Selling Indian Tourism in the U.S - Case Study Example

Executive Summary This study explores the success and continued viability of the island resort of Boracay, in the Philippines, as a premiere tourist spot. This assessment is grounded on a description of the tourist industry in this island in terms of the 7 P’s of services marketing – product, place, price, promotion, people, physical evidence, and process. The initial 4 P’s are similar to the marketing mix components of classical marketing theory. The three additional P’s find relevance in services marketing because of the unique nature of service products vis-à-vis manufacturing of tangible goods. The analysis revolves not only in one establishment, but rather on the tourism effort in Boracay as a whole. This is because the market is still expanding in Boracay, and the various services and accommodations in that area is largely collaborative. The Philippine government promotes Boracay as a total experience, with enterprises linking together to provide a total experience for foreign as well as domestic tourists. To detract from this approach will be insufficient in analyzing the service product that is Boracay. The study underscores the product as it pertains to the domestic market. It encompasses the experience of a tourist island resort. The price is competitive for the domestic tourists, employing the bundling or discount approach. The place is unique for its combination of unspoiled natural beauty and modern amenities; also that it is ideal for easy travel from Manila, being quite accessible. The people are well trained and hospitable, the process involves mainly outdoors activities, and promotion is spearheaded by no less than the Philippine government among the local tourists. The future of Boracay as a tourist spot is dependent on its continued innovation of the service product. Table of Contents Introduction Marketing is a social and managerial process through which institutions and individuals obtain what they want through creating, offering and exchanging products and services with others (Gibbs and Knapp, 2002). The many studies in services marketing and management have emphasize the difference from the services product and tangible goods in conventional marketing. The most salient difference lies in the fact that service products combine the production and marketing phase, unlike the manufacturing of goods and services. Thus services are more difficult because they involve a perishable good that could not be inventoried (Booms, 1980). The 7 P’s of service product marketing was developed by Lovelock and is incorporated in Lovelock and Wirtz (2007). It will be undertaken in this study using the framework suggested by the following diagram: http://www.software112.com/images/Business/Other/Screenshots/65079-4p-7p-marketing-mix-software.gif Tourism product/service In services marketing the product is defined as the specification of the actual goods or services, and how it relates to the end-user’s needs and wants (Paliwoda & Ryans, 2008). Included in the product are the quality and reputation of the service provider, the breadth of the service product offering, and other intrinsic factors (Peerson, Price & Roth, 2006). Tourism enterprises are strictly service enterprises, according to Booms and Bitner (1980), and thus must be studied within its distinct paradigm. There are three operational components: the channelers of tourists (such as travel agencies), the transporters of tourists (airlines and shipping lines), and the receivers of tourists (hotels, resorts, and restaurants). This study will center on the establishments that are considered receivers of tourists, in particular the tropical resort. This particular tourism product was chosen because it pertains to a particular sort of tourist, one who “wants to get away from it all;” and, the service is sufficiently contained or delimited so as to present a suitable subject of investigation for this paper. The specific resort of choice is the Boracay Island in the Philippines. It will be viewed as a single product, as the market as of now is expanding and the services there are thus little differentiated from each other, particularly for domestic tourists. The Philippine government is actively promoting the island as a destination (see section below on promotions) and it is from this perspective that the product is being defined. In this tropical island resort, there are various individual “receiver” services that tie in to the total service product experience. There are the beaches and resorts, the hotel and cottage accommodations, and the activities, the suppliers of which are fragmented and disperse due to the expanding demand. Activities include diving, kiteboarding, sailing, spa and massage, parasailing, speedboats and jet skis, skimboarding and helicopter adventures, mostly run by entrepreneurial proprietors. Since tourism is so closely related to the economy of most countries, it should always be planned with the view in mind of advancing tourism operations as a means to provide macro-economic development to an emerging region. Specifically, the Quality-of-Life (QOL) theory of Neal (2008) is instructive, as diagrammed below. Source: Neal, 2008 In the case of Boracay, it is apparent that there is not so much competition as there is collaboration among the different providers of the various services, such that synergies are created among the establishments in the area. For instance, hotels and other lodgings collaborate with the enterprises that provide activities (diving, etc.) by promoting them and providing liaison with the tourists, and these service providers likewise respond by providing special rates for particular tourists, especially domestic tourists, aware that this segment can provide a more regular clientele because of their residence within the country. Place In the service marketing mix, place refers to the manner in which the product gets to the customer, or “distribution” in conventional marketing terms. In services marketing, it refers to the channel by which the service is sold to the customer, and to which segment of the market. (Paliwoda & Ryans, 2008) The study will deal on the tropical seaside resort of Boracay in the Philippines. This tourist destination was chosen for this study, as it is fast becoming one of the world’s favorite beach resorts. It was voted to the top spot in the ten most popular beach of 2007 by Yahoo!Travel. It has also garnered the distinction of being voted as one of the best beaches in the world by the BMW Tropical Beach Handbook (Boracay.com, 2009) 2009 Winners of the Miss Earth Beauty Pageant, which was held in Boracay. Source: Boracay.com Boracay is an island in the Philippines located approximately 200 miles or 345 kilometers south of Manila. It boasts of white sand beaches and clear blue water, ideal for swimming, surfing and scuba diving. The location has well appointed accommodation. The hotel types include the Mandarin, Regency, Peninsula and Crown Regency among many others. There are also bungalow type accommodations, spas and clubs, plus a host of other service providers such as scuba diving and jet skiing rentals and instructors. This paper deals on the island resort as a total package experience, as choosing any single one service product will diminish the nature of the service product. The Philippine government is actively promoting the island as a tourist site for both foreign and domestic clientele, and is actively participating in the strategy formulation and implementation of development plans for Boracay, including the provision of financial support and subsidy to the locality. This study will provide important input to the planning authorities of the island resort in the service marketing aspect. The advantage of the place factor in the case of Boracay is that it is an island removed, though not distant or inaccessible, from the municipalities and metropolises. One of the problems in the planning and promotion of seaside tourism is the difference in boundaries between municipalities/residential areas and existing destinations (Klepers, Rozite & Van der Steina, 2009). Often, the source of the problem either is that the activities of the tourist resort interferes with the way of life of the municipality, or the conditions in the municipality (e.g. high population density, lower standard of living, pollution) interfere with the environment that the tourist resort would want to maintain (cleanliness, attractiveness to tourists). Promotion Promotion refers to the manner in which the product is introduced to the customer’s attention and the means by which the customer is induced to purchase the product. This includes advertising, sales promotion and promotional education, publicity, and personal selling, among others. Branding is also resorted to in order to create in the mind of the customer the distinction of the particular product, the brand name, or the company, and mentally separate it from the rest of the competition (Paliwoda & Ryans, 2008). The Philippines is actively promoting Boracay as a premiere tourist spot not only for foreigners but also for domestic tourists. This is implemented by way of special offers and advertising among the tourist agencies that cater to domestic travel. Furthermore, the Philippine President, Gloria Arroyo, has taken an active hand in promoting domestic tourism by making it a policy to schedule the celebration of most of the national holidays on either a Monday or a Friday. The Philippine work week is from Monday to Friday, and by “moving” the celebration of national holidays to the weekends the government encourages long trips/short family vacations to several of the tourist destinations away from, but accessible to, the metropolitan areas. Boracay has been one of the tourist spots that has been benefited by this development, and has recorded increased sales and patronage since this policy went into effect (Boracay.com, 2009). More recently, there have also been several Internet websites that have promoted the Boracay experience, providing tourist information services among the many establishments and activities in the island. These have also proven effective in increasing volume of tourists to the area. Price Pricing refers to the manner and strategy by which a price is set for the product, and includes discounts and packages (Paliwoda & Ryans, 2008). Several methods of pricing are possible, such as other mediums of exchange for the product or service other than monetary (e.g., time, energy or attention). There are also several strategies in pricing, such as price skimming, comparable or competitive pricing, loss leader pricing, market penetration strategy, and bundling and quantity discount pricing. For the domestic traveler, many inns and hotels in Boracay offer up to 75% lower charges than accommodations for foreign tourists. These inns and hotels may tailor their services to the more practical needs that budget-conscious local tourists find preferable than the full service amenities that, however, a family from Manila do not necessarily require. Room prices range from $20 to $200 a night for the smaller to medium establishments, with many ranging between $50 to $70, depending on the type of room (standard, de luxe, suite, apartment type). Among the activities, one of the more popular products is scuba diving which caters both to beginners and seasoned enthusiasts. The clear waters are abundant with exotic fish and reefs, wreck sites, caves and canyons. Some 30 quality dive shops on the island could take the tourist to more than 30 popular dive sites within 30 minutes of the island. The rates are at $55 to $68, and PADI (Professional Association of Diving Instructors) offers open water certification courses from $210 to $260. Several specialty courses are also offered such as advanced open water, advanced plus, rescue through dive master, drift diving, night diving, cave diving, deep diving and wreck diving, among others (My Boracay Guide, 2009). The prices of other activities such as kiteboarding, sailing, spa and massage, and so forth, will no longer be mentioned here; suffice it to say that the price strategy employed by the establishments for domestic tourists employ the bundling and quantity discounts strategy. There are many well-to-do local residents (i.e., from Manila and other metropolitan areas) who could afford higher rates, but since Boracay is seen as a local destination like many others they could have gone to within the country, the bundled packages and quantity discounts provide the added incentive to choose the particular accommodation and service. In the mindset of the domestic customer, going to a foreign destination and spending in terms of US dollars would appear reasonable; however, remaining in the country and spending in terms of the local currency, which has an exchange rate of PhP48:US$1, triggers a perception that the accommodation or service would appear to expensive as a solo offering. Thus, for the domestic traveler, a penchant for “bargains” and “combo deals” (bundled packages) are more attractive than single purchases. People By people is meant the persons involved in the actual service marketing/production, that is, those who deal directly with the customers (Paliwoda & Ryans, 2008). The Philippine populace provides an ideal manpower pool, with a literacy rate of 95% and widespread use of English as the second medium (the national language is Filipino) (Philippine Department of Education, 2004). Having been an American colony, the Philippine nation is particularly friendly towards foreign tourists, and have often been appreciated for their hospitality and amiability. This also influences the service provided in the establishments in Boracay. Aside from their natural friendliness and hospitability, the Philippine government provides staff training and development particularly for workers in the tourism industry. Furthermore, the many schools and universities in Manila and the other major cities provide degree programs in hotel and restaurant management as well as tourism and hospitality, so there is no lack of professional manpower from which to source qualified employees. Process Process refers to the manner by which orders are handled, customers’ needs are fulfilled, and in toto, the way the service is delivered (Paliwoda & Ryans, 2008). In tourism, there is not one process to speak of, but many and diverse, all pertaining to the entertainment and leisure activity. In the seaside resort, the process has much to do with the location and its ambience; the activities that would define the process would require everything from housekeeping, culinary, entertainment, and outdoors activities. “Tourism is a service, thus delivery of peak performance is critical to its success” (Calantone & Mazanec, 1991). While most services are certainly supported by tangibles such as amenities, physical place, and certain goods, the essence of the product is still the intangible service provided by personal interaction (Lovelock & Wirtz, 2007). Thus, all events and activities should highlight the natural beauty of the surroundings, and promote the sand, sea, and excellent flora and fauna. The food should complement the exotic theme with the natural tastes of the local produce and dishes, but should also provide something familiar to the tourists particularly from abroad. For domestic travelers, a taste of international cuisine would be welcome. Physical evidence Physical evidence refers to the tangible aspect of the service delivery, pertaining to the material evidence that the evidence has been delivered and the customer’s needs satisfied. Lovelock & Wirtz (2007) stressed the need for excellent personal service process as being central to the effective delivery of the service product; this is, however, enhanced by the physical evidence surrounding the product, the tangible elements that support the service product. In this seaside resort, the physical evidence would consist of the well-appointed lodgings and hotel accommodations which are admittedly good, moreso considering the relatively low rates (compared to other international destinations). The names of many international hotel chains are located here, but there are also a host of other lodgings that cater to the budgetg-conscious travelers. Physical evidence in this resort also includes the diving equipment, jet skis and rented boats. Water sports and outdoors activities require the necessary facilities, manned by competent and trained individuals, in order to support the service experience of adventure and excitement. Recommendations for improvement 1. Discover new services or enhance previous ones Boracay is currently a hot tourist spot, but tourism is an industry that thrives on novelty. For the domestic tourists, in particular, there must be something in a tourist destination that will entice them to keep coming, several times over several years. This is not easy in a country of 7,100 islands that may provide similar experiences. Tourism services grow increasingly competitive and many services are experiencing the trend towards shorter lifespans. In such instances, in order to maintain competitive survival, businesses have to continue exploring the provision of new services, or the enhancement of existing ones (Dalton, Lally & Lynch, 2009). Therefore, the government and local businesses should keep an eye towards further development of the island’s potentials. 2. Innovations are critical in maintaining the viability of tourist resorts While some tourist spots could get by with glossing over and improving what is already existing, there is a dire need for innovative approaches in seaside resorts. This is because relying on the sea, sand and sun alone is not viable in the long term – such an experience may be replicated in many other places in the world. Innovations, therefore, are a critical direction the establishments have to take, by way of exploring new services and attractions for the foreign and domestic tourists. It must be emphasized that the “sun and sand” package holiday is enhanced by the introduction of innovations, according to a series of surveys by Aguilo, Alegre and Sard (2005). 3. The service innovations should always include the place distinctiveness In determining the innovations to be developed, planners should always keep in mind that there must be a link between the innovation and the distinctive qualities of the place. For Boracay, for instance, the different and specialized courses in diving (e.g., “wreck diving”) have been made possible because of the presence of several wreck sites in the vicinity, some dating to the time of the Spaniards. This is an important distinguishing quality of the place that the diving service providers have effectively explored. Resource decline is not necessarily associated with the course of the lifecycle of the business, but internal and external forces at work, as well as any restructuring done to the service industry, “must incorporate a greater appreciation of place distinctiveness” (Agarwal, 2002). Conclusions In this assessment of the island resort of Boracay has shows that the service product offered by the place continues to present excellent potential. As it is now, the industry that has spawned in Boracay’s beaches has provided its greatest sponsor, the Philippine government, with a good return on its investment. Its current primacy as a tourist destination, among international as well as domestic tourists, should continue in the future with attention given to improving present services as well as creating and developing innovations. The latter is important, because boredom is the single greatest enemy of a tourist spot, and Boracay has to stave this off by means of new services and offerings that enhance the tourists’ perception of the innate beauty of the island. References Agarwal, Sheela. Restructuring Seaside Tourism: The Resort Lifecycle. Annals of Tourism Research, vol. 29, no. 1, pp. 25-55, 2002. Aguilo, Eugeni; Alegre, Joaquin; & Sard, Maria. The persistence of the sun and sand tourism model. Tourism Management, vol. 26, pp. 219-231, 2005. Booms, Bernard H. & Bitner, Mary J. New Management Toolds for the Successful Tourism Manager. Annals of Tourism Research, vol. VII issue 3 pp. 337-352, 1980 Boracay.com, the Official Website of Boracay, Philippines. Accessed 5 December 2009 from http://www.boracay.com/ Calantone, Roger J. & Mazanec, Josef A. Marketing Management and Tourism, Annals of Tourism Research, vol. 18, pp. 101-119, 1991 Dalton, Roseline; Lally, Anne Marie; and Lynch, Patrick. Towards a Model of New Service Development for Differentiated Tourism Services. Unpublished Thesis, Waterford Institute of Technology. 2009. Accessed 7 December 2009 from http://repository.wit.ie/1344/1/TOWARDS_A_MODEL_OF_NEW_SERVICE_DEVELOPMENT_FOR_DIFFERENTIATED_TOURISM_SERVICES-_RIKON_Group.pdf Frey Responsible Tourism 2008 http://www.artyforum.info/documents/MicrosoftWord-FREY.pdf Klepers, Andris; Rozite, Maija; & Van der Steina, Aija. Spatial Processes in Seaside Tourism and their Management – The Case Studies of Kurzeme Peninsula. Tiltai, 2009. Lovelock, Christopher H. & Wirtz, Jochen Service Marketing, 6th ed. Prentice Hall, 2007. My Boracay Guide, 2009. Accessed 5 December 2009 from http://www.myboracayguide.com/menuoption/activity.html#Helicopter_Adventures Neal, Janet D. How Tourism Services Impact Travelers’ Quality of Life (QOL): A Macromarketing Perspective. Unpublished paper. The University of North Carolina At Greensboro, 2002. Accessed 5 December 2009 from http://fama2.us.es:8080/turismo/turismonet1/economia%20del%20turismo/calidad%20y%20turismo/how%20tourism%20services%20impact%20tourists%20quality%20life%20QOL.pdf Paliwoda, Stanley J. & Ryans, John K. Back to First Principles. International Marketing: Modern and Classic Papers, First Edition. 2008. Pearson, Arnold; Price, Chris; and Roth, Christiane. Preparing a Marketing Plan for Your Institution. Lecture delivered in the EAIE 18th Annual Conference, Basel, 2006. Accessed 5 December 2009 from http://www.eaie.org/pdf/basel/605.pdf Selling Indian Tourism in the U.S., Canada. Travel Agent, 6/8/2009, Vol. 334 Issue 12, p2-2 Yeong-Hyeon Hwang; Zheng Xiang; Gretzel, Ulrike; Fesenmaier, Daniel R. Assessing Structure in Travel Queries.. Anatolia: An International Journal of Tourism & Hospitality Research, 2009, Vol. 20 Issue 1, p223-235 Read More