Transcript Presentation Module 2

HOTEL MANAGEMENT
THE EXTENDED MARKETING MIX
1
The Extended Marketing Mix
Marketing Mix - People
People refers to your customer service staff and the
attitude and appearance that is reflective of your
organization, or perceived by your customer.
 You cannot have strong corporate image without
good people; good people that listen to your
customers, and good people that communicate those
comments, concerns, and needs to your entire
organization.
 Your people can determine whether
your customer will return.

Marketing Mix - People

How to develop PEOPLE into a competitive
advantage?
and selection – choose the right
people for the right job (with good attitude)
 Training – product knowledge, customer
service skills and the processes
 Development – prepare employees to take on
greater roles and responsibilities in future
 Compensation – do not underpay in terms
of salaries and benefits.
 Recruitment
Marketing Mix - People

How to develop PEOPLE into a competitive advantage?
 Treatment– treat employees well with dignity and
respect
 Working environment - provide a safe and
comfortable working environment, foster teamwork and
cooperation
 Empowerment – allow employees the power to
 make decisions that enables them to
 serve customers better, make employees
 accountable for their actions
Marketing Mix - Process
Procedure, mechanism and flow of
activities by which services are used.
 Also the 'Procedure' how the product /
service will reach the end user.
 Always focus on simplifying the process for
your prospective customers.
 All processes can be represented by the
Value Chain.

Marketing Mix - Process

How to make PROCESS a competitive
advantage?
– make processes simple for
customers to understand and perform
 Convenient – make processes convenient for
customers from their perspective (not the hotel
or employees)
 Reduce waiting time – do not let guests wait
too long for the service
 Simplify
Marketing Mix – Physical Evidence

The elements of 'marketing mix' which customers
can actually see or experience when they use a
service.
 Contribute to the perceived quality of the service
Marketing Mix – Physical Evidence

Include the following elements:
Furniture
and furnishing of the rooms and all public
areas
Façade and appearance of hotel building itself
Brochures, paperwork and stationery
 Lighting and ambience
 Signage
 Temperature and noise
 Appearance of staff
 Web pages
 Appearance of advertisements
Marketing Mix – Physical Evidence
Physical Evidence must go in line with the
positioning of the hotel.
 A luxury hotel MUST appear luxurious!
 A budget hotel however does not need to
look cheap!
 Physical evidence must make the customer
perceive the hotel offers value and comfort.

Marketing Mix – Pricing

Three C of Pricing
 Competition
 Costs
 Customers’ Comfort Zone

Competition is a dominant factor – Hotel cannot price
itself out of the market / The prices must not differ
too much from other hotels of similar standards
Marketing Mix – Pricing
Pricing based on Costs
1. Determine the operating costs of the hotel
2. Classify into fixed costs and variable costs
- fixed costs
– do not change in relation of volume / level of activity
- examples: rent, salaries, depreciation, insurance
- variable costs
– increase in relation to volume / level of activity
- examples: consumable stores, water and electricity
Marketing Mix – Pricing
Pricing based on Costs
3. Determine the targeted profits and occupancy level
4. Calculate the targeted pricing using the formula:
Fixed Cost + Targeted Profit
Contribution per room night
Where Contribution = Selling Price less Variable Costs
Marketing Mix – Pricing
Pricing based on Costs
3. Determine the targeted profits and occupancy level
4. Calculate the targeted pricing using the formula:
Fixed Cost + Targeted Profit
Contribution per room night
Where Contribution = Selling Price less Variable Costs
Example : Cost Plus Pricing
A hotelier runs a 50 room budget hotel.
The average room rate is $25 per room night
Budgeted monthly costs are as follows:
Depreciation
$2,000
Fixed utilities
$1,000
Salaries
$17,000
Repairs and maintenance
$1,000
Stationery and Printing
$1,000
Advertising
$3,000
Consumable materials and variable utilities $5 per
room night.
Example: Cost Plus Pricing
Calculate the breakeven in room nights and
sales.
If the hotelier expects at least 60%
occupancy rate, what should he do?
Other Pricing Strategies
Hit or Miss
 record occupancy rate at each pricing level
 analyze the collected information
periodically to determine which level
was most profitable
 set rate at the most profitable
Other Pricing Strategies
Percentage increase
 list rates charged in the previous year
 adjust for inflation and payroll increase
Pied Piper
 set rates according to what other hotels in
the area are asking for comparable
accommodation