University College Birmingham

Assessment

"Madeira Live Project"

Final Project Report

Team Members: Thomas Punzel, Elisabeth Stockmann

Programme: MA Tourism Business Administration

Year: 2007/2008

Module Title: Live Project

Hand in Date: Friday, 29th May 2008

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Table of Contents

Page

1. Project Brief

4

2. Executive Summary of Project Report

5

3. Madeira Island

6

4. The Product

8

4.1 The Project Aim

8

4.2 Strategic Objectives

8

4.3 Product Risk Assessment

10

5. Internal Analysis

14

5.1 Visitor demand Characteristic

14

5.2 Cruise Operators Demand

16

5.3 Economic Impact of Tourism

16

5.4 Tourism Inventory

16

5.5 Attractions Inventory

19

5.6 Images Held

23

5.7 Organisation of Tourism

25

5.8 Marketing & Promotion

25

5.9 Sustainability Issues

28

5.10 Community Issues

30

5.11 Summary of Internal Audit with key Strengths and Weaknesses

31

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Page

6. External audit analysis

32

6.1 Stakeholder Analysis

32

6.2 External Strategic Analysis

35

6.2.1 Remote Environment Analysis

35

6.2.2 Operating Environment Analysis

37

6.3 Tourism Product Portfolio Analysis

41

6.4 Cruise Trends

42

6.5 Summary of External Audit with key Opportunities and Threats

43

7. Strategies to develop the tourism Product

44

7.1 The TOWS Matrix

44

7.2 Choice of Strategies

46

7.3 Implementation of Strategies

49

7.3.1 Marketing Mix

50

7.3.2 Product

50

7.3.3 Price

53

7.3.4 Promotion

54

7.3.5 Place

56

7.3.6 People

57

7.3.7 Process

58

7.3.8 Physical Evidence

59

7.3.9 Partnerships

59

8. Monitoring Strategy Performance

61

9. Conclusion

62

10. References

73

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1. Project Brief

Groups of 4 were assigned in order to analyse the existing range of the tourism product

portfolio on Madeira. The task was to develop a new product for the existing market

segment of cruise passengers on Madeira, which is consistent with the resources and the

tourism aims on the island. The project report consists of internal and external analysis,

the product idea and a suitable marketing mix.

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2. Executive Summary of Project Report

The product FUNCHALoCITY is a touring-information-voucher guide that includes

maps, routes, vouchers and discounts, insider information and a hotel voucher for the

cruise passenger segment. Derived from the internal analysis one of the islands′

strengths is its range of attractions gastronomy and accommodation. Furthermore, the

climate and the geography favour the tourism activity, which result in a high rate of

local people who own, or work in local businesses. This is a favourable basis to build

the product on. However, the island has weaknesses that include high attraction prices

that turn into an opportunity for the product. Another weakness is Madeira′s global

image as being an old people′s destination that again can be used by the product to help

the destination attract more families and younger visitors. Last but not least, the

cooperation of local tourism related businesses lack and yet another possibility for

FUNCHALoCITY is to improve collaboration in Funchal, whose infrastructure is well-

developed anyway. Threats might only be of an environmental nature also deriving

from the huge centralisation of population in Funchal.

The combination of product development and focus strategies is used for launch, short

and medium term stages. The product development strategy is the first step to introduce

a product into an existing market. Furthermore, the focus strategy is quite important to

achieve efficient production, distribution and marketing through specialisation. In order

to implement these strategies, the promotional mix mainly consists of promotion,

personal selling on the cruise ships and the establishment of partnerships in Funchal.

The first step is to build up the network of local businesses in Funchal and secondly it is

important to convince the cruise line companies to promote the product on their ships.

Furthermore, the product awareness will be raised using promotional elements like

news stories, tourism brochures and leaflets.

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3. Madeira Island an Introduction

"And legend of this love my dear still murmurs today

She - the famous Island

He - the sea which surrounds and kisses her."

(Madeira Story Centre, wall painting)

The Autonomous Region of Madeira is located in the northern Atlantic Ocean,

southwest of Portugal. The Madeira Islands are made up of the islands of Madeira,

Porto Santo, Desertas and Selvagens. Madeira is the largest island of the group with

surface area 789 km 2, the population is 260,000 people, and most of whom are catholic.

The largest city in Madeira is the capital city Funchal with about 130.000 inhabitants.

Funchal was made a city in 1508 and it is now the main centre for trade, tourism and

culture in the whole archipelago. Madeira′s climate is subtropical, warm in the summer

(22°C -26°C), and mild in the winter (17°C-22°C) (Madeira Tourist, 2008).

Madeira is known, originally from the Romans as the "Purple Island" and was

rediscovered by Joao Goncalves Zarco and Tristao Vaz Teixeira, Who discovered Porto

Santo first in 1418, and one year later in 1419 Madeira (Madeira Archipelago, 2008).

Nowadays in Madeira the tourism industry was expanded to become the islands′ prime

source of revenue and contributes 20% to the regions GDP. The island is based on

tourism, and on touristic products, like flowers, tropical fruits and the Madeira wine.

According to the Ministry of Economy and Innovation, one of the main visions is that

Madeira is one of the fastest-growing destinations in Europe, driven by a value proposal

based on country′s distinctive and innovative characteristics. Another reason is that

Madeira is mainly based on tourism, and the growing importance in the economy,

constituting one of the key drivers of social, economic and environmental development

at regional and national level (Ministry of Economy & Innovation, 2007).

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It has already been mentioned that Madeira is a fast growing destination in tourism, the

local aims and objectives have changed in the last few years. The attractiveness for the

island is increasing; the location is premium for the cruise market. The access of

availability- ferry, cruise, and airplane- is increasing. Direct air connections mean that

there are often more headways, and more points of departure from other countries. The

local entertainment, cafes, restaurants, hotels and spas are also increasing. The Madeira

Tourism Board pointed out that in the next few years they would like to have more spas

and wellness facilities (DRTM, 16/04/2008). The interest is improving conveniences,

like touring around the island, relaxing on the beach in the sun, nature tourism - long

walks along the Levadas-, and not least nautical tourism ­ the more frequent arrival of

cruise ships. And furthermore the developments of the other islands like Porto Santo,

which has a beautiful sunny, sandy beach. The local objectives are supporting the aims.

The island has a wide diversity of touristic products for example the walks in the

Levadas, the experience of the spas, the cable car, and the Madeira Story centre. The

products are remit the health-wellness, the residential tourism ­ new hotels, spas, rebuilt

the old hotels ­ and the international overnight and tourist arrivals are increasing

(DRTM, 16/04/2008).

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4. The Product

Currently there are quite a few products available for tourists in Madeira available, like

round trips, museums, and the cable car and so on. However, products especially for

cruise tourists are very rare or not available.

On this account, there is a need for products for this special target group, which have

just a small time-frame of approximately 7-9 hours.

4.1 The project aim

The aim of the project will be the development of touring-information-voucher guide,

called "FUNCHALoCITY".

This is a small touring guide who includes tours and vouchers for different target

groups. Like families, senior citizen, sport fascinated people and nature lovers.

4.2 Strategic objectives

To reach the project aim, it is necessary to define different strategic objectives.

As mentioned, there is a lack of products for cruise tourists.

Cruise tourists have to be informed on the website of the tourism board about the

options they have, when they cruising to Madeira.

That will lead to the first objective of this project, an improvement of the website of the

Direcção Regional do Turismo da Madeira (DRTM).

For sure, the websites provides a lot of information. However, there must be a section

just for off boarding cruise tourists. With a listing of all possible activities cruise tourists

have in different time-frames, a list of restaurants, bars, cafes ordered by price,

nationality and distance from the port. Maybe also some touring tips, an interactive city

map with stereoscopic pictures of the main attractions.

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This sub-page of the website has to offer quality products and no user-generated-

content, because it should be just an information page.

The second strategic objective is the advance information on the cruise ships. One day

before arriving in Madeira, a guest speaker has to introduce the passengers to their next

destination. At different times, that speaker has to present a video, PowerPoint etc. to

attract their passengers′ attention to Madeira.

Furthermore brochures, information material and maps of Madeira must be available on

the cruise ships, so that it will be possible for the passengers to familiarise themselves

with Madeira before they arrive.

The third objective, which is essential for the following product, is the development of a

network of small local businesses, which offer local and unique products. This network

should be an initiative with the name "Business initiative of independent local

tradesmen".

This network should include primarily locals, for example tradesmen, museums, hotels,

gastronomy and tourism product providers.

The goal of this network should be a closer linkage between these interest groups, to

develop future projects concerning tourism in Madeira and to attract customers, for

example street festivals and a further development of the following product.

Furthermore by founding this initiative, a platform for sharing information, critique and

opinions will be provided.

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