Chapter 15
Marketing planning
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Understand the contexts and types of marketing planning
in hospitality organizations
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Describe a generic process for marketing planning
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Carry out the research needed to develop a strategic
marketing plan
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Explain how analytical tools are used to evaluate a
hospitality business’s current and potential situation
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Recognize the limitations of marketing planning and the
importance of contingency planning
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Planning is widespread in businesses of all sizes
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Larger companies have formalized planning processes, smaller
companies perform planning essentials
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A plan sets out what a company wants to achieve and how it is
going to achieve it
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The essence of planning is a goal with accompanying strategies
and tactics
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The goal defines what the company wants to achieve
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The strategy and tactics set out how the goal will be achieved
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A marketing plan sets out the marketing objectives that a
company wants to achieve and the strategy and tactics that will
be used to reach the objectives
Corporate marketing planning
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Complex hospitality organizations produce strategic marketing
plans at the highest corporate level to make strategic decisions
(which geographic markets to enter, which hospitality formats to
offer in those markets, market entry strategies)
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Decisions are implemented at divisional level
Divisional marketing planning
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Focuses on goals of major division in hospitality company
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A division is profit centre with core branded businesses, led by
management team who produce marketing plans for each brand to
deliver sales, profit, growth goals
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Divisions are responsible to Corporate Executives and set brand
standards for units
Unit marketing planning
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Hospitality operational unit – a hotel or a restaurant
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Goals and strategies focus on implementing brand standards such
as targeting, positioning and developing strong pre-encounter,
encounter and post-encounter marketing mixes
Strategic marketing plans (SMP)
 Focus on long-term goals (3- to 5-years)
 Objectives to build market share, building yield and growing
revenues
 Strategic decisions on market segmentation, target markets
and market positioning, and brand standards
Tactical marketing plans (TMP)
 Operates short time-frame (1 year or less)
 TMP subordinate to SMP and operates within boundaries set
by STP
 TMPs consist primarily of campaigns and events – unit or
department
 Campaign is short term promotion
 Campaigns have carefully targeted and timed
customer/prospect communications
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Vision, mission, values
Situation audit
Objectives
STP
Marketing mix
Budgeting
Implementation
Controls
Evaluation
Leading hospitality companies develop vision statements,
mission statements or sets of values
These are statements about:
 what the organization is en route to becoming in 10
years or more (the vision statement)
 why the organization exists (the mission statement)
 how the organization shall act in relationships with its
stakeholders, such as shareholders, customers,
employees and the local community (the values
statement)
Many organizations have policies like these but merge them
into a single generic mission statement that contains
elements of all three
Purpose to enable top management to provide:
 focus for the future direction of the company
 link with the company’s short- and medium-term objectives,
and the long-term goals of the organization
 tool for communicating top management’s perception of
the company’s future with its various stakeholders
Mission statement can include:
 definition of broad scope of the business, the markets
served, the products and services offered and the distinctive
benefits provided by the organization to its customers
 summary of the distinctive competences the business has
developed
 description of the desired market position vis-à-vis
competitors
 clear statement about the company’s values
Figure 15.1 Prêt à Manger’s mission statement
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Need to carry out research into the company, and its
environment, to answer the question ‘where are we now?’
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Should be written as brief factual statements covering key
aspects of hospitality business
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Two sections of the situation audit are:
 internal audit
 external audit
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Key issues summarized in a SWOT (Strengths, Weaknesses,
Opportunities and Threats) analysis
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Assesses all aspects of the hospitality unit’s operations
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Aims to establish what the business is doing well – the strengths
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What parts of the business are performing poorly – the weaknesses
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Managers often can identify their business’s strengths and know
their weaknesses; but difficulty is recognizing the difference
between the symptoms of the problem (e.g. low food sales) and
the cause of the problem (unpopular menu items, high prices, poor
food production system)
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Identifying causes of the problem, actions taken to correct poor
performance
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Strengths and weaknesses identified by vertical analysis (e.g. within
business functions – finance, operations, marketing, human
resources) or using marketing mix
Boston Consulting Group (BCG) matrix analytical approach to assessing cash flow,
based on relative market share and market growth for SBUs
Star (high market growth/high relative market share):
 company needs to reinvest the cash generated to maintain brand’s position
 all cash generated by a star is reinvested in the star
Cash cow (growth/high relative market share):
 cash cows generate cash and high profits because of economies of scale
 profits generated are reinvested by the parent company to fund
development of question marks
Question mark (high market growth/low relative market share):
 question marks are new products which require significant investment
 they use more cash than they generate
 if successful can turn into stars and ultimately into cash cows
Dog (low market growth/low relative market share):
 dogs are businesses which have to be managed carefully
 dogs can be cash-neutral, but if making a loss need to be disposed of
quickly
 dogs are not able to generate the profits and growth expected by major
companies
 new owners (with different performance measures) might turn a dog into
a satisfactory return
Figure 15.2 BCG portfolio analysis – cash generated and cash used
External environment includes all the factors over which the
company has no control
Purpose of an external audit is to identify:
 potential opportunities that can be exploited by the
firm
 threats that might damage the business
External factors are applicable to all companies operating in
the same competitor set
External influences can be classified:
 macro-environment
 micro-environment
Macro-environment:
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includes major regional, national and global trends
influencing business and society
PESTE factors which influence the demand/supply in
hospitality
macro-environment analysis evaluates current and
future PESTE factors to enable the hospitality business
to adapt its operations to changes in the needs and
wants of customers
Micro-environment:
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includes external stakeholders and, most importantly,
customers, competitors and suppliers
local or regional factors influence microenvironment
and impact upon hospitality business
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Key SWOT data emerges from the situation analysis
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Internal audit data reflect the strengths and weaknesses
of marketing offers
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External audit presents potential opportunities and
threats facing hospitality business
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The SWOT summarises key issues and helps to plan
future objectives, strategies and tactics
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Strengths (internal)
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Opportunities (external)
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Weaknesses (internal)
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Threats (external)
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Objectives are statements that translate the hospitality company’s
mission into easily understood targets regarding markets and
products, sales, occupancy and the marketing mix
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Objectives provide answers to the question ‘where do we want to
go?’
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Objective setting is an essential step in the marketing planning
process
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Companies that do not have objectives fail to provide managers
and employees with a clear direction
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Objectives should be Specific, Measurable, Achievable, Realistic
and achieved within set Timetable (SMART)
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SMART objectives provide managers with operational targets that
measure performance using quantified metrics like money,
percentages and numbers to be achieved by a given time period
(month, year)
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Gap analysis is an extension of ‘where are we now?’ and
‘where are we going?’
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Company has historic sales data and SWOT suggest what
will happen to sales in the future
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Companies can find a ‘gap’ between where they want to
be in terms of sales objectives and where a forecast
based on the SWOT analysis tells them they will be
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Gap analysis helps by computing the size of the gap and
suggesting measures to bridge gap
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Four alternative strategies for filling the ‘gap’ was
developed into a matrix by Ansoff
Figure 15.3 Gap analysis
Market penetration strategy (existing markets/existing products)
 Aim is to grow the business by increasing sales of current offer to
current target markets
Market extension or development (new markets/existing products)
 Rolls out existing product to new markets
 Strategy can focus on growth within existing units, or expand
number of properties in the group
Product development (existing markets/new products)
 Strategy is to enhance product made to existing customers
 Hospitality operations are constantly looking for ways to increase
customer satisfaction by improving the product offer
Diversification (new markets/new products)
 Focus is on creating new products for new target customers
 Riskiest growth strategy because the company has no existing
customer or product knowledge
Figure 15.4 Ansoff or market/product mix
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Marketing strategies and marketing tactics are marketing mix
decisions made by managers to achieve the agreed marketing
objectives
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Strategies and tactics should deliver sales from the targeted
customers (target market segments) against the identified
competitors (market positioning)
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Two different approaches to construct the marketing mix part of a
marketing plan:
Each element of the marketing mix in unit discussed:
 product strategy, price strategy, distribution strategy, the
marketing communications strategy
Marketing mix for functional areas is considered:
 the marketing mix for the accommodation, the marketing mix
for the restaurant operations, the marketing mix for the
conference
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Companies need to create a budget for the implementation of
their strategic and tactical marketing plans
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Budgets include two classes of data: forecast revenues and
costs
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Costs attributable to marketing function are:
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market research expenses
distribution (commissions to intermediaries)
marketing communication activities
sales team (salaries, travel costs, support materials and
training)
customer database management
Effective marketing planning monitors and control the plan’s implementation
Key concerns are no unacceptable variance between plan’s revenue targets and
anticipated sales
Five stages in control process:
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set SMART objectives
establish reporting process to inform progress against targets
monitor performance
identify significant variations from target
take corrective action
Control measures include financial performance:
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sales, achieved room rate, occupancy and RevPAR; customer mix ratios
changes in market share
changes in brand awareness and brand image
number of hits on the website, number of bookings (the conversion ratio
from enquiries to bookings)
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Contingency planning recognizes that key assumptions may be
incorrect
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Contingency plans are formulated on ‘what if?’ scenarios
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what would happen if a serious environmental incident affected
our business?
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Only major risks are considered in contingency planning
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Contingency planning linked to crisis management and more
important
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Marketing plans should include budget items for contingencies
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provides funds to take advantage of an unforeseen opportunity
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responds to a downturn in demand by increasing marketing
activity
Figure 15.5 Summary of marketing plan
After conclusion of planning period, event or campaign, marketing
team needs to evaluate results including:
comparison of actual performance with the SMART
objectives across all the areas of the business
 commentary explaining the reasons for variance
 provides useful information for the next marketing plan
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Companies repeat successfully tried-and-tested tactics of previous
years and aim to learn from less effective activities
Marketing is a continuous learning activity:
 cycle of forward-planning for next campaign
 implementing the current marketing action plan
 evaluating recent activity is carried out simultaneously
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Marketing planning provides hospitality companies with
a structured approach to planning for the future
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Future is uncertain, environmental trends can be
identified and evaluated
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Marketing planning improves the chances of survival and
success
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Chan, B. (2003). ‘Sharing the experience’. Hospitality
Magazine (HCIMA), pp. 18–19.
McDonald, M. (1999). Marketing Plans. ButterworthHeineman.
McDonald, M. (2008). Malcolm McDonald on Marketing
Planning: Understanding Marketing Plans and Strategy
Marketing Plans. Kogan Page.