Tourism Distribution Channel Lecture Notes

Introduction

• Today's discussion on Tourism Distribution Channel includes:
  • Definition of Tourism Distribution Channel
  • Types of travel intermediaries
  • Functions of specialty intermediaries
  • Comparison of travel agents and tour operators
  • Description of distribution channel
  • Relationship of distribution to marketing
  • Distribution strategies

Definition of Distribution Channel

• Tourism Distribution Channel: A chain of intermediaries distributing product from supplier to final consumer.
  • Link: Connects suppliers of travel services to consumers.
  • Robert McIntosh's Definition: An operating structure through which travel products are described and confirmed to buyers.

Types of Distribution Channel

1. Direct Distribution: Product sold directly from supplier (e.g., transportation, lodging, food) to consumer.
2. Indirect Distribution: Product passes through travel intermediaries (e.g., wholesalers, retail travel agents) to reach consumer.

Functions of Travel Intermediaries

• Intermediaries can enhance distribution and sales effectiveness through specialization.
• Key Functions:
  • Rearranging products and adding services.
  • Assembling diverse services into attractive packages for consumers.
  • Providing information on destinations and services.

Types of Travel Intermediaries

1. Travel Agents: Arrange travel services from suppliers.

   • Types:
     • Wholesaler Travel Agents: Organize tour packages sold through retail agents.
     • Retail Travel Agents: Sell travel services directly to consumers.

2. Tour Operators: Deliver specified services in tour packages (e.g., transportation, accommodation).

   • Tour packages combine multiple travel service components.
   • Can sell directly or through retail agents.

3. Receiving/In-Bound Agents: Specialize in services for incoming visitors, targeting foreign tourists.

4. Specialty Intermediaries: Focus on specific areas (e.g., incentive travel firms, convention planners, hotel representatives).

   • Represent buyers or suppliers and influence product distribution.
   • May earn commission fees.

Distribution Channels Overview

• Product Distribution Pathways:
  • Direct (supplier to consumer)
  • Indirect (supplier to travel agent to consumer)
  • Through tour operators.

Types of Distribution Channels

1. Consensus Channel: No control over the system; participants work together.
2. Vertically Integrated Channel: One company owns production and retail distribution.
3. Vertically Coordinated Channels: Control through contracts or financial commitments.

Relation of Distribution to Marketing

• Distribution is part of the marketing mix.
• Affects pricing due to service charges or commissions added by intermediaries.

Distribution Strategies

1. Intensive Distribution: Maximizes exposure by utilizing all available intermediaries (e.g., airlines).
2. Exclusive Distribution: Limits channels and outlets for products (e.g., automobiles).
3. Selective Distribution: Suitable for high-priced products with limited purchasing frequency (e.g., luxury brands like smartwatches).

Conclusion

• Encouraged questions for further understanding.
• Reminder for next lesson.