BSHM 75 PDF - Pricing in Tourism and Hospitality

MODULE 6: Discounting Advantages of Direct Marketing Consider adding conditions to...

MODULE 6: Discounting Advantages of Direct Marketing Consider adding conditions to a discounted price like a minimum stay or Direct marketing is an ideal promotional tool for products and PRICING IN TOURISM AND HOSPITALITY number of travellers in the booking. services that want to capture a niche market. Here are some advantages of direct marketing: What is price? Package Deals Price is the amount that the customer pays for a product; it is the amount 1. Precision Targeting. Packaging can also be used to target niche markets effectively e.g golf of money exchanged for something of value. Having a good database can help pinpoint prospects based on weekends, food and wine tours, pampering packages etc the prospects lifestyles, demographics, purchasing patterns, etc. Key Concepts Relevant to Pricing The direct mail campaign can be very precise in specifying its Commissions Sales target market. Many bookings will come via some sort of third party who will charge you a Is the total amount that a company gets based on quantity sold multiplied commission such as a retail travel agent, wholesaler, inbound tour 2. Personalized Messages. by selling price. operator or online travel agent (OTA). A persons name is the sweetest word in the world. Prospective customers will definitely read through the material when their name is on it Revenue Addressing specific customers personally will better capture Is the total income/profit that the company keeps after all the experience have been paid for Simply put: sales minus expense equals revenue. CHAPTER 7 their attention than generic and random messages. 3. Privacy. Fixed costs What is promotion? The company offer is not visible to competitors since it is Are costs incurred due to the operations of the business; they do not The most visible of the four Ps, promotion includes advertising, personalized. The competition will not be able to monitor what the offer is. fluctuate with the volume of sales. direct mailing promotion, merchandising salesforce activities, brochure Hence, they will not be able to match it. production, Internet communications, and public relations activities Profit Margin Promotions have been defined as the coordination of 4. Faster Sales. Is the level of income that is desired by the company. This usually comes seller-initiated efforts to set up channels of information and persuasion to Direct marketing can yield faster sales since it is targeted to out in percentage form as the amount of mark-up placed on top of the sell goods and services or promote an idea. actual users of the product. fixed and variable cost of a product. All marketing communications techniques seek to inform, increase awareness, attempt to persuade, and reinforce the buying 5. Variety of Packaging Options. behavior of customers A variety of packaging options are available for direct mail Variable Costs campaigns limited only by the marketer's creativity and budget. Are costs that vary based on volume or quantity. Bigger quantities of the same order will cost less than smaller quantities of the same specifications Advertising is defined as any paid form of non-personal communication 6. Less Competition (from other media content). This concept is commonly known as economies of scale. A letter or package that is opened by the prospect will have less about an organization, product, service, or idea by an identified sponsor In the hospitality industry, advertising is viewed as a way to competition from other media content compared to billboards, TV Break-even Point commercials, and the like. Is the point where in total cost is equal to total revenue. create and maintain awareness of the company, property, or destination The receiver would take more time reading through your content because it is personalized and unique. Pricing Components All tourism businesses should have a rack rate – this is your “full rate” Objectives of Advertising 7. Immediate Results. before any discounts are applied and typically is what is provided to An advertising objective is a specific communication task to be A response form or action is normally solicited from the wholesalers and printed on brochures for the season ahead accomplished with specific target audience during a specific period of time prospective customer; hence, results can be immediate. Advertising can be classified based on its objectives: (1) to inform, (2) to Seasonal Pricing persuade, and (3) to remind. 8. Measurability. Using a mix of pricing throughout the year to cover low, high, and shoulder 1.​ Informative advertising is used to introduce a new product or The company knows the number of direct mailers issued; seasons is a standard way for tourism businesses to cater for differing to build up primary demand for the product. Companies employ hence, it will be easy to determine response rates. levels of demand due to the time of year. aggressive tools to ensure that a new product creates excitement and demand within its target market. Last-Minute Pricing Elements of a Direct Marketing Campaign 2.​ Persuasive advertising is used when competition is stiff. 1.​ The list contains all the names and contact information of your A common method for accommodation suppliers to fill those last-minute Companies rely on persuasive advertising to be able to keep gaps in inventory availability, last- minute pricing is basically discounting target market. their market share. daily prices according to forward bookings and promoted on last- minute 2.​ The message needs to be customized and personalized. booking websites. 3.​ Reminder advertising is very important for products that have 3.​ The offer should be interesting and worthy of the prospective reached the maturity stage. Products attempt to maintain customer to consider making a purchase. It should move the Common Pricing Types market position even if they are already top of mind. prospective client into action. < Per Person pricing < Per Unit pricing < Single or double occupancy Direct Marketing Measures of Success Common for B&B’s there is a single rate and a double rate With the moving away of marketing from advertising to the One of the advantages of direct marketing as a promotional tool (which is not double that of the single rate). integrated marketing communications approach, direct marketing has is its measurability properly executed direct marketing campaign can be gained prominence and acceptance. measured in several ways, amely:n 1. the number of inquiries generated. 2. the ratio of conversions or purchases realized from inquiries generated; and 3. its communication impact.  Employees involved in PR play the role of advisers with regard Personal selling to public issues that may have an effect on the company's position and can be defined as the person-to-person communication between image. a salesperson a prospective customer in which needs are met in exchange for money or resources. Limitations of the Internet Sales representatives are an integral part of the success of the Contributions of Public Relations to Marketing The web has been developed to a great extent in recent years. However, tourism and hospitality industry, outline the primary tasks sales The contributions of PR cannot be downplayed. It can help marketers need to be aware that it has its limitations. Some of its professionals perform for the companies as follows: marketing in the following ways: limitations include: 1. Prospecting. 1. Assist in the launch of new product 2. Assist in repositioning a mature product 1. Digital divide. The sales professional is tasked to look into potential customer or Information is available only to those who have access to “prospect” 3. Build up interest in a product category 4. Influence specific target groups through smartphones and computers. 2. Targeting. 5. Defend products that have encountered problems 2. Information overload. Sales professionals need to determine how to prioritize their limited. time There is difficulty in finding specific information since the and resources to tap customers from their list of prospects. Internet offers a rich universe of information that is unstructured, making Public Relations Process sorting of information difficult. 3. Communicating. 1. Understanding the firm's mission, culture, and target market. A constant stream of communication should flow from customer 2. Setting of objectives. 3. Speed. to client and vice versa. 3. Defining the target market. Information is available almost instantaneously. 4. Selling. 4. Designing the PR message. 4. Security. Sales personnel are trained to do product presentations, to 5. Implementing the PR plan. The perception that the web is unsecure, and that personal information negotiate to overcome objections, and to close the sale. This is the core of 6. Evaluating PR results. might be used to wrongly hinder the growth of e-commerce. what the salesperson does for the company. 5. Credibility of information. 5. Servicing. CHAPTER 9: DIGITAL MARKETING Since everyone can distinguishing fact from fiction becomes extremely Salespersons should not remain as order takers. Instead, they hard. upload information should shift to becoming customer consultants-helping clients solve The digital world is moving at a very fast pace. Materials written problems and rendering technical/expert assistance. 6. Intellectual property and copyright issues. a few years ago may become obsolete today and what is written today Copying and pasting information uploaded by others and 6. Information Gathering. may be irrelevant in a few years. The global online population is fast claiming them as one's own is a major issue that needs to be resolved. Sales representatives assist the company in gathering shifting. Plagiarism and copyright infringements are rampant. intelligence information such as what the competition is doing, or what the The widespread adoption of the Internet and the use of company's needs are. They also suggest innovations based on market electronic media help facilitate e-commerce worldwide. It is one channel 7. Trustworthiness. demands. that even local business cannot and should not ignore. Consumers are quite hesitant to make online payments dur trust 1. Use of moment marketing issues. Public relations Connected consumers prefer stories. Appealing stories create banks on the idea that if a credible person--not related to your an emotional connection where content invokes various emotions that business-says something good about your product or service, then range from happy to sad and everything in between. Advantages of Using the Internet consumers may more certain that it is really good. 1. Global market reach. 2. Use different platforms 2. 24/7 nature. Digital marketing tools include websites, email, Facebook, 3. Multimedia nature. Major Public Relations Activities Instagram, Twitter, etc. Mix and match the different platforms and use the 4. Lower costs. 1. Press/Media Relations. appropriate tools to catch your target customers. 5. to-business, business-to-consumer, Mass media channels help generate publicity and awareness for 3. Do it consistently huge audiences. Your digital marketing strategy will only work for you do it often, Marketing on the Internet 2. Product Publicity. every day if possible. 1. Through their chain or consortium. This involves efforts to introduce or publicize new products, 4. Engaging content is essential 2. By setting up their own site. special events, or new developments within the business through product ​ Marketers need to capture the attention of the audience quickly. 3. By listing themselves on one of the mega-travel websites. endorsements or mentions in various channels. 3. Corporate Communications. Social Media This covers internal and external communications that promote Albert Angehrn (1997) summarized the use of cyberspace for marketing Wikipedia defines social media as ‘;participatory online media understanding of the organization using tools such as newsletters, (Middleton, Fyall, and Morgan where news, photos, videos, and podcasts bulletins, and email blasts. 2010): are made public via social media websites through submissions’ 4. Lobbying. 1. Information Social media is a great way to influence a crowd by listening to to public issues that may have an effect on the company's 2. Transaction what they say online then adjusting and improving what one offers position and image. 3. Distribution 4. Communication 5. Counseling.  2. Ease of navigation. 3. Artistic design that complements content. 4. Functional characteristics. a. Facebook and Instagram are popular social media applications used not Popular Social Media Channels Website Development, Maintenance, and Analytics only for personal networking purposes but also as helpful tools in More than half of the world's population now uses social media A website professionalizes and legitimizes your business. developing social media engagements for tourism destinations. with 4.66 billion people using the Internet. As of January 2021, the It serves as a platform to showcase who you are, what you do, following social media channels have penetrated the world: your products and services, and how customers can contact you. b. Instant messaging is a type of online chat which offers real-time text ​ Facebook (FB) is still the most widely used social media It plays an important role in partnership with your social media transmission via the Internet. channel in the world. There are 2.7 billion active users of FB. and email marketing efforts as the website serves as your landing page, c. Email marketing is a tool that allows direct contact with the customer for ​ YouTube has more than 2.2 billion users with 90% of users are where interested customers can see the b picture and where they actually commercial purposes. It is still considered one of the most effective 18-44 yrs old. make the decision to buy. marketing tools online. ​ Instant messaging apps WhatsApp and FB Messenger have 2 billion users and 1.3 billion users, respectively. d. Maximize the power of influencers. Travel blogs both professionally and ​ Instagram has 1.221 billion users. Travel Websites personally created help improve product awareness and reach. ​ Tik Tok has over 689 million users in 150 countries (as of A travel website is a consolidator of different travel products. It e. The hiring of a freelance digital marketing professional can help put all February 2020) with 850 million active daily users, 60% of which brings together a varied range of travel products so that potential these digital campaign recommendations together. are Gen Z. customers can just go to one site. ​ LinkedIn has 675 million users as of February 2020, almost half They also contain comments made by customers who have of which are active users, with mostly millennial users. availed of the product. These sites are growing fast because the The future of digital marketing is promising. customers' preference for using a travel website is also growing. ​ It is a game changer. They assist and guide customers in the evaluation of ​ It is a great equalizer. Social Media Content alternatives and facilitate purchases online. ​ It transcends time and space. 1. Blogging Blogging is one of the easiest ways to enter social media. Influencers 2. Microblogs User generated content is now an issue that tourism marketers Microblogs bring social networking to its most essential need to watch out for. Consumers can rave or rant about your services CHAPTER 9 elements -a post, a comment, and an indication of relationships. and products without your consent. As such, they can make or break your Image. Distribution systems 3. Vlogging ​ A distribution system is the "place" aspect of a company's A vlog is a piece of content that attracts a lot of YouTube lovers As more and more customers come to rely on information from social media, tourism marketers need to take control in crafting and marketing mix. and offers a richer site experience than text-based blogging ​ It provides an adequate framework for making a company's managing their images online. 4. Photo Sharing products or services available to the consumer Photos convey more than words can. ​ It is a set of different organizations, independent or not, that are Group Buying Sites involved in the process of making products and services 5. Video Sharing available for use or consumption Online selling or e-commerce has become a cost-effective Videos are even more effective than photos. ​ Distribution systems are often used to move the customer to the intermediary for different types of products, including tourism products. Group buying sites have grown in recent years primarily to help product. 6. Location-based Social Network Also known as a mobile social network, this is where people can put together great deals on one website. share their location with friends. Deal aggregators or GBSs, collectively known as groupons, facilitate discount seeking bargain hunting, and new product discoveries. Factors that increased its importance Competition Social Networking Sites (SNS) Ethics Globalization. 1. Do not randomly contact people to build a list of followers/friends, then Online Auctions Electronic Distribution Techniques. suddenly bombard them with Another form of e-commerce is the online auction. Online Perishability of the product. posts about yourself or your products (Evans 2008). 2. Make sure the content is original. If not, acknowledge the sources. auctions have the ability to flexibly set prices based on the dynamic Better to post original pictures concurrence of supply and demand, subject to specific market and competitive conditions. Distribution Channels and its Functions then get photos from the Internet and make them look as if they were your A distribution channel is a delivery arrangement used by a own. supplier, carrier, or destination marketing organization. 3. Tone down on the use of expletives and negative words. Smartphone Effective Digital Marketing Campaigns The distribution system may be directed or indirect. and SNS Growth The basics of online marketing of creating a solid strategy, search engine optimization and search engine marketing, website Direct distribution channels are those the company uses on its analytics, email marketing, social media marketing, online PR, affiliate own without the assistance of independent intermediaries. Company Website marketing, and online display advertising are still effective tools. A direct system of distribution is one where the supplier It is not enough to have a good website. The website needs to Coming up with a blend of which channels may work best in (destination, airline, hotel, etc.) communicates directly with the customer. be marketed to lead potential customers to visit the site. Google, Yahoo, and MSN are the most popular search engines used. tapping the target market for your particular product is the goal of an An Indirect distribution channel, on the other hand, uses the effective digital marketing campaign. assistance of independent intermediaries to distribute its products. Characteristics of a Good Hospitality Website Design 1. Useful and relevant content. Functions of Distribution Channel 7. Reservation Systems ADVANTAGES AND DISADVANTAGES TO THE FRANCHISEE 1.​ Information. Reservation systems are entities that provide a central To the Franchise Distribution channels are exposed to information reservation system for hotels. about what the market needs and wants. They can gather They provide the system for small chains by providing overseas Advantages marketing research and intelligence information about marketing reservation services through a local number. ​ Brand recognition environment. ​ Minimizes financial risk because of fewer chances of business 8. Global Distribution Systems (GDS) failure 2.​ Promotions. Global distribution systems such as amadeus and galileo are ​ Faster business growth Distribution channels help in developing and computerized reservation systems that serve as product catalogs for travel ​ Assistance in the site selection spreading persuasive communications about a company’s agents and other distributors. ​ Architectural plans current offer. These agencies are linked to a reservation system through a ​ Standard operating procedure software and manual terminal. ​ National contacts with suppliers 3.​ Contact. Distribution channels are the company’s link to finding 9. Concierges ​ Product development and communicating with prospective and current buyers. The hotel front office staff are usually the most frequently asked ​ Consulting on managerial and technical concerns hotel employees about the nearest restaurants, shopping malls, or ​ Access to a comprehensive reservation or delivery networkz 4.​ Matching. attractions. as such, the concierge, bell staff, and front desk clerks should ​ Establish customer base Distribution channels know what the product can do be ready with good recommendations. and what the buyer needs; hence, they can shape and fit the Disadvantage offer to those needs. 10. Online Travel Agencies ​ Required fees and royalties Online travel agents conduct their business in the virtual world, ​ Sleep initial fees 5.​ Negotiation. ​ with no physical location or stores to entertain clients. ​ Return on investment might not be as quick as expected Distribution channels represent the company to the All their transactions are done online. ​ Limits products and recipes to be sold consumer during negotiation. Hence, they are equipped to settle ​ Franchisee is subject to rules and regulations on operating on pricing and other terms of purchase and acquisition of hours and minimum volume sold per product products and services. Types of Channel ​ The franchisor’s performance affects the profitability of the 6.​ Physical Distribution. 1. Channel 1 is the direct marketing channel where there is no franchisee Distribution channels handle the physical transport of intermediary the manufacturer directly sells to the consumer. ​ Limits the creativity of the franchisee in all aspects of the goods and services to consumers. business 2. Channel 2 is where the manufacturer passes on the product or service ​ Territorial disputes on franchise agreements to a retailer who sells it to the end consumer. Marketing Intermediaries 3. Channel 3 contains two levels where the goods pass through a are types of indirect distribution channels that an independent wholesaler and retailer before reaching the consumer. To the Franchisor organizations that help distribute products and services. Advantage 4. Channel 4 contains three levels: wholesaler, jobber, and retailer. A ​ Receives a percentage of gross sales 1. Travel Agents/retailers jobber sells to small retailers who are not normally serviced ​ Expands the brand without much capitalization These are the most widely used marketing intermediary in the ​ Can achieve rapid growth through its franchisees tourism industry (though the internet is now becoming vastly popular as ​ Gets negotiating support for national contacts with supplies well). Franchising ​ Takes advantage of economies of scale is a method of doing business by which a franchisee is granted 2. Tour Operators/Wholesalers the right to engage in offering, selling, or distributing goods or services Disadvantages These are organizations that offer packaged vacation tours to under a marketing format that is designed by the franchisor ​ Limits other options of expanding distribution the general public, targeting the leisure market. ​ Franchisees must be monitored closely to ensure product and 3. Travel Specialist service consistency. Franchise agreement ​ Poorly run franchise units can reflect negatively on the entire Travel specialists are organizations that focus on one or more is an authorization granted to someone to sell or distribute a functions of the distribution system. brand. company's goods and services in a certain area or a business established ​ Limited ability to require franchisees to change operations 4. Hotel Sales Representatives or operated under such authorization strategies Hotel sales representatives sell hotel rooms, function rooms, ​ Franchisees want and need to have an active role in and other services in a particular market area. decision-making. Hotel sales representatives can carry different noncompeting Franchisee, Franchisor hotel brands simultaneously. They are paid a straight commission. A franchisee is an organization or person that purchases a brand name to distribute a product or a service. Delivery System 5. Government Tourist Associations A franchisor is the parent company of a franchising distribution In the Philippines, during the lockdown and enhanced They usually market their locality to tourists and carry with them network community quarantine (ECQ) due to the deadly COVID-19 pandemic, the different establishments, properties, and attractions within their mobility solutions stirred up as people demanded for goods delivered right territory. on their doorsteps. 6. Consortia One very useful mobility application is the food delivery service. A consortium is a group of hospitality organizations that are This has replaced traditional delivery services, which are straight from the allied for the mutual benefit of the members restaurant to your homes.