Tag Archives: eMarketing

The Travel Products’ Price Determinants

This is an excerpt from my latest tourism textbook, entitled; ‘Travel Marketing, Tourism Economics and the Airline Product’. This publication will be available through Springer and Amazon.com.

Price Determinants
The type of pricing strategy which marketing managers consider is determined by a number of factors, including: organisatonal and marketing objectives; types of pricing objectives; cost levels; other marketing mix variables; market demand; competition, and legal and regulatory issues, among other matters.

Organisational and Marketing Objectives

Company policy and image, target profit margins and staff count could influence the type of pricing policy which the marketing managers will apply. Company policy and image will play an important role when determining a pricing strategy. The price set must be consistent with the general corporate objectives and the strategic direction of the company. For example, a full-service airline may want to be associated with the top-end of the market by providing a high-quality service to the business travel segment. To price below the average rate for such a service may imply an inferior and poor-quality service.

Any airline which would like to target the business market should provide an extensive schedule and a high-quality service. Therefore, it will require considerable resources and capabilities to do so.

Pricing Objectives

The most fundamental pricing objective is that of survival pricing. When experiencing severe competition, businesses may be forced to offer lower prices than their rivals. This way they will generate revenue, and improve their chances of survival. A tourism service or sub-product will not generate revenue if it is not used over a given period of time (it will perish) . While the service or sub-products may be available for sale at some later point in time, the revenue that was originally lost, can never be regained. For example, a hotel had thirty empty rooms on a specific date. These empty rooms cannot be sold at a later date because the service has been completed, and perished. Similarly, an airline could depart with empty seats which cannot be sold at a later date.

Moreover, the demand for tourism products is usually seasonal. For example, many north Americans flee south to Hawaii and to the Caribbean, during the winter months; whilst Australasians travel to Europe during the summer months of June, July and August. Of course, seasonality may be due to other factors, other than climate, including; vacation and holiday periods. For example, families may habitually travel at the same time of the year, usually over Christmas, Easter or summer periods. This is the usual close-down time period for schools, industry and commerce, in many countries. Since tourism is highly seasonal, suppliers may reduce their prices during off-peak times. Hence, a low price strategy assists in creating demand particularly among price-sensitive customers. Conversely, operators may charge higher prices when there are peaks in demand, due to major attractions and special events.

Profit maximisation is another pricing objective. However, it may prove difficult to measure, as businesses could not be in a position to determine when they have reached maximum profit. As a result, profit maximisation may be evaluated according to a certain ‘level of satisfaction’. A change in profit relative to previous periods may be considered as satisfactory or unsatisfactory for the businesses. The setting of prices to obtain a fixed rate of return on a company’s investment is a profit-related objective. Many businesses could be aiming to achieve a specific profit.

Another possible pricing objective is that of increasing market share. Many companies may design pricing policies which will enable them to improve their market share. However, at times, they may be satisfied with their current status in the market. In this case, their objective would be to retain their status quo. Companies with such an objective may not use pricing as a competitive tool. They will probably maintain a steady market share by nurturing their brand equity.

Cost Levels

The marketing managers should be careful to analyse all costs so that they will be included in the total cost. Therefore, the pricing of products should be based on the company’s direct and indirect costs (and may consider overhead expenses) if they are projecting a certain profitability margin.

Other Marketing Mix Variables

The marketing mix elements, including; promotions (the integrated marketing communication mix) and place (distribution channels), could determine the target customers’ perceptions of the firms’ products (or services), in a given competitive context.

The extent to which a product is promoted can have a huge effect on consumer demand. The products’ price will usually determine their target market. Low-priced products may attract price-sensitive markets. Such products will be promoted through different marketing communications channels other than high-priced, better quality, premium services. The more expensive the products; the higher the customers’ expectations. Considerable thought and action must go into product development so as to provide the customer with a valuable service which reflects the product’s price. One of the most significant promotional tools is word-of-mouth publicity. For instance, online reviews and ratings are increasingly playing a major role in tourism marketing.

When making a pricing decision, the businesses should consider their distribution costs. The companies’ intermediaries, including; tour operators, online travel agents, and the like, will expect financial compensation for selling travel products. Alternatively, they will expect discounts and special incentives to push the businesses’ products to consumers. For example, they may book large seat orders and place substantial mark-ups on seats which they have bought from the airline (these products may be demanded for inclusive tours). These factors must always be taken into consideration by the airline marketing managers, as they have to add mark-ups to the cost price of seats, when selling them to intermediaries.

Market Demand

There is a highly segmented market for tourism products. Each of the market segments vary in terms of elasticity, and service requirements. These variables will influence the way in which prices a set.

The business travel segment is generally more inelastic in demand. Fluctuations in prices will not affect demand to any great extent. However, the business travel segment expects a high-quality service. Generally, business travellers are prepared to pay a higher price for such services. The higher fares will not only cover the costs of the superior service, but will also convey an image of a premium, prestige product.

The passengers from the leisure travel segment are usually price-sensitive. Their expectations are somewhat lower than those of the business travellers. Demand is extremely elastic in this segment; and an increase in price may result in lower demand.

The socio-political factors may affect market demand. If a destination is politically or socially unstable, tourists may not want to go there. Most people like to feel safe and comfortable. For instance, many destinations have experienced dramatic reductions in the number of tourist arrivals, following the terrorist activities in certain countries.

Economic factors, including the individuals’ income and well-being, will affect their propensity to travel. However, this may not necessarily translate to an increased demand for all tourism products. For instance, if leisure travellers receive an increase in income, they may decide to travel to long-haul destinations rather than short-haul itineraries. Alternatively, these clients may increase the quality and standard rather than to increase their frequency of travel. Such customers may decide to upgrade their hotel accommodation, or to travel in higher classes. Income may affect demand according to the purpose of travel. For business travellers it may not make much difference, whilst for leisure travellers it can make quite a substantial difference. Their demand may also be influenced by the availability of substitute products. If there are no substitutes for the product, then consumers will be forced to buy regardless of price.

In addition, customers may develop perceptions about tourism products. Whether they are accurate or not, they could influence their purchase behaviours. Therefore the travellers’ perceptions, the online ratings and reviews should be carefully considered, as tourism products must always be purchased in advance.


The businesses should be aware of their competitors’ prices. They may decide to respond to their rivals’ pricing strategies, or to be proactive by taking the pricing initiative, themselves.

Responding to the Competitors’ Pricing Initiatives

There is no rigid method of responding to a price initiative taken by competitors. Every situation is unique. However, businesses are capable of making confident decisions if they examine the situation from different viewpoints:

At times, competitors may decide to lower their prices: It is not wise for other businesses to follow suit, unless they establish why their competitors are pursuing such a pricing strategy. It may be the case that the competitors have made a bad decision. It must be determined whether the competitors’ pricing initiative was a long term or a short term one. For instance, an airline’s poor fleet planning may result in the company changing its prices on a long-term basis. In such situations, rivals will have to respond or risk losing their market share. Price reductions will eventually lead to lower yields for the airline. As a result, this will have a negative impact on the airline and its long-term sustainability prospects. If the pricing initiative appears to be a short-term action, it is advisable to ignore it, and to avoid de-stabilising the market.

The price reductions on certain products may be questioned by the airline’s customers. As discussed above, the airlines may usually charge higher prices for their business and first class as these services are considered as prestige products. The airlines can differentiate themselves from competitors when they provide superior services; that are perceived as an index of quality and corporate image.

On the other hand, the airlines’ should continuously monitor those competitors who are resorting to price-cutting policies. Certain leisure markets may be more price-sensitive than others, as they may exhibit higher price-elasticity levels. The lower prices could result in an increase in demand for the economy class of service.

Taking the Price Initiative

Generally, businesses may avoid lowering their fares, as this will affect their bottom lines. Price wars have destroyed the profitability of many businesses. However, there may be a tendency toward price competition: when firms have low variable costs; when there is little differentiation among the competitors’ products; when industry growth rate is low, and; when the economies of scale are important. The businesses need to consider their cost levels before taking the initiative to lower their prices. The lean businesses who may have less costs, will usually be in a much stronger position to lower their prices than other competitors with high costs. However, more established high-cost businesses may have stable financial backing, which will enable them to meet, if not undercut, the new companies’ prices. They could eventually push their competitors out of the market.

An increase in price may be required if the business is facing controllable or uncontrollable costs. For example, if the airlines’ uncontrollable costs, include; increased airport landing fees and air traffic control charges; they may either decide to absorb these costs or alternatively, they may increase their fares as a means of covering these added costs. Of course, rival airlines will also face the same pressure. In such cases, the airlines could inform their customers about their uncontrollable costs, which have forced them to increase their fares. Ongoing corporate communications and public relations will help them to maintain their customers’ goodwill. On the other hand, the airlines’ controllable costs, including the employees’ salaries and wages, are under their direct responsibility. Such costs may not justify taking pricing initiatives to improve the organisation’s financial performance. They may even aggravate the airline’s profitability, in the long-term.

Legal and Regulatory Issues

Legal and regulatory issues may have an impact on a company’s pricing structure. Although, the airline industry has experienced deregulation and liberalisation in the past decades, there is still some government intervention, in certain areas. In international markets, air service agreements between governments necessitate that national airlines should meet and agree on the fares and rates to be charged to passengers. The agreed fare is brought back to both the airline’s governments who have the right to veto the fare. Should this happen, the airline concerned must seek to re-open negotiation.

Deregulation and liberalisation have affected the airlines’ pricing policies in many contexts. For example, liberalisation has changed the fares regime in the United States of America, in the European Union and in many other places. Today, several airlines have introduced lower fares which have contributed to increased travel. Moreover, the rise of the low-cost carriers has often resulted in lower air fares within pre-agreed zones. Evidently, pricing is increasingly being used as a competitive tool, in many contexts.


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Using Big Data for Customer-Centric Marketing

Big data

The latest advances in information and communications technologies have brought significant improvements for the processing and storage of digital information. Nowadays, users can easily access multiple sources of data that is readily available through websites, social media networks as well as from mobile devices, including smart phones and tablets. These developments have inevitably led to endless opportunities for marketers to leverage themselves by using big data analytics.

Big data has expanded in recent years. As a matter of fact, digital data has dwarfed analogue content and continues to grow at an exponential rate. This data is being collected and stored in massive amounts by search engines and eCommerce conglomerates. In addition, more information is being gathered through social media networks. In fact, all individuals leave a digital trail of data as they move about in the virtual and physical worlds. This phenomenon is called, “data exhaust”. Initially, this term was used to describe how Amazon.com used predictive analytics in order to suggest items for customers. Hence, predictive analytics anticipates human behaviours that have not happened yet. Evidently, it is based on large amounts of current and past indicative data that has been collected from multiple sources. Yet, at the moment, such analytics cannot determine when and why individuals may change their preferences for certain brands. Another new addition to big data is called preventative analytics. This latter one is aimed at reducing the likelihood of contingent situations, risk and uncertainty. It may be particularly relevant in the fields of healthcare, public services and law enforcement.

Data is the new currency for connecting people, ideas and products. Today, digital information is being gathered in innovative, new ways that have dramatically changed and improved consumers’ experience. For instance, online businesses are commonly utilising browser cookies to track websites that are visited by internet users. Once individual users leave these sites, some of the products or services they had viewed; will be shown to them again and again in native advertisements, across different websites. Therefore, businesses are using browsing session data, combined with the consumers’ purchase history to deliver “suitable” items for consumers. Many brands are becoming quite proficient in personalising their offerings – as they collect, classify and use large data volumes on consumers’ behaviours.

This year, more brands shall be using mobile devices and networks to acquire sensory data. As more customers are increasingly carrying smartphones with them, they are (or may be) getting used to receiving compelling offers that instantaneously pop up on their mobile devices. This type of geo-based marketing message is delivered at the right time and the right place. Of course, firms will need more than transaction history and loyalty schemes to be effective at this. They will inevitably require socio-demographic and geo-data that other businesses are not capturing. Moreover, anonymous cookieless data-capture methods are connecting consumer data with matching geo-location-based data. It may appear that these methods are empowering marketers to hyper-target consumers with real-time mobile ad campaigns before, during and after in-store activity. Geo-location capabilities are not only enabling advertisers to capitalise on leads, in real time; but they can also offer valuable insights on shopping habits and consumer behaviours. This information is valuable to brands as they seek to acquire relevant information on their consumers’ digital behaviours and physical movements.

Notwithstanding, businesses have become even more interactive through the proliferation of near-field communication (NFC). Basically, NFCs are embedded chips situated inside smart devices. These chips exchange data with retailers’ items possessing NFC tags. It is envisaged that mobile wallet transactions using this NFC technology are expected to reach $110 billion by 2017 (CNBC, 2013). The latest Android and Microsoft smartphones already include these NFC capabilities. Indeed, these technological developments can enable businesses to provide a deeper personalisation of content as well as bespoken offers to individuals. Consumers use apps that may involuntarily indicate their geo-location to third parties. As a result, data collection has greatly benefited from geo-data services like satellites, near-field communication and global positioning systems. These systems track users’ movements that measure traffic and other real-time phenomena. Arguably, the emergence of such data-driven, digital technologies are adding value to customer-centric marketing endeavours. Unsurprisingly, sensor analytics, geo-location and social data-capture were some of the big trends that were recently announced during the 2015 Consumer Electronics Show.

Big data is fundamentally shifting how marketers collect, analyse and utilise data to reach out to customers. It is helping companies to get new insights into how consumers behave. The challenge for marketers is not to become dependent on big data and analytics to drive business strategies, but rather to recognise its value as a tool for customer satisfaction. Therefore, big data should inform, not consume marketing efforts. Perhaps, new marketing decision-making ought to harness big data for increased targeting and re-targeting of individuals and online communities. Lately, on-demand, real-time marketing has become more personalised. Every customer contact with a brand is a moment of truth, in real-time. Businesses who are not responding with seamless externally-facing solutions will risk losing their loyal customers to rivals.

This contribution suggests that a strategic approach to data management can generate leads and conversions. It also maintains that an evolving digital ecosystem will lead to superior levels of customer service, engagement and repeat business.

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Digital Marketing trends to look out for during 2015


(This contribution also appeared on Business2Community.com)

As 2014 is winding down, it’s time for businesses to start planning their marketing strategy in a business scenario that is continuously changing at the speed of technology. Firms should adapt themselves to the online marketing environment. Many marketers are already chasing their daily meanderings in terms of “likes”, “shares”, “tweets”, click-through rates and ever more immediate metrics. All these interesting developments on internet allow businesses to differentiate themselves to get ahead of their rivals. Smart marketers regularly collect social data to offer more personalised, relevant and wanted content toward customers. Interestingly, 78% of marketers believe that data-driven marketing via digital channels is the path to new growth (American Marketing Association, 2014). In a sense, web 2.0 has helped businesses to share relevant information about their branded products, service features and propositions that may have generated leads and conversions. Nowadays, some of the best businesses are focusing their attention on inbound marketing techniques as they diligently segment their audiences and target them with online advertising through different social platforms:

  1. Social Media Marketing: It is in the businesses’ interest to get to know about the demographic profile of customers. In addition they should be aware of the latest contemporary trends and conversations that are happening on social networks. Businesses ought to present themselves in a way that feels native and endemic to customers. One of the main ways that companies are establishing authority and trust among their consumers is by consistently creating high quality content that may provide useful and interesting insights to audiences. Through integrated marketing communications involving social media channels, companies are steadily building a strong rapport with customers, which will inevitably help them to develop brand equity.
  2. Ad Re-Targeting: Today, businesses use content marketing tactics by producing valuable, engaging content that is designed for specific customers. Content on social media is becoming more conversational in nature. Consumers value those brands that show their human face. They consider them as trustworthy and authentic. Therefore, businesses communicate with their targeted audiences to build fruitful relationships with loyal followers. Several marketers are increasingly becoming quite proficient in re-targeting customers. Retargeting works by utilising browser cookies that track websites that are visited by internet users. Once the users leave these sites, the products or services they viewed will be shown to them again in advertisements, across different websites. Therefore, ad retargeting works to increase the overall conversion rate by reminding consumers of the product or service they had viewed. This keeps the brand and the product at the top of the consumers’ minds. Many studies have indicated that simple exposure to brand names and logos may ultimately lead to purchase decisions. Even if there’s no instantaneous purchase, an increased brand awareness can really pay off in the long run.
  3. Search Engine Optimisation: The goal of Google, Bing and other search engines is to provide their users with the most relevant and highest quality content. It goes without saying that, these days social signals may play a key role in organic search rankings. As more people share content through social media channels, it is very likely that the most popular content will be featured in search engine results. It’s no coincidence that the top-ranking search results tend to have lots of social shares, while those ranked lower have fewer. Moreover, social shares may often serve as a stamp of approval or can be considered as a trust signal for visitors. That’s why so many businesses are installing social share plugins and encouraging consumers to share their content, as much as possible.
  4. Mobile Marketing: We are living in an era that is characterised by mobile readiness, responsive designs as well as the revival of ‘going local,’ Businesses are encouraged to produce content that “scales down” on mobiles. Such content may include marketing emails, eNewsletters, websites, social posts and the like. According to (Forbes, 2013), “87% of connected devices sales by 2017 will be tablets and smartphones”. Whether businesses opt to create an alternative mobile version of a website or decide to utilise responsive web design, it’s important for them to provide a positive experience for those internet users that are browsing via mobile devices.
  5. Video Marketing: When it comes to potential reach, video is peerless. YouTube is currently receiving more than one billion unique visitors every month – that’s more than any other channel, apart from Facebook. For the record, “one out of three Britons view at least one online video a week – that’s a weekly audience of more than 20 million people in the UK alone” (Guardian, 2014). Of course, it’s vital for businesses to offer content that is easy to digest; if not, consumers will simply move on. Apps such as Twitter’s Vine (with its six-second maximum clip length) have dramatically increased the opportunity for businesses to upload social videos having authentic content.

In a nutshell, this contribution suggests that next year many businesses will increasingly resort to digital marketing tactics to reach their individual consumers. eMarketer (2014) anticipates that in the next 12 months,  the marketing budget that is allocated to social media will rise to 13.2% (from 9.4%). It is imperative that marketers learn how to  engage with online visitors through effective, relevant content. Notwithstanding, it may appear that electronic marketing has changed consumers’ mindsets and behavioural attitudes toward businesses. Perhaps, there’s an opportunity for businesses to leverage themselves through faster adaptations, shorter lead times and always-on, real-time marketing.


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A Search Engine Optimization Strategy for Content Marketing Success

This post also appeared on Social Media Today

Internet Marketing

Search engines are continuously collecting data from every web page so that they can better serve their online users. It may appear that they act like librarians who try to find the right book to satisfy their patrons. Evidently, the search engines’ systems are capable of taking a lot of information before they split up the best results for their users. Every search engine has a secret recipe which is called an algorithm. The algorithm turns all the information into useful search results. It goes without saying that the web pages which appear in the first page of search results are placed in a better position than other sites which feature in the latter pages of the same search query. Therefore, certain web sites are ranked higher in search results. Some sites are more popular than others as they are easier located on the web.

Search Engine Optimization (or simply SEO) is the process of getting traffic from the “free,” “organic,” “editorial” or “natural” listings on search engines. All the major search engines including Google, Yahoo and Bing present search results along with links to web pages and other content including videos or local listings. Such content is displayed and ranked according to what the search engine considers the most relevant to its users. Of course, the sites’ content cannot lack proper visibility. Websites cannot afford to become buried in search results. A recent saying among millennials goes; “The best place to hide a dead body is page two of Google’s search results.” There are several key ingredients that site administrators ought to consider as they develop their quality content. Ideally, the content strategy of web sites should resonate with the individual internet users in the following ways:


  1. Keywords Based on Search Intent
    Search results will feature pages with information containing the few words which were inserted by internet browsers in their search query. Therefore, keywords maintain their vital role in optimization. They determine page rank as they drive relevant search traffic. Keywords are still the primary entry method to the search process, whether initiated by conversational or exact match searches. It is very advisable to integrate keywords in URLs, titles, body texts and internal links to align meta-information of content with the search intent.Recently, the release of Google’s Hummingbird algorithm has expanded rank requirements beyond keywords. Although greater emphasis is now placed on conversational search, Hummingbird did not eliminate the need for keyword targeting. Interestingly, this week Google announced its latest update, namely; Panda 4.0. Google maintained that it wants to prevent sites with poor quality content from working their way into its top search results. In other words, Google strives to remain relevant, as it is assuring its users that they will get the answers they are looking for.
  2. Quality Inbound Links for Authority and Discoverability
    Quality inbound links between websites matter. The webpages which link to other sites will often strengthen their URL link for search engines. Quality content will naturally gain quality links. Yet, link-building strategies should never be disregarded. Inbound links continue to influence search rank and visibility. Search engines will always evaluate the authority of inherent, linked content. Therefore, links are one of the best indicators of relevance and credibility. That’s why savvy site developers often keep focusing their attention on gaining quality links through organic, white-hat methods such as reciprocal linking.
  3. Responsive Design for the Mobile User Experience
    As the mobiles’ share of digital traffic continue to rise, content should be optimized for an enhanced mobile users’ experience. Mobile internet has already surpassed desktop traffic. According to a recent comScore survey, mobile devices accounted to no less than 55 percent of all digital site traffic in January 2014. In addition, comScore maintained that 89.4 percent of mobile media users had accessed Google sites via smartphones in January 2014. Consequently, marketers need to optimize their content for mobile search. Key mobile considerations that factor into responsive design may include page load time, content length, voice search behavior, image and video processing as well as formatting and structure. Mobile consumption habits and responsive elements can be at the forefront of web site administrators. It is in their best interest to ensure a fluid content consumption experience across all devices.
  4. Social Sharing Functionality to Enhance Social Signals
    When relevant content is widely shared across different social networks, search engines may respond by identifying and incorporating all social signals in their search results. Strong social engagement often signifies content quality and resonance. Therefore, site developers ought to place social sharing buttons to facilitate their content promotion for further dissemination – through other digital media. The frequency of user updates may also attribute rank value to dynamic data. It is very likely that in the foreseeable future, social actions will gain greater influence. Google’s algorithms are increasingly becoming more sophisticated as they continue to expand to include broader web and social connections.
  5. Authorship Mark-ups for Rank Influence
    Apparently, both Google’s and Bing-Klout’s Authorships have incorporated their users’ social influence and digital presence in their rankings so as to improve the quality of their search results. In a sense, there is an opportunity for web site administrators to pursue engagements with influencers. Previously, the credentials to display author information may have included web signals such as authorship mark-ups and email verifications. The new qualifications now include relevance and engagement levels of content. This latest development reaffirms the tie between high quality content and SEO.

In conclusion, this contribution suggests that the recipe for a good SEO is changing all the time. Content strategists and marketers who care about their e-reputation realize that they have to come up with fresh, engaging content with a growing number of quality links. They have to make sure that their websites offer great content for different search engines. A SEO strategy demands consistent high quality content which is meaningful and purposeful for target audiences.

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