NIOS Module 5 • Lesson 19 Management of Tourism Business

Tourism Marketing

7 Ps Marketing Mix
Micro vs Macro
CRM Architecture
NIOS Tourism Management Study Guide

Lesson 19: Tourism Marketing

Master the core principles of tourism marketing, service product characteristics, the 7 Ps marketing mix, internal and external marketing environments, strategic pricing models, promotional frameworks (AIDA), distribution channels, and Customer Relationship Management (CRM).

1

Foundations of Marketing & Features of Tourism Products

Marketing vs Selling, Definitions, and 4 Service Characteristics

• Concept of Marketing: Marketing is the sum total of all activities that direct the flow of goods and services from producers to consumers. In tourism, you sell experiences and memories rather than tangible physical items.
• Key Definitions:
  - American Marketing Association (AMA): "The performance of business activities that direct the flow of goods and services from producer to consumer or user."
  - British Institute of Marketing: "The management process responsible for identifying, anticipating and satisfying customer requirements profitably."
  - Philip Kotler: "A societal process by which individuals and groups obtain what they need and want by creating, offering and freely exchanging products and services of value with others."
  - Krippendorf (Tourism Context): "Marketing in tourism is to be understood as a systematic and co-ordinated execution of business policy by tourist undertakings at local, regional, national, or international levels to achieve optimal satisfaction of consumer needs and an appropriate return."

Dimension Marketing Selling
OrientationMarket-oriented approachProduct-oriented approach
Primary FocusFocuses on the needs of the buyerFocuses on the needs of the seller
Core ObjectiveSatisfying customer needs holisticallyConverting product into immediate cash
ScopeBroader concept (includes selling as a sub-part)Narrow operational activity
Price DeterminationConsumer determines price; price determines costCost determines price

4 Distinct Features of Tourism Products

1. Inseparability: Services are produced, consumed, and experienced simultaneously. A passenger consumes an airline flight while the plane flies from Delhi to Mumbai.
2. Perishability: Unsold tourism capacity cannot be stored for future sale. An empty hotel room or unbooked airline seat for a specific date perishes forever.
3. Lack of Ownership: Customers purchase only the right to experience or access a facility (a houseboat or hotel room) without transferring permanent legal ownership.
4. Heterogeneity: High human involvement leads to variation in service delivery and customer experience from one interaction to another.
2

Marketing Mix (7 Ps) & Key Marketing Functions

Market Research, Segmentation, Traditional 4 Ps, and Extended 3 Ps for Services

• Marketing Functions: To achieve organizational objectives, a tourism business performs 5 core tasks: Market Research (gathering data on tourist tastes/origins), Product Planning & Development (designing composite packages), Segmentation (categorizing buyers by socio-economic/motivational profiles), Promotion, and Selling (Direct, Retail, Agency, Tele-sales, Online).
• The Extended 7 Ps Framework: Traditional products rely on 4 Ps (Product, Price, Place, Promotion). Services like tourism require 3 additional Ps (People, Physical Evidence, Process).

The Traditional 4 Ps

• Product: The composite offer (attractions, accommodation, transport, entertainment).

• Price: Financial monetary value representing satisfaction and revenue generation.

• Place (Distribution): System of linkages making products available to target markets.

• Promotion: Communication mix (advertising, sales promotion, PR, personal selling).

The Service Extended 3 Ps

• People: Frontline staff (receptionists, guides, drivers) whose behavior creates customer satisfaction.

• Physical Evidence: Tangible cues (decor, cleanliness, uniforms, ambient layout of hotels/restaurants).

• Process: Efficiency and speed of service delivery without compromising quality standards.

3

Marketing Environment: Macro & Micro Dimensions

Uncontrollable External Forces vs. Immediate Operational Factors

• Marketing Environment Concept: Consists of internal and external forces that affect a firm's ability to develop and maintain successful relationships with target customers (Kotler & Skinner).

Macro Environment (External & Uncontrollable)

• Political Environment: Laws, government stability, and policies (e.g., FDI regulations, visa rules).

• Economic Environment: Consumer purchasing power, inflation rates, and exchange rates.

• Demographic Environment: Population size, age distribution, income brackets, and regional trends.

• Technological Environment: Digital innovations (online booking engines, internet connectivity).

• Socio-Cultural Environment: Beliefs, lifestyle preferences, customs, and family structures.

Micro Environment (Immediate Task Forces)

• Suppliers: Entities providing required input resources (hotels, transport fleets).

• Consumers: The core focal point for whom marketing strategies are specifically tailored.

• Competitors: Business rivals offering similar competing tourism options.

• Intermediaries: Wholesalers, retail agents, and OTAs creating time and place utility.

4

Pricing Strategies, Advertising & Sales Promotion

5 Pricing Models, AIDA Framework, Media Categories, and Short-Term Incentives

• Strategic Pricing Models: Price is the only marketing mix element generating revenue.

1. Penetration Pricing: Initial low price to capture market share rapidly and block competitors, later increased.
2. Skimming the Cream: Initial high price for innovative/luxury offerings to skim top-layer profits before lowering.
3. Psychological Pricing: Priced to appeal emotionally (e.g., pricing a tour at Rs 999 instead of Rs 1000).
4. Promotional Pricing: Temporary discount below standard cost to stimulate short-term surge demand.
5. Discount Pricing: Seasonal clearances or volume incentives (e.g., off-season hotel rates or "Buy 2 Get 1 Free").

Advertising Features & The AIDA Model

Advertising is a paid, non-personal form of communication with an identified sponsor. Its goals follow the AIDA framework: Attract Attention, create Interest, stimulate Desire, trigger Action (+ yield Satisfaction).

• Media Channels: Press (Newspapers, Brochures), Broadcast (TV, Radio jingles, Cinema), Digital/Internet (Search engine ads, Email), Aerial Advertising, and Railway/Transit media.

• Sales Promotion: Short-term non-recurring incentives designed to induce immediate purchases (Discount coupons, Free samples, Trade shows, Frequent flyer rewards).

5

Distribution Networks & Customer Relationship Management

Travel Agents vs Tour Operators, Cybermediaries (OTAs), and the 7-Step CRM Architecture

• Distribution Channels in Tourism: Linkages connecting potential tourists to suppliers. Includes Travel Agents (retailers earning commissions), Tourism Agencies (state/regional promotion boards), Tour Operators/Wholesalers (consolidators buying inventory in bulk to create packages), and Online Travel Companies / Cybermediaries (e.g., MakeMyTrip, Yatra, ClearTrip, GoIbibo).
• Customer Relationship Management (CRM): A business model aimed at managing all interactions with current and prospective clients to maximize satisfaction and foster long-term brand loyalty.

The 7 Steps in the CRM Process Workflow

  1. Collect Information: Gather raw data during guest contacts (bookings, stays, inquiries).
  2. Build Customer Database: Store structured profiles in a centralized database.
  3. Obtain Requirements: Identify specific preferences, dietary needs, and travel habits.
  4. Analyze Requirements: Segment profiles into actionable customer categories.
  5. Develop Products/Services: Customize packages and room amenities tailored to guest profiles.
  6. Maintain Personal Communication: Reach out via personalized SMS, email, and courtesy calls.
  7. Deliver Products & Services: Execute personalized hospitality during transactions to build lifelong loyalty.