Place = Distribution

 The 4Ps
 Product, Price, Place, Promotion

 What the “P” of Price is to Revenue

Management, the “P” of Place is to
Distribution
Distribution
Today “distribution” in the hospitality industry
generally references transient sales today

Revenue management and distribution merging

together

Internet marketing includes distribution issues

Distribution Channels
 A distribution channel - set of
independent organizations involved in the
process of making a product or service
available to the consumer or business user

 Used to move the customer towards the

product or the product to the customer

 Organic development of an industry

Distribution Channels

DISTRIBUTION CHANNELS

People and firms involved

in the transfer of title to a product
as the product moves from producer to
ultimate consumer or business user

Final
Consumer
Producers Middlemen Or
Business
User
Marketing Channel or Distribution
Channel

 A set of interdependent organizations

involved in the process of making a product
or service available for use or consumption
by the consumer or business user.
 Wholesalers
 Distributors
 Dealerships
 Retailers

Copyright 2007, Prentice Hall,

Inc. 10-5
Distribution also describes
 Locations for hotel brand distribution
 Franchising

 Ownership

 Management contracts

 The sales staff and system

 Group sales or volume accounts

 Reservations and transient sales

 National sales offices

 Representation firms, consortia

Distribution Channel Functions
 Information: consumer behavior “search
stage”
 Promotion: messaging
 Negotiation: price and other terms
 (how is this done online?

 Physical distribution: think e-tickets?

 Prospecting: finding, communicating, and
tracking prospective buyers
Digitalization and Connectivity

 Digitalization - converting text, data,

sound, and image into a stream of bits
that can be dispatched at high speeds
from one platform to another
 Connectivity - building networks
connecting people and companies;
social and mobile convergence
Direct versus Indirect Channels

 Direct Channels
 Employed sales staff
 National sales staff
 Brand.com
 Voice/CRS/Mobile
 Indirect – Intermediaries
 Why use them?
 Why so many of them?
Getting the Customer to the Product

 Reservation  Global distribution

services systems (GDS)
 Representation  Traditional off-line
firms travel agents
 Consortia  Central reservation
 Incentive travel systems (CRS)
organizations  Internet channels
 Corporate travel  Websites
management
Push vs. Pull strategies

 Pushing the product “down” through the

distribution channel TO the customer
 Incentives to travel agents and intermediaries

 Pulling the customer “up” through the

distribution to the channel
 Traditional media/private sales/CRM
Why Use Intermediaries?

 Selling through wholesalers and retailers usually is

much more efficient and cost effective than direct
sales

 Fragmentation of the travel purchase and travel

inventory, transportation (idea of “lift”), hotels,
attractions, meeting facilities, restaurants, and so on.
 Marketing Intermediaries

Travel Agents Tour Wholesalers

Specialists:
Concierges
Brokers & Junket Reps

Internet Hotel Representatives

Global Distribution National, State,

Systems and Local Tour Agencies

Consortia & Reservations

Systems

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
E-Commerce & E-Marketing
 E-commerce involves buying and selling
processes supported by electronic means,
primarily the Internet

 E-marketing is company efforts to

communicate about, promote, and sell
products and other services over the Intranet;
also web or Internet Marketing
E-Commerce Domains
 B2C (business to consumer)
 Branded websites

 B2B (business to business)

 Passkey

 C2B (consumer to business)

 User groups

 C2C (consumer to consumer)

 Blogs; review sites are blends of above
Internet Intermediaries

 History of the internet as a discount channel

 Price and convenience key drivers still
 Dominance about inventory allocation
 Consistency of all 4Ps by channel
 How Product is described
 Pricing parity
 Channel profitability
 Communication needs to vary by segment (channel)
Major Issues/Challenges
 Costs have risen as has competition
 Global differences in systems
 Technology also flattening this

 System hard to change and complex to manage

 Historical controls of GDS, OTA

 Diversity of travel “parts” makes all of the

distribution points part of the experience and if an
intermediary fails, so does the experience
Major Issues/Challenges
 Fragmented owner-manager relationships
 Capital costs for technology and talent
 Travel agents reinvention imperative remains
 Battle of the brands—brand channels that is!
 Big data: not new
 Proliferation: more more more more
 Mobile?
 Monetizing social media
Evaluation of Channels

 Control and cost of each channel

 Tracking of statistics to better negotiate
contracts in the future
 Understand when and why to use a channel
 Good channel management ensures
customer satisfaction AND revenue
optimization AND profit maximization
Goal for hotels in distribution

 Q: What is the definition of revenue

management?
 A: Selling the right product to the right
customer at the right time for the right (read:
maximum) price!…by the right channel!
Thank You