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Strategic Marketing in the Tourism and Hospitality Sector

Introduction

Strategic marketing involves the use of analytical tools and techniques to find the optimum balance between the realization of a company and the consumer’s objectives and goals. The concept has been applied in different business fields, but its role in the rapidly evolving tourism and hospitality industry is still unclear. The effects of an uncertain business environment, a global pandemic, rapid technological change, and shifting consumer tastes and preferences greatly contribute to that (Vellas 111). The multiplicity of tourism products and rising competition among different players in the sector for travelers have highlighted the need to understand the role of strategic marketing in the growth of the industry.

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Strategic marketing is concerned with the formulation of plans to create a competitive edge over business rivals. When applied in the tourism and hospitality sector, the concept emerges as a useful tool for matching consumer needs and preferences with products and services that exist in the market. In this paper, the role of strategic marketing in promoting the growth and development of the tourism and hospitality sector will be explored relative to its role in developing the industry. To demonstrate its importance in the sector, it is vital to understand the role of strategic marketing in developing tourist destinations for domestic and international visitors.

Marketing Destinations for Domestic and International Visitors

Globally, the market for tourism products and services is often categorized into domestic and international segments. Domestic tourism refers to activities involving people traveling within their local borders. Comparatively, international tourists do not reside in the host countries for more than 12 months and refrain from engaging in economic activities that generate financial proceeds from within the borders of the same countries (Camilleri 2). Broadly, domestic tourism is deemed an important part of a country’s tourism inflows, but much attention is often given to international tourism, which, in some countries, may only represent a small proportion of tourism arrivals. For example, in many western nations, the market for domestic tourism often outweighs the foreign market. For example, in the United States and China, domestic tourists often outnumber people who visit the countries from overseas markets because of the large population of host countries.

Domestic and international tourists have different and unique needs. Therefore, marketers have to design tourism products that fit specific demographics and target markets. In most developing parts of the world, such as South America and Africa, few marketing strategies appeal to domestic tourists because of low-income levels among the host population (Vellas 61). Consequently, these regions often report an unbalanced reliance on international tourists to sustain their hospitality industries. This problem means that there is scanty information regarding the potential for pursuing domestic marketing strategies in developing countries. This situation persists despite the availability of statistics from developed countries, which show that domestic tourism could account for most tourism revenues (Vellas 61). Thus, tourism products designed to fit both international and domestic tourists should involve effective market research. One way of doing so is to understand marketing models and techniques used in the tourism and hospitality sector.

Marketing Models and Techniques Applied in the Tourism and Hospitality Sector

The type of marketing model adopted by a company depends on industry dynamics and the profile of the target market. Researchers have proposed different models and techniques for marketing tourism products in the hospitality sector but Maslow’s hierarchy of needs theory and the Boston Consulting Group (BCG) matrix are the most commonly mentioned models in the hospitality sector. Particularly, researchers have used Maslow’s hierarchy of needs theory to understand consumer needs and priorities according to five distinct needs criteria: physiological, safety, love, self-esteem, and self-actualization needs (Kolb 128). Maslow’s hierarchy of needs theory is important to marketers because it has been used to identify products and services that are relevant to unique customer groups. However, its inability to explain the fulfillment of different needs at the same time remains its biggest criticism.

Alternatively, the BCG matrix has been widely adopted in the tourism and hospitality industry to understand the potential that different products and services have in the market. Therefore, based on the potential of a product or service in the market, tourism and hospitality products could be categorized as “stars,” “cash cows,” “dogs,” or “question marks” (Pruschkowski 3). “Dogs” refer to products that are offered in low-growth markets but have a high market share. Comparatively, “question marks” are hospitality products, which are provided in high-growth markets but have a low market share. Alternatively, stars are items or services that are offered in high-growth markets and enjoy a high market share, while “cash cows” are products offered in low-growth markets but having a high market share.

The BCG marketing model is justifiably used in the tourism and hospitality industry because it provides managers with an opportunity to understand the market potential of various products and services offered in the industry. This advantage is particularly useful to marketers that want to introduce new and innovative products because they are typically constrained by resource limitations (Pruschkowski 3-4). The BCG matrix helps marketers to allocate their limited resources to launching products and services that have the maximum potential for growth and profit optimization in the long term. This model is also instrumental to big businesses, which offer multiple products and services because they could use the model to know whether their portfolio is balanced or not.

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Regardless of the immense benefits offered by the BCG matrix to the tourism and hospitality industry, it is still criticized for being “unfriendly” to small and medium-term tourism establishments (Pruschkowski 3-4). Stated differently, it is deemed relevant to big businesses with multiple product categories. However, based on the merits and demerits of the business model, it applies to all types of businesses in the sector because it acts as a reliable tool for conducting market research and designing successful product launches. After all, businesses can better estimate the potential of their products in making a successful market entry through effective market positioning. Nonetheless, it is important to develop a strategic plan to get the best result when implementing such a model.

Developing a Strategic Plan for the Tourism and Hospitality Sector

Developing an effective strategic marketing plan for the tourism and hospitality industry requires the creation of a perfect blend of marketing mix components.

Marketing Mix Components

A marketing mix strategy requires a careful understanding of product, place, price, and promotion strategies for a specific product or service. The correct blend of these four elements of a marketing mix strategy depends on the industry in question. Indeed, different sectors of the economy require unique sets of marketing mix strategies because they have varied internal and external market conditions. The growing prominence of international trade and global diversity in business have magnified the importance of using the right strategic marketing tools to align consumer tastes and preferences with existing products or services. Stemming from this need, the sections below outline the marketing mix components of product, place, price and product that could be used in such a context.

Product

Tourism products should be categorized into three different segments: budget, middle income, and luxury products. These three product categories may be designed to meet the needs of different market segments, including low-income, middle-income, and high-income markets. Unlike in the past when traveling was deemed a luxury and privilege that only a few people could enjoy, the expansion of tourist products, a rising middle class in developing countries, and the growing affordability of air transport have made traveling one of the most preferred activities for many people around the world (Kulakova). The three product categories highlighted above may fit into this trend as each product category may be designed by combining a blend of man-made, cultural, and natural resources to market a tourist destination.

Doing so requires differentiated features across each of the product categories. For example, luxury products may be equipped with more facilities for guests, as opposed to the budget product category, which may be equipped with fewer facilities. The main basis for creating differences in each product category is to exploit opportunities for generating different emotional experiences for each tourist product or service. Marketers could also design tourism products to overlap each product category by appealing to common interests that define different market segments. For example, medical tourism could be developed as a unique product category that cuts across high, middle, and low-income markets. Additionally, sports tourism could also be developed as a unique product category that also fits the same characteristics. For example, the Olympic Games, the Super Bowl, and other high-profile events attract people from different market categories. Therefore, marketers could develop new product categories that cut across all groups and markets.

Place

The place strategy adopted by marketers is important in implementing a successful marketing mix strategy because it dictates where a company would place its products and services to increase its market share. This aspect of the marketing mix strategy is also commonly referred to as the distribution strategy because it helps managers to decide whether a company would develop physical or virtual stores (Puthussery 1). Based on the international nature of the tourism and hospitality industry, a digital distribution strategy should be pursued to allow people from different parts of the world to access tourist products and services. For example, a travel agent located in one part of the world could build a website that advertises its products or service. A client from another part of the world could simply log onto the same platform and book their services. What is essential, all these processes happen virtually and in real-time.

Therefore, both parties benefit from the convenience of completing successful business transactions from the corner of their homes or offices, but in different parts of the world and without physically meeting each other. Transport and tour companies have already adopted the digital place strategy to support their businesses and increase their market share by using the technique to promote their products in foreign markets. Their continued use of the model has created a large body of evidence that justifies its adoption in other areas of the tourism and hospitality sector.

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The decision to use an online distribution strategy is cemented in the fact that the tourism and hospitality industry has been significantly affected by digital growth and development in business. For example, booking options for accommodation, flights, and transport facilities have been transformed from manual techniques to automated processes. This is true for airlines and hotels, which accept online bookings from their customers. Payment processing options in the tourism and travel industry are also adopting an online model, and more travel options are being advanced or developed to improve performance.

To implement a successful digital place strategy, it is also critical to integrate advanced technological tools, such as data analytics, in marketing to understand trends and patterns in information flow. It could be beneficial in developing new tourism products or improving existing ones. Similarly, it is important to exploit some of the new features and tools provided in a digital place strategy to effectively reach customers in hard-to-reach segments of the population. For example, marketers could exploit the capabilities of an online distribution model to make short marketing videos using their phones by creating market gimmicks and stories to attract the attention of different target audiences. The online place strategy allows marketers to be more creative by making, sharing, or developing new content to reach their customers. Therefore, the online place strategy emerges as the best model to use in the overall marketing mix plan.

Price

A flexible pricing strategy should be pursued in the tourism and hospitality industry to accommodate the needs of varying income groups. For example, a premium pricing strategy could be pursued for business travelers, while a budget pricing strategy may be adopted for budget travelers. A flexible pricing strategy would make sure that the needs of each income group are reflected in the overall marketing plan. This pricing strategy is adopted for the hospitality industry because different destinations have varied income potential. For example, some market destinations offer access to the beach, while others offer basic amenities of travel. Strategic marketing helps to identify a flexible pricing plan that would accommodate these varying market potentials for different market segments.

A flexible pricing strategy is justifiably proposed for use in the tourism and hospitality industry because it rewards customers for making purchase decisions, thereby improving their levels of loyalty. For example, some companies have benefitted from high levels of customer loyalty in the airline and travel industry by adopting a flexible pricing strategy. It accommodates the financial requirements of a customer depending on the season when a ticket was purchased. Therefore, customers could frequently visit an airline’s s travel website to get flights at affordable costs. The flexible pricing strategy is convenient for long-term travel planners because it could help customers secure good bargains during off-seasons and transfer the cost savings to purchase other travel products or improve their accommodation options.

Promotion

A digital-based promotion strategy should be used in the tourism and hospitality sector to improve the effectiveness of existing marketing strategies. This type of plan should involve the use of electronic media to reach segments of the population, which would be difficult to reach using traditional media. This type of promotion strategy should be pursued because the tourism and hospitality sector is global as it attracts people from different parts of the world. A digital promotion strategy will help marketers to gain access to new markets with little inhibition. Such researchers as Chaffey affirm its proficiency in helping marketers to launch new products and services in the industry (1). Therefore, it has been successfully adopted in different market segments.

The justification for pursuing a digital promotion strategy is also rooted in the fact that the world is now in a digital age, and internet marketing is becoming an effective way of marketing tourism products around the world. The readiness to pursue a digital promotion strategy is also rooted in an increase in internet access around the world. Stated differently, people are becoming more internet savvy and more travelers are looking to develop their travel plans based on recommendations regarding travel destinations via social media marketing platforms, such as Instagram and Facebook. Coupled with a rapidly growing segment of tourism travelers from the millennial generation, a digital promotion strategy stands out as the best promotion plan to pursue in the tourism and hospitality industry. However, to get the best results from the deployment of this marketing mix, it is vital to adapt it to suit specific tourism and hospitality products.

Adapting Marketing Plans to Specific Tourism and Hospitality Products

Companies must customize their marketing strategies to suit their respective products and markets. Doing so helps them to optimize their operations for success by adapting to market differences that exist in domestic and international markets. For example, when a multinational company intends to set up a new hotel in a foreign country, it may have to adapt its marketing message to suit the new region. It could do so by adapting the brand message to suit the local language and culture because what works in one market may fail to succeed in another one. Similarly, consumers in different market segments have varying thresholds of pain and patience. Therefore, a marketing strategy that addresses the issues of one market or demographic may not meet the needs of another one. Therefore, marketers need to develop plans that suit their unique objectives.

Part of the changes that companies can make when designing their marketing plans includes alterations to a brand’s image or word choice to make them more appealing to the local market dynamics. In some cases, the changes could simply involve alterations to word choices to make the target market relate better with the core message. However, changes in word choice should be adopted cautiously as the overall message could have a different meaning after translation. For example, Coca Cola has been a victim of erroneous translation of its brand name in the Chinese market. When directly translated to the local language, the meaning of Coca Cola changed to “bite the wax tadpole,” which was not the original intention of the branding campaign (Pruschkowski 3-4). This example shows the importance of verifying new adaptation strategies before market launch. Particularly, this is true for international companies operating in unfamiliar markets. Nonetheless, social media has emerged as a useful tool that can allow companies to adapt their strategies to suit unique markets.

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Role of Social Media in Tourism and Marketing Products

In today’s information age, marketing concepts are quickly evolving to represent a dynamic customer demographic. Relative to this assertion, social media has been used to investigate marketing trends within specific demographic groups (Kulakova). For example, it can be used to understand travel behaviors within a specific period of assessment to have a better understanding of the kind of tourist products customers need. Social media has also played a significant role in influencing travel destinations. For example, some people are often indecisive about the type of location they would want to visit for vacation and rely on their friends’ experiences or online recommendations to make such decisions. In other words, they get the inspiration to visit specific destinations based on the information they acquire from social media.

Social media has also been used as a platform where people seek advice on where to stay as it provides a database of reviews from previous clients regarding different facilities offering accommodation options in the target markets. This competency has been developed through a sustained encouragement of people to share their travel experiences online (McGruer 189-191). Relative to this assertion, social media allows people to evaluate and consume travel information in ways that are useful to them. However, doing so has created a bigger trend where customers build trust with their travel agents based on the reviews of other users. Stakeholders in the tourism and hospitality industry have also been able to build better relationships with customers through the same platform by engaging their clients on different aspects of product development and service delivery. For example, hotels use social media to address the issues raised by their guests regarding their stay. Sometimes, some of them have apologized to customers regarding varied issues raised on the platform, thereby increasing customer trust as people begin to understand that the hotel cares for them based on the transparency on social media.

Overall, social media platforms have revolutionized the relationship between businesses and customers by increasing the intensity of engagement between the two parties. Currently, a heightened level of awareness regarding business ethics among customers and businesses suggests that both parties could benefit from social media use. For example, companies can easily make their clients aware of product changes or new product categories via the platform, while customers can have their travel and accommodation concerns addressed on the same stage, as highlighted above. These developments mean that social media has heightened the level of engagement between marketers and customers.

New Tourism Products and Services

Tourism products and services are subject to changes in consumer tastes and preferences, which dictate their level of demand. For example, the growing prominence of new luxury tourism destinations, such as Dubai and Abu Dhabi, is a product of such changes in the market, which have seen marketers provide unique products designed for a premium market. Globally, there has been an increase in the number of players in the sector and changes in the business landscape, which have made the provision of certain products and services untenable or unrealistic. Therefore, marketers need to constantly scan the industry for new and emerging opportunities to promote their products and services or advance their marketing goals.

Currently, the growth potential for tourism products and services is in emerging lifestyle patterns among different demographics around the world. For example, the rapid spread of international trade and multiplicity of travel options have elevated the profile of medical tourism as a unique segment of the market with a lot of potential in driving the next phase of growth in the sector. This type of tourism activity is predicated on the need for people to travel from one part of the world to another in search of quality and affordable medical services.

Urban tourism is another emerging area of tourism development, which is rooted in the growing number of people who visit cities to know about its history and relevance to local populations. For example, a group of people could be traveling to New York or London to visit monuments or landmarks that are significant to a city’s history. Investors could package their tourism products to address the needs of this market. Based on the unique differences between different cities around the world, this tourism product could be replicated in other areas, with more revenue generated as a result. While doing so could be advantageous to most marketers, the replication of business ideas is one challenge, which could lead to an increase in competition among industry players and dwindling revenues. Alternatively, it could lead to an increase in marketing expenses, which would ultimately undermine a company’s bottom line.

Summary

This assessment suggests that strategic marketing plays an important role in promoting the growth and development of the tourism and hospitality industry by helping marketers to align product features with segments of the market that need them. However, it is difficult to do so without understanding theories and models that inform consumer decision-making patterns. In this regard, this study contains the BCG matrix and Maslow’s hierarchy of needs model to explain consumer-purchasing decisions by marketers. The strategic marketing concept has also helped to identify important considerations to make when developing sound marketing mix strategies. A flexible pricing plan and digital-based product, place, and promotion strategies are needed to appeal to current market dynamics. However, in the long-term, marketers should focus on integrating aspects of digital marketing in their overall plans to improve the quality of their decisions because this will be the new frontier of competitive strategic development.

Works Cited

Camilleri, Mark. Tourism Planning and Destination Marketing. Emerald Group Publishing, 2018.

Chaffey, Dave. Digital Marketing. Pearson UK, 2019.

Kolb, Bonita. Tourism Marketing for Cities and Towns: Using Social Media and Branding To Attract Tourists. 2nd ed., Taylor & Francis, 2017.

Kulakova, Galina. “What is Hospitality and Tourism Marketing?” Amara Marketing, 2020, Web.

McGruer, Dawn. Dynamic Digital Marketing: Master the World of Online and Social Media Marketing to Grow Your Business. John Wiley & Sons, 2020.

Pruschkowski, Martin. Analysis of the Portfolio of Red Bull Based on the BCG Matrix. GRIN Verlag, 2018.

Puthussery, Antony. Digital Marketing: An Overview. Notion Press, 2020.

Vellas, François. The International Marketing of Travel and Tourism: A Strategic Approach. Macmillan International Higher Education, 2016.

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