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HOSPITALITY AND TOURISM MARKETING STRATEGIES: RYAN AIR

Executive Summary Impact of hospitality and tourism sector gets influenced by adapting various strategies and implementing them effectively. Airlines use many strategies these days to attract potential customers and earn profit out of it. This assignment puts focus on strategies like network and customer relationship, activities of marketing communications, e-marketing and etc that are adopted by Ryan Airlines. Theories of marketing and communication theories are applied accordingly. Ryan Air is an Irish company which focuses on low price strategies and try to attract potential customers. Company effectively uses Porters Five forces Model for effective analysis and implementation of marketing strategies. Ryan Airs marketing mix helps in determining a closure view of the company. Researcher makes ample uses of secondary research to have a study on Ryan Airlines. The present scenario of organisation is shown in terms of size, market, customers, products or services. Secondary sources help in forming a viewpoint which frames the base of the assignment and depicts the present scenario of Ryan Airlines. Researcher has tried to give certain recommendation which can be implemented by the company for improving the condition of the concerned organisation.

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Table of Contents Executive Summary ................................................................................... 1 1.0 Introduction: ....................................................................................... 3 2.0 Role and Effectiveness of Ryan Air .......................................................... 3 2.1 Network and Customer relationships marketing strategies ......................... 4 2.2 Marketing communications activities and strategies .................................. 7 2.2.1 Suppliers Bargaining Power ................................................................ 7 2.2.2 Customers Bargaining Power .............................................................. 7 2.2.3 Threat of New Entrants: ..................................................................... 8 2.2.4 Threat of Substitutes: ........................................................................ 8 2.3 E-marketing, Viral and Guerilla Marketing activities and strategies of Ryan Air: .......................................................................................................... 8 2.3.1 Critical Analysis of E-marketing, Viral and Guerilla Marketing activities and strategies of Ryan Air: ................................................................................ 9 2.4 Role and Effectiveness of Public Relations activities and strategies: .......... 11 2.4.1 Critical analysis of Role and Effectiveness of Public Relations activities and strategies: .............................................................................................. 11 3.0 Recommendations for Ryan Air............................................................. 12 3.1 Security of passengers: ....................................................................... 12 3.2 Recent hike in price: ........................................................................... 12 3.3 Better quality of service: ..................................................................... 13 3.4 Merging with other firms for expansion ................................................. 13 3.5 Operational effectiveness..................................................................... 13 4.0 Conclusions: ...................................................................................... 13 REFERENCES: .......................................................................................... 15 Appendices: ............................................................................................ 18

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1.0 Introduction: Hospitality and tourism industry is one of the most booming segments of the global economy. The market of this leisure segment has enhanced all over the world attracting more and more entrepreneurs in the industry (Bowie and Buttle, 2007). With the competition surging in the industry, the organizations operating within the industry has to develop new methods or strategies of survival. Focusing on the basic need of generating revenue and earning profits, the business entities has to develop effective marketing strategies for surviving in the competitive market scenario. New techniques and tools of marketing have evolved with the growth of technology; an organization has to use these suitable for building a sustainable competitive advantage. Ryan Air was set up in 1985 with 25 employees and launched their first flight from Waterford to London Gatwick in 15 seater Bandeirante aircraft. Gradually they have emerged as one of the busiest airline operators with over 1500 flights per day across 168 destinations and 28 routes across the country. Their fleet consists of more than 290 Boeing 737-800. The company is operated by more than 9000 employees and carried almost 85 million passengers in 2011. The operating regions mainly restrict to European countries [Available from: http://www.ryanair.com/en/about, 16th October 2012]. Ryan Airs quarter one report of 2012 stated that their revenue have increased 11% compared to the last quarter of 2011. Total traffic has increased by 6% to 22.5 million passengers per quarter. However, their profit has declined by 29% to 99 million from 139 million in June 2011 a fall of almost 29% [Available from: http://www.ryanair.com/en/investor/investor-relations-news, 14th October].

2.0 Role and Effectiveness of Ryan Air As described by Gursoy et al. (2008), process which allows organisation to implement certain strategies or methods which will help in utilising opportunities and increasing popularity among potential customers is known as marketing strategies. Brassington and Pettitt (2006) explained that many companies are launching low cost airlines around the world; this strategy has gained success as it enjoys advantages over premium airlines. As it has gained position of being Britains 3|Page

favourite airline, it has to maintain the image of being a low cost airline by adopting certain marketing strategies.

2.1 Network and Customer relationships marketing strategies Network theory as explained by Blomme et al. (2009), deals with studying of relationship that exists between a company and its customers. With the help of networking, as observed by DAnnunzio-Green (2008), Ryan Air was capable of building relationships and developing rapport with their customers or with their clients during meetings or social happenings. On the contrary, Nykiel (2009) mentioned that network marketing allows risk involvement as it leads to failure within a very short period of time. However, on the commercial airline segment Ryan Air gained considerable success by acquiring the position of worlds no.1 declared carrier by IATA (International Air Transport Association) in 2008. Networking is an important factor implemented by Ryan airlines, as building relationship along with clients and customers helps in knowing their mind set due to which company is capable of accessing their demands and is able of serving them as per their needs. Moreover, concept of networking is helpful in accessing the level of satisfaction and dissatisfaction among the customers. After analysing the reason of dissatisfaction accordingly, steps and measures can be taken by concerned company. Marketing Mix: In 2009, company was able of achieving around 35% more customers when compared to any other airline companies due to effective implementation of marketing strategies and promotional techniques. A more detailed look of Ryan Air can be obtained with the help of Marketing Mix. Service/ Product: Hooley et al. (2008) stressed that cost of tickets at Ryan Airlines is low when compared to other airline companies. Contrary to it, Kotler, and Armstrong, (2007) commented that RA reduces the cost of air tickets but curtail down in case of foods or drinks. Passengers are supposed to buy drinks and foods within flight or can carry along with them. RA makes sure of making profits by focusing

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on strategy of up selling. Certain examples include bus tickets and phone cards. A recent survey showed that 16% of profit of RA is earned via this strategy. Price: Price rates of RA are much lowered than other airlines (Veal, 2007). Poulston (2008) commented that many of the premium airlines loosed their potential customers due to the introduction of low priced airlines. Survey conveyed recently showed that 70% of RAs seats are sold due to the facility of lowest price of airline. Place: RAs avoids using any travel agents which helps in saving the expense of commission (Stacey, 2011). Strategy of direct marketing is applied by RA for recruiting people and retaining customers. As seen from a survey, almost 20% of the bookings are done via online which leads to save on agencies fees. Promotion: Poulston (2008) noted that RA do not involve much into advertisement of company and neither do they employ any advertisement agency. In-house advertisement pattern is adopted by Ryan Airlines (Reid and Bojanic, 2006). Olsen (2004) argued that RA tries to involve itself into controversies for having publicity among passengers. People Kotler and Armstrong (2007) explained that People of younger age are recruited by company so that they can stay in company for a longer period of time which restricts the cost of recruitment. Physical evidence Cost of aircraft is very less as RA prefers to buy them when other companies do not want it (Ransley and Ingram, 2008). Due to an off season purchase, a huge amount gets saved by company. Process

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As Process of RA consist of no check in, if a passenger shows passport along with reference number (Hudson and Miller, 2007). People are offered seats on the basis of first come, first serve. Bowie and Buttle (2007) observed that company like Ryan Air uses customer relationship management strategy for interacting with their customers and clients with the aim of increasing revenue. Chisnall (2008) opined that CRM theory deals with collecting information while on the way and making use of it for earning experience and using it for building long-term relationships. Blomme et al. (2009) mentioned that the basic purpose of maintaining customer relationship is attracting and gaining new clients and customers into the purview of the company. Kotler and Armstrong (2007) argued the importance of customer relationship by stating that customer relationship management (CRM) involves monetary values like profits and revenues and a high probability exists for over estimation of measuring strength of relationship. However, it can be mentioned based on t6he survey that around 48% of customers problems are solved by efficient application of CRM. Few factors that can be illustrated while implementing networking and customer relationships in Ryan air are as described below: Customers are treated warmly and with humble nature while they are welcomed into flights and through the duration of their travelling period. Brassington and Pettitt (2006) described that when a customer feels comfortable and with a pleasing attitude which helps company in gaining appreciation. Company tries to provide a friendly atmosphere inside flight. As analyzed by Antony and Antony (2008), if a customer receives a friendly atmosphere, then they feel as if they are at home which aids in gaining their trust and confidence. If there arrives a regular passenger at flight, then Ryan Air avail certain sorts of benefits like discounts, special booking facility, cheaper rates and etc. Blomme et al. (2009) feels that if a passenger is availed to such kinds of benefits then it helps in retaining customers.

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2.2 Marketing communications activities and strategies Ryan airlines tried to process on strategies that concentrates on availability of resources by increasing sales and attaining competitive advantage. Ryan airlines are dynamic and interactive. Factors of external environment included customer analysis, competitor analysis and target market analysis. An evaluation of elements of technological, cultural or political impact is done while achieving success. Internal environment comprises of factors like marketing mix, performance analysis and strategic constraints. For evaluation of external analysis, Ryan air concentrated on application of Porters Five Forces model. The model of Porters Five Forces is provided in Appendices 1.0.

2.2.1 Suppliers Bargaining Power Main suppliers of RAs are Boeing and Airbus. It was observed by Chisnall (2008), that if RAs switches from one supplier to another for cost issue then it will be more costly for company as it will acknowledge retraining of new technologies and crew. Cost of fuel directly affects the price of tickets (Hasse and Milne, 2007). Argued to it, DAnnunzio-Green (2008) proposed that RAs tries to put a check on aviation fuel by applying hedging. Certain level of bargaining power is lies in hands of regional airports as they depend mostly on one airline. Go and Pine (2008) argued by stating that RAs competitors are capable of having better bargaining power with airports as they operate in larger airports also.

2.2.2 Customers Bargaining Power As customers are quite sensitive in terms of price so they can quickly switch over to other airlines due to easy access of online booking (Bowie and Buttle, 2007). Blomme et al. (2009) mentioned that customers are less loyal towards airlines. Hasse and Milne (2007) argued the above statement by mentioning that RA applies strategy of low pricing due to which people tend to be royal with the company, which is a great advantage for the company.

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2.2.3 Threat of New Entrants: As observed by Chisnall (2008), RAs are facilitated with having some to entry as it involves huge investment and facility of slot is restricted while making suitable airports. It requires urgency of low cost base and approval of authorisation is required by flights authority.

2.2.4 Threat of Substitutes: As opined by Antony and Antony (2008), customers do not prefer brand royalty in terms of pricing so chances of substitutes gets higher for RA. Lack of improved customer relationship creates a barrier for growth of company. Christensen and Rog, (2008) demonstrates that if a customer switches from one company to another then no additional cost is incurred which decreases the chance of attaining loyal customers.

2.3 E-marketing and Viral Marketing activities and strategies of Ryan Air: E-marketing is part of digital branding and the latest form of marketing policy supported by technological advancements (Hasse and Milne, 2007). E-marketing is generally used to target consumer segments unlike mass marketing. The reach of e-marketing is more as compared to mass media marketing techniques. Viral marketing is also called social media marketing (Nykiel, 2009). The main objective of viral marketing is to promote their brand among the consumers and build better relationship with the consumers. Ryan Airs e-marketing policy is based on social media marketing and website marketing. Apart from this, they also use their company website. Social media is the latest marketing tool in the corporate industry and they communicate with their customers mostly thorough social media websites like Facebook, MySpace and Orkut (Christensen and Rog, 2008). They also have accounts in media sharing websites like Youtube for promoting events of the company. Ryan Air also maintains regular blogs in Twitter and Blogspot. They also use e-mails for communicating with the consumers and other business partners (Kotler and Armstrong, 2007).

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2.3.1 Guerilla Marketing activities and strategies of Ryan Air: Guerilla marketing is a two marketing process used to promote the business operations to other business enterprises as well as the customers (Fu and Parks, 2007). Guerilla marketing can be done both online and offline. The management has to design a network of customers and business houses for utilizing this marketing technique (Hyde, 2006). The marketing process should stick to the designed network only. It is a form of segmented marketing. The marketing strategy is designed on the basis of introducing new techniques and involves customer suggestions as part of the marketing plan (Hasse and Milne, 2007). Ryan Air uses online guerilla marketing for promoting products and services. Offline guerrilla marketing is used for internal strategies like comparison of products with competitors (Antony and Antony, 2008). They also use guerilla marketing for creating mergers and joint ventures with supportive firms. Ryan Air also uses guerilla marketing for market research and analysing the market situations.

2.3.2 Critical Analysis of E-marketing and Viral Marketing activities and strategies of Ryan Air: The marketing strategies of Ryan Air comprises of all the major marketing activities and strategies used in the current industrial sector. Use of e-marketing in the business scenario has increased the scope of business by enlarging the area of coverage and taking it beyond geographical boundaries. Stacey (2011) stated that social media marketing has aided in improving the relationship of the consumers and the business houses. Nykiel (2009) argued that the social media has limited the capability of the organizations to technical communication that affects the level of consumer satisfaction. Hasse and Milne (2007) pointed in favour of social media marketing that organizations benefit from this they get to know the consumers on a personal level and can have valuable suggestions regarding the service quality of the company. Christensen and Rog (2008) criticized this point by stating that use of social media can also lead to negative promotion as the bad experience of a single consumer will be reflected and word of mouth marketing can make it worse.

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2.3.3 Critical Analysis of Guirella Marketing Activities and Strategies of Ryan Air: Kotler and Armstrong, (2007) opined that the outcomes of guirella marketing are slow and cannot be involved for earning quick results. Fu and Parks, (2007) observed that guerilla marketing strategies aid in building a larger territory of business by providing new merger and venture opportunities with other business houses. Go and Pine (2008) highlighted that guerrilla marketing is cheap and useful for meeting operational objectives of an organization. Hyde (2006) evaluated that using guerrilla marketing often causes organizations to lose their competitive advantage through mergers and ventures. Brassington and Pettitt (2006) argued on this point that changing competitive advantage is based on the operational policies and the market conditions and not on the application of a certain marketing style. The positioning map is provided in the appendices 2.0. Industry positioning map represents the position of Ryan Air in the airline industry of Europe. Airlines in the orange block represent the big players of the market. Ryan Air is placed on the inexpensive side but is far away from the point of high quality. But it is in a more suitable position, compared to airlines such as Easy Jet and Titan Airways (Buhalis, 2008). In case of Ryan Airlines, the recent updates in their Facebook page highlight complaints of the customers that may lead to defamation of the brand. However, Ryan Air has shown a positive intent by replying to the comments and taking in the suggestions provided by the consumers for improving their service (Brymer et al. 2008). Online marketing strategies of Ryan Air are promoting their brand to the consumers, but they need to highlight their unique advantages to the consumers for attracting the customers (Adcock et al. 2008). For example: Ryan Airs main advantage is their pricing strategy as they have maintained a cheap price of their services in-spite of the rising fuel prices and other expenses. The social and other marketing strategy should reflect this to the consumers and also prove the matter of their quality (Antony and Antony, 2008). Ryan Airs guerrila marketing strategy mainly focuses on building partnerships and accomplishing marketing small term objectives. However, they should keep in mind their

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organisational culture and uniqueness, while creating new ventures (Hasse and Milne, 2007).

2.4 Role and Effectiveness of Public Relations activities and strategies: Public relations activities are the bedrock of hospitality and tourism industry. Chisnall (2008) explained that role of public relations is to attract the consumers towards the service of the organizations and increase the revenue in the process. Gursoy et al. (2008) added that public relation not only attracts consumers but also urge the organizations to improve and streamline their services according to the needs of the consumers and demand of the market. Buhalis (2008) opined public relation plays a vital role in building the brand image of the organizations. However, Hooley et al. (2008) stated that public relation strategies must be supported with a strong marketing policy. Ryan Air has a poor record for maintaining public relations. The main reason signified for this was the tendency to keep the price low and meet the competition standard of the industry (Hudson and Miller, 2007). Their Faebook page displays the dissatisfaction of the consumers. Another reason for improper public relations of Ryan Air is the low number of employees for the maintaining consumers. This causes inefficiency in the workforce and the customers are often left unattended (Reid and Bojanic, 2006). The customers stick to Ryan Air mostly because of the low prices and availability of fights in the smaller routes. Ryan Air has tried to maintain the public relations mostly through online tools like social websites, media sharing websites and blogging websites (Gursoy et al., 2008). They need to develop some face-to-face medium that will satisfy the consumers more.

2.4.1 Critical analysis of Role and Effectiveness of Public Relations activities and strategies: Adcock et al. (2008) explained that public relations supports the marketing procedure of the organizations and also helps in enhancing its consumer base. Buhalis (2008) highlighted the negative aspects of public relations stating that it adds to the expenses of the marketing system and also brings in instability among the consumer base. Go and Pine (2008) provided that public relations also promotes word of mouth marketing which is considered as the most 11 | P a g e

cheapest and influencing form of marketing. Hasse and Milne (2007) explained that maintaining public relations will generate the consumer base but the management has to ensure that the expenses are covered with the outcomes of public relations system. Public relations of Ryan Air are not up to the standard of the airline industry. The social media marketings of the company reflects more displeasure of the people that influences a negative influence on public relations of the company (Go and Pine, 2008). Front desk service and personal customer management in the flights is dissatisfactory for the customers. Moreover, as majority of the marketing is done online, SEO (Search Engine Optimisation) of the company is not boosting up the public relations or the marketing process. However, Ryan Air has successfully managed to communicate with its consumer through social networking sites and micro-blogging sites. Another major problem with public relations of Ryan Air is that attachment with consumers with events. Ryan Air uses media sharing sites for advertising and promoting the events of the company. The customers are excited but dont get engaged with the events that leaves a gap in the communication process.

3.0 Recommendations for Ryan Air Although company had tried to avail many kinds of facilities, still on certain areas certain recommendation is granted by author can be implied within Ryan airlines.

3.1 Security of passengers: Company focuses on low rates of airlines but certain degree of responsibilities should be given for security of passengers. At Ryan airlines, robbery and theft is quite a common incident. It should be put on a check and level of security system should be improved. Passengers should be guaranteed for security of their life and their possessions. It will increase trustworthiness for company.

3.2 Recent hike in price: Recently Ryan airlines were famous for being low cost airline service. However, they have increased the fair of the air tickets. The reason for this hike was although increase in price of fuel but passengers got reluctant to choose this 12 | P a g e

airline due to rise in air tickets. This led to lose passengers to some extent. Ryan Air should formulate strategies for maintaining the price of their services and keep the competitive advantage of pricing strategy.

3.3 Better quality of service: Company puts more emphasis on attracting customers through low price strategy but the level of service rendered within flights should be improved so that potential customers can be converted into loyal customers. Cabin crew should be more polite and humble towards their approach. Any grievances of customers should be handled effectively and as soon as possible.

3.4 Merging with other firms for expansion If RA can merge with other firms and agencies then a plan of expansion can take place. RA can try for expansion in the areas of Eastern Europe and North Africa. It will help in attracting customers of those routes as the pricing policy of RA is surely advantageous for customers.

3.5 Operational effectiveness Research shows that operational activities of Ryan Airlines are not up to the mark. Certain environmental issues related to flight operations that can be improved are noise and air emissions which include aircraft engines. Maintenance of activities related to wastewater and wastes also needs a check.

4.0 Conclusions: Implementation of marketing strategies is effective in increasing sales of any company. Ryan Air had although made ample use of these strategies but room for improvement still exists. Company is able of attracting customers but is not capable enough of retaining them and building long term relationship with them. Researcher has used secondary research to analyse the status of RA. In the above study, a thorough analysis of the marketing strategies and theories has been conducted to evaluate the effectiveness of the marketing style of Ryan Air. The analyst has used tools like marketing mix, Porters Five Forces, Positioning Map and PESTEL analysis has been used for examining the marketing

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strategies of Ryan Air. The researcher also provided suitable recommendations based on the study conducted. Strategies like network and customer relationships, marketing communication activities, e-marketing, viral and guerrilla activities of Ryan Airlines were effectively implemented to achieve positioning among passengers. However, there is always a need and space for improvement. Ryan Air must formulate new strategies for building up their public relations with the consumers and enhance their business opportunities. A well built marketing strategy needs to focus on every aspect of the business.

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Fu, Y.Y. and Parks, S. C. (2007) The relationship between restaurant service quality and customer loyalty among the elderly. Journal of Hospitality and Tourism Research, 25(3): 320-336. Go, F.M. and Pine, R. (2008) Globalisation Strategy in the Hotel Industry. 5th ed. London: Routledge. Gursoy, D., Maier, T. and Chi, C. (2008) Generational differences: an examination of work values and generational gaps in the hospitality workforce, International Journal of Hospitality Management, 27(3) pp. 448-58. Hasse, J. C. and Milne, S. (2007) Participatory Approaches 272-289. Hooley, G. J., Saunders, J.A. and Piercy, N.F. (2008) Marketing Strategy and Competitive Positioning. 3rd ed. Harlow: Financial Times Prentice Hall. Hudson, S. and Miller, G. (2007) The responsible marketing of tourism: The case of Canadian mountain holidays. Tourism Management, 26(2): 133-142. Hyde, K. F. (2006). Contemporary Information Search Strategies of and Geographical

Information Systems (PAGIS) in Tourism Planning. Tourism Geographies, 7(3),

Destination-Nave International Vacationers. Journal of Travel & Tourism Marketing, 21(2/3), 63-76. Kotler, P. and Armstrong, G. (2007) Principles of Marketing. 12th ed. Harlow: Prentice Hall Companion. Kotler, P., Bowen, J. and Makens, J. (2006) Marketing for Hospitality and Tourism. (International Edition). 4th ed. New Jersey: Pearson Prentice Hall. Nykiel, R. A. (2009) Hospitality Management Strategies. 6th ed. London: Prentice Hall. Olsen, M. D. (2004) Literature in Strategic Management in the Hospitality Industry. International Journal of Hospitality Management, 23, 411-424. Poulston, J. (2008) Hospitality workplace problems and poor training: a close relationship, International Journal of Contemporary Hospitality Management, 20(4), pp. 412-27. 16 | P a g e

Ransley, J. and Ingram H. (2008) Developing Hospitality Properties and Facilities. 2nd ed. Oxford: Butterworth Heinemann. Reid, R. D. and Bojanic, D. C. (2006) Hospitality Marketing Management. 4th ed. New Jersey: John Wiley & Sons Inc. Stacey, R. (2011) Strategic Management and Organisational Dynamics: The Challenge of Complexity to Ways of Thinking about Organisations. 6th ed. Harlow, England, New York: Financial Times Prentice Hall. Veal, A.J. (2007) Research Methods for Tourism and Leisure: A Practical Guide. 3rd ed. Harlow: Financial Times, Prentice-Hall. Investor relations homepage, Available from: http://www.ryanair.com/en/investor/investor- relations-news,[Accessed on 14th October] History of Ryan Air. Available from: http://www.ryanair.com/en/about,

[Accessed on 16th October 2012].

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Appendices: 1.0 THREAT OF NEW ENTRANTS

SUPPLIERS BARGAING POWER

INDUSTRY RIVALRY

BUYERS BARGAINING POWER

THREAT OF SUBSTITUTES

Figure 1: Porters Five Forces Model (Source: Fu, Y.Y. and Parks, S. C., 2007, p332) 2.0

Expensive

British Airways

Thomas Cook BMI Ryan Air Easy Jet Titan Airways Inexpensive Low Quality 18 | P a g e

High Quality

Virgin Atlantic

Figure 2: Industry Positioning Map for Ryan Airlines. (Source: Brymer et al., 2008, p551)

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Figure 3: Marketing Mix (Source: Fu, Y.Y. and Parks, S. C., 2007, p329)

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