Marketing Report for the Hotel Industry
What marketing is and why it matters to the industry
Over the past few decades, businesses in the hospitality industry that operate as a chain have enjoyed considerable growth by eating into the marketing share of the smaller players in the industry through the effective execution of marketing principles. This underscores the importance of marketing skills in the hospitality industry. According to Reind and Bojanic (2009), the term marketing "encompasses merging, integrating, and controlling supervision of all company’s or organization’s efforts that have a bearing on sales (p. 8). Various segments of the hospitality industry such as hotels, and bed and breakfast accommodations are still dominated by product orientation and given the major changes experienced by the industry in recent years, such as the consolidation of various businesses into chains in order to win larger market shares and gain a competitive advantage, it appears that firms in the industry need to embrace marketing concept in order to survive and become successful (Sahrma, 203).
Competition is a key aspect of the constant changes in the hospitality industry. Increasing competition in the hotel segment, for example, offers consumers a wider selection of choices for their varied needs. Therefore, if all businesses in the hotel segment are to succeed, they need to develop and embrace differential competitive advantage. This refers to a unique set of features of a firm and its associated products that the target market perceives as superior and significant to those offered by the competition (Gitman and McDaniel, 2007). One way is to create a niche competitive advantage. This is especially the case for small firms who have to compete with larger firms on a limited budget. To do so, the firm must identify a market segment characterised by good growth potential.
How the business owner could ensure the principles of marketing are applied to their business
Firms rely on the 4 P's of marketing to ensure the execution of effective strategies.
Product
The product that the hotel business sells is in the form of an intangible service. Evaluation of a product entails assessing its level of satisfaction with a need in the market, in addition to providing consumer value. It is important for the hotel business to ensure that their product not only satisfies a perceived need in the market but also provides the features demanded by specific consumer groups.
Price
This is the amount that consumers are willing to pay for a product. A decrease in price leads to a rise in profits. Pricing in the hotel industry tends to differ geographically. For example, smaller and medium size cities are characterised by different prices from those of major metropolitan companies. Also, rural properties have different price points from those for downtown properties (Pizam, 2012). It is important for the hotel business to identify the suitable price for their segment and then endeavour to match those pricing strategies. One such strategy that the firm can adopt is promotional pricing which basically entails reducing the price of a product over a short duration with the goal of 'pulling' consumers towards a service or product by providing consumers with a temporary economic incentive. However, Pizam (2012) opines that in order for this strategy to be effective, it must be backed by an effective distribution channel, strong operational efficiency, and high consistency in service/product quality.
Place
Place describes the location of a hotel. It also describes the various places where one can get a hotel room at a price (Power and Barrow, 2005). The hotel business is characterised by a short channel of distribution and concentrates on establishing locations near to or convenient for consumers. For instance, the business might decide to choose a location near a shopping mall or one in high-traffic areas in order to be close to its target market.
Promotion
This aspect of the marketing mix encompasses all the communications linked to marketing a service or product. The key elements of the promotional mix include personal selling, sales promotion, advertising, and publicity. Firms in the hospitality industry establish their promotion mix on the basis of their trading areas and clientele. As a small business, the hotel business under study is likely to draw customers from its local setting and may be better off using such local media as radio stations and newspapers (Bowie and Buttle, 2013). The hotel can also take advantage of the advent of the internet and social media to reach out to its target market in a cost-effective manner, using Facebook and Twitter.
Segmentation, targeting and positioning process and what factors influence targeting and positioning strategy
Market segmentation involves dividing the total heterogeneous market into homogenous segments or sub-markets to enable the marketer to reach out to such distinct sub-markets within a unique marketing mix (Kumar and Sharma, 2000). Elsewhere, Armstrong (2006) defines market targeting as "the process of formulating market coverage policies" (p. 31). This process involves identifying market segments that offer the best opportunities to the firm. The market targeting process entails manipulating the marketing mix to ensure that each of the identified market segments has access to a unique product. This calls for the development of market coverage policies that will enable the marketer to identify market segments that offer the best opportunities. On the other hand, positioning entails developing the firm's offer and image in such a manner as to ensure that it occupies a valued and unique place among the target consumers (Kotler and Armstrong, 2010).
Why marketing research is important and the process for conducting research
Marketing research is the orderly compilation, documentation, and analysing of data on issues of marketing services and goods (Kumar, 2010). For firms in the hospitality industry, marketing research is crucial as it offers them a basis for making effective marketing decisions. Hotels can rely on quantitative and qualitative research to better understand how consumers select and view hotels, whether they book hotels for leisure or business purposes, to understand consumers’ in-hotel experience, as well as to explore their post-stay communications (Bowie and Buttle, 2013). In this way, market research allows firms in the hospitality industry to make informed decisions, thereby minimising uncertainties.
The significance of buyer behaviour and how customers and consumers make decisions
Studying consumer behaviour enables marketers to position their services and products in such a manner as to appeal to what customers’ desire. Understanding customer buying behaviour goes a long way in enabling marketers to understand customer expectations and perceptions, which in turn has a positive impact on customer satisfaction. This involves the implementation of the service mix that encompasses the physical environment of the business, the target market, and the process (Beamish and Ashford, 2005).
The concept of building relationships with customers and relationship marketing
Bowie and Buttle (2013) have defined relationship marketing as "an approach to run a business that stresses the importance of customer retention and a marketing strategy with a set of tools and practices" (p. 370). Firms endeavour to develop relationships with their customers on economic grounds. This is because companies have been shown to realise better financial results in case they are in a position to manage their customer bases in such a manner as to facilitate the identification, satisfaction, and retention of customers. Relationship marketing is thus essential in the hotel business where there is stiff competition as a means of increasing the market share. This will in turn enable the firm to better understand its customer requirements and minimise marketing costs. To achieve successful relationship marketing, the firm has to embrace a customer-oriented culture.
References
Armstrong, M., 2006. A Handbook of Management Techniques: A Comprehensive Guide To Achieving Managerial Excellence & Improved Decision Making. London: Kogan Page Publishers.
Beamish, K., and Ashford, R., 2005. Marketing Planning 06/09. London: Routledge.
Bowie, D., and Buttle, F., 2013. Hospitality Marketing. New York: Taylor & Francis.
Gitman, L., and McDaniel, C., 2004. The Future of Business: The Essentials. Stamford, Mass.: Cengage Learning.
Kotler, P., and Armstrong, G.M., 2010. Principles of Marketing. New York: Prentice Hall.
Kumar, P., 2010. Marketing of Hospitality & Tourism Services. New Delhi: Tata McGraw-Hill Education.
Kumar, A., and Sharma, R., 2000. Marketing Management. New Delhi: Atlantic Publishers & Distri.
Pizam, A. (2012). International Encyclopedia of Hospitality Management 2nd Edition. New York: Routledge.
Powers, T., and Barrows, C.W., 2005. Introduction to Management in the Hospitality Industry, Student Workbook. London: Wiley.
Reid, R, D., and Bojanic, D.C., 2009. Hospitality Marketing Management. New York: John Wiley and Sons.
Sharma, K.K., 2003. Tourism and Hospitality. New Delhi: Sarup & Sons
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