Integrated marketing communications plan 2014 for SaiGonTourist travel service

LIST OF ABBREVIATIONS ATF Asean Tourism Forum B2B Business-to-business B2C Business-to-customer FDI Foreign Direct Investment GDP Gross Domestic Products ITB International Travel B

MMA7

Authors: TRAN HOANG AN

NGUYEN THI NGOC YEN

INTEGRATED MARKETING COMMUNICATIONS PLAN

2014 FOR SAIGONTOURIST TRAVEL SERVICE

MASTER PROJECT MASTER IN MARKETING & ADVERTISING

Ho Chi Minh City

(2014)

Ms Nguyen Thi Ngoc Yen entitled “Integrated Marketing Communications Plan 2014 for Saigontourist Travel Service” I recommend the project for acceptance in fulfillment of the requirements for the Master in Marketing and Advertising degree

Tran Vinh

Project Tutor

ACKNOWLEDGEMENT

We wish to express our great gratitude to our tutor – Mr Tran Vinh for his valuable

guidance, advice and encouragement during the project

Special thanks are extended to Professor Marianne Claes and other members of the Master

in Marketing and Advertising program for your advice and strong support to complete this final assignment

Deep appreciation and thanks also go to Mr Vo Viet Hoa – Deputy Manager of Outbound

Division, Saigontourist Travel Service for providing us the desired data and information for this study

Last but not least, we would like to send a special note of thanks to our families and friends for their constant love and encouragement

LIST OF ABBREVIATIONS

ATF Asean Tourism Forum

B2B Business-to-business

B2C Business-to-customer

FDI Foreign Direct Investment

GDP Gross Domestic Products

ITB International Travel Berlin

ITE International Travel Expo

MITT Moscow International Travel & Tourism Exhibition

ODA Official Development Assistance

PR Public Relations

TVC Television Commercial

VTA Vietnam Tourism Association

WTM World Travel Market

GLOSSARY

Travel/ tourism Activity of a traveler who moves between

different geographic locations, for any purpose and any duration The visitor is a particular type

of traveler and consequently tourism is a subset

of travel

Domestic Tourism Activities of a resident visitor within the country

of reference either as part of a domestic tourism trip or part of an outbound tourism trip

Inbound Tourism Activities of a non-resident visitor within the

country of reference on an inbound tourism trip

Outbound Tourism Activities of a resident visitor outside the country

of reference, either as part of an outbound tourism trip or as part of a domestic tourism trip

outside his/her usual environment, for less than a year, for any main purpose (business, leisure or other personal purpose) other than to be employed by a resident entity in the country or place visited A visitor (domestic, inbound or outbound) is classified as a tourist (or overnight visitor), if his/her trip includes an overnight stay, or as a same-day visitor (or excursionist) otherwise

classified as a tourist (or overnight visitor), if his/her trip includes an overnight stay

Destination Management Company Professional services companies possessing

extensive local knowledge, expertise and resources, specializing in the design and implementation of events, activities, tours, transportation and program logistics

TABLE OF CONTENT

COMMITMENTS 1

ACKNOWLEDGEMENT 2

LIST OF ABBREVIATIONS 3

GLOSSARY 4

INTRODUCTION 7

A THEORETICAL CONCEPTS 8

I.Service characteristics & 7Ps in tourism marketing 8

II.Customer life cycle & the touch point-driven communications planning 10

B.OVERVIEW OF SAIGONTOURIS T’S CURRENT MARKETING STRATEGY 12

I.Vietnam tourism market & competitive analysis 12

II.Background of Saigontourist Travel Service Company 15

III.Current marketing strategy overview 18

1.Segmentation, target market & brand positioning 18

2.Marketing Objectives 19

3.Product & services portfolio 19

4.Pricing 22

5.Distribution channels 22

6.Promotional Mix 23

7.People 23

8.Process 24

9.Physical evidence 24

C.ASSESSMENT OF MARKETING COMMUNICATIONS ACTIVITIES FROM 2010-2013 25

I.Marketing communications objectives 25

II.Target audience analysis 25

1 Inbound tours 25

2 Domestic and outbound tours 25

III.Communications activities reviews 30

1 For inbound tours promotion 30

2 For domestic and outbound tours promotion 31

IV.Evaluation of communications effectiveness 34

D.RECOMMENDATIONS & EXECUTION PLAN FOR SAIGON TOURIST IN 2014 36

1 Recommendations for International Partners 36

2 Recommendations for End-users & Individual Travelers 36

3 Communications timeline, budget allocation & key indicators 38

REFERENCE 39

APPENDIX : ONLINE SURVEY QUESTIONNAIRE (1-15 DEC 2013) 41

INTRODUCTION

Saigontourist Travel Service Co.,Ltd is a leading tour management company in Vietnam that have successfully operated in all three tourism fields including inbound, outbound and domestic travel

The purpose of this project is to provide an intensive look into current communications strategy of Saigontourist and determine which brand touch-points should be further developed in the year 2014 to achieve its communications objectives in alignment with entire marketing goals

All analysis results are based on public data and a web-based questionnaire Interviews with representatives from Saigontourist management have also been carried out to

investigate current brand challenges and customers’ perceptions towards the brand’s core

values At the end, some recommendations are proposed for Saigontourist Travel Service

to enhance the brand value in the marketplace and keep business further growing

A THEORETICAL CONCEPTS

I Service characteristics & 7Ps in tourism marketing

 Service definition & characteristics

Services are acts or performances offered by one party to another, typically referring

to both business to business (B2B) and business to consumer (B2C) services which include telecommunications services, financial services, transportation services, healthcare services or all types of tourism & hospitality services

According to the World Tourism Organization (UNWTO), “travel” refers to the

activity of travelers who move between different geographic locations for any purpose

and any duration “Tourism” is a subset of “travel” and consequently, “tourist” is a subset of “traveler”

Tourism as a service is characterized by the followings:

 Intangible: This implies that service offerings cannot be seen, felt, heard, tasted

or smelt before purchase Total service quality is purely a “promise” from provider, therefore it is essential for tourism marketers to promote “intangible” benefits of tourism as well as make the service more “tangible” to potential

travelers

 Inseparable: In tourism industry, the production and consumption happens

almost simultaneously So there will be an active involvement of customers in creating the service product as a result, either by self-serving or co-working with service staffs in certain situations

 Variable: Service quality varies from customer to customer according to employee performance, customer’s traits (needs, expectations, moods…) or other occasional elements (climates, political events …)

 Perishable: Service cannot be stocked Therefore, if the moment of production

and consumption is passed, revenue will be lost accordingly

Three main challenges with services:

 Challenge 1 – Satisfaction: How to define service quality as it can only be

measured through consumers Satisfaction is subjective to each consumer’s

comparison between what they expect against what they perceive High satisfaction shall lead to retention and loyalty

 Challenge 2 – Service encounter: Direct interaction between customer and the

service provider via contact personnel, service system, service scape (tangible things) and other customers

 Challenge 3 - Productivity: How to make a service more efficient in terms of

service complexity, service capacity and allocation of activities

 Tourism marketing & 7Ps concept

As defined by James Makens et al in “Marketing for Hospitality and Tourism”

(1999), marketing is “to design a product/service combination that provides a real

value to targeted customers, motivates purchase, and fulfills genuine customer needs”

Tourism marketing is an adaptation of basic marketing principles which have been long developed and practiced through the famous 4Ps marketing mix (Product-Price-Place-Promotion) However, when it comes to service marketing or tourism marketing

in particular, the mix has further been modified with 3 extra Ps Physical evidence) for more relevancy The key is to have a well-thought-out marketing plan

Figure 1: Strategic Marketing Planning for the Tourism Marketing

Source: www.ruf.com

 Product – What is being sold: The creation of a service concept that offers

value to target customers and satisfy their needs better than competing

alternatives It consists of a core product that responds to the customer’s

primary needs and an array of extra service elements

 Place – The place or the physical distribution through which people can buy

your service: It may include both physical and electronic channels

 Promotion – The way you promote your service: Tourism service providers

need to educate their customers about the service benefits, where and when to

obtain it, and how to participate in the service processes for best outcomes…

via various selective communication channels

 Price – The price you are charging for your service: Service marketers must set

price that target customer are willing to pay and minimize other burdensome outlays that are incurred, including monetary expense in travelling, time

expenditures, unwanted mental and physical efforts…

 Process – The system used to assist the organization in delivering the service:

Variability in service can be reduced through careful design of the customer service process, adopting standardized procedures, implementing rigorous management of service quality, high standards of training and automation

 People – The human capital of the firm: Recruiting the right staff and training

them appropriately in the delivery of their service is essential to convince consumers make judgments in their favor These individuals should possess the required technical skills, good interpersonal skills and positive attitudes that can become a key competitive advantage for the firm

 Physical evidence – Physical clues that customer look for about when judging

the quality: Includes the appearance of buildings, vehicles, landscaping, interior furnishing, uniforms, signs, printed materials and other visible cues that provide evidence of service quality and guide customers through the service process

Figure 2: 7Ps in tourism marketing

II Customer life cycle & the touch point-driven communications planning

As suggested by Jim Taylor - a communications practitioner - in his book “Space Race” (2005), communications planning is “the discipline of developing a holistic

plan, across marketing and trade marketing functions that creates a “Big picture” for consumers by weaving together every aspect of a brand’s communications” There are

three common approaches to communications planning: response-driven, touch driven and idea-driven

point-Touch points or Moments of truth are the interfaces of a product, a service or a brand with customers, non-customers, employees and other stakeholders before, during and after a transaction respectively (Wikipedia.com)

In touch point-driven planning, all channels (paid, owned, earned, shared) shall be taken into consideration to determine which channels best express a particular emotion

or convey a specific message An insight will be generated first, leading to a performance strategy which incorporates communications selected tasks

Figure 3: Modern significant touch-points

Brand touch points are only identified from sophisticated understandings of entire customer experience or customer life cycle The more level of customer interact with the service operations, the more opportunities for brand exposure and direct interface

In a high-contact service like tourism, customer experience is usually divided into three phases: Pre-purchase, Purchase (Service encounter) and Post-purchase (Post-encounter)

Figure 4: Brand touch points throughout customer life cycle

Source: www.marketingprofs.com

When marketers understand this cycle and effectively direct their spending and messaging to the moments of maximum influence, they stand a much greater chance

of reaching consumers in the right place at the right time with the right message

Figure 5: The customer decision-making journey (McKinsey)

Source: www.mckinsey.com

B OVERVIEW OF SAIGONTOURIST’S CURRENT MARKETING STRATEGY

I Vietnam tourism market & competitive analysis

Tourism is a vital component of the economic growth globally and for Vietnam particularly Not only strongly contributing to GDP, the industry itself also drives the development of other economic sectors and significantly provides jobs for local labors

 Market demand and future forecast

 Key growth drivers

- Increasing household income, rising living standards lead to growing travel demand both domestically and internationally

- The Government’s heavy investment in improving transport infrastructure

as well as promoting Vietnam as a tourist destination all over the world

- Industry players like travel agencies or accommodation providers continuously improve their services and launch promotional campaigns

 Inbound & Outbound tours

- Vietnam tourism market is showing positive signs of solid growth throughout the forecast period to 2017, with number of inbound tourists significantly outweighing total outbound figures

- Travel from Vietnam (outbound) grew by over 17% in 2012 compared with

2010 and remains at roughly 12% year-in-year from 2013 By 2017, outbound tourism is expected to reach over 5.5 million, an increase of over

2 million on the 2013 outbound statistics

- The number of tourists arriving in Vietnam (inbound) also increases, especially between 2010 and 2012, and is expected to reach over 9 million

by 2017 Reasons for this growth are mainly from the recovery trend of global economy as well as the expansion of Asia Pacific travel market, especially to countries like China and India

Chart 1: Total inbound & outbound tourists 2010 – 2017 (‘000)

Source: Vietnam General Statistics Office

- Top 5 countries by arrivals (inbound) from 2010-2017: China, South Korea, Japan, USA, Taiwan

- Top 5 countries by departures (outbound) from 2010-2017: Cambodia, Thailand, Laos, Singapore, Malaysia

 Domestic tours

- The economic growth in Vietnam has led to a more affluent middle class with growing spending power This leads to increases in travel demand, not only internationally but also within the nation Total domestic tourists are forecast to reach 70 million in 2030, showing an increase of almost 40 million compared with 20 years before This implies a great opportunity for local players to direct their financial and human resources to serve domestic travelers

Chart 2: Total domestic tourists 2010 – 2030 (‘000)

Source: Vietnam National Administration of Tourism

 SWOT Analysis for Vietnam tourism market

 Strengths

- Strong support by the Government in terms of infrastructure and marketing investment

- Advantage in regional travel links (by land, by sea)

- Huge source of tourism attractions (History & culture; Beaches & islands; Diversified ecosystem; World heritages; National parks; Vietnamese cuisine; Traditional festivals; Handicraft villages; Unique life style; Friendly people)

 Weaknesses

- Inefficiency in managing national attractions and services

- Weak infrastructure and facilities

- Lack of qualified human resources with professional service manner

- Lack of innovative market & product development strategies

- Limited management capacity of the Government

 Opportunities

- Increasing FDI & ODA flow facilitates modernization of infrastructure

- Lift of some policies regarding visa … leads to wider range of tourists

- Competitive pressure from emerging number of travel companies

- Influence from natural disasters, climate change

- Decreasing travel demand due to economic crisis

 Competitive analysis

- Travel and tourism market in Vietnam is dominated by domestic players and highly influenced by the Government For instance, thanks to the strong support from the government, SaigonTourist Holding is taking the leading share in both the travel retail and accommodation areas

- Travel agencies in Vietnam have robustly grown in terms of both quantity and service quality As of end of 2010, there are 800 international tourism service firms and approximately 10,000 domestic tour agencies Due to intense rivalry pressure, most of them have proactively participated in the promotion of their service as well as expanded cooperation with many countries, territories and tourism organizations in the world, thus harvested valued experience, technology, customer bases and even capital to build their own competitive advantages

- In terms of revenue and market share, Vietravel and Saigontourist are biggest players with different strengths and target market decisions While Vietravel targets at revenue stream from outbound tours, Saigontourist has long been a giant in both domestic and inbound tour segments This can be seen from both their business performance as well as remarkable

achievements in the nation’s most prestigious award for travel companies –

Vietnam Tourism Awards These awards are granted on a specific set of criteria: Business performance (revenue, net profit, productivity, number of

tourists …) and average income level of the company’s labor force

Chart 3: Market Share of Top Tour Operation Companies

Source: General Statistics Office of Vietnam & Business Monitor International

Vietravel Saigontourist Benthanh Tourist

Fiditour

11,39% 9,46%

2,96%

2,62%

10,52% 9,14%

2,39%

2,30%

2012 2011

Table 1: Top 5 Vietnam Tourism Awards Winners 2010-2012

Top 5 Best Domestic Travel Companies

No 1 Saigontourist Saigontourist Saigontourist

No 2 Fiditour Fiditour Fiditour

No 3 Benthanh Tourist Benthanh Tourist Vietravel

No 4 Hanoitourist Vietravel Benthanh Tourist

No 5 Lua Viet Tours Vietnamtourism-Hanoi Peace Tour

Top 5 Best International Travel Companies (Inbound)

No 1 Saigontourist Saigontourist Saigontourist

No 2 Benthanh Tourist Exotissimo-Cesais Fiditour

No 3 Apex Vietnam Vietravel

Vietnamtourism-HCMC

No 4 Vietnamtourism-Hanoi Benthanh Tourist Vietnamtourism-

Hanoi

No 5 Fiditour H.I.S – Song Han Peace Tour

Top 5 Best Outbound Travel Companies

 Development vision to 2020 (Vietnam Tourism Master Plan to 2020)

- Tourism becomes key sector, strongly contributes to Vietnam economy and drives socio-economic development

- Develop tourism toward professionalism with focus on quality, effectiveness, branding and competitive advantages

- Develop both international and domestic tourism; priority on inbound and better control outbound tourism

- Emphasize on sustainable tourism development

- Foster public participation and mobilize all resources investing for tourism development

II Background of Saigontourist Travel Service Company

 Company Overview

- Saigontourist Travel Service Company was originally established by the State in 1975 and is now part of the Saigontourist Holding Company, which was incorporated in 1999 at the behest of Ho Chi Minh City

People’s Committee The company is the biggest tour operator in Vietnam,

successfully offering three primary kinds of tourism including inbound, outbound and domestic

- Saigontourist holds official membership of a number of foreign tourism associations such as PATA, ASTA, USTOA, JATA, Vietnam Tourism Association (VTA), Ho Chi Minh City Travel Association (HTA) It also continue expand its links to international markets via close partnership with over 400 travel companies, agents from many countries and territories such

as France, Japan, Germany, the United States of America, Northern

Europe, Spain, China, United of Kingdom, South of Korea, ASEAN…

- Moving forward, the group is expanding its tour services, having recently opened the country's biggest travel information centre in HCMC, offering a range of tourist services across several languages

 Mission Statement

- “Saigontourist Travel Service, as a Viet Nam’s leading tour operator, is committed to creating the best values with its travel services for its customers, partners and to guaranteeing the sustainable and harmonious

development for the benefits of its staff and social community”

 Vision

- “Saigontourist Travel Service focuses on diverse business in terms of

market, customer and travel service & product in all fields of inbound, outbound and domestic travel with an aim to become one of the leading

travel companies in the region”

 Business Philosophy

- Business focus: targeting at sustainable business development

- Customer focus: satisfying all travel demands with best services

- Staff focus: human resource is core asset of the company

- Community focus: harmonizing the benefits of the social communities in

addition to financial profits

 Business Performance

- The company continues to perform well, with tourism revenue in 2013 forecast to reach VND2,550 billion, up 22% compared with 2012 Average growth ratio for the period 2010-2013 is 25% year-on-year Total gross profit is expected at VND110 billion in 2013 Overall, the group provide services for over 480,000 domestic and international tourists in 2013, reflecting the breadth of the company's market coverage

Chart 4: Number of Tourists

Source: Saigontourist Travel Service

2008 2009 2010 2011 2012 2013 Tourists (people) 317,134 250,874 277,400 376,147 413,000 480,000

100,000 200,000 300,000 400,000 500,000 600,000

-Chart 5: Revenue & Gross Profit 2008-2013

Source: Saigontourist Travel Service

- In addition to financial performance, Saigontourist has always aimed at boosting local tourism human resources by providing jobs as well as constantly improving working conditions and individual income As of end

of 2013, the company is employing 829 full-time staffs with average income at VND11,750,000, up 27% compared with 2010

Chart 6: Number of Employees & Average Monthly Income

Source: Saigontourist Travel Service

III Current marketing strategy overview

1 Segmentation, target market & brand positioning

 Segmentation

Tourism market is commonly segmented based on the destinations’ geographical

positions Saigontourist is applying the same perspective to divide the market into international and domestic segments

 International market segment with following destinations:

- America: North America, South America, Latin America

- Asia Pacific: Japan, China, Korea …

- Europe: France, Britain, Germany …

 Domestic market segment with following destinations:

- Northern-Vietnam: Ha Noi, Hai Duong, Hai Phong …

- Central-Vietnam: Khanh Hoa, Phan Rang …

- Southern-Vietnam: Ho Chi Minh City, Mekong delta …

 Target market

In the long term, Saigontourist is directing all its marketing efforts and resources to domestic market through two key product pillars – domestic and inbound tours Top

reasons that lead to this strategic decision are:

 The Government’s direction to develop tourism market to 2020: Prioritize

boosting domestic and inbound tours while controlling outbound travel This strategy will help increase total GDP, boost job opportunities for local people, improve foreign currency reserve thanks to the expense of foreign tourists and touches on other economic sectors such as transport,

accommodation …

Saigontourist is a state-owned company operating tour business under control of Ministry of Culture, Sports and Tourism of Vietnam It has to strictly follow the industry direction as a matter of fact

 Market demand for domestic and inbound tours is showing strong growth

signs thanks to the economic recovery, higher income level and significant communications efforts of Vietnamese Government to boost national image

 Business effectiveness: Upon operating domestic and inbound tours, the

margin is considerably much better than that of outbound tours in terms of revenue stream against total costs

 Positioning

Brand position: “Saigontourist – A brand you trust”

Ambitious to become a most trusted brand in the heart and mind of customers, partners and stakeholders, Saigontourist heavily emphasizes on its premium service quality – a key differentiator that enhances the brand name popularity This core value

is constantly realized by comprehensive development, continuing innovation and improvement in management technology, serving style standardization and dedicated, professional, high-skilled staff

Table 2: Logos & Slogans of Top tour operation companies

Saigontourist “A brand you trust”

Vietravel “Asia leading tour operator”

Benthanh

Peace Tour “With Peace Tour, enjoy a

world of peace”

Source: Internet

2 Marketing Objectives

Marketing objective of Saigontourist is becoming a leading travel company in region

in terms of both customer base and business results

3 Product & services portfolio

The company’s business is constructed of two main fields with equal share of revenue

stream: tourism and travel support

Chart 7: Tourism revenue stream by tour types (2013)

Source: Saigontourist Travel Service

Inbound tours

Saigontourist Travel Service owns competitive edges this field thanks to their strong partnership network to many countries over the world Vietnam also possesses many attractions to develop diversified tourism products ranging from sight-seeing, adventure, social–culture exploration, gastronomy, eco, diving, golf, research,

handicapped, and so on

The company’s expertise is also reflected throughout the ability of operating

special-interest and highly customized tours in accordance with customer’s demands, bringing

the most exotic experiences such as contemplating the marvelous natural landscape from a helicopter, taking an elephant ride across the Lak lake, challenging oneself in a trans-Viet trip by motor , and has always received high appreciation Saigontourist’s

professional, enthusiastic team of operators and tour guides, who are well-trained with various languages of English, French, German, Russian, Korean, Chinese, Spanish, Italian, etc as well as comprehensive knowledge of Viet Nam, make an deep impression on both domestic and international customers to choose for their travel Besides, they offer to the foreign individual tourists for short tour to Cu Chi, Tay Ninh,

My Tho….and city tour which can attract many customers

 Cruise travel and Shorex

Being one of the first tourism companies to approach cruise market in the early 90s, Saigontourist is now listed amongst the industry leaders in exploiting and developing cruise travel to Vietnam with comprehensive experiences and skills

in serving small and mega cruise ships to the country, including luxury super yachts and sailing yachts

 MICE Travel (Meetings, Incentives, Conferences and Exhibitions)

44%

36%

20%

OutboundDomesticInbound

Saigontourist has always been a priority of companies, enterprises,

entrepreneurs, schools… when choosing MICE tour operator thanks to our

ability to satisfy various exquisite tastes and supplying all kinds of high-quality services throughout both MICE packages (traveling combined with meeting, conference, workshop, event, incentive, team-building and social program, etc.) and separated MICE services (meeting room, accommodation, meeting permits, visa, transfer, pre and post tours) both domestically and abroad

 Business Travel Service (BTS)

BTS help customers who would like to combine their business trip to visit, travel around the country By helping customers to save time and money, BTS services include contracts in package services of air-ticket, visa, passport, accommodation, transfer, seminar, workshop, travel program, business travel, market research & survey tour and premium travel

 Budget Travel – IKO Travel: Everyone can travel

This product is a progressive step in diversified product & service development

strategy and a reflection of the company’s business philosophy “prioritizing community’s benefits-bringing products” IKO Travel is developed to meet the rising demand to travel “adequately, effectively, and budget-saving” of the

market

Outbound tours

These tours are operated in the forms of both package and private tours for individual travelers as well as travel groups of local Vietnamese, over-sea Vietnamese and foreigners living in Vietnam, with a wide range of such destinations as ASEAN countries, Hong Kong, China, Belgium, Germany, France, Canada, Italia, Australia, New Zealand, the United States, Spain, Japan, South Korea, etc Moreover, many enterprises, multi-national corporations, domestic organizations, as well as local authorities have continually chosen Saigontourist for incentive trips, market research tours, commercial promotion programs etc

 Travel support business

 Airline ticket