Month: February 2017

Environmental sustainabilityMarketing 3.0Strategy planning & executionSustainabilityThird sector and social sustainability

The principles and goals of a destination model: sustainability

Sustainability means qualitative and balanced growth preserving both socio cultural and environmental value. Sustainable development is defined as “the satisfaction of the present moment without compromising the capacity of the future generations to satisfy their needs”. In the tourism industry there are several forces favoring a tourism sustainable development:

  • The consumer pressure: greater consciousness about environmental issues, increase of alternative tourism concepts such as ecotourism, agrotourism, etc. and better preservation of the destination’s environmental and cultural resources.
  • The public authorities: through new regulations incentivizing conservation and recuperation of the environment.
  • The civil society: increasingly concerned about the environment, demanding measures for the conservation of the cultural, social and natural heritage.

There are however some forces against the sustainable development, namely the economic growth, which has to be countered with development planning measures and policies. Businesses want to increase revenue and financial value, the society is demanding employment, and the public administration needs their taxes to provide public services.

According to Professor Muller from the University of Bern, there are five conditions that a destination should comply with to be sustainable, all ingrained in the public policies:

  • Economic development, intending to develop tourism as an alternative economic sector.
  • Environmental conditions, intending to develop environmental consciousness and preserving the natural heritage.
  • Cultural identity, fostering traditions and local cultural heritage.
  • Social base, improving the life quality of the destination inhabitants.
  • Tourism attractiveness, improving the visitor satisfaction by leveraging the local heritage.

The public administration has to consider the needs of this development in the regulations, and ensure the participation of the local stakeholders through a campaign to arouse consciousness and concern about these issues.

Do you think of other conditions to make a destination sustainable?

Collaborative business modelsStrategyStrategy planning & executionSustainability

The destination model as a key factor for competitiveness and sustainability

The competitiveness of a tourism destination is not just a matter of tourism operators’ performance. Instead, the potential of a destination for competing in the travel market is determined from the top government policies regarding urban planning, public services, territory planning –protecting natural interest areas-, and tourism development planning, determining tourism related regulations, license policies, investments in facilities and infrastructures and also cross-destination marketing planning and execution.

So long as the tourism activity affects not only the tourism operators, but also the residents’ lives, other business sectors and the image of the territory, it is necessary to elaborate a thorough model attending to the needs and aspirations of all stakeholders. The complexity and challenge of tourism development planning is namely in the need for reaching a balance point, considering all the stakeholders’ interests.

A destination model is to provide answers to three main questions:

  • What can we do to develop tourism in the destination?
  • How can we do it?
  • What vision do we want to strive for?

Finding answers to these questions means choosing among different alternatives related to the tourism to be developed: the development pace, intensity, the limitations to the business growth, etc. Furthermore, a development model works like a guide and reference framework for the activities of both public and private agents, and to articulate cooperation between different public bodies and between public and private ones.

Other advantages and benefits of defining a destination development model are:

  • The territorial structure –cluster definition- of the tourism development is clearly defined.
  • The destination takes advantage of the market opportunities more effectively.
  • The destination’s resources and attractions are leveraged more adequately.
  • Government leaders and local operators have a reference framework to orient their strategy.
  • The need for infrastructures, facilities, financial, technological and human resources are clearly defined according to established goals.
  • Investors have a reference framework that provides them with valuable orientation.
  • Resources are assigned more rationally, effectively and profitably.
  • The tourism management has a reference framework to orient the decision making.
  • The reaction versus certain changes in the market is faster and more effective.

Once the model is defined, if this is brought into practice, there are even more benefits:

  • The destination creates and develops solid and sustainable competitive advantages.
  • The destination positioning and image is stronger.
  • The tourism businesses operating in the destination are more profitable and increase revenue
  • The service quality and tourists’ satisfaction increases.
  • The destination inhabitants perceive the positive impact of the tourism activity more clearly.
  • All stakeholders have more confidence in the future of the destination.

Do you think of other benefits of defining the destination development model?

Culture changeMarketing 3.0Storytelling training & case studiesSustainabilityThird sector and social sustainability

The transformational power of storytelling: raising social consciousness

Similar to what happens with the self-awareness to know ourselves better, storytelling training also manages to shift our mindset and arouse a higher sense of social consciousness and connect with the values of our human spirit. In this process of gaining awareness and maturity, we frequently discover our wish to contribute to social causes and when we drive this will to action, we find out the fulfilling power of creating positive impacts in our community. Then it is when we are again on the way to becoming a better version of ourselves. There have been identified three main types of social transformation:

  • Cultural transformation. Listening to personal stories about unknown realities about which we often have many misconceptions works like an eye opener and eventually also as a mind shifter. When we listen to stories about stigmatized issues or taboo topics we are likely to discover many hidden aspects of that reality which may change our opinion, and therefore our attitude towards people related to that social group changes, and social value change begins.
  • Community building. Sharing community based stories may serve as a basis for discussion on community challenges and concerns affecting a significant proportion of its members. Such discussions may be the starting point for mapping out strategic guidelines to take action and address these issues. In this case, storytelling workshops help build solidarity among community members and join efforts, thus creating a deeper sense of community belonging.
  • Call for the need of policy enforcement. In line with the aforementioned community or social problems, stories told by people suffering these problems raise awareness about the need for more effective policies to tackle such challenges or just call for the need for further enforcement in the application of the current policies. Storytelling helps by giving a voice to the often overlooked minorities or discriminated groups that need further care and protection.

All these exposed life-changing effects are at the core of the value proposition of destinations approaching the Vision of Tourism 3.0, as a vital part of the mission and also as strategic experiences that empower and move people to join in the efforts in the mission pursuit. Such social motivations could be the ones to motivate the local community to learn the art of storytelling, which then could be used for destination marketing purposes.

Do you think of other ways through which storytelling may foster social consciousness?

Culture changeMarketing 3.0Storytelling training & case studies

The transformational power of storytelling: self-discovery, transferring wisdom and healing traumas

Transfer of values and wisdom. As traditional storytelling has done throughout the centuries, stories are conveyors of cultural values and wisdom. Stories illustrate the consequences of doing good versus the consequences of doing bad, teaching the rules of life that conform to popular wisdom. The compelling power of good stories is the best guarantor of effectively transferring both the community values and knowledge. This wisdom and value transfer could be the object of Storytelling training programs for school students, for instance.

Self-discovery and awareness. By sharing and listening to other people’s stories, participants have the opportunity to reflect on the reasons why things happened and the key learning outcomes they can take away from that experience. As introduced in previous sections, telling stories about our lives is also an opportunity to gain knowledge and awareness about who we have been, who we are and who we are to become. Personal story work is as much a creative process as it is a mindfulness development process.

This brings us emotional, intellectual and moral clarity to make important decisions and envision our possibilities. Again, to get the most of this process, it has to be carried out in a group, as it is by being listened to and by listening to other people’s comments that we gain such awareness. When we tell our story, we convey the kind of person we are as much as the tale itself. At this point, by listening to understand contrary points of view the teller gains maturity and awareness.

Healing personal traumas. The sole fact of being truly listened to when telling a personal traumatic story releases pain and changes people’s lives. Then, storing the trauma in a box called story helps the teller in stepping away from the trauma and regarding all the suffering from outside, as what happens when doing meditation. By telling the story, the teller releases all the negative energy and feelings that were kept inside, and this works like a magic healing therapy that helps to store the trauma in a corner of our memory and leave empty space for positive feelings and experiences to come in.

How do you think that these transformational powers may be applied to destination experiences?

StrategyStrategy planning & executionSustainability

Understanding the forces to design strategy

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Understanding the five competitive forces that shape industry’s structure is the first step in the strategy design process. Every business should understand the key factors that determine the current profitability, as well as the ones responsible for the profitability shifts at least in the recent past.

Understanding the industry structure orientates corporate strategists in finding the best opportunities and shaping the right strategies to catch them, or foreseeing threats and designing the strategies to anticipate and prevent them from harming the business.  Some of the strategic moves that the 5 forces analysis may suggest to do are the following:

Positioning the destination. This strategy is to find a position in the market where the destination businesses are better protected from the strongest forces threatening the business profitability. Furthermore, the five forces analysis may also help the businesses analyze the convenience of entry or exit in an industry.

A thorough foresight analysis of an industry’s 5 forces may even spot levels of profitability that are not yet reflected in the share value of incumbents. A good case study of a destination finding its most profitable positioning is that of Macau (PRC), which positioned itself as the best destination for gambling all over Asia, and is actually the world’s number 1 destination making profits from gambling, ahead of Las Vegas.

Exploiting industry change. Industry changes are source of threats and opportunities, and so the visionary strategists have to be the first to foresee these changes and drive the business towards advantageous positions to catch the new opportunities and avoid the new threats. Structural changes may generate new needs or new ways to satisfy the current ones.

Industry leaders are more likely to overlook some of the new opportunities and may have more difficulties to change their business model due to their size constraints. So these changes are usually the opportunity of small or middle size players to grow towards industry leadership positions, thanks to the agility allowed by their smaller size.

In Europe, the boom of Ryanair as a low cost carrier operating in small airports some kilometers away from the main destinations changed the airline industry boosting the number of travelers and taking business from the tour operating industry in favor of the FITs. This benefited many businesses developing a strategy to get the Ryanair travelers, many of whom used to travel through tour operators’ packages. At the same time, many new destinations emerged, especially those near the airports where Ryanair was flying, many of whom were not so popular before Ryanair’s flights.

Shaping industry structure. Sometimes, a company manages to transform the industry structure through revamping their business model and altering the five forces. In these cases, the other industry players are somehow forced to follow this industry leader so as not to lose their market position and eventually the entire industry structure is transformed. The new industry leader reshaping the industry structure is likely to get the most benefit by reshaping competition in a way that can let its strengths shine.  The industry restructure may be carried out in two different ways: redistributing profitability among incumbents or expanding the overall profitability.

Redistributing profitability. To attract more profits to the industry it is necessary to identify the main force or forces that are most constraining to profitability and neutralize them. A firm may potentially influence any of the competitive forces.  To counter supplier power, the incumbents may standardize the features of its inputs to reduce or eliminate switching costs.

To neutralize buyer power, incumbents may offer value added services that raise customers’ switching costs, or find new channels to reach customers without the established powerful ones. To keep new entrants away from the industry, incumbents may create barriers to entry such as the marketing expenditure or the R+D budget. To reduce the threat of substitutes, companies can differentiate the product with new features or value added services to better satisfy the needs of its customers.

Expanding the overall profit.  When the “industry pie” expands all players are likely to benefit from the growth. That occurs when the industry discovers new markets to satisfy undiscovered needs that were not satisfied, or by developing new product categories that generate new demand and expand the potential market.

Overall profitability may also grow due to improved collaboration with suppliers or buyers to reduce inefficiencies. Also, agreeing on industrywide quality standards raises the reputation of the whole industry benefiting all players and allowing price raises. The distribution of the newly expanded profit pie is to be determined by the five forces. The most successful strategists will be those who manage their business to take the highest percentage of the new profits.

Continuing with the Ryanair case study, this expanded the tourism business in existing destinations and also developed many new local destinations. The low cost flights stimulated new demand both from the current outbound markets and from some new outbound markets that were not used to having international flights to travel abroad directly.

Defining the industry. It is necessary for companies operating in many industries to well define the industry boundaries, to assign every business unit to the corresponding industry and to analyze profitability and design strategy for every business unit separately. It is essential to identify when two similar products are different enough to actually play in different industries, and so they are to be separated in two business units to properly set their own strategy.

In the hotel industry, it is quite common –among large hotel operators- to create different brands depending on the segment they are operating in or targeting: business, vocational, city trip, luxury, etc.

Do you think of other case studies that showcase these strategic moves?

 

 

 

 

 

 

 

 

1. Introduction 2
2. The tourism industry structure and its key players 3
3. The 5 competitive forces in the tourism industry 5
4. Business portfolio strategy method for destinations 15
CONTENTS
The 5 competitive forces

& Business Strategy

<<PLANNING METHODS WHITEPAPER SERIES >>

 

 

 

 

BP1 Crafting the business portfolio strategy

When crafting Strategic Plans for destinations, one of the essential strategies to design is the Business Strategy, to depict the portfolio of sectors in which the destination will compete. Nowadays, more than ever before, the tourism market is segmented in an increasing amount of sectors or businesses, each of which has enough specificities to deserve its own competitiveness and attractiveness analysis and assessment.

Moreover, destinations need to diversify their risk, reduce demand seasonality, and renovate their products to sustain their competitive position. The ultimate purpose of this methodology is to establish a scale of priorities in the assignation of the funds to carry out the necessary renovations and investments.

In the case of Tourism 3.0, as explained in other Whitepapers, the Special Interest travel and other minor sectors play a very important role on the success of its development, and so a sound analysis should be carried out on an extensive range of Special Interest sectors.

The methodology based on the McKinsey matrix analyzes for every sector the capacity of the destination to compete and the attractiveness of the sector, considering the market volume and growth potential, seasonality of demand, tourists’ expenditure, multiplying effect, customer loyalty potential, and the 5 competitive forces that shape long term profitability. This 5 forces analysis is the most complex and sound to be carried out, for a specific section is dedicated to it in this Whitepaper.

Then, the challenge is to assess the proportional relevance of every player in relation with its corresponding force, and determine the proportional strength of every force in the sector. To rate the importance or strength of every force in shaping the industry’s long-term profitability, it is necessary to combine both quantitative and qualitative analysis. In this regard, statistical data corresponding to the business volume, the purchasing and sales volumes, prices and price differences between different dealers, margins corresponding to business with different dealers should be obtained for every incumbent.

Furthermore, it is necessary to gather data related to possible barriers to entrance, barriers to exit –it is possible to quantify the switching costs, for instance- and other factors mentioned in the explanation of the framework.

Finally, the assessment of a pool of industry experts is also necessary to find important insights that are specific to every sector, or not properly explained in the available secondary sources. Industry experts may also lead to new secondary sources, for it is convenient to interview them rather at the beginning of the research, so as to help us orientate its process.

An industry experts pool should comprehend many profiles, such as directors of travel agencies –outbound & incoming-, tour operators, hotels, tourism facilities, transportation services; consultants, journalists, government officials, etc.

What other methodologies would you use for the business portfolio strategy?

 

 

 

 

BP2 Attractiveness assessment for the tourism industry

As with any other industry, the development of the tourism businesses requires a prior strategic assessment on the attractiveness of its various sectors to determine the optimum business portfolio to invest in. To do so, the 5 competitive forces framework analyses the structure of every sector through the five forces that shape its long term profitability:

  • The threat of new entrants
  • The suppliers’ negotiation power
  • The buyers’ negotiation power
  • The threat of substitutes
  • The competitive rivalry

These five forces determine how the generated value is to be distributed among the different types of players: how much is retained by incumbents, how much is taken by suppliers and customers using their bargaining power, and also how the profitability is limited by the threat of new entrants and substitutes.

The strength balance between the different forces is to determine the average industry profitability, and a key to formulate the adequate strategy. Hereby, we will analyze the application of the five forces model for the tourism industry.

Apart from the 5 forces analysis, there are some more factors to be considered when assessing the sectors’ attractiveness:

  • Market volume and main segments volume
  • Market growth trends and potential: current and foreseen market growth
  • Seasonality of demand, considering length of high, mid and low seasons.
  • Price elasticity of the demand: price sensitivity of all kinds of buyers, adjusted according to the share of everyone.
  • Expenditure in accommodation, food & beverage, activities and shopping (% of each).
  • Multiplying effect: strategic value of the business in terms of its capacity of fostering the prestige of the destination and marketing it for other businesses.
  • Loyalty potential: capacity of the business in retaining customers (%)

When composing the attractiveness matrix we will adjust the value of every factor according to its impact on the sector attractiveness.

Would you consider other factors when assessing a sector’s attractiveness?

 

 

 

 

 

 

 

 

 

 

 

BP3 Key tourism industry players

There are 3 groups of players: first level suppliers, service operators and marketing operators

 

1st level suppliers. Human resources, land owners, infrastructure operators, utility operators, government as license supplier and the construction sector are the basic suppliers for the tourism industry operators. As we have seen in the five forces model, they play a key role in defining the industry’s profitability when tourism is not so developed in a territory or we are analyzing the attractiveness of a tourism sector that would require the construction of new facilities and services. We may take into account Governments as active players in the industry whenever they are in charge of marketing the destinations.

Service operators. Food & beverage, accommodation, transport and activities providers are the key operators of the industry, as service providers. Whenever we analyze the attractiveness of tourism business that would be based on existing services and facilities, we will consider them as suppliers, except for the activities’ operators, which could be considered as incumbents in this case.

Marketing operators. Here lies the complexity of the tourism industry, where we define several kinds of operators, which may be either competitors or partners.

  • Booking centers & portals: online and/or telephone based commercial platforms managing bookings for one or more kinds of services operators –mostly focused on accommodation and also activities-, usually gathering the tourism services offered within a local or regional territory. They usually get their profits by keeping a percentage of the business they bring to their local service suppliers. In this concept we can also include new business models like Airbnb, whose service suppliers are local householders marketing their spare rooms.
  • Incoming agencies: operators located in the destination in charge of creating packages including accommodation, transportation and activities. These are the most genuine marketing operators, as they are in charge of product development, combining services and experiences available in the destination for the satisfaction of every target. They may sell their packages to tour operators, travel agencies or directly to the final customer. In many cases, they are also the activity providers.
  • Tour operators: operators located in the outbound market in charge of creating packages, usually marketing several destinations and several kinds of products. However they may be tour operators specialized in one destination and more often in one kind of product (golf, ski, sun & beach, cultural touring, incentive trips, etc.). These may deal directly with the service operators or with the incoming agencies, and then sell their packages to the travel agencies or directly to the final customer. They usually buy service capacity long in advance to the service operators or incoming agencies at a lower price ensuring them business, and then have to sell this capacity to the outbound markets.
  • Travel agencies: service retailers usually located near to the customer, selling either incoming agencies’ or tour operator’s packages, or directly booking to the services’ operators. Many travel agencies sell through the internet. Their value is based on the confidence of the customer, offering packages from different operators and sometimes specialization in certain products.
  • Travel social media sites: even if they are not included in the previous scheme as business players, sites like Tripadvisor and many similar models are key influencers in the decision making process of both the chosen destination and mostly the chosen operators within, therefore they deserve a relevant mention as key players in the tourism industry.

In this table are summarized the main features that define each of the marketing operators:

Marketing operators conceptual features
  Location Product development Dealing with final customer Marketing focus
Booking center Destination No ··· One destination. One or many products
Incoming agency Destination Yes · One destination. One or many products
Tour operator Outbound market Yes · Many destinations.  One or many products
Travel agency Outbound market No ··· Many destinations.  One or many products
Travel social site Internet No ··· All destinations.

All services

 

Being that this conceptual outline is representative for most of the industry operators’ models, we should also note that many operators have developed business models integrating several concepts and functions altogether, in most cases as a result of a forward integration process.

Would you consider other key players when analyzing the tourism industry structure?

 

BP4 The 5 Competitive forces: the threat of new entrants. Initial barriers to entry

The entrance of new competitors in the industry expands the overall offer and challenges the market share of the incumbents, pressing on prices, costs, value added and investment needed to keep their position in the market.

In the tourism industry, the new entrants tend to be the focus of attention of many travelers, at least those who are always willing to explore unknown destinations. Needless to say that there is an almost unlimited number of potential new entrants, if we consider the entire tourism industry, though we will carry out this analysis for each tourism sector separately, thus reducing significantly the number of potential entrants. In general, new destinations have to face some particular challenges or initial barriers to enter the market:

Product differentiation: a new entrant has to have a unique selling proposition and enjoy a credible image as a tourist destination. This is not easy to achieve in a few years, given that brand image is a result of consistent communication efforts over a long period. Positive image development takes time and should be followed by substantive action.

Capital investment: any territory that wants to develop tourism needs substantial investments in hotels, roads and other infrastructures to meet demand requirements. To do so, it will have to convince investors proving political stability and offering a business friendly environment.

Access to distribution channels: most destinations will need well-established distribution of their new products via tour operators. In that respect there has been a process of concentration in the tour operating industry, thus playing a key role and strengthening their force. Despite the increasing role of the internet as a direct distribution channel, tour operators still play a major role and tend to promote only easy to sell destinations due to high demand.

Government policy: Governments often regulate the industry including limiting the entrance of new operators through a licensing system to protect the heritage or the environment. Many kinds of regulations may limit the development of tourism, such as those related to either natural or cultural heritage protection, environmental protection affecting the development of ski or golf resorts, regulation against gambling, etc. Governments may also subsidize some incumbents thus creating a disadvantage for potential entrants.

The threat of entry –and not the fact that new entries actually occur- puts a cap on the profitability potential of the industry, as if the threat is high, incumbents have to hold down their prices to deter new competitors. This threat will depend on the extent of entry barriers and the retaliation that new entrants may expect from incumbents.

Would you consider other key challenges as initial barriers to entry?

BP5 The 5 Competitive forces: the threat of new entrants. Barriers to entry or challenges to compete successfully

Apart from the main challenges explained above, there are other kinds of barriers to overcome, related to the challenges to compete successfully in the market:

Supply-side economies of scale: They are created when large volumes of production manage to spread fixed costs over more units and thus lower the cost per unit, or obtain better deals with suppliers due to larger orders. That makes new entrants have to choose between investing on a large scale or assume a cost disadvantage that should be compensated via a differentiated product. Such is the case of mass tourism destinations, which can often be only competed against with smaller scale differentiated products at higher prices. Or even in the same destination, this is the competition between large hotels and boutique hotels. The most cost efficient level of production is termed Minimum Efficient Scale (MES). If MES for firms in an industry is known, then we can determine the amount of market share necessary for low cost entry or cost parity with rivals.

Demand-side benefits of scale: This advantage arises when a larger network of clients increases the attractiveness of the destination. In the tourism industry, this is the case of some popular destinations among a certain target of tourists, whose leaders attract most of the group, niche or segment to that destination, based on either objective or prestige criteria, or because spending holidays with the group is an essential part of the motivation.

Customer switching costs: These are costs that clients have to assume if they change to another supplier. In the tourism industry, this is the case of the residential tourism, in which the tourists own a property in the destination where they go most frequently. All the cost of selling the property and moving to the new destination is a significant barrier.

Incumbency advantages independent of size: Incumbents build often their competitive advantage on some proprietary assets such as exclusive licenses to access natural heritage or to operate in a certain location, reputable brand identity, or a specific know-how that sets them apart from competitors. This is the most typical kind of barrier to entry in the tourism industry, for which we could find an endless amount of examples, especially related to access to natural resources, geographic locations and brand identities. Technology in the tourism sector applies to the capacity to produce unique experiences due to a specific know-how, like the wellness & spa, gastronomy, cultural & art performances, etc.

Government advisories: countries presenting some kind of safety risk due to conflicts or health threats for travelers are evaluated by other countries governments, which advise their citizens about such threats. Presenting any relevant threat for the tourist is likely to prevent any destination from being marketed through the main distribution channels.

Investment and asset specificity: needless to say that for many tourism businesses, significant investments need to be carried out, some of which correspond to special equipment that cannot be used for other purposes or not easily sold if the venture fails, thus becoming a barrier to exit. Such is the case of ski resort lifts, sailing marinas and many others.

Brand loyalty and advertising expenses: incumbents’ brand loyalty may be a significant barrier to entry, as long as new entrants will have to develop expensive marketing campaigns to gain a position in the market. Those campaigns will only be profitable in the long term. Incumbents’ advertising expenses are themselves a barrier to entry, as new entrants will need to invest much more than incumbents to gain significant brand awareness and market share.

Apart from the barriers to entry, we should take into account the expected retaliation by incumbents towards new entrants. Newcomers are expected to fear retaliation if:

  • Incumbents have previously reacted effectively against the entrance of new players.
  • Incumbents have proven capacity to strike back (cash, borrowing power, productive capacity or influence in the distribution channels).
  • Incumbents appear to be likely to cut prices in order to retain market share, due to a high fixed cost structure.
  • The low industry growth so newcomers can only develop business by taking it from incumbents.

When carrying out the 5 competitive forces assessment for a destination’s strategy plan, we consider incumbents all the local operators: accommodation providers, local operators organizing activities, transport operators, and incoming agencies.

Would you consider other challenges to compete successfully?

 

 

 

BP6 The 5 Competitive forces: The power of suppliers

Powerful suppliers may leverage their bargaining power by raising prices, or by reducing product quality or related services among many possibilities. A supplier is powerful when:

  • Its business volume is much larger than its clients’ or there is higher concentration in the suppliers’ side than in the client side.
  • It supplies to several industries and therefore its business does not depend on one industry.
  • The supplied inputs are critical for the industry.
  • Its clients have to face switching costs when changing to another supplier.
  • It markets differentiated products.
  • Its product has no possible substitutes
  • It can seriously threaten its clients to integrate forward into the industry.

In the tourism industry, the main suppliers to be considered are human resources, land owners, energy and utility suppliers and the government as license provider, responsible for urban planning and key infrastructure owner. Besides, every sector may have their specific suppliers related exclusively to their activity. Whenever we are analyzing a sector for a developed destination, in which there is no need to build new accommodation, we may take the accommodation and transport providers as suppliers as long as this sector needs the tour operators to market the destination –because they provide key added value- or the rate of FITs in this sector is insignificant.

What other relevant suppliers would you consider when analyzing this force for a destination?

 

BP7 The 5 Competitive forces: The power of buyers

In a similar way, powerful clients can leverage their bargaining power by pushing prices down, demanding higher product quality or more added services, etc. In the tourism industry, buyers are FIT, outbound tour operators, internet portals, travel agencies, corporate clients and sometimes also DMCs. However, every tourist sector may have a different buyer structure (%FIT, TTOO concentration, relevance of corporate clients and associated clients). Tour operators can be identified as the main buyers of most tourist products. Buyers have negotiating power when:

  • There is higher concentration in the buyers’ side than in the suppliers’, or the business volume of the buyers is significantly larger than their suppliers’. In this respect, there has been an increasing concentration of the outbound tour operators in the major outbound markets, especially in the sectors with the highest concentration of travelers.
  • The products tend to be commoditized. That occurs with destinations that do not care for their heritage and do not foster their culture as an essential part of the experience, in those sectors that are not culture focused.
  • There are few or no switching costs for customers. Switching costs are barely ever relevant apart from residential tourism (when the tourist own a property in the destination).
  • Customers may seriously threaten with backward integration to take a stake on suppliers’ business. Some outbound tour operators buy hotels in the destinations and set their own inbound travel services.
  • Buyers have very good information about the demand, prices and the supplier. In the tourism industry it is not easy to hide information of the suppliers.

 

  • If the utility of the product is low for the buyer, this will be more likely to press the prices down to compensate the low utility. This is unlikely to happen in the tourism industry.

Instead, buyers are weak if:

  • Producers threaten with forward integration, acquiring the distribution channel. This happens when accommodation operators market their services directly to the client, usually through the internet. It could also happen that these operators create packages including transportation and activities and market directly to the final customer through the internet, travel agencies or its own retailers.
  • Significant buyer switching costs. Only in the case of residential tourism.
  • Buyers are fragmented. This is the case of FITs and sometimes small tour operators.
  • Producers supply critical portions of buyers’ input distribution of purchases. This refers to the uniqueness of the accommodation or activities operator as a supplier within the tour operator package.

A buyer group is price sensitive if:

  • The purchased product accounts for a significant proportion of the procurement budget. Accommodation is usually the most significant fraction of the package, along with transportation depending on the length of the trip.
  • The customer is under pressure to reduce its costs due to low profits, tensions in the cash flow, etc. This happens quite often with the tour operators when negotiating with incoming services suppliers.
  • The product object of negotiation has little impact on the buyer’s product quality. This cannot happen in the tourism business, as all the main components are clearly visible to the final customer.
  • The product has little impact on the customer’s other costs. This is not likely to apply to the tourism industry. Only in very special cases.

Many producers try to counter the channel power with exclusive deals with specific distributors or simply by selling directly to final customers through their own channel.

Through a series of mergers and acquisitions, a few tour operators control most of the sales outlets today. Operators such as Kuoni are also in a position to centralize purchasing for an entire brand in all European countries. A common complaint by hoteliers is that if the requested price is not given, tour operators have the ability to take their clients to another destination. Tour operators identify new destinations with low startup costs and compete with existing destinations which are then forced to reduce prices. Certain European charters recently pulled out citing price issues.

Would you add more considerations on analyzing the power of buyers in destinations?

 

BP8 The 5 Competitive forces: The threat of substitutes

A substitute is a product or service that satisfies the same need in a different way. A threat of substitutes exists when a product’s demand is affected by the price change of a substitute product. A product’s price elasticity is affected by substitute products –as more substitutes become available, demand becomes more elastic since customers have more alternatives.

 

Many substitutes may be overlooked because of their different nature, as they are not direct competitors. They limit the industry’s profitability by pressing the product prices, just as another competitor would. There is a high threat of substitutes when:

  • The substitute product or service offers an advantageous price-performance relationship compared to the industry product
  • There are little or no switching costs associated to the substitute product or service.

Strategists should monitor all the potential substitute industries’ evolution, to detect changes that may turn these potential substitutes into attractive alternatives due to a price downturn, emerging risks concerning security or health issues, a crisis diminishing the buyer’s available budget, or new entertainment trends, for instance. In the tourism industry we consider substitutes –in most cases- those other tourism sectors that may satisfy the same or similar needs. For instance, we consider that two ski resorts are competitors, but a rural villa or a golf resort is a potential substitute as long as it satisfies the need for vacation. Other conventional substitutes could be residential tourism with relatives or friends, or activities related to the entertainment industry. However, sometimes the substitutes may come from technological industries, such as videoconference services in the case of business tourism.

How would you assess the power of substitutes in the tourism industry?

 

BP9 The 5 Competitive forces: Rivalry among competitors

Competitors’ rivalry may be shown through much evidence, such as advertising campaigns, new product launches, price discount campaigns, product or service improvements, etc. The extent to which rivalry affects the industry’s profitability depends upon the intensity of the competition and the basis of the competition.

The intensity of rivalry is greater when:

  • There are a large number of competitors, or many of them are similar in size.
  • The slow industry growth intensifies the fights for market share.
  • Participants have industry leadership aspirations beyond economic performance, and so they have a passionate commitment to their business. This happens sometimes in the great international events, which are not profitable themselves but foster the reputation of the destination.
  • Different business models measure performance in different ways due to different strategic goals, and so it is difficult for them to monitor their rivals’ evolution, success and chances to gain market share. A diversity of rivals with different cultures, histories and philosophies make an industry unstable. There is greater possibility for mavericks and for misjudging rival’s moves.
  • Strategic stakes (investments) are high when a firm is losing market position or has potential for great gains. Over the last decade there has been a process of concentration affecting most of the major tour operators throughout Europe, taking advantage of the market growth.
  • Industry shakeout. The industry may become crowded if its growth rate slows and the market becomes saturated, creating a situation of excess capacity with too many goods chasing too few buyers. A shakeout ensues, with intense competition, price wars, and company failures.

 

  • Significant increase of the used production capacity increases offer and hence competition.
  • High exit barriers. This happens in some businesses with very specific assets that cannot be resold for other purposes, thus making it imperative to compete to recover the investment.

The dimensions in which rivals compete and the extent to which they compete in the same dimensions have a significant impact on the industry’s profitability. Rivalry is especially harmful to profitability when it is focused on price competition, as this pushes the prices down and favors only the customers. Price competition also makes the customers overlook other product features and focus only on price. Price competition is more likely to take place when:

  • Product differentiation is low (and there are few switching costs for buyers).
  • The overheads are high and the variable costs are proportionately low, pushing the prices down in some cases to near the marginal costs. This happens especially in the low season.
  • There needs to be a significant increase in capacity to make the business profitable.
  • The perishability of the product forces the price down to what the market is willing to pay, which in some cases is ridiculous. Over the last years there has been a trend to market the vacant rooms or packages through specialized “last minute” channels.

When the competition is based in other dimensions such as product differentiation, design, or branding, profitability is less likely to be damaged, as the competition drives rivals to innovate in creating more value for the customer, which is actually likely to end up pushing the prices up rather than cutting them. Further, value based competition builds barriers to entry and makes the potential substitutes less attractive or suitable.

Stronger rivalry occurs when competitors aim for the same positioning in the market, focusing on the same dimensions and so are trying to satisfy the same needs for the same targets. This usually ends up in a zero-sum competition, not increasing the profitability.

Rivalry turns into a positive sum –increase the industry’s average profitability- when each participant focuses on different targets, offering different products and services adapted to the target segment’s needs, with different features, different value added services, different branding, different price mix, etc. In this case, so long as the companies’ products satisfy better the clients’ needs, they build more barriers to entry, differentiate from substitutes and so they can also charge higher prices and increase their margins, increasing the business profitability. It is the challenge of the strategist to shift the nature of competition towards segmentation and differentiation in order to increase and secure profitability.

Industry rivalry may be measured by the Concentration Ratio (CR), indicating the percentage of market share held by the four largest firms in the industry. With only a few firms holding a large market share, the competitive landscape is less competitive (closer to a monopoly). A low concentration ratio indicates that the industry is characterized by many rivals, none of which have a significant market share. These fragmented markets are said to be competitive.

If rivalry among firms in an industry is low, the industry is considered to be disciplined. However, a maverick firm seeking a competitive advantage can displace the otherwise disciplined market. The intensity of rivalry commonly is referred to as being cutthroat, intense, moderate or weak, based on the firms’ aggressiveness in attempting to gain an advantage.

In the tourism industry, there are two key trends that favor value based rivalry: market segmentation and leverage of the destination’s cultural identity to build more powerful brands.

However there is a considerable market for price sensitive customers, and once in the destination there is usually plenty of information about all accommodation and services choices, in which the price is one of the most visible features. Massive tourism destinations tend to compete on a price based type of rivalry.

To gain advantage over rivals, a destination may choose among several strategic moves:

  • Developing new products
  • Improving their segmentation strategy
  • Using the distribution channels more creatively to gain awareness and offer attractive deals
  • Developing a cost advantage to lower prices
  • Improving other aspects related to the destination’s competitiveness

How would you measure rivalry between destinations?

 

BP10 Factors to consider when analyzing the industry profitability

Beyond analyzing the five competitive forces that shape the industry structure and its long term profitability, there are other factors that are usually analyzed but also overvalued as key indicators when estimating long term profitability. These are the following:

Industry growth rate. A usual mistake is to overestimate the importance of industry growth. This only means that the industry business is going to grow in volume, but not necessarily in profitability. It only occurs so long as there are few or no entrants and the incumbents manage to develop further economies of scale as a result of the business volume increase. But still, many other forces play a decisive role in shaping profitability.

Innovation. In Tourism this refers mostly to business model and product innovation. Even if new technologies are developed to optimize operational efficiency, this is rarely a significant advantage for a destination, mainly because new technologies are developed by third party players –not tourism operators- and therefore the technology is soon available to all operators.

Government. To properly assess the influence of government policies in the industry, it is convenient to analyze how every policy affects each of the competitive forces.  In the tourism industry, the government plays a decisive role, being the owner of key infrastructures, the license/permit provider either for the construction of facilities or for the exploitation of cultural or natural resources as tourist attractions, responsible for the planning of the territory and quite often also responsible for the marketing of the territory as a tourist destination.

Complementary products and services. Some products or services are consumed or used along with others as a matter of need or to enhance value. Complements become relevant to the strategic analysis when they influence the demand for the industry product, and influence profitability through the way they influence the 5 forces.

The strategist should assess whether the influence of every component on every force is positive or negative, as well as to estimate the strength of such influence. For instance, complements usually directly affect the barriers to entry, depending on the nature of the complement and its relationship with the main product or service. It also tends to affect the thread of substitutes. In the tourism industry, all tourism activities requiring specific equipment (golf, ski, sailing, etc.) are subject to such complement factor, especially as they create a barrier to entry for new customers.

Complements may also affect other forces as they raise switching cost or reduce product differentiation, up to the extent that some companies enter the complement industry to alter it in their favor. This is to say that analyzing complement industries and its impact in the five forces may be an essential part of the strategist work.

Would you consider other factors?

 

BP11 Changing forces, reshaping profitability

Industry structures tend to be rather stable, though there are usually some adjustments and occasionally some radical disruptions. Change drivers may come from outside or from within the industry: technological disruptions such as the rise of internet and social media, changes in customer needs and rise of new segments, development of new business models, etc.

Shifting threat of new entry. Changes in the aforementioned barriers to entry are to shift the threat of new entrants. One of the most usual barriers to entry is the Government policy in urban planning and license concessions for building and operating tourism facilities. They are also decisive in the development and maintenance of communication infrastructures to facilitate a good accessibility to the destination. A lack of Government commitment and investment is a considerable barrier to entry for the destination’s operators.

Another common barrier to entry, at least concerning distant markets, is the flight connection. A good case study is that of the low cost airlines -namely Ryanair- that created flight connections with many unknown destinations in Europe. In this case, the Government policy is also decisive, as owner and operator of the airports in most of the cases.

Changing supplier or buyer power.  The factors influencing the bargaining power of both buyers and suppliers are to change over time in both directions. The rise of the internet as sales and communication channel and internet based business models –namely low cost airlines- changed significantly the negotiation power of many local operators in front of the tour operators, as it was much easier for the suppliers to market their services directly to the client, and these two factors also boosted the rise of FITs, who could easily organize their trip comparing many options “at a click” at very competitive prices.

However, despite the loss of market share by the tour operators, this setback was rapidly countered through a process of concentration affecting many big and middle sized tour operators to regain negotiation power in front of the destinations’ operators.

Shifting threat of substitution. The shifts in the threat of new substitutes come from new product developments that shift the price-performance comparisons between different options. In the case of the tourism industry, the rise of the collaborative business models such as Airbnb is a serious threat for the traditional accommodation suppliers. Other examples are the car sharing models taking business from the regular transportation services, and even some platform based models where locals offer special interest experiences to visitors. In all cases, non-professional services are competing with the destinations’ operators, and so are considered as substitutes rather than rivals.

Do you think of other case studies in which a force shift significantly reshaped profitability?

 

 

 

 

BP12 Understanding the forces to design strategy

Understanding the five competitive forces that shape industry’s structure is the first step in the strategy design process. Every business should understand the key factors that determine the current profitability, as well as the ones responsible for the profitability shifts at least in the recent past.

Understanding the industry structure orientates corporate strategists in finding the best opportunities and shaping the right strategies to catch them, or foreseeing threats and designing the strategies to anticipate and prevent them from harming the business.  Some of the strategic moves that the 5 forces analysis may suggest to do are the following:

Positioning the destination. This strategy is to find a position in the market where the destination businesses are better protected from the strongest forces threatening the business profitability. Furthermore, the five forces analysis may also help the businesses analyze the convenience of entry or exit in an industry. A thorough foresight analysis of an industry’s 5 forces may even spot levels of profitability that are not yet reflected in the share value of incumbents. A good case study of a destination finding its most profitable positioning is that of Macau (PRC), which positioned itself as the best destination for gambling all over Asia, and is actually the world’s number 1 destination making profits from gambling, ahead of Las Vegas.

Exploiting industry change. Industry changes are source of threats and opportunities, and so the visionary strategists have to be the first to foresee these changes and drive the business towards advantageous positions to catch the new opportunities and avoid the new threats. Structural changes may generate new needs or new ways to satisfy the current ones.

Industry leaders are more likely to overlook some of the new opportunities and may have more difficulties to change their business model due to their size constraints. So these changes are usually the opportunity of small or middle size players to grow towards industry leadership positions, thanks to the agility allowed by their smaller size.

In Europe, the boom of Ryanair as a low cost carrier operating in small airports some kilometers away from the main destinations changed the airline industry boosting the number of travelers and taking business from the tour operating industry in favor of the FITs. This benefited many businesses developing a strategy to get the Ryanair travelers, many of whom used to travel through tour operators’ packages. At the same time, many new destinations emerged, especially those near the airports where Ryanair was flying, many of whom were not so popular before Ryanair’s flights.

Shaping industry structure. Sometimes, a company manages to transform the industry structure through revamping their business model and altering the five forces. In these cases, the other industry players are somehow forced to follow this industry leader so as not to lose their market position and eventually the entire industry structure is transformed. The new industry leader reshaping the industry structure is likely to get the most benefit by reshaping competition in a way that can let its strengths shine.  The industry restructure may be carried out in two different ways: redistributing profitability among incumbents or expanding the overall profitability.

Redistributing profitability. To attract more profits to the industry it is necessary to identify the main force or forces that are most constraining to profitability and neutralize them. A firm may potentially influence any of the competitive forces.  To counter supplier power, the incumbents may standardize the features of its inputs to reduce or eliminate switching costs.

To neutralize buyer power, incumbents may offer value added services that raise customers’ switching costs, or find new channels to reach customers without the established powerful ones. To keep new entrants away from the industry, incumbents may create barriers to entry such as the marketing expenditure or the R+D budget. To reduce the threat of substitutes, companies can differentiate the product with new features or value added services to better satisfy the needs of its customers.

Expanding the overall profit.  When the “industry pie” expands all players are likely to benefit from the growth. That occurs when the industry discovers new markets to satisfy undiscovered needs that were not satisfied, or by developing new product categories that generate new demand and expand the potential market.

Overall profitability may also grow due to improved collaboration with suppliers or buyers to reduce inefficiencies. Also, agreeing on industrywide quality standards raises the reputation of the whole industry benefiting all players and allowing price raises. The distribution of the newly expanded profit pie is to be determined by the five forces. The most successful strategists will be those who manage their business to take the highest percentage of the new profits.

Continuing with the Ryanair case study, this expanded the tourism business in existing destinations and also developed many new local destinations. The low cost flights stimulated new demand both from the current outbound markets and from some new outbound markets that were not used to having international flights to travel abroad directly.

Defining the industry. It is necessary for companies operating in many industries to well define the industry boundaries, to assign every business unit to the corresponding industry and to analyze profitability and design strategy for every business unit separately. It is essential to identify when two similar products are different enough to actually play in different industries, and so they are to be separated in two business units to properly set their own strategy.

In the hotel industry, it is quite common –among large hotel operators- to create different brands depending on the segment they are operating in or targeting: business, vocational, city trip, luxury, etc.

Do you think of other case studies that showcase these strategic moves?

 

Marketing 3.0Storytelling training & case studies

The transformational power of storytelling: skill development

Beyond the goal of learning how to tell stories, storytelling training has often had other benefits of a very different nature. In the research and reflection process for the elaboration of this Whitepaper, up to five different types of outcomes have been identified:

  • Skill development
  • Transfer of values and wisdom
  • Self-discovery and awareness
  • Healing personal traumas
  • Raising social consciousness

Skill development. Storytelling encourages and empowers people to develop many capacities that are unused or underdeveloped, most of the time due to cultural factors. There are three main kinds of abilities to consider at this point:

  • Communication and leadership skills. An important part of the workshops is learning to communicate through writing, visual and audio contents, and public speaking. This is a very comprehensive set of skills that helps participants in communicating more effectively in the various challenges they are to face in their lives. For kids to develop their assertiveness and expressivity, communication abilities are a key to overcome the different challenges we are to face throughout life. For adults, to develop leadership skills is to empower them in becoming change leaders in developing
  • Listening skills. Equally important as speaking skills, effective communication needs the development of listening abilities. Understanding others is the first step to formulate an effective message for our listeners. Effective communication consists of a two way flow of information, and humans need to be listened to and understood to open their hearts and minds, to then understand the people they are talking with. Further, as explained in many passages, listening is necessary to learn from others, and in storytelling this is essential.
  • Artistic skills. Crafting stories is an art, and therefore storytelling training provides the chance to develop artistic skills. This is usually an under-developed ability due to the constraints of the education systems and some cultural factors. Both the art of self-expression and creativity are important skills to develop, especially for the professional life and generic problem solving. In the case of kids, developing imagination helps them build the capacity to envision innovative approaches when facing problems, which contributes to their self-confidence as they regard themselves capable of tackling more challenges.

What other skills could be developed through storytelling?

Marketing 3.0Storytelling training & case studiesTourism marketing

Storytelling training process: assembling the pieces and reviewing the story

When all the audio and visual pieces have been found or created, it is time to first decide how to structure the story, and then to put them together with the narrative to see how they work. This is composing the script and storyboard. Next, as long as the story is edited and the result of the assembling is evaluated, it is time to decide what pieces of content to add, to change or to withdraw. All the details are important in order to compose a consistent and smooth storytelling experience, effectively conveying all the intended emotions and messages.

Another key element to consider before drafting the storyboard is the order of delivering each fact of the story, which does not necessarily have to be chronological. At this point, the storyteller can play with the sequence to create more suspense by leaving unanswered questions and unrelated pieces that challenge the audience to guess how the story will trigger.

Then, in the scripting and storyboarding phase the teller decides the layout in which the visual, audio and narrative pieces are combined. The way that these different types of content are combined allows the audience to make connections without need for specific explanation. This process of understanding connections through the combination of visuals, audio and narrative content is called closure, and the challenge of the teller at this point is to find the optimal combination of pieces to provide the maximum closure.

After the pieces assembly, there comes the decision about the pacing, as long as this contributes to the story meaning, bringing emphasis at critical moments. Further, pace also conveys an added layer of meaning: that of calmness versus urgency. Spaces of calmness help the audience to digest all the previous events and have the ideas more clearly understood.

When the assembling is completed, it is time to review the outcome and contrast it with the initial purpose with which you started the process. Furthermore, consider the context information that you may need to provide the audience with, and reconsider the purpose of the story if necessary. Depending on the type of audience and the setting where the story is to be delivered, there is more or less need for contextualization. On the other hand, during the process of crafting the story, new ideas about the messages and purpose may come to the teller’s mind, so there has to be a time to seriously reflect on this.

It is important to note the convenience of doing this process in a group, where every teller works on his or her story, but interacts with other tellers and shares their experience, which ultimately inspires them and helps them to focus properly.

Would you consider other tips in the assembly and review stage?

Marketing 3.0

Changing forces, reshaping profitability

Industry structures tend to be rather stable, though there are usually some adjustments and occasionally some radical disruptions. Change drivers may come from outside or from within the industry: technological disruptions such as the rise of internet and social media, changes in customer needs and rise of new segments, development of new business models, etc.

Shifting threat of new entry. Changes in the aforementioned barriers to entry are to shift the threat of new entrants. One of the most usual barriers to entry is the Government policy in urban planning and license concessions for building and operating tourism facilities. They are also decisive in the development and maintenance of communication infrastructures to facilitate a good accessibility to the destination. A lack of Government commitment and investment is a considerable barrier to entry for the destination’s operators.

Another common barrier to entry, at least concerning distant markets, is the flight connection. A good case study is that of the low cost airlines -namely Ryanair- that created flight connections with many unknown destinations in Europe. In this case, the Government policy is also decisive, as owner and operator of the airports in most of the cases.

Changing supplier or buyer power.  The factors influencing the bargaining power of both buyers and suppliers are to change over time in both directions. The rise of the internet as sales and communication channel and internet based business models –namely low cost airlines- changed significantly the negotiation power of many local operators in front of the tour operators, as it was much easier for the suppliers to market their services directly to the client, and these two factors also boosted the rise of FITs, who could easily organize their trip comparing many options “at a click” at very competitive prices.

However, despite the loss of market share by the tour operators, this setback was rapidly countered through a process of concentration affecting many big and middle sized tour operators to regain negotiation power in front of the destinations’ operators.

Shifting threat of substitution. The shifts in the threat of new substitutes come from new product developments that shift the price-performance comparisons between different options. In the case of the tourism industry, the rise of the collaborative business models such as Airbnb is a serious threat for the traditional accommodation suppliers. Other examples are the car sharing models taking business from the regular transportation services, and even some platform based models where locals offer special interest experiences to visitors. In all cases, non-professional services are competing with the destinations’ operators, and so are considered as substitutes rather than rivals.

Do you think of other case studies in which a force shift significantly reshaped profitability?

Marketing 3.0Storytelling training & case studiesTourism marketing

Storytelling training process: finding visual supports and audio content

In the case of the Digital Storytelling, the next step is to find images or videos to support the story. To do so, storytellers have to first describe the images that come to their mind when recalling the story, understand the messages and emotional contents embedded in every image, find or create such images or videos, and combine them with the written or audio content in the best way to convey the intended message and emotions.

When combining the visual contents you have to be aware that they are creating additional layers of meaning. It is preferable to use real visuals, but if these are not available, the teller can also create images or videos faithfully reproducing the scenes of the story. At this point, the storyteller has to be aware of all the messages that the visual content is likely to convey, as the communication power of visual content is far superior to that of the written.

At this stage, the emotional tone of the story should have been identified, and therefore the teller should have a clear idea of the adequate audio content to combine with the other content, or at least it should be easy to discern whether a certain type of audio content may or may not be suitable to convey the intended tone and emotions. The way the voice-over is performed, the ambient sound and the music are the three kinds of audio content to play with.

In digital stories, the voice of the teller not only conveys the narrative but also the way he or she lives the story experience and his or her personality. The teller adds a significant layer of meaning and has the power of arousing emotions. To play with this added layer of meaning, it is also useful to consider not only the right choice of words but also other resources such as the use of incomplete or broken sentences that have the power to help the audience understand how the narrator –who is often the main character – is feeling about the scene.

In considering the addition of ambient sound, it is recommendable to start by adding as little as possible and see if this added layer of sound enhances or spoils the story. In the case that it enhances it, you may try to add a bit more and consider again whether to leave it, to add more or to withdraw. To choose the right sound, try to identify those that come to your mind when recalling the story in the critical moments where sound is usually added.

Music requires a similar exercise like that of the ambient sound. Music has the power to set the tone, change the perception of the visuals and even the meaning or the scene. Bear in mind that in adding both visual and audio contents, it is crucial to specifically relate every piece of content to the corresponding part of the narrative.

Would you consider other tips to enhance the integration of audiovisual contents?

Marketing 3.0Storytelling training & case studies

Storytelling training process: identifying the key insights

The storytelling training is a journey that may encompass many phases depending on the nature of the story and the purpose of the story itself. However, according to Joe Lambert from the Center for Digital Storytelling, this process may be standardized in a set of steps, each of which has its own goals. However, there is a set of goals of the whole process to be understood from the beginning of the workshop.

These main goals are to help storytellers in:

  • Finding the story they want to tell and visualize it from the outset
  • Defining that story in a written form
  • Identifying the emotions that the story generates in them and to the audience
  • Envisioning how the audience will perceive their story through digital platforms

First of all, it is necessary to reflect upon what the story means to you, what it is about, and what messages it intends to convey. To gain deeper understanding of your wish to tell the story, you should also ask yourself why you want to tell this story now, the people you are thinking about when recounting the story and whether the story shows you the way you really are or the reason why you are the way you are.

All these reflections may enlighten you with a better view on who you were, who you are and who are you going to become. It is all about examining your personal process of change from the past to identify the direction you are taking in your future and why you are taking this direction. Then, when you raise awareness of the reasons you are going in a certain direction, you get a much clearer view and give yourself the opportunity to reconsider if this is what you really want. Change stories may have two different drivers: change may be forced from outside or may be driven from inside, as a result of your free will. There are however many shades of grey to consider in this point. Reality is almost never black or white.

Storytelling is a learning process for both tellers and listeners. When listening to stories people search for answers related to their lives, and those may end up inspiring listeners to make changes in their lives. But tellers also have the opportunity to learn so long as they listen to the audiences’ comments and stories in contrast with their views, and this way may eventually fill some gaps of the initial story and upgrade the story to a new version with deeper meaning.

What other key insights do you think that should be identified?