Distribution channel
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This document discusses distribution channels and systems in the tourism industry. It describes how tourism products move from producers to consumers through various intermediaries like travel agents, tour operators, and retailers. It outlines the key functions performed by members of distribution channels, including information gathering, promotion, negotiating agreements, and physical distribution of goods. Common distribution systems like direct distribution, indirect distribution, and chains involving multiple levels of intermediaries are examined. The roles of important intermediaries like tour operators and travel agents are also summarized. Finally, the impact of emerging technologies like the global distribution system, computer reservation systems, and the internet on the tourism distribution landscape are overviewed.
Distribution channel
- 1. Distribution channels : Travel agents & Tour operator
- 2. Distribution Systems The process which moves the product from production to consumption stage is called distribution. Two factors make the distribution of the tourist product unique: The consumer must go to the destination The tourist product is highly perishable It is important to understand the sales distribution systems and their role in influencing sales.
- 3. clarice / 20113 Distribution Channel Functions Members of the marketing channel perform many keys function: 1. Information- Gathering and distributing marketing research intelligence information about the marketing 2. Promotion – Developing and spreading persuasive communications about an offer 3. Contact – Finding and communicating with prospective buyers 4. Matching – Shaping and fitting the offer to the buyer’s need, including such activities as manufacturing, grading, assembling and packaging
- 4. clarice / 20114 Distribution Channel Functions 5. Negotiation – Agreeing on price and other term of the offer so that ownership or possession can be transferred 6. Physical distribution – transporting and storing goods 7. Financing – Acquiring and using funds to cover the costs of channel work 8. Risk taking – Assuming financial risks such as the inability to sell inventory at full margin
- 5. clarice / 20115 The Chain of Distribution PRODUCER ↓ INTERMEDDIARIES ↓ RETAILERS ↓ CONSUMERS
- 6. clarice / 20116 The Chain of Distribution Two level Distribution Channels PRINCIPLES ↓ TRAVEL AGENTS ↓ TOURISTS
- 7. clarice / 20117 The Chain of Distribution Three level distribution channels PRINCIPLES ↓ TOUR OPERATORS ↓ TRAVEL AGENTS ↓ TOURISTS
- 8. clarice / 20118 The Chain of Distribution There are some general consideration when choosing the channels distribution including: a) Cost b) Control and level of services c) Efficiency
- 9. Distribution Systems Direct Distribution System Sales are realized through direct contact Advantages Time saving – by direct communication Increased profits – no commission to any middleman Flexibility – make possible changes Greater Control – feeling of comfort and security in transaction Disadvantages High cost of sales force Possible reaction of dissatisfied intermediary
- 10. Distribution Systems Indirect Distribution System Use one or more travel intermediaries Benefits of customers Professional consultation Greater variety Lower price Single payment
- 11. Travel Intermediaries Tour Operator • Designs • Prepares • Promotes • Executes Supplier Tour operator Travel agent Air travel + lodging + meals + entertainment + ground transportation + sightseeing tours + special entrance fees Sales of tour packages Tour Operator: A company that operates as an intermediary between the travel product supplier and the retail travel agent in the marketplace, generally provides such as information and reservations to travel agents. (Tour operators often operate as wholesalers, but usually when they are involve in some form of product packaging)
- 12. Travel Intermediaries The Role of Tour Operators Purchasing in bulk Buying power and ability to negotiation Financial security to suppliers and large sales Types of Operators Inbound operators Outbound operators Domestic operators Independent operators Airline operators Wholesale travel agent Specialty operators Travel clubs
- 13. Travel Intermediaries The Travel Agent Definition: • A licensed travel product retailer that provides travel information, reservations and other forms of assistance to consumers, companies and groups in making travel arrangements. • Final link in the consumption process • Connecting the receiver and the source (supplier or wholesaler) Representative selling products • Legally a travel agent is a commissioned agent or an authorized representative. • Maintains a delicate balance between serving the client and promoting the interests of the principles the agent represents.
- 14. Travel Intermediaries Regulation and Intermediaries Travel Agents o Some states require a license o Where a license is not is not legally obliged, certification or accreditation consists of approval from industry conferences o Minimum bond and minimum cash reserve o Minimum experience o Travel agents have a legal obligation to perform in a professional manner Tour Operator o A local business license and compliance with governmental and airline regulations are required o Some monetary constraints
- 15. The Impact of Technology on Travel Distribution Systems The Link between Technology and Tourism Changes in market and mentality o Travel marketers realize that they are not only in pleasure or business travelers but also in the business of communication and information. Group vs. individual travel o Developing of mass tourism Need for technology o The use of technology to gather, manage, distribute, and communicate information.
- 16. The Impact of Technology on Travel Distribution Systems Computer Reservation Systems (CRS) Beginning in the Airline Industry Introduced in 1960’s for keeping track of the seats sold Become a reservation system in 1970s. Linking Systems Interconnection between CRS in 1976 Alliances within Industry Different travel suppliers linked their reservation systems Global Distribution System
- 18. Traditional GDS Role CRSs TAs Airline Consumer
- 19. The Impact of Technology on Travel Distribution Systems Ticketing Automation Satellite ticket printers (STP) Electronic ticket delivery network (ETDN) Electronic Kiosks Ticketless Travel The Internet Both complement and substitute Advantages and disadvantages The Future Elimination of intermediaries On-line operations
- 22. The End