The External audit entails a sound market research to assess target markets attractiveness and markets trends to identify opportunities and threats. When analyzing the industry and market trends, every trend has to be classified according to its correspondence to one of the 5 competitive forces that shape the destination’s long term profitability: negotiation power of suppliers, negotiation power of buyers, threat of new entrants, threat of substitutes and competitor’s rivalry. This framework is to help the marketer with the strategic reflection on analyzing the effects of the market trend on the destination.
Once classified according to its corresponding force, an assessment has to be made on whether it represents an opportunity, a threat or it doesn’t have an effect at all. Furthermore, a level of priority corresponding to its impact on the destination should be assigned, and the following assessments should be carried out:
For every trend representing an opportunity:
- Assess the potential market value of the opportunity for the destination
- Assess the investment needed to take advantage of this opportunity. Consider many options
- Estimate profitability for many viable options
For every trend representing a threat:
- Assess the risk of the threat, considering likelihood, market value and strategic importance
- Assess the investment needed to neutralize that threat -if possible- and its profitability.
When assessing the markets & segments attractiveness, analyze for each of them:
- Market size, evolution and perspectives
- Public types and demand characterization: sociological profile, seasonality, length of the trip, demanded services, trip organization, advanced booking, motivations, expenses and price elasticity.
- Purchasing behavior: information sources, decision key factors, etc.
- Possibility of fostering customer loyalty, prestige and multiplying effect
- Quantitative and qualitative trends of both supply and demand.
- Key players, prescribers, opinion leaders and other trendsetters.
- Associations, publications, events, fairs, portals, forums, blogs and social networks.
- Key competitiveness factors and requirements.
- Best practices benchmarking in improvement of management and destination competitiveness, marketing, products, business models and technologies.
- Marketing strategies and actions. Minimum investment recommended.
- Tour operators, travel agents and web portals working with this segment. Positioning and market share of each one, segment concentration, entries and exits. Estimated share of FIT.
- Segment attractiveness: analysis of the 5 competitive forces and potential.
- Analysis of competitiveness/price, distribution and offer variety compared between destinations. Positioning of each destination.
- Knowledge and assessment of the destination by the tour operators and travel agents.
The market information may be obtained through existing market intelligence reports and complemented with ad-hoc research if necessary.
Would you consider any other point to assess the markets’ attractiveness?
