Tourism Australia

Targeting a market segment

Introduction

In recent years, Australia has become an increasingly desirable holiday destination for UK
travellers due to its diversity as a travel destination, beaches, outback, rainforests, city
lifestyle and adventure. This is also the result of cheap flights and the strength of the £
sterling against the Australian dollar; more than 50% of all European arrivals are from the UK.
In addition, the UK is the third largest source market for visitors to Australia behind Japan and
New Zealand. This influx of visitors from overseas has greatly benefited the Australian
economy.

Inbound tourism is an important export industry for Australia that generates more than
a quarter of a million jobs. In fact, it is Australia’s fourth largest earner of foreign exchange
dollars and represents 11.2% of total export earnings from the 5 million international visitors in
the June 2001 financial year. Every billion dollars in tourism export earnings creates 11,367
jobs and export earnings is expected to grow to 30.8 billion in 2008-9.

In the last year, the Australian High Commission has issued just under 40,000 working
holiday visas to the UK market (the backpacker market represents more than 100,000
visitors). The working holiday scheme aims to provide opportunities for young people (18-30)
to holiday in Australia for up to a year while supplementing their funds through work. Australia
is a desirable country to both live and work (no language problems for the UK traveller) and a
working visa provides a perfect opportunity to combine travelling with working. Key trade
partners have introduced visa processing services along with job contacts and advisory
services to encourage backpackers to make use of the opportunity. Australia has many
attractions and is one of the world’s best backpacking holiday destinations. The international
tourist industry however, is highly competitive and Europeans wishing to travel have many
short, medium and long-haul destinations from which to choose. The increasing number of
alternative, affordable holiday opportunities on offer represents a considerable, ongoing
challenge for the Tourism Australia (TA).

Buying and selling a service is a complex matter, particularly when it involves a major
purchasing decision with many intangible and sophisticated benefits that international travel
provides.

People’s reasons and motivations for travelling abroad are many, varied and complex. When
deliberating when and where to travel, customers almost invariably do some research. This
research often clarifies their thinking and firms up their ideas about what they are really
looking for. Some have fixed views, but others are open to persuasion. The challenge to
every country’s tourist industry is to discover what attributes make a destination attractive to
which sort of people, and why, and then to meet the expectations of particular groups by
offering an appropriate travel experience.

For countries that depend heavily on tourism for their export earnings and for domestic
employment, ‘getting it right’ is critical to their economic well-being.

It follows from this that marketers of travel and tourism products need to have a good
understanding of their customers and must also develop strategies that recognise and take
into account the likely response of different consumer groups.

This case study focuses upon the strategies used by the Tourism Australia to win over
segments of tourism and travel business. In particular, it looks at how the TA has developed
a strategy for attracting young travellers to Australia.

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Tourism Australia (TA)

In a competitive environment an organisation needs to have a clear idea of what it is trying to

achieve and where it is heading. It can establish a direction for itself by:
• giving itself a mission
• setting a range of objectives.

Setting objectives also establishes targets by which to measure progress. The targets
become performance indicators against which success can be assessed e.g. targets of 3
million visitors a year, each staying on average for at least 10 days, spending on average
1,000 dollars, and with more than half being under 30 years of age.

TA was established in 1967 to promote Australia as an international tourism destination. TA’s

mission statement says:

‘We promote Australia internationally to create a sustainable advantage for our tourism
industry, for the benefit of all Australians.’

Two of TA’s principal objectives are to:

• increase the number of visitors to Australia from overseas

• maximise the benefits to Australia from overseas visitors.

To meet these objectives, the TA provides a range of services, including:

• helping travellers to plan their trip to Australia through the provision of destination
information
• helping businesses to co-operate in mutually supportive tourist ventures
• working with a range of partners to convert strong interest levels in visiting Australia
into actual travel decisions.

Market segmentation

It is generally recognised that marketers cannot develop strategies that appeal to all buyers in
all markets: a broad sweep to all does not work. This is because buyers have different
characteristics and needs as well as different ways of going about buying.

Rather than trying to compete within an entire market in a broad, unfocused way,
organisations have to recognise and identify those market segments that they can best serve.
To do this, they need to understand:

• the nature, attributes and appeal of their own product(s)

• the buying behaviour of their customers (length of stay, money to spend on
travel)
• potential size of their market.

They must then develop sophisticated marketing strategies that are carefully aimed at
targeted groups of consumers.

There are three main phases involved in serving a distinct market.

Phase 1: SEGMENTATION
Phase 2: TARGETING
Phase 3: POSITIONING

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Segmentation

TA has maximised the efficiency of its marketing efforts by breaking up the travel market into
specific market segments, including:

• independent adventurers aged 25-34 (primary market)

• young independent travellers (YIT’s) aged 18-24 (secondary market)
• independent adventurers aged 45-65.

For the purpose of this study, we will focus on the young independent travellers (YIT’s).

Targeting

An efficient marketing mix targets certain segments and then devises a specific package for
each segment. For example, YIT’s are typically single students who make their own travel
arrangements. Many are on a ‘gap year’ and travel either on their own or with friends. YIT’s
see themselves as travellers seeking experiences rather than as tourists seeing sights opting
for low-price products, including hostel accommodation, bus passes, sporting activities,
adventure and an immersion in the "fun" Australian lifestyle and people.

Positioning

Positioning involves using the marketing mix in a way that takes into account the thoughts
and perceptions of consumers when placing the product in a particular segment of the
market. In this instance, the product is Australia and the market is all travel experiences and
opportunities open to YIT’s.

Traditionally, they were perceived to have less funds for travel and would book their ground
arrangements in Australia. This is beginning to change, with major tour operator partners in
the United Kingdom enticing the YIT’s to book before they leave.

The UK positioning statement for Australia seeks to give the Australian experience a unique
position in a clearly defined market. It aims to develop communications and activities that are
consistent with the perception that: ‘a holiday in Australia offers the LIBERATION of an OPEN
OUTDOOR LIFESTYLE and OPTIMISTIC attitude to life. It is a LAND of NATURAL
WONDERS and UNSPOILT WIDE-OPEN SPACES’.

Meeting the needs of younger travellers

The marketer’s job is to understand consumers’ attitudes towards products and to translate
their positive support or interest into some form of action. When trying to convert consumers’
expressed interest in visiting Australia into actual visitation, the starting point is to understand
the behaviour of targeted consumers. For example, European long-haul travellers view
Australia as a good opportunity for individual experiences that the mass tourist destinations of
the Mediterranean cannot provide.

European travellers also look for novel experiences in unfamiliar environments and amid
different cultures. Australia’s appeal is strongly driven by people’s perceptions of the open
and outdoor lifestyle, as well as by its natural beauty and space. Younger travellers look for a
sense of adventure and are attracted to the more challenging and active elements such as
snorkeling, surfing, white water rafting and bungee jumping. They will look to immerse
themselves in the experiences and life-styles of Australians and they are attracted as much
by the potential experience as by the prospect of visiting the main tourist areas.

Australia is perceived as a safe destination for first time travellers but still has the adventure
based element which is one of the primary motivators for this target market.

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Marketing strategies

The TA’s marketing strategy involves both trade marketing to organisations as well as
consumer marketing directly to travellers.

For example, the TA works closely with tour operators (e.g. STA, USIT, Trailfinders), with
airlines (eg Qantas and Singapore Airlines) and with other organisations that are seeking to
tap into the Australian market based in the UK. In developing these opportunities, the TA
produces a couple of key consumer publications that are the main tool for providing
information to the consumer. These are the annual Travellers Guide and a consumer website,
australia.com. The TA also participates in trade events and provides regular newsletters for
industry partners. Much of this communication is now done through web based activity via
their corporate website www.tourism.australia.com.

Brand Australia

The Brand Australia campaign has been launched across the major markets of Europe.
Branding supports the positioning process. It uses a range of features that help consumers to
identify and develop perceptions about a range of products which convey a series of
attributes, benefits, values and promises.

The essence of the Brand Holiday Australia strategy was to identify the brand with being
‘naturally free-spirited’. The brand is conveyed as being:

• free-spirited
• colourful
• optimistic.

The values of the brand help to show what it stands for and what it believes in. Brand Holiday
Australia promotes three virtuous images, conveying the idea that Australia and Australians
are:

• genuine
• open
• unpretentious.
These positive images are then linked to tangible product benefits (eg safe adventure, the
awe inspiring feeling of vast landscapes) as well as to a range of brand attributes, the ease of
experiencing the landscapes and the open outdoor lifestyle.

Targeting younger travellers

A marketing communicator starts with a clear target audience in mind. Having targeted the
youth market, it was important to develop a message that elicited an appropriate response.
The aim of the communication process was to encourage young people not just to think
about, but to make a decision to go to Australia. With young travellers, the approach was to
communicate the aspects of Australia that would most appeal to them:

• young, vibrant, dynamic - city life

• innovative - lifestyle, food and wine, culture
• active and sporty - beaches, trails, surf and sports facilities
• fun-loving - places to party, with festivals and events.

At the same time, it was important to help young people to think about what they do within
Australia by highlighting:

• the easiest travel options to move around Australia

• the wide diversity within regions
• the uniqueness of many Australian experiences.

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Working holiday visas

Australia’s working holiday maker scheme aims to promote international understanding by

allowing young people to experience the culture of another country. It allows young working
holiday makers to have an extended holiday by supplementing their incomes through
employment. Applications come from those between 18 and 30 without dependent children,
and show that the main reason for coming to Australia is for a cultural and social holiday that
promotes mutual understanding between Australia and other nations and they intend to
supplement their funds with temporary work.

Meeting the objectives

The richness of the Australian experience creates many opportunities for targeting younger
travellers. The TA also received a huge boost with the opportunities presented by images
from the Sydney Olympics, the Paralympic Games in 2000 and the millennium celebrations.
As a result, there has been a significant growth of Europeans arriving in Australia increasing
its market share of international tourism: at the same time, total visitor expenditure by
overseas visitors within Australia has increased and this has increased export earnings from
tourism as well as the number of people working within the tourism industry.

Conclusion

TA’s experience in recent years exemplifies the potential rewards that stem from a disciplined
and focused approach to marketing. Know your product and its attributes. Identify your
potential customers. Determine how best to engage their interest and commitment. It’s a
familiar formula, and it works.

Questions

1a How does positioning help a brand?

1b Evaluate how the experience gained from developing targeting strategies for younger
markets could be usefully applied in relation to travelers in the 25-40 age group.

2 Investigate another country’s tourism program (not Pakistan) and compare it to TA’s.

3 Critically analyze the role of “Pakistan Tourism Development Corporation”. Develop a

new mission statement for it, in light of the learnings from this case.

4 What is meant by trade marketing and how is TA managing it? Give examples from
other areas.

5 Develop a “Brand Pakistan” campaign and highlight its key features.