Saturday, September 01, 2007

Travel industry vs the Appliance Industry: round 2

I ran a post earlier in the week from TRAVELtech about the emerging battle for discretionary dollars between the travel industry and the appliance/consumer products industry. With travel being difficult to do, consumers are considering giving their money to TV makers over Airline companies and hoteliers. Through some tips from insiders and a bit of digging around I have found some evidence to prove this theory.

First some research from Tourism Research Australia (the research arm of Tourism Australia). Their 2007 report "Changing Consumer Behaviour" (pdf) blamed a drop in domestic travel spend in Australia in part on the increasing share of discretionary spend going to consumer goods. Here is how they put it
"the increasing competition for share of wallet and of time, the industry may need to accept that domestic travel is unlikely to return to historically high levels....‘spending patterns and the benefits derived from it vary across the generations, although there are some constants: technology, cars and furniture...Generally those who are younger or more under pressure spend more on compensatory items to make them feel better about life. These tend to deliver instant gratification in a way that travel cannot."
Lots of bureaucratic speak for people a buying bigger and flasher TVs, cutting into their travel spend.

Secondly there is a marketing example. Jetstar (low cost carrier offshoot of Qantas and previous winners of the BOOT "worst marketing idea of the week award"). Have teamed up with a large Australia consumer goods retailer called the Good Guys to give an appliance to one passenger on every flight between now and Nov 5. The hope being to convince customers that they can have their TV and beat it all at the same time.
Prizes range from a blender to a plasma screen though it is unclear from the T&Cs how to know which one is up from grabs in a particular flight.

Either way we have marketing and research evidence of this new battle front for the travel industry.

3 comments:

Tim3 said...

Tim, I've seen this idea bandied about a fair bit, and whilst I can comprehend it having an impact in the year that any one family choose to by a new plasma, why would it have an impact the year after? Are they buying one for each room in the house?

Also, the screens that cost $30K seven years ago are now available for a fraction of that cost, in some cases far less than a family holiday.

Sometimes I wonder how many different reasons we can come up with to explain peaks in demand.

Tim Hughes said...

But Tim...if an arm of the Australian Govt says it is true, then it must be right...right!

Seriously there is something behind a trend domestically in Australia that seeing travel costs falling with the Jetstar led price war but operators and destination services companies arguing that domestic travel is in decline. I agree that there are only so many home theatre sets you can buy but consumer money must be going somewhere

Anonymous said...

food....clothing.....DVD.....petrol.....medicine...health insurance.... all those little things that CPI keep telling us are below 3 %.