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Destination Competitive Analysis.pptx

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Destination Competitive Analysis.pptx

  1. 1.  The notion of destination competitiveness must be consistent with the notion of competitiveness in the international economics and international business literature.  Competitiveness is both a relative concept (ie. compared to what?) and is multi-dimensional (ie. what are the salient attributes or qualities of competitiveness
  2. 2.  Destination competitiveness would appear to be linked to the ability of a destination to deliver goods and services that perform better than other destinations on those aspects of the tourism experience considered to be important by tourists.  Tourism competitiveness is a general concept that encompasses price differentials coupled with exchange rate movements, productivity levels of various components of the tourist industry and qualitative factors affecting the attractiveness or otherwise of a destination
  3. 3.  Competitiveness has also been defined as ---the ability of a destination to maintain its market position and share and/or to improve upon them through time .  Defines competitiveness as the destinations ability to create and integrate value-added products that sustain its resources while maintaining market position relative to competitors.
  4. 4. According to Ritchie and Crouch has the ability :  To increase tourism expenditure,  To increasingly attract visitors  While providing them with satisfying memorable experiences and to do so in a profitable way,  While enhancing the well-being of destination residents and  Preserving the natural capital of the destination for future generations
  5. 5.  PORTERS’ COMPETITIVE STRATEGY  Why firms based in a particular nation are able to compete successfully against foreign rivals in particular industries?  PORTER DISTINGUISHES BETWEEN:  The activities of individual firms in seeking success in global industries (the five competitive forces; generic strategies)
  6. 6.  The determinants of national competitive advantage .  Taking offensive or defensive actions to create a defendable position in an industry, to cope successfully with the five competitive forces and thereby yield a superior return on investment for a firm.
  7. 7.  Firms have discovered many different approaches to this end; best strategy for a given firm is a unique construction reflecting its particular circumstances  At the broadest level: three generic strategies (can be used singly or in combination)
  8. 8. SUPPLIERS buyers POTENTIAL ENTRANTS Rivalry among existing firms Substitutes
  9. 9.  Barriers –economies of scale –product differentiation (brand, customer loyalties) –capital requirements –switching costs( e.g. for the buyer) –access to distribution channels –government policy (e.g. limitations new ski areas) • Reaction of existing competitors –retaliation –experience
  10. 10.  Numerous or Equally Balanced Competitors  Slow Sector Growth • High Fixed Costs (Eg Tourism) • Lack Of Differentiation • High Strategic Stake ( To Be Successful In One Market) • High Exit Barriers
  11. 11.  All firms in an industry are competing, in a broad sense, with industries producing substitute products  Substitutes limit the potential returns of an industry by placing a ceiling on the prices firms in the industry can profitably charge  Tourism: eg. domestic tourism, recreational activities at home
  12. 12. a buyer group is powerful if:  it purchases large volumes relative to seller sales ( e.g. to hotel.  the products it purchases from the industry represent a significant fraction of the buyer’s costs or purchases ( hotel costs for a to) –the products it purchases from the industry are standard or undifferentiated (e.g. hotel rooms)  it earns low profits
  13. 13.  A SUPPLIER GROUP IS POWERFUL IF: – it is dominated by a few companies and is more concentrated than the industry it sells to – the industry (e.g. to) is not an important customer of the supplier group ( air carrier) – the suppliers group’s products are differentiated – the suppliers’ product is an important input to the buyer’s business (e.g. flight costs for a to) – the supplier group poses a credible threat of forward integration
  14. 14.  an effective competitive strategy takes offensive or defensive action in order to create a defendable position against the five competitive forces. how?  positioning (e.g. low cost) – improving the firm’s relative position ( e.g. to raise brand identification, vertical integration) – diversification
  15. 15.  In coping with the five c.f. there are three potentially successful generic strategic approaches to outperforming other firms in our industry  Firms Succeed If They Possess Sustainable CompetitiveAdvantages. BasicTypes Are:  lower cost  – differentiation  – scope or the breath of a firm’s target within its industry: product varieties/distribution channel/segmentation/geographic areas
  16. 16.  COST LEADERSHIP  lower cost than the competitor • price reductions are achieved through cost reductions  • requirements: – large market share  – aggressive price policy – good infrastructure and organization  examples: thomson holidays; benidorm
  17. 17.  perceived as being unique along some dimensions or attributes that are widely valued (premium price)  • advantages: – loyalty/less price sensitivity  • how to differentiate? – design/brand /costomer service/dealer network  • example hotel – functional utility or benefit – symbolic utility( e.g. identification with a group) – experience utility( e.g. friendliness)
  18. 18.  Concentration On One Or More Markets Segments - Buyer Group •To Be A “ Big Fish In A Small Pond”  BASED ON:  cost leadership –product differentiation (to meet the needs of the particular target)
  19. 19.  new tourism changes the rules of the game and calls for new strategies to ensure competitive success  • innovation - introduction of new products- is far more important than low cost, differentiation or focus.  • competitive strategies for industry players – they have to follow a number of principles to compete successfully  • strategies for tourism destinations
  20. 20.  Put Consumers First  • Be A Leader In Quality  • Develop Radical Innovations  • StrengthenYour Strategic Position
  21. 21. LINK MARKETING WITH PRODUCT DEVELOPMENT :  UnderstandThe Consumer  Be Honest/DeliverWhat Is Promised  Built Success From Repeat Business SATISFYTHE CONSUMER  be flexible ( sandals policy)  provide the experience consumers want  deliver ‘ high-touch’ services
  22. 22.  WHAT IS HOLISTIC APPROACH?  the holiday experience is not simply the bed nights at the hotel  –influence the image and development of the entire destination (e.g. dirty streets)  –control service delivery at all levels  • customs and immigration  • tours & attractions  • police  • harassment etc
  23. 23.  DEVELOP HUMAN RESOURCES  develop creative recruitment and personal management  invest in education training/motivate/reward IMPROVE PROCESSES CONTINUALL  empower the front line  –rely on feedback from the frontline to refine production.
  24. 24.  free human resources for ‘high touch’ services develop radical innovations • don’t be afraid of new idea – explore new markets – provide new services – develop new processes
  25. 25.  In general, the competitive performance of organisations is defined from the input and output side.  The input measure is based on physical and human capital endowment and research and development expenses.  The output side covers profitability, market share, productivity, growth and so on .
  26. 26.  Based on this grouping, the input side of destination competitiveness could be physical sources (tourist facilities, infrastructure and environment), human capital endowment (services), and marketing and promotion expenses.  The output side is market share both in the number of arrivals and the amount of tourism receipts, productivity and so on
  27. 27.  As Pearce (1997) implies, a competitive analysis refers to comparative studies. Therefore, destination competitiveness can be evaluated both quantitatively and qualitatively.  Quantitative performance of a destination can be measured by looking at numbers such as annual numbers of tourist arrivals, amount of annual tourism receipts, level of expenditure per tourist, length of overnight stays.
  28. 28.  Battles could be both internal and external barriers affecting the success of the organisation or the destination and its competitiveness in the marketplace. These factors are explained in detail in the following section.
  29. 29.  The socio-economic and socio-demographic profiles of tourism demand in potential markets are a determinant for affecting the choice to vacation and its direction towards particular destinations.  The level of age, income, occupation, time, whom to travel with and personality play a significant role in determining destination choice process .
  30. 30.  Consumers will be likely to choose destinations where any or all of these variables are better matched with what the destination offers.  Since every destination has a different product to attract consumers from different markets, it unlikely to say that all destinations are able to compete for all market segments
  31. 31.  How close a destination is to the tourist markets is another determination of destination competitiveness .  Research findings revealed that there is a reverse relationship between perceived distance and intention to visit and revisit a destination. 
  32. 32.  However, the distance sometimes may not always be important in affecting the flow of tourism demand to any destination.
  33. 33.  By classifying the psychology of consumers in tourism under two headings such as 'allocentric' (those who have active personality) and 'psychocentric' (those who have passive personality).  Plog (1974) suggested that such typology could be effective in understanding why destinations fall or rise in popularity.
  34. 34.  Understanding what a satisfied customer needs and wants is the basic ingredient of a recipe in arriving at successful marketing and improving competitive advantage .  Attention is drawn to the importance of tourist perceptions in successful destination marketing since they influence the choice of a destination the consumption of goods and services while on holiday and the decision to return .
  35. 35.  Where package tours are concerned, the extent to which a destination can attract the interest of tour operators and how it can be included in their brochures will be effective in reaching the market.  Tour operators feel themselves to be ahead of tourist destinations as they, as international suppliers and / or retailers, have to search for better products, applications or destinations for meeting consumer requirements and following changes in their wants and needs.
  36. 36.  The image of the product (destination) is primarily influenced by tour operators’ promotional activities in the tourist generating country.  Depending on the volume of income or the appearance of any problem, tour operators are likely to switch their customers to alternative resorts / destinations .  Tour operators consider themselves to be responsible for monitoring the situation in a destination; they offer holidays to alternative destinations if any threat is posed to their customers.
  37. 37.  The are a lot models proposed, tested and validated to measure the competitiveness of a given destinations.  But it is claimed that none of those models are comprehensive enough to demonstrate the holistic approaches of destination competitiveness.
  38. 38.  The general conceptual model of destination competitiveness developed by Crouch and Ritchie (1999).  Well-known conceptual model of destination competitiveness in tourism literature and has been the starting point for many other research studies about destination competitiveness.  The model distinguishes 36 attributes of competitiveness classified into five key factors.
  39. 39.  The model outlines a series of factors that play a determining role in the competitiveness of a tourist destination.
  40. 40.  Physiography and Climate  Culture and History  Market Ties  Mix of Activities  Special Events  Entertainment  Superstructure
  41. 41.  Infrastructure  Accessibility  Facilitating  Resources  Hospitality  Enterprise
  42. 42.  Marketing  Finance andVenture  CapitalOrganisation  Human Resource Development Information/Research  Quality of Service  Visitor Management  Resource Stewardship
  43. 43.  System definition  Philosophy  Vision  Audit  Positioning  Development  Competitive/collaborative analysis  Monitoring & evaluation
  44. 44.  Competitive (micro) Environment  Global (macro) Environment
  45. 45.  Location  Interdependencies  Safety/security  Awareness/image/brand  Cost/value
  46. 46.  The integrated model includes some types of determinants missing from theCrouchRitchie model.  The integrated model explicitly recognizes Demand Conditions as an important determinant of destination competitiveness.  The integrated model explicitly recognizes that destination competitiveness is not an ultimate end of policy making but is an intermediate goal toward the objective of regional or national economic prosperity.
  47. 47. Endowed Resources  Natural Resources  Cultural/Heritage Resources  Created Resources • Tourism infrastructure • Special events • Range of available activities • Entertainment • Shopping
  48. 48. Supporting Factors and Resources  General Infrastructure  Quality of Service  Accessibility of Destination  Hospitality  MarketTies Destination Management
  49. 49.  Destination ManagementOrganisation • Coordination • Provision of information • Monitoring and evaluation Destination Marketing Management Destination Policy Planning, Development Human Resource Development Environmental Management
  50. 50.  Situational Conditions  Destination Location  Competitive (micro)Environment • Capabilities of Firms • Strategies of Firms • Industry Structure and Firm Rivalry  Global (macro) Environment o political/legal/regulatory o economic o sociocultural o technological
  51. 51.  Security/ safety  Price competitiveness Demand Conditions  Tourist preferences  Awareness of destination  Destination image
  52. 52.  There are a number of criteria to assess the performance of tourist destinations on the table of competitiveness.