Over the past few weeks I have been writing about how the tourism industry is undergoing a transformation, perhaps even a revolution, as a result of the disruptive effects of mobile and embedded technology. You can get caught up with the former technology (mobile) by reading my two part series “The Meteor that Slammed Tinseltown: How Mobile Technology is Transforming the Tourism Industry” and the latter technology (embedded, aka The Internet of Things) from my five part series “Invasion of the Things.”
Some may find my analogies overly dramatic or alarming (“A meteor? Really?”), but as of a few days ago, I submit not. That is when I had a lengthy phone conversation with an executive from a well-funded and patient European company intent on becoming the next Facebook or Youtube. Their go-to-market strategy is taken directly from the playbook of successful social media companies: build an open platform, allow millions of users to use it for free, and once there is a critical mass of content and users, monetize with advertising. The only difference between the European company and Youtube is that the former’s platform is designed for mobile tours and not for showing videos of the cat playing piano.
And so it begins.
This phrase was used by King Theoden in the Lord of the Rings movie “The Two Towers” right before the major battle at Helms Deep. It is a phrase often used to signify the start of a major or significant event, and thus apropos for what we are now witnessing in the tourism industry…the beginning of the end. The European company, whether they are successful with their strategy or not, is to the tourism industry what Napster was to the music industry ~ a massive disruptive force. This disruption will not happen fast, not like a meteor hitting the earth, but more like a slow crisis. The guided tourism industry is, as was the music industry before them, like a man sleeping on an air mattress with a small leak in it ~ he won’t wake up until his head hits the floor.
With this new platform (which is very nice, by the way), even more mobile tours will be made available for free, tempting even more consumers to stop paying for them. It’s Napster and 1999 all over again! And why would consumers pay, especially if content is free, legal and easily available? Why would anyone continue to pay the kind of prices charged by the traditional tour companies?
To answer my own questions, I turned to the bottle. No, not THAT bottle, rather bottled water.
Yes, water. It’s basically free. Most of us get it from the tap, and it’s pretty good. In fact, free tap water was plenty good enough until about 20 years ago when someone had the bright idea to put water in plastic bottles. Suddenly a new industry was born, competing effectively with free. According to the International Bottled Water Association, sales revenues for the U.S. bottled water market in 2015 were $14.2 billion in wholesale dollars, a 8.7% increase over the previous year. Bottled water is currently the second largest beverage category by volume in the United States, behind carbonated soft drinks.
While bottled water is still just a tiny fraction of all water consumed, it’s not hard to see the secrets of the bottled water industry’s success. They crushed three of the four P’s of marketing: a convenient Product, smart Promotion, and accessible Placement. And Price? Well, if you get the other three P’s right, then price takes care of itself, does it not?
So how does one package, promote and place a fee-based mobile tour so that it effectively competes with free?
In Part Two of this series, I will answer that question, and provide a few best practice examples of how to deal with the coming deluge of free.