Marketing mix in tourism the case of Go Asia Travel

You have a good product at good price; many people know about you but do they feel easy and convenient to buy it Place, and there more decisions we have make are people, process and phys

VIETNAM NATIONAL UNIVERSITY, HANOI

SCHOOL OF BUSINESS

Nguyen Dac Quy

MARKETING MIX IN TOURISM THE CASE OF GO ASIA TRAVEL

MASTER OF BUSINESS ADMINISTRATION THESIS

Hanoi - 2011

VIETNAM NATIONAL UNIVERSITY, HANOI

SCHOOL OF BUSINESS

Nguyen Dac Quy

MARKETING MIX IN TOURISM THE CASE OF GO ASIA TRAVEL

Major: Business Administration

Code: 603405

MASTER OF BUSINESS ADMINISTRATION THESIS

Supervisor: Dr Pham Quy Long

Dr Nguyen Thi Phi Nga

TABLE OF CONTENTS

ACKNOWLEDGEMENTS i

ABSTRACT ii

TÓM TẮT iv

TABLE OF CONTENTS vi

LIST OF FIGURES ix

LIST OF TABLE x

LIST OF ABBREVIATIONS xi

INTRODUCTION 1

Significance of The Thesis 1

Literature Review 2

Objective of The Study 3

Scope of the Study 3

Data Sources and Research Methodology 3

Contribution of The Study 4

Structure of The Study 4

CHAPTER 1: THEORY BACKGROUND OF MARKETING AND MARKETING MIX IN TOURISM 5

1.1 CONCEPT OF MARKETING 5

1.2 CONCEPT OF MARKETING IN THE SERVICE IN DUSTRY 6

1.2.1 Product: 8

1.2.2 Pricing: 11

1.2.3 Promotion: 13

1.2.4 Place 17

1.2.5 People 19

1.2.6 Process 20

1.2.7 Physical Evidence 21

1.3 CONCEPT OF TOURISM 21

1.4 CHARACTERISTICS OF TOURISM PRODUCTS 22

1.4.1 Inflexibility 22

1.4.2 Inventory / Perish ability 22

1.4.3 Inconsistency 23

1.4.4 Intangibility 23

1.4.5 Seasonality: peaks and troughs in demand 24

1.4.6 High fixed costs of service operations 24

1.4.7 Interdependence or inseparability of tourism products: 25

1.5 MARKETING MIX FOR TOURISM INDUSTRY 26

1.5.1 Products 26

1.5.2 Pricing 26

1.5.3 Promotion 27

1.5.4 Place 27

1.5.5 People 27

1.5.6 Process 27

1.5.7 Physical Evidence 28

1.6 ANALYZING TOOLS USED IN THIS THESIS 28

1.6.1 External environment analysis: 28

1.6.2 Internal and external environment analysis: 31

1.6.3 Interview and questionnaire 33

CHAPTER 2: MARKETING MIX IN GO ASIA TRAVEL COMPANY ANALYSIS 36

2.1 Introduction of Go Asia Travel Company 36

2.1.1 Overview of Go Asia Travel Company 36

2.1.2 Company Organization Chart 37

2.1.3 Products of Go Asia Travel Company 37

2.2 The factors influence on Marketing Activities of the company 38

2.2.1 Customer 38

2.2.2 Competitors 40

2.2.3 Partnership 44

2.3 Marketing mix decisions of GAT travel 45

2.3.1 Product: 45

2.3.2 Price 52

2.3.3 Promotion 54

2.3.4 Places 59

2.3.5 People 61

2.3.6 Process 63

2.3.7 Physical evidence 64

2.4 Assessment of GAT‘ marketing activities 66

2.4.1 Positive Sides 66

2.4.2 Negative Sides 67

CHAPTER 3: RECOMMENDATION TO GO ASIA TRAVEL 69

3.1 Philosophy of GAT 69

3.2 Solutions to improve the effectiveness of marketing activities in GAT 70

REFERENCES 80

APPENDIX 82

LIST OF FIGURES

Figure 1.1: Marketing mix 7P 8

Figure 1.2: The element of the communication process 13

Figure 1.3: The element of the promotion mix 14

Figure 1.4: PEST Model 28

Figure 1.5: SWOT model 31

Figure 2.1: Company Organization Chart 37

Figure 3.1: Marketing mix 4Ps Error! Bookmark not defined.

LIST OF TABLE

Table 1.1: Statistics of foreign tourists to Vietnam before and after WTO Event 30

Table 2.1: Competition Analysis 42

Table 2.2: Rate policy for Halong bay one day tour 54

Table 2.3: Rate of Alova Cruise on Opening Promotion 55

Table 2.4: Six steps to handling with complaints 64

Table 2.5: Specifications of Alova Halong Cruise 65

LIST OF ABBREVIATIONS

No Abbreviations Stand for

INTRODUCTION

Significance of The Thesis

People say that ―Marketing is the art of selling goods and services‖ And to have a good marketing strategy, company need to analyze themselves, competitor and the market Besides some strategic decisions like positioning, market segmentation, marketing objective… a marketing manager always has to focus on 7 tactical decisions In my viewpoint, marketing mix is key and handbook to obtain the success in business and to be an active and practical approach

Marketing mix shows that we should choose the first thing is product which need to

be met the customer need and be controlled in quality (Product); answer the question how much we will sell this product, the price need to be high or low, how many factors which influence on the pricing (Price) The third question is how to bring our product to all the potential customers, how to be a famous product, how to engage the customers in communication (Promotion) You have a good product at good price; many people know about you but do they feel easy and convenient to buy it (Place), and there more decisions we have make are people, process and physical evidence

In almost travel companies in Vietnam, they do not have a professional marketing plan for starting a company or a product They do not implement full parts of marketing mix some of them under evaluate the role of product or over evaluate the role of advertising…

So many companies in Vietnam have not separated marketing from the sales and marketing department

Whereas, more and more foreign competitors with the position of multi-sided strength, financial, profession especially they are the master of marketing They have enough strategies, tactics and the resources to win the global market Currently, Vietnamese travel company still have some advantage in the local way but under the roadmap of WTO joining and the quick internet development, they have to survive with the extremely difficult market, encounter with the giant

competitors Everything is changing very quickly, Go asia Travel and the other have

to obtain the knowledge of marketing especially marketing mix with 7 practical decisions It is, therefore, very necessary to conduct a study on Marketing Mix in Tourism, using the case of Go Asia Travel to analyze and understand more,

In the physical product field, marketing mix includes Product, Price, Place and Promotion In the services field, marketing mix is expanded with 3 additional elements: People, Process and Physical evidence

In this thesis, I would study about marketing mix in tourism industry and figure out some recommendations for Go Asia Travel

The study aims to gain the following significances:

1 Theoretical aspect: contribute some recommendation to concept of marketing mix in tourism industry

2 Practical aspect: Apply theories on marketing mix in the case of Go Asia Travel

Literature Review

Relating to this topic, there are some authors mentioned about this For example, the book of ―Marketing in Travel and Tourism‖ by Victor Middleton, Alan Fyall and Michael Morgan In this book, the author also write about marketing mix in tourism service for a chapter (chapter 8 – page 136) This chapter describes all 7 Ps tactics

in specific tourism services It also mentions marketing mix in the context of marketing system

The second book which talks about marketing mix is ―The portable MBA in marketing‖ by Charles Schewe and Alexander Hiam In this book, the author use whole 1 part (part, page from 337-509) to write about applying marketing mix tactics including creating a product, manage product, pricing method, distribution function and how to promote sales

Before and during the time of making this research, I have not seen any research

Travel Company Therefore, we can conclude that my research is not coincided with others

Objective of The Study

To do this research, the author tries to reach the following objectives:

1 Review theories on Marketing mix and Marketing mix in tourism industry

2 Apply theories on marketing mix into the practice of Go Asia Travel

3 Contribute some recommendations about marketing mix to Go Asia Travel

Scope of the Study

Scope of study is limited in following time, place and work:

Time: Study about Marketing mix in Go Asia Travel from 11/2010 to 10/2011, and some recommendations for next 5 years

Place: The research is conducted in Hanoi and on the internet only

Work: Marketing mix for Go Asia Travel only, for the products serving foreign customers only (inbound customers)

Data Sources and Research Methodology

1 Data sources and processing

The information used in this thesis is primary and secondary ones Primary information is collected through surveys, interviews, discussion and questionnaires Secondary information is collected directly from Go Asia Travel and some other travel companies Information also collected from some books, websites, academic newspapers and marketing plan when available

Based on the collected information and marketing mix theory, I analyze them and then give out the evaluation and the best practice for Go Asia Travel

2 Research methodology

1 Research method: Qualitative/ case study

2 Research design: Case study

3 Analysis: Descriptive analysis

Contribution of The Study

This study aims to contribute some recommendations to Go Asia Travel in the aspect of Marketing This is the first study which researches on this company so it may become the reference for the next researcher with the same objects It can be the reference for who wants to make a study on Marketing Mix in Tourism industry

Structure of The Study

Apart from Acknowledgement, abstract, list of abbreviation, list of table, introduction, conclusion, reference, and appendix, the thesis is divided into 3 chapters:

Chapter 1: Theory background of Marketing in Tourism

Chapter 2: Marketing Mix in Go Asia Travel Company Analysis

Chapter 3: Solutions to improve the effectiveness of marketing mix for the Go

Asia Travel Company

CHAPTER 1: THEORY BACKGROUND OF MARKETING AND

MARKETING MIX IN TOURISM

 The Chartered Institute of Marketing defines marketing as "the management process responsible for identifying, anticipating and satisfying customer requirements profitably

 Marketing is the set of human activities directed at facilitating and consummating exchanges by Marketing Management, 2nd edn, 1972 - Prof Philip Kotler

 Marketing decisions generally fall into the following four controllable categories: Product, Price, Place (distribution) and Promotion The term "marketing mix" became popularized after Neil H Borden published his 1964 article E Jerome McCarthy later Summarized into the four categories that today are known as the 4 P's of marketing

For a managerial definition, marketing has often been described as ―the art of selling products‖, but people surprised when they hear that the most important part

of marketing is not selling Selling is only the tip of marketing iceberg

By Peter Ducker, a leading management theorist said that:

―The aim of marketing is to make selling superfluous The aim of marketing is to know and understand the customer so well that product and service fit him and sell itself Ideally, Marketing should result in a customer who is ready to buy‖

In this thesis, I will use the first concept to develop my topic For service marketing

I will understand that: Marketing is the process of planning and executing the conception, pricing, promotion, distribution, people, process and physical evidence

of ideas, goods and services to create exchanges (with customers) that satisfy individual and organizational objectives

In the tourism field, I suppose that: Things to do of a marketing manager are to make 7 decisions: Product, Price, Promotion, place, People, Process and Physical evidence which can help find customers, satisfy them and get profits for an enterprise

1.2 CONCEPT OF MARKETING IN THE SERVICE IN DUSTRY

The key concept of Marketing in service industry is people and customer‘ relationship factors The reason is that, not like physical goods, service is intangible and need participation of both customers and producers The service marketing is also known as an extended marketing mix and is an integral part of a service blueprint design The service marketing consists of 7 P‘s as compared to the 4 P‘s

of a product marketing mix Simply said, the service marketing assumes the service

as a product itself However, it adds 3 more P‘s which are required for optimum service delivery

The product marketing mix consists of the 4 P‘s which are Product, Pricing, Promotion and Place

The service marketing places 3 further P which includes People, Process and Physical evidence

In the tourism marketing mix, I would like to mentioned here 3 more Ps

(Partnership, Programming, Packaging) which indicated by Alastair Morrison

The additional Ps will be:

Partnership: as mentioned in part 2.2 the factors influence on marketing activities

of the company, we can see that Partnership is very important factor which affects

on the success of a marketing plan

Programming: In tourism, a travel company serve the customers with a trip (can be

more than 5 days long), so all of events, arrangement need to be scheduled carefully

by the tour organizer A good tour program which matched with the customer‘s budget and time helps customer understand about their itinerary and helps company control well their service In many cases, customer before arrive Vietnam for instant

do not have a clear plan where to go and what to see…At this time, they need the advices from the tour sellers In this case, programming is a very important factor in the selling process which affects on customer‘s purchasing decision

Packaging: a tour package means the combination of transportation tickets,

accommodation fee, and entrance tickets, guide fees, meals…which to serve tourist

in a trip Package factor should be included in marketing mix because, customer always want to book a package with 2 reasons The first is they do not want to work with many different providers in one trip A tour is for the relaxing purpose so tourists do not want to work and worry about it too much after they book They just want to trust one provider and believe it for all the arrangement during their trip in a curtain region The second reason is that, buyers and sellers always think that package price should be cheaper than an individual service price

However, in this thesis, I just want to go with 7 Ps Marketing mix Let us discuss the same in further detail

Figure 1.1: Marketing mix 7P

1.2.1 Product:

The first element in the marketing mix is the product A product is any combination

of good and service offered to satisfy the needs and wants of consumers Thus, a product is anything tangible or intangible that can be offered for purchase or use by consumers A tangible product is one that consumers can actually touch, such as a computer An intangible product is a service that cannot be touched, such as computer repair, income tax preparation, or an office call Other examples of products include places and ideas Cities also promote themselves as great places to live and work Typically, a product is divided into three basic levels:

The first level is often called the core product, what the consumer actually buys in terms of benefits For example, consumers don't just buy a mobile phone, rather, customers buy the benefit that a mobile phone offer, like being able to access internet to do many other things, not only call and sending message

Next is the second level, or actual product, that is built around the core product The actual product consists of the brand name, features, packaging, parts, and styling

level People want to stay in Sofitel Metropole Hanoi Hotel, not only because of its room and facility but also by its famous brand

The final, or third, level of the product is the augmented component The augmented component includes additional services and benefits that surround the first two levels of the product Examples of augmented product components are technical assistance in operating the product and service agreements

Products are classified by how long they can be used—durability—and their tangibility Products that can be used repeatedly over a long period of time are called durable goods Examples of durable goods include automobiles, furniture, and houses By contrast, goods that are normally used or consumed quickly are called nondurable goods Some examples of nondurable goods are food, soap, and soft drinks In addition, services are activities and benefits that are also involved in the exchange process but are intangible because they cannot be held or touched Examples of intangible services included eye exams and lawyer services

Another way to categorize products is by their users Products are classified as either consumer or industrial goods Consumer goods are purchased by final consumers for their personal consumption Final consumers are sometimes called end users The shopping patterns of consumers are also used to classify products Products sold to the final consumer are arranged as follows: convenience, shopping, specialty, and unsought goods Convenience goods are products and services that consumers buy frequently and with little effort Most convenience goods are easily obtainable and low-priced, items such as bread, candy, milk, and shampoo

Shopping goods are those products that consumers compare during the selection and purchase process Typically, factors such as price, quality, style, and suitability are used as bases of comparison With shopping goods, consumers usually take considerable time and effort in gathering information and making comparisons among products Major appliances such as refrigerators and televisions are typical shopping goods

Specialty goods are products with distinctive characteristics or brand identification for which consumers expend exceptional buying effort Specialty goods include specific brands and types of products Typically, buyers do not compare specialty goods with other similar products because the products are unique

Unsought goods are those products or services that consumers are not readily aware

of or do not normally consider buying Life insurance policies and burial plots are examples of unsought goods Often, unsought goods require considerable promotional efforts on the part of the seller in order to attract the interest of consumers

Industrial goods are those products used in the production of other goods Examples

of industrial goods include accessory equipment, component parts, installations, operating supplies, raw materials, and services Accessory equipment refers to movable items and small office equipment items that never become part of a final product Office furniture and fax machines are examples of accessory equipment Component parts are products that are turned into a component of the final product that does not require further processing Component parts are frequently custom-made for the final product of which they will become a part For example, a computer chip could be produced by one manufacturer for use in computers of other manufacturers Installations are capital goods that are usually very expensive but have a long useful life Trucks, power generators, and mainframe computers are examples of installations Operating supplies are similar to accessory equipment in that they do not become part of the finished product Operating supplies include items necessary to maintain and operate the overall firm, such as cleaners, file folders, paper, and pens Raw materials are goods sold in their original form before being processed for use in other products Crops, crude oil, iron ore, and logs are examples of raw materials in need of further processing before being used in products The last category of industrial goods is services Organizations sometimes require the use of services, just as individuals do Examples of services sought by

The product in service marketing mix is intangible in nature Like physical products such as book or a candy, service products cannot be measured Tourism industry or the education industry can be an excellent example At the same time service products are heterogeneous, perishable and cannot be owned The service product thus has to be designed with care Generally service blue printing is done to define the service product For example – a restaurant blue print will be prepared before establishing a restaurant business This service blue print defines exactly how the product (in this case the restaurant) is going to be

1.2.2 Pricing:

In the earlier times, the price was determined through a barter process between sellers and purchasers In modern times, pricing methods and strategies have taken a number of forms

Pricing new products and pricing existing products require the use of different strategies For example, when pricing a new product, businesses can use either market – penetration pricing or a price-skimming strategy A market-penetration pricing strategy involves establishing a low product price to attract a large number

of customers By contrast, a price – pricing skimming strategy is used when a high price is established in order to recover the cost of a now product development as quickly as possible Manufacturers of computer, video recorders, and other technical items with high development cost frequency use a price- skimming strategy

Pricing objective are established as a subset of an organization‘ overall objectives

As a component of the overall business objective, pricing objective is usually take one of 4 forms:

Profitability, volume, meeting the competition, and prestige

Profitability pricing objective means that the firm focus mainly on maximizing its additional revenue equals the increase in product production costs Using volume pricing object, a company aims to maximize sales volume within a given specific profit margin

The focus of volume pricing objectives is on increasing sales rather than on an immediate increasing in profits Meeting the price level of competitors is another pricing strategy With a meeting - the – competition pricing strategy, the focus is less on price more on non- price competition items such as location and service With prestige pricing, product a priced high and consumers purchase them as status symbols

In addition to the 4 basic pricing strategies, there are 5 price- adjustment strategy: discount pricing and allowances, discriminatory price, geographical pricing, promotional pricing and psychological pricing

Discount pricing and allowances includes cash discounts, functional discount seasonal, trade – in allowances and promotional allowances Discriminatory when companies sell products or services at 2 or more prices These price different may

be based on variables such as age of the customers, location of sales, organization, membership, time of day, or season Geographical pricing is based on the location

of the customers Products maybe priced differently in distinct regions of the target area because of demands differences Promotional pricing happens when a company temporarily prices products below the list price or below cost Products price below cost are sometime called ―lost leader‖ The goal of promotional pricing is to increase short – term sales Psychological pricing considers price by looking at the psychological aspects of price For example, consumers frequently perceive a relationship between product price and product quality

Pricing in case of services is rather more difficult than in case of products If you were a restaurant owner, you can price people only for the food you are serving But then who will pay for the nice ambience you have built up for your customers? Who will pay for the band you have for music? Thus these elements have to be taken into consideration while costing Generally service pricing involves taking into consideration labor, material cost and overhead costs By adding a profit mark up you get your final service pricing

1.2.3 Promotion:

Promotion is the third element in the marketing mix Promotion is a communication process takes place between a business and its various publics Public are those individuals and organization that have an interest in what the business produces and offers for sales Thus, in order to be effective, business need to plan promotion activities with the communication process in mind

Figure 1.2: The element of the communication process

The sender refers to the business that is sending a promotional message to a potential customer Encoding involves putting a message or promotional activities

in to some forms Symbols are formed to represent the message The sender transmits the symbol through some forms of media Media are methods to sender uses to transmit the message to the receivers Decoding is the process by which the receivers translate the meaning of the symbol sent by the sender into a form that can

be understood

The receiver is the intended recipient of the message Feedback occurs when the receiver communication back to the sender Noise is anything that interferes with the communication process

Noise can be quality of telephone, quality of internet, health status of senders or receivers…

There are for basic promotion tools (also be called as promotion mix): Advertizing,

Personal selling, Sales promotion and PR

Figure 1.3: The element of the promotion mix

Each promotion tool has its own unique characteristics and function For instant, advertising is described as paid, no personal communication by an organization using various media to reach its various public For example, television or radio advertising

The purpose of advertising is to inform or persuade a targeted audience to purchase

a product or service, book tour, or adopt an idea Advertising is also classified as to its intended purpose The purpose products advertising are to secure the purchase of the product by consumers The purpose of institutional advertising is to promote the image or philosophy of a company Advertising can be further divided in to six subcategories:

Pioneering, competitive, comparative, advocacy, reminder, and cooperative advertising Pioneering advertising aims to develop primary demand for the product

product or service Comparative advertising seeks to contrast one product or service with another Advocacy advertising is an organizational approach designed to support socially responsible activities, causes, or messages such as helping feed the homeless Reminder advertising seeks to keep a product or company name in the mind of consumers by its repetitive nature Cooperative advertising occurs when wholesalers and retailers work with product manufacturers to produce a single advertising campaign and share the costs Example, almost of big hotels in Phu Quoc co - operate an advertising campaign to attract customers to this island

They share the cost and intangible and tangible benefits

Advantages of advertising include the ability to reach a large group or audience at a relatively low cost per individual contacted Further, advertising allows organizations to control the message, which means the message can be adapted to either a mass or a specific target audience Disadvantages of advertising include difficulty in measuring results and the inability to close sales because there is no personal contact between the organization and consumers

For example, Hanoi Oasis Hotel advertises on TV, it is easy for them to control the massage which they want to send to the possible customers but it is very difficult to calculate the effectiveness of this advertising actions How many customers come with them after seeing the advertising on TV? It is very difficult question to the advertisers

The second promotional tool is sales promotion Sales promotions are short-term

incentives used to encourage consumers to purchase a product or service There are three basic categories of sales promotion: consumer, trade, and business Consumer promotion tools include such items as free samples, coupons, rebates, price packs, premiums, patronage rewards, point-of-purchase coupons, contests, sweepstakes, and games Trade-promotion tools include discounts and allowances directed at wholesalers and retailers Business-promotion tools include conventions and trade shows Sales promotion has several advantages over other promotional tools in that

it can produce a more immediate consumer response, attract more attention and

create product awareness, measure the results, and increase short-term sales For example, a city hotel normally apply a ―summer promotion‖ for the low season, it normally lasts 1 month Some example promotions can be ―Noel promotion‖, opening promotion‖

Public relation is the third promotional tool An organization builds positive public

relations with various groups by obtaining favorable publicity, establishing a good corporate image, and handling or heading off unfavorable rumors, stories, and events Organizations have at their disposal a variety of tools, such as press releases, product publicity, official communications, lobbying, and counseling to develop image Public relations tools are effective in developing a positive attitude toward the organization and can enhance the credibility of a product Public relations activities have the drawback that they may not provide an accurate measure of their influence on sales as they are not directly involved with specific marketing goals People said that ―advertising is talk about your self, public relation is to make others talk about you‖

Example of ford automobile: Ford is recalling 2,945 Five Hundreds and Mercury Montegos because of a fuel leak that could result in a fire, according to the National Highway Traffic Safety Administration

This event help Ford was more famous and reliable by creating hundreds of article

on public

The last promotional tool is personal selling Personal selling involves an

interpersonal influence and information-exchange process There are seven general steps in the personal selling process: prospecting and qualifying, pre-approach, approach, presentation and demonstration, handling objections, closing, and follow-

up Personal selling does provide a measurement of effectiveness because a more immediate response is received by the salesperson from the customer Another advantage of personal selling is that salespeople can shape the information presented to fit the needs of the customer Disadvantages are the high cost per

contact and dependence on the ability of the salesperson This kind of tool is applied strongly by insurance companies which require much personal contact

For a promotion to be effective, organizations should blend all four promotion tools together in order to achieve the promotional mix The promotional mix can be influenced by a number of factors, including the product itself, the product life-cycle stage, and budget Within the promotional mix there are two promotional strategies: pull and push

Pull strategy occurs when the manufacturer tries to establish final consumer demand and thus pull the product through the wholesalers and retailers Advertising and sales promotion are most frequently used in a pulling strategy

Pushing strategy, in contrast, occurs when a seller tries to develop demand through incentives to wholesalers and retailers, who in turn place the product in front of consumers

Promotions have become a critical factor in the service marketing mix Services are easy to be duplicated and hence it is generally the brand which sets a service apart from its counterpart You will find a lot of banks and telecom companies promoting them rigorously Why is that? It is because competition in this service sector is generally high and promotions are necessary to survive Thus banks, IT companies, and dotcoms place themselves above the rest by advertising or promotions

1.2.4 Place

The fourth element of the marketing mix is place Place refers to having the right product, in the right location, at the right time to be purchased by consumers This proper placement of products is done through middle people called the channel of distribution The channel of distribution is comprised of interdependent manufacturers, wholesalers, and retailers These groups are involved with making a product or service available for use or consumption Each participant in the channel

of distribution is concerned with three basic utilities: time, place, and possession Time utility refers to having a product available at the time that will satisfy the needs of consumers Place utility occurs when a firm provides satisfaction by

locating products where they can be easily acquired by consumers The last utility is possession utility, which means that wholesalers and retailers in the channel of distribution provide services to consumers with as few obstacles as possible

Channels of distribution operate by one of two methods: conventional distribution

or a vertical marketing system In the conventional distribution channel, there can

be one or more independent product manufacturers, wholesalers, and retailers in a channel The vertical marketing system requires that producers, wholesalers, and retailers to work together to avoid channel conflicts

How manufacturers store, handle, and move products to customers at the right time and at the right place is referred to as physical distribution In considering physical distribution, manufacturers need to review issues such as distribution objectives, product transportation, and product warehousing Choosing the mode of transportation requires an understanding of each possible method: rail, truck, water, pipeline, and air Rail transportation is typically used to ship farm products, minerals, sand, chemicals, and auto mobiles Truck transportation is most suitable for transporting clothing, food, books, computers, and paper goods Water transportation is good for oil, grain, sand, gravel, metallic ores, coal, and other heavy items Pipeline transportation is best when shipping products such as oil or chemicals Air transport works best when moving technical instruments, perishable products, and important documents

Another issue of concern to manufacturers is the level of product distribution Normally manufacturers select from one of three levels of distribution: intensive, selective, or exclusive Intensive distribution occurs when manufacturers distribute products through all wholesalers or retailers that want to offer their products Selective distribution occurs when manufacturers distribute products through a limited, select number of wholesalers and retailers Under exclusive distribution, only a single wholesaler or retailer is allowed to sell the product in a specific geographic area

Place in case of services determine where the service product is going to be located The best place to open up a petrol pump is on the highway or in the city A place where there is minimum traffic is a wrong location to start a petrol pump Similarly

a software company will be better placed in a business hub with a lot of companies nearby rather than being placed in a town or rural area

1.2.5 People

People are one of the most important elements of service marketing mix People define a service If you have an IT company, your software engineers define you If you have a restaurant, your chef and service staff defines you If you are into banking, employees in your branch and their behavior towards customers define you In case of service marketing, people can make or break an organization Thus many companies nowadays are involved into specially getting their staff trained in interpersonal skills and customer service with a focus towards customer satisfaction

In fact many companies have to undergo accreditation to show that their staff is better than the rest

People are the ones that make up the company It is people that we deal with in and out each day When you are marketing or selling to a business, you are actually dealing with its people It is not about my company and your company It is about

me and you Most importantly, develop a relationship and make them like you

It is also important in your business that you emphasize this people factor Build your people up and build your business around them whenever possible, make them

a big part of your business At the end of the day, it is them that are doing the marketing and selling not your brand!

To have a good people, company should focus on all the factor of human resource management including recruitment, training, labour policy and all of motivation actions to the staff

There are many processes which help get thing done in a company For example in

a travel company: Request handling, tour operation, check in, serving, guiding, complaint handling process…In all of them, the most important ones in services industry are serving process and complaint handling process If you do them well, you will have a good service which can satisfy customers

It is said that ―complaint handling is the forgotten way to get profit‖ or Service Recovery practices are a critical element in a Customer Loyalty Program One way

to think about service recovery is that it is a positive approach to complaint handling No matter how well prepared you are there is always the potential for something to go wrong The way you and your personnel handle complaints can be the determining factor in turning a ―disaster‖ into a ―success.‖ Tourism & More offers the following ideas on handling complaints:

Complain handling process:

Step 1 Listen When a visitor is angry or upset allows the person to know that

he/she is being heard Prepare your personnel to listen and to handle each complaint

as if it were the most important part of their day

Step 2 Understand Make sure personnel have a full understanding of the

complaint Prior to responding to the complaint they need to determine the exact nature of the complaint Personnel should try to focus in on the main context of the complaint, and not be diverted by side issues

Step 3 Take Action The visitor should see that he/she matters, and that you

seriously consider their complaint Make sure the upset visitor knows exactly what can or cannot be done, and what he/she may expect as a form of recompense (refund, free offers) If the problem cannot be solved, immediately tell the visitor approximately how long it will take to find a solution Often something as simple as

an inexpensive complimentary gift or some special attention from the manager or boss can turn a negative situation into a positive one

Step 4 Learn Every complaint and/or complainer provides a tourist professional

with a learning experience Have your personnel share with colleagues what things went wrong, and the steps they took to correct the situation Keep records of past complaints, not only for in-house training purposes, but also as a guide of future problems to prevent

1.2.7 Physical Evidence

The last element in the service marketing mix is a very important element As said before, services are intangible in nature However, to create a better customer experience, tangible elements are also delivered with the service Take an example

of a restaurant which has only chairs and tables and good food, or a restaurant which has ambient lighting, nice music along with good seating arrangement and this also serves good food Which one will you prefer? The one is with the nice ambience That‘s physical evidence Several times, physical evidence is used as a differentiator in service marketing Imagine a private hospital and a government hospital A private hospital will have plush offices and well dressed staff Same cannot be said for a government hospital Thus physical evidence acts as a differentiator

1.3 CONCEPT OF TOURISM

Tourism comprises the activities of persons travelling to and staying in places outside the usual environment for not more than one consecutive year for leisure, business and other purposes (World Tourism Organization, 1992)

1.4 CHARACTERISTICS OF TOURISM PRODUCTS

Like the other service industry‘ products, Tourism products have some characteristics as below:

1.4.1 Inflexibility

The tourism industry is highly inflexible in terms of capacity The number of beds

in a hotel or seats on a flight is fixed so it is not possible to meet sudden upsurges in demand similarly restaurants tables, hotels beds and flights seats remain empty and unused in periods of low demand

1.4.2 Inventory / Perish ability

Services are deeds, performance or act whose consumption take place simultaneously; they tend to perish me the absence of consumption Hence, services cannot be stored The services go waste if they are not consumed simultaneously i.e value of service exists at the point when it is required

The perishable character of services adds to the service marketer's problems The inability of service sector to regulate supply with the changes in demand; poses many quality management problems Hence, service quality level deteriorates during peak hours in restaurants, banks, transportation etc This is a challenge for a service marketer Therefore, a marketer should effectively utilize the capacity without deteriorating the quality to meet the demand

It is related to the fact that travel products are intended to be consumed as they are produced For example, an airline has seats to sell on each flight; a hotel has rooms

to sell for each night If the airline is not able to sell all its seats on its flight, or a hotel is not able to sell its rooms for the night then the opportunity to sell the product is lost forever Service sector cannot keep inventory like products To overcome this problem, the travel industry has come up with various marketing strategies One is to overbook An airline overbooks its seats to a certain extent in anticipation that even though certain customers do not turn up but the flight will be

fully seated Another strategy is multiple distributions For example a customer can buy an airline ticket from an airline, tour operator or from a travel agent The chances of perishability are reduced If the tourist cannot visit the place, the opportunity is lost Hence, this becomes one of its important characteristics

1.4.3 Inconsistency

A general norm is that in Travel and Tourism industry the product or the package of the tourism can be standardized i.e for example of 2 days 3 night in so and so hotel, but the actual experience of consuming this package is highly inconsistent There is high level of inconsistency prevailing A quality of a tourism product can be depends on the weather, health status of consumers, surrounding ambience… so they are not consistent

1.4.4 Intangibility

Services are activities performed by the provider, unlike physical products they cannot be seen, tasted, felt, heard or smelt before they are consumed Since, services are not tangibles, they do not have features that appeal to the customer‘s senses, their evaluation, unlike goods, is not possible before actual purchase and consumption The marketer of service cannot rely on product-based clues that the buyer generally employs in alternative evaluation prior to purchase So, as a result

of this, the services are not known to the customer before they take them The service provider has to follow certain things to improve the confidence of the client: The provider can try to increase the tangibility of services For example, by displaying a plastic or a clay model showing patients an expected state after a plastic surgery

The provider can emphasize on the benefits of the service rather than just describing the features

Not all the service product has similar intangibility Some services are highly intangible, while the others are low i.e the goods (or the tangible component) in the service product may vary from low to high

For example: Teaching, Consulting, Legal advices are services which have almost nil tangible components; While restaurants, fast food centers, hotels and hospitals offer services in which their services are combined with product (tangible objective) , such as food in restaurants, or medicines in hospitals etc

Travel products cannot be touched as they include flight experience on an airplane, cruise on an ocean liner, a night's rest in a hotel, view of the mountains, a visit to a museum, a good time in a night club and much more These products are experiences Once they have taken place they can only be recalled and relished Associated with the basic or generic characteristics common to all services, there are at least 3 further features that are particularly relevant to marketing travel and tourism services These are

- Seasonality and other major variations in the pattern of demand

- The high fixed costs of operation, allied to fixed capacity at any point in times

- The interdependence of tourism products

1.4.5 Seasonality: peaks and troughs in demand

It is characteristic of most leisure tourism markets that demand fluctuates greatly between seasons of the years High season of a beach resort is summer is an example Around one week, week day or weekend also affect on occupancy of a city restaurant or a nightclub

1.4.6 High fixed costs of service operations

When the profit and loss accounts of service businesses in the tourism industry are analyze, It is generally the case that they are reveal relatively high fixed costs of operating the available (fixed level of capacity, and relatively low variables costs I

fixed cost is one that have to be paid for in advanced in order for a business to be opened to receive customers; A variable cost is one that is incurred in relation to the number of customers received at any given time What this means in practice may easily be understood in the case of a airline, which must fund the following main costs in order to be able to provide its flights such as fleet costs and premises, fuel charges and heating and lighting cost and salary for full time employees and marketing cost

1.4.7 Interdependence or inseparability of tourism products:

Services are typically produced and consumed simultaneously Incase of physical goods, they are manufactured into products, distributed through multiple resellers, and consumed later But, incase of services, it cannot be separated from the service provider Thus, the service provider would become a part of a service

For example: Taxi operator drives taxi, and the passenger uses it The presence of taxi driver is essential to provide the service The services cannot be produced now for consumption at a later stage / time This produces a new dimension to service marketing The physical presence of customer is essential in services For example:

to use the services of an airline, hotel, doctor, etc a customer must be physically present

Inseparability of production and consumption increases the importance of the quality in services Therefore, service marketers not only need to develop task-related, technical competence of service personnel , but also , require a great input

of skilled personnel to improve their marketing and inter personal skills

Most visitors need to combines several products in the trip decisions, not just one A business visitor needs transport, accommodation, food and beverage and may be car rental and conference facilities

A vacationer chooses an attraction at a destination together with the products of accommodation, transport and other facilities such as recreational activities and caterings Accommodation suppliers at a destination are therefore partly influenced

by the marketing decision of tour operators and travel agents, attraction, transport interests and tourist boards, which together or separately promote the destination and its activities and facilities Over the periods of the years the is always a relationship underlying the capacity and quality of different tourism products at a destination, and potential synergy to be achieved in their marketing decisions if the different suppliers and destination management interests can find ways to combine their respective efforts

1.5 MARKETING MIX FOR TOURISM INDUSTRY

1.5.1 Products

Products in tourism industry include accommodation like hotel, motel, hostel,

resort, restaurants for tourist: Transportation like airport transfer, tourist bus, train ticket, flight ticket; Tour operator for domestic, inbound and outbound travelers; Travel Agencies for tour tickets, transportation tickets; Travel site operators for entrance tickets, Entertainment centers for a game tickets…

Product is still very important factors of marketing mix in tourism Thing a marketer need to do is find out suitable product to satisfy customer‘s need and which product will match with which chosen customer segmentation

1.5.2 Pricing

Pricing in case of services is rather more difficult than in case of products

Price for a tour package is very sensitive as it depends on how many people in a group, what kinds of hotels/ car they plan to use…

If you were a restaurant owner, you can price people only for the food you are serving But then who will pay for the nice ambience you have built up for your customers? Who will pay for the band you have for music?

For a travel agency or a tour operator, Pricing depends on provider‘s price, how much they plan to mark up, competitor‘s price and season Season factor in tourism industry is very important so pricing is highly based on the season (low or high

1.5.3 Promotion

Promotions have become a critical factor in the service marketing mix For tourism products, tourists normally go to a destination for one or two times and they cannot see, cannot touch what they want to buy so they have to be careful before booking a tour That why promotion is a critical factor to make a marketing plan successful Take advantage of internet, tourism company establish/ accomplish a strong online adverting campaign like website, search engine optimization (SEO), banner, and email advertising….to promote their products and services quicker, broader and more economical

1.5.4 Place

Most of Travel Company chooses a big city to locate or put branch offices, customer can reach and buy very easy Nowadays, e-commerce (online sales) helps them to distribute their products easier and broader There are some excellent examples for this case Expedia.com, Agoda.com, Vietnam airline e- tickets They distribute their product worldwide and round the clock

1.5.5 People

People play a key role in service marketing and in tourism industry also People define a service If you have a restaurant, your chef and service staff defines you If you are a tour operator, your staff (tour guides, tour consultants) defines you In case of service marketing, people can make or break an organization People in tourism industry are required to be skillful, customer – oriented, open – minded to create a service or product which satisfies customers

1.5.7 Physical Evidence

The last element in the service marketing mix is a very important element As said before, services are intangible in nature However, to create a better customer experience tangible elements are also delivered with the service Take an example

of a restaurant which has only chairs and tables and good food, or a restaurant which has ambient lighting, nice music along with good seating arrangement and this also serves good food Which one will you prefer? That‘s physical evidence Several times, physical evidence is used as a differentiator in service marketing Imagine a private hospital and a government hospital Thus physical evidence acts

as a differentiator

For some hotels in Hanoi, they differentiate by swimming pool And they get a lot

of customers

1.6 ANALYZING TOOLS USED IN THIS THESIS

To understand subject in this study – Go Asia Travel in the context of high competition and changing business environment, I would use external and internal analysis method to give out suitable recommendation for marketing decision of Go Asia Travel

1.6.1 External environment analysis:

Figure 1.4: PEST Model

1.6.1.1: Political factors

Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate Some following factors are samples: tax policy, employment laws, environmental regulations, trade restrictions and tariffs, political stability

Those factors are very important and highly effect on an enterprise More than that,

a travel company is very sensitive with those factors as it works mainly with foreigners They arrive from the other places, stay overnight in an unusual place In the most case, a travel company has to follow strictly the international disciplines like visa process, travel insurance…

1.6.1.2: Economic factors

Economic factors affect the purchasing power of potential customers and the firm's cost of capital Economic factor includes exchange rate, inflation issue, average income and economic condition worldwide This factor affects a lot on a travel company in some decisions for price and promotion Vietnam now is a member of WTO from 2006 We can see international trading exchange is growing up Number

of foreigner tourist arriving Vietnam for business and leisure purpose is increased after that Number of foreign tourists to Vietnam is increasing from this event However, it is also affected by many other factors in the big picture Below figure can show something about it:

Table 1.1: Statistics of foreign tourists to Vietnam before and after WTO Event Year Number of foreign tourists to Vietnam Percent of increasing

1.6.1.4: Technology factors

Technology factors are one of external factor affects on a travel company a lot People nowadays use internet to search and purchase a travel service Mean of transportation, payment method and many other technology applications are modernized All of them affect on enterprise in the way of distribution and promotion a product

1.6.2 Internal and external environment analysis:

Figure 1.5: SWOT model

For a curtain enterprise, it possesses an advantage (Strength) or disadvantage (weakness) of man power, finance or market Analyzing strength and weakness of

an enterprise is to figure out what need to focus on and what need to overcome or avoid

In the other side, an enterprise need to find out which is an opportunity to catch and what is a thread to avoid In practical case, some factors are weakness for a company but they are strength for the other At the same time, some event or accidents are opportunity for a company but they bring risk for the others In each

situation, a marketing manager has to analyze and make the right decision based on SWOT model

1.6.2 1 Strengths

A firm's strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage Examples of such strengths can be strong brand names, a favorable access to distribution networks…

1.6.2 2 Weaknesses

The absence of certain strengths may be viewed as a weakness For example, each

of the following may be considered weaknesses: a weak brand name, not professional staff, lack of capital…

In some cases, a weakness may be the flip side of strength Take the case in which a firm has a large amount of manufacturing capacity While this capacity may be considered a strength that competitors do not share, it also may be a considered a weakness if the large investment in manufacturing capacity prevents the firm from reacting quickly to changes in the strategic environment

1.6.2.3 Opportunities

The external environmental analysis may reveal certain new opportunities for profit and growth Some examples of such opportunities include: an unfulfilled customer need, arrival of new technologies, loosening of regulations, and removal of international trade barriers

1.6.2 4 Threats

Changes in the external environmental also may present threats to the firm Some examples of such threats include: shifts in consumer tastes away from the firm's products, emergence of substitute products, new regulations, and global economic crisis