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MARKETING STRATEGY AND TOURISM PATRONAGE IN SOUTHWEST NIGERIA

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Topic Description

CHAPTER ONE

INTRODUCTION

  • Background to the Study

Nigeria’s revenue profile comprises of oil and gas and non-oil sectors. The oil and gas sector contributes over 70% to the total revenue of the Federation Account (Jones, Ihendinihu & Nwaiwu, 2015). Also, findings of previous scholars on the Nigerian economy reveal the dominant role of the petroleum industry in the development of the Nigerian economy (Amodu, 2014; Ibrahim, 2014; Ajibola, 2013; Attah, 2011). The global perception of Nigeria is a rich oil producing nation but with a growing poverty index (Yakub, 2008). Similarly, the Central Bank of Nigeria indicates that the oil and gas sector contributed an average of 77.5% from 1986 to 2012 while the non-oil sector contributed 22.5% during the same period. Thus, the mono-product reliance of the Nigerian economy poses future danger to the country’s economy and it is currently worsened by volatility in the international price of oil and observable short falls in production resulting from occasional social and political unrest (Jones, Ihendinihu & Nwaiwu,  2015).  These scholars assert that such circumstances put the nation’s earnings at risk and portend severe consequences on the economy.

Also, in the pre- independence era, the contribution of the agricultural sector topped the Gross Domestic Topic (GDP) and exceeded every other sector in the economy. In 1960, on the attainment of political independence, the trend was still the same. During 1964-1965, agriculture accounted for 55% of GDP and employed 70% of the adult workforce (Oyelaran and Adeya 2002; & Manyong, Ikpi, Olayemi, Yusuf, Omonona, Okoruwa, Idachaba 2005.). In 1970, agriculture exported crops like cocoa, groundnut, cotton, rubber, palm oil, palm kernel etc. accounted for an average of between 65.75% of Nigerian’s foreign earnings and provided the most important source of revenue for the federal as well as state governments through export product and sales taxes (Ekundare, 1973). After Independence the agricultural sector which was our source of GDP before independence has suffered for years. Nigeria is no longer a major exporter of cocoa, groundnut, rubber and palm produce, the cocoa production using mostly obsolete varieties and over aged trees is stagnant at around 150,000 tonnes annually. There have been similar decline in groundnut, palm oil and other major exports (Martins and Olarinde, 2014). This has resulted into corruption, unemployment, social unrest, violence and deprivation.

According to Akinlo (2012) the high revenues from oil presented net wealth which gave birth to opportunity for increased expenditure and investment. Furthermore, the high revenues complicated macroeconomic management and also made the economy highly oil dependent.  Sabiu and Reza (2014) explain that the downstream sector of the oil generates problem for the country over the years as it is the distributing arm that links the product to the consumer. This sector is characterized by incessant crises in supply of products due to frequent break down of Nigeria’s four refineries which gave rise to supply shortages, scarcity of products at retail outlets and many other vices in Nigeria such as black market, pipeline vandalism, product diversion and hoarding (Sabiu& Reza 2014). Also, Akinlo (2012) establishes that regulatory constraints and security risks have limited new investment in oil and gas, and Nigeria’s oil production contracted in 2012 and 2013. Gregory & Ajibola (2013) support Sabiu and Reza (2014) and declare that despite its strong fundamentals, oil-rich Nigeria has been identified by low standard of living. Economic diversification and strong growth have not translated into a significant decline in poverty levels – over 62% of Nigeria’s 170 million people live in extreme poverty (Nigeria 3zEconomic Profile 2015).

Furthermore, Gregory and Ajibola (2013) reveal that there is upward growth of youth unemployment which becomes a significant contributor to the rise in social unrest and crime such as the Niger Delta Militancy, Boko Haram and Jos Crisis. The International Monetary Fund, World Economic Data Base (2015) indicates spiral increase in unemployment rate in Nigeria over the years, e.g. in 2009 unemployment rate is 19.7% which is 32.21% increase to 2008, 2010 witnessed 21.1% unemployment rate and in 2011 there was 23.9% unemployment rate given a percentage change of 13.27%. The youth of the nation are the most impacted with youth unemployment rate of over 50%   (Gregory & Ajibola, 2013). There is a need to develop alternative source of revenue and employment to enable this country to come out of its present challenges. Iyiola (2014) stresses the fact that Nigeria economy has relied on oil as source of income for too long and advises that economy that relies solely on the pillar of one commodity will eventually run into problem. The fluctuation of price of oil in the international market necessitates Nigeria’s needs to explore other sectors of the economy to diversify its income base. Ayeni and Ebohon (2012) confirm that tourism industry has been identified to contribute to economic development of Nigeria. Adaora (2010) discovers that tourism industry contributes to socio economic and political development of many countries in the world, particularly, Nigeria. He declares that tourism is a very vital and popular global human activity that now becomes an economic booster. One fact that is quite glaring about tourism in Nigeria is that the sector has potentials to generate significant foreign exchange earnings, employment and investments towards economic development (Ogunberu 2011; Adaora, 2010).It has been established thatWorld travel and tourism is an important contributor to economic growth and development and the global growth in international tourist arrivals is greater than national income growth one out of every two years over the past 30 years ( Baker 2014).  Baker (2014) further established that the growth continues as international tourism sector account for one in every 12 jobs and 30% of the world’s services export (WTO, 2013).  Baker (2014) discovered  that receipt from international tourism in destinations around the world grew by 4% in 2012 reaching US $219 billion in receipts and record in receipts from international passenger transport brings total export generated by international tourism in 2012 to US $1.3 trillion (WTO, 2013).For many developing countries, tourism serves as the primary export industry. Jenkins (1990) critique tourism policies in developing countries and concluded that as a path to development tourism is an attractive option because people from richer nations a growing urge to visit faraway places.

“Kenya provide a good example of a developing country that has embraced tourism as a tool for socio-economic development because it has increasingly become a popular tourist destinations for visitors from Europe, North America and emerging tourist-generating regions particularly South-East Asia” (Akama Kieti, 2007). Akama and Kieti (2007) established that the country receives over 6% of the total international tourist arrivals to Africa and it has boosted Kenya’s economy steadily over the 40years.Francos and Don (1980) also found that despite the perception of some serious negative aspects Santa Marta residents consider the overall impact of tourism to be beneficial thereby encourage their government to offer more economic incentives and eliminate any restrictive measures in order to stimulate tourism in the area..  Mauritaus is another developing country that was once regarded as an extreme case of mono-crop economy, depending mainly on the export of sugar but now a reputed exporter of non-traditional good (textiles) and services (tourism) (Afxentiou & Serletis 2004). Community based tourism is also gaining prestige all over the world as an alternative to mass tourism and the interesting discovery is that tourism development can create jobs and generate wealth, (Tomas, Sandra & Victor 2011).

In fact, the world tourism organisation (WTO) factually concludes that Africa will attract about 77.3 million people in 2020 a substantial increment to 27.8 million in 2003.Worldwide tourism increased from 25 million arrivals in 1950 to 808 million in 2003 resulting in an average annual growth rate of 6.5%. As a continent, Africa has experienced an increase in tourist arrivals from 8.4 million to 10.6 Million and receipts growth from $2.3 Billion to $3.7 Billion (Ibrahim, 2014; TTCL, 2013). The Government of Nigeria has also given attraction to tourism. However, tourism industry in Nigeria has not been exploited to generate the expected contribution to the socio economic development of the country (Gregory & Ajibola 2013).

Consequently, one of the major reasons for this problem is the non­-application of marketing strategies especially in the areas of promotion. Iyiola and Akintunde, (2011) affirm that much work has not been done in the area of tourism marketing in Nigeria and that promotion strategies are particularly invaluable to tourism business in Nigeria due to its characteristics such as being intangible and immobile. The characteristics of tourism product which makes it impossible to taste or test the benefits expected before purchase and more so cannot be moved from its location while it is still intangible, meaning that customers cannot hold, touch, taste the product until it is purchased, makes  proper marketing strategy necessary to have an effective tourism demand and patronage. Therefore, this research has investigated the impact of marketing strategy for tourism in the Southwest Nigeria.Marketing strategy are very basic activities required to link the tourism product with potential tourism market either at international or national levels.

Despite the advocacy of tourism as an economic booster, the industry failed to grow as expected especially in Africa and sub-Saharan African countries due to lack of effective marketing strategy.  Though Sub-Saharan African countries and Nigeria in particular have quite a lot of attractive destinations.( Baker ,2014; Esu,2013; & Adaora,2010 );  there are some challenges such as poor infrastructure, image crisis, political instability, security issue and ineffective market positioning  Therefore tourism  destination should put into consideration marketing strategy that can properly position tourism product locally, nationally and internationally .  Marketing strategy is an organization’s effort directed at identification of market segment and target market, determination of uses of the 7ps of marketing mix that are product, price, place, promotion, people, process and physical (Divya, 2013). Rajan (2010) concisely refers to marketing strategy as organizations framework that is used to manage the marketing behavior of firms in the realms of 4ps (product, promotion, price and place).

This study directs its aim and objective on successful implementation of tourism programme through the use of the 7ps of marketing mix which are product, price, place, promotion, people, process and physical environment.  To achieve these objectives the study postulates hypothesis on the significant effect of each one of the 7ps of marketing mix on tourism patronage and the Southwest of Nigeria is used as case study.

 

1.2       Statement of the Problem

The tourism business has the potential to provide a very good substitution to the country’s oil revenue if it is properly managed. The beliefs that tourism has the potential to catalyze the economies of developing nations were based on research and empirical evidences and not just political inclination (Esu, 2013). This has been recognized by the Nigerian government which has established the Nigerian tourism development master plan in 2005. In spite of this, the Nigerian tourism sector is not growing as expected while the fast growth is recorded globally. (Ibrahim, 2014) The contribution of tourism revenue to Nigeria Gross Domestic Topics (GDP) is low compared to other countries. Nigeria GDP in 2014 was $568.51 billion compared to Australia $1453.77 billion, Brazil $2346.12 billion, China $10360.10 billion, France $2829.19 billion, India $2066.90 billion, Germany $3852.26 billion, U.K $2941.89 billion (Iyiola, 2014; Tunde, 2012 & WTTC,2012).

The value of GDP contributed by Agriculture, Construction, Manufacturing, Mining, and Public Administration to GDP of 2014 are clearly indicated while that from tourism is not. The poor performance of tourism in Nigeria is also due to the country’s poor international image (Iyiola, 2014). The current marketing approach is weak and the promotion of Nigeria as tourist destination lacks a strategic marketing approach (Iyiola & Akintunde, 2011). Government of   developing countries treat international tourists as a key imperative in tourism market because they stay around for longer period at a destination and use standard accommodation and transport thereby earning currency that contributes to host country’s Gross Domestic Topics (Clarke 2001). Further, it is found that tourism services and facilities in Nigeria tourism destination lack marketing strategy; the marketing mix elements are not framed to reflect its specific application (Pilot Study, 2015).This results in very low patronage of tourism destination in Nigeria and contributes to the low gross domestic product from tourism. This is evident from the World Bank indicator (2013) which finds that the international tourism expenditure in U.S dollars in Nigeria in the year 2012 is $52,601,313,000 which is quite low compared with China that is $102 billion, Germany $83.7 billion among other countries.

This study has examined if marketing strategy can significantly improve tourism patronage to boost the GDP in Nigeria. Nigeria offers a wide variety of tourist attractions. However, many of these attractions are still largely untapped and are even at their raw state due to lack of modern infrastructural facilities. Iyando and Haruna (2013) declared that one of the most important among these facilities is the transportation services and it is an impediment to tourism in Nigeria. Eze and Ezeani (2014), in line with these authors explains that transport industry provides the link between dwelling and destination regions of tourists, but the industry’s role as an agent responsible for making tourist reach these destinations has not been considered. Distribution or place management is one of the marketing strategies; hence, there is a need to confirm the relationship between distribution or place management and tourism patronage in Nigeria. Although Esu (2013) asserts that research and empirical evidences reveal that tourism has the potential to catalyze the economy of developing nations; previous researchers on tourism marketing in Nigeria are very small and most works on tourism in Nigeria are mere propositions and they have not been empirically tested (Iyiola 2014; Tunde, 2012 & WTTC, 2012 ). This study has empirically examined the impact of marketing strategy on tourism patronage in Nigeria using selected tourism destinations in the Southwest Nigeria as case study.

 

1.3    Objective of the Study

The major objective of this study is to determine if there is any relationship between marketing strategy and tourism patronage in the Southwest Nigeria. The specific objectives are to:

determine the effect of product planning and development on tourism patronage in the Southwest Nigeria;

investigate the relationship between price and tourism patronage in the Southwest Nigeria;

  1. discover the effect of promotion on tourism patronage in the Southwest Nigeria;
  2. assess the effect of distribution strategy on tourism patronage in the Southwest Nigeria;
  3. determine the relationship between people (or personnel) on tourism patronage in the Southwest Nigeria;
  4. evaluate the effect of process on tourism patronage in the SouthwestNigeria
  5. examine the relationship between physical evidence and tourism patronage inSouthwest Nigeria; and
  6. estimate the moderating effect of government policies on the relationship between marketing strategy and tourism patronage in the SouthwestNigeria.

 

1.4       Research Questions

The following are the research questions:

  1. What effect does product planning and development have on tourism patronage in the Southwest Nigeria?
  2. What is the relationship between pricing strategy and tourism patronage in theSouthwest Nigeria?
  3. What is the effect of promotion on tourism patronage in the Southwest Nigeria?
  4. What effect does distribution strategy have on tourism patronage in the Southwest Nigeria?
  5. What is the relationship between people (or personnel) and tourism patronage in the

Southwest Nigeria?

  1. How does process affect tourism patronage in the Southwest Nigeria?
  2. What is the relationship between physical evidence and tourism patronage in the Southwest Nigeria?
  3. What is the moderating effect of government policies on the relationship between marketing strategy and tourism patronage in the Southwest Nigeria?

 

1.5       Hypotheses

To achieve the objectives of this research the following hypotheses were formulated and tested at 0.05 significant levels.

H01:  There is no significant effect of product planning and development on tourism patronage in theSouthwest Nigeria

H02:  There is no significant relationship between price and tourism patronage in Southwest

Nigeria

H03:  There is no significant effect of promotion on tourism patronage in the Southwest Nigeria

H04:  There is no significant effect between distribution strategy and tourism patronage in

Southwest Nigeria.

H05:  There is no significant relationship between people (personnel) and tourism patronage in the SouthwestNigeria

H06:  There is no significant effect between Process and Tourism Patronage in the SouthwestNigeria

H07:        There is no significant relationship between

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