sha501: marketing fundamentals for the hospitality industry · pdf filethe servuction model

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SHA501: Marketing Fundamentals for the HospitalityIndustry


MODULE OVERVIEW

Module 1: Introduction to Marketing Analysis in the Hospitality Industry

The most important objective in any business, including hospitality and tourism, is to identify and satisfy customers.Knowing who your customers are and how to satisfy them enables you to successfully compete in the marketplace.Identifying and satisfying customers is the primary role of marketing, thus the marketing function is central to any businessfirm. Understanding marketing and how marketing strategies are developed enables you to serve your customers and todeal wisely with competitors.

This course is designed to help you make clear and well-thought-out marketing choices, and to teach you the role andscope of marketing in an organization. To learn these concepts, you will examine and discuss several case studies. Thefirst case study describes the efforts of a consumer vacuum cleaner company to sell its high tech product to the hospitalityindustry. The second case study details the efforts of the InterContinental Hotel chain to place a premium quality hotel inthe Toronto area. In the course of these case studies, you will investigate many of the core conditions and conceptsaround which successful marketing and product placement are centered.

After completing this module, you should be able to:

Define the primary role of marketing in an organizationDefine the term marketingDefine the concept of exchangeDefine the marketing concept


TOPIC OVERVIEW

1.

2. 3.

4.

Topic 1.1: The Role of Marketing in the Organization

This topic presents a case study of a fictional company's unsuccessful attempt to introduce a new product to themarketplace. As you read the case study, pay attention to how it illustrates the importance of the following fourfundamental truths of marketing and the consequences of ignoring them:

A superior product or facility is no guarantee of success. What one customer views as superior, another may viewas average or unimportant.How you define the customer often defines the marketing strategy, and quite often the firm's success.Customer requirements change all the time for a variety of reasons. Therefore, research, not experience, tells uswhat the customer wants.Increasing competition leads to increasing customer choice. This leads to the increasing importance of andemphasis on delivering customer value to achieve success.

Then go to the discussion forum to share your analysis of why the company's product failed to meet expectations.

After completing this topic, you should be able to:

Define the primary role of marketing in an organizationDiscuss the four fundamental truths of marketing


Hydrotech Vacuum Cleaner Case Study

In this case study you examine the Hydrotech Vacuum company and see how a product that was very successful in theconsumer market faired as Hydrotech tried to gain market share in the hospitality industry.

The content of this activity is the basis for this topic's discussion. You may want to open both this window and thediscussion window at the same time, to do so.click here

Transcript: Hydrotech Vacuum Cleaner Case Study

Product specifications for the Hydrotech Vacuum, the most technologically advanced vacuum on the market today:

The Hydrotech is the most powerful and complete vacuum available today. It traps 99.9% of dirt, pollen, dust andother irritants using its patented Ionic-Scrub technology-and doesn't spew pollen and dust back into the air likeother Vacuums. The Hydrotech is a much more advanced piece of equipment than other vacuums on the market.The Hydrotech is one of the most popular vacuums in the Health Club industry, because it stands up to anychallenge.It's favored by many smart consumers in the upscale private sector.If consumers really care about cleaning, then they need a Hydrotech. Studies have shown that no other vacuumcomes within 20% of the cleaning power of the Hydrotech.It starts at $1,200.With regular maintenance, and emptying of the water reservoir that traps what the Hydrotech picks up, this vacuumwill provide years of service. It does take some training to understand how to carefully clean the Hydrotech aftereach use.

Corporate Strategic Goals Summary

To continue to grow we need to expand our customer base. After successfully gaining product recognition and steadysales results in the consumer market and health industry, the next obvious market for our company is the hospitalityindustry. For the Hydrotech Company, the advantages of making sales to the hospitality industry are many, the big onebeing that a sale to a consumer is one vacuum, but a hotel would buy multiple units. Further, in the hospitality industryvacuum cleaners are replaced approximately every three years. Once staff are trained to utilize the dramatic cleaningpower of a Hydrotech, the results will create return customers. We did some market research of potential customers tosee what Hydrotech's selling points would be.

Hydrotech Market Research

In our market research, we uncovered the following data points:

Consumer Feedback

A standard vacuum returns a high percentage of the dust and airborne allergens that it encounters back into the air.A Hydrotech vacuum removes 99.95% of them; 89% of hotel visitors rated this attribute as "very important".80% of hotel visitors rated room cleanliness as "very important" to the quality of their experience.55% of hotel visitors said allergies were an issue for them; 40% of visitors use medication to treat allergicsymptoms.60% of hotel visitors said they have had experience staying in a hotel where the room cleaning was sub-par, and itinfluenced their decision to not return for a follow up stay.

Manager Feedback

Managers prefer to have one vacuum cleaner brand for all areas so maintenance is simple and replacement partsdo not have to be stocked for different brands.Commercial vacuum cleaners also have to be much sturdier than the vacuums used by consumers for their homes.The list price of a commercial vacuum cleaner is around $500-$600, but discounts are routinely given by vendors tomake a large sale. Housekeeping Directors can usually negotiate prices of $350-$450 for each unit purchased.Housekeeping Directors also prefer upright vacuum cleaners with only one attachment that cannot be removed-asone Director noted, "fancy, removable attachments get lost and are seldom used."Ease of operation for the vacuum cleaner is essential.Commercial vacuum cleaners for guest rooms typically weigh about 18 lbs and are 12-15 inches wide so they cango under and behind furniture.


Vacuum cleaners for hotel public areas are generally much bigger, wider and more powerful then room-usemodels; they often are self-propelled.

Corporate Sales Report Results

Despite the best efforts of our talented sales team, including the introduction of an installment payment plan, we are verydisappointed with our sales volume to date. Further analysis is needed to examine why we have not achieved the samesuccess in the hospitality industry that we have enjoyed in other market segments.


Ask the Expert: Why It's Not a Good Idea to Start With a Good Idea

Listen as Professor Siguaw describes how sometimes a seemingly good idea may be surpassed by an idea that comesfrom customer-based research.

Transcript: Ask the Expert Why It's Not a Good Idea to Start With a Good Idea

What are the advantages of not starting the marketing process with a specific idea of the service or property Iwant to develop?

The best ideas are those that meet customers' current or future needs. So rather than just saying "I have this good idea,"and going out and implementing that idea, you must first identify what are customers' needs and how you might best useyour expertise to meet those needs, now and in the future. This process may result in your adapting or discarding youroriginal "good idea." When individuals or companies fail to explore customer needs, new products and services generallyfail. For example, one company developed an orange-scented deodorant, while another created baked cat food. Bothcompanies thought these ideas were really good, but their customers saw no need for these products.

On the other hand, the company that first invented the microwave oven recognized the need for customers to save time.Utilizing its expertise in appliances, the firm invented a device that helps us save time; now this device is found in nearlyevery home, apartment, and dormitory in every developed country. Similarly, within the hospitality industry, Jack DeBoerwas an apartment building developer who frequently received requests for short-term leases. He recognized this customerneed and built the first extended-stay hotel, thus beginning the Residence Inn chain, which he later sold to Marriott.

How do I get an idea?

You should seek new ideas by examining trends in culture, politics, ecology, demographics, competition, economics, andtechnology. Based on these trends, try to identify what customer needs will be in the future and how you can step in to fillgaps that are not being met by your competitors. Also ask if there are new market segments that have developed whichyour company should be targeting? Are there new technologies that you should be embracing or that you need to preparefor because your customers will be adopting them? Are there new health trends on which your restaurant or spa cancapitalize? I hope you get the general idea. A wonderful resource for noting trends is magazine,American Demographicsand you may find the book especially interesting.The Tipping Point: How Little Things Make a Big Difference

How do I develop my idea?

Once you have identified an idea that you believe truly meets customer meets, you need to assess the viability of this ideaby proceeding with the environmental and SWOT analyses as outlined in this course. This will ensure that your good ideabecomes a successful idea!


TOPIC OVERVIEW

Topic 1.2: The Scope of Marketing in the Organization

Far from being a "fringe" part of a business, the marketing and refining of products based on marketing reports is centralto success in today's increasingly competitive environment. A well-researched marketing analysis is a businessadvantage, and there is much to learn when it comes to integrating marketing with the day-to-day operations of yourorganization. Marketing helps find new customers, clarifies the needs of current customers, and discovers unserved andunderserved needs in the market. Simply put, marketing is information that supports important business decisions.

In the following case study you will be presented with a scenario, and the resources in this topic will help you learn thetools and the knowledge to tackle the problems presented in it.


Define the term marketingDefine the concept of exchangeDefine the marketing conceptDefine the term marketing myopiaDiscuss the four Ps of marketing in the context of the hospitality industry


InterContinental Hotel Case Study

Mr. Rex Rice, manager of the Toronto InterContinental Hotel, is worried about his hotel. If they stay at their current pricelevel, other hotels might steal their present customers. Besides, Mr. Rice is not sure his hotel is even attaining its fairshare of the current market. If he raises his price to attract the upscale business market, he is afraid that occupancy woulddrop to the low levels his hotel experienced at opening. In this case study Mr. Rice has some hard choices to make,choices that will have long-term consequences for his hotel. He is relying on his marketing director, John Visconti, to givehim some facts to base his decisions from.

The content of this activity is the basis for this topic's discussion. You may want to open both this window and thediscussion window at the same time; to do so.click here

The material for this case study is used with permission of John Wiley & Sons, Inc., ,Marketing Leadership in Hospitality2nd edition, by Robert C. Lewis, Richard E. Chambers, Harsha E. Chacko, pp. 377-378, 2000.

Transcript: Intercontinental Hotel Case Study

Background

The General Manager of Toronto InterContinental Hotel, Mr. Rex Rice, wondered how he could increase occupancy andraise prices to their original levels. The hotel had opened with a single corporate rate of $195 but only a 22 percentoccupancy during the first four months. Occupancy increased to 55 percent when the rate was dropped to $169 after thefirst summer. (All dollar amounts in this study are Canadian dollars, which at the time of the study were equal to about .85U.S. Dollars.)

About the ICH Corporate Parent

The InterContinental Hotel (ICH) was owned and operated by the parent company of the same name, which is owned bythe Saison group of Japan. It claimed to be the world's leading deluxe hotel chain. ICH contended that 85 percent of itscustomers were business travelers, 40 percent of all guests at a specific hotel were repeat visitors to that hotel, and it wasthe first choice of frequent international business travelers, according to an in-flight survey.

The chain had 105 properties located in 48 countries around the world. Eighty-six of these were deluxe, first classInterContinental Hotels; 17 were high quality, moderately priced hotels known as Forum hotels; three were executiveconference centers called Scanticon.

Over the past 40 years, the company had achieved a reputation for personalized service, luxury product, and geographicscope, making it a recognized name among international business and leisure travelers. ICH had a strong foreignpresence, but its image in the North American Market was considerably weaker.

Toronto Facility

The Toronto property was built for about $50 million and was fully owned by ICH. It was one of Toronto's premier boutiquehotels and was located in the upscale downtown area of the city, also known for expensive restaurants and boutiqueshops. There were 213 guestrooms, including 12 suites plus seven meeting rooms, a business center, a fitness center, anindoor rooftop lap pool, and a sundeck. There was also an upscale lounge and dining room. Guest services includedlaundry, valet and shoe shine service, 24-hour pressing, twice daily maid service and turn down, 24-hour room service,concierge, guest relations service, and valet parking.

Competition

The InterContinental Hotel had five competitors in the same product class. All were in the same approximate area, exceptfor the King Edward, which was farther downtown. A comparison of these properties for the past year--on price, number ofrooms, average occupancy rate, and market share--is shown in the table on slide 6. Mr. Rice, however, felt that not all ofthese properties were competing for the same customer.

Mr. Rice felt that the main competitive advantage for the ICH was its facilities. The hotel was less than a year old and hada very high quality product with exclusive guest services. Mr. Rice asked his Marketing Director, John Visconti, to rank thecompetition based on the condition of the facility and the guest services offered for the corporate market. His reportfollows.


Marketing Report

Analysis by John Visconti:

The Four Seasons has the same guest services and competes for the same business market segment. It is a luxuriousfacility with an image of being the best upscale hotel chain in North America. The Toronto property has a refurbished lobbyand front desk, but the rooms are beginning to look tired and run down. (Mr. Visconti rated it as an eight out of 10.)

The King Edward and Sutton Place have refurbished facilities, but each lacks essential customer services for thecorporate transient segment. (He rated the Sutton Place a six, but downgraded the King Edward to a five because of itslocation.)

The Park Plaza has two towers. One has been recently refurbished but the other is very run down. It also lacks essentialguest services. (Mr. Visconti rated it a four.)

The Renaissance is being refurbished and promises an upgraded facility next year. (It also lacks essential guest servicesand so was rated a four.)

The ICH has superior facilities with a lavish marble entryway, mahogany paneling, and rooms that cater specifically to thebusiness traveler with oversized desks, and a separate shower and bathtub in each bathroom. Extensive guest servicesalso rank the ICH higher than the competitive properties, except the Four Seasons, which has the same services. (ICHwas rated a nine out of ten).

Marketing Report Table

*The Renaissance periodically closed rooms for refurbishing during the year.

FMS (fair market share) is the number of rooms of each hotel divided by the total number of rooms.

AMS (actual market share) is the number of rooms occupied of each hotel divided by the total number of rooms occupied.

Marketing Report Recommendations

Mr. Visconti felt that the area drew four major market segments. They were the tourist/entertainment, corporate transient,government, and upscale conference segments. Major attractions for the tourist entertainment segment were in the fartherdowntown core except for the very upscale boutique shop buyer. The ICH area was home to most of the large businessesin the downtown area and attracted the corporate transient market. Government was a large segment because of QueensPark, just to the south and home of the provincial government. The upscale conference market was attracted to the areabecause of its quality and upscale hotels.

ICH targeted the corporate transient and corporate group markets specifically. The Four Seasons, King Edward, andSutton Place were competing for these same segments. The Park Plaza and the Renaissance, because of their lowerprices, were getting a majority of the government segment. The tourist/entertainment market, because of its diversity, wasspread among all downtown hotels.

Conclusion

Mr. Rice wondered how to position the InterContinental Hotel for the future. If they stayed at their present price level, otherhotels might steal their present customers. If he raised prices to attract the upscale business market, he was afraid thatoccupancy would drop as it had before. What is the real problem in this case? What would you recommend that Mr. Ricedo?


Marketing Concepts

To help companies deliver value to their various constituents, managers must understand marketing and how to developwell-thought-out marketing strategies. An illustrated presentation with audio appears below, along with a text transcriptthat introduces you to the core concepts of marketing. Watch the presentation below to explore these concepts further.

Transcript: Marketing Concepts

Definition of Marketing

The American Marketing Association defines marketing as the activity, set of institutions, and processes for creating,communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

This new definition positions marketing as an activity instead of a function. It identifies marketing as a broader activity in acompany or organization, and not just a department. The new definition also recognizes that marketing provides long-termvalue as well as the short-term benefit of exchange of money for the shareholder and the organization.

Concept of Exchange

The essence of marketing is an exchange between two parties, meaning one party is willing to give up something (oftenmoney) in exchange for something he or she would rather have. Exchange occurs when one social unit (person ororganization) exchanges something of value with another social unit.

Conditions for Exchange

Six conditions must exist for an exchange to be able to occur:

First, two or more social units must be involved.Second, the parties must be involved voluntarily-that is, each party must be free to accept or reject the other's offer.Third, each must have needs that must be satisfied.Fourth, each party must have something of value to exchange.Fifth, the parties must believe that they will benefit from the exchange.And finally, the parties must be able to communicate with each other, and deliver the goods or services to beexchanged.

The Marketing Concept

The Marketing Concept is a philosophy that guides the firm in how it conducts its business. The Marketing Conceptsuggests that an organization should aim all its efforts at identifying and satisfying consumer needs.

The Marketing Concept is based on three fundamental beliefs:

First, all planning and operations should be customer-oriented.Second, all marketing activities in an organization should be coordinated.And third, customer orientation and coordination of activities are essential to achieve the organization'sperformance objectives.

Strategic Marketing Concept

However, some observers have said that the focus of the Marketing Concept was too narrow, because it failed to accountfor the larger business and social environment. Consequently, there have been efforts to extend the Marketing Concept tocreate a philosophy more attuned to the realities of today's business environment.

One such extension is the Strategic Marketing Concept.

Noting that the Marketing Concept does not adequately consider a firm's competition, the Strategic Marketing Conceptsuggests that a firm must satisfy customer needs while sustaining a competitive advantage to ensure long-termprofitability. That is, a firm must have dual goals: satisfying customers and outperforming the competition on one or morekey factors.

For example, Tune Hotels is a rapidly growing lodging chain designed to provide real value to the large population at thebase of the population pyramid. Tune Hotels' business model embraces many of the efficient operating characteristics


1. 2. 3. 4. 5.

pioneered by low-cost carrier airlines such as Southwest Airlines, RyanAir, and Air Asia.

For Tune Hotels, this includes:

Internet distribution direct to customers,Aggressive use of price to stimulate demand and maintain high occupancies,"Opt-in/opt-out" amenities,High operating efficiencies, andA simple and consistent operating model that gives the customer a significant value proposition.

Using ten tiers of room rates, Tune can offer incredible value for guests willing to book months in advance; this representsa creative marketing opportunity for developing markets that have rapidly growing, large populations with limiteddisposable incomes. Guests can access a quality, compact, clean guest room for less than US$5.00 per night, includingall fees, and pay only for the amenities they require. Prices are kept low because incremental revenue is generated inevery way possible, including the selling of advertising space throughout the hotel's physical structure.

Societal Marketing Concept

Another extension of the Marketing Concept is the Societal Marketing Concept, which addresses the criticism thatalthough the Marketing Concept may lead to business success, it may encourage actions that conflict with a firm'sresponsibility to society. Thus, the Societal Marketing Concept evolved to resolve what is known as "the micro-macrodilemma." That is, what is good for some producers and consumers may not be good for society as a whole.

The Societal Marketing Concept recognizes that the market includes not only buyers of the firm's products, but also otherpeople affected by the firm's operations. It also means the firm takes a long-term view of customer satisfaction.

For example, in one region of Cambodia, every tour bus company stops at a particular wat (a Cambodian temple) startingat 4:00 in the evening for the express purpose of letting tourists view the sunset from the top of the hill where the wat islocated. Although including this scenic view increases the satisfaction of the tour bus companies' customers, the vastnumber of tourists clambering around the hill are destroying the ancient wat, so future generations will be unable to enjoyit. If the tour companies were practicing the Societal Marketing Concept, they would identify another venue that wouldprovide equal customer satisfaction and would also protect the wat from destruction, especially since the customers arethere to view the sunset, not the wat.

Firms that practice corporate social responsibility are utilizing the philosophy of the Societal Marketing Concept.

Applying Marketing Concepts

So which of these marketing concepts is the most appropriate for your organization?

In their 2008 article on the relative merits of the different marketing concepts, Ward and Lewandowska indicate that involatile, uncertain business environments, following the simpler Marketing Concept strategy of customer orientation seemsto be most effective. In stable business environments, it is better to use the Societal Marketing Concept andcompetitive-based Strategic Marketing Concept.

All strategies come with caveats and marketing is no different. In very rare conditions, utilizing any form of marketing maywaste resources. These limited conditions include:

When the customers are satiated to the point they will not make any further purchasesWhen a product that customers want will not be made availableWhen the cost of gathering the information about customer needs exceeds the revenue it will generateWhen the firm is restricted in what it can exchange

Marketing Myopia

The Marketing Concept suggests that an organization should aim all its efforts at identifying and satisfying consumerneeds.

Businesses that define themselves in terms of goods and services rather than consumer needs often find themselvesengaging in narrow, short-term thinking, which is sometimes called "marketing myopia." The term "marketing myopia" was coined by Ted Levitt in a 1975 essay published in the . WhenHarvard Business Reviewan organization suffers from marketing myopia, it defines its business strategy too narrowly, to the point where it cannotadapt to evolving consumer needs.


Service-Profit Chain

Another critical concept in the hospitality industry is the service-profit chain.

The concept of the service-profit chain was originally introduced by Heskett and others in an essay published in the in March-April 1994. It has been widely embraced by the hospitality industry because the modelHarvard Business Review

contends that if the organization treats employees well, employees will be more satisfied and have greater loyalty andproductivity. In turn, increased employee productivity will increase focus on providing an excellent customer experience,and increase customer value and satisfaction. Because satisfied customers are more loyal to the brand and more willingto shop with the firm, the internal service focus leads to improved firm financial performance.

Extended Service-Profit Chain Model

Most recently, in the March 2009 issue of , Christian Homburg, Jan Wieseke, and Wayne D. HoyerJournal of Marketingpublished research that demonstrated that customer satisfaction resulted more from employee-company identification thanfrom employee satisfaction. In this complementary model, employee-company identification leads through improvedcustomer focus to customer-company identification. This directly influences customer loyalty and customer willingness topay. As in the traditional service-profit chain, these factors lead to improved financial performance.

These two complementary models make up the extended service-profit chain.


The Extended Service-Profit Chain

"Firms thatsuccessfullymanage both SPCpaths tend toperform betterthan firms that aresuccessful in onlymanaging eitherthe satisfaction orthe socialidentity-basedpath. Thus, weargue in favor ofan extended modelthat includes boththe "old" and the"new" SPC paths."

-Homburg,Wieseke, and Hoyer

In this optional article, Homburg, Wieseke, and Hoyer discuss a new focus forresearch on the service-profit chain (SPC). The SPC, the intentional efforts toimprove financial performance by increasing employee satisfaction, has longfocused on traditional, satisfaction-based methods of improving firm performance.The authors begin by noting a need for further research. Specifically, they note thata model with such a strong emphasis on improving customer expectations is notsustainable; if customers continually expect more and better services than they arecurrently receiving, it becomes increasingly difficult for the firm to meet and exceedthose expectations.

The authors propose extending the model to include a social identity-based SPCmodel. This model suggests a complementary path to SPC, which states thatemployee and customer identification with a firm will lead to increased customerloyalty. This, in turn, leads to improved financial performance. In the article, theauthors review these two complementary paths to SPC and derive specifichypotheses for improving financial performance.

View the article

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Marketing Mix: The Four Ps of Marketing

The "Four Ps of Marketing" have been a mainstay in marketing education for years. Although the elements seem simple, itis amazing how many businesses ignore these basics when creating their products and offering them to the public.Marketing consists of four components around which marketing strategies are developed.

Sometimes marketers refer to a fifth P of marketing People or the consumers that the marketer is trying to reach.

Click each item below to learn more about the "Four Ps of Marketing."

The successful marketer will carefully mix the four elements into a balance that will satisfy the consumer in the face ofcompetition. This is called marketing mix.

Transcript: Marketing Mix: The Four Ps of Marketing

Product

Product means identifying and developing the goods and services that consumers want or need. Often this involvesin-depth market research.

Place

Place is offering products in a location so that they are convenient to the guest. For example, the number one hotelattribute for which a customer selects a particular hotel over that of a competitor is the convenience of the hotel's location.

Price

Setting the price is an essential step of the process. A price must serve many functions. It must yield a profit, it mustprovide value to the guest, and it has to take into account the price of competing goods and services.

Promotion

Promotion involves letting guests know about the product through advertising, personal selling, and other forms ofmarketing communications.


Module 1 Wrap-Up

Congratulations on completing Module 1. This module focused on the role of marketing in an organization and providedyou with an overview of the concepts necessary for rolling out an effective marketing strategy.

Having completed this module, you should be able to:

Define the primary role of marketing in an organizationDefine the term marketingDefine the concept of exchangeDefine the marketing concept


MODULE OVERVIEW

Module 2: Applications of Marketing Principles

The competitive business environment evolves and changes much like a biological environment does. Looking back overthe last few decades, the evolution in the business strategies dominant companies follow can be clearly seen.

At one time, most companies followed a production orientation. Under this strategy, a company focused on production of afew specific products perhaps because few of these products were competing in the marketplace. The firm's planning wasshaped by production and engineering. Marketing was not believed to be necessary because people were thought to bewilling to buy any product that was well made and reasonably priced. A saying that exemplifies the attitude of theproduction orientation era is "build a better mousetrap and the world will beat a path to your door."

The production orientation era was followed by the sales orientation era. In these times companies emphasized sellingbecause of increased competition. The underlying rationale for a heavy sales orientation was that even good productsneeded to be promoted to overcome consumer resistance. Companies felt that with enough effort anything could be sold.Consequently, sales management increased in importance within firms, and the hard sell was accentuated. Customerneeds were not considered central as companies focused on simply selling whatever they produced.

The market orientation era commenced when competition became much more intense, overproduction and a myriad ofchoices became common, and demand became uncertain. Demand was consciously stimulated by manufacturers duringthis time. Companies recognized that a sales decision predominantly depended on a customer's perception of the value ofthe product sold. Thus, the focus of a market orientation is on the needs of the customer who creates opportunities whereproducts can be sold.

In this module you learn the essential principles of marketing that characterize the present era of market orientation, andhow to apply these principles to the case studies that you worked on in the previous module.

After completing this module, you should be able to:

Discuss the four fundamental truths of marketingDefine the term strategyDefine the term strategic windowDiscuss the process of developing a marketing plan in terms of moving from the strategic to the tacticalDefine the concept of value as it applies to the hospitality industryList factors that provide value for customersExplain the relationship between goods and servicesDiscuss the key characteristics and features of servicesDefine and discuss the Servuction Model as it applies to the hospitality industry


TOPIC OVERVIEW

Topic 2.1: From the Strategic to the Tactical

A market orientation stresses the importance of identifying and satisfying the customer's needs and wants whilemaintaining a competitive advantage. The achievement of a clear market orientation will have to be based on themarketing concept. The principle that it must keep its eye on competitors as well as customers forces the company toexamine how it can survive in the long run. Therefore, it is a sound basis for developing marketing strategies.

In this topic you begin by analyzing the cyclical nature of the marketing process through the marketing process continuum.Then you investigate the different classes of opportunities businesses can pursue. Finally, you may apply these principlesto the case studies you looked at in the last module.


Define the term strategyDefine the term strategic windowDiscuss the process of developing a marketing plan in terms of moving from the strategic to the tactical


The Marketing Process Continuum

Firms following a market orientation guide their businesses toward two goals: first that of providing superior value tocustomers over the long-term, and that of gaining an advantage over their competitors by coordinating the company'smarket planning and product development resources.

The marketing process continuum clearly demonstrates how the varied elements of marketing strategy relate to anddepend upon each other. The content of this activity is the basis for this topic's discussion.

Transcript: The Marketing Process Continuum

Mission statement

The mission statement should answer the following questions about the business:

Who am I?Type of hotel-product focus and needQuality level-luxury, first-class, budgetBusiness mix

What are the key market segments I serve?What makes me unique?

Salience, determinance, and importanceWho are the key competitors whose success directly affects my business?Who are my constituents-formal and informal groups (employees, unions, suppliers, regulators/inspectors, and soon)-whose efforts on my behalf may contribute to success?How will I improve over the next 3-5 years?

The answers to these questions help organizations define their target markets and their business mix.

Strategy

Strategy involves matching opportunities with corporate capability. The strategic window of opportunity is a limited periodduring which the combination of an opportunity and the firm's ability to exploit it exists.

Breakthrough Opportunities are opportunities that help innovators develop hard-to-copy marketing strategies that will bevery profitable for a long time. There must be a match or "fit" between the target market opportunity and the company'sresources.

Competitive Advantage means that a firm has a marketing mix which the target market sees as better than a competitor'smix. The goal of strategic planning is to gain a sustainable competitive advantage.

An organization with a production orientation would focus on achieving a competitive advantage by increasing productionefficiencies to develop a production cost advantage. A company with a sales orientation would develop a competitiveadvantage by having a more persuasive sales message. A firm with a marketing orientation would achieve a competitiveadvantage by satisfying consumers' needs.

Unless the company has some overriding competitive advantage, the target market selected should be served by only afew, small competitors.

Analysis

There are two schools of thoughts regarding what happens after an opportunity is identified. The traditional belief is thatmarketers must conduct an environmental analysis to analyze the sociocultural, demographic, economic, technological,political and legal, competitive, and ecological environments. Marketers use the data they've gathered in an environmentalanalysis to conduct a SWOT analysis, identifying the strengths, weaknesses, opportunities, and threats associated withtheir enterprise. In concert with the identification of organizational resources, this enables organizations to definemarketing objectives and a unique competitive advantage.

The opposing, and more nascent view, known as the Effectual Approach, is that analogical reasoning based onexperience should be used to make marketing decisions, whereas predictive information should be ignored or given littleweight. The goal is to control outcomes, co-create value through partnerships, and transform situations to achieve desiredresults.


Read, Stuart, Nicholas Dew, Saras D. Sarasvathy, Michael Song, and Robert Wiltbank (2009), "Marketing UnderUncertainty: The Logic of an Effectual Approach," Journal of Marketing, 73 (3), 1-18. Tactics

Under the traditional approach, organizations develop product, place, price, and product strategies for each target marketbased on resource and capability constraints; develop actionable tactics to implement strategy; and identify all resourcesneeded for implementation.

As part of this stage, they also create a set of tools such as budget and pro-forma income statements for the next fiveyears. These are used to perform a business analysis to ensure the direction the firm is taking will be a profitable one, todetermine the actual cost of the business tactics, and to identify how much income the firm expects to generate. Inaddition, accountability controls and methods of evaluation are developed to assist with the review process that will followat a later time.

Contingency plans are also created so that organizations are prepared to respond rapidly to minor changes in theirsituations.

Following the effectual approach, the belief is that markets and products can be broadly transformed when moving alongthe path from concept to acceptance. Thus, alternative markets are more likely to be considered, pricing is likely to followa skimming strategy, and channel strategies are more likely to focus on partnerships serving a narrow customer segment.Succinctly, the effectual approach is focused on relationships, networking, equity, co-creation, humans, and operantresources.

Review

During this phase, marketers re-examine strategies to ensure their continued fit with the organization's defined objectivesas well as the prevailing environmental constraints. Further, they review and evaluate the effectiveness of their tacticsbased on the accountability controls, methods of evaluation, and contingency plans they established earlier.

Strategy

On the basis of their review, it may be necessary to revise strategies and even, in the most extreme circumstances, themission statement. Such revisions lead to consequent revisions in tactical implementations, which are followed by anotherreview cycle, another round of revisions, another review cycle, another round of revisions, and so on.


Types of Opportunities to Pursue

When determining what marketing opportunities to pursue in the hospitality industry, consider the following:

- trying to increase sales of a firm's present products in its present markets probably through aMarket Penetrationmore aggressive marketing mix.

- trying to increase sales by selling present products in new markets.Market Development - offering new or improved products for present markets.Product Development

- moving into totally different lines of business which may include entirely unfamiliar products,Diversificationmarkets, or even levels in the production-marketing system.

Formulate a Marketing Strategy

After selecting opportunities, formulate a marketing strategy, which is the overall company program for selecting aparticular target market and then satisfying consumers in that market through careful use of the elements of the marketingmix.

Once customer needs have been identified, marketers must respond by doing the following:

Determine what group of consumers have the needsDevelop products to meet these needsPosition products for the target segment(s)Develop an effective marketing mixEvaluate customer responses to company strategies


TOPIC OVERVIEW

Topic 2.2: Marketing Value and Services

The first thing managers need to understand is exactly what matters to their customers. But customers come in manydifferent types, and the first activity in this topic gives some clear indications of how different customer profiles valuedifferent services. Some of the unique challenges involved in providing these valued services will also be addressed in thistopic. Once managers have figured out what a particular customer segment wants, their next task is then to use thetraining, tools, and facilities at their disposal to satisfy those customers.


Define the concept of value as it applies to the hospitality industryList factors that provide value for customersExplain the relationship between goods and servicesDiscuss the key characteristics and features of servicesDefine and discuss the Servuction Model as it applies to the hospitality industry


Value Drivers for Customers

Marketers must understand the value drivers for their customers. Different segments of the hospitality industry will havedifferent value drivers; that is, the criteria for selection and the basis of a positive experience may differ to some degreedepending on whether the hospitality product is a hotel, airline, amusement park, casino, etc.

In this section, we examine the primary factors that drive guests' purchase decisions regarding lodging facilities. Thesehave not substantively changed over the years; consequently, location, price and services available continue to determinebooking decisions within the hotel industry.

However, the purchase decision is not as simple as it may initially seem; indeed, it is generally quite complex. Forexample, the benefit of the proximity of the hotel to nearby tourists' attractions or the central business district is likely to beweighed against the price, the purpose and length of the stay, and the general appeal of the property based on availablephotos or the view from the road. Consumers often use price and hotel-star category as signals of the quality of theservices and products, and likely have certain expectations as to what is a "fair" price. Moreover, for very short stays,consumers are often willing to accept properties with minimal services and low prices, while those guests intending to staylonger, will want additional services and amenities available. The three key factors of location, price, and services becomeintertwined and the prospective customer must weigh and balance the benefits of each.

The selection process creates consumer anxiety as the risk of a poor decision is considered. To alleviate risk in thepurchase decision, some consumers will base their choice of hotel on their prior experience, while others will seek aproperty with a good brand reputation. Many others will turn to recommendations from others, including Internet websiteswhich offer user-generated reviews of properties.

Because recommendations from others are often the tipping points in the decision process, it is important to understandthe value drivers behind the guest experience. Research has shown that once guests have experienced the lodgingfacility, other factors emerge determining perceived value. Cleanliness, guest room design, the physical property, andservice level are all key in establishing a positive guest experience. In addition, price is a factor the higher the price, thegreater guest expectations. Consequently, properties are not always able to meet these very high expectations and so theevaluation of the accommodations decline. That is, the guests do not feel they have received good value. Finally, locationalso influences the post-purchase evaluation of the lodging property, as the convenience, natural beauty or quaintness ofthe area where the hotel is located becomes irrevocably linked to perceived quality.

While less research has been focused on the restaurant industry, these value drivers have been identified: price, foodtype, food quality, service quality, cleanliness, restaurant environment, and brand reputation. While some elements, suchas price, overlap with important factors in the lodging decision process, for the most part, restaurant factors are different.

Marketers should seek to understand what key issues motivate consumers to purchase their particular hospitality productand what factors determine satisfaction and perceived value.

Baek, Seung-Hee, Sunny Ham, and Il-Sun Yang (2006), "A Cross Cultural-Comparison of Fast Food Restaurant SelectionCriteria between Korean and Filipino College Students," International Journal of Hospitality Management, 25 (4), 683-698

Chan, Eric S. W., and Simon C. K. Wong (2006), "Hotel Selection: When Price Is Not the Issue," Journal of VacationMarketing, 12 (2) 142-159.


Dube, Laurette, Cathy A. Enz, Leo M. Renaghan, and Judy A. Siguaw (1999), American Lodging Excellence: The Keys toBest Practices in the U.S. Lodging Industry, New York: American Hotel Foundation.

Fernandez-Barcala, Marta, Gonzalez-Diaz, and Juan Prieto-Rodriguez (2009), "Factors Influencing Guests' Hotel QualityAppraisals," European Journal of Tourism Research, 2 (1), 25- 40.

Lockyer, Tim (2005), "Understanding the Dynamics of the Hotel Accommodation Purchase Decision," International Journalof Contemporary Hospitality Management, 17 (6/7), 481-492.

Lockyer, Tim (2005), "The Perceived Importance of Price as One Hotel Selection Dimension," Tourism Management, 26(4), 529-537.

Lockyer, Tim and Linda Roberts (2009), "Motel Accommodation: Trigger Points to Guest Accommodation Selection,"International Journal of Contemporary Hospitality Management, 21 (1), 24-37.

Yu-Hua, Christine Sun and Alastair M. Morrison (2007), "Senior Citizens and Their Dining-Out Traits: Implications forRestaurants," International Journal of Hospitality Management, 26 (2), 376-394.


Service Characteristics of Hospitality and Tourism Marketing

An illustrated presentation with audio appears below, along with a text transcript. Use these resources to learn about thedefinition of service, the goods-service continuum, and the key features of service that include intangibility, inseparability,perishability, and difficulty of standardization.

Transcript: Service Characteristics of Hospitality and Tourism Marketing

Service

At first glance, defining service as a product is not an easy task, because service is not a physical item that can be pickedup and examined. But customers paying money for your organization's services, come to conclusions regarding the valueof those services. That is, they decide whether the service received has been worth its cost.

Christian Grönroos (a pioneer of modern service marketing) defines service as an intangible activity that takes placebetween the guest and a service organization's service employees, physical resources, or systems-or some combinationof those.

Characteristics of Services

Most products have components of both goods and services inherent to their purchase. This can be as simple as amailing address to return a defective product, or a huge facility equipped to respond to varying needs, such as an autodealership with an attached service department. Most services are performed in the context of a tangible good, and mostgoods are combined with some element of a service. In the restaurant business, for example, the product is a combinationof the food (the "goods") and everything associated with the way it is served (the service).

The relationship between goods and services can be illustrated by the Goods-Services Continuum. Most hospitalitypurchases fall to the right of this spectrum.

Characteristics of Services

In the hospitality industry, the key features of services include intangibility, inseparability, perishability, and the difficulty ofstandardization. Understanding each of these elements can help you define your tasks as a manager to improve theproduction and delivery of services.

Intangibility

The intangibility of service makes it difficult for hospitality organizations to differentiate themselves from the competition,and it makes it difficult for consumers to compare the quality of different services prior to consumption. When it comes topurchasing service, consumers simply do not have as much information to go on before they spend their money. Thatmeans it's riskier for consumers to try a new service or a new service provider than it is to try a new good. At the sametime, the risk associated with trying new services means that, given a positive experience, customers are more likely topurchase the same service again.

Managers in the hospitality industry try to minimize the risk associated with first-time service purchases by making thenature of those services as tangible as possible, so that customers know what they're buying before they spend theirmoney. Some of the strategies they use include:

Requiring employees to wear uniformsEmploying the same logo, building design, and façade on all buildingsMaking certain features (such as lobbies) visible, recognizable, and attractiveCreating outward identifying signs and signifiers at every opportunity

Inseparability

Inseparability means that the production and consumption of services are tied together and often occur simultaneously. Inthe hospitality setting this often involves interactions between guest and clerk or guest and waiter; in such cases, there areusually several well-defined points of contact. These moments of personal contact between employees and guests arevery important in the effectiveness of the service delivered. The interaction between the employee and the guest is part ofthe total product. Proper training and proper attention to detail are essential to ensure a successful interaction betweenguest and employee.


Perishability

When it comes to most tangible goods, items not sold today will keep their value and can be sold tomorrow. But certaingoods are perishable--fruit, for example, ripens and has retail value for a limited window of time. The service-relatedefforts of your staff are similar in that they cannot be stored or saved. To manage a facility and staff profitably and ensurecustomer satisfaction, managers in the hospitality industry must be aware of such perishability and manage their capacityaccordingly. The value of a room carried vacant tonight can never be realized in a future time period. To guard againstthis, hotels (and often airlines) frequently overbook their facility. If this is a regular business practice within your firm, thenit's important to develop a process for finding alternate accommodations when guests walk in and discover their roomshave been given away.

Difficulty of Standardization

It is difficult to ensure consistent quality in the service industries because of the human element involved in the serviceproduction. Highly standardized behavior is almost impossible and not always desirable. Still, employees must bemanaged so that they provide a level of service that meets customer expectations and is commensurate with thecorporate image. There are a wide variety of tactics used by the hospitality and tourism industry to manage the difficulty ofstandardization including:

Increasing automation of tasks (electronic check in/out)Training employees to make good decisionsEmpowering employees to make those decisions

Nonetheless, one of the more frustrating aspects of the service industry is that regardless of the employees' best efforts,ill-natured guests will probably not have a good experience.


The Servuction Model

The interactive relationship between all the variables involved in the production and delivery of services in the hospitalityindustry can be illustrated by something called the Servuction Model. Hospitality managers must be aware of the elementsof this model, and do their best to influence how they combine, to make sure the customer experience is a positive one.

Transcript: The Servuction Model

The interactive relationship between all the variables involved in the production and delivery of services in the hospitalityindustry can be illustrated by something called the Servuction Model. Hospitality managers must be aware of the elementsof this model, and do their best to influence how they combine, to make sure the customer experience is a positive one.

The customer is the center of the service experience. Businesses must not lose sight of the fact that the quality of acustomer's experience, repeated over and over, forms a business reputation that will determine long-term profitability andsuccess.

There are many places where the inanimate environment of the hospitality setting can have an impact on the customer.When customer A pulls into the parking lot, and then walks into the lobby this customer will immediately form impressionsbased on a number of visual and sensory cues. For example:

What impression do the hotel grounds make?Is the sidewalk to the front door clean and free of snow, ice, gravel, or other blemishes?When the customers enter the hotel, does the physical setting of the main lobby match their expectations?Do small details warn customers of carelessness on the part of the staff?When customers reach their rooms, how thorough was the housekeeping staff in preparing those rooms?What little elements have/have not been taken care of, and does the level of care/extras match the customer'sexpectations for the business?

The lesson that needs to be absolutely clear is that the inanimate environment provides an initial benchmark that begins todefine the way the customer experiences your business.

The customer-facing staff have a tremendous impact on the visitor's experience. Their ability to greet the customer politelyand meet needs efficiently is often a key determinant of how the customer will perceive the hotel. In addition to those atthe front desk, customer-facing staff can include bellhops and gift-shop, bartending, and wait-staff employees.

Behind the scenes, the invisible organization defines, informs, and shapes the level of service each customerexperiences. The most obvious examples of a hotel's invisible organization are the kitchen, housekeeping, andengineering staff. Less apparent but equally important are the support systems, training programs, and resourcesavailable for front-line employees. If the organization chooses to reveal any of these elements to the guests (such as byincorporating an open kitchen into the restaurant design) the organization must understand how that may alter thecustomer experience.

If the only thing impacting a customer's experience were the grounds, staff and support systems, then the job of hospitalityadministration would be much easier. But each customer's hospitality experience includes his or her interactions with othercustomers. Imagine a couple sitting at a table tucked away in a corner of the hotel restaurant, enjoying a romantic eveningtogether. Suddenly, their experience is shattered by the loud, obnoxious behavior of a customer at a neighboring tablespeaking loudly on his cell phone. Potential hazards also include customers traveling with noisy families, or travelerswhose idea of a relaxing night in the room next door involves the TV blaring at earsplitting volume all night long. The adeptmanager will have a well-conceived plan in place to ensure that all customers' needs are met with a minimum of conflict.

No matter how thorough the organization is in doing everything possible to ensure customer satisfaction, there are alwayselements beyond the organization's control that nonetheless affect the customer's overall experience. Weather is perhapsthe most obvious example. What does a resort property do to compensate its customers when the weather refuses tocooperate-when there's no snow at the ski resort during the holidays, or the island resort experiences a week of non-stoprain? Customers realize, of course, that such factors are beyond the control of the organization, but they can't help butallow them to color their experience.

There are many ways to show your appreciation of a customer who chooses your organization. Examples of servicebenefits include everything from the trivial to the substantial: mints on the pillow, room upgrades, frequent-flyer miles,room vouchers, monogrammed pillow cases, coupons for low-cost follow-up stays, in-hotel health-club privileges, andmore-the list is limited only by the promotional staff's creativity. Especially when dealing with external factors beyond the


organization's control, such as inclement weather, such service benefits can go a long way toward ensuring a positiveoverall experience. These small outlay expenditures in the "bundle of service benefits" category often repay theorganization many times over by winning long-term repeat customers.


Using Research to Uncover Key Value Drivers in the Hotel Industry

Staying in a hotel, especially for longer than two days, is an emotional experience. One of the challenges facing marketresearchers in the hospitality industry is to devise approaches to the hospitality experience that go beyond satisfyingcustomers' superficial needs and tap into the customers' core emotional experiences.

There are three types of customer needs to consider in providing overall customer satisfaction:

: Those requirements marketers identify simply by asking customers what they want. ExamplesRevealed Requirementsin the hospitality industry might include:

Workout room24-hr. room serviceIndoor poolFree delivery of the morning paperFull-service spa

: Elements of the consumer experience are so basic that customers may fail to acknowledgeExpected Requirementsthem. Nonetheless, fulfillment of these requirements is essential to achieving customer satisfaction. Examples mightinclude:

Daily changes of linens and towelsOverall cleanliness of the facilitiesCable TV accessIn-room telephonePolite staff

: Elements of the consumer experience that go beyond customers' expectations. These are theExciting Requirementsunanticipated "perks" that make the experience truly memorable, here are some examples:

Welcome basket of fruits, chocolates, and champagneFree in-room broadband Internet connectionTickets/coupons to local eventsFree dry-cleaning serviceMonogrammed pillowcases for repeat guests

The definition of what constitutes exciting, revealed, and expected requirements varies according to the market segment.For example, what an upscale market segment considers an expected requirement might qualify as an excitingrequirement for a mid- to lower-level market segment.


Source: Adapted from Kano, Noriaki, N. Seraku, F. Takahashi, and S. Tsuji (1984), "Attractive Quality and Must-beQuality," in "Hinshitsu" Quality: The Journal of the Japanese Society for Quality Control, 14 (April), 39-48.

Kano's model, pictured right, helps explain how satisfying each of these kinds of needs contributes to building thecustomers' overall emotional experience.

According to the model, failure to satisfy revealed requirements is sure to result in customer dissatisfaction. Customersatisfaction increases in direct proportion to the degree to which the organization fulfills revealed requirements. Revealedrequirements are both a necessary and sufficient condition for customer satisfaction. It is through revealed requirementsthat hotels seek to establish differentiation and a competitive advantage.

Satisfying expected requirements, on the other hand, never results in high degrees of customer satisfaction. At best,organizations that confine their efforts to fulfilling expected requirements can hope only to avoid dissatisfaction. In otherwords, these attributes are a necessary but not sufficient condition for customer satisfaction.

It is in fulfilling the unexpected, exciting requirements that organizations elevate the hospitality experience into theemotional realm. Failure to fulfill these requirements won't dissatisfy customers, because they do not expect them in thefirst place. However, fulfilling these requirements adds extra excitement to the consumer experience. Therefore, excitingrequirements are sufficient, but not necessary conditions for satisfaction. These particular attributes can form the basis ofa marketing strategy designed to pull market share from competitors.

Market research, then, must do more than simply identify revealed and expected requirements; to achieve high levels ofcustomer satisfaction, organizations must anticipate and provide the unexpected.

For more information about Kano's model and the relationship between revealed, expected, and exciting requirements,visit the and see the article "Elicit Service Customer Needs Using SoftwareGlenn H. Mazur published works webpageEngineering Tools," by Glenn H. Mazur. The Kano model does have its detractors. While the Kano model identifies thenon-linear relationship between performance and satisfaction, it does not account for the performance of specific attributesas compared to competitors. Consequently, the model does not reveal opportunities for improvement.

http://www.mazur.net/mazur_presentations.htm


Ask the Industry Expert: Value Drivers in the Restaurant Industry

:About Our Expert

Dennis Sweeney is a retired partner of Joseph Baum & Michael Whiteman Co., an international consulting firm for thehospitality industry, and a partner in the re-planning and re-marketing of the Rainbow Room atop Rockefeller Center inNew York City.

Prior to joining Baum & Whiteman, Mr. Sweeney was Vice President in Charge of Operations for Inhilco, Inc., a whollyowned subsidiary of Hilton International that operated all of the public restaurants in the New York World Trade Center.

Mr. Sweeney is a 1964 graduate of Cornell's School of Hotel Administration, a past president of the New York Chapter ofthe Cornell Hotel Society; a member of the American Institute of Wine and Food, and a full professional member of theFoodservice Consultants Society International. He has served as an Industry Advisor to Hotel Ezra Cornell since 1995,and is the 1998 recipient of the New York Chapter of the Cornell Hotel Society's "Hotelier of the Year" Award.

Transcript: Ask the Industry Expert: Value Drivers in the Restaurant Industry

Why is marketing important in the restaurant industry?

First, it is impossible to overstate the importance of marketing in the restaurant industry today. Every single thing arestaurant does, I think, expresses its marketing, from the design and materials of the restaurant, to the menu and itsexpression, even the uniforms and the tabletop, the logo, and the furnishings market directly to the customer.

How does the restaurant industry express value to its customers?

Value is expressed by direct communication with a customer of a complete marketing strategy. Like a Wheel ofExcellence, each spoke must be strong and of the same quality level as the next. Crisp table linens may be one spoke onthe wheel, a specialty shellfish service another, and a quality guest newsletter yet another, but each making that Wheel ofExcellence stronger than the sum of its parts.

How do customers perceive value today?

We used to say that you could sell the customer the "sizzle" in the steak. However, today that is not enough. We must sella truly great steak not just the "sizzle" because customers are more sophisticated, they are better read, they are more welltraveled, and are more knowledgeable about food. Therefore, only marketing that stresses a restaurant's uniqueness willget the customer's top of the mind awareness.

What are some things restaurants are doing to introduce new value propositions to their customers?

Unfocused promotions that do not relate to the restaurant's real marketing plan will not work. For example, an ethnic liquorpromotion, or trying to sell German beer, in a fancy French restaurant is something that is unrelated to a restaurant'smarketing position and therefore does nothing to really reinforce it. Yet, a French brasserie that features a Mother's Daymenu containing recipes from famous French chef's mothers, is a natural extension of the marketing of a brasserie, andwill work. Things such as periodic menu changes, easily promotable, will work best if they express and reinforce themarketing program of the restaurant, whereas peripheral, unfocused ones, will be the least effective.


Module 2 Wrap-Up

Congratulations on completing Module 2. In this module you learned how to analyze the cyclical nature of the marketingprocess and providing valued services by analyzing customer profiles and value drivers.

Having completed this module, you should be able to:

Discuss the four fundamental truths of marketingDefine the term strategyDefine the term strategic windowDiscuss the process of developing a marketing plan in terms of moving from the strategic to the tacticalDefine the concept of value as it applies to the hospitality industryList factors that provide value for customersExplain the relationship between goods and servicesDiscuss the key characteristics and features of servicesDefine and discuss the Servuction Model as it applies to the hospitality industry


Course Wrap-Up

Upon reaching this page, you should have completed the following modules in the course:

Introduction to Marketing Analysis in the Hospitality IndustryApplications of Marketing Principles

If you have completed these modules, congratulations! Let's review the course objectives. Having completed this course,you should feel comfortable with your ability to do the following:

Identify the fundamental aspects of modern marketingDefine the relationship between customer value and marketing in the hospitality industry


Thank You and Farewell

Hello. This is Judy Siguaw again. Congratulations on completing the first course in the marketing certificate series, . I hope you've enjoyed the course and now have a much betterMarketing Fundamentals for the Hospitality Industry

understanding of marketing and its role in your organization.

If you are interested in learning more, consider signing up for the second course in the series, Conducting Effective. This course covers the various methods of data collection, market segmentation, steps inHospitality Marketing Research

the buying process, and gives you tools for identifying and defining your target markets. I hope you join us in this nextintellectual pursuit.


Stay Connected


Supplemental Reading List

The provides focused whitepapers and reports based on cutting-edge researchCenter for Hospitality Research

http://www.hotelschool.cornell.edu/research/chr/


1. 2. 3. 4. 5. 6. 7.

Glossary

concept of exchange

The essence of marketing is that it is an exchange between two parties, i.e., one party is willing to give upsomething (often money) in order to receive something more desirable.

conducting an environmental analysis

For a business, to conduct a marketing environmental analysis is to construct an overall map of where theyare. This map will then help them to navigate towards business goals. An environmental analysis looks atthese seven factors:

SocioculturalDemographicEconomicTechnologicalPolitical and legalCompetitiveEcological

conjoint analysis

Conjoint analysis determines the importance that customers assign to attributes, and therefore, provides theresearcher with an understanding of the value that customers attach to the level of each attribute. Conjointanalysis is often used to examine tradeoffs: Not what the customer wants, but what the customer is willing togive up.

database marketing

Database marketing is the creation of a large computerized file of customers'-and potentialcustomers'-profiles and purchase patterns. Databases are built through customer lists, coupon redemptionrecords, guest registration, customer clubs, and intermediary information.

four Ps of marketing

Marketing consists of four components around which marketing strategies are developed: product, place,price, and promotion.

inseparability

Inseparability means that production and consumption of service are tied together and often occursimultaneously.

intangibility

The intangibility of service makes it difficult for service organizations to differentiate themselves from thecompetition and for consumers to determine benefits prior to consumption.

market segmentation

Market segmentation can create more revenues than a mass marketing strategy by addressing consumers'different needs. It promotes new ideas centered on the customer segment, and helps to develop an effectivemarketing mix-product, price, promotions, and place-geared to a particular set of customers.

marketing concept

The marketing concept is based on three fundamental beliefs: all planning and operations should becustomer oriented, all marketing activities in an organization should be coordinated, and finally, customerorientation and coordination of activities are essential to achieve the organization's performance objectives.

marketing information system


1. 2. 3. 4. 5. 6.

A Marketing Information System (or Marketing Intelligence System) involves the continuous collection andanalysis of marketing information into a central database. It may comprise information from internal reports(property management-system reports, reservation data, guest history, etc.) and environmental scanning,such as competitor intelligence.

marketing mix

The successful marketer will carefully mix the four elements of marketing, product, place, price, andpromotion, into a balance that will satisfy the consumer in the face of the competition.

marketing myopia

Marketing myopia denotes the condition of an organization that focuses so narrowly on how it defines itsbusiness that it can no longer adapt to evolving consumer needs.

marketing process continuum

These elements combine to make up the marketing process continuum: Mission statement -> Strategy -> Analysis -> Tactics -> Review -> Strategy

perishability

In the hospitality industry "perishability of service" means that what you don't sell today cannot be stored upand resold tomorrow. The service-related efforts of your staff cannot be stored or saved up. The value froma room carried vacant tonight can never be realized at any point in the future.

relationship marketing

After enough data is in place, database marketing allows for relationship marketing. Relationship marketingis a means for attracting, developing, and retaining customer relationships to build strong customer loyalty.Relationships will be based on the buyer's trust and satisfaction with the seller.

Servuction Model

The relationship between all the variables involved in the production and delivery of services in thehospitality industry can be illustrated by the Servuction Model. The elements of the Servuction Model revolvearound the customer who stands in the center of their activity. These elements are: the inanimateenvironment, invisible organization/support systems, contact personnel, factors beyond the organization'scontrol, other customers, and the bundle of service benefits customers receive. It is the responsibility ofhospitality managers to combine the elements of this model in such a way as to ensure that the customerexperience is a positive one.

six stages of the buying process

The six stages of the buying process are:

Need recognition or problem awarenessChoice of an involvement levelIdentification of alternatives or information searchEvaluation of alternativesPurchase decisionPost-purchase behavior

societal marketing concept

Another derivation of the marketing concept, known as the societal marketing concept, has been developedto overcome perceived flaws in the original version of the marketing concept. The societal marketingconcept addresses the criticism that although the marketing concept may lead to business success, it mayat the same time encourage actions that conflict with a firm's responsibility to society. It means the firmrecognizes that the market includes not only buyers of the firm's products but also other people affected bythe firm's operations. It also means the firm takes a long-term view of customer satisfaction.

SWOT analysis


SWOT stands for Strengths, Weaknesses, Opportunities and Threats. The strengths and weaknessescategories are based on internal issues, while opportunities and threats are based on external issues. ASWOT analysis is really a decision-making tool, providing a framework for identifying and highlighting issuesthat are critical when making organizational decisions.


Course Files

Some of the pages in this course include files for you to download. We've made all of the downloadable files availablehere for your convenience.

The Scope of Marketing in the Organization

(350.8 KB )The Extended Service-Profit Chain pdf file

https://d31owemgwclw9w.cloudfront.net/content/SHA/SHA501/sha501_223_article_en-us.pdf

sha501: marketing fundamentals for the hospitality industry · pdf filethe servuction model

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