The importance of marketing mix to the Travel, Tourism and Hospitality management and analyse the pricing strategies and policies
ASSES THE IMPORTANCE OF COMPONENTS OF THE MARKETING MIX TO THE
TRAVEL, TOURISM AND HOSPITALITY INDUSTRY AND ANALYZE THE PRICING
STRATEGIES AND POLICIES IN RELATION TO THE INDUSTRY
HND TTM & HM – Batch 001
2. • Marketing Mix strategy is choosing and implementing the best
possible course of action to attain the organization’s long-term
objectives and gain competitive edge.
• The Marketing Mix, more popularly referred to as the 8Ps of
Marketing is a set of controllable and interrelated variables that a
company assembles to satisfy a target group better than it’s
• The tourism product unlike a car or a computer that consists of a
combination of tangible and intangible items and the potential
customers “buy” the product before “acquiring” the product.
4. • CORE PRODUCT :-
EXAMPLE :- THE AIRCRAFT SEAT
• GENERIC PRODUCT :-
EXAMPLE :- THE ECONOMY CLASS SEAT
• EXPECTED PRODUCT :-
EXAMPLE :- LEG ROOM, SAFETY
• AUGMENTED PRODUCT :-
EXAMPLE :- ONBOARD LOUNGE , FFP , CDS
• POTENTIAL PRODUCT :-
EXAMPLE :- USE OF LEATHER FOR A/C SEATS
5. The pricing strategies in introduction phase of the PLC were discussed in
pricing new products. Other strategies are expected to be elaborated here.
PRODUCT LIFE CYCLE
6. Introduction Stage Pricing Strategy
The introduction stage of the product life cycle is where a new product is
launched into a market. In the growth stage of the product life cycle, the
market has accepted the product and sales begin to increase.
Growth Stage Pricing Strategy
Here, industrial marketers lower the product price as well as they focus on
product differentiation, product line extension and building new market
Maturity Stage Pricing Strategy
In this, a company has to cut its competitors’ market share to increase its
sales. The strategy is to lower prices to match the competitors’ prices
Decline Stage Pricing Strategies
- If the company has a reputation on good product quality or dependable
service, do not cut price but reduce costs to earn some profits.
- Cutting prices to increase sales and using a product to help to sell other
- Selective increases in prices in markets that are not price sensitive.
7. • Price refers to time, travel cost and lost opportunities that are spent on
attending an event or purchasing a product. It may be defined as the value
of product or service expressed in monetary terms which a consumer pays
or is expected to pay in exchange of the expected or offered product or
• Price gives a product or service a perceived value in the eyes of the
8. • The airline, railways, taxi and bus companies charge you a fare for the
service that they offer
• The price has to match the product, but good marketing makes the price
seem more attractive. The operator can either add features to the product
and keep the price the same or give a discount for the same features.
• It can be incredibly diverse and pricing strategies can evolve as a tourism
business develops its brand and market share.
Eg – Star Ratings of Hotels
• For tourism businesses that cater to the exclusive/luxury traveller pricing
may not fluctuate much at all. While those targeting the budget travel
market may not have too much room to move on pricing and they will rely
on volumes of bookings.
PRICE EVOLVING TOURISM & HOSPITALITY
10. • Internal Factors
1. Marketing Objectives
The 4 major marketing objectives are Survival, Profit Maximization, Market
Share Leadership & Quality
2. Other Marketing Mix elements
Product Influences the price level.
Eg- Higher the product quality, higher the price of the product.
3. Costs (Direct & Indirect Costs)
The cost of marketing and promoting the product will have direct impact on
the price. The marketer should mark price to cover up the cost.
4. Nature of Market Demand
(i) Perfect Competition – Where many buyers and sellers exists. Usually in this
companies should set their prices according to the competition.
(ii) Monopoly – Here the market consists of only one seller. Therefore the
seller can change any amount as the price of the product.
Eg – Ceylon Tobacco Company
11. • External Factors
1. Competitors Price & Offer
Price is also determined by how intense the competition is in the industry,
substitutes and etc.
2. Environmental Factors
These factors are also very crucial for the company’s price decisions.
Eg – Government Laws and Regulations, Weather Conditions & etc…
3. Consumer perceptions of price and value
These factors will effect the pricing in long term
Eg – Expecting price of Consumers on Product or service (Iphone 7)
4. Price Elasticity of Demand
This defines as, the percentage change in quantity demanded to the
percentage change in price.
(i) Inelastic demand – Easy to change the market price. (Eg – Fuel, Monopoly)
(ii) Elastic demand – For a small percentage of price changes, there may be a
significant change in quantity ordered. (Eg – Demanded Product)
12. • Cost Based Products – Here the anticipated profit on product being sold is
added to cost of production per unit of the product.
• Break even Pricing – Here the firm tries to determine the price that will
produce the profit it is seeking. It is known as target pricing. Normally some
companies keep 10% to 20% profit on its investment.
• Value Based Pricing – Value based pricing users buyers’ perceptions of value,
not the seller’s cost, as the key to pricing. Eg – Fashion Based Products, BMW
• Competition based pricing – The price are set according to the competitors’
• Every day low pricing – Constantly low price. Eg – Cargills Food City
• High low pricing – This involves charging higher prices but running frequently
promotions to lower the prices. Eg – Samsung Mobile Phones
• Destroyer pricing – Charging very low prices where competitors can’t survive.
Eg - Monopoly
GENERAL PRICING APPROACHES
13. • Price Bidding – Winning a contract. In this approach, companies submit the
quotation according to the tender calls.
• Psychological Pricing – According to this even small differences in prices can
suggest product differences.
Eg – Consider a product priced at LKR 4899.99 rather than 5000.00 LKR
• International Pricing – Companies that market their products internationally
must decide the prices according to the countries.
• New Product Pricing Strategies
1. Market Skimming Pricing - charging a high price for a relatively short period
and lowered it when demand from “early adopters” falls.
Eg – Samsung High End Mobile Phones
2. Market Penetration Pricing – Set a low initial market price in order to enter
the market quickly and attract a large number of buyers quickly and win a
large market share.
Eg – Samsung Low End Mobile Phones
GENERAL PRICING APPROACHES
14. • Rack Rates – This is the full rate before any discounts are applied and
typically is what is provided to wholesalers and printed on brochures for
the season ahead. however accommodation operators – particularly those
in the middle of the market will be changing pricing almost daily for the
month or 2 months ahead to fill gaps.
• Seasonal Pricing - Using a mix of pricing throughout the year to cover low,
high, and shoulder seasons is a standard way for tourism businesses to
cater for differing levels of demand due to the time of year.
• Last Minute Pricing - A common method for accommodation suppliers to
fill those last minute gaps in inventory availability, last minute pricing is
basically discounting daily prices according to forward bookings and
promoted on last minute booking websites.
PRICING APPROACHES IN TOURISM INDUSTRY
15. • Discounting - While discounting has its place, and often unavoidable in a
competitive market such as tourism, be very wary about continually
discounting your prices to stimulate demand. Consider adding conditions
to a discounted price like a minimum stay or number of travellers in the
• Package Deals - Strike up deals with local businesses to provide a full
package and share business with each other – you should be able to get
their products or services at a “net” rate so the package pricing is better
than if they had purchased each component separately. This Packaging can
also be used to target niche markets effectively. Eg - Golf weekend
• Commissions - Many bookings will come via some sort of third party who
will charge you a commission such as a retail travel agent, wholesaler,
inbound tour operator or online travel agent (OTA). But this should
actually be considered in the setting of your rack rates.
PRICING APPROACHES IN TOURISM INDUSTRY
16. 1. Price List
It is a base price of a product consisting various sizes and specifications. This is
a published statement of basic prices and given to the customers.
2. Trade Discounts
Trade discounts are offered to marketing intermediaries, such as dealers and
distributors. Further these trade discounts should be uniform to all industrial
3. Quantity Discounts
A quantity or volume discount is given to customers who buy in large
quantities as well as this is a price reduction given by deducting the quantity
discount from the list price of the product. This is to encourage customers to
buy in larger quantities and maintain customer loyalty. The amount of quantity
discounts depends on demand, costs and competition.
17. 4. Cash Discounts
Cash discounts are given to encourage customers for prompt payments. This is
applicable on gross amount (basic price + excise duty + sales tax) of the bill
and this is granted to customers who pay bills within a stated period from the
date of invoice.
5. Geographical Pricing
Pricing the company’s products based upon the different geographical
locations of buyers. Mainly, this happens since the company has to undergo
different transportation costs and transit insurance when delivering products
or service to various locations.
20. • Advertising makes people aware of the product
• Acts as a stimulation
• Expands market when advertised in remote
• Will be effective if advertised on a repeat basis
• Gives more employment
21. • Has a psychological effect on people
• Creates a want for the product even if not really
• Increases curiosity in consumers
• Attracting reluctant customers with samples
• Increases customer loyalty
(example:- frequent flyer programs)
22. • More attention can be given to an individual
• Immediate feedback
• More chances of customer being persuaded
• More interactive
• People sometimes prefer the human touch
more than electronic based
23. • Creates good image of the company
• More creditability than an
• Ability to reach the correct target
24. • Have a one to one conversation with customers so
immediate response received
• Have a chance to close the sale in one go
• Good service with clients leads to long professional
• Increase in sales
• Ability to measure your
sales and performance
26. • Place refers to the location where the customer buys the collection of
services. Ideally, the operator uses it to encourage the potential customer to
visit the operator's location and complete the purchase.
• Generally Hotels are located at either City Center area or Tourist Zones, and
Airlines and Travel Agents are around Metro City areas, Malls and Office
• Fast food restaurants and sales and service centers may be located in busy
main streets to allow walk in customers, while a fine dining restaurant may be
located in a quiet street to maintain exclusivity and privacy.
• The product or service must be available in the right place, at the right time
and in the right quantity.
• As mentioned, the service is produced and consumed in the same place. It
cannot be owned and taken away from the location.
EVOLVING TOURISM & HOSPITALITY
27. • Since the product is a collection of services, the people who provide the
services are a key to the success of the transaction and they are the ones
who represent the company.
• Physical appearance, behavior, knowledge, grooming and attitude has a
powerful impact on customers perception of the tourism & hospitality
• Ensure staff are trained to ensure the product or service is delivered in
accordance with the marketing strategic plan.
28. • When a service is being delivered, the person delivering it is not unique from
the service itself.
• The level of hospitality given to the visitors will define and contribute to the
level of satisfaction of their experience.
• Operators must have top-level service to initially complete the sale and to
encourage repeat customers.
• When dining at a restaurant, if a rude waiter is encountered, the entire
experience will be labeled as bad service.
• This is why companies prefer well trained employees – to be polite pleasant
• Extent of training and knowledge of the product/service concerned
EVOLVING TOURISM & HOSPITALITY
30. Partnership refers to the common partners, usually being
governmental agencies. Where packages are jointly marketed, event
managers and partners will have to modify their prices of each product
to become more attractive and to therefore be able to sell well.
Partnership marketing is all about brands working together to reach
new audiences through mutually beneficial campaigns.
It also known as cooperative marketing, increasing the reach and
impact of marketing efforts.
WHAT IS PARTNERSHIP????
31. • Marketers believe partnership marketing is
an excellent way of accessing consumers
in a way that fits in with their lifestyle and
32. Partnership marketing is now much more
about true collaboration, with partners
working to achieve the same goals of
extended reach, maximizing budgets and
driving acquisition, rather than each
individual organization working in
EVOLVING TOURISM & HOSPITALITY
33. • New technologies and mobile are also mentioned and
recognized as platforms via which a partnership marketing
strategy can stand out and cut through. Partnership
marketing lends itself to communicating with customers
across their lives and therefore over multiple touch points,
matching the way consumers now interact with their
EVOLVING TECHNOLOGY IN
35. • Effective use of budget
Partnerships are able to provide an effective and efficient use of
companies’ budgets by enabling them to substitute purchasing assets
with leveraged brand equity in mutually beneficial partnerships which
require minimal financial investment from both parties.
• Expanding reach
Domestic firm may wish to engage in a partnership for a variety of
reasons; for example, Sri Lankan Airlines and Qatar Airways have agreed
to make a code share partnership to flights to Europe and North America
through Doha airport. Sri Lankan Airline's motivation is to give the
connections to it’s passengers where they don’t fly.
BENEFITS OF PARTNERSHIP
37. Programming within the event is also a marketing decision,
especially by the way of creating targeted benefits.
It involves the elements and the quality of style of the event.
For the Kandy Esela Perahera, there were not much activity
because it was an street performance where visitors are
allowed to sit, relax and enjoy their performances.
WHAT IS PROGRAMMING???
38. Programming is basically customer-oriented activities designed
to increase customer spending or length of stay, or to add to the
appeal of packages…
Example - special events, festivals, special activities or etc..
EVOLVING TOURISM & HOSPITALITY
39. One way to add value to the standard product and to distinguish
a particular offering from competitors is to offer exclusive
Customers will purchase a product that cater to their particular
interest. Special programming can address such preferences and
draw in additional customers.
Programming within the event is also a marketing decision,
especially by the way of creating targeted benefits for the
41. • A package tour, package vacation, or package holiday comprises transport
and accommodation advertised and sold together by directly or by a vendor
known as a tour operator. Other services may be provided such a rental car,
activities or outing during the holidays.
• Packaging and distribution defines that business can either package events
with other attractions and services or offer them on their own.
WHAT IS PACKAGING?
42. • The distribution network is important for the sales of tickets. In this factor,
intermediaries will be required for the sales, thus good relationship has to be
cultivated with packaging partners and intermediaries.
• Packaging should never be considered a random part of the marketing mix,
as it incorporates all other elements of your products and/or services.
• Your packaging is the signature you leave everywhere, and it has the ability
to attract today’s customers much better than outdated sales and
• Purchasing a package offers tourists convenience by reducing the amount of
time they will need to spend researching what the city/destination has to
EVOLVING TOURISM & HOSPITALITY
43. • Cost Saving – The company offering you the holiday package is much more
aware of the best air fares, hotel tariffs and rates of every other thing.
• Zero Headache – Everything will be done on your behalf by the tour
operator and would simply be paying the charge.
• Complete Tour – Holiday packages are designed specially are major spots in
a place so that customers get best value for their money.
• Best Service – By opting for an all inclusive holiday package you can enjoy
the best of all services available at hotel/ destination.
Eg – Swimming Pool, Spa and Sauna, Safari and etc..
• Safe Travelling – Companies that offer tour packages are completely aware
of situations in a particular place, the risks and the safe zones. By planning a
trip on your own, may fall in trouble at unknown place.
• Planning – Tailor Made tours allows you to make your own planning and
inform the travel agent.
ADVANTAGEOUS OF CHOOSING A
44. • Traveling too quickly – May be it’s seems fun to see 5 cities in 7 days but in
reality the pace of the tour might be too fast.
• Lack of flexibility – You have to stick on their schedule. This means you can’t
decide where you go.
• Big Crowds – While on group tours, You’ll constantly be herded around in a
big group with little time to be on your own.
• Limited interactions with locals – You’ll see the sights but no the
personalities that make up the culture you’re exploring
• Communication – For any problem that is encountered, the first point is
always the travel agent. This may cause inconvenience especially for those
who travelling different countries.
DISADVANTAGEOUS OF CHOOSING A
Product Life cycle
Development & Introduction
(Explain in the next slide)
Launching of a product No profit, High cost, Hard to promote
Profit increase, Cost stable, No more lost, Customers starting to come to the business
Sales and Profits are high. Better than the competitors, discourage brand switching
Sales and profits declining, should phase out unprofitable products and outlets
When we consider the price, we should consider the time, travel cost and lost opportunities in tourism industry.
It may differ according to customers’ needs and wants
Price gives the value
(Next slide, how price involving in tourism industry)
If you don't have prices available for the potential clients with a higher budget range you will loose.
Or if your prices are too low higher budget clients you will loose profit margin.
if your prices are too high for travellers with a lower budget you will loose out on bookings.
Here you can see how companies loosing or making the profit (Explain graph)
Mainly 4 Internal factors – (Read all the titles)1. Survival, Profit Maximization, Market Share Leadership & Quality2. Higher the product quality, higher the price of the product.3. The marketer should mark price to cover up the cost.4. (i) Many buyers and sellers exists(ii) only one seller exists
Mainly 4 Internal factors – (Read all the titles)1. Price according to the competitor2. Government Rules and regulations3. Consumer expected price (Iphone 7 not yet released but consumers thinks it will be around 200,000 LKR)4. (i) Easy to change the market price – Eg – Ceylon Electricity Board(ii) If small price changes happens, big change in quantity – Eg – Cigarettes
(Rashitha)Read the titles,
Product price based on unit cost
Margin based pricing
Brand value based pricing
Set price according to competitors
Daily low price
Start with high end with low
Start with low, so no competitions
Tender based pricing
Price according to countries
1. high price at beginning then lower (Eg – Samsung s7)2. start with low to attract more buyers (Eg – Samsung One)
Net rate without discount or mark up. This Is for company use only.
Price according to demand
Group discount, longer stay discount
Theme based package deal, Eg – IPL, Shopping Bangkok, Singapore safari
Online and offline travel agent commissions
Whole sale price
Discount for large quantity
4. Cash payment discount
5. Delivery chargers to out of city
Place is one of the 8ps. It’s important because it gives value to the service industry
Branches, Outlets and Offices
Hotels – City hotels & Resorts in tourist zonesAirline Offices & Travel Agents – Metro City, Malls, Office complex (Crowded area)
Fast food – Busy main streetFine dine in – Relax area
Product or service must be available in the right place, at the right time and in the right quantity.
People are the represent of the company.(Read Employees section)
People and service are goes together
Partnership is a key factor in marketing. Specially to Service industry like Tourism and hospitality.
Partnership means common partners, working together through mutual benefits, increase reach
Partnership market is excellent tool to reach consumers beyond the limit
Working to achieve the same goal
Partnering with different services to give more benefits to consumers
Eg – These websites, where you can book Air, Cruise, Taxi Tickets, Hotels, Other services and more.
Eg – Instead of having to shops in both Bambalapitya junction and Bambalapitya Flats (Where sales are lower), Have one shop in between the places, where people can easily access. (Sales are getting good)
(Eg given in the slide)
This usually refers as events, festivals and etc
(Read the slide)
(Read the slide)
If you want to win the competition, you should make an exclusive offer on programming
Customers can add their wishes
Programming within the event creates more benefits to the customers
Packing is a key element in Tourism business
It’s a combination of travel, accommodation and etc sold to consumers by directly, or by tour operator
Packaging includes many things Such as Eg……………
Packaging considers the followings,
Sale of ticket
All marketing mix elements
Attract today’s customers
Convenience to travellers
(Explain in the slide)
(Explain in the slide)
Tailor Made packages are the perfect solution for Traveling too quickly, Lack of flexibility