Tag: strategy planning

Culture changeMarketing 3.0StrategyStrategy planning & execution

The Tipping Point’s theory for expanding destinations 3.0 (IV)

Beyond the key ideas of the Tipping point’s theory exposed in the previous articles, there are some case studies that showcase how this theory comes into practice in the real world.

The diffusion model is an academic model of looking at how a contagious idea or innovation moves through a population. For instance, when the hybrid seed was launched to the market, the group of farmers who started trying it at first were the Innovators. The slightly larger group who were convinced by them were “the early adopters”. They were the opinion leaders in the community, a group of respected and thoughtful people who watched and analyzed what those Innovators were doing and eventually decided to follow. After them came the Early Majority and the Late Majority, the deliberate and the skeptical mass, who would never try anything until the most respected ones had tried it first. Finally there came the Laggards, the most conservative of all, who see no urgent reason to change. Plotting that progression on a graph, it forms a perfect epidemic curve –starting slowly, tipping just as the Early Adopters start using the seed, then rising sharply as the Majority catches on.

But many times the contagious spread of a new idea is actually quite tricky. There is a substantial difference between the people who originate trends and ideas, and the people in the Majority group who eventually adopt them. These two groups may be next to each other on the word-of-mouth continuum. But they don’t communicate particularly well. The first two groups –the Innovators and Early Adopters- are visionaries. They want revolutionary change, something that sets them apart qualitatively from their competitors. They are the people who buy brand-new technology, before it’s been perfected or even proved, or before the price has gone down. They usually have small companies and are just starting out, willing to take enormous risks.

The Early Majority, instead, are big companies. They have to worry about any change fitting into their complex business structure. If the goal of visionaries is to make a quantum leap forward, the goal of pragmatists is to make a incremental improvement, some measurable and predictable progress. The word risk is negative in their vocabulary.

Innovations don’t just slide effortlessly from one group to the next. There is a huge gap between them. Actually, all kinds of high-tech products fail, never making it beyond the Early Adopters, because the companies that make them are not always able to scale them to the mainstream market, just because it’s not appealing enough to the Early Majority.

Connectors, Mavens and Salesmen are those who make it possible for innovations to bridge over the gap between both groups. They translate ideas and information from the highly specialized world of the innovators into a mainstream language that everybody can understand. What they do is to highlight the aspects that most matter to the audience, exemplifying through storytelling how the idea could change their lives, dropping the unnecessary information and technical details that could only lead to confusion.

The Innovators fit a different personality type. They feel different. If you ask people what worries them the most, the trendsetters pick up on bigger-picture things, whereas the mainstream people think about being overweight, or how well they are doing at work. They are passionate activists to some extent.

Conclusion

When trying to use the Tipping Point theory to craft a strategy to create some kind of social epidemics, like engaging and gaining stakeholder support to the destination business model, is that efforts have to be concentrated in three groups of people: Connectors, Mavens, and Salesmen, so long as they are responsible for starting word-of-mouth epidemics.

We then have to prepare a message that sticks, which can actually be a story, no matter how short we make it. The learning outcomes of the storytelling technique from previous articles and Whitepapers are essential to understand how the human psychology works in order to create emotional connections with our target audience and move them to take action in the direction we want.

We finally have to understand the power of context, that regardless of our thinking about ourselves as autonomous and inner-directed, we are actually strongly influenced by our social and physical environment, and so all the environment factors matter when preparing for the tipping point to happen.

It’s particularly interesting to take into account the rule of 150 when choosing the target audience, so long as it can be split into blocks in accordance with this parameter, to ensure its receptivity to the message. Working thoughtfully on these points we can shape the course of social epidemics. In the end, Tipping Points are no more than a reaffirmation of the potential for change and the power of intelligent action.

If you are interested in further insights about this topic, I strongly recommend you to read Malcolm Gladwell’s “The Tipping Point”, where you will also find many case studies that illustrate all the concepts and theories among other interesting content.

Culture changeStrategyStrategy planning & execution

The Tipping Point’s theory for expanding destinations 3.0 (III)

Following with the second article presenting the Tipping point theory, where the “Stickiness factor” was explained, this third article explains the third key success factors to reach a Tipping point: the power of context.

The power of context

Social epidemics are very sensitive to the environment and the circumstances of the times in which they occur. The key idea of the power of context is that people are more than just sensitive to changes in context. And the kinds of contextual changes capable of tipping an epidemic are very different than we might ordinarily suspect.

For instance, Wilson and Kelling argued that crime is an inevitable result of disorder. If a window is broken and left unrepaired, people walking by will think that no one cares. Soon, more windows are likely to be broken, and the sense of anarchy spreads out from the building to the whole street, and further to the rest of the district, sending a message that anything goes.

The Tipping Point in this epidemic it’s something physical like graffiti. The motivation to engage in a certain kind of behavior is not necessarily coming from a certain kind of person but also from a feature of the environment. The essence of the Power of context is that our inner states are the result of our outer circumstances.

Thinking about “How much influence does immediate environment have on the way people behave?”, Philip Zimbardo –from Stanford University- concluded that there are certain times, places and conditions when our inherent predispositions can be swept away, and that there are circumstances where you can take normal people from good schools and happy families and good neighborhoods and powerfully affect their behavior just by changing the immediate details of their situation.

What this study suggests is that the convictions of our heart and our thoughts are eventually less important in guiding our actions than the immediate context of our behavior. Environmental Tipping Points are things that can be changed: we can fix broken windows and clean up graffiti and change the signals that first invite to vandalism or other kind of undesirable behavior.

Judith Harris has convincingly argued that peer influence and community influence are more important than family influence in determining how children behave. Their behavior is powerfully shaped by the environment out of their family, and the features of their immediate social and physical world –the streets they walk down, the people they encounter –play a huge role in shaping who they are and how they act.

More specifically, hereby we analyze the critical role that groups play in social epidemics. Psychologists say that when people are asked to make decisions in a group, they come to very different resolutions than when they are asked the same by themselves. When we’re part of a group, we’re all susceptible to peer pressure and social norms and other kinds of influence that play a critical role in sweeping us up in the beginnings of an epidemic.

The spread of any new and contagious idea also has a lot to do with the skillful use of group power. It’s easier to remember and appreciate something if you discuss it for two hours with your friends. Then it becomes a social experience and an object of conversation. On the other hand, peer pressure is much more powerful than a concept of a boss. People want to live up to what is expected from them. When each person has a group-acknowledged responsibility for particular tasks and facts, greater efficiency is inevitable.

The rule of 150 is an interesting example of the strange and incredible ways in which context affects the course of social epidemics. There is a concept in cognitive psychology called the channel capacity, referring to the amount of space in our brain for specific kinds of information. We have a channel capacity for feelings, and there is also what could be called social channel capacity. So what does correlate with brain size? According British anthropologist Robin Dunbar social group size is what correlates with the size of our brain. If you look at any species of primate the larger their neocortex is, the larger the average size of the groups they live with.

Dunbar’s argument is that brains evolve, they get bigger, in order to handle the complexities of larger social groups. If you belong to a group of five people, then you have to keep track of ten separate relationships: your relationships with the four others in your circle and the six other two-way relationships between the others. That’s what it takes to know everyone in the social circle.

Humans socialize in the largest groups of all primates because we are the only animals with brains large enough to handle the complexities of that social arrangement. Keeping things under 150 has proved to be the most efficient and effective way to manage a group of people. When the group gets larger than that, people become strangers to one another. They’re knit together, which is very important if you want to be effective and successful at community life. If you get too large, you don’t have enough things in common, and then you start to become strangers to one another and that close-knit fellowship starts to get lost. Above the 150 Tipping Point, there begin to be structural impediments to the ability of the group to agree and act with one voice.

If you are interested in further insights about this topic, I strongly recommend you to read Malcolm Gladwell’s “The Tipping Point”, where you will also find many case studies that illustrate all the concepts and theories among other interesting content.

Culture changeStrategyStrategy planning & execution

The Tipping Point’s theory for expanding destinations 3.0 (II)

Following with the first article where the Tipping point theory was introduced, and the first point “The law of the few” was explained, this second article explains the second key success factor to reach a Tipping point: the stickiness factor.

The stickiness factor

Whereas the law of the few focuses on the nature of the messenger, the stickiness factor puts the focus on the content of the message and its capacity to become compelling, practical and personal. Only then it becomes memorable. As I explained in the Whitepaper “Marketing destinations through storytelling”, where the secret of successful stories was revealed, crafting a compelling story is an art, attainable only for especially talented individuals. This applies to the messages too, to make them stick.

To figure out how to create sticky messages, we should further deep into the storytelling technique. First of all, why do we like stories? We like them because they provide answers to our lives and a mechanism to shape our identity by connecting with the story characters. We connect emotionally with the story characters as long as they have similar challenges and values, and thus we regard them as a representation of ourselves. Stories not only help us building our identity but also work like social glue, as they help us in connecting with others and building relationships. Stories are the most effective way to create an emotional connection between brands and consumers.

Further, humans process information more efficiently when this is delivered through a story, and therefore this information is more likely to be remembered in the form of a story.

Stories can change our way of thinking and influence our feelings. They can drive an organizational culture change by opening people’s minds and building capacity of mutual understanding to enhance cooperation. They also have the power to make people envision a better future and how to overcome all the obstacles. Stories are pull strategy, as they allow people to decide by themselves, which is a key success factor of effective influence.

The art of persuasion consists on uniting ideas with emotions, and emotions are best conveyed through the form of a compelling story. Arousing the audience’s emotions spurs energy in them and moves them to take action. This is the power of storytelling.

Compelling stories are those that not only move people to share and take action but also engage the audience in a way that they are willing to follow up with the story with more chapters. Such kinds of stories are like the marketing diamond all marketers dream of, because they not only boost conversions, but also virality and customer loyalty.

To sum it up, as Aristoteles said, compelling stories need to have ethical appeal, emotional appeal and logical appeal to connect with the mind, heart and human spirit of the audience. Beyond the story itself, skilled storytellers have the ability to connect with the audience and convey the emotions embedded in the story. How the message is delivered is as much important as the content of the message itself. By telling the story with passion, enthusiasm and expression, the audience is more likely to get engaged. Besides, great storytellers have the ability to turn “me” into a “we”, by telling stories that shine the light on a concern that both the teller and the audience share. This connection creates empathy and opens people’s hearts, hence appealing to their human spirit and enhancing commitment in taking action.

There is no magic formula to reach the Tipping point to trigger the social epidemic, but there are many factors, strategies and tactics that increase the chances to make it happen, according to those who have studied the marketing contents that go viral. The main key success factors are:

Promise of practical value inspires people to share knowledge that may be useful to others. Either it is a matter of generosity or a matter of a will to be perceived as smart and helpful, inherent practical value works as a social currency that fosters relationships among people. For some people, it makes them feel like insiders having privileged information.

Specific topics related to the dreams, aspirations and challenges of specific audience segments, inspiring them and spurring discussion among their community. These may encompass warnings, inspirational stories, advise, special deals and opportunities.

Inspiring strong emotions of laugher, amusement, anger, surprise, inspiring solidarity or uniting people for a common cause are powerful drivers of virality.

According to a survey carried out by The New York Times, the top motivators for sharing were:

  • 75% said that sharing helped them better understand news they were interested in
  • 85% said that the comments they got from sharing provided them more thought
  • 94% considered how helpful a link would be to another user
  • 68% shared as an advertisement for themselves, to give others a sense of who they are
  • 73% said it helped them find people with common interests

Based on these factors and other considerations, there are three strategy recommendations:

Design your content to provoke an emotional reaction. Arousing a sense of amusement, surprise, anger, solidarity or affection is likely to foster sharing among the audience.

Create content that provides real value. As aforementioned, stories may address some of the audience’s needs, challenges or aspirations, providing know how and inspiration for their personal lives.

Embed features that facilitate virality. Incorporating interactive features in the content is likely to foster more engagement, and this leads to virality.

Finally, there are some common mistakes you should avoid if you want to boost engagement and virality: being offensive, asking for likes, talking about yourself and being too obscure.

You may find further information on this topic in the Whitepaper “Marketing destinations through storytelling”, freely downloadable in www.envisioningtourism.com

Marketing 3.0StrategyStrategy planning & executionTourism marketing

Brand Planning Should be the CEO’s Baby

This article is written by Bill Baker, Chief Strategist at Total Destination Marketing, author, speaker, and blogger at “Small City Branding around the world”.

At the conclusion of a presentation on place branding, I was approached by the CEO of a mid-west Chamber of Commerce who lamented that their brand planning had resulted in a bland and uncompetitive outcome. To my surprise, the CEO went on to take the blame himself by saying, “I made the mistake of delegating the project to our marketing manager and not taking responsibility to drive the process myself.” I’m sure that he hasn’t made the admission within his community or to his Board, but it’s commendable that he recognized this as being a major factor in the brand’s mediocre result.

The president, executive director, or CEO of the organization leading the effort on behalf of the community must be actively engaged in every aspect of the brand planning and development, and breathe vitality into the assignment. We have found that the only way for the brand to take off is having a leader who “gets it” and has the passion, authority, skills and vision to make it work. If he or she takes a passive role, the brand will almost certainly fail.

Understandably, there may be many legitimate distractions that consume the CEO’s time. However, the brand is at the heart of every activity directed toward the way the place will present itself for years to come, so it is worth every minute that he or she can devote to it. While the CEO may want to delegate aspects of the day-to-day management of the process to others, he must remain intimately involved in crafting and managing the strategy.

This article is re-posted with permission from http://citybranding.typepad.com/city-branding/page/2/

Culture changeStrategyStrategy planning & execution

The Tipping Point’s theory for expanding destinations 3.0 (I)

As it has been explained in previous articles as well as in the Whitepapers, the success of destinations 3.0 is based on growing and expanding a network of varied stakeholders who contribute in different ways to the destination’s business model development, as innovators, content creators, brand ambassadors, etc.

Creating and developing such a network is probably the most daunting of all the challenges in the destination 3.0 journey. Malcolm Gladwell’s Tipping Point explains a theory on how social epidemics and trends work, through the power of influence of three types of characters: Mavens, Connectors, and Salesmen, disregarding the support of the technological means. This theory may serve as a basis for understanding how this stakeholder network development can be achieved, so long as it is possible to craft a strategy to make it happen.

The theory states that social epidemics take place following three common characteristics: contagiousness, little facts causing big effects, and the existence of a turning point in the expansion of the epidemics, also called “the tipping point”. Besides, it identifies three key rules in spreading social epidemics or trends: the law of the few, the stickiness factor, and the power of context.

“The law of the few” says that a group of people with exceptional skills are the ones who create the trend and spread it throughout their community; “the stickiness factor” says that there are some ways to make a message compelling and contagious to create an outstanding impact; and “the power of context” explains how the environment turns to be a key factor to determine human behavior. These three rules can provide us with guidance on how to reach a tipping point in spreading social epidemics.

The law of the few

Understanding why some ideas or messages turn viral and others don’t starts by understanding how people are connected to each other, and findings show that there are different types of people, who connect in different ways and bring different types of value to their community.

Connectors are individuals with an extraordinary knack of making friends and acquaintances. This type of people is important not only for the number of people they know, but also for the many kinds of people they know. They are gifted with an instinct that helps them relate to the people they meet. Therefore, when looking for a job, new information, or new ideas, acquaintances turn to be more useful than friends, because these acquaintances are more likely to live in a different social or professional environment than yours, hence more likely to know many things that neither you nor your friends know.

The closer you are to a Connector, the more powerful, wealthier or the more opportunities you are likely to get. The closer an idea or a product comes to a Connector, the more chances to succeed it has as well.

The Maven, instead, is someone who accumulates knowledge. In recent years, economists have been studying Mavens, so long as if marketplaces depend on information, the people with the most information are among the most important to research on. They are who keep the marketplace honest. They are not just information collectors, once they figure out how to get that deal, they want to tell you about it too, initiating discussions with consumers and responding to requests, becoming helpers in the marketplace. Mavens are teachers, but also students. They are information brokers who share knowledge and create the message to be spread out by Connectors.

Finally, the Salesmen are those especially skilled to persuade the community members on to their way of thinking, to adhere to the new idea or trend and join the social epidemic. What sets them apart from average people is the number and the quality of the answers they have to the objections commonly raised to what they preach.  These persuasive skills relate more to the non-verbal than to the verbal communication, and consist of the ability to express emotions and to be emotionally contagious. People with this ability are also called “senders”.

The rest of the Tipping Point theory is to be explained split in three upcoming articles.

StrategyStrategy planning & execution

The World Bank builds country ownership in the National Tourism Strategy of Georgia

Tourism strategic planning is a comprehensive process for determining what a business or destination should become and the steps needed to achieve that goal. Many times when consultants are hired to create a strategic plan, the plan is at risk of remaining on the shelf and never being fully implemented. Why? Because those most affected by the tourism development plan may not have been fully integrated into the development of the strategy, and may not agree with the ideas. This is an ongoing issue the tourism industry faces, and a difficult one in which to find a solution.

The World Bank and the Georgia National Tourism Administration (GNTA) recognized this problem in the past. As part of the solution, they decided to develop a tourism strategy for the Caucasus nation. The consultants were asked not to lead the development of the strategy, but rather facilitate and guide the GNTA through the strategy development process to ensure it was collaborative and comprehensive as possible.

Between the years 2009 and 2013, Georgia’s international tourism arrivals grew over 300%. This was largely in part to its envious location at the crossroads of Europe, Asia and the Middle East, as well as increasing amounts of exposure in international press as a unique, exciting destination. Georgia is the birth place of wine, has an exquisite culinary tradition, a rich early Christian history, and an abundance of natural assets – including 7 national parks. These attributes – if developed practically – demonstrate a significant strength to the country’s tourism sector within the high-value European marketplace, while improving the industry’s ability to contribute economically.

To keep pace with the increasing demand for tourism in Georgia, additional financing for private and public investments will be necessary. “The joint World Bank and IFC collaboration [in Georgia] focuses on fostering entrepreneurship and access to finance, improving the investment climate, and developing Georgia’s tourism strategy that will determine how to improve the sector’s performance, align implementation priorities and enable job growth.” said Henry Kerali, World Bank Regional Director for the South Caucasus.

Georgia’s tourism development approach has generally been focused on regional advancements rather than a cohesive national-level plan. However, to maximize tourism’s national impact, a national strategy is required that takes into consideration large scale infrastructure and marketing activities that cannot be achieved by the regions alone.

 “The tourism sector currently provides nearly 20 percent of export earnings. The national tourism development strategy is, therefore, an instrument to take full advantage of Georgia’s potential and position it globally as a rich, diversified and high quality destination.” Ahmed Eiweida, Program Leader for Sustainable Development Programs in the South Caucasus.

Where is the Georgia National Tourism Administration now?

With the support of the World Bank, the GNTA produced a 2025 strategic plan that articulates the country’s current position, its vision for the future, and the key activities required in order to get there.
To build buy-in for the strategy, the GNTA led regional workshops, communicated with inter-government committees, issued press events and integrated action plans from other tourism-related sectors. The final document describes how the GNTA and its partners will deliver creative marketing to attract to higher income markets and statistical projections on how the GNTA will achieve a minimum of 5% growth rate over the next 10 years.

Where does Georgia National Tourism want to be in 2025?

The GNTA envisions the country as a premier, year-round, high quality tourism destination – a destination centered on its unique cultural and natural heritage, its world-class customer service, and timeless tradition of hospitality. The GNTA will be at the forefront of tourism competitiveness, through strategic investments in infrastructure, education, marketing, and the development of unique Georgian visitor experiences that appeal to high-value markets around the globe.

How does the GNTA lead the tourism industry to reach it’s vision?

Extensive stakeholder consultation resulted in the identification of 50 priority actions that have been grouped around the following 8 strategic objectives.

1.Respect, enhance, and protect Georgia’s natural and cultural heritage
2. Create unique and authentic visitor experiences centered on those natural and cultural assets
3. Enhance competitiveness, through delivery of world-class visitor services
4. Attract higher spending markets, through increased and more effective marketing and promotion
5. Expand and enhance Georgia’s ability to collect and analyze tourism data and measure industry performance
6. Enhance the business environment, to facilitate increased foreign and domestic investment
7. Expand public and private sector investment in the tourism sector
8. Build partnerships between government, industry, non-governmental organizations, and communities that will be needed to achieve all of the above

What will the challenges be?

Even though the GNTA has completed their strategic plan and found positive monetary incentive to start implementation; the national and regional tourism stakeholders must work as a team to have success. And most importantly, the 2025 strategic plan will only be effective if the GNTA continues to be committed and take ownership of this visionary strategic plan.

This blog post is from  www.solimarinternational.com/resources-page/blog/itemlist/tag/Destination%20Assessment

StrategyStrategy planning & execution

Your Road Map to a Great Tourism Business Plan

Any great tourism business begins with a great “road map.” This road map serves as your business plan with actionable steps for moving forward with developing the enterprise. There are seven key components to your road map.

  1. Clear Concept- Before you can dive into the road map, the essential first step is to clearly articulate your enterprise concept. What is your enterprise? What do you do? What are you trying to achieve? What impact do you expect your enterprise to generate? Before you move further down the road map, be sure that you put some thought into these questions and can clearly define the concept of your tourism enterprise. Try to condense this concept into a simple one to two sentence pitch that clearly articulates your business concept.
  2. Market Analysis- Your market analysis includes the international, regional, and national tourism statistics and travel trends, the profiles of your target market segments, and a value chain/ industry analysis. Begin by getting an idea of the relevant tourism trends and statistics. What percentage of tourists coming to your destination region, country, or city are country nationals versus international visitors. When is the peak season that tourists come to visit? What are the typical demographics of visitors? Has the number of international tourists to your destination been increasing or decreasing? Addressing these questions will help you to better understand your market before moving forward.

From here, you can develop the profiles of your target market segments. Determine the nationality of your market, their wants and needs, their budget, etc. Think about whether your target traveler is seeking adventure and physical challenges, luxury and relaxation, or service and learning opportunities. Additionally, you will need to analyze the existing tourism industry in your destination. Especially if your enterprise will work with intermediaries; investigate the existence, success, and business models of tour operators, travel agents, and hotels; as they relative to your business concept to market or sell tourism products.

  1. Sales and Marketing Strategy- At this stage of your road map, it is important to determine strategic positioning in terms of the pricing, placement, and promotion strategies of your business. There are numerous factors, both short and long-term to consider for pricing including the value provided compared to that of competitors, the price the market is willing to pay, the revenue needed to enable the business to reach its financial goals, and profit maximization. Your placement, or distribution, may be conducted either through direct or indirect sales. Your promotion strategy will describe the sales and marketing techniques used to reach your target market and should include online and social media marketing.
  2. Competitive Analysis-Complete a summary of competing businesses and products, and determine your competitive advantage. Begin by defining your business competition- the people and businesses that offer similar products and services and seek the same markets. Research these competitors and assess their products or services on a number of factors, such as pricing, product quality, and customer service. Porter’s Five Forces Analysis is a useful tool to use for a through investigation of your competition. By assessing your business competition against your proposed enterprise, you will gain a better understanding of where your business stands and how best to leverage your strengths against your competition’s weaknesses. To determine your competitive advantage, simply outline the major advantages that your enterprise holds over the competition.
  3. Operations and Training Plan-Consider your business structure and the key personnel and training needs that will be required to support it, while also keeping in mind any legal considerations. Will your enterprise be a private company, a partnership, a limited liability corporation (LLC), a cooperative, a non-profit organization, or an association? There are pluses and minuses to each, and it is extremely important to think carefully to determine the best structure for your enterprise. Once the structure is determined, consider the number of employees needed and the roles and responsibilities of each. Consider the hierarchy of employees in your business and how profits will be shared.  Finally, the legal environment is key to consider; think about potential requirements like business registration, employee/membership agreements, permits, and insurance coverage.
  4. Community and Conservation Support- Consider sustainable tourism as a cornerstone to your business plan. Sustainable tourism has the potential to not only mitigate potentially harmful impacts of visitation to a site, but it can also support conservation of the resources upon which it depends. At Solimar, we employ a market-based approach that links jobs and revenue generated by sustainable tourism to support conservation of the resources upon which the tourism depends. To develop a sustainability plan, begin by assessing the conservation threats related to your tourism enterprise. Once these threats have been assessed, you can choose tourism conservation strategies that address those threats, such as an environmental education program or a trail monitoring and research program. Lastly, be sure to budget for the implementation of your sustainability plan, including salaries, equipment, materials, and trainings.
  5. Key Milestones and Workplan- Lastly, now that your business plan has been fully considered, you can create a timeline of the major activities related to the establishment of your enterprise and its tour products and services. Create a comprehensive list of the milestones to be completed for the successful establishment of your business and determine the order in which they shall be addressed. With each milestone completed, you are one step closer to being the proud founder of a great tourism business!

This blog post is from www.solimarinternational.com/resources-page/blog/item/163-your-road-map-to-a-great-tourism-business-plan

 

StrategySustainability

Clustering benefits for sustainability

Cluster based destinations may also have many benefits for sustainability. First, adequate cluster development planning makes it also easier to prevent the tourist flows from overflowing the carrying capacity of the environmentally fragile areas, or having negative impacts on the residents’ lives. The cluster based development plans assess the carrying capacity of all areas to avoid congestion and protect the environmentally fragile points. Then, as long as possible, the Plans should locate the attractions in a way that spreads out the visitors’ flows within the cluster, through controlled itineraries where the flow dimension is monitored and may be constrained. So long as the flows are predictable, it is also easier for the transport and other service operators to offer the adequate services that the tourists need.

Regarding environment sustainability, so long as this is not homogeneous throughout the destination territory, dividing it into clusters is necessary as a part of the process of identification of the critical issues to be managed to ensure sustainability, as these issues are to be different in each destination cluster. Therefore, clustering is a key strategy to manage the destination’s sustainability.

Furthermore, the concentration of activities in specific areas fosters a more efficient development of infrastructures for accessibility (roads, railways, airports, etc.), reducing the negative impacts in the environment to the minimum possible. This also makes the tourism development more cost-efficient for the government, and in some cases, this cost-efficiency affects directly or indirectly the local operators and the visitors.

Cluster based destinations are also more likely to be targeted for research purposes and are easy to study, so long as  they are clearly defined areas. This facilitates gaining knowledge about the key issues that affect the destination’s sustainability. Further, as a part of the cluster infrastructure, it is quite likely that the cluster attracts educational centers, and these attract researchers at the same time, so a virtuous circle is developed in this regard.

Finally, so long as the resources are taken care of, and the activity concentration reinforces competitiveness, this also enhances the economic viability of the tourism development over the long term, ensuring the economic sustainability of the destination.

Do you think of other clustering benefits for sustainability?

StrategyStrategy planning & execution

Clustering benefits for profitability and growth

The concentration of many attractions and related services within an area, specialized in a certain type of activities is likely to attract other operators dealing with this type of activity, as this is where their potential clients go and so as to profit from the existing tourism flows and necessary services available in that area. This saves them many marketing costs, and also results in a much lower risk investment. Therefore, consolidated and competitive clusters are more likely to attract investors.

Further, as it happens in all industries’ clusters, business’ concentration reduces trading costs, thus enhancing profitability. As in all types of clusters, there are also common infrastructures and key resources, which shared among many operators, reduces its cost per operator, through creating economies of scale.

Moreover, concentration helps to boost cooperation, and by joining efforts, partners not only accelerate innovation and develop economies of scale by sharing strategic resources, but also cooperate in lobbying to gain negotiation power against common suppliers and clients, as well as to counter or neutralize other competitive forces that shape the long term industry’s profitability. The Whitepaper “The 5 Competitive forces and business strategy” depicts how these 5 forces shape the long term profitability in the tourism industry.

In many cases, companies in a specialized cluster have a better access to skilled employees and specialized suppliers, also located within the cluster influence area. Institutions or Universities can be used mutually and capital expenditures in regional marketing, infrastructure or education programs can be employed and shared together (Müller and Lanz 1998). Finally, cluster based tourism attractions’ concentration is also beneficial to profitability as long as it contributes to extending the average tourist length of stay.

Beyond profitability, consolidated clusters are also likely to foster more new business creation. First, a concentrated clients’ base lowers the risks for new suppliers to settle in, and as a result of the cluster based boosted innovation, also more spin-offs and start-ups are likely to be created. Further, financial institutions have a good knowledge about the industry, and so they are more likely to provide financial support to new ventures.

Do you think of other clustering benefits for profitability and growth?

StrategyStrategy planning & execution

Clustering benefits for competitiveness

The cluster structuring and development in a destination offers four main types of benefits: enhancing competitiveness, boosting profitability and growth, ensuring sustainability and increasing marketing effectiveness.

As the Competitiveness Planning 3.0 Whitepaper explains in detail, destination competitiveness is based on the relation between value offered to the visitors and efforts demanded, considering experiences, feelings, service quality, and positive impacts of tourism development in the destination as the sources of value; and discomforts, risks, price and negative impacts of the tourism development in the destination as the sources of efforts demanded, or factors diminishing value.

Among all these key factors that determine the destination’s competitiveness, the tourist experience is probably the most important. In this regard, having a higher concentration of experiences –related to the same motivational profile- available within a short distance (not needing to change accommodation in many cases, nor consuming much time in transfers) clearly optimizes the whole destination experience. Cluster development also entails an increasing variety of experiences available, beyond the experience efficiency due to the reduced distances within the cluster.

A good cluster planning should consider a strategy to prevent congestion issues by spreading the tourism flows right from the conception of the cluster layout. This may be achieved by creating many itineraries throughout the cluster to diversify the visitor’s flows –avoiding “backbone itineraries” which tend to concentrate the flows-, and preventing bottlenecks.

Furthermore, by creating themed itineraries and charming transportation systems which may eventually become iconic experiences themselves, not only are the tourist flows spread out but also the experience is enhanced. Charming transportation systems may be traditional transportation means –gondolas, tramways, etc.- made tourist friendly in terms of comfort, or just innovative transport means which are a new experience for the visitors.

Business concentration makes it also more feasible to invest in key resources, which eventually influence positively the cluster’s competitiveness. This may be the case of educational facilities, R&D centers, and cross-destination infrastructures related to accessibility, environmental management & protection, etc.

Do you think of other clustering benefits for the destination competitiveness?