marketing essay

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

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

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

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.

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.

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.

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

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.)

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.

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.

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.

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.

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%

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

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:

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

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

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

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

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.

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

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

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

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.

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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marketing essay

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