The service sector has several typical characteristics, and the tourism sector also shows some of these. These characteristics determine the industry’s scope and the mix of marketing strategies that can be used to increase sales in the industry.
Many tourism products are intangible. The services related to the tourism industry cannot be seen, touched, or felt. The person can experience the tour or related services but does not get any tangible product in hand. Thus travel products like the flight experience, the cruise experience, or the experience of the view are experiences.
The experience can be remembered and enjoyed again. There are tangible components like the hotel bed and food that are products nit they are part of the experience, and they are not the product that the customers seek but the intangible benefits of pleasure and relaxation, etc., that the customer desires. Even those tangible products that are purchased are essential to gain access to the intangible experiential aspects.
Perishability means that the product’s life has a deadline, and once the deadline passes, the product is unavailable for sale. All tourism products are perishable, like the capacity of hotels, entry to tourism sites, etc. These cannot be stored till the consumer decides. Thus, the travel services need to be consumed as soon as they are produced.
For example, for each flight, there are tickets to seats that the airline has to sell, and the hotel has rooms that need to be rented out every night. Thus tourism services are considered highly perishable. Because the tourist cannot visit the place or stay in the hotel, the opportunity is lost, and the product cannot be stored for the future.
There are several strategies that the industry uses to resolve this issue. One strategy is to overbook. For example, as the airline overbooks the seats for flights anticipating that there will be a certain number of customers that do not board the flight, the overbooking ensures that the flight is fully seated.
Yet another marketing strategy is the setting up of multiple distribution outlets. One example is that flight tickets are available from several sources like an airline office, a tour operator, or even a travel agent. In this way, the perishability of the product reduces. Yet another strategy to encourage consumption is to offer discounts.
The services provided in the tourism industry are intangible and cannot be stored as inventory or stored in any way for future consumption. As explained above, an airline has tickets that need to be sold for every flight, and a hotel has rooms they need to rent for each night. If the airline fails to sell the seats within a particular time, the opportunity to sell the product is lost. The service sector can’t keep inventory like the product-based industry.
The products offered by the tourism industry are not homogeneous. The services provided in the sector are not standardized. Tourism companies have tried to standardize service delivery by training the staff for efficiency and using quality control to maintain and control standards. Still, because of the human element involved, some differences exist. For example, there are certain products like two days and three-night stay package at a hotel – which is standardized, but the experience of the package when it is consumed is different.
Other factors that lead to differences are that for most services, the consumer must have physical interaction with the service producer, and the consumers have different sets of expectations; therefore, the same product is perceived differently by the consumers. Several external factors affect the tourism experience.
The tourism industry is dependent on people’s interactions from booking to accommodation. As mentioned above, there is a high degree of interaction in the industry at different stages of the experience, from booking the ticket to staying at the hotel to going sightseeing, and so on. The tourism industry is very people-oriented, and several service providers have high contact with the consumers. Some service providers provide excellent contact with the consumers and others have poor. That is why the tourism industry is a people-centric industry,
Many tangible products are produced at one place and time and then consumed in another place at another time. But most travel-related products are both made and consumed at the same time and in the same place. For example, a tourist experiences a wildlife safari while the safari is underway.
Thus, in this case, the production and the consumption are simultaneous. Thus, there is a certain level of interdependence between the producers and the consumers; also, the consumers need to come to the producers to consume the product. It is this interaction between the consumers and the producers which shape the consumer experience.
Demand fluctuation is one of the major issues that the tourism industry faces. It is an industry that has to deal with seasonal demand fluctuations. Apart from this, it is also influenced by natural or artificial events (like natural disasters) events (like riots, war, etc.) that can affect demand.
Small Business Industry
The Department of Tourism has reported that about 70% of the businesses in the tourism sector employ less than ten employees making this a classic small business industry. The nature of the business and the ease of entry are the primary reasons why it is a small business industry.
Private Sector Driven
The governments usually run marketing campaigns to build tourist interest in the destination as well as the development of the infrastructure (like roads, airports, management of national parks, etc.) but other than that; there is very little assistance that they provide. So the business owner has to design his own tour packages and conduct the tours themselves; thus, they take care of the business themselves.
Several different services fall under the ambit of the tourism industry. Also, there are a number of different service providers offering different services. Apart from this, for different locations, the services and service providers are also different. Thus making the industry very decentralized with players of all sizes.