authorized adaptation from the united states edition

Pearson Education LimitedEdinburgh GateHarlowEssex CM20 2JEEngland

and Associated Companies throughout the world

Visit us on the World Wide Web at:www.pearsonglobaleditions.com

© Pearson Education Limited 2017

The rights of Philip Kotler, John T. Bowen, James C. Makens, and Seyhmus Baloglu to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.

Authorized adaptation from the United States edition, entitled Marketing for Hospitality and Tourism, 7th edition, ISBN 978-0-13-415192-2, by Philip Kotler, John T. Bowen, James C. Makens, and Seyhmus Baloglu, published by Pearson Education © 2017.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a license permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saf-fron House, 6–10 Kirby Street, London EC1N 8TS.

All trademarks used herein are the property of their respective owners.The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners.

ISBN 10: 1-292-15615-5ISBN 13: 978-1-292-15615-6

British Library Cataloguing-in-Publication DataA catalogue record for this book is available from the British Library.

10 9 8 7 6 5 4 3 2 114 13 12 11 10

Typeset in Melior Com by Integra.

Printed and bound by Vivar in Malaysia.

Vice President, Editorial Director: Andrew GilfillanExecutive Editor: Daryl FoxEditorial Assistant: Lara DimmickProgram Management Team Lead: Laura WeaverProgram Manager: Susan WatkinsProject Management Team Lead: Bryan Pirrmann Project Manager: Maria ReyesProject Manager, Global Edition: Sudipto RoySenior Acquisitions Editor, Global Edition: Sandhya GhoshalProject Editor, Global Edition: Rahul AroraSenior Project Editor, Global Edition: Daniel LuizManager, Media Production, Global Edition: M. Vikram KumarSenior Manufacturing Controller, Production, Global Edition: Trudy Kimber

Senior Art Director: Diane SixCover Designer: Lumina Datamatics, Inc.Vice President of Sales and Marketing: David GesellSenior Product Marketing Manager: Darcy BettsField Marketing Manager: Thomas HaywardSenior Marketing Coordinator: Les RobertsDigital Studio Project Manager: Leslie BradoManufacturing Specialist: Deidra SmithVendor Project Manager: Melissa Sacco, Lumina Datamatics, Inc.Full-Service Project Management and Composition: Revathi Viswanathan, Lumina Datamatics, Inc.Cover Art: © Banana Republic images / Shutterstock

A01_KOTL6156_07_SE_FM.indd 2 07/26/16 4:15 PM

204 Part II Developing Hospitality and Tourism Marketing Opportunities and Strategies

Finally, in the organizational buying process, buyer and seller are often very dependent on each other. Sales is a consultative process. The hospitality organiza-tion’s staff develops interesting and creative menus, theme parties, and coffee breaks. The staff works with meeting planners to solve problems and works. They also have a close working relationship with their corporate and association customers to find customized solutions to satisfy their needs. Hotels and catering firms retain customers by meeting their current needs and thinking ahead to meet their future needs.

■■■ Participants in the Organizational Buying Process

The decision-making unit of a buying organization, sometimes called the buying center, is defined as “all those individuals and groups who participate in the purchasing decision-making process, who share common goals and the risks arising from the decisions.”2

The buying center includes all members of the organization who play any of the six roles in the purchase-decision process:3

1. Users. Users are those who use the product or service. They often provide recommendations to those directly involved in the purchase decision, either directly or through user-generated comments on Web sites.

2. Influencers. Influencers directly influence the buying decision but do not make the final decision themselves. They often help define specifications and provide information for evaluating alternatives. Past presidents of trade asso-ciations may exert influence in the choice of a meeting location. Executive secretaries, a spouse, regional managers, and many others can and do exert considerable influence in the selection of sites for meetings, seminars, confer-ences, and other group gatherings.

3. Deciders. Deciders select product requirements and suppliers. For example, a company’s sales manager for the Denver area selects the hotel and negotiates the arrangements when the regional sales meeting is held in that area.

4. Approvers. Approvers authorize the proposed actions of deciders or buyers. Although the Denver sales manager arranges the meeting, the contracts may need to be submitted to the corporate vice president of marketing for formal approval.

5. Buyers. Buyers have formal authority for selecting suppliers and arranging the terms of purchase. Buyers may help shape product specifications and play a major role in selecting vendors and negotiating.

6. Gatekeepers. Gatekeepers have the power to prevent sellers of information from reaching members of the buying center. For example, a hotel salesperson calling on a meeting planner may have to go through an administrative assis-tant. This administrative assistant can easily block the salesperson from seeing the meeting planner. This can be accomplished by failing to forward messages, telling the salesperson the meeting planner is not available, or simply telling the meeting planner not to deal with the salesperson.

Buying centers vary by number and type of participants. Salespersons calling on organizational customers must determine the following:

• Who are the major decision participants?

• What decisions do they influence?

• What is their level of influence?

• What evaluation criteria does each participant use?

When a buying center includes multiple participants, the seller may not have the time or resources to reach all. Smaller sellers concentrate on reaching the key buying influencers and deciders. It is important not to go over the decider’s

Buying center. All those individuals and groups who participate in the purchasing and decision-making process and who share common goals and the risks arising from the decisions.

M07_KOTL6156_07_SE_C07.indd 204 07/26/16 3:17 PM

Chapter 7 Organizational Buyer Behavior 205

head. Most deciders like to feel in control of the purchasing decision; going over a decider’s head and working with the boss will be resented. In most cases the boss will leave the decision up to the decider and the ill will created by not dealing with the decider directly will result in the selec-tion of another company. Larger sellers use multilevel, in-depth selling to reach as many buying participants as possible. Their salespeople virtually “live” with their high-volume customers.

Special Importance of International CompaniesThe growth of international tourists has led to the growth of international commerce. Sheer numbers of visitors are impressive. The U.S. National Tourism and Travel Office has forecasted 88.3 million foreign visitors by 2019 with the largest growth from the following countries4:

China 172%

Columbia 72%

India 47%

Brazil 43%

Mexico 38%

Other countries showed similar trends. The United Kingdom experienced a record of 32.8 million visitors in 2013.5

Visitor numbers alone do not reflect the equally important worldwide trend of foreign companies locating in one’s home nation. Montreal, Canada, has over 2,800 foreign subsidiaries with expenditures of $26 billion. Many of these companies are from the high-tech sector: aerospace, life sciences, health technology, and informa-tion/communications technology.

In the United States, over 1,500 German companies are located in Georgia. South Carolina automotive business now ranks high as an industry sector with many representing foreign companies.

The entrance of foreign companies provides new opportunities and challenges for the local hospitality industry. It also poses unique learning opportunities. Foreign companies like to bring visitors to their locations from the home country.

A local conference center, resort, or hotel desiring the meeting business of these companies must be familiar with any unusual needs such as cuisine. This may require the addition of a chef experienced in this cuisine or other client needs unfamiliar to the local hospitality industry.

■■■ Major Influences on Organizational Buyers

Organizational buyers are subject to many influences as they make their buying decisions. Some vendors assume that the most important influences are economic. They see buyers as favoring the supplier who offers the lowest price, best product, or most service. This view suggests that hospitality marketers should concentrate on price and cost variables.

Others believe that buyers respond to personal factors such as favors, attention, or risk avoidance. A study of buyers in 10 large companies concluded that emotions andfeelingsplayapartinthedecisionprocessofcorporatedecision makers.

It is important to have good relationships with administration assistants; they can help you gain an appointment and may influence the purchase decision. Courtesy of Andresr/Shutterstock.

M07_KOTL6156_07_SE_C07.indd 205 07/26/16 3:17 PM


They respondto“image,”buyfromknowncompanies,andfavorsupplierswhoshow them respect and personal consideration. They “overreact” to real or imagined slights, tending to reject companies that fail to respond or delay in submitting bids.6

In reality, organizational buyers commonly respond to both economic and personal factors. Where there is substantial similarity in supplier offers, price becomes an important determinant.

The various influences on organizational buyers may be classified into four main groups: environmental, organizational, interpersonal, and individual, see Figure 7–1.7

Environmental FactorsOrganizational buyers are heavily influenced by the current and expected economic environment. Factors such as the level of primary demand, the economic outlook, and the cost are important. In a recession, companies cut their travel budgets, whereas in good times, travel budgets are usually increased.

Organizational FactorsEach organization has specific objectives, policies, procedures, organizational structures, and systems related to buying. The hospitality marketer has to be familiar with them and must know the following: How many people are involved in the buying decision? Who are they? What are the evaluation criteria? What are the company’s policies and constraints on the buyers?

Interpersonal FactorsThe buying center usually includes several participants, with differing levels of interest, authority, and persuasiveness. Hospitality marketers are unlikely to know the group dynamics that take place during the buying decision process. Salespeople commonly learn the personalities and interpersonal factors that shape the organi-zational environment and provide useful insight into group dynamics.

Individual FactorsEach participant in the buying decision process has personal motivations, percep-tions, and preferences. Buyers definitely exhibit different buying styles. Hospitality marketers must know their customers and adapt their tactics to known environ-mental, organizational, interpersonal, and individual influences.

■■■ Organizational Buying Decisions

Organizational buyers do not buy goods and services for personal consump-tion. They buy hospitality products to provide training, to reward employees and distributors, and to provide lodging for their employees. Eight stages of the

Objectives

Policies

Procedures

Organizationalstructure

Systems

Organizational

Authority

Status

Empathy

Persuasiveness

Interpersonal

Level of primarydemand

Economic outlookCost of money

Supply conditionsRate of technological

changePolitical andregulatory

developmentsCompetitive

developments

Environmental

IndividualAge

EducationJob positionPersonality

Risk attitudes

Buyers

Figure 7–1Major influences on business buying behavior.

M07_KOTL6156_07_SE_C07.indd 206 07/26/16 3:17 PM

Chapter 7 Organizational Buyer Behavior 207

organizational buying process have been identified and are called buyphases.8 This model is called buygrid framework. The eight steps for the typical new-task buying situation are as follows:

1. Problem RecognitionThe buying process begins when someone in the company recognizes a problem or need that can be met by acquiring a good or a service. Problem recognition can occur because of internal or external stimuli. Internally, a new product may create the need for a series of meetings to explain the product to the sales force. A human resource manager may notice a need for employee training and set up a training meeting. A CEO may feel that the executive team would benefit from a weekend retreat to reformulate the firm’s strategy. Externally, the buyer sees an ad or receives a call from a hotel sales representative who offers a favorable corporate program. Marketers can stimulate problem recognition by developing effective ads and calling on prospects.

Recently Walmart announced it would spend $1 billion on employee raises and on training. Hospitality chains should have automatically asked for appoint-ments at Walmart to determine travel and lodging needs. A corporate-wide strategy should then have been devised to earn Walmart’s business.

2. General Need DescriptionHaving recognized a need, the buyer goes on to determine the requirements of the product and to formulate a general need description. For a training meeting, this would include food and beverages, meeting spaces, AV equipment coffee breaks, and sleeping room requirements. The corporate meeting planner works with others—the director of human resources, the training manager, and potential participants—to gain insight into the requirements of the meeting. Together, they determine the importance of the price, meeting space, sleeping rooms, food and beverages, and other factors.

The hotel marketer can render assistance to the buyer in this phase. Often, the buyer is unaware of the benefits of various product features. Alert marketers can help buyers define their companies’ needs and show how their hotel can satisfy them.

3. Product SpecificationOnce the general requirements have been determined, the specific requirements for the meeting can be developed. For example, a meeting might require 20 sleeping rooms, a meeting room for 25 set up classroom style with a whiteboard and overhead projector, and a separate room for lunch. For larger meetings with an exhibit area, the information need becomes more complex. Information often required includes availability of water, ceiling heights, door widths, security, and procedures for receiving and storing materials prior to the event. Salespersons must be prepared to answer their prospective client’s questions about their hotel’s capabilities to fulfill the product specification. Today, these needs are certain to include technology, including portals for computers, the latest AV equipment, and others.

4. Supplier SearchThe buyer now conducts a supplier search to identify the most appropriate hotels. The buyer can examine trade directories, do a computer search, or phone familiar hotels. Hotels that qualify may receive a site visit from the meeting planner, who eventually develops a short list of qualified suppliers. Personal recommendations from individuals such as members of management, consultants, lawyers, and others often are seriously considered in the search process.

Problem recognition. The stage of the industrial buying process in which someone in a company recognizes a problem or need that can be met by acquiring a good or a service.

Product specification. The stage of an industrial buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item.

Supplier search. The stage of the industrial buying process in which a buyer tries to find the best vendor.

M07_KOTL6156_07_SE_C07.indd 207 07/26/16 3:17 PM


5. Proposal SolicitationsOnce the meeting planner has drawn up a short list of suppliers, qualified hotels are invited to submit proposals. Thus hotel marketers must be skilled in researching, writing, and presenting proposals. These should be marketing-oriented, not simply technical, documents. They should position their company’s capabilities and resources so that they stand out from the competition. Many hotels have developed videos for this purpose. Unfortunately, far too many videos are look-alikes and do not effectively differentiate one hotel/resort from another.

6. Supplier SelectionIn this stage, members of the buying center review the proposals and move toward supplier selection. They conduct an analysis of the hotel, considering phys-ical facilities, the hotel’s ability to deliver service, and the professionalism of its employees. Frequently, the buying center specifies desired supplier attributes and suggests their relative importance. In general, meeting planners consider the following attributes in making their selection of a location:

• Sleeping rooms

• Meeting rooms

• Food and beverage

• AV staff and equipment

• Billing procedures

• Check-in/checkout

• Staff

• Availability of online information

Technology has made it possible for meeting planners to take a visual tour of the meeting space. Companies such as eMarketing 360 specialize in capturing video images of meeting space and making it accessible to buyers on the Web. Meeting Matrix provides a Web site with meeting information, including room diagrams, and videos of meeting space. This helps meeting planners narrow their selection or even make their selection without visiting the site. The later would likely be made up of buyers who have a lot of faith in the brand. Regardless of the sophistication of communication devices, nothing can substitute for on-site visits. These should be an integral part of the selection process.

The organization may attempt to negotiate with preferred supplies for better prices and terms before making the final selection. There are several ways the hotel marketer can counter the request for a lower price. For example, the dates can be moved from a high-demand period to a need period for the hotel, or menus can be changed. The marketer can cite the value of the services the buyer now receives, especially where services are superior to competitors.

7. Order-Routine SpecificationThe buyer now writes the final order with the chosen hotels, listing the tech-nical order-routine specifications of the meeting. The hotel responds by offering the buyer a formal contract. The contract specifies cutoff dates for room blocks, the date when the hotel will release the room block for sale to other guests, and minimum guarantees for food and beverage functions. Many hotels and restaurants have turned what should have been a profitable banquet into a loss by not having or enforcing minimum guarantees.

8. Performance ReviewThe buyer does a postpurchase performance review of the product. During this phase the buyer determines if the product meets the buyer’s specifications and if the buyer will purchase from the company again. It is important for hotels to have

Supplier selection. The stage of the industrial buying process in which a buyer receives proposals and selects a supplier or suppliers.

Order-routine specification. The stage of the industry buying process in which a buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies, warranties, and so on.Performance review. The stage of an industrial buying process in which a buyer rates its satisfaction with suppliers, deciding whether to continue, modify, or drop the relationship.

M07_KOTL6156_07_SE_C07.indd 208 07/26/16 3:17 PM

authorized adaptation from the united states edition

Documents