Pricing in Tourism and Hospitality

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is price? What is exchanged for the price?

Price is the amount that the customer pays for a product. The amount of money is exchanged for something of value.

What is Sales?

The total amount that a company gets based on quantity sold multiplied by the selling price.

What is Revenue?

The total profit/income that a company keeps after all the expenses have been paid for.

What are Fixed Costs?

<p>Costs incurred due to the operations of the business. They do not fluctuate with the volume of sales.</p> Signup and view all the answers

What is profit margin?

<p>The level of income that is desired by the company. This is typically determined by calculating the percentage markup on top of the fixed and variable cost of each product.</p> Signup and view all the answers

What are Variable Costs?

<p>Costs that vary based on volume or quantity. Bigger quantities of the same order will cost less than smaller quantities of the same specifications. This is a concept commonly known as economies of scale.</p> Signup and view all the answers

What is the Break-even Point?

<p>The point where the total cost is equal to total revenue</p> Signup and view all the answers

What is the "full rate" before discounts are applied called?

<p>Rack Rate (A)</p> Signup and view all the answers

Seasonal Pricing is a standard way for tourism businesses to cater for differing levels of demand due to the time of year.

<p>True (A)</p> Signup and view all the answers

What is Last-minute pricing?

<p>A common method for accommodation suppliers to fill those last-minute gaps in inventory availability. Last-minute pricing involves discounting daily prices according to forward bookings and it is often promoted on last-minute booking websites.</p> Signup and view all the answers

What are the 3 main types of pricing?

<p>Per Person, Per Unit, and Single or Double Occupancy</p> Signup and view all the answers

With package deals, you can target niche markets effectively.

<p>True (A)</p> Signup and view all the answers

Commissions are not charged by a Retail Travel Agent.

<p>False (B)</p> Signup and view all the answers

What is Promotion?

<p>The most visible of the four Ps, promotion includes advertising, direct mailing promotion, merchandising, salesforce activities, brochure production, Internet communications and public relations activities.</p> Signup and view all the answers

What is the definition of promotions?

<p>Promotions have been defined as the coordination of seller-initiated efforts to set up channels of information and persuasion to sell goods and services or promote an idea. (B)</p> Signup and view all the answers

Marketing communication techniques seek to inform, increase awareness, persuade customers, and reinforce the buying behavior of customers.

<p>True (A)</p> Signup and view all the answers

What is advertising?

<p>Any paid form of non-personal communication about an organization, product, service, or idea by an identified sponsor.</p> Signup and view all the answers

What are the 3 aims of Advertising?

<p>To inform, Persuade, and Remind (D)</p> Signup and view all the answers

What is direct marketing?

<p>Direct marketing is an ideal promotional tool for products and services that want to capture a niche market.</p> Signup and view all the answers

What are the advantages of direct marketing?

<p>Precision Targeting, Personalized Messages, Privacy, Faster Sales, Variety of Packaging Options, Less Competition, Immediate Results, Measurability (B)</p> Signup and view all the answers

What is the definition of Personal Selling?

<p>Person-to-person communication between a salesperson and a prospective customer in which needs are met in exchange for money or resources.</p> Signup and view all the answers

What are the primary tasks that sales professionals perform for the companies as follows?

<p>Prospecting, Targeting, Communicating, Selling, Servicing, Information Gathering (D)</p> Signup and view all the answers

What is Public Relations?

<p>Public relations hinges on the idea that if a credible person, not related to your business, says something good about your product or service, consumers may be more certain that it is really good.</p> Signup and view all the answers

What are the major public relations activities?

<p>Press/Media Relations, Product Publicity, Corporate Communications, Lobbying, Counseling (B)</p> Signup and view all the answers

What is the digital divide?

<p>The digital divide refers to the gap between those who have access to information and those who don't.</p> Signup and view all the answers

What is information overload?

<p>There is difficulty in finding specific information because the internet offers a rich universe of information that is unstructured, making sorting and filtering difficult.</p> Signup and view all the answers

The web is secure.

<p>False (B)</p> Signup and view all the answers

It is easy to differentiate fact from fiction online.

<p>False (B)</p> Signup and view all the answers

What are the advantages of using the internet for marketing?

<p>Global market reach, 24/7 nature, Multimedia, Lower costs, and Business-to-business, Business-to-consumer.</p> Signup and view all the answers

What are the different ways to market on the internet?

<p>Through their chain or consortium, By setting up their own site., and By listing themselves on one of the mega travel websites.</p> Signup and view all the answers

What is a distribution system in tourism?

<p>A distribution system is the &quot;place&quot; aspect of a company's marketing mix.</p> Signup and view all the answers

What are the factors that have increased the importance of distribution systems?

<p>Competition, Globalization, Electronic Distribution Techniques, Perishability of the product. (C)</p> Signup and view all the answers

What is a distribution channel?

<p>A delivery arrangement used by a supplier, carrier, or destination marketing organization.</p> Signup and view all the answers

A direct distribution channel is one where the supplier communicates directly with the customer.

<p>True (A)</p> Signup and view all the answers

An indirect distribution channel uses the assistance of independent intermediaries to distribute its products.

<p>True (A)</p> Signup and view all the answers

What are the advantages to being a franchisee?

<p>Minimizes financial risk, faster business growth, brand recognition, architectural plans, product development, standard operating procedures, national contacts with suppliers, consulting on managerial and technical concerns, access to comprehensive reservation and delivery network, and establishment of a customer base.</p> Signup and view all the answers

What are the disadvantages to being the franchisor?

<p>Loss of control over operations, disputes between franchisees and the franchisor, and the potential for negative publicity.</p> Signup and view all the answers

What is a delivery system in the hospitality industry?

<p>The delivery system is the final step in the hospitality process. It entails delivering goods and services to consumers.</p> Signup and view all the answers

Flashcards

Price

The amount of money a customer pays for a product or service.

Sales

The total amount of money a company earns from selling a specific quantity of a product, calculated by price multiplied by quantity.

Revenue

The total income a company keeps after paying all expenses. Sales minus expenses.

Fixed costs

Costs that stay the same regardless of sales volume, like rent or salaries.

Signup and view all the flashcards

Variable costs

Costs that vary based on the quantity produced. Higher production means higher variable costs.

Signup and view all the flashcards

Profit margin

The desired level of income for a company, often expressed as a percentage markup on fixed and variable costs.

Signup and view all the flashcards

Break-even point

The point where total costs equal total revenue. There is no profit or loss at this point.

Signup and view all the flashcards

Rack rate

The normal, full price of a product or service, before any discounts are applied.

Signup and view all the flashcards

Seasonal pricing

Adjusting prices based on different seasons of the year to cater to varying levels of demand.

Signup and view all the flashcards

Last-minute pricing

Offering discounts for last-minute bookings to fill empty rooms or inventory.

Signup and view all the flashcards

Per person pricing

Pricing based on the number of people, like per-person rates for tours or meals.

Signup and view all the flashcards

Per unit pricing

Pricing based on a single unit, like per-night rates for hotels or per-person rates for activities.

Signup and view all the flashcards

Single or double occupancy pricing

Offering different rates for the same room based on the number of people staying, like single or double occupancy.

Signup and view all the flashcards

Advertising

Any paid form of non-personal communication about a product, service, or idea, by an identified sponsor.

Signup and view all the flashcards

Advertising objective

A specific communication goal to be achieved with a target audience during a particular time period.

Signup and view all the flashcards

Informative advertising

Used to introduce a new product or build primary demand.

Signup and view all the flashcards

Persuasive advertising

Used when competition is strong to maintain market share.

Signup and view all the flashcards

Reminder advertising

Used for products that have reached maturity to maintain their position in the market.

Signup and view all the flashcards

Direct marketing

Direct communication with a targeted audience, using personalized messages and offers to encourage a response.

Signup and view all the flashcards

Precision targeting

Targeting specific customers based on lifestyle, demographics, purchasing patterns, and other specific characteristics.

Signup and view all the flashcards

Personalized messages

Personalizing messages to individual customers by using their names and addressing their specific needs.

Signup and view all the flashcards

Privacy in direct marketing

Keeping offers private and visible only to the targeted customers.

Signup and view all the flashcards

Measurability in direct marketing

The ability to track the results of a direct marketing campaign and measure its effectiveness.

Signup and view all the flashcards

Personal selling

A person-to-person communication between a salesperson and a potential customer, focusing on understanding needs and closing a sale.

Signup and view all the flashcards

Prospecting

The process of identifying and engaging with potential customers for a business.

Signup and view all the flashcards

Targeting in sales

Prioritizing and allocating resources effectively to target specific groups of potential customers.

Signup and view all the flashcards

Communication in personal selling

A continuous flow of information between a business and its customers, building relationships and understanding needs.

Signup and view all the flashcards

Public relations

The activities that an organization undertakes to create and maintain a positive image in the public eye.

Signup and view all the flashcards

Digital marketing

The use of various digital channels, like websites, social media, and email, to reach and engage with potential customers.

Signup and view all the flashcards

Distribution system

A collection of organizations, independent or not, that are involved in making products and services available to consumers.

Signup and view all the flashcards

Franchisee

An organization or individual who purchases the right to use a brand's name and system to distribute products or services.

Signup and view all the flashcards

Franchisor

The parent company that grants the right to franchisees to use their brand and system.

Signup and view all the flashcards

Study Notes

Pricing in Tourism and Hospitality

  • Price is the amount a customer pays for a product/service.
  • Revenue is sales minus expenses.
  • Fixed costs don't change with sales volume.
  • Profit margin represents desired income, often expressed as a percentage markup.
  • Variable costs change with sales volume (e.g., economies of scale).
  • Break-even point is where total cost equals total revenue.
  • Rack rate is the initial, full price before discounts.
  • Businesses use seasonal pricing to adapt to demand variations.
  • Last-minute pricing discounts accommodate inventory gaps.
  • Common pricing methods include per person, per unit, and occupancy rates (single/double).
  • Discounts often come with conditions like minimum stays or passenger numbers.
  • Package deals attract specialized markets (e.g., golf, food & wine).
  • Commissions are fees charged by third-party vendors (e.g., online travel agencies).

Promotion

  • Promotion coordinates seller efforts to persuade customers to buy products or services.
  • Promotion aims to inform, create awareness, attempt to persuade, and strengthen purchase behaviors.
  • Direct marketing is good for niche markets. Advantages include:
    • Precise targeting through customer databases.
    • Personalized messages for improved efficacy.
    • Privacy due to personalized content.
    • Faster sales as it's targeted.
    • Various packaging options to choose from.
    • Reduced competition compared to other media.
    • Immediate outcomes based on direct responses.
    • Measurable outcomes – quantify results (e.g., response rates).
  • Advertising is paid communication from an identified sponsor.
  • Advertising, in the hospitality industry, maintains brand recognition and visibility.
  • Advertising objectives can be informational (introduce new products), persuasive (in competitive situations), or reminder (maintain market position).
  • Direct marketing gains importance in the integrated marketing approach.
  • A direct marketing campaign must include: A list of target customers, Personalized message, and an enticing offer.
  • Metrics for evaluating direct marketing campaigns include inquiries generated, conversion rate, and communication impact.

Digital Marketing and Public Relations

  • Online presence is essential for local businesses in today's market.
  • Internet & electronic media facilitate global e-commerce.
  • Digital marketing is versatile, inclusive/inclusive of various tools like websites, email, social media (Facebook, Instagram, etc.)
  • Consistent online presence is vital.
  • Engaging content is crucial for capturing audience attention quickly.
  • Digital marketing includes numerous methods like search engine optimization (SEO), search engine marketing (SEM), email marketing, social media marketing, online PR, affiliate marketing, and online display advertising.
  • Combining these methods helps target marketing.
  • Social media as influence (through user-generated content or influencers), can be employed to market destinations/businesses. This method's success largely depends on the engagement and trust of users.
  • Websites serve as a main display page, helping customers decide whether or not to purchase a service or product.
  • Travel websites aggregate diverse travel products and reviews; this facilitates customer decision-making.
  • Businesses use public relations to enhance their image and gain consumer trust by highlighting favorable aspects; this is often achieved through marketing.
  • Public relations activities (e.g., press releases, media relations, corporate communications) help markets in new product and/or improved product launch.
  • Digital marketing transcends time and space as it bridges gaps between consumers/businesses.
  • Digital marketing provides a relatively cost-effective method to improve business visibility, awareness, sales, or image.
  • Global reach and 24/7 availability (availability for business through the internet) are among advantages of using digital marketing.
  • The ease of customization and personalization is among the more cost-effective benefits of using this method.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

BSHM 75 PDF - Pricing in Tourism and Hospitality

More Like This

Use Quizgecko on...
Browser
Open
Browser
Browser