day 2 marketing in practice

8/13/2019 Day 2 Marketing in Practice

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MARKETING IN PRACTICE


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Marketing in Practice: LearningOutcomes

At the end of this module, you will

Have a good understanding of themain concepts addressed within the

module. Be able to apply these concepts in

the hotel context.

Be aware of both the strengths andlimitations of different approaches tomarketing in practice in the hotelindustry.


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TODAYS LEARNING

MARKETING INTRODUCTION,DEFINITIONS AND EXAMPLES

MARKETING RESEARCH BASICS

MARKET SEGMENTATION/TARGETINGAND POSITIONING

UNDERSTANDING YOUR MARKET- SWOTANALYSIS, PEST ANALYSIS

TRENDS AND UNCERTAINTIES


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MARKETING INTRODUCTION,DEFINITIONS AND EXAMPLES


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A social definition of marketing

Aprocess in all societies by which

individuals and groups obtain whatthey need and want throughcreating, offering and freelyexchanging products and services of

value with others.


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A management definition

It is the process of planning andexecuting the conception, pricing,

promotion and distribution of ideas,goods and services to createexchanges that satisfy individual andorganizational goals.


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EXERCISE: Marketing Hotels

Look at both the social and

management definitions ofmarketing.

From your experience, which is morelike what you do to market your hotelor department?


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Marketing Concept

The marketing conceptis the

philosophy that hotel firms shouldanalyze the needs of their customersand then make decisions to satisfythose needs, better than thecompetition.


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Marketing

Is applicable to hotel and restaurantbusinesses whether they are big andsmall.

Involves the planning andimplementation of most everything anhotel does to facilitate an exchange

between itself and its guests.


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Marketing

Is a continuous and dynamic strategicdecision-making process.

Is a strategic process that matches thehotels strengths and resources to

potential opportunities that existwithin the marketing environment.


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Marketing as a Business Philosophy

Four orientations or business philosophies:

1. Product Orientationa focus on makingproducts widely available, affordable,and require little selling effort

Investment in hotel inventory without

reference to demand


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Marketing as a Business Philosophy 2

2.Sales Orientation- promotes thebusiness philosophy of selling what

we make Filling hotel rooms at whatever price

we can get judging performance onoccupancy rates rather than revenue

or REVPAR Focus on volume rather than quality


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Marketing as a Business Philosophy 3

3. Market Orientationinvolves

Customer focus

Coordinated marketing effort

Long-term success Knowing your guests and understanding

their needs

Taking a long-term view of occupancy,

revenue and profit Using effective guest and yield

management systems


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Marketingas a Business Philosophy 4

4. Relationship Marketing Orientation-creates and sustain mutually satisfyinglong-term relationships with not only itsguests but with other key stakeholderssuch as employees, suppliers, distributors,retailers and the community

Focus on repeat customers and customerloyalty

Retaining price and brand integrityUse of internal marketing with staff

Using socially responsible businesspractices


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Are marketing and sales the samething?

ABSOLUTELY NOT!!

Marketing is selling + + + - a lot more!!

If you are good at sales you will not necessarilybe good at marketing

Marketing does involve sales but also includesresearch, product and service planning,promotion, distribution and pricing

Famous guru Ted Levitt of Harvard says thatselling focuses on the needs of the seller(fillingrooms, meeting targets) while marketingfocuses on the needs of the buyer(satisfaction)


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Marketing and Selling

SALES MARKETING

1. Emphasis is on theneeds of the hotel

1. Emphasis is on theneeds of the guest

2. The company builds thehotel and then decideshow best to sell rooms tothe customer

2. The company finds outwhat the guest wants andthen works out how tomeet those needs

3. Management is roomsales volume focused 3. Management is profitoriented

4. Planning is short-termand focused on todaysproducts and markets

4. Planning is long-termand focuses on newproducts, tomorrowsmarkets and future growth


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EXERCISE: What market orientation?

A resort within the Beautiful HotelsPortfolio is faced with the aftermath of aterrorist outrage close to the property.The Executive Team meet and come upwith a number of responses to thecrisis.

What would you say each of themrepresent in terms of the 4 marketingphilosophies?


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1. Cut prices by 50% in order to retainoccupancy and market share

2. Offer all repeat visitors an automatic up-

grade and complimentary champagnedinner for two

3. Invest in the training of all staff with theWere all marketeers programme

4. Cut staff and services drastically toreduce costs in the short-term

5. Sign up with a European low-cost carrier tooffer value-for-money all inclusive packages


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Do normal marketing rules applyto hotels?

Argument that services, includinghotels, need a different approach tomarketing

Most marketing theory and ideas comefrom the marketing of products, thingswe can hold in our hands and buy inshops

We can clearly see that most hotels

(maybe not bottom of the range budgetproperties) are a lot more than the sumof their physical assets beds, TVs,showers, restaurant tables etc.


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Difference between physicalgoods and services

Physical goods ServicesTangible Intangible

Homogeneous Heterogeneous

Production and distribution

are separate fromconsumption

Production, distribution and

consumption aresimultaneous processes

A thing An activity or process

Core value processed infactory

Core value produced in thebuyer-seller interaction

Customers do not participatein the production process

Customers participate inproduction

Can be kept in stock Cannot be kept in stock orinventoried

Transfer of ownership No transfer of ownership


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Characteristics of Services

Intangibility

Inseparability

Perishability

Variability


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EXERCISE: Hotel marketing inpractice

In groups of 3 or 4, select THREE of the

hotel service characteristics andidentify some of the their

consequences for the marketing ofa) a beach resort hotel

b) an airport hotel


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Hotel Service Characteristics

Hotel services cannot be inventoried

Hotel services are time dependent

Hotel services are place dependent

Consumers are always involved in theproduction process

Hotel services cannot be qualitycontrolled at the factory gate

There is a direct human role in hotelservice mediation


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MARKETING RESEARCH BASICS


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What is Market Research?

Simply a matter of finding out as muchas you can before committing yourselfto an irretrievable step

When you do not have answers throughyour own analysis of the environment

within which your hotel operates


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What to find out?

What does the customer need?

Who is the target audience and howmuch can you find out about them?

What is the competition? Are there any gaps in the market?

Would your hotel and its services beable to fill that gap?

Would your hotel and its services beacceptable in the market?


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Market Research and the HotelManager

You dont really need to know HOW toundertake market research

BUT

It is important to understand themethods because

You may be responsible forcommissioning market research

You need to know what you are buying You do need to read market research

reports and interpret them and theirlimitations!


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The Components of MarketResearch


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Secondary Research


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EXERCISE: What do I know aboutmy hotel?

List all the formal INTERNAL sources ofinformation you have available to you

about your hotel or your company

Share the lists with your neighbour andconsider why your lists are

a) very similar, or

b) have some clear differences


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Internal Sources

Company accounts

Internal reports and analysis

Stock analysis

Daily performance data (financial,occupancy, REVPAR) by market segment

Guest loyalty cards

Repeat visitation data

Guest spending data

Can you think of other sources?


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External Sources

Government statistics

Statistics from international agencies

- UNWTO Hotel trade publications

Commercial data and reports(generally expensive)

Other hotel firms research Research documents publications,

journals, etc.


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Sampling Methods


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Sampling Methods

Random Samplesequal chance of

anyone being picked

May select those not in the targetgroup indiscriminate

Sample sizes may need to be largeto be representative

Can be very expensive


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Sampling Methods 2

Stratified or Segment Random Sampling

Samples on the basis of arepresentative strata or segment

Still random but more focussed

May give more relevant information

May be more cost effective


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Sampling Methods 3

Quota Sampling

Again by segment Not randomly selected

Specific number on each segment areinterviewed, etc.

May not be fully representative Cheaper method


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Sampling Methods 4

Cluster Sampling Primarily based on geographical areas

or clusters that can be seen as being

representative of the wholepopulation Multi-Stage Sampling Sample selected from multi-stage

sub-groups Snowball Sampling Samples developed from contacts

of existing customers word ofmouth type approach!


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Primary Research


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Primary Research

First hand information

Expensive to collect, analyse and evaluateespecially in the international marketswithin which many hotels operate use oftourist board studies rather than hotel-specific research

Can be highly focussed and relevant

Care needs to be taken with the approachand methodology to ensure accuracy

Types of question closed limitedinformation gained; open usefulinformation but difficult to analyse


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Primary Research 2

Quantitative and QualitativeInformation

Quantitativebased on numbers (56%of British holiday makers prefer all-inclusive vacations) but does not alwaystell you why, when, how

Qualitativemore detail can tell youwhy, when and how!


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Purpose


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Advantages of Market Research

Helps focus attention on objectives

Aids forecasting, planning andstrategic development

May help to reduce risk of newproduct development

Communicates image, vision, etc.

May identify new training needs

(heath food trends, languages)

Globalisation makes marketinformation valuable


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Disadvantages of Market Research

Information only as good as themethodology used

Can be inaccurate or unreliable

Results may not be what the businesswants to hear!

May stifle creativity, initiative and gut

feeling Always a problem that we may never

know enough to be sure!


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MARKET SEGMENTATION,TARGETING AND POSITIONING
http://www.flickr.com/photos/teenytinyturkey/359586244/


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STP a three stage process

Segmentingdividing up the market intodifferent groups

Targetingselecting a segment to target

Positioning developing a marketing

strategy which positions the product inrelation to rivals in order to appeal tomarket segments


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What is Market Segmentation?

The breaking down or building up of

potential buyers into groups called

Market Segments
http://www.flickr.com/photos/teenytinyturkey/359586210/


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EXERCISE: Segmenting yourmarket

Thinking about the market that usesyour hotel is segmented

How many major segments can youthink of?

What criteriadid you use to segmentthem in your mind?

Are there other criteria that you couldhave used


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Segmenting your Market

Wide variety of criteria that you couldhave used:

Age

Gender

Nationality (probably the most commonin hotels)

Purpose of visit (business, leisure andleisure interests)


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Benefits of Market Segmentation

1. Identifies opportunities for newproduct development

2. Helps design marketing programmesmost effective for reachinghomogenous groups of buyers

3. Improves allocation of marketingresources


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Market Segmentation Variables

Market

Segmentation

Variables

GeographicalPsychographic

Demographic Behavioural


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Fundamental Buyer Related Questions

Who are they?

What do they want to buy?

How do they want to buy?

When do they want to buy?

Where do they want to buy?

Why do they want to buy?


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Geographic

Subdividing markets into segmentsbased on location, the regions,countries, cities and towns wherepeople live.

The reason for this is simply thatpeople from the same location havealmost the same desire for product andits usage.

Geographic characteristics are alsomeasurable and accessible.


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Geographic Segmentation

Region:by continent, country, state, oreven neighbourhood

Size of metropolitan area:segmented

according to size of population Population density:often classified as

urban, suburban, or rural

Climate:according to weather patterns

common to certain geographic regions


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Demographic

The demographic are basically identifiablecharacteristics of individual's becausepeople with different backgroundgenerally have different purchase

requirements. Demographics are the most common basis

for segmenting consumer markets.

They are frequently used because they areoften strongly related to demand andrelatively easy to measure.

The demographic may be viewed single orcombination.


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Demographic Segmentation

Age

Gender

Family size

Family lifecycle

Generation:

baby-boomers,

generation X etc

Income

Occupation

Education

Ethnicity

Nationality

Religion

Social class


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Psychographic Segmentation

Groups customers according to theirlifestyle

Activities Interests

Opinions

Attitudes

Values


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Behavioural Segmentation

Is based on actual customer behaviortoward products

Benefits sought Usage rate

Brand loyalty

User status: potential, first-time,

regular, etc. Readiness to buy

Occasions: holidays and events thatstimulate purchases


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Each Market Segment should be

Measurable

Differentiable

Accessible

Substantial


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Criteria for Segmentation

Relatively homogenous group

Distinctive and identifiable

Accessible capable of being reached

Actionable

Measurable

Sufficiently large to be profitable


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Market Targeting

The process of evaluating each marketsegments attractiveness and selectingone or more segments to enter.

Develop measures of segmentattractiveness.

Identify which and how manysegments should be targeted.


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Why engage in segmentation?

To develop different strategies fordifferent parts of the market

To tailor marketing mix to meet the needsof distinct groups

To increase sales and profits by servingparticular segments

To identify marketing opportunities

To dominate niche segments

To reflect differences in customer tastes To prioritise on those segments most

likely to provide a higher return


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Target Market StrategySpecifying segments to pursue

Differentiated Marketing

The organizationpursues several

different market

segments

simultaneously e.g.

Ritz Carlton

Organization

Market


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Concentrated Marketing

The organization focuses

on a single marketsegment

Organization

Market



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Undifferentiated

Marketing

The organization ignoresegments and treat all

groups the same

Organization

Market



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Benefits of targeting

Focus resources on the most profitablesegments

Provides a focus for analysing competitors

Enables the organisation find a strategicfit between its marketing strategy and itslongterm objectives

Provides better understanding of a limitedmarket

Improved communication between sellerand buyer

Enables the business to focus attention on

segments it understands


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Market Positioning

The development of an offer withineach segment that is most likely toappeal to a targeted group

Arranging for a product to occupy aclear, distinctive and desirable placerelative to competing products in themind of target consumers

A products position is the place theproduct occupies relative tocompetitors in consumers minds


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The process of positioning

Understand consumer perceptions

Positioning products in the minds of

consumers Develop positioning for each market

segment

Design appropriate mix tocommunicate positioning

To remain competitive a business


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To remain competitive a businessmust

Separatethe market into appropriatesegments with a focus on those likely

to deliver the best returns Targetappropriate segments

Positionthe product in the minds ofpotential customers

Be prepared to repositionthe product

UNDERSTANDING YOUR MARKET


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UNDERSTANDING YOUR MARKET-SWOT ANALYSIS, PEST ANALYSIS


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SWOT Analysis

SWOT analysis is a tool for auditing anorganization and its environment

It is the first stage of planning andhelps marketers to focus on key issues

Is a simple framework for generatingstrategic alternatives from a situationanalysis


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It concentrates on the issues thatpotentially have the most impact

Is useful when a very limited amountof time is available to address acomplex strategic situation, as is oftenthe case in the hotel industry

A word of caution, SWOT analysis canbe very subjective


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SWOT Analysis

Looking at your hotel in terms of its

Strengths (internal).to build on Weaknesses (internal).to cover

Opportunities (external).to capture

Threats (external).to defend against


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SWOT Analysis

Opportunities

Strengths

Threats

WeaknessesInternal

(controllable)

External

(uncontrollable)

Source


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SWOT Analysis Example

Opportunities

A developing marketsuch as Internet

StrengthsLocation

Threats

A new competitorin your home market

WeaknessesLack of marketing

experience

Internal

(controllable)

External

(uncontrollable)

Source


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Internal Analysis

Company culture

Company image

Organizational

structureKey staff

Skills profile of staff

Languages profile of

staff

Access to natural

resources

Position on the

experience curve

Operational efficiency

Operational capacityBrand awareness

Market share

Financial resources

Exclusive contracts


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External Analysis

Customers

Competitors

Market trends

Suppliers

Travel intermediaries

(travel agents, tour

operators)Partners

Natural

Social changes

New technology

Economic

environment

Political and

regulatoryenvironment

Simple rules for successful SWOT


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Simple rules for successful SWOT

analysis

Be realistic about the strengths andweaknesses of your organization whenconducting SWOT analysis

SWOT analysis should distinguish between

where your organization is today, and whereit could be in the future

SWOT should always be specific. Avoid greyareas

Always apply SWOT in relation to your

competition i.e. better than or worse thanyour competition

Keep your SWOT short and simple. Avoidcomplexity and over analysis


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Once key issues have been identified

with your SWOT analysis, they feed

into marketing objectives.SWOT can be used in conjunction withother tools for audit and analysis, suchas PESTanalysis


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PEST Analysis

Organizations operates in micro andmacro environment which arechanging time to time.

Formulation of right strategies alwaysneeds scanning of internal andexternal environment to determine thelevel of impact of each factor on

organization business. PEST is the best technique for scanning

of macro level environment.


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Political/Legal

Monopolies legislation

Environmental protection laws

Taxation policy

Employment laws

Government policy

Legislation Others?


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Economic Factors

All businesses are affected by national and

global economic factors.

Inflation

Employment

Disposable income

Business cycles Energy availability and cost

Others?


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Example

The global credit crunch originating in theUSA contributed towards the credit crunchin the UK in 2007/08.

An economy undergoing recession willhave high unemployment, low spendingpower and low stakeholder confidence.

A booming or growing economy will

have low unemployment, high spendingpower and high stakeholder confidence.


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Sociocultural Factors

These forces shape who we are as people,the way we behave and ultimately whatwe purchase.

Demographics Distribution of income

Social mobility

Lifestyle changes

Consumerism

Levels of education

Others?


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Example

Within the UK peoples attitudes are changing

towards their diet and health.

As a result the UK is seeing an increase in the

number of people joining fitness clubs and a

massive growth for the demand of organic

food. Products such as Wii Fit attempt to deal

with societys concern, about childrens lack

of exercise.

Organizations must be able to offer products andservices that aim to complement and benefit peopleslifestyle and behaviour.


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Technological

Technology has created a society which

expects instant results.

New discoveries and innovations Speed of technology transfer

Rates of obsolescence

Internet

Information technology Others?


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PEST analysis is particularly important

within a hotel industry that is very

vulnerable to external influences on itsoperating and marketingenvironments.


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TRENDS AND UNCERTAINTIES


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Changing Customer Profile

Changing demographics in major sourcemarkets (Europe is getting older!)

Shifting consumption patterns (shorterand more?)

Intensifying competition (destinations,hotel companies)

Growing segmentation Dwindling differentiation (technology

equalisation across brands)


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Changing Customer Profile

Diminishing brand loyalty (price,location driving forces)

Increasing value orientation Escalating concern for the environment

Continuing consolidation between majorcompanies

Increasing influence of the Internet oninformation and distribution

Making sense of the future: an


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Making sense of the future: anessential tool for marketing

1. The general economic development:

continued economic growth andglobalisation or,

economic recession and nationalism

2. The development of certain consumertrends

frugal/ thrifty or,

escapism

Two uncertain but very important drivers for thetourism sector has been identified

Crossing Drivers of Change


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Frugal

Consumers willdevelop a more frugaland spiritual approach

to consumption. Thepersonal

responsibilityconcerning for

example health,environment, climateand fair trade is taken

very serious. Savingbefore spendingbecomes more

important.

Economic recession and nationalism

A recession will influence the society forthe next 10-12 years. It will result in

increased nationalism and regionalismwhere regions and nations turn their back

to global cooperation concentrating on

their own lack of resources.

Economic growth and globalisation

The ongoing economic crisis is just

a minor and short economic slowdown. With such a positive

economic development increasedglobalisation will follow.

Escapism

Consumption istypically driven by thefaster, better, bigger

ideology. Climateproblems for example

are not seen as apersonal

responsibility. Theescapists are

concerned abouthealth and the fairnessof the world but tendto escape via wellnessand traditional luxury.

The Four Scenarios


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The Four Scenarios

Economic recession and

nationalism

Continued economic growth and

globalisation

Scenario 1

The Marco

Polo

Scenario

Scenario 2

The Sunny

Beach

Scenario

Frugal

Scenario 3

The Body

Shop

Scenario

Scenario 4

The

Asceticism

Scenario

Escapism

Characteristics of the four visions


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in terms of future tourism

Economic recession and nationalism

Continued economic growth and globalisation

Escapism Puritanism

The Marco Polo Scenario

High individualisationSome specialisation possibilitiesPolarisation of the marketHigh growth in inbound tourismWellness and traditional luxury

The Body Shop Scenario

High individualisation

Many specialisation possibilitiesSegmentation of the marketHealthy lifestyle and holidays

Goodness: volunteering, fair trade,organic food, etc.

The Sunny Beach Scenario

Mass produce, economies of

scaleHighly price driven marketConformityComfort but no luxuryRegionalisation of travelling

The Ascetism Scenario

Basic living simple holidaying

Close-to-home tourismExperiences: healthy, sustainableand cheapFood: vegetarian, organic, local

produce, simple

EXERCISE Wh t d th i


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EXERCISE: What do the scenariosmean for us?

Consider what each of the scenarios

could mean for

a) your hotel

b) the tourism and hotel industry inEgypt


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THE END

day 2 marketing in practice

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