Marketing In Hospitality Industry

Introduction Marketing process is central to the success of every business whether large or small. This is because it addresses the key aspects of the market. Marketing process involves understanding the market environment and taking opportunities present to reach to the customers with the right product, at the right place and at the right time. Wise marketing definitely led to success of business. Without proper marketing, a company cannot reach the customers and satisfy their need and if a company cannot do so, competitor will definitely do so. This paper will research existing literature to provide well structured and compressive information that will help understand the best marketing process within hospitality industry 1.1 discuss concepts of marketing for a relevant services industry According to CIM (2015) marketing is a management process that is responsible for identifying, anticipating and satisfying consumers needs profitably. There are several key concepts addressed in the marketing process. These include customers’ needs, want and demand; Product; Value, cost and satisfaction; exchange, transaction and relationship; Marketer, marketing and Marketer. Customers’ needs Want and demand As mentioned by CIM (2015) in their definition, the purpose of marketing is to identify and satisfy customers’ needs. Customers’ need is therefore an important concept in marketing. Customers needs refer to the problems which customers what to solve through purchase of goods and services (Bowie and Buttle 2004). Clever and effective marketing only take place when customers’ needs are identified, anticipated and satisfied to a substantial level. Value and satisfaction Customer satisfaction is the central in marketing process. A customer is said to be satisfied when the product or services offer them value they were looking for. Value is the product’s capability to meet customer need (Kotler, Bowen and Makens 2009). The biggest aims of marketing process are to customer satisfaction. This is achieved by design, manufacturing or providing goods or services that match or exceed customer needs/requirements. If customer are not satisfied, the marketing process can be termed as ineffective which may led to poor performance. Exchange, Transaction and relationship Exchanges are the act of obtaining something from someone else by offering something in return. Transaction is the end results of exchange. Relationship is a pattern of building long-term and satisfying contact with customers (Kotler, Bowen and Makens 2009). In marketing Exchanges, transaction and relationship are some of essential for effective marketing Market Market refers to all the potential customers that share same needs/wants and who has the capability to engage in commercial exchanges to satisfy their needs and wants (Kotler, Bowen and Makens 2009). Marketers Markets refer to the party working for or on behalf of an organization to ensure exchange take place so that customers needs and wants can be satisfied by and organization in profitable manners. Marketing is incomplete without a marketer (Kotler, Bowen and Makens 2009). 1.2 assess the impact of the marketing environment on the industry Business operations are always subjected to the influences of environment within which they operate. This includes the micro and macro environment. The micro environment of a company is made up of suppliers, Customer, intermediaries, Competitors, pressure group and local residents (Mawson 2000). A company macro environment typically consist of the economy, politics, technology, society, ecology and legal and culture. To understand the impact that both micro and macro environment has it is important to conducted two type of analysis namely PESTEL and SWOT analysis. These two analysis help a manager understand factors in their environment that has or is likely to have impact on organization operation. For instance, analysis of London business environment using SWOT analysis and PESTEL analysis can reveal a numbers of issues affecting hotel business. Pestle analysis of London Business environment and it impact on hospitality industry PESTEL help monitor changes in political, economical, society, technology, ecological legal and culture that are likely to impacts on business. In the London business environment, there are several Pestel-based factors that affect Hospitality industry. These include Politic- Political factors in London have affected and will continue to affect Hospitality industry in London. The political stability in London has provided hotels with a good environment to invest and operate. However, the increase threat of terrorism especially those posed by ISIS are likely to negatively affect the industry. Equally, UK has recently been considering quitting the EU. If such thing happen, it mean the cooperation between UK and Other EU countries will changes and this is likely to see less tourism and business person flocking London as they used to do before. Economic- London is one of the cities than has been hit by recent economic crisis in Europe. This crisis led to decreases in numbers of visitor and guest in Hospitality industry in London. Social Technology- London is one of the cities where technology has advanced. As such many hotels in has embraced the use of technology especially social media marketing and online booking. This has enable the hotels in the region to have wide reach and make booking lot easier for customer SWOT analysis SWOT analysis helps monitor and scan both macro and micro environment to identify marketing strength, weakness, threat and opportunities that exists in the marketing environment (Kotler, Bowen and Makens 2009). A SWOT analysis of London business environment in relation to hospitality industry revealed the following Threat Competition is the biggest threat to Hotels in London. Currently London is home to quite good of Hotel in upper, middle and budget economy and it is estimated that more than 30000 hotel rooms will be added in the next one year (PWC 2016). This competition affects business negatively and as mentioned by Kotler, Bowen and Makens (2009), it is likely to lead to price reduction. Opportunity According to PWC (2016), the demand for low cost hotel facilities in London especially from the younger generation is on the rise. This give hotels the opportunity to capture and tap into this emerging market In the context above, it visible that the marketing environment both micro and macro has a direct impacts, positive and negative, on companies. In order to put a clever and effective marketing process in place, monitoring the entire marketing environment is investable. PESTEL analysis and SWOT analysis are two important tools that can be used to monitor the environment. PESTEL Help monitor changes in political, economical, society, technology, ecological legal and culture. On the other hand, SWOT analysis helps monitor and scan both macro and micro environment to identify marketing strength, weakness, threat and opportunities that exists in the marketing environment (Kotler, Bowen and Makens 2009). 1.3 evaluate the relevance of consumer markets in the industry Consumers market is a term that is used to refer to consumers who buy services and goods for personal consumption. In the hospitality industry context, consumer markets refer to the end users of services. for instance, a customers who book a hotel accommodation while attending business trip, a customers who dine in a restaurant, a customer who uses Spa facilities of restaurant are good examples of consumers market. They are making the purchase not to resell but to consume. Consumers market in the hospitality industry is very crucial as much of revenue is generated from it. The entire industry is consumer-oriented in that every business prioritizes the needs and wants of customers. Failure to be responsive to customer needs and wants can lead to lose of customers to competitors. Understanding the factor s that influences consumers’ behaviour is therefore important. There are several models of consumers’ behaviour that try to explain factors influences consumers’ behaviour. These models include buyers’ Black box model, sociology model, and economical man model. According to buyers’ black box model, consumers’ behaviour is determined by the interaction between stimuli (market and environment stimuli, buyers characteristic and buyer responses. Stimuli, in this case refer to market and environmental factors that create awareness and desire to purchase (e.g. Product, price, social, economical and technological factors), Buyer characteristic refers to the personality of characters of buyers as well as their decision making process. While buyer responses refers to buyer attitude, preference, and relation with a company and perception (Balakrishnan n.d). Figure.1 Buyers’ black box model (Source; Balakrishnan n.d) Sociology model argued that consumers are member and parts of the society. They are element in many social group and institutions in the society and their behaviour is thus determined and influenced by the society. Sociology model assert that the buying behaviour of consumers is influenced by members of society close to the customers. These include family members, friends, colleague, workmate etc (TutorialPoint.com 2016). 1.4 discuss the rationale for developing different market segments Market segmentation is a business strategy that involves dividing broad target market into small subsets of customers that have common needs, interest and priorities and then developing and implementing market strategies to meet the needs of the targeted segment (Weinstein 2013).The market in the hospitality industry is so broad in that it become almost impossible for one organization to meet the different needs of consumers. It therefore becomes necessary to divide the market in different segment and then chose one or several segment to focus on. As mentioned by... Macdonald (2012) this strategy help improve a company’s competitive advantages over it competitors since it will be able to focus in meeting specific needs common to a certain group of consumers. There are several ways in which market segmentation can be done. These including segmenting it according to demographic characteristic, geography, social economical status, Buyer behaviour among other criteria ( Macdonald 2012, Weinstein 2013) Market segmentation based on demographic involved dividing the broad market base on demographic characteristic of consumers. These characteristic may include age, gender, ethnicity and house hold composition (Macdonald 2012, Weinstein 2013 Market segmentation based on Geographical involves dividing the markets according to geographical region, or countries. This strategies is usually used by Multinational Corporation where they divide markets according to regions and countries (Macdonald 2012, Weinstein 2013 Market segmentation based on social economical involves dividing the market according to the social and economical condition of consumers. Typically, under this segmentation, the market is dividing into three segment namely high income, middle income and low income (Macdonald 2012). This segmentation strategies is the mostly in hospitality industry in UK and rest of world. For instance Hotel are classified as Budget/economy hotel (to serve low income earner), middle tier hotel (to serve middle income earner and upper tier hotel (to serve the rich) (Mawson 2000) 2.1 assess the importance of components of the marketing mix to the industry Clever and effective marketing depend on how well the marketers combine four controllable variables Commonly Known as 4ps to meet the customers’ needs. This Four P’s are product, price place and promotion. The combination of the four P’s in order to meet customers’ needs is called Marketing mix (CIM 2015). Marketing mix is crucial for achieving good performances in the markets. Below is a brief explanation of each of the 4 P’s and it importance in the hospitality industry Product- The most primary element of the market ix is Product. Without a product, all the other variables lack meaning and importance. Product refers to good or services that business offers to customers. Clever and effective marketing requires that the products being offered create some values to customers. A company should not develop a products and then look for market afterward. Instead, customers needs must be identified first and products to meet those need developed. In hospitality industry which is more customer-oriented, imposing a product on customers can be beginning of poor performance. Goods or services need to designed and delivered based on what customers want (CIM 2015) Price- this refers to the monetary value attached to a product. As mentioned by CIM (2015) a product is only worth what customers are prepared and able to pay for it. In order to achieve superior performance, the prices set for a products must be competitive but that does not mean it should be the cheapest. It also worth to note that price set should allows the companies to make profit. Promotion –this refer to the ways in which company communicate what it does and what if offers to customers. Clever and effective marketing requires that a company uses wisely various promotion methods which include Public relation, personal selling, advertisement, social media outreach, special offers and exhibition (CIM 2015). In hospitality industry, promotion needs to be a two way communication; it should communicate benefits of services of good offered. It also needs to be appealing to seeking customers’ attention (Mawson 2000). Place- Clever and effective marketing requires that the product is made available to customer at the right place and at the right time (CIM 2015). In the hospitality industry, the place where product is offered to customers is very important. The place must cater for the needs of different customers For instance, in hotel business; the location of a restaurant must cater for the needs of target market. It must give them conveniences 2.2 analyse pricing strategies and policies in relation to the industry Pricing is a very crucial component of market mix. As Mentioned by CIM (2015) the price set for a products need to be competitive and at the same time give good profit margin to the companies. Most business in the hospitality industry are Profit-making entities and such having the right pricing strategy is key for their success. Some of the mostly used pricing strategies in the UK hospitality industry include Absorption pricing – this is a pricing method where all the cost incurred in delivering a product is recovered. In the hospitality industry, this pricing strategy is very common. Most hotels calculate the variable cost associated with delivering a certain cost adds to it a portion of fixed cost in order to determine the cost of products delivered (Reid and Bojanic 2009). Penetration pricing – is a pricing method which including setting very low prices with the goals of attracting customers and gaining market share (Reid and Bojanic 2009). The method is normally used by new entrant in the industry. For instance when Accor Hotels enter the UK budget hotel sector it charged the lowest prices in the market a strategies which has helped it become one of the leading hotel brand in the budget sector. Cost-plus Pricing-is a pricing method where all cost incurred in delivering a product are summed up and a mark-up added on it to determine the prices of services. The summing up of cost help the company cover all the cost incurred while at the mark-up allows the company to make some profit (Bowie and Buttle 2004) Premium pricing- is a pricing method was the price of product is set above the market range with the goal of creating a favourable perception among buyer based on price (Bowie and Buttle 2004). In the UK hospitality industry, Premium pricing is the mostly used strategies. Most of the top tier hotels including Hilton and Marriot hotel have used Premium pricing method to create favourable perception which has helped them attract the wealthy consumers. 3.1 evaluate the role of the promotional mix There are several methods that can be used alongside each others for promotion purpose. These include Public relation, advertising, sale promotion and online marketing. Altogether, these methods form the promotion mix (Bowie and Buttle 2004). Promotion mix play an important role in helping business communicates with customer about what that offer. In the hospitality industry, promotional mix is the only sure ways for Hotels to tell customer who they are and what they offers (Bowie and Buttle 2004). Take Marriott hotel for example, It has used promotion mix which include advertisement in newspaper, communication through it website, hiring sale agents and engaging in public relation activities. This promotion mix has partly contribute to it success. Without promotion mix it could have been difficult for the hotel to create awareness about it existence, facilitate sale and create long lasting relation with customers. When deciding the promotion mix to use in promoting a business in the hospitality industry, there are several consideration that must evaluated. This include the objectives to achieve, resources available/budget, competitors’ strategies, demand for services, level of competition, customers needs and regulation (Bowie and Buttle 2004). 3.2 plan an advertising campaign for a services industry operation Advertisements are very imperative tools in services industry and especially promotion of hotel business. However, For Advertising campaign to be effective, it needs to be properly planning. Planning an advertisement campaign is a process that takes several steps as follow and shown by Figure below. • Selecting target market- The first things to do when planning an advertisement campaign is to select the target market. Target markets are the people which the advertisement messages aim to reach. In most cases, target customers are customer both current and potential. It can however target other stakeholders • Developing advertisement objective- the next step should be to setting of objective to achieve with advertisement. This is crucial as it will affect all the other planning process including development of message and choice of channels • Determining advertising budget- advertisement must have a budget. The budget need to be realistic an adequate. Having an advertisement budget prevents overspending • Design message strategies- This involves developing the message to be communicated in the advertisement. The message may be in audio form, Picture, video, writing etc. Message should be well developed as it determines influences the achievement of advertisement objective • Select media channel- there are various media channel that can be used for advertisement this include different TV station, radio stations, newspaper, magazine, Billboard etc. The most appropriate channel must be chosen. To determine the most appropriate channels, issues to do with reach, cost, form of message carried by each channel must be considered • Evaluating effectives- the final stage involves conducting and evaluation to determine whether the advertisement as effective or not. The evaluation of advertisement can be done by conducting a survey to identify number reached, analyses sale volume etc. (Sharma and Singh 2006) Figure 3- Planning an advertisement Campaign Source; Sharma and Singh (2006) 3.3 analyse the role that sales promotion and public relations play in promotional efforts Both Sale promotion and public relation play an important role in marketing. Blesh (2008) describe sale promotion as direct inducement which offers extra value and incentive to distributor or customers with the goals of generating immediate sale. Sale promotion may take different form which include discount, price off, Bonus, sampling among others. Sale promotion plays an important role in determining the sale of products and services. According to Reich (1997) sale promotion helps organization increases and grows their sale in short-term. In the hospitality industry, Sale promotion is imperative in increase sales volumes especially during recession time. By inducing customers hotels and other business in hospitality industry are able to motivate customers to purchase services and products which they could have otherwise not purchased due to recession economic condition. Public relation is a marketing function involved in managing the reputation and images of an organization. In the hospitality industry, Public relation play key role in the overall success of the company. As mentioned by McCabe (2010), it helps create favourable images, reputation and perception of a company in the eyes of general public. In addition, as mentioned by Foxwell (2014) Public relation also generates free media exposure and advertisement as well as generates positive word of mouth impact. 4.1 discuss the relevance of market research to services industry operations Clever and effective marketing requires that marketing decision to be well informed. This is where market research comes in. Wiid and Diggines (2010) describe marketing research as the process of gathering valuable information for solving marketing problem or challenges faced by and organization. In hospitality industry, marketing research is imperative for the success of the business. It not only helps understand consumers’ needs and response to products but it also help hotels have proper understanding of marketing dynamics such as competitors’ actions, trends in the market among others. In addition, marketing research is a powerful and important tool of forecasting future demand for products or services offered. This help player in the hospitality industry to put in place strategies and mechanism that would help them faces the future more certainly (Nykiel 2007). 4.2 undertake market research for an appropriate product or service Due to the significant marketing research play in the hospitality industry, it is important to know how it is conducted. Typically, a market research can be primary research or secondary research. Primary research involves gathering data that has never been gathered before. In primary research, the marketers usually gather data directly from end users of services or other stakeholder (Morebusiness.com 2011). Primary research can be conducted using several methods which include; 1. Questionnaire- a set of question asked to participants in research 2. Interview- is a face-to-face conversation between market and interviewee 3. Focus group-is a discussion within a group moderated by marketer whose aims are to generate valuable information to aid decision making (Morebusiness.com 2011, Gupta 2004, Wiid and Diggines 2010) On the other hand secondary research involves gathering of already available data. It involves analysing published information, government public industry report etc (Morebusiness.com 2011). Once data are gathered they are analysed in order to be presented in a form that is easier to comprehend and use for decision making. Analysis of gathered data can be done using two methods i.e. qualitative and quantitative. Qualitative is descriptive in nature, while Quantitative analysis is involve numerical/statistical analysis of data (Gupta 2004). 4.3 analyse the suitability of different media for marketing an appropriate product or service There are different media of marketing that can be used in hospitality Industry. These media include newspaper, television, radio, magazine, Billboards, poster, brochure, internet and magazine (Bowie and Buttle 2004). However, as stated by McCabe (2010) business in the hospitality industry need to chose the media of marketing carefully. This is because, different group of consumers uses some media more than others and it is therefore important to understand the media consumed by the target markets. It is equally important to take into consideration the reach of each media before using it marketing. Only media that has wide reach of the target consumers should be used. In addition, it is important to take into consideration the cost of using each media. Almost all business in the hospitality industry operates to make profit and as such efficiency is imperative. Media that are cost effective should be used. 4.4 evaluate the implementation of the marketing plan for an appropriate product or service Clever and effective marketing needs to be done in a logical and systematic manner. This requires the whole marketing process to be planned. A marketing plan needs to be prepared. There are several things that must be addressed in the marketing plan these include, objective to achieve, activities or course of action to be taken, Timescale for each action, budget (Bowie and Buttle 2004). Once prepared, the marketing plan must be implemented. Each course of action as outline in marketing plan must be implemented according to goals, timescale and budget as contained din marketing plan. During implementation, monitoring of the implementation plan must be done to ensure everything aspect of marketing is done according to plan. This would help detect deviation and correct them at their earliest stage. Where Necessary, marketing plan must be revised to reflect changing business environment (Bowie and Buttle 2004) Conclusion The paper has research existing literature complied the finding and presented them in manner that make it easier to understand the best practice of marketing process in hospitality industry. Finding shows that marketing is all about meeting customer needs profitably. The finding has also shown that marketing mix, promotion mix and market research are all important tool for achieve great marketing performance