Realize economic development opportunities: Large infrastructure projects, for example, can provide an opportunity to develop new skills in the labour force and/or encourage private sector investment in local communities. 3.4 SUMMARY • Private tourism businesses can provide a forum for discussing and resolving common problems associated with tourism enterprises • Private tourism businesses can sponsor special events • Private tourism businesses can act as local spokesman to the local community • Public-Private Partnership in tourism is to be employed with a combination of policy reforms, institutional support, incentives and financing modalities to encourage the private sector participation in financing, constructing, managing infrastructure and other related. 3.5 KEYWORDS • Globalization: the movement of goods, ideas, values, and people around the world • International Air Transport Association (IATA): the trade association for the world’s airlines • International Civil Aviation Organization (ICAO): a specialized agency of the United Nations that creates global air policy and helps to develop industry capacity and safety • International Festivals and Events Association (IFEA): organization that supports professionals who produce and support celebrations for the benefit of their respective communities • Meetings, conventions, and incentive travel (MCIT): all special events with programming aimed at a business audience • Meeting Professionals International (MPI): a membership-based professional development organization for meeting and event planners 3.6 LEARNING ACTIVITY 1. Discuss the relationship between tourism and other organisation 101 CU IDOL SELF LEARNING MATERIAL (SLM)
__________________________________________________________________________ __________________________________________________________________________ 3.7 UNIT END QUESTIONS A. Descriptive questions Short Questions 1. What is IATO 2. Give brief note on TTDC 3. Write the role of Mistry of tourism in tourism development? 4. Write the objectives of IATA? 5. Give short note on ITDC? Long answer questions 1. Explain the role of private sector in the development of tourism 2. Explain the role of public private partnership the development of organization 3. List few tourism organizations in India. 4. What is the role of IATA in Tourism industry? 5. Explain IATO and their role in promotion of tourism industry. B. Multiple Choice Questions 1. The Ministry of Tourism is headed by ------------------------ a. President b. Prime Minister c. Chief Minister d. Union Minister for Tourism 2. Expand IATA 102 a. International Aviation Travel Association b. International Air Transportation Association c. International Aviation and Tourism Association d. None of these CU IDOL SELF LEARNING MATERIAL (SLM)
3. The Headquarters Of IATA a. Geneva b. Montreal c. London d. None of These 4. The Executive Office Of IATA a. Montreal b. Geneva c. New York d. None Of these 5. The Headquarters Of IATO a. Perth b. Geneva c. Delhi d. None of These Answers 1-d 2-b 3-b 4-b 5-c 3.8 REFERENCES Text Books: • Holloway, J.C., The Business of Tourism, Prentice Hall, London. • Roday. S, Biwal. A & Joshi. V., Tourism Operations And Management • Oxford University Press, New Delhi. • Goeldner, R & Ritchie. B, Tourism, Principles, Practices And philosophies, John Wiley & Sons, London • Bhatta dev University, Department of Tourism of Tourism and Travel Management. 103 CU IDOL SELF LEARNING MATERIAL (SLM)
UNIT - 4 TOUR FORMULATION STAGE-I Structure 4.0 Learning objectives 4.1 Introduction 4.2 Stages in tour packages 4.3 Summary 4.4 Keyword 4.5 Learning activity 4.6 Unit end questions 4.7 References 4.0 LEARNING OBJECTIVES After studying this unit, the student will be able to • Identify the factors affecting tour packages. • Explain the stages in tour packages 4.1 INTRODUCTION Factors Affecting Tour Packages Factor Affecting the Tour Package Formulation Generally, the business of package tours involves great risk, high breakeven, high-quality product, and competitive prices. Therefore, the tour management requires in-depth tour planning and market survey. However, before a tour is designed the tour manager should take into consideration certain factors which are crucial in the formulation process. There are many factors that influence the running of the tourism industry. Some show immediate effect while, there are also factors which affect in the long run. Environment at Destination Tourism is in its best form when the destination boasts of conducive climate. In contrast, any undesired changes in the environment such as high winds, flash floods, drought, and extreme climate can affect tourism adversely. 104 CU IDOL SELF LEARNING MATERIAL (SLM)
For example, during harsh summer months in India, people prefer to travel to colder climate regions like hill stations. Economy of the Country When a country is undergoing economic turbulence and when people are facing unemployment issues, tourism is affected adversely. On the contrary, when a country’s economy is doing well and people can afford to spend money on leisure, tourism progresses. Historical or Cultural Importance of Destination The place or destination of travel affects the tourism business to a great extent. If the destination is of great historical or cultural significance then tourists will certainly like to visit the place for seeing monuments, castles, forts, ancient architecture, sculptures, caves, antic paintings and utensils, clothes, weapons, ornaments, and other allied heritage. For example, the world-famous places of historical and cultural importance are Taj Mahal (India), Pyramids of Gaza (Egypt), Began City (Burma), Acropolis (Athens, Greece). Research Importance of Destination There are tourists who visit places with the objective of studies and exploration. Need for research promotes tourism. Archaeologists, Geologists, Oceanographers, Biologists and Zoologists, Architects, and People researching Arts and Cultures seek places that have great significance in the field of research. Religious Importance of Destination The places of religious importance or worship are always flooded with tourists. At these places, tourism is at its peak at particular time periods in a year. The tourists often go on pilgrimage to find inner peace and invoke blessings of the deities they worship and to cleanse their sins before death. For example, Mecca, Bethlehem, Kashi. 105 CU IDOL SELF LEARNING MATERIAL (SLM)
Fig 4.1 Factors Affecting Tourism Technology Internet has penetrated to almost every corner of the world. Tourists are enjoying the benefits of Internet. While planning a tour, the tourists try to get the idea about the places they are going to visit, the quality of amenities and services, and the attractions at the destination. After visiting a destination, the experienced tourists share their opinions on various platforms of the Internet. Thus, the reviews of experienced tourists shared on the internet work as guidelines for the following tourists. Hence, just like a double-edged sword, the Internet can boost as well as bring down the tourism business. These factors have a profound impact on the tourist’s satisfaction. The main factors are: • Purpose of Tour • Choice of Destinations • Tourist Budget • Legal Requirement • Types of Tourist Accommodation • Tour Period 106 CU IDOL SELF LEARNING MATERIAL (SLM)
• Departure and stay information • Tour price; inflationary condition • Tour Reference Tools • Tour Features – political stability The relationship between the host and tourist generating nation Tour Package Design and Selection Process The quality of a package tour is entirely based on the above factors. Essentially, to design/formulate a travel product, the tour manager has to take the biggest responsibility, intuitiveness, imagination, and innovation coupled with a lot of business activities which range from finding new exotic destinations and planning, organizing or promoting such tour. 4.2 STAGES IN TOUR PROCESS The following are the main stages in the tour design and selection process: Research – Destination and Market: The main object of tour packaging research is to analyse and understand the key elements associated with a particular tourist market and destination. Generally, many tour operators find that it is very difficult to arrange all things for all people. Advertisements: Suppose there is a person desiring to enter the tour field and accordingly will concentrate on identifying his areas of interest and specialization, therefore, the tour operator will research not only on the tours that seem to fit those areas of interest and specialization but, also on the potential market relating to those areas. Some tour operators start with a tour product and then seek a market for it. Their tour product is the destination area consisting of tourist potential, touristic appeal, accommodation, and other services. Conceptually, a tour operator undertakes the following steps before entering the tourism market as such: • Identification of economic, political, social and climatic factors that influence the future development of package tours. 107 CU IDOL SELF LEARNING MATERIAL (SLM)
• The target market, when the target market is small the tour operator must obtain a large percentage to make a tour successful, but if the market is large, he tries to capture smaller percentage. • Making the tour to meet the exact needs of the target market. • Identification of key destinations and a comparative study of alternative destinations. • Approaching the suppliers. • Making the policy decisions. Basically, the positive progressive approach to be adopted by tour operators is based upon researching both tour ingredients and the market i.e. the clientele, competition and tourist resources at the destination area. Therefore, it is certainly not to suggest that one should not enter the tour market but rather to stress the importance of undertaking marketing research prior to investing amount and time on a tour that the study would have shown to be unprofitable or unpromising. Initial Research (i) The Destination Research -The decision to develop and formulate a new package is a multi-stage process that involves various positive and negative points/steps. Normally, the idea for a new product comes either from the tour executive within the company due to a review of the questionnaire completed by the previous tour members because of the political, economic and social development in a particular area . When a tour manager see that a large number of old clients are interested in taking a trip to particular destinations, naturally, those destinations become the nucleus of a new ‘tour concept’. (ii) Market Research Since tour package is a complete tourism product, obviously, before formulating/designing this product, market research needs to be analyzed and assessed in a systematic manner. Market research provides us the answer to the following questions • What is the size of the tourism market? • Who are the existing clients? • Where do they live? 108 CU IDOL SELF LEARNING MATERIAL (SLM)
• Who will be their potential buyers? • Who are their competitors – their strategy and area of business leisure? • How many tourist ones want to cater? • What price will the clients accept? • What facilities are available and required? • What are the constraints viz., license, permission, finance, restrictions, taxes, and others? Once we know the basic components of the package tour, distribution channels, market conditions, constraints in the tourism market, we can develop the marketing strategy. It enables the smooth functioning of the agency and also offers a clear picture of the tour programme. Practically, market research is conducted by the private tour companies/ private tourism enterprises in order to penetrate the market. Itinerary development has become the crux and /or central point for the success of a tour company. Itinerary is a summarized tour programme designed to identify the origin, destinations, stopping points, en route points, accommodation, transportation, transportation and sightseeing activities. An itinerary shows the sequence of various tour ingredients and provides essential information such as assembling point, departure point, date of departure and duration of tour, legal requirements, features of destinations, optional activities, meal and perhaps more than these. Tour planners must find the answer to three key questions – 'How much customer demand is in the market?'; 'How practical is the tour?' and 'How profitable is it?' The tour company negotiates with the following tour vendors/suppliers: airlines, lodging companies, transport operators, car rentals, ground operators, sightseeing vendors and so forth. The appointment of handling agency not only ensure excellent travel services to the tourist but also make the operation smooth and profitable. Negotiation means talk between the travel companies and the principal suppliers for the terms, conditions, and prices of a tour package. A tour planner has an option to negotiate with air carrier directly or through a travel agency. Travel agencies buy considerably more airline seats from airlines than tour operators. Hotel negotiations are generally more informal than in case of air carriers. 109 CU IDOL SELF LEARNING MATERIAL (SLM)
A tour operator also negotiates with other vendors such as ground operators, restaurants, transport operators, sightseeing vendors, insurance companies, banking companies, cruise organizations and even others who are indirectly dealing with tourist services, which are the part of a tour package. The ground operators tend to be umbrella companies that provide a variety of tourism services under one roof. The cost of a tour package can be determined as per clients/market requirements or organisational strategies. Air travel, accommodation, payroll, research, marketing and other expenses make up the total cost. Cost is the basis for the determination of 'right' amount of profit and so is a biggest challenge for the tour planner. New tour operator must adopt step-by-step approach of costing a tour packages, it is suggested. The costing process involves several steps which can be changed to meet the individual needs of the tour company. Tour pricing is a very complex decision especially in view of the degree and intensity of linkages, the nature of tour ingredients, competitive tourism ingredients, and problems involved in tourist demand. Most tour operators recover overheads by determining per capita contribution i.e. per pax break-even point based on anticipated costs for the year and anticipated number of tourists to be carried. Specialist tour operators whose product is unique may have more flexibility here and may determine prices largely on the basis of cost plus mark-up. Poynter states that professional tour operators believe that a tour should not be operated unless it can be run profitably. In case of specialist tour operators, prices reflect market demand at different periods of the year. Tour operators must constantly keep in mind that with every rupee increase in the price of their tour, a percentage of potential tourists may be excluded from the tour market. Since the tour operation business is seasonal in nature, it requires extra personnel to meet the increasing needs. Tour managers consider it important to oversee the whole tour, deal with problems, guide tour members in the culture and language, and generate business. Thousands of tour operating companies are designing and marketing tour packages in the international tourism market. Tour package marketing is significantly different from the marketing of other tourism elements. Marketing strategies of adventure tour operators will be different from strategies used by ground operators/or inbound tour operators. Marketing of inclusive tours is largely the responsibility of the tour operators, writes Shashank Joshi. The marketing strategies of multiple tours involving multi-destinations will usually be different, he says. 110 CU IDOL SELF LEARNING MATERIAL (SLM)
It would, therefore, seem sensible that tour operator must adopt a structured and systematic tour marketing plan. Tour company needs to understand both its product and its market before developing a marketing plan. Tour marketing plan is normally a short-term plan which guides the tour operator for one to three years. To decide on the tour marketing strategies is perhaps the most complicated stage in the planning process. Large scale tour operators add a few new strategies, each year to maximize their return. It is of utmost significance that all marketing plan components need to be coordinated in a manner that they fit together easily and effectively. International tour market composed mainly of tours organized and planned in another country and operated in other countries. Getting contracts to handle inbound tours is quite different from handling outbound tours. Tour operator will either offer his tours directly to the market or sell them through travel agencies. Sales will hinge on products being presented in brochures designed by the tour operators and marketing techniques as well as promotional campaigns. The tour operator's marketing tool is its tour brochure which contains comprehensive information to persuade and motivate potential holiday makers to purchase tourist products/services. The brochure cover shows the title, date, tour code, and name of the tour company. The inside pages/flaps highlight the tour features, modes of transportation, types of accommodation, payment conditions, and other information. In addition to tour brochures, tour operators often undertake various promotional programmes to market tour packages such as personal promotional selling, sales promotion and advertising campaigns. The total tourism product is no more than an idea – the brochure establishes expectation of quality, value for money, product image and status. Tour promotion is the blend of communication activities designed and carried out to influence those clientele size on whom the tour operator's sales depend. It is not sufficient to influence target markets only but also travel agents, suppliers, travel writers and journalists, destination companies, and Governments. Tour package is an amalgam of various products/services which can really be experienced only at the time they are offered. A tour manual includes several sections relating to carrying out day-to-day responsibilities, policies, guidelines for working with vendors and emergency handlings. The tour industry practices have shown that if everything is managed professionally then it is not only one of the most effective. 111 CU IDOL SELF LEARNING MATERIAL (SLM)
Many tour companies have a policy to obtain tour manager's perceptions regarding what tour participants (members) liked the most about the trip and what they disliked. Detailed vendor reports are often required to evaluate the services rendered and products provided by these vendors. These reports are evaluated and reviewed to identify real or potential problems. 4.3 SUMMARY • There are many factors that influence the running of the tourism industry. Tourism is in its best form when the destination boasts of conducive climate. Economic turbulence and unemployment can affect tourism adversely. When a country's economy is doing well and people can afford to spend money on leisure, tourism progresses. Historical or cultural importance of a place or destination of travel affects the tourism business to a great extent. • Religious importance of places of religious importance or worship are always flooded with tourists. Need for research promotes tourism. Internet has penetrated to almost every corner of the world. Tourists are enjoying the benefits of Internet. Main factors are: Purpose of Tour, Choice of Destinations, Budget, Legal Requirement, Types of Tourist Accommodation, Tour Period, Departure and stay information. • Quality of a package tour is entirely based on the above factors. To design/formulate a travel product, the tour manager has to take the biggest responsibility, intuitiveness, imagination, and innovation. The target market, when the target market is small the tour operator must obtain a large percentage to make a tour successful. If the market is large, he tries to capture smaller percentage. The decision to develop and formulate a new package is a multi-stage process that involves various positive and negative points/steps. • Market research needs to be analyzed and assessed in a systematic manner. Once we know the basic components of the package tour, distribution channels, market conditions, we can develop the marketing strategy. It enables the smooth functioning of the agency and also offers a clear picture of the tour programme. Whether it is a lean season or an offseason, escorted or not escorted, consumer-oriented or readymade tour programme, the itinerary is prepared to identify the origin, destinations, stopping points, accommodations, sightseeing and other travel services. New tour operators undertake 'familiarization tour' and after successful operation, they develop an itinerary. 112 CU IDOL SELF LEARNING MATERIAL (SLM)
• An itinerary is a summarized tour programme designed to identify the origin points, destinations, en route points, accommodation, transportation, sightseeing activities and other services. Theoretically, there are two basic approaches for itinerary development. The first deals with approaching vendors without identifying himself. The second approach means a tour planner makes contract with all potential vendors in advance to put together all ingredients. The appointment of handling agency not only ensure excellent travel services to the tourist but also make the operation smooth and profitable. • Negotiation means talk between the travel companies and the principal suppliers for the terms, conditions, and prices of a tour package. The tour company negotiates with the following tour vendors/suppliers: airlines, lodging companies, transport operators, car rentals, ground operators, sightseeing vendors and so forth. A tour planner has an option to negotiate with air carrier directly or through a travel agency. If the tour company has a long history of operating large number of inclusive air tours, the tour planner will usually be better placed to negotiate a better price. Travel agencies buy considerably more airline seats from airlines than tour operators. • Air carrier vendors generally provide/offer price reductions only to their best clients. Hotel negotiations are generally more informal than in case of air carriers. Tour operator also negotiates with other vendors such as ground operators, restaurants, transport operators, sightseeing vendors, insurance companies, banking companies, cruise organizations and even others who are indirectly dealing with tourist services, which are a part of a tour package. The reliability and honesty of these vendors is an important issue which must be considered by the tour planner. Main aim of negotiations is obviously to reach the best competitive price for a satisfactory quality-price ratio. • Air travel cost, accommodation cost, local arrangement cost, payroll cost, research cost, marketing cost and other expenses make up the total cost of a tour package. The cost is the basis for the determination of 'right' amount of profit and so is the biggest challenge for the tour planner. After costing of a package tour, tour planner determines exchange rates, estimates future selling prices and finalizes tour prices. The tour planner has to finalize price structure some ten months or more before the departure of a trip. No generalized tour pricing approach exists in the tour operator industry, and in actual practice, the approaches/methods adopted vary from one tour company to another. 113 CU IDOL SELF LEARNING MATERIAL (SLM)
• Most tour operators recover overheads by determining per capita contribution i.e. per Pax break-even point based on anticipated costs for the year and anticipated number of tourists to be carried. In case of specialist tour operators, prices reflect market demand at different periods of the year. Specialist tour operators whose product is unique may have more flexibility. Poynter states that professional tour operators believe that a tour should not be operated unless it can be run profitably. New tour operators must overcome the price obstacle on the very first tour so that the newcomer will not be under-pricing himself. • Tour operators recruit persons with friendly and sociable personalities, organizational skills, good humor, a sense of ethics, the ability to make decisions and a love for people, places and travel. Many tour operators recruit mostly reservation staff, guides, resort staff, sales representatives, international agents, and so forth on a part-time basis. 4.4 KEYWORD • Destination Research -The decision to develop and formulate a new package is a multi-stage process that involves various positive and negative points/steps • Price Skimming – Price skimming is a product pricing strategy by which a firm charges the highest initial price that customers will pay and then lowers it over time. • Price Penetrating – Penetration pricing is a marketing strategy used by businesses to attract customers to a new product or service by offering a lower price during its initial offering. The lower price helps a new product or service penetrate the market and attract customers away from competitors. • Price Discrimination - Setting different prices for similar items sold to different customers, intended to capture differences in the customer’s willingness to pay. The practical application of a pricing segmentation system. 4.5 LEARNING ACTIVITY 1. Prepare a tour package that would suit age group from 50-60 years of aged people ___________________________________________________________________________ ___________________________________________________________________________ 114 CU IDOL SELF LEARNING MATERIAL (SLM)
4.6 UNIT END QUESTIONS A. Descriptive questions Short Questions 1. Explain what are the factors affecting tour packages? 2. Describe what is a customized tour? 3. Define what is a tour evaluation? 4. Explain about sales promotion. 5. Describe briefly about Post Tour Management. Long Questions 1. What are the initializing factors for tour formulation? 2. Explain the background information for preparing itinerary. 3. What is package tour? How is the process interwoven in a systematic manner? 4. Why is the tour formulation process very important for tour operator? 5. Explain the steps involved in developing your package tour B. Multiple Choice Questions 1. Tourism destination planning relates to planning of _______________ a. Carvings b. Sculptures c. Architecture d. Places 2. Tourism activity is ______________generating activity a. Income b. Recreation c. Travel d. Destination 3. The place at which a traveller terminates his journey is called ________________ a. Destination b. Domestic Tourism 115 CU IDOL SELF LEARNING MATERIAL (SLM)
c. Excursionist d. Mass tourism 4. Tourist ___________is a composition of series of operations that are result of study of the market a. Infrastructure b. Motel c. Itinerary d. Multiplier 5. One of the steps in destination planning is ____________ a. Goal setting b. Tourism planning c. Resource Planning d. Profit making Answers 1-d 2- a 3- a 4-c 5-c 4.7 REFERNCES Text Books: • Holloway, J.C., The Business of Tourism, Prentice Hall, London. • Roday. S, Biwal. A & Joshi. V., Tourism Operations And Management • Oxford University Press, New Delhi. • Goeldner, R & Ritchie. B, Tourism, Principles, Practices And philosophies, John Wiley & Sons, London 116 CU IDOL SELF LEARNING MATERIAL (SLM)
UNIT - 5 TOUR FORMULATION STAGE -II Structure 5.0 Learning objectives 5.1 Introduction 5.2 Stages of Developing and Planning a Tour Package 5.3 Summary 5.4 Keyword 5.5 Learning Activity 5.6 Unit end question 5.7 References 5.0 LEARNING OBJECTIVES After studying this unit, you will be able to • Explain the itinerary preparation of tour formulation • Evaluate basic steps in Itinerary Planning 5.1 INTRODUCTION Itinerary Preparation Itinerary is a systematic method of arranging places of interest. It enhances value and appeal of package tour and provides maximum satisfaction to customers. The saleability and marketability of any package tour is determined by tour itinerary. Customers always check nature and type of tour itinerary that provides ample information about the operation of tour. Places of tourist importance are logically arranged while taking the interest, convenience, cost, availability of services, climate, terrain, sunrise, etc into considerations. Tour operator has the sole responsibility of designing tour itinerary and it involves several stages of finalizing itinerary. It requires several rounds of survey of tourist destinations, priority of visits and connectivity. This lesson will present the meaning, types, nature and importance of tour itinerary. Meaning of Itinerary 117 CU IDOL SELF LEARNING MATERIAL (SLM)
An itinerary is a schedule or an arrangement of programmes or events. It is prepared for designing package tour. The origin, destination and en-route halting points and duration of halts along with elements of services like hotel rooms, transports, activities and miscellaneous services are clearly described in tour itinerary. An itinerary gives detailed information about nature, type, length and quality of package tour. Importantly, it determines sales of package tour and it is aptly a selling point for alluring customers to buy package tour Importance of Itinerary Itineraries are also prepared for customers for air travel. The nature of air travel or train travel or road travel does not include other essential components of package tour. The air or rail itinerary highlights on departure and arrival time of flight or trains, terminal or station details, number of flight and trains, baggage limits, transits, seat allocation and minimum check-in time in case of flight and suggested arrival time at station. However, it is an itinerary designed for FIT and they themselves arrange other component of services. However, it doesn’t explain the type of marketing plan and strategy for positioning or branding package tour in market. An itinerary includes all kinds of requirement of package tour and it is basically regarded as complete itinerary to satisfy travel, stay and activities. It is essentially important to ensure quality of package tour. The quality can be measured from the suitability, nature and comprehensiveness of a tour itinerary as it is described in tour brochures. It gives much confidence and interest to undertake journey to places of interest. Or else, it gives so much uncertainty and other problems in the tour. Thus, tour itinerary is printed in brochures with elaborate description of places of interest and kinds of services. Tour brochures are printed after expert team visits the places of interest, properties and other on-site activities. Accordingly, it includes logical inclusion and exclusion of services and sequential arrangement of a variety of features considering the needs and pleasure of customers. The core business of tour wholesalers or tour operators is package tour. A planned itinerary eliminates much of the tension and problems at the time of operation of tour. For example, when a particular tablet or injection is prescribed to heal the diseases without experimentation or test, it may have serious negative impacts and there may be many side effects. The same example may be applicable to use itinerary without having proper test. Itinerary gives a frame through which package tour is conducted and other features are also incorporated to enhance value of package. Thus, logical planning along with familiarization 118 CU IDOL SELF LEARNING MATERIAL (SLM)
trip is generally done to ensure precision in the operation of tour. There can be additions or deletions as the process continues to produce an appealing itinerary. Before the finalization of tour itinerary along with the route, one or two FIT or small group tours are conducted to analyse the feedback of customers. One tour operator can design package tour on the basis of itinerary as it is a final product for sale. Tour operator provides seamless itinerary and it can be tailor-made or customized or specialized. Thus, it is important to study the meaning and importance of itinerary planning and tour packaging. 5.2 STAGES OF DEVELOPING AND PLANNING A TOUR PACKAGE 1. Research – Destination and Market: The main object of tour packaging research is to analyse and understand the key elements associated with a particular tourist market and destination. Generally, many tour operators find that it is very difficult to arrange all things for all people. Suppose there is a person desiring to enter the tour field and accordingly will concentrate on identifying his areas of interest and specialization, therefore, the tour operator will research not only on the tours that seem to fit those areas of interest and specialization but, also on the potential market relating to those areas. Some tour operators start with a tour product and then seek a market for it. Their tour product is the destination area consisting of tourist potential, touristic appeal, accommodation, and other services. Conceptually, a tour operator undertakes the following steps before entering the tourism market as such: • Identification of economic, political, social and climatic factors that influence the future development of package tours. • The target market, when the target market is small the tour operator must obtain a large percentage to make a tour successful, but if the market is large, he tries to capture smaller percentage. • Making the tour to meet the exact needs of the target market. • Identification of key destinations and a comparative study of alternative destinations. • Approaching the suppliers. • Making the policy decisions. 119 CU IDOL SELF LEARNING MATERIAL (SLM)
Basically, the positive progressive approach to be adopted by tour operators is based upon researching both tour ingredients and the market i.e. the clientele, competition and tourist resources at the destination area. Therefore, it is certainly not to suggest that one should not enter the tour market but rather to stress the importance of undertaking marketing research prior to investing amount and time on a tour that the study would have shown to be unprofitable or unpromising. 2. Tour Itinerary Development: Once the study as regards the destination and the target market has been conducted, the second phase in the developmental process involves working out an effective tour itinerary. It is based on two things – for new tour operators to research on both destination and tour ingredients and for established ones to review the questionnaires completed by previous tour participants. Generally, the new tour operators undertake ‘familiarization tour’ and after successful operation, they develop an itinerary. The itinerary is a summarized tour programme, which is designed to identify the origin points, destinations, en route points, accommodation, transportation, sightseeing activities and other services. Moreover, an itinerary shows the sequence of various tour ingredients and provides essential information such as assembling point, departure point, date of departure and duration of tour, legal requirements, features of destinations, optional activities, meal and perhaps more than these. Thus, itinerary development has become the crux and /or central point for the success a tour company. Theoretically, there are two basic approaches for itinerary development. The first deals with approaching vendors without identifying himself. The reasons supporting this approach being that the tour planner makes reservations independently from the vendor companies as tourist or as tour planner to discover how the “average tourist” is treated by them. It helps him to classify vendors into categories ranging from extremely good to extremely bad. That is, under this approach tour planner starts the ‘tour’ as a tourist who is not distinguished from the other tourists. 120 CU IDOL SELF LEARNING MATERIAL (SLM)
It provides a major advantage to the tour planner in the form of an opportunity to evaluate vendors and their services from the standpoint of general public (tourists). However, the approach has pitfalls of being both expensive and time consuming. The second approach means a tour planner makes contract with all potential vendors in advance to put together all ingredients. When the ‘fam tour’ is conducted in this manner, the tour planner puts all possible components of tour together and develops final tour itinerary. Obviously, tour planner receives much more than the average tourist would have received. Mostly vendors provide the tour planner more convenient and comfortable facilities during his visit. However, this approach is not free from disadvantage of giving the planner a skewed viewpoint in respect of all ingredients of the tour. The tour operator industry practices show that the combined approach is most often used by tour planners to develop an itinerary. The tour planner undertakes all possible attributes of the tour first as an unidentified individual traveller and repeats each tour ingredient as an identified tour planner. Thus, a tour planner will have a much more realistic view at the time of itinerary preparation. More significantly, before designing and planning an itinerary, the tour planner must try to find the answer to three key questions – ‘How much customer demand is in the market?’; ‘How practical is the tour?’ and ‘How profitable is the tour?’. 3. Negotiations with Tourism Suppliers/Vendors: Once the itinerary is finalized, the next step is to negotiate with prospective vendors. The tour planner works with many vendors depending upon the nature and size of the tour. The major ones are airlines, lodging companies, transport operators, car rentals, ground operators, sightseeing vendors and so forth. A tour planner has an option to negotiate with air carrier directly or through a travel agency. If the tour company has a long history of operating large number of inclusive air tours, the tour planner will usually be better placed to negotiate a better price and better terms/conditions than the tour planner/company could obtain through travel agency. 121 CU IDOL SELF LEARNING MATERIAL (SLM)
On the other hand, if the company is new and normally operates railroad tours, the company will obtain a better price and margin, working through a travel agency than directly, because air carrier vendors generally provide/offer price reductions only to their best clients. Travel agencies buy considerably more airline seats from airlines than tour operators especially, small scale. Practically, a tour company works on several air tours and purchases a substantial number of air carrier seats, the tour planner is in a position to meet with airline’s marketing executives and negotiate future tour group fares and ticketing. But if he has to negotiate for reduced rate air tickets, the tour planner will be referred to the airline group desk. However, most airlines do not provide this type of negotiation. Therefore, any tour company wishing to obtain ‘group’ rates must abide by all rules and conditions (formal) in order to qualify for such rates. Further, the negotiations concerning various services and concessions from carriers will depend upon how badly the airline needs to have the seats filled. Hotel negotiations are generally more informal than in case of air carriers. Negotiations with lodging properties should be initiated on an appointment basis, meeting with top executives in each property if at all possible. It is suggested that the negotiated arrangements agreed upon through discussions with property executives be detailed immediately after each meeting and the tour planner must strike a balance in obtaining quality accommodation at a price that is affordable for the target market being solicited for participation in the tour. It is always better if the executive with whom the negotiation is undertaken agrees to sign a binding contract with a penalty clause included in case the hotel fails to provide stated services and facilities. Further, a tour operator also negotiates with other vendors such as ground operators, restaurants, transport operators, sightseeing vendors, insurance companies, banking companies, cruise organizations and even others who are indirectly dealing with tourist services, which are the part of a tour package. The ground operators tend to be umbrella companies that provide a variety of tourism services under one roof. Each of the vendors range in its degree of sophistication based 122 CU IDOL SELF LEARNING MATERIAL (SLM)
primarily on factors relating to their size of activities and the number of tourists handled every year. Moreover, the reliability and honesty of these vendors is an important issue which must be considered by the tour planner. Therefore, in selecting and negotiating these vendors, tour planner should be wary of potential problems that occur when finalizing the contracts. Once negotiations have been successfully agreed upon contracts (may be both national and international) are drawn up with these vendors. Normally, having a letter of contracts, especially one that includes penalty clauses for non- performance or for performance to a lesser standard than that agreed to in the contract is one of the best ways of assuring that the vendor’s performance will be at least of expected standards. Thus, the main aim of negotiations is obviously to reach the best competitive price for a satisfactory quality-price ratio. 4. Costing of a Package Tour: The concept of ‘tour cost’ is focal to understanding the connotation and practices of tour management in determining the monetary value of a tour package. In simple terms, ‘cost’ means the total expenses incurred to change the shape of individual ingredients into a tour package. Since a tour company does not manufacture a tourism product (tour package) itself, rather it assembles or purchases individual ingredients/components from the various tourism vendors to form tour package. Therefore, the cost of a tour package can be determined as per clients/market requirements or organisational strategies, As a general rule, the elements that make up the total cost of a tour package can be broken into various categories as, air travel cost, accommodation cost, local arrangement cost, payroll cost, research cost, marketing cost and other expenses. Further, the cost sheet is designed to show the total cost/cost structure along with the break- up of individual cost elements. It gives an idea how the profit margin is to be fixed. Till today, there is no specific costing approach which is used in tour operator industry. However, as per the prevailing costing practices, one can visualize the following step-by-step procedure widely used in the tour operator industry. 123 CU IDOL SELF LEARNING MATERIAL (SLM)
The costing process involves several steps. Even though, these steps are not standard or generalized ones but can be changed/modified to meet the individual needs of the tour company. However, it is suggested that, new tour operator must adopt step-by-step approach of costing a tour package. Because the cost is the basis for the determination of ‘right’ amount of profit and so is a biggest challenge for the tour planner. 5. Financial Evaluation and Pricing: After costing of a package tour, tour planner determines exchange rates, estimates future selling prices and finalizes tour prices. The tour planner has to finalize price structure some ten months or more before the departure of a tour. Therefore, apart from the usual hazards of determining the tour price in advance, tour operators must evaluate the financial risks such as foreign exchange, for payment of airlines, hotels, and other destination agencies. The tour price is not solely determined in terms of the cost but also on the basis of expected goals such as Rate of return, Market share (both domestic and international) and Price competitiveness of the tour package. Tour pricing is a very complex decision especially in view of the facts like the degree and intensity of linkages, the nature of tour ingredients, competitive tourism marl et, and problems involved in tourist demand. Moreover, due to number of external and non- controllable factors – Government policies, climate, terrorism, inflation, competitive prices, market segments, exchange rate fluctuations and so forth. Thereby as such no generalized tour pricing approach exists in the tour operator industry, and in actual practice, the approaches/methods adopted vary from one tour company to another. James M. Poynter (1993) has developed a tour pricing formula and has described the various steps involved in it. As per the formula the tour price can be obtained by adding projected profit margin into the total tour cost. Initially, the Tour Costing & Pricing Manager, determines the per pax break-even point tour price by dividing the break even number of tour participants and compares the calculated per 124 CU IDOL SELF LEARNING MATERIAL (SLM)
person break-even point tour price (after adding the per person profit) to the budgeted projected per person tour price and modify accordingly. To some extent this approach is useful for new tour planners or new tour packages but for established tour operators or existing tour products/services, this approach does not operate effectively as the tour planners are forced by competitive environment particularly suppliers and sophisticated clients to reduce their profit margins. Holloway (1992) opines that specialist tour operators whose product is unique may have more flexibility here and may determine prices largely on the basis of cost plus mark-up whereas majority of tour operators take into account the prices of their competitors. Most tour operators recover overheads by determining per capita contribution i.e. per pax break-even point based on anticipated costs for the year and anticipated number of tourists to be carried. However, it has been noticed that in case of specialist tour operators, prices reflect market demand at different periods of the year and there is no equal distribution of overheads i.e. administrative costs. Generally, administrative overheads are recovered in the peak season. In practice, the following tour pricing approaches are now being favoured for adoption by the tour operators. 1. Cost-oriented tour pricing • Mark-up. • Total cost/absorption cost. • Product cost. • Rate of Return. 2. Market-oriented tour pricing • Skimming. • Going • Differential. • Penetrating. • Backward. Poynter states that professional tour operators believe that a tour should not be operated unless it can be run profitably. It is important for the new tour operators to overcome the 125 CU IDOL SELF LEARNING MATERIAL (SLM)
price obstacle on the very first tour so that the newcomer will not be under-pricing himself consistently. Avoid running tours at below cost, making do with inferior quality and giving yourself too little remuneration and avoid unrealistic overpricing fears. Thus, tour operators must constantly keep in mind that with every rupee increase in the price of their tour, a percentage of potential tourists may be excluded from the tour market. 6. Administrative Staff: Since the tour operation business is seasonal in nature, it requires extra personnel to meet the increasing needs. Tour operators are usually clear about what they want while selecting administrative staff to perform the extra activities, may be at a particular destination or at a resort. Tour operators recruit persons with friendly and sociable personalities, organizational skills, good humour, a sense of ethics, the ability to make decisions and a love for people, places and travel. Tour managers see themselves in much the same way, but they also consider it important to oversee the whole tour, deal with problems, guide tour members in the culture and language, and generate business. Generally, the same staff come and works for the same operator every year, which reduces the need for training. Many tour operators recruit mostly reservation staff, guides, resort staff, sales representatives, international agents, and so forth on a part-time basis or at the most for a season. 7. Marketing of a Tour Package: The tour operators’ strategic position between the various vendors encompassing airlines, transport operators, hotels, etc. and the ability to combine the various elements of travel industry into relatively affordable and standardized tour package, have emerged as the key manipulators of tourism industry. They play a pivotal role in determining tourist flows to a particular destination, in both developed and developing nations. As Shaw and William (1994) point out that approximately 80 percent of travel from the UK to Greece is in the form of package tours. 126 CU IDOL SELF LEARNING MATERIAL (SLM)
Thus, in United States, India, and most Western European countries there are now thousands of tour operating companies which are designing and marketing tour packages in the international tourism market. When tourists choose to book a package or decide to go on holiday, how do they determine which package to buy especially in view of the consumer’s inability to inspect the ingredients making up the tour package prior to travel? It is the tour ‘marketing’ which applies much more sophisticated strategies of trying to know what the tourist will want and satisfying the needs of the clients by means of the services rendered as well as the other customer’s value satisfactions associated with planning, preparing, and experiencing his travels. Kotler (1988) defines marketing as ‘a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and values with other’. The American Marketing Association (1984) defines marketing as “the performance of business activities that direct the flow of goods and services from producer to the consumer or users”. In simple words, marketing is the creation of a demand that results in satisfying consumers and accomplishing corporate objectives. Thus, the most important aspect that should be central to any marketing definition is based not only on identifying different consumer needs, but also on delivering a tourist product/service whose experiences provide sets of satisfactions which are preferable to those of the competitors. Tour package marketing is significantly different from the marketing of other tourism elements. This is because of the nature and types of tour packages offered by tour operators. Moreover, in the tour industry the marketing strategies that are effective and profitable for the mass tour operators, will often be substantially different than the marketing strategies adopted by tour specialists. For example marketing strategies of adventure tour operators will be different from strategies used by ground operators/or inbound tour operators. Even the marketing strategies of multiple tours involving multi-destinations will usually be different from the one day/one destination tours. 127 CU IDOL SELF LEARNING MATERIAL (SLM)
Thus, it has become imperative for a tour operator (if wants to be effective in marketing) to analyse profoundly what has been beneficial or productive for other tour companies in the same tour/similar destinations. Marketing of inclusive tours is largely the responsibility of the tour operators. Radburn and Goodall (1990) rightly stifle that it is vital to the tour operator that marketing creates the image necessary to achieve volume sales, which is encouraged at least in part by each tour operator offering a range of tour packages with a high degree of substitutability. It would, therefore, seem sensible that tour operator must adopt a structured and systematic tour marketing plan. 8. Developing a Tour Marketing Plan: Tour marketing plan is centred on organizational objectives. It is important to have a clear understanding of what the tour operator desires to achieve through marketing plan. In fact, a tour company needs to understand both its product and its market before developing a marketing plan. For many tour companies, budget is the first step in the process of developing a tour marketing plan. It is normally based on a certain percentage of projected expenditures for the next year. However, the proportion varies from package to package or existing tour company to new tour company. For new tour companies and specialized tour operators a higher budget will be required. It may range from 25 to 30 percent of the total projected cost. The tour marketing plan is normally a short-term plan which guides the tour operator for one to three years. It provides a clear direction of the tour marketing operation based upon a systematic approach to planning and action. It also coordinates the resources of the tour company to achieve the set targets. Recognizing the importance of tour marketing, tour operator develops the required mechanism to build effective tour marketing strategies. It illustrates how the tour marketing planning process should function and ensure that marketing activities match the resources, time requirements and objectives of the tour company. 128 CU IDOL SELF LEARNING MATERIAL (SLM)
To decide on the tour marketing strategies is perhaps the most complicated stage in the planning process. The working out of an appropriate strategy is directly related to the nature and type of the tour i.e., which strategy is most befitting for inbound tours, outbound tours, or incentive tours is based on its ability to provide a substantial return on investment. For example, tour operators, in case of outbound tours generally target travel agencies through a combination of strategies. Large scale tour operators add a few new strategies, each year to maximize their return. Some strategies are used for only a specific season/ destination while some strategies will be undertaken on a regular basis and reviewed or monitored periodically or at regular intervals of time. After identifying marketing strategies, tour operator develops annual media plan, advertising plan, sales plan, direct mail plan, and telemarketing plan. Practically, tour operator develops marketing plans in a number of ways namely, annual marketing plan i.e. blueprint for the whole year and individual tour marketing plan. It is of utmost significance that all marketing plan components need to be coordinated in a manner that they fit together easily and effectively and, consequently can be implemented economically. 9. Marketing Inbound and Outbound Tours: Generally, the international tour marketing is relatively more complex and difficult than domestic tour marketing. International tour market is composed mainly of tours organized and planned in another country and operated in other countries. Although the tour components in different types of tours are different but the tour marketing is similar to much extent. As an inbound tour operator handles these tours in different countries/destinations. For example, the India based tour operator handling international inbound tours will be expected to provide full tour services that are included in the package in the similar way as US, UK and French tour operators do, but the components may be different. Interestingly, obtaining contracts to handle inbound tours is quite different from handling outbound tours. For outbound tours, the tour operator usually is required to approach each and every tour member to sell its product (package), directly or through travel agencies. 129 CU IDOL SELF LEARNING MATERIAL (SLM)
In many cases a tour operator undertakes substantial contracting with inbound tour operators or ground operators to provide services as prescribed in the tour programme. However, for marketing inbound tours, a tour operator procures lists of those tour companies and travel agencies which are interested in travel business from the destinations served by the inbound tour operators. This is generally achieved through participation in international meets, marts, conferences and other associations. Practically, these events are so planned that international tour companies and travel agencies may purchase from the different country based inbound tour operators those travel ingredients required in order to operate their tours during the coming years. Thus, it is clear that tour operator will either offer his tours directly to the market or sell them through travel agencies. Whichever method of distribution he chooses, sales will hinge on products being presented in brochures designed by the tour operators and marketing techniques as well as promotional campaigns being applied. 10. Tour Operator’s Brochures: The tour operator’s vital marketing tool is its tour brochure which contains comprehensive information to persuade and motivate potential holiday makers to purchase tourist products/services. Middleton (1988) demonstrates that tour marketing relies on brochures to a much greater extent than other forms of consumer marketing. It presents the product ‘stock’ at the retail level but, at the time of sale, the total tourism product is no more than an idea – the brochure establishes expectation of quality, value for money, product image and status. Holloway (1992) lists the information that should be included in a tour operator’s brochure. • Name of tour company responsible for tour. • Transport mode(s) – carrier name, aircraft type and use of scheduled or charter services. • Details of destinations, itinerary and travel time. • Duration of tour – nights and days. • Description of destinations. 130 CU IDOL SELF LEARNING MATERIAL (SLM)
• Type of accommodation and meals. • Services of ground operators. • Price. • Extra charges clearly indicated. • Details of special arrangements and facilities. • Full booking conditions including cancellation terms. • Any optional or compulsory insurance cover. • Documentation required for travel to the destinations featured; and • Any health hazards or inoculation recommended. Thus, the tour brochure consists of several sections and sub-sections. The brochure cover shows the title, date, theme, tour code, and name of the tour company. The inside pages/flaps highlight the tour features, a brief itinerary, modes of transportation, types of accommodation, payments, unique appeal of destination(s), payment conditions, insurance, currency, documents, internet address, website(s) and also contains a self-mail flag/page on which potential tourists may fill in tour registration information in order to sign up for the tour. The large tour companies, especially in UK, US, India, Germany, Japan, and France print over one thousand copies of their tour brochures and distributes through retail travel agencies/ground operators, and their own retail outlets. Sometimes the brochures are sent directly to the past clients and others who have been identified by market research, particularly corporate houses. However, tour operators must make an appropriate decision in this context, because about half of all tour brochures are eventually thrown away without being seen by the public/ corporate houses. Therefore, wastage can be controlled or minimized by establishing accurate standards/norms. Thus, it is suggested that before distribution of tour brochures, sales managers must categorise their agents and clients. Definitely, it will prove instrumental in cutting down waste as well as costs. In addition to tour brochures, tour operators often undertake various promotional programmes to market tour packages such as personal selling, sales promotion and advertising campaigns. 131 CU IDOL SELF LEARNING MATERIAL (SLM)
Tour promotion is the blend of communication activities designed and carried out to influence those clientele size on whom the tour operator’s sales depend both in the short term and long-term. It is not sufficient to influence target markets only but also travel agents, suppliers, travel writers and journalists, destination companies, and Governments. Basically, the tour promotion is substantially different than other travel products/services because of variety of specialization in tour operation industry. Therefore, a tour company must define marketing/promotion objectives very clearly to design and practice most effective promotional tools/techniques. In actual practice, tour companies employ the following promotional techniques to create awareness and building brand image of tour packages: • Advertising. • Direct Mail. • Sales Promotion. • Public Relations. • Personal Selling. • Literature. • Sponsorship. • Exhibitions. • Travel Marts. • Films and Video. • Familiarization Tours. • Telemarketing. • Conferences and Debates etc. Paradoxically, the promotion of tour package relies on effective communication of tour ingredients. Tour package is an amalgam of various products/services which can really be experienced only at the moment of their consumption and which cannot be systematically reproduced in an identical way. Therefore, in an increasingly competitive tourism market, it is often the access to information which ensures the success of tour marketing. For tour operators, it is extremely important to participate in Computerized Reservation Networks and in Global Distribution Systems. 132 CU IDOL SELF LEARNING MATERIAL (SLM)
Today, tour companies have access to information on all air carriers, hotels and related products/services and can distribute their packages through a global distribution system network. GDS terminals provide immediate access to all the suppliers which have opted to market their products through this network. GDS has, therefore, become extremely significant in the sale of air and other tour packages. Unfortunately, GDS has not been put to use by many tour operators especially small scale/ground operators and domestic operators because of being poorly equipped. They are still using the traditional methods. Many tour companies have designed effective tour reservations system to put a tour package into operation. Generally, tour operators have employed several methods to handle tour reservations. New and small tour operators tend to work with answering services and usually consider direct reservation from public through telephone, and through agency’s computer reservation system. While large scale tour operators have their own reservation network. They obtain more than 75 percent of their business through intermediaries and the balance directly i.e. through CRSs. This provides substantially better-quality reservations, greater data flexibility and faster data input. Today, most of the tour operators have computer reservation systems tailor designed to meet their specific needs. Although these are expensive, but they can provide the company with a highest degree of capability. It may seem to be illogical but is true that tour operators are even now using same resources they have always relied on: Printed brochures and personal sales visits. In fact, according to recently released HSMAI Survey of Tour Operation Industry (North American segment), 1999, industry professionals are relying on tour brochures (75%), trade directories (68%), trade periodicals (60%), direct mail and so forth. 11. Operation and Execution of a Tour: 133 CU IDOL SELF LEARNING MATERIAL (SLM)
The success of a tour operator depends on how efficiently it operates a tour. This phase is very crucial and has capacity to convert promises into realities. So utmost care has to be taken to realize whatever had been promised in the package tour to offer to tourists. An experienced tour operator develops tour manual for tour manager, tour escort, tour guide, Destination Company and for other services to provide an understanding of how the tour company wants to operate and handle tour. A tour manual provides procedures and policies to conduct tours in more professional manner and the way in which procedures should be implemented as the tour progresses from beginning to end. Practically, a tour manual includes several sections relating to carrying out day-to-day responsibilities, policies, guidelines for working with vendors and tour participants and emergency handlings. It helps to establish a standard and a reputation for the tour company while giving guidelines to tour managers for answering questions on location/destination. It means that a problem can be resolved right away rather than waiting until direction can be received from headquarters. The tour industry practices have shown that if everything is managed professionally then it is not only one of the most effective but the only effective and productive system of operating and executing tours. Incidentally, most of tour companies are lacking in this professional approach to operate tours. 12. Post Tour Management: This phase is relatively more crucial, which involves preparation of several reports and their evaluation. In fact, it reveals the success of the tour, where tour planner should go for comparative analysis of the perceived goals, actual achievement and assessing the tourist satisfaction level, the financial gains, and the effectiveness of the tour packages. Many tour companies have a policy to obtain tour manager’s perceptions regarding what tour participants (members) liked the most about the trip and what they disliked. Detailed vendor reports are often required to evaluate the services rendered and products provided by these vendors. These reports are evaluated and reviewed to identify real or potential problems. Generally, tour company decrees that if there were vendor problems which were serious enough to 134 CU IDOL SELF LEARNING MATERIAL (SLM)
consider making a change, tour manager should expedite the reports so that tour planner may add the right ingredients in the next tour package. Tour member’s tour evaluations regarding the ingredients and services mostly serve two purposes. Firstly, to determine the feelings of tourists regarding the tour and its ingredients. Secondly, to remind tour members of how enjoyable the tour was and motivate them to sign up for future tours. Thus, tour member’s tour evaluation report must include both general and specific questions. Normally, each evaluation response is statistically analysed to calculate a mean average in determining an overall tour members opinion. Other statistical tools may, however, be used to obtain more accurate results. These findings give an idea of how the next tour is to be planned, designed and marketed. 5.3 SUMMARY • Itinerary is a systematic method of arranging places of interest. It enhances value and appeal of package tour and provides maximum satisfaction to customers. Salability and marketability of any package tour is determined by tour itinerary. An itinerary gives detailed information about nature, type, length and quality of tour. Itineraries are also prepared for customers for air travel. • The quality can be measured from the suitability, nature and comprehensiveness of a tour itineraries as it is described in tour brochures. It is essentially important to ensure quality of package tours. The core business of tour wholesalers or tour operators is package tour. Itinerary gives a frame through which package tour is conducted and other features are also incorporated to enhance value of package. logical planning along with familiarization trip is generally done to ensure precision in the operation of tour. • There can be additions or deletions as the process continues to produce an appealing itinerary. One tour operator can design package tour on the basis of itinerary as it is a final product for sale. Tour operator provides seamless itinerary and it can be tailor-made or customized or specialized. Itinerary development has become the crux and /or central point for the success of a tour company. New tour operators undertake 'familiarization tour' and after successful operation, they develop an itinerary. • The itinerary is a summarized tour program designed to identify the origin points, destinations, en route points, accommodation, transportation, sightseeing activities and 135 CU IDOL SELF LEARNING MATERIAL (SLM)
other services. Itinerary shows the sequence of various tour ingredients and provides essential information such as assembling point, departure point, date of departure and duration of tour, legal requirements. Negotiations with Tourism Suppliers/Vendors: Once the itinerary is finalized, the next step is to negotiate with prospective vendors. A tour planner has an option to negotiate directly with the air carrier directly or through a travel agency. Travel agencies buy considerably more airline seats from airlines than tour operators especially, small scale. • Negotiations concerning various services and concessions from carriers will depend upon how badly the airline needs to have the seats filled. If a tour company works on several air tours and purchases a substantial number of air carrier seats, the tour planner is in a position to meet with airline's marketing executives. Negotiations with lodging properties should be initiated on an appointment basis, meeting with top executives in each property. Tour operator also negotiates with other vendors such as ground operators, restaurants, transport operators, sightseeing vendors. The reliability and honesty of these vendors is an important issue which must be considered by the tour planner. • The main aim of negotiations is obviously to reach the best competitive price for a satisfactory quality-price ratio. The concept of 'tour cost' is focal to understanding the connotation and practices of tour management in determining the monetary value of a tour package. Cost is the basis for the determination of 'right' amount of profit and so is biggest challenge for the tour planner. Tour planners have to finalize price structure some ten months or more before the departure of a tour. Tour price is not solely determined in terms of the cost but also on the basis of expected goals such as Rate of return, Market share (both domestic and international) and Price competitiveness of the tour package. • James M. Poynter (1993) has developed a tour pricing formula and has described the various steps involved in it. Most tour operators recover overheads by determining per capita contribution i.e. per pax break-even point based on anticipated costs and anticipated number of tourists to be carried. In case of specialist tour operators, prices reflect market demand at different periods of the year and there is no equal distribution of overheads. Poynter states that professional tour operators believe that a tour should not be operated unless it can be run profitably. Tour operators must constantly keep in mind that with every rupee increase in the price of their tour, a percentage of potential tourists may be excluded from the tour market. 136 CU IDOL SELF LEARNING MATERIAL (SLM)
• Tour operators play a pivotal role in determining tourist flows to a particular destination, in both developed and developing nations. 80 percent of travel from the UK to Greece is in the form of package tours. Tour managers see themselves in much the same way, but they consider it important to oversee the whole tour, deal with problems, guide tour members in the culture and language, and generate business. Tour operators' strategic position between the various vendors encompassing airlines, transport operators, hotels, etc. and the ability to combine the various elements of travel industry into relatively affordable and standardized tour package. Tour package marketing is significantly different from the marketing of other tourism elements. • Marketing of inclusive tours is largely the responsibility of the tour operators. It is important to have a clear understanding of what the tour operator desires to achieve through marketing plan. A tour company needs to understand both its product and its market before developing a marketing plan . The tour marketing plan is normally a short- term plan which guides the tour Operator for one to three years. It provides a clear direction of the tour marketing operation based upon a systematic approach to planning and action. 5.4 KEYWORD • FIT-Free independent Travellers • GIT-Group inclusive Tour • Price Signaling - Legal methods of communicating your pricing intentions to your customers and the industry and interpreting similar signals from other companies. Includes announcing price increases, retailer promotions, and other publicly visible actions. • Price Segment - Price segmentation is the process of charging different prices for the same or similar product or service 5.5 LEARNING ACTIVITY 1. Prepare a vendor itinerary for supply of Food during halts in Travel destinations ___________________________________________________________________________ ___________________________________________________________________________ 137 CU IDOL SELF LEARNING MATERIAL (SLM)
5.6 UNIT END QUESTIONS A. Descriptive Question Short Question 1. What are the stages in development of tour planning? 2. Discuss the pricing strategies in tour packages 3. What is the difference between client’s and vendors itinerary? 4. List the steps in planning an itinerary. 5. What types of permissions are required before finalising an itinerary? Long Question 1. What background information is required while preparing an itinerary? 2. List out some major do’s of itinerary preparation. 3. List out some major don’ts of itinerary preparation. 4. Mention any two features of itinerary for FIT. 5. Mention any two features of itinerary for GIT. B. Multiple choice Question 1._________ pricing in tourism occurs, when a company sells tourism product at different prices in different locations. a. Promotional b. Mark -up c. Differential d. Follow the leader 2. Developing promotional objectives is one of the steps of _______ 138 a. Procedure of promotional plan b. Pricing CU IDOL SELF LEARNING MATERIAL (SLM)
c. Physical distribution d. Product designing 3. _________ operates as a legally appointed agent, representing the principal in certain geographic area. a. Tour operator b. Travel agency c. Tour broker d. Ground operator 4. Destination marketing organization can be classified as Regional Destination Marketing Organisation and ___________ a. Social Destination Marketing Organisation b. Community Destination Marketing Organisation c. National Destination Marketing Organisation d. International Destination Marketing Organisation 5. The online selling of goods and services to final consumers is known as 139 a. B2B online marketing b. B2C online marketing c. C2B online marketing d. C2C online marketing Answer 1-c 2-a 3-b 4-b 5-b 5.7 REFERENCE Text Books: CU IDOL SELF LEARNING MATERIAL (SLM)
• Holloway, J.C., The Business of Tourism, Prentice Hall, London. • Roday. S, Biwal. A & Joshi. V., Tourism Operations And Management • Oxford University Press, New Delhi. • Goeldner, R & Ritchie. B, Tourism, Principles, Practices And philosophies, John Wiley & Sons, London 140 CU IDOL SELF LEARNING MATERIAL (SLM)
UNIT - 6 TOUR FORMULATION- STAGE III Structure 6.0 Learning objectives 6.1 Introduction 6.2 Tourism marketing and promotion strategies for package Tour 6.3 Unique Features of Tourism Marketing 6.4 Brochure designing 6.5 Itinerary preparation for international tourist 6.6 Summary 6.7 Keyword 6.8 Learning Activity 6.9 Unit End Questions 6.10 References 6.0 LEARNING OBJECTIVES After studying this chapter, the student will be able to • Explain the brochure designing • Prepare itinerary for international tourist • Explain Tourism marketing and its strategies • Analyze about Unique features of Tourism Marketing 6.1 INTRODUCTION Travel and tourism marketing is the systematic and coordinated execution of business policies by both private or public and public sector tourism organizations operating at the local, regional, national, or international level to achieve the optimal satisfaction of the needs of identifiable tourist groups, and in doing so to achieve an appropriate return. Definitions of Tourism Marketing According to Kotler, ” Marketing is a social and managerial process by which consumers obtain what they need and want through creating and exchanging product services and values with other.” He has emphasized more on wants, needs, satisfaction, demand, and marketers. 141 CU IDOL SELF LEARNING MATERIAL (SLM)
According to the British Chartered Institute of Marketing, ” It is the management process responsible for the identification, anticipating, assessing and satisfying the customer’s client’s requirements profitable.” The modern marketing concept is not limited only to the identification and satisfaction of customers. It is a comprehensive process which encompasses research and analysis of society’s as well as consumer’s needs, asserts the company’s resources and marketplace and delivers the products/services to those whose experience provides a set of satisfactions which are preferable to those of the competitors. Krippendorf defines tourism marketing,” as the systematic and coordinated execution of business policies by both private or public sector tourism organizations operated at the local, regional, national, or international level to achieve the optimal satisfaction of the needs of identifiable tourist groups, and in doing so to achieve an appropriate return.” According to Paynter (1993), ” tour marketing is a systematic process consisting of marketing objective, strategies, schedules, marketing media, focused on the specific market segment and based on a substantial return on investment.” World Tourism Organisation (UNWTO) at Ottawa Seminar, has defined tourism marketing as,” a management philosophy which, in the light of tourist demand, makes it possible through research, forecasting and selection of tourism products/services from suppliers, on the line with organization’s purpose and tourist satisfaction.” The following aspects can be identified from the above definitions: • Tourism marketing is a thought-provoking process. • Identification and selection of the target market. • Positioning and product lifecycle is important. • Future tourism marketing strategies. • Innovative/proactive marketing. 6.2 TOURISM MARKETING AND PROMOTION STRATEGIES FOR PACKAGE TOUR Promotion a key method to spread the word about tour packages to customers, stakeholders and the general public. Once a tour operator identifies their target market, they gain good idea 142 CU IDOL SELF LEARNING MATERIAL (SLM)
of the best way to reach them. It uses a mix of advertising, personal selling, sales promotion and public relations to promote tour packages. Advertising Advertising is a form of communication designed to persuade potential customers to choose tour packages over competitors. Success of advertising depends upon how tour operators making their package know to visitors. It should be a planned, consistently with the activities that can keep the name of package in the mind of the consumer. These are the following key strategies adopted for package advertising. • Make a tour package most familiar to visitors • Create goodwill and build a favorable image of company. • Attract customers to find out more about tour package. Personal Selling Selling is the exchange of goods or services for an agreed sum of money. Following situation can be understood for personal selling: • Identifying need and want of tour packages in market which afford to pay by visitors. • Creating contact with visitors by phone, email or in writing etc • Making presentation and demonstration about the tour package in order to convince potential visitors for a holiday. Sales Promotion Sales promotion includes short-term incentives or activities that encourage the purchase or sale of a package. It should target toward final buyers (consumer promotions), business customers (business promotions), retailers and wholesalers (trade promotions) and members of the sales force (sales force promotions). Some sales promotion activities for tour package are as follows: • Point of purchase display material like poster, banners, broachers etc. • Competitions, coupons and games • Loyalty reward programs • Seminars and workshops about the packages • Conference presentations • Trade show displays like SATTE, KTM, WTM and ITB etc • Telemarketing and direct mail campaigns 143 CU IDOL SELF LEARNING MATERIAL (SLM)
• Newsletters • Event sponsorship • Capability endorsement • Reward incentives linked to purchases or sales • Reseller staff incentives • Commissions • Public Relations The Public Relations Institute of Australia (PRIA) defines Public Relations (PR) as ‘the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization (or individual) and its (or their) publics. Typical PR tools include: • Media releases: news creation and distribution • Special events: such as news conferences, grand openings and product launches • Speeches and presentations • Educational programs • Annual reports, brochures, newsletters, magazines and Audio-Video(AV) presentations • Community activities and sponsorships Holidays provide an essential opportunity to refresh ourselves and escape our demanding schedules. Therefore, holidays need to be designed and delivered carefully to provide delight to tourists for pleasant memories. In the light of this, it is crucial for package tour operator to design and deliver unforgettable tour with maximum sightseeing, good hotels and food all in one inclusive package. 6.3 UNIQUE FEATURES OF TOURISM MARKETING Tour package as a specialized product creates a number of significant considerations which need to be fully analyzed. The management of tour package cannot be divorced from the management of service and quality. Thus, the marketing of the tour package is different from other products because the tour package is a service product where instead of selling physical goods an intangible experience is sold. 144 CU IDOL SELF LEARNING MATERIAL (SLM)
An understanding of the complexity of the tourism product concept is an essential pre- requisite for effective tour package marketing in this context. The specific features of tourism marketing are: • The demand for tour package is highly elastic and seasonal in nature. • Tour package is a combination of various service ingredient. • Designing, developing and marketing of tour package a number of intermediaries are involved. Bed experience at one level can spoil the entire image of the package as well as the tour operator. • A tourist does not only by the tour package in advance because it is consumed and felt at the same time at a particular destination. It is not possible to evaluate/demonstrate/sample the tour package in advance because it is consumed and felt at the same time at a particular destination. Tour Package Marketing The tourism industry provides for a combination of different products and activities, which ranges from small taxi operator to the largest airline or hotel chain. The concept of change and survival are as important to the tour operators as they have to deal with both various vendors in the tourism market. It would, therefore, become imperative to understand what tour marketing planning is especially for the long-term survival of ant tour/company. A tour marketing plan is a structured guide for carrying out marketing operations. It provides a common structure and focuses on all the company’s management activities. The purposes of a marketing plan include: • It provides a clear direction for marketing operations. • It coordinates the resources of the organization in order to eliminate confusion and misunderstanding and achieving cooperation. • Identifying different market segments. • Setting targets/goals. • Identifying the organization’s strengths and weaknesses. • Corporate mission and goals. • External and Internal Audit. • Business situation analysis. • Creating the objectives. 145 CU IDOL SELF LEARNING MATERIAL (SLM)
• Providing an effective marketing mix strategy. • Monitoring the plan. Thus, it has become imperative to discuss the tour marketing segment, tourist generating market, and tour marketing mix before developing a tour marketing plan. Tour Market Segmentation It involves a division of the prospective market into identifiable groups. The reasoning behind this is that a tour package can be sold more effectively if efforts are concentrated towards those groups which are most potential. According to Middleton, “Market segmentation is the process whereby producers organize their knowledge of customer groups and select for particular attention those whose needs and wants they are best able to meet their product.” The main purpose of tour market segmentation in tourism marketing are: • Segment the tourists generating markets. • Identify the network of intermediaries. • Identify the nature of demand for one’s product. • Identify the prospective tourists. An effective market strategy will determine exactly what the target market will be and to attempt to reach only those markets. The target market is that segment of a total potential market to which the tourist attraction would be most saleable. Targets markets are defined geographically, demographically and so forth market segmentation must be employed in the marketing programmes to both the long-term strategies. Every tourism attraction can appeal to a multitude of market segments, and the market segment can overlap a great deal. The tour manager must look at market segments and determines which one offer the promising potential for his/her service. Tour market segment further categories into the following types: 1. Geographic Segment 2. Demographic Segment 3. Psychographic Segment 4. Socio-Economic Segment 5. Price Segment 146 CU IDOL SELF LEARNING MATERIAL (SLM)
Geographic Tourism Market Segmentation This segment is based on the idea that customer needs differ according to geographic regions. Demographic Segmentation Under this segmentation, the tourism market is divided into various groups, keeping in view the demographic variables such as age, income, sex family size, occupation, education, religion etc. Behavioural Segmentation In this segmentation, prospective tourists are segmented on the basis of their knowledge, attitude, use or response to the tour product. Under this segmentation, the marketing strategies of a four-company include: • User Status • Usage Rate • Loyalty Status • Buyer Readiness Stages • Attitude Psychographic Segmentation Under this, the tourists are divided into different group on the basis of their social status, lifestyles, and personality characteristics. For example, upper class, upper middle, lower classes, product preferences, adventure sports, etc. Price Segmentation Price ranges often come in handy in segmenting the tourist markets, such as • Those who want to take a low priced vacation. • Those who may take a moderately priced vacation. Price ranges communicate to the tourists the quality expectation of a product along with the producer’s image. While determining the price of a tour package a tour planner must understand the paying capacity of the tourist. Tour Marketing Mix In the competitive tourism marketplace, a tour operator can be successful if it’s complete marketing mix offer matches what the tourist wants. It is planned and coordinated by 147 CU IDOL SELF LEARNING MATERIAL (SLM)
marketers so that the input can be contributed in such a way that the company will be able to maximize demand and satisfaction of the tourists. The concept of the tour marketing mix is equally relevant in the case of tourism products as it is in the case of other services and goods. Tour marketing manager must constantly search for the right marketing mix, the right combination of elements that will produce a profit. The marketing mix is composed of every factor that influences marketing efforts such as: • Time • Brands Pricing – In the Ratio of quality and value • Product features • Image • Channels of distribution – both international and national • Advertising • Selling techniques • Public relation The fundamental starting point for the creation of a successful tour marketing mix to ensure that the target market is clearly defined. The target market is the focus of all marketing mix activities. Generally, the marketing mix constitutes four P’s . These four P’s are following as: • Product • Price • Promotion • Place However, besides these four Ps in the tourism industry fifth P – People, Process, Physical evidence is also of most relevance. Developing Tour Marketing Plan The marketing of the package tour is materially different than the marketing of other tourism products. The reasoning behind this is that the type of tours offered by one tour company and another are different, and the marketing strategies also differ from company to company. Each company has a wide range of tours and marketing strategies. No other travel and tourism industry component have such a wide range of specialization. 148 CU IDOL SELF LEARNING MATERIAL (SLM)
This fact should be recognized that the effective and profitable marketing strategies are based on the tour marketing plan which is a complete ‘mechanism’ for the success of a tour company. The mechanism includes several components. These component and stages of making a tourism marketing plan are following as: • Developing a tour marketing plan • Marketing Budget • Plan Strategies • Prepare Plan Schedules • Decide Media Plan • Developing Advertising Plan • Developing Public Relation Plan • Preparing an Annual Sales Plan • Feedback and Evaluation Plan 6.4 BROCHURE DESIGNING Brochures are an important means of conveying your image and message to potential customers. Brochures are usually printed and given to customers at events, other local associated businesses or as a reminder of a visit to an open house. There is no limit as to how a brochure is distributed. A brochure’s purpose is to entice, convince and ultimately sell a company’s products or services. A pamphlet, on the other hand, is about relaying information about a specific topic, but not to sell it. It’s no hard and fast rule that a brochure must be printed. You can technically also create a pdf brochure to send over email. But a classic brochure is the printed kind. A brochure is an informational pamphlet or leaflet advertising an organization, Business, event, product or service. Brochures are a great way to package information in a simple, eye-catching design that attracts potential clients by offering basic information. A well-made brochure will grab the attention of the reader and provide needed information while inspiring the reader to take action Brochures should do more than describe the how, what, where and when of your business; to stimulate interest and demand. 149 CU IDOL SELF LEARNING MATERIAL (SLM)
They need to be visually appealing; convey the right amount of information; and brochure should be comparable to other brochures in the industry. When drafting the copy of a brochure, one should make sure not to include any unacceptable (illegal) clauses or misleading information. There has been an increase in the number of legal actions brought against operators for loss of enjoyment or deceptive and misleading advertising. It is essential to honestly represent product/service in promotional material. It is advisable to seek legal advice in this regard to avoid any inconvenience later. Before you begin to write, plan your brochure. Consider the following to help you gather the information needed. Target your audience by answering the following questions: • audience specialized or familiar with your subject, or are they a general audience, not in the field or trade? • How will your audience use your brochure? For ex - ample, is it a “how to” that people will keep, or is it to promote a one-time event? • How will the brochure be used with other marketing tools? DETERMINE THE PURPOSE OF YOUR BROCHURE. Are you persuading or informing? Having one primary purpose or approach can be more effective than producing a generalized brochure that tries to say everything and therefore says too much. STAND OUT FROM YOUR COMPETITION. Emphasize what makes your business unique. What do you offer that other companies, services, or experiences do not? DETERMINE THE CALL TO ACTION. A call to action is wording that tells the reader to do something. It could be to make reservations, sign up as a volunteer, visit a store, plant water-wise landscaping plants, or fill out and mail in an order form. In your call to action, provide the reader with specific examples and/or detailed instructions to help them take the next step. If you do not include action steps, the reader may lose the point of the brochure or the motivation to take the next step. GRAB ATTENTION. If the brochure is in a rack among many, it has to stand out. Make sure the front panel will attract attention by using catchy phrases or images The entire look. Attractiveness determines how likely a potential customer is to pick up your brochure. The design, including colours, fonts, graphics, and layout, all impact attractiveness. 150 CU IDOL SELF LEARNING MATERIAL (SLM)
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