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Chapter 1 Introduction to Hospitality Marketing and Sales
In the mid-twentieth century, the typical hotel o o Located in a population or trade center, fewer than 50 rooms, and independently owned. Two prominent chains: Sheraton and Hilton. Small rooms, no telephones, a few lacked a private bath. No standardization of products, amenities, or services
Nowadays Hotel Environments (in the mid-1950 s) o o o Population growth: a tremendous influx of people Longer life span: live longer, new households. Improved incomes: postwar economy, two-income families. Increased leisure time: 40 -hour workweek, additional legal holidays, part-time work, jobsharing Expanded highway system: interstate highway system, vehicle registrations
o o o Development of suburbs: impact of highway system, new residential neighborhoods, retail shopping centers, office buildings, and recreational and entertainment facilities -> increased traffic and the need for accommodations and meeting place Increased air travel: business and leisure, 700 airports in early 1980 s, 23 large hub airports Conventional center expansion: growing economy, businesspeople needs facilities for conventions and meetings
Environmental Impacts o o Convention hotels, hotels with business floors and business centers, and extendedstay properties Hotel web sites affects the business environment
Marketing and Sales The need for concentrated marketing and sales strategies has never been greater in the hospitality industry.
Hospitality Industry Marketing o o Shift from a strictly sales orientation to utilizing combined sales and marketing strategies Marketing and sales are, first and foremost, customer oriented, servicing customers.
Marketing o Marketing is much broader in scope than sales. Marketing is the study and management of the exchanging process. It involves those things that the property will do to select a target market and stimulate or alter that market’s demand for the property’s services. Marketing includes sales and a number of other elements: research, action strategies, advertising, publicity, and sales promotions, as well as a means to monitor the effectiveness of the marketing program.
Sales and Trends o Sales n o Sales consists of direct efforts to sell the property by personal sales calls, telecommunication, and mailings. Trends n n Mover toward a stronger market orientation: Market focused and customer oriented. Marketing focuses on trend research and the development of successful sales techniques and efforts.
The Marketing Mix Diagram o o Indicate the integrating of several variables to satisfy specific consumer needs, four Ps. The innermost circle contains the focal point of the marketing efforts-the customer The middle circle illustrates the marketing mix of product, price, promotion, and place (the four Ps). These are termed controllable variables The outer circle identifies uncontrollable variables such as the economic environment, political and legal influences, and the cultural and social environment.
4 P in hospitality marketing o Product -> Product-service n o The service orientation of hospitality properties; Guestroom/Menu Option, Quality: Brand name, Reputation, Image, Exterior Structure and Interior Layout, Service Features, Packaging: Total Gamut of Amenities (Recreation), Furnishing and Décor Place -> Place-distribution n To include the channels of distribution or the intermediaries who aid in the flow of hospitality products and serves to guests; Travel Agents, Tour Operations, Sales People, Referral Group/ Franchise Systems, Reservation Services, Direct Sales.
o Promotion -> Promotion-communication n o Marketing communication, two-way exchange; Publicity, Word-of-Mouth, Public Relations, Direct Sales, Media Advertising, Internal Sales. Price -> Price-rate n Variability Pricing, Room Rates, Menu Pricing, Recreation Amenity Fees, Beverage Prices, Discounts/Commissions.
Marketing mix o o Developing a product-service mix based on the wants and needs of the target markets Determining the most appropriate channels (place -distribution) or ways to reach the market(s) Determining promotion, including sales, advertising and public relations, and other communication strategies and informing markets of the product-service. Establishing a price-rate mix that is competitive and will ensure a fair return to the property while providing value to its guests.
Product-Service o o o Guestrooms, banquet space, food and beverages, and services such as parking, housekeeping, and express check-in and check-out The product-service mix must be tailored to the needs and wants of the quests sought, whether the firm is focusing on its current guest base or seeking out additional markets. Most hospitality properties serve more than on market segment (target market), each with somewhat different needs and wants. Ex) A Four Season hotel: families, business travelers, and small business meeting groups.
o o o Marketing and sales department is responsible for researching the guests’ product-service needs and wants and then working with management to develop the property so that it meets those needs and wants, and evaluates the existing product-service mix and the property’s brand name identity for possible improvements. Ex) Budgetel changed its name to Baymont. Hospitality properties can face difficulty due to the fixed nature of the product. Ex) Hotel rooms and facilities are not versatile; a guestroom cannot become a suite without considerable effort and expense. Service, the other element of the product service mix, is considerably more flexible, but nearly impossible to standardize hotel services.
Place-Distribution o o o The accessibility of the product to consumers. In the hospitality industry, instead of the product traveling to the consumer, the consumer travels to the product. Hospitality products-clean guestrooms, a pleasant dining experience, and so on-are neither shipped nor stored. The problems of warehousing and inventory control do not arise, making distribution much simpler for hospitality firms. The distribution channels available to lodging establishments: direct (direct mail, telephone solicitation, personal sales calls, or media advertising) or indirect (Intermediaries such ad travel agents, tour operators, incentive travel houses, and independent hotel representatives).
Promotion-Communication o o o Promotion is the way a hotel or restaurant communicates to target markets, and can involve advertising and direct sales techniques. Communication is different from promotion; promotion implies persuasion (something the marketer does to the consumer) while communication is a two-way exchange (something the marketer does with the consumer). Determining what the consumer wants and needs through communication is much more effective than trying to sell a product or service that is not needed.
Price-Rate o o o If a potential guest rejects the property and its services because of price, all of the previous efforts were wasted. Guests who stay at a budget motel have different wants, needs, and expectations from those who choose an expensive resort property. Hotels often develop variable-rate policies to meet the needs of different market groups, depending on the competitive situation and the bargaining position of the buyer.
o o o The bargaining position of the buyers is depending on peak period (in-season), valley period (off-season), and shoulder period (between a peak and a valley, can be an excellent opportunity to build business). Meeting planners know they can generally negotiate better rates during valley or shoulder periods than during peak convention months, and vacationers often wait to take advantage of the off-season’s reduced rates. A property’s pricing policy can also affect it image. Reputation can play a significant role in the pricing of hospitality products.
Marketing Mix Decisions o o The elements of the marketing mix are interrelated, and a decision with respect to one variable usually affects other variable of the mix. Four Ps are Controllable variables, but all variables are not absolute. Uncontrollable variables-external factors-will also affect a marketing effort. Ex) A recession, an energy crisis, natural disasters such as earthquakes and floods, or weather conditions. Successful marketing efforts don’t just happen. Both variables must take into consideration. A carefully researched, planned, and managed sales effort must be developed to ensure that the property attracts guests and keeps them.
Management’s Role in Marketing and Sales
The General Manager o The success or failure of a hotel’s marketing and sales program starts with top management. Marketing-oriented general manager is the key to a firm’s sales effort.
The Director of Marketing o o o Perform a variety of management tasks, such as setting objectives and policies; make decisions; and organize, select, supervise the sales and marketing staffs. A marketing director’s supervisory tasks: planning, organizing, staffing, directing, controlling. Looking for new opportunities is an ongoing process and requires the skills of a full-time marketing director.
The Director of Sales o o Carry out marketing strategies and directs the sales staff in finding solutions to customers’ problems (that is, marketing sales). The most important responsibility of a salesperson is to sell the product. Contact prospective or current clients and selling the benefits of the property.
The Importance of Marketing and Sales
Importance o o o Vital parts of a process that fills guestrooms and restaurants and sells function and meeting room space. Direct sales are as important today as they were before marketing efforts came to the forefront of hospitality promotion. Most prospects will be impressed by the salesperson’s persistence and the fact that the salesperson really care about determining and meeting the prospect’s need.
Marketing and Sales as a Career o o o Sales has become a scientifically designed function, generated by computers relying on detailed consumer profiles or through lists scientifically developed for each property’s target markets. Professional salespeople are now trained in the psychology of selling and in both verbal and nonverbal communication. They are becoming experts in people-handling skills, such as the recognition of common personality types, and methods of dealing with each type of client. Hospitality sales is an excellent career choice. Many opportunities open for sales people today.
The Challenge of Hospitality Marketing and Sales o o o Hospitality salespeople must consider the following characteristics of hospitality products and services when selling potential clients on the hotel. Intangibility: Salespeople sell the use of guestrooms or banquet rooms. That is, they must sell the benefits or the experience the property’s products and services will provide to prospective clients. Perishability: An unused guestroom, and empty restaurant seat, or an unfilled tee-off time represents business lost forever. It cannot be stockpiled or inventoried to sell later. Inconsistency: The service may vary greatly at different hotels or restaurants-or even at the same outlet. Maintaining a consistent level of services is a special challenge to chain properties and restaurants. Inseparability: Production and consumption are largely simultaneous with services. Guests come in contact with employees and with other guests.
Trends Shaping the Future of Hospitality Marketing and Sales Environmental scanning in marketing circles is and integral part of hospitality sales and marketing.
Globalization o o o Expand their business globally were ushered in during the last decade. Globalization continues to impact the hospitality industry. Since the U. S. market is considered to have matured, it will become more important for hotel chains to look outside the country for more opportunities. Leaders in globalization include major international as well as U. S. hotel chains (see Exhibit 2). Globalization is a two-way street, with several foreign chains establishing a greater presence in the United States(Inter. Continental Hotels Group, Accor chain). Globalization has greatly affected the food service industry as well(Mc. Donald’s). The global marketplace offers both opportunities and challenges. Hospitality companies must be sensitive to cultural differences; one product or one approach does not fill.
Consolidation: Mergers, Acquisitions, and Joint Ventures o o o High costs of globalization, requires advanced technology to process international reservations and develop marketing strategies for specific countries and regions, additional promotion costs. -> The consolidation of hospitality companies. Merger and acquisitions within the hospitality industry. Why this frenzy of mergers? Medium-size hotel companies lack the presence and resources for the technology needed for worldwide marketing. Five major hotel companies control the majority of hotels globally in the near future. Large hotel companies enjoy a number of advantages: More marketing clout (influence), more cost –effective purchasing capabilities, more borrowing power, more cost-effective opportunities.
Partnership Marketing o o Developing strategic alliances and synergism marketing, involves two or more firms-ideally serving similar markets with noncompetitive products-joining together to benefit from each other’s strengths Two-types of strategic alliances: like-kind alliances and relatedbusiness alliances. Like-kind alliances are those in which two or more organizations in the same business (such as several hotels) form an alliance to benefit all parties. Ex) Central reservation system. Related-business alliances include hotels teaming up with such hospitality-related firms as cruise lines, food service companies, theme parks, and credit card companies to enhance their presence in the marketplace. Ex) Franchised restaurants, Frequently traveler programs, Joint promotions.
Niche Marketing and Branding o o Niche marketing-designing, building, and marketing hospitality products for specific market segments. Three broad categories-luxury, mid-priced, and budget. n Ex) Ramada Plaza Hotels, Ramada-Inns, Ramada-Limited. See also Exhibit 3. Another Example, Marriott Hotels. Creating brand loyalty: Hotel chain and independent hotel case. Branding and positioning will continue to remain important factors in hotel and restaurant marketing (see Exhibit 4). A strong brand can bring many benefits.
Technology o o To communicate with customers and other chain properties is a key element in providing superior guest service, and has greatly changed the way in which hospitality firms conduct their sales and marketing efforts. Computerized reservation system, websites, emails, faxes delivered via computer. Automated check-in/check out kiosks, point-of-purchase sales terminals, electronic or infrared-based guestroom locks, frequent-quest programs using a property’s electronic data base, smart card, laptop computer, cellular phones.
Environmental Awareness o o Today’s customers are concerned about environmental issues. Ecotourism can be easily confused with adventure travel, but it is much more. Helping to protect the visited region
Guest Preferences o o Keep consumer’s changing preferences and the latest demographic trends. Ex) Baby boomers, two-income family, do-ityourselfers Are connected, are time conscious, are demanding, are more health conscious.
Relationship Marketing o o o To build a repeat customer base. Good service is expected by guests. To develop friendships with guests and making an extra effort to be sure their expectations are met and their needs anticipated for their next visit. Relationship marketing plan to turn customers into customers for life, build customer trust and loyalty. CRM (Customer Relationship Management).
o o o Relationship marketing involves building value for the customer and giving the perception that the hotel and the customer are partners. This creates bonds with customers by fully understanding and responding to their needs, requirements, and problems with customized personal service. Obtaining a new customer is five to ten times more expensive than retaining existing customers. Long-term, loyal customers also tend to spend more per visit than new customers, which can result in significant revenues.
Key Terms o o Consolidation: The combination of two or more corporations to form a new corporation, by purchase, merger, or another ownership transfer. Consolidation reduces the number of companies owning brand hotels. Ecotourism: Tourism that promotes enjoyment of nature (without harming the environment); it may include efforts to protect or preserve the visited region. Environmental scanning: The analysis of trends and factors that will affect a hospitality firm’s marketing efforts. Globalization: The international consolidation of big businesses and the growing trend for countries to allow the transfer of goods and services across national borders.
o o o Marketing: A system of interrelated activities formulated to plan, price, promote, and make available services or products to potential customers or guests in a particular target market. Marketing mix: The combination of the four “Ps” of marketing-product, price, place, and promotionthat is used to achieve marketing objectives for a target market. Niche marketing (branding): Designing, building, and marketing hospitality products for specific market segments.
o o Partnership marketing: Also known as developing strategic alliances and synergism marketing, it involves two or more firms-ideally serving similar markets with noncompetitive products-joining together to benefit from each other’s strengths. Peak period: Also known as in-season, that is the period when demand for a property and its services is highest. Maximum rates may be charged at this time. Relationship marketing: Marketing that views customers as asset and emphasizes retaining customers by nurturing and sustaining a relationship with them. Sales: Direct efforts to sell a product or service through personal contact, telecommunication, and advertising and other promotion.
o o Service guarantee: A promise made to customers in advance of purchasing that they can be assured of 100 percent satisfaction or they will not have to pay. Shoulder period: A period when the level of business for a property falls somewhere between its peak and valley periods. Strategic alliance: A business alliance in which the allies benefit from each other’s strengths. Valley period: Also known as off-season, valley periods are times when demand for a property and its services is lowest, Reduced room rates are often offered during valley periods to attract business.