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Market research in tourism
Current issues Market research in tourism Howimportant is it? Peter Hodgson
Even though tourism is probably the world’s largest industry, only 5% of total market research turnover is in travel and tourism, indicating the relative underuse of research in the industry. The intangible nature of tourism and the lack of a truly free market place certain limits on market research’s relevance, but the article suggests that the major barriers to its effective use are managerial attitudes and a lack of appreciation of how effective research can lead to increased profitability. In addition, the very areas where research would be most beneficial may well be those where it is most unlikely to be used: in understanding consumer motivations and in planning for the future. Peter Hodgson is TATR -Travel and 39 Highbury Place, currently Chairman ciation of European tutes.
Managing Director of Tourism Research Ltd, London N5 1QP. He is of AEMRI - the AssoMarket Research Insti-
‘P. Hodgson. ‘Why leisure research is different’, 4fst ESOMAR Marketing Research Congress, Lisbon, September 1988. ‘H.M. Shields, ‘1991 outlook for international travel’, Proceedings of the Sixteenth Annual Travel OuNook Forum, Pittsburgh, October 1990.
274
Travel, tourism and leisure constitute the most dynamic growth business sector in the world; but it is a sector where market research is underutilized. The reasons for the underuse of research in travel and tourism have been well documented and include the influence of external events and the need for marketers to be able to react rapidly without the luxury of detailed research; the limits on marketing action imposed by the existence of official regulations; the intangible nature of the travel product itself; the close customer-management contact which the industry’s structure permits; the proliferation of small operators who cannot usually afford to commission research; and the introspective nature of many of the industry’s managers (see note 1 for a fuller discussion of these factors).
External events The extraordinary world events of the recent past have certainly had a greater effect on the travel and tourism industry than on most others. Recent political change in Eastern Europe has totally altered the face of the tourism world of the future even though the potential unleashed by new found freedoms to travel may as yet be unrealized because of a lack of disposable income. Similarly, the tourism attractions of Eastern Europe are yet
TOURISM
to be developed and lack effective infrastructure. Currency exchange rates almost certainly play a greater part in determining the success of tourism destinations than any marketing or promotional effort. For example. over the past few years the weakness of the US dollar against European currencies has made North America a bargain destination for Europeans while making Europe itself an expensive option for visiting Americans. Over the five year period 1985-90, foreign visitor arrivals in the USA and Canada rose 60% while North American arrivals in Europe rose by only 15%. Research studies indicate a high inverse correlation between exchange rates and tourist movements.’ The repercussions of the Gulf War had a dramatic effect on the fortunes of many sectors of the industry; countries like Israel in the immediate danger zone received damaging blows to their viability as tourist destinations, and much effort (and time) will be needed before recovery. However, other destinations not in the immediate firing line such as Turkey and Cyprus have also had one of their major revenue earning industries put at risk. More recent tragic developments in Yugoslavia will undoubtedly have long-lasting repercussions on the Croatian economy and on the fortunes of specialist tour operators.
MANAGEMENT
December
1991
CUrrentissues
A direct result of the Gulf War in the UK was the crash of International Leisure Group; although ILG’s holiday companies were themselves profitable, the whole group was forced into liquidation as scheduled airline Air Europe’s debts proved unmanageable in the face of drastically reduced passenger carryings - and Air Europe’s routes did not go within a thousand miles of the war zone. Travel industry marketers, however, are nothing if not opportunistic; much of the UK’s ailing inclusive tour industry may well have been rescued by the collapse of ILG. Competitors who, a few weeks previously, had been taking desperate survival measures in the face of low bookings and fears for a bad summer season, soon displayed what the media described as indecent glee in sharing out the spoils. Senior executives from ILG companies lost little time in launching new operations - and this was all done without the need for detailed market research because in an emergency of this nature, there was simply no time for research even if it had been deemed necessary. The inevitable result is new and untested products and unresearched ‘me too’ brands to add to the hundreds in an already crowded marketplace.
TOURISM
MANAGEMENT
Faced with such practicalities, of what relevance would research programmes designed to check what schedules would suit potential clients have been? The preferences of the flying consumer have to be subjugated to political whim, and thus scope for consumer-led marketing action is inevitably reduced to the periphery. London City Airport provides another example; although the potential of the airport is immense since it is sited only a few miles away from London’s financial centres and is in the middle of the vast new rejuvenated Docklands area, the airport has been crippled by restrictions on runway length and by organized local opposition which has effectively prevented the use of modern jet aircraft, thus limiting the routes which could be served and the airlines which might be interested in using the airport. Research’s relevance to airlines using London City Airport was therefore minimal. However, it now appears that finally planning permission has been granted for airport expansion and BAe 146s will be allowed to use the airport. Only the future will see whether the airport authorities and airlines flying out of the airport will use survey research among both business and leisure markets effectively.
Limits on action
Managerial attitudes
The air travel industry provides two topical examples of the way in which the unique nature of the travel and tourism industry can effectively bypass the use of market research. For many years, it was UK government policy to prevent new carriers gaining access to Heathrow; but with the opening up of the airport to competition a new situation has arisen. Long-term Heathrow users Pan Am and TWA, facing bankruptcy, were obliged to sell the rights to many of their valuable UK-USA routes to United and American - newcomers to Heathrow need to secure suitable departure and arrival ‘slots’ and Pan Am and TWA were the slot owners. At the same time other carriers like Virgin Atlantic and ANA claimed the right of access to the airport in order to compete more effectively with British Airways.
It is not only the nature of the travel and tourism industry and its intangible, difficult-to-research products which restrict the use of market research techniques; the real barrier is arguably the combination of the unique historical background and development of many client companies and the attitudes of many of their managers. Of course, it would be both insulting and untrue to suggest that all travel and tourism companies and their managers are resistant to modern marketing practice. Many of the more successful airlines, hotel companies, tour operators, national tourist offices and transport operators are regular and sophisticated users of market research as well as of other modern marketing techniques. However, they are probably in a minority within the
December
1991
275
Current issues
‘travel and tourism are verv clannish’
3P. Hodgson, ‘New tourism product development - market research’s role’, Tourism Management, Vol 11, No 1, March 1990; and C. Isley, ‘New product research in the travel and tourism market - is it possible?‘, in Proceedings of the ESOMAR ‘Travel & Tourism in Transition’ seminar, Dublin, May 1991.
276
leisure industry - market researchers therefore face a major challenge if they are to convince the sceptical majority of the benefits on offer. The domination of much of the travel and tourism industry by ‘operations men’ instead of by marketers is a contributory factor. The philosophy of much of the industry is still that it should be run by travel and tourism professionals rather than by professional managers and marketers. Senior industry managers may be people with a wealth of highly relevant experience in the day-to-day detail of operations but they may have little appreciation, understanding or experience of marketing, advertising or market research. In contrast, in the fast moving consumer goods world, much less store is set upon specialized expertise within any particular industry: few would expect the chairman of a major electrical group to be a trained electrician or the managing director of a frozen foods company to be a refrigeration engineer. It is often claimed that travel and tourism are ‘friendly’ businesses; they are also very clannish ones where outsiders without a proven pedigree of experience and success within travel and tourism itself can be looked upon with suspicion. This situation is changing as more and more leisure industry organizations realize that they must bring in fresh blood with new skills from different business backgrounds. It is to be hoped that it will be less of an uphill task to convince the management of new style travel and tourism companies that they need a full-time market researcher on their staff and that they should listen to his or her‘contribution. Until recently, in many sectors of the travel and tourism industry, demand exceeded supply; however many products were made available they could usually be sold to a public eager to sample further travel experiences. It is from this scenario that the traditional inclusive package tour to the sun has developed. But has the package tour come to the end of its lifecycle? There is some truth in the oft repeated claim that the package tour is a tired and dying product; research studies have shown that consumers
TOURISM
are increasingly sophisticated and willing to organize their own travel. The growth of foreign holiday homes and timeshare has led to a burgeoning new market in travel: the seat only sector. However. although sales of package tours have declined in the UK from nearly El2 million in 1989 to an estimated fY million in lYY1, a market catering for Y million people out of a total population of 5h million is hardly a dead product. The level of inclusive holiday taking is lower in most other Western European countries (the exception is Scandinavia) but the outbound foreign package holiday market is still a vast one: Western Europe alone purchases an estimated 31 million foreign inclusive tours each year. Even if the allegation that the package tour is dead is a gross exaggeration, it is undeniable that there is now serious overcapacity in many suhxectors of the travel industry taken as a whole, and specifically in transatlantic air travel and in seaside resorts (both in the UK and on the continent of Europe). Many industry managers are clearly finding it difficult to come to terms with a situation where client requirements have to be taken into consideration h~~~brc products are marketed; in the past the practice was to offer holiday products in the near certain knowledge that they would sell. Thus is the need for effective new product development in travel and tourism born; but this is a very frequently neglected area, mainly because of product intangibility and the comparative ease of real life test marketing (see note 3 for a fuller discussion of new production development in travel and tourism).’
Selling and pricing The highly competitive nature of much of the travel and tourism industry has meant that all too often ‘marketing’ is seen as no more than a modern, trendy synonym for ‘selling’. Indeed, many travel companies combine the two functions by appointing a sales and marketing manager - and note that the two words are nearly always that way round. Frequently, the majority of such a manager’s time will be in selling, not marketing and,
MANAGEMENT
December
1991
Current issues
reflecting the ‘fun’ nature of the travel industry, senior managers can usually expect to pose in silly hats for the benefit of the travel trade press on a fairly regular basis. One result of this concentration on selling as opposed to marketing is that when the going gets tough, only one answer readily presents itself: reduce prices and sales will magically increase - only the short term matters. This approach appears to hold equally good for both major and minor operators. Optimal pricing is a vital area in which market research provides assistance to companies in other service businesses and in the FMCC world. Sophisticated research techniques have been evolved to examine the potential uptake of products at differing price levels, and retail auditing is used to indicate the success or otherwise of selling the same product at different prices or in different pack styles in different parts of the country. There is relatively little use of research as an aid to setting price in the travel and tourism industry. In much of the travel business there still appears to be little realization that price cutting can only bring short-term gains, that repeated discounting in the face of slow sales can only degrade a product and the last thing which a glamorous product like travel needs is to be portrayed as a cheap commodity. As a columnist in the UK travel trade press pointed out last year, you do not need an MBA to knock f50 off the price of a holiday. Constant price cutting in order to hold on to market share has led in the past to the impossibly low margins on which much of the travel industry has to survive; it also means that the industry cannot offer competitive salaries to attract sufficiently high calibre managerial staff, that investment in training is restricted and that expenditure in peripheral activities (and market research often falls into this category) is seen as an inessential luxury.
Weak branding Research shows that price is not the only motivator in purchase, provided that the product itself (or more importantly the brand) has sufficient image
TOURISM
MANAGEMENT
December
1991
and attraction to justify a premium being paid. However, with a constant emphasis on low prices, it is little wonder that much of travel and tourism has become a weakly branded commodity market. What is too often missing in travel and tourism marketing is the heavy and effective branding used in other consumer industries, branding designed to convince the consumer that he or she should buy one (often nearly identical) product instead of another. When the single most important weapon of the modern marketer, the brand, is disregarded by so many managers in travel and tourism, it is little wonder that the need for market research is minimized. This, of course, is not to suggest that there are not some successfully branded products in travel and tourism, and several stand out as exccptional - the most obvious examples being British Airways, Virgin Atlantic, Club Med, Orient Express, Disneyland and most of the major international hotel groups. Holidays, travel and tourism are attractive and interesting products for most of us; the consumer often sees them as highly aspirational and ‘such stuff as dreams are made on’. Surely it is therefore logical that advertising and promotion should be emphasizing the brand values offered by various products - if a travel trip is worth having, is it not worth paying a premium in order to ensure that it will be ‘special”? While much travel and tourism advertising does emphasize the aspirational nature of the product, there are surprisingly high numbers of advertisements which either fail to promote brands effectively or which, almost unthinkably, degrade the brand. A significant amount of travel advertising neither originates from advertising agencies nor undergoes any pretesting even of the most basic nature. While home-made advertising is understandable in the case of small businesses, internationally known touristic products are frequently advertised in a way that research would show as a counterproductive. This is a further symptom of the ‘operations men know best’ syndrome. Research is used extensively by an
277
Currenf
i.ssues educated minority of organizations in the international travel and tourism industry but it still probably only accounts for 5% of total market research turnover. I would suggest that market research’s potential uses in travel and tourism can be divided into four broad categories: Measuring the past (and the present): tourist/traveiier flows; brand sales/audit share measurement; data; advertising tracking; conversion studies; customer profiling; customer satisfaction; quality control; and image studies. Predicting the future: by forecasting and purchase intentions/travel plans. the future: product Creating and inlpro~~ement/modification new product development. Understanding the market: segmentation, qualitative insights and understanding customer rationale.
‘there has been a tradition of DIY research in travel for many years’ “C. Riley, ‘Qualitative research in travel and tourism’, in Proceedings of lnstitufe of Travei and Tourism Market Research Seminar, London, October 1990.
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Reflecting the sales orientation of much of the travel and tourism industry, there is a naturai inclination to concentrate on the first two of those categories: how many traveiiers are going to a destination? Is that number failing or growing? Wow are one’s competitors doing? Who exactly is the potential client and how can one best advertise to him or her? Was the new in effective advertising campaign attracting customers and how many’? Do visitors like the product‘? Is the product quality acceptable? And where will the market move to next? In too many instances researchers are not called upon to assist in any in-depth understanding of the market’s needs and are merely required to provide facts and figures without any marketing interpretation. Refiecting the fact that tourism is naturally more at home with numbers than with words, quantitative research is frequently more acceptable than quaiitative studies. Just as, in other business sectors, the research industry needed to convince marketers and advertisers of the value of qualitative input 10 or 15 years ago, so travel researchers face a similar uphill struggle with many potential clients today. Further, researchers are faced with
TOURISM
the problem that there has been a tradition of DIY research in travel for many years. This preference for seifhelp instead of calling in professionais stems both from narrow profit margins and from a widespread lack of awareness of the skill which outside researchers can bring to bear on marketing problems. The DIY approach is exemplified by the proliferation of amateurishly designed questionnaires to be found in the industry which range from blatant database building exercises under the guise of market research to the ubiquitous self-completion guest ‘questionnaire’ which is ignored by SO many hotel guests in their rooms.
understanding
c~~s~rn~r
choice Leisure travel is often a major purchase for any household, yet it is a purchase which is frequently made in an atmosphere of considerable ignorance, often leading to higher than necessary dissatisfaction levels. Under such circumstances, it should be selfevident that there is a vital need for marketers to have an in-depth understanding of exactly how the consumer is I~lotivated and qualitative research would appear to be the obvious way to approach this problem; yet it is used by relatively few client companies. There have been many attempts (mainly by US academics) to evolve m~~thenlatical models of how holiday destinations are selected and these usually concentrate on identifying quantifiable relationships between destination awareness and image, travel motives and practical constraints such as timing and finance. Unfortunately most of these exercises are theoretical and go little further than pointing out the problems inherent in attempting to investigate the travel decision choice process. Perhaps what they really show is that marketers must devote more time and resources to qualitative understanding of the consumer choice process.’ Too many travel and tourism organizations still remain unconvinced that there is a real need to monitor customer satisfaction on a regular and statistically reliable basis. There is a
MANAGEMENT
December
1991
Current
tendency to believe that it is better to distribute customer satisfaction questionnaires to as many clients as pOssible without worrying too much what percentage will respond and whether there will be any built-in response bias among returners. The concept that those who complete quality control questionnaires are likely to be different from those who do not do SO to0 often appears to be alien to the nonresearcher. in contrast, the prime objective of any professional researcher when faced with the task of setting up an effective consumer satisfaction exercise would be to ensure that a representative sampling of clients was effected and that a high and unbiased response rate yielded an adequate sample for analysis. Customer satisfaction research is frequently confused with quality control, database building and public relations. The objectives of the exercise then become blurred-is its purpose to monitor client satisfaction with the standards of product and service, is it to keep any eye open for unsatisfnctory components of a product package so they may be remedied, is it to provide a channel for passenger complaint, is it to show clients that the company cares about them or is it to build ui a database for future promotional mailings? Of course, the answer is likely to be all of these, and when money is tight and profit margins are narrow it is perhaps naive to retain a purist outlook.
Conversion
5T. Davidson and W. Wiethaupt, ‘Accountability marketing research: an increasingly vital tool for travel marketers’. Journal of Travel Research, Vol 27, No 4, Spring, 1989; and J. Burke and R. Gitelson, ‘Gonversion studies: assumptions, applications, accuracy and abuse’, Journal of Travel Research, Vol 28, No 3, Winter 1990.
TOURISM
MANAGEMENT
studies
Expenditure on tourism marketing, whether it be above the line advertising, below-the-line promotion or brochure production needs to be justified and this stricture applies particularly to offical tourist authorities who are responsible for spending public funds. The need for accountability in market research is born out of the necessity to show that there will be a positive return on investment in marketing activities. A result of this need is the ‘conversion studv’ which records the number of inquirers to a marketing initiative and then, by measuring the eventual number of inquirers who visited the destination
December
1991
issues
being promoted, determines a ‘conversion rate’. There are several problems underlying the use of such studies, not least of which are the implicit assumptions that the reason for all tourism inquiries is to help decide which destination is to be visited; and that there is a necessary causal relationship between inquiry and eventual holiday taking. Too many conversion studies take little account of the fact that many brochure applicants have already firmly decided to visit a destination before being exposed to any promotional message. The use and abuse of conversion studies has been detailed in the series of articles from the US Department of Commerce.’ To be used effectively, conversion studies must be able to distinguish between the differing purposes of tourism promotional activity: are brochures and other activities designed to inform the committed and thus confirm their intentions or is persuasion the order of the day? Other research methods should be considered: pre/ post-studies in particular are valuable in measuring the persuasive effectiveness of tourist promotions. Conclusions Currently, market research’s contribution to successful travel and tourism marketing is probably overconcentrated on recording the past and measuring the present rather than on planning for the future. Effective product renewal is essential to the tourism industry and in a market economy, it must be consumer led not operations led. Professional researchers need to demonstrate to a sometimes insular and introspective industry that market research is more than just a provider of bald facts and figures which can all too easily find their way into a ‘data cemetery’ of unread, unused reports. Faults lie on both sides of the clientresearcher divide: many travel and tourism managers do not appreciate the potential benefits which effective research can give them and, at the same time, much of the research business has failed to convince the travel and tourism manager that it is anything more than a detached and disinterested onlooker.
Even though tourism is probably the world’s largest industry, only 5% of total market research turnover is in travel and tourism, indicating the relative underuse of research in the industry. The intangible nature of tourism and the lack of a truly free market place certain limits on market research’s relevance, but the article suggests that the major barriers to its effective use are managerial attitudes and a lack of appreciation of how effective research can lead to increased profitability. In addition, the very areas where research would be most beneficial may well be those where it is most unlikely to be used: in understanding consumer motivations and in planning for the future. Peter Hodgson is TATR -Travel and 39 Highbury Place, currently Chairman ciation of European tutes.
Managing Director of Tourism Research Ltd, London N5 1QP. He is of AEMRI - the AssoMarket Research Insti-
‘P. Hodgson. ‘Why leisure research is different’, 4fst ESOMAR Marketing Research Congress, Lisbon, September 1988. ‘H.M. Shields, ‘1991 outlook for international travel’, Proceedings of the Sixteenth Annual Travel OuNook Forum, Pittsburgh, October 1990.
274
Travel, tourism and leisure constitute the most dynamic growth business sector in the world; but it is a sector where market research is underutilized. The reasons for the underuse of research in travel and tourism have been well documented and include the influence of external events and the need for marketers to be able to react rapidly without the luxury of detailed research; the limits on marketing action imposed by the existence of official regulations; the intangible nature of the travel product itself; the close customer-management contact which the industry’s structure permits; the proliferation of small operators who cannot usually afford to commission research; and the introspective nature of many of the industry’s managers (see note 1 for a fuller discussion of these factors).
External events The extraordinary world events of the recent past have certainly had a greater effect on the travel and tourism industry than on most others. Recent political change in Eastern Europe has totally altered the face of the tourism world of the future even though the potential unleashed by new found freedoms to travel may as yet be unrealized because of a lack of disposable income. Similarly, the tourism attractions of Eastern Europe are yet
TOURISM
to be developed and lack effective infrastructure. Currency exchange rates almost certainly play a greater part in determining the success of tourism destinations than any marketing or promotional effort. For example. over the past few years the weakness of the US dollar against European currencies has made North America a bargain destination for Europeans while making Europe itself an expensive option for visiting Americans. Over the five year period 1985-90, foreign visitor arrivals in the USA and Canada rose 60% while North American arrivals in Europe rose by only 15%. Research studies indicate a high inverse correlation between exchange rates and tourist movements.’ The repercussions of the Gulf War had a dramatic effect on the fortunes of many sectors of the industry; countries like Israel in the immediate danger zone received damaging blows to their viability as tourist destinations, and much effort (and time) will be needed before recovery. However, other destinations not in the immediate firing line such as Turkey and Cyprus have also had one of their major revenue earning industries put at risk. More recent tragic developments in Yugoslavia will undoubtedly have long-lasting repercussions on the Croatian economy and on the fortunes of specialist tour operators.
MANAGEMENT
December
1991
CUrrentissues
A direct result of the Gulf War in the UK was the crash of International Leisure Group; although ILG’s holiday companies were themselves profitable, the whole group was forced into liquidation as scheduled airline Air Europe’s debts proved unmanageable in the face of drastically reduced passenger carryings - and Air Europe’s routes did not go within a thousand miles of the war zone. Travel industry marketers, however, are nothing if not opportunistic; much of the UK’s ailing inclusive tour industry may well have been rescued by the collapse of ILG. Competitors who, a few weeks previously, had been taking desperate survival measures in the face of low bookings and fears for a bad summer season, soon displayed what the media described as indecent glee in sharing out the spoils. Senior executives from ILG companies lost little time in launching new operations - and this was all done without the need for detailed market research because in an emergency of this nature, there was simply no time for research even if it had been deemed necessary. The inevitable result is new and untested products and unresearched ‘me too’ brands to add to the hundreds in an already crowded marketplace.
TOURISM
MANAGEMENT
Faced with such practicalities, of what relevance would research programmes designed to check what schedules would suit potential clients have been? The preferences of the flying consumer have to be subjugated to political whim, and thus scope for consumer-led marketing action is inevitably reduced to the periphery. London City Airport provides another example; although the potential of the airport is immense since it is sited only a few miles away from London’s financial centres and is in the middle of the vast new rejuvenated Docklands area, the airport has been crippled by restrictions on runway length and by organized local opposition which has effectively prevented the use of modern jet aircraft, thus limiting the routes which could be served and the airlines which might be interested in using the airport. Research’s relevance to airlines using London City Airport was therefore minimal. However, it now appears that finally planning permission has been granted for airport expansion and BAe 146s will be allowed to use the airport. Only the future will see whether the airport authorities and airlines flying out of the airport will use survey research among both business and leisure markets effectively.
Limits on action
Managerial attitudes
The air travel industry provides two topical examples of the way in which the unique nature of the travel and tourism industry can effectively bypass the use of market research. For many years, it was UK government policy to prevent new carriers gaining access to Heathrow; but with the opening up of the airport to competition a new situation has arisen. Long-term Heathrow users Pan Am and TWA, facing bankruptcy, were obliged to sell the rights to many of their valuable UK-USA routes to United and American - newcomers to Heathrow need to secure suitable departure and arrival ‘slots’ and Pan Am and TWA were the slot owners. At the same time other carriers like Virgin Atlantic and ANA claimed the right of access to the airport in order to compete more effectively with British Airways.
It is not only the nature of the travel and tourism industry and its intangible, difficult-to-research products which restrict the use of market research techniques; the real barrier is arguably the combination of the unique historical background and development of many client companies and the attitudes of many of their managers. Of course, it would be both insulting and untrue to suggest that all travel and tourism companies and their managers are resistant to modern marketing practice. Many of the more successful airlines, hotel companies, tour operators, national tourist offices and transport operators are regular and sophisticated users of market research as well as of other modern marketing techniques. However, they are probably in a minority within the
December
1991
275
Current issues
‘travel and tourism are verv clannish’
3P. Hodgson, ‘New tourism product development - market research’s role’, Tourism Management, Vol 11, No 1, March 1990; and C. Isley, ‘New product research in the travel and tourism market - is it possible?‘, in Proceedings of the ESOMAR ‘Travel & Tourism in Transition’ seminar, Dublin, May 1991.
276
leisure industry - market researchers therefore face a major challenge if they are to convince the sceptical majority of the benefits on offer. The domination of much of the travel and tourism industry by ‘operations men’ instead of by marketers is a contributory factor. The philosophy of much of the industry is still that it should be run by travel and tourism professionals rather than by professional managers and marketers. Senior industry managers may be people with a wealth of highly relevant experience in the day-to-day detail of operations but they may have little appreciation, understanding or experience of marketing, advertising or market research. In contrast, in the fast moving consumer goods world, much less store is set upon specialized expertise within any particular industry: few would expect the chairman of a major electrical group to be a trained electrician or the managing director of a frozen foods company to be a refrigeration engineer. It is often claimed that travel and tourism are ‘friendly’ businesses; they are also very clannish ones where outsiders without a proven pedigree of experience and success within travel and tourism itself can be looked upon with suspicion. This situation is changing as more and more leisure industry organizations realize that they must bring in fresh blood with new skills from different business backgrounds. It is to be hoped that it will be less of an uphill task to convince the management of new style travel and tourism companies that they need a full-time market researcher on their staff and that they should listen to his or her‘contribution. Until recently, in many sectors of the travel and tourism industry, demand exceeded supply; however many products were made available they could usually be sold to a public eager to sample further travel experiences. It is from this scenario that the traditional inclusive package tour to the sun has developed. But has the package tour come to the end of its lifecycle? There is some truth in the oft repeated claim that the package tour is a tired and dying product; research studies have shown that consumers
TOURISM
are increasingly sophisticated and willing to organize their own travel. The growth of foreign holiday homes and timeshare has led to a burgeoning new market in travel: the seat only sector. However. although sales of package tours have declined in the UK from nearly El2 million in 1989 to an estimated fY million in lYY1, a market catering for Y million people out of a total population of 5h million is hardly a dead product. The level of inclusive holiday taking is lower in most other Western European countries (the exception is Scandinavia) but the outbound foreign package holiday market is still a vast one: Western Europe alone purchases an estimated 31 million foreign inclusive tours each year. Even if the allegation that the package tour is dead is a gross exaggeration, it is undeniable that there is now serious overcapacity in many suhxectors of the travel industry taken as a whole, and specifically in transatlantic air travel and in seaside resorts (both in the UK and on the continent of Europe). Many industry managers are clearly finding it difficult to come to terms with a situation where client requirements have to be taken into consideration h~~~brc products are marketed; in the past the practice was to offer holiday products in the near certain knowledge that they would sell. Thus is the need for effective new product development in travel and tourism born; but this is a very frequently neglected area, mainly because of product intangibility and the comparative ease of real life test marketing (see note 3 for a fuller discussion of new production development in travel and tourism).’
Selling and pricing The highly competitive nature of much of the travel and tourism industry has meant that all too often ‘marketing’ is seen as no more than a modern, trendy synonym for ‘selling’. Indeed, many travel companies combine the two functions by appointing a sales and marketing manager - and note that the two words are nearly always that way round. Frequently, the majority of such a manager’s time will be in selling, not marketing and,
MANAGEMENT
December
1991
Current issues
reflecting the ‘fun’ nature of the travel industry, senior managers can usually expect to pose in silly hats for the benefit of the travel trade press on a fairly regular basis. One result of this concentration on selling as opposed to marketing is that when the going gets tough, only one answer readily presents itself: reduce prices and sales will magically increase - only the short term matters. This approach appears to hold equally good for both major and minor operators. Optimal pricing is a vital area in which market research provides assistance to companies in other service businesses and in the FMCC world. Sophisticated research techniques have been evolved to examine the potential uptake of products at differing price levels, and retail auditing is used to indicate the success or otherwise of selling the same product at different prices or in different pack styles in different parts of the country. There is relatively little use of research as an aid to setting price in the travel and tourism industry. In much of the travel business there still appears to be little realization that price cutting can only bring short-term gains, that repeated discounting in the face of slow sales can only degrade a product and the last thing which a glamorous product like travel needs is to be portrayed as a cheap commodity. As a columnist in the UK travel trade press pointed out last year, you do not need an MBA to knock f50 off the price of a holiday. Constant price cutting in order to hold on to market share has led in the past to the impossibly low margins on which much of the travel industry has to survive; it also means that the industry cannot offer competitive salaries to attract sufficiently high calibre managerial staff, that investment in training is restricted and that expenditure in peripheral activities (and market research often falls into this category) is seen as an inessential luxury.
Weak branding Research shows that price is not the only motivator in purchase, provided that the product itself (or more importantly the brand) has sufficient image
TOURISM
MANAGEMENT
December
1991
and attraction to justify a premium being paid. However, with a constant emphasis on low prices, it is little wonder that much of travel and tourism has become a weakly branded commodity market. What is too often missing in travel and tourism marketing is the heavy and effective branding used in other consumer industries, branding designed to convince the consumer that he or she should buy one (often nearly identical) product instead of another. When the single most important weapon of the modern marketer, the brand, is disregarded by so many managers in travel and tourism, it is little wonder that the need for market research is minimized. This, of course, is not to suggest that there are not some successfully branded products in travel and tourism, and several stand out as exccptional - the most obvious examples being British Airways, Virgin Atlantic, Club Med, Orient Express, Disneyland and most of the major international hotel groups. Holidays, travel and tourism are attractive and interesting products for most of us; the consumer often sees them as highly aspirational and ‘such stuff as dreams are made on’. Surely it is therefore logical that advertising and promotion should be emphasizing the brand values offered by various products - if a travel trip is worth having, is it not worth paying a premium in order to ensure that it will be ‘special”? While much travel and tourism advertising does emphasize the aspirational nature of the product, there are surprisingly high numbers of advertisements which either fail to promote brands effectively or which, almost unthinkably, degrade the brand. A significant amount of travel advertising neither originates from advertising agencies nor undergoes any pretesting even of the most basic nature. While home-made advertising is understandable in the case of small businesses, internationally known touristic products are frequently advertised in a way that research would show as a counterproductive. This is a further symptom of the ‘operations men know best’ syndrome. Research is used extensively by an
277
Currenf
i.ssues educated minority of organizations in the international travel and tourism industry but it still probably only accounts for 5% of total market research turnover. I would suggest that market research’s potential uses in travel and tourism can be divided into four broad categories: Measuring the past (and the present): tourist/traveiier flows; brand sales/audit share measurement; data; advertising tracking; conversion studies; customer profiling; customer satisfaction; quality control; and image studies. Predicting the future: by forecasting and purchase intentions/travel plans. the future: product Creating and inlpro~~ement/modification new product development. Understanding the market: segmentation, qualitative insights and understanding customer rationale.
‘there has been a tradition of DIY research in travel for many years’ “C. Riley, ‘Qualitative research in travel and tourism’, in Proceedings of lnstitufe of Travei and Tourism Market Research Seminar, London, October 1990.
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Reflecting the sales orientation of much of the travel and tourism industry, there is a naturai inclination to concentrate on the first two of those categories: how many traveiiers are going to a destination? Is that number failing or growing? Wow are one’s competitors doing? Who exactly is the potential client and how can one best advertise to him or her? Was the new in effective advertising campaign attracting customers and how many’? Do visitors like the product‘? Is the product quality acceptable? And where will the market move to next? In too many instances researchers are not called upon to assist in any in-depth understanding of the market’s needs and are merely required to provide facts and figures without any marketing interpretation. Refiecting the fact that tourism is naturally more at home with numbers than with words, quantitative research is frequently more acceptable than quaiitative studies. Just as, in other business sectors, the research industry needed to convince marketers and advertisers of the value of qualitative input 10 or 15 years ago, so travel researchers face a similar uphill struggle with many potential clients today. Further, researchers are faced with
TOURISM
the problem that there has been a tradition of DIY research in travel for many years. This preference for seifhelp instead of calling in professionais stems both from narrow profit margins and from a widespread lack of awareness of the skill which outside researchers can bring to bear on marketing problems. The DIY approach is exemplified by the proliferation of amateurishly designed questionnaires to be found in the industry which range from blatant database building exercises under the guise of market research to the ubiquitous self-completion guest ‘questionnaire’ which is ignored by SO many hotel guests in their rooms.
understanding
c~~s~rn~r
choice Leisure travel is often a major purchase for any household, yet it is a purchase which is frequently made in an atmosphere of considerable ignorance, often leading to higher than necessary dissatisfaction levels. Under such circumstances, it should be selfevident that there is a vital need for marketers to have an in-depth understanding of exactly how the consumer is I~lotivated and qualitative research would appear to be the obvious way to approach this problem; yet it is used by relatively few client companies. There have been many attempts (mainly by US academics) to evolve m~~thenlatical models of how holiday destinations are selected and these usually concentrate on identifying quantifiable relationships between destination awareness and image, travel motives and practical constraints such as timing and finance. Unfortunately most of these exercises are theoretical and go little further than pointing out the problems inherent in attempting to investigate the travel decision choice process. Perhaps what they really show is that marketers must devote more time and resources to qualitative understanding of the consumer choice process.’ Too many travel and tourism organizations still remain unconvinced that there is a real need to monitor customer satisfaction on a regular and statistically reliable basis. There is a
MANAGEMENT
December
1991
Current
tendency to believe that it is better to distribute customer satisfaction questionnaires to as many clients as pOssible without worrying too much what percentage will respond and whether there will be any built-in response bias among returners. The concept that those who complete quality control questionnaires are likely to be different from those who do not do SO to0 often appears to be alien to the nonresearcher. in contrast, the prime objective of any professional researcher when faced with the task of setting up an effective consumer satisfaction exercise would be to ensure that a representative sampling of clients was effected and that a high and unbiased response rate yielded an adequate sample for analysis. Customer satisfaction research is frequently confused with quality control, database building and public relations. The objectives of the exercise then become blurred-is its purpose to monitor client satisfaction with the standards of product and service, is it to keep any eye open for unsatisfnctory components of a product package so they may be remedied, is it to provide a channel for passenger complaint, is it to show clients that the company cares about them or is it to build ui a database for future promotional mailings? Of course, the answer is likely to be all of these, and when money is tight and profit margins are narrow it is perhaps naive to retain a purist outlook.
Conversion
5T. Davidson and W. Wiethaupt, ‘Accountability marketing research: an increasingly vital tool for travel marketers’. Journal of Travel Research, Vol 27, No 4, Spring, 1989; and J. Burke and R. Gitelson, ‘Gonversion studies: assumptions, applications, accuracy and abuse’, Journal of Travel Research, Vol 28, No 3, Winter 1990.
TOURISM
MANAGEMENT
studies
Expenditure on tourism marketing, whether it be above the line advertising, below-the-line promotion or brochure production needs to be justified and this stricture applies particularly to offical tourist authorities who are responsible for spending public funds. The need for accountability in market research is born out of the necessity to show that there will be a positive return on investment in marketing activities. A result of this need is the ‘conversion studv’ which records the number of inquirers to a marketing initiative and then, by measuring the eventual number of inquirers who visited the destination
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1991
issues
being promoted, determines a ‘conversion rate’. There are several problems underlying the use of such studies, not least of which are the implicit assumptions that the reason for all tourism inquiries is to help decide which destination is to be visited; and that there is a necessary causal relationship between inquiry and eventual holiday taking. Too many conversion studies take little account of the fact that many brochure applicants have already firmly decided to visit a destination before being exposed to any promotional message. The use and abuse of conversion studies has been detailed in the series of articles from the US Department of Commerce.’ To be used effectively, conversion studies must be able to distinguish between the differing purposes of tourism promotional activity: are brochures and other activities designed to inform the committed and thus confirm their intentions or is persuasion the order of the day? Other research methods should be considered: pre/ post-studies in particular are valuable in measuring the persuasive effectiveness of tourist promotions. Conclusions Currently, market research’s contribution to successful travel and tourism marketing is probably overconcentrated on recording the past and measuring the present rather than on planning for the future. Effective product renewal is essential to the tourism industry and in a market economy, it must be consumer led not operations led. Professional researchers need to demonstrate to a sometimes insular and introspective industry that market research is more than just a provider of bald facts and figures which can all too easily find their way into a ‘data cemetery’ of unread, unused reports. Faults lie on both sides of the clientresearcher divide: many travel and tourism managers do not appreciate the potential benefits which effective research can give them and, at the same time, much of the research business has failed to convince the travel and tourism manager that it is anything more than a detached and disinterested onlooker.