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CU-BSC.TTM-SEM-III-Tourism Marketing- Second draft-converted

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B.SC. TRAVEL AND TOURISM MANAGEMENT SEMESTER III TOURISM MARKETING BTT112

2 CU IDOL SELF LEARNING MATERIAL (SLM)

CHANDIGARH UNIVERSITY Institute of Distance and Online Learning Course Development Committee Prof. (Dr.) R.S.Bawa Pro Chancellor, Chandigarh University, Gharuan, Punjab Advisors Prof. (Dr.) Bharat Bhushan, Director – IGNOU Prof. (Dr.) Majulika Srivastava, Director – CIQA, IGNOU Programme Coordinators & Editing Team Master of Business Administration (MBA) Bachelor of Business Administration (BBA) Coordinator – Dr. Rupali Arora Coordinator – Dr. Simran Jewandah Master of Computer Applications (MCA) Bachelor of Computer Applications (BCA) Coordinator – Dr. Raju Kumar Coordinator – Dr. Manisha Malhotra Master of Commerce (M.Com.) Bachelor of Commerce (B.Com.) Coordinator – Dr. Aman Jindal Coordinator – Dr. Minakshi Garg Master of Arts (Psychology) Bachelor of Science (Travel &Tourism Management) Coordinator – Dr. Samerjeet Kaur Coordinator – Dr. Shikha Sharma Master of Arts (English) Bachelor of Arts (General) Coordinator – Dr. Ashita Chadha Coordinator – Ms. Neeraj Gohlan Academic and Administrative Management Prof. (Dr.) R. M. Bhagat Prof. (Dr.) S.S. Sehgal Executive Director – Sciences Registrar Prof. (Dr.) Manaswini Acharya Prof. (Dr.) Gurpreet Singh Executive Director – Liberal Arts Director – IDOL © No part of this publication should be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording and/or otherwise without the prior written permission of the authors and the publisher. SLM SPECIALLY PREPARED FOR CU IDOL STUDENTS Printed and Published by: TeamLease Edtech Limited www.teamleaseedtech.com CONTACT NO:- 01133002345 For: CHANDIGARH UNIVERSITY 3 Institute of Distance and Online Learning CU IDOL SELF LEARNING MATERIAL (SLM)

First Published in 2021 All rights reserved. No Part of this book may be reproduced or transmitted, in any form or by any means, without permission in writing from Chandigarh University. Any person who does any unauthorized act in relation to this book may be liable to criminal prosecution and civil claims for damages. This book is meant for educational and learning purpose. The authors of the book has/have taken all reasonable care to ensure that the contents of the book do not violate any existing copyright or other intellectual property rights of any person in any manner whatsoever. In the event the Authors has/ have been unable to track any source and if any copyright has been inadvertently infringed, please notify the publisher in writing for corrective action. 4 CU IDOL SELF LEARNING MATERIAL (SLM)

CONTENTS Unit 1: Introduction To Marketing ............................................................................................6 Unit 2: Marketing Environment Analysis................................................................................29 Unit 3: Marketing Mix .............................................................................................................60 Unit 4: Tourism Products.........................................................................................................75 Unit 5: Motivation For Travel..................................................................................................95 Unit 6: Packaging Of Tourism Products..............................................................................111 Unit 7: Product Life Cycle.....................................................................................................126 Unit 8: Tourism Promotion....................................................................................................148 Unit 9: Marketing Distribution Channel ................................................................................170 Unit 10: Challenges And Strategies.......................................................................................179 5 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 1: INTRODUCTION TO MARKETING 6 Structure 1.0 Learning Objectives 1.1 Introduction 1.2 Meaning of Marketing 1.2.1 Tourism marketing 1.2.2 New developments in tourism marketing 1.3 Needs 1.4 Wants 1.5 Demand 1.6 Consumer vs Customer 1.7 Role of Customer 1.8 Role of Consumer 1.9 Relationship between Consumer and Customer 1.10 The Difference between Product and Service Marketing. 1.10.1 Types of Product 1.11 Traditional difference between Product and Service Marketing. 1.11.1Customization 1.11.2 Delivery 1.11.3 Ownership 1.11.4 Expiration 1.11.5 Time 1.12 Tabular column of Product and Service Marketing 1.13 Service Market Implications 1.14 Marketing implications of Consumers 1.15 Summary 1.16 Keyword 1.17 Learning activity 1.18 Unit end Questions 1.19 References 1.0 LEARNING OBJECTIVES CU IDOL SELF LEARNING MATERIAL (SLM)

After studying this unit, the students will be able to • Explain the meaning of marketing in Tourism • Analyse the concept of needs, Wants &Demand in Marketing Services. • Recognizes the difference between Product and Service Marketing. • Identify the Traditional difference between Product and Service marketing. • Explains the Product, Service and Market implications. 1.1 INTRODUCTION Marketing is the bedrock of corporation and non-profit activities. Understanding the different marketing programs and their purposes enables for-profit and not-for-profit organisations to accomplish their objectives. Marketing is the method of persuading potential customers to purchase a product or service offered by a company. Marketing services are the strategies employed in the manufacturing, pricing, promotion, and delivery phases of a marketing strategy. Market analysis, advertisement, promotion, and public relations are the primary marketing facilities. Market research entails the collection of statistical data for the purpose of developing an organization's marketing strategy and schedule. Advertising and marketing are concerned with informing consumers and rising demand for a product or service. Public relations are concerned with activities that contribute to the development of a positive and trustworthy reputation among the public. 1.2 MEANING OF MARKETING: Marketing's objective is to maximize sales. Concentrating on a specific market and communicating a message that stands out rather than fitting in with the competition provides a company with the best possible chance of success. 7 CU IDOL SELF LEARNING MATERIAL (SLM)

Fig 1.1 “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” 1.2.1 Tourism marketing Marketing is the process of creating products and services that are tailored to the needs and desires of an end user or customer (Kotler, Haider & Rein, 1993). This traditional concept of marketing entails the elements that comprise the optimal combination of profit-generating elements: price, place, commodity, and promotion - the marketing mix. Tourism Marketing entails determining what visitors want. This is accomplished by market research, which serves as the foundation for developing pertinent products and services. These goods and services are promoted and advertised to potential tourists. Tour operators, travel agents, and airlines all have information about how and where to purchase goods and services. Advertising is founded on the goal of raising awareness and enhancing a company's position or image (Dwyer & Tanner, 2002). The second role of tourism marketing is to foster an environment conducive to salespeople; however, in certain cases, consumers will place orders directly from ads, so the ultimate goal is to generate sales. The Tourism Marketing Mix The traditional 4Ps have been expanded in recent years as some aspects of tourism marketing have become recognised as critical. Numerous marketing mix structures have been suggested, but the 8P model will be explored in greater detail below by concentrating on the Ps that are most pertinent to tourism. This requires the inclusion of the four Ps: individuals, packaging, programming, and partnerships, which apply to both destinations and individual businesses. 8 CU IDOL SELF LEARNING MATERIAL (SLM)

People Tourism is fundamentally about people: the visitor, the service staff, and the local populace. As previously addressed under variability and intangibility, the tourism commodity is influenced by both the visitor and the service personnel. Various factors such as behaviour, perceptions, mood, and stress may all play a role. have an impact on the product's consistency. As a result, it is critical to prioritise staff preparation, appearance, engagement, and customer touch. Additionally, it is important to note that the local population is a component of the product/destination. Certain Caribbean destinations are known for their wet, friendly people, which has served as the foundation for countries such as Jamaica, the Bahamas, and St. Lucia's tourism promotion (Crick, 2003). Packaging When promoting tourism, it is important to recognise that the tourism commodity is comprised of a diverse range of products and services (travel agent, airline, car rental, hotel, restaurants, museums and other attractions, taxi, etc.). The term \"packaging\" refers to the process of combining two or more combining various aspects of the tourism experience into a single product. Tour operators provide packages that include transportation, lodging, transfers, and visits to attractions, as well as travel insurance and other tourism-related services. A destination packages its tourism commodity by selling bundles of the destination's various activities, attractions, and events. Regional tourism organisations promote the region's attractions, festivals, sports, and other tourism-related programmes as integrated packages. Programming This P is concerned with how to package meetings, special activities, and other programmes more effectively for the consumer. It helps to increase a destination's appeal and consumer spending. Numerous attractions can be linked to create a mix of products and encounters. To step away from standardised holiday packages, programmes such as the traditional Caribbean beach vacation package provided by tour operators can be supplemented. Partnership 9 CU IDOL SELF LEARNING MATERIAL (SLM)

There is a high degree of interdependence and a need for cooperation among all tourism stakeholders. Stakeholders are collaborating in the form of strategic alliances. This began in the tourism industry with airlines cooperating. Collaborating across countries and continents in order to increase market share The partnerships have grown to include car rental agencies, hotels, restaurants, and retail establishments. These professional relationships are established not only with colleagues, but sometimes with competitors as well. Star Alliance is the largest and most known alliance (see www.staralliance.com). Another example is Air Jamaica's 7th Heaven frequent flyer programme, which rewards passengers for trips taken and can be redeemed for airline tickets within the same category. Air Jamaica, Delta, Virgin Atlantic, Air Canada, Hertz, Island Car Rental Jamaica, Travel Master Card, and Courtleigh Manor Hotel Jamaica are all members of the party. Additionally, Miami and Baltimore provide discounted airport parking. These strategic partnerships support the company members by assisting them in retaining customers, but they also benefit the consumer by rewarding them for their loyalty. 1.2.2 New developments in tourism marketing Many would say that marketing is the polar opposite of sustainable tourism, since the tourism industry is likely to take an interest in sustainability only if it is of concern to the consumer. However, others would argue that this is not the case. This point of view is \"both implausible and false\" (Swarbrooke, 1999). Henry Ford succinctly summarised the issue of placing consumers at the centre of creative solutions when he said, \"If I had asked my customers what they desired...they would have said a faster horse.\" Marketing has an impact on people's lives, which makes it a very effective tool. Of course, this can be used to promote more sustainable modes of tourism, which should be a priority for tourism stakeholders. De-marketing is a marketing strategy that can be used in the pursuit of sustainability (Swarbrooke, 1999). De-Marketing While Kotler coined the term \"de-marketing\" in the early 1970s (Kotler & Levy, 1971), there are few studies and examinations of the impact of de-marketing on tourism. By promoting the restriction of advertisement spending, reducing the number of distribution outlets, and increasing costs, de-marketing is referred to as 'deconsuming' (Kotler & Levy, 1971). This 10 CU IDOL SELF LEARNING MATERIAL (SLM)

marketing strategy is used to decrease rather than increase demand for a product. It is not, however, used to convince customers to completely avoid a location or a product. One might wonder why anyone might want to reduce tourism demand. The response to this question could be to ensure the future viability of the 29 product base upon which the tourism industry is based. There are three primary strategies for de-marketing tourism, dubbed the 3Ps of de- marketing (Swarbrooke, 1999); individuals, peak hours, and locations. Destinations, attractions, and tourism goods in general have the potential to de-market individuals who are undesirable in any way, such as their purchasing power or behaviour. In some Caribbean islands, young, heavy drinkers have become unwelcome guests. By staying at all-inclusive hotels/resorts where anything, including drinks, is included, and not spending money outside the hotel, more attractive market segments may be discouraged from staying at the hotel or visiting the destination. This segment can be demarketed by discouraging tour operators who specialise in wild vacations from offering package tours to the destination. The destination or hotel may attempt to reposition itself in order to make it less appealing to the \"group visitor.\" Additionally, the destination or hotel should emphasise details that attracts the \"party visitor\" while remaining appealing to other markets. Destinations that experience high levels of visitation during peak times will de-market these periods by rising prices. Additionally, reminding visitors about congested cycles to prevent them from visiting at those times. Places that are thought to attract an excessive number of visitors may be de-marketed to mitigate the effects of overcrowding. Reduced overcrowding can be accomplished by reducing information about the location, selling bundled holidays to destinations with overcrowding issues, increasing rates to minimise demand, and restricting access. 1.3 NEEDS Needs are the fundamental requirements of a human being, such as food, clothing, and shelter. Humans are incapable of surviving in the absence of certain requirements. Education and health care comprise a sizable portion of modern-day needs. Individuals have varying requirements. Among them are the following physical requirements: food, clothing, shelter, and protection. Personal needs—expression of self, discussion of emotions, etc. 11 CU IDOL SELF LEARNING MATERIAL (SLM)

Social requirements—love, affection, and so forth. The ego requires status, acknowledgment, and self-esteem. We are all familiar with Maslow's hierarchy(Figure 1.1) of needs, which divides needs into five categories, beginning with physiological needs and progressing to self-actualization needs. However, as a marketer, it is critical to understand the degree of need your brand is addressing. Consider several examples of brands that cater to a range of needs. Fig 1.1 Needs 12 1. Physiological Needs – Food companies (Nestle, Pepsi, Coca Cola) 2. Safety Needs – Insurance companies (ICICI Prudential, Tata AIG, HDFC Life) 3. Social Needs – Social networking sites ( Facebook , Twitter , Instagram) CU IDOL SELF LEARNING MATERIAL (SLM)

4. Esteem Needs – Luxury brands (iPhone, Mercedes, Estee Lauder) 5. Self-actualization needs – Non-Profit organizations and NGOs (UNICEF, Teach for India) In marketing, there is another way to categorize needs. There are basically five types of consumers’ needs: 1. Stated Needs – As the name suggests, in this case, the consumer explicitly states what he wants. For eg. “I need a phone”. 2. Real needs – This is a more precise statement. Thus, when a customer desires a phone with a long battery life in order to stay linked with friends, family, and colleagues, the real requirement is for a phone with a high battery backup, not a high camera resolution 3. Unstated needs – The consumer also expects warranty and other sorts of after sales service when buying a phone which he might not say explicitly. 4. Delight needs – The consumer would like the phone manufacturer or the dealer to give him some free gift or a promotional item (phone case, tempered glass, free SIM etc.), but he doesn’t clearly express that he wants something with the phone. 5. Secret Needs – These are the desires that the customer is hesitant to acknowledge; for example, the consumer desires the phone as a status symbol but is hesitant to accept that status is important to him. In the preceding case, responding to a single specified need, i.e., \"I need a phone,\" does not result in the development of an appropriate product proposition. As a marketer, it is critical to delve deeper and reveal not only the actual needs of the customer, but also his unstated, delight, and hidden needs. 13 CU IDOL SELF LEARNING MATERIAL (SLM)

Fig 1.2 1.4 WANTS Wants are the sources of satisfaction for needs. Specific goods are capable of satisfying specific desires. Wants are a subset of human needs and are highly dependent on them. Desires are limitless. Customers expect a high level of value and satisfaction for their money. For instance, if you need to write, the best pen would be your choice. For writing is a necessity, but the best brand of pen is a desire. Fig 1.3 1.5 DEMANDS Demands are expressed as desires for particular goods. They are backed up by a desire and capacity to purchase. Demand is created when desires are backed up by money and the ability to invest it. For example, You need BMW car and you have the buying power, is your demand. 14 CU IDOL SELF LEARNING MATERIAL (SLM)

1.6 CONSUMER VS CUSTOMER A consumer is an individual/business/organization that purchases the seller's offering through a financial transaction or monetary exchange. In basic terms, a customer is someone who purchases an offering. An individual purchasing a gift for another person from a gift shop is a customer of the gift shop. In general, companies prioritise consumer acquisition because it enables them to expand and increase profits. Customers are classified in a variety of ways depending on the type of company. However, for the sake of convenience, we may divide them into two groups: End-Customer – These are the individuals who purchase the product provided for their own use, thus becoming the designated product's buyer. Reseller – They are the intermediary who purchases the products with the intention of reselling them to others, and therefore serve as a customer rather than a purchaser of the purchased product. Definition of Consumer A consumer is an individual who is the end-user of the product/service offered by a business. In simple terms – Consumer is the end-user who consumes the offering. Example: Take a kid who recently got candy from his dad. Even though his dad was the customer who bought the candy, this child is the consumer who ends up consuming the product. 1.7 ROLE OF CUSTOMER Customers propel businesses and are their primary target – it is only through consumer sales that businesses can support themselves and operate. Without consumers, companies will cease to exist. Customers contribute to the improvement of the quality of goods and services provided by businesses and organisations. This is accomplished by surveying existing customers – a 15 CU IDOL SELF LEARNING MATERIAL (SLM)

practise often referred to as Customer Relationship Management (CRM) – in order to ascertain and enhance customer loyalty and expectations. 1.8 ROLE OF CONSUMER While a customer may or may not use the product, service, or good purchased, a consumer does use/use the product. This enables companies to assess the true utility and authenticity of their items. Consumer behavior is an excellent indicator of which products are still in demand and which have become outdated. Businesses use them to easily reach their ideal audience, allowing them to have the greatest effect on the company's revenue and growth. This takes us to the fact that consumers can be customers as well – if not always. Extrovert Consumers: These are the consumers who have a thing for branded products. They would almost certainly remain faithful to them and aspire to become one. They have a strong chance of being brand ambassadors if they are presented with high-quality goods and services. The Inferior Goods Type: They are those who face a severe lack of funds and are classified as low-income. As a result, they are compelled to buy only those items necessary for survival. The Commercial Type: Regardless of their particular buying requirements, this group of customers would purchase goods and products in bulk. This information may or may not be used commercially. The Discrete Consumer: As the name implies, these consumers would adopt a discrete mode of purchasing. Simply put, they would consider investing a substantial sum on a limited number of specialised products, such as cosmetics, jewellery, or clothing. And will largely avoid thrifting in other categories. 1.9 RELATIONSHIP BETWEEN CUSTOMER AND CONSUMER 16 CU IDOL SELF LEARNING MATERIAL (SLM)

Fig 1.4 The terms \"customer\" and \"consumer\" are interchangeable – quite simply because a customer and a consumer are the same entity. Purchasing groceries for one's own use is an excellent example. When an individual purchases grocery from a supermarket for personal use, they become a customer of the store – they are paying for the groceries sold by the store. When the customer consumes the groceries, he or she still becomes a consumer. However, this is only one instance in which a person may be both the customer and the consumer. However, they remain distinct – which is why the words customer and consumer exist. COMPARISION CUSTOMER CONSUMER MEANING The buyer of goods or services is The user of goods or services is known as the Customer. known as a Consumer. PURPOSE Resale or Consumption Consumption only; No resell PURCHASE Not necessary; Price may or may Yes; Price is paid by the customer not be paid by the consumer 17 CU IDOL SELF LEARNING MATERIAL (SLM)

TYPE Individual or Organization Individual or group of people 1.10 THE DIFFERENCE BETWEEN PRODUCT AND SERVICE MARKETING The obvious difference between product and service marketing is that products are tangible, and services are intangible. Products: Tangible goods are often considered to be easier to sell because they can be illustrated, touched, and viewed, and are thus easier for the audience to comprehend in terms of importance or need. It's difficult to say whether this is true or not, particularly given the blurred lines of the B2B technology sector, where goods and services are becoming increasingly entwined. Regardless, the objective of your marketing campaign should be to identify the optimal market for your product and to promote it in a manner that elicits the most positive response from your target audience. It's important to note that the product is the same regardless of who you're selling to and that it can be returned if the consumer is unhappy. 1.10.1 Types of Products (Consumer Products and Industrial Products) Marketers evaluate products mainly in terms of their intended audience. They categorize products according to their intended use: consumer or manufacturing. Generally, goods are categorized into two categories: consumer products and industrial products (convenience products, shopping products, specialty products, unsought products). Industrial Components (capital goods, raw materials, component parts, major equipment, accessory equipment, operating supplies, and services). The following are some marketing considerations for different consumer products: Marketing Type of Consumer Product Consider- ations Convenience Shopping Specialty Unsought 18 CU IDOL SELF LEARNING MATERIAL (SLM)

Customer Frequent Less frequent Strong brand Little product buying purchase, little purchase, much preference and awareness, behavior planning, little planning, and loyalty, special knowledge (or Price comparison or shopping effort, purchase effort, if a little or Distribution shopping effort, comparison of little even negative low customer brands on price, comparison of interest) Promotion involvement quality, style brands, low price sensitivity Examples Low price Higher price High price Varies Widespread Selective Exclusive Varies distribution, distribution in distribution in convenient fewer outlets only one or a locations few outlets per market area Mass promotion Advertising and More carefully Aggressive by the producer personal selling targeted advertising and by both promotion by personal producer and both producers selling by resellers and resellers. producers resellers Toothpaste, Major Luxury goods, Life insurance magazines, appliances, such as Rolex laundry detergent televisions, watches or fine Red Cross furniture, crystal blood clothing donations Table 1.1 Marketing consideration for various consumer products 19 Industrial goods can be classified into; • Capital goods. • Raw materials. CU IDOL SELF LEARNING MATERIAL (SLM)

• Component parts. • Major equipment. • Accessory equipment. • Operating supplies. • Services. Services: Services, being intangible, can be harder to show value. You can’t see or touch a service. Often, then, the goal of marketing services is to create good relationships with your target audience, developing and building trust. You are essentially selling yourself. 1.11 THE TRADITIONAL DIFFERENCES BETWEEN PRODUCT AND SERVICES 1.11.1 Customization While products are designed, built and delivered to a range of customers ‘as standard’, services can be tweaked and customized depending on the needs or wants of customers. Tip: Your service marketing strategy should reflect this by highlighting the personal touches you provide or how you listen to your customers’ needs. 1.11.2 Delivery When a company sells a product to a consumer, the customer acquires the product. When it comes to a service, the customer must visit the company in order to appreciate or experience it. It is impossible to disentangle the service from the supplier. For instance, if you wanted to purchase a DVD from Amazon, you would click the buy button and wait a few days for the item to arrive. However, if you want to take advantage of Amazon Prime's subscription service, which features frequently updated movies, you must visit the website and watch the film there. Tip: When selling a service, make the customer experience as smooth and as simple as possible. It means making sure your customer touch points are connected and up to date. 20 CU IDOL SELF LEARNING MATERIAL (SLM)

1.11.3 Ownership While a product may be purchased, used, and then resold'second-hand,' a service cannot be resold once used. Additionally, a commodity is a distinct entity from the company that creates/sells it. In the other hand, a service is inextricably linked to the company that offers it. Tip: Marketing for services should be all about building the brand and personality of the service provider. 1.11.4 Expiration It’s also important to understand that services are consumed immediately and cannot be returned once carried out. This is where the marketing goal of creating trust comes in. Tip: Bear in mind that if you offer poor service, your customers may not be able to return the service, but they will cease to be customers. If a customer has purchased a product, this does not guarantee they will purchase from you again – but if they are satisfied with it, they are more likely to do so. If you're selling a product or a service, providing an exceptional customer experience should be the highest priority. 1.11.5 Time Typically, services are rendered at a predetermined time and for a predetermined duration. The service agreement must then be extended or terminated. A commodity can be purchased and acquired without regard for time constraints. Tip: Marketing differences here should centre around the value of low-cost monthly subscriptions in the case of services, or a ‘buy once, use forever’ message for a product. 1.12 TABULAR COLUMN PRODUCT AND SERVICE MARKETING: Product marketing Service marketing Meaning Product marketing refers to the Service marketing implies the process in which the marketing marketing of economic activities, activities are aligned to promote and offered by the business to its sell a specific product for a clients for adequate particular segment. consideration. 21 CU IDOL SELF LEARNING MATERIAL (SLM)

Marketing 4 P’s: Product, Price, Place, 7 P’s: 4 P’s + People, Process, mix Promotion Physical evidence Sells Value Relationship Who comes to Products come to customers Customers come to service whom? Transfer It can be owned and resold to It is neither owned nor another party. transferred to another party. Return ability Products can be returned. Services cannot be returned after they are rendered. Tangibility They are tangible, so customer can They are intangible, so it is see and touch it, before coming to difficult to promote services. the buying decision. Separability Product and the company producing Service cannot be separated from it, are separable. its provider. Customization Products cannot be customised as Services vary from person to per requirements. person, they can be customised. Imagery They are imagery and hence, They are non-imagery and do not receive quick response from receive quick response from customers. customers. Quality Quality of a product can be easily Quality of service is not comparison measured. 1.13 SERVICE MARKETING IMPLICATIONS 22 CU IDOL SELF LEARNING MATERIAL (SLM)

The SERVQUAL model provides a comprehensive framework for identifying what are key criteria from the customer’s perspective when evaluating and assessing the quality of services provision. In turn, it suggests the key areas where a service provider has to perform effectively. Finally, and related to these first two aspects, the SERVQUAL model guides the implementation of quality programmes for services marketers together with systems of evaluation and control. The SERVQUAL model stresses that a company has service quality problems where there is a gap between what consumers expect and what they perceive they receive with regard to services quality. There are possible bases for such gaps and therefore strategies for filling them: Customer intelligence gaps – First of all, a gap can exist because a company simply does not understand what customers want, and in particular what represents the key service attributes and levels of performance. They simply do not understand their customers’ needs. Design gaps – Even if the service marketer understands the service need and requirements of customers, service levels may still be decided which we know do not meet these. This may be because of resource constraints on the part of the service provider or perhaps because the customers desired service levels are deemed to be too costly to provide and hence unprofitable. Production gaps – Even if the marketer understands and proposes to meet customers’ service needs and requirements the process may simply fail to deliver these. Often such gaps are due to unrealistic targets for service levels and especially where these unrealistic levels are promised to customers so that the customer now expects them. Sometimes, this type of gap stems from lack of resources, training or systems devoted to achieving the standards set. When Virgin Trains was first established, Virgin made several promises about the service standards customers could expect from the Virgin Train Service. These related to areas such as punctuality, reliability, cleanliness, safety and so on. As much as anything, some of the problems that Virgin Trains have experienced with regard to customer complaints about the 23 CU IDOL SELF LEARNING MATERIAL (SLM)

service stem from the initial expectations which these promises encouraged on the part of customers. Perceptual gaps – This type of gap stems from the customer simply not recognizing that their service requirements and expectations have in fact been met. For some reason the marketer has failed to persuade or convince the customer about this 1.14 MARKETING IMPLICATIONS Once you understand how customers make their purchasing decisions, how does this affect your marketing efforts? The response is complex. You need to understand how the core audience makes these decisions, not how consumers generally make them. The most powerful way to address your concerns is through marketing analysis. There is a wide variety of available marketing research strategies, including: • Online surveys • Proctored testing • Diary studies • Focus groups Online Surveys in Marketing Online surveys are the simplest and most cost-effective method of easily collecting consumer data. To produce a survey properly, you must concentrate on one main task at a time. You cannot obtain clear data if you are not based on an online survey, and your questions should be simple to read and answer. Proctored Testing in Marketing In this case, proctored testing is distinct from school-based testing. Rather than that, it emphasises the presence of a researcher when a consumer evaluates a function or product. For instance, if you want to determine how well your online application is performing, you can observe customers shopping on their smartphones. What is important in this situation is the opportunity to obtain real-time consumer reviews. Encourage the participants to think aloud as they complete the task you assign them. As a marketer, the customer's thinking process is unquestionably more important than how the evaluated application or product works. 24 CU IDOL SELF LEARNING MATERIAL (SLM)

Diary Studies in Marketing Although diary studies are significantly more time-consuming and involved than surveys or proctored research, they can be invaluable to a marketer. Your participants will either capture regular videos or particular activities relevant to your product over a specified time period. Generally, a week is a fair request for participant time; exceeding that greatly increases the risk of drop-off. Focus Groups in Marketing Focus groups were once a staple of marketing research; now, they are incredibly inefficient and should be avoided at all costs. Numerous studies have been conducted to determine the efficacy of focus groups. One such examination examined a pair of jeans. The researcher pulled out a pair of jeans and requested that they be passed around and inspected, before inviting participants to talk. After completing the first pair of jeans, the researcher removed the pants from the room, waited a moment, and then returned with the same pair of jeans. Almost immediately, it became clear that at least one participant was aware that they were the same pair, but chose not to express it because everyone else agreed with either the first or most confident participant. Additionally, focus groups tend to skew in the direction that an organisation \"wants\" them to. Due to confirmation bias, this is not true science. To really understand how to research customers, you must speak with them individually in order to avoid succumbing to the personality cult. 1.15 SUMMARY • Marketing is the process of persuading potential consumers to buy the organization's product or service. • Tangible Products can be shown by Demonstration. • Services are Intangible can be harder to show value. • Traditional differences of Product and Service, like Customization, Delivery, Ownership, Expiration and Time. • Marketing Mix of 4P’s, product, Price, process physical. • SERVQUAL model, comprehensive framework for identifying the quality of services provision. • Marketing implications like On-Line surveys, Diary Studies,Focus groups , Proctored. 25 CU IDOL SELF LEARNING MATERIAL (SLM)

• On-Line surveys are the easy and cheapest way of marketing. 1.16 KEYWORDS • B2B - Business to Business. • B2C – Business to Customer • DVD -Digital Versatile Disc. • CRM – Customer relationship management. • NGO – Non-Governmental Organization 1.17 LEARNING ACTIVITY 1. Talk to an administrator in a tourism service business and determine the significance of marketing in that firm. Summarized the finding in the form of a report ___________________________________________________________________________ ____________________________________________________________________ 1.18 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What is marketing? 2. What is the Role of Customer? 3. List out the Service Marketing Implication? 4. Who is end-customer? 5. What is meant by production gap? 6. Describe perceptual gaps. 7. Is there any difference between a final customer and a final consumer? If so, what is it 8. If User X purchases milk with a purpose to resell and User Z purchases milk for his kids, who of the following is a customer or a consumer? Long Questions 26 1. Explain the difference between Product and Service Marketing? 2. Explain the Market implications. 3. Differentiate between role of customer and consumer. 4. Describe products and its types. CU IDOL SELF LEARNING MATERIAL (SLM)

5. Explain classification of consumer product? B. Multiple choice Questions: 1. ----------- is the basic requirement of Human Being. a. Wants b. Need c. Demand d. Education. 2. The End-User who consumes the Offering ----- -- a. Customer b. Consumer c. individual d. People 3. An organization's objectives should be _________. a. short and few in number b. clear and specific c. clear and unreasonable d. All of these 4. What is the goal of relationship marketing? a. to know the names of all the business's customers b. to segment a market by age c. to create a customer for life d. to introduce the new product to the market 5. Complimentary shampoo, clean towels, and breakfast are examples of goods in the _________ industries. a. hospitality and tourism b. sport management c. food and beverage 27 CU IDOL SELF LEARNING MATERIAL (SLM)

d. Transportation 6. The total assortment of products that a company makes or sells is called _________. a. the marketing mix b. the promotional mix c. the pricing mix d. the product mix 7. A(n) ________ restaurant is a popular way for a young entrepreneur to enter the restaurant business. a. Sandwich b. Family c. haute cuisine d. ethnic Answer 1.d 2.a 3.c 4.a 5.a 6.d 7.d. 1.19 REFERENCES Reference books • Kotler, Philip : Marketing Management & Hospitality and Tourism Marketing. • Sinha, P.C : Tourism marketing. • Vearne, Morrisson Alison: Hospitality marketing • Kotler, Philip and Armstrong Philip, Principle of Marketing, 1999, Prentice-Hall India, 1999 Text books • Specific Country Guide Books of Lonely Planet Publication. • DK Eyewitness Travel Guide: Europe • A.K Bhatia – International TourismMgt. • International Geography for Travel and Tourism by John P.Wrades 28 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 2: MARKETING ENVIRONMENT ANALYSIS Structure 2.0 Learning objectives 2.1 Introduction to Marketing Environment 2.2 Definition 2.3 SWOT Analysis 2.3.1 Strengths 2.3.2 Weaknesses 2.3.3 Opportunities 2.3.4 Threats 2.4 Marketing Analysis PESTEL 2.4.1 Political 2.4.2 Economic 2.4.3 Socio cultural 2.4.4 Technological 2.4.5. Legal Environmental 2.5 Porter’s Five Forces 2.6 Segmentation, Targeting, Positioning 2.7 Summary 2.8 Keywords 2.9 Learning activity 2.10 Unit end Questions 2.11 Reference 2.0 LEARNING OBJECTIVES After studying this lesson, the students will be able to • Recognize the concept of Marketing Environment • Explain about SWOT Analysis • Describe Porter’s five force analysis • Apply PESTEL concept in tourism industry • Analyse about Segmentation ,Targeting and Positionig 29 CU IDOL SELF LEARNING MATERIAL (SLM)

2.1 INTRODUCTION TO MARKETING ENVIRONMENT Tourism marketing does not occur in a vacuum. A tourism organisation operates within a set of circumstances. Therefore, in order to operate a tourism company successfully, it is essential to consider all of the factors affecting the business and their effect on it. Numerous environmental factors and forces have a sizable effect on any company. Organizations are more reliant on their environment when the following factors exist: 1. Required resources are scarce; 2. Required resources are not equally distributed; 3. Increasing connectedness disrupts the environment's elements and their relationships. All influences, both internal and external, contribute to the formation of the market climate. Thus, comprehending the company entails comprehending its climate. When the world is more ambiguous and difficult to comprehend due to the following factors: 1. It is more distinct 2. It is dynamic, and 3. Its various components are intricately linked. 2.2 DEFINITION According to Philip Kotller, \"the marketing world\" refers to the internal factors and forces that influence a business's ability to establish and sustain effective transactions and relationships with its target customers. According to Skinner, the marketing climate encompasses all external factors influencing an organization's marketing operations, including competition, policy, politics, culture, economic conditions, and technology. The term \"marketing climate\" applies to all the constituent powers that exist in a given environment and affect how a business unit operates. The marketing environment refers to both internal and external influences, which directly or indirectly influence the organization’s decisions related to marketing activities. Internal factors are under an organization's control; external factors are not. External factors include government, technological, economic, social, and competitive forces; internal factors include an organization's strengths, weaknesses, and competencies. A marketing environment is composed primarily of the following environments: 30 1. Micro Environment CU IDOL SELF LEARNING MATERIAL (SLM)

2. Macro Environment 2.3 SWOT ANALYSIS. (STRENGTH, WEAKNESS, OPPORTUNITIES THREATS) Watershed's initial value lies in determining your environment and the location of your internal strengths and weaknesses and gauging your external opportunities and risks. It considers both positive and negative factors affecting the firm's performance, both internal and external. Consistent analysis of the world in which the business operates aids in forecasting/predicting emerging patterns and also aids in incorporating them into the organization's decision-making process. Below is a summary of the four factors (Strengths, Weaknesses, Opportunities, and Threats). 2.3.1 Strengths Strengths are the characteristics that allow us to carry out the mission of the organisation. These are the pillars upon which future progress can be built and sustained. There are two types of strengths: visible and intangible. These are the areas in which you are knowledgeable or have experience, the characteristics and skills that your workers possess (both individually and collectively), and the distinguishing characteristics that give your company its consistency. Strengths are an organization's advantageous characteristics or strengths, which include human capabilities, process capabilities, financial resources, goods and services, customer goodwill, and brand loyalty. Significant financial capital, a diverse product portfolio, no debt, and dedicated staff are all examples of organisational strengths. 2.3.2 Weaknesses Weaknesses are the characteristics that keep us from successfully completing our mission and reaching our full potential. These flaws have a detrimental effect on the organization's performance and development. Weaknesses are certain elements that do not live up to the expectations we believe they can. A company's weaknesses which include depreciating equipment, inadequate research and development facilities, a limited product selection, and poor decision-making. Weaknesses can be overcome. They must be reduced to a minimum and removed entirely. For instance, new machinery may be purchased to replace obsolete machinery. Other organisational 31 CU IDOL SELF LEARNING MATERIAL (SLM)

vulnerabilities include massive debts, high employee turnover, complicated decision-making processes, a limited product selection, and significant raw material waste. 2.3.3 Opportunities The world in which our company works presents opportunities. This occur when a company can leverage the conditions in its environment to develop and implement strategies that increase its profitability. By capitalising on opportunities, organisations will achieve a competitive edge. Organizations must exercise caution and consider and seize opportunities when they occur. Selecting goals that are both beneficial to the client and achieve the desired outcomes is a challenging challenge. Markets, competition, industry/government, and technology all present opportunities. Increased demand for telecommunications coupled with deregulation presents an excellent opportunity for new companies to join the telecom sector and compete for revenue with established firms. 2.3.4 Threats Threats occur when external events jeopardise the organization's ability to conduct business reliably and profitably. They exacerbate the vulnerability by relating to the flaws. Threats are inescapable. When a threat occurs, the security and survival of the community can be jeopardised. Examples of risks include employee unrest; ever-changing technology; rising competition, which results in excess capacity, price wars, and decreased business profits; and others. Incredible India SWOT Analysis Incredible India Below are the Strengths in the SWOT Analysis of Incredible Strengths India: 1. The campaign highlights not only the tourist places in India, but also its cultural and historical heritage 2. The campaign managed to make a powerful visual impact on the viewers. 3. The campaign was featured sufficiently through print and TV media and hence had a good reach 32 CU IDOL SELF LEARNING MATERIAL (SLM)

4. The Incredible India campaign along with the complementary campaign of “AtithiDevoBhava” managed to gain popularity Incredible India Threats occur when external events jeopardise the organization's Weaknesses ability to conduct business reliably and profitably. They exacerbate the vulnerability by relating to the flaws. Threats are inescapable. When a threat occurs, the security and survival of the community can be jeopardised. Examples of risks include employee unrest; ever-changing technology; rising competition, which results in excess capacity, price wars, and decreased business profits; and others. Incredible India Threats occur when external events jeopardise the organization's Opportunities ability to conduct business reliably and profitably. They exacerbate the vulnerability by relating to the flaws. Threats are inescapable. When a threat occurs, the security and survival of the community can be jeopardised. Examples of risks include employee unrest; ever-changing technology; rising competition, which results in excess capacity, price wars, and decreased business profits; and others. Incredible India Threats Threats occur when external events jeopardise the organization's ability to conduct business reliably and profitably. They exacerbate the vulnerability by relating to the flaws. Threats are inescapable. When a threat occurs, the security and survival of the community can be jeopardised. Examples of risks include employee unrest; ever-changing technology; rising competition, which results in excess capacity, price wars, and decreased business profits; and others. 2.4 MARKETING ENVIRONMENT PESTEL 33 CU IDOL SELF LEARNING MATERIAL (SLM)

The tourism industry has been growing for decades, and shows no signs of stopping. As individuals from across the world have more money to spend than ever before, and get to see the globe’s many wonders through social media, it’s no surprise they want to travel Figure 2.1 Pestel Analysis Political • Open borders • Government stability • Tax incentives Economic • Rising disposable incomes • Sharing economy Socio cultural • Social pressures • Racial acceptance Technological 34 CU IDOL SELF LEARNING MATERIAL (SLM)

• Better transport Legal Environmental • Transport pollution • Tourist negligence 2.4.1 Political Here are the Political factors affecting the tourism industry: Open borders It is now easier than ever to fly to new nations, thanks to numerous policymakers' decisions to open their borders to foreigners. Although some countries remain inaccessible (often due to political reasons), the vast majority of destinations are now accessible to visitors from all over the world. In certain cases, some type of visa is required; however, the process of applying for a visa has been streamlined in a number of countries, in part due to the use of technology. Government stability Political stability is critical to a tourist destination's success. Travelers are instinctively curious about the environment and can be swayed only by the fear of risk. The majority of popular tourist destinations are regarded as secure. However, there are many culturally significant destinations that would be famous tourist destinations were it not for political instability. Syria, Iraq, and, more recently, Hong Kong are all examples. Tax incentives Tax incentives are another political factor that has an effect on the tourism industry around the world. Tourists can demand a tax refund on goods purchased during their trip in a number of countries. Although these tax breaks are rarely the sole reason for a tourist to visit, there is no denying that they are a \"incentive\" for all visitors! 2.4.2 Economic 35 Here are the Economic factors affecting the tourism industry: CU IDOL SELF LEARNING MATERIAL (SLM)

Rising disposable incomes Incomes are growing all over the world. Individuals are able to earn more and more as the global economy expands. With living costs not increasing at the same rate, many people around the world have more money to invest than they have in the past. This has resulted in an increase in the use of electronic products (which are becoming more affordable due to lower product costs), as well as an increase in the number of people who are willing to fly. This is unquestionably beneficial to the tourism industry. Economic analysis will be performed on foreign countries' monetary, fiscal, and economic policies. Per capita wealth, disposable income, economic growth, currency controls, the balance of payments, the leave of imports and exports, and interest and foreign exchange rate fluctuations are all factors that affect consumer purchasing and spending patterns. The value of a currency is determined by its exchange rate with the currency of another country. Currency exchange rates fluctuate often, putting a number of sectors, including travel and hospitality, at risk. When the economy is nice, tourism businesses would be more willing to expand and take calculated risks. When interest rates are low and demand is high, for example. Increased incomes and improved living standards have always resulted in more discretionary income for luxuries like long-haul travel and other hedonistic activities. Sharing economy The sharing economy refers to a business movement in which people share goods and services directly with one another by facilitating services like Uber and Airbnb. The emergence of the sharing economy is changing the way we move, as you might have seen from those two examples. The sharing economy is making travel more available, but it is hurting some of the industry's corporate providers, with services like Uber providing a convenient way for visitors to catch rides around the world and Airbnb providing a cheaper alternative to conventional travel accommodation (primarily hotels and hostels). 2.4.3 Socio cultural Here are the Socio cultural factors affecting the tourism industry: Social pressures There's no denying it: travel is in style. Individuals now have a regular, online presence thanks to the advent of social media, and they want to use it to impress. Individuals are travelling while they would have otherwise stayed at home due to the social success of travel. 36 CU IDOL SELF LEARNING MATERIAL (SLM)

Of course, this trend is beneficial to the tourism industry, but it might not be sustainable if society moves away from social media use. Racial acceptance Racism acceptance is another positive sociocultural factor for the tourism industry. Individuals from all walks of life are becoming more inclusive of people of all races and religions. This makes travelling much more enjoyable because visitors are no longer profiled or targeted based on their skin colour, religion, or any other personal characteristics they may possess. Social issues Cultural norms, behaviours, customs, values, standards, lifestyles, and desires are all examined in a social study. Demographic variables, such as the age structure of the population, can change over time (for example, there are many developed countries that are already having an ageing population). Furthermore, social problems can include the cultural background, which is influenced by factors including population size, race, religious views, gender, family, education, occupation, and a person's position in society. Institutions have the power to influence society's core values, behaviours, and desires. Changes in consumer behaviour, for example, can be linked to recent fashions and styles. Customer behaviour and proclivity for travel can be influenced by climate and seasonal changes. Of course, other factors such as credit availability and expectations, competition from other purchasing behaviours, and so on can influence consumers' willingness to travel. Social issues can also be linked to travel distances, urban and rural lifestyles and attitudes toward travel, emigration, school holiday times, and perceptions of international commuting, among other items. A number of social issues should be addressed by tourism marketers. They would be better able to place their businesses and anticipate consumer demands if they have a strong understanding of social shifts. For the time being, a number of countries, especially for short- break itineraries, are experiencing a surge in popularity. As a result, demand for tourism products has increased during shoulder and off-peak seasons. Simultaneously, in the wake of recent terrorist attacks, airports and airlines are attempting to beef up security. The US government is currently considering banning laptops from planes. Civil wars, assassinations, and kidnappings of foreign nationals are all social factors to consider. These ancillary problems are also hazardous to tourism businesses' profitability. 37 CU IDOL SELF LEARNING MATERIAL (SLM)

2.4.4 Technological Here are the Technological factors affecting the tourism industry: Better transport The advancement of transportation is one of the most important technological factors affecting the tourism industry. Travelers now have more transportation options than ever before, particularly with the introduction of aeroplanes, and they are also cheaper (and faster!) than ever before. Buses, trains, and planes are all more convenient than ever, with new features like WiFi networking and charging ports. Technological Issues: Since marketers must stay updated on the latest developments in the tourism industry, a technical review is needed. Tourism industries, like airlines, are affected by digital technologies, which may result in the creation of new products and market opportunities, much like every other sector (Sigala, 2018; Gretzel, Werthner, Koo & Lamsfus, 2015). For example, customer-pleasing larger and faster aircraft, as well as airport technologies and facilities like efficient check-in desks, lounges, shuttles, and online travel booking sites, have all led to a positive customer experience. In addition, there have been a number of notable innovations in the area of airport security recently. In response to the need for quicker, more seamless processing and baggage checks, the Transportation Security Administration (TSA) is looking into the possibility of adding new security lanes. Furthermore, significant efforts have been made to improve the accuracy of threat detection. Emerging technologies have the ability to enhance both security and the passenger experience. Face recognition systems for passenger boarding are also being considered by a number of airlines. Because of the rapid pace of technological innovation, travel and tourism companies have been forced to invest heavily in order to remain competitive. This allows them to provide their customers with a higher quality of service. Many full-service legacy airlines introduced sophisticated reservation systems in the 1990s, allowing them to improve passenger services. They then introduced big data, analytics, and CRM programmes, all of which helped them develop their customer-centric strategies. In addition, as a result of industry partnerships 38 CU IDOL SELF LEARNING MATERIAL (SLM)

and/or code-sharing agreements with other carriers, a number of airlines, especially full- service carriers, have established sophisticated frequent flyer programmes. The efficient sharing and dissemination of vast quantities of information online has recently been made possible by the use of digital media, electronic databases, and interactive communications. Technology is increasingly being used by tourism marketers to improve service levels. Several forward-thinking destination management organisations (DMOs) are using a range of smart technology to improve their customer service levels. For example, in Seoul, South Korea, the KTO Tourist Information Centre (TIC) has introduced a number of information, communication, and technology (ICT) resources, including a visitor website with an interactive map that includes pre-arrival information. Marketing and public relations professionals use Facebook, Twitter, Instagram, and Snapchat to communicate with clients, and many travellers use a range of mobile apps. The Montreal Tourist Office, for example, promotes its attractions with an immersive video that gives tourists virtual experiences; the Las Vegas Tourism Office provides customised itineraries; and Tourism New Zealand has created an interactive trip planner with customisable maps, price ranges, and activities. Businesses in the tourism industry are becoming heavily reliant on their ability to use the internet (Buhalis & Law, 2008). In a number of respects, technological advances and the advent of ubiquitous media and mobile communications have had a major effect on tourism businesses. Via interactive media, a large number of consumers and prospects participate in two-way communication with companies. They can also use social media and review and rating sites like TripAdvisor and Yelp to engage in electronic word-of-mouth ads (which can be positive or negative). 2.4.5. Legal Environmental Here are the Environmental factors affecting the tourism industry: Transport pollution The pollution generated by transportation mediums such as buses, trains, and — more so than others — aeroplanes, is perhaps the most significant environmental factor affecting the tourism industry. As these modes of transportation become more common, their environmental impact grows. All three result in vast quantities of toxins (such as carbon dioxide) being released into the atmosphere, contributing to global warming and other environmental issues. 39 CU IDOL SELF LEARNING MATERIAL (SLM)

Tourist negligence Tourism can cause pollution on a local level in addition to global pollution. Tourists may be less respectful of a destination than they are of their home, littering and/or contaminating the environment. This is an undesirable side effect of the tourism industry, whether it's discarding bottles in the countryside or using daily shampoo in lakes. Environmental scanning Environmental scanning entails collecting information on the various forces at work in the marketing environment. This involves looking at and analysing primary and secondary sources of information, such as online content from business, trade, media, and government, to name a few. The method of assessing and analysing gathered data is known as environmental analysis. Marketing managers or analysts tasked with conducting market research may perform ongoing analysis of the information gathered. Marketers can conduct research in order to detect current environmental patterns and even predict future trends. Brand managers should be able to recognise possible threats and opportunities associated with environmental changes by analysing patterns and trends. We must consider both the external (i.e. macro-environment) and internal (i.e. micro-environment) aspects of the'marketing atmosphere' when analysing it (Kotler, Armstrong, Frank & Bunn, 1990). The macro environment Tourism businesses must constantly assess the marketing environment in which they work. It is essential for their long-term economic viability and success. As a result, marketing executives must search and study the world. The majority of firms are skilled at assessing the political climates of their home countries. It is also more difficult for them to judge political climates in other countries. It is attended by international companies with political risk management expertise, as they are expected to perform ongoing systemic evaluations of the political risks they face in foreign countries. Any changes in the political world that may have a negative effect on the value of a company's operations are referred to as political risks. The majority of political risks are the result of government decisions, such as legislation expropriating private property, increased operating costs, currency devaluation, or limits on funds repatriation, to name a few. Non-governmental activities involving criminal activity can also pose a political threat (for example: kidnappings, extortion and acts of terrorism, et cetera). As shown in Table 1.1, political risks can affect all businesses equally or have a disproportionate impact on particular sectors. Political challenges raised by non- 40 CU IDOL SELF LEARNING MATERIAL (SLM)

governmental actors should also be considered. For example, French farmers have staged numerous symbolic protests against Disneyland Paris and McDonald's, which they see as a simple way to communicate their dissatisfaction with US foreign agricultural policies. Demonstrations may often devolve into abuse, resulting in businesses closing their doors. Type Impact on Firms Expropriation Loss of future profits. Confiscation Loss of assets, loss of profits. Campaigns against businesses Loss of sales; increased costs of public relation; efforts to improve public image. Loss of sales; increased costs of public relation; efforts to improve public image. Loss of sales; increased costs of public relation; efforts to improve public image. Loss of sales; increased cost of public relation:effort to improve public image Mandatory labour benefits legislation Increased operating costs. Kidnappings, terrorist threats and other Increased security cost;increased managerial forms of violence Kidnappings, terrorist cost; lower productivity threats and other forms of violence Civil wars Destruction of property; lost sales; increased security costs. Destruction of property; lost sales; increased security costs. Destruction of property; lost sales; increased security cost Inflation Higher operating cost Repatriation Inability to transfer funds freely. Currency devaluations Reduced value of repatriated earnings. Increased taxation Lower after-tax profits. Table 2.1 Typical example of Political risks 41 CU IDOL SELF LEARNING MATERIAL (SLM)

When it comes to investing in new markets, international companies should think about the following simple questions: Is the host country business-friendly? Is it governed by a democracy or a dictatorship? Is there a single individual or political party in charge of authoritative power? Is the distribution of resources in the country dependent on the free market or on government controls? How much assistance from the private sector is needed to help the government achieve its overall economic goals? Is the government's attitude toward multinational corporations one of encouragement or impediment to its economic goals? Is the government acting unilaterally or following the rule of law when it comes to policy changes? What is the new regime's level of stability? Will the new government's economic policies be dramatically altered if it leaves office? Before entering a new sector, businesses should always think about (research) these problems. To avoid uncertainty and needless risks, they should be familiar with the host country's political and economic structures. Appendix A. provides an outline of the aviation industry's regulatory system. PESTLE Analysis of the Tourism Industry: Final Thoughts The tourism industry is influenced by a variety of positive factors. Political advantages for tourism include open borders, stable regimes, and tax incentives. Furthermore, changes in the economy, such as rising disposable incomes and the growth of the sharing economy, are making travel more affordable. Sociocultural factors such as social media pressure and increased racial acceptance, as well as technological factors such as improved transportation, are all helping the tourism industry. The only negative factors discovered by this PESTLE study are those related to the environment. Unfortunately, both locally and globally, tourism has a negative effect on the climate. If the industry can address these concerns, growth can continue unabated. 2.5 PORTER’S FIVE FORCES Michael Porter is a well-known scholar who is well-known for his finance, market strategy, and competitive advantage theories. Porter's Five Forces Analysis, Competitive Strategy, National Diamond, and Value Chain are only a few of the great works that have shaped the entire world. The Porter Five Forces Model is a great method for assessing market competition. It looked at the components of an industry to determine the level of competition, the availability of healthy margins, and the attractiveness of entry. 42 CU IDOL SELF LEARNING MATERIAL (SLM)

Many companies have used the model to show a full business environment and determine what can be done to gain from the five powers. Porter’s five forces with explanation Profitable sectors would undoubtedly draw new investment, resulting in an increase in production and a reduction in margin. A replacement product is one that uses advanced technology to solve the same problem in a more cost-effective manner. Customers' bargaining power is determined by the number of vendors in the industry. Customers would have more bargaining power if they can easily get what they want on the market. Suppliers' negotiating power is limited by the product's supply on the market. Suppliers' bargaining power can be boosted by advanced or differentiated technologies. The degree of concentration of the TOP 5 suppliers or downstream end users can be used to determine the level of competitive rivalry. The more fierce the competition in this industry, the lower the produce price. 43 CU IDOL SELF LEARNING MATERIAL (SLM)

Fig 2.2 Porter’s five forces with explanation Threats faced by newcomers: Newcomers enter a business with the aim of gaining market share. The severity of the threat is measured by whether or not the market has entry barriers for new entrants. Entry obstacles include customer loyalty to existing brands, stringent government legislation, and a lack of distribution channels. Established players may be less threatened if a market has higher entry barriers. Bargaining power of suppliers: This force determines how much clout and control suppliers have over the price and quality of imported goods and services. Increased availability of goods and services means a loss of price and quality control. On the other hand, if suppliers are few, they will have more power and control. Bargaining power of the buyer: This force determines how much pressure buyers can put on the firm. Customers are price aware and switch products often, putting the company under strain. The buyers are more powerful if a product has a small number of buyers and a large number of substitutes; conversely, the company is more powerful if the product has a large number of buyers and a minimal number of substitutes. Substitutes and alternatives: Consumers will easily switch from one brand to another if the company fails to meet their expectations, so the availability of substitute and alternative products puts the company under pressure. Businesses must keep an eye on new product launches and change their marketing strategies as required. Rivalry within the industry: This force evaluates the level of competition among the market's existing players. There is a lot of rivalry because there are a lot of competitors that are similar in size and weight. Rivals participate in aggressive advertising campaigns and price wars when competition is fierce. This necessitates a proper framing of the company's plans. 2.6 SEGMENTATION, TARGETING, POSITIONING 44 CU IDOL SELF LEARNING MATERIAL (SLM)

Fig 2.3 Segmentation, Targeting, Positioning 2.6.1 Segmentation “Market segmentation is the mechanism by which producers organise their awareness of consumer groups and pick for special attention those whose needs and desires they are best able to supply with their products,” says Victor T.C. Middleton. Since each tourist is unique, the tourism industry will not be able to meet all of their requirements. This is the cornerstone of market segmentation. Although every tourist is unique, some of them have characteristics in common. A tourism company's marketing team divides visitors into different categories, categorising both related and dissimilar individuals. Market segmentation can be applied to any aspect of the tourism supply chain and has the following advantages: • It aids in the comprehension of particular customer demands. • It aids in the effective allocation of marketing expenses. • It aids in the creation of successful marketing campaigns for a particular market segment. Tourism Market Segmentation The tourism market segmentation can be broadly divided into the following types − Geographic 45 CU IDOL SELF LEARNING MATERIAL (SLM)

Geographic market segmentation takes into account factors such as the origin of visitors. This is significant because visitors from various locations have been raised with diverse cultures and exhibit different behaviours. It is the simplest form of segmentation. Demographic This segmentation is done by considering the tourist’s gender, age, marital status, ethnicity, occupation, religion, income, education, and family members. Psychographic This segmentation is done by marketing professionals who consider the psychology of visitors. They collect information on the visitors' preferences, behaviours, lifestyle, views, and overall personality. In tourism, organisations use a variety of marketing techniques, though the focus on target marketing is gaining traction. Let us take the example of Airlines vis-à-vis the tourist market • Under stage-1, airlines are available for everyone to travel. • Under stage-2, the airlines offer Royal class, J class, Business class, Economy class or one can hire charter flight or a chopper. • Under stage-3, special airline services to pilgrim both domestic (dhams) or Vaishno Devi or international ( Haj Jerusalem) which have set target of customers from among the up budget tourist market 2.6.2 Market Targeting The list below refers to what’s needed to evaluate the potential and commercial attractiveness of each segment. Criteria size: The market must be large enough to justify segmenting. If the market is small, it may make it smaller. Difference: Measurable differences must exist between segments. Money: Anticipated profits must exceed the costs of additional marketing plans and other changes. Accessible: Each segment must be accessible to your team and the segment must be able to receive your marketing messages Focus on different benefits: Different segments must need different benefits. 46 CU IDOL SELF LEARNING MATERIAL (SLM)

2.6.3 Product positioning Positioning maps are the last element of the STP process. For this to work, you need two variables to illustrate the market overview. In the example here, Some cars available in the UK. This isn’t a detailed product position map, more of an illustration. If there were no cars in one segment it could indicate a market opportunity. Fig 2.4 Product positioning Using the very simple example above as an example, you can unpack the market by mapping your rivals into a matrix based on key purchasing factors. After that, you choose the segments to approach by identifying the most appealing. There are a few things to think about in this situation. Take a look at each segment's profitability first. Which consumer groups make the most money for you? Next, assess each customer group's size and potential for growth. Is it significant enough to warrant attention? Is it possible to maintain a steady rate of growth? How does it stack up 47 CU IDOL SELF LEARNING MATERIAL (SLM)

against the other segments? (Ensure that moving the target to a too-small niche market won't result in sales reduction.) Last but not least, consider how well your company will serve this market. Are there any legal, technical, or social obstacles, for example, that may be a hindrance? Conduct a PEST Analysis to learn more about the opportunities and threats that each section can face. To create an STP marketing strategy: 1. Define the market The global market is far too big and far too vast for anyone – even the biggest corporation with the most resources – to address. That’s why it’s important to break it down into smaller chunks and clearly define the part you are going after. Typically, to evaluate your business opportunity, you will need to define your TAM - Total Available Market SAM - Serviceable Available Market SOM - Serviceable Obtainable Market. Fig : 2.5 48 CU IDOL SELF LEARNING MATERIAL (SLM)

Think of it as an iceberg. The very top peeking from under the water is your SOM – that’s the portion of the market that you can effectively reach. SAM is the portion of the total available market that fits your product or service offering. Whereas TAM is the total available market, in other words, “the overall revenue opportunity that is available to a product or service if 100% market share was achieved.” For example, back when Airbnb was starting to pitch investors, they used the TAM, SAM, SOM model to explain their business potential. Their total available market (TAM) then was valued at $1.9 billion dollars and included any type of accommodation that travelers were worldwide . Fig 2.6 Since their service was geared toward low-cost travellers who used online booking engines to find a place to stay. The SAM was priced at $532 million dollars in this situation. Finally, their SOM was $10.6 million dollars, indicating the sales potential for Airbnb. In the case of a consumer product, we might assume that Diet Coke's TAM includes the whole soda industry. Its SAM would focus on soft drinks, while its SOM would target the carbonated sugar-free drinkers. When it comes to identifying a demand, you have many options. You can do so by following these steps: • Industry classification (agriculture, retail, transportation, etc. • Product category (apparel, health and beauty, food and beverage, etc.) • Country (United States, United Kingdom, etc.) 49 CU IDOL SELF LEARNING MATERIAL (SLM)

2. Create audience segments It's time to segment your target market using geographical, demographic, behavioural, and psychographic variables now that you've properly identified it. Each segmentation variable taps into a different part of your audience, and when used together, you can create niche segments that have a significant effect on your overall marketing strategy. If you divide the serviceable obtainable market into men and women (demographic variables), you still have a fairly large audience group. However, by layering additional segmentation variables on top, you can build a precise audience on which you can have the greatest effect. Perhaps you target American women (demographics) who choose to spend money on expensive goods (psychographics) who follow you on social media or have previously visited your website (behavior). Fig 2.7 As you can see, this layering method creates a hyper-focused audience segment that allows you to create an extremely personalized experience. And as we mentioned before, personalization has a huge impact on the success of your marketing efforts. 3. Construct segment profiles It's time to build segment profiles once you've determined which business segments are viable. Segment profiles are similar to ideal consumer personas in that they are comprehensive representations of the individuals in each segment, but they are subsets of your main persona. 50 CU IDOL SELF LEARNING MATERIAL (SLM)


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