What Is Tourism?
Tourism is the activities of people traveling to and staying in places outside their usual environment for leisure, business or other purposes for not more than one consecutive year.

Tourism is both an industry and concept. As a concept, tourism refers to traveling to a destination -- either within a person's own country or outside his or her own country -- for business or leisure purposes. More specifically, the World Tourism Organization defines the word "tourism" as the practice of "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure and not less than 24 hours, business and other purposes." As an industry, tourism consists of businesses that sell products or services to these travelers, whom are also known as "tourists."

Common examples of tourism businesses include:
•	 Cruise lines
•	 Hotels
•	 Tour guides
•	 Amusement parks
•	 Travel agents

What Is Hospitality?
The friendly and generous reception and entertainment of guests, visitors, or strangers.

Like tourism, hospitality is both a concept and industry. As a concept, hospitality refers to the relationship between a guest and a host. When you visit a friend's home for dinner, for example, he or she acts as the host while you act as the guest. Hospitality is the concept that governs this relationship. As an industry, hospitality consists of businesses that are heavily dependent upon such relationships. To succeed, hospitality businesses must foster strong and meaningful relationships with their guests. Failure to do so will likely result in guests leaving the business for a competitor's products or services.

Common examples of hospitality businesses include:
•	 Restaurants
•	 Cafes
•	 Hotels
•	 Bed & breakfasts
•	 Clubs
•	 Event planning

How the Tourism and Hospitality Industries Differ

Now let's take a closer look at how tourism and hospitality industries differ from each other. Hospitality is a larger industry that actually includes many tourism businesses. Because tourism businesses rely on strong and meaningful relationships with their customers to succeed, they are often classified as hospitality businesses as well. The difference between the tourism and hospitality industries is that former is a smaller industry that specifically focuses on traveling activities, whereas the latter is a larger industry that encompasses all businesses in which strong and meaningful customer relationships are required.

What is Tourism Marketing
Tourism and Hospitality Marketing is a total system designed to plan, price and promote and make available to selected markets products and services in form of benefits and experiences that create satisfied guests and achieve organisational objectives.
Marketing is the process for getting a company's product or service out to consumers. Tourism and Hospitality marketing is how segments of the tourism industry such as transportation, hotels, restaurants, resorts, amusement parks and other entertainment and accommodations businesses promote their products or services.
Just as the travel industry and behavior of travelers have changed, so has the way we market tourism products and services. And this is where tourism marketing comes into play. In a nutshell, Tourism Marketing is a marketing strategy that uses specific marketing plan and techniques to promote touristic products and services such as destinations, hotels and transport services, etc.

Importance of Tourism Marketing
Marketing is important because it helps you sell your products or services. The bottom line of any business is to make money and marketing is an essential channel to reach that end goal.
Tourism marketing drives business growth. If customers are satisfied with your services, they'll spread the word about your facility, whether it's a local pub or a hotel. This will bring you more clients and give you a competitive edge.
5 reasons why a good marketing strategy is vital to your tourism business:

1. Identify the ideal target market
The first step to developing a successful marketing campaign is identifying who the ideal target market is. Depending on the experience on offer, the customer will vary.

2. Attract new customers and develop loyalty
Once the ideal target market has been identified, a strategy to reach these potential customers must be developed. Because customer loyalty is key, a lot of time needs to be devoted to building brand awareness and creating ongoing, interconnected campaigns that both target previous guests, and attract new ones.

3. Understand the customer journey
In tourism, the ultimate end goal is the sale of an ‘experience’ – not a material object. This means that the customer journey to making a purchase is rather different and comes with its own set of challenges. Understanding this ‘journey’ that the customer takes before going through with a purchase is critical to a successful marketing campaign.

4. Stand out from competitors
As the tourism industry becomes more and more competitive, it’s important to make sure that your business stands out. Highlighting what is unique or different about the business is one of the best ways to achieve this. A really good marketing strategy is able to communicate these points effectively to the customers in a way that ‘speaks’ to them.

5. Hone in on the most effective tactics
Using research and analytical tools, a marketing strategy allows you to assess which resources are best helping to reach your audience, and then focus on those resources to ensure the best ROI possible. At the end of the day, having a good marketing strategy in place allows you to feel confident in knowing that all your business’s marketing needs are being carefully looked after.

Needs wants and demands

Needs wants and demands are a part of basic marketing priciples. Though they are 3 simple worlds, they hold a very complex meaning behind them along with a huge differentiation factor. In fact, A product can be differentiated on the basis of whether it satisfies a customers needs, wants or demands.
Need : The most basic concept underlying marketing is that of human needs. A human need is a state of felt deprivation. – these needs were not invented by marketers, but are part of the human makeup 
Wants : The second basic concept to marketing is that of human wants, the form human needs take as they are shaped by culture and individual personality. – wants are how people communicate their needs – wants are described in terms of objectives that will satisfy needs
Demands : People have almost unlimited wants, but limited resources, and so choose products that produce the most satisfaction for their money. – when backed by buying power, wants become demands 

 To Understand (Needs Wants and Demands) in more simpler way:
Need : Human needs are the basic requirements and include food, clothing and shelter. Without these humans cannot survive. An extended part of needs today has become education and healthcare. Generally, the products which fall under the needs category of products do not require a push.
Instead the customer buys it themselves. But in todays tough and competitive world, so many brands have come up with the same offering satisfying the needs of the customer, that even the “needs category product” has to be pushed in the customers mind.

Want : Wants are a step ahead of needs and are largely dependent on the needs of humans themselves. For example, you need to take a bath. But I am sure you take baths with the best soaps. Thus Wants are not mandatory part of life. You DONT need a good smelling soap. But you will definitely use it because it is your want. 
Demand : You might want a BMWor a Mercedes for a car. You might want to go for a cruise. But can you actually buy a BMW or go on a cruise? You can provided you have the ability to buy a BMW or go on a cruise. Thus a step ahead of wants is demands.
When an individual wants something which is premium, but he also has the ability to buy it, then these wants are converted to demands. The basic difference between wants and demands is desire. A customer may desire something but he may not be able to fulfill his desire.
Tourism demand is the total number of persons who travel or wish to travel to use the tourist facilities away from their places of work and residence.
Tourism is a dynamic field. It varies on the number of factors related to the tourists; the country of destination, the market from which the tourists emerge, and market of the destination. The tourism managers and researchers study a lot about tourists’ motivations and cultures, their changing behavior, and the driving and affecting factors of tourism. They also study the destinations investigating the amenities and attractions they provide or any prospective ways to attract the tourists.
The tourism businesses can figure out the demand of tourism in a particular area, by identifying the types of various tourists, their behaviors, and create right offerings for the right market.
Let us see, the types of tourists and how tourist behavior varies with respect to various factors.
Types of Tourists
There are different types of tourists −
Intrinsic Tourists− They are into holidaying for the sake of enjoyment.
•	Extrinsic Tourists− They have reward oriented motivation. These tourists are susceptible to the activities where performance is evaluated.
•	Adventurers− They give very little importance to relaxation. They are always up to exploring places and taking challenges. Mainly youths and singles from both genders carrying zest of life largely contribute to this type of tourism.
•	Budget Travelers− They are economy-oriented tourists. Their touring decisions about places, travelling mode, and other related factors are largely dependent on their financial status.
•	Homebodies− They are mainly relaxed tourists. They do not get into adventure. The tourists aged above 45 to 50 years belong to this type. The busy professionals under 45 years also belong to this type.
•	Moderates− They plan their tour ahead, have a high inclination towards tourism but they do not get into sports or adventure activities.
•	Vacationers− They plan touring during vacations such as summer break or Christmas break. They are not always sure of where and why they wish to visit.

Product
Here is an onion shell diagram that depicts elements of a tourism product. The diagram shows progression of elements from core to outer shell depicting the declining direct management control. It shows that the consumer’s involvement is maximum at the outermost shell. The tourism product is not just presence of all five elements but it is also the interaction of these elements among themselves.

The Physical Plant
It is tangible and is composed of various resources on which the tourism is based. Plainly, the physical plant is nothing but the destination with sound and catchy architecture that enhances tourists’ experience. It can be −
•	A natural attraction such as a landscape, wild life, natural structure.
•	A man-made attraction such as a resort.
•	A fixed property such as an accommodation.
•	A mobile property such as a ship or an airbus.
•	A natural or manmade condition such as weather, crowd, infrastructure at the destination.
Service
The features or facilities of the physical plant are put to use for the tourists with service. Providing services calls for a major contribution from human resources. It pertains to performing tasks for the benefit and satisfaction of the tourists. For example, serving food in a hotel is a service by the staff there.
Hospitality
It is the attitude with which the service is provided. Hospitality includes performing the service with smile, enthusiasm, untiringly, and with dedication. For example, arranging guest room supplies or serving food or beverage in a presentable manner is a part of hospitality.
Freedom of Choice
It is offering the tourist some acceptable range of options in order to elevate their experience. The degree of freedom varies greatly depending on the type of tourism (pleasure, business, family, or other), the tourist’s budget, previous experience, knowledge, and reliance on a travel agent.
A good tourism product must include some choice for its consumers. By offering some freedom to the tourists, the product gives some sense of control to the tourists. The freedom to choose an airline, a route, a seat, an accommodation, or a restaurant can enhance a tourist’s satisfaction. Freedom also implies good surprises. When the tourists come across unanticipated events, they get the feeling of being very fortunate to be in the right place at the right time, thereby gaining extra value from the visit.
Involvement
It depends upon the quality of inner four elements. These elements prepare the tourists for physical, intellectual, and/or emotional involvement in tourism services. Involvement is not only the physical participation, but also a sense of engagement in an activity- may it be for pleasure or business.
More the involvement of the tourists, more they are interested in striking conversation happily with others, more they are enthusiastic and curious to try out new things, and time passes fast for them.
Thus, a combination of tourists’ involvement, freedom of choice, service with hospitality and perfect destination (with all A’s present) can make the best tourist product.
Types of Tourism Products
The tourism products are grouped into the following types −
Tourism Oriented Products (TOP)
These are the products and services created primarily for the tourists and also for the locals. These products need a great share of investments in private sector. A few of them are −
•	Accommodations; For example, Taj, ITC Hotels.
•	Transportation; For example, Owning taxis, luxury buses, and boats.
•	Retail Travel Agents
•	Tour Operators
•	Shopping Centers such as malls
•	Cinema Theatres such as PVR
•	Restaurants for Food and Beverages
•	Tourism Information Centers
•	Souvenirs Outlets
•	Museums, Temples, Gardens, and Theme parks
Residents Oriented Products (ROP)
Here, the products and services are created mainly for the local residents staying at a particular tourist destination. This category requires investment in public sectors more. Some of them are −
•	Hospitals
•	Public Parks
•	Banks and ATMs
•	Petrol Pumps
•	Postal Service
Intangible Products of Tourism
They include −
•	Bookings of accommodations, theatres, and at various sites.
•	Tourists’ experience by visiting a destination, eating at a restaurant, or performing an activity.
•	Tourists’ memory which is created by storing the details of events and experience on the tour. The high degree of satisfaction or dissatisfaction is often stored as a long term memory.
•	Transportation of tourists and their luggage from one place to another.
Tour Operator’s Products and Services
To realize the facilities and experience a tourism product offers, service is required by skilled and qualified staff. The tour operator provides the following typical products and services −
Accommodations
The tourist destinations are equipped with different types of accommodations. They cater for tourists’ stay at the destination.
•	Serviced − This type of accommodation is supported by skilled staff such as housekeepers, drivers, guides, and cooks.
•	Self-catering − This accommodation offers staying facilities but dining is required to be self-catered. It is equipped with cooking, fuel and facility, some basic supplies such as tea/coffee/sugar sachets, and a drinking water source.
•	Hotels − Budget rooms to 7* hotels with classy amenities. The hotels contribute a major share of imparting the experience to the tourists by providing best services and amenities.
•	Guest Houses − Owned by business or government organizations, which can be used by its staff and staff relatives.
•	Camping Sites − They are open sites often located in areas of lush greenery. They are equipped with clean place to pitch the personal tent, a water supply, and electric supply. Camp sites have common rest rooms.
Reservations
The tour operator is responsible for making reservations for special events or activities the tourists are interested in. At some places, the reservations are required to be done well in advance to avoid last minute hassles. The events or activities such as a music concert or a theatre show, visiting a theme park or a zoo, require people to secure seats or avail entry with prior reservations.
Guided Tours
The tour operators can arrange guided tours. Some qualified staff who can get access to the place, explain the importance of the place, support, and guide the participants through the entire visit. The guide is arranged to accompany the tour participants as a part of tour.
Transport Facilities
These facilities are for travelling from one place to another.
Surface Transport − It includes support of transport by road or water.
Air Transport − This is the support of transport by air, generally given for long distance travel. Many times the tours include a halt of a couple of hours at transit destinations. Today the airports are built and maintained as engaging tourist terminals by providing amenities such as spas, lounges, food joints, bars, and book shops, retail shops for selling authentic local food, clothes, and souvenirs.
Today the Airlines are no more backstage when it comes to caring for their customers. They offer loyalty programs to their customers under Frequent Flyer Program to encourage the customers to travel more and accumulate points and redeem them against travel or rewards.
Dining Facilities
The tour operators can book accommodation that provides dining facilities or it can tie up with the local restaurants which are ready to entertain groups. If the tour package is all inclusive, the tour operator pays for breakfast, lunch, and dinner. If not, the tourists need to pay from their own pocket.

The Value of Tourism

Tourism serves many purposes and provides benefits for everyone and everything involved, from the traveler to the people serving those travelers, along with the cities, states and countries that are being traveled. Tourism brings people together and opens our eyes to a variety of cultures and beliefs that we may not have had a chance to experience. Whether traveling a short distance or halfway around the world, there is something to see or learn and fun to be had.
The Traveler Not only does the sheer fact of traveling to new places bring joy and fun to the traveler, but also relaxation and a break from the everyday routine of life. When traveling across borders, being exposed to diverse cultures can help gain a new perspective and appreciation on life. Being immersed in a different city or country opens the door for new learning experiences and becoming more culturally knowledgeable. There are new and fun experiences waiting for those that are just traveling to the next state over or to the beach a few hours away. No matter the distance, traveling opens the opportunity to make memories, escape ordinary life, have some fun, and recharge.The People
One of the world’s leading employers is tourism. Vacationers and explorers provide a warm place to stay and food on the table for many families, whether by simply purchasing a cup of coffee, attending a cultural event, or staying at a five-star hotel. It is also apparent that tourism creates a sense of pride among those serving tourists in regards to their community and heritage, which they are always happy to share with visitors.

The Service Culture
The world economy nowadays is increasingly characterized as a service economy. This is primarily due to the increasing importance and share of the service sector in the economies of most developed and developing countries. In fact, the growth of the service sector has long been considered as indicative of a country’s economic progress.
Economic history tells us that all developing nations have invariably experienced a shift from agriculture to industry and then to the service sector as the main stay of the economy.
This shift has also brought about a change in the definition of goods and services themselves. No longer are goods considered separate from services. Rather, services now increasingly represent an integral part of the product and this interconnectedness of goods and services is represented on a goods-services continuum.
Definition and characteristics of Services

The defining characteristics of a service are:
Intangibility: Services are intangible and do not have a physical existence. Hence services cannot be touched, held, tasted or smelt. This is most defining feature of a service and that which primarily differentiates it from a product. Also, it poses a unique challenge to those engaged in marketing a service as they need to attach tangible attributes to an otherwise intangible offering.
•	Heterogeneity/Variability: Given the very nature of services, each service offering is unique and cannot be exactly repeated even by the same service provider. While products can be mass produced and be homogenous the same is not true of services. eg: All burgers of a particular flavor at McDonalds are almost identical. However, the same is not true of the service rendered by the same counter staff consecutively to two customers.
•	Perishability: Services cannot be stored, saved, returned or resold once they have been used. Once rendered to a customer the service is completely consumed and cannot be delivered to another customer. eg: A customer dissatisfied with the services of a barber cannot return the service of the haircut that was rendered to him. At the most he may decide not to visit that particular barber in the future.
•	Inseparability/Simultaneity of production and consumption: This refers to the fact that services are generated and consumed within the same time frame. Eg: a haircut is delivered to and consumed by a customer simultaneously unlike, say, a takeaway burger which the customer may consume even after a few hours of purchase. Moreover, it is very difficult to separate a service from the service provider. Eg: the barber is necessarily a part of the service of a haircut that he is delivering to his customer.
Types of Services
•	Core Services: A service that is the primary purpose of the transaction. Eg: a haircut or the services of lawyer or teacher.
•	Supplementary Services: Services that are rendered as a corollary to the sale of a tangible product. Eg: Home delivery options offered by restaurants above a minimum bill value.
The first four elements in the services marketing mix are the same as those in the traditional marketing mix. However, given the unique nature of services, the implications of these are slightly different in case of services.
The 7 P’s of Services Marketing

•	Product: In case of services, the ‘product’ is intangible, heterogeneous and perishable. Moreover, its production and consumption are inseparable. Hence, there is scope for customizing the offering as per customer requirements and the actual customer encounter therefore assumes particular significance. However, too much customization would compromise the standard delivery of the service and adversely affect its quality. Hence particular care has to be taken in designing the service offering.
•	Pricing: Pricing of services is tougher than pricing of goods. While the latter can be priced easily by taking into account the raw material costs, in case of services attendant costs - such as labor and overhead costs - also need to be factored in. Thus a restaurant not only has to charge for the cost of the food served but also has to calculate a price for the ambience provided. The final price for the service is then arrived at by including a mark up for an adequate profit margin.
3. Place: Since service delivery is concurrent with its production and cannot be stored or transported, the location of the service product assumes importance. Service providers have to give special thought to where the service would be provided. Thus, a fine dine restaurant is better located in a busy, upscale market as against on the outskirts of a city. Similarly, a holiday resort is better situated in the countryside away from the rush and noise of a city.
4. Promotion: Since a service offering can be easily replicated promotion becomes crucial in differentiating a service offering in the mind of the consumer. Thus, service providers offering identical services such as airlines or banks and insurance companies invest heavily in advertising their services. This is crucial in attracting customers in a segment where the services providers have nearly identical offerings.
We now look at the 3 new elements of the services marketing mix - people, process and physical evidence - which are unique to the marketing of services.
•	People: People are a defining factor in a service delivery process, since a service is inseparable from the person providing it. Thus, a restaurant is known as much for its food as for the service provided by its staff. The same is true of banks and department stores. Consequently, customer service training for staff has become a top priority for many organizations today.
•	Process: The process of service delivery is crucial since it ensures that the same standard of service is repeatedly delivered to the customers. Therefore, most companies have a service blue print which provides the details of the service delivery process, often going down to even defining the service script and the greeting phrases to be used by the service staff.
•	Physical Evidence: Since services are intangible in nature most service providers strive to incorporate certain tangible elements into their offering to enhance customer experience. Thus, there are hair salons that have well designed waiting areas often with magazines and plush sofas for patrons to read and relax while they await their turn. Similarly, restaurants invest heavily in their interior design and decorations to offer a tangible and unique experience to their guests.

Management Strategies for Service Business
There are basically two approaches that any organization can have towards maintaining service standards - a proactive approach or a reactive approach.
Proactive: A proactive approach entails actively reaching out to customers and trying to gather their feedback on service quality and suggested areas of improvement. This can be done by way of:
a.Surveys and questionnaires: Such an approach helps a brand to anticipate customer demands and expectations and align its service offering accordingly. Also, the findings of such surveys can help to identify common issues and demands of customers hence helping a company to customize its service offering.
b.Gap Analysis: Another approach that is adopted for analyzing service quality is that of the gap analysis. The company has an ideal service standard that it would like to offer to its customers. This is contrasted with the current level of service being offered. The gap thus identified serves both as a measure and as a basis for planning a future course of action to improve the service offering.
c.Staff Training: Another crucial aspect of the proactive approach is staff training. Companies nowadays spend generously on training their personnel to adequately handle customer queries and/or complaints. This is particularly true if a company is changing its service offering or going in for a price hike of its existing services. For example, when a fast food chain increases the price of its existing products, the staff has to handle multiple customer queries regarding the hike. Lack of a satisfactory explanation would signify poor service standards and lead to customer dissatisfaction.
Reactive: A reactive approach basically consists of resorting to a predetermined service recovery mechanism once a customer complains about poor service quality. It usually starts with apologizing to the customer and then taking steps to redeem the situation. The fundamental flaw with this approach is that, here the customer has already had a bad experience of the brand’s service.
Measuring Service Quality
Another crucial element to be kept in mind while seeking to maintain service quality is to have in place a metric for ‘measuring’ quality. The particular parameters selected would depend on the type of business, service model and the customer expectations. For example: at a customer service call center of a telecom provider, the metric for measuring service quality could be the average time taken for handling a call or rectifying a complaint. For a fast food outlet, the metrics for measuring service quality of the sales staff could be the number of bills generated as a percentage of total customer footfalls or the increase in sales month on month.
Once a system is put in place for measuring quality, a standard can then be mandated for the service standard the organization is seeking to maintain.

In today’s ultra competitive business environment merely meeting customer expectations is not enough. In order to effectively differentiate themselves from the competition, service providers need to focus on exceeding customer expectations to create customer delight and create a pool of loyal customers. Therefore, when deciding on a service delivery design, it is imperative for the service provider to consider the targeted customer base and their needs and expectations. This will help in developing a service design that will help the provider to effectively manage customer expectations leading to customer delight.
Customer Needs and Expectations
Customer needs comprise the basic reason or requirement that prompts a customer to approach a service provider. For instance, a person visits a restaurant primarily for the food it serves. That is the customer’s need. However, the customer expects polite staff, attentive yet non intrusive service and a pleasant ambience. If these expectations are not properly met the guest would leave the restaurant dissatisfied even if his basic requirement of a meal being served has been met. Thus knowing and understanding guest expectations is important for any service provider.

Customer Satisfaction, Dissatisfaction and Delight
Based on the quality of the service experience a customer will either be satisfied, dissatisfied or delighted. Knowing a customer’s expectation is instrumental in developing a strategy for meeting and exceeding customer expectations.
•	Customer Dissatisfaction: This is a situation when the service delivery fails to match up to the customer’s expectations. The customer does not perceive any value for money. It’s a moment of misery for the customer.
•	Customer Satisfaction: In this case, the service provider is able to match the customer’s expectations and deliver a satisfactory experience. However, such a customer is not strongly attached to the bran and may easily shift to a competing brand for considerations of price or discounts and freebies.
•	Customer Delight: This is an ideal situation where the service provider is able to exceed the customer’s expectations creating a Moment of Magic for the customer. Such customers bond with the brand, are regular and loyal and will not easily shift to other brands.
Meeting and Exceeding Customer Expectations
Exceeding customer expectations is all about creating that extra value for the customer. The hospitality industry specializes in creating customer delight.
Example, most 5 star hotels maintain customer databases detailing room order choices of their guests. So if a guest has asked for say orange juice to be kept in the mini bar in his room, the next time that he makes a reservation at the hotel, the staff ensures that the juice s already kept in the room. Such small gestures go a long way in making customers feel important and creating customer delight.
Another novel way of exceeding guest expectations is often demonstrated by travel companies. Since, they usually have details on their customers’ birthdays, they often send out an email greeting to their guests to wish them. This not only makes an impact on the guest but also helps to keep the company acquire ‘top of the mind recall’ with the guest.

Marketing Management Philosophies

Every business, every company and every product is different. So it is a given that one strategy of marketing cannot apply to all uniformly. So different entities employ different tactics and concepts known as marketing management philosophies.
Production Concept
This concept is based on the efficient production process of a company. Since the days of the industrial revolution, it is believed that goods that are available in excessive quantities and cheap prices will always sell. It is the Says law that “supply will create its own demand’.
So a company can choose the production concept where it will utilize the economies of scale. It will produce huge quantities of goods at lower costs and sell them in all markets and inexpensive rates. Here the profits will come from the number of goods sold.
But the logic is flawed that the customer chooses a product only based on price. There are many other factors he will consider, such as quality and differentiation.
Product Concept
This concept places its emphasis on quality and innovation rather than price and availability. In a market, there are many factors that influence the customer. One such important factor is the quality of the product and all its features that are on offer.
So in the product concept, the company will make sure their goods are of the best quality. This will mean the cost of production and the price of the product will be higher. But the company will look to maximise profit by promising quality products. Those customers who will emphasise the cost or the accessibility of the product will be driven away.
Selling Concept
Here the concept shifts from production of the product to simply selling the product. Even if the goods meet the price and quality requirements of the consumer, the sale is not guaranteed. In the selling concept of marketing management philosophies, the idea is to persuade the consumer to buy the product by any means necessary.
Companies use promotion , advertising and publicity to convince the consumer to buy their products. At times they can even manipulate consumers. The ultimate aim here is to push the product, without thought of long-term consequences.
Marketing Concept
Marketing is one of the newer marketing management philosophies. It is a very 21st-century concept that truly believes “the customer is king”. Here ever decision will be influenced by the needs of the customer. Right from production and design of the goods to its transportation, every process has the customer in mind.
Since customer satisfaction is the main goal of the marketing concept they need not worry about selling or production. Since they are fulfilling all the needs of the consumers it is a given the consumer will pay an appropriate price for the product.
Societal Marketing Process
Sometimes the need of the customer and those of the company are not best suited to the society and/or the environment. But since the business is a part of society, it must ensure its wellbeing as well. So this concept will focus on the satisfaction of consumer needs without harming the society or the environment in the process.

Market segmentation

Market segmentation is the process of dividing up mass markets into groups with similar needs and wants. The rationale for market segmentation is that in order to achieve competitive advantage and superior performance, firms should: "(1) identify segments of industry demand, (2) target specific segments of demand, and (3) develop specific 'marketing mixes' for each targeted market segment. "From an economic perspective, segmentation is built on the assumption that heterogeneity in demand allows for demand to be disaggregated into segments with distinct demand functions.

Market segmentation is a process of dividing a heterogeneous market into relatively more homogenous segments based on certain parameters like geographic, demographic, psychographic, and behavioural. It is the activity of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers (known as segments) based on some type of shared characteristics.

In dividing or segmenting markets, researchers typically look for common characteristics such as shared needs, common interests, similar lifestyles, or even similar demographic profiles. The overall aim of segmentation is to identify high yield segments – that is, those segments that are likely to be the most profitable or that have growth potential – so that these can be selected for special attention (i.e. become target markets). Many different ways to segment a market have been identified. Business-to-business (B2B) sellers might segment the market into different types of businesses or countries. While business-to-consumer (B2C) sellers might segment the market into demographic segments, lifestyle segments, behavioural segments, or any other meaningful segment.
Market segmentation assumes that different market segments require different marketing programs – that is, different offers, prices, promotion, distribution, or some combination of marketing variables. Market segmentation is not only designed to identify the most profitable segments, but also to develop profiles of key segments in order to better understand their needs and purchase motivations. Insights from segmentation analysis are subsequently used to support marketing strategy development and planning.
A key consideration for marketers is whether to segment or not to segment. Depending on company philosophy, resources, product type, or market characteristics, a business may develop an undifferentiated approach or differentiated approach. In an undifferentiated approach, the marketer ignores segmentation and develops a product that meets the needs of the largest number of buyers. In a differentiated approach the firm targets one or more market segments, and develops separate offers for each segment.

Even simple products like salt, which might be considered as commodities, are highly differentiated in practice.
In consumer marketing, it is difficult to find examples of undifferentiated approaches. Even goods such as salt and sugar, which were once treated as commodities, are now highly differentiated. Consumers can purchase a variety of salt products; cooking salt, table salt, sea salt, rock salt, kosher salt, mineral salt, herbal or vegetable salts, iodised salt, salt substitutes, and many more. Sugar also comes in many different types - cane sugar, beet sugar, raw sugar, white refined sugar, brown sugar, caster sugar, sugar lumps, icing sugar (also known as milled sugar), sugar syrup, invert sugar, and a plethora of sugar substitutes including smart sugar which is essentially a blend of pure sugar and a sugar substitute. Each of these product types is designed to meet the needs of specific market segments. Invert sugar and sugar syrups, for example, are marketed to food manufacturers where they are used in the production of conserves, chocolate, and baked goods. Sugars marketed to consumers appeal to different usage segments – refined sugar is primarily for use on the table, while caster sugar and icing sugar are primarily designed for use in home-baked goods.
Any company should know that it cannot serve all consumers in the total market – at least not profitably and in the same way. The variety of different kinds of consumers and their needs is simply too large. There are too many differing types of customers, characteristics, needs, wants, and behaviours. Also, most companies can serve some segments better than others, because there is a greater fit between the company’s strengths and the segments’ opportunities. Thus, every company should not try to focus on the complete market. Instead, it should divide it up into small segments, which is called market segmentation. Then, it is better able to reach these markets efficiently and effectively with products and services that meet their unique needs. This is the first step of setting up a marketing strategy.
The market can be seen as a huge pie. But the company has only one mouth. So, it should choose the part of the pie which appears most delicious for the company. In other words, the marketer must determine which of all the segments offer the best opportunities. We can define market segmentation as the process of dividing a market into distinct groups of customers who have different characteristics, needs and behaviours and therefore require different products or marketing programmes. Consequently, we can look at a market segment as a group of consumers responding in a similar way to a set of marketing efforts

Market targeting

Market targeting is a process of selecting the target market from the entire market. Target market consists of group/groups of buyers to whom the company wants to satisfy or for whom product is manufactured, price is set, promotion efforts are made, and distribution network is prepared.
Market is segmented using certain bases, like income, place, education, age, and life cycle, and so on. Out of them, a few segments are selected to serve them. Thus, evaluating and selecting some market segments can be said as market targeting.
1. We can define the term as: Market targeting is a process of selecting the target market from the entire market. Target market consists of group/groups of buyers to whom the company wants to satisfy or for whom product is manufactured, price is set, promotion efforts are made, and distribution network is prepared.
2. It involves basically two actions – evaluation of segments and selection of the appropriate market segments. In this relation, market targeting can be defined as: Market targeting is an act of evaluating and selecting market segments.
3. Finally, we define market targeting as: Market targeting consists of dividing the total market into segments, evaluating these segments, and selecting the appropriate segments as the target market.

The four main types of market segmentation are:
•	Demographic segmentation: age, gender, education, marital status, race, religion, etc.
•	Psychographic segmentation: values, beliefs, interests, personality, lifestyle, etc.
•	Behavioral segmentation: purchasing or spending habits, user status, brand interactions, etc.
•	Geographic Areas: neighborhood, area code, city, region, country, etc.
A brand might also leverage business segmentation, taking into consideration things like industry, company size, or annual revenue.
Through market segmentation, brands get more specific about their target market. They can focus on a small group of customers who will be most likely to benefit from and enjoy their products.
For example, a brand that sells day planners may decide to focus on a smaller, specific target market. Instead of marketing to the masses, they may focus solely on selling planners to female business owners. Or they could choose to exclusively market to high school teachers. Both examples are smaller, more specific segments of the day planner’s potential market.
Why Is Targeting in Marketing So Important?

Targeting in marketing is important because it’s a part of a holistic marketing strategy. It impacts advertising, as well as customer experience, branding, and business operations. When your company focuses on target market segmentation, you can do the following:
Speak directly to a defined audience. Marketing messages resonate more deeply with audiences when readers can relate directly to the information. Brands that have a large, varied market of customers often struggle with creating marketing campaigns that speak directly to their audience. Because their viewers are very different, few slogans or stories can resonate with each person on a personal level. Through target marketing, you can alleviate this problem and focus on crafting messages for one specific audience.
Attract and convert high-quality leads. When you speak directly to the people you want to target, you are more likely to attract the right people. Your marketing will more effectively reach the people most likely to want to do business with you. When you connect with the right people, you are then more likely to get high-quality, qualified leads that will turn into paying customers.
Differentiate your brand from competitors. When you stop trying to speak to every customer in your market and start focusing on a smaller segment of that audience, you also start to stand out from competitors in your industry. When customers can clearly identify with your brand and your unique selling propositions, they will choose you over a competitor that isn’t specifically speaking to or targeting them. You can use your positioning in marketing to make your brand more well-known and unique.
Build deeper customer loyalty. The ability to stand out from competitors by reaching your customers on a more personal, human level also creates longer-lasting relationships. When customers identify with your brand and feel like you are an advocate for their specific perspectives and needs, they will likely be more loyal to your brand and continue to do business with you over a longer period of time.
Improve products and services. Knowing your customers more intimately also helps you look at your products and services in a new way. When you have a deep understanding of your target audience, you can put yourself in their shoes and see how you can improve your offerings. You can see what features you can add to better serve your customers.
Stay focused. Finally, the benefit of using targeting in marketing is that it also serves to help your brand and team. Target marketing allows you to get more specific about your marketing strategies, initiatives, and direction of your brand. It helps you clarify your vision and get everyone in the organization on the same page. You have more direction when it comes to shaping upcoming plans for both marketing and the business as a whole. A focused approach helps you fully optimize your resources, time, and budget.

Competitive Positioning

Positioning for Competitive Advantage Product’s Position - the way the product is defined by consumers on important attributes - the place the product occupies in consumers’ minds relative to competing products.
Marketers must: Plan positions to give their products the greatest advantage in selected target markets, Design marketing mixes to create these planned positions.
What sets your product, service and company apart from your competitors? What value do you provide and how is it different from the alternatives?

Competitive positioning is about defining how you’ll “differentiate” your offering and create value for your market. It’s about carving out a spot in the competitive landscape, putting your stake in the ground, and winning mindshare in the marketplace – being known for a certain “something.”
A good positioning strategy is influenced by:
•	Market profile: Size, competitors, stage of growth
•	Customer segments: Groups of prospects with similar wants & needs
•	Competitive analysis: Strengths, weaknesses, opportunities and threats in the landscape
•	Method for delivering value: How you deliver value to your market at the highest level
When your market clearly sees how your offering is different from that of your competition, it’s easier to influence the market and win mindshare. Without brand differentiation, it takes more time and budget to entice the market to engage with you; as a result, many companies end up competing on price – a tough position to sustain over the long term.
Competitive advantage is a profit over competitors gained by offering customers great value, either through lower cost or by providing more benefits that justify their higher prices. To build beneficial relationship with target customers, marketers must understand the customers’ needs better than their competitors do and deliver more value to them. Furthermore, a company can position itself as providing superior value to its customers, it gains competitive advantage. But strong positions cannot be built on empty promises. If any company places its product as offering the best services and quality, it must then provide the promised quality and services to their customers. Thus, in fact, positioning initiates with differentiating the marketing plan of a company offer so that it will provide superior values to the consumers
Marketers should think through customers’ entire experience with the company’s good and services if they want to know about differentiation. A smart company always tries to find out various ways to differentiate itself from every customer’s point of view. Company can differentiate itself along the lines of goods, services, channels, people, or image and these details are given below;
Product Differentiation: takes place along products’ variety. At one side we find physical products that allow little variation like chicken, steel, aspirin and even some considerable differentiation is also possible here. For example Perdue states that it branded chickens are fresher, better, and more tender and they get 10 % price premium based on this differentiation. At the other side products can be highly differentiated, like automobiles, furniture, and clothing. Such goods can be differentiated on the bases of features, performance, or style and design.

Beyond Differentiation: a company can also be differentiated with the services that accompany the product. Several firms gain services differentiation through convenient, speedy, or careful delivery. For example, BankOne has opened full-services branches in supermarkets to offer location convenience along with weekday-evening hours and Saturday, Sunday,.

Installation: can also differentiate one company from another, as can repair services. Many automobiles consumer will willingly pay a little more and travel a little farther to buy a car from a dealer that provides top-quality renovate services.

Channel Differentiation: firms that follow the channel differentiation achieve competitive advantage through the means they design their channel’s expertise, coverage, and performance. Avon, Amazon.com, and Dell set themselves apart with their high-quality direct channels.

People Differentiation: companies can get a strong competitive advantage through people differentiation for hiring the qualified people and to train them as per their job description than their competitors do. Disney World people are known to be friendly and cheerful. Each employee is carefully trained to value customers and to make people happy.

Image Differentiation: Yet, when competing offers show the same, buyers may perceive a difference which is based on company’s business or brand image differentiation. A brand image should convey the distinctive benefits and positioning of a product. To develop a strong and distinctive image calls for creativity and hard work.

These are the competitive advantages for positioning any product and services of a company. With this differentiation, a company can get more benefits and more consumers. Product and services offering by any company should be different from their competitors. So marketers should work hard to figure out current market situation and competitors’ position as well.
A competitive advantage is some trait, quality, or capability that allows you to outperform the competition. It gives your product, service, or brand an advantage over others in purchasing decisions. Competitive advantage may come from and or all of the following:
•	Price: Something in your production process or supply chain may make it possible for you to provide comparable value at a lower cost than competitors.
•	Features: You may provide tangible or intangible features that your competitors do not: for example, more colors, better taste, a more elegant design, quicker delivery, personalized service, etc.
•	Benefits: You may provide unique benefits to customers that your competitors cannot match. Benefits are intangible strengths or outcomes your customer gets when they use your offering. For example, time savings, convenience, increased control, enjoyment, relaxation, more choices, feeling better about oneself, being more attractive, etc.
Create a list of the things that make you different from competitors in positive ways. Then identify which of these factors are also competitive advantages: the influential factors that help you perform better in the marketplace and cause customers to choose your product, service, or brand over other options.
As a rule, it is relatively easy for competitors to undercut your pricing or match your features, so it is difficult to maintain a consistent competitive advantage in either of these areas. Market-leading products, services, and brands are most likely to differentiate based on benefits—the intangible strengths and outcomes that are harder for competitors to match.
For example, many car companies achieve strong ratings in safety tests, but driving a Volvo provides an extra, intangible benefit for the driver of feeling safer because of Volvo’s longstanding record and reputation for safety. A variety of theme parks in Southern California offer exciting rides and family fun, but only Disneyland’s Magic Kingdom makes people feel like they’re in the happiest place on earth.
You don’t necessarily need a long list of competitive advantages, but your list should be substantive: it should include the things that truly create distance between your offering and competitors. Dig deep to identify the intangible benefits your customers experience–or intangible benefits they could experience—from your offering that make it different and better than the alternatives.

Unit – 3

A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or needIncludes physical objects, services, places, organizations, and ideas.

In this Unit focus is on highlighting the fact that to meet market demand every destination needs to develop products whether they are cultural, natural or intangible in nature. Today it is neither acceptable nor desirable to develop an approach based on the assumption that “if we build facilities, services and products the market will welcome and consume it”. Rather you must try to establish a clean relationship between the nature of product and the market. In other words, you must accept this challenge to achieve a match between the product and the market. In tourism this process is more complex than in other forms of products as very often the tourism planners and product designers’ deal with resources which are irreplaceable and fragile. This Unit will, therefore, present some of the issues that you must address while designing and developing tourism products.

The tourism product is peculiar because of its characteristics. Therefore, your considerations while designing and developing tourism products tend to be different from those of general products. Tourism Product is a term that covers all the attractions and services, which can be sold to visitors. 
This product is so diverse in its nature that tourists just visit a town area, an island or an event rather than whole country. Some tourists may purchase Bali as a product rather than Indonesia, Phuket rather than Thailand, Wimbeldon championship in London and not a holiday in UK. This clearly illustrates that tourist products (destinations) may be an integrated product, or well appointed product or this may just be a theme based destination with other related services. Whatever may be the nature of destination/tourist site its product components would remain the same, i.e., built and natural attractions, tour and packages, services for travellers like shopping, restaurants, accommodation and other recreational activities.
It is true that under normal conditions natural attractions cannot be thought of as a product but when we talk about eco-tours in a National Park, this becomes a product. The heritage architecture of a community is not a product, but its interpretation through a guided tour can be seen as a product. It is, therefore, important to note that you shall not consider only the tourist attractions as product but rather visualise the destination in its totality as the community’s livelihood. The result then, therefore, shall be an authentic community tourism product that will be attractive for travellers promising hospitable and unique experiences.
As tourism professional you must consider the following issues related to tourism product designing development: A) Crucial elements of tourism product designing; B) Design product/site plan; C) Branding; D) Image; E) Product life cycle; F) Product feasibility study and G) Financing. 
A) Crucial Elements of Tourism Products Each destination has its own unique product mix, based on its resources, values, needs and preferences. 
Tourism products can be designed and developed taking these factors into account. While designing any destination product(s) you should not only analyse the available resources for tourism product but should also try to establish and interpret the inter-relationship between destination designing and motivations. To develop an attractive and sustainable tourism product you are advised to consider the following elements:
• Choose authentic themes which reflect the local culture(s) and environment-human relationships, 
• Keep development in scale with the community and environment,
• Ensure that developments also meet community needs (e.g., through joint use), 
• Develop attractions that are attractive and competitive in the long run, not faddish, 
• Require strong community support, do not impose new ideas on an unreceptive population, 
• Avoid imitating successful ideas from other places, you must acknowledge that success comes from strong local commitment and enthusiasm and, therefore, act in this direction, 
• Choose themes which help position the destination products within sustainable development principles, 
• Consider sports; many competitions and fun events can be held using existing facilities, 
• Inform all visitors of tourism plans, goals and management approach, 
• Ask local clubs, associations, and businesses to generate meetings and conventions to the extent permitted by infrastructure, and 
• Provide high-quality experiences. 
You will have to take a decision whether you are developing a unique product, a normal product which is better than others or a commonly available product. 
B) Designing Product/Site Plans This is one of the important issues in visitors/attraction management and to provide a product which can satisfy needs of the tourists. 
Every destination needs a design plan for developing attractions and facilities. This should include issues of visitor management and flows, parking, and access to the attractions. Site designs should be compatible with local heritage and lifestyles in order to maintain a sense of place, and enhance local architecture and culture. Site planning here refers to the specific location (or citing) of buildings and related development forms on the land and considers the functions of the buildings, their physical interrelationships, and the characteristics of the natural environmental setting. Site planning also includes the location of roads, parking areas, landscaped and open space areas, footpaths, and recreational facilities, all of which are integrated with the building locations and are consumed by tourists along with main products. The grouping of buildings, such as accommodation and their relatio nships to amenity and recreational facilities is an important concern of site planning. The type of grouping depends on the density and character of the development desired as related to the natural environment. 
There are several types of specific standards that are applicable to the controlled development of tourist facilities at the tourist destination. These standards typically include the following areas: 
• Density of development, 
• Heights of buildings, 
• Setbacks of buildings from amenity features, shorelines, roads, lot lines, and other buildings, 
• Ratio of the building floor area to the site area, 
• Coverage of the site by buildings and other structures, • Parking requirements,
• Other requirements such as for landscaping and open space, public access to amenity features, signs and utility lines, 
• Local styles and motifs, 
• Roof lines, 
• Use of local building materials, 
• Environmental relationships, and 
• Landscaping design. 
However, you must note that a destination, as a product, will always be a mix of different product lines of various departments, lengths and widths. 
C) Branding Just like consumer products many tourism products are also given brand names. As you know that brand names are given to a product to ascertain identity, which many a times couples with promotional activities assisting manufacturers to persuade the customers to buy that particular product. In tourism particularly it has been observed that many customers observe brand loyalty because they know that they are purchasing an experience or a dream to come true. They need to bank heavily on reliability parameters or standards of product manufacturer’s background or previous success record. However, this factor these days is replaced by borrowing an established name, i.e., franchise system. For example, if you are opening a five star hotel you have the option of entering into franchise agreement with brands like Intercontinental, Hilton, Spectrum Holiday Inn, and many more to assure your customer a higher standard of services. Same may be true in case of an airlines or an agency. This makes not the entry of your product easy but it also assures higher level of satisfaction among your users. Resorts, Golf Courses, National Parks, etc. are all branded.
D) Image Why does a tourist choose “Place X” as his/her destination in comparison to “Place Y”. An important factor in one’s decision making for purchase of a holiday is no doubt the image of the destination. The image of the destination is the way in which it projects itself and the way it is viewed by its markets due to a variety of factors like political stability, security, variety of attractions, air connectivity, currency value and so on. As it is already mentioned in the previous section that in a particular country one particular site enjoy such an image that makes a large number of tourists visiting the whole country, e.g., Bali in Indonesia or Phuket in Thailand, Varadero in Cuba and so on. On the contrary, in other cases it is a combination of sites/tourist destination which establishes a great image of the country among tourists, e.g., in India tourist prefer to have on their itineraries Golden Triangle (Delhi-Agra-Jaipur) or Emerald Triangle of South (Bangalore-Mysore-Madurai). It is also experienced by many destinations that image earned by them is due to their natured resources and location. For example, Switzerland enjoys an image of winter destination; Mauritius is popular as a destination for honeymooners; and Singapore for shoppers. However, India is lucky enough to enjoy an image of all seasons’ destination. In short image is an overall idea, the association which a place, service or a product has. If the image of your product is positive tourist may buy and enjoy it whereas if image is negative, tourists may prefer to stay away from it. You must remember that image is built up not just in a few days rather it is a result of satisfactory performance of your product over the years. You must always remember that image of your product also depends upon political viewpoints, i.e., diplomatic relations between the countries of hosts and guests.
E) Product Life Cycle The concept of Product Life Cycle was first used by Levitt (1965) when he stated that every product which is introduced, it grows, it matures, levels out and then declines. This remains true for all the products whether it is leisure/tourism product or consumer products. Every product has a life span. In its life cycle there comes a stage when it needs remodelling in some or the other way to retain its appeal for customers. 
F) Product Feasibility Study The issue of product designing is considered when you move from micro to macro level of planning, i.e., from planning of a destination you shift to designing a product like hotel, resorts, restaurant, theme park, or any other leisure product. 
a) Broader definition of your product highlighting its location and what services and facilities it tends to render and what kind of image or perception it aims to create in the mind of targeted users; b) Forecasting market potential and details of sales strategies you plan to follow to reach out targeted users; as well as to expand the market size for your products; c) Outlining the Operational Plan, i.e., what would be the design and schedule of product development and low budgets and finance would be arranged to meet the required expenditure; d) Design of Marketing Plan highlighting application marketing mix at each operational stage more particularly deciding upon the promotional and distribution strategies; and e) Organisation and Staffing Plan, i.e., pointing out sources for recruitment of skilled and semiskilled employees to accomplish organisational goals. While choosing your channel for hiring people you must remember that you are going to be a part of the industry where your success largely depends upon the performance of your employees. This underlines the important of not only recruiting right kind of people but also training and retraining them to meet satisfaction level of your customers. 
G) Financial Plans Financing is one of the major issues and priorities being faced by those who are responsible for designing and managing tourism products. Public budgets are often not adequate to cover rising costs of activities such as increasing waste disposal due to increasing tourism, management of historic sites and enforcement of building restrictions. Financial sustainability most often involves multiple funding sources with a focus on earned income with measures that contain operating and restoration costs. Your resources for financing may include: • Public sector grants and tax breaks, • Community initiative and investment, • Approaches that stress self-help and self-build, • Joint public/private ventures and partnerships where often the public sector contributes land or other resources, • Financing from various organizations such as non profits, trusts, foundations, revolving funds and community development corporations, • Build-operate-transfer arrangements, and • The private sector. Since governments in developing countries are playing minor role in providing finances to tourism projects due to the lack of financ ial resources. It is the private sector that mostly supply majority of the financing to small, medium and large tourism development products. These private sources include individuals, banks, trust companies, credit unions and insurance companies. Therefore, in tourism product development you need to achieve the right funding “mix” by increasing efficiency without compromising the products’ attractiveness. One more possible option is to combine market economy and public interventions. In this type of financ ing situation, public authorities are able to retain ownership of the resources such as facilities or historic buildings, but the development or renovation responsibility is transferred to private managers. Build-operate-transfer (BOT) procedures are good examples. These transfers, though bring with them other problems. Commercial management is primarily concerned with the facility’s ability to attract tourism, which may compromise with other considerations such as its larger role within the destination or conservation concerns. Any attempt at BOT approach requires that the public sector interest group, responsible for the facility must be expert in developing management policies and contracts that respect the local community and its environment while providing a reasonable rate of return.
In some situations, it may be inappropriate to contract out/lease out the development or management of a particular site/destination. However, supplementary commercial enterprises can be allowed, such as photography shops or restaurants, and the revenue from these activities can be put towards the ongoing development and protection of the site. Park and site admission fees, hotel and entertainment taxes, and fundraising events can also be used to raise money directly for tourism product management. A Community Tourism Development Corporation (CTDC) can also be established to attract investors, identify potential funding sources and manage funds. Private corporate sponsorships of events, sites or even clean up projects or other public awareness campaigns may be possible. Sponsorships may also be available in the form of expertise or organisational assistance. However, this type of non-profit sponsorship is often driven primarily by the desire to improve a company’s image. As long as the destination’s stakeholders are able to retain control over the terms of sponsorship, this type of support has the potential to be beneficial for all concerned. Donations of aid for specific restoration or preservation projects may also be availab le from international organisations or foreign governments however these are often one-time funds and cannot be depended on over the long term. Very often capital funds are available but operational financing is difficult if not impossible to obtain.

Phases of Tourism Product Development

The product creation process starts with primary inputs such as resources, raw materials, other materials for construction, energy, and fuel. This could also include the agricultural products required to prepare food for the tourists.
The primary inputs are then processed further through manufacturing or construction into intermediate (or processed) inputs. The intermediate inputs are nothing but the tourism facilities such as gardens, parks, museums, art galleries, shopping centers, convention centers, accommodations, restaurants, and gift or souvenir shops. They facilitate and support the tourism.
The intermediate inputs are further refined through expert management, workforce, and technical services, and packaging into intermediate outputs. The intermediate outputs are nothing but the services associated with tourism industry.
For example, the intermediate input such as a hotel room remains just as a commodity unless it is occupied by the tourist and turns into a part of a tourism product by incorporating the occupant’s experience. Similarly, the food at restaurants needs to be cooked and presented by the staff at any restaurant and needs to be ordered and consumed by the tourists.
The final outputs are nothing but the personal experience the tourist takes from availing services and by carrying out various tourism-related activities. The tourists utilize the intermediate outputs (or services) to generate intangible but a high value experience such as satisfaction, recreation, and completion of a business related task or maintaining a contact of friends or relatives.

Steps of Tourism Product Development
The following general steps are taken for tourism product development −
Research the Market
At this step, the tourism marketing force conducts research on the current market to identify the opportunities. In includes economy, study of various market segments and their varied requirements, past market data, and current market and tourism trends.
Match the Product with Market
By assessing the market segments and conditions for tourism, different packages are created for various market segments such that they can satisfy the requirement of each segment of individuals.
Assess the Destination
Since destinations form the basis of product development, the product development force visits the prospective tourism destination to assess its tourism potential and its ability to accommodate and serve the tourists, features of the destination, and its shortcomings. It is assessed to judge if the destination is fulfilling the requirement of Accommodation, Attractions, Activities, or Amenities. It is also checked for the ease of Accessibility.
Understand the Stakeholder Role
Tourism product development is the result of collaborative efforts of various stakeholders. It involves identifying all the stakeholders in private and public sectors, DMOs, Tourism and allied businesses, and their respective roles in creating or developing a part of a tourism product. The stakeholder meetings are conducted for creating a project plan. The project goals are set to realize long-term vision, medium-term action plans, and short-term progress assessments.
Product Building
At this step, the product is actually built using required resources and consultations of the expertise to create intermediate inputs (facilities and amenities) and intermediate outputs (services). It encompasses not only development of destination infrastructure but also support for special activities and experiences.
Marketing & Promotion
The functional and emotional benefits of the tourism at the tourist destination are communicated to the market. The marketing people create brochures, place advertisements on the business portals, and contact media to promote the destination and the product on the television and radio. They also use various other marketing techniques to increase the product visibility.
Providing Human and Technical Resource
It includes providing skilled staff and contemporary technology to cater the needs of tourists efficiently, to handle all tourism related operations at the destination effectively, and to communicate with the staff easily.

PRODUCT DEVELOPMENT FOR EXISTING BUSINESSES Businesses with existing products may be looking at expansion. The further expansion of a product line should undergo the same process as initial product development. With much of the needed information at hand, the process will be faster and easier.
Expansion of products can focus on new client markets and/or new or improved product lines. You can do this to improve sales, strengthen market position or take advantage of new market opportunities. 
There are four areas where expanding an existing product might work.
• Market Penetration 
• Market Development 
• Product Development 
• Diversification 
MARKET PENETRATION Market penetration focuses on increasing sales of existing product to existing clients. This is done through improvement in product and/or marketing. The advantage of market penetration is that the risk is low. You already know your product and your consumer and simply need to look for ways to create greater success. 
MARKET DEVELOPMENT Market development is achieved by taking existing product and finding new target market to sell it to. Let us say that I run a company out of Norman Wells, NWT that caters to 25- to 40-year-olds. I run challenging day-long mountain-bike rides into the backcountry. Presently, my bikes sit idle every evening and I have had no success promoting evening rides to my current clients. I decide instead to look at the family market and to promote an easy evening ride to view wildlife along the river corridor. This would be an example of market development. The mountain-biking theme remains constant, and I seek out a new user group. 
PRODUCT DEVELOPMENT Product development is different from market penetration or market development. Let us go back to my group of 25- to 40-year-olds who mountain bike with me. Since I already have the clients in hand, it is simply a matter of researching what other things they may be interested in doing while in the area. My questioning reveals that some of them are interested in going fishing. By offering a new product option, I am providing this same group with another opportunity to spend money with my company. I now offer my clients a remote experience that I contract from a local guiding company. We fly to the remote starting point, where a boat picks up the clients. I take a commission for the fishing portion, blend it with my business, and offer the clients a different way to enjoy their time. In both product development and market development, the risk is relatively low because you have some familiarity with one side of the equation or the other. This allows you to make some assumptions and predictions that help with matching clients' needs to product benefits. 
DIVERSIFICATION Diversification is a combination of a new market and a new product at the same time. Once again I am offering my mountain-biking tours to my 25- to 40-year-old market. But I decide to expand my business with a new market (teens, for example) and a new product (perhaps rock climbing). Here, the risk is high and comes from my unfamiliarity with both the new product and the new market. In this case, I must begin my development process right at the beginning and start by building a foundation. Making assumptions about what will or will not work here can be detrimental to the business. 

Product Life Cycle

For a business, having a growing and sustainable revenue stream from product sales is important for the stability and success of its operations. The Product Life Cycle model can be used by consultants and managers to analyse the maturity stage of products and industries. Understanding which stage a product is in provides information about expected future sales growth, and the kinds of strategies that should be implemented.
Product Life Cycle model: The “Product Life Cycle” is the name given to the stages through which a product passes over time. The classic Product Life Cycle has four stages: 
1} Market introduction stage.
2} Growth stage. 
3} Mature stage. 
4} Saturation and decline stage

1.Market introduction stage At the market introduction stage the size of the market, sales volumes and sales growth are small. A product will also normally be subject to little or no competition. The primary goal in the introduction stage is to establish a market and build consumer demand for the product. There may be substantial research and development costs incurred in getting a product to the market introduction stage, for example, thinking of the product idea, developing the technology, determining the product features and quality level, establishing sufficient manufacturing capacity, preparing the product branding, ensuring trade mark protection, etc. Marketing costs may be high in order to test the market, launch and promote the product, develop a market for the product, and set up distribution channels. The market introduction stage is likely to be a period of low or negative profits. As such, it is important that products are carefully monitored to ensure that sales volumes start to grow. If a product fails to become profitable it may need to be abandoned.
Some of the considerations in the introduction stage include:
Product development: research and development of the basic technology and product concept, determining the product features and quality level.
Pricing: should penetration pricing or a skimming price strategy be used? A skimming price strategy might be appropriate where there are very few competitors.
Distribution: distribution might be quite selective until consumer acceptance of the product can be achieved.
Promotion: marketing efforts are aimed at early adopters, and seek to build product awareness and to educate potential consumers about the product.
Features: - 1. Costs are high 2. Slow sales volumes to start 3. Little or no competition - competitive manufacturers watch for acceptance/segment growth losses 4. Demand has to be created 5. Customers have to be prompted to try the product 6. Makes no money at this stage

2.Growth Stage If the public gains awareness of a product and consumers come to understand the benefits of the product and accept it then a company can expect a period of rapid sales growth, enter the “Growth Stage”. In the Growth Stage, a company will try to build brand loyalty and increase market share. Profits are driven by increased sales volume (due to growth in market share as well as an increase in the size of the overall market). Profits might also be driven by cost reductions gained from economies of scale, and perhaps more favourable market prices. Competition in the Growth Stage remains low, although new competitors are expected to enter the market. When competitors enter the market a company might be subject to price competition and increase its marketing expenditure.
Some of the considerations in the Growth Stage include:
Product improvement: product quality might be improved, additional features and support services added, and packaging updated.
Pricing: if consumer demand is high the price might be maintained at a high level.
Distribution: distribution channels might be added as consumer demand increases.
Promotion: promotion is aimed at a broader audience. A company might spend a lot of resources on promotion during the Growth Stage to build brand loyalty.
Features: - 1. Costs reduced due to economies of scale 2. Sales volume increases significantly 3. Profitability begins to rise 4. Public awareness increases 5. Competition begins to increase with a few new players in establishing market 6. Increased competition leads to price decreases

3.Maturity Stage When a product reaches maturity, sales growth slows and sales volume eventually peaks and stabilises. This is the stage during which the market as a whole makes the most profit. A company’s primary objective at this point is to defend market share while maximising profit. In this stage, prices tend to drop due to increased competition. A company’s fixed costs are low because it is has well established production and distribution. Since brand awareness is strong, marketing expenditure might be reduced, although increased marketing expenditure might be needed to retain market share and fight increasing competition. Expenditure on research and development is likely to be restricted to product modification and improvement, and perhaps research into improved production efficiency and product quality.
Some considerations for the mature product market include:
Product differentiation: increased competition in the mature product market means that a company must find ways to differentiate its product from that of competitors. Strong branding is one way to do this.
Pricing: prices may be reduced because of increased competition. Firms in the market should be careful not to start a price war.
Distribution: distribution intensifies and incentives may be offered to encourage preference to be given over competing products.
Promotion: promotion will focus on emphasising product differences and creating/maintaining a strong brand.
Features: - 1. Costs are lowered as a result of production volumes increasing and experience curve effects 2. Sales volume peaks and market saturation is reached 3. Increase in competitors entering the market 4. Prices tend to drop due to the proliferation of competing products 5. Brand differentiation and feature diversification is emphasized to maintain or increase market share 6. Industrial profits go down

4.Saturation and decline stage A product enters into decline when sales and profits start to fall. The market for that product shrinks which reduces the amount of profit available to the firms in the industry. A decline might occur because the market has become saturated, the product has become obsolete, or customer tastes have changed. A company might try to stimulate growth by changing their pricing strategy, but ultimately the product will have to be re-designed, or replaced. High-cost and low market share firms will be forced to exit the industry.
As sales decline, a company has three strategy options: · Hold: maintain production and add new features and find new uses for the product. Reduce the cost of manufacturing (e.g. move manufacturing to a low cost jurisdiction). Consider whether there are new markets in which the product might be sold. · 

Harvest: continue to offer the product, reduce marketing expenditure, and sell possibly to a loyal niche segment of the market. · Divest: Discontinue production, and liquidate the remaining inventory or sell the product to another firm.
Some considerations for a declining market include:
Product consolidation: the number of products may be reduced, and surviving products rejuvenated.
Price: prices may be lowered to liquidate inventory, or maintained for continued products.
Distribution: distribution becomes more selective. Channels that are no longer profitable are asked out.
Promotion: Expenditure on promotion is reduced for products subject to the Harvest and Divest strategies.
Features: - 1. Costs become counter-optimal 2. Sales volume decline or stabilize 3. Prices, profitability diminish 4. Profit becomes more a challenge of production/distribution efficiency than increased sales.
It is claimed that every product has a life cycle. It is launched; it grows, and at some point, may die. A fair comment is that - at least in the short term - not all products or services die. Jeans may die, but clothes probably will not. Legal services or medical services may die, but depending on the social and political climate, probably will not. Even though its validity is questionable, it can offer a useful 'model' for managers to keep at the back of their mind. Indeed, if their products are in the introductory or growth phases, or in that of decline, it perhaps should be at the front of their mind; for the predominant features of these phases may be those revolving around such life and death. Between these two extremes, it is salutary for them to have that vision of mortality in front of them. However, the most important aspect of product life-cycles is that, even under normal conditions, to all practical intents and purposes they often do not exist (hence, there needs to be more emphasis on model/reality mappings). In most markets the majority of the major brands have held their position for at least two decades. The dominant product life-cycle, that of the brand leaders which almost monopolize many markets, is therefore one of continuity. In the criticism of the product life cycle, Dhalla & Yuspeh state: ...clearly, the PLC is a dependent variable which is determined by market actions; it is not an independent variable to which companies should adapt their marketing programs. Marketing management itself can alter the shape and duration of a brand's life cycle. Thus, the life cycle may be useful as a description, but not as a predictor; and usually should be firmly under the control of the marketer. The important point is that in many markets the product or brand life cycle is significantly longer than the planning cycle of the organisations involved. Thus, it offers little practical value for most marketers.

                                 Unit 4

Pricing
Pricing is considered to be one of the most important marketing tools in sales and sales promotion. Pricing is also one of the important topics that businesses should be careful about if they want to have an edge over their rivals in the market. Pricing is a process controlled by business itself.There are internal and external factors pricing depends on. Internal factors are: marketing strategies, cost structure and cost decision mechanisms. External factors are; market and demand structure, product price of opponents, chain of distribution and legal legislation.

Tips for pricing your tourism products
As the owner of a tourism business, you have many things to manage and consider. One of the main aspects to get right is the price you charge customers. If you set the price for your products too high, customers may look for a cheaper option. If you set your price too low, you run the risk losing money.
In this article, we’ll cover the top 5 tips for pricing your tourism products to increase your bookings and maximise profits.
What to consider when pricing your tourism business

1.      Seasonality
The first thing to consider when pricing your tourism products is seasonality.
Take a second to think about your business; is your business or are certain products seasonal? In other words, is there a peak season for your offering? If so, discount your offerings from your peak season price for the off season. Most travellers won’t want to pay top prices for products in low season, so reflect this in your pricing strategy.
2.      Competitors’ prices
Another useful thing to consider when setting prices for your business is your competition’s pricing.
If you haven’t already, now is the time to check out your competition. Compare their offerings to your own and determine differences. Factors to take into account include location, value-adding benefits, and points of difference. Keep your pricing similar to competitors or be able to justify your higher price.
3.      Operating costs
Operating costs are one of the more non-negotiable aspects of pricing your tourism business. Operating costs are broken into two categories: fixed costs and variable costs.
Fixed costs are expenses that are constant regardless of how many bookings you get. Fixed costs include things like rent, insurance, buildings and machinery, salaries, and other operations costs that are required to run your business.
Variable costs are the costs that change depending on the number of services or bookings sold. Variable costs include things like utilities, maintenance costs, booking commission, wages, and marketing.
Consider both fixed and variable costs and make sure to price your products or services above your costs to get a positive ROI. Check out this pricing tool to make sure you don’t miss any necessary details.
4.      Capacity
When pricing your tourism products, you must determine your capacity.
How many guests can you handle without sacrificing quality? Estimate your average capacity based on competitive analysis, visitation statistics for your location, and feedback from customers and staff.
Depending on how much you charge per guest, you may have to raise or lower your pricing.
5.      Distribution costs
The final tip for pricing your tourism business is to account for distribution costs.
Distribution is one of the most important parts of a successful tourism business and must not be excluded from consideration of your pricing strategy. Without proper distribution, your products can go completely unseen, meaning all of your hard work will have been for nothing.
Distribution cost can vary depending on what channels you use. You can opt to use a travel agent to promote your services, or an Online Travel Agency (OTA) such as Expedia. Booking.com or TripAdvisor. Alternatively, you can use a channel manager: software that lists your tourism products online in a variety of locations, including OTAs, state and local websites, and other relevant sites.
Channel managers are a cost-effective way to distribute your offerings to hundreds of locations, while keeping your costs low; many charge a fixed fee or cost per booking.
THE ROLE OF PRICE AND PRICING IN TOURISM MARKETING  
Price is part of the marketing mix: "A product's price is that which consumers exchange with the market in order to purchase the product. Consumers consider price to be an important criterion in their evaluation of alternatives, both before and after making a purchase. Furthermore if a product's design requires consumers to exchange both time and money, then the actual price includes more than just its monetary price". 
Price shows the published or negotiated terms of an exchange transaction for a product, between a producer who aims to achieve a predetermined sales volume and revenue objectives, and prospective customers who seek to maximise their perceptions of value for money in the choices they make between alternative products. It is one of the variables of the four "P's": product, price, place and promotion. "Pricing is one of the most important elements in the tourism marketing mix. Tourism customers rate the product at a price and without a price there is no indication of value. Pricing decisions are therefore essential for the profitability of the tourist establishment, as it has a tremendous impact on demand and sales volume. Pricing is also often considered an indication of quality ..... Although the pricing element is the most important one of the marketing mix in terms of profitability, pricing cannot be seen in isolation from the other elements". Therefore it must be viewed as an integral part of the marketing process, and the interrelationship with the other elements in the mix must also be taken into consideration. Price is an important variable in the regional marketing mix especially with regard to the Kruger National Park. The "right" price must satisfy both the tourists and meet the profit objectives of the tourism business. Therefore it is necessary to develop the price structure, objectives and strategies to establish the strategic role of price in the marketing mix, while enough flexibility must be retained to respond to changing conditions Consideration is necessary to pricing strategies for new products. 
TOURISTS' PERCEPTION OF PRICE:
Consumers perception carry the greatest weight in the various decisions made by tourists - the choice of a destination, the consumption of commodities while on vacation, and the decision to return. Perception are the consumer's subjective reality ..... Perception is important because contemporary consumers are becoming more and more discriminating". They are more experienced travellers, older and more value conscious. It is important in influencing travel behaviour. To stay competitive in such a climate, the tourism product must be perceived as of a quality similar or better to that of other competitors, and its price must be perceived as attractive. Thus the information on tourists' perceptions of prices and quality and on the role price plays in tourist behaviour is of the utmost importance. 
Price and quality interact to produce the value for money concept. Because pleasure travel is an experiential product, and therefore the value for money concept must be very subjectively measured by travellers: "Measurers of travelers' price/quality perceptions are key to determining a country's or industry's competitiveness, because competitive advantage grows out of a value that a country is able to create for its buyers which exceeds the cost of creating if'. Thus studies of price, quality and value can provide insights into a country's tourism product, and eventually give information for a competitive advantage in marketing its product and planning an industrial development strategy. 
The real meaning of price to tourists can be overlooked by tourism organisations like the National Parks Board. In a regional context there are actual charges of accommodation facilities, effort costs, time costs and psychological costs, for example, the possibility of a potential tourist patronising the tourism facilities can be based upon: 
• The actual price of the tourism facilities in the region. 
• The time costs and trouble of travelling a long distance to the specific region. 
• If the destination and its offerings are unknown to him, the tourist experiences will be uncertain.
Consumers do tend to believe that price is a good indicator of quality. The price of a product is an indication of its quality. When price differences between several tourism offerings are small, tourists will not use price as a basis for decisions whom to support. Consumers (tourists) tend to lean on price when they make an important decision, especially when they have no self-confidence during decision making. It may happen that tourists are sceptical about tourism destinations that require much less than others of the same kind. They might wonder what is wrong with the tourist destination, and assume that other more expensive places offer better tourism facilities. This price-quality relationship should be taken into account by tourism organisations and tourism businesses during the price-fixing for regional tourism offerings.
When setting prices, the psychology of prices is very important in determining a person's price-value relationship. Attitudes to price are very closely related to the amount of risk the buyer feels is involved in the purchasing decision. Therefore cost-based methods of setting tourism prices could be dangerous - their real value is in determining the lower limits of price. 
PRICE STRATEGY 
The essence of pricing strategies is Choosing the appropriate price to charge for a good or service is one of the most important challenges facing management. ... therefore, economists call the price which exactly matches the supply and demand for a particular good or service, the equilibrium price". The 'best' or 'correct' price to charge must remain uncertain ahead of actual production and sale. Because market conditions are in a constant state of flux, pricing decisions contain risks. To achieve the optimal pricing strategy, there must be perfect information available to managers about consumer demand, competitors' reactions and supply costs, etc. They reckon managers might adopt various approaches to pricing. 
Price determination and managerial objectives Price has two broad functions. Firstly, all managers must know that prices raise revenue for the firm. Price multiplied by the quantity sold determines the 59 firm's total revenue, and depending on the production costs, ultimately the firm's survival. Secondly, price rations out the available production amongst consumers on the basis of their ability and willingness to pay. Thus in a competitive market economy price is determined by the forces of demand and supply. Pricing is driven by managerial objectives. The precise objectives pursued by the management will ultimately determine the price strategy that is adopted. 
Generic pricing strategies There are four strategies: 
1) Marginal cost pricing involves the setting of prices, and therefore determines the amount produced, according to the marginal costs of production. It is normally associated with a profit maximising objective.
2) Incremental pricing deals with the relationship between larger changes in revenues and costs associated with the managerial decisions. To use an incremental analysis properly requires a wide-ranging examination of the total effect of any decision rather than simply the effect at the margin.
3) Break-even pricing requires that the price of the product is set so that the total revenue earned equals the total costs of production.
4) Mark-up pricing is similar to break-even pricing, except that a desired rate of profit is build into the price. Hence this is also sometimes referred to as cost-plus pricing, full-cost pricing or target-profit pricing.
Pricing and the competitive environment The nature of the market in which the product is sold will have a major influence on the pricing policy adopted. Markets can be conveniently divided into four broad kinds of markets: perfectly competitive, monopoly, monopolistically competitive and oligopoly markets. The appropriate approach to pricing in each of these is: 
1) Pricing in perfectly competitive markets. The supplier is a price taker. Because each firm's product is indistinguishable from products of all the other competitive firms the consumer buy only on the basis of price.
2) Product Pricing in monopoly markets. The firm is a price-maker. Thus as markets become less competitive (the degree of monopoly increases) and suppliers will have more discretion when setting prices. Price rises will reduce demand but will not completely destroy it. Price elasticity of 60 demand becomes an important consideration in setting prices - lesser price elastic for the demand for the product will increase the firm's market power which will result in freedom for the firm to set prices.
3) Pricing in monopolistically competitive markets. A large number of competitors produce substitutable products, in such a way that an attempt to achieve product differentiation is a dominant feature. This monopolistic competition means that firms still have control over their output. Thus they try segmenting their markets and thereby reducing competition.
4) Pricing in oligopoly markets. An individual firm's actions are very likely to provoke a competitive reaction. It is crucial to know how competitors are likely to react to price changes. Various competitive strategies are reflected in which price may or may not be a critical variable. 
Pricing and the competitive environment The nature of the market in which the product is sold will have a major influence on the pricing policy adopted. Markets can be conveniently divided into four broad kinds of markets: perfectly competitive, monopoly, monopolistically competitive and oligopoly markets. The appropriate approach to pricing in each of these is: 
1) Pricing in perfectly competitive markets. The supplier is a price taker. Because each firm's product is indistinguishable from products of all the other competitive firms the consumer buy only on the basis of price.
2) Product Pricing in monopoly markets. The firm is a price-maker. Thus as markets become less competitive (the degree of monopoly increases) and suppliers will have more discretion when setting prices. Price rises will reduce demand but will not completely destroy it. Price elasticity of 60 demand becomes an important consideration in setting prices - lesser price elastic for the demand for the product will increase the firm's market power which will result in freedom for the firm to set prices.
3) Pricing in monopolistically competitive markets. A large number of competitors produce substitutable products, in such a way that an attempt to achieve product differentiation is a dominant feature. This monopolistic competition means that firms still have control over their output. Thus they try segmenting their markets and thereby reducing competition.
4) Pricing in oligopoly markets. An individual firm's actions are very likely to provoke a competitive reaction. It is crucial to know how competitors are likely to react to price changes. Various competitive strategies are reflected in which price may or may not be a critical variable.

Nature of distribution channels

Distribution channels are the series of marketing entities through which goods and services pass on their way from producers to end users. Distribution systems focus on the physical transfer of goods and services and on their legal ownership at each stage of the distribution process.
Distribution channels are the ways your tours and trips get to your customers. There are two ways of reaching customers in tourism: Directly – In a travel agency or through a travel agency's website. Indirectly – Through a partnership with third-party distribution channels.

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.
To explain it simple, there are two ways of reaching potential customers:
•	DIRECTLY - You can target visitors directly through advertising, brochure distribution, website, social media, client referrals and so on.
•	INDIRECTLY- Another way to promote your business is through a third party (indirectly) by using tourism distribution channels such as retail travel agents, wholesalers and inbound tour operators.

The three most common distribution strategies are discussed below 
Intensive Distribution: Used commonly to distribute low priced products or impulse purchases. For example snacks such as chocolates, soft drinks and crisps 
Exclusive distribution: Involves limiting distribution to a single outlet. The product is usually highly priced, and requires the intermediary to place much detail in its sell. An example of would be the sale of vehicles through exclusive dealers. 
Selective Distribution: A small number of retail outlets are chosen to distribute the product. Selective distribution is common with products such as computers, televisions household appliances, where consumers are willing to shop around and where manufacturers want a large geographical spread. 
If a manufacturer decides to adopt an exclusive or selective distribution strategy they should select reputable intermediaries, experienced in distributing similar products and an intermediary known to the target audience.

The distribution channels link the customers with the businesses. For many years, the tourism businesses may have distributed their products and services through intermediaries. However, the latest advances in technology have brought significant changes in this regard. More individuals and corporate customers are increasingly benefiting of technologies, including digital media. The development of mobile devices and their applications, are offering a wide range of possibilities to the travel industry. Consumers are using smart phones and tablets to purchase tourism products. These issues have inevitably changed the structure of the tourism industry; in terms of control and value for money to consumers. In this light, this chapter describes the traditional and contemporary travel distribution channels as it raises awareness of the potential of new distribution technologies. The role of digital media in the distribution chain as tourism businesses are increasingly selling directly to customers through the internet via websites and travel search engines.

Marketing Intermediaries
Tourism intermediation is a business activity that consists of mediating in the sale and organization of tourism services. This activity includes organizing and marketing packaged trips, one-day tours, selling tickets, booking seats on all means of transportation, and booking or contracting tourist accommodation, in addition to booking services and activities offered by tourism companies. Tourism intermediaries are distribution agents that participate in a tourism-product sales process from its creation until the time it is consumed by final clients. Most intermediaries are wholesalers, tour operators, bed banks, booking centers, DMCs and OTAs (online travel agencies).

INTERMEDIARIES Firm or a person who acts as a mediator on a link between parties to a business deal, investment decision, negotiation etc. Intermediaries usually specialize in specific areas, and serve as a conduit for market and other types of information. They are also called the “middleman”. In tourism for example intermediaries are people or businesses that link the tour package with the tourist.
Some intermediaries do not want to be bothered with taking title or ownership of products. Agents and brokers are wholesalers whose main purpose is to facilitate sales. They help deliver products from the producer to the consumer. They make their profits by collecting a fee, or commission, based on the amount of sales they are successful at delivering for the producer.
Channel intermediaries perform three basic types of functions. Transactional functions include contacting and promoting, negotiating, and risk-taking. Logistical functions performed by channel members include physical transportation, storing, and sorting functions.
Marketing intermediaries fulfill an information role and a logistics role. They create value by adding efficiency to marketplaces for goods or services which are inherently “many-to-many” in nature. That is, most markets have many suppliers, and many consumers.