Chapter 6 Marketing in Commercial Recreation and Tourism: On-Line Lesson
The attitude and activities associated with the concurrent satisfaction of consumer and corporate needs is call marketing. In today's commercial recreation and tourism business environment the successful business is one that has correctly identified the consumers' preferences and provided products or experiences to satisfy them. Knowledge of consumer behavior and motivation is a key element of any manager's background.
Topics:
 | The marketing mix (4 Ps) |
| Product life course (PLC) |
| Channels of distribution |
| Pricing strategies |
| Discount pricing |
| Promotional mix |
Terms:
| promotion |
| going-rate pricing |
| market mix |
| mark-up pricing |
| price penetration |
| price skimming |
| product life course |
| publicity |
| top-of-mind-awareness (TOMA) |
| variable-cost pricing |
Marketing Mix (4 Ps of Marketing)
Market mix: a mix of inducements to buy that fit the needs and preferences of the target market.
Product: that (goods/services) which the consumer receives from the business transaction. The product is defined by the consumer as a certain kind of experience from which he/she derives specific benefits. Products need to be viewed as bundles of benefits that meet consumer needs.
Price: the cost to the consumer acquiring the product/service.
Place: a location, channel of distribution, knowing where the market is and the best way to reach it.
Promotion: the advancement or appreciation of the status, position, or value of a product or idea.
Product
The product is what the consumer (goods/services) receives from the business transaction or exchange. The product can be a tangible good (e.g., a tennis racket) or as an intangible service (e.g., tennis lessons). The product is defined by the consumer as a certain kind of experience from which he/she derives specific benefits. Until the commercial recreation and tourism manager begins to view the product as bundles of benefits that meet consumer needs, the success of the enterprise will be limited and the insensitivity and lack of response to market demands will increasingly affect the financial bottom line. Common benefits from commercial recreation and tourism products include:
Product development involves arranging activities or attributes in such a way that the consumers get from the product the specific benefits that they need or want.
Differences Between Goods and Services
Services are intangible endowments, deeds, performances, or efforts. Services are produced by the person who delivers it.
Goods are tangible items or devices that the consumer uses.
Market Segmentation: A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Market segmentation enables companies to target different categories of consumers who perceive the full value of certain products and services differently from one another. Generally three criteria can be used to identify different market segments:
1) Homogeneity (common needs within segment)
2) Distinction (unique from other groups)
3) Reaction (similar response to market)
For example, an athletic footwear company might have market segments for basketball players and long-distance runners. As distinct groups, basketball players and long-distance runners will respond to very different advertisements.
Source: Investopedia, http://www.investopedia.com/terms/m/marketsegmentation.asp#axzz2E1QXVKij
Product Development
Products are developed in response to the expressed or anticipated need of a market with which the business desires to have a commercial exchange. The satisfaction of consumer needs should be the primary motivation for product modification or new product development.
Product Diffusion
The process by which innovations (new or different good s & services) are spread to members of a social system.
Innovators: are adventuresome risk takers. They are usually younger, better educated, and more socially mobile that the other groups.
Early adopters: are opinion leaders in local reference groups, they are also successful, well educated, and somewhat younger than the other groups except innovators.
Early majority: are cautious and adopt a product earlier than most of the market, but only after it has proven to be successful.
Late majority: are skeptical about new products and tend to respond more to social pressure than to advertising in adopting an innovation.
Laggards: are locally oriented persons who engage in limited social interaction and are dogmatic and oriented towards the past.
Product Life Cycle
Most new products follow a similar pattern of development and decline from introduction to abandonment.
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Introduction stage: is characterized by gradual adoption and steady increases in consumption. |
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Take-off stage: product begins to see sharper increases in popularity. |
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Maturity stage: most of the market is aware of the product so the market is stable, loyal and about as large as it can be. |
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Decline stage: eventually newer products are developed to take customers away from the product. |
Product Rejuvenation
market penetration: a change in the way a product is presented to the market in order to increase the intensity and frequency of consumption.
market development: offering the same product to a much wider market.
product development: is to serve the same market with a modified product.
diversification: involves modifying both the product and the market.
Price
Price is an important part in the exchange between consumers and producers of commercial recreation and tourism products/services. Price is the cost to the consumer of acquiring the product/service. Price includes:
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sticker price |
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time and opportunity costs |
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psychological costs |
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personal effort costs |
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indirect financial costs |
Price Setting
The producer sets the sticker price at a level that is expected to accommodate and encourage purchasing and satisfying business objectives. The basic business objective is to generate a profit, which means that the money paid by consumers (price) must be more than the amount paid by the producer (cost). Business must know the producer costs and specify the cost recovery ration.
Example:
Product |
Unit Cost |
Cost Recovery Ratio |
Consumer Price |
Raft Trip/person |
$12 |
300 |
$36 |
Calculation: $12 x 300 = 36.00
Pricing Strategies
The basic business objective is to generate a profit, which means the money paid by the consumer (price) must be more than the money paid by the producer (cost).
| Price Penetration: Sets a price below cost in order to capture customers away from competitors then raise the price at a later time. |
| Price Skimming: Set a high initial price for a new product or service than gradually reduce it as the market becomes more competitive. |
| Going-Rate Pricing: simply matches the price of your competitors and competes on non-price variables. |
| Variable-Cost Pricing; is used where fixed costs comprise a large proportion of cost per unit sales. One price is not necessary to produce profits. |
| Markup Pricing: simplest and most popular. A fixed dollar or percentage amount is added to the cost of the product/service. Cost is $10 with a 200 percent markup = $30.00 |
Place (Distribution and Allocation)
Target Markets: is a relatively homogeneous group of consumers that have similar needs and product preferences and with whom the entrepreneur wishes to have a business exchange. A target market is a smaller group than the entire market of potential customers, and is the focus of a particular marketing effort.
Market Segmentation
Reasons for market segmentation are:
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Some larger markets may exhibit a great deal of heterogeneity. |
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Market segments respond differently to different marketing mixes. |
| Market segmentation is philosophically consistent with the marketing concept. |
Businesses should segment markets using only criteria that are relevant to the product and its delivery.
Common Segmentation Criteria include:
Delivery of the Product
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intensity: having more than one location |
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scheduling: the best time to offer a service is when the consumer is able and willing to receive it. |
Channels of Distribution
A network which creates exchanges between a producer of a product/service and a consumer.
Allocation
Allocation involves the determination and use of merit as a criterion upon which product delivery decisions are made. Merit refers to the "deservedness" of a market and may be measured in social or economic terms.
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Group sales |
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regular group discount |
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Industrial group discount |
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Consignment tickets |
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Discount cards |
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Group buyouts |
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Cooperative packages |
Promotion
Promotion is the advancement or appreciation of the status, position, or value of a product, service or idea. Promotional activities are for making goods and services known to the market, preferred by the market, and remembered by experienced customers.
Promotional activities are for making:
Promotions Mix
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Public Relations - the way the producer relates to the consumer public. |
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Customer Service - the ongoing service that is provided to customers. |
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Personal Selling - is the face-to-face communication between the corporate sales force and a customer. |
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Sales Promotion - are short term inducements of value to consumers that are designed to persuade them to buy. |
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Publicity - is unpaid communication about a business or its products or services in the mass media. |
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Advertising - is any paid form of non-personal presentation of ideas, goods, or services by an identified sponsor. |
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Online Promotion - is the use of web-based advertising and other forms of promotions (web sites, email, social networking, video sharing) |
Constructing a Promotional Message
| Is it visually attractive? |
| Does it have an appealing emotional or informational message to the target market? |
| Does it offer benefits to the consumer? |
| Will it
motivate the consumer to buy? |
"10 Marketing Strategies for Successful
Advertising"
A Free Report from Marlene B. Brown - TechnoTouch© Marketing
1. Have a professionally designed logo, and a
slogan, whose design - including message and colors - effectively
represents what you have to offer. Follow through with these on
all your marketing pieces as the continuity will help the
consumer have more confidence in your company.
2. Create a USP, a Unique Selling Proposition, something that will set you apart from your competition. While it has to be different, it also must show you understand your customers needs and can meet them.
3. Give something of value away. When people learn how much you know from that which you share freely, they'll often want to do business with you, knowing there's much more you have to offer them.
4. Request a response in your Ad or your marketing piece. Tell the reader what action you want them to take, then make it easy for people to do so by offering them a variety of ways to respond, including: voice mail, snail mail, fax mail, and e-mail.
5. Your marketing advertising should give your offer unique positioning plus specifics that increase believability. One way to accomplish this is to speak or write, in newsy style, directly to the reader.
6. Your copy needs to have a powerful headline that will persuade the reader to read more about what you have to offer them. If your message doesn't get them to read or listen further, someone else's will.
7. Features of your product or service must be turned into tangible benefits that appeal to the reader or listener. Everyone tunes into the most popular station, WIIFM - "What's In It For Me?"
8. Use testimonials. The fact is that people believe testimonials - comments made by people whose name or company they recognize - stating how they benefited from your products or service. This increases trust.
9. Offer an iron-clad guarantee along with a bonus or special discount. Then test market your advertising copy and its offer in order to target market segments, determine price, & develop promotional strategies.
10. Pull all of this together in an advertising and marketing campaign that's designed to target market those people who have a need for your product and/or services, and who will want to do business with you.
Remember, everybody "buys" every day. They can't buy
unless somebody is "selling." A winning marketing
campaign with advertising copy that sells will bring you an ROI
that will have you leapfrogging your competition and listening to
the ring of those cash registers as your profit soars. If we can
be of help to you in achieving your goals, please let us know!
Marlene B. Brown, www.technotouch.com
Top-of-mind-awareness
TOMA ( Top-of-Mind Awareness) is a measure of your name
awareness among local consumers. If local consumers were asked to name one firm
in your line of business, how many would you name first? The answer to that
question determines your TOMA ranking.
TOMA Research, an independent market research firm, recently conducted a survey
of Otero County consumers measuring Top-of- Mind Awareness in over 60 business
categories. How does your business rank? Being the first in the consumer's mind
is the key to real business success.
Top-of-mind-awareness article
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