Reformulation of Indonesia Tourism Targeting

Strategy for the International Tourism Market

Post Covid-19 Pandemic

Ike Janita Dewi(B)

Sanata Dharma University, Yogyakarta, Indonesia

ikejdewi@usd.ac.id

Abstract. Tourism is the most affected industry by the Covid-19 pandemic. Both
market changes and the new tourism development paradigm require reformulation
of marketing strategies. More importantly, the new paradigm of tourism develop-
ment in Indonesia, that is, the quality tourism paradigm, requires a reformulation
of marketing strategies. Based on historical data (visitor statistics pre-pandemic)
and current market data (during the pandemic), this research performed a clus-
ter analysis to cluster the international tourist markets visiting Indonesia. The
clustering was based on several variables: number, spending, and length of stay
of tourists from each of the markets. The resulted clusters offer perspectives on
the source markets, contributing to the biggest number of tourists, spending per
tourist, and the average length of stay. As competition intensifies and the mar-
keting budget shrinks, such market analysis provides sharpened market targeting
strategies for the Indonesian tourism government and industry to formulate more
targeted marketing strategies post-Covid 19 pandemic.

Keywords: Marketing strategy · Post Covid-19 pandemic · Indonesian tourism

1 Introduction

The Covid-19 pandemic has had the most severe impact on the tourism industry. The
policy of banning people from traveling to prevent the spread of the virus is hitting the
tourism industry. World tourism declined by more than 80% in 2020 and 80% in 2021
[1]. Indonesian tourism was also experiencing the same crisis. During the pandemic,
Indonesian tourism was only supported by domestic travel. The international tourism
industry can have stopped altogether because of the closed state borders. During the
pandemic, the tourism sector, which relies on a foreign exchange-generating sector,
could not attract international tourists because the Indonesian border and the border of
the tourists’ origin countries were closed.
Even during the pandemic, Indonesia’s competitor countries, such as Thailand and
Singapore, prepared several innovations, such as the travel bubble (Singapore and Thai-
land), sandbox (Thailand), and Vaccinated Travel Lane (Singapore). Indonesia has also
prepared a travel bubble and sandbox concept, although only in Bali and Batam-Bintan.
This strategy showed that strategic innovation is urgently needed, given that the pandemic

© The Author(s) 2023

W. R. Murhadi et al. (Eds.): INSYMA 2022, AEBMR 223, pp. 864–870, 2023.
https://doi.org/10.2991/978-94-6463-008-4_108
 Reformulation of Indonesia Tourism 865

that lasts for 2 years will definitely have an impact on market trends and intensify com-
petition [2–4]. In addition, the post-pandemic marketing budget will be greatly reduced
because the state’s fiscal finances will also be limited. Therefore, to support the recovery
of the Indonesian tourism sector, it is necessary to analyze the market segments that have
been the source markets for Indonesian tourism.
Sharpening and targeting become very important for formulating a more targeted
marketing strategy [5–7]. Besides, the paradigm shift in Indonesia’s tourism development
has become the development of quality tourism, where the critical success indicators are
not only the number of tourists but also the total benefits obtained from tourists [8]. The
total yield is the multiplication between the number of tourists and the average tourist
spending per day with the length of stay of tourists (Total yield = number of tourists ×
average spending per day × length of stay). Therefore, if the previous focus was placed
on the quantity (number of tourists), the current and future focus needs to be shifted to
tourists’ spending and length of stay.
To formulate more effective marketing strategies, Indonesia tourism should analyze
its market portfolio [9]. Specific source markets (i.e., origin countries of foreign tourists
visiting Indonesia) may offer many tourists, while the others supply tourists with higher
spending or longer length of stay. Even though the Bureau of Statistics (BPS) or other
agencies have collected the data, we need to cross-analyze the data to provide the potential
of each of the source markets in terms of their contribution to the total number of tourists
visiting Indonesia (i.e., market share), the average spending of tourists, market growth,
and total yield.
This paper utilizes secondary data already collected by several agencies and cross-
analyzes them to provide a map of the performance of a specific market vis-à-vis other
markets. Such a performance map would provide an insightful basis for decision-makers
to evaluate each market and, therefore, formulate more effective targeting strategies.

1.1 Segmentation and Targeting

In marketing management, segmenting and targeting are critical decisions. Companies

will not be able to serve all consumer groups. Tourists are also made up of different groups
with their tastes and preferences. Dolnicar [10] and Kotler and Keller [11] stated that a
tourist destination must determine its target market and focus on it to compete effectively.
The target market selection begins with segmentation analysis, namely dividing the
market into groups consisting of consumers who have almost the same characteristics.
The division of the market into relatively homogeneous groups is based on several
relevant factors. These factors can include demographics (income level, age, gender,
number of family members, ethnicity, etc.), psychographics (accepted values, opinions,
attitudes, activities, lifestyle, etc.), geography (characteristics and climate of the place
of origin/domicile), and behavior (users’ status, level of use, use situation, and benefits
sought).
866 I. J. Dewi

1.2 Geographic and Demographic Segmentation

Geographic segmentation divides the market into geographical units, such as countries,
provinces, cities, or a smaller geographical level. In tourism, geographic market seg-
mentation is the most popular market division. Market analysis based on tourist origin
is mainly used to analyze the foreign tourist market. The tourists’ country of origin
becomes the basis of segmentation by assuming that the tourists’ nationality or country
of origin shapes the characteristics of tourists to have tastes and preferences in choosing
tourist destinations to be visited [12, 13].
Geographical segmentation cannot be separated from demographic segmentation
[14]. Demographic segmentation divides the market into groups based on variables:
age, gender, income, socio-economic class, and others. Geographical segmentation can
be linked to demographic segmentation by linking the country of origin of tourists to
their socio-economic classes. This socio-economic class is measured by spending, or
the amount of money spent when traveling to a specific destination.

1.3 Quality Tourism Paradigm

The quality tourism paradigm is adopted to ensure that tourism would provide optimal
benefit for the people in the destination [8]. The overall benefit obtained from tourists is
the total yield which is a function of the number of tourists times the average spending
per day times the length of stay of tourists.
Quality tourism experience refers to the concept of experience in marketing litera-
ture. A tourism product/service, when combined with its surrounding experiences/events,
goes beyond itself to enhance and bring value to a customer’s life. High-value expe-
rience is personal and constructed by tourists themselves. Therefore, quality tourism
products/services are high-quality tourism experiences.
Therefore, a high-value tourism experience is the high-value as perceived by the
customers themselves. This is based on the concept of market segmentation and targeting.
Market segmentation classifies customers based on specific characteristics [11, 15].
Since customers perceive the value of experience, targeting becomes a vital decision.
Marketing mixes which include product, price, place, and promotion, are all designed
based on the target market segment. Therefore, skills in choosing target market segments
are crucial in creating a high-value tourism experience.

2 Research Methods
This research involves secondary data analysis. Primary data were collected from the
Bureau of Statistics. To support the primary data, secondary data analysis was performed
to provide more insights [16]. The extensive amount of primary data was further analyzed
to provide sufficient analysis to provide insights for the government and tourism stake-
holders to make decisions. The data sources include the Tourism Statistics of Indonesia
(2015–2019), Passenger Exit Survey (2019), and Tourism Satellite Account (2019) con-
ducted by the Indonesia Statistics Bureau [17], and China Market’s database by COTRI
[18]. Historical data for the period of 2015–2019 (pre-pandemic) were collected to ana-
lyze the market pattern of international tourists visiting Indonesia before the pandemic.
 Reformulation of Indonesia Tourism 867

Data for the pandemic period (2020–2021) was also analyzed to provide further analysis
of some key markets.
The analysis tool used was cluster analysis based on predetermined criteria.
Descriptive-quantitative analysis to provide a more detailed profile of priority markets.
The criteria used in conducting cluster analysis were variables that provide insight into
quality tourism development. As described in the literature review, the overall benefit
obtained from tourists is the total yield which is a function of the number of tourists
times the average spending per day times the length of stay of tourists.
Therefore, a cluster analysis was carried out for each country of origin of foreign
tourists visiting Indonesia, namely: (1) market share vs. total yield, (2) market share vs.
spending per tourist, and (3) market share vs. market growth. Tourist spending is money
tourists spend when visiting Indonesia (Passenger Exit Survey, 2019). Market share is
the division between the number of tourists from a particular country and the number of
foreign tourists visiting Indonesia.
Market growth (%) is calculated by calculating the difference between the number of
tourists in year X and year X−1 divided by the number of tourists in year X−1. Yield is
the result of multiplying the number of tourists, spending per tourist per day, and length
of stay of tourists.

3 Results and Discussion

The cluster analysis results provide insight into foreign tourists based on their country of
origin, which can be the basis for determining the target market. BPS recorded around
30–40 countries of origin of foreign tourists visiting Indonesia through 26 entrances (sea
and airports). If the number of visits data was analyzed based on market share and total
yield, Fig. 1 shows that in terms of cross-analyzed market share with total yield, there
are 4 (four) most productive source markets: Malaysia, China, Singapore, and Australia.
The four source markets are in QI, which is the quadrant for high market share-high
total yield, except for Australia, where market share is in QII, but is still the 4th highest
contributor, but ranked 2nd for total yield.
If we cross-analyze between market share and spending/tourist, the source markets
that occupy QI and QII are Malaysia, Singapore, China, and Australia. Figure 2 shows

Fig. 1. A Cluster Analysis on the Indonesia’s International Tourism Market (Market Share VS
Spending per Tourist).
868 I. J. Dewi

Fig. 2. A Cluster Analysis on the Indonesia’s International Tourism Market (Market Share VS
Market Growth).

Fig. 3. Chinese Outbound Travelers to Indonesia Q12016–Q3 2021 (Source: COTRI)

that apart from making a significant contribution to the total market, individual tourists
from these four countries also spend relatively more money. Figure 2 shows that the
quality (i.e., spending per tourist) of Chinese and Australian tourists is the highest.
Market development strategies also require information about the market potential
presented by high-growth markets. Therefore, if we cross-analyze market share and
market growth, Fig. 3 shows that in QI and QII we could identify the source markets of
Malaysia, Singapore, and China. Of these two variables, Australia is a priority source
market. Many source markets also show high growth, such as Russia, the Philippines,
Thailand, Egypt, and India. However, these markets contribute to a minimal number of
tourists.
Furthermore, marketers need to pay attention to changing market trends after Covid-
19. For two years, with limited border opening and quarantine requirements after return-
ing from other countries, the Chinese market will form its preferences for destinations
abroad that apply various policies to foreign tourists, especially the Chinese market.
Based on the COTRI data, during the Covid-19 pandemic, global travel and the tourism
industry came to a grinding halt. With the gradual recovery from this situation, the Chi-
nese outbound tourism market has begun to show early signs of increasing, mainly in
the form of trips to Macau, the only destination which was opened to Mainland Chinese
visitors without the need to go into quarantine upon return to China. Chinese tourism to
Indonesia has remained very low, with Q2 + Q3 2021 recording 28,000 arrivals instead
of 19,000 in the same six months in 2020, but still way below the more than one million
for the summer period of 2019. During the post-Covid-19 pandemic, Chinese tourists
may prefer to visit nearby destinations or the ones that first applied progressive (i.e.,
lenient policies) to the Chinese market.
 Reformulation of Indonesia Tourism 869

4 Conclusion
Based on the cluster analysis results, it is identified that in terms of the number of visits,
total yield, spending per tourist, and market growth, there are 4 (four) most profitable
source markets: Malaysia, Singapore, China, and Australia. Therefore, these four source
markets prioritize developing the foreign tourist market. Indonesian tourism needs to
formulate a well-targeted strategy by targeting these four source markets. The selection
of the target market has implications for the allocation of marketing resources in the form
of marketing communications and also product development following the tastes and
preferences of the target market. However, further analysis needs to be done on changes
in market trends that may occur due to the Covid-19 pandemic. As described in this
article, the Chinese market has also changed. The formulation of marketing strategies,
especially for the foreign tourist market, needs to pay attention to historical data and the
latest data after the Covid-19 pandemic.

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