28-02-2013, 09:40 AM
NEW-PRODUCT DEVELOPMENT IN TOURISM COMPANIES - CASE STUDIES ON NATURE-BASED ACTIVITY OPERATORS
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ABSTRACT
New product development in tourism companies has been a nearly ignored theme in
tourism marketing literature. Research on product development has in major studies
handled destinations, development of resorts or sites as a total tourist product. This paper
will introduce two case studies, which will aim to help us to identify the major problems as
well as key phases of the new product development process in a small tourism company.
The two examples represent Finnish activity operators, which at the moment have the
challenge to innovate more and more attractive activities to fulfil the customers needs for
emotional experiences. The theoretical framework for the study is based on the traditional
product (and services) development theory, which suggests it to be a process of following
stages: idea generation, service concept development and evaluation, business analysis,
service development and testing, market testing, commercialisation and postintroduction
evaluation. Based on the existing literature and our case studies we try to evaluate the
usefulness of the traditional product development model in small tourism business
marketing. We also try to present an advanced model for new product development in a
small tourism company.
INTRODUCTION
In the general marketing literature there has been a considerable amount of research carried out into
new product development, the majority of which is based on manufacturing industries, but
relatively less attention has been given to services (Edget 1994, Jones 1995, Kelly & Storey 2000).
Although product development is a prerequisite for satisfying tourists needs and changing demands
as well as insuring the profitability of the industry, new-product development in tourism companies
has been a nearly ignored theme in tourism marketing literature. There has been very little interest
in the new product development processes in small scale tourism companies, how the new
innovations are developed into product concepts in individual tourism companies, although
especially in rural tourism development projects all over the Europe the authorities and marketing
organisations call for new tourist products.
The research on product development in tourism marketing is dominated by research on destination
development, representing in most cases planning approach (see e.g. Gunn 1988, Pearce 1989). In
the literature of destination development, destination planning and destination marketing a
destination is viewed as an amalgam of individual products and experience opportunities that
combine to form a total experience of the area visited ( Murphy, Pritchard & Smith 2000, 44).
Medlik and Middleton (1973) suggest that the destination product consists of five components:
destination attractions, destination facilities, accessibility, images and price. This ”components
model” has been later borrowed by numerous authors.
COMPONENTS OF THE SPECIFIC TOURIST PRODUCT
According to Middleton and Clarke (2001) the tourist product means customer value, which is “the
perceived benefits provided to meet the customer’s needs and wants, quality of service received,
and the value for money”(Middleton & Clarke 2001, 89). The tourist product is fundamentally a
complex human experience (Gunn 1988), which is an output of a production process, where the
tourist utilises the facilities and services to generate the final output, experience (Smith 1994, 590-
591). Value is added in each stage of the production process and the consumer is an integral part of
the process (Smith 1994). The experience is a customer outcome, which, in the eyes of the
customer, is assosiated with added value and quality.
DEVELOPMENT OF A NEW TOURIST PRODUCT – A PRODUCT FORMULATION VIEW
To stay ahead of the competition, proactive tourism companies must constantly look for new
product innovations. The traditional product life cycle theory indicates that typically a product will
have a s-curve with stages of growth, maturity, saturation and decline in sales and profits. This
theoretical model seems to hold true also for tourist products, which means that the question of
product development and new- product innovations is important in tourism companies. It is
sometimes difficult to define what is meant by a new product. Improvements to an existing product
can render that product so new as to make it seen by prospective purchasers as a genuinly new
product, and if an existing product is launched to a new market or to other purposes, that product is
also new for the customer.
In most cases the tourist products are advances on and modifications of existing products.
According to Zeithaml and Bitner (1996) the types of new product options vary from major
innovations to minor style changes. Major innovations are new services for markets as yet
undefined. Startup businesses consist of new services for a market that is already served by existing
products that meet the same generic needs. New services for the currently served market represent
attempts to offer existing customers a service not previously available from the company, although
it may be available from other companies. Service line extentions represent augmentations of the
existing service line, service improvements represent the most common type of service innovation.
Style changes represent the most modest service innovations, although they are often highly visible
and can have significant effects on customer perceptions.
DEVELOPING A NEW TOURIST PRODUCT – CASE STUDIES AMONG NATURE BASED ACTIVITY OPERATORS
In this chapter we will introduce two short case descriptions. The aim of the interviews was to find
out how the small activity operators in nature-based tourism industry in Finland develop their
product line and how is their new-product development process like in reality. The two cases were
chosen to represent similar kind of businesses: both companies offer nature based activity services
for the same target group, business sector. Their product are divided into corporate entertainment
products, incentive products and nature-based activities for other groups of customers. For both
companies the local based corporate entertainment means nearly half of the income. Both
companies operate from and have their base (office) in the same town. These companies are both
limited companies and are run by two male entrepreneurs. In the nature-based activity service
sector these types of companies are common in Finland in terms of size, mode of operations, age of
the company and the background of the entrepreneurs. In this branch of tourism businesses the
customer involvement and the activity itself is crucial. Co-operation with the accommodation
business is inevitable, if the operator does not have own accommodation facilities.