Travel and Tourism (9395) | Defining the tourism market – market research and analysis

Welcome to Destination Marketing: Market Research & Analysis (Topic 6.1)

Hello! This chapter is your absolute foundation for successful destination marketing. Think of a destination like a huge, complex product. Before you sell it, you need to know who wants it, why they want it, and what the competition is offering.
If you skip this step, you might try selling snow holidays in the Sahara!
This section explains the vital tools destinations use to understand their customers and the complex global market. Let's dive in!

Quick Review: Why Research Matters for Destinations

The tourism industry is intensely competitive. Destinations must stand out. To do this, they need data to:

• Identify profitable customer groups.
• Understand changing trends (e.g., the rise of sustainable travel).
• Position their destination uniquely against rivals.

(a) Aims of Market Research and Market Analysis

Market research is the process of collecting and recording information about customers, competitors, and the market. The ultimate goal is to reduce the risk of making bad marketing decisions.

The key aims are to identify:

• The Market: Who are the potential visitors? Where are they coming from (generating areas)?
• Customer Needs and Wants: What experiences, facilities, or services do they expect? (e.g., a family needs kid-friendly activities; an older couple might need accessibility).
• Travel Trends and Customer Behaviours: Are people booking online more? Are they choosing short-haul or long-haul? Is demand for ecotourism increasing?
• Customer Preferences for Destinations: Why do they choose *Bali* over *Thailand*? What features appeal most? (e.g., weather, safety, price).
• Popularity of Destinations: Monitoring visitor numbers and satisfaction levels.
• Competition amongst Destinations: Identifying direct rivals and what makes them successful.
• Stage on the Butler 'Destination Life Cycle' (DLC) model:

Understanding the Butler Destination Life Cycle (DLC)

The DLC model helps destinations understand where they are in their development, which impacts their marketing needs.

The Stages:

1. Exploration: Very few tourists, highly authentic experience. (Marketing needs to be very targeted, focusing on adventure seekers.)
2. Involvement: Locals start providing basic services; visitor numbers increase.
3. Development: External companies invest; major infrastructure built; mass market starts arriving. (Marketing shifts to broad appeal.)
4. Consolidation: Growth slows; tourism is now a major employer. The destination is well-established.
5. Stagnation: Peak numbers reached; facilities may be ageing; destination image is old or negative. (Urgent need for research to identify new markets/products.)
6. Decline: Visitor numbers drop dramatically, leading to job losses. OR
7. Rejuvenation: New investment, new attractions, and a new image revive the destination. (Needs major rebranding based on new market research.)

Key Takeaway (Aims): Market research is about knowing your customers and knowing your competition, so you know where you stand (literally, on the DLC model!).

(b) Market Research: Advantages, Disadvantages, and Reliability

There are four main ways destinations collect data. You need to know the difference between them.

1. Primary Research (Field Research)

This is new data collected directly from the source for a specific purpose.

• Examples: Surveys of visitors at an airport, mystery shoppers checking hotel service, focus groups discussing a new logo, observed interactions (e.g., DMO staff counting tourists).

Advantages: The data is specific, up-to-date, and relevant to the destination’s exact needs.
Disadvantages: Expensive, time-consuming, and potentially biased (e.g., if the survey is only done on sunny days).

2. Secondary Research (Desk Research)

This is existing data that has already been collected by someone else for another purpose.

• Examples: Government tourism statistics, UNWTO reports, competitor annual reports, academic studies, analysis of website traffic (hits).

Advantages: Cheap and quick to access. Provides wide-ranging, historical trend data.
Disadvantages: May be outdated, may not be exactly specific to the destination's needs, and the reliability/accuracy may be hard to verify.

3. Quantitative Research (Quantity = Numbers)

Focuses on collecting numerical data that can be measured and analysed statistically.

• Examples: Number of tourists (arrival numbers), average length of stay, visitor spend, percentage of people booking online.

Reliability: High reliability and easy to compare (e.g., comparing arrival numbers year-on-year).

4. Qualitative Research (Quality = Feelings/Reasons)

Focuses on collecting non-numerical data to understand customer motivations, attitudes, and opinions (the "why" and "how").

• Examples: Open-ended questions in surveys ("What did you dislike most about your stay?"), focus group discussions, in-depth interviews.

Reliability: Lower reliability, as it is subjective and harder to measure, but provides crucial insight into customer behaviour.

Key Takeaway (Methods): Destinations use a mix of all four types of research to get both the facts (Quantitative/Secondary) and the reasons (Qualitative/Primary).

(c) Market Analysis Tools and Techniques

Once data is collected, destinations use specific analysis tools to make sense of the results and plan strategy.

1. Statistical Analysis of Travel Trends

This involves using the quantitative data gathered (e.g., from Secondary research) to forecast future demand, spot changes in spending habits, and see where the market is moving.

2. Analysis of Strengths, Weaknesses, Opportunities and Threats (SWOT)

The SWOT analysis is an internal and external assessment tool used to identify key factors influencing the destination's success.

• Internal Factors (things the destination can control):
  • Strengths: Positive features (e.g., unique natural attractions, excellent airport capacity).
  • Weaknesses: Negative features (e.g., poor infrastructure, limited accommodation options, lack of trained staff).
• External Factors (things the destination *cannot* control):
  • Opportunities: Favourable trends to exploit (e.g., a rise in a new market, competitor destinations facing political instability).
  • Threats: Unfavourable external risks (e.g., new visa restrictions by a major generating country, climate change impacting beaches, a global pandemic).

3. Analysis of External PESTLE Influence

PESTLE analysis is vital for understanding the broader environment in which the destination operates. These are external macro-environmental factors.

• P - Political: Government policies, stability, border controls, tourism taxes. (Example: A sudden change in government may lead to new investment or new travel restrictions.)
• E - Economic: Disposable income levels, currency exchange rates, inflation, local wages. (Example: If the currency of the source market is weak, travel to your destination becomes more expensive for them.)
• S - Social: Age profiles, family structures, attitudes towards tourism/sustainability, cultural norms. (Example: An ageing population in key generating markets means destinations need to focus on accessibility.)
• T - Technological: Online booking systems, use of social media for promotion, infrastructure (like fast Wi-Fi). (Example: Destinations must maintain an engaging website or risk being ignored.)
• L - Legal: Health and safety laws, employment regulations, environmental protection laws. (Example: Strict new building regulations might slow development.)
• E - Environmental: Climate change, pollution levels, natural disasters, sustainable practices required. (Example: Venice implementing day-visitor taxes to protect the environment.)

Key Takeaway (Tools): SWOT helps us look inwards and outwards immediately, while PESTLE ensures we consider the massive external forces shaping the global tourism industry.

(d) Market Segmentation (Target Customers)

A destination cannot effectively market to *everyone*. Market segmentation is the process of dividing the total market into smaller groups of customers with similar needs, characteristics, or behaviours.

The idea is simple: if you segment, you can create a highly targeted marketing message that is much more effective than a generic one.

Types of Market Segmentation:

1. By Travel Motivation: Why are they travelling?
   • Examples: Leisure (sun and beach), MICE (Meetings, Incentives, Conferences, Exhibitions), VFR (Visiting Friends and Relatives), Adventure, Health and Wellness.
2. Demographic Segmentation: Based on measurable, statistical characteristics of the population.
   • Examples: Age (millennials, retirees), Gender, Income (high-end luxury, budget travellers), Family Status (couples, families with young children).
3. Psychographic Segmentation: Based on lifestyle, personality, values, interests, and attitudes.
   • Examples: "Eco-conscious travellers," "Thrill-seekers," "Culture Vultures," "Cruisers." (This tells you what motivates their choices.)
4. Geographic Segmentation: Based on where the customer lives.
   • Examples: Customers from North America, visitors from Europe, local regional tourists. (This affects language, cultural sensitivity, and travel time.)

Did you know? Psychographic segmentation is often the hardest but most valuable, as it helps destinations craft the emotional appeal of their brand.

Key Takeaway (Segmentation): Destinations must segment their market to ensure their marketing budget is focused on the most profitable and suitable customer groups.

(e) Visitor Profiling

Once a destination has segmented the market (e.g., targeting "Budget-conscious young couples from Germany"), Visitor Profiling involves gathering specific data about the behaviour of that segment.

Profiling helps DMOs know *how* best to serve and communicate with their target visitors.

• Length of Stay: Are they staying for a weekend (short-haul) or two weeks (long-haul)? (Impacts accommodation needs.)
• Accommodation Preference: Do they prefer large hotels, boutique Airbnb, or camping?
• Spending Power: How much money do they typically spend on accommodation, food, and activities? (Crucial for economic planning.)
• Choice of Products and Activities: Are they interested in heritage sites, nightlife, or hiking? (Dictates what attractions should be promoted.)
• Media Type (Targeted Advertising Methods): Which channels do they use? (Social media, traditional TV, travel blogs?)
• Booking Method: Do they use a traditional travel agent, a tour operator, or online direct booking? (Determines the 'Place' aspect of the marketing mix.)

Key Takeaway (Profiling): Profiling takes the general segment and gives it specific habits and characteristics, allowing for hyper-focused marketing.

(f) Product Positioning and the USP

Product Positioning is how a destination is perceived by its target market relative to its competitors. It’s not just what you *say* you are, but what the visitor *thinks* you are.

1. Visitor Perceptions of Destination through Image/Reputation:

   The destination's reputation (good or bad) is built over time through media, word-of-mouth, and actual customer experience. Market research aims to measure this perception. (Example: Is the destination seen as luxurious, cheap, unsafe, or adventurous?)

2. Relationship of Destination to Competitors through Differentiation Strategies:

   How are you different? Destinations must clearly show how they offer something unique or better than their rivals. This leads to the most important concept in positioning: the USP.

3. The importance of a Unique Selling Point (USP):

   The USP is the one unique aspect or feature that sets the destination apart from all competitors. It must be something that matters to the customer and cannot be easily copied.

   • Example: If many places have beaches, "We have great beaches" is not a USP. A USP might be: "We have the highest density of protected nesting sea turtles in the Caribbean."
4. Communication and presentation of clear and attractive destination image/reputation:

   The marketing campaign must consistently communicate the chosen position and USP using attractive imagery and clear messaging.

Key Takeaway (Positioning): Positioning is about identity. Find your USP and shout about it clearly and consistently so customers see you as different and better than the competition.

(g) Review the Marketing Mix (The 4 Ps)

The Marketing Mix is a set of controllable tactical marketing tools that the DMO uses to produce the response it wants in the target market. For destinations, we focus on the traditional 4 Ps: Product, Price, Place, and Promotion.

1. Product (What the Destination Offers)

For a destination, the "product" is the *entire experience*. It includes attractions (built and natural), accommodation, catering, transport, customer service, and the atmosphere.

• Review Focus: Is the current product suitable for the target segment? Does it need regeneration or development (DLC stage)?

2. Price (Approaches and Strategies)

This relates to the cost of using the products and services (e.g., hotel rates, attraction entrance fees, flight costs). Pricing must reflect the destination's positioning (e.g., a luxury destination must maintain high prices).

• Strategies: Discounts for off-peak travel, inclusive package deals, premium pricing for specialised products (e.g., exclusive eco-tours).

3. Place (Distribution Channels)

Place refers to how the customer accesses the destination and its products. This is the distribution network.

• Review Focus: How can we make the destination accessible? (Online travel agents, direct-to-consumer websites, traditional tour operators, physical travel agents.)
• Destinations must choose the channels that best reach their targeted visitor profile (e).

4. Promotion (Raising Awareness)

Promotion involves using a range of methods to raise awareness and persuade customers to visit the destination.

• Methods: Advertising (online and traditional), social media campaigns, public relations (PR), sales promotions, familiarisation trips for travel agents/influencers, signage.