Transcript Marketing for Hotels and Restaurants Part 1 2008

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Strategic Marketing for Hotels and
Restaurants
Stowe Shoemaker, PhD
Cornell University Executive Education Faculty
University of Houston
[email protected]
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
Objectives
1. Introduce Strategic Marketing System Model – the
Framework for the class
2. Review definition of marketing and discuss the future
of marketing
3. Review the buyer purchase model
4. Discuss how to calculate the life time value of the
customer and the value of WOM and why this is
important
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Objectives
5. Discuss market positioning
6. Discuss a framework for developing a
marketing plan
7. Review communication strategies
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How to Reach Goals
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Lecture
Case studies
Discussion
Group 3 day project: Develop a marketing
strategy for Carvel Ice Cream
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Carvel Ice Cream
• Case to be presented the last day of class
• Award for best group presentation: Cornell
Marketing Strategy Contest
• Participants will vote:
– Incorporates class material (negates 5 forces model,
SWOT, presents measures to show success, etc.)
– Originality
– Likelihood of success
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not at all 1 2 3 4 5 6 7
#1
Creativity
Originality
Incorporates class
information
This group had fun
Will build a CA
Presents measures to
monitor success
TOTAL
#2
#3
does extremely well
#4
#5
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The Marketing Plan
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Some Possible Marketing Plan
Objectives
• Changes in marketing direction (defined by
competitive set or business mix or both)
• Defensive or offensive marketing moves
• New opportunities (new market segments)
• Other specific product line objectives (e.g.,
increase food, beverage, spa or other revenues)
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Some Possible Marketing Plan
Objectives
• Market share objectives—overall and by market
segment, such as geographic, demographic,
psychographic, group, FIT, package, etc.
• Pricing objectives (defined as an indexed value
against other properties in the competitive set)
• Sales and promotion objectives
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Some Possible Marketing Plan
Objectives
• Advertising objectives (in terms of awareness
and/or intention)
• Channel, distribution and intermediary
objectives, such as the percentage of business
from travel agents
• Research objectives
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Handout on Template for a
Marketing Plan
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Review Basics of Marketing
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The Concept of Marketing
• Definition of Marketing:
– identifying evolving consumer preferences, then
capitalizing on them through the creation,
promotion and delivery of products and services
that satisfy the corresponding demand. This is done
by solving the right customers’ problems, giving
them what they want or need at the time and place
of their choosing, and at the price they are willing
to pay.
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4 P of Marketing
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P
P
P
P
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Services versus Goods
• Differences between goods versus services:
– Heterogeneity
– Simultaneous production and consumption
– Perishability
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Types of Products/Services
• Search qualities
• Experience qualities
• Credence qualities
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Continuum of Evaluation for
Different Types of Products
Most
Goods
Most
Services
Easy to evaluate
Difficult to evaluate
High in search
qualities
High in experience
qualities
High in credence
qualities
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Tangibility Spectrum
Salt
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Soft Drinks
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Tangible
Dominant
Detergents
Automobiles
Cosmetics
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Fast-food
Outlets
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Fast-food
Outlets
Intangible
Dominant
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Advertising
Agencies
Airlines
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Investment
Management
Consulting
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Teaching
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7 P of Marketing
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P
P
P
P
P
P
P
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Fourteen C’s of Marketing
• Customization
• Customer
• Communications
• Categories of
offerings
• Customer measurement
• Capabilities of firm
• Customer care
• Cost, profitability and • Chain of relationships
value
• Capacity management
• Control of process
• Competitors
• Collaboration within • Cost to the customer
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Carvel Ice Cream
and the 14 C’s
• Identify as many of the 14C’s in the case.
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The Evolution of Marketing
Profitability
Sales
Strategic
Tactic
Push traffic,
no targeting,
discounts, little
measurement.
Still push,
discounts,
some
measurement.
“Price” driven,
segmented,
transaction
based.
Added value to
product, support
price, customized,
strengthen brand.
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Knowledge,
Help support
VAR in
loyalty
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Interactive Marketing
• Refers to any activity that uses the Internet to
advertise and sell goods and services to
consumers, business, or nonprofit organizations
and government
– Marketer’s Toolkit by Harvard Business School
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Contextual Marketing
• Give the customer what she wants and make it
useful and accessible so she can take action
when it matters to her
• Widget: widgets are basically little websites that
display directly on the Dashboard, rather than in
a web browser.
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Examples of Contextual Marketing:
Widgets
• Movable mini-applications used by consumers to
craft custom experiences
• http://www.clearspring.com/docs/introduction
• http://www.kickapps.com/platform/
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Ultimate Travel Widget
Ultimate Travel Widget Travel Widgets presents the "Ultimate Travel
Widget". Now you can book your Hotels, Air, Cruises, Hotel and Air
Packages all in one widget. No more clutter of 3 or 4 widgets to fill up
your Dashboard. The Ultimate Travel widget utilizes World Choice Travel,
a Travelocity company, so you can book with confidence. Air fares are
compared with 28 sites. Hotels from over 20,000 locations and every
cruise line can be searched for reservations. The 4 tab interfaces allows
you to toggle quickly from section to section. World wide travel and many
currencies supported. Download the Ultimate Travel Widgets today and
start traveling right from your dashboard.
http://www.jadewatertravel.com/Ultimate_Travel.zip
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http://www.nimblefish.com/
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Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
The Purchase Cycle
Brand
Advocate
WOM
Repeat Purchase
Loyalty
Circle
Satisfaction
Trial (Initial Purchase)
Dissatisfaction
Barriers
a.
b.
c.
Switching costs
Perceived risks
Lack of information
Need
Recognition
Awareness/
Search/Evoked Set
Complain
Switch
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Why Switch?
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Marketing Myopia
• Management defines an industry, or a product,
or a cluster of know-how so narrowly as to
guarantee its premature senescence.
• Examples: railroads, should be transportation;
oil business, should be defined as ?; buggy whip
manufacturer should be defined as? Hotel
business defined as ?
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Sales versus Marketing
• Marketing
• Selling
– Focuses on the needs of
seller;
– Preoccupied with need to
convert the product to
cash
– “you get rid of it, we will
worry about the profits”
– Focuses on the needs of
the buyer;
– Satisfying the needs of
the customers by means
of the product and the
whole cluster of things
associated with creating,
delivering, and finally
consuming it.
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Sales versus Marketing
• Selling
• Marketing
– What is offered for sale is
determined by the firm
– Marketing minded firms
try to create valuesatisfying goods and
services that consumers
want to buy
– What is offered for sale is
determined by the buyer
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Reasons for Marketing Myopia
1. The belief that growth is assured by an
expanding and more affluent population
2. The belief that there is no competitive
substitute for the industry’s major product
3. Too much faith in mass production and in the
advantages of rapidly declining unit costs as
output rises
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Reasons for Marketing Myopia
4. Too much faith in mass production and in the
advantages of rapidly declining unit costs as
output rises
5. Preoccupation with a product that lends itself
to carefully controlled scientific
experimentation, improvement, and
manufacturing cost reduction.
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Reasons Examined by Looking at
Three Industries
• Petroleum
• Automobiles
• Electronics
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Overview of Strategy and
Competitive Advantage
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“Alice:
Will you tell me please, which way I
ought to go from here?
Cheshire Cat:
Alice:
That depends a good deal on
where you want to get to.
I don’t much care
Cheshire Cat:
Then it doesn’t matter which way
you go.”
Lewis Carroll, Alice in Wonderland
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Strategy
– “The science and art of military command as
applied to overall planning and conduct of
large-scale combat operations”
– “The determination of basic long-term goals and
objectives of an enterprise and the adoption of
courses of action and the allocation of resources
necessary for carrying out these goals”
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Strategy versus Tactics
• Objective:
Increase revenues by being
perceived as hotel of choice
• Strategy:
Provide greater value
• Tactic:
Always have their reservation
and room ready; call them by name; make
sure they receive their wake-up call; focus on
dimensions of service quality
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Levels of Strategic Planning
• Corporate-level strategy
– Focus on long-term viability
• Business-level strategy
– Focus on overall theme of the company and its
position
• Functional-level strategy
– Focus on improving day-to-day operations
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Strategy Checklist
1. Is it identifiable and clear in words and
practice?
2. Does it fully exploit opportunity?
3. Is it consistent with competence and
resources?
4. Is it internally consistent, synergistic?
5. Is it a feasible risk in economic and personal
terms?
6. Is it appropriate to personal values and
aspirations?
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Strategy Checklist
7. Does it provide stimulus to organizational
effort and commitment?
8. Are there indications of responsiveness of the
market?
9. Is it based on reality to the customer?
10.Is it workable?
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Why Strategic Plans Fail
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Inadequate preparation of line managers
Poorly defined business units
Vague goals
Inadequate databases for action planning
Substandard linking of strategy with other
control systems
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Competitive Advantage
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Definition
• Something that a firm has or does that allows
the firm to earn higher than average profits,
capture higher than average market share, and
create a non level playing field;
• Gained by offering consumers something that
they value that is currently not being given to
them
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Competitive Advantage
• Distinctive competencies that lead to CA:
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–
–
–
–
–
–
Management knowledge
Culture
Location
Access to resources
Exceptional employees
Special patents
Access to capital
Brand name
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Value Chain
• Primary Activities that enable creation of the
project
– Manufacturing
– Marketing
• Secondary Activities that enable primary activities
to take place
– Infrastructure
– R&D
– Materials Management
– Human Resources
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Building Blocks of CA
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Efficiency
Quality
Innovation
Customer Responsiveness
Size
Value
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Building Blocks Not Independent
• Very often a firm focuses on two or three at the
same time.
• For instance, consider Harrah’s Entertainment
– size
– marketing efficiency
– customer responsiveness
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
Value
Efficiency
Quality
Innovation
Customer
Responsive
Size
Components
of a product;
GAP model
Taco Bell
The
components of
the loyalty
circle
Franchise
Infrastructure
Manufacturing
R&D
Marketing
customer
How to loyalty; lifetime value
create
Materials
Management
Human
Resources
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Mission Statements
• articulates its main philosophical values
• according to Peter Drucker, mission-statement
development is the time to ask:
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•
•
•
who are our markets (customers)
what is the value to customer (value of product)
what will our business be
what should our business be
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Vision Statements
• A road map showing the route a company
intends to take in developing and strengthening
its business. It paints a picture of a company’s
destination and provides a rationale for going
there.
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Strategic Vision versus Mission
Statement
• Strategic vision portrays a company’s future
business scope (“where are we going”)
• Mission statement typically describes its present
business scope and purpose (“who are we, what
do we do, and why we are here.”)
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Intercontinental Hotel Group
• Corporate Information/
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Starwood Hotels and Resorts
• Company Values
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McDonalds
• Company Values
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Measuring Success of Strategy
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Five Principles of the Strategy-Focused
Organization
1. Mobilize Change through Executive Leadership
2. Translate the strategy into operational terms
Use language that everyone understands
3. Align the Organization to the Strategy
Scorecard cascades the strategy to all parts of the
organization and align resources needed to
accomplish the strategy
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Five Principles of the Strategy-Focused
Organization
4. Motivate to Make Strategy Everyone’s Job
The reward and recognition system is used to align
individual behavior with performance objectives called for
by the strategy
5. Govern to Make Strategy a Continual Process
Strategy execution is linked to the budget and a reporting
system based on scoreboard measures is used to provide
feedback on strategic performance
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Balanced Scorecard
• Stems from the recognition that exclusive
reliance on financial performance measures
induce company managers to take actions that
make the company’s near-term financial
performance look good and to neglect the lead
indicators.
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Balanced Scorecard
• The solution: measure the performance of a
company’s strategy and make strategic
objectives an integral part of a company’s set of
performance targets.
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
Objectives to Measure Strategy
Financial Objectives
Strategic Objectives
An x % increase in annual
revenue
Winning a x % of market share
Annual increases in after-tax
profits of x percent
Annual increases in earnings per
share of x percent
Achieving lower costs
Profit margins of x percent
Achieve technological leadership
An x percent of return on
investment
Strengthen the firms brand name
Overtake keep competitors on
product performance or quality
or customer service
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Hilton – Only the Customer Can:
• Tell us what’s working and can choose us over
other hotels.
• Answer the tough questions:
– Are we doing things right?
– Are we doing the right things?
– Are we doing the right things right?”
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Hilton - continued
• Huckestein defined two broad, new strategies
1. Pursue an aggressive growth plan to ensure
that “a Hilton was always nearby”
2. Install a new performance management
system to help standardize processes and
deliver consistent quality across every Hilton
property
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Hilton – Value Drivers
• Operational effectiveness
Efficiently Hilton hotels convert revenue into profit through
hotel operations, processes, and procedures
• Revenue maximization
REVPAR targets
• Value proposition
How well managers create a service environment that
increases repeat visits among guests and retention of key
staff members
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
Hilton - continued
Operational Effectiveness
EBITDA
Revenue Maximization
RevPAR; RevPAR Index
Value Proposition
Overall guest satisfaction scores;
overall guest loyalty score;
overall staff satisfaction score;
average quality score through
mystery shopping
Score on compliance with brand
standards from on-site
inspections
Orientation training, skills
training, diversity plan
performance
Brand Management
Learning and growth of staff
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Exercise
• Develop mission statement for CIC
• Develop vision statement for CIC?
• How do employees know about the vision and
mission?
• How are employee/corporate rewards tied to
these statements?
• How do you know if you are meeting the
mission and vision statements?
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Need to Understand Environment as Part of
Strategic Planning Process
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SWOT
• Strengths
– Internal to the organization
– Things the firm is good at
• Weaknesses
– Internal to the organization
– Things the firm is not good it
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SWOT
• Opportunities
– External to the firm
– Examine the different environments
• Threats
– External to the firm
– Examine the different environments
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D