Critically examine the ways in which tourism marketing strategies and activities are responding to progress in information technology.
Author: Winnie To
Date: 6 December 2001
Course: Tourism Marketing (BA)
Critically examine the ways in which tourism marketing strategies and activities are responding to progress in information technology.
The objective of this essay is to examine the subject of tourism marketing, with the main focus on how tourism marketing strategies and activities are responding to progress in information technology. Firstly, there is a brief outline of the key concepts in both tourism and marketing, followed by an introduction of IT and how it has been applied in the past. The essay then develops further with a more detailed examination of IT as it is presently, and its affect on tourism marketing. Finally, there is a conclusion, with a summary of the main points illustrated.
"Tourism involves the movement, accommodation, entertainment and general servicing of clients from one geographical location, to another. These activities must be combined differently, integrated and 'packaged' to suit complex and rapidly changing consumer requirements." (Poon, 1993). Governments encourage the growth of tourism, as it is a powerful source of economic activity. The marketing of tourism, like all businesses, requires a need to create customer value and satisfaction. Marketing (in brief) is about identifying and satisfying consumer needs at a profitable level. Part of this process is creating a suitable marketing mix that can be used to its fullest potential (by giving you a competitive advantage), which commonly comprises of product, price, place, and promotion. Of course, there is a lot more to explain about marketing, but the main focus of this essay is to look at IT with tourism marketing.
"Quality is critical for competitive success. The potential of IT to improve the quality of travel and tourism services is currently under-exploited" (Poon, 1993). However, companies do recognise that they can develop an effective competitive strategy by lowering distribution costs and improving the service provided. A review of the emergence of IT and its importance follows.
IT has changed the way in which the industry works but has also unveiled many new opportunities and challenges. (For instance, tasks are done differently and new styles of distribution channels have become apparent.) Companies can best enhance their competitive performance by effectively exploiting new technologies. In tourism, it is not only some organisations that have learned to use technology but all of them, including travel agents, hotels, and airlines. This is due to the 'information-intensity' of the industry (where success depends on recognising and reacting to fast changing customer needs), and has led to a rapid flow of technology throughout. Effective use of technology has become fundamental to the travel industry and according to Poon (1993), no player will escape its impacts. From the use of computers by airlines in the 1950s to the travel agency use of PCs linked to those airline systems in the 1990s, the change has been exciting. Computerisation has fashioned customer convenience, improved productivity with speed, and reduced costs of making individual bookings. Furthermore, communication, interactivity, and competitiveness are enhanced. Hence, with the very nature of tourism, the development of ITs have inevitably taken on an important role in marketing, distribution, and promotion.
One of the most widespread technological changes in the UK (before the Internet, which will be discussed later) was the adoption of interactive videotex in 1979. Travel agencies used these systems for at least checking latest availability, up-to-date prices and general travel information, like currency exchange rates. The prime use was to improve communications between the tour operations and travel agencies. Previous communications channels were time consuming, with loss of potential custom, although the adoption of videotex then gave the advantages of being cost-effective and able to handle greater volume of business.
Forward into the 1990s ...
This is a preview of the whole essay
One of the most widespread technological changes in the UK (before the Internet, which will be discussed later) was the adoption of interactive videotex in 1979. Travel agencies used these systems for at least checking latest availability, up-to-date prices and general travel information, like currency exchange rates. The prime use was to improve communications between the tour operations and travel agencies. Previous communications channels were time consuming, with loss of potential custom, although the adoption of videotex then gave the advantages of being cost-effective and able to handle greater volume of business.
Forward into the 1990s there has been a phenomenal growth of information technology. The most important areas of impact from this are marketing, distribution and sales. This is evident by the extent of development of computerised reservations systems (CRSs) for the distribution of travel and tourism related services and the extent of their adoption by the industry. CRSs have emerged as the dominant technology in the travel and tourism industry. Although electronic distribution systems were developed in the 1970s, CRS have since had to expand their role: originally designed to provide travel agents with information on airline services, they now display information for a range of travel and leisure services and allow reservations to be made for hotels, car-rentals, cruises, railways, tours and sporting events. No longer could they merely be information and booking systems, they had to grow into marketing and distribution systems (Medlik, 1995).
Poon (1993) has recognised that strategically, CRSs are a very important marketing tool for airlines. They generate invaluable information on the performance of their services; the performance of travel agents who market their services; the performance of competitors that are co-hosts on their systems; and on profiles of the clients of their agency subscribers. However, Medlik (1995) goes on to say that the importance and role of CRSs grows further - "they are no longer a pure marketing system for an airline, but are an industry in their own right, and they will significantly alter the pattern of world tourism over the next decade".
Moving on, there are also the global distribution systems (GDSs). "A GDS is a super switch connecting several CRSs. Each GDS is powered by a large mainframe computer that performs many of the end-user functions that are delivered to travel agents using PC-based terminals." (Inkpen, 1998). GDSs are not only used by travel agents or airlines, but also within the hotel industry to distribute accommodation services to travel agents and consumers. The marketing opportunities offered have great potential for increased hotel sales. Hotels can use GDSs to aim their promotional efforts at a highly targeted section of the world's travel agency population. Therefore, the technology creates a flexibility and responsiveness to customers, especially as marketing messages are sent directly to the point-of-sale in travel agencies. However, hotel chains would have to ensure commitment to keeping their information up-to-date.
Whilst electronic distribution systems led to major structural changes within the tourism industry, further expansion was launched in the mid-1990s in the form of the Internet and World Wide Web (WWW). Since the Internet is such a huge subject, it will not be covered fully, but primarily made relevant to tourism marketing.
According to Inkpen (1998), the Internet is one of the most powerful movers and shapers of the travel and tourism industry both at the present time and, no doubt in the future. It has particular relevance to tourism, as it eases interactivity between the enterprise and the external world, however distant. For companies, it provides such a vast number of uses in management areas, mainly in marketing and promotions; for the consumers, it is an opportunity to make travel planning and implementation much easier and more informed. Research highlights that many Internet users are affluent and experienced travellers - the target market of many travel agents and suppliers. However, Briggs (2001) emphasises that this is changing: Internet users are now from a broad range of backgrounds and income groups. It is predicted that within five years, 20% of total bookings will be made via the Internet (Inkpen, 1998). And by 2001, over 400 million people will be on-line (Briggs, 2001).
Inkpen (1998) describes the Internet as "a marketing person's dream", as it levels the playing fields, enables companies of different size to compete more equally, and allows a channel of direct communication with its customers. It enables them to promote directly to potential and existing customers at a fraction of the cost of other traditional methods. As well as reaching out to customers, the involvement of transactions from them is increased, thus making the product or package more individual to each consumer. Furthermore, the organisation can receive quick feedback from customers as well as reacting almost immediately to their needs; building on relationship marketing and perhaps increased customer loyalty. It is the primary digital format for powerful marketing in use today.
Consumers, on the other hand, benefit by being able to undertake on-line reservations, and in their own time, perhaps when other travel agencies are closed. They can access accurate, reliable and up-to-date information to purchase only the most suitable products for their own individual needs. Although in marketing it is difficult to satisfy everyone's needs, this process makes it that little bit more possible. To add to this, users are empowered to gain information on a whole range of additional data about the resources, history and, social/economic structure of their destination.
Parallel with the Internet, there is the World Wide Web (WWW), another powerful marketing tool. The first and most basic commitment a company can make to the Internet is to establish its own Web site. This, again, allows them to build a relationship with users, inviting comments and feedback, so to "push" relevant promotional messages to the right markets. The website essentially acts as a channel of communication and distribution, offering users the opportunity to book online, hence enabling the delivery of information and selling simultaneously. They can reach a mass audience directly and tour operators, for example, can distribute electronic brochures and booking forms through the WWW directly to consumers, even niche markets. This saves the cost for developing, printing, storing and distributing conventional brochures, which is estimated to be approximately £20 per booking (Cooper et al, 1998). It is emphasised by Liu (2000) that in the travel business, the Web's flexibility and instantaneousness in information transmission is invaluable.
However, it should also be stressed that such technology is likely to result in increased competition between some products. Also, in order to build an effective website, it should be produced by the kind of people who design brochures, magazines, logos and advertisements. It is a specialist field and perhaps best to approach an outside agency. The website must attract consumers, but also encourage them to return to the site regularly.
Overall, the subject of the Internet and WWW has a vast amount of information and would be impossible for me to cover in one essay. Therefore, I am aware I have missed out on some additional details or information, but believe I have captured the main points. Nevertheless, I will briefly mention some other aspects of information technology that has affected tourism and marketing. Firstly, there are alternative methods of distribution: interactive television, which again offers substantial potential for direct sales to consumers; self-service kiosks that are intelligent ATM-style machines; and tele-sales centres. The interactive automated ticket machines (ATMs) consist of a computer with attached printer that permits passengers to research schedules and fares, make reservations, purchase and receive tickets and boarding passes without the intercession of a human agent (Poon, 1993). An expansion or growth of this kind of technology is the new ticketless-travel or e-ticketing, where check-in is done with proof of identity and a booking reference number. This saves the cost of printing, postage and time.
In conclusion to this essay, I will draw together the main points. First of all, tourism is an extremely important industry to the economy, and a growth industry. The marketing of tourism, like other products relies heavily on customer value and satisfaction. However, the various forms of information technology have allowed tourism marketing strategies and activities to be carried out more easily and effectively. For instance, companies can best enhance their competitive performance by effectively exploiting new technologies, such as CRSs, GDSs, Internet, WWW and many more. The electronic distribution systems have undoubtedly led to major structural changes within the tourism industry. CRSs have grown to a point where they are industries in their own right, and GDSs have brought about marketing opportunities that offer great potential for increased hotel sales. Besides this, the Internet and WWW have enabled an improved means of marketing directly with consumers. The interactivity and communication is fast and allows for immediate response to consumer needs, which in turn helps build on relationship marketing and customer loyalty. The consumers, on the other hand gain benefits of having the ability to purchase products that are suitable to their own individual needs, as well as getting additional information on the history and social/economic structure of their destination. Overall, IT has grown quite significantly in the last decade, and tourism marketing activities have successfully utilised the new technology to put them at a better competitive advantage, improving the service to customers.
BIBLIOGRAPHY
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1. Poon, A (1993) Tourism Technology and Competitive Strategies, CAB International, UK
