The structure and function of the tourism distribution channels between Japan and New Zealand

Abstract

This thesis explores the current structure of distribution channels between Japan and New Zealand studying the relationships between different channel members. This study adopts a cross analysis approach: channel members, geographical analysis, and sector analysis. It was found that since Japanese intermediaries established multiple products to reach multiple market segments, numerous distribution channels exist within a company, and many of those channels occur within different divisions of large integrated companies. Moreover, each sector providers in New Zealand has a different distribution channel structure to reach different market segments. In addition, this study also identified that the larger the scale of the New Zealand provider, the more complex the distribution channel becomes. Due to the price competitiveness of package tours, the Japanese tourism industry has tried to approach the market directly rather than using retailers. Even though Japanese intermediaries and New Zealand suppliers have tried to eliminate some channel layers to reduce distribution costs, it seems a very difficult goal to achieve. This is due to the value placed on strong personal relationships with current business partners, and the current structure of the distribution process. The industry still relies heavily on traditional distribution channel structures. The second part of analysis examines the perceptions and attitudes of channel members. Significant findings include that Japanese leisure travellers have become more price-conscious, and the market is shifting from group travel to FIT. At the same time, a large number of intermediaries are still feeling confident that Japanese leisure tourists will continue using the services of Japanese intermediaries due to language and cultural barriers, and the safety consciousness of Japanese travellers. Moreover, New Zealand suppliers and inbound operators (IBOs) perceive the Japanese travel industry is becoming price-oriented, and suppliers and IBOs are feeling more pressure to reduce their price to meet Japanese intermediaries' expectations and maintain good business relationships with them. Furthermore, a majority of channel members agree that there is a capacity issue and monopoly environment enjoyed by Air New Zealand. Moreover, most channel members consider these two issues are the major problems for potential development within the tourism industry in New Zealand. In addition, a large number of channel members have concerns about the insufficient infrastructure within New Zealand to cater for demand from a larger number of international tourists. The Internet is perceived as having a strong influence on the current structure of traditional distribution channels. The Internet is perceived as a threat as well as providing potential business opportunities to channel members. Numerous suppliers prefer to utilise the Internet to reach the market directly; however, a majority of them have concerns about the level of Internet usage, as they prefer not to disturb the current distribution channel and maintain good relationships with other channel members. At the same time, some Japanese wholesalers consider the Internet as an opportunity to reach the market directly rather than using retailers; however, a majority of wholesalers are aware that there are numerous issues to be resolved first, including security issues, payment issues, and the value of consultation. Studying the overall pattern of distribution channels between Japan and New Zealand, a significant imbalance in power relationships and dependency between channel members becomes obvious. Japanese intermediaries tend to hold greater power over New Zealand providers and IBOs. Most New Zealand providers and IBOs view their present level of dependency as undesirable and seek to reduce their reliance on the Japanese market by seeking other markets or reaching the market directly via the Internet. Though some suppliers and IBOs view this power relationship with other channel members negatively, most try hard to maintain good relationships and develop stronger bonds with frequent efforts at communication.