Destination Marketing in Vietnam - Essay Example

Destination marketing (DM) is an activity that sets the structure and direction for overall marketing drives for a particular tourist destination. It begins from conducting market research to establish its characteristics; this is in terms of competitor analysis and market prescience (Wang, Pizam 2011). DM also goes further to manage this tourism brand and strategize on cooperative marketing initiatives that can spur tourism sector growth. This report finds that destination marketing in Vietnam is conducted by government authorities with support from the private sector; this is a challenge to marketing as strict government regulation hinders private sector participation in overall tourism development. These DM initiatives in Vietnam have led to considerable improvement of tourist numbers with the number surpassing 5 million; this represents a 40% increase from 2009. However, Vietnam still lags behind other countries within the region for instance, Laos and Philippines which are smaller destinations. Vietnam marketers are also concentrated in promoting Vietnam as a cultural destination rather than focusing on other products like sports and eco-tourism which has gained much attention in the recent years. 1. INTRODUCTION Vietnam is the destination under focus and the country belongs to the greater Asia-Pacific tourism circuit. This report identifies the destination marketing organizations (DMOs) within Vietnam as well as giving a version of their structure and responsibilities. SWOT analysis is conducted to investigate the market’s competitiveness while also giving the challenges and constraints. Lastly, develop a two year marketing plan aimed at keeping the destination competitive in a rapidly changing market place. We use the Vietnam National Administration of Tourism’s website to find information about their operations including their overall objectives, promotional activities; it also gives their structure and partner organizations in both private and public sector. This report analyses key destination markets while also gauging Vietnam’s competitiveness within the region; this assists in understanding trends of development in tourism industry while at the same time investigating threats and areas of opportunities that can be explored to improve performance in the succeeding 2 years. 2. BACKGROUND INFORMATION ABOUT THE DMO The major DMO is the Vietnam National Administration of Tourism (VNAT) which is an institution under The Ministry of Culture, Sports and Tourism that is tasked with marketing key Vietnamese attractions (Kozak, Gnoth & Andreu 2009). In terms of structure, this authority is headed by a Director General who coordinates functions falling under the following departments: travel, hotel, finance, international cooperation, personnel organization and tourism marketing departments (Schweyer, Pi?amme?tta?wat 2011). The following are the activities that VNAT is involved in: Planning This is a management function that indicates the process of formulating and organising all the activities needed to achieve desired ends. In the DMOs, planning determines how, when and who is going to carry out specific tasks within the tourism industry to promote brand Vietnam. DMOs plan on how to utilize both human and physical resources including finances and other government incentives to encourage growth and competitiveness. Business development This is a long term process that the DMO’s undertake in order to introduce new products as a response to changing customer tastes or tap into new markets. It is always accompanied by extensive research that interrogates the holistic tourism industry in Vietnam (Ritchie, Crouch 2003). Public relations They carry this out by managing information flow between the government and tourism stakeholders. This is in an effort to maintain a favourable image of Vietnam in order to keep the tourists coming in. Vietnam has had a history of conflicts and human rights violations but these DMO’s have tried to market the new face of Vietnam through the internet and in the international media. Employee training This is conducted to make the employees get along with the authority as well as empowering them to better handle tourists as they move around Vietnam. Tourism is an industry of perception and hence good relations with customers and a warm receptive culture has a direct correlation with the number of tourists willing to visit the country. Research and development This is done by the government in collaboration with the private sector. Several surveys are conducted to gauge tourist’s satisfaction levels and they also comment on areas of improvement. Various tourism organizations like The United Nations World Tourism Organization (UNWTO) and media companies conduct reviews on attractions available in a particular country; this gives the industry players an opportunity to get expert advice on what to enhance. Policy implementation DMOs exercise oversight to ensure that the policies that are laid on paper, after contribution from the various stakeholders, are fully implemented. They do this by ensuring that financial and other resources that have been laid for specific projects are channelled at the right time. They also lobby for funds from the government to improve marketing and infrastructural development (Harris 2011). 3. VIETNAM’S TOURISM MARKETING PERFORMANCE Tourist arrivals in Vietnam maintained its double digit growth levels with 2011 recording a 15% increase. This is attributed to global economic recovery, expansion of air transport routes by international and local carriers, introduction of new tourism products and effective branding of Vietnam as a diverse destination. However, this upward growth trend faces numerous shocks among the major one being the Euro zone crisis which has resulted to budget tightening among citizens of major source markets. Vietnam expects to maintain this positive growth trajectory despite mild recession forecast for 2012 through to 2013 because of slowing levels of economic activities. In February this year, Vietnam welcomed close to 700,000 foreign tourists which is a 9% improvement from the figures recorded in January. This progress is attributed to the promotional efforts being encouraged by VNAT to make Vietnam a destination of choice. VNAT has forecasted to receive a total of 6.5 million tourists by the end of the year 2012; this is a 10% improvement from the previous year. The revenue targets are VND 150 trillion (Bobik 2010). According to VNAT statistics, Vietnam registers an average of about 25 million domestic and 5 million international tourists each year. However, it balances out when viewed in terms of levels of income as international tourists stay longer than local tourists and account for close to 90% of total bookings in 5-star hotels. 3. STRATEGIC FRAMEWORK FOR DESTINATION MARKETING PLAN 3.1 MISSION STATEMENT VNAT is going to make the plan of increasing the popular of attractive destination and reaching 40% positive income compared with three competitive destinations as Thailand, China, and Cambodia next five years. 3.2 EXTERNAL ANALYSIS- OPPORTUNITIES AND THREATS (Existed) 3.2.1 OPPORTUNITIES Strategic partnerships with ASEAN and EWEC partner states Tourism is better marketed regionally as standing alone and fighting other nations for tourism numbers is not an effective long term strategy. This is because no single country can be able to offer all the tourism products hence collaboration with other countries enables Vietnam attract those visiting neighboring countries, but within the ASEAN trading bloc. Meetings, Incentives, Conventions, and Exhibitions (MICE) are a tourism package that is better organized by integrating with other countries. This concept also helps improve overall service quality as pooling of resources and ideas helps in spurring growth. Vietnam also collaborates with member states in the East-West Economic Corridor (EWEC) by hosting joint Trade and Tourism Fairs; this is held on 17th to 21st August in Da Nang to promote products Vietnam, Laos, Thailand, and Myanmar. Nationalization This is done to centrally control tourism products by establishing a strong regulatory framework to improve tourist numbers in Vietnam. The government offers support for state corporations in this industry for instance, Vietnam Airlines which accounts of close to 90% of total air transport volumes in the country. In the line of car rentals and hotel accommodation services, Saigon Tourist Holding which is a government controlled enterprise has the majority share in service provision. From 5th to 8th November 2012, VNAT will collaborate with Vietnam Airlines to participate in World Travel Market 2012 (WTM 2012) at International Exhibition Centre Excel in London. This promotes images of culture, nature and people in Vietnam to the participants and potential clients. This program is one of the promotional activities under The National Tourism Promotion Program 2012 (Thu Giang 2012). 3.2.2 THREATS Competition destinations According to Blanke and Chiesa (2007), Vietnam’s major competitors lie within the South East Asia region. These are those countries that share cultural and historical similarities with Vietnam. These are Malaysia, Thailand, China, South Korea and Cambodia. Of most relevance to this study is the fact that many of these competing destinations are now diversifying their tourism products in order to stay competitive. They have also increased their budgetary allocations for destination marketing activities while VNAT is faced with a stagnant budget. Figure 1: Graph showing international tourist arrivals across S.E Asia by 2007 Potential fighting that occurs between Vietnam and China Vietnam and China are involved in a tussle over control of water and land resources at the bordering areas. This is because the region is believed to have large deposits of fish and gas. The citizen’s push for nationalism at their home countries is what is fuelling this conflict coupled with increasing interest from other countries bordering China including Philippines and Japan. There is an arms race in the region with China, Vietnam and Japan releasing their surveillance vessels to these regions as a sign of authority. This is seen as an act of aggression by China. Such political and military build up will make the recent tourism gains in this region fall back. This is out of the tourists’ own choice or by travel restrictions set by their home countries. 3.3 INTERNAL ANALYSIS- STRENGTHS AND WEEKNESSES (Existed) 3.3.1 STREGHTHS Low cost destination Vietnam is considered a low cost destination compared to other countries within the region. This is because the government has taken a leading role in promoting its products by lowering internal travel and hospitality costs. This has been boosted by discounts and promotions industry players offer to these tourists as the authorities try to keep the destination competitive (Berger 2005). Government investment Vietnamese government is heavily investing in tourism by: improving general transport infrastructure, constructing hotels, providing affordable air and road transport using state owned low cost carriers. The government, through its tourism and branding authorities, has also come up with a slogan and logo that describes the country. It is phrased as “Timeless Charm”; this is in line with the trends in the global tourism industry with countries like India and Thailand having their own-“incredible India” and “Magical Thailand” respectively. Organizing special events VNAT as a destination marketer organizes The Vietnam National Tourism Year (VNTY) which is an annual event that is held on a rotational basis across provinces in Vietnam. This is a promotional strategy aimed at increasing both international and domestic tourist numbers. Vietnam has diverse tourism products that are marketed independently through such events; every event has a theme for instance the 2011 event held in Phu Yen whose catch phrase was “Exotic Beaches and Islands.” 3.3.2 WEEKNESSES Visa regulations This is a problem for tourists coming into Vietnam as they need to apply for visas from the country’s overseas diplomatic missions. Others are issued with a visa confirmation letter which is a long process that eventually allows them obtain visa-on-arrival. This is a costly and a tedious process that makes tourists shy away from this destination. There are other countries within the same region including Thailand, Malaysia and Indonesia which have relaxed visa regulations. Internet marketing The English version of Vietnamese tourism websites are lacking in content with improper language. The words translated are full of first language interference and this makes it unattractive for international visitors. The expressions and descriptions of places sound appealing to native Vietnamese but lose its appeal when translated (Sweeney 2008). Modes of payment The modern day tourist is very complicated and would want to complete all the air travel and residential bookings at their own comfort using the internet. Vietnam system is too inflexible only allowing tourists to do their applications through the tour agents. VNAT and other DMO websites should allow for credit card payments to make it convenient and avoid red-tapes set by this government controlled industry. The government has however set many tourist booking facilities within the country (Laderman 2009). 3.4 A NEW DESTINATION MARKETING PLAN 3.4.1 OPPORTUNITIES China has been hit with SARS (severe acute respiratory distress syndrome) outbreak. This infection is endemic in areas like Guangdong which is in South-Western China; this is a major tourism spot (Bobik 2010). Visitors who had planned travel to that destination are now looking for alternatives such as Vietnam because of its low exposure rate to this highly contagious disease. In positioning the country as a healthy tourist destination and capitalizing on China’s SARS outbreak, DMOs should: Increase marketing activities in China’s source markets. This is done by establishing promotional centres in Europe, Japan and America while at the same time increase marketing vigour in existing markets. Vietnam should also increase use of aircrafts with larger capacities as state owned aircrafts are riddled with high inefficiency rates. Improve airport and border disease screening services as a preventive measure to minimize entry of Chinese and people from other nationalities who have already contracted the disease. Establish partnerships with Chinese hospitality service providers to direct the leaving tourists to Vietnam. This can also be enhanced by offering friendly rates to ensure that all parties in this partnership, including the tourists, gain from the exchange. Creating a buzz in both the internet and international media about the Vietnam brand as many visitors will be looking for alternative destinations. 3.4.2 CHALLENGES The governments of Thailand, China and Cambodia are doubling their marketing budgets of their official DMOs. However, the government of Vietnam which advertises its attractions through VNAT is not increasing in its marketing budget. Working smatter with constant budget The country should establish linkages with the private sector to release capital tied up in private hands; this will go towards expanding tourist facilities as well as developing infrastructure needed for growth. Focusing on specific segments also reduces marketing costs while at the same time ensuring that the only the targeted audience gets the message. For instance, in targeting MICE tourists, VNAT should organize for networking sports events like golf. This ensures that more of those belonging to this category actually attend the event. Having a general advert for the mass market increases exposure but does not appeal to specific segments. 3.4.3 CONSTRAINS The major airline company moving over 80% of the total domestic flights is Vietnam Airlines; this airline does not have the capacity to meet market demand. There are not enough seats available on planes to meet the demand from primary source markets. Vietnam can solve this by: Allowing private sector participation in providing domestic transport services; this is to increase number of domestic and international flights. Allowing more cross-sectoral players will increase competition which in turn increases efficiency as these companies fight for clients. Increasing flight frequencies to busy routes also results to higher number of passengers moved within a specific span of time. As a strategic measure, Vietnam should introduce two-daily flights in the Beijing and Tokyo route as these are considered the busiest. Using alternative routes for instance, the sea and land as a means for tourist arrivals. Efficient road and rail transport is ideal for those coming from neighbouring countries while cruises are for those travelling across many regions but using the large water bodies connecting the countries. Vietnam will negotiate with international finance corporations or donor countries to fund development of airports at the provinces to enhance passenger movement to the specific attractions. This is because this is a capital intensive venture which the government can better undertake through partnerships; the government should be planning ahead of time on how it will handle increasing tourists’ numbers. 3.5 MARKET SEGMENTATION AND POSITIONING 3.5.1 CURRENT MARKETS China This is the country with the highest number of visitors to Vietnam clocking the 1 million tourists mark in 2008 despite the global financial crisis that was experienced late in that year. Visitors coming from China are both business and leisure minded. Those coming for business trips and for MICE tourism form a large chunk of this as Vietnam falls within the ASEAN community that has strong business and cultural ties. United States of America This has been a rising market ever since the end of Vietnam War; US is seen as a strategic business partner and a source of high number of tourists visiting historic sites. According to VNAT statistics, 595 people out of 3482 people were businessman who visited Vietnam for their business (World tourism organization, European travel Commission 2007). Japan This is a source of MICE tourists as is the case with the Chinese market. However, Japan has close cultural and religious ties with Vietnam which makes the former’s citizens make trips to sample the scenery and historical shrines. 3.5.2 POTENTIAL/DEVELOPING MARKETS Russia Russia is seen as a rising market for Vietnamese tourism products. This is so because arrivals figures have been rising steadily over the past few years. The market recorded a 30% increase in tourist numbers over the first 8 months in 2012. Several steps are being taken to keep this growth momentum with VNAT organizing for Binh Thuan and Da Nang provinces’ participation in the in Leisure Moscow 2012. Most of Russian visitors prefer 3S’ as swimming in sea, sunbathing and liking seafood. 3.5.3 Market segmentation This takes more of a demographic pattern than geographic, psychographic and behaviouristic segmentation. Geographic Many tourists coming to Vietnam are those from across the region from countries like Japan, Korea, China and Thailand. The reason why there is a high number coming from the region is because of similar cultural characteristics and MICE travels. There is also a substantial number coming from Europe and America; these visits are majorly for exploratory reasons and leisure. Demographic Families- these come for group trips and are looking to modest spending. Couples- this is a highly spending segment and might take a comparatively longer time compared to MICE travellers and the youth. Honeymoon- this segment looks for seclusion and will not be put together with other tourists. They prefer visiting specific places rather than getting together with other tourists in group tours. Youth- this is a low spending segment attracted to Vietnam because of low travel and hospitality costs. Business travellers- this segment travels to source for business opportunities and attending meetings and conferences. A huge chunk of those coming to Vietnam from the regional markets come because of this reason. Behaviouristic Those tourists looking for local artefacts or collectables have a higher spending power than those merely on leisure travels. They tend to stay longer as they study local cultural beliefs and activities. 3.5.4 COMPETITOR ANALYSIS/ POSITION Visitors travel to Thailand for their landscape with beautiful beaches, luxury resort, special services for health care, cheap price for their market and famous Buddhist culture with many long-established temples. There are 3 competitive destinations that Vietnam is going to face for attracting visitors in tourism industry; they are Thailand, China, and Cambodia (Blanke, Chiesa 2007). China is known with many old traditional buildings and heritage architecture, big market for shopping. Cambodia and Vietnam are famous for their war history dark tourism and its traditional culture. In comparing these destinations to Vietnam, this report identifies and analyses their strengths and weakness of the three competitors to come up with the best approaches and strategies for keeping Vietnam competitive. These three countries are chosen for competitiveness destination by looking at factors determining destination’s competitiveness (Laws 2002). They are: Core resources and attractors, Supporting factors and resources, Destination management The qualifying determinants (Hong 2008). These destinations are positioned in Asian region and are neighbouring Vietnam; this makes them have some similarities in culture, history, market ties, food services, landscape, climatic conditions and transport infrastructure. There is a general perception across the major current and potential markets that tourism products in Vietnam, Thailand, China, and Cambodia are majorly similar. Vietnam and its competitor nations are also thought of having the same cultural aspects (Briggs 2000). 3.6 GOALS AND OBJECTIVE Devolved management Vietnam government is devolving management functions from the central government to the grassroots; this will help in strengthening institutions and linkages. It is also focusing on branding its key attractions to elevate them to achieve global competitiveness. Focusing on key segments Many high income visitors to Vietnam complain about the tendency of the destination to group all tourists and offering standard packages. This is not ideal for a destination which should be targeting segments from all income brackets by having specific packages. Advertising This will be done in both the print and electronic media. Several advertisements bearing Vietnamese slogan and logo and beamed across major international television networks; this is used to market the destination as a new frontier and shed the image of a troublesome past. Channelling funding to such initiatives is ideal to increasing a country’s exposure in the global arena. Public relations The DMO’s will be at the forefront in managing information flow between the government and industry stakeholders. This will help curtail the negative perceptions Vietnam has had in the past including history of conflicts and human rights violations. Sales promotion Use of various reward schemes to appeal to the market; this may take the form of discounts and shopping coupons to maintain industry’s perception of Vietnam as a low-priced destination. 3.7 ACTION PLAN The tourism action plan is led by Vietnam government through VNAT and is supported by the industry. The DMO will undertake the following plans: Education, internal communication and capacity development This is a very important step in ensuring that the local communities and tourism stakeholders are aware of their product. It also improves internal and external communications as they become knowledgeable of what they are presenting to the market. VNAT and provincial tourism authorities can organize joint breakfast meetings where issues and challenges identified are brought to the fore and addressed. These forums should assess new consumer tastes and their application to Vietnam tourism climate. A biannual e-newsletter can be posted at DMO’s website or mailed directly to the identified stakeholders. This gives information on oncoming events, trends and statistics, industry news and partnership ideas. Visitor information centre (VIC) This is the epicentre where all information regarding Vietnam tourism can be obtained. The main reason for establishing such a centre is that many potential and current tourists have a tendency of visiting a specific place whenever they want information regarding a particular destination (Gezgin, 2009). The Vietnam government will convince industry players like airline companies to set up visitor information booths. It will then formulate a structure that ensures that there is information exchange across agencies. These booths can be manned by volunteers especially during summers and off-season months. Branding Country branding as a tourist destination is not only done by having a nice logo and slogan; it should also be an embodiment of the spirit and vigour of its people. Effective branding also includes customer relations, promotional packages and product delivery. The DMOs should ensure that all these are integrated into Vietnam’s tourism projects and communications. It will also give identity to Vietnam that is facing stiff competition from neighbouring countries working with comparatively larger marketing budgets. The commonly used branding media is through the official websites, brochures, flyers and other materials. Other visual and audio additives can be integrated into the advert to make it appeal to target audience’s emotions. This is done using a variety of features including: attractive parks, restaurants, fine art galleries and amazing eco-treasures. 3.8 2 YEAR STRATEGIC PLANS Establish partnerships This will be done in collaboration with other industry players in both the private and public sector. Vietnam has unique tourism services and products that provide opportunities for exploring corporate advertising and promotional programs. There are special tourism promotions that might be publicized in VNAT website once it is fully operational. Other advertising media include brochures and mass media. The following are the segments that can be targeted by this: Wedding planners Vietnam has numerous beaches and other venues, including recreational parks and hotels, that wedding planners may find ideal. These are coupled with shopping outlets like bridal shops and hair salons where they can do their makeup. TIMEFRAME: In 6 months. Holiday offering Vietnam has numerous holiday shopping outlets and luxurious hotels scattered across the provinces including Novotel Ha Long Bay and Sofitel Legend Metropole. TIMEFRAME: 3 months. Hotel Discount Program Tourists coming into the country will be able to have special booking rates when coming for special events. These are publicised and visitors make their applications on the VNAT website. This is a seasonal promotion done at peak periods. Setting up a media relations program A destination looking for consumer awareness like Vietnam must be in constant touch with media organizations covering arts, travel, food and lifestyle. Being exposed frequently in the news for the right reasons increases client knowledge about the destination; this will also increase the number and frequencies of visits. The following will be done within the 2 years: Source for story ideas and post them in the website and other communication materials. VNAT will be at the forefront in establishing linkages between the media and Vietnam government and other industry stakeholders. This will improve publicity and product awareness to the market. Providing support for smaller industry players who might not have the capacity to organize their own media relations framework. Arranging for special media trips where they are able to get story ideas from the ground. These also act as a forum where industry players can establish linkages with the media. Bibliography HONG, W.-C. (2008). Competitiveness in the tourism sector: a comprehensive approach from economic and management points. Heidelberg, Physica-Verlag. WANG, Y., & PIZAM, A. (2011). Destination marketing and management: theories and applications. Wallington, Oxfordshire, UK, CABI. SWEENEY, S., & SWEENEY, S. (2008). 101 ways to promote your tourism web site: filled with proven internet marketing tips, tools, and techniques to get visitors to your site and your destination. 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