PRODUCT DEVELOPMENT - FACTSHEET
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1 Marketing Your Product Contents Marketing Your Product...2 The Marketing Plan...2 Positioning...3 The Marketing Mix...3 Product or Service...3 Place (Distribution)...3 Promotion or Selling...4 Advertising...4 Methods of Advertising...5 Brochures...6 PR/Media...7 Price...7 Packaging...9 Partnerships...10 Accreditation...10 Awards...10 Grants/Funding...10 Visit Victoria Website...11 Star Ratings...11 Conferences, Forums & Workshops...11 Further Information and Assistance...12 T O U R I S M V I C T O R I A PRODUCT DEVELOPMENT - FACTSHEET 1
2 Marketing Your Product Marketing is an essential part of running a business. New and existing tourism businesses need to undertake some basic marketing initiatives to be successful. The best hotel, tour or attraction in the world will not succeed without a planned approach to marketing. The Marketing Plan A marketing plan establishes a direction for your business. It identifies a marketing budget, sets out a media and promotion timetable and how you will review the success (or otherwise) of your marketing efforts. The basic elements of a marketing plan are: Overview Business Description Mission statement SWOT Analysis Strengths, Weaknesses, Opportunities and Threats Positioning Positioning statement what is my competitive advantage? Consumer profile who are my customers? Marketing Mix ( the 6 P s ) Product or service Place or distribution Promotion or selling Price Packaging Partnerships Monitoring Review performance of the Marketing Plan as part of your Business Plan. For more information on marketing plans, please visit: Five essential tips for growing your tourism business: 1. Stand out from the crowd 2. Get your website working and continually updated 3. Encourage your customers to share their experiences 4. Find your target audience and join the conversation 5. Be found in search engines 2
3 Positioning The Marketing Mix Positioning means designing your product to suit your target market. Before you do this you need to know who your customers are. How you position your product will be determined by the customers you are targeting. Market research is most helpful in analysing potential target market segments. An important consideration when positioning your product is how you are going to reach your customers. Your choice of distribution channels is an important element in positioning your product because it is through these channels that your customers will get the first impression of your product. You need to establish within your target markets a perception about your product that will differentiate it from that of your competitors. The name of your company, along with the price of your product, the design of the brochure, photography and advertisements will establish and reinforce your unique position in the mind of your customer. Your competitive advantage is what makes your product more appealing than those of your competitors. It may be something unique you have to offer, it may be superior service or extra value included in the price you charge. For more information regarding market research and benchmarking, please visit: Product or Service You probably have a general idea of what your product or service will be. You will need to establish a clear idea of the components of your business and the level of service or standards you intend to provide. It helps to identify the special features or benefits of your business, i.e. your competitive advantage, and to build your product or service around these. Place (Distribution) T O U R I S M V In order to gain maximum exposure for your product in your target market, you should consider all the different types of distribution channels that are available to you. These will include: Direct to the consumer Retailers (travel agents) Wholesalers Tourist Information Centres Electronic distribution 3
4 Promotion or Selling Promotion represents all of the communications and means of letting people know about your business. Promotion includes: Advertising Public relations Publicity Direct marketing Online (Website) and E-Marketing Trade and Consumer shows Word of mouth Advertising A promotional mix specifies how much attention to pay to each subcategory and how much money to budget for each item. A promotional plan can have a wide range of objectives, including: sales increases, new product acceptance, positioning or competitive retaliation. Promotion can be through brochures, trade displays or editorial in print media such as magazines generated from familiarisation visits. Make the most of cost-effective promotional opportunities such as public relations, word of mouth and web and e- marketing. Even the most appealing product requires some form of promotion in order to maximise sales and financial return. Advertising can help raise awareness of a product and create an appealing product image. Advertising covers any communication that is paid for, from cinema commercials, radio and Internet adverts through to print media, television and billboards. It can reach a large audience at once and the same message can be repeated many times. Creating the right message The advertisement should convey the following important information to the potential customer: Introduce a particular product/service Explain the product or service Demonstrate its unique selling points Provide an indication of price Indicate where the product is available/ distributed for sale Advertising in the tourism industry Advertising in the tourism industry is somewhat different to other industries. A holiday is an intangible product that the consumer can t see or touch before they buy. Often the customer will pay for the product before experiencing it. 4
5 With this in mind, advertising priorities should consider: Who would find your product most appealing? What are the potential customers needs and desires? What creative methods can be utilised to generate interest in a particular product? What is the best way to reach these customers? Methods of Advertising Leaflets/Flyers Either distributed by hand, in letterboxes or inserted in publications Print advertising Placed in local, regional or national newspapers, ethnic publications, trade and tourist magazines, journals or newsletters and magazines relevant to your target market. Canvassing By way of sales visits/sales calls Radio Advertising Placed locally or regionally Wholesaler Programs Promotional costs for such programs are shared and therefore less expensive. They can also reach a wider audience. Sponsorship Consider sponsoring local community events which attract large crowds and significant media coverage. Participating in such events can improve business exposure. Listings and displays Includes advertisements in telephone or business directories and cinema advertising Cooperative Advertising Cooperative advertising and promotion with your local, regional or industry association will help your message get wider distribution and because there are more businesses involved it will also cost less. For more information regarding Tourism Victoria s Cooperative Marketing Opportunities, click here: E-Marketing Tourism Victoria, in partnership with other state tourism organisations through the Australian Tourism Data Warehouse (ATDW), has produced a series of online marketing tutorials for tourism operators. The Online Marketing E-kit covers everything from the basics of developing a good web site to advanced topics like search engine marketing and online product. To download the free e-kit, click here: 5
6 Brochures Brochures are an important means of conveying your image and message to potential customers. Brochures need to be easy to read with an eye-catching heading, a simple message, and easy-to-read print. There are some basic decisions that need to be made early in the brochure production process. e.g: What do you want your brochure to do? Who is the brochure aimed at? What size/style should it be? What is your budget? How many do I need? Your brochure should be consistent with other brochures in the industry. These are usually either A4 in size (210mm x 297mm) or DL (210mm x 100mm). Both these sizes fit standard size envelopes. What to include in a Brochure Be sure that you include: Tour details - the number of days, departure dates, the itinerary, departure or pick-up points, start and finish times Booking conditions Contact details for bookings (phone/fax numbers, and web addresses) Validity dates of the brochure Tariffs or tours prices - this section should include discounts for pensioners, students, etc. and list what is and is not included in the price Alternative booking agencies Room on the back of the brochure for a travel agents stamp (if you are distributing to retail outlets) A map is useful, particularly if you are intending to promote your product overseas or interstate. Maps should show the location of your product in relation to Victoria or Australia. When drafting the copy (or words) of your brochure make sure you do not include any unacceptable (illegal) clauses or misleading information. There has been an increase in the number of legal actions bought against operators for loss of enjoyment or deceptive and misleading advertising. It is essential to honestly represent your product/service in promotional material. If in doubt, seek legal advice. The impact of your brochure will be dependent on effective distribution. You must consider who you want to distribute your brochure to and have a system in place to update stocks as required. 6
7 Brochure Distribution Potential distribution points include: Personal delivery to other attractions and facilities Display at your own facility, information centres and accommodation facilities Availability at transport terminals including airport, rail and coach operations Inclusion in local/regional information kits Direct mail to former and potential customers, related government departments and travel media Handouts at seminars, conferences and official functions Appropriate travel shows, caravan and camping shows, specialist markets i.e. farmers markets etc Visitor Centres PR/Media Price You have just completed your marketing plan and one of your aims is to achieve positive media coverage in the next 12 months. How do you achieve publicity? What do you need to do for media to take note of your business/product/service? Tourism Victoria provides a Media Guide geared to help you understand what the media is, how it works and how you can better promote your product, service or event through a variety of media channels. For a copy of Tourism Victoria s Working With The Media - A Practical Media Guide, click here: To be successful in the marketplace, a product must be priced accurately and competitively. This requires a clear understanding of the individual costs of all product components and their impact on total product price. Factors Influencing Pricing Seasonality: Fluctuations in business between high and low seasons. Operating costs: Includes general overheads, promotion and labour costs which can vary, depending on business peaks and troughs. Competition: This influences the maximum price for which a product can be sold. Demand: Generated by existing and potential customers. 7
8 Important points to consider when setting your prices are: The total costs involved in getting the product or service to the market Required profit margins Price sensitivity of target markets Commission levels and other distribution costs Allowance for any taxes that are applicable The research and statistical information that is available Competitor analysis and competitive advantage Market and image perception of the product and the region The image of the business The perceived value of the product The quality of the product Distribution Channels Expanding the number of distribution channels selling a product can improve sales and profitability. Establishing a business link with sales intermediaries does involve some costs. These costs are commonly known as commission and are classified as a distribution cost. Who s who in the distribution process? Retailer / Travel Agent Either based in Australia or overseas and commonly known as a retail travel agent. Wholesaler Either based in Australia or overseas, wholesalers provide retailers with travel packages comprising of two or more products supplied by different operators. Inbound Tour Operator Based in Australia and responsible for booking the ground arrangements on behalf of an international wholesaler. Pricing products with commissions Each distribution channel receives a level of commission which is generally a standard rate. These commissions should be added to the nett rate to create a retail price. Distribution channel commission International or domestic retailers who sell directly to a customer: 10% International or domestic wholesalers who sell to retailers, who then sell to a customer: 20% Inbound tour operators who sell to wholesalers, who then sell to retailers, who then sell to a customer: 25-30% 8
9 Commission Breakdown Traveller / Consumer Retailer / Travel Agent 10% Wholesaler 10-15% Inbound Tour Operator (ITO) 5-10% Product / You Dynamic Pricing Dynamic pricing is a popular method of pricing in the tourist industry. Higher prices are charged during the peak season, or during special-event periods. In the off-season, hotels may charge only the operating costs of the establishment, whereas investments and any profit are gained during the high season. Varying Levels of Dynamic Pricing Special Event Surcharges Seasonal Rates Day of the week variations Re-negotiations based on demand Surcharges for Ad Hoc groups + FIT on constrained days (above allocation) Packaging In order to sell your product it must be easy to buy. Packaging can improve business and provide travellers with well-priced, attractive and convenient holiday options. A package combines two or more products so that the purchaser is advantaged compared with buying the items separately. Core holiday components-transport, accommodation, meals, attractions, entertainment-can be carefully combined into a complete packaged experience that provides the customer with convenience or a more competitive price. 9
10 Partnerships Develop relationships with the organisations that promote your product - the local tourist association, tourist information centres, RACV and Tourism Victoria. Tourism Associations promote cooperation, successful partnerships and the exchange of industry experience. Policy, planning and tourism development enquiries can be directed to Victoria s Regional Tourism Associations. For a complete list of Victoria s Regional Tourism Associations please visit the ARTN website: Accreditation Awards Accreditation is a set of industry standards established by the tourism industry to provide a model for better business practice and customer service. In other words, accreditation provides business operators with a guide or outline of industry requirements to help them plan, develop, improve and document their business practices and procedures. Tourism Accreditation Board of Victoria Inc The Tourism Accreditation Board of Victoria Inc (TABV) administers the accreditation program in Victoria. TABV contact details: Address: Level 2, 10 Queen Street, Melbourne, VIC 3000 Phone: (03) info@tourismaccreditationvic.com.au Website: Victorian Tourism Awards The Victorian Tourism Awards recognise and reward excellence across all sectors of the tourism and hospitality industry. The recognition and rewarding of quality and innovative businesses translates into a number of competitive advantages and benefits. For more information on the Victorian Tourism Awards and other Tourism Awards, click here: Grants/Funding If you are you looking for financial support, advice, or education and training programs to help improve your business, the Victorian and Federal Government can assist with a range of funding and support services for all aspects of business from research and development to management and export. 10
11 For more information on Grants and Funding Opportunities, click here: Visit Victoria Website Sign up and list your business on Victoria s official consumer website, one of the leading state tourism websites in Australia. Create your own listing, complete with images, a full description, facilities, rates and maps that can be updated at any time. Tourism Victoria also offers businesses a personalised web address. Star Ratings To register or edit your listing go to: AAA Tourism, on behalf of Australia s Auto Clubs, manages the renowned STAR Rating Scheme for the Australian accommodation industry. In addition, AAA Tourism manages Australia s most comprehensive accommodation database and is the major publisher of online content and travel guides, available through the Auto Club websites, retail network and other selected outlets. For more information, visit Conferences, Forums & Workshops The Annual Victorian Tourism Conference The Annual Victorian Tourism Conference gathers together tourism industry professionals to discuss issues at the forefront of the industry, strengthen networks and learn skills to create a more sustainable and professional tourism industry. For more information, visit Starting up in Tourism Workshop Tourism Alliance Victoria, Small Business Victoria, Tourism Victoria and the OAMPS Group, have combined their expertise and resources to develop an introduction into the tourism industry for new operators. Its intention is to provide a strategic insight across a range of essential business practices and improve overall business acumen and planning. For more information, visit 11
12 Tourism Victoria's Tourism Marketing Masterclass Tourism Victoria's Tourism Marketing Masterclass is an innovative forum designed to provide you with updates and insights on what marketing is happening in the industry. Come to the Tourism Marketing Masterclass to find out what you need to know about reaching your target and prospective domestic audiences, and how to achieve better results from your marketing efforts. For further information, click here: Further Information and Assistance Victorian Business Centres Victorian Business Centres offer business start-up information and referral services. They also have expert counsellors who can assist in the development of a business plan and marketing plan. Find your nearest Victorian Business Centre at Business Victoria Business Victoria is a comprehensive online resource designed to help you start, run and grow your business. Visit: Tourism Victoria: Marketing Opportunities Guide Tourism Victoria s Marketing Opportunities Guide outlines marketing activities available to regional campaign committees, local and regional tourism associations, industry sector groups and individual business owners. The guide also provides key industry contact details. Find a copy of the Marketing Opportunities Guide (405 kb) here: This fact sheet is part of a series prepared by Tourism Victoria to support the development of a professional and sustainable Victorian tourism industry. The information contained in this publication is provided for general guidance only. Tourism Victoria have applied due diligence in producing the material contained in this fact sheet and does not make any representations or warranties (expressed or implied) as to the accuracy, currency or authenticity of the information. Tourism Victoria does not accept any liability or responsibility in the event of any person being subjected to legal proceedings for any failure of any statutory or other duty under any Act or Award, whether or not such proceedings arise directly or indirectly from any material contained in this fact sheet. Tourism Victoria
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