THC 321 – TOURISM HOSPITALITY MARKETING

MODULE 1 - WEEK 1&3:

INTRODUCTION TO MARKETING FOR TOURISM AND HOSPITALITY

Learning Objectives:

The learners shall be able to:

1. Describe tourism and hospitality marketing and its functions.
2. Adapt the eight Ps of services marketing in the tourism and hospitality industry.
3. Compare the different marketing concepts being used in the tourism and hospitality industry.
4. Identify the key players in the tourism and hospitality industry.
5. Explain marketing as a management process.

➢ WHAT IS TOURISM HOSPITALITY MARKETING?

- Tourism and Hospitality marketing are how segments of the tourism industry such as transportation,
hotels, restaurants, resorts, amusement parks, and other entertainment and accommodations businesses
promote their products or services.

- Marketing is the process of getting a company's product or service out to consumers.

- Hospitality marketing looks at how segments of the hospitality industry utilize marketing techniques
to promote their products or services.

- Tourism marketing does include plenty of techniques that are like traditional digital marketing, but it
has its specifics.

➢ TRADITIONAL MARKETING: Marketing Mix

- Kotler (2010) says that marketing facilitates the exchange process and the development of relationships
by carefully examining the needs and wants of consumers, developing a product or service that satisfies
these needs, offering it at a certain price, making it available through a particular place or channel of
distribution, and developing a program of promotion to create awareness and interest.

➢ 4Ps

• The product or service is what the company is offering to satisfy a consumer's want or need.

• The price is the value that the seller puts on the product or service. This includes the cost of the product
and the profit the seller wishes to make. The price is also the amount a customer must pay in exchange
for the product or service.

• The place is how the product or service reaches the consumer.

• Promotion is the strategic plan by which customers are informed about the product or service and its
value. Promotions also encourage customers to purchase the product or service.

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 - A well-planned and executed marketing mix will enable marketers to move their products or
services successfully to the consumers.

- In Morrison (2019), there are several other Ps to represent relevant functions of tourism marketing
such as People, Packaging, and Programming.

➢ 8Ps

- Product

- Product refers to the service a company wishes to sell. This could be flights in the case of an airline or
rooms in the case of a hotel. The core product of the hotel is its rooms which customers stay in for a
period. Of course, there is more to a luxury hotel than just its rooms; there are also its restaurants, free
Wi-Fi, and the spa. The product is the range of product and service mixes offered to customers that have
features and benefits.

- Place

- Place refers to the location where the customer buys the collection of services. It is how the product will
be made available to consumers in the market, selection distribution channels, and partners.

- Promotion

- Promotion is the specific combination of marketing techniques such as personal sales, public relations,
and other related activities. The promotion gives details of the product and the price. The promotion has
a target market, and the method and content of the promotion must appeal to the people it reaches.

- Pricing

- Pricing is part of comprehensive revenue management and pricing plan. The price must match the
product, but good marketing makes the price seem more attractive. The operator can either add features
to the product or keep the price the same or give a discount for the same features.

- People

- Since the product is a collection of services, the people who provide the services are key to the success
of the transaction. The people would include who interact with guests would include managers,
receptionists, concierge staff, cleaners, spa staff, waiters, and other staff. This concerns developing
human resources plans and strategies to support positive interactions between hosts and guests.

- Process

- Process refers to the procedures, mechanisms, and flow of activities that occur when the customer and
the business interact with each other. The key processes for example in a luxury hotel include the things
that happen when guests book a room, check-in, stay in the hotel, and check out. Each of these will have
a unique and formal process associated with them designed to delight the consumer.
- All these processes need to be tightly controlled to ensure a consistent customer experience. They are
usually defined in written Standard Operating Procedure documents (SOPs).

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- Physical Evidence
- These are ways in which businesses can demonstrate their marketing claims and customers can
document their experiences such as stories, reviews, blog posts, or in-location signage and components.
If possible, the provision of physical evidence that the customer experienced the tourism product can
help sales. Providing professional photographs of the customers at key events or the supply of branded
products are effective strategies for promoting tourism products.

- PESTLE

- A PESTLE analysis is a tool used to gain a macro picture of an industry environment. PESTLE stands
for Political, Economic, Social, Technological, Legal, and Environmental factors.

- It allows a company to form an impression of the factors that might impact a new business or industry.
Some factors will be more important to different types of businesses, and a PESTLE analysis will help
identify risk factors for the SWOT analysis.

➢ UNIQUE CHARACTERISTICS OF THE TOURISM INDUSTRY

Unlike consumer products that can be availed off the shelf, tourism products have unique
characteristics that make their marketing and promotions quite challenging.

- Intangible

- Tourism products cannot be touched, smelled, tasted, felt, or heard prior to purchase.

- They cannot be subjected to prior scrutiny. One cannot examine nor test them before purchase, unlike
consumer products.

- Inseparable

- The tourism product cannot be separated from the consumer. When tourists avail of products and
services, they must personally go to where the products are. Since what is being sold is the experience,
the product, and the consumer cannot be in two different places; they must be in the same place.

- Variable

- The tourism experience is likely to be different depending on when the product is availed, who one is
with, and how the service providers deliver the service at the time of consumption. One may have gone
to the same restaurant several times and have a different dining experience each time. While the first
time at the restaurant may have been quiet, the second time, one finds it to be noisy. There may have
been few customers during the first time and a rowdy group of teenagers during the second time, hence,
the variability of the tourism product.

- This is the primary reason why standardization of operations is crucial in the tourism industry.

- Perishable

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- The tourism product is one of the most highly perishable of products. Perishability, as used in this
context, refers to not being able to forward inventory to the next day. It does not refer to food being
spoiled and thrown away. Products become perishable when they can no longer be consumed today even
when no one consumed them the day before, unlike consumer products such as a pen. If the pen was not
sold today, it can still be stored in a warehouse to be available for sale the next day.

- Seasonal

- Seasonality does not only refer to the seasons of the year or the weather conditions. It also refers to
behavioral patterns of the travel market. The seasonality of the tourism product hinders it from
maximizing its profits all year round. Hence, intensified marketing during the lean season will help
increase demand for the product.

- This is also the reason most tourism products, such as airlines and resorts, have different rates throughout
the year. Such differences in rates help manage capacity and yield to maximize profitability.

- Substitutable

- Competition in the tourism industry is s intensifying. With new destinations emerging and competing in
the global marketplace, one destination can easily be substituted for another destination. When a new
restaurant opens, the old favorites are relegated as second choices. It is quite a challenge to establish
loyalty among clients — since there is a wide range of product offerings to choose from. With the many
choices available, the tourism product is highly substitutable. However, identifying one’s competitive
advantage and a unique selling proposition may help make a tourism product less substitutable.

Marketing plays an important role in the purchase of tourism products. Because of the
characteristics of the tourism product, a marketing strategy needs to be developed to make the product
competitive in a highly commercialized marketplace.

- Tourism as a High Involvement Product

- Decision-making in the purchase of tourism products is of high involvement. Tourism products of high
involvement mean that there is a greater degree of thought or study involved prior to the purchase.
Expensive, complex, and unrepeatable are characteristics of high involvement products.

o Purchase of expensive products is likely to go through a long and detailed process of canvassing and
comparing brands, suppliers, and product features. If the product commands a high price worth more
than one’s monthly salary, one will surely make detailed comparisons before finalizing any purchase.
Travel products, home appliances, and real estate properties fall under this attribute.

o Consumers may find complex products difficult to purchase. The difficulty may arise from the need to
understand the features or details of the product. Travel packages can be considered complex mainly
due to the variety of products and services available and the “jargon” (technical words) used in
explaining some of these products. The same holds true for highly technical products such as electronic
gadgets and computers.

o The unrepeatable nature of travel makes it a “once-in-a-lifetime” purchase. With the novelty-seeking
behavior of most tourists and the high cost of travel, travel purchases may not be repeated or may. be

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 infrequent. Hence, more scrutiny is exercised prior to purchase. Aside from travel products, special
events such as weddings and debuts fall under this characteristic.

Unlike low involvement products, which are inexpensive, simple, and familiar, more detailed
scrutiny of alternatives, a longer time for deliberation, and high expectations for satisfaction happen
when consumers avail of tourism products and services that are of high involvement.

➢ MARKETING MANAGEMENT AND PHILOSOPHIES

- Marketing concepts or marketing management philosophies are the philosophies used by businesses to
guide their marketing efforts. Basically, marketing concepts relate to the philosophy a business use to
identify and fulfill the needs of its customers, both the customer and the company. The same philosophy
cannot result in a gain for every business, hence different businesses use different marketing concepts.

- Marketing concepts are driven by clear objectives such as cost efficiency, product quality, and
customers’ need fulfillment.

- Marketing within the hospitality and tourism industry presents unique challenges, as marketers are
tasked with selling services and memories rather than goods. There are marketing management and
philosophies being used by businesses in this industry.

- Production Concept

- The production concept works on an assumption that consumers prefer a product that is inexpensive and
widely available. Hence, companies using this concept focus on producing more of the product and
making sure that it is available to the customer everywhere easily. An increase in the production of the
product makes the companies get the advantage of economies of scale. This decreased production cost
makes the product inexpensive and more attractive to the customer.

- A low price may attract new customers, but the focus is just on production and not on product quality.
This may result in a decrease in sales if the product is not up to the standards.

- Product Concept

- The product concept assumes that consumers will favor products that have quality, performance, and
innovative features. Hence under this concept, the focus of marketing is to create continuous product
improvements.

- Sometimes, however, concentrating on the company's product may lead to myopia. Consumers may
possibly be satisfying the same need but wanted a completely different product.

- Selling Concept

- Selling concept concentrates on making every possible sale of the product, regardless of the quality of
the product or the need of the customer. The focus is to make money. This philosophy does not include
building relations with customers. Hence repeated sales are very less. Companies following this concept
may even try to deceive the customers to make them buy their product.

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- Companies that follow this philosophy have a short-sighted approach as they try to sell what they make
rather than what the market wants.

- Fast-food stores in the Philippines are using this type of concept. Often, they would advertise when sales
started to drop. No attempt to neither analyze first nor change their product offerings to suit the taste of
the market. In the hospitality industry, when there is overcapacity, management usually tries to hard-
sell by increasing advertising and heavy campaigns.

- Marketing Concept

- The marketing concept works on an assumption that consumers buy products that fulfill their needs.

- Hence, companies must produce a product that shall satisfy the needs of their customers. Businesses
following the marketing concept conduct research to know about customers' needs and want and come
out with products to satisfy the same better than the competitors. By doing so, the business establishes
a relationship with the customer and generates profits in the long run.

- Societal Marketing Concept

- Adding to the marketing concept, societal marketing philosophy focuses on society’s well-being as well.

- The business focuses on how to fulfill the needs of the customer without affecting the environment,
natural resources and focusing on society's well-being. This philosophy believes that the business is a
part of the society and hence should take part in social services like the elimination of poverty, illiteracy,
and controlling explosive population growth and other environmental issues.

- Social marketing is an absolute necessity and no longer optional for the hotel industry.

- Holistic Marketing Concept

- Holistic marketing is a new addition to the business marketing management philosophies which
considers business and all its parts as one single entity and gives a shared purpose to every activity and
person related to that business. A business, like a human body, has different parts, but it’s only able to
function properly when those parts work together towards the same objective.

- Holistic marketing concept enforces this interrelatedness and believes that a broad and integrated
perspective is essential to attain the best results.

➢ MARKETING AS A MANAGEMENT PROCESS

Since the provision and consumption of tourism products and services usually occur simultaneously,
the marketing orientation should involve the entire organization. The marketing management process
involves the following key processes (Lumsdon 1997):

1. Marketing Information System. With the advent of technology, the provision of a marketing
information system enables the organization to compile an updated set of information about its
customers, competitors, and the organization’s capability and effectiveness.

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2. Marketing Planning. This involves an analysis of the marketing environment in relation to the potential
of one’s business. It also involves the setting up of objectives and an evaluation of the milestones that
the company has reached. The creation of marketing strategies will help increase business by obtaining
the best fit between the company’s resources and its target market position.

3. Planning Tactical Campaigns. This step ensures that practical and realistic tactical campaigns are
conducted in support of the comprehensive marketing strategy.

4. Marketing Operations. This process involves the challenging part of implementing the planned strategic
and tactical campaigns by coordinating with all stakeholders, finetuning the marketing mix as they
unfold, and ensuring that activities are conducted as planned.

5. Monitoring and Control. This involves the ongoing process of evaluating sales data and financial
performance versus marketing activities conducted. It also includes the handling of customer feedback
and complaints (if any) and coordination with what the staff has to say about the marketing campaigns.

Finally, it includes being aware of what the competitors are doing.

➢ CORE MARKETING FUNCTIONS

Marketing’s key functions include marketing information management, financing, pricing,

promotion, product/service management, distribution, and selling, briefly discussed as follows:

1. Marketing Information Management — entails gathering information about customers to better serve
their needs and improve decision-making.

2. Financing — involves planning to ensure that resources are available to maintain and improve the
business.

3. Pricing — ensures that the value and cost of goods and services offered to customers will be at the level
that customers are willing to pay.

4. Promotion — prepares the various promotional strategies that will enable the products to be introduced
and sold to the customers.

5. Product/Service Management — involves designing, developing, maintaining, improving, and

acquiring products and services to meet the needs of the customers.

6. Distribution — involves bringing the products and services to the customers in the best way possible.

7. Selling — is the ultimate measure of marketing success. Strategies on following up the sale, closing the
sale, and making a repeat sale are crucial tasks of marketing.

➢ KEY PLAYERS IN THE TOURISM AND HOSPITALITY INDUSTRY

There are basically several players in the tourism industry. They include the following:

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1. Private and Non-profit Sector
- This sector consists of travel agencies or tour operator associations, financial and banking institutions,
educational institutions, and insurance companies. An important player in this sector is the Destination
Marketing Organization (DMO) in charge of marketing specific tourism destinations and is responsible
for formulating and implementing travel and tourism policy. Here in the country.

2. Public Sector

- This sector is composed of provincial tourism organizations that work together to create more attractive
tourism products. In the Philippines, the Tourism Promotions Board (TPB) is a government corporation
dedicated to the promotion of the Philippines as a meeting and convention destination.

3. Transportation

- A good transportation system is important and beneficial for the tourism industry.
- Developing countries such as the Philippines invest heavily to make improvements in the transportation
system.

a. Roads - Although the Philippines has been much to offer in terms of tourism products; its growth has
been hampered because of poor infrastructure. Trains, taxis, buses, jeepneys, and trikes are the main
modes of public transportation.

b. Airlines - Airlines now are experiencing increasing demand both locally and internationally. Airports
now around the world have been on constant improvement of facilities. Philippine Airlines (PAL), the
national flag carrier and considered "Asia's First Airline," remains the country's biggest airline
company. The Philippines' largest national flag carrier, Cebu Pacific (CEB) entered the aviation
industry in March 1996 and pioneered the "low fare, great value" strategy. Other airlines that presently
fly the Philippine skies are Air Philippines, Southeast Asian Airlines, Laoag International Airlines,
Zest Air (formerly Asian Spirit Airlines), and Pacific Airways.

c. Cruise - More and more, the cruise sector is becoming a popular and successful component of the
tourism industry. In the past, cruise travel is just for the rich and famous passengers who wanted to travel
in luxury without any constraints on time and money. With mega-ships available, there are now a lot of
customers on-board cruise lines who enjoy much lower pricing due to economies of scale.

d. Railways - Some countries like the Philippines have invested a large amount of money for their trains
to solve the transportation problems. A land railway system operated by the Philippine National
Railways, called the Metrotren, is recommended for long-distance traveling. Within Metro Manila, the
Light Railway Transit (LRT) and Metro Railway Transit (MRT) are two other railway systems in
the Philippines.

4. Accommodations

- The accommodation sector consists of hostels, bed, and breakfasts, tourist residences, holiday dwellings,
timeshare apartments arid campsites. In big cities, hotels and chains of hotels are very common. The
Philippines’ best hotels all have several important characteristics in common which are top location,
quality facilities, and impeccable service. The most popular hotels in the Philippines are Shangri-La,
The Peninsula, Sofitel, New World Hotel, Dusit Thani, Manila Marriott, and Hotel H20.

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5. Food and Beverages

- These are companies involved in the process, package, and distribution of fresh and prepared foods, in
addition to prepackaged foods. Both alcoholic and non-alcoholic beverages are part of this sector. There
is an increase in the sales of alcoholic beverages and soft beverages these days in most emerging
countries. Coca-Cola and Pepsi have long partnered with local fast-food stores to market their products.

6. Attractions

- Tourist’s attractions are classified into natural and manmade. A lot of tourists are fascinated with those
that provide entertainment. The Philippines has numerous famous attractions such as but not limited
to Mayon Volcano, Puerto Galera, Puerto Prinsesa, Dunsol, Chocolate Hills, Boracay, and Banaue
Rice Terraces.

7. Events and Conferences

- Events are vital because of their tourist, social and cultural functions as well as to the local and national
development. Events provide a primary opportunity to know the local culture and experience the
importance of the place. Events also can help the place improves its image for good media coverage. In
addition, conferences when held in popular tourist attractions can be a means to draw numerous
customers to the target destination.

8. Intermediaries

- Tour operators and wholesalers, travel agents, travel specialists, and Web-based intermediaries are
important players in the tourism industry. Tour operators and wholesalers are responsible for offering
packaged vacation tours which include transportation, accommodation, entertainment, and food to
people. Travel agents and online travel agents have important roles in marketing for promotions.

9. The Tourists

- It is this person that bring revenues to the tourism and hospitality industry.

➢ INTEGRATED MARKETING COMMUNICATIONS APPROACH

The promoting and selling of products have become heavily reliant on traditional advertising
techniques which have become more expensive but less effective. The Integrated Marketing
Communications (IMC) approach was born from the need of businesses to enhance the promotion of
their products. What is IMC then? It is the process of using all forms of promotion to achieve maximum
communications impact while maintaining a consistent image for the products or services.

- Factors that Contributed to the Growth of IMC

- With the growth of technology, consumers have become less responsive to traditional advertising. The
remote control allows viewers to change channels while commercials are going on. TV and radio have
become more fragmented. People have shifted to using the computer and the Internet more often than
traditional mass media channels. The Internet has also allowed businesses to communicate in more

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 creative ways to their target customers. Interaction is enhanced with the use of smartphones and wi-fi
networks, where information is now available literally at our fingertips.

- There is a great challenge for advertising agencies and marketing departments to maximize resources
and budget for better efficiency and effectiveness. As such, businesses have shifted the compensation
of advertising agencies from fixed compensation to incentive-based compensation. This poses a
challenge for advertising agencies to come up with an integrated approach in mixing the different
promotional tools to yield maximum results because the more effective their marketing strategy is, the
higher their pay will be. Hence, the shift to incentive-based compensation is a win-win strategy for both
the business owner and the advertising agency.

- The rise of big retailers such as SM Malls, Puregold, Robinson's Malls, etc. has also altered the way
marketing and promotions are implemented. Instead of the usual marketing strategy for the direct
consumers, the consolidation of the retail industry has affected the way people have consumed
products. Big retailers can dictate the brands that will make it to their shelves. Thus, manufacturers are
at the mercy of these big retailers. Retailers can dictate the discount scheme and merchandising support
they would need from manufacturers. Otherwise, their products will not make it to the shelves of the
grocery store.

- The growth and development of database marketing have also enhanced the use of the IMC approach.
With enhanced computer programs adopted by many tourism establishments such as hotels, airlines,
and restaurants, database management is facilitated. These databases would be most helpful in carrying
out direct marketing campaigns such as telemarketing and loyalty programs. The behavior and needs of
consumers are tracked, and customers are served more efficiently through the management of a sound,
and updated database.

- Due to the advent of technological advancements, the IMC approach has become a popular option in
maximizing resources and optimizing results. Many opportunities have opened for the tourism marketer
in terms of new and cheaper ways of promoting destinations, products, and services. Digital marketing
strategies have made smaller destinations with fewer resources noticed in the crowded marketplace due
to videos or social media posts that have become viral.

- Combining traditional and digital promotional strategies gave rise to the integrated marketing
communication approach, acknowledging the fact that there is no one tool that will push awareness and
sales but rather a wise and efficient use of the various tools spaced out at the proper timing and the
accurate identification of the proposed target market.

Use of Integrated Marketing Approach

Reach Target
Market

Use of Integrated Achieve

Marketing Company
Approach Objective

Within Available
Budget

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- Various studies have shown that the IMC approach has been an effective way for companies to reach
their target market and to achieve company objectives within the available budget. Given creativity and
strategic thinking, IMC can maximize a company's limited resources; thus, allowing small players in the
tourism industry to compete with, established brands.

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 MODULE 2 - WEEK 4&5:
TOURISM AND HOSPITALITY SERVICE MARKETING AND QUALITY

Learning Objectives:
The learners shall be able to:
1. Describe the tourism and hospitality service culture.
2. Evaluate the service-profit chain as a theory and business model.
3. Solve some service delivery issues in the tourism and hospitality industry.
4. Adapt the most famous models that measure quality service in the tourism and hospitality industry; and,
5. Predict capacity and demand in the tourism and hospitality industry.

➢ The Tourism and Hospitality Service Culture

- Quality customer service is an experience of feeling valued or heard. Sometimes it is an intangible

element of why a guest may choose one tourism or hospitality provider over another. There is something
about quality customer service that no one knows why but it is their present satisfying customer
expectations and contributing to business profitability.

- The best hospitability organizations possess a quality culture. Such culture serves as a guide that profit
takes care of itself once everyone in the organization is committed to and practices managing for quality.

- In the hospitality and tourism industry, quality culture also means reducing and removing apparent
difficulties, complications, and deficits.

- A quality culture can influence the long-term plans of the company toward the attainment of its vision.

- The Service Profit Chain

- The service-profit chain is a theory and business model developed by a group of researchers from
Harvard University in the 90s. It forms relationships between profitability, customer loyalty, employee
satisfaction, loyalty, and productivity.

o Profit and growth are stimulated primarily by customer loyalty.

o Loyalty is a direct result of customer satisfaction.

o Satisfaction is mainly prejudiced by the value of services delivered to customers.

o Value is produced by happy, committed, and creative employees.

- Employee satisfaction, on the other hand, comes chiefly from high-quality support services and policies
that consent employees to deliver the best results to customers.

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- In the book of American economists W. Earl Sasser Jr. and Leonard A. Schlesinger and American
businessman James L. Heskett entitled "The Service Profit Chain: How leading companies link profit
and growth to loyalty, satisfaction and value" issued in 1997, the argument about service profit chain
is incorporated.

- The authors claimed that the fundamental principle of the theory concerns the fact that customer
satisfaction begins with good staffing and treatment of one's own employees. Loyal employees are
pleasant and express this to the customer.

- As it turns out, successful companies continue to be on top because they manage their Service Profit
Chain very well. Seemingly, there is a connection between service on the one hand and profit on the
other. This relationship consists of links, hence the name "chain". Such companies have a measurable
set of relationships that directly connect profit and growth to the many features of service.

- The Service Profit Chain consists of customer loyalty, customer satisfaction, employee loyalty,
employee satisfaction, and productivity. This way, strong links develop between:

1. Profit - Customer loyalty

2. Employee loyalty - Customer loyalty
3. Employee satisfaction - Customer satisfaction

Figure 1: The Service Profit Chain Model

Source: https://www.toolshero.com/strategy/service-profit-chain/

- Leadership plays an indispensable role in this chain. It is the manager's task to generate a culture in
which employees are optimally assisted and can grow. On the other hand, managers are anticipated to
center on customer service and service delivery.

- Every manager is responsible for being the bond between employees and customers and to follow and
observe the whole process. Therefore, managers invest a lot of time in hiring the right employees and
will do anything to include them in the decision-making process and help them improve. To get

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 employees to be committed, managers must look at everyone's individual role and encourage and
support them in this respect. This way, the service-profit chain will have the potential to succeed.

- Delivering Service Quality

- Managing quality is a critically important hospitality industry besides other types of businesses.

- The importance of managing quality for tourism organizations has intensely increased in the last years
due to the high level of competition in the industry produced by globalization and fewer obstacles to
entering the industry.

- The concept of quality is widely discussed in tourism and hospitality management.

- Quality in the tourism and hospitality industry is defined as the reliable delivery of products and guest
services based on anticipated standards. Creating value for the guest will lead to retaining the guest
successfully. In this industry, managers must know the importance of guest retention.

- Providing high-quality service is one of the biggest challenges that hotel managers would be facing
during the coming years. Customer satisfaction is considered the main gauge of service quality in the
tourism and hospitality industry.

- Nowadays, the management of tourism and hospitality organizations fully understands that high quality
of service must be assured for the business to develop in the long-term side. The nature of the service
industry acts as a challenge that relates to the delivery of high-quality service in the hotel industry.
- The mission of approving high-quality services is more demanding for hospitality organizations because
quality is highly subjective based on individual sensitivities.

- Service Delivery Issues in the Tourism and Hospitality Industry

- Developing trends in tourism designate that it is one of the fastest-growing industries and is an
important source of the labor market that hires millions of people globally. As hotels and restaurants
are highly differentiated in various types of businesses, it allows big companies to work for hand and
hand with these subsectors and engage millions of workforces. Additionally, it is in the vigorous interest
of developing countries to grow this industry since the service sector has a significant impact on the
Gross Domestic Product (GDP) of a country.

- However, there are many factors that challenge the performance of the service sector like quality
practices, security issues, and employment.

o As companies magnify their operations and price levels become comparable, service quality and the
management of the industry by players become crucial factors that distinguish these competing
companies. So, service quality should be managed in a manner that guarantees the satisfaction of
customers and leads to a competitive advantage for hotels in terms of service. Though service quality is

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 based on individual costumer’s perceptions, evaluations of services should be regarded from the
standpoint of the customer.

o Growing safety issues are also one of the main forces that challenge the tourism and hospitality industry.
Safety and security are measures of service quality provided to customers. Thus, the success of the
tourism industry can be measured by its ability to guarantee a safe environment for visitors.

- In general, tourism is a globally growing and highly competitive industry that has a strong effect on
the economy of countries. As service quality is susceptible to perceptions of customers, lack of safety
and overall quality of service is a significant aspect of their competitive performance in the market.
Thus, lack of these factors can negatively affect too.

- Measuring Service Quality

- People have been arguing that performance is challenging to measure in the service industry. This is
because people are not aware that service is also a product, the most famous models that measure quality
service in the tourism and hospitality industry are the following:

- SERVQUAL Technique

- Businesses can also decide to apply tools to determine customer satisfaction levels, such as the
SERVQUAL technique that compares customer perceptions of quality against customer expectations.
Under the SERVQUAL model, the five dimensions of service are:

1. Reliability - It is where the promised quality and level of service are delivered in a consistent and
accurate manner.

2. Assurance - It is the knowledge and politeness of the employees and their ability to create trust and
confidence.

3. Tangibles - The organization's physical facilities such as the building, website, equipment, and
appearance of employees.
4. Empathy - It is the degree of caring, individualized attention that the organization's employees provide
to its customers.

5. Responsiveness - This is the willingness of employees to help customers and offer a speedy service.

- These five dimensions use the acronym RATER. When these dimensions are constantly satisfied, a
company is very well on its direction to become customer oriented. Together, these concepts can form
part of a customer relationship management (CRM) strategy for tourism and hospitality businesses.

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o CRMs are tools used by businesses to select customers and continue relationships with them to grow
their lifetime value to the business. There are several touchpoints in time where this relationship is
maintained. For example:

1. The first-time possible guests visit a website and give their email addresses to receive more
information.
2. The time a reservation is made, and the company gets their personal details.
3. The in-person service meetings from the front desk to the parking lot.
4. Welcome notes, personalized menus, friendly hellos, and other touches during the interaction.
5. Background messages together with clean facilities and equipment in good repair, pleasant décor,
and ambiance.
6. Follow-up communications like a newsletter.
7. More interactions on social media.

- Mystery Shopping

- This is a widespread technique used for retail stores, hotels, and restaurants, but then works also for any
other service. It entails hiring an "undercover customer" to examine the company's service quality or
putting on a fake mustache and going with the crowd of employees.

- The undercover agent then assesses the service based on several criteria, for example, those provided by
SERVQUAL. This offers more insights than simply observing how employees work.

- Post Service Rating

- This is the practice of asking customers to rate the service right after it has been provided. With User
like’s live chat, for instance, a company can set the chat window to change into a service rating view
when it closes.

- The customers make their ratings, perhaps share some explanatory feedback, and end the chat.

- It is also done in phone support. The service representative asks whether a customer is pleased with the
service delivery or is enquired to stay on the line to do an automatic survey. Different scales can be used
for the post-service rating. Many make use of a number rating from 1 up to 10.

- Follow-Up Survey

- With this technique a company asks customers to rate the service quality through an email survey such
as Google Forms.

o It has twosome advantages over the post-service rating. For one, it offers a customer the time and space
for more comprehensive responses. A company can send a SERVQUAL type of survey, with numerous
questions instead of one.

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- This practice can also deliver a more rounded impression of the service. Instead of a case-by-case
evaluation, the follow-up survey measures a customers' general opinion of its service.

- Considering your complete experience with our association and the activities conducted, how likely
would you be to recommend us to a friend or a colleague?

Figure 2: Service Quality Survey Questions

Source: https://www.questionpro.com/survey-templates/service-quality-evaluation/

- In-App Survey

- With an in-app survey, the questions are requested while the visitor is on the website or in the app,
instead of later after the service or via email. It can be one simple question like "how would you rate our
service" or it could be a couple of questions. Convenience and relevance are the main advantages.
SurveyMonkey offers some great tools for implementing something like this on the website.

- Customer Effort Score (CES)

- Customer Effort Score surveys normally ask the question, on a scale of "very easy" to "very difficult",
how easy was it to interact with a company name. The notion is that customers are more loyal to a
product or service that is easier to use.

- Customer churn is a key business driver and customer effort. It is a great gauge of loyalty. This
measurement is quick and easy for customers to evaluate, and it's simple to implement across different
service and survey channels. CES correlates with business outcomes and is easy to track over time.

- Social Media Monitoring

- This method has been gaining force with the increase of social media. For many people, social media
serve as a channel. This is a place where they can release their frustrations and be heard. For this reason,
they are the ideal place to hear the unfiltered opinions of customers given the right tools.

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- Facebook and Twitter are recognizable choices, but also review platforms like TripAdvisor or Yelp can
be very important. It is better to ask the social media followers for feedback on the service quality.
Mention and Google Alerts are two great tools to track who are chatting about a company.

- Objective Service Metrics

- These statistics deliver the objective, quantitative analysis of a company's service. These metrics are not
sufficient to critic the quality of service by themselves, but they perform a vital role in presenting the
areas that should be enriched.

1. Volume per channel -This tracks the number of inquiries per channel. When combined with other
measures, like those covering efficiency or customer satisfaction, it permits a customer to choose which
channels to promote or cut down.

2. First response time - This measure trails how fast a customer receives a response on his probe. This
does not mean their issues are solved, but it is the first sign of life, informing them that they have been
heard.

3. Response time - This is the total average of time between responses. So, for example, an email ticket
was resolved with 4 responses, with respective response times of 10, 20, 5, and minutes. The response
time is 10.5 minutes. Concerning reply to times, the greatest number of people reaching out via email
expect a response within 24 hours, for social channels, it is 60 minutes. Phone and live chat necessitate
an instant response, less than two minutes.

4. First contact resolution ratio - Divide the number that has been fixed using a single response by the
number that needs more responses. Research showed that first contact resolutions are a vital customer
satisfaction factor for 73% of customers.

5. Replies per ticket - This shows how many replies a service team needs on average to close a ticket. It is
a measure of efficiency and customer effort.

6. Backlog Inflow/Outflow - This is the number of cases submitted compared to the number of cases
closed. A rising number means that companies must enlarge their service team.

7. Customer Success Ratio - A good service does not mean customers always find what they want. Yet
keeping track of the number that found what they looked for versus those that did not, can show whether
customers have the correct ideas about their offerings.

8. "Handovers" per issue - This track how many different service representatives are involved per issue.
Especially in phone support, where repeating the issue is required, customers dislike handovers. HBR
identified it as one of the four most common service complaints.

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9. Things gone wrong - The number of complaints/failures per customer inquiry. It helps pinpoint
products, departments, or service agents that need some "fixing."

10. Instant service/Queuing ratio - Not one person likes to wait. Instant service is the best service. This
measure keeps track of the ratio of customers that were served promptly versus those that had to wait.
The higher the ratio,' the better is the service.

11. Average queuing waiting time - The average time those queued customers must wait to be served.

12. Queuing hang-ups - This considers the customers abandoned the queuing process. 'This calculation is
a lost service opportunity.

13. Problem resolution time - This concerns the average time before an issue is fixed.

14. Minutes spent per call - This can give a comprehension of who is the company's most well-organized
operators.

- Capacity and Demand in the Tourism and Hospitality

- In service industries the matching of capacity and demand is chiefly problematic. There is either
excessive demand for the capacity, putting a strain on resources, or too little demand, giving an upswing
to unused capacity and a loss in revenue.

- This is known as the perishability factor, whereby revenue from a unit of capacity, in other words, a
hotel bedroom that is not sold on a particular day, is lost forever, unlike a product that if unsold can be
stored in a warehouse for sale later.

- Therefore, services need to develop some understanding of demand patterns. While the level of demand
can sometimes outwit the organization's control, strategies are available for measuring demand, along
with capacity, with a view to bringing them into balance.

- Capacity Management

- Capacity management is the ability of a given industry to balance demand from customers and the
likelihood of the service providers to propose quality services. The tourism and hospitality industry has
a big score of service offerings.

- The intention is to avoid excess supply. When guaranteeing maximum resource productivity, companies
need to be sensitive so that customer satisfaction would not be compromised.

- The supply and demand balance in the tourism and hospitality industry is very vital due to the nature of
services offered.

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- Capacity management had to match supply with the demand that comes with an amplified number of
tourists. Most of the services are intangible, real-time, and consumable. Capacity management should
thus be in a situation to match demand with supply.

- In the tourism and hospitality industry, there should be a balance of room capacity, cost per room, and
demand considering the perishability of the service.

- Figure 3 below shows that the level of capacity utilization will impact the quality of service. The
optimum capacity is the best level in most situations for all parties involved like the customers,
employees, and the organization.

- Functioning at maximum capacity, however, or even beyond as with nightclubs and bars is seen as a
desired feature of some service situations. Or else services must intend to occupy that optimum capacity
zone.

Figure 3: The impact of capacity utilization in a restaurant

Source:https://www.researchgate.net/publication/349534704_Approaches_for_restaurant_revenue_management/figures?lo=1

- Demand Management

- Demand management involves energetically managing overall demand by optimizing the usage of
distribution channels to reach target customer segments, influencing, and improving current customer
relationships, and taking effective revenue management (RM) actions. Demand for rooms, seats, cars,
and services by businesses in the tourism and hospitality industry comes from a variety of sources.

- These consist of loyal or repeat customers, corporate customers with negotiated rate programs, and
professional and casual event planners. Trade from these segments may come openly over a brand or
contracted reservation center/website, or through online and offline intermediaries. Intermediaries
accommodate the wishes of individuals or influence their selections, typically for compensation.

- These intermediaries may also combine services of more than one travel provider in packages intended
to satisfy consumer travel experience needs.

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- The role of the Internet in demand management has been realized as travel suppliers compete with online
travel agents.

- For the determination of producing future demand, demand management consists of marketing to
previous customers and encouraging them to endorse others directly or indirectly. It also means
considering loyal customers differently and more satisfactorily when applying yield management.

- Lastly, it means reaching out to former customers in tailored ways during off-peak periods. This comes
with striking value-added packages and programs and keeping control of availability posted with
intermediaries during peak periods so that loyal customers may use the inventory. In the situation of
loyal customers, this includes understanding how customers desire to book and making that process
simpler. It also means promoting customers to book over the phone, in person, or online.

- This improves the chance to serve loyal customers differently more favorably, from the start of the
shopping and booking process. It also means escaping intermediary fees that can needlessly reduce
possible revenue. However, caution must be taken to avoid the limits of such disintermediation in case
competitors take advantage of the possible negative effects on the reputation that can grow through such
activities.

- Managing Capacity and Demand

- Initially, two strategies are suggested for managing demand and capacity which are explained:

o Adjusting capacity to match demand

- This is also known as "chasing demand". Several options are available for consideration:
1. Lengthen the opening hours — This is not an option open to all service organizations. Where it is likely
it is likely to happen only when demand levels are considered too much.

2. Inspire employees to work harder — Here the requirement is typical 'of processing more customers per
hour or per day. While a mark of efficiency service quality for customers may weaken.

3. Cross-train employees — This allows organizations to function with a smaller number of staff. In its
place of being restricted to handling few responsibilities, the staff is armed to manage a diversity of
tasks and activities. It could be a move in the direction of job enlargement and job enrichment, increasing
employee motivation, satisfaction, and morale. Not all employees will welcome it, mainly where there
is seen to be a slight increase in corresponding rewards.

4. Recruiting part-time employees — This is a choice of low in cost and one that can be accomplished
quickly. Organizations should warrant those casual employees to be given similar support and
encouragement as given to permanent staff.

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5. Increase facilities — This is typically in the form of a table, chairs, or other equipment. Just how much
scope there is for this will depend on the preliminary configuration and layout intended to communicate
a particular atmosphere and/or level of service. Adding facilities may alter both.

6. Hire or Share facilities or equipment — This may be in the form of additional physical space or vehicles
necessary either on a temporary or cyclical basis.

7. Using customers as productive resources — Here up to this point all efforts at adjusting capacity have
involved controlling internal resources and assets. However, some have advised that organizations
should respect customers as "partial employees" and make an input to productive capacity.

8. Outsourcing — Calling on outside assistance is a valued choice in meeting market demand. Usual areas
for outsourcing are technological and marketing support, employee recruitment and training, and Web
development. Big organizations also outsource.

- These possibilities, then, are meant at enhancing the capacity to absorb demand. Yet, for service
organizations, there will unavoidably be periods of time where capacity is under-utilized. Such a
condition will continue so if attempts to encourage demand during these periods show unsuccessful. It
has been suggested that slack time be used creatively as a time to train new employees, do maintenance
on the equipment, clean the grounds, organize for the next peak, and give the workers some break from
the anxious step of the peak periods.

o Altering demand to match available capacity.

- This is also known as "level capacity" and is an attempt to shift demand. Given the relative inflexibility
of capacity, organizations may seek to smooth demand by decreasing the inconsistency and fluctuation
of existing patterns. Organizations can turn to the marketing mix for stimulating demand during periods
of spare capacity or shifting demand during periods where capacity is operating at or near-maximum.
Of among the 4 PS, price and to a lesser extent, the place offers the most possible in this area.

1. Manipulate price— The central role of price is to disappoint too many customers from using the service
during peak demand periods and inspire more customers to select off-peak periods. On price alone, this
strategy will only work if enough customers can be enticed by the lower prices accessible during low
demand periods. Leisure, hospitality, and transportation services would appear suited to this method.
However, this strategy of price differentiation is not without menace. Customers may become adjusted
to the lower prices and suppose them whenever the service is used. Equally, there is a menace to the
organization's image in that lower prices may fascinate unwelcome customers. This would be chiefly
applicable for a service that regards itself as more upmarket or exclusive.

2. Offer a mobile service — This is for a number of reasons consumers have welcomed the arrival of
mobile services where the provider takes the service to the customer instead of the customer having to
visit the provider in some permanent location. Libraries have used this method for numerous years, the
service is mainly appreciated by the incapacitated and those living in distant locations. Other services

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 that have found mobility an effective method of managing demand include breakdown and maintenance,
blood donation, and catering.

3. Communicating with customers — The delivery of information as to when demand is or is likely to be,
highly appears to be a strategy not well implemented by service organizations. For customers in the
"call center society," it can be specifically annoying.

4. Changing the service offer — For most organizations, this is not a preference. What they deal with
remains permanent. Where services with a large facilities like hotels experience weighty seasonal
fluctuations. However, action may be engaged to inspire diverse use of the facility when capacity is
under-utilized.

- THE MACRO & MICROENVIRONMENT

- MACRO Environment

- The general environment within the economy that influences the working, performance, decision
making, and strategy of all business groups at the same time is known as the Macro Environment. It is
dynamic in nature. Therefore, it keeps on changing.

- It constitutes those outside forces that are not under the control of the firm but have a powerful impact
on the company's functioning. It consists of individuals, groups, organizations, agencies, and others with
which the firm deals during its business.

- If any of the industries is really too susceptible to environmental factors, then it is the tourism and
hospitality industry. From changing weather to changing governments, all these factors can impact it
deeply.

- That could include a wide variety of things such as environmental factors, social factors, legal and
political conditions, or even technological changes.

o Political

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- The political environment is strongly affected by the tourism and hospitality industry, political
environment is made up of laws, government agencies, and pressure groups that influence and limit the
activities of various organizations and individuals in society.

- Political factors globally have a direct and deep impact on the hospitality industry. Whether it is the
changing government regimes worldwide or terrorism, the effect is always directly on the industry.
Political stability is always good for the hospitality industry. Tourism flourishes in an environment free
of turmoil. It cannot flourish in an environment of conflict or terror.

- Travel agencies and online travel agents had canceled reservations, citing concerns about the country's
peace and order situation as the main reason for negated plans to travel to the Philippines.

o Legal/Regulatory

- Regulation environment protects companies from each other. While most businesses praise competition,
they try to neutralize it when it affects them. Another way is to try to control companies dealing with
any unfair and awkward transactions. Also, the regulation also aims at protecting the consumer from
unfair business practices. If unregulated, companies might make unsafe or low-quality products and
services, be untruthful in their advertising or deceive through packaging and pricing.

- Moreover, hotel taxes, and restaurant taxes have become a popular source of revenue for local
government. Therefore, hotel managers should make sure that those taxes designated to promote tourism
are used effectively.

- The regulatory environment in the tourism industry is complex. It is because both labor and public
security are important concerns. Apart from it, there are other laws too that influence the sector, but
public safety and labor laws are the two most important concerns for it. In the Philippines, Republic
Act 9593 otherwise known as The Tourism Act Of 2009 made tourism an indispensable element of the
national economy and an industry of national interest and importance.

o Economic

- Economic factors have remained a major factor behind the high demand in the tourism sector globally
in 2016. The labor market has continued to grow stronger and with-it consumer spending. Not just this,
disposable personal income as well as average hourly incomes have also risen. So, overall, these are
positive signs for the hospitality industry.

- However, rising operational costs will also create pressure. However, the economic environment could
be included by following elements:

1. Wage inflation — In a recession, the wage of labor might not be increased, it would depend on the
decision are decided to cut the wage or increase the wage of the manager.

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2. Price inflation — Because of recession or economic decline, the commodity price will rise, which will
influence the decision customer make to travel or not.

3. Gross domestic product per capita — The most important economical element is the customer
purchasing power and spending patterns, GDP can indicate these elements, because total purchasing
power depends on current income, price, savings, and credit, hotel managers must be aware of major
economic trends in income and changing consumer spending patterns.

4. Exchange rates — The Philippines’ economic situation has fallen, the exchange from a peso to the
dollar is decreasing, and therefore, customers might choose domestic tourism rather than abroad for their
holidays.

5. Disposable income - This represents the amount of income left after the consumer pays his taxes and
other required deductions. Discretionary income represents the amount of disposable income left after
the consumer pays for other necessities such as housing, food, and clothing.

6. Spending patterns —These are also important, and they differ by country and/or culture. This
willingness on the part of Philippine consumers to spend their discretionary income and incur debt
identifies them as good prospects for hospitality and travel services. However, these consumers are also
prone to changes in the economy leading to inflation or a recession.

- The condition of the global economy is an important factor that affects the state of the tourism industry.
If the economy is flourishing, the consumers would be able to spend more on leisure activities.
Otherwise, economic slowdown affects their pockets and then the industry.

- Socio-cultural

- Like the economic trends, social trends shape the tourism industry.

- The rise of Air BnB is a challenge for the established names in the hotel segment. Similarly, ride-
sharing brands are rising against the traditional taxi and cab brands. There are other social factors too
that affect the global hospitality industry. Consumer preference is an important factor. If consumer
sentiment is favorable both airlines and hotel brands stand to gain.

- The social environment consists of the changing trends in the population in terms of demographics and
cultural norms. The average age of the population is also expected to increase, and there is an anticipated
shift from rural to urban areas.

- It is important for firms to determine how these changes in demographics and living conditions are going
to affect their businesses. For example, hospitality and travel firms can focus resources on marketing to
the aging population.

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- This social environment is probably the least dynamic of the external environments. In other words,
most of the changes take place over a long time and do not require immediate attention. The values and
norms of cultures and subcultures have been developed over hundreds, or thousands, of years and are
not likely to change drastically over short time periods.

- One aspect of negative social impact on tourism that cannot be ignored worldwide is that of child labor.
Since the industry includes hotels and food processing companies that hire children as employees.

- Technological

- The technological environment consists of factors that change the way consumers live and the
production and delivery of products and services. These changes have resulted in more product variety
and convenience for consumers. The areas with some of the most technological advances include
electronics and telecommunications. For example, hotels, restaurants, airlines, and rental car agencies
have all seen improvements in reservation management and point-of-sale systems in the form of
computer software programs that streamline the process and provide information for revenue
management.

- The technological factors have emerged to be the facilitators of demand for the tourism industry in the
21st century. From airlines to booking and even marketing, technology is the biggest influencer.
Technology has facilitated communication and transfer of information bridging the gap between several
parts of the world. More and more tourists are now conducted research and trying to find the best deals
before they go for the final booking. If new tourist destinations have emerged, then the credit mostly
goes to the rise of technology. Hotel and airlines brands are using information technology to serve their
consumers better. Undeniably, technology is an enabler of tourism. However, that does not reduce the
value of the human touch. The hotel industry has upped the use of technology.

- Nowadays, technology has significantly affected the hotel industry in many ways, for example,
Travelodge launched a free iPhone application that allows users to trace their five nearest Travelodge’s
by GPS, and they can see availability and prices, and book rooms. Moreover, customers can book their
accommodation or check-in via Internet, or get the information that is needed by customers on new
platforms, such as Facebook or Twitter. These and other technological advances will help companies to
be more effective in the marketplace.

- Above all, the advent of the Internet has had an intense effect on hospitality and travel companies. The
Internet offers hospitality and travel companies a way to reach new target markets like price-sensitive
consumers. In addition, companies can create databases and e-mail lists in their determination to increase
consumer loyalty.

- Finally, the new technology has allowed companies to abandon some of the service responsibilities to
consumers, while at the same time giving them a sense of control. Consumers also have the advantage
of the convenience of using the Internet for information search, comparing alternative products, and
making hospitality and travel purchases.

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- Ecological

- Sustainability is a key concern in tourism too. The focus has now shifted to ecotourism. United Nations
has also recognized 2017 officially as the International Year of Sustainable Tourism for Development.

- Environmental concerns are vital for tourism operators including transport operators and hotel and
restaurant brands. From managing the ecological impact to waste management, all these concerns are
essential for tourism operators. One important thing is the effect of weather conditions on travel and
tourism. The airline industry is affected severely by changing weather conditions. Airplanes cannot fly
in stormy weather and if a tragedy happens, it affects the whole industry. The changing seasons really
affect the demand and supply of tourism in various areas. Tourists do not flock to an area all the year
round like going to places closer to the equator, in the hot season. Thus, environmental, or ecological
factors have a major influence on the tourism industry.

- Cities that are greener and cleaner receive tourists in bigger numbers. While some people decide on
staying in a hotel because they are visiting family or conducting business in the area, numerous
consumers stay in hotels because they are taking their vacation in the area. Since the aim of a vacation
is fun and relaxation, the local climate and weather is a lot a significant concern when selecting a
destination.

- Here are some of the notable changes in the ecological environment:

o Climate Change

- Unpredictable or unstable weather patterns can be a hamper on hotels and tourism in both warm and
cool climates that depend on certain conditions for their guests and livelihood. As a solution to this
challenge, hotels could consider making changes to infrastructure to endure negative weather events.
Providers in mountainous areas could implement a four-season travel strategy for their guests.

- Changing destination patterns and changing the decisions of the industry are some of the severe impacts
of climate change on the tourism and hospitality industry. Some types of tourism will get affected such
as winter sports, lakes, and the sea, mountains, fishing because the tourism industry entirely depends on
the natural environment. At present, the coral reef that is existent underwater has started to dry out and
the sea animals have begun to die. These situations will result in a smaller number of tourists which
means less profit and less profit for the tourism and hospitality businesses. Tourists wanted to see natural
beauty but because of climate change, they see just an empty ocean. Tourists would also feel unsafe
even if the hotel is offering good incentives if tourism and hospitality businesses are in places where
getting heavy rains could end up in flood.

o Green Policies

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- The tourism and hospitality industry has caused a lot of damage to the natural environment such as the
mismanaged disposal of garbage and sewage by resorts. This mismanagement resulted in polluted
groundwater, damaged water supply, and garbage seen on beaches and back bays of tourist destinations.
The closure of the tourist island Boracay paves the way for a re-examining of the direction of tourism
in the Philippines to ensure establishments are on the same path towards strengthening the sustainability
of tourism in the country. Moreover, the rise of eco-tourists, both inbound and domestic, is expected
since travelers have become more informed about tourism and its implications for the environment and
society.

- All businesses are under increased pressure to incorporate environmental and sustainable practices and
programs. These might include energy and water conservation measures. Luckily, hotels and restaurants
can accommodate by considering eco-friendly options they can share with their guests such as energy-
efficient light bulbs appliances and reducing waste in a restaurant by donating to local food pantries.
Hospitality providers can use these practices to their advantage in marketing and attracting guests.

o Government intervention in natural resource management

- Government of every country has varying concerns and efforts in promoting a clean environment.
Countries can then contribute according to their capacities and resource availability. Developed
countries pursue environmental quality with strength. Emerging countries such as India, China, and
Brazil will be enthusiastic participants in such an initiative. Poorer nations though are willing to be
active promoters of a clean environment because often they rely on tourism and do not have the funds
or political will. Most businesses in the tourism and hospitality industry are now going beyond
government regulations directives. To create a world economy that can be beneficial in supporting the
planet open-endedly, enlightened companies are developing environmentally sustainable strategies and
practices.

o Competition

- The tourism and hospitality industry is competitive. It is dynamic and what makes this industry so
competitive is that every player needs to be ahead of the game. The aim of the industry is to satisfy every
tourist and guarantee they have a comfortable stay. Hospitality infrastructure, products, and services
should always be excellent. Any business in the industry needs to be able to provide for the different
needs of each tourist and be understanding of them. Being able to think of innovative ideas will place a
player ahead of its competitors.

- The competition in the tourism and hospitality industry is a result of two aspects:

1. Technological Adaptation
- Technology has elevated the business playing field and contributed to numerous aspects of the tourism
and hospitality industry, including branding, communication, and outreach.

- Three particular trends are progressively reshaping the industry through the years, which are:

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o A mobile-first approach - In evolving markets around the world, 1 billion people are projected to come
online worldwide. The greatest number of these will be customers who would like to experience their
whole guest lifecycle on their smartphones. Hospitality and tourism, as well as travel companies, hence,
have to invest in mobile-friendly and mobile-first guest engagement and retention strategies. In any
situation, customers are always looking for that "personalized" experience. Leveraging innovative
mobile tech just like what Airbnb and Uber did will be a key to brand differentiation and experience.
Hotels now are offering booking functionalities, lightning-fast operations, and other touchpoints for the
whole customer journey on mobile phones for the convenience of their customers.

o Connectivity - With Internet access has become limitless to digital natives and non-natives alike,
connectivity is sure to increase. Moreover, with the spread of connected devices and wearables in the
market, hotels will have to be innovative when it comes to new means of interrelating and engaging with
the consumer. Virtual reality tours, augmented reality interactions, robotics, and AI will initiate the
market and compose it for yet other travel experiences that can be remotely delivered.

o Machine learning, big data, and analytics - Tapping into big data permit the creation and curation of a
comprehensively personalized experience for every kind of consumer. A lot of marketing campaigns
can be leveraged effortlessly, and examined, keeping solid numbers in mind for growth and added
optimization. It also speeds up current processes like customer service, feedback collection, email
automation, and customer engagement. Also, it can also facilitate upscaling and downsizing the business
based on the company goals.

2. Changing Customer Profiles and Brand Experience

- The tourism and hospitality industry is witnessing a change in the psychographic and demographic
profiles of travelers. Along with Gen X travelers, there is a fresh invasion of Millennials, whose
expectations and lifestyles are setting totally diverse standards for industry performance. Customer
experience is presently the leading brand differentiator. It also drives customer loyalty and referrals, and
hotels will need to combine more targeted, personalized, and complicated loyalty structures than ever
before. This personalization and differentiation also encompass the kinds of experiences that are created.

- The "home away from home" idea does away with the homogenization of luxury, which was the tried
and tested model before. Currently, to deliver unparalleled service, rooting the hotel in its local climate
while at the same time giving experiences outside the conservative hotel space, has become an essential
factor. The Millennial demand for organic food and sustainable selections also creates more
susceptibility when it comes to risks and food safety, which needs to be checked by hotel owners.

- Travel brands have also been left behind by non-travel brands which have spoiled the customers by
giving intensified levels of service. Amazon, Starbucks, and Uber are a few names that Millennials hold
in respect and competition will only strengthen as customers initiate to anticipate the same out of every
service provider, especially the tourism and hospitality industry players.

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➢ PORTER FIVE FORCES

- The structure of the industry strongly affects the competition

between the companies, while deciding the strategies which are
used by companies. Therefore, Porter's Five Forces analysis can
be used to investigate the hotel industry.

1. New Entrants

- As hotels are not easy to collect space to construct and the costs of
building are very high. Additionally, the investments cannot
recover the period of the construction instantly. So, it will become a barrier obstruction slowly, and the
entry barrier is strong.

- Here are some of the threats of new entrants in the tourism and hospitality industry:
1. Government policies contrary to entrants.
2. Fixed cost is enormous.
3. Difficult to access additional credit.
4. Investments cannot recover instantly.

2. Suppliers

- There are two main bargaining powers in the industry, one is furniture and fittings, and another one is
food and cigarette.

- They are outlined below:

a) Furniture and Fittings — When hotels purchase furniture, they typically will make a standard and
constant to use. The number of furniture bought is usually a big amount rather than as individual item.
Accordingly, the orders must be relevant to the number of rooms operated.

b) Food and Cigarette — Many foods or cigarette manufacturers have their own sector to supply and
cope with the demands from the hotels. However, the bargaining power is depending on the size of the
hotel. If the company has a great scale, it could also have big power to bargain with suppliers. Contrary,
if the company has a small size of the property, its bargaining power will be limited. Bargaining power
is depending on the:
1. Size of the hotel
2. Distinctive technology and resource
3. Switching cost

3. Buyers

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- The hotel industry is facing aggressive competition. Companies possibly will sign a long-term contract
to retain their customer base. Therefore, customers in the bargaining process had a strong bargaining
force. Behind big hotels, there is a lot of capital to support them to purchase the land and construct a
hotel.

- Accordingly, the bargaining power of consumers is quite low. Contrary, when the situation occurred in
small hotels, the bargaining power of customers will be much greater, which means be that it might
harder to satisfy customers' expectations.

- However, customers will be separated into two sectors, namely individuals and groups with the
following:

a. Customers as an individual — It is divided into business travelers and individual tourists. Business
travelers usually might have a long-term contract with a hotel. Therefore, the price for them could be
negotiated. As individual leisure tourists, the bargaining powers are almost none.

b. Customers as a group — They usually book rooms through a travel agency. It would be a big number
of orders. In fact, these profits have been taken by travel agents. However, the price is still much
cheaper than the individual. That is, their bargaining power is more than an independent tourist.

4. Competitors
- In the tourism and hospitality industry the competitors could be direct or indirect:

a. Direct competitors — These are businesses offering a similar product or service, which is aimed at the
same customer group. Direct competitors operate in identical geographic locations and in similar or
adjacent product categories. For hotels, a three-star small-town business hotel could have a local
competitor set comprising of all three-star hotels, and perhaps some two- and four-star hotels, inside a
10-mile radius or 15 minutes travel time. Watching, knowing, and anticipating what competitors are
doing is a vital part of knowing the market.

b. Indirect competition — This includes all those companies and non-profit organizations that are
competing for consumers' disposable income (in other words choosing between buying a new car and
going on an exotic holiday). The competitive environment in many hospitality markets has become
stronger in latest years. The actions and reactions of competitors have drastically changed market
structure, prejudiced consumer behavior, and transform market demand.

- In an economic downturn, the main competition happens within upmarket, midmarket, and budget
hotels. Since mid-market hotels usually are for tourists who do not travel a lot, also their rooms are
priced much greater than budget hotels. In general, when the economy is in a recession, consumer
spending power decreased. Therefore, they might select a lower-priced accommodation for tourism.
Together, the budget hotel continued its strong plan of development to add extra rooms to its offer

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 through the extension of a new property. Between these two hotels, the development of budget hotels
has windswept to the midmarket hotels' territory.

5. Substitutes

- Competitors offering substitute products are these offers those potential consumers can choose instead
of a hospitality product and which satisfy the same need (in other words staying at home and cooking a
meal instead of going out to a restaurant).

- There are some substitutes in this industry, such as camping, club, casinos, and country house. People
now are fonder of domestic camping holidays which are doing better and may have a long-term trend.
This is an attractive option for budget-conscious consumers. The growth in this area is not good news
for the hotelier, as by definition a stay in a hotel is ruled out for this holiday type.

➢ THE MARKET

- In the market sector, the most important thing is a customer. Companies should encourage the main
customers they want to serve and the market they segment. The number of business travelers who are
choosing budget hotels for their commercial trips is increasing. Moreover, this trend starts currently is
a match for the recession in 2008. Because many companies have reduced their budget for commercial
travel, therefore, commercial travelers used the budget hotel in place of the mid-market hotels which
they usually used before the economic downturn.

- Budget hotels have made important investments to get closer to the gap with the mid-market brands.
There are three topmost improved brands for advertising awareness under the budget category namely,
Sogo, Victoria Court, and Mariposa.

- Hotels, especially high-end resorts, are moving toward localized advertising and marketing rather than
homogeneous services. Localization also brings in residents from the surrounding area that use hotel
lobbies and bars to socialize and decide on dining choices. Emerging markets drive much of the global
growth in the tourism and hospitality industry, but hoteliers must adjust to local cultures. A hotel in
Mindanao here in the Philippines, for example, would need to offer vegan and vegetarian food choices.

➢ MICROENVIRONMENT

- Microeconomics involves factors of resources availability and usage that impact individuals and
businesses. A company needs to understand the core microeconomic factors affecting business help in
planning and preparation, as well as long-term business strategy development. Six microeconomic
business factors that affect almost any business are customers, employees, competitors (discussed under
competition), suppliers, marketing intermediaries, and the public.

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o Customers
-
A customer may be an individual or household, an organization that purchases a product for use in the
production of other products, or an organization that purchases a product for resale at a profit. This
customer factor of a marketing microenvironment can be further divided into five types of general
customer markets namely:

a. Consumer markets - These consist of individuals and households that buy hospitality services for the
purposes of leisure, medical needs, and gatherings like reunions, weddings, and debuts.

b. Business markets - These groups purchase hospitality services to facilitate their businesses. These can
be individual rooms for tourists representing the company or for group meetings any establishments
may produce.

c. Resellers - Usually these groups buy a product and resell them. For instance, a tour operator may
reserve for airline tickets, hotel rooms, ground transportation and restaurant meals to package a tour
which is intended for resale.

d. Government markets - These are made up of government entities that buy hospitality services for
individual travelers or meetings. Often, they only buy based on the limited budget per diem rates.

e. International markets - These consist of buyers from other countries such as consumers, businesses,
resellers, and governments.

- Customers have the most direct microeconomic impact on a business. Knowing the best customer types
and developing and presenting effective marketing campaigns are essential to forming a customer base
and generating revenue streams.

o Employees

- Employees produce, sell or service the goods and services that drive the business. The availability of
competent, motivated employees for any business type is vital to economic success. If a business
operates highly technical, for instance, it might have to pay more in salary to attract a limited number of
available, specialized workers.

- For most hospitality companies, the local labor market is an important resource. The availability and
quality of skilled employees who have been educated and can be easily trained is an essential factor in
providing a quality service. Since employees interact with customers, they can have a big influence on
the level of customer satisfaction.

o Suppliers

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- Suppliers are individuals and companies that provide the resources required by the business to produce
its goods and services. Some hotels have contracted with restaurant companies to supply their food and
beverages. This outsourcing of food and beverages allows a hotel to concentrate on lodging while letting
food specialists handle the area of food and beverages.
- The hospitality company's performance is reliant on its suppliers. Though marketers are not openly
involved in operational purchase decisions, marketing should have an involvement in setting quality
standards and terms. The hospitality marketer will surely be responsible for managing relationships with
external marketing communication and marketing research agencies.

o Marketing Intermediaries

- Intermediaries are those companies who advise, influence, and make bookings for customers. They
consist of travel agents, tour operators, conference placement agencies, and incentive agencies.
Intermediaries are vital links in the distribution channel from the customer to the hospitality channels.
Marketing managers needed to promote good relationships with actual and potential intermediaries.

- The Internet has changed the distribution of hospitality services by creating new opportunities. Hotels
now have created their own Internet reservations systems to distribute their products and services locally
and worldwide.

- Companies recognized the importance of intermediaries as partners. Restaurants now serve as

intermediaries for soft drink companies. Fast food restaurants such as Jollibee, Mang Inasal, Chow King,
and Goldilocks to name a few have exclusive beverage provisions with Coca-Cola.

o Public

- Publics can exert considerable influence on the hospitality business. Developing effective public
relations activities and fostering good relationships with publics is part of the marketing task. The
locality of a hospitality business and the size of the company will regulate the character of the
organizations with which the company interacts.

- These publics could include:

a) Local government authorities who enforce health and safety, hygiene and planning regulations.
b) Other businesses and people who live in the neighborhood some of whom may also be customers.
c) Community, educational, religious, social, and voluntary institutions.
d) Leisure, sporting, and tourism attractions.
e) The local media.

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 MODULE 3 - WEEK 7:
CONSUMER AND ORGANIZATIONAL BUYING BEHAVIOR

Learning Objectives:
The learners shall be able to:

1. Appreciate the various typologies of tourists as consumers.

2. Differentiate factors affecting consumer behavior.
3. Adapt the buyer decision process.
4. Analyze the organizational buying process.
5. Identify participants in the organizational buying process.
6. Distinguish among group business markets.
7. Express the behavior of business travelers; and
8. Critique global trends in consumer behavior in the industry

- Customers use their senses to see, hear, smell, and touch (and sometimes taste) to decipher messages
from businesses, deciding on a product or service based on their perception of the facts rather than, at
times, the facts. Businesses in this industry must try to know the criteria being used by tourists in making
their decisions and the process they go through in buying services.

 TYPOLOGIES OF TOURISTS AS CONSUMERS

 Plog's Tourist Motivation Model

- Plog's Tourist Motivation Model (1974) classifies travelers as allocentric or psychocentric. Plog adds
"energy" as a determinant of (high or low) levels of activity.

o Allocentric prefer what is new, unstructured, exotic, or unusual in terms of trips or destination choice.

o Psychocentric are those who prefer the structured and familiar.

- Later, it was realized that there exists midcentrism wherein a tourist could portray characteristics of both
allocentric and psychocentric depending on the situation or season.

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- According to Stanley Plog from his tourist motivation model, tourists are into three categories as
described below:

1. Allocentric (The Wanderers) — A tourist who seeks new experiences and adventure in a wide range of
activities. This person is outgoing and self-confident in behavior. An allocentric person prefers to fly
and explore new and exotic areas before others do so. Allocentric enjoy meeting people from foreign or
different cultures. They prefer good hotels and food, but not necessarily modem or chain-type hotels.
For a tour package, an allocentric would like to have the basics such as transportation and hotels, but
not be committed to a structured itinerary. They would rather have the freedom to explore an area, make
their own arrangements and choose a variety of activities and tourist attractions.

2. Psychocentric (The Repeater) — A tourist falling in this category is usually non-adventurous. They
prefer to return to familiar travel destinations possibly on packaged tours where they can relax and know
what types of food and activity to expect. Such tourists prefer to drive to destinations, stay in typical
accommodations, and eat at family-type restaurants.

3. Midcentric (Combination) — Plog found out that the majority of tourists are somewhere in the middle.
Midcentric covers the ones who swing between the allocentric and psychocentric types.

- A critique of this model was made by Gilbert (1991) when he stated that tourists travel with different
motivations on different occasions. These show that travelers have preferences that help group them into
segments and, later, assist in identifying the products and services suited to the specific demand.

 Stewart's Model of Holiday Taking

- This model was based on a study of United Kingdom holidaymakers conducted by the Henley Centre
by Stewart in 1993. The model is built on the concept that as people become more affluent, they tend to
travel more and that the travel experience is cumulative. They also tend to be more adventurous and
confident as their level of affluence and travel experience increases.

- Stewart and the British Consultancy of Futurology, Henley Center has divided the tourists into four
phases, namely:

1. Phase I - Bubble travelers do not have much money as well as knowledge. They prefer packaged tours.
They long to observe different cultures without being a part of it. They travel mostly out of curiosity.

2. Phase II - Idealized experience seekers are confident tourists with the experience of foreign tours. They
are flexible and comfortable. They prefer tour offers made for individuals.

3. Phase Ill - Seasoned Travelers are more affluent tourists than the idealized-experience seekers. They
are more confident to experiment and experience different places and environments. They are more
adventurous and prefer individualistic tours.

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4. Phase IV- Complete immersers are tourists who have an intention of immersing completely into a
foreign culture, heritage, culinary experience, and language. Their holidaying is well-planned but not
well-structured.

 Cohen's Model
- Cohen (1972) proposed four classifications of
tourists: the organized mass tourist, the individual
mass tourist, the explorer, and the drifter.

o The organized mass tourist is the type of tourist

who buys all-inclusive tour packages and ensures
that everything goes as planned.

o The individual mass tourist is more autonomous

than the organized mass tourist, preferring to
travel independently but still choosing popular destinations and activities.

o The explorer seeks new areas but would sometimes opt for the comfort of familiar accommodations.

o The drifter is the free spirit who avoids any kind of traditional tourist establishments.

 The Non-Users

- Successful marketing efforts should cover the different segments of the market. While relationship
marketing, which focuses on customer retention, has become a popular marketing alternative, marketers
should continue to make efforts to acquire new customers. The best way to do this would be to target
the non-users.

- Non-users can be classified as:

▪ ex-users who stopped using the products/services for various reasons

▪ customers who are aware of the product or service but need to be persuaded to purchase, and

▪ those who are not aware of the products or service's existence.

- Though research shows it is more expensive to acquire new customers, a company needs to have a steady
flow of new customers for it to survive and eventually flourish.

- Understanding the consumer s needs and buying process is the foundation of successful marketing
(Hudson 1999). Different types of tourists have different needs. Understanding that there are different

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 types of tourists can help marketers communicate with each type more effectively and with greater
impact.

 FACTORS AFFECTING CONSUMER BEHAVIOR

- Consumer behavior in this industry studies why a tourist prefers a specific destination and what are the
driving factors that influence his decision to travel. In the tourism and hospitality industry, consumer
behavior affects how guests choose hotels, restaurants, and entertainment.
- Motivation is one of the most researched areas in the tourism and hospitality industry. Consumer tourists
stem from the field of human psychology. It is the satisfaction-forming factor.

- The factors of motivation can be categorized into two types, which are:

 Intrinsic Motivation

- Internal factors arouse, direct, and integrate a person's behavior and influence his decisions for
traveling.

- For many people, tourism is a way of satisfying their psychological needs such as traveling, performing
leisure activities, exploring novelty and capabilities, self-expression and self-assurance, creativity,
competition need for relaxation, and belongingness.

- The intrinsic motivations relate to guaranteeing one's capabilities on different emotional fronts.

- Intrinsic motivation drives the tourists to opt for tourism for intangible rewards such as fun, assurance,
and other emotional needs.

- The intrinsic factors of motivation are:

a) Attitudes of Consumer

- Attitude is a person's relatively consistent evaluations, feelings, and tendencies towards an object. This
is the knowledge of a person, place, or object and his positive or negative feelings about the same. For
instance, many people now are into the attitude of eating healthy food, so they regard chicken as a
healthy option for pork and beef.

- Attitude is hard to change that requires a lot of adjustments before it could be altered. Hence, it is best
to create products and services that are aligned to the present attitudes of customers rather than change
their attitudes towards said products and services. Attitudes are developed even during childhood which
could be retained until adulth60d. Jollibee is well-loved by children and able to retain such positive
attitude of these little customers until they become grown-ups. Travel and hospitality companies are
specifically subjected to lifelong consumer attitudes that could be the outcome of positive or negative

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 childhood experiences. Airsickness on a flight in which the flight attendant had shown little sympathy
for instance is a negative attitude-forming experience for a child.

b) Consumer’s Perception

- Through observing, listening, or getting knowledge, a consumer forms a perception about a place,
person, or object.

- Customers can form different perceptions of the same object due to the following perceptual processes:

1. Selective attention - This is the process of screening out only the stimuli that a person could possibly
attend to. Hence the role of marketers is to try harder to attract consumers s attention. Findings from
several studies reveal that people notice stimuli that relate to their needs, those that they anticipate, and
those that are bigger in relation to the normal size. A person who likes computers would notice computer
ads. It is more likely to notice computers in a computer store because that is expected. Likewise, a
promotion of 15% off is more noticeable than a 5% off on computer price.

2. Selective distortion - Some consumers twist information based on their personal meanings and fit their
perception of it with prejudice.

3. Selective retention - In this process, consumers only retain information that supports their own attitudes
and beliefs. Only good points are remembered among competing products, so marketers make use of
drama and repetition in sending their messages to the target audience.

c) Values or Beliefs

- A belief is a descriptive thought that a consumer holds about something. A consumer believes or values
a specific mode of conduct that is satisfactory personally or socially. A tourist may believe that H20
Hotel has the best facilities because it is down under the water and the price is reasonable because of
such a rare experience.

d) Personality of the Consumer

- This concerns the nature and physique of a tourist plays an important role in motivation in tourism.

1. Age and lifecycle stage - Preferences for leisure activities, travel places, food and entertainment are
often age-related. Older travelers give importance to grab bars in bathrooms, night lights, visible lights
in hallways, extra blankets, and big letters on menus. The tourists also have different preferences for
places according to their age.

2. Occupation - The goods and services consumers buy is affected by the nature of the occupation.
Executives usually dine in full-service restaurants while rank and file employees bring their pack lunch
or buy lunch from a nearby fast-food restaurant.

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 3. Economic situation - Product and service choices are affected by the individual's economic situation.
During the recession consumers cut back on meals, entertainment, and vacation. Personal income,
savings, and interest rates need to be studied by marketers. Certainly, opportunities are created during
prosperity. Consumers may opt to purchase imported wines and menus can be upgraded, and travel and
leisure expenses can be increased. The rise and fall in the economic situation can be used by marketers
to react to these changing conditions.

4. Lifestyle - A lifestyle is a person's pattern of living as displayed in his activities, interests, and opinions
or the "total person" interacting with his environment. Travel purchasers who avail of an all-inclusive
package often are socially interactive, caring, and take go for a vacation to relax. While those tourists
who prefer independent travel arrangements are more self-confident and often wanted privacy.

5. Self-concept - Also known as self-image is one's mental self-picture. If a consumer sees himself as
outgoing and active, he will likely purchase a cruise vacation. One’s choice of recreation such as golf,
biking, fishing, or hunting could be based on self-concept.

 Extrinsic Motivation

- These are external motives in tourism that can influence tourists and pull them towards a certain
motivation and subsequent decision. Here, a tourist gets motivated by external factors such as money
and the need to feel knowledgeable on the scale of expenditure and performance.

a) Social Factors

- A few social factors such as a person's social network, provide first-hand information that can alter a
person's decision of visiting or not to visit a particular place.

- Social factors could also influence consumer behavior such as:

1. Social Class - Tourists of different social classes prefer different places, events, and different types of
tourism. Social class is the position that a person occupies in society and could be determined by
income, wealth, education, occupation, family prestige, and neighborhood. The more educated the
tourist is, the wider range of choices, curiosity, and the knowledge of places he would have. This drives
the decision-making when it comes to choosing a destination. Each social class shows a similar behavior
with distinct product and brand preferences in food, travel, and leisure activities. Most customers of fast
food such as Jollibee, Mang Inasal, and Chow King belong to lower and middle-income consumers.
Social classes differ also in media preferences. Upper-class customers love to read books and magazines
while the lower class wants to watch television and watch soap operas and sports programs. Hence
people in the advertisement of tourism and hospitality businesses should know precisely how to weave
copy and dialogue for each social class.

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2. Family - The structure and the income of the family matter when it comes to buyer behavior. Today,
families with nuclear structure and double income tend to opt for long-distance, extravagant tourism
more than joint families or families with single earning members who are interested in visiting domestic
places. The tourism and hospitality industry are also interested in the roles and influence of each
family member. In the Philippines, children have a strong influence on family buying behavior in the
areas of food, clothing, entertainment, and personal items. Children can influence their parents about
almost everything from where to take a vacation to cars and to even cellphones they buy.

3. Internet and social media - Consumers have instant access to reviews and opinions about travel spots
and accommodations around the world, as well as airlines, car rental agencies, and other related travel
companies. More and more, people turn to the Internet to research potential trips and seek out
bargains. Thus, the Internet and social media can influence consumers' travel choices.

b) Geographical factors

- Some physical factors like geographical and climatic conditions, facilities, and amenities available at
the destination, advertising, and marketing conducted by tourism business alter the decision making of
the tourists.

1. Place of Origin - The grooming of the tourist depends upon the place of its origin. For example, for
the Filipino married women, tourism might come last in the list of preferential things they wish to do
whereas, for Italian ladies, tourism would acquire a much higher rank. North Americans like to follow
their own cultural framework. Japanese and Korean tourists like to visit places in groups.

2. Tourism Destination - It is a major contributing factor to altering tourist behavior. If a destination has
all basic provisions such as electricity, water, clean surroundings, proper accessibility, and amenities,
and has its own significance, it largely attracts tourists.

c) Personal Budgets

- Even with a bad economy, some people still need or want to travel.

- In 2010, savvy travelers have many ways to find deals online and cut their costs before heading out the
door. Airlines offer online specials for discount flights and last-minute trips, and companies such as
Kayak exist solely to gather the best travel deals on the Internet in one place, so shoppers can compare
prices. Trivago, on the other hand, gathers the various hotels in the same place for tourists to compare
prices and features of accommodations. Travelers no longer need to rely on the standard price for
transportation or accommodations. They may now make their travel choices based solely on price.

 THE BUYER DECISION PROCESS

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- In 1968, Kollat, Blackwell, and Engel released the first edition of a book called Consumer Behavior
where they identified a distinct five-step pattern for consumer decision-making.

Need/Problem
Recognition

Information Search

Pre-purchase/
Alternative Evaluation

Purchase Decision

Post-purchase
Evaluation

Stages of Buyer Decision-making Process

- Here are these critical components at each step:

1. Need Recognition

- For this process to start there needs to be a stimulus. There is a need that must be triggered and identified
by the buyer. At this stage, marketers need to identify the factors and situations that initiate consumer
problem recognition. Marketers should show how their product is a solution to the problem of
consumers.

2. Information Search

- The customer begins to consult different sources of information; personal (marketer dominated) and
intrapersonal (non-marketer) factors will likely be used.

- Consumers can get information from several sources such as:

o Personal sources are family, friends, neighbors, and acquaintances.

o Commercial sources include advertising, salespeople, dealers, packaging, and displays.

o Public sources - These are restaurant reviews and editorials in travel magazines.

o Internet composes the website of the company, travel blogs, reviews, and comments from previous
guests.

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- In the case of the tourism and hospitality industry, personal and public sources are more helpful and
provide a greater impact than advertisements. Loyal customers can serve as word-of-mouth (WOM)
advocates and be the walking and talking billboards for a business.

3. Pre-purchase Evaluation

- After researching the choices, the customer starts to evaluate options using both objective criteria, such
as price and location, and subjective criteria, such as the perceived status of the product or service. The
customer then evaluates the different options using relevant criteria and the degree of importance for
each attribute of the product or service. The experience and the perception of the consumer matter when
he starts to develop a set of beliefs about where each brand stands on each attribute.

4. Purchase

- The customer intends to buy the product or service that best matches the criteria. The consumer can
still be influenced by several factors such as friends and family who disagree with the purchase, or a
change in personal finances. Obviously, he buys his most preferred brand. The experience would turn
out to be a good or a bad one once the purchase is completed.

5. Post-purchase Evaluation

- After use, the customer evaluates the purchase against expectations. If these two did not match, the
customer will be either dissatisfied (expectations not met) or impressed (expectations exceeded). For
this reason, it is best for tourism and hospitality providers to "under-promise" and "over-deliver" to
bring satisfaction to customers.

 CONSUMER PROBLEM-SOLVING PROCESSES

Habitual Limited Extended

problem- problem Problem-
solving solving solving

- There are various situations that influence the consumer buying process. Based on the nature of the
purchase, consumers may show some levels of commitment.

- Howard and Sheth were able to identify three levels, namely:

o Habitual problem-solving

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- In habitual problem-solving, tourists have experienced a good experience of the destination or brand
name of the tourism or hospitality offering. With such a satisfactory experience, tourists have already
set the criteria for which they are likely to evaluate the brands they are considering. Consumers too have
identified available options ready since this is just a repeat buy of a tried and tested vacation. Say, for
instance, a tourist always stays in the same hotel every time he takes his vacation here in the Philippines.

o Limited problem solving

- Limited problem solving is another type of consumer problem-solving process that travelers use when
they purchase tourism or hospitality offering occasionally. Travelers may have knowledge or experience
already but are still inadequate about the unfamiliar destination. It necessitates a reasonable amount of
time for information gathering and reflection. On a second visit to the Philippines, a tourist may reserve
the same hotel where he stayed previously.

o Extended Problem-solving

- In this situation, the travelers have no proven or set criteria for evaluating a particular destination. He
needs to have a lot of information through a detailed search and make a far-reaching comparison of the
options. A first-time tourist visiting a destination that he only sees in an advertisement is an example of
this case.

 ORGANIZATIONAL BUYING PROCESS

- In comparison to consumer purchases, an organization purchase normally involves more buyers or a

buying team and in a more professional manner, hence more formalized.

- There are eight buy phases or stages in the organizational buying process.

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 1. Problem recognition - Problem recognition happens due to internal or external
stimuli. Internally, a new offering may entail a series of training for the salesforce. The
sales manager may request for his team for a weekend meeting for planning the
training. Externally, sales representatives of hotels or of destinations may offer a
reasonably priced corporate program for a future booking.

2. General need description - After recognizing the need, the buyer determines the
requirements of the offering. For the training meeting of salespeople above, the
requirements could be food and beverage, a function room for the training itself, audio-
visual equipment, a coffee break, and sleeping rooms to stay. The buyer meets together
to discuss the price, function room, sleeping rooms, food and beverage, and a lot more.
Hotel marketers may meet up with the planning team for assistance in this phase.
3. Product specification - Once the overall requirements have been discussed,
specific needs come after. For instance, the training may need thirty sleeping rooms, a
training room for thirty with whiteboard and projector and a dining room. Hotel
marketers need to be ready to answer buyers’ questions concerning the capabilities of
the hotel to complete the specifications.

4. Supplier search - In this phase, the buyer looks for the most suitable hotels. The
buyer may investigate trade directories, do a search on the Internet, or cell phone those
familiar hotels. He may also conduct an ocular inspection once it comes up on the
shortlist of hotels.

5. Proposal solicitations - Once a shortlist of hotels is completed, these suppliers

would be requested to submit their proposals. Hotel marketers need to be proficient in
research, writing -and presenting proposals. Possibly, hotel marketers may use video
presentations to convince the buyer that their hotels have the capabilities and resources
to beat the competition.

6. Supplier selection - In this stage, the buyer performs an evaluation of the hotel as
to physical facilities, ability to deliver service, and the professionalism of the hotel
staff. The buyer/buying team may ask for a visual tour of the hotels to narrow down
the selection. In addition, the buyer may already negotiate with the preferred hotels for
better prices and terms before making the final choice.

7. Order-routine specifications - The buyer now writes the final order listing the order-routine
specifications. The hotel's response would be a formal contract. This contract specifies the date of the
training, the spaces to be rented, the minimum guarantee for food functions, the price, terms, and other
related details.
8. Performance review - At this phase, the buyer determines if the specifications are satisfied so that the
company may do business with the hotel again in the future. The buyer and the hotel representative must
meet daily during the training to correct the things that are not doing well. This way the buyer would

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 perceive that the hotel is really giving their great service which is very important for the post-purchase
assessment of the buyer.

 PARTICIPANTS IN THE ORGANIZATIONAL BUYING PROCESS

- The tourism and hospitality businesses have a decision-making unit composed of:

1. Users - These people are the ones who require it for the smooth functioning of their operations. They
are the ones who initiate the buying proposal and assist to identify the product speculations. Usually,
these people are those who make use of the product or service.

2. Influencers - These people do not make the final decision to buy. However, they could directly influence
the buying decision because they recognize the need for a particular product requirement.

3. Deciders - These people are responsible for selecting product/service requirements and supplies. Or they
have the authority to decide whether to buy a certain product or not.

4. Approvers - They are given the responsibility to approve the proposed actions. Contracts should be
submitted to the approving authority.

5. Buyers - These people have the authority to select suppliers and arrange the terms of purchase. They
may also be given the role of creating product specifications for vendors’ selection and negotiating.

6. Gatekeepers - These people may prevent sellers or information from reaching members of the team in
charge of buying. Usually, an event planner passes through the secretary before going into the decision-
making.

 GROUP BUSINESS MARKETS

- The group business market requires sophistication and needs more technical compared to the consumer
market. Group business is a very important segment of the hotel business. Often, group markets need a
year or more advance booking.

- There are four main categories of group business namely:

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▪ Conventions

- Big hotels have the potential to attract conventions. Conventions are a specialty market that involves
having extensive meeting facilities. Most annual meetings of well-known associations are held in the
form of conventions. A convention is a big source of income for the sponsoring organization.
Remarkable banquets, extraordinary receptions and matchless coffee breaks are some factors of
differentiation for hotels offering conventions. Support services must readily be available once
requested. In the Philippines, hotels such as Manila Hotel, Diamond Hotel and Manila Peninsula are
some of the hotels offering facilities for conventions.

- In selecting a destination for conventions, some of the important factors are:

1. Accessibility of hotels and facilities

2. Easiness of transportation and the costs
3. Distance from the attendees
4. Climate
5. Recreation sites and cultural activities

▪ Association Meetings

- Associations normally sponsor various kinds of meetings such as regional, special-interest, educational,
and board meetings. Big associations usually schedule several meetings held during the year in several
places. The most important attributes of a destination for association meetings include accessibility of
hotels and facilities, easiness of transportation, and the costs and distance from the attendees.

- In the choice of a hotel, food quality, rates, meeting rooms, and billing procedures are very vital
considerations. Customers of a hotel who are members of trade associations can serve as ambassadors
for association meetings of their group. The availability of after-convention activities can also be a factor
in the choice of destination and hotel.

▪ Corporate Meetings

- A corporate meeting is a must to attend without choice for every member of the organization. A short
lead time is often required to organize a corporate meeting. Corporate meetings include training,
management, planning, and incentive. In the choice of destination, the factors required are the same as
conventions and association meetings. The hotel should see to it that meetings would turn out to be
productive and the company gains good value for the money it spends.

- Corporate meetings in the form of small groups and incentive travel are gaining popularity in the hotel
businesses.

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o Small groups may occupy less than fifty rooms in one booking. Small hotels have created special
packages which are often discounted by big hotels. Bookings of small meetings are usually done on
short notice. Meetings of small groups make use of WIFI connections, built-in projector, and landline
videoconferencing which should be made available by the hotels. The packaged price makes it easier
for companies to understand the costs. Usually, most small meeting arrangements are very simple for
those customers who are non-meeting planners.

o Incentive travel, on the other hand, is a performance reward in the form of entertaining trips paid for by
employers. The participants gain such incentive from accomplishing a particular goal which could be
given to a group or an individual. Incentive travel is predominantly used with the basic aim of increasing
sales. The incentive travel is focused on fun, food, and other activities rather than education and work.

 SMERF (SOCIAL, MILITARY, EDUCATIONAL, RELIGIOUS AND FRATERNAL ORGANIZATIONS)

- Many religious and other spiritual groups enjoy a

weekend getaway allowing them to practice their
faith in a neutral environment. Military groups
host events when service people return home to
help them, and their families adjust to the changes
that have taken place. Fraternities or sororities
of colleges and universities oftentimes reunite
and look for a great place to go for groups.
Hobbyists such as scrapbookers, writers, and
artists among other creative types are always
looking for venues that give them space to work
outside of their daily routine.
- The decades-old acronym for social, military, education, religious, and fraternal groups might need some
updating, but it is still a vital market for certain destinations and hotels. Some delegations favor budget
accommodations, but others choose higher-end, full-service hotels. Most attendees are paying their own
way and therefore are highly rate sensitive. As a result, many groups meet during value dates to get the
best deals and rates and hotels look to this sector to help fill holes in their calendars. Particularly in the
social and military segments, events are often planned not by professional planners but instead by
volunteer leadership that turns over every year or two.

 THE BEHAVIOR OF BUSINESS TRAVELLERS

- Business travelers are the most technologically savvy, socially driven, shared economy smart travelers
in the world nowadays. They can visit any place in the world using apps and smartphones. They are no
longer restricted to places they have been before or languages they know previously.
- There have been business travelers from the time when the earliest trade routes between cities. For ages,
there has been a stable change in business travel behavior and some of the most rapid change has
occurred within the last two decades.

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- Starting web-based researching tools being slightly better than hit or miss up to cutting-edge booking
options to travel agencies that moved online and self-booking tools, the world of travel has radically
changed. In addition, there was a swing of other advancements that took place in the world for corporate
travelers.

- Modern business travelers span all age ranges. However, the Millennial is one of the biggest segments
of corporate travelers. The Millennials who turn into adults during the Internet era are well-versed in
online travel agencies, self-booking tools, and smartphones. Hence, the concept of business travel of
this group has helped to shape the future of travel.

- The use of technology is one of the ways that the future of corporate travelers has changed. Online
booking tools have replaced some travel agents as the main agent by which people find their flights.
These days an employee of a company or an agency sets everything up for the corporate executives to
have a professional level of care for each step of their business travel.

 GLOBAL TRENDS IN CONSUMER BEHAVIOR

- With the highly competitive environment and the dynamic consumer behavior in the tourism and
hospitality industry, it needs to keep track of the emerging trends to grab the present new opportunities.
Players in this industry should learn, understand, and respond to these emerging trends to offer great
experiences and deliver what guests expect.

▪ Youniverse

- In this trend, the customer's individual tastes and preferences have the highest control. These days,
customers wanted something personalized based on the brands that they want. New technologies such
as brainwave readers, facial recognition, and biometric sensors allow brands to create more personalized
experiences.

- Such personalized guest experiences are based on deeper, more realistic, and subconscious motivations
of guests. Often, customers are astounded by the host of choices they face, but this means even more
options. Most consumers now are willing to share their data for the sake of making good decisions.
Hence, businesses in the tourism and hospitality industry have a big chance to realize the unfulfilled
needs of customers. With the use of technology, the industry can help customers make decisions as well
as unearth their unknown preferences.

▪ Purpose-Driven Travel

- A lot of travelers these days are making mindful decisions on where and how they travel. Often, purpose-
driven travelers select destinations where their visit will make a significant influence on the community.
Therefore, this type of traveler picks brands that are aligning with their own personal values.

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▪ The Business-Leisure Blur

- Bleisure means the continuing combination of professional and personal activities that have transformed
the lives of many travelers. More and more people are blurring the line between business and leisure
when they travel. With the rise of this trend, hotels and destinations are expected to make it easier to
work comfortably while a traveler is on the road. The tourism and hospitality industry needs to look for
new startups that will enable customers to travel the world while working distantly for a prolonged
period.

▪ Wellness

- Though not anymore, a new concept, the trend of traveling for wellness was fueled by health-conscious
consumers. Interest in travel as a form of self-care is at an all-time high. It is even projected to grow
increasingly in the coming years.

- Both baby boomers and the millennial groups are health-conscious travelers. They are too concerned
about the number of calories they take daily. They spend money on gyms, running stuff, and energy
bars. Most of the times travelers look for specific healthy foods. Hence hotels and restaurants need to
respond to the demand for healthier foods.

- Travel brands can exploit this interest in increasing wellness concepts for all budget options, from a
budget hotel rolling out healthy menu options and hiking maps to completely new luxury hotel and
cruise brands concentrated on wellness as a lifestyle.

▪ Space

- In the coming years, the tourism and hospitality industry may very well deal with the first real space
tourists. This is a milestone that has increased interest in celestial event tourism. The movie Star Wars
and Disney World will put space-themed trips on many travelers' vacation inspiration in the years to
come.

▪ Learning and Travel

- This trend explores on the desire of a tourist to learn from his travel experiences. The form of learning
could be on arts, history, or architecture of a destination. New skill and activity could also be part of
the learning experience. The experiences of travelers today provide them with a greater insight,
understanding and personal connection to the people and places that they visit. These days, educational
packaged tours are popular to all segments especially among the younger generations.

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 MODULE 4 - WEEK 8:
MARKET SEGMENTATION, TARGETING AND POSITIONING

Learning Objectives:
The learners shall be able to:

1. Express the concept of market segmentation in the tourism and hospitality industry.
2. Develop a target consumer base using a variety of segmentation approaches.
3. Adopt various ways in which a segment can be targeted; and,
4. Devise positioning strategies that may satisfy some basic tests of its likely effectiveness.

MARKET SEGMENTATION
While all tourists are different, some of them are like each other.

- Market segmentation is a technique that groups consumers with similar needs and common buying
behaviors into segments. These segments become the basis for targeted marketing, which is a more
efficient and effective method of marketing than advertising to the masses.

- A marketing segmentation approach is essentially a customer- centered approach that matches

products and offerings to consumer interests. These adjustments are designed to better match the
distinctive attributes and behaviors of segments, or groups, of consumers. Segmentation also provides
understanding the correlation patterns among large consumer groups.

- The criteria below for the usefulness of segments must be considered when one or more of many
possible segments are chosen for active targeting.

1) The segment should be distinct meaning that members of one segment should be as similar as possible
to each other and as different as possible from other segments.
2) The segment should match the strengths of the tourism destination. The segment should be identifiable.
While female travelers can be identified very easily, identification of those visitors who are motivated
by rest and-relaxation may not be as simple.
3) The segment should be reachable to enable destination management to communicate and distribute
effectively. For instance, surf tourists are likely to read surf magazines which could be used to promote
the destination.
4) A segment should be suitable in size, purchasing power and profits. This does not necessarily imply
that a bigger segment is better. A tourism destination may choose to target a small niche segment that
represents a large enough market for the destination and has the advantage of having very distinct
requirements.

Tourist and hospitality organizations need to carry out segmentation in order to make their task easier
in forming and inspiring demand. In this manner, they can pinpoint the potential tourists, transform them
into actual tourists and further into habitual tourists.

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 SEGMENTING THE CONSUMER MARKET

- There is no single correct way to segment a market particularly in the tourism and hospitality industry.
Defining a target consumer base can be performed using a variety of segmentation approaches. Some
common methods are discussed here.

A. Geographic Segmentation
- Geographic market segmentation is done based on location to better tailor the marketing efforts of
businesses. These factors are important as the tourists belonging to different places are brought up with
different cultures and show different traits of behavior. There are numerous ways in which geographic
segmentation can be made. The market can be segmented by geographical areas such as city, county,
state, region, country, or international region. Another alternative is to divide the market into rural,
suburban, and urban areas. The market could be segmented geographically by climate, or the total
population in each geographical area.

- Tourists love to go visit places with distinct winter, spring, fall and summer seasons to witness the
beauty of each season. Some of the world's most gorgeous snow destinations are nestled in Asia such as
the "Ice City" in Harbin located in China, Jeju Island in South Korea and Lhasa in Tibet. Harbin has the
largest and most elaborate ice and snow festivals in the world which displays over 1,000 larger-than-
life and mesmerizing ice sculptures. Pinoy travelers love how Jeju Island transforms into a magical
winter wonderland with its myriad of photogenic spots that look even more remarkable in winter. Lhasa
is for budget travelers and backpackers in winter who wanted to see the Butter Oil Lantern Festival,
Tibetan New Year, and Great Prayer Festival.

- During summer, the Philippines has a lot of beautiful places to offer such as Camiguin, Coron and
Boracay to name a few. Camiguin labeled as the "Island Born of Fire" has an overabundance of natural
wonders, including refreshing waterfalls, cold and hot springs, and an undamaged sand bar. Coron as a
Philippine destination delights its visitors with its crystal-like waters, unspoiled white-sand beaches,
towering limestone cliffs, and scenic remote islands perfect for swimming. Boracay is popular with its
splendid sunsets, dazzling waters and soft white sands both to local and foreign tourists.
- Certain foods have very specific geographic interest in some parts of the world like seafood. McDonald'
s for instance offers seasonal seafood meals, with lobster and crab, in select markets like New England.
This is a good example of segmentation by region using consumer preferences and product availability.

B. Demographic Segmentation
- This segmentation is done by considering the tourist's gender, age, marital status, ethnicity,
occupation, religion, income, education, and family members.

Age
- Market segmentation by age is among the most common types of segmentation. Most millennial
employees are travelling for business purposes and their buying habits are entirely different compared
with the oldies. Millennial travelers are not quite fond of loyalty program perks when they book air
travel. The airline service and the customer experience offered to these young people are the basis on

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 booking their flight. Young travelers, in addition always avail of room sharing services such as Airbnb
compared to other segments. Baby boomer or the older generation is not much interested in escorted
tours. This mature segment wants to travel and find their own experiences particularly in historical
places.

Life stage
- Life stage is like age. In fact, it is an alternative to age-based segmentation. Being in different life stages
has quite different preferences.

1. Backpackers and solo travelers - Backpackers and solo travelers usually want to spend more time
travelling around the city than spending time at the hotel. As such, they priority is low prices over
amenities and services. The hotel industry houses this group of travelers by offering bare bones lodgings
in return for per-night prices at a portion of higher end hotels. Since this group often desires mingling
with other travelers as part of the experience, hotels often form common lounges and shared areas as
part of the property.
2. Couples - Couples are another demographic of the hotel industry. Romantic partners search for
quiet premises, dimly lit restaurants and high-quality bedding. Though couples may go offsite to
appreciate neighboring attractions, a premium is placed on room interior and hotel conditions. Numerous
hotels offer newly married couples' packages in an effort to attract honeymooners to stay on the
premises. Such packages consist of discounts on room service, on-site entertainment deals and likely
room upgrades. Childless couples have more disposable income than families, thereby asking for luxury
goods more often.
3. Families - Children particularly can play a significant role in leisure travel, as they travel abroad
on holidays with their families. Families have very definite needs. They need kid-friendly and low-
priced restaurants, on-site play areas, entertainment and preferably, discounts for extra rooms in which
their kids can stay. Couples with babies necessitate added amenities, such as booster chairs, wide
stroller-friendly paths and changing stations. Open air spaces are also appropriate for parents with loud,
unruly children. Hotels target this group of consumers by offering cheap price child menus and discounts
to kid-friendly attractions, such as amusement parks.

Gender
- At one time, middle-aged males ruled the business travel market. Conversely, lately, the advertising and
promotion of airline services have gradually targeted female business travelers. The female gender is a
high-tech, connected, and social segment. This segment comprises the majority when comes to gender.
Hence, travel brands have started focusing their campaigns to better target women. The leisure travel
market is almost of equal situation in terms of gender. In reality, the life expectancy of women is longer
than men; the reason why older categories of leisure travelers of women outnumber men.

Income

- An individual's income greatly dictates the ability to travel for leisure purposes. Often when there is
financial difficulty, everyone gives up leisure travel because of being luxurious. Commonly, the
demand for air travel increases as personal income rises. Although during times of recession, no one
wants to spend much, so less leisure trips are planned. This concept is known as income elasticity.
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 Income elasticity concerns the correlation between changes in consumers' income level and the demand
for a specific thing.

C. PSYCHOGRAPHIC SEGMENTATION
The marketing people do this segmentation by considering the psyche of the tourists. They gather
information about the tourists' social class, lifestyle, or personality characteristics.

Social class
- Social class has a strong influence on the tastes and preferences of customers for cars, clothes, home
furnishings, reading habits and even recreational activities. The Manila Hotel, the oldest premiere hotel
in the Philippines built in 1909 caters to the upper-middle and upper classes. Manila Hotel has always
been everything a hotel should be, that is comfortable and gracious but certainly for a premium price.
In fact, Café Ilang-llang inside Manila Hotel offers breakfast for a net price of Php 1,550.00 per person.
Eurotel Hotel on the contrary, provides comfort and convenience in combination with affordability for
couples, tourists and travelers.

- Certainly, value for money is also a major consideration for these people who patronizes Eurotel.
Kabayan Hotel, on the other hand is for an OFW who just landed or a province-based traveler looking
for a place to rest with limited budget.

Lifestyle
- Lifestyle segmentation is unique way of segmenting the market as it studies the lifestyle of customers
such as how they live, what they do for living and what they like. Lifestyle is the way people live and
consists of the pattern of attitudes, interests, and opinions (AIO).

Sample AIO

1. Activities focus on someone's daily routine. They consist of work, hobbies, social events,
vacation, entertainment, community, club membership and social event of consumers. Such activities
inform marketers about what they do, where they are engaged and how they entertained themselves. For
example, a sale or a marketing person travels to another city to attend a business fair, and business
manager travels to another country for business deals. Their jobs involve a lot of traveling on a regular
basis wherein their works are exposing them with lots of outdoor activities.

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 2. People’s interests reveal concepts and ideals that drive their passions. Interests include family,
home, job, community, fashion, food, and recreation of consumer. For instance, some tourists travel to
places with the interest of health on their mind. They travel to avail some special medical treatment,
operation, surgery, medication, or low-priced aesthetic surgeries obtainable in different country such as
the Philippines. Such lifestyle activities update marketers about the overall interests of consumer. These
factors are very vital for markets to take fitting decisions for right type of segmentation depending on
consumer interests.
3. Opinions involve social issues, political, business, or economic, education, product and
themselves. Opinion is important because it informs marketers about different issues and people. For
example, a particular consumer is attracted to social issue which does not fall under promotional
campaign of a hotel then the interest of that customer cannot be fulfilled.

Personality
- Marketers in the tourism and hospitality industry make use of personality as a variable for segmenting
its market. When segmenting by personality, beliefs, morals, motivations, and overall outlook on life
are factors that must be considered.

- According to Joseph Chris Partners, the following are the subcategories in personality segmentation:

1. Belongers - These individuals always want to go well with their families, friends, and
community. They constantly seek to fit with a group of people, not wanting to stand out in a crowd, do
not like to feel isolated, place emphasis on loyalty and do not like to experience change. Individuals
who travel frequently with their families are good example of tourists that fall under this category. This
type of tourist plans their trips well in advance and wants to maximize their time. They too will be more
interested in tourist sightseeing, organized tours, and children’s friendly activities.
2. Achievers - People in this category are very ambitious, always busy, need to constantly be
productive, and dislike anything they feel is a waste of time. They tend to be materialistic. They
purchase luxury items because these symbolize as a "trophy" for a job well done. Tourists who are
achievers in life travel to luxurious places and usually find accommodations in first-class and expensive
hotels.
3. Emulators - These people want to be achievers, but they are missing either the skillset or work
ethic to get there. These folks often have low levels of self-esteem and are actively seeking out
relationships. Instead, they make big purchases they cannot pay for and buy imitation products to appear
successful. Emulators consider the purchase of a time-share vacation an investment which oftentimes
they pay using their credit cards to appear rich and famous.
4. Saviors -Saviors intend to achieve greatness for the world, instead of just for them. They are
socially conscious people who go out of their way to help others and the world around them, and rarely
ask for anything in return. They go out of their way to save the planet, help the homeless, and volunteer
their time at schools. Since this type of consumers is frugal with their money, they wanted to buy in
package that considers actual savings. Hence, tourists with this kind of personality may often buy a
packaged tour or a good deal.
5. Doomsdayers - These people see nothing but disaster and destruction for humans. They want
to protect their families from the disaster, so they move toward rural areas, live lives that are socially
conscious, and try to be as self-sufficient as possible. This personality type tends to have a strong opinion
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 about almost anything. These tourists tend to be selective on their choices of accommodations, food,
and other hospitality 'services. It requires them to search more on details before deciding to make
Purchases.
6. Integrators - Integrators are combination of Achievers and Saviors. They strive to earn as much
money as possible, but then spend it on philanthropic efforts, rather than themselves. This is the least
common psychographic personality type, which include Andrew Carnegie, Billy Graham, and Bill
Gates. These types of customers are usually the managers who would offer incentive travel as form of
reward for the employees.
7. Survivalists - These individuals struggle to earn a living wage, working paycheck to paycheck,
either through their own choices or because they were brought up in a poverty-stricken environment.
They do not plan purchases, but they do not spend money haphazardly either, because they are constantly
afraid of losing everything. As customers, they choose budgeted type of packages for vacation, food and
wellness services.

D. BEHAVIORAL SEGMENTATION
Consumers are divided into groups according to common behaviors they share. Typically, these
behaviors link to their knowledge of attitude toward, use of, or response to a product.

User status
User status is another way to segment customers behaviorally. This divides consumers according to
their use of a product but not the amount of the product they consume. Some of the most common
include:

1. Non-users - They lack the willingness, desire, and ability possibly because of having less income
and leisure time to spend. These customers may need to be made aware what they are missing in the
first place.
2. Prospects - They have the willingness, but the marketing resources have not been used optimally
to influence their impulse. Hence, there is a need to learn why the product or service being offered is
their best option.
3. First-time buyers - They have tried it once and need to form the habit of travelling. However, they
might need further instruction on how to use the product.
4. Regular users - They are already using the services generated by the tourist organizations. They
have formed a habit and avail of the services regularly. However, they should be introduced to
supplemental products or services being offered.
5. Defectors - Former customers who have switched to a competitor who might come back to the
brand if the issue that caused them to leave be fixed.

Purchase Occasion
- This approach tries to determine the reason or occasion for purchasing a product and how it will be
used. For example, airlines typically segment customers based on the reason for a passenger’s trip which
could be business versus personal travel. Someone traveling for business generally has different needs

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 and wants from someone traveling for pleasure. A business traveler tends to be less sensitive about price
and more focused on timing, location, and convenience.

- In the hotel industry the most common customer segmentation is purchase occasion, simply the reason
behind why the guest is traveling.

1) Business travelers - Business people travel for a range of reasons which could be to join sales meetings,
give presentations, form events, and meet with other members of the company in several places. The
business traveler though conscious of price, still they are willing to pay higher room prices in exchange
for convenient location, ease of access and business-related amenities. This group prioritizes fast
Internet access, availability of electronic devices like fax machines, printers and scanners and access to
lounges. There is also the possibility for them to stay in their room most of the time. Hence, hotels need
to provide consideration to features such as the quality of bedding, room service offerings and
furnishing, like desks with Internet access hookup.
2) Groups of travelers - These groups consist of leisure travelers as well as those traveling for business for
example a conference, convention, or company meeting. The hotel's sales manager targets this segment
by combining a package of lodging, meeting rooms and meals for the group. For instance, the group
may need three nights of accommodation for 20 rooms, a meeting room with Asian breakfast for each
of the days, dinner on one evening and lunches on two of the days. The price package contains all the
services, with discounts typically set on the room rates. Group leisure travelers comprise weddings
guests, school reunions and family reunions. Leisure travelers also include tour operators.
3) Leisure travelers - Leisure travelers need a safe and secure hotel. Families with children are fascinated
to hotels with extraordinary programs. These programs may include kids staying free in the same room
as the parents, dine free in the hotel's restaurant or get a special feature package of toys and treats. Some
hotels extend their services such as providing administered activities for children while the parents join
in sports, go shopping or lounge at the pool. The price choice for these customers goes from budget-
friendly to premium. The individual or family may be traveling to visit relatives, attend a family
gathering, and go on vacation, visit local attractions or for emergency related situations for example an
illness.
4) Hotel packages and specials - Through offering packages and specials to those outside the traditional
niche or at times when the hotel is not busy, the hotel is able to expand its customer niche. The hotel
may offer romantic weekend packages for couples or a golf package for sports enthusiasts. Students and
teachers could be part of the special interest groups in terms of an educational package. So many
restaurants now have deals for children's birthday parties, while hotels and cruise liners have special
honeymoon suites.

Loyalty
- This approach places consumers in loyalty categories based on their purchase patterns of brands. A
key category is the brand-loyal consumer. Companies have assumed that if they can identify individuals
who are brand loyal to their brand, and then delineate other characteristics these people have in common,
they will locate the ideal target market. There is still a great deal of uncertainty about the most reliable
way of measuring brand loyalty.

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- Segmenting by usage helps brands understand why certain types of customers become heavy or light
users. It enables them to test different marketing initiatives to increase usage from lower usage
customers, and potentially attract new heavy usage customers.

1. Heavy users — This is the most avid and engaged customers that spend the most time using the
company's product or service and buy most often. These are tourists and travelers who frequent places
and even hotels.
2. Medium users - These are customers that semi-regularly, but not very frequently, use or purchase
the products of the company. These constitute tourists and travelers who visit places and find
accommodations not very exclusive.
3. Light users - These are customers that use or purchase much less than other customers, sometimes
even only once. These people are those who are not much fond of travel, but they do because of necessity
or just to experience even just once in their lifetime going a place they have dreamed of.
- Airlines, hotels, restaurants, and others give their best service to provide the most excellent experience
possible such that they can retain their customers.

Readiness
- Readiness segmentation proposes that prospective customers can be segmented based on how ready
they are to buy a product such as unaware, aware, informed, interested, desirous, and intend to
buy. Using this approach, a marketing manager can plan the suitable market strategy to transport them
through the various stages of readiness. These stages of readiness are rather vague and difficult to
measure accurately, but readiness may be a useful lens for understanding the customer's mindset and
how to push them Coward buying, particularly when an education process is required prior to purchase.
Just like some people who would like to travel but still hesitant due to a lot of factors such as budget,
safety of the place or their hectic schedule would not allow. With a lot of convincing, they might push
with the travel plans.

TARGET MARKETING
A target market is a market segment selected by a travel and hospitality organization for marketing
attention. There are various ways in which a segment can be targeted. The basic ranges of targeting
strategies are:

1. Undifferentiated - When an organization serves an entire marketplace with a single marketing mix,
then it is called undifferentiated. Such kind of targeting reflects the sub-segments of the market as the
same. The focus is on the commonality of the consumers' needs. Having an undifferentiated target
provides cost economics in areas of production, inventory, and transportation. Cafeterias fall under this
type of targeting.
2. Differentiated - Using differentiated marketing the tourism and hospitality industry is structured
into several segments, each of which is targeted with a tailored marketing mix. Sofitel in the Philippines
let its customers experience the refined French art combined with the courteous and genuine warmth of
the Filipino spirit. On the other hand, Shangri-La Hotel provides luxury hotel services with distinctive
Asian standards of hospitality and service.

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 3. Focused - This is when a company pursues a big portion of a small market segment providing a
single marketing mix that best suits the needs of that segment. In November 2017, Airbnb bought travel
business start-up Accomable, which targets disabled travelers. As a result, Airbnb now offers 21 filters
for guests seeking accessible travel accommodation. This is an example of reaching out to a focused
market.
4. Customized - Customized targeting is tailoring the marketing mix of a tourism and hospitality
company to the individual's specific needs. Some markets lend themselves more naturally to a
customized approach, especially those that are in service sectors involving a high degree of human
interface. In the hospitality industry, a distinct set of services is offered to a particular segment and then
the service is customized to individuals within that segment. Guests may be provided activities or
services as per the preferences of the guest such as an outdoor activity for adventure-seeking travelers.

POSITIONING
- Positioning is the consumer's image of an offering in relation to other competitors in the marketplace.
Price and the quality of service provided are the two of the strongest elements that need special
consideration during the process of product positioning.

- The perception that a tourist develops or adopts about a specific destination depends on the variety of
attributes, benefits, past experiences, location, and the image that the product shows. Such perceptions
are not simply transformed. It requires special positioning to disregard unsupported perceptions amongst
tourists.

- Whatever position is decided upon; it must satisfy some basic tests of its likely effectiveness. Jobber in
2004 identifies a set of four such tests, namely:
1. Clarity - This is the basis of the position that must be clear and straightforward to understand.
2. Credibility - This refers to the positioning that must be justified and authenticated by the proof
presented.
3. Consistency - This is the core of the position communicated constantly over time in all elements
of the marketing mix.
4. Competitiveness - Here the positioning should result in benefits to the customers that are
obviously better to those delivered by its competitors.

- Bennett, Jooste and Strydom identified six positioning strategies as mentioned below.

1. Positioning on a specific feature - It is not enough that travelers shall relax and unwind. Certainly,
affordability and accessibility should be considered. Sogo Hotel and Kabayan Hotel are examples of
low-budget price as their specific feature. Marina Bay Sands in Singapore can promote the attribute of
height as its best feature having its swimming pool and Skybar as part of guests' ultimate experience.
2. Positioning on benefits, needs or problem solution — The Philippines is home to some of the best
hospitals and stand-alone specialty clinics in the world, offering world-class expertise, state-of-the-art
facilities, topped with the distinct warmth of the famous Filipino hospitality. Hotels near some of the
world's best spa retreat resorts and tour destinations in this part of the earth could be good examples.

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3. Positioning for specific usage occasions - Manila Marriott Hotel in Pasay City accommodates guests
in their dynamic meeting rooms with cutting-edge audiovisual technology during company convention.
It is a 5-star luxury hotel having the largest hotel convention facility in the Philippines.
4. Positioning for user categories - Hotels and restaurants are differentiated through the types of guests
who they accommodate such as tour groups, businessmen or families. Casa Bocobo Hotel, Diamond
Hotel and New World Manila Bay Hotel are some of the hotels that are frequently treasured by guests
who travel with their families. Their rooms have big spaces and have comfortable atmosphere that are
really family friendly.
5. Positioning against competitors - Often, organizations in the tourism and hospitality industry do not
really have a choice but to beat each other for profitability and sustainability. Although Jollibee Foods
Corporation has achieved dominance in the country in its burgers and chicken, pizzas, and Chinese food,
still it must out beat its competitors which are McDonald's and Pizza Hut.
6. Positioning away from competitors - Often to stay away from much competition, some organizations
in the tourism and hospitality industry, position themselves differently compared to competitors. Cebu
Pacific for instance has become popular as a budget airline or low-cost carrier (LCC). While Philippine
Airlines though a rival of Cebu Pacific has long been categorized as the flag carrier of the Philippines.

Prepared by: KAYCEE H. NUESTRO Instructor

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