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Role of distribution channels in marketing tourism products and services

  2. - Marketing means achieving the firm's goals by identifying the needs and desires of consumers, and then satisfying them better than competitors. – Tourism marketing is the application of marketing concepts in the travel and tourism industry. – Tourism marketing could be complex due to the product being an amalgam of many different industries such as accommodation and transportation. – The markets also vary widely, preferences could be difficult
  3. The organized, combined efforts of the national tourist bodies and/or the businesses in the tourism sector of an international, national or local area to achieve growth in tourism by maximizing the satisfaction of tourists. In doing so, the tourist bodies and businesses expect to receive profits.
  4. DISTRIBUTION SYSTEMS  The process which moves the product from production to consumption stage is called distribution.  Two factors make the distribution of the tourist product unique:  The consumer must go to the destination  The tourist product is highly perishable  It is important to understand the sales distribution systems and their role in influencing sales.
  5.  Distribution Channel Functions Members of the marketing channel perform many keysfunction: 1. Information- Gathering and distributing marketing research intelligence information about the marketing 2. Promotion – Developing and spreading persuasive communications about an offer 3. Contact – Finding and communicating with prospective buyers 4. Matching – Shaping and fitting the offer to the buyer’s need, including such activities as manufacturing, grading, assembling and packaging
  6.  5. Negotiation – Agreeing on price and other term of the offer so that ownership or possession can be transferred 6. Physical distribution – transporting and storing goods 7. Financing – Acquiring and using funds to cover the costs of channel work 8. Risk taking – Assuming financial risks such as the inability to sell inventory at full margin
  7.  Distribution Channel An operating structure, system, or linkage of various combinations of organisations through which a producer of travel products describes, sells, or confirms travel arrangements to the buyer Products get to consumer through a distribution channel  Tourism Services Services are actions; goods are material objects Services are often accompanied by facilitating goods which support the service In tourism there is no physical good that can be held in inventory and can be transferred from one middleman to the next
  9.  Why Use Intermediaries? Intermediaries make information and services widely available cost-effectively  They perform a variety of value-added functions e.g, types of services, potential customers, packages  Intermediaries are frequently paid on commission  May also charge the customer a modest fee  Exist where they perform a necessary role more cost-effectively than the supplier could perform the same role
  10. One-Level (Direct) Distribution Channels  Simplest form of distribution, no intermediary between supplier and customer  Most tourism suppliers utilize one-level distribution channels  Purchase directly from the supplier  World Wide Web is increasing the direct availability of information and purchase  Airlines encouraging the use of the Web and ticketless travel Advantages Simplicity,Additional Sales Opportunity, Flexibility, Greater Profitability to Suppliers, Personal Control over the Sale
  11. Two-Level Distribution Channels  Intermediary between tourism supplier and tourist  Most common form of tourism supplier  Travel agencies are the department stores of the travel industry  Improving service delivery through cooperative systems • Global distribution system (GDS) • Computer reservation system (CRS)  Two important cooperative systems for airline ticketing  Airlines Reporting Corporation (ARC)  International Airline Travel Agency Network (IATAN
  12.  Advantages Professional Assistance Multiple Options Free or Low-Cost Assistance Cumulative Group Power Single-Charge Billing Cost Less
  13. Three-Level Distribution Channels Add another level of intermediary such as tour operators to low-level channel  Some travel agencies have entered tour packaging business Tours  A package of two or more tourism services priced together Four primary forms of tours Independent Foreign/domestic independent Hosted Escorted  Tour Operators  Purchase tourism services in bulk and then mark up the price and resell in packaged form  Plan, prepare, market and often operate vacation tours  Also termed tour packager or tour wholesaler  Many financial risks in the tour packaging business  Receptive service operator is local company that handles group’s needs while in its location
  14. Distribution Systems  Direct Distribution System Sales are realized through direct contact Advantages  Time saving – by direct communication  Increased profits – no commission to any middleman  Flexibility – make possible changes  Greater Control – feeling of comfort and security in transaction Disadvantages  High cost of sales force  Possible reaction of dissatisfied intermediary
  15. Indirect Distribution System Use one or more travel intermediaries  Benefits of customers  Professional consultation  Greater variety  Lower price  Single payment
  16. Travel Intermediaries Tour Operator Tour Operator: A company that operates as an intermediary between the travel product supplier and the retail travel agent in the marketplace, generally provides such as information and reservations to travel agents. (Tour operators often operate as wholesalers, but usually when they are involve in some form of product packaging)
  17. Travel Intermediaries • The Role of Tour Operators Purchasing in bulk Buying power and ability to negotiation Financial security to suppliers and large sales Types of Operators  Inbound operators  OutBound operators  Domestic operators  Idependent operators  Airline operators  Wholesale travel agent  Specialty operators  Travel clubs
  18.  Travel Intermediaries The Travel Agent Definition: • A licensed travel product retailer that provides travel information, reservations and other forms of assistance to consumers, companies and groups in making travel arrangements. • Final link in the consumption process • Connecting the receiver and the source (supplier or wholesaler)  Representative selling products • Legally a travel agent is a commissioned agent or an authorized representative. • Maintains a delicate balance between serving the client and promoting the interests of the principles the agent represents
  19.  Travel Intermediaries  Regulation and Intermediaries Travel Agents • Some states require a license • Where a license is not is not legally obliged, certification or accreditationconsists of approval from industry conferences • Minimum bond and minimum cash reserve • Minimum experience • Travel agents have a legal obligation to perform in a professional manner Tour Operator • A local business license and compliance with governmental and airline regulations are required • Some monetary constraints
  20. The Impact of Technology on Travel Distribution Systems The Link between Technology and Tourism  Changes in market and mentality  Travel marketers realize that they are not only in pleasure or business travelers but also in the business of communication and information.  Group vs. individual travel  Developing of mass tourism  Need for technology The use of technology to gather, manage, distribute, and communicate information.
  21. The Impact of Technology on Travel Distribution Systems Computer Reservation Systems (CRS)  Beginning in the Airline Industry • Introduced in 1960’s for keeping track of the seats sold • Become a reservation system in 1970s.  Linking Systems • Interconnection between CRS in 1976  Alliances within Industry • Different travel suppliers linked their reservation systems • Global Distribution System
  22. The Impact of Technology on Travel Distribution Systems  Ticketing Automation  Satellite ticket printers (STP)  Electronic ticket delivery network (ETDN)  Electronic Kiosks  Ticketless Travel  The Internet  Both complement and substitute  Advantages and disadvantages  The Future  Elimination of intermediaries  On-line operations
  23. • Evolution Of The Concept Of Tourism Marketing Can Be Associated With The Various Business And Social Changes, Which Have Occurred Since The Introduction Of Industrialization • Like most industries, being a part of the tourism industry requires you to have industry specific knowledge to create and run a successful business. Understanding the distribution systems, recommended rates of commission, and the roles of various booking agents is essential for a successful business. This section has been designed to aid you in your understanding of the tourism industry.
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