sha501: marketing fundamentals for the hospitality industryone final action plan assignment ......

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SHA501: Marketing Fundamentals for the Hospitality Industry


This course includes

Two self-check quizzes

Multiple discussions; you must participate in two

One final action plan assignment

One video transcript file

Completing all of the coursework should take about five to seven hours.

What You'll Learn

Identify the fundamental aspects of modern marketing

Define the relationship between customer value and marketing in the hospitality industry

Welcome to . The primary function of marketing in business is toMarketing Fundamentals for the Hospitality Industry

identify customers and hold their attention in order to deliver a valuable product or service. Marketing departments help

differentiate a company from competitors by building brand recognition and creating sales collateral such as websites, sell

sheets, presentations and print ads, which in turn support sales departments and position the company to meet revenue

goals. Marketing is also typically responsible for gauging customer satisfaction and managing client relationships, in

addition to compiling testimonials, soliciting referrals and developing case studies.

Learn fundamental marketing concepts and principles as they relate to hospitality, observe marketing in action through

case studies and understand how to put that knowledge into practice. This course, produced in partnership with the

, consists of various activities and resources that have been put together toCornell School of Hotel Administration

introduce you to the fundamentals of marketing in the hospitality industry.

Judy Siguaw Dean, College of Human Ecology, East Carolina University

https://s3.amazonaws.com/ecornell/content/SHA/SHA501/SHA501_transcripts.pdf

http://www.hotelschool.cornell.edu/


Click Play to Listen

is Dean of the College of Human Ecology at East Carolina University.Judy A. Siguaw

Previously, she was a Professor of Marketing in the School of Hotel Administration at

Cornell University and was the founding Dean of Cornell-Nanyang Institute of Hospitality

Management. She also held the J. Thomas Clark Chair in Entrepreneurship and Personal

Enterprise. Dr. Siguaw earned her doctorate in 1991 from Louisiana Tech University. She

has published over 50 journal articles including those appearing in the Journal of

Marketing Research, Journal of Marketing, Journal of International Business Studies,

Journal of Strategic Marketing, Industrial Management, Journal of Business Ethics,

Journal of Travel Research and the Cornell Hotel and Restaurant Administration

Quarterly. She is co-author of Hospitality Sales: Selling Smarter, American Lodging

Excellence: The Key To Best Practices in The U.S. Lodging Industry, Exploring Best

Practices in the Hospitality Industry in Asia, and Introducing LISREL.

Start Your Course


Module Introduction: Introduction to Marketing Analysis in the HospitalityIndustry

The most important objective in any business, including hospitality and tourism, is to identify and satisfy customers.

Knowing who your customers are and how to satisfy them enables you to successfully compete in the marketplace.

Identifying and satisfying customers is the primary role of marketing, thus the marketing function is central to any business

firm. Understanding marketing and how marketing strategies are developed enables you to serve your customers and to

deal wisely with competitors.

This course is designed to help you make clear and well-thought-out marketing choices, and to teach you the role and

scope of marketing in an organization. To learn these concepts, you will examine and discuss several case studies. The

first case study describes the efforts of a consumer vacuum cleaner company to sell its high tech product to the hospitality

industry. The second case study details the efforts of the InterContinental Hotel chain to place a premium quality hotel in

the Toronto area. In the course of these case studies, you will investigate many of the core conditions and concepts

around which successful marketing and product placement are centered.

After completing this module, you should be able to:

Define the primary role of marketing in an organization

Define the term marketing

Define the concept of exchange

Define the marketing concept


1.

2.

3.

4.

Read: Hydrotech Vacuum Cleaner Case Study

We will begin with a case study of a fictional company's unsuccessful attempt to introduce a new product to the

marketplace. As you read the case study, pay attention to how it illustrates the importance of the following four

fundamental truths of marketing and the consequences of ignoring them:

A superior product or facility is no guarantee of success. What one customer views as superior, another may view

as average or unimportant.

How you define the customer often defines the marketing strategy, and quite often the firm's success.

Customer requirements change all the time for a variety of reasons. Therefore, research, not experience, tells us

what the customer wants.

Increasing competition leads to increasing customer choice. This leads to the increasing importance of and

emphasis on delivering customer value to achieve success.

In this case study you examine the Hydrotech Vacuum company and see how a product that was very successful in the

consumer market fared as Hydrotech tried to gain market share in the hospitality industry.

Consider the following questions as you review the case study information:

Why have Hydrotech sales not met company expectations?

Hydrotech had been very successful in gaining traction in other market segments (e.g., consumer and health care).

What mistakes did they make in selling to the hospitality industry?


Ask The Expert: Why It's Not a Good Idea to Start With a Good Idea

Listen as Professor Siguaw describes how sometimes a seemingly good idea may be surpassed by an idea that comes

from customer-based research.


Watch: InterContinental Hotel Case Study

Far from being a "fringe" part of a business, the marketing and refining of products based on marketing reports is central

to success in today's increasingly competitive environment. A well-researched marketing analysis is a business

advantage, and there is much to learn when it comes to integrating marketing with the day-to-day operations of your

organization. Marketing helps find new customers, clarifies the needs of current customers, and discovers unserved and

underserved needs in the market. Simply put, marketing is information that supports important business decisions.

Mr. Rex Rice, manager of the Toronto InterContinental Hotel, is worried about his hotel. If they stay at their current price

level, other hotels might steal their present customers. Besides, Mr. Rice is not sure his hotel is even attaining its fair

share of the current market. If he raises his price to attract the upscale business market, he is afraid that occupancy would

drop to the low levels his hotel experienced at opening. In this case study Mr. Rice has some hard choices to make,

choices that will have long-term consequences for his hotel. He is relying on his marketing director, John Visconti, to give

him some facts to base his decisions from.

Consider the following questions as you look at the InterContinental case study:

Why is InterContinental unable to maintain or increase its occupancy rate at the higher corporate rate, the way Four

Seasons (and to some extent, King Edward) can?

What has ICH failed to consider in developing its marketing strategy?

What should Mr. Rice do: stay at his current price, raise his price, or target a different market segment?

The material for this case study is used with permission of John Wiley & Sons, Inc., ,Marketing Leadership in Hospitality

2nd edition, by Robert C. Lewis, Richard E. Chambers, Harsha E. Chacko, pp. 377-378, 2000.


Watch: Marketing Concepts

To help companies deliver value to their various constituents, managers must understand marketing and how to develop

well-thought-out marketing strategies. An illustrated presentation with audio appears below that introduces you to the core

concepts of marketing. Watch the presentation below to explore these concepts further.


Read: The Extended Service-Profit Chain

"Firms that successfully manage both SPC paths tend to perform better than firms that are successful in only managing

either the satisfaction or the social identity-based path. Thus, we argue in favor of an extended model that includes both

the "old" and the "new" SPC paths."

-Homburg, Wieseke, and Hoyer

In this optional article, Homburg, Wieseke, and Hoyer discuss a new focus for research on the service-profit chain (SPC).

The SPC, the intentional efforts to improve financial performance by increasing employee satisfaction, has long focused

on traditional, satisfaction-based methods of improving firm performance. The authors begin by noting a need for further

research. Specifically, they note that a model with such a strong emphasis on improving customer expectations is not

sustainable; if customers continually expect more and better services than they are currently receiving, it becomes

increasingly difficult for the firm to meet and exceed those expectations.

The authors propose extending the model to include a social identity-based SPC model. This model suggests a

complementary path to SPC, which states that employee and customer identification with a firm will lead to increased

customer loyalty. This, in turn, leads to improved financial performance. In the article, the authors review these two

complementary paths to SPC and derive specific hypotheses for improving financial performance.

View the article

https://d31owemgwclw9w.cloudfront.net/content/SHA/SHA501/sha501_223_article_en-us.pdf


Read: Marketing Mix: The Four Ps of Marketing

Key Points

The successful marketer will carefully mix the four elements into a balance that will satisfy the consumer in the face of

competition. This is called marketing mix.

The "Four Ps of Marketing" have been a mainstay in marketing education for years. Although the elements seem simple, it

is amazing how many businesses ignore these basics when creating their products and offering them to the public.

Marketing consists of four components around which marketing strategies are developed.

Sometimes marketers refer to a fifth P of marketing: or the consumers that the marketer is trying to reach.People,

ProductProduct means identifying and developing the goods and services that consumers want or need. Often this

involves in-depth market research.

Place

Place is offering products in a location so that they are convenient to the guest. For example, the number one

hotel attribute for which a customer selects a particular hotel over that of a competitor is the convenience of the

hotel's location.

PriceSetting the price is an essential step of the process. A price must serve many functions. It must yield a profit, it

must provide value to the guest, and it has to take into account the price of competing goods and services.

PromotionPromotion involves letting guests know about the product through advertising, personal selling, and other forms

of marketing communications.

The successful marketer will carefully mix the four elements into a balance that will satisfy the consumer in the face of

competition. This is called marketing mix.


Module Introduction: Applications of Marketing Principles

The competitive business environment evolves and changes much like a biological environment does. Looking back over

the last few decades, the evolution in the business strategies dominant companies follow can be clearly seen.

At one time, most companies followed a production orientation. Under this strategy, a company focused on production of a

few specific products perhaps because few of these products were competing in the marketplace. The firm's planning was

shaped by production and engineering. Marketing was not believed to be necessary because people were thought to be

willing to buy any product that was well made and reasonably priced. A saying that exemplifies the attitude of the

production orientation era is "build a better mousetrap and the world will beat a path to your door."

The production orientation era was followed by the sales orientation era. In these times companies emphasized selling

because of increased competition. The underlying rationale for a heavy sales orientation was that even good products

needed to be promoted to overcome consumer resistance. Companies felt that with enough effort anything could be sold.

Consequently, sales management increased in importance within firms, and the hard sell was accentuated. Customer

needs were not considered central as companies focused on simply selling whatever they produced.

The market orientation era commenced when competition became much more intense, overproduction and a myriad of

choices became common, and demand became uncertain. Demand was consciously stimulated by manufacturers during

this time. Companies recognized that a sales decision predominantly depended on a customer's perception of the value of

the product sold. Thus, the focus of a market orientation is on the needs of the customer who creates opportunities where

products can be sold.

In this module you learn the essential principles of marketing that characterize the present era of market orientation, and

how to apply these principles to the case studies that you worked on in the previous module.

After completing this module, you should be able to:

Discuss the four fundamental truths of marketing

Define the term strategy

Define the term strategic window

Discuss the process of developing a marketing plan in terms of moving from the strategic to the tactical

Define the concept of value as it applies to the hospitality industry

List factors that provide value for customers

Explain the relationship between goods and services

Discuss the key characteristics and features of services


Define and discuss the Servuction Model as it applies to the hospitality industry


Read: The Marketing Process Continuum

A market orientation stresses the importance of identifying and satisfying the customer's needs and wants while

maintaining a competitive advantage. The achievement of a clear market orientation will have to be based on the

marketing concept. The principle that it must keep its eye on competitors as well as customers forces the company to

examine how it can survive in the long run. Therefore, it is a sound basis for developing marketing strategies.

Firms following a market orientation guide their businesses toward two goals: first that of providing superior value to

customers over the long-term, and that of gaining an advantage over their competitors by coordinating the company's

market planning and product development resources.

The marketing process continuum clearly demonstrates how the varied elements of marketing strategy relate to and

depend upon each other. The content of this activity is the basis for the upcoming discussion.


Read: Types of Opportunities to Pursue

When determining what marketing opportunities to pursue in the hospitality industry, consider the following:

- trying to increase sales of a firm's present products in its present markets probably through aMarket Penetration

more aggressive marketing mix.

- trying to increase sales by selling present products in new markets.Market Development

- offering new or improved products for present markets.Product Development

- moving into totally different lines of business which may include entirely unfamiliar products,Diversification

markets, or even levels in the production-marketing system.

Formulate a Marketing Strategy

After selecting opportunities, formulate a marketing strategy, which is the overall company program for selecting a

particular target market and then satisfying consumers in that market through careful use of the elements of the marketing

mix.

Once customer needs have been identified, marketers must respond by doing the following:

Determine what group of consumers have the needs

Develop products to meet these needs

Position products for the target segment(s)

Develop an effective marketing mix

Evaluate customer responses to company strategies


Read: Value Drivers for Customers

The first thing managers need to understand is exactly what matters to their customers. But customers come in many

different types, and the first activity we will look at gives some clear indications of how different customer profiles value

different services. Some of the unique challenges involved in providing these valued services will also be addressed in the

following pages. Once managers have figured out what a particular customer segment wants, their next task is then to use

the training, tools, and facilities at their disposal to satisfy those customers.

Marketers must understand the value drivers for their customers. Different segments of the hospitality industry will have

different value drivers; that is, the criteria for selection and the basis of a positive experience may differ to some degree

depending on whether the hospitality product is a hotel, airline, amusement park, casino, etc.

In this section, we examine the primary factors that drive guests' purchase decisions regarding lodging facilities. These

have not substantively changed over the years; consequently, location, price and services available continue to determine

booking decisions within the hotel industry.

However, the purchase decision is not as simple as it may initially seem; indeed, it is generally quite complex. For

example, the benefit of the proximity of the hotel to nearby tourists' attractions or the central business district is likely to be

weighed against the price, the purpose and length of the stay, and the general appeal of the property based on available

photos or the view from the road. Consumers often use price and hotel-star category as signals of the quality of the

services and products, and likely have certain expectations as to what is a "fair" price. Moreover, for very short stays,

consumers are often willing to accept properties with minimal services and low prices, while those guests intending to stay

longer, will want additional services and amenities available. The three key factors of location, price, and services become

intertwined and the prospective customer must weigh and balance the benefits of each.

The selection process creates consumer anxiety as the risk of a poor decision is considered. To alleviate risk in the

purchase decision, some consumers will base their choice of hotel on their prior experience, while others will seek a

property with a good brand reputation. Many others will turn to recommendations from others, including Internet websites

which offer user-generated reviews of properties.

Because recommendations from others are often the tipping points in the decision process, it is important to understand


the value drivers behind the guest experience. Research has shown that once guests have experienced the lodging

facility, other factors emerge determining perceived value. Cleanliness, guest room design, the physical property, and

service level are all key in establishing a positive guest experience. In addition, price is a factor the higher the price, the

greater guest expectations. Consequently, properties are not always able to meet these very high expectations and so the

evaluation of the accommodations decline. That is, the guests do not feel they have received good value. Finally, location

also influences the post-purchase evaluation of the lodging property, as the convenience, natural beauty or quaintness of

the area where the hotel is located becomes irrevocably linked to perceived quality.

While less research has been focused on the restaurant industry, these value drivers have been identified: price, food

type, food quality, service quality, cleanliness, restaurant environment, and brand reputation. While some elements, such

as price, overlap with important factors in the lodging decision process, for the most part, restaurant factors are different.

Marketers should seek to understand what key issues motivate consumers to purchase their particular hospitality product

and what factors determine satisfaction and perceived value.

Baek, Seung-Hee, Sunny Ham, and Il-Sun Yang (2006), "A Cross Cultural-Comparison of Fast Food Restaurant Selection

Criteria between Korean and Filipino College Students," International Journal of Hospitality Management, 25 (4), 683-698

Chan, Eric S. W., and Simon C. K. Wong (2006), "Hotel Selection: When Price Is Not the Issue," Journal of Vacation

Marketing, 12 (2) 142-159.

Dube, Laurette, Cathy A. Enz, Leo M. Renaghan, and Judy A. Siguaw (1999), American Lodging Excellence: The Keys to

Best Practices in the U.S. Lodging Industry, New York: American Hotel Foundation.

Fernandez-Barcala, Marta, Gonzalez-Diaz, and Juan Prieto-Rodriguez (2009), "Factors Influencing Guests' Hotel Quality

Appraisals," European Journal of Tourism Research, 2 (1), 25- 40.

Lockyer, Tim (2005), "Understanding the Dynamics of the Hotel Accommodation Purchase Decision," International Journal

of Contemporary Hospitality Management, 17 (6/7), 481-492.

Lockyer, Tim (2005), "The Perceived Importance of Price as One Hotel Selection Dimension," Tourism Management, 26

(4), 529-537.

Lockyer, Tim and Linda Roberts (2009), "Motel Accommodation: Trigger Points to Guest Accommodation Selection,"

International Journal of Contemporary Hospitality Management, 21 (1), 24-37.

Yu-Hua, Christine Sun and Alastair M. Morrison (2007), "Senior Citizens and Their Dining-Out Traits: Implications for

Restaurants," International Journal of Hospitality Management, 26 (2), 376-394.


Watch: Service Characteristics of Hospitality and Tourism Marketing

An illustrated presentation with audio appears below. Use this resource to learn about the definition of service, the

goods-service continuum, and the key features of service that include intangibility, inseparability, perishability, and

difficulty of standardization.


Watch: The Servuction Model

The interactive relationship between all the variables involved in the production and delivery of services in the hospitality

industry can be illustrated by something called the Servuction Model. Hospitality managers must be aware of the elements

of this model, and do their best to influence how they combine, to make sure the customer experience is a positive one.


Read: Using Research to Uncover Key Value Drivers in the Hotel Industry

Staying in a hotel, especially for longer than two days, is an emotional experience. One of the challenges facing market

researchers in the hospitality industry is to devise approaches to the hospitality experience that go beyond satisfying

customers' superficial needs and tap into the customers' core emotional experiences.

There are three types of customer needs to consider in providing overall customer satisfaction:

: Those requirements marketers identify simply by asking customers what they want. Examples inRevealed Requirements

the hospitality industry might include:

Workout room

24-hr. room service

Indoor pool

Free delivery of the morning paper

Full-service spa

: Elements of the consumer experience are so basic that customers may fail to acknowledge them.Expected Requirements

Nonetheless, fulfillment of these requirements is essential to achieving customer satisfaction. Examples might include:

Daily changes of linens and towels

Overall cleanliness of the facilities

Cable TV access

In-room telephone

Polite staff

: Elements of the consumer experience that go beyond customers' expectations. These are theExciting Requirements

unanticipated "perks" that make the experience truly memorable, here are some examples:

Welcome basket of fruits, chocolates, and champagne

Free in-room broadband Internet connection

Tickets/coupons to local events

Free dry-cleaning service


Monogrammed pillowcases for repeat guests

The definition of what constitutes exciting, revealed, and expected requirements varies according to the market segment.

For example, what an upscale market segment considers an expected requirement might qualify as an exciting

requirement for a mid- to lower-level market segment.

Source: Adapted from Kano, Noriaki, N. Seraku, F. Takahashi, and S. Tsuji (1984), "Attractive Quality and Must-be

Quality," in "Hinshitsu" Quality: The Journal of the Japanese Society for Quality Control, 14 (April), 39-48.

Kano's model, pictured above, helps explain how satisfying each of these kinds of needs contributes to building the

customers' overall emotional experience.

According to the model, failure to satisfy revealed requirements is sure to result in customer dissatisfaction. Customer

satisfaction increases in direct proportion to the degree to which the organization fulfills revealed requirements. Revealed

requirements are both a necessary and sufficient condition for customer satisfaction. It is through revealed requirements

that hotels seek to establish differentiation and a competitive advantage.

Satisfying expected requirements, on the other hand, never results in high degrees of customer satisfaction. At best,

organizations that confine their efforts to fulfilling expected requirements can hope only to avoid dissatisfaction. In other

words, these attributes are a necessary but not sufficient condition for customer satisfaction.

It is in fulfilling the unexpected, exciting requirements that organizations elevate the hospitality experience into the

emotional realm. Failure to fulfill these requirements won't dissatisfy customers, because they do not expect them in the

first place. However, fulfilling these requirements adds extra excitement to the consumer experience. Therefore, exciting

requirements are sufficient, but not necessary conditions for satisfaction. These particular attributes can form the basis of

a marketing strategy designed to pull market share from competitors.

Market research, then, must do more than simply identify revealed and expected requirements; to achieve high levels of

customer satisfaction, organizations must anticipate and provide the unexpected.

For more information about Kano's model and the relationship between revealed, expected, and exciting requirements,

visit the and see the article "Elicit Service Customer Needs Using SoftwareGlenn H. Mazur published works webpage

Engineering Tools," by Glenn H. Mazur. The Kano model does have its detractors. While the Kano model identifies the

non-linear relationship between performance and satisfaction, it does not account for the performance of specific attributes

as compared to competitors. Consequently, the model does not reveal opportunities for improvement.

http://www.mazur.net/mazur_presentations.htm


Ask The Expert: Value Drivers in the Restaurant Industry

About the Expert

Dennis Sweeney is a retired partner of Joseph Baum & Michael Whiteman Co., an international consulting firm for the

hospitality industry, and a partner in the re-planning and re-marketing of the Rainbow Room atop Rockefeller Center in

New York City.

Prior to joining Baum & Whiteman, Mr. Sweeney was Vice President in Charge of Operations for Inhilco, Inc., a wholly

owned subsidiary of Hilton International that operated all of the public restaurants in the New York World Trade Center.

Mr. Sweeney is a 1964 graduate of Cornell's School of Hotel Administration, a past president of the New York Chapter of

the Cornell Hotel Society; a member of the American Institute of Wine and Food, and a full professional member of the

Foodservice Consultants Society International. He has served as an Industry Advisor to Hotel Ezra Cornell since 1995,

and is the 1998 recipient of the New York Chapter of the Cornell Hotel Society's "Hotelier of the Year" Award.


Click Play to Listen

Judy Siguaw Dean of the College of Human Ecology

East Carolina University

Listen: Thank You and Farewell

Hello. This is Judy Siguaw again. Congratulations on completing the first course in the marketing certificate series,

. I hope you've enjoyed the course and now have a much betterMarketing Fundamentals for the Hospitality Industry

understanding of marketing and its role in your organization.

If you are interested in learning more, consider signing up for the second course in the series, Conducting Effective

. This course covers the various methods of data collection, market segmentation, steps inHospitality Marketing Research

the buying process, and gives you tools for identifying and defining your target markets. I hope you join us in this next

intellectual pursuit.


Stay Connected


Supplemental Reading List

The provides focused whitepapers and reports based on cutting-edge researchCenter for Hospitality Research

http://www.hotelschool.cornell.edu/research/chr/

sha501: marketing fundamentals for the hospitality industryone final action plan assignment ......

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