Innovation through product development
The most common and obvious outcome of innovation in the tourism industry is often in the area of product development. Most time and effort goes into maintaining and delivering existing products to current customers and then refining and extending them over time to attract new markets.
The emergence of new markets, fragmentation of larger markets into sub markets, better demographic and psychographic research, and the growing viability of niche markets often prompt operators to examine and develop new product offerings or modifications, as well as line extensions.
For example, the increasing social acceptance of alternative lifestyles during the past 25 years prompted the development of more mainstream tourism product for the gay and lesbian market. A growing social awareness and a desire to help developing countries has prompted some travel companies to develop cause-related travel product, where an important part of the itinerary is to work on a local community project. It could even be argued that our increasingly sedentary lifestyle has prompted the travel industry to develop extreme adventure products to cater for the latent ‘wilder' side of people.
Click here to read about a travel company which specialises in cause-related travel
New product development in tourism is often supply-led. For example, the establishment of the mining communities of Mt Tom Price and Newman in Australia’s north-west opened-up the incredible beauty of the Hamersley Range and Karrijini National Park to people other than intrepid adventurers. The sealing of the Mereenie Loop Road, which links Alice Springs, Palm Valley, Kings Canyon and Uluru, is expected to enhance a touring product that was previously recommended only for 4WD travellers. In Victoria’s High Country, the completion of the Great Alpine Road in 1999 - linking the north-east with East Gippsland - has created new tourism product and product spin-offs for both regions.
As a keystone of their “Passages to Innovation” program, the Canadian Tourism Commission has identified four quadrants of product development. Try to determine in which quadrant your business and business thinking currently sits.
Quadrant 1: Existing customers/ existing products
This quadrant represents the lowest risk strategy. In this instance the organisation is catering to its current market segments, with its existing product range. This quadrant is the safe bet for many organisations. However, the face of the tourism consumer is changing and organisations must not only react to new trends, but also be proactive in order to be ready for the new market/s, once the dust settles. An organization must first assess its strength within quadrant 1 to determine whether or not there is solid foundation to move into other quadrants.
Quadrant 2: New customers/ existing products
This represents a slightly higher risk strategy. An organization entering this quadrant is wise to also keep a portion of efforts in quadrant 1. As an organization develops a new market segment, research must be conducted to evaluate the potential of those market segments for the existing products. Often, in this instance, the product may be modified to best reflect the needs of the new market. However, this does not constitute a new product.
Quadrant 3: New customers/ new products
This quadrant represents the highest risk category. New businesses all start in this category. It is very delicate and must be executed with caution. Research is the basis of success – inventory, assessment, competitive analysis and clearly defining the USP.
Quadrant 4: Existing customers/ new products
This quadrant offers a potential high-risk strategy. When presenting new products to existing customers, you want to ensure that these products will cater for their needs and not alienate them. Existing customers will, however, be more willing to try new products coming from an organization they trust.