Chapter: 3

Strategic Marketing of Tourism in Uttar Pradesh

Tourism has become an integral part of the modern societies. However, tourism development is depending on effective and efficient delivery of tourism services and adequate tourism infrastructure to support the delivery mechanism of services and amenities to the visitors. Moreover, promotion of tourism destinations requires not only development of desired infrastructure and amenities but effective marketing of the tourism products. Marketing is a management philosophy, which, in light of tourist demand, makes it possible through research forecasting and selection to place tourism products on the market most in line with the organization’s purpose for the greatest benefits. Marketing operates in a highly competitive environment and thus, strategic planning for the development and marketing of tourism products and services becomes imperative.

Changing life styles of the people and the opening up of the economy has contributed to the growth of tourism industry in India. Travel barriers have been broken and there is a flow of free trade. Tourists’ attention is shifting from established destinations such as European countries to emerging new destinations such as Asia-Pacific countries. The emerging trends in tourism highlighted that there is a lack of strategic management approach for promotion and development of tourism in emerging tourists destinations. Moreover, the paradigms shift in tourism also focus on the need of promotion of eco-tourism destinations and their proper management. Tourism has become a multiple activity focused with integration of shopping and operation, entertainment and education, culture and marketing/business centre development. The strategic tourism management demands positioning of tourism destinations and their effective marketing. As tourism industry grows, the competition is likely to grow intense. To beat this competition and attract more tourists, tourism marketers have to embrace all the marketing tools available. Their main challenge is to create a distinctive position in the mind of customers; a position which can differentiate the destination from the competitors.

The past few years have shown a steady increase in the volume of international travel, and along with this growth in travel, the number of tourism destination choices has also increased, as many policy makers have recognized the value of tourism to the economies of their regions (Chacko, 2002). Importantly, one of the most effective tools in tourism marketing is positioning. The objective of positioning is to create a distinctive place in the minds of potential customers. A position that evokes images of a destination in the customers mind; images that differentiate the destination from the competitors and also a place that can satisfy their needs and wants. Positioning is a communication strategy that naturally follows through the market segmentation and target marketing. One of the biggest challenges faced by tourism marketers is that the product is largely intangible. Hotel room, the meal, the beach, the ocean, and the mountain etc. are all tangible aspects of the tourism destinations. Thus, tourism destination positioning should focus on enhancing and differentiating abstract realities by manipulating the tangible clues (Chacko, 2002).

Strategic management of tourism involves managerial process of setting organizations and objectives, analysis planning, and implementation of strategies. Moreover, environment and resource analysis, manpower planning, corporate planning, business strategy formulation, target marketing and positioning, and management of resources etc. are some of the crucial aspects of strategic management.

Environmental Analysis:

Educational analysis of environment and resources is the first step in strategic marketing planning. The environment in which a tourism organization operates is complex and constantly changing. For analytical purposes, the environment can be divided into the following three components (Health & Wall, 1992):

(i)The macro environment, which consists of those forces that create opportunities and pose threats to the destination of the tourism business units. These forces are factors that the tourism organization cannot control, and to which the tourism business units have to adopt. They include a wide variety of social, political, technological, economic and demographic factors.

(ii)The competitive environment, which consists of all those suppliers of tourism offerings that compete for the same customers or target markets as particular tourism organizations and business of the destination.

(iii)The market environment, which consists of the groups and other organizations that the regional tourism organization works with directly in order to accomplish its mission. In the tourism sphere, the main groups in the market environment are existing and potential tourists.

The external environment of UPSTDC is influenced by shareholding pattern of the corporation, institutional framework within the state for promotion of tourism, and the role-played by the corporation within this framework. UPSTDC functions within the governmental institutional framework and has linkages with Department of Tourism (DOT) and other government departments. Its activities, within the tourism business are primarily in the areas of hotels, and tours and travel.

The corporation's external environment consists of:

  • tourism industry in the state, and
  • environmental factors such as technological, social, legal and political.

Tourism Industry in U.P.:

The state of development of tourism industry in U.P. has an impact on the future role of the corporation. The basic mandate of the corporation in 1970s was to set up an environment for tourism development activities. This role was to be executed by opening unexplored areas of the state to tourists. Although, the properties were set up from a developmental point of view, the corporation is now expected to run these as commercial ventures. Table 3.1 presents the status of tourism industry in U.P.

Institutional and Regulatory Framework:

At the state level, the Department of Tourism (DOT) headed by a Secretary/Principal Secretary is responsible for formulating tourism policy of the state. Directorate of Tourism within the department performs role of promoting the State as a tourism destination, and regulating tourism industry in the state. It also helps operationalisation of the state's policy objectives, such as attracting private sector investment in the tourism industry. UPSTDC performs commercial role of running the hotel units and providing packages, booking, and related services to tourists.

Impact of Other External Environmental Factors:

The analysis of various constituents of the external environment, both in the present day context and future requirements will have an impact on the required vision of the corporation. External factors have an impact on the activity mix of the corporation, the required competencies, and the ownership patterns.

The external factors include political, socio-cultural, environmental, legal, climatic seasonality, security and law and order and competition from neighbouring states. The effect of these external environmental factors on the developmental
and commercial activities of the corporation have been considered. The impact of external environmental factors are shown in Table 3.2.

Table : 3.1

Status of Tourism Industry in U.P.

Parameter / Status / Analysis / Implications
Institutional and Regulatory Framework /
  • Role of DOT-policy formulation
  • Role of Directorate of Tourism - promotion/regulation of industry/attracting privater sector investment.
  • Role of UPSTDC-development through opening up of areas to tourists by operating hotels and transport services.
/
  • Areas of investment are decided by DOT based on state priorities and availability of government funds.
  • List of areas to be invested .
  • Need of formulation of a Tourism Master Plan and regulation of unchecked construction activity, hotel standards, and protection of the environment.
/
  • DOT should develop a Tourism Master Plan to facilitate long term policy focus for UPSTDC.
  • UPSTDC to have greater say in setting of new units.
  • UPSTDC to built new unit based on viability assessment of capabilities.

Infrastructure
Super-Structure /
  • Agra, Varanasi, and Lucknow show concentration of hotels.
/
  • Other areas have not comparatively shown increase in number of hotels as tourist arrivals are high in a few concentrated regions of the state.
/
  • Higher commercial competencies for the UPSTDC.
  • Larger share of profits from smaller number of units.

Infrastrcutrue /
  • No International Airport in the state
  • Limited air and rail access
  • Poor condition of road network within the state
/
  • Poor co-ordination/non-availability of funds for integrated infrastructure development can be an obstacle to long term growth of tourism.
/
  • Slow long term growth of tourism in the state
  • Rate of addition of new units will be slow.
  • Increased focus on existing units.

New sites/circuits to be developed /
  • The State Tourism Policy has identified 10 Thrust Areas for integrated, intensified, and rapid development of tourism facilities.
/
  • Circuits and areas poorly defined, no coherent state level tourism development plan.
  • State/Central plan objectives to be met by UPSTDC if there is no private sector involvement.
  • Low private sector involvement, may be due to paucity of funds/insufficient incentives/inadequate marketing of sites.
/
  • DOT should develop a Tourism Master Plan to facilitate a proper perspective on tourism development sites.
  • UPSTDC can play the role of facilitator for private sector participation in the development of new sites/areas.
  • Create synergy, between private and public sector competencies.

State Objectives and Priorities /
  • Employment generation socio-economic development of regions and increase in employment opportunities.
  • Private Investment : Investments in tourism sector and public utilities, and pioneer commercial activities.
  • Preservation of heritage and monuments
  • Preservation of environment.
  • Development of infrastructure for future growth and for attracting private sector.
  • Diversification of tourism products through different activities, such as Eco-tourism/health tourism/
    adventure tourism/camping, etc.
  • Facilities for Budget Class.
  • Increasing international tourist arrivals to earn foreign exchange.
  • Integrated development of infrastructure including airports, rail links, roads, and civic amenities in existing and new circuits.
  • Upgradation of current superstructure and development of fresh superstructure in potential tourist locations.
/
  • Identified policy, objectives and priorities are adequate but difficult to operationalise in the absence of a Master Plan for Tourism Development.
  • Operating experience indicates dispersal of resources over number of areas with no appreciable development in any areas.
  • Sub-optimal utilization of Central Government/overseas assistance.
  • Incentives for private investment in tourism facilities and infrastructure.
  • Empowered committee has been set up for taking policy decisions and decisions regarding individual investment cases.
  • UPSTDC's involvement envisioned in provision of accommodation facilities and development of related tourism services.
/
  • DOT to develop a Tourism Development Master Plan.
  • UPSTDC to play a developmental role by commercially operating accommodation units and related services.

Source : Tata Consultancy Services, Lucknow, 1999.

Table : 3.2

Impact of Other External Environmental Factors

Factor / Current Status / Future Projection / Commercial Role / Developmental Role / Implications
Political System/
Government / Federal /
  • Impact on operational role in terms of decisions, autonomy, and management/employee attitudes etc.
  • Likely to be unstable.
/
  • Higher emphasis
/
  • No effect
/
  • UPSTDC will require higher commercial capability.
  • Enhanced planning skills.
  • New unit viability assessment and autonomy.

Socio-cultural Pressure groups / No major groups / Grow in importance due to possible backlash from opening of remote areas and over-commercialisation of some areas including fairs and festivals. /
  • Backlash depends on the area being entered, which will again depend on the assessment of viability (infrastructure, size, expected arrivals etc.)
  • Currently, UPSTDC does not undertake such viability exercises.
  • Exploit new attractions such as fairs and festivals in a controlled manner.
/
  • No effect
/
  • Strengthen viability assessments.
  • Ensure sustainability of activities undertaken through local involvement.

Environmental Pressure Groups / No major groups at state level / Growth in importance, as environmental degradation of tourism sites could lead to backlash / Would have a greater impact initially on developed areas and act as any entry barrier which the corporation could benefit from through existing physical resources. /
  • Eco-tourism
/
  • Use government name to provide credibility.
  • Focus on upgrading existing units (consolidation).

Legal
Legislation / Enforcement of PFA, Sales Tax
Environmental regulations, etc. /
  • Increased judicial activism and intervention.
  • Public interest petitions
  • Environmental consciousness leading to regulation of growth of industry.
/
  • Entry barrier in areas where regulations apply.
  • UPSTDC prevented from building properties in these areas.
/
  • Being government-run, it has a greater responsibility in adhering to rulings and regulations.
  • Possesses first entry advantage through prime locations.
/
  • Responsibility to be discharged by developing internal accountability mechanisms such as development of internal Environmental Impact Assessment procedures.

Climatic
Seasonality / Different parts have different periods as peak/off seasons / No change /
  • UPSTDC would not enter areas, or make large investments in areas where off-season period is substantial.
/
  • Unequal socio-economic development of regions.
/
  • Spread seasonality factor across wide network of properties, through proper marketing, thus giving it a competitive edge.

Security / Poor law and order situation in the state. /
  • May upset planning and projections if law and order situation deteriorates.
/
  • Reduced profitability can adversely affect the developmental role.
/
  • Unable to effectively counter threats.
  • Extensive marketing setup can help minimize loss.

Neighbouring States / Good business in border areas / No change /
  • Can benefit by synergistic alliances with other states.
/
  • Inter-state marketing can help develop new areas.
/
  • Marketing and product development role is emphasized.

Source : Tata Consultancy Services, Lucknow, 1999.

Political System/Government:

Changes in the political system would affect the organization due to governance pattern and institutional framework within which the corporation functions, as corporation is wholly owned by the state government. This is also important due to the nature of tourism industry in which the corporation functions, and importance of this industry in state's economy. Given the current pressure for dis-investment and privatization, the commercial role of the corporation is likely to come under sharp focus. Income from commercial operations will now be expected to pay for the developmental commitments of the corporation such as creating facilities in new areas. Likely instability of the political system in the state has potential to adversely affect functioning of the corporation. This scenario indicates that corporation will require higher commercial competencies to generate profits to facilitate its developmental role. The corporation will also have to strengthen its planning and viability assessment functions to help support its developmental role. While demanding higher performance from the corporation, government will need to ensure that there is no day-to-day interference with the functioning of corporation, and that management and employee attitudes and actions are allowed to be shaped by the proposed Corporate Plan. This will not only help corporation fulfill its developmental and commercial roles, but also help sustain the corporation through periods of political uncertainty (TCS, 1999).

Socio-Cultural Factor:

The socio-cultural system within which the corporation functions, has an impact on growth of the tourism industry. Excessive commercialization of ethnic and cultural events or opening up of rural areas could prove counter-productive because of lack of exposure and education people in these areas have to the outside world. This could even provoke a backlash. The nature of Indian society and the prevalent customs which lay stress on certain beliefs, values, attitudes, and habits have to be taken into consideration before tourism plans are implemented. Also relevant in the social context are the feelings at the regional or state level regarding the influx of foreign and domestic tourists, erosion of local customs and traditions, and its detrimental effect on the people.

Environmental Pressure Groups:

It is foreseen that importance of environmental pressure groups will grow. This may first manifest itself in already developed areas where developmental pressures are high. However, it will also have increasing degree of relevance for projects at new sites. There are several implications to this scenario. Firstly, in saturated areas emphasis may have to be on upgradation of existing units rather than venturing into new ones as it will be simpler to carry out upgradation from an environmental perspective. Secondly, the developmental role may have to cater to promote eco-tourism.

Legal Environment:

The legal environment relates to status of tourism industry in the state, in terms of the extent of regulation on different aspects of the industry - hotels, restaurants, travel, guide services, and the impact of trade legislation on corporation's activities. It is projected that there may be increased judicial activism and stricter environmental regulations to comply with. Stringent rules and regulations may act as an entry barrier in some areas in the future. Due to government ownership the corporation will have greater responsibility to comply with these rules and regulations. The implications could include better internal accountability mechanisms including instituting Environmental Impact Assessment procedures etc., when planning for new tourism projects.

Climatic Seasonality:

As different parts of the state have different seasons, climatic factors may affect the corporation's role as a commercial entity by forcing it to stay out of the areas where the off-season period is substantial. On the developmental side this could however contribute to unequal development of the state. However, the Corporation can spread the seasonality factor across its wide network of properties through proper marketing.

Neighbouring States:

The neighbouring states have largely built upon the tourists arriving to visit the Taj Mahal. This main attraction is common to many interstate packages prevalent. The opportunity presented by the Taj could not be utilized by the corporation due to weaknesses in the marketing network, and creation and management of suitable products. Similarly, hotel development in the vicinity of Khajuraho has not been successful. Buddhist circuit also offers possibilities of collaboration with Bihar and Nepal. Therefore, the best strategy in the current scenario would be to develop a suitable marketing network and try to create synergy with neighbouring states.