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Teaching the Teacher: A Closer Look at Destination Marketing
By Donald F. Holecek, Director of the MSU Tourism Resource Center and Editor-in-Chief of Michigan Tourism Business
Over the holidays, I spent some time reading the answers to a set of questions submitted by Kudzayi Maumbe (a foreign student from Zimbabwe) that constituted her Ph.D. comprehensive examination. The questions were developed by myself, Dr. Chris Vogt, and Dr. Bonnie Knutson (a faculty member in the Hospitality Business School). A comprehensive examination is administered to our Ph.D. candidates to assess their readiness to enter the final stage of their doctoral studies, preparation of a defensible dissertation. While Ms. Maumbe’s responses to her questions demonstrate that she is well prepared to begin her dissertation research, they also provided the stimulus for this editorial, which will focus on destination marketing.
Ms. Maumbe’s comprehensive examination included four questions of which three dealt with her program emphasis on tourism marketing. The essence of these questions was:
- Discuss the evolution of destination marketing theory.
- Evaluate a recent journal article (Weilbacker 2003) in which the author claims that advertisers have largely ignored psychological research from the last 30-40 years concerning how consumers make their purchase decisions.
- Explain how a tourism business or destination marketing organization should determine the size of its promotion budget and how it should be allocated.
What I realized after reading what Ms. Maumbe had written was that she had captured the essentials needed to effectively market a tourism business or destination. She had reduced the thousands of pages that have been written on this subject to a mere 20-25 pages, which I will further synthesize herein.
Let’s begin by considering the evolution of the focus of tourism marketing. The focus on marketing in general as well as destination marketing has evolved through these stages:
- Build it, and they will come – product focus
- Build it and sell it, and they will come – sales focus
- Determine customer’s needs, build it, and they will come – customer focus
But, the evolution from product to customer focus is far from being complete across Michigan’s tourism industry, and it is unlikely that it will ever be complete, since each year brings with it a new cadre of tourism marketers who have yet to grasp the importance of being customer focused. Those who choose to ignore the history of marketing or those who are not aware of it will be inclined to advocate for the next Auto World (product focus) or to join those who believe that their destination is a “best kept secret” that can be sold to the masses via an expanded sales campaign. When they perchance align with customer needs, either a product or sales driven marketing strategy will be effective. This tends to slow evolution of the learning process for those who have been lucky enough to have applied wrong marketing strategy with positive results. The history of marketing teaches that a customer focused marketing strategy out-performs all other approaches.
The article reviewed by Ms. Maumbe addresses prevailing wisdom about how advertising works to stimulate sales. Common knowledge suggests the decision process is linear beginning with generating Attention, which leads to Interest, which produces Desire, which results in Action (purchase). This model, commonly labeled AIDA, would suggest that advertising that generates attention (think of those you’ve seen during a Super Bowl) could be deemed effective, which explains why advertising awareness measures are the dominate objective standard for evaluating advertising. But, psychological research has amply documented that the consumer decision-making process is not as the simple the AIDA model suggests. The primary fault found with the AIDA model is that it ignores the importance of prior purchase behavior and information accumulated from other sources (i.e., inputs from friends and relatives) in how individuals do, or do not, process advertising. Individuals use advertising messages very selectively. They tend to confine their list of purchase options to only a select few, generally “brands” they have purchased before that have satisfied their needs. The central theme of this article is that effective advertising is that which can penetrate the targeted customer’s accumulated information set for the product type (i.e., travel destinations) being promoted, convince customers to add a new brand to their short list of options, and ultimately to choose that brand over other options on this list. Obviously, one must possess considerable knowledge about prospective customers to frame advertising messages that will influence their purchase behavior, which implies a far greater investment in research to acquire this knowledge than is the norm for most tourism businesses and destination marketing organizations.
Many readers at this point are probably thinking that this is interesting “theory,” but it has little practical importance to me since I can’t afford to spend money on customer research. While I think the knowledge needed can be acquired for less that you might expect, there are other implications imbedded in this treatise on how advertising works that can be exploited that do not require a major investment in research. These include:
- Recognizing that as consumers are most likely to purchase familiar brands, a significant proportion of one’s advertising budget should be allocated to past customers. They are inclined to be repeat visitors, so communicate with them. Invite them back, but it is also important to remind them of the “fun” they had on prior visits. Post-purchase advertising has been found to be critical to re-enforcing positive perceptions of past-purchase behavior, which in turn greatly increases the probability of purchasing that brand in the future.
- Recognizing that changing people’s behavior is a daunting challenge implies that one must choose precise advertising targets and develop advertising strategies that fit these targets specific needs. Generic one-size-fits-all marketing strategies simply don’t carry power to alter consumer behavior, especially with respect to leisure travel choices. Claiming a place on consumers’ short lists of travel destinations will be expensive, but, once this is accomplished, the tendency of such consumers to become repeat customers makes the investment in target marketing a better option than mass marketing.
- Recognizing that customers return to brands with which they are familiar and that have delivered satisfactory results in the past strongly supports the importance of providing quality product and service to customers. In fact, delivering quality service is the foundation for any destination marketing strategy. Not only will quality service maintain your destination on an individual’s short list of future places to visit, it insures that this customer will become part of your advertising team via positive recommendations to friends and relatives. Word of mouth remains the most powerful form of travel advertising, and it comes without spending a nickel on paid advertising. There is also an often-overlooked opportunity here for destination marketing organizations. Producing satisfied customers is an essential part of any destination’s overall advertising strategy, which, with few exceptions (e.g., a full service resort) can’t be accomplished by an individual business. Hence, it is appropriate for DMOs to direct their attention and financial resources toward projects that build customer satisfaction – such as community-wide hospitality training programs.
Having established that marketing should have a customer focus and having explored how consumers make their purchase decisions, I will turn to the last question Ms. Maumbe addressed, how to determine how much to spend on advertising and how it should be allocated. The theoretical basis for answering this question is simple; one should invest in advertising up to the level that such investment yields an acceptable (always greater than zero) rate of return (ROI). What is an acceptable rate of return depends upon factors ranging from the rate at which one can borrow money to what alternative investment options will yield. It will also vary by the nature of the organization involved. For example, a minimum ROI for a DMO could be a yield of a dollar in room assessment per dollar invested in advertising. The point here is not what one should choose as an acceptable measure of ROI, rather it is that ROI is the proven vehicle for determining both how much to spend on advertising and what forms and amounts of advertising should be purchased.
Although most DMOs and individual businesses would ascribe to the ROI approach to investing in advertising, it is rarely put into practice. Why? Possibly because developing ROI on advertising requires investing in research and evaluation. Such investment reduces the amount available to purchase paid advertising. Many feel that they are better served by spending more dollars on paid advertising and less on research. They often receive at least moral support for their position from advertising professionals with whom they associate whose backgrounds are long on the creative side and short on the research/science side of advertising.
The reluctance of many tourism businesses and DMOs to apply ROI analysis to their advertising is difficult for me to understand. I have been in attendance at countless meetings where the topic has been on how to grow an organization’s advertising budget or how to allocate what is available by media type, geographical area, etc. One after another, participants rise to state his/her case for one or another option, but specific ROI measures are rarely mentioned, probably because the investments needed to derive them haven’t been made.
In conclusion, with competition for the traveler’s dollar increasing and advertising budgets shrinking, I feel that it is timely to adopt a customer focused and objective research-based approach to tourism advertising. Such an approach would:
- Yield a greater return per dollar invested in advertising.
- Provide an objective basis for determining how much to spend on advertising and how to allocate what is available.
- Provide an objective basis for assessing performance of marketing staff and advertising agencies.
- Reduce the time all of you devote to debating how to best spend advertising dollars. The end result would be shorter meetings or more time for debating issues that proven research methods cannot resolve.
Happy New Year!
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