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Tourism strategic marketing planning: challenges and opportunities for tourism business sector in Egypt

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Tourism strategic marketing planning: challenges and opportunities for tourism business sector in Egypt
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  Tourism Analysis,  Vol. 10 pp. 00–001083-5423/05 $20.00 + .00Printed in the USA. All rights reserved. Copyright © 2005 Cognizant Comm. Corp.www.cognizantcommunication.com 1 Address correspondence to Mohammed I. Eraqi, Tourism Studies Department, Faculty of Tourism & Hotels, Cairo University, Cairo,Egypt. E-mail: m_eraqi@hotmail.com RESEARCH NOTE TOURISM STRATEGIC MARKETING PLANNING: CHALLENGES ANDOPPORTUNITIES FOR TOURISM BUSINESS SECTOR IN EGYPT MOHAMMED I. ERAQITourism Studies Department, Faculty of Tourism & Hotels, Cairo University The results of this study proved that the tourism business sector managers in Egypt have positiveattitudes towards the importance of tourism strategic marketing as a way to improve their companies’operating efficiency. However, there is still a degree of misunderstanding to the concept of tourismstrategic marketing and most of them are dealing with it as a tool or a policy to implement tourismmarketing functional objectives.Key words: Strategy; Planning; Tourism; Scale; Marketing; Mission Tourism Strategic Marketing ManagementStrategic marketing planning is the first step inthe marketing process, and involves developing thebusiness portfolio, creating the mission statement,determining goals and objectives, and designingfunctional strategies for each department of the busi-ness (e.g., human resources, accounting, purchas-ing). Goals and objectives are set in order to helpthe company and its various departments fulfill themission statement, and to provide direction for ev-ery aspect of the business. Functional strategies areplans that help each business unit to achieve its goalsand objectives (Becherel, 1999). There is a definedneed for all organizations and individuals involvedStrategic planning is necessary to reduce theamount of waste during the stages of production anddistribution. The major challenge facing tourismcompanies is how to build and maintain healthy busi-nesses in the face of the rapidly changing market-place and environment. It is important to continu-ously satisfy changing consumer needs. Companiesthat view this as fundamental to success practice theart of market-oriented strategic planning (Gretzel etal., 2004; Kotler, Bowen, & Makens, 2003;Middleton & Clarke, 2001).This article endeavors to analyze the attitudes of tourism business managers in Egypt towards the im-portance of tourism strategic marketing and explainhow they understand it.  2ERAQIwith the tourism industry to become strategic in themanagement of all their operations, including mar-keting. This stems from:1.The “new” political stance on the role of sub-sidy and the rise in market forces, which in turnmeans that for tourism enterprise/destinations,there are: a) an increased emphasis on earnedincome and b) an increased accountability for,and effectiveness in, the use of scant tourismresources.2.The growing need to balance the tourist urgewith the financial imperative and also with so-cially inclusive government policy.To select those markets that are most critical toyour business, it is necessary to be able to: antici-pate shifts in travel demand by market, determinetrue market size by region, identify the fastest grow-ing markets, target new and emerging markets, un-derstand the risks facing current and future markets,and locate and target the most lucrative customers.It is clear that there are many differing factors (vari-ables) that influence the strategic framework of tour-ism companies/destinations, all of which impact onthe company’s decision for concentrating on short-term or long-term objectives (Gretzel et al., 2004).Analyzing these variables is difficult due to the com-plexity of the tourism industry and the unique aims,objectives, and trading tourism business environ-ments of each tourism company/destination withinthe industry. However, through exploring the trad-ing business environment of the past decade, thepressure affecting a tourism company/destination’sfuture could be understood and an insight into theoptions available to the planer as he/she tries toprogress the tourism company/destination as far aspossible. These variables, considered as the widerenvironment, are the key motivation behind adopt-ing this new philosophy as framework for strategicthinking and the expansion toward the long-termobjectives rather than the short-term programs. Thesuccess of this new approach will face the challengeof achieving cooperation among a variety of the tour-ism company/destination’s strategic business units(SBUs) or strategic areas (SAs), or to generate stra-tegic alliances, franchising, or management contractsbetween different tourism companies/destinationswithin the region or throughout the world (Knowless,1999; Morley, 2003). It is necessary to focus atten-tion on the critical tourism issues and choices, anddevelop a strategic attitude among top and upperlevel managers.Research Methodology The sample frame was 1200 Egyptian tourismcompanies (Egypt, 2003) from different categories:A, B, C, and others (unclassified firms). Randomsampling was employed to choose 200 companiesfrom which tourism marketing managers were cho-sen. The main criterion for the selection of the par-ticipants was their experience and expertise in thefields of tourism and marketing. Most interviewstook place at the respondent’s business; a few tele-phone interviews were done with some managerswho work outside greater Cairo. The number of con-ducted interviews (132) was considered sufficientfor the validity of the research as it represented 66%of the total random sample (Finn, Elliott-White, &Walton, 2000). The researcher first contacted 20 tour-ism marketing managers who had at least 2 years of experience in the field of tourism marketing as a pilotstudy to check the questions, to determine the suit-able number of questions and to understand theirknowledge about strategic marketing and their abili-ties to answer the survey questions. The 132 com-pleted questionnaires resulted from the four differ-ent catetories (A, B, C, and others) from differentgovernorates in Egypt: Cairo (30), Giza (21), Alex-andria (11), Mansoura (17), Fayoum (15), Luxor(14), Marsa Matrouh (10), Al-Minya (9), and Aswan(5). They represent 66% of the total sample (200marketing managers) and 11% of the total popula-tion (1200).The study questionnaire was developed guided bythe Likert scale of attitude measurement(1=strongly disagree to 5=strongly agree)(Kinnear & Taylor, 1991) and review of literature inthis context. Four experts (two in the field of surveydesign and two academics) reviewed the first draftof the questionnaire. Important suggestions wereconsidered and the second draft was piloted to 20tourism marketing managers. The first and the sec-ond trial versions of the questionnaire resulted inthe final form, leading to the selection of 16 itemsthat formed two subscales of the questionnaire. Thereliability of the scale was calculated at 0.5326 for  TOURISM STRATEGIC MARKETING PLANNING3Cronbach’s alpha value. Cronbach coefficient alphawas less than 0.7 but it was still positive, greaterthan zero and less than 1. The mean interitem corre-lation for the items equaled 0.3720, which was inthe optimal range, suggested to be from 0.2 to 0.4(Pallant, 2001).Tourism Strategic Marketing Importance in EgyptDeterminants of tourism strategic marketing im-portance from the viewpoints of tourism businesssector managers was tested using one sample t  -test.The results of the t  -test ranged from 36,685 to 79,222and the two-tailed significance value was 0.000,which was less than the alpha value (0.05). So themean values for all determinants had a significanteffect on the importance of tourism strategic mar-keting from the viewpoints of tourism companymangers in Egypt. Depending on the mean value of each determinant, the main factors that explain theimportance of adopting the philosophy of tourismstrategic marketing by the Egyptian tourism com-panies can be summarized as: • improve return on capital, • help tourism managers improve their company’soperation efficiency; • strengthen the relationship between the com-pany and its stakeholders, • improve the level of customer satisfaction, • help to access the targeted market segments; • increase the company’s market share; • help in deciding tourism company’s strengths,weaknesses, opportunities, and threats.The main factors that affect and control the imple-mentation of strategies, policies, and the processesof implementing the concept of tourism strategicmarketing by the Egyptian tourism companies canbe summarized as: • concentrate on one tourism product, • economic factors affecting tourism company’smarketing strategies & policies, • political factors affecting the tourism company’sstrategic marketing plan • concentrate on current market segment, • social factors affecting tourism company’s mar-keting strategies & policies; • cultural factors affecting tourism company’smarketing strategies & policies, • marketing research activities for alleviating thebad effects of the external factors; • technological factors affecting tourismcompany’s marketing strategies & policies.Most managers of tourism companies understandand implement strategic marketing as promotion andadvertising, and public relations. This means thatthere the concept of tourism strategic marketing ispoorly understood. Tourism company managers con-sider this concept as a tool or a policy for imple-menting tourism marketing. This result seems to beaccurate because only 21% of tourism business man-gers consider tourism strategic marketing as a phi-losophy to guide the work of the firm and the meanof the responses was 2.7348 ( t  -test=39,305,  p =0.000).The Egyptian tourism company managers hadpositive attitudes towards the importance of tourismstrategic marketing for their companies. The aver-age of the responses on the Likert scale ranged from49% for agree to 4% for strongly disagree. The per-centage for agree was 32% and 49% for stronglyagree. From the one sample t  -test, the mean of theLikert scale ranged from 4.11 to 3.7. These meanswere close to strongly agree and agree (1=stronglydisagree to 5=strongly agree). These results alsomatch with the upper and lower values under 95%confidence intervals of the difference. Table 1 showsthe results of running a stepwise model using 15variables to determine which of them had signifi-cant effects on the understanding and implementingthe concept of tourism strategic marketing.According to Table 1 the following model couldbe established: Y  =  f  (  X, Z  ) (implicit function)(1) Y  = b o + b  x  X  + b  z  Z   (explicit function)(2)So the estimated function, according to SPSS pro-cess results, is: Y  =1.464+0.175  X  +0.139  Z  (3)where: Y  : variable of understanding and the way of imple-  4ERAQImenting the concept of tourism strategic marketingin Egypt (dependent), b o : constant, b  x : slope or elasticity of  x ,  X  : variable of the degree to which the tourism com-pany is concentrating on its current market segment(independent variable), b  z : slope or elasticity of  z ,  Z  : variable of the economical factors affecting thetourism company’s marketing strategies & policies(independent variable).There were 15 variables that were provided tothe SPSS program, two of which were entered intothe model because the other 13 variables’ signifi-cance was more than 0.05 ( t  -test ranged from 2.190to –1.211 and significance ranged from 0.983 to0.030) for all variables and so they did not haveimportant effect on the behavior of the dependentvariable (the understanding and the way of imple-menting the concept of tourism strategic market-ing in Egypt). According to the results of this pro-cess, there were only two variables that control andaffect the understanding and the way of implement-ing the concept of tourism strategic marketing inEgypt. These two variables are: the degree to whicha tourism company is concentrating on its currentmarket segment (  X  :  R 2 =0.060, beta=0.233, t  -test=2.775, t   significance=0.006, F  -test=8.239, F   significance=0.005), and the economical fac-tors that affect a tourism company’s marketing strat-egies & policies (  Z  :  R 2 =0.093, beta=0.184, t  -test=2.190, t  =significance 0.030, F  -test=6.637, F   significance=0.002). It seems that this result iscorrect in the case of Egypt because most of theEgyptian tourism companies are small travelagents. That is why the variable  X   interprets about0.060% of change and behavior of the dependentvariable, the understanding and the way of imple-menting the concept of tourism strategic market-ing in Egypt ( Y  ).For the second variable (  Z  ), it interprets about0.093% of change and behavior of the depend vari-able ( Y  ). This is because of the rapid changes of theeconomic factors such as exchange rate, interest rate,government economic policies, inflation rate, andeconomic legislation, which cause Egyptian com-panies to concentrate on short-run objectives ratherthan their strategic marketing objectives. For ex-ample, investment organizations underwent a lot of changes during the period 1974–1997. In 1974 lawNo. 43 was issued for organizing Foreign and ArabCapital, followed by law No. 32 in 1977, which wasannulled and substituted by law No. 230 in 1989. In1981, law No. 159 was issued for organizing thebusiness sector in Egypt. In the 1990s law No. 8was issued in 1997. Hence, there were five laws re-garding investment issued from 1974 to 1997, whichmeans that a law has been issued every 4 years, whichresults in an unstable environment of investment inEgypt. This explains why tourism companies’ man-agers concentrate on short-term decisions rather thanlong-term ones.There are also several economic factors that sup-port this result, such as external and internal factorsaffecting tourism growth in Egypt. External factorsinclude economic instability, the impact of the Euro/ dollar relation on hotel and tourism services prices(especially for Europeans), and foreign competitionfrom other Mediterranean countries, such as Turkey.The General Agreement for Trade & Services (GATS)is expected to result in greater foreign competition,but also in a potential transfer of foreign technologyand skills to Egypt enhancing service quality. Inter-nal factors include institutional obstacles (adminis-trative complexity, financing limitations, fees andtaxes), government policies (the exchange rate, tour- Table 1Stepwise Regression Model Test UnstandardizedStandardizedVariables EnteredCoefficients (B)Coefficients (Beta)  R 2 t  -Test t   Sig. F  -Test F   Sig.Constant1.464 ( b o )4.0910.000The degree to which tourism a company is0.175 ( b  x )0.2330.0602.7750.0068.2390.005concentrating on its current market segment (  X  )The economic factors affecting a tourism0.139 ( b  z )0.1840.0932.1900.0306.6370.002company’s marketing strategies & policies (  Z  )  TOURISM STRATEGIC MARKETING PLANNING5ism regulations, environmental, pricing, and market-ing policies), human resources (particularly educa-tion and training), and tourism-related services (in-cluding travel agencies, tourist guides, public touristestablishments, transportation, and infrastructure). Allof these economic factors affect tourism companymanagers’ attitudes to be oriented toward short-termobjectives rather than long-term strategic thinking.ConclusionsThere is a degree of misunderstanding to the con-cept of tourism strategic marketing. According tothe stepwise regression analysis results there are onlytwo factors that control and affect the understand-ing and the method of accomplishment of the tour-ism strategic marketing strategies and policies. Thefirst factor is the degree to which the tourism com-pany/destination is concentrating on its current mar-ket segment rather than diversifying their tourismproducts and markets. This is because most of tour-ism companies in Egypt are small and work as travelagents. The second factor is the economic variablethat has an effect on tourism marketing strategiesand policies. This results from the rapid changes of economic factors such as exchange rate, interest rate,etc., that cause the Egyptian tourism companies/des-tinations to concentrate on short-term outcomesrather than their strategic marketing results. For im-proving the situation there should be a kind coop-eration between tourism companies/destinations inEgypt, such as emerging or strategic alliances. ReferencesBecherel, L. (1999). Strategic analysis and strategy formu-lation. In F. Vellas & L. Becherel (Eds.), The interna-tional marketing of travel and tourism, a strategic ap- proach.  UK: Antony Row Ltd.Egypt. (2003). Tourism in figures.  Information & ComputerCenter, Ministry of Tourism.Finn, M., Elliott-White, M., & Walton, M. (2000). Tourismand leisure research methods, data collection, analysisand interpretation.  UK: Pearson Education Limited.Gretzel, U., et al. (2004). Tell me who you are and I will tellyou where to go: Travel personality testing for destina-tion, recommendation system. In A. J. Frew (Ed.),  Infor-mation communication technology in tourism  (pp. 205–215). New York/Wien: Springer-Verlag.Kinnear, T. C., & Taylor, J. R. (1991).  Marketing research,an applied approach . New York: McGraw-Hill.Knowles, T. (1999). Strategic marketing in the hospitalitysector. In F. Vellas & L. Becherel (Eds.), The interna-tional marketing of travel and tourism, a strategic ap- proach.  UK: Antony Row Ltd.Kotler, P., Bowen, J., & Makens, J. (2003).  Marketing for hospitality and tourism  (3rd ed.). Englewood Cliffs, NJ:Prentice-Hall.Middleton, V. T. C., & Clarke, J. (2001).  Marketing in traveland tourism.  UK: Butterworth-Heinemann.Morley, C. L. (2003). Impact of international airline alliances. Tourism Economics, 9 (1), 31–51.Pallant, J. (2001). SPSS survival manual, a step by step guideto data analysis using SPSS for windows, version 10. USA: Open University Press.
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