Marketing the Competitive Destination

*Tel:#44-207-911-5000: ext 3112; fax:#44-207-911-5171.E-mail address: [email protected] (D. Buhalis)

Tourism Management 21 (2000) 97}116

Marketing the competitive destination of the future

Dr Dimitrios Buhalis*Department of Tourism, University of Westminster, 35 Marylebone Road, London, NW1 5LS, UK

Received 5 January 1999; accepted 21 July 1999

Abstract

Destination marketing is increasingly becoming extremely competitive worldwide. This paper explains the destination concept andattempts to synthesise several models for strategic marketing and management of destinations. It provides an overview of severaltechniques widely used and illustrates examples from around the world. The paper also explains that marketing of destinations shouldbalance the strategic objectives of all stakeholders as well the sustainability of local resources. Destinations need to di!erentiate theirproducts and develop partnerships between the public and private sector locally in order to co-ordinate delivery. Taking advantage ofnew technologies and the Internet also enables destinations to enhance their competitiveness by increasing their visibility, reducingcosts and enhancing local co-operation. Destination marketing must lead to the optimisation of tourism impacts and the achievementof the strategic objectives for all stakeholders. ( 1999 Elsevier Science Ltd. All rights reserved.

1. Introducing destinations and destination marketing

Destination marketing facilitates the achievement oftourism policy, which should be co-ordinated with theregional development strategic plan. Marketing of desti-nations should also guide the tourism impacts optimisa-tion and the maximisation of bene"ts for the region. Inorder to appreciate the complexity of destination market-ing this paper explains the destination concept andattempts to synthesise several models for strategicmarketing and management of destinations.

The analysis illustrates numerous frameworks for thedevelopment of a destination marketing strategy anda comprehensive marketing mix. The paper also illus-trates the relationship between marketing and planningof destinations and their con#icting and symbiotic rela-tionship. This paper is based on research and consul-tancy on destination marketing around the world, whereseveral frameworks have been tested and implemented. Itdiscusses a wide spectrum of destination marketing toolsand provides plentiful references for researchers whowould like to study in-depth each technique. Althoughthe suggestions and conclusions presented here are inevi-tably generalised, destination managers and marketerscan use the suggested methodology in order to develop

and implement their strategic plan and marketing pol-icies. The contribution of the paper is therefore in syn-thesising well-developed techniques and to providea comprehensive framework for destination marketingrather than to introduce original research outcomes.

2. Destination as an amalgam of tourism servicesand experiences

Destinations are amalgams of tourism products, o!er-ing an integrated experience to consumers. Traditionally,destinations are regarded as well-de"ned geographicalareas, such as a country, an island or a town (Hall, 2000;Davidson & Maitland, 1997). However, it is increasinglyrecognised that a destination can also a perceptual con-cept, which can be interpreted subjectively by consumers,depending on their travel itinerary, cultural background,purpose of visit, educational level and past experience.For example, London can be a destination for a Germanbusiness traveller, whilst Europe may be the destinationfor a leisure Japanese tourist who packs six Europeancountries in a two week tour. Some travellers will con-sider a cruise ship to be their destination, while others onthe same cruise may perceive the ports visited during thetrip as their destination. Often destinations are arti"ciallydivided by geographical and political barriers, which failto take into consideration consumer preferences ortourism industry functions. An example of that is the

0261-5177/99/$ - see front matter ( 1999 Elsevier Science Ltd. All rights reserved.PII: S 0 2 6 1 - 5 1 7 7 ( 9 9 ) 0 0 0 9 5 - 3

Table 1Six As framework for the analysis of tourism destinations

Attractions (natural, man-made, arti"cial, purpose built, heritage,special events)

Accessibility (entire transportation system comprising of routes,terminals and vehicles)

Amenities (accommodation and catering facilities, retailing, othertourist services)

Available packages (pre-arranged packages by intermediaries andprincipals)

Activities (all activities available at the destination and what consumerswill do during their visit)

Ancillary services (services used by tourists such as banks, tele-communications, post, newsagents, hospitals, etc.)

Alps shared by France, Austria, Switzerland, Italy byoften perceived and consumed as part of the same prod-uct by skiers. For the purpose of this paper destinationsare considered to be a de"ned geographical region whichis understood by its visitors as a unique entity, witha political and legislative framework for tourism market-ing and planning. This de"nition enables DestinationManagement Organisations (DMOs) to be accountablefor the planning and marketing of the region and to havethe power and resources to undertake action towardsachieving its strategic objectives.

Destinations o!er an amalgam of tourism productsand services, which are consumed under the brand nameof the destination. Leiper (1995, p.87) explains that desti-nations are places towards which people travel andwhere they choose to stay for a while in order to experi-ence certain features or characteristics-a perceived attrac-tion of some sort. Cooper, Fletcher, Gilbert, Shepherdand Wanhill (1998) de"ne destinations as the focus offacilities and services designed to meet the needs of thetourists. Most destinations comprise a core of the follow-ing components, which can be characterised as the six Asframework as illustrated in Table 1. Therefore, a destina-tion can be regarded as a combination (or even asa brand) of all products, services and ultimately experien-ces provided locally. It also enables us to assess theimpact of tourism regionally, as well as manage demandand supply in order to maximise bene"ts for all stake-holders.

Although there is plenty of literature on destinationplanning and development of facilities (Inskeep,1991,1994; Pearce, 1989; Gunn, 1994; Davidson & Mait-land, 1997), there are few textbooks examining destina-tion marketing (Heath & Wall, 1992; Goodall &Ashworth, 1988) and even fewer illustrate destinations asan experience provider for tourists and locals (Ryan,1997,1991a). This is also re#ected in the academic litera-ture published in journals and other scienti"c publica-tions. The inadequacy of destination marketing literatureprobably illustrates the interest of researchers in theimpacts of tourism on destinations. Hence, the manage-

ment and marketing of destinations is often left to indus-try people and consultants and it is not frequentlydiscussed in the literature or in academic debates. Thecompetitive nature of destination marketing also pre-vents involved parties from publishing their strategiesand marketing plans. In addition, there is an apparentdi!erence between the marketing and planning tourismliterature.

Traditionally, marketing concentrates on increasingvisitation and treats tourism like any other commodity.This approach fails to recognise the unique needs andlimitations of each destination as well as their particulargeographical, environmental and socio-cultural charac-teristics. In contrast, planning literature concentratesmore on the impacts of tourism and on limiting tourismdevelopment, often ignoring the market dynamics andthe requirements of entrepreneurs at the destination andthe place of origin (Ryan, 1991b; Burns, 1999). Ryan(1991b) explains that companies and governments haveapplied only part of the marketing mix to tourism (i.e.,promotion), with little attention being paid to the othercomponents of marketing. However, if tourism is to sur-vive by generating satisfaction among interacting touristsand hosts, it must adopt societal marketing strategies.This involves carefully monitoring tourist satisfactionlevels and using these as part of the criteria for success,rather than increasing numbers of tourists; continuallymonitoring host reactions to tourists, for host-touristinteraction is an important component of the touristexperience; and being aware that infrastructure develop-ment of tourism resort areas has implications for thetypes of tourists that will be attracted (Ryan, 1991b).

3. The strategic purpose of destinations and theirmanagement and marketing

Destinations are some of the most di$cult entities tomanage and market, due to the complexity of the rela-tionships of local stakeholders (Sautter & Leisen, 1999).Managing and marketing destinations is also challengingbecause of the variety of stakeholders involved in thedevelopment and production of tourism products. Thedestination experience is essentially comprised of regions,resources and amalgams of tourism facilities and services,which often do not belong to individuals. Instead theyrepresent a collection of both professional and personalinterests of all the people who live and work in the area.Managing often con#icting stakeholders' interests makescontrolling and marketing destinations as a whole ex-tremely challenging. Hence, strategies and actions shouldtake into account the wishes of all stakeholders, namelyindigenous people, businesses and investors, tourists,tour operators and intermediaries, and interest groups.Perhaps, the most di$cult problem is ensuring therational use of zero-priced public goods, such as

98 D. Buhalis / Tourism Management 21 (2000) 97}116

Fig. 1. The dynamic wheel of tourism stakeholders. Source: Adaptedfrom Buhalis and Fletcher (1995).

landscapes, mountains, and the sea for the bene"t of allstakeholders and at the same time preserving the re-sources for future generations. Con#icts can easily devel-op, especially when some (perhaps greedy) stakeholdersexploit resources for short-term bene"ts. A compromiseencompassing all these interests is extremely di$cult ifnot impossible, but is the key to long-term success(Buhalis, 1999a; Buhalis & Fletcher, 1995; Jamal & Getz,1996; Yuksel, Bramwell & Yuksel, 1999; Palmer & Bejou,1995).

And yet tourists perceive the destination as a brandcomprising of a collection of suppliers and services.Before visiting they develop an image about destinationsas well as a set of expectations based on previous experi-ence, word of mouth, press reports, advertising, and com-mon beliefs (Chon, 1991,1992; Baloglu & Brinberg, 1997).During their holiday, they `consumea destinations asa comprehensive experience, without often realising thateach element of the product are produced and managedby individual players. Most service providers are smalland medium-sized tourism enterprises which have a widerange of strengths and weaknesses whilst are also charac-terised by their independent nature (Buhalis & Cooper,1998; Cooper & Buhalis, 1992). Tourists' overall experi-ence is composed of numerous small encounters witha variety of tourism principals, such as taxi drivers, hotel-iers, waiters, as well as with elements of the local attrac-tions such as museums, theatres, beaches, theme parks,etc. Their overall impression develops their image ofa destination after their visitation. As a consequencethere is much overlapping between strategic marketing ofthe destination as a whole and of each individual supplierat the region. Hence, the competitiveness of each player isoften interrelated and almost indistinguishable from oneanother.

As consumers increasingly value environmental re-sources they are prepared to pay for them premiumprices (Pigram, 1996; Archer, 1996; Thomas, 1992; Gar-rod & Willis, 1992; Laarman & Gregersen, 1996). Hence,local resources become a central asset for destinationsand tourism suppliers and their sustainability a corefunction of tourism marketing. Middleton and Hawkins(1998, p. 8) state that à marketing perspective is essen-tially an overall management orientation re#ecting cor-porate attitudes that, in the case of travel and tourism,must balance the interests of shareholders/owners withthe long-run environmental interests of a destination andat the same time meet the demands and expectations ofcustomersa.

DMOs tend to be part of the local, regional or nationalgovernment and have political and legislative power aswell as the "nancial means to manage resources ra-tionally and to ensure that all stakeholders can bene"t inthe long term. Destination management and marketingshould act as tools and facilitators to achieve a complexrange of strategic objectives, which will ultimately need

to satisfy the needs and wants of stakeholders. Four keygeneric strategic objectives should be addressed byDMOs, as illustrated in Table 2. Fig. 1 demonstrates thedynamic wheel of tourism stakeholders. The develop-ment and implementation of strategic objectives at desti-nations depends on relationships between stakeholdersand thus the implementation of the key generic strategicobjectives illustrated in Table 2 will be determined by thedynamics of the actors on this wheel. Naturally, eachstakeholder aims to maximise the bene"ts emerging forthemselves. Inevitably, the interests of some stakeholdersmay be con#icting with others and thus some of the fourkey strategic objectives may be jeopardised. This is oftena result of some stakeholder trying to enhance its bene"tat the expense of others. For example, a tour operatormay try to reduce the prices paid to local suppliers inorder to increase its pro"t margin and remain competi-tive in the marketplace. It is imperative, therefore, forDMOs to use legislative and management tools duringplanning and management of destinations in order toensure that the bene"ts of tourism activity is shared fairlybetween all stakeholders and that sustainable practicessafeguard the regeneration of resources utilised for theproduction of tourism (Buhalis, 1995; Buhalis & Fletcher,1995; Sautter & Leisen, 1999). Failure to ensure andmaintain a balance e!ectively jeopardises relationshipsbetween stakeholders, and threatens the achievement ofthe strategic objectives and the long-term competitive-ness and prosperity of destinations.

Hence, tourism marketing should not only be regardedas a tool for attracting more visitors to a region, as it hasbeen the case for most destinations. Instead, tourism

D. Buhalis / Tourism Management 21 (2000) 97}116 99

Table 2Strategic management and marketing objectives for destinations

Enhance the long-term prosperity of local peopleDelight visitors by maximising their satisfactionMaximise pro"tability of local enterprises and maximise

multiplier e!ectsOptimise tourism impacts by ensuring a sustainable balance between

economic bene"ts and socio-cultural and environmental costs

marketing should operate as a mechanism to facilitateregional development objectives and to rationalise theprovision of tourism in order to ensure that the strategicobjectives of destinations are achieved. Tourism market-ing should also ensure equitable returns-on-resources-utilised for the production and delivery of tourismproducts, as well as the regeneration of these resources. Itshould also provide suitable gains to all stakeholdersinvolved in the tourism system. Hence, marketing shouldbe used as a strategic mechanism in co-ordination withplanning and management rather than a sales tool.

Destinations may also involve de-marketing, i.e., thediscouragement of certain market segments from visitingthe destination during certain periods, through a range ofprohibitive measures or by charging premium prices.Examples of these techniques include:

f visitor management techniques in theme parks whichdivert people from congested attractions to less busyones by using a leading story/attraction;

f towns like Cambridge, which aims to attract onlyvisitors who stay overnight and to discourage excur-sionists who contribute little to the local economy bycontrolling their parking processes;

f Mauritius which provides high-quality resort accom-modation and does not allow charter #ights, thereforepromoting high expenditure tourism; or

f Venice, which deters more visitors by charging pre-mium prices for all services o!ered and recently in-itiated negative advertisement to reduce mass tourism.

In this way marketing is used as a mechanism to achievestrategic objectives of destination regions and thus, shouldbe guided by the policies for regional development.

4. Main markets and destination choice

Understanding destination types and characteristics isof paramount importance for its marketing. Each desti-nation can only match certain types of demand andhence tourism marketers need to appreciate travel mo-tivations in order to develop appropriate o!erings andbrand destinations for the right target markets. In addi-tion, destinations should be aware not only of the needsand wants of the active demand but also of the potential

markets they can attract. It can then develop a productportfolio, which will enable the optimisation of bene"tsand adapt their marketing mix to their target markets(McKercher, 1995; Tribe, 1997). Consumer behaviourstudies indicate that a wide range of criteria is used toselect tourism products. These criteria are altered accord-ing to the purpose and features of the trip, elements of theexternal environment, the characteristics of the travellerand the particularities and attributes of destinations. Sev-eral analysts have examined tourism consumer behaviourin detail (Gilbert, 1991,1993; Swarbrooke & Horner, 1999;Goodall, 1988,1991; Kent, 1991; Mansfeld, 1995; Mayo& Jarvis, 1981; Sirakya, McLellan & Uysal, 1996;Mazanec, 1989; Mazanec & Zins, 1994; Moutinho, 1987;Ryan, 1997; Woodside & Lysonski, 1989).

Classifying travel behaviour and segmentation be-comes increasingly more di$cult as modern travellerscombine pleasure with business, in order to achieve timeand cost advantage. There are therefore endless vari-ations between the two principle classi"cations of travelactivities, i.e. business and leisure trips. However, leisuretrips may include elements, characteristics and motiva-tions of business travel and vice versa. Incentive travel-ling, extended conference stays and business meetingsduring leisure travel makes the distinction between thetwo categories increasingly blurred. Nevertheless, thetwo principle categories are fairly identi"able and theyare treated di!erently in this text for simplifying theconcepts and marketing responses.

Business trips are fairly in#exible and it is often di$cultfor travellers to select their destinations. Business travel,often referred to as meetings}incentives}conferences}ex-hibitions (MICE), is normally determined by businessopportunities and involvement of the traveller with or-ganisations at the destination. Perhaps, more #exibilitycan be exercised by travelers attending optional meet-ings, which provide bene"ts but are not strictly essentialto their business such as conferences, exhibitions, incen-tives, familiarisation trips, etc. (Davidson, 1994). Eventhough business tourism is much more restricted in termsof choice, destinations providing a high-degree of e$-ciency and safety, as well as elegance and leisure oppor-tunities tend to be preferred for conferences and incentivetravel. Business travel is seasonal, as people do not gener-ally travel less during the holiday seasons, i.e., summermonths and public holidays. Nevertheless, businesstourism provide much higher revenue for enterprises asconsumers are willing to pay more for their in#exibleschedules and also destinations can increase their multi-plier e!ects as some particular forms of business tourismuse a much greater spectrum of local services than leisuretourism. Convenient transportation connections withmajor cities around the world, smooth arrangementsat the destination and adequate provision of busi-ness related amenities are therefore very important.Urban destinations in developed countries with strong


Table 3Types of destinations * main target markets and activities undertaken

Type of Destination Customers Activities

Urban Business-MICE Meetings}incentives}conference}exhibitionsEducation}religion}health

Leisure Sightseeing}shopping}shows}short breaksSeaside Business-MICE Meetings}incentives}conference}exhibitions

Leisure Sea}sun}sand}sex}sportsAlpine Business-MICE Meetings}incentives}conference}exhibitions

Leisure Ski}mountain sports}healthRural Business-MICE Meetings}incentives}conference}exhibitions

Leisure Relaxation}agriculture}learning activities}sportsAuthentic third World Business-MICE Exploring business opportunities}incentives

Leisure Adventure}authentic}charities}special interestUnique}exotic}exclusive Business-MICE Meetings}incentives}retreats

Leisure Special occasion}honeymoon}anniversary

economic activity and vibrant markets tend to receive themajority of business tra$c, as a result of the businessmeetings taking place locally. The location of meetingpartners, host organisations, as well as company policymay determine the selection of destinations for businesstravel. In addition, corporate rates, membership ofloyalty clubs (i.e., frequent #yer or frequent guest) as wellas the availability of service providers are some addi-tional criteria used to identify suitable destinations andservice providers for the MICE market (O'Brien, 1998;BTA, 1999; Vlitos-Rowe, 1994).

Leisure travellers, on the other hand, use a much morecomplex set of criteria in selecting their destination. Theyhave a much higher price elasticity and therefore, priceis a key element in the decision making process(Gilbert, 1991,1993; Swarbrooke & Horner, 1999; Good-all, 1988,1991; Mayo & Jarvis, 1981). In addition, leisuretravellers are often time sensitive as families with childrencannot travel during school time, creating the seasonalityproblem for the industry. However, di!erent market seg-ments have dissimilar seasonality patterns. For example,pensioners and elderly people tend to travel during thelow season to bene"t from discounts, whilst Scandina-vian tourists tend to stay home during the summermonths in order to enjoy the whether. School childrenand University students go on "eld research trips orexcursions during the low season. Therefore, destinationshave to identify the seasonality patterns of their variousmarkets and attract compatible segments, which willenable them to maximise their total yield (both averageexpenditure and occupancy levels) (O'Brien, 1996). It isalso important to understand other factors that in#uencethe decision of consumers to purchase. The social statusand peer groups of consumers often in#uence what isacceptable and desirable as a destination. Travel inter-mediaries also play a signi"cant role in determining thedestination decision of consumers by using a wide rangeof promotional techniques and often channelling travel-lers to destinations and principals who o!er higher re-

muneration for them. This will also enable destinationsto manage their resources accordingly and attract theright market segments in order to optimise their impacts.

Nevertheless, for both leisure and business markets,perhaps the most important criterion for selecting to visitor not to visit a destination is its image. Image is the set ofexpectations and perceptions a prospective traveller hasof a destination. Past experience of the destination or thecompanies involved (i.e., airlines, hotels, tour operators);descriptions by friends and relatives; general information;and marketing campaigns develop these expectationsand perception which may be true or imaginary repres-entations. (Baloglu & Brinberg, 1997; Chon, 1991,1992;Chacko, 1997). Interestingly, the sustainability of localresources becomes one of the most important elements ofdestination image, as a growing section of the market isnot prepared to tolerate over-developed tourism destina-tions and diverts to more environmentally advanced re-gions. The degree of consumer satisfaction will dependon the assessment of the perceived overall experience ofthe destination versus anticipated expectations and per-ceptions. Developing the right image for destinations willtherefore determine their ability to satisfy visitors as itwill allow them to develop realistic and ful"l-able expec-tations (Morgan & Pritchard, 1998; Seaton, 1997; Pearce,1997).

5. Types of destinations, target markets and marketingstrategies required

Developing a destination typology is a di$cult task, asdi!erent visitors use destinations for di!erent purposes.Nevertheless, most destinations can be classi"ed in sev-eral categories which represent their principle attractive-ness, as illustrated in Table 3. Understanding andappreciating the type of destination enables marketersto develop a suitable destination marketing mixes anddeliver them to the appropriate target markets.


Urban destinations have been involved in tourism sincethe early years of the civilisation. People used to travel tocities and towns to meet politicians and business associ-ates. Sports organisations, such as the Olympic Games inancient Greece also generated tourism activity in maincities. People also travelled to cities on pilgrimage forreligious purposes, as this is where all major cathedrals,mosques and temples were usually located. Urban desti-nations have also been attracting business travellers at-tending meetings, conferences and exhibitions. Mosturban destinations are well equipped with conferenceand exhibition halls and transportation and accommo-dation infrastructure to facilitate the organisation of lar-ger events. Urban destinations also attract leisuretravellers, especially during periods of low businesstravelling activity, such as weekends and school holidays.Suppliers and facilities aim to reduce seasonality by de-veloping the number of leisure visitors, despite the factthat they can only charge a fraction of the price theycharge business travellers. On the other hand, leisuretravellers can take advantage of some of the uniquefacilities and services of urban destinations to enjoyshort-breaks or extended weekends. London for exampleprovides a wide range of heritage attractions as well asentertainment opportunities such as theatre, concerts,bars, theme restaurants, discos, etc. Barcelona o!ers ex-cellent conference facilities, combined with a culturallyinteresting and relaxed atmosphere. New York is highlyregarded for shopping, sight seeing and theatre going.Urban destinations also attract education and healthtourists, as they are generally equipped with good educa-tional establishments and hospitals. Increasingly, urbanresorts take advantage of their industrial heritage and useobsolete industrial sites as educational experiences andleisure facilities. The Docklands in Liverpool and coalmines in Skipton are good examples of these facilities(Berg, Borg & Meer, 1995; Law, 1996,1993; Page, 1994;Mazanec, 1997).

Seaside destinations and resorts traditionally servetourists on holidays. Travellers from Northern regionsand climates tend to spend a proportion of their annualholiday in the South where they can enjoy sunshine aswell as sea sports. Seaside resorts nearby the place ofresidence were replaced by international destinations asa result of the emergence of mass tourism since the 1970s.For example, in the U.K. traditional resorts such Black-pool, Scarborough, Bournemouth and Brighton werereplaced by the Spanish Costas through the developmentof package holidays. Typically, European leisure travel-lers will take their annual holiday at Mediterraneanseaside resorts, whilst Northern Americans visit South-ern regions such as Florida, California and the Cari-bbean. As the product in traditional seaside resortsmatures, new long haul and exotic destinations, often inless-developed countries attract sophisticated travellerswho are looking for authentic and o!-the-track experien-

ces. The globalisation experienced reduces distances andenables people to travel further a"eld. Examples includedestinations such as Goa and Bali which take advantageof developments in transportation and attract travellers.Examples of seaside destinations and resorts can be iden-ti"ed globally (see for example Jenner & Smith, 1993;Gayle & Goodrich, 1993; Lockhart & Drakakis-Smith,1997; Morgan, 1995; Brigulio, Archer, Jafari & Wall,1996; Briguglio, Butler, Harrison & Filho, 1996; Shaw &Williams, 1997; Conlin & Baum, 1995; Towner & Newton,1996).

Alpine destinations attract leisure travellers for wintersports, such as skiing, as well as holidaymakers whoappreciate natural attractions in all seasons. They alsoattract activity holidaymakers such as naturalists, moun-tain cyclists, walkers, etc. Although, the majority of al-pine sports are for recreational purposes a wide range ofexpeditions and challenges are organised for mountainssuch as the Everest or the Alps. Lakes may also o!erfacilities for sea sports such as sur"ng and skiing. Al-though the majority of alpine resorts are in near proxim-ity to urban centres and thus can easily be accessed byprivate car, several are still unexplored and o!er auth-entic experiences for travellers. Lakes and scenic land-scapes make alpine resorts increasingly more popular forconference and incentive tourists and thus a certain busi-ness travelling activity can be observed in the last fewyears. The development of important business, politicaland economic meetings, such as the Davos Forum, at-tract a new market segment and expand the season forwinter resorts. As a result a wide range of marketing andplanning implications emerge to allow alpine areas tobene"t from tourism and yet to ensure the sustainabilityof their resources (Johnston & Edwards, 1994; Weier-mair, 1993; Khan, 1994).

Rural tourism is also developing rapidly. Farmers andrural populations take advantage of the desire of travel-lers to go back to nature and experience some authenticagricultural processes. Hence agricultural facilities areoften transformed to leisure activities. Tourism is re-garded as a development tool for several regions wheretheir agriculture declines steadily or where people wouldlike to diversify their living and working patterns. Tour-ists can stay in rural areas and contribute to agriculturalactivities taking place or assume a more passive role.There is an educational element to this activity parti-cularly for children from urban centres who may havenever experienced agricultural life. Rural tourism canalso be themed according to the activities undertaken,such as cooking or bee-keeping schools organised inrural regions. Examples of this form of tourism can beidenti"ed globally (Page & Getz, 1997; Sharpley& Sharpley, 1997; Oppermann, 1996).

Destinations in authentic (often Third World) countriesare often o! the beaten track. Tourists enjoy authenticexperiences in places which have experienced limited


Table 4Contribution of marketing research to destination marketing!

Identi"cation of the main attributes anticipated by each marketsegment

Design and attributes required for tourism products and servicesEvaluation and development of destination imageSegmentation of market and development of corresponding

marketing mixesOpening new markets and reducing dependency on existing onesEvaluation of the elasticity of demand for each market segmentReduction of seasonality by matching market segmentsExamination of reasons deterring people (suppressed demand) from

visiting destinationsAssessment of compatibility with other target marketsExamination of alternative distribution channelsAssessment of tourism impacts to the destination and selecting the

right segmentsEvaluation of marketing e!ectiveness and selection of media for

promotion

!Source: Adapted from Baker et al. (1994); Ritchie (1996) and Calan-tone and Mazanec (1991).

tourism development. Emerging destinations in Asia,South America and Africa attract a small number ofadventurous tourists who are prepared to forego theircomfort in order to interact with local communities andunspoiled surroundings. Although these regions may de-velop at a later stage to mass tourism destinations, theyneed to be planned properly in order to sustain theirresources. They often lack the required infrastructureto deliver tourism services (Silver, 1993; Hughes, 1995;So"eld, 1991).

Finally, certain destinations are branded unique-exotic-exclusive as they are regarded to o!er a uniqueand precious experience. As a result, these destinationsare promoted as òne-in-a-life-timea experience andthey are charged at premium prices. Examples includeBhutan, Mauritius, and Seychelles. In some destina-tions, there are several mechanisms controlling thenumber of visitors, often through managing their trans-portation and accommodating capacity or immigrationprocedures and visa allowances. These destinationsfocus on the non-charter and non-mass traveller reducingtheir visitation but maximising their income per visitor.They often epitomise the dream of the average travellerand thus are packaged and priced as prestigious specialproducts, for instance for weddings, honeymoons,anniversaries or a special occasion trip, or for incentivetravel.

6. Marketing research: identifying market segmentsfor destination products

Marketing research is used extensively by destinationmarketers to identify the types of customers that can beattracted (active demand), as well as the prospectivevisitors (suppressed demand) who do not visit for a var-iety of reasons (Athiyaman, 1997). Approaching the righttarget market and providing the most appropriate com-bination of local tourism products and services is thesecret for successful destinations. Product design andformulation should therefore be based on research(Baker, Hozier & Rogers, 1994; Ritchie, 1996; Calantone& Mazanec, 1991; Hu & Ritchie, 1993). As tourismbundles are formulated ad-hoc to satisfy speci"c con-sumer requests, a dynamic marketing research processwill enable destinations to provide unique products byinitiating local partnerships between all suppliers to ad-dress the needs of demand. Destination image is alsodeveloped through marketing research, which guidespromotional activities towards branding and amendingthe brand values of the region. The e!ectiveness of pro-motional campaigns can be assessed so that the mostcost-e!ective media is used to approach and persuadetarget markets to visit the destination (Woodside, 1990).Table 4 illustrates the contribution of marketing researchto destination marketing.

Marketing research should not be limited to beforevisitation investigations. As tourism demand is extremelydynamic, marketing research needs to follow constantdevelopments to ensure that all elements of the destina-tion marketing mix evolve continuously. Surveys duringand after visitation enable destinations to identify weak-nesses and concentrate their corrective action. Data isoften collected by frontier controls, airports and trans-port authorities, national statistics o$ces, local councils,tax o$ces as well as principals such as hotels, travelagencies, etc. The e!ectiveness of marketing research indestinations will depend on their ability to co-ordinatethe research activities undertaken by the entire range oflocal authorities and organisations. It is therefore veryimportant to co-ordinate all these surveys and data inorder to produce meaningful inferences to inform andguide tourism policy and marketing strategies (March,1994; Hawes, Taylor & Hampe, 1991).

7. Marketing destinations: strategies and practices

Developing a marketing strategy and mix for destina-tions is a complex process, mainly because there aremany independent stakeholders and principals involved.Destinations cannot be managed or marketed as enter-prises, due to the dynamics of interests and bene"tssought by stakeholders. In addition, most destinationsare amalgams of independent SMTEs, which alreadyfollow their own marketing strategies. Although DMOshave traditionally taken marketing responsibility for thedestination product, they fail to control marketingactivities and mixes of individual players and hence canonly co-ordinate and guide, rather than undertake


a comprehensive marketing strategy. Perhaps the mostimportant challenge for destination marketing thereforeis to bring all individual partners together to cooperaterather than compete and to pool resources towards de-veloping an integrated marketing mix and delivery sys-tem (Buhalis & Cooper, 1998; Fayos-Sola, 1996).

The international tourist industry is becoming anincreasingly competitive marketplace where only thebest-managed destinations are likely to prosper. Com-prehensive strategic business plans therefore need to ad-dress all factors that have an impact on the product.Tourism strategies should not only concentrate on visita-tion, but also include the entire range of impacts such asovercrowding, environmental problems, visitor safetyand security, seasonality problems, and sensitivity tolocal culture (Evans, Fox & Johnson, 1995). This willenable destinations to develop comprehensive strategiesto ful"l all strategic objectives illustrated in Table 2.

7.1. The position of destinations and their marketing

Perhaps one additional complication to tourism mar-keting is that in most cases destinations have alreadya rich history, image and legacy development which needto be taken into consideration when developing tourismmarketing strategies. Not only consumers develop cer-tain images and views about places, but also previousdevelopment often provides several limits for marketingto address as well as stakeholders who need to be respect-ed and consulted. Understanding therefore the stage androots of tourism development is critical for developmenta strategy. One of the most widely used tools for under-taking this task is the destination life cycle (Butler, 1980).The main utility of the destination life cycle is to facilitatethe understanding the evolution of tourist products anddestinations and it to provide guidance for strategic deci-sion taking. Cooper (1989,1992,1994) suggests that thelife cycle concept illustrates that destinations experiencea `birth to deatha cycle and that the life cycle model hasgained attention in tourism and hospitality as an ex-planatory tool. Although in tourism, life cycle analysis isoften seen as a useful conceptualisation tool for destina-tion area development, in hospitality management it isbeginning to be used as a guide for strategic planning.However, the main problems relate to identifying turningpoints, stages, length of stages and level of aggregation.Despite the many criticisms of the life cycle concept, it isquite critical for marketers to appreciate the stage ofdevelopment of resort areas (Haywood, 1986). A numberof researchers have used the cycle as a framework foranalysing changing destinations (Agarwal, 1997; Shaw& Williams, 1997; Formica & Uysal, 1996; Tooman,1997; Douglas, 1997; Choy, 1992; Getz, 1992; Ahmed& Krohn, 1990; Cooper & Jackson, 1989).

Based on the above literature, Fig. 2 synthesises thedi!erent stages destinations are going through during

their life cycle and illustrates how that e!ects theirtourism impacts. This also illustrates that di!erent stagesof the life cycle require di!erent marketing strategies andplanning actions. This is largely due to the di!erencesbetween demand and supply experienced at di!erentlevels. In the early stages demand exceeds supply whilstthis relationship is reversed in the maturity and consolida-tion stages. As a result, marketing strategies should focuson building awareness and promoting the destinationproduct on the early stages of the circle while they prob-ably have to deal with image alteration and re-design andre-launch the product at the later stages. The entire mar-keting mix therefore will need to be di!erentiated to ac-commodate the needs of destinations at each stage of theirlife cycle. In addition, Fig. 2 highlights that destinationsexperience di!erent environmental and socio-cultural im-pacts during their di!erent development stages. As a resultthey need to use marketing to encourage sustainable prac-tices for both consumers and industry as well as to com-municate their environmental and socio-cultural policies.

It is evident, therefore, that di!erent destinations area!ected in a dissimilar pattern on each stage of their lifecycle and as a consequence they require speci"c market-ing action. For example Northern European coastal re-sorts have experienced declining visitor numbers anddecay which has resulted to alteration of main use offacilities as well as a concentration on few expandingmarkets (e.g. senior citizens, conferences and languageschools). In contrast, the majority of coastal regions inSouthern Europe face a decline of tourism bene"ts,rather than numbers of visitors as a result of their pro-gression from one stage of the cycle to the next one.Paradoxically, in most cases the number of visitorsincrease, mainly due to the price reductions used tostimulate demand. Established mass tourism destina-tions, such as Benidorm, use a high-volume low-pro"tmargin strategy to ensure their pro"tability and they aresuccessful in increasing their visitors. They also reinveston their facilities and introduce quality standards mecha-nisms. However unless carefully managed any increase ofvisitors may deteriorate local resources further and pushdestinations in greater decline, which can force to furtherprice reductions and further quality decrease. This isa vicious circle which eventually makes the purpose andbene"t of the entire tourism activity at the destinationquestionable. Clearly, therefore resorts will need to takeinto consideration the phase of development there are inas well as the patterns of destination life cycle experi-enced in competing destinations and adopt their strategicmarketing accordingly.

7.2. Strategic marketing for destinations andstrengthening their competitiveness

Competitive strategy ìs the search for a favourablecompetitive position in an industrya. This is a function of


Fig. 2. Destination life cycle and tourism impacts.


both the attractiveness of the industry and the relativecompetitive position within that particular industry,as well as alternative activities that an organisationcan undertake. `Competitive strategy aims to establisha pro"table and sustainable position against the forcesthat determine industry competitiona (Porter, 1985).Competitiveness is, therefore, de"ned here as the e!ortand achievement of long term pro"tability, above theaverage of the particular industry within which theyoperate as well as above alternative investment oppor-tunities in other industries. This de"nition includes theconcept of opportunity cost and illustrates that successfulorganisations should not only compete within theirparticular industry but also against other investmentopportunities. When referring to tourism destinationscompetitiveness should also include the sustainability oflocal resources for ensuring the maintenance of long-term success as well as the achievement of equitablereturns-on-resources utilised to satisfy all stakeholders.

There is little written about the competitiveness oftourism destinations. Bordas (1994a,b) has developedseveral frameworks which determine destination com-petitiveness. They are based on demand and supply aswell as a wide range of factors in#uenced by the externalenvironment of the destination. Ritchie and Crouch(1993) have developed a comprehensive model fortourism organisations (see "gure in Goeldner, Ritchie& MacIntosh, 2000, p. 26), which can be analysed furtherto include the entire range of factors a!ecting the com-petitiveness of destinations.

The framework explains that the prosperity of destina-tion depends on the competitiveness of all economicsectors as well as the competitiveness of tourism. A fur-ther analysis illustrates the competitiveness of tourism isa function of several factors related to destination admin-istration. A wide range of elements are included in themodel illustrating that tourism is a!ected by an endlessnumber of factors in its internal and external environ-ment. Although the model fails to rate the importance ofeach of the elements examined, it is suggested that a dis-similar rating should be adopted by di!erent destinationsdepending on the types of markets they attract, their lifecycle stage and speci"c characteristics. Nevertheless, thecontribution of the Ritchie and Crouch lies on the com-prehensiveness and wideness of the elements taken intoconsideration. The model highlights that it is the combi-nation of all factors comprising the competitiveness ofdestinations as well as synergies between these elementsthat determine the attractiveness of a region. Perhapsfuture research will attach ratings to each factor forspeci"c types of destination and also illustrate potentialtradeo!s that consumers may consider. Consumers maybe willing to compromise some elements for some others,for example overcrowdness for cheaper price in someSpanish Costas. Understanding the values and primeaims would be critical for developing the module further.

Ultimately, the competitiveness of destinations dependson their ability to maximise their performance for eachindividual element assessed.

7.3. Strategy formulation for destinations

This paper reviews three strategy models, namely Por-ter's generic strategies, Gilbert's proposition for `di!er-entiation of the destinationa and Poon's analysis for`#exible specialisationa. The paper then synthesises theirpropositions in order to propose a generic strategy andillustrate how destinations should develop their o!erings.

7.3.1. Porter's generic strategiesPorter (1980) proposed three main strategies (see the

Generic Strategies Graph in Porter, 1980), aimed to òut-perform other "rms in an industrya, i.e.:

f overall cost leadership, where organisations arerequired to minimise their costs, based on mass pro-duction and strict cost control of the main businessfunctions;

f diwerentiation of products or services o!ered by `cre-ating something that is perceived industry-wide asbeing uniquea;

f focus on a `particular buyer group, segment of theproduct line or geographical marketa and achieveeither cost leadership or product di!erentiation.

This is well-developed generic model, which is widelyused to all industries. It provides clear guidance fordecision makers to position their products in order tomaximise pro"tability and improve their competitive-ness. However, this model fails to address the speci"cneeds of tourism and in particular the scarcity of re-sources at the destination level. Therefore, similarly withcommodities this model suggests unlimited resources areavailable to reproduce endless number of products. Thisis particularly the case for the cost leadership strategywhere organisations are urged to increase their volumeand to reduce their pro"t margin. Unfortunately, envir-onmental resources, both natural (e.g. coral reefs ormountain landscapes) and man-made (e.g. archaeologicalsites or architectural structures) have a limited capacitywhich they can accommodate. Resources in tourism areirreplaceable once destroyed and therefore a strategyshould ensure that their use is limited to the degree thatdoes not threat their sustainability in the long term. Oncethis is understood and appreciated, Porter's model en-ables tourism marketers to focus on di!erentiation strat-egies and to develop their mix accordingly. However,several destinations, which are on the consolidationphase of their life cycle, have exceeded the maximumcapacity which would have enabled them to sustain theirresources. Their ability to promote di!erentiated tourismproducts has also been jeopardised, as over-developmenthas exploited and damaged their resources. This is


Fig. 3. Gilbert's di!erentiation strategy. Source: Adapted from Gilbert (1990, p. 25).

experienced in some mass tourism destinations, such asBenidorm and Costa Brava in Spain, or Faliraki andMalia in Greece. Once destinations have reached thatstage there is limited choice. The majority try to attractmore mass tourism so they can increase their pro"tabilitythrough volume. Increasingly, however, some regionsaim to renovate their properties and facilities and re-launch their o!erings. The Calvia example in Mallorca,which decided to demolish three hotels in order to im-prove public areas and to enhance the quality of itsproducts set new best practices which may be followed byother regions.

7.3.2. Gilbert's strategic frameworkBased on the above rational the second strategic

framework introduced by Gilbert (1984,1990) argues thatdestinations can be classi"ed on a continuum betweena `statusa and a `commoditya area, as illustrated inFig. 3. `Status areasa achieve intentional demand asa result of the unique product attributes perceived by thetourism market. These unique attributes may be genuineor imaginative and thus, a destination is regarded asirreplaceable, which increases consumers' loyalty andwillingness to pay. In the `commodity statusa case, desti-nations are substitutable, very sensitive to price andeconomic changes, while consumers have a low aware-ness of any unique bene"ts or attributes. Thus, travellersbase their decision to visit the area merely on price, whilethe demand for the destination is incidental and destina-tions are unable to attract high spenders. Despite the factthat the sustainability of resources is not discussed ex-plicitly by the model, it is quite evident that `statusareasa manage their resources as product attributes andtherefore are appreciated by consumers who are willingto pay more.

Gilbert (1990) asserts that destinations should attemptto become `status areasa, rather than a `commodityareaa one, in order to improve their image, loyalty andeconomic bene"ts. It is suggested that destinationsshould di!erentiate their tourism products in order toachieve a unique `tourist product bene"ta. This willenable them to establish their position in the interna-tional market, and attract both high spenders and loyal

tourists, who appreciate the uniqueness of their resourcesand o!erings. Although the model clearly di!erentiatesdestinations to distinctive categories it fails to recognisethat the majority of destinations lay between the twoends of the continuum. It also fails to relate to thedi!erent stages of the life cycle and to the inevitabilityexperienced in several regions where destinations arelaunched as status areas and gradually slip to commoditystatus (Buhalis, 1999a). Nevertheless, the model clearlycontributes to tourism marketing by correlating productattributes with willingness to pay and also by illustratingclearly that destinations should decide on what directionthey should plan and manage their resources and facilities.

7.3.3. Poon's yexible specialisationA third strategic approach for tourism is proposed by

Poon (1989,1993), based on the concept of `#exiblespecialisationa of the tourism business. Poon examinesthe tourism industry processes and proposes a strategy toenable tourism organisations to improve their com-petitiveness. Poon argues that `#exible specialisationa isa strategy of `permanent innovationa and `ceaselesschangea which provides for `new tourisma. New tourismis #exible, segmented, customised to the tourist's needsand diagonally integrated. In contrast, old tourism canbe characterised as `mass, standardised and rigidlypackageda. `The main sources of #exibility for service"rms lie in the organisation, management, marketing,distribution and other forms of interaction and interre-lationships among guests, hotels, suppliers, distributors.What is important however is not each of these stand-alone aspects but how they are coupled to create com-petitive advantages and hence, capabilities to move withthe marketa (Poon, 1993). This is a timely model, whichpredicted the impact of information technology on theboth decision making and consumer behaviour. Industryinnovation is critical in this strategy and the utilisation ofnew technology provides the opportunity to customiseproducts according to customers' speci"c requirements.Hence destinations can organise their assets andattributes in such a way which will enable them tospecialise their tourism product according to particulardemand needs.


Although Poon's model revolutionised tourism think-ing it is still di$cult to implement at the destination level.The majority of infrastructure and superstructure isbased on "xed assets, which cannot be altered easily andtherefore they have a limited degree of #exibility. This ismore evident at destinations at the consolidation stages,which are unable to reinvent themselves and approachnew markets. Nevertheless, the model clearly contributesto the "eld by encouraging tourism organisations anddestinations to challenge existing strategies and practicesand to forcing them to approach new tourism with newtools introduced by technology. Concentrating on corefunctions and outsourcing all peripheral activities to net-works of virtual co-operations should enable destina-tions and enterprises to innovate and to adapt to theneeds of consumers constantly.

7.3.4. Synthesis of strategic frameworks and lessonsfor strategic destination marketing

The discussion of the three models provides severalinteresting lessons. A close examination of strategies re-veals that they share a similar base. Porter's `di!erenti-ationa, Gilbert's `status areaa and Poon's `#exiblespecialisationa describe how "rms and destinations canachieve value-competitive advantages. Consumers ap-preciate special attributes and values and as a result theyare inclined to visit areas more regularly, to increase theirloyalty and to pay higher prices. In contrast, `cost leader-shipa, `commodity areaa and `standardisationa or the`Fordism production modela describe the e!orts of "rmsor destinations to achieve `cost competitive advantageaby o!ering their products for less than their competitors.This is achieved through economies of scale, standardisa-tion and mass production. Destinations and tourismproducts are treated as commodities and decisions aremerely based on price. Hence the underlying concept ofthe two alternative strategies is the relationship betweenvolume and price. The "rst set of strategies supportsa `low-volume-high-pro"t margina approach, whereeach consumer is paying premium prices for uniqueproducts, whilst the second set of strategies followsa `high-volume-low-pro"t margina approach.

Tourism destinations should avoid the cost advantagestrategies as they are based on mass production andconsumption and assume unlimited production capacityand resources. The inseparability of the tourism productdetermines that consumers should be present at the timeof product delivery. Therefore, the interaction of con-sumers with socio-cultural and environmental scarce re-sources can decay the very reasons, which attract peopleto places. Seasonality also generates demand peaks andin#ates the problem during certain periods every year.Although economic bene"ts can also be achieved byusing the `commodity areaa or the `standard productmodela, it is argued that on the long term these ap-proaches reduce tourist satisfaction, consumer willing-

ness to pay, and are against demand trends. In addition,the `high-volume-low-pro"t marginsa strategy has cata-strophic social and environmental impacts on destina-tions. As a result, not only their sustainability may bejeopardised but also the competitiveness of the region asa whole. E!ectively, these strategies push destinationsthrough their life cycle stages and force them to reachtheir consolidation stage. Destinations therefore shouldde"ne and not exceed their carrying capacities in order tosustain their resources and at the same avoid jeopardis-ing consumers satisfaction.

This is re#ected on both Gilbert and Poon's strategieswhich agree that destinations should aim to achievea `status areaa or `nichea orientation through di!erenti-ation, in order to increase consumer satisfaction as wellas to maximise the bene"ts for tourism regions. Thisstrategy is already adopted in several resort areas, such asValencia in Spain, where it is recognised that the need fordiversi"cation and di!erentiation `has now become es-sential owing to the level of competitiveness that hasbeen attained (and can be foreseen) in the world touristmarketa (Fayos-Sola, 1992). It is also particularly usefulfor insular, peripheral and remote destinations, wherea limited number of economic and "nancial resources areavailable. However, this strategy should not serve as anexcuse for principals at destinations for not improvingtheir e$ciency and minimising their production costs.Although providing unique service to satisfy touristneeds should be their priority, o!ering perceived valuefor money would determine their competitiveness in themarketplace (Murphy & Pritchard, 1997). As most desti-nations consist of networks of tourism suppliers andprincipals, there is much overlapping between the stra-tegic orientation followed at the macro and micro level.Hence a close collaboration between the private andpublic sector is required. Destinations and enterprisesfollowing a `status areaa strategy would probably en-hance tourists' satisfaction, as well as their competitive-ness. The formulation of unique and customised productsby using #exibility and co-operation will also increasetourists' willingness to pay and their loyalty, whileresponding to new tourism demand trends.

Unfortunately, some destinations can no longer bepositioned as irreplaceable unique products, due toover-development and degradation of their resources.Tourism supply has exceeded their carrying capacity andthey have reached the saturation or decline phases oftheir life cycle. For example several Mediterranean `cos-tasa have been overdeveloped to such an extent that onlya high-volume, low-pro"t margin orientation is feasible.When resorts reach their saturation level only a `costleadershipa or `mass productiona strategy can be em-ployed, as they are unable to provide any speci"c `touristproduct bene"ta. The attraction of the lower end of themarket is inevitable and as a consequence, there are noalternative strategies. In this case, the minimisation of


further social and environmental damages as well asattempts to improve the surrounding environmentshould also be the primary objective.

In addition, a re-positioning of the product can also beattempted although it is quite di$cult to alter the imageof destinations. For example the Calvia Municipality inMallorca has implemented a dynamic plan for enhancingthe quality of the tourism o!ering through the enhance-ment of the landscape and the regeneration of environ-mental resources. As a result, intentional demand hasincreased and a higher willingness to pay is experienced,enhancing the pro"tability of the private sector andboosting the economic impacts of tourism. Another suc-cessful example of destination management and market-ing is also Las Vegas. Although it is not yet on thematurity level, the local industry constantly undertakesinitiatives to reinvent and reposition itself. They diversi"-ed their target markets by developing theme parks withinmajor hotels in order to attract families and young chil-dren. Several new hotels open every year while olderproperties are being renovated, often by demolishing andrebuilding them. The òld stripa was also relaunched toattract visitors from the new hotels and casinos by cover-ing the street and projecting a lazer show.

8. Destination marketing mix

Once a tourism management and marketing strategyhas been decided destinations will have to develop theirmarketing mix. This will enable them to approach eachtarget market with a comprehensive range of o!eringsand to propose an integrated solution to consumer needsand wants. Developing a marketing mix for destinationswill depend on each destination, the types of target mar-kets and a whole range of issues on the external environ-ment. Nevertheless, some principles need to be addressedand the following text illustrates examples and frame-works which can assist destination marketers to decideon the most appropriate marketing mixes.

8.1. Formulating the destination product

Destinations are amalgams of individually producedtourism amenities and services (accommodation, trans-portation, catering, entertainment, etc.) and a wide rangeof public goods (such as landscape, scenery, sea, lakes,socio-cultural surroundings, atmosphere, etc.). All theseelements are branded together under the name of thedestination. The ubiquity of the destination concept ef-fectively means that the tourism product for each pro-spective traveller is very subjective and depends heavilyon his/her image and expectations of the place. Neverthe-less, the tourism product for a region consists of theentire range of facilities and services o!ered locally, plusall socio-cultural, environmental resources and public

goods. Understanding the core product as well as thefacilitating, supportive and augmented products for eachtarget market is of paramount importance for destinationmarketing. The augmented environment will includeintangible elements such as interaction and customerparticipation as well as accessibility and physical envi-ronment (Kotler, Bowen & Makens, 1996, p. 276).

DMOs have an overall responsibility for the entiredestination product and through incentives and policiesfacilitate the development of products, which is desirablefrom the demand side, and at the same time does notjeopardise local resources. DMOs should therefore bethe guardians of the image and resources of destinations.However, throughout the world tourism services are of-fered by small and medium tourism enterprises (SMTEs)which tend to be family managed. The challenge fordestination management organisations is therefore toprovide leadership in the development of innovativeproducts and create local partnerships for the delivery ofseamless experiences. These partnerships should bringtogether both private and public sector and should en-sure that the long-term competitiveness of the tourismproduct prevails all decision making processes (Buhalis& Cooper, 1998).

DMOs also need to enhance and diwerentiate theirproducts by emphasising their uniqueness. Destinationmarketers often adopt a mass tourism orientation, be-cause they falsely believe that tourism products can growinde"nitely. Hence, generic characteristics of destinationsare frequently emphasised in all marketing campaigns asthey attempt to attract too many target markets. Sun andsea dominate the promotion of Mediterranean destina-tions; exotic surroundings are emphasised for long hauldestinations and skiing is o!ered by Alpine resorts. How-ever, it is increasingly evident that new-sophisticatedconsumers seek authentic and unique experiences. Theyare also willing to pay a premium, but only if the productis signi"cantly better than that of competitors. Hence,destinations will need to re-assess the entire range of theirresources and identify suitable tourism products for eachparticular target market segment.

Themed or alternative tourism enables destinations toprovide unique experiences and achieve their status area.For example, Greece could concentrate on its heritageand history and o!er ancient/mythology experiences;Italy can develop culture/art/design/fashion/cuisinethemes; Romania should explore the Dracula myth; andBali should concentrate on the unique religious ritualsand cultural traditions. Natural, agricultural, cultural,artistic, heritage, resources of destinations can be usedaccordingly. Tourism should also contribute to the pres-ervation of these resources by increasing the awareness ofboth locals and visitors and by providing funds for theconservation and regeneration of resources. Attractingappropriate target market segments should also assistthe reduction of seasonality, as special theme o!erings, as


well as festivals and events should enable destinationsto increase their demand during the low season. Forexample, the renovation of physical features and naturalresources on Mallorca, or the development of innovativenew products such as Festivals and themed experiences(e.g. Edinburgh New Year's Eve and summer festivals)also enable destinations to manage their product lifecycle e!ectively. The aim is to maintain the destinationto the maturity/consolidation stages and to avoid thestagnation, saturation and decline stages in their lifecycle.

8.2. Pricing the destination

A wide range of pricing techniques are applicable totourism destinations (Meidan, 1995; Kotler et al., 1996).However, pricing is a di$cult process for destinations asit is often determined by the pricing and marketing pol-icies of individual enterprises both at the destination anddistributors at the place of origin. Local suppliers canhave their own policy and thus co-ordinating and estab-lishing a destination wide pricing strategy is almostunachievable. Furthermore, national economic policiesand economic conditions in the international market-place also in#uence pricing. Therefore, both macro-and microeconomics determine the pricing function oftourism organisations locally and destinations. The costof living and employment, as well as in#ation, exchangerates and local e$ciency and competition all contributeto the pricing equation. Tourism in Japan is inevitablymuch more expensive than tourism in Indonesia due tothe di!erences between the two economies. Macroeco-nomic changes have great in#uence on the pricing ofdestination and the attraction of consumers. For in-stance, the depreciation of the Spanish Peseta and theGreek Drachma as well as the high in#ation rate of theTurkish Lira have all determined the pricing of theirdestinations and have in#uenced their competitiveness(Edwards, 1993).

Pricing the destination and all the individual elementsof the local tourism product is a very complex process.Principals tend to have their own pricing mix and pol-icies. DMOs can control elements of pricing throughregulation, advice and through partnerships with theprivate sector. However, DMOs often provide guidelinesby suggesting minimum prices to protect small suppliersfrom "erce competition and maximum prices to protectconsumers from overcharging. For example, in severaldestinations the public sector determines the lowest priceper category for accommodation, advises on the retailprice of consumer goods and foods, set the maximumprices for transportation or taxi services. Although en-forcing pricing policies is extremely di$cult, destinationmanagers should formulate partnerships with principalsand train them on the importance of maintaining a fairlystandardised pricing structure and policy.

In several leisure destinations tour operators also playa critical role in determining the price consumers pay forproducts locally. This has signi"cant implications forregions which depend on intermediaries (tour operators)for their clientele, and in particular for destinations whichhave an oversupply of facilities. Tour operators inEurope and especially the larger/mass/integrated oper-ators, such as Airtours, Thomson, TUI, and Neckerman,exercise bargaining and coercive power because of thelarge volume of tourists they represent and reduce theprices of principals at destinations. This enables them too!er competitively priced products at their marketplace.However, as local suppliers may not be able to gainenough pro"t from the basic product (i.e., accommoda-tion and transfers) they may need to overprice otherelement of the product (i.e., catering, entertainment, localexcursions) in order to boost their pro"tability (Buhalis,1999b).

The higher the expenditure of tourists locally, the bet-ter it is for destinations, as it increases the pro"tability oflocal enterprises and enhances the economic bene"ts.Consumers take into consideration the total cost ofa trip, i.e., before, during and after their visit. In mostcases they have not visited the destination before theypurchase their travel product. Hence, pricing plays animportant role in determining the image of destinations.Perhaps the biggest travel expenditure is transport toand from the destination, especially for long haul trips,and thus can determine the willingness and ability oftravellers to visit destinations.

Destinations can only charge premium prices if theyo!er a unique experience. Venice for example pro"tsfrom its unique product attributes and charges substan-tially higher prices than other Italian destinations. How-ever, increasingly consumers are unimpressed by tourismfacilities and products, as they have travelled extensivelyand have acquired a wealth of experiences. Global com-petition and oversupply, as well as the emergence of newdestinations in third world countries with lower labourcosts, generate frequent price wars especially for con-strained capacity at the last minute. As a result, con-sumers are increasingly prepared to pay less for gettingmore. Nevertheless, it is important for consumers toperceive prices as fair and good value for money, becausedissatisfaction damages the competitiveness of the desti-nation.

8.3. Distributing tourism destinations

Distribution or marketing channels are de"ned as setsof interdependent organisations involved in the processof making a product or service available for use orconsumption. The ultimate objective of distributionchannel can be summarised as: delivering the right qual-ity and quantity of a product, in the right place, at theright time, at the right cost, to the right customer. Several


Table 5Penetration of the largest tour operator groups in the European leisuremarket in 1994/5!

Country Tour operators Estimatedmarket share (%)

United Kingdom Thomson/Airtours/First Choice

58

Belgium NUR (Neckerman) 50Austria Touropa/ITAS/Ruefa/

Kuoni/Neckerman45

Scandinavia Airtours (Spies, Tjaereborg) 43Ireland Budget/JWT (First Choice) 40Germany TUI/NUR/LTT 37Netherlands TUI (Holland

International/Arke)30

France Nouvelles Frontieres/Club Med 25

!Source: Adapted from O'Brien (1996) and Bywater (1997,1992).

important distribution and marketing functions per-formed by channel members, such as: carrying of inven-tory; demand generation through promotion; marketinformation collection and analysis; negotiation betweenchannel members and consumers; physical possessionand distribution; risk taking; payment and "nancialarrangements; and after-sale service. Distribution isemerging as a critical element of strategic managementand as one of the few remaining sources of real competi-tive advantage. Apart from in#uencing costs, increasinglydistribution channels also support and enable productdi!erentiation by adding value on the product and bycontributing to the total brand experience and projectingpowerful images.

The entire range of players that bring together tourismdemand and supply for a region formulate its distribu-tion channel. Distribution of destinations becomes in-creasingly more important, not only because it isestimate to cost 20}30 per cent of the product price butalso because it determines whether and under what con-ditions suppliers can meet their target markets. This isthe case especially in the European leisure market con-text as concentration has led four major companies todominate the market. Business travellers have strictschedules and use intermediaries to organise their itiner-aries. In contrast, leisure travellers tend to have muchgreater #exibility and price elasticity. As a consequence,intermediaries can in#uence their decision and choice ofdestination.

Business travellers can be in#uenced indirectly bypeople who are responsible for arranging business meet-ings and conferences. These include corporate travel o$-cers and administrative sta! in organisations who choosethe location of meetings, as well as services suppliers. Fordestinations to attract business travellers they need todevelop strong links with the local business and aca-demic communities as well as with various types of asso-ciations. This will enable DMOs to appreciate the needsof business travellers and to provide convenient andadequate products. Often local associations, chambers,businesses or academics need to be closely involved inorder to attract and arrange meetings, incentives, con-ferences, and exhibitions (MICE) at the destination. Con-sequently, relationships with business travel agencies aswell as conference and exhibition organisers are impor-tant to attract and satisfy the MICE markets.

Leisure travellers have a much wider choice and #exib-ility and therefore a di!erent distribution strategy andmix are required. Domestic tourists usually make directarrangements and often use their own transport, whereasinternational leisure travellers tend to be more in#uencedby intermediaries. Representation of destinations in touroperators' brochures determines their ability to attractthe appropriate volume and quality of consumers.Leisure travellers often require travel agencies advice onselecting appropriate destinations and products. Hence,

destinations need to provide travel agencies with in-formation and promotional material, as well as to or-ganise educational trips and provide incentives for theirsta! in order to promote the destination to consumers.Workshops and road shows may also increase awarenessand provide positive impressions. Travel trade manualsserve as reference books for intermediaries o!ering com-prehensive information about destination regions. Devel-oping long-term partnerships with tour operators andleisure travel agencies is therefore extremely signi"cantfor the success of leisure destinations.

The concentration of the European tourism industryincreases the power of certain integrated travel organisa-tions. As a result, they increasingly control more than 70per cent of the market and can use a wide range ofmarketing techniques to determine consumer choice.Table 5 illustrates the penetration of the largest touroperating groups in the European market and clearlydemonstrates that leisure movement in Europe is di-rected to a large extent by a small number of integratedtour operators (O'Brien, 1996; Bywater, 1992,1997). Sincethen more concentration is experienced daily as oper-ators merge to develop their volume and take advantagefrom economies of scale and negotiation power. In addi-tion, a wide range of smaller specialised tour operatorsexists in each market promoting specialised products.

Although, there is a concentration on leisure distribu-tion channels, consumers become more independent andsophisticated and use the entire range of tools to arrangetheir travel. The availability of information on the Inter-net and the emergence of electronic intermediaries revol-utionise distribution. Destinations that appreciate thenew developments and build comprehensive tools fortheir local suppliers increasingly improve their ability toreach their strategic objectives. IT enables consumers toseek for information as well as construct and purchaseindividual itineraries on-line, and thus it revolutionised


destination marketing. Not only do they provide oppor-tunities for reducing dependency on traditional inter-mediaries for remote, peripheral and insular destinationsbut they also provide a mechanism to develop and pro-mote specialised products for mini market segments(Buhalis, 1998).

Electronic distribution also o!ers opportunities forcloser interaction and co-operation at the local level. Inseveral places where IT has been used extensively, such asTyrol, Ireland and Singapore, an integration of localresources and organisations enables suppliers at the des-tination level to develop and deliver seamless tourismproducts to consumers. Destination Management Sys-tems will need to be developed in order to enable thenetworking of all local tourism providers as well asa comprehensive and innovative interface between thedestinations and their prospective and current clients(Buhalis, 1994,1997).

8.4. Promoting the destination

Promoting destinations essentially implies the devel-opment of communicating channels with clientele andother stakeholders to increase awareness and persuade topurchase products. Destination promotion requiresa co-ordinated campaign and message for all local princi-pals and suppliers. Designing a cost-e!ective promo-tional mix is di$cult because of the diversity of tourismsuppliers at destinations and the spread of consumersthroughout the world. Achieving a consensus on themarketing campaign as well as raising adequate funds todevelop and implement it is one of the most challengingtasks for destination marketing. Traditionally, DMOslead promotional campaigns, whilst suppliers participateand contribute. A wide range of techniques are used, bothabove and below the line (Kotler et al., 1996; Horner& Swarbrooke, 1996; Millington & Cleverdon, 1999).

Above the line promotional activity includes advert-ising on television, radio, and press as well as using postercampaigns. Targeting the right market with the rightmessage at the right time is always di$cult, especially fordestinations, which attract consumers from several geo-graphical regions as well as cultural and linguistic back-grounds. Although very expensive, above the lineadvertisement can assist the development of the destina-tion brand as well as in#uence a large number to visitorsto travel to the destination or to extend their visit (Bon-ham & Mak, 1996). Crouch (1994) has illustrated thatalthough many countries have substantially increasedtheir spending on tourism promotions there is little evid-ence of their e!ectiveness as studies which have attem-pted to evaluate the promotional impact empiricallyhave generally produced inconclusive and varied results.Nevertheless, DMOs are increasingly being held ac-countable for generating adequate results throughadvertising and for measuring advertising e!ective-

ness (Woodside, 1990; Faulkner, 1997; McWilliams &Crompton, 1997; Schoenbachler, Benedetto, Gordon& Kaminski, 1995). Advertisements use slogans, whichchange frequently in order to follow tourism demandtrends and to update the image of destinations (Morgan& Pritchard, 1998). For example, Spain recently changedits slogan from èverything under the suna to `passionfor lifea. This change re#ected the refocus of its productaway from the traditional `sun and seaa product toa much more sophisticated o!ering based on socio-cultural diversity and the life-style of local people(Fayos-Sola, 1996).

In addition, DMOs often use below the line promo-tional techniques. They participate in major annualtourism and travel fairs in Berlin, London, Milan, Mad-rid, Paris and elsewhere. There they have the opportunityto meet intermediaries and members of the public topromote their o!erings. They produce brochures, whichthey distribute to all their partners in the industry and toprospective consumers who require information on thedestination. Brochures normally show local attractionsand activities, whilst they also feature a number of localsuppliers such as hotels, entertainment and catering es-tablishments (Wicks & Schuett, 1991,1993). In addition,travel trade manuals o!er information about the destina-tion to the travel trade and provide a reference guide.

Although DMOs often operate information o$ceswhere they provide information about local suppliersthey tend to refrain from selling direct, as they regardthemselves as facilitators rather than intermediaries andalso avoid to be seen as promoters of individual productsand services against other local suppliers. Instead, whenasked by prospective customers they provide contactdetails of local suppliers and advise consumers on theones that are likely to satisfy their demand. However,increasingly DMOs are forced to play a more activeselling role as consumers appreciate an one-stop-service.In many destinations they are also required to justifytheir income or to contribute towards their expenses andhence they charge commissions for local bookings andsell maps, local guidebooks and souvenirs to generateincome. Direct marketing is also used as destinations canidentify prospective customers and promote elements ofthe local o!erings that satisfy the speci"c demand. Devel-oping relationship marketing and loyalty clubs enablesrepeat visitors to be recognised and appreciated. Dis-count schemes and other add-ones are currently develop-ing for several destinations to reward and maintain theirloyal clientele.

Finally, public relations are extensively used for mosttourism destinations. Destination representatives at na-tional level establish tourism o$ces in their major mar-kets to distribute promotional material and informationas well as through their embassies. In addition, publicrelations are used to generate news stories, articles andpublicity in order to develop the awareness of consumers


and persuade them to purchase the products. Often host-ing a journalist or a celebrity in the destination cangenerate more interest than any other forms of promo-tion because consumers are more passive receivers thanwith advertising. Public relations are also critical for thedevelopment and updating of the right image (Morgan& Pritchard, 1998; Kotler et al., 1996; Middleton, 1992).

9. Marketing competitive destinations for the future

Destination marketing is increasingly becoming ex-tremely competitive worldwide. Providing innovativeand well co-ordinated tourism products is therefore ex-ceedingly important for tourism regions. Consumers as-sess their travel experience as a whole and they associatedestinations with the entire range of local producers andsuppliers. Producing innovative and specialised tourismproducts will enable destinations to attract intentionaldemand and to di!erentiate their products. Flexiblespecialisation will also support local suppliers and theregion as a whole to evolve with consumer trends andsupport the requirements of the emerging sophisticatedclientele as well as compete globally. Destinations, whichappreciate these principles, can develop and maintaincompetitive advantage and as a result achieve their stra-tegic objectives.

Partnerships between the public and private sector andclose co-operation between all local suppliers is key tothe ability of destinations to o!er quality products. Ex-ceeding consumers' expectations is instrumental for theability of both suppliers and destinations to attract visi-tors in the long term. Hence the competitiveness of eachsupplier locally as well as their distributors determinesthe competitiveness of destinations. Local suppliersshould co-operate rather than compete. Buhalis andCooper (1998) argue that tourism suppliers at destina-tions need to mature and understand that they shouldnot compete with each other at the destination level.Instead they should join forces and pool resources todevelop and implement comprehensive marketing strat-egies which enable them to compete with other destina-tions. The rapid development of new destinations,especially in third-world countries generates an unprece-dented level of competition. They can o!er unspoilednatural landscapes and authentic socio-cultural re-sources inexpensively. In contrast, most traditional desti-nations su!er from their own success and the lack ofa strict rational planning and management system. Hav-ing gone through most of the stages of their life cycle theyhave reached maturity or saturation and this has forcedthem to rely mass tourism for their operations. Oftenfacilities require urgent renovation, but lack of "nancialresources and the unwillingness of consumers to payjeopardise the competitiveness of destinations further.Initiatives at the local level facilitated by both private

and public sectors can improve the tourism product byinvestment in resources, as well as the implementation ofa comprehensive marketing strategy and mix which sup-ports the competitiveness of the destination. This is parti-cularly important for small and medium-sized tourismenterprises, which traditionally dominate local supplybut lack management and marketing expertise to operatetheir business professionally and "nancial resources toapproach their target markets.

Taking advantage of new technologies and the Internetcan also enable destinations to enhance their com-petitiveness. Technology can improve the e$ciency of alllocal suppliers and also provide tools for the develop-ment and delivery of di!erentiated tourism products.Provision of information on local facilities and attrac-tions and the ability to reserve the whole range oftourism products determines the ability to attract thenew and sophisticated types of tourism demand. Therecent evolution of destination management systems(DMSs) enables destinations to co-ordinate the entirerange of products and services o!ered locally and topromote them globally. The provision of di!erentiatedand tailor-made products becomes much easier as con-sumers can assemble specialised products and constructtheir own itinerary. The availability of information onlocal resources and services reduces the cost of individualtravel and enables destinations to o!er mass-customisedservices.

More importantly the new IT tools enable even small-er and peripheral players to compete on equal footagewith larger and more central ones and therefore providean unprecedented opportunity to enhance their com-petitiveness. One of the major bene"ts is the reduction ofdependency on intermediaries for the distribution oftourism products. As a consequence, tourism suppliersare able to improve their negotiation power with power-ful tour operators and can develop a healthier distribu-tion mix. This is particularly signi"cant for remote,peripheral and insular destinations where local principalsand authorities have a great dependency on tourism fortheir lifehood but lack expertise and resources to under-take comprehensive marketing campaigns. Partnershipsmarketing through loyalty/fun clubs enabling destina-tions to develop long-term relationships with consumersbene"t both destinations and suppliers. DMSs shouldalso be utilised to optimise tourism impacts by providingan e!ective mechanism to bridge the expectations of bothconsumers and local residents with their experiencesfrom tourism (Buhalis, 1993,1994,1997,1998).

Finally, tourism destinations should learn from pastmistakes and appreciate that their strategic managementand marketing must lead to the optimisation of tourismimpacts and the achievement of their strategic objectives forall stakeholders. Hitherto, destinations have su!eredbecause they wrongly assumed that the higher the vol-ume of tourists, the more bene"ts they can achieve.


However, it is evident that limits on the development oftourism activity should be imposed in order to avoidover-exploitation of local resources. Although marketinghas often been regarded as an enemy of sustainability,destination authorities and principals need to realise thatstrategic marketing should be used to achieve destinationpolicies. A comprehensive marketing strategy should en-able managers and planers to identify appropriate targetmarkets and to maximise economic bene"ts locally with-out jeopardising local resources. A suitable communica-tion strategy should support destination authorities toconvey their message and promote environmentallyfriendly practices locally.

10. Conclusion

In conclusion, destination marketing is becomingmore complex as tourists consume regions as experien-ces, often ignoring that tourism products consist ofa great number of individually produced products andservices. Global competition and industry concentrationdevelop new challenges. In this sense, destination mar-keters have to achieve the strategic objectives set throughstakeholders' analysis and match the appropriate de-mand with supply, by using the entire range of marketingtools for communicating with consumers and suppliers.Global competition and the new, experienced, demand-ing and sophisticated travellers reposition destinationmarketing to be the main interface between consumersand local principals. Consumers are increasingly follow-ing special interests and regard their trips as bothrecreational and educational experiences. Therefore, des-tination themes and their interpretation become moreimportant for the future. Training of human resources aswell as co-operation between competing and com-plementary destinations enable regions to learn fromeach other and adapt to demand requirements. Innova-tive marketing led by research and using new technolo-gies, will be the only way to manage and marketcompetitive destinations in the future for the bene"ts oftheir stakeholders.

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Marketing the Competitive Destination