International Marketing for Travel and Tourism

This document provides an in-depth analysis of international marketing strategies for the travel and tourism industry. It includes a situational analysis of Club Med, assessment of market selection and entry barriers, and recommendations for market segmentation, targeting, and positioning. The document also discusses methods to evaluate cost effectiveness of sales promotion and identifies potential issues that can affect overall strategy. Additionally, it provides recommendations for promotional strategies and risk assessment.

International Marketing for Travel and Tourism
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Table of Contents
Introduction......................................................................................................................................3
Situational analysis of Club Med.....................................................................................................3
Analysis of current international marketing practice of Club Med.................................................6
Assessment of Club Med’s market selection, entry and barriers to entry.......................................7
Recommendation of market segmentation, targeting and positioning............................................8
Methods that can help Club Med to evaluate cost effectiveness of sales promotion......................9
Identification of issue that can affect overall strategy of Club Med................................................9
Recommendation of promotional strategy with marketing mix for proposed market...................10
Risk assessment of implementing promotional strategy...............................................................10
Conclusion.....................................................................................................................................11
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Introduction
Organisational operations govern the fact whether a business will be more profitable if it expands
to international markets. The nature of the products and services also suggest whether business
expansion can actually be helpful to the company. In this study, the assessment of the operations
and marketing strategies that are adopted by a company Club Med is conducted along with
recommendations for better promotion in the international markets by identifying issues in the
current strategy. The market segmentation, targeting and positioning strategy of the company is
carefully elaborated upon to devise better recommendations for market segmentation and entry.
The assessment of the barriers to entry allows in identifying issues that can hinder business
growth. The risk assessment that will be involved in the implementation of promotional strategy
by the company is also evaluated so that risk factors can be identified to prepare contingency
plans for any unforeseen circumstances.
Situational analysis of Club Med
SWOT analysis
According to Calow (2011), the first step that businesses must make sure to evaluate is a proper
assessment of their strengths, weaknesses, various opportunities and threats in the global market
environment. This allows companies to adjudge the necessary strategies that can allow them to
be profitable in the global business atmosphere.
Strengths:
 The major strength that Club Med
possesses is its unique style for a
holiday. The all-inclusive holidays
together with geographically beautiful
locales makes the full package worth
investing in. As per Luo (2015), travel
and tourism industries vie for the best
of locations along with attractive
holiday packages that provide bang for
the buck value to its customers.
Weaknesses:
 One of the major weakness that the
company shows is the pricey nature of
its products and services. Since it
caters to high income segment, the
prices are too high in comparison to
the medium and low income target
group. This effectively reduces the
customer base and interest.
 Even though the company business is
huge with a wide customer base across
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 The volume of established business
that amount to 71 resorts that are
highly populated with 4T and luxury
5T resorts make them a premium
destination for all customers. The
worldwide business allows brand
recognition.
 Possession of cruise options and
separate section for luxury tours
allows them to reach out to customers
of higher income segments.
 Adopting a friendly and multicultural
approach generates positive appeal to
its luxury resorts across the globe.
 The multiple activities that customers
can enjoy in the holiday packages
gives the company full advantage to
fulfil every type of demands from
different customers.
many countries, the marketing factor
for the company has been relatively
weak. This makes the company
relatively invisible to a major chunk of
the population. According to Ayal and
Zif (2013), proper marketing can
enhance brand image and help in
creating new customers in addition to
the already established consumer base.
 The problem with large organisations
is the huge number of employees and
staff that makes the internal
management cost high. On top of that
being a luxury resort increases the
costs of maintenance even more.
 The biggest disadvantage that the
company faces is the limited products
and services at their disposal. On top
of that it caters only to the upscale
focus target audience and reduces the
impact that it can achieve by catering
to medium and high income customer
base.
Opportunities:
 The opportunity is present to target
growing economies and markets of
China and Brazil aggressively. The
geographical topography will
definitely suit their business model.
 The reach of Club Med and its
products can be enhanced with the use
Threats:
 The political instability in various
nations can invariably disrupt the
business operations. Moreover, the tax
changes that occur due to instability
can lead to erratic business.
 The entry of new competitors with
low cost and economical packages are
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of social media. Each and every
product of the company can be
presented attractively through various
social media websites to create
awareness and reach out to millions of
people across the globe.
 Development of new products and
services that cater to the economical
customers so that they can provide
quality services to them as well and
increase its market share.
threatening business across the globe.
The competitors such as Uniworld
Boutique River Cruise Collection,
Pacific Islands Club Saipan and
Carefree vacations provide cutthroat
competition through its economical
packages across the globe
(Datafox.com, 2016).
 According to Li (2014) natural
disasters are potentially a threat as it
can result in a catastrophe for the
company.
 Health crisis is an important factor
since any disease that is contagious
can affect the entire cruise ship and
can be a potential disaster. The recent
case being the Ebola virus.
Table 1: SWOT analysis for Club Med’s international business
(Source: Created by Author)
Micro/Macro environment analysis
Luo and Tung (2015) argued that business undertakings and marketing features are interrelated
and it makes the analysis of the micro/macro environment even more critical. Business planning
and strategies are devised based upon data gathered after careful market analysis. Holidays and
vacation are the aspects that consumers, irrespective of their income bracket want to enjoy to the
fullest. Club Med has mostly catered to the upscale customers, however if they are to market
their products effectively they must understand the first and most important issue of global
economy.
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The global recession and the uncertain economy of countries can hamper potential business
propositions due to irregular pricing. The higher prices of the products of Club Med will increase
and hence a considerable amount of consumers may back out. Moreover, marketing costs in
other countries may vary and that will invariably influence the final pricing of the holiday
packages. Competitors also play a vital role in the distribution of market share. In the case of
Club Med, the influx of more cruise liners and low cost holiday packages have disrupted
business value. The factor of technology should be utilised by the company to make its services
more streamlined and with the use of social media they can address a larger chunk of the
audience.
Competitor analysis
According to Mahoney and Chi (2011), analysing the competitors and its products and services
can allow the development of ideologies that can help the business compete on the business
perspective. The biggest advantage that the competitors of Club Med is their reasonable and
economical pricing of their tour packages and plans. Even though they cater to high income
categories, the varied plans for others including economical options make them options that
customers can prefer. For example, a rival of Club Med, Carefree Vacations have products that
have a price range starting from $500 and an option of around 12 cruise liners
(Carefreevacations.com, 2016).
The threat of new entrants is massive as it provides more options and services to customers and it
will directly affect global business. Keeping in mind the little marketing measures used by Club
Med to generate interest, the products of competitors can effectively hurt business propositions.
The new products and services of another competitor Uniworld Boutique River Cruise
Collection, have river cruises that are based on certain themes and it allows an interactive
experience to all its users. Other planning features allow packages for single users, family users
and other facilities that are not all-inclusive as compared to Club Med (Uniworld.com, 2016).
This makes their rates cheaper when compared to Club Med.
Analysis of current international marketing practice of Club Med
According to Narasimhan (2015), developing of marketing practices allows companies to enter a
new market capably and helps them to launch their product on a larger scale to the desired target
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audience. If the context of Club Med and its marketing approach for the global market is to be
focused, it can be noted that it needs improvement. The latest development where Club Med has
opted to go upscale brings forward certain difficulties that they may face in the international
market. In these many years, the marketing strategy that they have focused upon has remained
the same. The focus on multicultural, upscale and friendly services has been adopted and used
for many years. This has been relatively successful. The scrapping of old resorts and investing on
new luxury villas have helped in brand development. According to Otto and Ritchie (2014), the
strategy of Club Med has a two layer approach that involves in providing the customers a classy
view of the brand and secondly the treatment to customers fulfils the second approach. Their
marketing strategy was based upon the nature of their product and services that promises
sophistication. As per reports, the company has adopted marketing policy so that a more
concentrated customer base is formed. Rugman and Verbeke (2014) argued that previously, Club
Med failed in their marketing plans due to weak advertising campaigns and used up to 8
advertising agencies across the world. The policy of using upscale positioning method has
necessitated that rigid and effective marketing plans should be adopted for better reach in the
market.
As per recent developments, Club Med has used the help of Current Lifestyle Marketing to
provide service as their PR agency. This was initiated after a competitive review. The new resort
line at the Dominican Republic is to be set up and the company is gearing new marketing
strategies to make it a success. The approach that the company decided is to re-educate
customers about the history of Club Med across the globe by including newer markets for ski
resorts in Europe and Japan (Prweek.com, 2016).
Assessment of Club Med’s market selection, entry and barriers to entry
According to Smith (2015), the importance of market selection reflects heavily on the business
front as it allows preparation of market entry strategies and helps in identifying potential barriers
for the company. If the perspective of Club Med is evaluated, it is evident that in order to
establish a healthy global market share correct market must be selected to attain profitability. As
per recent reports, Club Med opted to achieve a concentrated target market and has been
spending heavily to cater to markets such as USA, Canada, Belgium, Japan, Italy, Germany and
Switzerland. It has opened three new resorts in USA in order to attract maximum customers
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since they have made the USA market their main priority followed by China. Looking at that fact
in mind it is clear Club Med looks at utilising the market with maximum approachability and
geographically exotic locales. On the business expansion front, Club Med had failed severely to
operate in the Chinese market, however, it has attempted to create brand presence by opening
numerous sales offices. This strategy for market entry allows brand establishment and visibility
so that the business can be later launched grandly (Globalmarketingtoday.wordpress.com, 2016).
Another area where they entered a new marked was that of Dominican Republic. The market
entry methodology that they adopted was to cater to children as well. They established
playgrounds for children in the resort and included activities such as acrobatics, trapeze and
dance. The new market entry also facilitated the strategy of re-educating consumers about the
current services that Club Med provides. However, the business in a new market may face
barriers that can be economic, political or geographical in nature. For instance, business can be
hampered if climatic disasters such as tsunamis or earthquakes occur in the resorts of Dominican
Republic. On the political point of view, the political scenario in China may create issues
regarding taxes, duties and certain regulations that are strictly followed in in the travel and
tourism industry. According to Tsai and Chen (2011), language barrier can be a major factor that
has a role in deciding the overall profitability of the company.
Recommendation of market segmentation, targeting and positioning
According to Wu et al. (2015), market selection and segmentation can allow companies to
identify potential customers and keeping other micro/macro factors in consideration, the market
entry procedure can commence with fruitful results. If the current business of Club Med is to be
focused upon, their focus is mainly on establishing resorts in beach destinations and skiing
resorts. Keeping this fact in mind, it can be suggested that the markets of Italy and Switzerland
must be exploited even more with the addition of a new market in Chile and New Zealand for
skiing resorts. Older markets will allow sustainable business to the company and the new
markets will allow brand establishment for their skiing resorts.
If the beach resorts are to be considered, the market of Dubai is a wonderful prospect both
financially and for the business objective. The company can enter a partnership or joint venture
with the cruise liners and resorts in Dubai to gain a positive profit sharing ratio. Since the target
market is upper income level customers, the economy and spending capability of people in
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tourist destinations as Seychelles, Dubai and Chile will be a helping hand. The company will
position its products with the assurance of 5 star quality comfort and every upscaling method that
can make the holiday worth cherishing.
Methods that can help Club Med to evaluate cost effectiveness of sales promotion
Calow (2011) argued that every new market can be targeted using attractive sales promotion so
as to lure more consumers, but precaution should be made regarding the risk of going over
budget in the promotional activities. In order to assess the effectiveness of the sales promotion by
Club Med in the target markets, they must make sure that the planning for the volume of
customers desired before and after promotion is to be done in advance. The proper evaluation of
the promotional costs is also to be maintained regularly and it can be further enhanced using a
customer survey.
Luo (2015) opined that proper planning is detrimental for a business to survive in a new market.
Club Med must make sure that they estimate the volume of sales that they expect without
promotion, this helps in finding variations of the sales volume. It must also be ensured that they
monitor and compare the actual revenue with the actual sales after deducting the promotional
costs, if figures are positive then the business is profitable and promotional activities can be
termed cost effective. Regular reviews must be taken from customers to assess their comfort and
satisfaction levels. This also helps in development of brand awareness and recall.
Identification of issue that can affect overall strategy of Club Med
According to Luo and Tung (2015), new market entry for a business is not an easy process as it
brings along certain issues that can invariably derail the strategies of a company. In the context
of Club Med, the issue that can affect the overall strategy is the cost of marketing that is
necessary for the business to prosper. Since the company aspires to reach out towards global
expansion and invest in multiple beach resorts and ski resorts, the cost of marketing and
promotion may be costly to maintain. The reason behind this issue is the bad track record of Club
Med in terms of advertising and promotion of their product.
Additionally the problem raise the need for re-educating the consumers and may require better
sales promotional campaigns and offers. This can effectively have an impact on the overall costs.
Smith (2015) argued that venturing into a new market necessitates the education of the customers
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regarding a brand, else making a connection with the audience is difficult. The increase in the
cost of marketing and promotion can have an impact on the overall pricing of the holiday
packages and that may deter many customers from tying out the brand.
Recommendation of promotional strategy with marketing mix for proposed market
The proposed markets that Club Med can target includes Chile, Dubai and Seychelles regarding
their interest to open ski resorts and beach resorts. Keeping this factor in mind, the promotional
activity that can be used for beach resorts in Dubai can include tie ups with major cruise liners
present in the country and offering early bird promotional offers in both resorts and the cruise
travel. The tie up with domestic cruise liners will help in cost reduction for major promotion
since they can attach their brand name to the established cruise liners and create a bonus
package. In order to cater to the Chilean market, the use of promotional campaigns in restaurants
and major tourist spots should be adopted to make their presence felt. A full unveiling of all the
new features and offers should be clearly stated along with a brief history of Club Med’s
business performance and features. The skiing resort in Chile will require maximum exposure
due to the existing domestic resorts. Use of promotional mediums such as advertising through
print and visual media, use of billboards and social media advertising can assist to reach the local
target audience. Costs can be saved from creating kiosks and large scale promotional campaigns.
They must position the brand as a premium product that offers 5 star quality service to couples,
friends and families.
The positioning that can used for the market in Seychelles in to target honeymoon couples as
well as unmarried couples. This way the exotic locales can be used for developing a promotion
event at a beach showcasing the plans of the company for the resort and the services and plans
that they mean to achieve. This can generate footfalls and eventually word of mouth publicity.
Risk assessment of implementing promotional strategy
The designing of market entry and promotional strategies must be carefully chalked out and a
risk assessment must be made to ensure contingency plans are developed on time before any
mishap. The political risks is high in the Dubai market due to the government’s push for growth
in domestic business houses. The profit share ratio may not be profitable as a consequence of
that factor. The Ski resort in Chile may pose the risk that is also economic in nature. The small
and open economy makes it vulnerable to situations of financial crisis across the globe. This can
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make promotion in the country massively difficult. On the other hand, the promotional strategy
in Seychelles can be hampered due to the mismatch of skilled labour as it hinders the creation of
quality job creation. Business establishment may be difficult.
Conclusion
The study elaborates on how important it is to expand business in newer markets and allows an
explanation of the various promotional strategies and its effects on the overall cost of the
package. The study states that Dubai, Chile and Seychelles can become the untouched markets
that can generate business profits. The various risks involved suggest that promotion cost must
be maintained very strictly to avoid losses.
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Reference list
Books
Calow, P.P. ed., (2011). Handbook of environmental risk assessment and management. John
Wiley & Sons.
Luo, Y., (2015). Entry and cooperative strategies in international business expansion.
Greenwood Publishing Group.
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Ayal, I. and Zif, J., (2013). Market expansion strategies in multinational marketing. The Journal
of Marketing, 15(2), pp.84-94.
Li, J., (2014). Experience effects and international expansion: Strategies of service MNCs in the
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Narasimhan, C., (2015). Competitive promotional strategies. Journal of Business, 22(2), pp.427-
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Otto, J.E. and Ritchie, J.B., (2014). The service experience in tourism. Tourism
management, 17(3), pp.165-174.
Rugman, A.M. and Verbeke, A., (2014). A perspective on regional and global strategies of
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Smith, W.R., (2015). Product differentiation and market segmentation as alternative marketing
strategies. Journal of marketing, 21(1), pp.3-8.
Tsai, C.H. and Chen, C.W., (2011). The establishment of a rapid natural disaster risk assessment
model for the tourism industry. Tourism Management, 32(1), pp.158-171.
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Wu, A., Costa, J. and Teare, R., (2015). Using environmental scanning for business expansion
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Websites
Carefreevacations.com. (2016). Cruise Offers | Carefree Vacations. [online] Available at:
http://www.carefreevacations.com/cruise/offers.
Datafox.com. (2016). Top 5 Club Med competitors in the travel and hospitality Industry.
Available at: https://datafox.com/competitors/club-med.
Globalmarketingtoday.wordpress.com. (2016). Club Med Goes Upscale. [online] Available at:
https://globalmarketingtoday.wordpress.com/the-real-world/club-med-goes-upscale/ [Accessed
19 Dec. 2016].
Prweek.com. (2016). Club Med names Current Lifestyle Marketing its PR agency | PR Week.
[online] Available at: http://www.prweek.com/article/1341097/club-med-names-current-
lifestyle-marketing-its-pr-agency.
Uniworld.com. (2016). Hallmarks of Distinction | Uniworld River Cruises. [online] Available at:
https://www.uniworld.com/in/why-uniworld/hallmarks/.
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