Tourism Marketing - Tourism: Principles, Practices, Philosophies - page 426

Penetration Pricing

The opposite approach to price skimming is market penetration, in which the seller attempts to
establish the price of the product as low as possible to penetrate the market as completely as
possible. A low pricemakes the product available to as many income levels as possible, and the sellers
are likely to establish a largemarket share quickly. When penetration pricing is used, this introductory
price tends to become the permanent price of the product. It results in a slower recovery of xed costs
and requires a greater volume to break even. The factors that would recommend a penetration-
pricing approach would be: (1) high price elasticity, (2) large savings from high-volume production
(economies of scale), and (3) an easy fit of the product into consumer purchasing patterns.
When Motel 6 was launched, the firm used a penetration approach, and it continues to use the
low-price model.

Place (Distribution)

Another dif cult decision for the marketing manager concerns what distribution channel or channels
will be used. The distribution decisions affect the other elements of the marketing mix, and in the best
marketing mix all aspects will be compatible with one another. Chapter 7 contains a description of the
travel distribution system. The Internet is becoming the primary channel through which the travel
industry engages the consumer. There is a move away from the traditional distribution channels to the
Internet.
Channels of distribution

are selected by: (1) analyzing the product; (2) determining the nature
and extent of the market; (3) analyzing the channels by sales, costs, and pro ts; (4) determining the
cooperation you can expect from the channel; (5) determining the assistance you will have to give to
the channel; and (6) determining the outlets to be used. For example, if you want intensive
distribution, exposing your product to maximum sale, you will use many travel agents. In contrast,
with an exclusive distribution policy, you would sell your product yourself or through one or a few
agents who would have the sole right to sell your product or service in a given area.

Promotion

The aim of promotion activities is to create demand for a product or service. is a broad

term that includes advertising, personal selling, public relations, publicity, and sales promotion
activities such as familiarization tours, giveaways, trade shows, point of purchase, and store displays.
To sell the product, it is necessary to: (1) attract attention, (2) create interest, (3) create a desire,
and (4) get action. Either personal selling or advertising can carry out all of these steps in the selling
process; however, the two used together tend to be more powerful. Advertising is ideally suited to
attract attention and create interest in the products and services. Personal selling is best suited to
creating desire and conviction on the part of the customer and to closing the sale. Advertising and
personal selling are even more effective when supplemented by publicity and sales promotion
activities. Familiarization tours (or famtours, as they are commonly called) are a form of promotion of
particular importance in the travel industry. Travel agents, tour operators, and other persons who
in uence travel decisions are invited on a famtour in order to become more knowledgeable about the
destination.

Promotion

Advertising

Advertising has been de ned as any nonpersonal presentation of goods, ideas, or services by an

identi ed sponsor. In travel marketing, these paid public messages are designed to describe or
present a destination area in such a way as to attract consumers. This can be done through the use