The Branding of Tourist Destinations

Theoretical and Empirical Insights

Mark Anthony Camilleri

• Publisher: Emerald Publishing Limited
• Year: 2018
• Print ISBN: 9781787693746
• eBook ISBN: 9781787693753
• Topic: Business
• Subtopic: Business General
• Index: Business

The marketing of tourist destinations requires continuous strategic planning and decision making. The Branding of Tourist Destinations: Theoretical and Empirical Insights provides researchers and practitioners with an in-depth understanding of different tourism products, marketing strategies and destination branding tactics, as well as useful insights into sustainable and responsible tourism practices.

The authors present contemporary conceptual discussions and empirical studies on several aspects of destination branding that help contextualise the attractiveness of a range of tourist destinations. In particular, they explore how tourism marketers, including destination management organisations (DMOs), formulate strategies and tactics to attract prospective visitors. This book also sheds light on the latest industry developments in travel, tourism, hospitality and events in different contexts around the world, including destinations in Sweden, Portugal, Spain, Italy and Ecuador.

Chapter 1

The Marketing Environment of Tourist Destinations

Mark Anthony Camilleri

Abstract

The tourism marketing environment consists of internal and external forces which could impact the organisations’ performance. To be successful, companies must adapt to ongoing trends and developments in their macro- and micro-environments. When organisations scan their marketing environment, they will be in a position to deal with any possible threats from the market and to capitalise on any available opportunities. Therefore, this chapter explains the external environmental factors of tourist destinations, including political, economic, social and technological influences. It also considers their internal environmental factors, including capital structures, resources, capabilities and marketing intermediaries, as it identifies competitive forces from differentiated or low-cost service providers.

Keywords: Tourism marketing; destination marketing; marketing environment; competitive forces; tourism macro-environment; tourism micro-environments; environmental scanning

Introduction

A sound knowledge of the customer requirements is an essential ingredient for any successful business. For this reason, destination management organisations (DMOs) should consistently monitor their marketing environment. The marketing environment is continuously changing, as it consists of a number of unpredictable forces which surround the company.

As well as conducting a thorough analysis of the actual marketing environment, the tourism businesses must investigate the conditions in which they operate. The regulatory and competitive conditions as well as other market forces, including political, economic, social and technological forces, could affect the organisational performance of the tourism businesses. Hence, this chapter will look into some of these issues. The tourism industry is highly influenced by economic factors, including strong exchange rate fluctuations, the price of oil and other commodities, among other matters. Moreover, social factors including global concerns about safety and security could influence tourist behaviours. Notwithstanding, the regulatory environments will also have an impact on tourism and airline businesses (Belobaba, Odoni, & Barnhart, 2015). For instance, the airline industry’s deregulation and liberalisation has created numerous opportunities for many airlines, including low-cost carriers (LCCs). At the same time, it has threatened inefficient airlines that have been protected by regulation.

Undoubtedly, competition is a vitally important element in the marketing environment and it should not be underestimated. The businesses competitors comprise suppliers of substitute products. They may be new entrants in the marketplace. Alternatively, they may include customers and suppliers who were stakeholders of the business. In this light, tourism marketers, including DMOs should be knowledgeable of different business models as competition can take different forms, like for example, differentiated, full-service companies or low-cost service providers. For these reasons, organisations should have effective mechanisms to monitor the latest developments in the marketing environment.

Environmental Scanning

Environmental scanning entails the collection of information relating to the various forces within the marketing environment. This involves the observation and examination of primary and secondary sources of information, including online content from business, trade, media and the government, among others. The environmental analysis is the process of assessing and interpreting the information gathered. An ongoing analysis of the gathered data may be carried out by marketing managers or by researchers who have been commissioned to conduct market research. Through analysis, marketing managers can attempt to identify extant environmental patterns and could even predict future trends. By evaluating trends and tendencies, the marketing managers should be able to determine possible threats and opportunities that are associated with environmental fluctuations. When discussing the ‘marketing environment’ we must consider both the external environment (i.e. the macro-environment) as well as the internal environment (i.e. the micro-environment) (Kotler, Armstrong, Frank, & Bunn, 1990).

The Macro-Environment

The tourism businesses must constantly assess the marketing environment. It is crucial for their survival and achievement of their long-term economic goals. Therefore, marketing managers must engage in environmental scanning and analysis. Most firms are comfortable assessing the political climates in their home countries. However, the evaluation of political climates in foreign territories is far more problematic for them. Experienced international businesses engage in political risk assessment, as they need to carry out ongoing systematic analyses of the political risks they face in foreign countries. Political risks are any changes in the political environment that may adversely affect the value of any firm’s business activities. Most political risks may result from governmental actions, such as the passage of laws that expropriate private property, an increase in operating costs, the devaluation of the currency or constraints in the repatriation of funds, among others. Political risks may also arise from non-governmental actions when there is criminality (e.g. kidnappings, extortion and acts of terrorism, etc.). Political risks may equally affect all firms or may have an impact on particular sectors, as featured in Table 1.1. Non-governmental political risks should also be considered. For example, Disneyland Paris and McDonalds have been the target of numerous symbolic protests by French farmers, who view them as a convenient target for venting their unhappiness with US international agricultural policies. In some instances, protests could turn violent and may even force firms to shut down their operations, in particular contexts.

Table 1.1: Typical Examples of Political Risks.

Type	Impact on Firms
Expropriation	Loss of future profits
Confiscation	Loss of assets and loss of profits
Campaigns against businesses	Loss of sales, increased costs of public relation and efforts to improve public image
Mandatory labour benefits legislation	Increased operating costs
Kidnappings, terrorist threats and other forms of violence	Increased security costs, increased managerial costs and lower productivity
Civil wars	Destruction of property, lost sales and increased security costs
Inflation	Higher operating costs
Repatriation	Inability to transfer funds freely
Currency devaluations	Reduced value of repatriated earnings
Increased taxation	Lower after-tax profits

Source: Adapted from Camilleri (2018a).

International corporations who intend to invest in different markets should consider asking these simple questions: is the host country business-friendly? Is its government a democracy or a dictatorship? Is the authoritative power concentrated in the hands of one person or on one political party? Does the country rely on the free market or on governmental controls to allocate resources? How much of a contribution is the private sector expected to make in helping the government achieve its overall economic objectives? Does the government view foreign firms as a means of promoting or hindering its economic goals? When making changes in its policies, does the government act arbitrarily, or does it rely on the rule of law? How stable is the existing government? If it leaves office, are there going to be any drastic changes in the economic policies of the new government? Firms should always contemplate (research) these issues before entering into a new market. They should be knowledgeable about the host country’s political and economic structures, in order to minimise uncertainty and unnecessary risks. Appendix provides a good background on the aviation industry’s regulatory environment.

A political, economic, social and technological (PEST) analysis provides a useful framework to analyse macro-environmental factors. The businesses should carefully analyse these issues before considering their expansion in a different country through foreign direct investment.

Political, Legal and Regulatory Issues

The political analysis relates to how governments influence the companies’ strategy and operations. The political environment encompasses laws, government agencies and pressure groups which could have an effect on tourism organisations and entrepreneurs. Such factors include national politics on financial matters, including foreign debt, rates of inflation (i.e. increase in prices) and recession; policies and regulatory legislation on reciprocal trade and foreign investment; travel restrictions, the governments’ tourism policies; as well as ecological considerations, among other issues.

Political, legal and regulatory issues can affect the viability of tourism firms. Therefore, any prospective changes in the governments’ priorities (e.g. public spending) or a change in government can lead to the opening-up or the closing of markets. The business activity tends to grow and thrive when a nation is politically stable. National governments and their legal systems could facilitate or hinder businesses, in many areas. Therefore, any political changes are closely related with the legal and economic matters (e.g. employment laws, minimum wage laws, health and safety laws, zoning regulations, environmental protection laws, consumer protection laws, tax laws, etc.). For instance, new European Union regulations have led to greater levels of competition in European aviation. However, many stakeholders are concerned about the environmental impact from airlines.

Many nations are increasingly encouraging free trade by inviting firms to invest in their country, while allowing their domestic firms to engage in overseas business. These nations may decide not to impose conditions on imports, or they would not discriminate against foreign-based firms. On the other hand, there are other governments who may oppose free trade. The most common form of trade restrictions is the tariff (i.e. a tax that is placed on imported goods). Tariffs or levies are usually established to protect domestic manufacturers against competitors by raising the prices of imported goods. Multinational firms may face the risk of expropriation. This happens when the government will take ownership of land, buildings and/or other fixed assets; sometimes, without compensating the rightful owners for their loss. When there is the risk of expropriation, multinational firms will be at the mercy of foreign administrations. Unstable governments may have the authority to change their laws and regulations at any point in time, to meet their needs.

Very often, the best sources of information are their own employees. Whether they are citizens of the business’ home country or of their host country, employees possess first-hand knowledge of the local issues, and are a valuable source of risk information. The views of local staff should be supplemented with the views from outsiders. The government, embassy officials, international chambers and industry associations are often rich sources of information. Many governments will usually signal their economic and political agendas during their political campaigns before being elected in parliament. Once in office, several governments continue to provide useful information about their current and future plans. Moreover, numerous consulting firms specialise in political risk assessment. Their role is to assist those firms who are considering foreign direct investment, those who would like to penetrate into a particular market. To reduce the risk of foreign operations, many developed countries have created government-owned or government-sponsored organisations which insure firms against political risks. For instance, the Overseas Private Investment Corporation insures US overseas investments against nationalisation. The Multilateral Investment Guarantee Agency, a subsidiary of the World Bank, provides similar insurance against political risks. Private insurance firms such as Lloyds of London also underwrite political risk insurance.

The Economic Issues

The economic analysis will involve an examination of the foreign countries’ monetary, fiscal and economic policies. The factors affecting consumer purchasing and spending patterns include wealth per capita, discretionary income, industrial development, currency restrictions, balance of payments, leave of imports/exports, fluctuations in interest and foreign exchange rates, among other issues. The ...

Table of contents

• Cover
• Title
• Chapter 1 The Marketing Environment of Tourist Destinations
• Chapter 2 Branding Places and Tourist Destinations: A Conceptualisation and Review
• Chapter 3 A Stakeholder Approach for Destination Management Organisations
• Chapter 4 The Destination Branding through Multisensory Experiences: Case Studies from Sweden
• Chapter 5 The Development of the Agritourism Sector in Campania, Italy
• Chapter 6 Using the Destination’s Heritage, Language, Lifestyle and ‘Made in Italy’ As a Tourism Development Model
• Chapter 7 The Consumer-Based Brand Equity of Music Events: Two Case Studies from Portugal
• Chapter 8 Branding Porto: A Case Study of the ‘Essence of Wine’
• Chapter 9 Oleotourism Development in Jaén, Spain
• Chapter 10 The Hotel Managers’ Attitudes Towards Environmental Responsibility. An Empirical Study from Ecuador
• Chapter 11 The Moderating Effect of Perceived Value on the Relationship between Country Image and Destination Brand Extension in Alanya, Turkey
• Chapter 12 Exploring Customers’ Attitudes Towards the Hospitality Brands in India: A Social Identity Perspective
• Index