Coping with congestion at London’s airports.

Travel chaos is to be expected in a British winter and particularly so at airports.

Heathrow however managed a modest growth of 0.3% in passengers during January and estimate that would have been bettered to 1.7% had it not been for the disruption caused by snow. Still a total of 5.2 million travelers is good and on line to meet its target of 71 million for the year. Gatwick despite wheeling out their new snowploughs suffered a passenger drop of 0.8% in January but will easily reach a yearly total of 35 million. Stansted copes with half of Gatwick’s passenger, so together with the two other airports that serves London, Luton and London city, these airports serve about 132 million passengers a year.

The view is that there is a pressing need for more capacity.

Mayor Boris Johnson favours the building of a new modern airport on the Thames estuary at a cost of billions. The alternatives are to build a third runway at Heathrow, expand the facilities at Stansted and Luton and progress the expansion of Southend airport.   

But there are alternatives to building what might become huge and costly white elephants.  

The trend towards the use of larger aircraft will increase. Better airline promotion has filled more seats, but a 70% sold seat capacity suggests that they can do much better. See how well Emirates promote their services.  

Our Government appears to under rate the importance of tourism to our economy except as a taxation cow. The industry has created nearly two million jobs and contributes 4% of GDP. Britain is still very popular as a tourism destination.

We can all do much better.

Contact me at: daz@bbvs.co.uk 
(Your name will not be passed on to anyone)

Reviving the tourism market

There is evidence that the dramatic drop in tourism since 2008 has plateaued. We are still however bumping along at the bottom.

The long recession hasn’t helped of course, but people can get tired of feeling poor, particularly when they haven’t felt any real hardship themselves. Asset rich folks can be persuaded that the meagre returns on their savings justify spending on indulgences.

One element holding back the long haul tourism business is the much-hated Airline passenger duty.

Now the four leading airlines in the British Isles have published a report by Price Waterhouse, which calls for scrapping this ‘green’ tax. Using a model favoured by the World bank it examines the impact of one such element can impact on other sectors of the economy.

PWC claim that scrapping APD will stimulate the economy, create up to 60,000 extra jobs, encourage in-bound tourism and reduce business costs. Moreover the income lost will be made up by extra revenue from income tax and Vat. 

This APD tax has not been as lucrative as the Chancellor had hoped. The ‘Laffer’ effect works here as well. However George Osborne may take comfort in the fact that the fewer Brits who go abroad aids the tourism deficit. We earn less from in- bound tourism than we spend abroad.

And our new Visa rules make it more difficult to attract the new middle classes from China and India. We couldn’t even persuade more tourists to visit during the Olympics, though this may have been a marketing blunder.

We must create conditions to kick-start our tourism business. This means greater capacity at our airports and a better understanding of the benefits tourism deliver to the economy.

Would you defer this holiday?

People often make irrational decisions about spending money. They are however more careful when deciding on their major holiday.

This can be the most expensive purchase made in the year, so prospects decide on the type of holiday, draw up a list, and choose a destination that is highly desirable within their price range and distance. Provided it is accessible and safe.

The destination that offers unique qualities such as stunning landscapes and wildlife, will be preferred to countries that are ubiquitous. France or Italy rather than Greece if you are interested in fine dining and culture.

However there is a third dimension in this decision taking.

You’ve cut the orange, first on the basis of desirability and then again on uniqueness. The quarter you are left with includes destinations that meet your criteria.

The third factor is deferability.

Canada and New Zealand are wonderful countries for British tourists. However their political stability and friendliness of locals is not going to change in the short term. This makes it less of an urgent decision, unlike the possibility of a holiday in Cuba. Will it retain its old world faded charm after Castro, particularly if the USA decides to re-engage?

What can you do if you wish to generate an artificial sense of urgency?

Create events and festivals as Germany does. The Oktoberfest in Munich is just one of the many incentives to visit.     

The power of word of mouth

Bobby Ghosh writing in a recent issue of Time described a country so:

“This is the last authentic place on earth. Authenticity is a rare and valuable commodity and people will travel far to find it”. Mr Ghosh uses the word to mean real and genuine in a positive sense. He goes on to say “It’s the closest thing to Shangri-La I’ve ever seen”. For readers unfamiliar with James Hilton’s classic novel, Shangri-La was a beautiful land in the Himalayas where good gentle people lived long happy lives untouched by so called civilization.

He is describing Bhutan, a country sandwiched between China and India with a population of 700,000 with their own version of Buddhism and a democracy with two distinct differences in their belief in what constitutes progress in the 21st century.

Bhutan has an alternative to the western gauge of the Gross Domestic Product. Their version is the Gross National Happiness index based on what they describe as “The four pillars”. These are sustainable economic development, conservation of the environment, preservation of culture and good governance. 

The nine components of happiness are psychological well-being, health, work-life balance, education, good governance, cultural diversity and resilience, community vitality, ecological diversity and resilience, and finally living standards.  

Unlike many western democracies, Bhutan’s government will not abandon everything in pursuit of growth and know that wealth alone does not guarantee happiness.

The Government has also decided what sort of tourist they would welcome. Not the hippies on the trail of cheap marijuana that damaged Goa and Nepal. Bhutan wants the rich visitor interested in the beauty of the preserved countryside, it’s culture and religion. Birdwatchers, and adventure seekers are also welcome. These folk pay a daily tariff to limit the number of tourists and help with the maintenance of authentic Shangri-La.

Go before they change their mind.    

Some advertisements work better than others

There are some great advertisements and though there are more poor, irrelevant and wasteful ones, the good successful ads help justify a huge industry and the many clever people it employs. Advertising expenditure accounts for about 1.4% of the gross domestic product. That’s more than 16 billion pounds sterling.

One explanation why it’s so hard to eliminate waste in advertising is the mass-market nature of the business.

Most advertisers need to influence only a small proportion of the people reached by their advertising. Household detergents hold no interest for most people who see their commercials. Yet Proctor and Gamble continue to invest heavily on Television. Tena panty liners are used by even fewer women, yet can support a £4 Million TV spend. Perhaps this is demonstrated more simply by an example from direct response advertising.

You wish to sell a lightweight vacuum cleaner for £19.95 inclusive of Vat. You can make a profit if you spend no more than £5 on advertising per sale. A colour page in a leading up market colour supplement is negotiated for £4000, so it needs to generate 800 sales. The magazine has a circulation of 800,000 and a readership of 2,000,000. Success therefore requires one out of 2,500 readers to buy.

Even targeted online advertising impressions, have a click through rate on average of 0.6 %, and a click to your website is still only an indication of interest and a long way from an actual sale.  

Another problem is the lack of interest in advertising by the general public. A leading French expert said:

“We interrupt people’s activity when they watch TV, read a newspaper or travel around by bombarding them with advertisement messages for cars, chocolate and other more mundane products. Not surprisingly, most are ignored.”

Successful campaigns emerge from a clear brief, more precise media targeting, relevant messaging and engaging advertisements.  

How does advertising work?

It’s a good question. It implies that there is a definite objective for advertising and that an evaluation of its effectiveness will be undertaken.

In reality, few advertisers bother with a formal listing of objectives and even when these are formulated often consist of general business goals. Increasing sales, brand share, distribution and so on are not communication tasks. Advertising’s function is to inform and persuade and these objectives are much harder to articulate and monitor.

Another problem is isolating advertising contribution from the other elements of the marketing mix. Brand success may be relatively more reliant on product innovation, pricing strategy, and packaging than the advertising campaign.

Advertising in a general sense must work, but not always and often not very efficiently. The drive to make advertising more efficient is akin to the search for the Holy Grail. You will have heard the quote attributed to John Wanamaker of the USA or Lord Leverhulme:

“ I know that 50% of my advertising is wasted. The problem is that I don’t know which 50%.”

In the early half of the 20th century, Mr. Elmo Lewis developed his AIDA model for advertising. It described four stages for good advertising. Attract attention, make the advertisement relevant and engaging so as to engender interest, create desire and finally generate action in the form of a sale.

In the early 60’s, Russell Coley developed his DAGMAR model, which stands for: Defining advertising goals for measured advertising results. He postulated that customers went on a journey from unawareness to awareness and comprehension of the message. If well done, this leads to a positive attitude being formed of the brand and a conviction of its suitability.

Stephen King, the doyen of JWT’s London account planners warned that the nature of the advertising message may cause success to be measured on varying time scales. A Television commercial announcing a retail sale will have the tills ringing, or not, almost immediately. A campaign promoting Nuclear energy will need a longer time scale for the measurement of advertising success.

Most older advertising models are linear and pre suppose rational decision-making. These days we know that emotional triggers are also important. Behavioral economics is the flavour of the moment.

It seems that we have been asking the wrong question. We cannot generalise and must be specific. The question should be: How does my advertisement work?

Or even better: How do my customers use my advertisements?   

Answers to these questions will lead to less waste and more effective determination of the ideal advertising budgets. 

Far away places with strange sounding names...

Most British holidaymakers know what sort of holiday they want.

If its sun, sea and sangria, then they will never be persuaded to go jungle trekking. So, for the main holiday, Barbados has to compete with Jamaica and the Costa Brava with The Algarve. Yet every destination offers differences even within these parameters.

Tenerife attracts different sorts of tourists than Menorca. Knowing who your best prospects are should be easily determined. In reality it appears to be difficult. Try finding out the differences between destinations on the same shortlist for yourself.

A simple graph comprised of prospects opinion of relative merits of different destinations is shown below. It is small in scale but makes our point.

Click to enlarge the chart below

Then consider New Zealand and Australia. Their distance from the UK make the travel an onerous experience and a promise of 'The pure Country' or 'The land of wonder' will not make up for the long boring journey. These countries attract relatively small number of British tourists. However they stay for an average of six and a half weeks. A safe guess would be that this long stay can only be afforded by time rich holiday takers such as the retired older folk and gap year young people. You will not find any mention of these prospects in their advertisements.

Another factor for countries that once provided immigrants to Britain is the lure of familiar things. India does attract a few Anglo Saxons. However, about one third of UK residents who travel to India have Indian passports and it is a safe bet that a sizeable number of visitors who are British now, were originally from the sub-continent. For them ‘The incredible country’ is not a justification.

A common language, familiar food and culture should be promoted more strongly in advertising for Canada and the USA.

Success in tourism advertising comes when you understand the importance of identifying your prospects and then find exciting and relevant ways to express your differences.