TOURISM POLICY AND
(created July 2015)
• Defining product policy
• The product mix
• The product life cycle
• Product formulation in travel and tourism
• Tourism products - local and international
1. National Strategy
The objective is Formulate an integrated sustainable tourism management
plan for Central Philippines, identifying viable critical environmental,
infrastructure and community-based projects to link and integrate the
tourism development of the area.
The 2006 State of the Nation Address envisaged the Central Philippines to
be the country’s premium tourist destination on account of its range of
natural attraction and cultural heritage.
Government looking to tourism as the way forward.
Internationally traded services with significant growth potential are few,
tourism is being the main one.
Tourism Policy: The Philippines
Image Source: http://www.fcarehmo.com.ph/newface/Providers/images/Visayas_With%20Name.jpg
Target is the Central
Visayas is the group
of islands in the
the largest of which
are: Panay, Negros,
Cebu, Bohol, Leyte,
Biliran and Guimaras.
2. Destination Strategy
To achieve the projected growth in tourist numbers and expenditures over the
next decade, the Central Philippines will have to move to an investment-
Outside of Cebu and Boracay, little investment has taken place in recent years
in the Super Region’s tourism sector. The result is that the tourism industry is
totally reliant on its natural attractions as the motivation for tourists to visit.
But the natural attractions, though unique in many ways, are not sufficiently
strong in themselves to attract the numbers required to support a significant
tourism sector. This is a primary factor driven strategy and characterized by
infrastructure inadequacies, limited investment in product, insufficient
accommodation, medium to low quality product and inadequate airlift.
To move on to the next stage of development require an investment driven
strategy, with sustained investment in all aspects of tourism – infrastructures,
utilities, new products, destination marketing, human resource development
2.Nature and Adventure
3.Lifestyle (shopping,entertainment and dining)
The Philippine Tourism Products
Product Development for the Central Philippines:
2.Nature and Ecotourism Sites
4.Festivals and Events
7.Yachting & Marinas
In 1980, Butler proposed that most tourist resorts
go through a six stage model and he called this
the tourism life cycle model.
It states that most tourist resorts start on a very
small scale and get bigger and bigger until
The Butler’s Model is more commonly used today
as the Tourism Area Life Cycle.
A few hardy and
people looking for
different in a
holiday find a
place that is
special in terms of
its culture, natural
beauty, history or
may be no tourist
and local people
will not be
involved in tourist
Image Source: https://travelfoodguru.files.wordpress.com/2011/09/boracay-white-beach.jpg
Local people start to notice that there are increasing numbers of people coming to
their local area. They start businesses to provide accommodation, food, guides, and
Image Source: http://lazydogboracay.com/about-boracay/
Big companies start to see the emerging potential of the area as a tourist resort and
therefore start to invest money in the region. They build large hotel complexes and
sell package holidays (a package might include travel, accommodation, food and
excursions). This makes the numbers of tourists swell dramatically and massively
expands the number of job opportunities for people in the local region, in both tourist
related jobs and in construction and services.
Image Source: http://mostbeautifulplaces.org/wp-content/uploads/boracay-island.jpg
The local economy is probably dominated by tourism at this stage, and many local
people will make their money from this type of industry. However, this can remove
people from other industries such as farming and fishing and these industries can
suffer as a result. There will be continued building and expansion of the resort
BUT some of the older buildings will start to become unattractive and a lower
quality client base might result.
Image Source: http://
Competition from other
resorts, rowdiness and
a loss of the original
features (e.g. if it had
a great beach but that
is now crowded and full
of rubbish) can cause
the resort to stop
growing. The number
of people going levels
off then starts to
local businesses and
Image Source: http://www.wheninmanila.com/boracay-island-highly-endangered-act-now-or-lose-it-forever/
From the stagnation point onwards there are 2 basic
1.Decline in various forms or rejuvenation (regrowth
of the resort) Decline can be slow or rapid, and
regular visitors are replaced by people seeking a
cheap break or day trippers.
2.Rejuvenation involves a cash injection from either a
private company or the government, to create a new
attraction within the original resort to boost its
Decline or Rejuvenation
ikAsik Falls in North Cotabato
argao Island: http://kokairesortsiargao.com/wp-content/uploads/2014/09/surfing-siargao-e1395274464934.jpg
boc River https://swrphome.files.wordpress.com/2011/09/d5100_20110710_651_hdr.jpg
chanted Kingdom http://3.bp.blogspot.com/-gmSiCZ40ytw/TxI0kP-mYAI/AAAAAAAAEjQ/W-RuXt_bN5U/s400/enchanted_gcbig.gif
Tourism Management and the
Product Life Cycle
Product Life Cycle (PLC) was first developed in 1965 by
Theodore Levitt in an article entitled “Exploit the
Product Life Cycle” published in the Harvard Business
Review on 1 November 1965.
For a business, having a growing and sustainable revenue
stream from product sales is important for the stability
and success of its operations.
The Product Life Cycle model can be used by consultants
and managers to analyse the maturity stage of products
Understanding which stage a product is in provides
information about expected future sales growth, and the
kinds of strategies that should be implemented.
At the market introduction stage the size of the market,
sales volumes and sales growth are small. Characterized
1. little or no competition
2. establish a market and build consumer demand
3. substantial research and development costs
4.Marketing costs may be high in order to test the
market, launch and promote the product, develop a
market for the product, and set up distribution
5. The market introduction stage is likely to be a period
of low or negative profits.
Market Introduction Stage
Some of the considerations in the introduction stage
1.Product development: research and development of
the basic technology and product concept,
determining the product features and quality level.
2.Pricing: should penetration pricing or a skimming
price strategy be used? A skimming price strategy
might be appropriate where there are very few
3.Distribution: distribution might be quite selective
until consumer acceptance of the product can be
4.Promotion: marketing efforts are aimed at early
adopters, and seek to build product awareness and to
educate potential consumers about the product.
If the public gains awareness of a product and consumers
come to understand the benefits of the product and
accept it then a company can expect a period of rapid
1.Costs reduced due to economies of scale
2.Sales volume increases significantly
3.Profitability begins to rise
4.Public awareness increases
5.Competition begins to increase with a few new players
in establishing market
6.Increased competition leads to price decreases
Some of the considerations in the Growth Stage
1.Product improvement: product quality might be
improved, additional features and support services
added, and packaging updated.
2.Pricing: if consumer demand is high the price might
be maintained at a high level.
3.Distribution: distribution channels might be added as
consumer demand increases.
4.Promotion: promotion is aimed at a broader
audience. A company might spend a lot of resources
on promotion during the Growth Stage to build brand
When a product reaches maturity, sales growth slows and sales
volume eventually peaks and stabilises. This is the stage during
which the market as a whole makes the most profit. A company’s
primary objective at this point is to defend market share while
1.Costs are lowered as a result of production volumes increasing
and experience curve effects
2.Sales volume peaks and market saturation is reached
3.Increase in competitors entering the market
4.Prices tend to drop due to the proliferation of competing
5.Brand differentiation and feature diversification is emphasized
to maintain or increase market share
6.Industrial profits go down
Some considerations for the mature product market
1.Product differentiation: increased competition in the
mature product market means that a company must find
ways to differentiate its product from that of competitors.
Strong branding is one way to do this.
2.Pricing: prices may be reduced because of increased
competition. Firms in the market should be careful not to
start a price war.
3.Distribution: distribution intensifies and incentives may be
offered to encourage preference to be given over competing
4.Promotion: promotion will focus on emphasising product
differences and creating/maintaining a strong brand.
A product enters into decline when sales and profits start to fall.
The market for that product shrinks which reduces the amount of
profit available to the firms in the industry. A decline might occur
because the market has become saturated, the product has
become obsolete, or customer tastes have changed. A company
might try to stimulate growth by changing their pricing strategy,
but ultimately the product will have to be re-designed, or
replaced. High-cost and low market share firms will be forced to
exit the industry.
1.Costs become counter-optimal
2.Sales volume decline or stabilize
3.Prices, profitability diminish
4.Profit becomes more a challenge of production/distribution
efficiency than increased sales.
Saturation or Decline Stage
Some considerations for a declining market
1.Product consolidation: the number of products
may be reduced, and surviving products
2.Price: prices may be lowered to liquidate
inventory, or maintained for continued products.
3.Distribution: distribution becomes more
selective. Channels that are no longer profitable
are asked out.
4.Promotion: Expenditure on promotion is reduced
for products subject to the Harvest and Divest
As sales decline, a company has three strategy
· Hold: maintain production and add new features
and find new uses for the product. Reduce the cost
of manufacturing (e.g. move manufacturing to a
low cost jurisdiction). Consider whether there are
new markets in which the product might be sold.
· Harvest: continue to offer the product, reduce
marketing expenditure, and sell possibly to a loyal
niche segment of the market.
· Divest: Discontinue production, and liquidate the
remaining inventory or sell the product to another
The most important aspect of product life-cycles
is that, even under normal conditions, to all
practical intents and purposes they often do not
The dominant product life-cycle, that of the
brand leaders which almost monopolize many
markets, is therefore one of continuity.
In the criticism of the product life cycle, Dhalla &
Yuspeh state: “clearly, the PLC is a dependent
variable which is determined by market actions; it
is not an independent variable to which companies
should adapt their marketing programs.
Marketing management itself can alter the
shape and duration of a brand's life cycle.
Thus, the life cycle may be useful as a
description, but not as a predictor; and
usually should be firmly under the control of
The important point is that in many markets
the product or brand life cycle is significantly
longer than the planning cycle of the
organisations involved. Thus, it offers little
practical value for most marketers.
A components view of travel
and tourism products
From two standpoints
The overall tourism product: The tourist product is to be
considered as an amalgam of three main components of
attractions, facilities at the destination and accessibility of the
The product of individual tourist business: Individual service
producers designing products ‘must define the service concept in
terms of the bundles of goods and services sold to the consumer
and the relative importance of each component to the
Components of the overall
There are five main components in the overall tourism
1. Destination attractions and environment- and
the visitor activities they generate
▪ Natural attractions
▪ Built attractions
▪ Cultural attractions
▪ Social attractions
2. Destination facilities and service
▪ Accommodation units
▪ Restaurant, bars and cafes
▪ Transport at the destination
▪ Other facilities
▪ Retail outlets
▪ Other services
3. Accessibility of the destination
▪ Government regulations
4. Images and perceptions of the destination
5. Price to the consumer
Components of specific products-
The tourism business view
Three levels of tourism product
• The core product
• The formal product or tangible product
• The augment product
The Core Product
The core product is the essential service or
benefit designated to satisfy the identified
needs of target customer segments.
The Formal Product
The formal or tangible product, which is
the specific offer for sale stating what a
customer will receive for his money. It is a
marketing interpretation that turns the
core into a specific offer.
The Augmented Product
Augmented product comprises all the forms of
added value producers may choose to build
into their formal product offers to make the
experiences they provide more attractive than
competitors’ offers to their intended
Country Comparative: For each tourism product site a
Philippine Example and an Asia Pacific example then a
Product Phillippines Asia Pacific World
Beach Boracay Phuket Maimi
Festival and Events
Hiking or Trekking
References Tourism Policy: http://www.tourism.gov.ph/SitePages/
Market Segmentation: http://www.hotelmule.com/
Tourism Life Cycle: http://
Tourism Life Cycle: http://www.academia.edu/
Tourism Product Life Cycle: http://
Philippine Tourism Products: http://
Dust Thani College Guided Lesson Plan