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There is nothing new in the observation that price is a deciding factor, or even the deciding factor, in consumer behaviour. What is new is that the economic model associated with low prices is becoming more and more popular. Companies adopting this model make it their mission to offer high-calibre, no-frills products that are in no way synonymous with poor quality. For examples, one has only to look at the soaring popularity of low-cost carriers in the airline industry.

A thousand and one reasons to cut prices

It is only normal that customers want to get the most for the least amount of money. There are many reasons to cut prices:

promotions to publicize a new product;
deals to attract new customers;
lower prices to beat the competition ;
special group rates;
« early-bird » specials;
last-minute prices to liquidate stock;
off-season prices;
guaranteed best rates to lure reservations away from middlemen.

And yet, at the end of the day, such measures cut into the profit margin.

The low-cost concept is in no way synonymous with cheap

Working from the idea that people are looking for low prices, a number of businesses have successfully questioned their traditional ways of doing things and found ways to cut costs and still offer a quality product. In fact, the term low cost (which is often poorly translated into French as « bas prix » or low price) simply means that – since operating costs are lower – one can ultimately offer lower prices. Of course, the calculations are very different for Air Canada from what they are for WestJet when it comes to a $99 Montreal-Toronto flight. Since these two companies do not have the same cost structure, one operates such a flight at a loss, while the other can make a profit. For WestJet, the price is in line with its operating costs, while for Air Canada, it is simply a strategy to boost sales or keep up with the competition.

An increasingly popular business model

The avant-garde, low-cost concept was first adopted by Southwest Airlines in the United States back in 1978. Although it has taken time to catch on, the low-cost concept and the carriers using it are causing a lot of turbulence in the airline industry. WestJet was the first to adopt the concept in Canada and it has been followed by JetsGo, Canjet and Air Canada’s Zip and Tango services.

Even airports are investing in the market. Marseille, Beauvais, Geneva and, most recently, Singapore have all announced plans to open low-cost terminals expressly for these carriers. Could Montréal’s suburban Saint-Hubert Airport be far behind?

To counter stiff competition from low-cost carriers, France’s national rail company (SNCF) has also decided to explore the concept. It has launched a low-cost version of its TGV high-speed rail service, combined with an innovative array of special services. Basically, the rail company is offering exclusive online-booking and « early-bird » rates, considering partnerships to enable customers to design their own products, and is testing a process whereby all tickets are checked upon boarding, rather than on the train.

In France, the Formule 1 hotel chain has revolutionized the economy hotel industry. The concept was developed in the 1980s after a study showed many travellers found hotel rooms too expensive. The entire hotel « production line » was closely scrutinized to reduce capital and operating costs. This type of hotel meets customers’ primary expectations: cleanliness, comfort and low-cost.

Low-cost cruises are now on the horizon. Already the owner of easyJet (a low-cost carrier), easyGroup will soon launch easyCruise. Some are criticizing the idea, saying that easyCruise is more about ocean transport and ferry service than an actual cruise. As opposed to the usual cruise concept based on luxury and attentive service, easyCruise will follow the example of the airlines with a reduced crew, simplified pay-per-use services and, above all, low prices.

Even destinations (Cuba, Tunisia and Turkey) are targeting the low-cost market. At the opposite end of the spectrum, destinations like Monaco, Île Maurice and Deauville wish to maintain their image as playgrounds of the elite.

To each his own, but make sure you are clear

Many successful businesses have proven the merit of the low-cost business model. When a company’s prime objective is to offer a low-priced product, it is important to communicate this clearly and ensure the customer understands what this implies in terms of quality, service and price.

The strength of those who develop new concepts lies in their ability to discern opportunities and take advantage of what the environment offers. Although this is easy enough to say, one must truly have a visionary streak to venture off the beaten path.

Source: Les Cahiers Espaces. « Stratégies de petits prix, » Vol. 79, November 2003.

According to a survey conducted by the Travel Industry Association of America (TIA), the Internet is the « most useful » medium for finding travel information, followed by motor club magazines and newspaper travel sections. Strangely, however, the same survey notes that media users found consumer travel magazines to be twice as credible as the Internet.

According to the survey of 1,300 U.S. adults conducted in July 2001, 61% of travellers (or 82 million Americans) said they read articles about travel and destinations in the media, or watch or listen to travel shows on TV or the radio. This number is up from the 55% of travellers surveyed last year who said they had used such information sources. The survey asked only about unpaid travel coverage, not advertising.

The survey also asked respondents to rank the usefulness of various travel media. The Internet was ranked first as the single most useful medium, as follows:

When it came to believability,however, the media users rated the travel information in same media quite differently:

Finally, the level of trust of respondents with regard to travel media varied depending on the planned activity. The following lists the percentage of media users who said YES when asked if something they read or heard caused them to:

Using television to promote a destination

Television coverage is often used to counteract the effects of a crisis or when a destination’s image has been tarnished due to a particular situation (war, epidemic, environmental accident, natural disaster, social crisis, etc.). It provides information about the destination and its products, while helping to market it to the public.

According to Thierry Baudier, Director General of Maison de la France and a participant at the First World Conference on Tourism Communications (TOURCOM), which was held in Madrid in January 2004, television targets the general public, and people likely to travel in particular. It is also aimed at the media, which, in his opinion, play a major role in building a destination’s image, shaping public perception and providing information.

For Gary Wardrope, Commercial Director at the Travel Channel, TV is ideal for this type of message:

it is easy to use and simple to understand
it provides great detail, both visual and auditory
it appeals to the emotions
it reaches a very wide audience, especially if the show is rebroadcast on other regional, national or even international channels

Summer television in Quebec

In the wake of shows like « Partis pour l’été« , « La poudre d’escampette » and « La route des vacances« , Quebec’s TVA channel will broadcast « 100 détours » this summer. This weekly series will invite sixty or so performers to take part in car rallies that will feature and promote some of the province’s principal tourist attractions. Shooting will begin in May and cover the regions of Montreal, Quebec City, the Montérégie, Outaouais, Laval, the Laurentians, the Saguenay, Charlevoix and Lanaudière.

Nothing new for the province

In March 2003, the Zoo de Saint-Félicien was featured in a special report on Canal Évasion. The show’s host spent the night in a tent, under the stars, with all the animals roaming free around her. According to zoo officials, the show was an excellent way to « sell » the zoo to tourists.

Last year, Canal Évasion also broadcast a new series entitled « La détente est dans le spa, » which visited Quebec’s various spas and health resorts. Although the show focussed primarily on spas, hotel complexes and the desire to be waited on hand and foot, it also presented general information about nearby tourist spots and the surrounding area.

Promotional TV used around the world

The Korea National Tourism Organization is also planning a spate of travel shows to sing the praises of Korea on regional TV channels. It has developed two different shows, one for Southeast Asia and one for China. A third show, targeting the Japanese market, is in production.

Great Britain is also counting on two TV advertising campaigns to boost tourism. The officials behind the VisitBritain promotional campaign hope to increase the number of visitors by 30% by the year 2010.

Sources:
– Wardrope, Gary. « The Power of TV in Tourism Communications, » First World Conference on Tourism Communications, Madrid, January 29-30, 2004.
– Rogers, Daniel. « VisitBritain aims for 30% growth in English tourism, » Marketing, London, November 27, 2003, p. 6.
– « Korea battles visitor dip with TV plan, » Media, Hong Kong, February 27, 2004, p. 7.
– « Annie Brocoli animera une émission touristique, » Le Quotidien, April 3, 2004, p. 43.
– « Évasion… au Zoo !, » Progrès-dimanche, March 7, 2004, p. A10.
– Travel Industry Association of America. « How Americans Use the Travel Media, » April 2004.

Commentary from Frédéric Dimanche

The question « Which medium should I use to plan a vacation? » in fact involves two different themes for discussion: firstly, what role do the media play in the consumer decision-making process and, secondly, to what extent do the media influence such decisions?

We must begin by defining which use of media we are discussing. Are we talking about strictly commercial uses, that is, advertising or, more specifically, messages controlled and paid for by advertisers, or are we talking about informative lead articles, written by journalists who are not beholden to the destination or attraction’s marketing team? Feature articles and personal accounts, which consumers consider more impartial, are no doubt more influential than advertising.

Media advertising is only one factor among many that can influence consumer decisions: prior experience, referrals from friends, family and co-workers, information from the competition and basic constraints like budget and available vacation time all play a part. The key is to make the destination one of the options that the consumer considers before deciding. The role of media advertising can vary: the goal can be to build the destination’s reputation or communicate its image, or it can use a specific promotion to prompt a decision and subsequent purchase.Increasingly, advertising appeals to the emotions and the senses by creating situations that inspire the target market. Although TV certainly has a large part to play, advertisers are also learning to use events as experiential marketing tools. Television alone is not enough to make someone select a destination; for this reason, one wonders what VisitBritain is going to do after two TV advertising campaigns.

The TIA survey confirms, if that was needed, the growing importance of the Internet as an information source. Surfers can quickly locate all sorts of information, both unbiased (reviews, travel guidebooks, etc.) and biased (sales and promotional information directly linked to the destination, attractions or available lodging). It is no longer enough to simply recognize the importance of the Internet; one must now understand what consumers read online. The Internet is first and foremost a source of information, and consumers are looking for credible information like that found in consumer travel magazines. It is this type of information/recommendations that will direct travellers to a destination’s service providers.

Media communications are important, whether they are controlled by the destination or not. However, they are not the only tools available. In fact, long-term efforts to ensure service quality and the satisfaction of visitors and intermediaries can sometimes be a much better marketing investment.

Frédéric Dimanche

Professor and Director,
Centre de management du tourisme
CERAM Sophia Antipolis European School of Management