By Kathleen Cassedy

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 said.

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 said.

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.

E-COMMERCE UPDATE
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?"

ON-LINE AUCTIONS
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 decisions.

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.

SELLING ON-LINE
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," he said.

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 brand.

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?"

BRAND MESSAGES
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.

STRATEGIC DRIVERS
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 said.

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 often inadequate.

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."