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Destination Marketing

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Introduction

The purpose of this report is to investigate the chosen country destination Philippines analysing current Marketing Plan and available and relevant statistical data about the current marketing strategy.

Philippines are located in the western Pacific; it consists of more than 7,100 islands and is part of the Malay Archipelago. Most of the territory is occupied by two large islands of Luzon and Mindanao.

Official government organisation that is responsible for implementation, monitoring and development of the tourism industry in Philippines is Department of Tourism and Philippine Tourism Authority is subordinated authority to the above mentioned.

Destination marketing policy developed by these organizations and described in the National Tourism Development Plan 2011-2016 has the following purposes:

  • strategic analysis and policy resources area to identify opportunities and the role of tourism in shaping the overall sustainable development of the region, including the possible economic impact of tourism, social, environmental, etc.
  • analysis of the tourist resources of the territory and analysis of the expectations of the main actors destination marketing - government, business, local residents.
  • identify the most attractive territory of the tourist market segments, analyzing their needs, expectations, motivation;
  • development of an integrated product destination, the corresponding expectations of the target segments of tourists;
  • creating new and improving existing tourist attractions destination;
  • develop and implement a set of destination promotion;
  • development and management of brand and image of destination;
  • establishing and maintaining strategic partnership of government, business and local residents for the successful development of the destination;
  • increased attractiveness of investments and sales in the destination of investment projects in tourism and hospitality.

Statistical review on tourist arrivals

It was established in 1973 as the main government agency that is responsible for the promoting, encouragement and development of tourism with the aim to improve the social-economic situation due to foreign currency inflow and creation of the additional working places. All goals mentioned are aimed at providing guarantees of the safety, convenience, comfortable and unforgettable travel of foreign and local visitors in the Philippines. 

Philippine Tourism Authority is a reporting to Department of Tourism organization whose responsibilities include the development of the tourism infrastructure in Philippines.

Long-term marketing strategy for the destination is described in details in Formulation of the Philippine National Tourism Development Plan 2011-2016. As pointed by Holloway (2004) marketing plan with its long-term perspectives is an efficient tool for the evaluating where the destination is now, what opportunities should be developed to keep a competitive advantage in the constantly changing tourism environment. The weaknesses and consequently the area for operational tasks of the National Tourism Development Plan are defined as follows:

  • inability of the first line and second line airports to satisfy the growing demand in international tourism;
  • connection between air, sea and road infrastructure and transportation needs to be improved;
  • water, power, sanitation and solid waste management should be improved;

77 tourist development areas (TDA) that exists or are in a rapid developmental phase are identified and further are divided into 21 thematic Cluster Destinations and three main regions that combined these destinations Northern, Central and Southern Philippines.

Regarding the visitors statistics, it should be mentioned that top 12 markets according to the statistical data presented at the official web site of Department of Tourism in 2011 year are the following:

  1. Korea 925,204 arrivals (23.62%)
  2. USA 624,527 arrivals (15.94%)
  3. Japan 375,496 arrivals ( 9.59%)
  4. China 243,137 arrivals (6.21%)
  5. Taiwan 181,738 arrivals (4.64%)
  6. Australia 170,736 arrivals (4.36%)
  7. Singapore 137,802 arrivals (3.52%)
  8. Canada 117,423 arrivals (3.00%)
  9. Hong Kong 112,106 arrivals (2.86%)
  10. United Kingdom 104,466 arrivals (2.67%)
  11. Malaysia 91,752 arrivals (2.34%)
  12. Germany 61,193 arrivals (1.56%)

Regarding others contributors to the tourism development in Philippines, Australia demonstrates 92,648 arrivals, Singapore 73,015 arrivals, Canada 65,503 arrivals, Hong Kong 57,790 arrivals and United Kingdom 57,181 arrivals.  Opportunity markets include Russia with 42.92%, Saudi Arabia with 18.94%, Germany with 12.61% and Malaysia with 11.96%.

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Comparing to 2010 the growth in international arrivals accounts for 11.1% that is 3.9 million arrivals. This figure is optimistic comparing to the data of 3.0 million arrivals in 2009 having the main reason of global economic crisis and recession. Summarizing the statistical data on average growth rate it should be mentioned that in the period between 2001 and 2011 it varies in the 7.0% area. More than a half (65%) of all international tourists came to Philippines on holiday and leisure, stayed an average of 8.21 nights and spent an average of US$ 83.59 per day in 2010.

The income on tourism between 2001 and 2010 depends greatly on the top 3 markets of South Korea, the USA and Japan. They make a sum of approximately 50% of the total arrivals. Next is China and Australia, followed by the Singapore and Malaysia (10% of growth rates). The most stable markets with moderate arrivals growth are USA and Australia.

Main Purposes of arrivals were holiday, business, visit friends and relatives. Top destinations are: Metro Manila, Boracay Island, Zambales, Camarines Sur, Bohol, Davao City, Negros Oriental, Cagayan Valley, Puerto Prinsesa City, Baguio City, Ilocos Norte, Camiguin Island, Cebu. Regarding the domestic tourism average length of stay is approximately 4.0 nights. The sum of Php 8,356.75 is spent on average per four trips. Visiting friends and relatives takes the lion's share (41.7%), vacation possesses the second place (26.8%), business goes third (7.7%), following by study, attending the meetings and exhibitions, health events and others. Tourism direct gross value added accounts for Php 518,465 million or 5.8% of GDP. Tourism industry gives the working places for 3.647 million persons that accounts for 10.1% of total employment figure (National Tourism Development Plan 2011-2016).

Philippine target markets and motivations of visitors destination’s choice

According to the Philippine National Tourism Development Plan 2011-2016 priority target markets the destination is addressing are key markets that have more than 200,000 arrivals p.a. and are either growing or stable. They are South Korea, USA, Japan, and China.

The Plan also identifies the strategic markets as having arrivals data near 100,000-200,000 arrivals p.a. and fast growing (+10% per year). They are Singapore, Malaysia, Canada, Hong Kong, Taiwan, Australia and United Kingdom.

Moreover the Plan describes “niche markets with small existing share of Philippine tourism (less than 100,000 arrivals p.a.) but have niches or segments with the scale and potential to grow quickly such as India, Scandinavia, Russia, Germany and the Middle East” (p.11).

The Philippines destination  selected target markets based on statistical data and on the understanding the motivations of their target markets with the help of dividing the products that the destination is proposed into three broad categories, such as key products, strategic products and opportunity products.

Key products described in Philippine National Tourism Development Plan 2011-2016 deliver higher growth rates, assure higher level of stay length and expenditure level are nature-based tourism, sun and beach tourism, and cultural tourism products. They target Europe, North America and Middle East markets, Australia and some niche segments in the regional markets.

Moreover it is specified in the Plan that strategic products that can attract large regional markets with such statistical data as moderate length of stay and expenditure are business meetings and events conducting, entertainment and shopping complexes, health and wellness, and cruise tourism products. They target the regional markets especially South Korea, China, Japan, India, Taiwan, Malaysia, and Australia.

Opportunity products characterized by future essential growth with long average length of stay and expenditure combine nautical, educational, and retirement products. Europe, Middle East and North America, Australia and segments in the regional markets are target markets for such niche products. 

When deciding what destination to choose the consumers travel to the official site of Department of tourism Philippines and evaluate such existing, promoting and marketing capacities of the Philippines’ tourism resources as:

  • nature-based tourism;
  • cultural tourism products;
  • sun and beach tourism; meetings and  leisure; entertainment and shopping complexes; diving and marine sports, products;

It is pointed in the National Tourism Development Plan 2011-2016 that “nature-based tourism and cultural tourism products able to deliver higher growth, higher lengths of stay and expenditure, and benefits that will appeal to long haul markets in Europe, Middle East and North America, and selected markets such as Australia and niche segments in the regional markets” (National Tourism Development Plan 2011-2016, p.11). 

Visitors satisfaction assessment and internal marketing concept

Importance-performance analysis is used to identify the level of tourists’ satisfaction (Pike 2004). Firstly a list of the most characteristic features of the services is developed. It is created on the basis of the review of assessment experts, focus group interviews with consumers, etc. the most critical characteristics (attributes) of the services are identified. Further a short questionnaire for the tourists is developed. First, tourists are asked to rate on a scale to them the importance of the attributes of each attribute. Next, consumers are asked whether they were satisfied with each of those same attributes. This survey is carried out in the local destinations with the reporting to the Philippine Tourism Authority and consequently to the Department of Tourism organization.

Raising the question of internal marketing it should be pointed that internal marketing is a recent approach and implies systematic optimization of the processes occurring within the company regarding specific employees’ management. Thus, internal marketing implies that the relationship between the company and its employees are based on the same type as the relations of the company and its customers: the company offers a "product" - a specific job that involves certain responsibilities and rights, and employee "acquires" this product paying for it with his employment. In this case, the basis of traditional marketing - focus on the customer and their needs - is complemented by a focus on the employee as an "internal" consumer. Internal marketing aims to provide a high quality product at all stages of production and sales, because it increases the motivation of employees, if they are satisfied with the conditions of work, pay, conditions and atmosphere in the team (Enright & Newton 2004). As stated in the National Tourism Development Plan 2011-2016 one of the main tasks for the government is to improve tourism industry manpower capabilities in the form of internal marketing procedures implementation with the aim to develop a competent, motivated tourism workforce showing high productivity. This will involve: providing decent level of pay, building skills training assessment centers; made the amendments to the labor code, restructuring the system of service charge distribution, providing professional tourism training and education in the form of participating in ASEAN initiatives.

Competitive advantages of Philippines

According to the United Nations World Tourism Association, in 2010 the Philippines represent 1.7 percent of all tourist arrivals in the fast growing Asia Pacific region, and a near 1.1 percent of total revenues concerning international tourism figures.  As pointed in the research China is a leader in the region (27.3 percent), but the Philippines also loses the competitive positions in comparison with Malaysia (12.1 percent of Asia Pacific’s international tourist arrivals), Thailand (7.8 percent), Singapore (4.5 percent).

Taking into consideration the above mentioned data I have chosen Malaysia, Thailand and Singapore as the 3 main competitive destinations to Philippines.  Applying the destination competitiveness model proposed by Crouch and Ritchie (Hsu, Killion, Brown, Gross & Huang 2008) the Philippines shows such comparative advantages as a tourist destination as:

  • more attractive but underdeveloped natural resources;
  • famous hosting culture;
  • public sector investment in infrastructure;
  • positioning as a new pristine destination in Asian markets.
  • positioning as a destination to English-speaking markets.
  • large domestic tourism market with a great growth potential.

Comparing Philippines with some of its main competitors in the ASEAN Region—Thailand, Singapore and Malaysia the main disadvantages are low and unsystematic tourism development; underdeveloped air, ground transport infrastructure together with tourism infrastructure; and the low promoting the natural and cultural heritage assets. New developed marketing plan aims to set more prioritization to tourism development.  These tourism industry weaknesses are a central concern for the National Tourism Development Plan.

Conclusion

Philippines are positioned as “the fun destination” in Southeast Asia targeting its potential markets with Picturesque beaches, world-class landscapes, opportunities of new adventures, positive hosting culture, enchanting history and lots of unexplored territory.

The Philippine government in face of Department of tourism prioritizes the following goals for 2016 pointed in its National Tourism Development Plan for 2011-2016:

  • 10 million tourists in international scale (potential 10% of all arrivals to Southeast Asia) with an average stay of 9.2 nights and spending of Php 4,383 per day;
  • 35.5 million domestic tourists (4.4 nights  average stay length; Php 11,167 average expenditure for four trips). 

To reach this figures Philippine Department of tourism must address all its efforts on the eliminating the existing internal weaknesses:

  • low level of destination competitiveness due to insufficient international airport infrastructure, air services, and hotel rooms capacities;
  • low level of service standards;
  • poor safety and security level of existing destinations;
  • low workforce skills and productivity level due to inadequate funding and education.

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