CHAPTER ONE

INTRODUCTION

1.1              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 Product (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 Products (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 Products (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?

6.               How does process affect tourism patronage in the Southwest Nigeria?

7.               What is the relationship between physical evidence and tourism patronage in the Southwest  Nigeria?

8.               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 physical evidence and tourism patronage in the SouthwestNigeria

H08: There is no significant moderating effect of government policies on the relationship between marketing strategy and tourism patronage in the SouthwestNigeria?

1.6       Rationale for the Hypotheses

H01:     There is no significant relationship between product planning and development and tourism patronage in the SouthwestNigeria.

This hypothesis is formulated on the assumption that product planning and development have significant effect on tourism patronage.  There are sufficient evidences that the product offered have a major effect on the decision-making process in today’s competitive market (Sanib, Aziz & Rahim 2013; Rezky, Huam, Amran, Thao and Inda 2012; Singh, 2012, Schiffman & Kanuk 2007).

 Mohammed, Wang and Sumayya (2012) attempt to present proper tourist product characteristics and concluded that the right product will generate market opportunities by the recipients of the tourists product.  In other studies, Ljiljana and Susan (2009) found that well innovative and coordinated tourism products are exceedingly important for tourism regions.   In their studies, Arjun (2014); Mustapha (2011); Brei, D’Avilla, Carmago, Engels (2011) and Kalamani (2005) show that one of the important product management is destinations’ features for international tourists such as its unique nature’s beauty with backwaters, mountains and beaches. However, these studies are being conducted in developed countries while developing countries have been poorly investigated. The studies on product planning and its development in developing countries focused more on other products and economies outside Nigeria (Bangare, Chalsea & Ghangala 2015; Farzad & Kamran 2012).

Few studies that exist in Nigeria examine the impact of environmental beautification and other factors on domestic patronage of tourists without looking at its marketing perspective, (Iyiola, 2014; Awaritefe 2003; Afolabi, 1993). Therefore, it will be necessary to contribute to studies on tourism patronage by confirming the significant relationship between product planning, development and tourism patronage in the South- West Nigeria.

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

Measurement of tourism patronage can be ascertained from price paid by tourists on services that he/she benefited in a tourism destination. Shameem and Gupta (2012) suggest that the pricing of services product does not affect the sales volumes and profitability alone but also influences the perceived quality in the minds of the consumers.  Kotler, Armstrong, Saunders and Wong (1999) consider price to be the most significant factor that affects consumer’s choice.  Mohammed and Sumayya (2012) measure price and tourists satisfaction using cost of the tourist as a sensitive element toward satisfaction and intention to revisit while Rezky, Huam, Amran, Thoo and Inda (2012) use levels of purchase intention and repeat buying and conclude that price does not determine tourist motivation to visit a tourism destination.  Shameem and Gupta (2012) posit that there is a need for a sound marketing strategy and competitive pricing.  There is a need to investigate further the relationship between price and tourism patronage in Nigeria context.

H03:There is no significant relationship between distribution strategy and tourism in the Southwest Nigeria.

Some studies establish relationship between distribution management and firm’s revenue (Kamau, Waweru, Lewa, & Misiko 2015; Singh, 2012; Moghaddam & Forough 2012). Iyiola (2014) asserts that Nigeria’s efforts to diversify and encourage greater foreign investment such as international tourism will come to deaf ears if transportation and other infrastructures are not upgraded. 

Moghadam and Forough (2012); Eusebio,Andreu and Belbeze, (2007) in their study about influence of marketing strategy element on market share of firms conclude that in recent days active and advanced exporters have more control on distribution activities as well as the time of delivery of the product and distribution channels. Iyiola (2014) researches into how tourism can be supported in Nigeria via integrated marketing and opined that environmental attributes of the destinations which include accessibility are the central concern.  This is supported by (Awaritefe, 2003) who concludes that any policy strategy to enhance tourism destination must put place attributes into consideration. In support of these studies, Moghadam and Forough (2012) assert that in a competitive market environment, similarity of the firm in services can be differentiated with a good place strategy. Previous studies by Ambler (2000) and Ogunmokun (2004) find that distribution strategy has positive relationship on market share while Rodriguez (2013) later points out that distribution of tourism products and services is more associated with where information about the products and services are distributed such as trade shows, web pages, resellers, direct mail, tourist destinations. These scholars have common discovery that place is a significant strategy on patronage of goods and services but none has investigated its effect on tourism patronage in the Southwest Nigeria.  This hypothesis therefore tests the significant effect of distribution strategy on tourism patronage in the SouthwestNigeria.

H04:     There is no significant effect of promotion on tourism patronage in the Southwest Nigeria.

This hypothesis is being postulated on the assumption that promotional actions in services marketing environment is very important. Many studies have researched into promotion and its relationship with customer patronage and profit. (Kamau, Waweru, Lewa, Misiko 2015; Margraf 2015;Mayala and Prasad (2012),Pomering, Johnson & Noble 2010; Rodriguez 2013). Leonidou, Katsikeas and Samiee (2002) study marketing strategy: a meta-analysis on previous studies and explained promotion mix configuration to include advertising, sales promotion, individual selling, trade fairs, individual visit and promotion adaptation. The study further explains the importance of sales promotion including coupons, samples, premiums in low income economics and high competition. 

Fizebakhsh (2002) study on investigation of effective factors on increase export of Iran Petrol Chemical products founds that attendance in fair, send catalog, advertising on the internet, journals and TV channels, direct marketing would increase patronage on export performance.  In contrasts Eusobio, Adreu and Belbeze (2007) disagree and establish that more investment in promotional activity did not show significant effect on market patronage and market share. Thus drawing from this assertion there is a rationale to test this hypothesis and ascertain the effect of promotion on tourism patronage in the SouthwestNigeria.

H05:     There is no significant relationship between people and tourism patronage in the SouthwestNigeria.

This hypothesis is based on the innovative theory and market orientation theory.  Given the inseparable nature of tourism products, people are directly involved in the buying and selling namely the customers, firms personnel in the service environment (Zeithaml, Bitner & Gremler, 2009). Mohammad, Aimin and Sumayya (2012) investigate the impact of marketing mix elements on tourists’ satisfaction on East Lake of China and found that people and tourists’ satisfaction are positively related to each other.

Redriguez (2013) and Reid and Bojanic (2010) conclude that appearance, skills and attitude of all the people involved in the tourists experience impacts on the overall satisfaction of the customers. Shameem and Gupta (2012) state that people plays significant roles in behavior quality control and personal selling in tourism marketing. Studies put forth rest on common conclusion that tourism is labour intensive and tourism experience and satisfaction depends on the interaction with local community and well trained personnel of a tourism location.  In contrast YuWang (2006) examine training and development practices of a Chinese service company using multiple case studies and establishes that personnel training and development may not necessarily lead to superior training effects on personnel. Therefore, it will be interesting to ascertain the significant effect of people on tourism patronage in the Southwest Nigeria.

H06:     There is no significant relationship between process and tourism patronage in the Southwest Nigeria.

Process is particularly useful in services marketing. Nusairat and Addmour (2014) study the marketing mix factors that influence treatment service in the decision of Arab patients for choosing Jordan as the best place to receive treatment and find stronger evidence that process has great impact on service customer satisfaction. Baldauf, Cravens, Dramantopoulous and Zeugner-Roth (2009) specify that market mix strongly and positively influences brand profitability performance.  Hirankitti, Mechinda and Manying (2009); Cirikovic (2014); Devashish (2011) concur that there is a direct relationship between process, efficient services and customer patronage.  Most of the studies used the marketing mix with customer satisfaction in the western world and none of them examined Nigerian tourism sector.  Moreover, the literatures reviewed lack research in process strategy in tourism patronage in the Southwest Nigeria. Therefore, this hypothesis tests for effect of process on tourism patronageinSouthwest Nigeria.

H07:     There is no significant relationship between physical evidence and tourism patronage in the Southwest Nigeria.

Physical environment are important factors to consider when talking about services, Shameem and Gupta (2014); Musa and Ndawayo (2011); Muala and Qurneh (2012) explain that generally the tourism product is intangible therefore the place, the décor and everything in the tourism office can be related to customers experience. Kannan & Srinivasan (2009) study tourism marketing from a service marketing perspective and conclude that in tourism the physical evidence basically depends on travel experience, stay and comfort.  Shameem and Gupta (2012) noted that evidence is a key element of success for service provider.

Similarly, Bitner (1990); Mittal and Baker (1998) opine that the visible surroundings can affect the impressions perceived by the customers about service quality. Rathmall (1974) posits that services normally cannot be displayed; hence firms must create a suitable environment to demonstrate the facts to the customers. These studies were conducted in developed economy while developing economy has not been properly researched. The impact of physical evidence on Nigeria tourism has not been properly investigated. (Iyiola, 2014). There is rationale for investigating the relationship between tourism patronage and physical evidence in theSouthwest Nigeria.

H08:     There is no significant moderating effect of government policies on the relationship

between marketing strategy and tourism patronage in Southwest Nigeria?

Most studies on government policies and tourism have concluded that there is significant relationship between government policies and tourism development at national and international levels. Karim (2014) studies policy analysis of tourism development in Bangladesh and compared it with Bhutanese policy and found that government policies have brought significant growth in the tourism sector.  Hjalagar (2010) suggests that there is a need to study the interaction of tourism policies around the world and the role of various organisations.  Tourism policy is an important area of study because of its practical and theoretical importance (Hjalagar 2010).

As a corollary, Attah (2011); Hall (1999); Ahmed & Krohn (1990) and Elliot (1997) claim that it is of practical significance as international travel requires government cooperation in bilateral airline negotiations, decisions about provision of facilities and services, interaction with other sectors and community, use of publicly owned resources such as national park, the issuing of tourist visas and in the funding of marketing of a destination.  Okoli, (2011) and Elliot (1997) conclude that it is only government that has power to provide the political stability, security, legal and financial framework which tourism requires.  Therefore, it will be necessary to contribute to study on tourism marketing by confirming the relationship between government policies and tourism patronage in Nigeria using theSouthwest Nigeria as case study.

1.7       Scope of the Study

This study examined the impact of marketing mix strategy on tourism inSouthwest Nigeria. It also examined how marketing strategy is applied to boost tourism patronage in the year 2010-2015. The South-West Nigeria is made up of six states namely; Ogun, Ondo, Oyo, Osun, Ekiti and Lagos State with 21 tourism destinations (Radio Nigeria, Ibadan, ICT Unit 2014, South West Region Guide).The study covered all the six tourism destinations in theSouthwestNigeria.

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