While the East Coast was sweltering from
a heat wave in early June, delegates attending ATME's 1999 conference
at the seaside resort, Hilton La Jolla Torrey Pines, in San Diego,
were enjoying a crisp, sunny week in southern California during
a golf tournament, and al fresco coffee breaks, receptions and
meals. But more than from the weather, the real highlights that
week emanated from the conference. Its theme, "The Changing
Face of Marketing: Solutions for Today, Insights for the Future,"
provided opportune bases for launching provocative discussions
and predictions as we edge ever closer to year 2000, which many
perceive as the beginning of a new era.
Anyone attending ATME '99 went away knowing that the profession
of travel marketing has never been as exciting or challenging.
OLDER, BUT NOT OLD
What better time than the approach of a new millennium to take
a closer look at demographics, especially aging "boomers,"
of which many ATME delegates are members. Keynote speaker, Dr.
Ken Dychtwald, CEO of Age Wave Communications, has made a career
in analyzing the senior market for the past quarter century.
Just in the last past decade, 12 million people turned 50, entering
the mature market, which will steadily increase with the aging
of the 76-million "baby boom" generation, born between
1946 and 1964. The 50-plus population is the largest mature market
in history, with another boomer turning 50 every 8 seconds.
In the U.S., medical and scientific advances have extended life
expectancy to 76 years. When you consider that in 1900, the average
life was 47, people didn't age, they died, Dychtwald said. That
means there was no senior market to plan retirement, need Medicare,
or take extended trips. Few four-generation families existed,
so major family reunions were scarce.
With the average age of retirement at 60, many seniors can expect
20 more years of relatively free time. Dychtwald, himself a boomer,
said that longevity today means that "more old people feel
that they have enough time to go back to school, start a new
job, or travel around the world....We are living long enough
that we can be multiple people. We can be late bloomers. We can
have comebacks. We can fall in love again."
Currently, more than 85 percent of those 65 and older do not
work, yet boomers are expected to work five to 10 years longer
than their parents' generation, due to their longevity and monetary
needs. When Age Wave studied newspaper advertising three years
ago they found depictions of seniors walking along the beach,
swinging golf clubs, or drinking lemonade, but none were working
when many corporate heads are in their 50s and 60s, Dychtwald
Since 80 percent of all money in the U.S. is held by seniors,
and half of discretionary income, it is not surprising that they
account for 41 percent of new car purchases, and 48 percent of
luxury cars purchases. Yet only 5 percent of advertisers target
this group, Dychtwald said.
SENIORS VACATION LONGER
Surveys show 40 percent of seniors spent more time on vacations,
travel further distances, and spend 74 percent more on a typical
vacation than the under 50-year-olds. Many retirees in Florida,
for example, take six-week summer "getaways." In planning
travel, seniors appreciate counselors who can advise on availability
of medical services and ease of transportation, including luggage.
Dychtwald divides seniors into three groups. The oldest is frugal,
as a result of living during the Great Depression, but they still
enjoy traveling and visiting friends and relatives; the second
group is solidly middle-class, seeking good value; and the third
group wants the best that their money can buy-they've earned
it, and they feel they deserve it.
A portion of the senior market are technologically savvy. According
to Age Wave research, 15 to 17 million seniors use the Internet
everyday, and they are beginning to make online purchases.
YOUNGER OLD PEOPLE
Since today's seniors are more youthful in activity and spirit
than previous generations, they are changing what aging means.
Because they have fulfilled their material needs, they prefer
experiential purchases, and are trying "exotica" in
travel experiences, such as back road tours or adventure travel.
Consider oldsters, Senator/astronaut John Glenn, who sought one
last spin through space, or President George Bush, who fulfilled
a lifelong desire to skydive.
Beside these thrill seekers, within the senior market several
niches offer specific opportunities to marketers. The mature
single market is 18 million. Single women-typically widows, from
40s through 60s, who often travel in groups-is virtually untapped.
Yet they have the greatest concentration of wealth in the country.
Another marketing niche is grandparents, who enjoy vacationing
with grandchildren. Statistics show that 6 million grandparents
vacation with their grandchildren in a typical month, Dychtwald
Among industries that should win from this aging age wave are
medical and financial services, and the travel industry. So if
you think boomers are slowing down with years, think again, the
average age of that raucous touring band, Rolling Stones, is
55, and still going strong.
A conference highlight was the marketing trends "think tank"
discussion, which focused on the impact of on-line marketing
and electronic commerce. According to a panel of seven travel
industry executives, direct Internet sales, in most cases, are
still less than 1 percent of total sales. Yet not one panel member,
representing diverse segments-government, cruise, travel agency,
airline, hotel and car rental, plans to abandon Internet marketing.
Instead Web advertising budgets are increasing, even doubling.
Bruce Wolff, senior vice president of distribution, sales and
marketing for Marriott Lodging, reported that Internet bookings
for the hotel giant are between 1 to 2 percent, but predicts
that will increase to 8 to 10 percent within the next five years.
Lisbeth Mack, TWA's vice president of marketing, revealed that
the airline is receiving less than 1 percent of sales over the
Internet, but thinks that will grow by 3 to 5 percent, but not
much more after that. Daryl Thrasher, Avis vice president of
industrial sales and marketing, provided the same statistics
and predictions as Mack. Larry Pimentel, CEO of Cunard Line Ltd.
said sales were also less than 1 percent, but was the most optimistic
for the near future, for which he is predicting sales to reach
15 percent within three to five years.
Marketers believe many people are visiting on-line sites, then
making their travel purchases off-line. Market research shows
that on-line lookers are purchasing within 49 hours, according
to Philip Wolf, president of PhoCusWright, a consulting company
specializing in online marketing, who noted that five years ago,
people said no one would purchase on-line. "There's no doubt
that 100 percent of travel supply will be sold on-line,"
he said. "The question is when?"
Meanwhile, some travel inventory is sold on online auctions.
The question regarding online auctions is "Will it dilute
the brand?" According to Wolff, all of Marriott's activities
are aimed at strengthening its brand. Marriott does not do "net
only" promotions because the company believes that that
indicates a brand on sale. "We want people to come to us
from any channel and feel that they're getting all the information
that we provide," Wolff explains. "We launched 'single
image inventory' to ensure that [customers] are offered the same
inventory on the Web [as on the phone or elsewhere]." Auctions
appeal to people who are brand indifferent, he said, so auctions
are a way to reach them.
Mack noted that airlines were first to try online auctions, but
have found more effective ways to distribute inventory.
Convention & visitor bureaus (CVBs) and government tourist
offices are using the Internet to help brand their destinations.
The San Diego CVB's web site is designed as a shopping mall to
facilitate vacation or meeting planning and booking online. Reint
Reinders, San Diego CVB president, pointed out that effective
web sites need to be interactive. For example, you can go on-line
and experience a "virtual" vacation. Queensland (Australia)
Tourism is capturing the flavor of its destination through more
online graphics, which international browsers use to make travel
Thrasher of Avis said that its Web site carries the same images
as the company's other advertising media. He also noted the importance
of keeping up Web sites. "If people visit your web site
and see stale information, they are not going to come back for
quite a while."
Web sites and advertising should not be used to build brand,
but to extend the brand, Mack said. TWA's online business doubled
during its recent online promotion, based on miles rather than
price, in which people clicked through the site to receive a
bonus at the end, she said.
IMPACTS OF INTERNET
Panelists compared the Web to other technologies, such as the
fax machine and 800 number, which facilitated ease of business
transactions. The panel disagreed if e-commerce will weaken or
strengthen retail travel agencies. Supporters said agencies that
embrace the Web will be popular with consumers without time or
desire to go on-line to search travel supplier databases.
Thrasher pointed out that technology has diminished personal
contact with customers. "Now we need someone with people
skills to drive the bus [since the driver may be the only employee
with whom customers come in contact]," he said. "This
has changed the way we hire."
A Travel Monitor report found 7 out of 10 business travelers
prefer not to travel, if given an alternative. However, Reinders
pointed out that human interaction at conferences and trade shows
cannot be reproduced by phone calls or satellite conferences.
He noted the trend toward bringing family members along on business
trips and adding leisure days.
While most marketing executives support e-commerce, not all have
determined its potential or likely impact. Philip Wolf, however,
has no doubts that e-commerce will dominate the marketplace.
"Assume anything you can think of will be purchased online,"
Wolf named 12 on-line travel brands, which include Travelocity
and Expedia, who are leading the pack. "Nobody is really
close to them in terms of on-line purchases right now. We're
talking 7,000 tickets a day; $16 to $18 million a week. Each
one of those companies could be a billion dollar travel agency
by the end of the year."
Wolf warns profitable businesses that if they do not develop
their e-commerce potential, their stock prices will go down.
"Because the marketplace is looking at you and criticizing
you for acting very much in the present," he explained.
At the same time he warns that although there are extremely low
barriers to entry, the Internet, which levels the playing field,
also levels the players.
DRIVING BRAND VALUE
"It's relationships that create brand equity," said
Tom Duncan, professor of integrated marketing communications,
University of Colorado, who co-founded the university's IMC graduate
program with Susan Moriarty. Brand loyalty, brand awareness,
perceived quality, brand associations, and proprietary brand
assets are all elements that comprise brand equity, he said.
"It used to be that the majority of a company's net worth
or shareholder value was its physical assets, but today that
is not true. The intangible side is [what provides] the majority
shareholder value," Duncan said. "We must manage our
brands and our relationships that drive our brand."
Because brand equity relies on the types of relationships a company
has with its stakeholders, including and especially customers,
building brand relationships must be an organization-wide responsibility,
he said. Relationships are based on perceptions, which is marketing's
responsibility. When a company's customer service is poor, the
marketing department cannot ignore its negative impact on the
When a company says, "We're not sure we want to get into
this integrated marketing thing?" it's irrelevant, because
they are already in it, Duncan explained. Although customers
may not remember every message sent from a company, each experience
they have with any department will form their overall impression
of the company, Duncan said. "At the end of the day, they
either like or don't like your company. So the question is: Do
you advocate that integration or do you manage it?"
Duncan identified four sources of brand messages that influence
customers regarding their desire to have a relationship with
your company. First of these is from the product message, which
includes the product's performance, the price, and distribution
points, which all send a message.
Then there is the customer service message, which is critical
in keeping customers who have had bad experiences. Customers
know that companies will make mistakes, but they expect company's
to have mechanisms in place to solve mistakes. Research shows
that a customer who has a problem successfully handled is nine
times more loyal than a regular customer who never experienced
a problem, Duncan said. "In a way, when [a company] makes
a mistake, it's an opportunity to strengthen that brand relation."
The third source of brand messages is unplanned, which could
be for general conversations among employees outside the office,
or between customers. "We can't control those messages,
but they can be influenced," Duncan said. The forth source
are planned messages, i.e., the market communications and advertising.
While planned messages are important, Duncan said, the other
messages have more impact with stakeholders.
BRAND CONTACT POINTS
Brand contact points are where these messages intercept with
stakeholders. These happen in three ways: (1) created contact
points are the market communications and advertising; (2) intrinsic
contact points are automatic, occurring when customers buy or
use the products or services; and (3) customer-created contacts
are the complaints, inquiries, and suggestions. "A lot of
times, companies spend money creating messages, when their intrinsic
and customer created contact points are not as they should be,"
Duncan said. These latter contact points are underfunded, undermanaged
and undervalued, yet their strength is necessary to maintain
the brand's integrity.
In building brand integrity, companies must identify all ways
customers come in contact with the company; then prioritize contact
points by their impact, and the company's ability to control
or influence them.
Duncan outlined 10 "strategic drivers" for managing
profitable brand relationships. The first strategic driver is
the company's relationships and their characteristics. Does your
company have the trust of its customers? Is your company responsive,
accessible, reliable, consistent, and likable when interacting
with customers? When a company has a customer's trust, customers
buy more each year without "selling" them, they make
referrals, and provide valuable feedback. Customers want brands
they can trust because it simplifies their choices and saves
time; they also like to be recognized with best-customer promotions
and other benefits.
Another strategic driver relationship is with stakeholders, who
should understand the company and have opportunities to influence
the brand. After all, people do not have to buy the company's
stock or work for the company. Because every department has a
communication dimension that sends messages, all departments
should be required to participate in managing the message, Duncan
Other strategic driver functions are to: use cross-functional
management; create core competencies; maintain strategic consistency;
use database-driven marketing communications; give purpose to
interactivity; partner with an integrated communication agency;
market your mission; and use zero-based planning.
Duncan's presentation was taken from his book, Driving Brand
Value, co-authored with Susan Moriarty, who also teaches IMC
at University of Colorado.
RATING CUSTOMER SERVICE
An interactive IMC study of 174 companies/organizations showed
that more than half provide fair to poor customer service. Moriarty
presented findings from a 1998 study conducted by University
of Colorado graduate students, who contacted companies using
800 numbers, e-mail or website addresses. Companies' businesses
were either in services or goods, communications, business to
business, or nonprofit. Companies' responses to customer inquiries
showed lack of consistency. Two-thirds of phone calls were answered
by automated voice response (AVR), which have multiple disadvantages
from the customers' point of view: AVRs had too many menu levels
that wasted customers' time, and the menu options did not cover
all areas, or have an option to talk to a person.
POOR CUSTOMER CONTACT
When companies did have personal contact with customers, most
failed to use those opportunities to learn more about their customers
for profile data or to cross-sell. Customer service representatives
were often rude, had little knowledge, and lacked authority to
resolve unique problems. Two-thirds of companies contacted online
took longer than 24 hours to respond, and others were difficult
to reach with e-mail. When responses were received, they were
The study concluded that customer service and interactivity with
customers must be designed for customers' benefit, rather than
with cost savings and less hassle for the company as priorities.
If the company cannot afford interactivity infrastructure, including
staff and training, to manage 800-lines or on-line inquiries,
they should not offer or advertise them. Companies should monitor
their customer contact points, similarly to a "mystery shopper."