marketing essay
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TABLE OF CONTENTS
SR. NO. TOPIC PAGE NO.I DISCLAIMER 1II DECLARATION 2III ACKNOWLEDGEMENT 3IV TABLE OF CONTENTS 4
1.1 INTRODUCTION 61.2 What is Marketing 71.3 The Marketing Process 91.4 The STP Process 121.5 Delighting the Customers 141.6 Handling Macro and Micro Marketing 151.7 Critique 16
1.7.1 Glance at the Indian Hospitality Industry 161.7.2 The Specimen – Taj Ambassador Hotel, Delhi 171.7.3 Market Share of the Ambassador Hotel 171.7.4 The Customer Segment of the Hotel 171.7.5 Market Share Analysis 181.7.6 Current Positioning Statement of the Hotel 191.7.7 SWOT Analysis 191.7.8 Target Market of the Hotel 201.7.9 Market Positioning Strategies 211.7.10 Four Phased Process of Repositioning 211.7.11 Internet Marketing Strategies 221.7.12 Discounting Strategies 231.7.13 Rate Fence Strategies 231.7.14 Tie Ups, Alliances and Loyalty Programmes 241.7.15 Market Segmentation Strategies 251.7.16 Customer Management Strategies 261.7.17 Distribution Channel Strategies 26
1.8 Price Recommendations 27CONCLUSIONBIBLIOGRAPHY
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Marketing is so basic that it cannot be considered a separate function. It is the
whole business seen from the point of view of its final results, that is, from the
customer’s point of view ...Business success is not designed by the producer but
by the customer.
Peter Drucker
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INTRODUCTION
Globalization has ushered in a process of integration of the world economic and financial
systems. The growing interdependence of the global financial markets into a mega market
place was evident during the Asian financial crisis of the later nineties and the simultaneous
downturn in stock markets across the world over the past three years. Even though not so big
a country like India, which was not connected with the origins of such crises, the effects
crossed their borders uninvited. Whether we like it or not, financial globalization is a
phenomenon which is rapidly changing the world economic landscape.
Crisis is often critical to innovation. A crisis provides an urgent sense of focus to mobilise
resources and break down barriers which normally stand in the way of innovation. The
economic crisis in the US following the 1907 San Francisco earthquake and fire led to the
creation of the Federal Reserve System. The Second World War was the spur to the creation
of new technologies and manufacturing techniques, advancing mass production and
knowledge management. As
the recession continues, hotel companies that are able to limit the degree to which room rates
are discounted will be in the best position to benefit once the economic environment
improves.
During recessions, of course, consumers set stricter priorities and reduce their spending. As
sales start to drop, businesses typically cut costs, reduce prices, and postpone new
investments. Marketing expenditures in areas from communications to research are often
slashed across the board – but such indiscriminate cost cutting is the biggest mistake one can
make. In such turbulent times, companies must understand customers’ shifting needs and then
adjust their communications strategies and offerings. Marketers should segment customers
according to their recession psychology (from fear to carefree) and how they categorise their
purchases (from essential to expendables).
Through carefully targeted appeals, brands can connect emotionally with consumers.
Companies that employ such tactics will perform better now and in the long run than those
that make cuts across the board.
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1.2 What is Marketing?
"Marketing is embedded in everything we do - from the clothes we wear, to the web site we
click on, to the ads we see. Marketing profoundly affects our day-to-day life and is present
everywhere”
- A.Koshy and M.Jha
Success of an organization often depends on its marketing ability. Finance, operations and
other business functions will not matter if there is not enough demand for the product and
services so that the company can make profit. People and organizations all over the world
formally or informally, engage in a vast number of activities that could be called Marketing.
Marketing can be explained in simple words as “meeting needs profitably”. Marketing
management is the art and science of choosing target markets and getting, keeping and
growing customers through delivering and creating superior customer value. Key ingredients
for marketing management are insightfulness for creative marketing plans and strategies to
guide the marketing activities. Right marketing strategy can only be developed through
discipline and flexibility along with a clear understanding of how the market works.
(Kotler.P, 2007, “Marketing Management: A South Asian Perspective”)
Marketing can be regarded “as the art of selling products”, but Peter Ducker explains that
marketing is not only about selling, that is just the tip of the iceberg, he says “There will
always be a need for selling. But the aim of marketing is to make the selling superfluous. The
aim of marketing is to know and understand the customer so well that the product or service
fits him and sells itself. Ideally marketing should lead in a customer who is willing to buy.
All that should be needed then is to make the product or service available.” Thus it is said
that skilful marketing is a never ending pursuit and Good marketing has become an
increasingly vital ingredient for business success, it is a result of careful planning and
execution. Marketing practices are therefore being continuously refined and reformed in all
industries to increase the chances of success. Marketing is both an “art” and “science”; there
is constant tension between the formulated and the creative side of marketing.
One set of marketing definitions suggests that marketing is primarily a business philosophy
that puts the customer first. From this perspective, the primary goal of hospitality businesses
should be to create and retain satisfied customers. This concept proposes that satisfying
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customers’ needs and wants should be at the centre of an organization’s decision-making
process. Professional marketers believe that this customer focus is the responsibility of
everybody in the organization. Adopting this philosophy requires a total management
commitment to the customer, and companies that pursue this approach can be described as
having a customer orientation. Marketing management therefore encompasses a wide variety
of functions and activities, although the marketing department itself may be responsible for
only a subset of these. Efficient marketing ensures effective market segmentation and market
analysis in order to improve the operational potential and increase the level of sales,
especially in times of recession.
Successful marketing managers focus on understanding their consumers’ wants and needs as
clearly as possible. More recently, marketers have begun to better understand the subject of
consumer behaviour as it relates to the consumption of services. This knowledge enables
marketing managers to develop sophisticated marketing programs aimed at very specifically
targeted market segments. Restaurants have responded by providing menu choices that are
lower in fat and salt and adding more fresh fruits, vegetables, and grains. The products and
services made available to consumers must respond to the changing needs of the target
market segments. The study of consumer behaviour focuses on understanding consumers as
they purchase products or services. This behaviour takes place within the larger context of the
environment in which each individual operates. Therefore, consumer behaviour examines the
roles and influences that others have on the behaviour of individual consumers.
Marketing methods take into consideration many of the social sciences, particularly
psychology, sociology, and economics. Market research underpins these activities. Through
advertising, it is also related to many of the creative arts.
Marketing is a wide and heavily interconnected subject with extensive publications. It is also
an area of activity infamous for re-inventing itself and its vocabulary according to the times
and the culture. Thus it can be said that marketing is a science as well as an art.
Marketing has two levels which are as follows:
Strategic marketing: It attempts to determine the competitive strategy of an organization in
the market place. In particular, it aims at generating a competitive advantage relative to its
competitors.
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Operational marketing: It executes marketing functions to attract and keep customers and
to maximize the value derived for them, as well as to satisfy the customer with prompt
services and meeting the customer expectations. Operational Marketing includes the
determination of the marketing mix (6 P’s).
1.3 The Marketing Process
1. Research Your Market Environment
3. Review and Improve 2. Develop and Implement Your Marketing Plan
1. Research your Market Environment:
One must research their industry and know their competitors and establish who their
target customers (or target market) are for their goods or services. Only once this is
known:
Who your customers are, what their needs are and how much they are prepared to
pay.
Who your competitors are, what they sell and at what price.
Can one decide how to position their goods or services in their target market and develop a
marketing plan to achieve their goals.
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2. Develop and Implement your Marketing Plan
Marketing covers much ore than just advertising goods or services. When developing ones
marketing plan, one must consider how one can use the elements of the marketing mix to
attract customers, meet their needs and keep them coming back for more.
The elements of the Marketing Mix are the six P’s
1. Product
2. Price
3. Promotion
4. Place
5. People
6. Process
None of the P’s can be considered as given. For developing an effective marketing
programme for a hotel, the only given is the customers – everything else is a variable, and
must be seen as controllable to some extent.
Product: To the customers, the product is all of the features, advantages and benefits that
they can enjoy from buying the goods or services. The product is not only the goods or
services that ones business offers but also includes:
The people within the business and the service they give.
The packaging of the product and services, and
The processes that that one has to make buying easier and more enjoyable.
The product element is the customer’s entire experience of dealing with ones business from
the quality of customer services that one gives to the image, environment and facilities of the
business premises.
Price: Price relates to the pricing strategy which includes the setting of price for the product
or services. Pricing should take into account how much the market is prepared to pay and
mark-ups that are needed to cater for overheads, other costs and profit margins. The provision
of credit to customers, the costs of credit and volume discounting are also aspects of pricing.
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Promotion: Promotion relates to how one makes their customers aware of the products or
services and the benefits that they can receive by buying them. Promotional activities include:
Advertising – Where one pays for the message to be sent to their target customers
through newspapers, radio, television, magazines, outdoor signage, web sites and
telephone directories.
Publicity – This comes from sending media releases to print and broadcasting media,
giving interviews to the media and from favourable word of mouth. From these
activities, information reaches the target customers through articles that are published
in newspapers, magazines and television shows at no charge.
Sales Promotion – These are short-term non-routine incentives that a business offers
to encourage purchase of products or services which include coupons, competitions
and contests.
Personal Selling – This is the use of personal presentations and meetings to sell
goods or services. Effective personal selling requires the use of good interpersonal
and communication skills, excellent product/service knowledge and the ability to sell
the benefits of the goods or services to the prospective customers.
Direct Marketing – Includes sending letters, emails, pamphlets and brochures to
individual target customers. Often followed by personal selling or telemarketing,
direct marketing activities normally use a customer database to identify and contact
target customers and to record details about interactions with these customers.
Place: Place relates to the distribution element of marketing and covers issues such as
methods of distribution, distribution channels and the location of the business.
People: People, because having the right people, correctly trained, on the front lines of the
hotel is part and parcel of the service itself and how it is perceived and valued by customers.
Process: This emphasizes that the hotel sees it important to err on the side of caution,
offering a level of service it knows it can deliver, so that customers are not disappointed. It
carries out a process through which this can be checked; after the product or service is
delivered a customer feedback form is given to the guests to get a feedback about their
overall experience, ensuring that customer expectations continue to be met.
3. Review and Improve
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After one has implemented the marketing plan, then determine how well it has increased your
sales and profits (review) and make any necessary improvements.
1.4 The STP Process
Figure:# The STP process.
(Source: Lihen, G. L. (2000). Understanding and Applying th STP Process. 1-2.)
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Define the Segmentation Problem
Use Value as the Basic for Segments
Identify Market Segment
Select Target Segments
Define Target Segment Positioning
Implement Marketing Program
Step 1:
In its most general form deciding the segmentation problem involves deciding whether or not
the benefits of segmentation outweigh the costs.
Answering the major decision problem of whether or not segmentation is beneficial almost
always requires conducting a segmentation analysis.
Step 2:
Segmentation bases are the variables used to classify a market into groups. Ideal bases for
segmentation are those that link customer response with the firm’s key decision variables.
In practice, bases of segmentation are often selected a-priori, based on managerial experience
with certain variables. Segmentation bases can also be selected post-hoc.
Step 3:
The identification of market segments often requires a market research study, which includes
a sample survey of customers and potential customers. Potential customers can be classified
into groups using their scores as reflected in the questionnaires with various statistical
techniques. Potential customers can be assigned to sets of groups so that those who are most
alike are grouped together. This is one of the major goals of segmentation.
Step 4:
Which one or more should be targeted? This strategic decision requires an evaluation process
in which the segments are compared on some clearly defined criteria.
Step 5:
A brand’s position is defined by its perception against competitors in the minds of (potential)
customers. The aim of positioning is to establish a strong association between the total
offering and the brand in customers minds, such that it meets their needs more cost-
effectively than do competitive brands.
Step 6:
The last step of the STP process is related to the implementation of the entire programme. In
practice, the best segmentation scheme means little until it is implemented.
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1.5 Delighting the Customers
Marketing proposes that satisfying customers is no longer enough in a competitive
environment. Companies, striving to develop sustainable competitive advantage, compete by
‘delighting their customers’ to ensure repeat and recommended business. Albrecht (1992)
suggests that there are four product levels that companies can offer (Figure-#)
Figure: # The hierarchy of customer value (adapted from Albrecht, 1992)
1. At the basic level, a company provides essential core attributes (e.g. a clean bed) that
customers need. If this basic level is not provided, customers will not buy the product
– if the bed is not clean, customers will not be satisfied and might check out of the
hotel. A hospitality firm that only offers a basic level of value is not competitive, and
is unlikely to generate significant repeat and recommended business.
2. At the expected level, a company provides attributes that customers expect and take
for granted – for example, efficient check in, a clean bed and availability of a
bar/restaurant might be examples of the attributes expected from a mid-scale hotel. A
hospitality company providing attributes at the expected level is only providing an
average standard service; there is nothing better about the service offer compared to
the competition. Customers may only be moderately satisfied, and there is no
incentive to return or recommend this company.
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3. At the desirable level, a company provides attributes that customers know of but do
not generally expect. The friendliness of the staff, the quality of the food and the
efficiency of the service are examples of attributes that customers know, but do not
always expect. Companies providing the desirable offer are competing more
effectively than most of their competitors.
4. At the unanticipated level, hospitality operators offer customers ‘delightful and
surprising’ attribute that demonstrate outstanding service quality. Examples might
include imaginative decor and fittings, staff that perform exceptional service, or
cuisine with unforgettable taste sensations. Companies operating at the unanticipated
level can be said to delight their customers with memorable experiences, and are
achieving a significant advantage over their competitors. The difficulty with
providing unanticipated levels of service all the time is that customers begin to expect
these delightful surprises, and competitors replicate them.
1.6 Handling Macro and Micro Environments
The term macro-environment denotes all forces and agencies external to the marketing firm
itself. Some of these forces and agencies will be closer to the operation of the firm than
others, e.g. a firm’s suppliers, agents, distributors and other distributive intermediaries and
competing firms. These ‘closer’ external constituents are often collectively referred to as the
firm’s proximate macro-environment to distinguish them from the wider external forces
found, for example, in the legal, cultural, economic and technological sub-environments.
The term micro-environment denotes those elements over which the marketing firm has
control or which it can use in order to gain information that will better help it in its marketing
operations. In other words, these are elements that can be manipulated, or used to glean
information, in order to provide fuller satisfaction to the company’s customers.
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1.7 CRITIQUE
1.7.1 Glance at the Indian Hospitality Industry
“From a seven-eight brand hotel market a few years ago, India will be a 40-brand hotel
market by 2011, redefining both the personality and structure of the hospitality industry as it
stands today.”
- Natwar Nagar, Director, HVS International
The Indian hospitality industry is on a high-growth trajectory, ranked by the World Travel
and Tourism Council (WTTC, 2007) as the fastest-growing tourism destination with a
projected demand of over one lakh new rooms. Claiming that positive trends, including
higher tourist arrivals, improved domestic business confidence, increasing foreign investment
inflows, rising consumerism, easier and cheaper finance for vacations, lower air tariffs due to
increased competition, greater air connectivity, and an accelerating pace of business activity
with increased business opportunities in sectors such as Information Technology and IT-
enabled services/business process outsourcing, auto ancillaries, have resulted in rapid growth
of the hospitality sector are becoming prevalent.
With the buoyancy in room demand, ADR, and RevPAR, the room supply is set to increase.
The existing hospitality companies are expanding and there is a growing trend among
hospitality sector players to acquire a multi-locational, Pan-Indian presence. The industry is
also seeing a number of incumbent players.
Another significant trend is the increasing interest of branding in the budget segment.
Traditionally, most of the budget hotels in India have been independently owned. As the
world’s large hotel groups consolidate and benefit from economies of scale, scope, and
concentrated resources for acquiring more sophisticated and demanding customers, there is
an increasing pressure on small and medium-sized independent hotels to be able to continue
to perform well or even survive (Holverson and Revaz, 2006). With the optimism in the
Indian Market, an increasing number of global chains are entering India and the existing
brands are expanding their distribution. As a result, the share of these brands in the budget
segment is on an upward trend. Thus, the hospitality industry in India is going through a
significant expansion stage, widening and deepening the market.
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1.7.2 The Specimen – Taj Ambassador Hotel, New Delhi
The Taj Ambassador Hotel located near New Delhi’s business and shopping district is ideal
for guests traveling for work or leisure. Being situated near the Khan market and in central
Delhi, the hotel has its share of customers coming from all proximity of the city as well as
national and international tourists. The hotel has 88 rooms including 12 deluxe suites and 14
executive rooms. All rooms are large and give a feeling of space (ranging from 300-625 sq
ft). The Ambassador hotel is an experience that has old world colonial charm with
comfortable rooms and suites, fine dining, crisp service and the state of art facilities.
1.7.3 Market Share of The Ambassador Hotel
“Market Share indicates how well a firm/product is doing in the marketplace compared to
its competitors.”
- Givon and Muller
The bustling commercial, social and political nerve centre of India, the capital city of New
Delhi attracts several tourists from different economic and social backgrounds. Hotels in
Delhi comprise several luxury, heritage and economy class hotels that provide the customers
with a wide range of options to choose from. These hotels offer the tourists with a safe
accommodation and a comfortable and pleasant stay.
Being situated near the central business district of Delhi and surrounded with competition all
around, the Ambassador hotel has managed to make its place between the top hotels in the
city, although with a market share of 6% Ambassador has its regular client list outlined in the
market.
1.7.4 The Customer Segment of Taj Ambassador Hotel, New Delhi
Corporate: 82% Events: 1%
Long Stay: 6% Groups: 1%
Conference: 6% Leisure: 4%
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1.7.5 Market Share Analysis
Figure #: Market Share Analysis
Trends in the hospitality industry have changed over the past few years. Now, the customers
do not want only a feeling of “home away from home” when they stay at a hotel, they are
looking for more than that. Luxury and high quality services is the need of the moment, this
is where the trend of boutique hotels fits in.
To keep up with the market need and competition The Ambassador hotel has decided to
reposition itself as “Delhi’s premiere boutique hotel”.
1.7.6 Identifying Current Positioning Statement for Taj Ambassador Hotel, Delhi
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NAME OF THE HOTEL ROOM INVENTORY MARKET SHARE (%)
Intercontinental 444 30.6
The Park 225 15.5
Crown Plaza 195 13.4
The Mariott 191 13
The Claridges 162 11
The Ambassador Hotel 88 6
Connaught Hotel 81 5.5
The Plaza 67 4.6
TOTAL 1453 100
The Taj Ambassador Hotel, New Delhi is categorised under the Taj Business Hotels,
Currently it has an inventory of 88 rooms including 12 Deluxe Suites. There are various
factors that help in determining the positioning of the hotel according to the customer.
Firstly, the SWOT of the hotel provides a clear picture about the current position of the hotel
among its target market.
1.7.7 SWOT Analysis
Strengths:
The Taj Brand name associated with hospitality and service culture.
Large base of loyal and repeat customers.
Centrally located close to the business district and commercial area of the city.
Synergy due to large sales set up.
Large and spacious rooms and bathrooms.
Popular Food and Beverage outlets.
A motivated team.
Weaknesses:
Not perceived to be Taj Hotel in the market.
Small inventory of rooms.
Health clubs/Swimming pool.
Too many riders of NDMC restricting expansion of rooms and food and beverage
outlets.
Surrounding residential blocks considered to be a security concern.
Opportunities:
Increased hotel’s visibility through selective PR events and aggressive advertising.
With the facilities; like the swimming pool and the fitness centre a higher ARR can be
achieved.
Increase visibility as a Taj Hotel.
Increase in corporate and tourist inflow with market buoyancy.
Threats:
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Old hardware-competitive set has all the modern amenities and facilities and is
renovated.
New supply from Shangri-La and others in the same operating zone, tentative addition
in the near future.
Non hotel service sector poaching on trained staff.
1.7.8 Target Market for Taj Ambassador Hotel, New Delhi
Since the Taj Ambassador is a business hotel, the target market largely constitutes of only
business clientele base however there exist a base for leisure travellers also which is only 5 –
10%. The current business booking largely constitutes of group booking from corporate
giants like Rashtriya Inspat Nigam limited, TELCO, Oxford University Press, etc. there is a
large amount of group bookings also made for crews and corporate giants (on event basis).
Top 10 Revenue Generating Companies for Taj Ambassador Hotel, New Delhi
China Airlines
Tata Motors Ltd.
United Conference on Trade and Development
Renault India Pvt. Ltd.
Rashtriya Ispat Nigam Ltd.
Tata Services Ltd.
Steel Authority of India
Capexil
Kubase Aviation
NDTV
Figure: # Revenue Generating Companies
1.7.9 Market Positioning Strategies
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Positioning strategy refers to the choice of target market segment which describes the
customers a business will seek to serve and the choice of differential advantage which defines
how it will compete with rivals in the segment. Doyle (1983)
This definition shows that a positioning strategy only applies at the level of a particular
product and/or service operating within a particular market, and that it should not be confused
with the broader concept of “corporate” strategy, or with the more specific concepts of
strategy as it relates to each individual element of the marketing mix, such as a “pricing”
strategy.
In order to reposition the hotel from a pure business hotel to a boutique business hotel, the
marketing strategies are discussed below. It will thereby help to determine how Taj
Ambassador Hotel, New Delhi as a boutique property will gain a leverage over all the other
properties in the similar segment in New Delhi.
1.7.10 The Four Phased Process of Repositioning Adopted by Taj Ambassador Hotel
Phase 1: Determining the Current Status of the Brand
The purpose of this phase is to understand the company and brand, including exploring key
issues, opportunities and challenges. The reason is to obtain a clear snapshot of the company
and brand in present terms, which will offer a clear insight to opportunity identification and
assessment. This phase also looks at production capabilities and constraints, distribution
strengths and strategy, top key accounts, key selling points, along with a careful review of all
sales and marketing promotions.
Phase 2: What Does the Brand Stand for Today?
This phase helps determine and understand how consumers feel about the company and
brand. This phase also helps determine needs, both unmet and met, current brand equity
drivers of the brand. This will not only provide a snapshot of today and where your brand sits
but also an immediate insight into where you can take your brand tomorrow.
Phase 3: Developing the Brand Positioning Platforms
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The purpose of this phase is to utilize all marketing research, brand, industry, and consumer
information to reposition what the brand should and can stand for.
Phase 4: Refining the Brand Positioning and Management Presentation
The purpose of this phase is to review and refine the new brand positioning and communicate
to all function departments in order to align efforts.
The main reason is that it is important that everyone on the brand team and all function areas
understand, buy in, and support the new brand positioning. Essentially, it will become the
umbrella strategy for the brand group dictating marketing programme and tactics.
1.7.11 Internet Marketing Strategies
Internet marketing has become a dominant player in hotel marketing efforts because of its
power to reach target audiences and generate bookings in record numbers. These are some of
the important marketing strategies implemented by Taj Ambassador Hotel, New Delhi.
1. Organic Search Engine Optimization – Search Engine Optimization (SEO) is the
process of making a website and its content highly relevant for both search engines
and searchers.
Focus on dominating local search.
Make sure the hotel website has the right keywords at the right place.
To establish a web presence, not just a website.
2. Paid Search Marketing (PPC) – Paid Search Advertising, also called sponsored
listing or Pay Per Click, is when an advertiser places an ad on a host site and pays
each time the ad is clicked. Taj Ambassador has done this on many travel sites.
Determine the hotels objectives (ROI, Growth, Market Research, etc.)
Use professional keyword research tools.
Use property features as keywords.
Do keyword competitive analysis to find opportunities.
3. Linking Strategy – Link Building is the process of directing targeted traffic to the
website through links placed on external websites. A comprehensive linking strategy
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is fundamental to any internet marketing campaign. This helps increase visibility,
bring more traffic to the website and increase ranking with popular search engines.
4. Email Marketing – Direct email marketing is still the number one way to get results.
It is inexpensive and very effective.
1.7.12 Discounting Strategies
One way to deal with this is to increase rack rate and offer the other prices as discount prices.
Discounting is a marketing tactic which has been in existence since the time industries with
fixed capacity and perishable products identified the need to increase their revenue by
attracting a large number of customers. Traditionally discounting was done in a very arbitrary
manner. Discounting was done to satisfy as many guests as possible and to maximize revenue
from existing demand. Any price sensitive customer who reserved well in advance was
offered a discount. It was considered as a marketing method to cover variable cost and just
break even. Discounting is used with new dimension of restriction and supply and demand
management. Customers who book well in advance are offered discounted rate but with a
restriction attached to it, that is it is compulsory for the guest to come to the hotel. This
method not only ensures incremental revenue but also the revenue lost due to no-shows is
reduced. Different discounting techniques are adopted in order to price the rooms at the
lowest possible rate for the groups. The amount of discount in case of group discount is
calculated by using many mathematical calculations.
1.7.13 Rate Fence Strategies
Another strategy is to use rate fences which can be either physical or non-physical in nature
and represent the reason why customers pay different rates. Physical rate fences, among
others, include room type, view, room location, and presence of amenities. Some physical
rate fences, most notably room type, can lead to reduced revenue since only so many of a
particular room type exist. Non-physical rate fences include customer characteristics,
transaction characteristics, and consumption characteristics. Customer characteristics restrict
discounted rates to members of certain organizations, employees of certain companies, and
certain groups of customers, e.g. frequent guests or employees. Transaction characteristics
include restrictions on time of purchase, place of purchase, level of risk accepted, and limited
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availability. Time characteristic rate fences include day of week, time of year and length of
stay. Regardless of which rate fences are used, managers must ensure that the rate fences are
clear, logical, easy to communicate, and difficult to circumvent. Otherwise, the use of fences
could result in confusion and dissatisfaction among customers. Therefore, hotels should
design rate fences carefully, thoroughly train reservation and front desk employees and
ensure that the fences are integrated with the reservation system because well designed rate
fences offer hotels the prospect to customize their rates to better meet customer needs while
at the same time increasing revenue.
1.7.14 Tie Ups, Alliances and Loyalty Programmes
Taj has a very good clientele coming to its doorstep due to tie ups with flights, by
offering frequent flier schemes, in which every 1000 miles travelled by the guest by
a particular airline, the guest used to get discounts from the hotel. Tie ups with
financial institutions also helps the hotel to get business, as banks issue credit cards
to customers, by offering them 5% cash back, if you settle your bill with the card .
Such schemes influence the people to stay at a particular hotel for the benefits they
draw from the particular hotel. Customer loyalty programs such as, Taj Inner Circle
Membership also helps the hotel to get repeat business. By offering such benefits or
schemes to the guests, it influences the guest to come back to the same hotel or hotel
chain.
Some Existing Airline Alliances of Taj Ambassador Hotel
British Airways - Executive Club, Partnership in existence from 1st April 1996 till
31st December 2009.
o 500 miles per stay at participating Taj Luxury Hotels & 250 miles per stay at
Taj Business & Taj Leisure hotels.
o British Airways Executive Club members - Database around 40 lakh
members.
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Virgin Atlantic - Flying Club, Partnership in existence from 1st September 2000.
o 500 miles per stay at participating Taj Hotels Resorts and Palaces.
o Virgin Atlantic Members world wide: UK - 620,000 members, US - 330,000
members, Australia, Hong Kong and China - 20,000 & India – 9000.
1.7.15 Market Segmentation Strategies
If all customers would pay the same price for using the same amount of resources, the
challenge would perhaps be limited to selling as quickly as possible, e.g. if there are costs for
holding inventory. One way of achieving a different willingness to pay is to achieve effective
market segmentation. A firm may repackage its basic inventory into different products to this
end. Market segmentation is the art of identifying and profiling distinct groups of buyers who
might require separate product and / or marketing mix. The main objective is to expand
market and increase revenue by charging higher prices to those powerful market segments
which will respond to price reduction by increasing the purchases by a large amount to more
than offset the revenue reduction occasioned by the discounts. In the travel industry, the
business travel segment of the market is very less sensitive with respective to price levels
than the leisure segments. The challenge is to take advantage of these market characteristics
when provisioning, packaging and pricing the hotel product by matching different rates
against different purchase behaviour. Thus, hoteliers have to implement rational restrictions
which prevent inelastic price trade downs. Therefore, the critical point is the manager’s
precision in establishing the respective needs of each market. Those willing to pay a high rate
will receive accommodation in periods of high demand and through this the company will
receive higher revenues. This could be seen as unfair by those willing to pay less during the
same period.
1.7.16 Customer Management Strategies
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The goal is to align business processes and customer strategies for long-term customer
loyalty and profitability. Strategies include binding the customer to the organization through,
for example, clubs and loyalty cards. An organization must also establish a means of ranking
their customers, identify the most valuable ones and service them differently, this being a
fundamental component of CRM. It should be highlighted that customer relationships are
fragile: “Out of sight means out of mind”. Hence, keeping in touch and maintaining relations
is extremely important. It is through effective management of customer relations that a firm
may successfully influence the portfolio of resources that customers invest in the firm. At the
same time, customers may realize a satisfactory return on those customer resource
investments valued by the firm. When a firm’s portfolio of customer resources is developed
in this way, there is increased potential for continued investment in the relationship by each
party, and the building of a sustainable competitive advantage.
1.7.17 Distribution Channel Strategies
The development of numerous external Computerized Reservation Systems (CRSs) primarily
by major airlines is recognized as a significant source of influence on the hotels competitive
and operational structure strategies. One of the principal objectives of CRSs development is
the establishment of sophisticated systems of market communication through a distinct
distribution channels. This enables the product/services suppliers to link more directly with
the major clients sources and therefore reduce market transactions cost. Earlier at a very
general level the strength of a given CRSs would be largely determined by the number of
points of scale terminals it contained and the extent of its geographic coverage. But with the
advent of internet related services and their reach a consumer in another corner of the world
can virtually walk into a hotel room sitting at his home. Even small hotels can reach out to
the entire world through internet web sites. Global distribution system (GDS) and Central
reservation system (CRS) have become the most powerful tools in maximizing revenue for
the hotels. Almost all the hotels across the globe follow these two channels to maximize their
revenues.
Amadeus is a leader in technology and distribution system. In India, Taj Hotels have selected
Amadeus.
1.8 Pricing Recommendations
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Price is clearly an instrument which could be used to manipulate demand. However, price is
also a delicate matter since it has an impact on customers and therefore impacts on demand in
various ways. Price differentiation would capture greater revenue but this also implies that
each market segment’s needs, wants, and willingness to pay are fully understood. Regardless,
prices must be justified in a fair way to customers. Hence, strategies have been suggested in
how to manage this. It is also highlighted that if these strategies are not managed correctly, an
increase in occupancy at a lower price might lead to a decrease in RevPar. Pricing tactics
could, as capacity management, be interlinked to Yield Management. Nevertheless, the
practice of YM in relation to only lowering prices could be questioned. Consequently,
managers must adopt a proactive management style in order to match demand with supply
without jeopardizing revenue. As we have seen earlier the growing demand of rooms and
increasing average rate, the rate of room will further continue to rise in the future.
Room Rates
Hotel Name Taj Ambassador
Period 1st September 2008 - 31st August 2009
Single DoubleStandard 13000 14250
Superior 15500 16750
Executive 18000 19250
Deluxe Suites 25000 25000Figure: # Existing Room Rates
Proposed Room Rates
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Period 1st September 2009 - 31st August 2010
Single DoubleStandard 14690 16100
Superior 18445 19900
Executive 21600 23100
Deluxe Suites 31250 31250Figure: # Proposed Room Rates
According to the author there can be increase in room price of standard room by 13%,
superior by 19%, executive by 20% and deluxe suite by 25%.
With respect to level of discounting there can be shrinkage in level of discount which is
offered to guests.
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CONCLUSION
In the essay the author showcases how the hotel needs to be repositioned keeping the hard
factors and soft issues in mind and also paying due heed to the current positioning statement
of the hotel. For this purpose the researcher has also observed the customer responses on this
matter.
The author has noted that while repositioning of the hotel as a premier boutique property
there are a number of changes that are going to come about. The most noticeable changes of
them all, Taj Ambassador; New Delhi will be the market competition. Taj Ambassador being
the only boutique property in Delhi will have no competitor in the market. Secondly the
clientele base for the hotel will change from only business to leisure and business.
One thing is certain: the future will bring uncertainty and change. To be successful, and
remain successful, in the international market – place, the marketing manager will need to
become expert at analysing the complex international trading environment. The development
and implementation of successful strategies will depend increasingly on teams of people from
a multi-cultural background. The future is never easy to plan for, but managers and
companies who take a more international stance in their preparation are more likely to
survive and prosper than those who are myopic about the opportunities and the challenges of
the international market-place.
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