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Analysis of Online Travel/Tourism Market and Purchase Behavior. Lauren Orians Marketing Departmental Honors Project Wright State University 5/3/2012. Overview. Introduction Literature Review Background of Travel/Tourism Industry and Evolution into Online Methods
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Analysis of Online Travel/Tourism Market and Purchase Behavior Lauren Orians Marketing Departmental Honors Project Wright State University 5/3/2012
Overview • Introduction • Literature Review • Background of Travel/Tourism Industry and Evolution into Online Methods • Online Marketing Practices of Travel/Tourism Industry • Case Studies of Online Travel Companies • Current Consumer Purchase Behavior in Online Travel/Tourism Products and Services • Hypotheses • Methodology • Analysis and Results • Managerial Implications • Q & A
Introduction • Prior research in online travel purchasing • Research gap due to change in: • Internet environment • Purchasing influences • Declining consumer loyalty • Marketing methods • Analysis meets this research gap! • This research concludes: • Consumers value PRICE of a travel product/service and the TRUST of an online company above all other influences • Traditional media is the most substantial marketing method
Background of Travel/Tourism Industry and Evolution into Online Methods • People =Desire to see new places and experience new cultures • One of the fastest growing sectors in global economy • Travel/Tourism in almost every region of the world • Large amount of the global workforce • Global tourism was estimated to grow by $4.41 trillion from 2004 through 2014 • Air travel is the biggest component of the travel industry • This year in 2012, United States online travel bookings are projected to have double digit growth
Tradition: travel agencies/brick-and-mortar travel service firms was way to purchase travel products and services. • Internet=BIG INNOVATION! • 50% reduction in the number of travel agents in the past decade • Today : 14,000, 10 years ago: 29,500 • Very successful form of e-commerce • Began with computer booking systems by travel agenciesnatural fit • United States Travel Association in 2009: • 96.8% of US travelers used online methods to plan their travel • 80.3% of these US travelers purchasing travel products online
Rapid Growth=Positive Internet Characteristics • Reach new markets • Millions of consumers • Improve efficiency • Showcase information • Accessibility • Research/Price Check • Consumer Reviews & Photos • Growth of Travel and Tourism Market • In 2005, 1/3rd travel booked online • 250% increase in US adult travel purchase from 2000 to 2009 • In 2011, 50% air travel and 54% rail booked online • Expansion opportunities • Corporate Business Market & International Bookings
Online Marketing Practices of Travel/Tourism Industry • Digital “touch points” to reach customers online • Most effective online is company web site • Communicate brand message & relevant information • Kept up-to-date to be effective • Low-price guarantees • Email • Holiday seasons • Not always receptive • Display ads • Product information delivery • Virtual Online Tours • Feedback from travel suppliers to online travel agents • Social Media • Blogging
Large online travel agencies • Advantage: offers products through many suppliers=economies of scale • 54% of US Travelers start with an online travel agent • Specialized Rewards specialty of individual travel sites (Delta) • Mobile Phone and Apps • Word of Mouth—four times more effective than promotions • A Consumer Online Community (3rd Party Perspective) • Makes use of customer reviews, comments, and ratings (TripAdvisor) • Establishing Consumer Trust • “The willingness of consumers to rely on an exchange partner for the delivery of certain desired benefits” • Four Types (Koehn) • Goal-based, Calculative, Knowledge-based, and Respect-based trust.
Trust Concern: Privacy and Security • Secure Sites • Sensitive information protection=encryption • Documented privacy/security policies • Verification by sites like TrustE and Verisign • Marketing Communication Misleading • Stock photos, special lens photos and photo embellishments • Sometimes bend the truth about a travel location
Case Studies of Online Travel Companies • Kayak utilized T.V advertising • 13 animated humorous T.V spots • Repeat clip viewings encouraged through Kayak.com and TiVo • Dean Harris, CMO of Kayak, “we needed to do something powerfully creative." • Consumer-created T.V advertisement contest: Prize=free trip to New York
Offers customized trip packages—customization key • Customers can add more than just hotel and flight • 2002: spent twice on advertising than competitors • Sport sponsorships • VP of Marketing states “travel is an emotional and experiential product” • Forbes “Best of the Web Pick” and is the highest-ranked travel site in 2011
Current Consumer Purchase Behavior in Online Travel/Tourism Products and Services • Park, Wang and Fesenmaier Study in 2011 • Identified purchasing influences of travelers • Personal factors (internet skills and experience) • Technology design factors • Context factors (travel purpose) • Number of Travel Products Purchased (US Travelers) • In 2009, majority purchase 1+ travel product/service per transaction • Two thirds purchase 2+ travel products online • Third only purchase 1 travel product online
Low-Risk Commodities • Flights • Lodging • Rental cars • High-Risk, Information Search Intensive! • Travel packages • Cruises • RV rentals • Popularity for Online Purchase • 1. Airline Tickets • 2. Accommodations • 3. Travel Packages • Purchase Factors • Quality • Simplicity • Easy Navigation • Low Prices • Special Offers • Positive Reviews • Consumer Loyalty • 42% Loyal to at least one company in 2003> 28% in 2010! • Search three websites before making decision in 2005<21 in 2010!
Hypotheses • Further research is appropriate • Price-sensitivity, Customer Loyalty decreasing, Consolidation This research seeks to find any changes in consumer purchasing influences due to this declining consumer loyalty. • FIRST HYPOTHESIS: “Price of a Travel Product/Serviceby on online travel firm is the greatest influence in online travel purchase.” • Growing trend for Consumer Reviews (Trip Advisor, Google Reviews) • Customer loyalty declining, quick to establish trust • SECOND HYPOTHESIS:“Trust/Reputation of a Company is the second greatest influence in online travel purchase.”
Methodology • Primary Data • 10-item questionnaire paper survey • Administered to a sample of 50 consumers • In vicinities of Dayton and Findlay, Ohio • Questions Regarding: • Demographics • Online travel consumer behavior • Purchasing patterns • Online travel market opinions
Analysis and Results • The results were obtained in March 2012 • Each survey was given an identification number for participant anonymity • 50 survey participants • Utilizing SPSS, 50 entries were input and analyzed using descriptive statistics as well as frequencies.
Managerial Implications • Support and Validate First Hypothesis—Price Greatest Influence • Support an Validate Second Hypothesis—Trust/Reputation 2nd Greatest Influence • Companies CANNOT just focus on Price though! • Gain Consumer Trust (non-biased reviews, secure transactions, customer service) • Online travel agents have dominant market share • Travelocity, Expedia and Orbitz • Complex packages and high priced items are often not purchased online—trust and personal service needed • Utilize Traditional Media • Trends • Smartphone mobile devices • Online improvements over brick and mortar • Ease of site navigation