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Sep 14, 2017 in Marketing
Being created and popularized by Hector Ceballos-Lascurain in 1983, the term "ecotourism" is applied to identify nature-based, environment-friendly, and research-oriented tourism activities. Although ecotourism is a relatively new segment of tourism and traveling, it is generally recognized as one of the most rapidly developing industries. Being an integral part of the hospitality industry, ecotourism plays an important economic role, owning to its contribution to gross domestic product (GDP) and high rates of the total workforce employed in service organizations. A constant increase in demand for services provided by ecotourism results in the growth of competitiveness between business units involved in every branch of this industry. Thus, marketing strategies related to ecotourism should be utilized in accordance with results of a situational analysis on the internal and external factors that impact the business.
Ecotourism aims to overcome global issues of deforestation, environmental pollution, endangered species and deterioration of natural resources by "minimizing negative impacts on the physical environment and indigenous cultures while maximizing the positive contributions travelers can make" (Foster 2008, p. 131). The Peopleєs Republic of China possesses a substantial potential for the development of ecotourism due to its exceptional diversity of flora and fauna, ethnographic peculiarities, weather conditions, labor forces, numerous touristsє destinations and favorable geographic position. These factors encourage eco-tourists to visit China and stipulate the growth in demand for ecotourism in this country. Core natural resources and such attractors as specific cultural, national, and historical peculiarities are the main reasons why eco-tourists prefer one destination to another (Pong 2009; Sloan et al. 2009; Parks, Parks, Allen 2009, p. 89). Ecotourism in China, as well as worldwide, ensures the creation of new jobs, generation of additional incomes, diversity of the national economy, development of new businesses and tourism products, preservation of endangered species and restoration of natural resources (Pong 2009).
The Lijiang Xintuo Ecotourism Company is a business unit located in Yunnan Province; the organization has performed its ecotourism-related business activities since 2002. In conformity with the data provided via the official website of the organization, "It is employee and community-owned with support from the Nature Conservancy, and 10% of its profit is given to a conservation and community development fund which provide services to community and schools" (Xintuo Ecotourism 2013). The companyєs services include hiking, walking, biking, and trekking tours to such destinations as the Tibet area, Lijiang, Deqin, Shangri-La, Lashihai Wenhai Watershed Nature Reserve, and three parallel rivers (Nu River, Yangtze River, and Lancang River).
Situational Analysis: Internal factors
The effectiveness of the companyєs business is influenced by both internal and external factors. The strengths and weaknesses, resources, management, business processes and competitiveness of the business unit are assessed against the major competitors of the company.
Internal factors that impact the profitability of the Lijiang Xintuo Ecotourism Company involve the staff overage (representatives of 30 families participate in the company management), ineffective administration, poor choice of supplied services, insufficient degrees of services novelty, as well as the low advertising and marketing activity. The ownership structure is excessively ramified, posing problems to communication processes within the organisation and affecting decision making. The organisationєs complex structure aggravates the coordination of services provision. Furthermore, the company mainly employs ethnic minority trained guides. Although they are completely aware of their native land and objects worth seeing, they are inadequately trained to satisfy requirements specific to contemporary eco-tourists, especially those from other countries.
External factors encompass a wide range of existing and potential threats and favorable opportunities of the environment. "An environmental threat is a challenge posed by an unfavourable trend or development that would lead, in the absence of defensive marketing action, to lower sales or profit." (Kotler, Keller 2006, p. 53). Impacts of demographic factors, legal and political issues, technological aspects, exchange relations, business and economic trends on the effectiveness of the Lijiang Xintuo Ecotourism Company were evaluated.
The fact that the Chinese transport infrastructure is constantly developing significantly contributes to the organisationєs success. Tourists can get to China by different means of transportation. In order to facilitate ecotourism activities of foreign tourists, the Chinese transport infrastructure provides them with services of multiple transportation companies; those include state-owned enterprises, Chinese private organisations, joint ventures, and foreign enterprises such as British Airways, Air China, KLM, Cosco Pacific, Denmarkєs APM Terminals, China Southern, China Eastern Airlines, and others (Pong 2009). In addition, "the Ministry of Railways has announced plans to expand the network to about 75,000 miles by 2015" (Pong 2009, p. 605). Prices of tickets are reasonable and suitable for students. Thus, the Chinese transport infrastructure can be identified as flexible, well developed, able to satisfy demands of eco-tourists and contribute to the companyєs success.
In order to encourage ecotourism, Chinese officials pursue the ecology-oriented policy of the ecological preservation and productive utilization of spectacular areas of national parks. Chinese ecotourism-related policies are provided in compliance with official regulations determined by China National Tourism Administration (CNTA), the Chinese National Tourism Bureau, the World Travel , Tourism Council (WTTC), the World Tourism Organization (UNWTO/OMT), the International Ecotourism Society (TIES), the International Eco-tourism Association, the Ministry of Housing and Urban-Rural Development, Chinese environmental associations, and Chinese provincial and municipal tourism departments (Pong 2009). Thus, it is obligatory to coordinate all activities with regulatory organizations and local authorities.
Technological advances facilitate the business performance of the organization. The Lijiang Xintuo Ecotourism Company advertises its services on the own Internet site; potential consumers can easily obtain the information concerning available tours, places of destination, prices of packages and accommodation. Thus, the Internet technology reduces communications costs and provides the organization with solutions to organize the online communication and break down geographical barriers.
Strengths, Weaknesses, and Rivalry
The company offered its ecotourism services at a fair price ($259-930); reasonable prices enhance constant consumersє demand for tours. Prices range, depending on the destination and duration of a tour. Thus, the company pricing strategies can be identified as the strength contributing to its effectiveness.
Despite the favourable geographical location of the province and developed system of connections with other Chinese regions (Appendix 1), tours provided by the Lijiang Xintuo Ecotourism Company are geographically limited. According to Pong (2009) and Foster (2008), today, the most popular tourist destinations are mainly associated with the cultural and historical inheritance of China. Such places as the World Natural Heritage site of Jiuzhaigou in Sichuan, home of iconic giant pandas, Shanghai, Suzhou, the Tibetan and Qinghai plateaus, Beijing, X‘ian, Lugu Lake watershed, Hangzhou, and Guilin are the basic touristsє destinations in China, where travelers can participate in activities associated with ecotourism. Thus, the range of tours provided by the company can be identified as insufficient.
In conformity with the information represented on the companyєs website, "Local food is provided to the tourists" (Xintuo Ecotourism 2013). However, being attractive at first, the specific Chinese cuisine can cause digestive disorders of foreign tourists and detract potential customers (Yan 2007). Therefore, food services can be evaluated as the companyєs weakness.
The companyєs tours do not completely consider physical and age characteristics of tourists. Although the levels of toursє difficulty are estimated by the company as "moderate", trips require good health, physical fitness, and endurance.
The Lijiang Xintuo Ecotourism Company has to compete with both national and international ecotourism organizations, such as Wild China, China Tour, ChinaTour360, China Highlights, TravelChinaGuide.com, and many others, which supply the same ecotourism-associated services. There are numerous rival tour operators offering ecotours to different Chinese destinations. Therefore, the competitiveness of the industry can be evaluated as intense.
In order to improve its services, the Lijiang Xintuo Ecotourism Company investigates the touristsє demand for the most popular tours. However, the average rating of positive feedback does not exceed 3.8. The given fact testifies to the necessity of the development of new services associated with ecotourism.
The companyєs strategic objectives and services development should consider its weaknesses, strengths and competitive environment. Efficient management, strategic planning, clearly specified business objectives, well-developed business operations, widely applied innovative technologies and expanded services at reasonable prices will allow the Lijiang Xintuo Ecotourism Company to become a highly competitive and profitable enterprise. Contemporary organisations involved in ecotourism are facing the challenge of correlations between global and local approaches to business strategies. Thus, stakeholders and empowered personnel have to design and consistently implement collaborative initiatives with foreign tour operators.
Students from the USA, Canada, Australia and the European countries can be identified as the target audience. Students from different countries have already actively participated in diverse ecological projects launched in the province of Yunnan. Conducting the research on relevant ecological issues, students can improve their knowledge and broaden horizons. Such a strategy can satisfy touristsє educational and travelling needs. In addition, students can participate in such initiatives as Yunnan Zemahe 15MW Small Hydropower Project, Kunming Eco Communities, Yunnan OCT, Eco-Farming Biogas Digestor CDM Project, and so forth. In terms of involving young people from foreign countries, such projects will support and promote the growth of ecotourism.
The concept of marketing mix includes interconnected variables of four Ps, which identify product, price, place and promotion (Kotler, Keller 2006). In order to facilitate the implementation of new initiatives of the Lijiang Xintuo Ecotourism Company, the following marketing mix has been designed.
Products of ecotourism are a set of services developed to meet the needs of tourists while traveling. An organization involved in ecotourism should offer a wide range of package tours in order to successfully compete against its contenders. Therefore, the product, specifically tours provided by the Lijiang Xintuo Ecotourism Company, should be expanded to satisfy requirements that are specific to the target audience (students from other countries). Numerous eco-tourists are attracted by opportunities to observe endangered and rare species in their habitats. Thus, this company will not experience the lack of tourists and can become a successful enterprise. Providing ecotours to such destinations as Xishuangbanna Dai Autonomous Prefecture, Shilin, Shiping County, Kunming and Chengjiang, the company can increase its revenues and contribute to the protection of the environment.
Price is the most important economic tool of the marketing mix, which is inextricably linked with the profitability of the Lijiang Xintuo Ecotourism Company. Paying capacities of students from different countries vary greatly. Thus, it is mandatory to provide clients with different types of accommodation and food services at reasonable and flexible prices. In addition, the more services are supplied, the higher demand for them is. Seasonal discounts, different bonuses and reduced prices for loyal customers can increase the target audience.
The variable of place should include distribution channels provided by collaborators (foreign tour operators) and owners of local hotels in order to make services of the Lijiang Xintuo Ecotourism Company more available to the target customer. Partnerships and alliances with foreign tour operators and owners of local hotels offer mutual benefits and provide the increased value to potential customers. The involvement of foreign travel agencies, dealers and various agents appears to be an effective distribution decision, as well.
The promotion of the companyєs services can be facilitated by the Internet-based marketing and advertising. The current abundance of Chinese organizations involved in ecotourism requires the development and implementation of such a strategy, which is able to attract the maximum number of tourists and provide a stable income. The effective Internet-based marketing is comprised of technological advances and promotion of ecotourism offers in order to increase profits. Today, the Internet is steadily becoming the place, where most people find and purchase their tour packages. Furthermore, taking into consideration the engagement of the target audience of students with the Internet-related activities, this marketing practice can increase the number of customers. While promoting their services via the Internet, marketing experts of the Lijiang Xintuo Ecotourism Company will generate positive customersє responses, enhance public relations, and increase sales of package tours.