Chapter 13 Place: Distribution Channel and the Travel Trade

Chapter Objectives
1. What are the different kinds of marketing channels. 2. Distribution Channel in Tourism and Hospitality Industry.
a. Define the terms of distribution mix and travel trade. b. List the major travel trade intermediaries. c. List steps involved in marketing to the travel trade.

Objective 1
1. What are the different kinds of marketing channels?

What is a Marketing Channel??

A Marketing Channel is a network of all parties involved in moving products or services from producers to consumers or business customers. A Marketing Channel is the structure linking a group of individuals or organizations through which product or service is made available to the consumer or industrial user.

Marketing Channels
Wholesalers Retailer
Marketing Channel

Agent

Channel Structure for Consumer Goods

1
Producer Consumer

Producer

Retailer

Consumer

Producer

Wholesaler

Retailer

Consumer

Producer

Agent

Retailer

Consumer

1. Producer-Consumer (direct supply channel)

Manufacturers

Customers

The manufacturer and consumer deal directly with each other. E.g. Factory shop, pick-your-own fruit farm and door-to-door selling.

2. Product-Retailer-Consumer (Short Channel)

Manufacturers

Retailer

Customers

Very popular foe larger retailers because they can buy in large quantities, obtaining a special price (by negotiating the prices) and delivery arrangements.

3. Producer-wholesaler-retailer-consumer (Long channel)

4. Producer-agent-wholesaler-retailer-consumer
Producer Agent Retailer Consumer

The longest and most indirect channel. This model is widely used by small organizations who trying to sell their products in remote markets or when the manufacturer is trying to enter to unknown expert market. Manufacturer chose the agent who have local knowledge, contact and expertise in selling into the country. Agent gets commission from manufacturer. The problems of this channel is manufacturer have to trust the quality of the agents know ledge, commitment and selling ability.

Objective 2 Distribution Channel for Tourism and Hospitality Industry

Distribution Mix and the Travel Trade

Distribution Mix is the combination of the
direct and indirect distribution channels a hospitality and travel organization uses to reserve and deliver its service to customers.

 Direct Distribution = when the organize assumes

total responsibility for promoting, reserving, and providing service to customers (Not working with travel trade intermediaries).

Indirect Distribution = when other organization

or other companies are responsible for promoting, reserving and providing service to customers (working with travel trade intermediaries/third party intermediaries).

Indirect Online Distribution Channel = selling

products/service through the Internet.
E.g. Agoda.com, Booking.com, Expedia.com

The Hospitality and Travel Distribution System

Individual and Group Customers

Convention/ Meeting planners

Corporate Travel Manager Retail Travel Agent

Incentive Travel Planners

Tour Wholesalers

Carriers, Suppliers, Destination Marketing Organizations Lodging Restaurant/Food Service Airline/rail/bus/ferry Cruise Line Rental Car Attractions Casino DMO

Specific Roles and benefits of Travel Trade Intermediaries for tourism and Hospitality Industry
1.) Retailing the services suppliers, careiers, DMOs at location convenient for travelers. 2.) Expanding the distribution network for tourism and hospitality products. 3.) Providing specialized, knowledgeable advice to travelers on destinations, prices, facilities, schedules, and services. 4.) Assembling vacation. Holiday packages by bringing together an array destination and the services of suppliers and carriers at all inclusive price. 5.) Organizing and coordinating convention, conferences, and meeting for associations, corporations, and other organization. 6.) Operating and guiding group tour.

Individual Travel Trade Intermediaries

Retail travel agents Tour wholesalers and operators Corporate travel managers and agencies Incentive travel planners Convention/meeting planners Online Travel Companies

Retail travel agents

Selling the products/services from suppliers carriers and other travel trade intermediaries in the form of commission.
Customers are charged charged in form of Service fees.
Hotel booking, Airline/Cruise/Bus tickets, Traveler cheque

Tour wholesalers and Tour operators

(1)

Who negotiate price and block the space with supplier and carriers and markup to all elements to determine an all-inclusive price. They bought product in bulk or bulk buying and resold to customers through retail agency.

A tour Operator = Tour Wholesaler!!!? Inbound Tour Operator specialize in providing local service to other tour operators in specific nation or destination.

Tour wholesalers and Tour operators

Negotiate booking, fares, rate with carriers/suppliers

(2)

Establish tour/ package price, print brochures and give to

travel agencies

Update information in website

Printed online material

(advertisements)

Remark!!: Wholesalers also a Trade Advertising

Corporate Travel Managers and Agencies

A individual departments, divisions, or even managers that is responsible for booking their own flights, rooms, and rental cars
Monitor and analyze travel expenditure at a company wide-level. Set, communicate, enforce, and adjust travel policy. Negotiate corporate travel contracts and discount Create strategic meeting management programs (SMMPs). Mandate an online system

Incentive travel planners

Incentive travel is a motivation tool for
companies/organization by rewarding employees, dealers, and other who meet or exceed objective, increase production, increase sell, and enhancing morale and goodwill. Incentive Travel Planner are specialized tour wholesalers.
They tailor-made package (transportation, accommodations, meals, etc.) They negotiate price/block space with carrier and suppliers and mark-up commission (planning service fees).

Convention/meeting planners
Convention and Meeting = MICE (Meeting,
incentives, Conventions, and Exhibitions).

Convention/Meeting Planner plans and coordinates

their organizations external meeting event. Work for associations, corporations, large non-profit organizations, government agencies, and educational institutions.

Online Travel Companies

Benefit of the online travel companies. Ability to self-book travel online. Assistance in planning travel trip. Online pricing comparisons. Convenience of accessing travel information. Immediate confirmation of travel booking. Instant access to travel information Potential of securing lover prices on hospitality and travel services.

Marketing to Travel Trade (A three-step Process)

Research and Select Trade Segment

Decide on the positioning approach and marketing objective

Establish a promotional mix for travel intermediaries

1. Research and Select Trade Segment

1. Key Feeder and market areas - Cities or Regions. 2. Major corporate travel and convention/meeting accounts. 3. Tour wholesalers and incentive travel planners

2. Decide on the positioning approach and marketing objective

Positioning approach
Establish a distinctive image or position in travel trade.

Marketing objective.
5% increase in the number of travellers.

3. Establish a promotional mix for travel intermediaries

(1)Trade Advertising. (2) Directories and Computerized Databased. (3) Personal and Telephone Selling. (4) Trade Sale Promotion.
a. b. c. d. Familiarization Trip or Farms. Contest, Sweepstakes, and Incentive Programs. Specialty Advertising Giveaways. Trade Shows.

3. Establish a promotional mix for travel intermediaries

(5) Merchandising and Brochures. (6) Public Relation and Publicity. (7) Cooperative Marketing (Partnership). (8) Website Access.

Thank you for your attention!! Questions?