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Transcript of Analysis of Online Travel/Tourism Market and Purchase Behavior Lauren Orians Marketing Departmental...
Analysis of Online Travel/Tourism Market and Purchase Behavior
Lauren OriansMarketing Departmental Honors Project
Wright State University5/3/2012
Overview1. Introduction2. 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
3. Hypotheses4. Methodology5. Analysis and Results6. Managerial Implications7. Q & A
IntroductionPrior 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 culturesOne of the fastest growing sectors in global economyTravel/Tourism in almost every region of the world Large amount of the global workforceGlobal 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: 29,500Very successful form of e-commerce
Began with computer booking systems by travel agenciesnatural fitUnited 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 CharacteristicsReach new marketsMillions of consumersImprove efficiencyShowcase information AccessibilityResearch/Price CheckConsumer Reviews & Photos
Growth of Travel and Tourism Market In 2005, 1/3rd travel booked online250% increase in US adult travel purchase from 2000 to 2009 In 2011, 50% air travel and 54% rail booked onlineExpansion opportunities
Corporate Business Market & International Bookings
Online Marketing Practices of Travel/Tourism Industry
Digital “touch points” to reach customers onlineMost 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 ToursFeedback from travel suppliers to online travel agents Social MediaBlogging
Large online travel agenciesAdvantage: 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 AppsWord of Mouth—four times more effective than promotionsA 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 SitesSensitive information protection=encryptionDocumented privacy/security policiesVerification by sites like TrustE and Verisign
Marketing Communication MisleadingStock 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
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 onlineThird only purchase 1 travel product online
Current Consumer Purchase Behavior in Online Travel/Tourism Products and Services
Low-Risk Commodities FlightsLodgingRental cars
High-Risk, Information Search Intensive!Travel packagesCruisesRV rentals
Popularity for Online Purchase1. Airline Tickets2. Accommodations3. Travel Packages
Purchase FactorsQualitySimplicity Easy NavigationLow PricesSpecial OffersPositive 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!
HypothesesFurther 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/Service by 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.”
MethodologyPrimary Data10-item
questionnaire paper survey
Administered to a sample of 50 consumers In vicinities of
Dayton and Findlay, Ohio
Questions Regarding:DemographicsOnline travel
consumer behaviorPurchasing
patterns Online travel
market opinions
Analysis and ResultsThe results were obtained in March 2012 Each survey was given an identification
number for participant anonymity 50 survey participantsUtilizing SPSS, 50 entries were input and
analyzed using descriptive statistics as well as frequencies.
41
9
Item One: “Have you ever purchased a travel product/service from an online travel company, with an online travel company being either a di-rect site (example Delta.com) or an online travel
agency (example Travelocity.com)”
Yes No
32
23
6
23
1 8
Item Two: “What type(s) of travel products/services have you purchased from an online
travel company in the past? (choose all that ap-ply)”
Transportation
Lodging
Travel Packages
Event Tickets
Other Travel Products/Services
I have not purchased travel products/services online
Trust/Reputation of Company
Price of Product/Service
Ability to Customize Product/Service
Special Company Deals/Offerings
Ease of Transaction/Usability of Website
I do not purchase online travel products/services
0 5 10 15 20 25 30 35 40 45 50
7
30
0
1
5
7
Item Three: "What is the greatest influence on your choice of an online travel company for purchase of a
travel product/service? (only choose one)"
Trust/Reputation of Company
Price of Product/Service
Ability to Customize Product/Service
Special Company Deals/Offerings
Ease of Transaction/Usability of Website
I do not purchase online travel products/services
0 5 10 15 20 25 30 35 40 45 50
17
11
1
5
10
6
Item Four: "What is your second greatest influence for purchase of a travel product/service from an on-
line travel company? (only choose one)"
Travelocity.com
Kayak.com
Expedia.com
Bing Travel
Orbitz.com
Priceline.com
Yahoo! Travel
Hotels.com
CheapFlights.com
I do not purchase online travel products/services
I have purchased from other online travel
0 5 10 15 20 25 30 35 40 45 50
16
6
12
1
11
5
0
10
9
7
15
Item Five: "What online travel companies have you purchased from in the past? (Circle all that apply)"
38
12
Item Six: "Do you ever view travel customer re-views, comments or feedback on a hotel, desti-
nation, etc before making a purchasing decision (such as TripAdvisor.com, Google Reviews, etc)?"
Yes No
7
1720
6
Item Seven: "Statement: Online travel and tourism have driven out brick and mortar (physical) travel agencies and services completely from use in the
United States"
Strongly Disagree Disagree
Neutral Agree
Strongly Agree
Item Eight: “What is your age? (in years)”
Mean Age 26
Max Age 73
Min Age 19
Mode Age (15 Respondents) 21
T.V, Commercial/AdsOnline Internet Ads (Ads, Pop Ups and Banners)
Commercials (No specification Online or T.V)Online Ads and Email
Online PostsT.V and Email
T.V and OnlineSocial Media
T.V and MagazineCommercial and Facebook Advertising
T.V, Internet and EmailFood
Ads on Websites and FacebookSpecials and Low Prices
Commercials and Online adsOnline Ads, Word of Mouth, Email
N/A
0 2 4 6 8 10 12 14 16 18 20
167
4111
41
21111
24
12
Item Ten: "What is the most frequent type of advertising you notice utilized by online travel companies to reach consumers like your-
self? (Do not mention specific companies)"
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