Increasing a DMO’s profit by applying the long tail distribution strategy

The long tail distribution strategy by Chris Anderson focusses on products and services in the tail of distribution. These products have little sales volume because they have a very particular nature. So for example, in many online stores the already popular products are promoted, in order to attract more customers than the competitors. The other products are sold as well, but those items do not make a big impact. However, some stores have such an amount of inventory that the less popular items in total make most of the profit, these are the long tail products. In general they have little sales volume but there are many in numbers.

In the tourism industry the long tail distribution strategy is becoming successful due to advances in communication technology and social networking. This Internet-based economy gives more people access to a broader range of goods, services and information to choose from. Furthermore, companies like DMOs are not limited by a certain amount of meter, so they have the possibility to offer a wide range of products, services or in this case destinations.

The article ‘Long Tail Tourism: New geographies for marketing niche tourism products’ by Lew (2008)  states that the long tail distribution strategy is already being applied to certain businesses within the tourism industry. A good example is the accommodation sector. The ‘short head’ consists out of the large hotel chains and aggregator websites such as Expedia.com and Hotels.com. The long tail consists out of a few different sectors. First the larger niche markets such as last minute travel and corporate travel. This is followed by single destination specialists and hotel auction sites such as youth hostels and B&Bs. Even further down the long tail are more obscure accommodation options such as couch surfing.

Furthermore, according to Lew’s article, the  following three aspects should be taken into account when a DMO applies the long tail distribution strategy. First of all, it is required to have a sufficient number of products. Also, minimizing storage and distribution costs by strategic warehousing is needed. Lastly the company needs to develop a broad and deep market and distribution channels. Chris Anderson also states that tourism related companies should apply three rules for developing the supply side when using the long tail distribution channel. The first one is to ‘Make Everything Available’. For DMOs this can mean to expand the diversity of offerings and to develop different ways to experience attractions and services. The second rule is to ‘Cut The Price, Then Lower It’. This means to offer the client the product for a price based on the actual cost with an appropriate profit. The last rule is ‘Help Me Find It’. The website should be easy to understand and it should have a broad web presence which can created by the use of search engine optimization.

In conclusion, when taking these two factors and the advices  by Chris Anderson into account, DMOs should be able to increase their profit when using this strategy. They are not limited by a certain amount of square meters to fit products and there are still many less known niche markets and destinations.

References

Lew, A. A. (2008). ‘Long Tail Tourism: New geographies for marketing niche tourism products’. Journal of Travel & Tourism Marketing, Vol. 25. Retrieved from: https://nau.edu/uploadedFiles/Academic/SBS/GPR/Forms/Long-Tail-Tourism-Lew.pdf

Peelen, E. and Beltman, R. (2013). Customer Relationship Management. Pearson Education Limited. Harlow, United Kingdom.

 

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