9/17/2017
I
3
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
I
“Would you tell me, please,
which way I ought to go from
here?” said Alice.
“That depends a good deal
on where you want to get to,”
said Cheshire Cat.
— LEWIS CARROLL
(ALICE IN WONDERLAND)
3
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
1
9/17/2017
OBJECTIVES
After reading this chapter, you should be able to:
• Explain company-wide strategic planning.
I
• Understand the concepts of stakeholders, processes,
resources, and organization as they relate to a highperforming business.
• Explain the four planning activities of corporate
strategic planning.
• Understand the processes involved in defining a
company’s mission and setting goals and objectives.
• Discuss how to design business portfolios and
growth strategies and explain the steps involved
in the business strategy planning process.
3
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
The Role of Marketing in Strategic Planning
The Inn on Biltmore Estate
• The Inn on Biltmore Estate was designed to be a
four-star hotel and one of the finest of its kind in the
southeastern United States.
I
– among competitors were The Greenbrier (West Virginia),
Homestead (Virginia) and Pinehurst (North Carolina)
– Stephanie Williams, director of hotel sales & Randy
Fluharty, senior vice president, had been planning the
development &opening of the inn for more than a year
• The inn would be the first and only lodging on the
property of the Biltmore Estate.
3
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
2
9/17/2017
The Role of Marketing in Strategic Planning
The Inn on Biltmore Estate
• The French Renaissance chateau mansion, billed as
―America’s Largest Home‖ serves as a museum
with a curator.
I
– fully furnished & viewed by hundreds of thousands yearly,
it is not used for lodging or serving of food & beverage
• The 8,000 acres estate in the Blue Ridge Mountains
consists of the chateau, a vineyard, three restaurants,
an ice cream parlor, a bake shop, and a spectacular
flower garden.
– now it would have an inn with 222 guest rooms and
suites to match its splendor
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
The Role of Marketing in Strategic Planning
The Inn on Biltmore Estate
• Stephanie and Randy believed many would come to
the Inn from the 900,000 annual paid estate visitors.
I
– they positioned the inn as a weekend & holiday transient
vacation property but with conference/seminar facilities
designed with the midweek corporate guest in mind
• The Inn’s restaurant would feature classic cuisine.
– estate-raised beef, lamb, veal, and trout, as well as
seasonal fruits, vegetables, and herbs
• The hotel site had been carefully selected to offer
views of a meadow and mountain from one side
and of downtown Asheville from the other.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
3
9/17/2017
The Role of Marketing in Strategic Planning
The Inn on Biltmore Estate - Corporate Business
• Seminar & conference guests were expected to come
from Charlotte, Raleigh, Greensboro, Atlanta, and
Tennessee cities such as Knoxville.
I
– the inn was planned to accommodate business meetings,
corporate retreats, and small-group functions
– two boardrooms, two banquet rooms & a reception salon
can accommodate groups of up to 144 people
3
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
The Role of Marketing in Strategic Planning
The Inn on Biltmore Estate - Planning
• The hotel would not be affiliated with a chain, so
those responsible for planning did not have the
benefit of a corporate planning department.
• Rooms were to be on a modified American plan
(MAP) and would include afternoon tea, breakfast,
parking, and gratuities.
• Prices were expected to range from $300 to $500
per room per night.
I
– a premium position within the Asheville market
• The internal mission was to position the hotel as a
destination without overshadowing the chateau.
tab
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
4
9/17/2017
The Role of Marketing in Strategic Planning
The Inn on Biltmore Estate - Planning
• Two test guest rooms were built in a storage area in
Asheville.
I
– while water was not connected, in all other respects
the test rooms were identical to future guest rooms
• Details such as drapery, bedspreads, and the
armoire were carefully studied in these test rooms.
– designer and suppliers worked closely with the inn’s staff
• Stephanie worked with travel media writers to create
preopening knowledge and excitement among the
travel-receptive public.
3
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
The Role of Marketing in Strategic Planning
The Inn on Biltmore Estate - Sales Planning
• The estate had a key customer pass-holder program,
allowing unlimited pass privileges to the property.
I
– this database contained over 49,000 names & addresses
– 90% lived outside the Asheville area.
• The estate reservation center reported that over 60%
of those calling for information did not have lodging.
– the estate served as a broker for area hotels
• Reservations center agents could be trained to first
attempt to sell the inn.
– and offer lesser-priced alternatives if the caller showed
heavy price resistance
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
5
9/17/2017
The Role of Marketing in Strategic Planning
The Inn on Biltmore Estate - Sales Planning
• A problem to be reconciled was that of gate passes
for friends &relatives of guests staying at the inn.
I
– estate policy was admittance to the property could be
gained only through a paid ticket or pass
• Hotel guests would want to invite others to join them
for dinner or cocktails, desirable for the hotel.
– a way was needed to keep them from touring the chateau,
gardens & winery without paying for the privilege
• Another challenge facing Stephanie was a negative
perception of the area by those in Atlanta.
– an issue discovered through focus group interviews
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
The Role of Marketing in Strategic Planning
The Inn on Biltmore Estate - Sales Planning
• The focus groups revealed that many Atlantians
believed it was a great distance away, in the middle
of nowhere with nothing to do.
I
– in reality, Asheville is only 3.5 hours from Atlanta
– in addition to the estate, the area offered hiking, whitewater rafting, sightseeing from the Blue Ridge Parkway
– a Native American casino is about one hour away
3
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
6
9/17/2017
The Role of Marketing in Strategic Planning
The Inn on Biltmore Estate - Yield Management
• A corporate planner called and wanted to book future
business with a discount.
I
– the booking called for a spillover into the weekend
• It was turned down in expectation of higher yield
due to weekend occupancy by transient customers.
– without a history of bookings for the hotel, this was a
bold decision
• Yield management importance was recognized by
Stephanie, who was looking for a yield management
specialist to join her staff
– but had discovered that such people were in short supply
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
The Role of Marketing in Strategic Planning
The Inn on Biltmore Estate - Market Segments
• Stephanie identified market segments that she felt
offered opportunities for the inn, one of which was
the wedding market.
• Stephanie felt this market offered great potential.
I
– the call center received 5-10 calls per day about holding
weddings on the estate
– 80 percent of these calls were from out of state
• Other segments to develop included international
visitors, attracted by the Vanderbilt name.
– Europeans seem to be attracted by the historical family
name
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
7
9/17/2017
The Role of Marketing in Strategic Planning
The Inn on Biltmore Estate - Market Segments
• Another possible segment was the Butterfield
Robinson walking tour, top-of-the-market mountain
tours in the area that cater to affluent individuals.
• These and many other considerations kept Stephanie
and Randy constantly occupied in both planning and
development at strategic and tactical levels.
I
– they put to use many of the concepts discussed in this
chapter on strategic planning
3
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
Nature of High-Performance Business
Introduction
• A major challenge facing hospitality companies is
building & maintaining healthy businesses in a
rapidly changing marketplace & environment.
• The consulting firm of Arthur D. Little proposed a
model of the characteristics of a high-performance
business which pointed to four factors:
I
– stakeholders, processes, resources, and organization.
3
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
8
9/17/2017
Nature of High-Performance Business
Stakeholders
• The starting point for any business is to define the
stakeholders and their needs.
I
– traditionally businesses focused on their stockholders
• A business must at strive to satisfy the minimum
expectations of each stakeholder group.
– including customers, employees, suppliers, and the
communities where their businesses are located
• The progressive company creates a high level of
employee satisfaction.
– which leads employees to work on continuous
improvements as well as breakthrough innovations
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Nature of High-Performance Business
Stakeholders
• Growth creates opportunities for advancement,
profits mean we can pay our employees a fair wage.
• There is a synergistic loop between satisfied
customers & satisfied employees.
I
– satisfied employees create satisfied customers
– employees like dealing with customers who are happy
and they know from previous visits
• This creates more customer satisfaction, which in
turn creates more employer satisfaction, resulting
in higher-quality products & services.
– creating high customer & stakeholder satisfaction
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
9
9/17/2017
Nature of High-Performance Business
Stakeholders
• A critical, sometimes overlooked, stakeholder group
are the owners of hotels operated by a hotel
management company.
• Many hotel owners are actually investors and do
not wish to manage a property actively.
I
– they contract with an experienced hotel management
company
– such a company may be a well-known flag company
or one that is unknown to the public
3
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
Nature of High-Performance Business
Processes
• Company work is traditionally carried on by
departments.
• Departmental organization poses some problems, as
departments typically operate to maximize their own
objectives, not necessarily the company’s.
I
– walls go up between departments
– there is usually less than ideal cooperation
– work is slowed & plans often are altered
• Companies are increasingly refocusing attention on
the need to manage processes more than departments.
3
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
10
9/17/2017
Nature of High-Performance Business
Processes - The Las Vegas Hilton
• The Las Vegas Hilton was concerned with the profit
contribution from various market segments.
I
– the result was a radically different approach to hotel
accounting called market segment accounting
• This approach incorporated marketing & strategic
planning into accounting rather than viewing them
as separate stand-alone areas and philosophies.
• This required an interdepartmental analysis.
– because different guests have widely varying impacts
on the profit implications for various departments
3
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
Nature of High-Performance Business
Processes - The Las Vegas Hilton
• The hotel wanted answers to these questions:
1.
2.
3.
4.
5.
I
What is the relative profitability of the gaming guest,
premium-gaming guest and tour/travel guest?
How many room nights will a segment fill yearly?
How much should be spent to attract each segment?
How should rooms be priced for each segment?
How should these rooms be allocated to the segments
during critical periods of the year?
• Teams were formed representing finance, marketing,
and information services.
– eventually, the heads of all the hotel’s major departments
contributed to the new market segment accounting model
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
11
9/17/2017
Nature of High-Performance Business
Resources
• To carry out processes, a company needs resources
like personnel, materials, machines, and information.
I
– traditionally, companies sought to own & control
most of the resources that entered the business
• Companies are finding some resources under their
control are not performing as well as those they
could obtain from outside.
– more companies today outsource less critical sources
• Smart companies are identify their core competencies
and use them as the basis for their strategic planning.
3
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
Nature of High-Performance Business
Organizational Resources for Strategic Planning
I
Table 3-1 Strategic analysis: Questions that generate creative ideas.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
12
9/17/2017
Nature of High-Performance Business
Organization
• The organizational side of a company consists of its
structure, policies, and culture.
I
– all of which tend to become dysfunctional in a rapidly
changing company
• Although structure and policies can be changed, the
company is the hardest to change.
• Companies must work hard to align their
organization’s structure, policies, and culture
to the changing requirements of business strategy.
3
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
Strategic Planning: Defining Marketing’s Role
Introduction
• The company starts strategic planning by defining its
overall purpose & mission at the corporate level.
I
– this mission is turned into detailed supporting objectives.
• Next, headquarters decides what portfolio of business
& products is best for the company and how much
support to give each one.
3
Figure 3-1 Steps in Strategic Planning.
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
13
9/17/2017
Strategic Planning: Defining Marketing’s Role
Introduction
• Each business & product develops detailed marketing
and other plans that support the companywide plan.
• Strategic planning sets the stage for the rest of the
planning in the firm.
• Companies usually prepare annual plans, long-range
plans, and strategic plans.
I
– annual & long-range plans deal with current businesses
– the strategic plan involves adapting to take advantage
of opportunities in its constantly changing environment
• Corporate headquarters has the responsibility for
setting into motion the whole planning process.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Strategic Planning: Defining Marketing’s Role
Introduction
• Hospitality faces the need for greater empowerment
of employees, particularly in middle-management.
• It has been suggested that many of the traditions
within the industry have experienced little change.
I
– ―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”
• Increasingly, industry executives and researchers
view this traditional approach as needing change.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
14
9/17/2017
Strategic Planning: Defining Marketing’s Role
Introduction
• Because the hospitality & tourism industries are
international & multicultural, attitudes & culture can
create sharp differences in management style.
I
– a study of hospitality managers in Poland, France, and
Austria showed differences in risk taking & international
vision
• The study concluded that different attitudes of the
managers affected their degree of autonomy.
– the authors also believed the strategy of a hospitality firm
and its level of performance were affected by the differing
attitudes of managers within the three nations
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Strategic Planning: Defining Marketing’s Role
Defining the Corporate Mission
• A hospitality organization exists to accomplish
something…
I
– to provide a night’s lodging
– a day of adventure and entertainment for a family
– a great dining experience for a couple
• At first, it has a clear mission or purpose, but over
time, its mission may become unclear.
– as the organization grows, adds new products &
markets, or faces new conditions in the environment
• When management senses that the organization is
drifting, it must renew its search for purpose.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
15
9/17/2017
Strategic Planning: Defining Marketing’s Role
Defining the Corporate Mission
• According to Peter Drucker, it is time to ask some
fundamental questions.
–
–
–
–
I
what is our business?
who is the customer?
what do customers value?
what should our business be?
• Successful companies raise these simple-sounding,
yet difficult questions continuously and answer
them carefully and completely.
– many organizations develop formal mission
statements that answer the questions
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Strategic Planning: Defining Marketing’s Role
Defining the Corporate Mission
• A mission statement is a statement of the
organization’s purpose—what it wants to
accomplish in the larger environment.
I
– a clear mission statement acts like an ―invisible
hand‖ that guides people in the organization
• Management should avoid making a mission too
narrow or too broad.
– the organization should base its mission on its
distinctive competencies
• Firms with well-crafted mission statements have
shown better organizational & financial performance.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
16
9/17/2017
Strategic Planning: Defining Marketing’s Role
Defining the Corporate Mission
• Missions are at their best when they are guided by a
vision, an almost impossible dream.
I
– Thomas Monaghan wanted to deliver pizza to any home
within thirty minutes, and created Domino’s Pizza
– Ruth Fertel wanted to provide the finest steak dinners
available, and created Ruth’s Chris Steakhouses
• The corporate mission statement should stress
major policies the company wants to honor.
– policies define how employees should deal with
customers, suppliers, competitors & other groups
3
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
Strategic Planning: Defining Marketing’s Role
Defining the Corporate Mission
• The company’s mission statement should provide a
vision & direction for the next ten to twenty years.
• Missions are not revised every few years in response
to every new turn in the economy.
I
– a company must redefine its mission if that
mission no longer defines an optimal course
3
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
17
9/17/2017
Strategic Planning: Defining Marketing’s Role
Setting Company Objectives and Goals
• The company needs to turn its mission into detailed
supporting objectives for each level of management.
I
– each manager should have objectives and be responsible
for reaching them
• Each broad marketing strategy must then be defined
in greater detail.
• In this way, the firm’s mission is translated into a
set of objectives for the current period.
3
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
Strategic Planning: Defining Marketing’s Role
Designing The Business Portfolio
• Most companies operate several businesses, however,
they often fail to define them carefully.
I
– 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
• Management, of course, should avoid a market
definition that is too narrow or too broad.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
18
9/17/2017
Strategic Planning: Defining Marketing’s Role
Holiday Inn
• Holiday Inns, Inc., the world’s largest hotel chain
with over 300,000 rooms, fell into this trap.
I
– there was a time when it broadened its business definition
from the ―hotel business‖ to the ―travel industry‖
• It acquired Trailways, Inc., then the nation’s second
largest bus company, and Delta Steamship, Inc.
– but it did not manage these companies well and
later divested the properties
• Today Holiday Inns is part of the Intercontinental
Hotel Group & is refocused on the lodging industry.
3
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
Strategic Planning: Defining Marketing’s Role
Designing The Business Portfolio
• Companies have to identify those of its businesses
that they must manage strategically.
• These businesses are called strategic business units
(SBUs). 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.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
19
9/17/2017
Strategic Planning: Defining Marketing’s Role
Designing The Business Portfolio
• The purpose of identifying SBUs is to assign to these
units strategic-planning goals & appropriate funding.
I
– these units send their plans to company headquarters,
which approves them or sends them back for revision
• Headquarters reviews these plans to decide which
of its SBUs to build, maintain, harvest, and divest.
3
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
Strategic Planning: Defining Marketing’s Role
Developing Growth Strategies
• Companies need growth if they are to compete and
attract top talent.
I
– at the same time, a firm must be careful not to make
growth itself an objective
– the company’s objective must be ―profitable growth‖
• Many add that growth must be environmentally
responsible, though this is not unilaterally accepted
• Marketing has a responsibility to achieve profitable
growth for the company.
– and must identify, evaluate & select opportunities
and lay down strategies for capturing them
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
20
9/17/2017
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.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
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
I
– market concentration strategy
• Then it considers whether it can find or develop new
markets for its current products
– market development strategy
• Next, management should consider product
development:
– offering modified or new products to current markets
3
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
21
9/17/2017
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.
I
– 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
3
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
Strategic Planning: Defining Marketing’s Role
Diversification Growth
• Diversification growth makes sense when good
opportunities are found outside present businesses.
I
– a good opportunity is one where the industry is highly
attractive and the company has the mix of business
strengths to be successful
• Three types of diversification can be considered:
• The company could seek new products with
technological or marketing synergies with existing
product lines, even though the products may appeal
to a new class of customers
– concentric diversification strategy
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
22
9/17/2017
Strategic Planning: Defining Marketing’s Role
Diversification Growth
• The company might search for new products that
could appeal to its current customers, although
technologically unrelated to its current product line.
I
– horizontal diversification strategy
• The company might seek new businesses that have
no relationship to the company’s current technology,
products, or markets.
– conglomerate diversification strategy
• A company can systematically identify new business
opportunities by using a marketing systems
framework.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Strategic Planning: Defining Marketing’s Role
Diversification Growth
• Companies that diversify too broadly into unfamiliar
products or industries can lose their market focus.
I
– despite the risk, companies that started in one market
often desire to enter other, complimentary markets
• Not a secure strategy, as different businesses often
require different management styles & practices.
3
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
23
9/17/2017
I
See this feature on page 66 of your textbook.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Strategic Planning: Defining Marketing’s Role
Integrative Growth
• Opportunities in diversification, market development,
and product development can be seized through
integrating backward, forward, or horizontally
within that business’s industry.
I
– a hotel company could select backward integration by
acquiring one of its suppliers, such as a food distributor
– or forward integration by acquiring tour wholesalers or
travel agents
– in horizontal integration the company might acquire one
or more competitors
3
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
24
9/17/2017
Strategic Planning: Defining Marketing’s Role
Integrative Growth
• Integrative growth offers opportunities in related
businesses, but a company must have or acquire the
expertise to succeed in the new business.
I
– through investigating possible integration moves, a
company may discover additional sources of sales
• A company can systematically identify new business
opportunities using a marketing systems framework.
3
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
Marketing Strategy and the Marketing Mix
Introduction
I
• 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.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
3
tab
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
25
9/17/2017
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.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Strategic Planning: Defining Marketing’s Role
Customer-Driven Marketing Strategy
• To succeed in today’s competitive marketplace,
companies need to be customer centered.
• Before it can satisfy consumers, a company must
first understand their needs and wants.
I
– sound marketing requires a careful customer analysis
• Companies know that they cannot profitably serve all
consumers in a given market.
• Each company must divide the market, choose the
best segments & design strategies to serve them.
– this involves market segmentation, market targeting,
differentiation, and positioning
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
26
9/17/2017
Customer-Driven Marketing Strategy
Market Segmentation
• Since markets consists of many types of customers,
products, and needs, the marketer must determine
which segments offer the best opportunities.
I
– consumers can be grouped & served based on geographic,
demographic, psychographic, and behavioral factors
• Dividing a market into distinct groups of buyers who
have different needs, characteristics, or behavior,
who might require separate products or marketing
programs is called market segmentation.
• Every market has segments, but not all ways of
segmenting a market are equally useful.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Customer-Driven Marketing Strategy
Market Targeting
• Market targeting involves evaluating each market
segment’s attractiveness and selecting one or more
segments to enter.
• A company should target segments in which it can
profitably generate the greatest customer value and
sustain it over time.
I
– a company with limited resources might decide to serve
only one or a few special segments or ―market niches‖
• Most companies enter a new market by serving a
single segment & if successful, they add segments.
– large companies eventually seek full market coverage
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
27
9/17/2017
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.
I
– 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.
• The company’s entire marketing program should
support the chosen positioning strategy.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
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
I
– the set of controllable, tactical marketing tools the firm
uses to produce the response it wants in the target market
• An effective marketing program blends all of the
marketing mix elements into an integrated program.
• 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
3
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
28
9/17/2017
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.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Managing the Marketing Effort
Introduction
• Managing the marketing process requires the four
marketing management functions shown here:
I
Figure 3-4
The relationship
between analysis,
planning,
implementation,
and control.
3
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
29
9/17/2017
Managing the Marketing Effort
Introduction
• The company first develops companywide strategic
plans and then translates them into marketing and
other plans for each division, product, and brand.
• Control consists of measuring and evaluating the
results of marketing activities and taking corrective
action where needed.
• Marketing analysis provides information and
evaluations needed for the other marketing activities.
I
3
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
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).
I
Figure 3-5
SWOT analysis.
3
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
30
9/17/2017
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.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Managing the Marketing Effort
Internal Environmental Analysis
• Each business needs to evaluate its strengths and
weaknesses periodically.
• Management or an outside consultant 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, minor
weakness, or major weakness.
• A company with strong marketing capability would
probably show up with the ten marketing factors all
rated as major strengths.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
31
9/17/2017
Managing the Marketing Effort
Internal Environmental Analysis
• Sometimes a business does poorly not because its
department lacks the required strengths, but because
employees do not work together as a team.
I
– in some hospitality companies, salespeople are viewed as
overpaid playboys & playgirls who produce business by
practically giving it away to customers
– salespeople often view those in operations as incompetent
dolts who consistently foul up their orders and provide
poor customer service
• It is critically important to assess interdepartmental
working relationships as part of the internal
environmental audit.
tab
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Managing the Marketing Effort
External Environmental Analysis
• A business unit must monitor forces that will affect
its ability to earn profits in the marketplace
I
– macroenvironmental forces (demographic-economic,
technological, political-legal, and social-cultural)
– microenvironmental forces (customers, competitors,
distribution channels, and supplies)
• For each trend or development, management needs
to identify the implied opportunities and threats.
• The terrorist attacks on September 11, 2001 brought
sudden awareness to the hospitality/tourism industry
of the impact such events can have on travel.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
32
9/17/2017
Managing the Marketing Effort
External Environmental Analysis
• The emergence of China, India, and Eastern Europe
as new industrial and political powers is seriously
affecting hospitality/tourism in unforeseen ways.
I
– high quality health care combined with low cost in
countries such as India has created a new segment
of tourism known as medical tourism
• In today’s rapidly changing environment, external
environmental threats and opportunities have taken
on new importance in strategic planning.
3
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
Managing the Marketing Effort
Opportunities
• A major purpose of environmental scanning is to
discern new opportunities, areas of need where a
company can perform profitably.
I
– 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.
3
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
33
9/17/2017
Managing the Marketing Effort
Threats
• Threats are challenges posed by unfavorable trends
or developments that would lead to sales or profit
deterioration, and should be classified according to
their seriousness and probability of occurrence
• 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
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Managing the Marketing Effort
Threats
• All hospitality companies must study possible threats
& build risk management systems.
I
– in addition effects of 9/11, risks such as mad cow disease
and microbial contamination are of vital concern
• Because microbial outbreaks are possible in any food
establishment, they must be considered as risks with
prescribed procedures to follow after an outbreak.
• The Jack-in-the-Box restaurant chain was linked to
400 illnesses & 3 deaths due to an outbreak of E-coli.
– the chain, accused of serious deception, irresponsibility
and poor communications, suffered heavy financial loss
for four years and nearly went out of business
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
34
9/17/2017
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.
• Most business units pursue a mix of objectives,
including profitability, sales growth, market-share
improvement, cost containment, and so on.
I
– where possible, objectives should be stated quantitatively
• Objectives support measurable goals, and a business
should set realistic goals.
– the levels should arise from an analysis of the business
unit’s opportunities & strengths, not from wishful thinking
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Managing the Marketing Effort
Goal Formulation
• Objectives are sometimes in a tradeoff relationship.
• Some important tradeoffs:
I
– high profit margins versus high market share
– deep penetration of existing markets versus developing
new markets
– profit goals versus nonprofit goals
– high growth versus low risk
• The hotel industry is faced with unique challenges in
goal formulation and performance measurement.
– due to management agreements between owners &
operating companies.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
35
9/17/2017
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.
I
3
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
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.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
36
9/17/2017
Managing the Marketing Effort
Goal Formulation
• Goals indicate what a business unit wants to achieve;
strategy answers how to get there.
I
– 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.
3
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
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.
I
3
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
37
9/17/2017
Managing the Marketing Effort
Marketing Planning
• Marketing planning involves deciding on marketing
strategies that will help the company attain its overall
strategic objectives.
I
– 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.
• The main section of the plan presents a detailed
SWOT analysis, states major objectives for the
brand and outlines the specifics of a marketing
strategy.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
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.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
38
9/17/2017
Managing the Marketing Effort
Implementation
• Even a clear strategy and well-thought-out
supporting program may not be enough.
I
– the firm may fail at implementation
• The company must communicate its strategy to the
employees and make them understand their part in
carrying it out.
• To implement a strategy, the firm must have the
required resources, including employees with the
necessary skills to carry out that strategy.
3
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
Managing the Marketing Effort
Feedback and Control
• All companies need to track results and monitor new
developments in the environment.
• The environment will change, and when it does, the
company will need to review strategies or objectives.
• 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.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
39
9/17/2017
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.
• Major chains commonly do not own all the properties
they manage.
I
– some hotel chains may own no individual properties
• Owners of hotel-resorts often show surprisingly little
interest or knowledge of their properties
– owners complain that management companies are
nonresponsive, have little expertise in planning, and
do not work closely with owners or their representatives
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Unique Challenges of the Hotel Industry
• Hotel management companies, generally unknown or
invisible to the general public, may own or manage
many diverse properties, such as Ramada, Holiday
Inn, or Days Inn hotels.
• 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.
– in many cases, the only alternative has been to drop the
property from the chain
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
40
9/17/2017
Unique Challenges of the Hotel Industry
• Hotels may or may not own or manage secondary
properties within the hotel, such as restaurants, retail
stores, health and business centers, and nightclubs.
I
– this creates added complexity in strategic planning
• Strategic alliances between hotel chains on a global
basis may further complicate the planning process
• Marketing has a role to play in strategic planning &
must maintain close, continuous customer ties.
• Marketing is responsible for identifying and studying
consumer needs and, as such, has a level of expertise
in this area that is invaluable in strategic planning.
tab
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
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.
I
3
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
41
9/17/2017
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.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
I
3
© 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
tab
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
42
9/17/2017
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.
I
3
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
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
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
43
9/17/2017
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).
I
3
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
EXPERIENTIAL EXERCISES
Try One !
• Visit two hotels, restaurants, or other hospitality
businesses.
• You will be able to observe elements such as
location, physical facilities, employee attitude,
quality of products, reputation of the brand (if it
is a brand), and other factors.
I
– from your observations write down what you think are
the strengths and weaknesses of the businesses
3
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
44
9/17/2017
EXPERIENTIAL EXERCISES
Try One !
• Find a strategic alliance between a hotel company
and another company. This can be for another
hospitality organization or a company outside the
hospitality industry.
I
– state what you think the benefits of the alliance are for
each partner
3
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
INTERNET EXERCISES
Try This !
Support for this exercise can be found on the Web
site for Marketing for Hospitality and Tourism,
www.prenhall.com/kotler
• Find the mission statement of a hospitality or
travel company on the Internet.
• Critique the mission statement against the
guidelines for a mission statement, as stated in
the text.
– if you have difficulty finding a mission statement, you
can check the Web site under this exercise and you
will find the URL to some mission statements
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
tab
I
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
45
9/17/2017
INTERNET EXERCISES
Try This !
Support for this exercise can be found on the Web
site for Marketing for Hospitality and Tourism,
www.prenhall.com/kotler
• Visit the annual report of a hospitality
organization (these can usually be accessed
through the company’s home page).
• What does the annual report tell you about their
strategy?
I
3
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
END
I
CHAPTER END
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
3
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
46