Chapter Ten Understanding Competition Shoemaker Lewis and Yesawich

Chapter Ten Understanding Competition Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Macrocompetition u Any organization that competes for a customer’s business u The maturity stage u Missed opportunities become threats u Marketing threats: Michael Porter’s Five Forces Model Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Choosing the Right Competition u Critical to a competitive analysis u Focus on the concept at the expense of the customer: “conceptitis” u How do we compete? – Choose competition you can and want – Ask customers where else they would like to patronize and why Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Competitive Intensity u How intensely companies battle each other u Factors contributing to competitive intensity u Example: the amenities war u Services can be easily duplicated u When the market needs are similar, intensity is greater Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Competitive Intelligence Know your competition u Measurable differences: u – REVPAR – Yield index – REVPOR – REVPAC – Internet REVPAR Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition u Measurable differences (cont. ): – Purchased data – RSQFT – REVPAS – Customer satisfaction index (CSI) – Perceptual mapping © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Example of Market Share Hotel Actual Rooms Sold Occupancy % Fair Share % Actual Share % Upper-Tier Hotels A 300 220 73. 3 11. 5 15. 5 B 500 350 70. 0 19. 2 24. 7 C 1200 500 41. 7 46. 2 35. 2 Yours 600 350 58. 3 23. 1 24. 7 Total 2600 1420 54. 6 100. 0 E 275 220 80. 0 31. 3 39. 6 F 425 360 84. 7 48. 3 50. 0 G 180 140 77. 8 20. 4 19. 4 Total 880 720 81. 8 100. 0 Middle-Tier Hotels Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Example of REVPAR Hotel Actual Rooms Sold Occupancy % Average Daily Rate (ADR) Revenue REVPAR Yield Index Upper-Tier Hotels A 300 220 73. 3 $120 $26, 400 $88. 00 1. 17 B 500 350 70. 0 130 45, 500 91. 00 1. 21 C 1200 500 41. 7 150 75, 000 62. 50 0. 83 Yours 600 350 58. 3 140 49, 000 81. 67 1. 08 Total 2600 1420 54. 6 137. 96 195, 900 75. 35 1. 00 Middle-Tier Hotels E 275 220 80. 0 $110 $24, 200 $88. 00 1. 06 F 425 360 84. 7 100 36, 000 84. 70 1. 02 G 180 140 77. 8 90 12, 600 70. 00 0. 85 Total 880 720 81. 8 101. 11 72, 800 82. 70 1. 00 Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Calculation of Competitive Index Importance Brand A Rating Brand B Score Rating Score Column A B C D E Feature Scale: 1 -10 Ax. B Scale: 1 -10 Ax. D It is a place friends like to go 7. 30 7. 60 55. 48 6. 40 46. 72 Atmosphere is very pleasant 8. 80 7. 70 67. 76 7. 60 66. 88 One place seems to have better odds 7. 40 6. 80 50. 32 6. 00 44. 40 Slot machines filled in a timely manner 7. 50 6. 80 51. 00 Types of promotions offered 7. 40 7. 70 56. 98 6. 80 50. 32 TOTAL 384. 00 INDEX Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition 281. 54 259. 32 73. 32 (281. 54/384 x 100) 67. 53 © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Competitive Intelligence u Types: – Defensive – Passive – Offensive Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition u Objectives: – Understand positional advantage or disadvantage – Understand strategy or tactics of competitors – Create strategies that will lead to a competitive advantage © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Competitive Intelligence (cont. ) u Step-by-step procedure 1. 2. 3. 4. Setting up the process Collecting the raw data Evaluate and analyze the data Draw conclusions and use the data Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Competitive Analysis u Barriers: – Size of a targeted market – Cost differentials (i. e. , advertising) Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition u Sustainable competitive advantage: – Customers perceive a consistent difference – Differences are a result of better capability – Differences and capability endure over time © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Competitive Marketing u Positioning – Develop strengths that align with competitors’ weaknesses – Take the offense to disrupt the balance – Anticipate shifts in the industry to exploit change – Obtain a position that is less vulnerable to attack Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Finding Marketing Opportunities u Identify and quantify customer problems u Simple and easily understood by customer u Know your market, customers, and their problems u Ask: Will it create/keep a customer? Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Feasibility Studies u Quantitative research strength of an opportunity u Evaluate marketing opportunities u Focus on proposed financial performance u Depends on the behavior of customers Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.