VisitScotland has been reorganised in 2005 which offers the opportunity to observe not only how the distribution channels have been set-up to fulfil a global demand but also how to take into consideration the “more” traditional ways of distributing the goods and services being in the business since 1969.
2. Distribution channels
Brassington and Pettitt define distribution channel as the structure linking a group of individuals or organisations through which a product (tangible) or service (intangible) is made available to the consumer or industrial user (Brassington and Pettitt 1997 p472). How will the channels be structured and how will they cover the tourism market?
a. Channel structure
There are a number of ways for customers to buy tourism products. Some are direct, over the phone or internet; others are indirect, through a third party who may be in the destination or origin country or not.
Buhalis and Laws (Buhalis and Laws 2009 pp11-12) describe the main distribution channels used in the tourism industry. Between the consumer and destination (suppliers/principals), we have 3 main agent types, the inbound and/or outbound travel agencies (retailers) and the tour operators (wholesalers).
The consumers can use from zero (direct distribution) to all agents (indirect distribution) to book a stay in Scotland.
VisitScotland can be seen as a vertical integrator as the organisation serves multiple purposes between the consumers and the services/goods providers.
They not only assess the standard of accommodation, visitor attractions and places to eat but they also work as a multi-channelled bookings and information service for visitors to Scotland (on-line and telephone requests for information and bookings, on-line information provision to more than 100 Visitors’ Centres).
b. Market coverage
Kotler and Keller (Kotler and Keller 2009 pp 460-461) are also differentiating between exclusive, selective and intensive distribution i.e. whether we use a few, a selection of or all available channels to get our products or services on the market.
Based on the above definition, we can say that VisitScotland is using selective distribution channels mainly internet and its industry partners like VisitBritain, Trade and Professional agencies, Tourism agencies, etc.
Using a selective approach helps not only to keep control on the distribution and the partners but also lower the overall costs.
3. Trends of distribution in the recent years
We did mention what are the channels used to distribute products and services but there are changes happening in the tourism sector. The main two according to Buhalis and Laws are the integration and e-commerce capabilities (Buhalis and Laws 2009 p10).
There is a general trend in horizontal (e.g. Air France & KLM) and/or vertical (e.g. Club Med) integration in the distribution of goods and services.
Both of those behaviours are leading to better cost control and economies of scale (Buhalis and Laws 2009 p10).
This is in that context that VisitScotland has been put in place to replace the 14 Area Tourist Boards that were acting at local level (VisitScotland 2009). This is how it became a horizontal integrator playing all the agents’ roles between the destination and the consumer, making VisitScotland both a vertical (see 2.a) and a horizontal integrator.
Another main stream change is the e-commerce that is also evolving (Kotler and Keller 2009 pp 474-477) as the conventional industry players realised the profit made by the “Pure-Click” companies.
New distribution channels have been created adding more complexity as it means that strategies had to be implemented to manage the traditional channels to retain those partnerships.
The emerging new channel is M-Commerce i.e. distribution of goods and services through PDAs and mobile phones.
If you Google “Scotland”, http://www.visitscotland.com/, the portal where you can request information or book accommodation, tours, packages … in 14 different languages, arrives second after the Wikipedia reference.
This reference can also be found in social networks as Facebook and for some other countries as Australia they also developed Twitter capabilities.
4. Difference between tangible products and intangible services
Kotler and Keller define as Categories of Service Mix (Kotler and Keller 2009 pp 387-388) the continuum from pure tangible goods to pure services with in the middle tangible goods with accompanying services, hybrid and major service with accompanying minor goods and services.
To understand what this means for VisitScotland, we should go back to the core objectives (VisitScotland 2009):
• Attract visitors by building a successful Scottish tourism brand.
• Engage and work in partnership with the tourism industry.
• Enhance the visitor experience.
• Provide strategic direction to the industry.
• Manage our business efficiently and effectively.
So on the one hand the organisation is set-up to deliver intangible services i.e. activities or benefits that one party can offer to another which is essentially intangible and does not result in the ownership of anything (Kotler, Wong, Saunders and Armstrong 1996 p625). On the other hand we can observe that they also deliver tangible goods as market researches, useful statistics for professionals (http://www.visitscotland.org/research_and_statistics/) and other marketing support material as brochures and guides.
VisitScotland is using the new and the traditional distribution channels for both their intangible services and tangible products by:
• integrating vertically and horizontally the distribution roles using e-technologies
• maintaining selective relationship with intermediaries in the industry through partnerships
6. Reference list / Bibliography
BRASSINGTON, F. and PETTITT, S., 1997. Principles of Marketing. 3rd ed. Edinburgh: Pearson Education Limited.
BUHALIS, D. and LAWS, E., 2001. Tourism Distribution Channels. 1st ed. UK: Thomson Learning
KOTLER, P. and KELLER K.L., 2009. Marketing Management. 13th ed. Upper Saddle River, New Jersey, USA: Pearson Education, Inc.
KOTLER, P., WONG, V., SAUNDERS, J., ARMSTRONG, G., 1996. Principles of Marketing. 4th European ed. Edinburgh: Pearson Education Limited.
VISITSCOTLAND, 2009. Organisation History. Edinburgh, UK: VisitScotland. Available from: http://www.visitscotland.org/about_us.htm [Accessed 23 June 2009]