Indirect Exchange Channel Model Type 1 Type 2 Type 3


1.2.3.2.Price

Price is an important component in the marketing mix strategy. Many experts believe that price is the most effective tool to attract customers and counter competitors. Determining price and price competition is the number one important issue that managers have to face. A tourism business with too high a price may lose many potential tourists. On the contrary, a business with too low a price will have difficulty in maintaining and servicing equipment, operating costs and may lead to losses. So how to get the right price?

First of all, we must clearly understand the concept of "Price". According to the traditional point of view, price is generally understood as the quantity that converts the value of a product. Nowadays, price can be understood as the sum of values ​​that consumers spend (exchange) for the benefits of owning or using goods or services. In a narrow sense, price can be understood as the amount of money charged for goods or services.

Factors affecting the valuation of DNDL

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The pricing decision-making process is influenced by many factors. Based on the company's ability to adjust, these factors are divided into two groups: internal factors of the company and external factors of the market.

Internal factors affecting the determination of business prices Business strategy and positioning

Indirect Exchange Channel Model Type 1 Type 2 Type 3

To have a correct pricing strategy, each business needs to choose the target market and position the product carefully. The price determination of the business depends on the product strategy that the business chooses. Market positioning strategies often have major impacts on determining the price of a business's products.

The more clearly a business defines its goals, the easier it is to determine the price of its products. The goals that businesses often set are: Ensuring survival, maximizing profits, maximizing market share, and leading the market in product quality.

Survival goal: The number one goal that businesses set for themselves is how to survive through difficult times. Therefore, survival is more important than profit. Travel businesses often apply a price reduction strategy to try to get revenue to cover costs.

Profit maximization goal: businesses want to set prices so that they can maximize profits. Businesses believe that, based on market demand and costs, they can determine different prices and they choose the price that can bring in the most profit.

high revenue, high profit, quick return on investment, achieving short-term financial goals without regard to long-term survival.

Target to maximize market share: businesses want to lead the market in terms of market share. Businesses believe that with a high market share, even with a low price, they can still achieve their long-term profit goals. Therefore, they use the strategy of pricing at the lowest possible level. After a while, when the number of customers is stable, they increase prices sharply and use other marketing tools to affirm their position in the competition.

The goal of leading the market in product quality: reputable travel companies often have very high prices. They always put product quality first, always compete with product quality. To achieve such goals, businesses always need to focus on investing in R&D activities and quality control and maintenance activities.

Operating costs

Cost is the main basis for businesses to determine the price of products. First of all, the price must ensure to cover the costs of products, distribution, product promotion and ensure the return of capital for investors. Therefore, cost is an important component in the pricing strategy of businesses.

One thing to note for businesses is that customers do not care about the production costs that businesses have to pay, they only care about the values ​​that they will receive. Therefore, businesses need to pay close attention to their production costs to determine prices that can compete with competitors, while ensuring that they can cover costs and earn profits.

External factors affecting the determination of business prices Competitive market

In the tourism business, most markets are monopolistic competition and oligopolistic competition. Therefore, tourism businesses often determine very diverse prices based on the diversification of products supplied to customers and tourism businesses often have to be sensitive to price changes to respond to price changes of competitors in the market.

Other external factors

When determining prices, businesses must also pay attention to other factors of the external environment such as inflation, economic growth, and bank interest rates. For example, when the economy shows signs of a recession in goods and purchasing power declines, many restaurants have to rebuild their menus with lower prices, and travel agencies have to redesign their tours with lower costs.

Price is a major concern for all types of goods and services. However, it is also a concern for the tourism market – a market with many products and services.


easily substituted products, targeting entertainment and vacation segments. Therefore, managers need to use price as a lever in coordination with other elements in the marketing mix to reconcile consumer interests with the limits in the strategic structure of the business objectives of the enterprise.

1.2.3.3.Distribution - Place

Product and service distribution policy is the direction that shows how hotel and tourism businesses provide products and services to their customers. It is a system of measures and techniques to bring products and services to the final customers with reasonable quantity of goods, suitable items and ensuring civilized service factors.

Distribution policy plays an important role in the production and business activities of each enterprise. Each reasonable distribution policy will make the business process safe, the goods produced will not be in stock, reduce competition and increase the speed of goods circulation. Especially for tourism business, supply and demand are uneven, so the distribution channel plays a very important role in: market research, promotion, negotiation, material distribution, establishing relationships, ...

Because the product is mainly intangible, if there is no reasonable distribution policy, the available product cannot be sold. Product policies and price policies are closely related to distribution policies.

Like any other field, tourism products also have two main forms of distribution channels: direct distribution and indirect distribution.

Direct distribution channel : businesses choose this distribution channel, maintain their own sales force and are responsible for all channel issues. This type of channel is often chosen when the business only focuses on a few clearly identified customers. Sales efforts require tough negotiations and appropriate, timely decisions. For example, customers who buy travel programs are organizations. Sales staff of the travel company will directly negotiate with customers and sign contracts for using travel services.

Diagram 1.2. Direct distribution channel model


Business

Tourists


(Source: Tourism Marketing Textbook, Dr. Ha Nam Khanh Giao) Indirect distribution channel : businesses choose this type of distribution channel in case they do not want to maintain the entire sales force and share

functions in the channel with other intermediary organizations and individuals. Enterprises encourage intermediary levels to introduce and develop the expansion of distribution channels. If the company's new product has advantages over other competitors in the market, instead of competing, other companies can also choose to become intermediaries distributing this new product of the company to achieve benefits for both parties. For example, businesses can combine in gathering individual customers for group travel programs. This type of distribution can only be implemented under the condition that the company has an advantage in gathering individual customers or an advantage in costs and accepts a low profit level according to the motto of increasing profits through scale development.

Business

Branch

Level 1 Agent

Level 2 Agent

Tourists

Business

Branch

Tourists

Business

Branch

Agency

Tourists

Diagram 1.3. Indirect exchange channel model Type 1 Type 2 Type 3


(Source: Tourism Marketing Textbook, Dr. Ha Nam Khanh Giao)

Businesses can choose both direct and indirect distribution methods and choose between different levels of intermediaries. However, in the tourism sector, to make intermediaries truly meaningful and avoid conflicts, appropriate policies are needed for each type of channel and each level of intermediary.

1.2.3.4. Promotion

Modern marketing activities pay great attention to the promotion mix strategy. This is one of the main strategies of the marketing mix that organizations and tourism enterprises need to use to impact their target markets.

A business that creates a good product, sets an attractive price and offers it in a convenient location is ideal, but it is not sure to be effective if all the information about that product is not provided to customers in a thoughtful way. The business must communicate with customers to provide information for customers to recognize the product and the business to influence their tastes, perceptions and behaviors.


Currently in the world, marketing scholars have many different views on the tools of mixed promotion in tourism. According to Alastair, M. Morrison, mixed promotion includes 4 main tools:

Advertising : Advertising is the art of introducing goods or services to a specific target market through paid media . Through advertising, businesses can provide any information related to products, services, businesses and persuade them to buy their products or services. In addition, advertising also has a very important function, which is the function of recall, that is, reminding consumers to remember their products. In fact, consumers have too many concerns in their daily lives, so they easily forget if certain information appears in the media irregularly or a few times. The information provided must be repeated many times to make consumers remember.

When advertising, businesses must consider many factors to choose the most suitable advertising media for their products and businesses. There are 4 main factors that influence businesses' choice of media:

Media usage habits of target customers . For example, young people prefer the Internet, middle-aged people prefer television.

Product characteristics : depending on the type of product or service, it is suitable for certain media. For example, advertising for daily consumer products is suitable for advertising on television, tourism advertising is suitable for advertising in publications, outdoor advertising, and the Internet.

Different types of messages will require different media : short messages are suitable for radio and television, detailed messages that require a lot of space and time to present should be done in magazines, the Internet,...

Cost : Television is a more expensive medium than other media, but of course, the number of people accessing information is also greater. Therefore, businesses need to consider carefully to harmonize all requirements regarding advertising goals, messages and costs.

Promotion : Promotion includes many promotional tools to stimulate customers to consume tourism products quickly. Promotion activities often include: customer promotion by giving gifts, coupons, refunds, discounts, rewards, contests, ... commercial promotion (for travel agents) sales support, gifts, advertising, sales competition cooperation between agents, ... Appropriate promotion is both pervasive and creative, so companies

in the industry constantly compete to innovate and gain leadership in motivating customers, and gaining market share.

Public Relations : Public relations is the practice of creating, maintaining and developing relationships with different publics. This activity aims to create a good impression and image in the public, making the public love the business, thereby correcting negative information and eliminating false information. In the tourism industry, the public is local residents and businesses, other industries, corporations under environmental pressure, politicians and service providers.

Public relations work includes the following contents: press relations (creating and posting valuable information to the media to attract attention to tourism products and programs), tourism program propaganda (making the public aware of the company's tourism programs), building and maintaining domestic and local community relations, lobbying (building and maintaining relationships with lawmakers and state officials), investor relations (maintaining relationships with shareholders, etc.),...

Public relations works through a variety of tools: favorable news about the company and products, speeches, special occasions, written materials, audiovisual materials, corporate identity materials, social activities

Personal selling : unlike sales promotion or advertising, personal selling is a direct communication activity between the salesperson and current and potential customers. It is the effort of each individual in the travel business to get orders for travel programs from customers. The role of direct selling depends on the nature of the product, the needs of consumers and the stages in the process of buying and selling products and services. Participating in direct selling activities are not only direct salespeople but can also include many people in the business such as service order takers, cashiers, etc.

Personal selling must be integrated into the communications mix so that it can be supported by advertising and PR in creating awareness, knowledge, and interest in organizations. Today, direct selling must not only meet sales targets but also secure future potential transactions to generate sales. The focus is on customer retention, relationship building, and sales management rather than just one-off transactions. The rapid development of information technology is certainly changing the role of direct selling in the 21st century, especially in selling travel programs to organizations, and will undermine the traditional role of retail distributors in


tourism industry. However, it will not greatly affect the special role of direct sales staff in the service delivery process, which is characteristic of the tourism industry.

1.2.3.5.People

The human factor plays an important role in service marketing in general and tourism marketing in particular. It can be said that the success of a tourism business depends largely on the recruitment, training, coaching, motivation and management of people in the business. The human factor plays different roles in influencing the tasks of marketing and communicating with customers. Researchers have classified this impact into four groups:

The first group has the role of regular contact with customers, they are sales people or customer service people and as such, they have a close relationship with marketing activities. Therefore, they must be trained and motivated to serve customers well on a daily basis.

The second group is people in positions that are not related to high-level marketing activities, but they also regularly come into contact with customers, creating relationships between businesses and customers.

The third group is professional marketers, who are those who implement marketing strategies and plans in different roles and functions. These people are often trained to have in-depth knowledge of marketing.

The fourth group is those who perform various tasks in the business. They do not directly contact customers or perform marketing tasks but they have a direct impact on the business's activities. These people need to be trained to understand the importance and role of internal and external marketing as well as understand the business's marketing plan to contribute to improving the quality of customer service.

With such important impacts, we see that people are an important factor in the marketing-mix activities of travel businesses and are considered as a separate factor. Successful businesses often create a marketing orientation for the whole business and a correct human policy. 1.2.3.6. Service provision process - Processing

In the tourism service industry, the process of providing and consuming services occurs simultaneously and customers must directly participate in the process of creating services. Customers are not only interested in the results of tourism services but also interested in the process of providing them. This process has a strong impact on customer psychology.

Because of the simultaneous nature of service provision, the quality of tourism products must be ensured through a clear and careful supply process, eliminating errors from both sides. Tourism enterprises need to plan clearly and in detail each step of their tourism programs. The tourism service process includes a set of operating systems with mutual impacts between factors, linear impacts between stages and steps of the system in close relationship with regulations, rules, schedules and operating mechanisms.

1.2.3.7.Service environment - Physical Environment

This is the 7th P in the marketing mix strategy, a part of the marketing strategy. The physical environment of a tourism service provider is where the service is created, where customers and service providers communicate, plus the tangible elements used to support the role of the service. Because tourism products have the characteristic of "invisible" services, in tourism business, managers must always try to provide supporting facilities, reduce the invisibility of the service, and increase customer trust. That is why tourism companies always try to invest in the company's facilities such as hotels, offices, employee uniforms, technology used in the working process, etc. to increase the impression of the company's reputation, prestige and position.

1.3. Overview of competition 1.3.1.What is competition?

Why are some countries highly competitive, while others fail to compete, and why do some businesses succeed while others do not? These are questions that many country and business leaders often ask in today's market economy. Competition has become the most concerned issue of national and business leaders.

How is the concept of competition defined most appropriately and accurately in today's economy? Up to now, there has not been a concept of competition proposed by any organization or individual that has been widely accepted by everyone. The main reason is that this term is used to evaluate many businesses or countries. But the basic goals are set differently depending on the consideration from the perspective of each business or each country.

According to the economic dictionary of Hanoi Truth Publishing House, " Competition is the struggle between private producers of goods to gain more favorable production and consumption conditions " or " Competition is the struggle to gain a consumer market, source of raw materials, and favorable investment areas to gain a dominant position in a certain industry, in the national economy or in the world economic system" .

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