, various activities etc. reported notably lower incidence claims. 10% of those recalling a CY Ad mentioned Ad slogans of sorts, however none mentioned “Cyprus in your heart”.

15. 2. Summary of Findings • Ad Evaluation of CY’s Campaign • Ad recognition (when shown unbranded) for both Print and TV executions were relatively low with incidences at 14% and 22% respectively. The executions were mostly mistaken for being Ads of other Mediterranean countries, mainly those of Greece, Turkey and Egypt. • The branded communication materials (Print/TV) influenced (to a degree) positively respondents’ opinions towards Cyprus (the T2B score on “overall opinions” after the Ad exposure increased by 9%) and helped improved certain perceptions - however their maintenance could be attained with more sustainable communication exposure! • The overall Ad effectiveness score (72.4) achieved indicates an “average” campaign – it should be noted that we classify campaigns in 3 bands; below average, average and above average! • Ad Likeability & Ad Engagement received the highest scores (3.9 Av. Mean score), with Ad Uniqueness & Ad Relevance reporting the lowest (3.2 & 3.3 respectively). The scores for Ad Credibility & Ad Interest were very similar both in terms of TB, T2Bs and Average mean (3.7). • The Needs-Fit analysis which is another measure of Ad effectiveness, (it incorporates customers’ needs in the analysis) has revealed a N-F score of 52.5, which again classifies the campaign as “average”; having said that the specific analysis reported significant improvements (from the “pre Ad exposure” score), as the N-F score increased by 40%. • This increase was more notable for the attributes considered as Leverageable strengthssuch as “clean & beautiful beaches”, “comfort & pampering” and “natural beauties” and for “being friendly & hospitable place” an attribute identified as Priority improvement area(the aforementioned attributes achieved N-F score over 60). • Still though the attribute with the lowest N-F score was reported for “reasonable prices” (24)!

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

17. 2.1 Spontaneous mentions Holiday destinations that come to mind Recalling an Ad of Holiday destinations in the P6Ms Holiday destinations visited in P5Ys

18. 2.1.1 Spontaneous mentionsHoliday Destinations that come to mind (unprompted) • On average, respondents mentioned between 6-7 holiday destinations. • Spain, Germany, Italy and the USA appear to be the most common holiday destinations coming to mind (all with around 30% mentions), while France, Egypt, Turkey, Greece and Australia follow with incidences ranging from 20-25%, with another 15 countries reporting mentions over 10%. • Cyprus comes 27th overall, with 9% of all interviewed consider CY as holiday destination. 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 2007 results (for countries whose data were available), Germany has made the most significant gains (up 20% - probably an indication of the current economic situation), while Italy’s claims appear to have made the biggest losses (down 9%). • Cyprus also exhibits notable gains, as its 2011 results were 8% higher than those of 2007. • Note: Caribbean islands in their entirety, are considered as a holiday destination by 20% of the respondents, and is comprised by the mentions of 6 different countries!

19. 2.1.2 Spontaneous mentionsRecalling an Ad of Holiday destinations in the P6Ms • The highest unprompted Ad recall claims were reported for Turkey (27%) and Egypt (24%), followed by Germany, Spain Greece and Croatia. Ad recall claims for UAE (overall) were also high (was 3rd with 21%), however this was split between Dubai (8%), Abu Dhabi (8%) and UAE unspecified (5%). • Cyprus was 7th overall with a reported Ad recall incidence at 9%. • From a demographic point of view the only notable differences observed were regionally; with Dresden reporting significantly higher incidence, while Munich & Leipzig showing significantly lower Ad recall. • 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 (Bulgaria is ranked 35th & Malaysia 72nd), with 6 of them ranked in the top 7.

20. 2.1.3 Spontaneous mentionsHoliday destinations visited in P5Ys • One in two claimed to have spent vacations in Germany . Spain (29%), Austria (28%), Italy (26%), France (26%) and Turkey (19%) follow as the holiday destinations mostly visited in the past 5 years. • Of the top 30 countries visited, 18 are in mainland Europe and Scandinavia and all can be reached with relative ease by car, bus, train or boat - thus a possible indication of the change in trend for using other means than airplanes to reach a destination! • Cyprus has been visited by 4% of the respondents! • It is also worth noting, amongst those who consider visiting CY in the next 3 years, only 9% have visited the country in the past!

21. 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 Country Consideration vs Familiarity Overall opinions Overall opinions amongst considerers

22. 2.2.1 Overall measuresFamiliarity • Spain and Italy lead the familiarity scale with 75% of the respondents claiming fairly good knowledge (top 3 box scores) of the countries. • Greece, Turkey and Portugal followed the familiarity claims but with significantly lower scores. • Cyprus is ranked 8th of the 12 key markets evaluated (at an av. Mean score). This should be an area of concern, as the level of familiarity is indicative of what is perceived about a country! Furthermore, familiarity usually precedes considerations to visit! • Amongst “considerers”, their familiarity scores are significantly higher (true for all markets) – with CY’s Top 2 box score reported at 32%. • Having said that CY’s considerers scores are even lower compared to the claims of other markets, as its overall rank drops to 10th place.

23. 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 (in the next 3 years) at 48% and 45% respectively, followed by Greece (28%), Portugal (24%), Cyprus (24%), Turkey (23%) and Croatia (23%) – Turkey could be under reported due to the number of ethnic Turks & Kurds who live all-over Germany and might not be fully captured in the metro areas the investigation was conducted! • Cyprus has reported the biggest %age gain (10% - significant at 95% confidence level) from the 2007 results, and one of the biggest %age drops of “definite non considerers” (7%) – a possible indication of the effeteness of CY’s Ad and promotional campaigns; CY’s EU membership may have also contributed to that! • Greece appears to be the biggest looser in terms of consideration to visit when compared to the 2007 results (lost 10% points) and this could attributed to the current economic situation in Greece and EU’s (mainly Germany’s) bail out rescue package given!

24. 2.2.3 Overall measuresReasons for not considering to visit Cyprus • The most prominent reason cited for not considering Cyprus as a tourist destination is ‘lack of awareness’about the country (33%) - this is an area needs to be further addressed via future communication / promotional campaigns! • The Cyprus ‘political situation’was also another major reason for not considering visiting the country (28%). A similar number of claims was cited for ‘preference towards other countries’, and ‘CY similarity to other destinations’. • For some CY’s unappealing culture and its limited & uninteresting offering were also key reasons for not visiting. • Only 1 in 10 cited cost (too expensive) as a reason for not wanting to visit, while a similar number of respondents claim distance to be also a preventer for consideration.

25. 2.2.4 Overall measuresProfile of CY considerers • The profile of people considering 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 the Net HH income and Marital status. • The proportion of HH’s with net income over €4,500 is significantly higher amongst those consider to visit Cyprus, implying “price” for CY considerers is possibly less of an issue. Similarly, married people/living with partner demonstrated higher CY consideration than the overall average. • Some notable higher incidences have been also reported by 50yo+, and respondents who are in business and in top management positions!

26. 2.2.5 Overall measuresCross consideration • CY considerers exhibit the desire to visit other markets (in fact at least 3-4 other destinations are considered), with Spain and Italy being the main benefactors, reporting 57% and 53% respective cross consideration. Greece (43%), Portugal (41%) and Turkey (35%) followed CY considerers’ desire to visit and they are less likely to visit Malaysia and Bulgaria (with 16% & 9% consideration claims respectively). • Looking at considerers of other countries, half of those who are considering to visit Malta (53%) also consider visiting CY as well, followed by Malaysia (42%), Portugal (41%), Greece (36%) and Turkey (35%).

27. 2.2.6 Overall measuresCountryConsideration vs Familiarity • Looking at the relation between country consideration and country familiarity (at aggregated level) the fit of the model (R²) achieved is quite high, meaning the independent variable (familiarity) could explain up to 65% of the dependent variable’s results (Consideration); basically the above analysis confirms to a degree that increasing familiarity could potentially increase country consideration.

28. 2.2.7 Overall measuresOverall Opinion (amongst all interviewed) • Spain and Italy continue to enjoy the lead over other key markets by achieving significantly the highest overall opinion scores, with Portugal following in 3rd place. • Cyprus comes fourth in both T2B and Av. Mean scores, very close to those reported for Malta. • The surprise amongst the key markets should be Egypt, which came 9th in OO rankings and this could be (partly) attributed to the recent country unrest and the issues on safety which were cited – see country perceptions! Similarly relatively low scores have been reported for both Greece and Turkey (7th and 9th overall). • Significantly higher OO scores for CY have been exhibited by respondents in Leipzig and Essen, by those who visited CY and those who recall a CY Ad.

29. 2.2.8 Overall 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 TB, T2B and Av. Mean scores diminishing notably. • Though CY’s overall ranking has drop to 5th, its high average mean score (6.1 vs 6.3 achieved by Spain & Italy) 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

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 top 10 requirements in an “ideal” holiday destination covers a range of contrasting needs which include both • culture & natural beauties, • quality service & hospitality, • beautiful beaches but also safety • comfort but at reasonable cost • thus giving a direction as to what today’s holiday destinations ought to provide! • Almost identical needs have been reported by CY considerers - by including “well preserved antiquities” and omitting the need of “contrasting experiences” from their top 10. • 9 out of the top 10 top characteristics were common amongst the considerers of all markets, thus making the differentiation in strategy more difficult!

32. 2.3.2 Ideal holiday destination and Image PerceptionsIdeal Holiday destination vs perceptions of key markets • The smaller the gap for an attribute between a country’s score and the score given for the “Ideal” holiday destination, the better the country is suited to capitalise on that need over competition. • Looking at the top 10 elements identified as key parameters a holiday destination should offer, one can easily observe why Spain and Italy lead both past visits and future considerations to visit, as they are in the top 3 spots (in terms of incidence) in almost all the elements sought – easy access (i.e. reachable by car) could have attributed to that! • Cyprus is the best performing country in terms of comfort and pampering, and 3rd in terms of clean and beautiful beaches. • Greece and Egypt are strong in their antiquity offering, while Turkey on actual cost and hospitality

33. 2.3.3 Ideal holiday destination and Image PerceptionsIdeal HD for CY considerers vs their perceptions towards CY • As already highlighted CY considerers’ ranking of the “Ideal” holiday destination characteristics are very similar to the overall sample. • Perceptions towards Cyprus amongst CY considerers are notably closer to the key characteristics desired in their ideal holiday destination when compared to the perceptions expressed by the total sample. • There is a very close incidence match (on the key Ideal characteristics sought) on attributes referring to CY’s history and cultural identity as well as on the islands natural beauties, but there is still some distance to cover especially on the top 3 characteristics sought namely clean & beautiful beaches, for being friendly & hospitable and for being a safe destination – areas in which communication could better address! • Again the area for which CY is not delivering is on cost!

34. 2.3.4 Ideal holiday destination and Image PerceptionsBrand associations – Key performing (at image level) countries and their rank

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 and it is not recognised neither for its vivid night lifenor for having reasonable prices!

36. 2.3.6 Ideal holiday destination and Image Perceptions Brand associations – Overall CY vs CY considerers • Perceptions towards Cyprus (overall) are considered to be average and Cyprus’ scores are better (than competition) only for offeringcomfort and pamperingand for having clean and beautiful beaches. • For the majority of the attributes assessed, CY was ranked (in incidence claims) manly in the region of 7th-9th, while in terms of reasonable priceswas ranked 11th of the 12 countries evaluated. • The attribute scores (in their entirety) for CY considerers are significantly higher than those achieved by the total sample, clearly demonstrating their more positive perceptions towards the country. • In addition to the (aforementioned)attributes for which CY is performing well, is the island’s natural beauties, for being hospitable & friendly place, having lots of sights to visit & CY’s cultural identity and for being a safe place, also figure prominently in considerers’ mind.

37. 2.3.6 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 quality service and the comfort and pampering offering.

38. 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 1 & 2 • PIM 1 excludes the impact of Stated importance obtained through the Ideal HD • PIM 2 includes the impact of Stated importance obtained through the Ideal HD

39. 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.

40. 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!

41. 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) - even when the analysis was run at a respondent level the fit was calculated at 0.7 which is still an extremely high figure for a market research study!

42. 2.4.3 Attitudinal Brand Equity Attitudinal brand equity Shares (amongst considerers - adjusted) • Cyprus Attitudinal equity share is 7.2, and is ranked 7th of the 12 key markets. Basically, if external factors couldn’t influence choice, then CY would have been potentially visited by 7.2% of the target audience (assuming the choice was restricted to the 12 key markets evaluated)! • Looking at the AE segments, CY’s High AE segment contributes 60% (i.e. 4.3÷7.2) of the CY’s AE share/score and is contributed from 26% of its considerers (i.e. 6.6÷25.6) – they are the most likely to visit Cyprus. Similarly 31% 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).

43. 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 demographic level, age appears to have the biggest variation between the segments where bigger proportion of the 50yo+ are clustered in the High and 20-49yo in the Low AE segment. Also females seem to be stronger advocates of Cyprus than males (High AE segment)! • Looking at actual responses, it is evident that considerers belonging to the High AE segment achieved higher incidence claims than both Medium & Low segments. • A strong indication of considerers’ in the High AE segment likely intentions i.e. to visit CY, is demonstrated by their cross consideration claims, where the number of countries considered visiting (other then CY) is notably smaller than the other 2 segments.

44. 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 incidence scores reported both in recall of CY’s Ad and likability (are more likely to register communication efforts), but also with the attributes which have been identified as key drivers of CY’s attitudinal brand equity share – basically they perceive more positively the country!

45. 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. • Also at Ad measures level (the components the Ad campaign was evaluated against), overall the respondents belonging to the High AE segment have rated the Ad (at top box level) higher than the other segments. • If we suppose that 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 holiday taken 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 651,000! • 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 520,000!

46. 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 variables! • The driver analysis and importance coefficients estimated provide the first step for determining strategic guidelines where efforts should be channelled (in terms of changing perceptions and actual delivery through experience). • How is read: If the score on High quality service increases by 10% i.e. from 53.1% goes to 58.4%, then CY’s AE share could increase by 3.3% i.e. from 7.20 would go to7.43 and so on! • Assuming external factors are more difficult to alleviate, increasing the AE share appears to be a credible mean to increase inflow of visitors! • The attributes that would impact more CY’s AE share are: • High quality service • Friendly and hospitable • Clean and beautiful beaches • Lots of sights to visit • Rich cultural identity • Comfort & pampering

47. 2.4.6 Attitudinal Brand Equity CY’s Priority Improvement Matrix 1 • Looking at the drivers of CY’s AE share in relation to CY’s relative performance on those attributes (standardised based on CY’s performance in relation to competition), the results provide more actionable strategic directions. • Since changing the importance of attributes is considered impossible (unless changes in attribute performance take place across markets), the effort should be placed in those areas where Cyprus underperforms (relative to competition) and the importance of the attributes is higher. • From the map we can observe that in the areas of • Comfort & pamperingand Clean & beautiful beachescould be considered as Leverageable Strengthswhereas the attributes High quality service,Friendly & hospitable place, Sights to visit, Rich cultural ID, Catering for people with special needs and natural beauties as areas of Primary Improvement. • Maintaining Leverageable strengths, and improving perceptions identified as primary improvement areas (especially the attributes ‘ offering high quality service’ and ‘being friendly & hospitable place’) could be conducive in CTO efforts to attract more visitors.

48. 2.4.6 Attitudinal Brand Equity CY’s Priority Improvement Matrix 2

49. 2.4.6 Attitudinal Brand Equity CY’s Priority Improvement Matrix 2 • The Priority Improvement Matrix 1 took into account the attribute relative performance and the attribute importance coefficients (i.e. what drives CY considerers’ Attitudinal Equity share) in order to determine where to concentrate efforts i.e. which attributes should be strategically improved, in order to increase Cyprus’ Attitudinal Equity share. • The above though excluded from its thinking the category’s/industry’s attribute importance (i.e. attributes sought in a holiday destination as observed from the Ideal HD), therefore including the aforementioned in the “equation” the Priority Improvement Matrix 2 not only is strategic but also becomes Industry relevant ! • 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 industry’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 15 could be classified as a LS, 16-24 as a SI and a score over 25 as a PI areas. • The analysis of PMI 2, not only identified the same core attributes (Leverageable strengths and Priority improvement areas) as in PIM 1, but also elevated attributes such as Reasonable pricing, Vivid nightlifeand well preserved antiquities to primary improvement areas, enabling the potential capture of a wider audience of potential visitors if improved, and allowing CY to compete with other destinations in areas it finds currently hard to do so! • For example if a future Ad campaign lowers the “luxury” dimension (which was part of the current campaign) , then perceptions towards CY as an “expensive destination” could be reduced! • Of course such attempts to improve specific perceptions should be only taken if these are in line with CTO’s current strategy!

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