Paper 14: Tourism and Hospitality Marketing   
                 Module 21: Place Decisions  
                                                                                                                    
                  
                                         
                                                THE DEVELOPMENT TEAM 
               Principal Investigator               Prof. S. P. Bansal 
                                                    Vice Chancellor, Indira Gandhi University, Rewari 
               Co-Principal Investigator            Dr. Prashant K. Gautam 
                                                    Director, UIHTM, Panjab University, Chandigarh 
               Paper Coordinator                    Dr. Rajesh Verma 
                                                    Mittal School of Business, Lovely Professional University, 
                                                    Punjab 
               Paper Co-Coordinator                 Dr. Rahul Sharma  
                                                    Assistant Professor Mittal School of Business, L.P.U (PB) 
               Content Writer                        Mr Ajay Chandel  
                                                    Assistant Professor, Mittal School of Business L.P.U (PB) 
               Content Reviewer                     Prof. Balram Dogra 
                                                    Campus Director, Rayat Bahra University, Kurali, Punjab 
                
                
                
                
              
              
             TERMS             DESCRIPTION OF MODULE 
             Subject Name      Tourism & Hospitality 
             Paper Name        Tourism and Hospitality Marketing 
             Module No.        21 
             Module Title      Place decisions 
             Objectives        To build an understanding of place/distribution decisions related to tourism 
                               industry 
             Keywords          Marketing mix, Distribution channels, Third-party channel members  
              
                                               TABLE OF CONTENTS 
                  1.  Learning Outcome 
                  2.  Introduction 
                  2.1 Place/Distribution channel 
                  2.2 Types of distribution strategies 
                  2.3 Functions of a Distribution Channel 
                  3.  Distribution of tourism product 
                  3.1 Levels of distribution channels in tourism 
                  3.2 Traditional tourism distribution chain 
                  4.  Third-party distribution channels 
                  5.  Summary 
              
                                                  QUADRANT-I 
                                                  Place decisions 
             1. Learning Outcome 
             After completing this module students will be able to: 
               a)   Understand the concept of distribution channels, their typology and functions 
              b)    Understand the concept of distribution channels in Tourism and Hospitality 
               c)   Understand various third-party distribution channels available in tourism marketing 
             2. Introduction 
             Given to the nature of tourism and hospitality product’s complex nature, the network of tourism 
             distribution channels is an extremely complicated system. Advent of technological developments, 
             advent  of  online  social  networks  and  online  reviewing  websites  have  added  supplementary 
             distribution channels to the existing traditional tourism distribution channel network making it 
             even more complex system.  
              
                 
                Since selection of channel members in any business has a great significance, it becomes an area of 
                great  concern  for  many  businesses.  Carefully  selected  channel  members  help  organization’s 
                products  and  services  penetrate  the  market  by  promoting  their  sales  into  the  market  like  a 
                responsible partner while any challenge faced post selection can prove fatal for business success.  
                2.1 Place/Distribution channel 
                Place or distribution is one of the very important parts of the marketing mix. A distribution channel 
                is a chain of mediators which are used to pass a product or service to its end user. It might involve 
                the use of wholesalers, retailers, distributors and even the relatively newer distribution channels 
                like  Internet.  Distribution  channels  can  further  be  divided  into  direct  and  indirect  channels  of 
                distribution. Direct channels enable the consumer to buy the products or services directly from the 
                producer and the indirect channels allow the consumer to buy the products or services from a 
                wholesaler or retailer. 
                A firm must strategically distribute its product or service at a place that is easily available to its 
                existing  and  potential  consumers.  Strategically  determining  upon  the  place  or  distribution  is  a 
                multifaceted process as it involves having a very thorough understanding of the target market. 
                Understanding the needs and preferences of the target market inside out is extremely helpful in 
                identifying the most efficient distribution channels that directly appeals to a firm’s target market. 
                 
                2.2 Types of distribution strategies 
                There are three major types of distribution strategies, including: 
                       Intensive distribution: A distribution strategy that aspires to cover the entire market by 
                        using all available distribution channels is called as an intensive distribution strategy. There 
                        are many regular products whose sales can be increased if the number of outlets used to sell 
                        these  items  is  increased  (e.g.,  soaps  and  other  FMCG  items).  Intensive  distribution  is 
                        usually  one  of  the  most  commonly  used  distribution  strategies  for  products  for  which 
                        customers do not have very specific requirements. In other words, a customer is not very 
                        brand conscious about these product categories and will usually buy another brand which 
                        can serve the same need for the customer in case the required brand is not available. Hence, 
                        in this approach all possible outlets can be used to distribute the product in the market. An 
                        extremely mainstream example of such distribution strategy would be cold drinks. Various 
                        cold  drink  brands  are  available  in  restaurants,  five-star  hotels,  soft  drink  stalls,  kiosks, 
                        roadside eateries, tea shops, and so on. 
                 
                 
                       Selective distribution: A distribution strategy in which a company/manufacturer uses a 
                        relatively lesser/limited number of outlets in a geographical region to sell its products or 
                        services is called selective distribution. This strategy sometimes works better because in 
                        this  strategy  the  firm  thoroughly  decides  about  the  distribution  channel  members.  This 
                        choice of channel members depends upon the firm’s judgment of a distribution channel that 
                        it believes can be the most appropriate channel partner and hence can focus its efforts on 
                        them. Selective distribution is  a  great  distribution  strategy  when  customer  groups  have 
                        specific  choices  and  will  search  for  those  choices  when  they  are  not  available.  In  this 
                        strategy, the firm decides to choose some outlets to distribute its products and focus its 
                        selling  efforts  on  these  few  outlets  only  rather  than  scattering  it  over  many  unworthy 
                        outlets. This strategy enables healthy and sustainable working relationship with channel 
                        partners.  A  firm  can  gain  reasonable  market  coverage  and  control  using  selective 
                        distribution strategy.  
                       Exclusive  distribution:  Kind  of  distribution  strategy  when  a  firm  uses  only  one 
                        wholesaler, retailer  or  distributor  in  a  specific  geographical  area  to  sell  its  products  or 
                        services is called as exclusive distribution strategy. Prestigious brands all over the world 
                        follow this type of distribution strategy. 
                        Prestigious automobiles and highly prestigious hospitality firms are some of the examples 
                        of firms that use exclusive distribution strategy. Exclusive distribution strategy enables a 
                        firm to have a strict control over the marketing mix of the products or services offered. Few 
                        channel partners also enables the firm to pursue aggressive marketing strategy. 
                        Comparison of these three approaches is tabulated below: 
                                       Table 1: Comparison of three types of distribution channels 
                                                                                                                   
                        2.3 Functions of a Distribution Channel