Marketing mix in tourism the case of go asia travel

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

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

1 WTO World Trade Organization

3 GDP Gross Domestic Product

4 SPT South Pacific Travel

5 APT Asia pacific International Travel

6 VLT Viet long Travel

7 GAT Go Asia Travel

8 FIT Free Independent Travelers

9 GIT Group Inclusive Travelers

10 ITF International Travel Firm

11 FAM Trip Familiarization trip

12 SEO Search Engine Optimization

13 SEM Search Engine Marketing

14 HR Human Resources

INTRODUCTIONSignificance of The Thesis

People say that ―Marketing is the art of selling goods and services‖ And to have agood marketing strategy, company need to analyze themselves, competitor and themarket Besides some strategic decisions like positioning, market segmentation,marketing objective… a marketing manager always has to focus on 7 tacticaldecisions In my viewpoint, marketing mix is key and handbook to obtain thesuccess 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 thequestion how much we will sell this product, the price need to be high or low, howmany factors which influence on the pricing (Price) The third question is how tobring our product to all the potential customers, how to be a famous product, how toengage the customers in communication (Promotion) You have a good product atgood price; many people know about you but do they feel easy and convenient tobuy it (Place), and there more decisions we have make are people, process andphysical evidence

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

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

Whereas, more and more foreign competitors with the position of multi-sidedstrength, financial, profession especially they are the master of marketing Theyhave enough strategies, tactics and the resources to win the global market.Currently, Vietnamese travel company still have some advantage in the local waybut under the roadmap of WTO joining and the quick internet development, theyhave 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 practicaldecisions It is, therefore, very necessary to conduct a study on Marketing Mix inTourism, using the case of Go Asia Travel to analyze and understand more,

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

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

The study aims to gain the following significances:

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

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

Literature Review

Relating to this topic, there are some authors mentioned about this For example, thebook of ―Marketing in Travel and Tourism‖ by Victor Middleton, Alan Fyall andMichael Morgan In this book, the author also write about marketing mix in tourismservice 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 ofmarketing system

The second book which talks about marketing mix is ―The portable MBA inmarketing‖ by Charles Schewe and Alexander Hiam In this book, the author usewhole 1 part (part, page from 337-509) to write about applying marketing mixtactics including creating a product, manage product, pricing method, distributionfunction 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 withothers.

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 Primaryinformation is collected through surveys, interviews, discussion and questionnaires.Secondary information is collected directly from Go Asia Travel and some othertravel companies Information also collected from some books, websites, academicnewspapers and marketing plan when available

Based on the collected information and marketing mix theory, I analyze them andthen 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 theaspect of Marketing This is the first study which researches on this company so itmay become the reference for the next researcher with the same objects It can bethe 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 3chapters:

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 managementprocess responsible for identifying, anticipating and satisfying customer requirementsprofitably

 Marketing is the set of human activities directed at facilitating andconsummating exchanges by Marketing Management, 2nd edn, 1972 - Prof PhilipKotler

 Marketing decisions generally fall into the following four controllablecategories: Product, Price, Place (distribution) and Promotion The term "marketing mix"became popularized after Neil H Borden published his 1964 article E Jerome McCarthylater 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 ofselling 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 toknow and understand the customer so well that product and service fit him and sellitself 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 theconception, pricing, promotion, distribution, people, process and physical evidence

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

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

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 intangibleand need participation of both customers and producers The service marketing isalso known as an extended marketing mix and is an integral part of a serviceblueprint 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 optimumservice 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 andPhysical 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‘sbudget and time helps customer understand about their itinerary and helps companycontrol 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 theadvices from the tour sellers In this case, programming is a very important factor inthe 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, customeralways want to book a package with 2 reasons The first is they do not want to workwith many different providers in one trip A tour is for the relaxing purpose sotourists do not want to work and worry about it too much after they book They justwant to trust one provider and believe it for all the arrangement during their trip in acurtain region The second reason is that, buyers and sellers always think thatpackage 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 discussthe 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, aproduct is anything tangible or intangible that can be offered for purchase or use byconsumers A tangible product is one that consumers can actually touch, such as acomputer An intangible product is a service that cannot be touched, such ascomputer repair, income tax preparation, or an office call Other examples ofproducts include places and ideas Cities also promote themselves as great places tolive 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 interms 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 accessinternet 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 Theactual 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 itsroom and facility but also by its famous brand.

The final, or third, level of the product is the augmented component The augmentedcomponent includes additional services and benefits that surround the first twolevels of the product Examples of augmented product components are technicalassistance in operating the product and service agreements

Products are classified by how long they can be used—durability—and theirtangibility Products that can be used repeatedly over a long period of time arecalled durable goods Examples of durable goods include automobiles, furniture,and houses By contrast, goods that are normally used or consumed quickly arecalled nondurable goods Some examples of nondurable goods are food, soap, andsoft drinks In addition, services are activities and benefits that are also involved inthe 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 aseither consumer or industrial goods Consumer goods are purchased by finalconsumers for their personal consumption Final consumers are sometimes calledend 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 thatconsumers buy frequently and with little effort Most convenience goods are easilyobtainable and low-priced, items such as bread, candy, milk, and shampoo

Shopping goods are those products that consumers compare during the selection andpurchase process Typically, factors such as price, quality, style, and suitability areused as bases of comparison With shopping goods, consumers usually takeconsiderable time and effort in gathering information and making comparisonsamong products Major appliances such as refrigerators and televisions are typicalshopping goods

Specialty goods are products with distinctive characteristics or brand identificationfor which consumers expend exceptional buying effort Specialty goods includespecific brands and types of products Typically, buyers do not compare specialtygoods 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 areexamples of unsought goods Often, unsought goods require considerablepromotional efforts on the part of the seller in order to attract the interest ofconsumers

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 tomovable items and small office equipment items that never become part of a finalproduct Office furniture and fax machines are examples of accessory equipment.Component parts are products that are turned into a component of the final productthat does not require further processing Component parts are frequently custom-made for the final product of which they will become a part For example, acomputer chip could be produced by one manufacturer for use in computers of othermanufacturers Installations are capital goods that are usually very expensive buthave a long useful life Trucks, power generators, and mainframe computers areexamples of installations Operating supplies are similar to accessory equipment inthat they do not become part of the finished product Operating supplies includeitems necessary to maintain and operate the overall firm, such as cleaners, filefolders, paper, and pens Raw materials are goods sold in their original form beforebeing processed for use in other products Crops, crude oil, iron ore, and logs areexamples of raw materials in need of further processing before being used inproducts The last category of industrial goods is services Organizations sometimesrequire 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 productssuch as book or a candy, service products cannot be measured Tourism industry orthe education industry can be an excellent example At the same time serviceproducts are heterogeneous, perishable and cannot be owned The service productthus has to be designed with care Generally service blue printing is done to definethe service product For example – a restaurant blue print will be prepared beforeestablishing a restaurant business This service blue print defines exactly how theproduct (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 betweensellers and purchasers In modern times, pricing methods and strategies have taken anumber of forms

Pricing new products and pricing existing products require the use of differentstrategies For example, when pricing a new product, businesses can use eithermarket – penetration pricing or a price-skimming strategy A market-penetrationpricing 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 highprice is established in order to recover the cost of a now product development asquickly as possible Manufacturers of computer, video recorders, and othertechnical items with high development cost frequency use a price- skimmingstrategy

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 itsadditional revenue equals the increase in product production costs Using volumepricing object, a company aims to maximize sales volume within a given specificprofit margin

The focus of volume pricing objectives is on increasing sales rather than on animmediate increasing in profits Meeting the price level of competitors is anotherpricing strategy With a meeting - the – competition pricing strategy, the focus isless 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 statussymbols.

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 discountseasonal, trade – in allowances and promotional allowances Discriminatory whencompanies 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 targetarea because of demands differences Promotional pricing happens when a companytemporarily prices products below the list price or below cost Products price belowcost are sometime called ―lost leader‖ The goal of promotional pricing is toincrease short – term sales Psychological pricing considers price by looking at thepsychological aspects of price For example, consumers frequently perceive arelationship between product price and product quality

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

1.2.3 Promotion:

Promotion is the third element in the marketing mix Promotion is a communicationprocess takes place between a business and its various publics Public are thoseindividuals and organization that have an interest in what the business produces andoffers for sales Thus, in order to be effective, business need to plan promotionactivities 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 apotential customer Encoding involves putting a message or promotional activities

in to some forms Symbols are formed to represent the message The sendertransmits the symbol through some forms of media Media are methods to senderuses to transmit the message to the receivers Decoding is the process by which thereceivers 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 thereceiver communication back to the sender Noise is anything that interferes withthe communication process

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

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 organizationusing various media to reach its various public For example, television or radioadvertising

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 toits intended purpose The purpose products advertising are to secure the purchase ofthe product by consumers The purpose of institutional advertising is to promote theimage or philosophy of a company Advertising can be further divided in to sixsubcategories:

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

product or service Comparative advertising seeks to contrast one product or servicewith 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 arelatively low cost per individual contacted Further, advertising allowsorganizations to control the message, which means the message can be adapted toeither a mass or a specific target audience Disadvantages of advertising includedifficulty in measuring results and the inability to close sales because there is nopersonal contact between the organization and consumers

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

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

incentives used to encourage consumers to purchase a product or service There arethree basic categories of sales promotion: consumer, trade, and business Consumerpromotion 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 atwholesalers and retailers Business-promotion tools include conventions and tradeshows 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 Forexample, a city hotel normally apply a ―summer promotion‖ for the low season, itnormally 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 goodcorporate image, and handling or heading off unfavorable rumors, stories, andevents Organizations have at their disposal a variety of tools, such as press releases,product publicity, official communications, lobbying, and counseling to developimage Public relations tools are effective in developing a positive attitude towardthe organization and can enhance the credibility of a product Public relationsactivities have the drawback that they may not provide an accurate measure of theirinfluence 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 makeothers talk about you‖

Example of ford automobile: Ford is recalling 2,945 Five Hundreds and MercuryMontegos because of a fuel leak that could result in a fire, according to the NationalHighway 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 generalsteps 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 moreimmediate response is received by the salesperson from the customer Anotheradvantage of personal selling is that salespeople can shape the informationpresented 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 appliedstrongly by insurance companies which require much personal contact.

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

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

Pushing strategy, in contrast, occurs when a seller tries to develop demand throughincentives to wholesalers and retailers, who in turn place the product in front ofconsumers

Promotions have become a critical factor in the service marketing mix Services areeasy to be duplicated and hence it is generally the brand which sets a service apartfrom its counterpart You will find a lot of banks and telecom companies promotingthem rigorously Why is that? It is because competition in this service sector isgenerally 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 rightproduct, in the right location, at the right time to be purchased by consumers Thisproper placement of products is done through middle people called the channel ofdistribution The channel of distribution is comprised of interdependentmanufacturers, wholesalers, and retailers These groups are involved with making aproduct 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 theneeds of consumers Place utility occurs when a firm provides satisfaction by

locating products where they can be easily acquired by consumers The last utility ispossession utility, which means that wholesalers and retailers in the channel ofdistribution 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 achannel The vertical marketing system requires that producers, wholesalers, andretailers to work together to avoid channel conflicts

How manufacturers store, handle, and move products to customers at the right timeand at the right place is referred to as physical distribution In considering physicaldistribution, manufacturers need to review issues such as distribution objectives,product transportation, and product warehousing Choosing the mode oftransportation 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 suitablefor transporting clothing, food, books, computers, and paper goods Watertransportation is good for oil, grain, sand, gravel, metallic ores, coal, and otherheavy items Pipeline transportation is best when shipping products such as oil orchemicals Air transport works best when moving technical instruments, perishableproducts, 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 distributeproducts through all wholesalers or retailers that want to offer their products.Selective distribution occurs when manufacturers distribute products through alimited, select number of wholesalers and retailers Under exclusive distribution,only a single wholesaler or retailer is allowed to sell the product in a specificgeographic 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 placewhere 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 companiesnearby 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 Peopledefine a service If you have an IT company, your software engineers define you Ifyou have a restaurant, your chef and service staff defines you If you are intobanking, employees in your branch and their behavior towards customers defineyou In case of service marketing, people can make or break an organization Thusmany companies nowadays are involved into specially getting their staff trained ininterpersonal skills and customer service with a focus towards customer satisfaction

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

People are the ones that make up the company It is people that we deal with in andout each day When you are marketing or selling to a business, you are actuallydealing 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 Buildyour 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 themarketing and selling not your brand!

To have a good people, company should focus on all the factor of human resourcemanagement including recruitment, training, labour policy and all of motivationactions 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 servicesindustry 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 ServiceRecovery 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 complainthandling No matter how well prepared you are there is always the potential forsomething to go wrong The way you and your personnel handle complaints can bethe determining factor in turning a ―disaster‖ into a ―success.‖ Tourism & Moreoffers 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 exactnature of the complaint Personnel should try to focus in on the main context of thecomplaint, 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 whatcan 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 visitorapproximately 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 orboss 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 thingswent wrong, and the steps they took to correct the situation Keep records of pastcomplaints, not only for in-house training purposes, but also as a guide of futureproblems to prevent

1.2.7 Physical Evidence

The last element in the service marketing mix is a very important element As saidbefore, services are intangible in nature However, to create a better customerexperience, 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 restaurantwhich has ambient lighting, nice music along with good seating arrangement andthis also serves good food Which one will you prefer? The one is with the niceambience That‘s physical evidence Several times, physical evidence is used as adifferentiator in service marketing Imagine a private hospital and a governmenthospital A private hospital will have plush offices and well dressed staff Samecannot be said for a government hospital Thus physical evidence acts as adifferentiator

1.3 CONCEPT OF TOURISM

Tourism comprises the activities of persons travelling to and staying in placesoutside 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 somecharacteristics 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 indemand similarly restaurants tables, hotels beds and flights seats remain empty andunused in periods of low demand

1.4.2 Inventory / Perish ability

Services are deeds, performance or act whose consumption take placesimultaneously; they tend to perish me the absence of consumption Hence, servicescannot 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 Theinability of service sector to regulate supply with the changes in demand; posesmany quality management problems Hence, service quality level deterioratesduring peak hours in restaurants, banks, transportation etc This is a challenge for aservice marketer Therefore, a marketer should effectively utilize the capacitywithout deteriorating the quality to meet the demand

It is related to the fact that travel products are intended to be consumed as they areproduced 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 ahotel is not able to sell its rooms for the night then the opportunity to sell theproduct is lost forever Service sector cannot keep inventory like products Toovercome this problem, the travel industry has come up with various marketingstrategies One is to overbook An airline overbooks its seats to a certain extent inanticipation 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 canbuy an airline ticket from an airline, tour operator or from a travel agent Thechances of perishability are reduced If the tourist cannot visit the place, theopportunity 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 ofthe 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 ishigh level of inconsistency prevailing A quality of a tourism product can bedepends on the weather, health status of consumers, surrounding ambience… sothey are not consistent

1.4.4 Intangibility

Services are activities performed by the provider, unlike physical products theycannot be seen, tasted, felt, heard or smelt before they are consumed Since, servicesare not tangibles, they do not have features that appeal to the customer‘s senses,their evaluation, unlike goods, is not possible before actual purchase andconsumption The marketer of service cannot rely on product-based clues that thebuyer 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 Theservice 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, bydisplaying a plastic or a clay model showing patients an expected state after aplastic surgery

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

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

For example: Teaching, Consulting, Legal advices are services which have almostnil tangible components; While restaurants, fast food centers, hotels and hospitalsoffer 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 amuseum, a good time in a night club and much more These products areexperiences Once they have taken place they can only be recalled and relished.Associated with the basic or generic characteristics common to all services, thereare at least 3 further features that are particularly relevant to marketing travel andtourism 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 greatlybetween seasons of the years High season of a beach resort is summer is anexample Around one week, week day or weekend also affect on occupancy of acity 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 areanalyze, It is generally the case that they are reveal relatively high fixed costs ofoperating 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 beopened to receive customers; A variable cost is one that is incurred in relation to thenumber of customers received at any given time What this means in practice mayeasily be understood in the case of a airline, which must fund the following maincosts in order to be able to provide its flights such as fleet costs and premises, fuelcharges and heating and lighting cost and salary for full time employees andmarketing cost.

1.4.7 Interdependence or inseparability of tourism products:

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

For example: Taxi operator drives taxi, and the passenger uses it The presence oftaxi driver is essential to provide the service The services cannot be produced nowfor consumption at a later stage / time This produces a new dimension to servicemarketing 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 physicallypresent

Inseparability of production and consumption increases the importance of thequality 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 Abusiness visitor needs transport, accommodation, food and beverage and may be carrental and conference facilities

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

by the marketing decision of tour operators and travel agents, attraction, transportinterests and tourist boards, which together or separately promote the destinationand its activities and facilities Over the periods of the years the is always arelationship underlying the capacity and quality of different tourism products at adestination, and potential synergy to be achieved in their marketing decisions if thedifferent suppliers and destination management interests can find ways to combinetheir 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, trainticket, flight ticket; Tour operator for domestic, inbound and outbound travelers;Travel Agencies for tour tickets, transportation tickets; Travel site operators forentrance tickets, Entertainment centers for a game tickets…

Product is still very important factors of marketing mix in tourism Thing amarketer need to do is find out suitable product to satisfy customer‘s need andwhich 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 agroup, what kinds of hotels/ car they plan to use…

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

For a travel agency or a tour operator, Pricing depends on provider‘s price, howmuch they plan to mark up, competitor‘s price and season Season factor in tourismindustry 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 tourismproducts, tourists normally go to a destination for one or two times and they cannotsee, cannot touch what they want to buy so they have to be careful before booking atour That why promotion is a critical factor to make a marketing plan successful.Take advantage of internet, tourism company establish/ accomplish a strong onlineadverting campaign like website, search engine optimization (SEO), banner, andemail advertising….to promote their products and services quicker, broader andmore 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) helpsthem to distribute their products easier and broader There are some excellentexamples for this case Expedia.com, Agoda.com, Vietnam airline e- tickets Theydistribute their product worldwide and round the clock

1.5.5 People

People play a key role in service marketing and in tourism industry also Peopledefine a service If you have a restaurant, your chef and service staff defines you Ifyou are a tour operator, your staff (tour guides, tour consultants) defines you Incase of service marketing, people can make or break an organization People intourism industry are required to be skillful, customer – oriented, open – minded tocreate 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 saidbefore, services are intangible in nature However, to create a better customerexperience 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 restaurantwhich has ambient lighting, nice music along with good seating arrangement andthis 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 highcompetition and changing business environment, I would use external and internalanalysis method to give out suitable recommendation for marketing decision of GoAsia 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 bothformal and informal rules under which the firm must operate Some followingfactors are samples: tax policy, employment laws, environmental regulations, traderestrictions 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 withforeigners They arrive from the other places, stay overnight in an unusual place Inthe most case, a travel company has to follow strictly the international disciplineslike visa process, travel insurance…

1.6.1.2: Economic factors

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

of foreigner tourist arriving Vietnam for business and leisure purpose is increasedafter 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 figurecan 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 oftransportation, payment method and many other technology applications aremodernized All of them affect on enterprise in the way of distribution andpromotion 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 oravoid

In the other side, an enterprise need to find out which is an opportunity to catch andwhat is a thread to avoid In practical case, some factors are weakness for acompany but they are strength for the other At the same time, some event oraccidents 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 onSWOT model.

1.6.2 1 Strengths

A firm's strengths are its resources and capabilities that can be used as a basis fordeveloping a competitive advantage Examples of such strengths can be strongbrand 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, notprofessional staff, lack of capital…

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

1.6.2.3 Opportunities

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

1.6.2 4 Threats

Changes in the external environmental also may present threats to the firm Someexamples of such threats include: shifts in consumer tastes away from the firm'sproducts, emergence of substitute products, new regulations, and global economiccrisis