Add Thesis

Product Offering Diversification

A Qualitative SWOT Analysis on Wedding Tourism in Kenya

Written by C. Ngarachu

Paper category

Master Thesis

Subject

Business Administration>General

Year

2015

Abstract

Master Thesis: Product diversification and expansion diversification is defined in the literature as the process of expanding business opportunities through the additional market potential of existing products (Bovée, 2006). Diversification can be achieved by entering other markets or through pricing strategies. Usually, products may be improved, changed or changed, or new marketing activities may be developed (Hall and Williams, 2008). For this definition, the international tourism market, and more specifically the wedding tourism market, must provide diversified products according to the destination, because this process constitutes the development of successful products. One of the main areas of the marketing function and the main task of the marketing manager is to design a product-service combination that provides real value to target customers, incentivizes purchases, and meets real consumer needs (Kotler et al., 1999). Middleton (2001) believes that product decisions are very important because they not only affect the marketing mix, but also affect the company's long-term growth strategy and investment and human resource policies. Regarding travel and tourism, the company operates in a dynamic global environment that brings new marketing goals every ten years. Practices and rapid changes may quickly obsolete yesterday's successful strategy (Kotler et al., 1999). Therefore, realize that product design and innovation have huge competitive advantages. A lot of research on diversification comes from the fields of economics and strategic management. Researchers from finance, economics, and strategic studies have explored many different diversification motivations. For example, many studies in the financial field believe that diversification is driven by the benefits of risk reduction (Markham, 1973). The argument is that when the cash flows of multiple businesses are not completely correlated, diversification is used to reduce the total risk. However, this view is also challenged by the opposite argument that shareholders can reduce risk by diversifying their own financial asset portfolio (Levy and Sarnat, 1970). On the other hand, economists have studied that the motivation for diversification is the desire of companies to gain “group power” (Hill, 1985) or to protect themselves from the prospect of recession in the dominant industry (Miles, 1982; Rumelt, 1974). As tourism has become the main source of urban employment, income, international visibility and opportunities, the efficiency of urban tourism management has become increasingly important (Wöber et al., 2003). New product development and innovation are indispensable for all kinds of companies that want to stay relevant in a vibrant business market, because it is a prerequisite for growth and development. Schumpeter (1997) described the most important factor of economic growth as a process of creative destruction. This means that the company's structure will be revolutionized by permanently destroying old products and structures to create new products. In his view, and inspired by Kondratiev's (1935) discovery of economic prosperity and recession cycles, innovation has become the fundamental driving force of economic change and growth. Schumpeter (1997) distinguished various forms of innovation: 1) the creation of new products or services, 2) new production processes, 3) new markets, 4) new suppliers, and 5) changed organizations or management systems (Schumpeter 1934) . Therefore, innovation not only affects the production function, but also factor prices and the total cost curve. According to Schumpeter (1961), change is the only constant in the business environment. He believes that the followers of innovators may appear late, but they will eventually destroy the competitive advantage of innovators. As a result, a new round of development of new products will begin. The necessity of new and innovative products and services stems from the product life cycle, which means that the product life cycle, that is, its attractiveness to customers, will end at some point and must be modified or replaced with new products. Today, the challenge that travel companies must face is that the product life cycle has been shortening in the past few decades (Weiermair, 2004). The development of new products must take into account new travel experiences, needs, demands, and trends in demographic changes. Especially the creation of unforgettable travel experiences today seems to be expected to bring sustainable competitive advantages for travel companies (Weiermair, 2004). The time from development to market launch to product obsolescence is getting shorter and shorter. As a result, the competitiveness and age of products have also declined rapidly. Company sales usually consist of more and more "young" products (von Braun 1994). Therefore, strategic decisions should be made for the product life cycle. Laws (2002) emphasized that successful travel companies exhibited product portfolios at different life cycle stages. Therefore, products in the high-profit stage can provide funds for the introduction or degradation of other products. The concept of product life cycle also allows us to understand the dynamics of market forces, such as market growth and profit prospects (Idea Sandbox, 2007). Read Less