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Introduction. I. Introduction: Marketing in the Hospitality Industry 1) Customer orientation. The purpose of a Business is to create and maintain profitable customers. Customer satisfaction leading to profit is the central goal of hospitality marketing.

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  1. Introduction • I. Introduction: Marketing in the Hospitality Industry • 1) Customer orientation. The purpose of a Business is to create and maintain profitable customers. Customer satisfaction leading to profit is the central goal of hospitality marketing. II. What Is Hospitality Marketing? Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.

  2. III. Importance of Marketing • 1) The entrance of corporate giants into the hospitality market and the marketing skills these companies have brought to the industry have increased the importance of marketing within the industry. • 2) Analysts predict that the hotel industry will consolidate in much the same way as the airline industry has, with five or six major chains dominating the market. Such consolidation will create a market that is highly competitive. The firms that survive this consolidation will he the ones that understand their customers. • 3) In response to growing competitive pressures, hotel chains are relying on the expertise of the marketing director.

  3. IV. Travel Industry Marketing • 1) Successful hospitality marketing is highly dependent on the entire travel industry. • 2) Government or quasigovernment agencies play an important role in travel industry marketing through legislation aimed at enhancing the industry and through promotion of regions, states, and nations. • 3) Few industries are as interdependent as the travel and hospitality industries. • V. Understanding Marketing. • Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. To understand the definition, we must understand the following terms: needs, wants, and demands; products; value, cost, and satisfaction; exchange, transactions, and relationships; and markets.

  4. 1) Needs, wants, and demands • a) Needs. Human beings have many complex needs. These include basic physical needs for food, clothing, warmth, and safety; social needs for belonging, affection, fun, and relaxation esteem needs for prestige, recognition, and fame; and individual needs for knowledge and selfexpression. • b) Wants. Wants are how people communicate their needs. • c) Demands. People have almost unlimited wants, but limited resources. They chose products that produce the most satisfaction for their money. When hacked by buying power, wants become demand. • 2) Products. A product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a need or want. • 3) Value, satisfaction, and quality

  5. a) Value. Value is the consumer’s estimate of the product's overall capacity to satisfy his or her needs. Today's consumer behaviorists have gone beyond narrow economic assumptions of how consumers form value in their mind and make product choices. Modern theories of consumer choice behavior are important to marketers because the entire marketing plan rests on assumptions about how consumers make choices. Therefore, concepts of value, quality, and satisfaction are crucial to the discipline of marketing. • b) Satisfaction. Satisfaction with a product is determined by how well the product meets the customer's expectations for that product. • c) Quality. The totality of features and characteristics of a product that hear on its ability to meet customer needs. The fundamental aim of today's total quality movements has become total customer satisfaction. • 4) Exchange, transactions, and relationships • a) Exchange. Exchange is the act of obtaining a desired object from someone by offering something in return. • b) Transactions. A transaction is marketing's unit of measurement. A transaction consists of a trade of values between two parties.

  6. c) Relationship marketing. Relationship marketing focuses on building a relationship with a company's profitable customers. Most companies are finding that they earn a higher return from resources invested in getting repeat sales from current customers than from money spent to attract new customers. • 5) Markets. A market is a set of actual and potential buyers who might transact with a seller. • VI. Marketing Management. • Marketing management is the analysis, planning, implementation, and control of programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives. • VII. Five Marketing Management Philosophies • 1) Production concept. The production concept holds that customers will favor products that are available and highly affordable, and therefore management should focus on production and distribution efficiency.

  7. 2) Product concept. The product concept holds that customers prefer existing products and product forms, and the job of management is to develop good versions of these products. • 3) Selling concept. The selling concept holds that consumers will not buy enough of the organization's products unless the organization undertakes a large selling and promotion effort. • 4) Marketing concept. The marketing concept holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfaction more effectively and efficiently than competitors. • 5) Societal marketing concept. The societal marketing concept holds that the organization should determine the needs, wants, and interests of target markets and deliver the desired satisfactions more effectively and efficiently than competitors in a way that maintains or improves the consumer's and society's wellbeing.

  8. Service Characteristics of Hospitality & Tourism Marketing • I. The Service Culture. The service culture focuses on serving and satisfying the customer. The service culture has to start with top management and flow down. • II. Four Characteristics of Services • 1) Intangibility. Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they are purchased. To reduce uncertainty caused by intangibility, buyers look for tangible evidence that will provide information and confidence about the service. • 2) Inseparability. In most hospitality services, both the service provider and the customer must be present for the transaction to occur. Customer contact employees are part of the product. Inseparability also means that customers are part of the product. The third implication of inseparability is that customers and employees must understand the service delivery system.

  9. 3) Variability. Service quality depends on who provides service and when and where they are provided. Services are produced and consumed simultaneously. Fluctuating demand makes it difficult to deliver consistent products during periods of peak demand. The high degree of contact between the service provider and the guest means that product consistency depends on the service provider's skills and performance at the time of the exchange. • 4) Perishability. Services cannot be stored. If service providers are to maximize revenue, they must manage capacity and demand since they cannot carry forward unsold inventory. • III. Management Strategies for Service Businesses • 1) Tangibilizing the service product. Promotional material, employees’ appearance, and the service firm's physical environment all help tangibilize service. • a) Trade dress. Trade dress is the distinctive nature of a hospitality industry's total visual image and overall appearance. To compete effectively, an entrepreneur, operator, or owner must design an effective trade dress while taking care not to imitate too closely that of a competitor.

  10. b) Employee uniform and costumes. Uniforms and costumes are common to the hospitality industry. These have a legitimate and useful role in differentiating one hospitality firm from another and for instilling pride in the employees. • c) Physical surroundings. Physical surroundings should be designed to reinforce the product's position in the customer's mind. A firm's communications should also reinforce their positioning. • d) "Greening" of the hospitality industry. The use of outside natural landscaping and inside use of light and plants have become a widely used and popular method of creating differentiation and tangibilizing the product. • 2) Managing employees. In the hospitality industry, employees are a critical part of the product and marketing mix. The human resource and marketing department must work closely together. • a) Internal marketing. The task of marketing to employees involves the effective training and motivation of customer contact employees and supporting service personnel.

  11. 3) Managing perceived risk. The high risk that people perceive when purchasing hospitality products increases loyalty to companies that have provided them with a consistent product in the past. • 4) Managing capacity and demand. Since services are perishable, managing capacity and demand is a key function of hospitality marketing. First, services must adjust their operating systems to enable the business to operate at maximum capacity. Second, they must remember that their goal is to create satisfied customers. Research has shown that customer complaints increase when service firms operate above 80% of their capacity. • 5) Managing consistency. Consistency means that customers will receive the expected product without unwanted surprises.

  12. The Role of Marketing in Strategic Planning • I. The Aim of Strategic Planning. It helps a company select and organize its business in a way that keeps the company healthy despite unexpected upsets occurring in any of its specific business or product lines. • II. Three Ideas Define Strategic Planning • 1) Managing a company's business as an investment portfolio, for which it will be decided which business entities deserve to be built, maintained, phased down, or terminated. • 2) Assessing accurately the future profit potential of each business by considering the market's growth rate and the company's position and fit. • 3) Underlying strategic planning is that of strategy and developing a game plan for achieving its long-run objective.

  13. III. Four Major Organizational Levels • 1) Corporate level. The corporate level is responsible for designing a corporate strategic plan to guide the entire enterprise. It makes decisions on how much resource support to allocate to each division, as well as which businesses to start or eliminate. • 2) Division level. Each division establishes a division plan covering the allocation of funds to each business unit’s strategic plan to carry that business unit within that division. • 3) Business level. Each business unit in turn develops its business unit’s strategic plan to carry that business unit into a profitable future. • 4) Product level. Each product level within a business unit develops a marketing plan for achieving its objectives in its product market.

  14. IV. Four Natures of High Performance Business • 1) Stakeholder. The principle that a business must at least strive to satisfy the minimum expectations of each stakeholder group. • 2) Processes. Companies build cross-functional teams that manage core business processes to be superior competitors. • 3) Resources. Companies decide to outsource less critical resources. They identify their core competencies and use them as the basis for their strategic planning. • 4) Organization. Companies align their organization's structure, policies, and culture to the changing requirements of business strategy.

  15. V. Four Elements of Defining the Corporate Mission. • A mission statement provides company employees with a shared sense of purpose, direction, and opportunity. The company mission statement guides geographically dispersed employees to work independently and yet collectively toward realizing the organization’s goal. • 1) History. Every company has a history of aims, policies, and achievements, and the organization must not depart too radically from its past history. • 2) Consideration of the current preferences of the owner and management. • 3) The organization’s resources determine which missions are possible. • 4) The organization should base its mission on its distinctive competencies.

  16. VI. Mission Statement's Characteristic and Focused Goals • 1) Industry scope. The range of industries that the company will consider. • 2) Products and application scope. The range of products and applications in which the company will participate. • 3) Competencies scope. The range of technological and other core competencies that the company will master and leverage. • 4) Market segment scope. The types of market or customers that the company will serve. • 5) Vertical scope. The number of channel levels from raw materials to final products and distribution in which the company will engage. • 6) Geographical scope. The range of regions or countries where the corporation will operate.

  17. VII. Establishing Strategic Business Units. • Three dimensions in defining a business’s: customer groups, customer needs, and technology. VIII. Strategic Business Units (SBUs). An SBU is a single business or collection of related businesses that can be planned for separately from the rest of the company. It has its own set of competitors and a manager who is responsible for strategic planning and profit performance. IX. Boston Consulting Group Model (BCG Model)

  18. X. Planning New Businesses. • The strategic p1anning gap is the gap between future desired sales and projected sales. There are three ways to fill the gap: • 1) Intensive growth opportunities. To identify further opportunities to achieve growth within the company's current business. • 2) Integrative growth opportunities. To identify opportunities to build or acquire businesses that are related to the company's current business. • a) Backward integration. A hotel company acquires one of its suppliers. • b) Forward integration. A hotel company acquires a tour wholesaler or travel agents. • c) Horizontal integration. A hotel company acquires one or more competitors, provided that the government does not bar the move.

  19. 3) Diversification growth opportunities. To identify opportunities to add attractive businesses that are unrelated to the company's current businesses. • a) Concentric diversification strategy. Company seeks new products that have technological and or marketing synergies with existing product line, even though the product may appeal to a new class of customers. • b) Horizontal diversification strategy. Company searches for new products that could appeal to its current customers though technologically unrelated to its current product line. • c) Conglomerate diversification strategy. Company seeks new businesses that have no relationship to the company's current technology, product, or market. • XI. Business Strategy Planning • 1) Business mission. SBU defines its various scopes: its products and applications, competence, market segments, vertical positioning, and geography. It must also define its specific goals and policies as a separate business.

  20. 2) External environment analysis • a) Macro environment forces. Demographic, economic, technological. Political-legal. competition and social-cultural. • b) Microenvironment factors. Customers, competitors, distribution channels. suppliers. • c) Opportunities. A marketing opportunity is an area of need in which a company can perform profitably. Opportunities can be listed and classified according to their attractiveness and the success probability. • d) Threats. An environmental threat is a challenge posed by unfavorable trends or developments that would lead, in the absence of defensive marketing action, to sales or profit deterioration, Threats can be classified according to their seriousness and probability of occurrence. • 3) Internal environment analysis (strengths analysis and weaknesses analysis). Company reviews the business's marketing, financial, manufacturing, and organizational competencies. Each factor is rated as to whether it is a major strength, minor strength. neutral factor, major weakness, or minor weakness.

  21. 4) Goal formulation (what do we want?) Four characteristics of an SBU's objectives: • a) Hierarchical. The business unit should strive to arrange its objectives hierarchically, from the most to the least important. • b) Quantitative. Managers use the term goals to describe objectives that are specific with respect to magnitude and time. • c) Realistic. The levels should arise from an analysis of the business unit's opportunities and strengths, not from wishful thinking. • d) Consistent. Long-run market-share growth and high current profits, for example. • 5) Strategy formulation (How do we get there?) Michael Porter's three generic types of strategy: • a) Overall cost leadership. The real key is for a firm to achieve the lowest costs among those competitors adopting a similar differentiation or focus strategy. • b) Differentiation. The firm cultivates strengths that will give it a competitive advantage in one or more benefits. • c) Focus. The firm gets to know the needs of these segments and pursues either cost leadership or a form of differentiation within the target segments.

  22. 6) Program formulation. Supporting programs, such as running recruiting programs to attract the right employee, conducting training programs, developing leading-edge products and amenities, motivating the sales force, developing advertisements to communicate its service leadership. • 7) Implementation. To implement a strategy the firm must have the required resources, including employees with the skills needed to carry out the company's strategy. • 8) Feedback and control. The firm needs to track results and monitor new developments in the environment. The company will need to review and revise its implementation, programs, strategies. or even objectives.

  23. The Marketing Environment • I. Microenvironment. • The microenvironment consists of actors and forces close to the company that can affect its ability to serve its customers. The actors in the microenvironment include the company, suppliers, market intermediaries, customers, and publics. • 1) The company. Marketing managers work closely with top management and the various company departments. • 2) Suppliers. Firms and individuals that provide the resources needed by the company to produce its goods and services. • 3) Marketing intermediaries. Firms that help the company promote, sell, and distribute its goods to the final buyers. • 4) Transportation system. The system moves the product from the factory, to the customer. The hospitality industry depends on transportation systems to move supplies and customers to their businesses. • 5) Marketing services agencies. Marketing research firms, advertising agencies, media firms, and marketing consulting firms help companies to target and promote their products to the right market.

  24. 6) Financial intermediaries. Includes hanks, credit companies, insurance companies, and other firms that help hospitality companies to finance their transactions or insure risks associated with the buying and selling of goods and services. Microenvironment Macroenvironment

  25. II. Macroenvironment. • The macroenvironment consists of the larger societal farces that affect the whole microenvironment demographic, economic, natural, technological, political, competitor, and cultural forces. Following are the seven major forces in a company’s macroenvironment. • 1) Competitive environment. Each firm must consider its size and industry position in relation to its competitors. A company must satisfy the needs and wants of consumers hetter than its competitors do in order to survive. • 2) Demographic environment. Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistics. The demographic environment is of major interest to marketers because markets are made up of people. • 3) Economic environment. The economic environment consists of factors that affect consumer purchasing power and spending patterns. Markets require both power as well as people. Purchasing power depends on current income, price, saving, and credit; marketers must he aware of major economic trends in income and changing consumer spending patterns.

  26. 4) Natural environment. The natural environment consists of natural resources required by marketers or affected by marketing activities. • 5) Technological environment. The most dramatic force shaping our destiny today is technology. • 6) Political environment. The political environment is made up of laws, government agencies, and pressure groups that influence and limit various organizations and individuals in society. • 7) Cultural environment. The cultural environment includes institutions and other forces that affect society's basic values, perceptions, preferences, and behaviors. • III. Responding to the Marketing Environment. • Many companies view the marketing environment as an “uncontrollable’ element to which they must adapt. Other companies take an environmental management perspective. Rather than simply watching and reacting, these firms take aggressive actions to affect the publics and forces in their marketing environment. These companies use environmental scanning to monitor the environment.

  27. Marketing Information Systems & Marketing Research • The Marketing Information System (MIS). A MIS consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision maker The MIS begins and ends with marketing managers, hut managers throughout the organization should he involved in the MIS. First, the MIS interacts with managers to assess their information needs. Next, it develops needed information from internal company records, marketing intelligence activities, and the marketing research process. Information analysts process information to make it more useful. Finally, the MIS distributes information managers in the right form and at the right time to help in marketing planning, implementation, and control.

  28. I. Assessing Information Needs. • A good marketing information system balances information that managers would like to have against that which they really need and is feasible to obtain. • II. Developing Information. • Information needed by marketing managers can be obtained from internal company records, marketing intelligence, and marketing research. The information analysis system processes this information and presents it in a form that is useful to managers. • 1) Internal records. Internal records information consists of information gathered from sources within the company to evaluate marketing performance and to detect marketing problems and opportunities. • 2) Marketing intelligence. Marketing intelligence includes everyday information about developments in the marketing environment that help managers to prepare and adjust marketing plans and short-run tactics. Marketing intelligence can come from internal sources of external sources.

  29. a) Internal sources. Internal sources include the company’s executives owners, and employees. • b) External sources. External sources include competitors. government agencies, suppliers, trade magazines. newspapers, business magazines, trade association newsletters and meetings. and databases available on the Internet. • c) Marketing research. Marketing research is a process that identifies and defines marketing opportunities and problems, monitors and evaluates marketing actions and performance, and communicates the findings and implication to management. Marketing research is project oriented and has a beginning and an ending. It feeds information into the marketing information system that is ongoing. The marketing research process consists of four steps: defining the problem and research objectives, developing the research plan. implementing the research plan, and interpreting and presenting the findings. • i) Defining the problem and research objectives. There are three types of objectives for a marketing research project: • a) Exploratory: to gather preliminary information that will help define the problem and suggest hypotheses. • b) Descriptive: to describe the size and composition of the market. • c) Causal: to test hypotheses about cause-and-effect relationships.

  30. ii) Developing the research plan for collecting information • a) Determining specific information needs. Research objectives must be translated into specific information needs. To meet a manager's information needs, researchers can gather secondary data, primary data, or both. Secondary data consist of information already in existence somewhere, having been collected for another purpose. Primary data consist of information collected for the specific purpose at hand. • b) Research approaches. Three basic research approaches are observations, surveys, and experiments. • i) Observational research. Gathering of primary data by observing relevant people, action, and situations. • ii) Survey research (structured unstructured, direct/indirect). Best suited to gathering descriptive information. • iii) Experimental research. Best suited to gathering causal information. • c) Contact methods. Information can be collected by mail, telephone, or personal interview. • d) Sampling plan. Marketing researchers usually draw conclusions about large consumer groups by taking a sample. A sample is a segment of the population selected to represent the population as a whole. Designing the sample calls for three decisions. • i) Who will be surveyed? • ii) How many people should be surveyed? • iii) How should the sample be chosen? • e) Research instruments. In collecting primary data, marketing researchers have a choice of primary research instruments: the interview (structured and unstructured), mechanical devices, and structured models such as a test market. Structured interviews employ the use of a questionnaire. • f) Presenting the research plan. At this stage the marketing researcher should summarize the plan in a written proposal.

  31. iii) Implementing the research plan. The researcher puts the marketing research plan into action by collecting, processing, and analyzing the information. • iv) Interpreting and reporting the findings. The researcher must now interpret the findings, draw conclusions, and report then to management. • d) Information analysis. Information gathered by the company's marketing intelligence and marketing research systems can often bend from additional analysis. This additional analysis helps to answer to questions related to “what if” and “which is best.” • III. Distributing Information. • Marketing information has no value until managers use it to make better decisions. The gathered information must reach the marketing managers at the right time.

  32. Consumer Markets & Consumer Buying Behavior • I. Model of Consumer Behavior. • The company that really understands how consumers will respond to different product features, prices, and advertising appeals has a great advantage over its competitors. As a result, researchers from companies and universities have heavily studied the relationship between marketing stimuli and consumer response. The marketing stimuli consist of the four P’s: product, price, place, and promotion. Other stimuli include major forces a events in the buyer's environment: economic, technological, political, and cultural. All these stimuli enter the buyer's black box, where they are turned into a set of observable buyer responses: product choice, brand choice, dealer choice, purchase timing, and purchase amount.

  33. II. Personal Characteristics Affecting Consumer Behavior • 1) Cultural factors • a) Culture. Culture is the most basic determinant of a person’s wants and behavior. It compromises the basic values, perceptions, wants, and behaviors that a person learns continuously in a society. • b) Subculture. Each culture contains smaller subcultures, groups people with shared value systems based on common experiences a situations. • c) Social classes. These are relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors. Social class in newer nations such as the United States, Canada, Australia, and New Zealand is not indicated by a single factor such as income, hut is measured as a combination of occupation, source of income, education, wealth, and other variables. • 2) Social factors • a) Reference groups. These groups serve as direct (face-to-face) or direct point of comparison or reference in the forming of a person's attitude and behavior. • b) Family. Family members have a strong influence on buyer behavior. The family remains the most important consumer-buying organization in American society.

  34. c) Roles and status. A role consists of the activities that a person is expected to perform according to the persons around him or her. Each role carries a status reflecting the general esteem given to it by society. People often choose products that show their status in society. • 3) Personal factors • a) Age and life-cycle stage. The types of goods and services people buy change during their lifetimes. As people grow older and mature, the products they desire change. The makeup of the family also affects purchasing behavior. For example, families with young children dine not at fast-food restaurants. • b) Occupation. A person's occupation affects the goods and services bought. • c) Economic situation. A person's economic situation greatly affects product choice and the decision to purchase a particular product. • d) Lifestyle. Lifestyles profile a person's whole pattern of acting and interacting in the world. When used carefully, the lifestyle concept can help the marketer understand changing consumer values and how they effect buying behavior.

  35. e) Personality and self-concept. Each person’s personality influences his or her buying behavior. By personality we mean distinguishing psychological characteristics that disclose a person’s relatively individualized, consistent, and enduring responses to the environment. Many marketers use a concept related to personality: a person's self-concept (also called self-image). Each of us has a complex mental self-picture, and our behavior tends to be consistent with that self-image. • 4) Psychological factors • a) Motivation. A need becomes a motive when it is aroused to a sufficient level of intensity. Creating a tension state causes a person to act to release the tension. • b) Perception. Perception is the process by which a person selects, organizes, and interprets information to create a meaningful picture of the world. • c) Learning. Learning describes changes in a person's behavior arising from experience. • d) Beliefs and attitudes. A belief is a descriptive thought that a person holds about something. An attitude describes a person's relatively consistent evaluations, feelings, and tendencies toward an object or an idea.

  36. III. Consumer Involvement in the Buying Decision. • A marketer needs to know which people are involved in the buying decision and what role each person plays. Identifying the decision maker in many transactions is fairly easy. People might play any of several roles in a buying decision: • 1) Initiator. The person who first suggests or thinks of the idea of buying a particular product or service. • 2) Influencer. A person whose views or advice carries some weight in making the final buying decision. • 3) Decider. The person who ultimately makes a buying decision or any part of it. • 4) Buyer. The person who makes an actual purchase. • 5) User. The person who consumes or uses a product or service.

  37. IV. Purchasing Decision Process • 1) Problem recognition. The buying process starts when the buyer recognizes a problem or need. • 2) Information search. An aroused consumer may or may not search for more information. How much searching a consumer does will depend on the strength of the drive, the amount of initial information, the ease of oh-taming more information. the value placed on additional information, and the satisfaction one gets from searching. • 3) Evaluation of alternatives. Unfortunately, there is no simple and single evaluation process used by all consumers or even by one consumer in all buying situations. There are several evaluation processes. • 4) Purchase decision. In the evaluation stage, the consumer ranks brands in the choice set and forms purchase intentions. Generally, the consumer will buy the most preferred brand. • 5) Postpurchase behavior. The marketer's job does not end when the customer buys a product. Following a purchase, the consumer will be satisfied or dissatisfied and will engage in Postpurchase actions of significant interest to the marketer.

  38. Organizational Buyer Behavior of Group Market • I. The Nature of Organizational Buyers. • Their purchases often involve large sums of money, complex technical, economic considerations, and interactions among many people at all levels of the organization. Buyer and seller are often very dependent on each other. • II. Participants in the Organizational Buying Process • 1) Users. Users are those who will use the product or service. • 2) Influencers. Influencers directly influence the buying decision but do not themselves make the final deci5ion. • 3) Deciders. Deciders select product requirements and suppliers. • 4) Approvers. Approvers authorize the proposed actions of deciders or buyers. • 5) Buyers. Buyers have formal authority for selecting suppliers and arranging the terms of purchase. • 6) Gatekeepers. Gatekeepers have the power to prevent sellers or information from reaching members of the buying center.

  39. III. Major Influences on Organizational Buyers • 1) Environmental factors. Organizational buyers are heavily influenced by the current and expected economic environment. • 2) Organizational factors. Each organization has specific objectives, policies, procedures, organizational structures, and systems related to buying. • 3) Interpersonal factors. The buying center usually includes several participants with differing levels of interest, authority, and persuasiveness. • 4) Individual factors. Each participant in the buying decision process has personal motivations, perceptions, and preferences. The participant's age. income, education, professional identification, personality, and attitudes toward risk all influence the participants in the buying process.

  40. IV. The Organizational Buying Process • 1) Problem recognition. The buying process begins when someone in the company recognizes a problem or need that can be met by acquiring a good or a service. • 2) General need description. The buyer goes on to determine the requirements of the product. • 3) Product specifications. Once the general requirements have been determined, the specific requirements for the product can be developed. • 4) Supplier search. The buyer now tries to identify the most appropriate suppliers. • 5) Proposal solicitation. Qualified suppliers will be invited to submit proposals. Skilled research, writing, and presentation are required. • 6) Supplier selection. Once the meeting planner has drawn up a short list of suppliers, qualified hotels will be invited to submit proposals. • 7) Order-routine specification. The buyer writes the final order, listing the technical specification. The supplier responds by offering the buyer a formal contract. • 8) Performance review. The buyer does postpurchase evaluation of the product. During this phase the buyer will determine if the product meets the buyer’s specifications and if the buyer will purchase from the company again.

  41. V. The Group Markets Segments • 1) Conventions. Conventions are usually the annual meeting of an association and include general sessions, committee meetings, and special-interest sessions. A trade show is often an important part of an annual convention. • 2) Association meetings. Associations sponsor many types of meeting including regional. Special-interest, educational, and board meetings. • 3) Corporate meetings. A corporate meeting is a command performance for employees of a company. The corporation's major concern is that the meeting be productive and accomplish the company's objectives. • 4) Small groups. Meetings of less than 50 rooms are gaining the attention of hotels and hotel chains. • 5) Incentive travel. Incentive travel, a unique subset of corporate group business, is a reward participants receive for achieving or exceeding a goal. • 6) SMERF groups. SMFRF stands for social, military, educational, religious, and fraternal organizations. This group of specialty markets has a common price sensitive thread.

  42. VI. Dealing with Meeting Planners. • When negotiating with meeting planners, it is important to try to develop a win-win relationship. Meeting planners like to return to the same property. • VII. The Corporate Account and Travel Manager. • A nongroup form of organizational business is the individual business traveler. Most hotels offer a corporate rate, which is intended to provide an incentive for corporations to use the hotel.

  43. Market Segmentation, Targeting, and Positioning • I. Market. A market is the set of all actual and potential buyers of a product • II. The Target Marketing Process involves three steps: market segmentation, market targeting, and positioning. • 1) Market segmentation is the process of dividing a market into distinct groups of buyers who might require separate products and/or marketing mixes. • 2) Market targeting is the process of evaluating each segment’s attractiveness and selecting one or more of the market segments. • 3) Positioning is the process of developing a competitive positioning for the product and an appropriate marketing mix.

  44. III. Market Segmentation • 1) Bases for segmenting a market. There is no single way to segment a market. A marketer has to try different segmentation variables, alone and in combination. • a) Geographic segmentation calls for dividing the market into different geographic units, such as nations, states, regions, counties, cities or neighborhoods. • b) Demographic segmentation consists of dividing the market it groups based on demographic variables such as age, gender, family life cycle, income, occupation, education, religion, race, and nationality. • c) Psychographic segmentation divides buyers into different groups based on social class, lifestyle, and personality characteristics. • d) Behavior segmentation divides buyers into groups based on be knowledge, attitude, use, or response to a product. • 2) Requirements for Effective Segmentation • a) Measurability: the degree to which the segment’s size and purchasing power can be measured. • b) Accessibility: the degree to which segments can be accessed and served • c) Substantiality: the degree to which segments are large or profitable enough to serve as markets. • d) Actionability: the degree to which effective programs can be d signed for attracting and serving segments.

  45. IV. Evaluating Market Segments • 1) Segment size and growth. Companies will analyze the segment size and growth and choose the segment that provides the best opportunity. • 2) Segment structural attractiveness. A company must examine major structural factors that effect long-run segment attractiveness. • 3) Company objectives and resources. The company must consider its own objectives and resources in relation to a market segment. • V. Selecting Market Segments. • Segmentation reveals market opportunity available to a firm. The company then selects the most attractive segment or segments to serve as targets for marketing strategies to achieve desired objective • 1) Market-coverage alternatives • a) Undifferentiated marketing strategy. An undifferentiated marketing strategy ignores market segmentation differences and goes after the whole market with one market offer. • b) Differentiated marketing strategy. The firm targets several market segments and designs separate offers for each.

  46. c) Concentrated marketing strategy. Concentrated marketing strategy is especially appealing to companies with limited resources. Instead of going for a small share of a large market, the firm pursues a large share of one or more small markets. • 2) Choosing a market-coverage strategy. Companies need to consider several factors in choosing a market-coverage strategy. • a) Company resources. When the company's resources are limited, concentrated marketing makes the most sense. • b) Degree of product homogeneity. Undifferentiated marketing is more suited for homogeneous products. Products that can vary in design, such as restaurants and hotels, are more suited to differentiation or concentration. • c) Market homogeneity. If buyers have the same tastes, buy a product in the same amounts, and react the same way to marketing efforts, undifferentiated marketing is appropriate. • d) Competitors’ strategies. When competitors use segmentation, undifferentiated marketing can be suicidal. Conversely, when competitors use undifferentiated marketing, a firm can gain an advantage by using differentiated or concentrated marketing.

  47. VI. Market positioning. • A product's position is the way the product is defined by consumers on important attributes--the place the product occupies in consumers minds relative to competing products. • 1) Positioning strategies • a) Specific product attributes. Price and product features can be used to position a product. • b) Needs products fill or the benefits they offer. Marketers can position products by the needs that they fill or the benefits that they offer. For example, a restaurant can be positioned as a fun place. • c) Certain classes of users. Marketers can also position for certain classes of users, such as a hotel advertising itself as a women’s hotel. • d) Against an existing competitor. A product can be positioned against an existing competitor. In the "Burger Wars," Burger King used its flame-broiled campaign against McDonald's, claiming that people prefer flame-broiled burgers over fried burgers.

  48. 2) Choosing and implementing a positioning strategy. The positioning task consists of three steps: identifying a set of possible competitive advantages upon which to build a position, selecting the right competitive advantages, and effectively communicating and delivering the chosen position to a carefully selected target market. • 3) Communicating and delivering the chosen position. Once having chosen positioning characteristics and a positioning statement, a company must communicate their position to targeted customers. All of a company's marketing mix efforts must support its positioning strategy.

  49. Designing and Managing Products • I. Product. • A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. It includes physical objects, service, places, organizations, and ideas. • II. Product Levels • 1) Core product answers the question of what the buyer is really buying. Every product is a package of problem-solving services. • 2) Facilitating products are those services or goods that must be present for the guest to use the core product. • 3) Supporting products are extra products offered to add value to core product and to help to differentiate it from the competition. • 4) Augmented products include accessibility (geographical location hours of operation), atmosphere (visual, aural, olfactory, and tactile dimensions), customer interaction with the service organization (joining, consumption, and detachment), customer participation, and customers' interactions with each other.

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