Tourism Products and Components

Tourism Products

• Tourism provides a comprehensive experience, not just a product
• The tourism product evolves from development to phase-out
• A tourism product combines tangible and intangible elements like natural, cultural, and man-made resources.
• These combine attractions, facilities, services, and activities around a specific interest to create an overall visitor experience
• This involves the core of the destination marketing mix and includes emotional aspects for potential customers
• A tourism product is priced, sold through distribution channels and follows a life cycle
• Tourism products consist of multiple components that create the complete tourism experience
• In consumer marketing, a product is anything offered to satisfy a want or need

Components of Tourism Product

• Destination Attraction: The main element attracting people, such as beaches, historical sites, or festivals
• Destination Facilities: Supports tourist enjoyment of attractions via accommodation, transportation, food, beverages and shopping
• Accessibility: The presence of infrastructure and transportation, like airports, roads and direct flights

Factors for Destinations

• Image: Vital for motivating visitors and shaping expectations
• Price: Helps set expectations for service quality, with high prices suggesting excellent service

Product Types

• Core Products: The main purchase, like a hotel stay
• Facilitating Products: Necessary for the core product, such as hotel check-in
• Supporting Products: Adds value, like a business center or spa
• Augmented Products: Factors influencing consumer choice, including accessibility and customer satisfaction

Product Considerations

• Accessibility: Product availability regarding location and hours
• Atmosphere: Overall feel appreciated through the five senses
• Customer Interaction with Services: Engaging with staff in a memorable and pleasant way
• Customer Interaction with Other Customers: Experience varying with customer behavior
• Co-Production: Customer involvement in service delivery

Product Life Cycle (PLC)

• This refers to the stages a product goes through from introduction to phase-out, each needing different marketing, production, and distribution approaches.

Stages of Product Life Cycle

• Product Development: Begins with a new idea, involving market research and feasibility assessments
• Introduction: The product launches, experiencing slow sales and possible losses due to high investments
• Growth: Rapid market acceptance and profit increase
• Maturity: Sales plateau, attracting competitors and requiring innovation to prevent decline
  • Strategies to prevent decline:Market Modification, Product Modification or Marketing Mix Modification
• Decline: Sales and profits decrease
• Phase-out: Product is removed due to strategy or market shifts

Tourist Area Life Cycle (TALC)

• Tourist destination evolution, mirroring the product life cycle, in five stages: exploration, involvement, development, consolidation, stagnation, and decline.

Stages of TALC

• Exploration: Initial tourist visits with no specific tourism infrastructure
• Involvement: More tourists and locals providing basic services
• Development: Rapid tourism growth with significant investments and physical changes
• Consolidation: Tourist growth stabilizes, investments decline
• Stagnation: Growth nears zero, with some travel agents departing
• Decline: Tourist numbers fall, requiring rejuvenation strategies to regain popularity

Product Development

• Critical for sustaining business success amid increasing competition

Stages of Product Development

• Idea Regeneration
• Idea Screening
• Concept Development and Testing
• Marketing Strategy
• Business Analysis
• Prototype Creation
• Test Marketing
• Commercialization
• Evaluation

Key Players in the Tourism Industry

• Private and Non-profit Sectors: Industry associations that represent special interest groups
• Public Sector Services: National, regional, or provincial tourism organizations promoting destinations
• Suppliers: Transportation, accommodation, food, beverage, attractions, and events
• Travel Intermediaries: Travel agents, tour operators, and online distributors
• Tourists: The primary consumers

Pricing in Tourism

• Price is part of the marketing mix and is the consumer payment to acquire a product
• Pricing is essential for profitability and influences demand and sales volume
• Consumers consider price when evaluating options

What is Price

• The monetary amount exchanged for value
• This is a critical element in tourism marketing mix
• It affects the profitability of tourist establishments and influences demand and sales
• Price indicates quality and must integrate into the marketing process alongside other elements

Key Concepts Relevant to Pricing

• Sales: Quantity sold multiplied by the selling price
• Revenue: Total income after expenses
• Fixed Cost: Costs not fluctuating with sales volume
• Profit Margin: Desired income level added to fixed and variable costs
• Variable Costs: Costs varying with volume or quantity

Factors Affecting Price

• Costs
• Organizational and Marketing Objectives
• Marketing Mix Variables
• Buyer Perceptions of Value of Price
• Competition
• Government Regulation and Taxes
• Nature of the Market and Demand
• Pricing in Different Markets
• Price Elasticity of Demand
• Environmental Factors

General Pricing Approaches

• Cost-based Pricing: Prices cover costs and include a profit mark-up
• Break-even Analysis and Target Profit Pricing: Setting price using break-even and projecting a target profit
• Buyer-based Pricing (Value Based): Prices based on perceived consumer value, not seller costs
• Competition-based Pricing: Prices based on competitors

Pricing Strategies

• Prestige Pricing: Positions products as luxurious with higher prices
• Market Skimming Pricing: High prices when demand is high and supply is low
• Market Penetration Pricing: Low prices to quickly gain market share
• Product Bundling Pricing: Reduced rate for combined products
• Volume Discount: Discounts for frequent users
• Discounts Based on Time of Purchase: Out-of-season/ early booking discounts
• Discriminatory Pricing: Different prices based on market segment characteristics

Psychological Pricing

• Pricing tactics using numbers

Promotional Pricing

• Discounts or incentives for special events or product launches

Revenue Management

• A systematic approach matching supply with demand to maximize revenue
• Key factors include perishable products, fixed capacity, seasonal demand, different market segments, and flexible pricing based on lead time and seasonality

Market Recovery through Price

• Destinations or businesses use price to recover lost market share

Important Considerations for Pricing in Tourism

• Always consider market demand, competition, and objectives
• Prices should reflect the products value, and be acceptable to buyers while ensuring profitability