Transcript Chapter 3

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THE ROLE OF MARKETING
STRATEGIC PLANNING
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Nature of High-Performance Business
Introduction
• A major challenge facing hospitality companies is
building & maintaining healthy businesses in a
rapidly changing marketplace & environment.
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• Nature of High-Performance Business
–
–
–
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Stakeholders
Processes
Resources
Organization
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Nature of High-Performance Business
Stakeholders
• define the stakeholders and their needs.
– traditionally businesses focused on their stockholders
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• strive to satisfy the minimum expectations
– including customers, employees, suppliers, and the
communities where their businesses are located
• creates a high level of employee satisfaction.
– which leads employees to work on continuous
improvements as well as breakthrough innovations
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Nature of High-Performance Business
Stakeholders
• growth creates opportunities
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– pay employees a fair wage.
• synergistic loop between satisfied customers &
satisfied employees.
– satisfied employees create satisfied customers
– employees like dealing with customers who are happy
and they know from previous visits
• higher-quality products & services.
– creating high customer & stakeholder satisfaction
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Nature of High-Performance Business
Processes
• work is traditionally carried on by departments.
• Departmental organization poses some problems
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– walls go up between departments
– there is usually less than ideal cooperation
– work is slowed & plans often are altered
• refocusing attention on the need to manage processes
more than departments.
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Nature of High-Performance Business
Resources
• to carry out processes, a company needs resources
–
–
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–
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personnel
materials
machines
information
• identify their core competencies and use them for
their strategic planning.
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Nature of High-Performance Business
Organization
• organizational side of a company consists of its
structure, policies, and culture.
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– all of which tend to become dysfunctional in a rapidly
changing company
• align their organization’s structure, policies, and
culture
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Strategic Planning: Defining Marketing’s Role
Introduction
• Strategic planning. The process of developing and
maintaining a strategic fit between an organization’s
goals and capabilities and its changing marketing
opportunities.
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• defining its overall purpose & mission
– this mission is turned into detailed supporting objectives.
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Figure 3-1 Steps in Strategic Planning.
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Strategic Planning: Defining Marketing’s Role
Introduction
• detailed marketing and other plans that support the
companywide plan.
• companies prepare annual plans, long-range plans,
and strategic plans.
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– annual & long-range plans deal with current businesses
– the strategic plan involves adapting to take advantage
of opportunities in its constantly changing environment
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Strategic Planning: Defining Marketing’s Role
Introduction
• been suggested that many of the traditions within the
industry have experienced little change.
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– “Most of its managers, for instance, were trained in the
classical management style.”
– “formal rules and regulations guide decision making and
ensure organizational stability. …authority and decision
making tends to be centralized”
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Strategic Planning: Defining Marketing’s Role
Defining the Corporate Mission
• clear mission or purpose
– as the organization grows, adds new products &
markets, or faces new conditions in the environment
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• Corporate mission statement. A guide to provide all the
publics of a company with a shared sense of purpose,
direction, and opportunity.
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Strategic Planning: Defining Marketing’s Role
Defining the Corporate Mission
• avoid making a mission too narrow or too broad.
– the organization should base its mission on its
distinctive competencies
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• well-crafted mission statements have shown better
organizational & financial performance.
• company’s mission statement should provide a vision
& direction
– ten to twenty years.
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Strategic Planning: Defining Marketing’s Role
Setting Company Objectives and Goals
• turn mission into detailed supporting objectives
– each manager should have objectives and be responsible
for reaching them
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Strategic Planning: Defining Marketing’s Role
Designing The Business Portfolio
• most companies operate several businesses and fail to
define them carefully.
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– businesses are too often defined in terms of products
• market definitions of a business are superior to
product definitions.
– a business must be viewed as a customer-satisfying
process, not a product-producing process
– companies should define their business in terms of
customer needs, not products
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Strategic Planning: Defining Marketing’s Role
Designing The Business Portfolio
• Strategic business units (SBUs). A single business or
collection of related businesses that can be planned separately
from the rest of the company.
• An SBU has three characteristics:
Chipotle was once an
SBU of McDonalds.
– it is a single business or a collection
of related businesses that can be
planned for separately from the
rest of the company
– it has its own set of competitors
– it has a manager responsible for strategic
planning & profit performance and who
controls most factors affecting profits.
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Strategic Planning: Defining Marketing’s Role
Designing The Business Portfolio
• purpose of identifying SBUs is to
– assign strategic-planning goals
– appropriate funding.
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Strategic Planning: Defining Marketing’s Role
Developing Growth Strategies
• need growth to compete and attract top talent.
– at the same time, a firm must be careful not to make
growth itself an objective
– the company’s objective must be “profitable growth”
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• growth must be environmentally responsible
• Marketing has a responsibility to achieve profitable
growth
– and must identify, evaluate & select opportunities
and lay down strategies for capturing them
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Strategic Planning: Defining Marketing’s Role
Developing Growth Strategies
• The Ansoff product–market expansion grid offers a
useful framework for examining growth.
Figure 3-2 The product-market expansion grid is useful in helping managers visualize and identify
market opportunities.
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Strategic Planning: Defining Marketing’s Role
Developing Growth Strategies
• Management first considers whether it could gain more
market share with its current products in their current markets
– market concentration strategy
• Then it considers whether it can find or develop new markets
for its current products
– market development strategy
– Market development strategy. Finding and developing
new markets for your current products.
• Next, management should consider product development:
– offering modified or new products to current markets
– Product development. Offering modified or new products
to current markets.
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Strategic Planning: Defining Marketing’s Role
Developing Growth Strategies
• By examining these three intensive growth strategies,
management ideally will discover ways to grow.
• If not be enough, management must also examine
diversification and integrative growth opportunities.
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– Starbucks developed packaged products that can be
sold in supermarkets
– the Hunter’s Head Tavern in Virginia gained national
publicity when it became the first restaurant to get an
animal rights stamp of approval for humane treatment
of animals used in the restaurant
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Strategic Planning: Defining Marketing’s Role
Diversification Growth
• Diversification growth makes sense when good opportunities
are found outside present businesses.
– a good opportunity is one where the industry is highly
attractive and the company has the mix of business
strengths to be successful
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Strategic Planning: Defining Marketing’s Role
Diversification Growth
• Three types of diversification can be considered:
– Concentric diversification strategy. A growth strategy
whereby a company seeks new products that have
technological or marketing synergies with existing product
lines.
– Horizontal diversification strategy. A product growth
strategy whereby a company looks for new products that
could appeal to current customers that are technologically
unrelated to its current line.
– Conglomerate diversification strategy. A product growth
strategy in which a company seeks new businesses that
have no relationship to the company’s current product line
or markets.
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Strategic Planning: Defining Marketing’s Role
Integrative Growth
• Opportunities in diversification, market development, and
product development can be seized through :
– Backward integration. A growth strategy by which
companies acquire businesses supplying them with
products or services
– Forward integration. A growth strategy by which
companies acquire businesses that are closer to the
ultimate consumer, such as a hotel acquiring a chain of
travel agents.
– Horizontal integration. A growth strategy by which
companies acquire competitors.
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Strategic Planning: Defining Marketing’s Role
Integrative Growth
• acquire the expertise to succeed in the new business.
– through investigating possible integration moves, a
company may discover additional sources of sales
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• identify new business opportunities using a
marketing systems framework.
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Marketing Strategy and the Marketing Mix
Introduction
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• The strategic plan defines
the company’s overall
mission and objectives.
– Fig. 3–3 shows
marketing’s role
& activities
Figure 3-3 Managing marketing strategy and
the marketing mix. Source: Kotler & Armstrong,
Principles of Marketing, 12th ed., p. 47.
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Marketing Strategy and the Marketing Mix
Introduction
• Consumers stand in the center.
• Next comes marketing strategy, the marketing logic
by which the company hopes to create this customer
value and achieve these profitable relationships.
• The company designs an integrated marketing mix
made up of factors under its control—product, price,
place, and promotion (the four Ps).
• To find the best marketing strategy and mix, the
company engages in marketing analysis, planning,
implementation, and control.
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Strategic Planning: Defining Marketing’s Role
Customer-Driven Marketing Strategy
• companies need to be customer centered.
• understand their needs and wants.
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– sound marketing requires a careful customer analysis
• cannot profitably serve all consumers in a given
market.
• divide the market, choose the best segments & design
strategies to serve them.
– this involves market segmentation, market targeting,
differentiation, and positioning
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Customer-Driven Marketing Strategy
Market Segmentation
• Market segmentation. The process of dividing a market into
distinct groups of buyers who have different needs,
characteristics, or behavior who might require separate
products or marketing programs.
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• Since markets consists of many types of customers, products,
and needs, the marketer must determine which segments offer
the best opportunities.
– consumers can be grouped & served based on geographic,
demographic, psychographic, and behavioral factors
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Customer-Driven Marketing Strategy
Market Targeting
• A target market is a group of customers towards which a
business has decided to aim its marketing efforts and
ultimately its merchandise.
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• evaluating each market segment’s attractiveness and selecting
one or more segments to enter.
• target segments in which it can profitably generate the greatest
customer value
– a company with limited resources might decide to serve
only one or a few special segments or “market niches”
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Customer-Driven Marketing Strategy
Market Differentiation and Positioning
• After a company has decided which market segments
to enter, it must decide how it will differentiate its
market offering for each targeted segment and what
positions it wants to occupy in those segments.
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– product position is the place the product occupies,
relative to competitors’ products, in consumers’ minds
• Positioning is arranging for a product to occupy a
clear, distinctive, and desirable place relative to
competing products in the minds of target consumers.
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Customer-Driven Marketing Strategy
Developing an Integrated Marketing Mix
• After deciding its overall strategy, the company is
ready to plan the details of the marketing mix
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– the set of controllable, tactical marketing tools the firm
uses to produce the response it wants in the target market
• There is a concern that holds that the four Ps concept
takes the seller’s view of the market, not the buyer’s.
– from the buyer’s viewpoint, the four Ps might be
better described as the four Cs
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Customer-Driven Marketing Strategy
Developing an Integrated Marketing Mix
• Where marketers see themselves as selling products,
customers see themselves as buying value or
solutions to their problems.
• Marketers would do well to think through the four Cs
first and then build the four Ps on that platform.
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Managing the Marketing Effort
Introduction
• Managing the marketing process requires the four
marketing management functions shown here:
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Figure 3-4
The relationship
between analysis,
planning,
implementation,
and control.
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Managing the Marketing Effort
Marketing Analysis
• The marketer should conduct a SWOT analysis,
which evaluates the company’s overall strengths (S),
weaknesses (W), opportunities (O), and threats (T).
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Figure 3-5
SWOT analysis.
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Managing the Marketing Effort
Marketing Analysis
• Strengths include internal capabilities, resources,
and positive situational factors that help the company
to serve its customers and achieve its objectives.
• Weaknesses include internal limitations & negative
situational factors that may interfere with the
company’s performance.
• Opportunities are favorable factors or trends in the
external environment that the company may be able
to exploit to its advantage.
• Threats are unfavorable external factors or trends
that may present challenges to performance.
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Managing the Marketing Effort
Internal Environmental Analysis
• evaluate its strengths and weaknesses periodically.
• reviews the business’s marketing, financial,
manufacturing, and organizational competencies.
• strong marketing capability would probably show up
with the ten marketing factors all rated as major
strengths.
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Managing the Marketing Effort
External Environmental Analysis
• A business unit must monitor forces that will affect
its ability to earn profits in the marketplace
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– macroenvironmental forces (demographic-economic,
technological, political-legal, and social-cultural)
– microenvironmental forces (customers, competitors,
distribution channels, and supplies)
• identify the implied opportunities and threats.
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Managing the Marketing Effort
Opportunities
• opportunities can be listed & classified according
to their attractiveness and the success probability
• The best performing company will generate the
greatest customer value & sustain it over time.
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Managing the Marketing Effort
Threats
• are challenges posed by unfavorable trends or
developments that would lead to sales or profit
deterioration
• After assembling a picture of major threats and
opportunities, four outcomes are possible:
– an ideal business is high in major opportunities
and low in major threats
– a speculative business is high in both major
opportunities and threats
– a major business is low in major opportunities & threats
– a troubled business is low in opportunities, high in threats
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Managing the Marketing Effort
Goal Formulation
• after the business unit has defined its mission and
conducted a SWOT analysis, it can proceed to
develop specific objectives and goals.
• objectives support measurable goals, and a business
should set realistic goals.
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– the levels should arise from an analysis of the business
unit’s opportunities & strengths, not from wishful thinking
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Managing the Marketing Effort
Performance Measures
• Three examples of performance measures used
in the hotel industry:
• A hotel’s return. Returns-based performance tests
measure income before fixed costs (IBFC) or net
operating income (NOI).
• Operating margins. Owners also often insist on
performance measures based on increases in
operating margins, such as increasing IBFC
from 20 percent of revenue to 28 percent.
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Managing the Marketing Effort
Performance Measures
• Three examples of performance measures used
in the hotel industry:
• Revenue per available room (REVPAR) tests
assume room revenue is a good indicator of overall
performance. These tests do not measure revenue
such as laundry, food & beverage, rents, and phone.
As a result, some hotel managers pay little attention
to the marketing of these product lines.
• Those who use REVPAR often compare their results
with other hotels, but the accuracy of comparative
data may be questioned.
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Managing the Marketing Effort
Goal Formulation
• Goals indicate what a business unit wants to achieve;
strategy answers how to get there.
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– every business must tailor a strategy for achieving its goals
• Michael Porter has noted three generic types that
provide a good starting point for strategic thinking.
• Overall cost leadership. The business works hard to
achieve the lowest costs. The real key is for the firm
to achieve the lowest costs among those competitors
adopting a similar differentiation or focus strategy.
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Managing the Marketing Effort
Goal Formulation
• Differentiation. The business concentrates on
achieving superior performance in an important
benefit area valued by a large part of the market.
• Focus. The business focuses on one or more narrow
segments rather than going after a large market. The
firm gets to know the needs of these segments and
pursues either cost leadership or a form of
differentiation within the target segments.
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Managing the Marketing Effort
Marketing Planning
• Marketing planning involves deciding on marketing
strategies that will help the company attain its overall
strategic objectives.
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– a detailed marketing plan is needed for each business,
product, or brand
• The plan begins with an executive summary of major
assessments, goals and recommendations.
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Managing the Marketing Effort
Marketing Planning
• A marketing strategy outlines how the company
intends to create value for customers in order to
capture value in return
• It lays out a program for implementing the strategy
along with details of a marketing budget.
• It also outlines controls used to monitor progress,
measure return on investment & take corrective
action.
• As a manager or a director of sales of a hospitality
business, you will be required to develop a marketing
plan every year.
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Managing the Marketing Effort
Implementation
• must communicate its strategy to the employees and
make them understand their part in carrying it out.
• firm must have the required resources, including
employees with the necessary skills to carry out that
strategy.
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Managing the Marketing Effort
Feedback and Control
• need to track results and monitor new developments
in the environment.
• Peter Drucker pointed out that it is more important to
do the right thing (being effective) than to do things
right (being efficient).
• Once an organization starts losing its market position
through failure to respond to a changed environment,
it becomes increasingly harder to retrieve market
leadership.
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Unique Challenges of the Hotel Industry
• The hotel-resort industry is characterized by a unique
management & ownership structure that complicates
the process of strategic planning.
• Owners of hotel-resorts often show surprisingly little
interest or knowledge of their properties
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– owners complain that management companies are
nonresponsive, have little expertise in planning, and
do not work closely with owners or their representatives
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Unique Challenges of the Hotel Industry
• Professional managers of individual properties have
little or no training in strategic planning.
• Management companies often have little real power
to force owners to make necessary investments or
the strategic changes deemed essential.
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– in many cases, the only alternative has been to drop the
property from the chain
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KEY TERMS
• Ansoff product–market expansion grid. A matrix
developed by cell, plotting new products and
existing products with new & existing products.
• Backward integration. A growth strategy by which
companies acquire businesses supplying them with
products or services
• Concentric diversification strategy. A growth
strategy whereby a company seeks new products
that have technological or marketing synergies with
existing product lines.
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KEY TERMS
• Conglomerate diversification strategy. A product
growth strategy in which a company seeks new
businesses that have no relationship to the
company’s current product line or markets.
• Corporate mission statement. A guide to provide
all the publics of a company with a shared sense of
purpose, direction, and opportunity.
• Forward integration. A growth strategy by which
companies acquire businesses that are closer to the
ultimate consumer,such as a hotel acquiring a chain
of travel agents.
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
KEY TERMS
• Horizontal diversification strategy. A product
growth strategy whereby a company looks for new
products that could appeal to current customers that
are technologically unrelated to its current line.
• Horizontal integration. A growth strategy by which
companies acquire competitors.
• Macroenvironmental forces. Demographic,
economic, technological, political, legal, social,
and cultural factors.
• Market development strategy. Finding and
developing new markets for your current products.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
KEY TERMS
• Market segmentation. The process of dividing a
market into distinct groups of buyers who have
different needs, characteristics,or behavior who
might require separate products or marketing
programs.
• Marketing opportunity. An area of need in which
a company can perform profitably.
• Marketing strategy. The marketing logic by which
the company hopes to create this customer value and
achieve these profitable relationships.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
KEY TERMS
• Microenvironmental forces. Customers,
competitors, distribution channels, and suppliers.
• Product development. Offering modified or new
products to current markets.
• Strategic alliances. Relationships between
independent parties that agree to cooperate but still
retain separate identities.
• Strategic business units (SBUs). A single business
or collection of related businesses that can be
planned separately from the rest of the company.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
KEY TERMS
• Strategic planning. The process of developing and
maintaining a strategic fit between an organization’s
goals and capabilities and its changing marketing
opportunities.
• SWOT analysis. Evaluates the company’s overall
strengths(S), weaknesses (W), opportunities (O),
and threats (T).
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458