MARKETING IN PRACTICE

Marketing in Practice: Learning OutcomesAt the end of this module, you will Have a good understanding of the

main concepts addressed within the module.

Be able to apply these concepts in the hotel context.

Be aware of both the strengths and limitations of different approaches to marketing in practice in the hotel industry.

TODAY’S LEARNING

MARKETING – INTRODUCTION, DEFINITIONS AND EXAMPLES

MARKETING RESEARCH BASICS

MARKET SEGMENTATION/TARGETING AND POSITIONING

UNDERSTANDING YOUR MARKET- SWOT ANALYSIS, PEST ANALYSIS

TRENDS AND UNCERTAINTIES

MARKETING – INTRODUCTION, DEFINITIONS AND EXAMPLES

A social definition of marketing

A process in all societies by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others.

A management definition

It is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals.

EXERCISE: Marketing Hotels

Look at both the social and management definitions of marketing.

From your experience, which is more like what you do to market your hotel or department?

Marketing Concept

The marketing concept is the philosophy that hotel firms should analyze the needs of their customers and then make decisions to satisfy those needs, better than the competition.

Marketing

Is applicable to hotel and restaurant businesses whether they are big and small.

Involves the planning and implementation of most everything an hotel does to facilitate an exchange between itself and its guests.

Marketing

Is a continuous and dynamic strategic decision-making process.

Is a strategic process that matches the hotel’s strengths and resources to potential opportunities that exist within the marketing environment.

Marketing as a Business Philosophy

Four orientations or business philosophies:

1. Product Orientation – a focus on making products widely available, affordable, and require little selling effort

Investment in hotel inventory without reference to demand

Marketing as a Business Philosophy 2

2. Sales Orientation - promotes the business philosophy of “selling what we make”

Filling hotel rooms at whatever price we can get – judging performance on occupancy rates rather than revenue or REVPAR

Focus on volume rather than quality

Marketing as a Business Philosophy 3

3. Market Orientation – involves• 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

Marketing as a Business Philosophy 4

4. Relationship Marketing Orientation - creates and sustain mutually satisfying long-term relationships with not only its guests but with other key stakeholders such as employees, suppliers, distributors, retailers and the community

Focus on repeat customers and customer loyaltyRetaining price and brand integrityUse of internal marketing with staffUsing socially responsible business practices

Are marketing and sales the same thing?

ABSOLUTELY NOT!! Marketing is selling + + + - a lot more!! If you are good at sales you will not necessarily be

good at marketing Marketing does involve sales but also includes

research, product and service planning, promotion, distribution and pricing

Famous guru Ted Levitt of Harvard says that selling focuses on the needs of the seller (filling rooms, meeting targets) while marketing focuses on the needs of the buyer (satisfaction)

Marketing and Selling

SALES MARKETING

1. Emphasis is on the needs of the hotel

1. Emphasis is on the needs of the guest

2. The company builds the hotel and then decides how best to sell rooms to the customer

2. The company finds out what the guest wants and then works out how to meet those needs

3. Management is room sales volume focused

3. Management is profit oriented

4. Planning is short-term and focused on today’s products and markets

4. Planning is long-term and focuses on new products, tomorrow’s markets and future growth

EXERCISE: What market orientation?

A resort within the Beautiful Hotels Portfolio is faced with the aftermath of a terrorist outrage close to the property. The Executive Team meet and come up with a number of responses to the crisis. What would you say each of them represent in terms of the 4 marketing philosophies?

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

2. Offer all repeat visitors an automatic up-grade and complimentary champagne dinner for two

3. Invest in the training of all staff with the “We’re all marketeers” programme

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

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

Do “normal” marketing rules apply to hotels? Argument that services, including

hotels, need a different approach to marketing

Most marketing theory and ideas come from the marketing of products, things we can hold in our hands and buy in shops

We can clearly see that most hotels (maybe not bottom of the range budget properties) are a lot more than the sum of their physical assets – beds, TVs, showers, restaurant tables etc.

Difference between physical goods and services

Physical goods ServicesTangible Intangible

Homogeneous Heterogeneous

Production and distribution are separate from consumption

Production, distribution and consumption are simultaneous processes

A thing An activity or process

Core value processed in factory

Core value produced in the buyer-seller interaction

Customers do not participate in the production process

Customers participate in production

Can be kept in stock Cannot be kept in stock or inventoried

Transfer of ownership No transfer of ownership

Characteristics of Services

Intangibility Inseparability Perishability Variability

EXERCISE: Hotel marketing in practice

In groups of 3 or 4, select THREE of the hotel service characteristics and identify some of the their consequences for the marketing ofa) a beach resort hotelb) an airport hotel

Hotel Service Characteristics

Hotel services cannot be inventoried Hotel services are time dependent Hotel services are place dependent Consumers are always involved in the

production process Hotel services cannot be quality

controlled at the factory gate There is a direct human role in hotel

service mediation

MARKETING RESEARCH BASICS

What is Market Research?

Simply a matter of finding out as much as you can before committing yourself to an irretrievable step

When you do not have answers through your own analysis of the environment within which your hotel operates

What to find out?

What does the customer need? Who is the target audience and how

much can you find out about them? What is the competition? Are there any gaps in the market? Would your hotel and its services be

able to fill that gap? Would your hotel and its services be

acceptable in the market?

Market Research and the Hotel Manager You don’t really need to know HOW to

undertake market researchBUT

It is important to understand the methods because

■ You may be responsible for commissioning market research

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

reports and interpret them and their limitations!

The Components of Market Research

Secondary Research

EXERCISE: What do I know about my hotel?

List all the formal INTERNAL sources of information you have available to you about your hotel or your company

Share the lists with your neighbour and consider why your lists are a) very similar, orb) have some clear differences

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?

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.

Sampling Methods

Sampling Methods

Random Samples – equal chance of anyone being picked May select those not in the target

group – indiscriminate Sample sizes may need to be large

to be representative Can be very expensive

Sampling Methods 2

Stratified or Segment Random Sampling

Samples on the basis of a representative strata or segment

Still random but more focussed May give more relevant information May be more cost effective

Sampling Methods 3

Quota Sampling

Again – by segment Not randomly selected Specific number on each segment are

interviewed, etc. May not be fully representative Cheaper method

Sampling Methods 4

Cluster Sampling Primarily based on geographical

areas or ‘clusters’ that can be seen as being representative of the whole population

Multi-Stage Sampling Sample selected from multi-stage

sub-groups Snowball Sampling

Samples developed from contacts of existing customers – ‘word of mouth’ type approach!

Primary Research

Primary Research

First hand information Expensive to collect, analyse and evaluate

especially in the international markets within which many hotels operate – use of tourist board studies rather than hotel-specific research

Can be highly focussed and relevant Care needs to be taken with the approach

and methodology to ensure accuracy Types of question – closed – limited

information gained; open – useful information but difficult to analyse

Primary Research 2

Quantitative and Qualitative Information

Quantitative – based on numbers (56% of British holiday makers prefer all-inclusive vacations) but does not always tell you why, when, how

Qualitative – more detail – can tell you why, when and how!

Purpose

Advantages of Market Research

Helps focus attention on objectives Aids forecasting, planning and

strategic development May help to reduce risk of new

product development Communicates image, vision, etc. May identify new training needs

(heath food trends, languages) Globalisation makes market

information valuable

Disadvantages of Market Research

Information only as good as the methodology used

Can be inaccurate or unreliable Results may not be what the business

wants to hear! May stifle creativity, initiative and ‘gut

feeling’ Always a problem that we may never

know enough to be sure!

MARKET SEGMENTATION,TARGETING AND POSITIONING

STP – a three stage process

Segmenting – dividing up the market into different groups

Targeting – selecting a segment to target

Positioning – developing a marketing strategy which positions the product in relation to rivals in order to appeal to market segments

What is Market Segmentation?

The breaking down or building up of potential buyers into groups called

Market Segments

EXERCISE: Segmenting your market

Thinking about the market that uses your hotel is segmented

How many major segments can you think of?

What criteria did you use to segment them in your mind?

Are there other criteria that you could have used

Segmenting your Market

Wide variety of criteria that you could have used:

Age Gender Nationality (probably the most common

in hotels) Purpose of visit (business, leisure and

leisure interests)

Benefits of Market Segmentation

1. Identifies opportunities for new product development

2. Helps design marketing programmes most effective for reaching homogenous groups of buyers

3. Improves allocation of marketing resources

Market Segmentation Variables

Market Market SegmentationSegmentation

VariablesVariables

GeographicalGeographicalPsychographicPsychographic

DemographicDemographic BehaviouralBehavioural

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?

Geographic Subdividing markets into segments

based on location, the regions, countries, cities and towns where people live.

The reason for this is simply that people from the same location have almost the same desire for product and its usage.

Geographic characteristics are also measurable and accessible.

Geographic Segmentation Region: by continent, country, state,

or even 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

Demographic The demographic are basically identifiable

characteristics of individual's because people with different background generally have different purchase requirements.

Demographics are the most common basis for segmenting consumer markets.

They are frequently used because they are often strongly related to demand and relatively easy to measure.

The demographic may be viewed single or combination.

Demographic Segmentation

AgeGenderFamily sizeFamily lifecycleGeneration: baby-boomers,generation X etc

IncomeOccupationEducationEthnicityNationalityReligionSocial class

Psychographic SegmentationGroups customers according to their lifestyle

Activities Interests Opinions Attitudes Values

Behavioural SegmentationIs based on actual customer behavior toward products

Benefits sought Usage rate Brand loyalty User status: potential, first-time, regular,

etc. Readiness to buy Occasions: holidays and events that

stimulate purchases

Each Market Segment should be…

MeasurableMeasurable

DifferentiableDifferentiable

AccessibleAccessible

SubstantialSubstantial

Criteria for Segmentation

Relatively homogenous group Distinctive and identifiable Accessible – capable of being reached Actionable Measurable Sufficiently large to be profitable

Market Targeting The process of evaluating each market

segment’s attractiveness and selecting one or more segments to enter.

Develop measures of segment attractiveness.

Identify which and how many segments should be targeted.

Why engage in segmentation? To develop different strategies for

different parts of the market To tailor marketing mix to meet the needs

of distinct groups To increase sales and profits by serving

particular 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

Factors in choice of target segment

Size Growth potential Degree and intensity

of competition Potential competition Business capabilities

of the organisation

Resources available Corporate objectives

and mission Accessibility Sustainability Is it defendable? Ability of the

organisation to establish itself in the market

Target Market StrategySpecifying segments to pursue

Differentiated Marketing

The organization pursues several different market segments simultaneously e.g. Ritz Carlton

Organization

Market

Concentrated Marketing

The organization focuses on a single market segment

Organization

Market

Target Market StrategySpecifying segments to pursue

Undifferentiated Marketing

The organization ignore segments and treat all groups the same

Organization

Market

Target Market StrategySpecifying segments to pursue

Choosing segments to targetUnattractive segment

Average segment

Attractive segment

Absence of competitive advantage

Avoid Avoid A possibility

Average in terms of competitive advantage

Avoid A possibility A secondary target

Strong competitive advantage

A possibility A secondary target

A prime target

Benefits of targeting Focus resources on the most profitable

segments Provides a focus for analysing competitors Enables the organisation find a strategic fit

between its marketing strategy and its longterm objectives

Provides better understanding of a limited market

Improved communication between seller and buyer

Enables the business to focus attention on segments it understands

Market Positioning The development of an offer within

each segment that is most likely to appeal to a targeted group

Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the mind of target consumers

A product’s position is the place the product occupies relative to competitors in consumers minds

The process of positioning

Understand consumer perceptions Positioning products in the minds of

consumers Develop positioning for each market

segment Design appropriate mix to

communicate positioning

To remain competitive a business must…

Separate the market into appropriate segments with a focus on those likely to deliver the best returns

Target appropriate segments Position the product in the minds of

potential customers Be prepared to reposition the product

UNDERSTANDING YOUR MARKET- SWOT ANALYSIS, PEST ANALYSIS

SWOT Analysis SWOT analysis is a tool for auditing an

organization and its environment

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

Is a simple framework for generating strategic alternatives from a situation analysis

It concentrates on the issues that potentially have the most impact

Is useful when a very limited amount of time is available to address a complex strategic situation, as is often the case in the hotel industry

A word of caution, SWOT analysis can be very subjective

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

SWOT Analysis

Opportunities

Strengths

Threats

Weaknesses Internal(controllable)

External(uncontrollable)

Source

SWOT Analysis Example

Opportunities•A developing market such as Internet

Strengths•Location

Threats•A new competitor

in your home market

Weaknesses•Lack of marketing experience

Internal(controllable)

External(uncontrollable)

Source

Internal Analysis

Company cultureCompany imageOrganizationalstructureKey staffSkills profile of staffLanguages profile ofstaffAccess to naturalresources

Position on theexperience curveOperational efficiencyOperational capacityBrand awarenessMarket shareFinancial resourcesExclusive contracts

External Analysis

CustomersCompetitorsMarket trendsSuppliersTravel intermediaries(travel agents, touroperators)Partners

NaturalSocial changesNew technologyEconomicenvironmentPolitical andregulatoryenvironment

Simple rules for successful SWOT analysis Be realistic about the strengths and

weaknesses of your organization when conducting SWOT analysis

SWOT analysis should distinguish between where your organization is today, and where it could be in the future

SWOT should always be specific. Avoid grey areas

Always apply SWOT in relation to your competition i.e. better than or worse than your competition

Keep your SWOT short and simple. Avoid complexity and over analysis

Once key issues have been identified with your SWOT analysis, they feed into marketing objectives. SWOT can be used in conjunction with other tools for audit and analysis, such as PEST analysis

PEST Analysis Organizations operates in micro and

macro environment which are changing time to time.

Formulation of right strategies always needs scanning of internal and external environment to determine the level of impact of each factor on organization business.

PEST is the best technique for scanning of macro level environment.

PEST Analysis

A PEST analysis is used to identify the external forces affecting an organization (which the organization does not have direct control over)

Political factorsEconomic factorsSociocultural factorsTechnological factorsNatural factors

Political/Legal

Monopolies legislation Environmental protection laws Taxation policy Employment laws Government policy Legislation Others?

Economic Factors

All businesses are affected by national andglobal economic factors. Inflation Employment Disposable income Business cycles Energy availability and cost Others?

Example The global credit crunch originating in the

USA contributed towards the credit crunch in the UK in 2007/08.

An economy undergoing recession will have high unemployment, low spending power and low stakeholder confidence.

A “booming” or growing economy will have low unemployment, high spending power and high stakeholder confidence.

Sociocultural Factors

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

Demographics Distribution of income Social mobility Lifestyle changes Consumerism Levels of education Others?

ExampleWithin 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 society’s concern, about children’s lack of exercise.

Organizations must be able to offer products and services that aim to complement and benefit people’s lifestyle and behaviour.

Technological

Technology has created a society whichexpects instant results. New discoveries and innovations Speed of technology transfer Rates of obsolescence Internet Information technology Others?

PEST analysis is particularly important within a hotel industry that is very vulnerable to external influences on its operating and marketing environments.

TRENDS AND UNCERTAINTIES

Changing Customer Profile

Changing demographics in major source markets (Europe is getting older!)

Shifting consumption patterns (shorter and more?)

Intensifying competition (destinations, hotel companies)

Growing segmentation Dwindling differentiation (technology

equalisation across brands)

Changing Customer Profile

Diminishing brand loyalty (price, location driving forces)

Increasing value orientation Escalating concern for the environment Continuing consolidation between major

companies Increasing influence of the Internet on

information and distribution

Making sense of the future: an essential tool for marketing

1. The general economic development: continued economic growth and

globalisation or, economic recession and nationalism

2. The development of certain consumer trends

frugal/ thrifty or, escapism

Two uncertain but very important drivers for the tourism sector has been identified

Crossing Drivers of Change

FrugalConsumers will

develop a more frugal and spiritual approach to

consumption. The personal

responsibility concerning for

example health, environment, climate and fair trade is taken very serious. Saving

before spending becomes more

important.

Economic recession and nationalismA recession will influence the society for

the next 10-12 years. It will result in increased nationalism and regionalism where regions and nations turn their

back to global cooperation concentrating on their own lack of resources.

Economic growth and globalisationThe ongoing economic crisis is just a minor and short economic slow

down. With such a positive economic development increased

globalisation will follow.Escapism

Consumption is typically driven by the ‘faster, better, bigger’

ideology. Climate problems for example

are not seen as a personal responsibility

´. The escapists are concerned about health and the

fairness of the world but tend to escape via

wellness and traditional luxury.

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 in terms of future tourism

Economic recession and nationalism

Continued economic growth and globalisation

Escapism Puritanism

The Marco Polo Scenario

• High individualisation • Some specialisation possibilities • Polarisation of the market• High growth in inbound tourism• Wellness and traditional luxury

The Body Shop Scenario

• High individualisation• Many specialisation possibilities • Segmentation of the market• Healthy lifestyle and holidays• Goodness: volunteering, fair trade, organic food, etc.

The Sunny Beach Scenario

• Mass produce, economies of scale • Highly price driven market • Conformity• Comfort – but no luxury• Regionalisation of travelling

The Ascetism Scenario

• Basic living – simple holidaying• ‘Close-to-home’ tourism• Experiences: healthy, sustainable and cheap• Food: vegetarian, organic, local produce, simple

EXERCISE: What do the scenarios mean for us?

Consider what each of the scenarios could mean for

a) your hotelb) the tourism and hotel industry in Egypt

THE END