HOSPITALITY
MARKETING
1
CHAPTER 1
MARKETING: AN OVERVIEW
Definition of Marketing
Marketing Activities
Marketing Management
Marketing Environment
2
Marketing affects everyone
Consumers
Business organizations
Nonbusiness (nonprofit) organizations
Government
Academicians
3
Marketing is the process of planning and
executing the conception,
pricing, promotion, and distribution of ideas,
goods, and services
to create exchanges that satisfy individual and
organizational
objectives.
4
Marketing is a game played by an enterprise with the
participation of consumers which rules are dertermined by
macro environmental forces and leaded by micro
environmental forces
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MARKETING ENVIRONMENT
Micro environmental variables
Internal environment
Top management
Production
Finance
Research and development
External environment
Markets
Suppliers
Intermediaries
Competitors
Public
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Macro environmental variables
Demographic forces
Economic forces
Ecological forces
Technological forces
Political forces
Cultural forces
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Major implications of definition:
•The purpose of marketing is to satisfy human needs
and wants.
•Marketing facilitates and creates exchanges.
•Marketing consists of various activities.
•Marketing is performed by individuals and
organizations.
•Marketing occurs in a dynamic environment.
•Marketing activities should be planned, organized,
coordinated, executed, and controlled.
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Understanding Marketing: Terms





Needs, wants, and demands.
Products.
Value, satisfaction, and quality.
Exchange, transactions, and relationships.
Markets.
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Needs, Wants, and Demands:
Needs: A state of felt deprivation.
Physical, social, esteem, individual.
Wants: How people communicate their needs shaped by
culture and individual personality.
Demands: Wants that are backed by buying power.
Products:
Anything that can be offered to a market for attention,
acquisition, use or consumption and that might satisfy a need
or want.
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Value:
 Customer value is the difference between the benefits that
the customer gains from owning or using a product and the
cost of obtaining the product.
Satisfaction:
 Customer satisfaction depends on product’s perceived
performance in delivering value relative to a buyer’s
expectations.
Quality:
 The totality of features and characteristics of a product that
bear upon its ability to meet customer needs.
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Exchange:
 The act of obtaining a desired object from someone by
offering something in return.
Transactions:
 A trade of values between two parties and marketing’s unit of
measurement.
Relationship marketing:
 Focuses on building a relationship with a organization’s
profitable customers.
Markets:
 A set of actual and potential buyers who might transact with a
seller.
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Core Marketing Concepts
Needs, wants,
and demands
Markets
Exchange, transactions,
and relationships
Products and
services
Value, satisfaction,
and quality
Marketing’s Future
 Manufacturing concept ,Product concept, Selling concept,
Marketing concept, Societal marketing concept, SOCIAL
MEDIA AGE
 Rapid globalization resulting in a vastly more complex
marketing environment.
 Greater focus needed on satisfying customers.
 Marketing must encompass the entire business; all
departments are becoming involved in satisfying the
customer.
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Chapter 2
Service Characteristics of Hospitality and
Tourism Marketing
A service culture
Characteristics of service marketing
(intangibility, inseparability, variability,
perishability)
Management strategies for service businesses
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A Service Culture
 The service culture focuses on serving and satisfying
the customer.
 Service culture has to start with top management
and flow down.
 A service culture empowers employees to solve
customer problems.
 Organization’s culture must support and reward
customer need attention.
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Four Characteristics of Services
1. Intangibility
Services cannot be seen, tasted, felt, heard, or smelled
before they are purchased.
Buyers look for tangible evidence that will provide
information and confidence about the service.
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Four Characteristics of Services
2. Inseparability
Customer-contact employees are part of the product.
Customers are part of the product.
Customers and employees must understand the service delivery
system.
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Four Characteristics of Services
3. Variability
Services are highly variable.
Services are produced and consumed at the same time which
limits quality control.
Fluctuating demand makes it difficult to deliver consistent
quality during periods of peak demand.
Lack of consistency a major source of customer disappointment.
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Four Characteristics of Services
4. Perishability
Services cannot be stored.
Capacity and demand must be managed since unsold inventory
cannot be carried forward.
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Three Types of Marketing in Service
Industries (Figure 2-2)
External marketing = company and
customers
Internal marketing = company and
employees
Interactive marketing = employees and
customers
Company
Internal marketing
External marketing
Employees
Customers
Interactive marketing
• Internal marketing means that the service firm must
effectively train and motivate its customer-contact
employees and all the supporting service personnel
to work as a team to provide customer satisfaction.
• Interactive marketing means that perceived service
quality depends heavily on the quality of the buyerseller interaction during service encounter.
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Management Strategies for Service Businesses
1. Managing Differentiation
Price Competition referred companies to develop a
differentiated offer, delivery, and image.
 Offer innovative features (e.g., British Airways sleeping
compartment, hot showers, and cooked-to-order breakfasts).
 Differentiate service delivery through: 1) people; 2) physical
environment; and 3) process.
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Management Strategies for Service Businesses
2. Managing Service Quality
The key is to exceed the customers’ service-quality expectations.
The first step is to empower frontline service employees to give
them the authority, responsibility and incentives they need to
recognize and tend to customer needs.
Develop a set of common virtues regarding service quality.
Watch service performance closely (both our own and
competitors)
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Management Strategies for Service Businesses
3. Tangibilizing the Product
• Promotional material, employees’ appearance, and
the service firm’s physical environment all assist in
tangibilizing the service.
 Trade dress (the distinctive nature of a company’s
total visual image and overall appearance)
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Management Strategies for Service Businesses
4. Managing the Physical Surroundings
Physical evidence that is not managed properly can hurt a
business. (signs with missing letters, burned out lights,
employees in dirty uniforms, messy workstations)
Physical surroundings should be designed to reinforce the
product’s position (organization image) in the customer’s
mind.
5. Stress Advantages of Nonownership
In a service the customer does not have ownership of the
product. Lack of ownership, sometimes cited as a major
characteristics of a service can be stressed as a benefit.
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Management Strategies for Service Businesses
6. Managing Employees as Part of the Product
In the hospitality, employees are a critical part of the product
and marketing mix.
Human resources and marketing departments must work closely
together.
Must manage service at the “points of encounter”
A point of encounter is any point at which an employee
encounters the customer.
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Management Strategies for Service Businesses
7. Managing Perceived Risk
Customers experience some anxiety before they purchase
hospitality and tourism services because they can not
experience the product beforehand.
Customer loyalty increases for companies that have provided a
consistent product in the past.
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Management Strategies for Service Businesses
8. Managing Consistency
Consistency means that customers receive the expected product
without unwanted surprises.
It is not a simple task to accomplish many factors work against
consistency such as; unclear company policy, fluctuating
demand.
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Chapter 3
The Marketing Environment
• The company operates in a complex marketing environment,
consisting of uncontrollable forces to which the company
must adapt.
• The environment produces both threats and opportunities.
The company must carefully analyze its environment so that it
can avoid the threats and take advantage of the
opportunities.
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The marketing environment is made
microenvironment and a macro environment.
up
of
a
• The microenvironment consists of actors and forces close to
the company that can affect its ability to serve its customers.
• The macroenvironment consists of the larger societal forces
that affect the whole microenvironment; demographic,
economic, natural, technological, political, competitor, and
cultural forces.
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THE COMPANY’S MICROENVIRONMENT
The actors in the microenvironment include the company, suppliers,
market intermediaries, customers, and publics.
Company
Marketing
Intermediaries
Suppliers
Customers
Competitors
Publics
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THE COMPANY
Marketing managers work closely with top management and
the various company departments. All company departments
will have some impact on the success of marketing plans.
-Housekeeping is responsible for delivering clean rooms sold
by the sales department,
-The accounting department has to measure revenues and
costs to help marketing know how well it is achieving its
objectives etc.
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MARKETING INTERMEDIARIES
Marketing intermediaries include
operators, middlemen, physical
service
agencies,
financial
representatives. They help the
distribute its goods to final buyers.
travel agents, wholesale tour
distribution firms, marketingintermediaries
and
hotel
company promote, sell, and
Marketing services agencies include public relations agencies,
advertising agencies, and direct mail houses. They work directly
with the company’s marketing consulting firms which help
companies target and promote their products to the right markets.
Financial intermediaries include banks, credit companies,
insurance companies etc. They help hospitality companies finance
their transactions or insure the risks associated with the buying
and selling of goods and services.
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THE COMPANY’S MACROENVIRONMENT
The macroenvironment consists of the seven major forces:
Compatitive
Forces
Economic
Forces
Demographic
Forces
Technological
Forces
Natural
Forces
Cultural
Forces
Political
Forces
Company
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1-COMPETITIVE ENVIRONMENT
Each firm must consider its size and industry position in relation to its
competitors. Both large and small firms must find marketing strategies
that give them specific advantages over competitors operating in their
markets.
In general a company should monitor three variables when analyzing
each of its competitors:
*Share of market: The competitor’s share of the target market.
*Share of mind: The percentage of customers who named the
competitor in responding to the statement, “Name the first company
that comes to mind in this industry.”
*Share of heart: The percentage of customers who named the
competitor in responding to the statement, “Name the company from
whom you would prefer to buy the product.”
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Every company faces four levels of competitors:
1-Product form competition: A company can view its competitors as
other companies that offer similar price. At this level, McDonald’s will
view its competition as Burger King, Wendy’s, and Hardee’s.
2-Product category competition: A company can see its competitors as
all companies making the same product or class of products. Here
McDonald’s may see its competition as all fast-food restaurant.
3-General competition: A company can see its competitors more broadly
as all companies supplying the same service. Here McDonald’s would
see itself competing with all restaurants and other suppliers of prepared
food.
4- Budget competition: A company can view its competition even more
broadly as all companies that compete for the same consumer dollars.
Here McDonald’s may see itself competing with grocery stores and the
self provision of the meal by the consumer.
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2- DEMOGRAPHIC ENVIRONMENT
Demography is the study of human populations in terms of size,
density, location, age, sex, race, occupation, and other statistics. The
demographic environment is of major interest to marketers because
markets are made up of people.
a) Changing Age Structure of the Population: The age distribution is
rapidly assuming. Two very large age groups, the baby boomer
generation and the echo boomer, surround the smaller Generation –X.
-The Baby Boomers: The post-World War II baby boom produced 78
million baby boomers born between 1946 and 1964. Since then, the
baby boomers have become one of the most powerful forces shaping
the marketing environment. Today’s baby boomers account for about
30 percent of the population but earn more than half of all personal
income.
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They will spend billions of dollars on travel, looking for active
vacations, where they can have adventure or explore, such as
historical and cultural tours of Europe. They are approaching life with
a new stability and reasonableness in the way they live, think, eat, and
spend. As they continue to age, they will create a large and important
senior’s market. By 2025, there will be 64 million baby boomers aged
61 to 79, a 90 percent increase in the size of this population from
today.
-Generation X: The baby boom was followed by a “birth dearth”,
creating a generation of 45 million people born between 1965 and
1976.
The GenXers are defined as much by their shared experiences as by
their age. They are a more skeptical bunch, cynical of frivolous
marketing pitches that promise easy success. They like lower prices
and a more functional look.
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GenXers share new cultural concerns. They care about the
environment and respond favorably to socially responsible
companies. They represent $125 billion in annual purchasing
power. By the year 2010, they will have overtaken the baby
boomers as a primary market for almost every product category.
-The Echo Boomers: Born between 1977 and 1994, these children
of the baby boomers now number 72 million. The echo boomers
has created large and growing kids’ and teens’ markets.
One distinguishing characteristic of the echo boomers is their
utter fluency and comfort with computer, digital, and Internet
technology.
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The generation born after the year 1994 until 2004 is referred to as
Generation Z. There is interest in this generation as in another few
years the members will be joining the workforce and contributing
to the economy of the country and the society. This is the first
generation to be born with complete technology. They were born
with PCs, mobile phones, gaming devices, MP3 players and the
internet. They do not know life without technology. This reliance
on technology and gadgets has had a negative effect on the
members. They rather stay indoors and use their electronics than
play outdoors and be active. They are leading a sedentary life that
can result in health problems later on. it is a known fact that this
generation has it all time high in obesity. For them ,social media
platforms are a way to communicate with the outside world. They
are not bothered about privacy and are willing to share intimate
details about themselves with complete strangers. They have
virtual friends and for them hanging out with friends means
talking to them over the cell phones, emails and text messages. 42
This generation is considered to highly creative and collaborative
and will have a significant impact on the way companies work when
they join the workforce. They wont have any communication skill
they will just have technology skills. When they get to be working
age, they will change the workplace dramatically in terms of style
and expectations. To keep going the next step is Multitasking. They
can text, read, watch, talk and eat all at the same time, a talent that
stuns adults. With this preference toward multitasking comes a dark
side, which mental health experts are calling "acquired attention
deficit disorder”. While they are able to complete many tasks at
once, each task gets divided attention, and the generation is losing
the ability to focus and analyze more lengthy, complex information.
The last characteristic is speedy. Speedy is a short attention span,
perhaps brought on by the tendency to multitask, also requires
information to be delivered in rapid, short bursts if it is to be
understood. Generation Z thrives on instant gratification. This is why
classes are so short and the breaks on so long.
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b) Changing Family Style:
The “traditional household” consists of a husband, wife, and
children (sometimes grandparents). But now, more people
are divorcing or separating, choosing not to mary, marrying
later, or marrying without time intention to have children.
Marketers must increasingly consider needs of nontraditional
households, because they are now growing more rapidly than
traditional households.
The number of working women has also increased greatly.
This trend has spawned the child day care business and
increased consumption of convenience foods and services,
career-oriented women’s clothing, financial services, and
many other business opportunities.
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c)Geographic Shifts in Population:
This is a period of great migratory movements between and within
countries. The population shifts interest marketers because people
in different regions buy differently.
Today, people are moving to “micropolitan areas” small cities
located beyond congested metropolitan areas.
These smaller micros offer many of the advantages of metro areasjobs, restaurants, diversions, community organizations- but
without the population crush, traffic jams, high crime rates, and
high property taxes often associated with heavily urbanized areas.
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3- ECONOMIC ENVIRONMENT
The economic environment consists of factors that affect consumer
purchasing power and spending patterns. Purchasing power depends on
current income, price, saving and credit; marketers must be aware of
major economic trends in income and changing consumer spending
patterns. Whereas demographic and cultural trends generally affect the
size and needs of various markets, economic trends affect the
purchasing power of these markets.
Changes in Income
Marketers should pay attention to income distribution as well as
average income. There is a comfortable middle class that is somewhat
careful about its spending but can still afford the good life of the time.
The working class must stick close to the basics of food, clothing, and
shelter and must try hard to save. Finally, the underclass (persons on
welfare and many retirees) must count their pennies when making even
the most basic purchases.
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Changes Consumer Spending Patterns
Changes in major economic variables such as income, cost of living,
interest rates, and savings and borrowing patterns have a large impact
on the marketplace. Companies use economic forecasting to anticipate
changes in these variables. With adequate warning, businesses can
reduce their costs and adjust their marketing mix to ride out the
economic storm. Restaurants, for example, can vary their menus and
offer a number of lower-priced entrees during a recession.
Global Economic Patterns
With many markets in Europe saturated with hotels, companies are
looking to other global markets. As a region’s economy develops,
demand is created for lodging and food facilities. The global growth
creates many opportunities; however it also greatly increases the
complexity of the macroenvironmental forces.
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4- NATURAL ENVIRONMENT
The natural environment consists of natural resources required by
marketers or affected by marketing activities.
Communities are finding that preserving the natural environment can
be good for tourism. Hong Kong, for example, saw the coming of
Disneyland as a chance to improve its natural environment.
One way of protecting the environment is to recycle and reduce
waste. Disney has an aggressive program to reduce waste. Disney
World shreds its paper products and sends the shredded paper to the
gift shops to use as packing material.
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5- TECHNOLOGICAL ENVIRONMENT
Technology has affected the hospitality industry in many ways:
Technology is having an impact on hotel room amenities. Many
business class hotels have a combination fax machine, printer, and
copier in each room.
Also, machines cook food automatically, eliminating human error.
Computerized video checkout services are now common in many
hotels. Electronic guest room locking systems tells which guests
accessed their mini bar, making restocking easier.
Technology has also made communication easier. The Internet has
had a profound effect on the hospitality and travel industries. The
Internet has created a new distribution channel for hospitality and
travel products. Most hotel, rent a car companies, and hotel chains
have set up their own on-line reservation systems, allowing the guest
to book directly on line.
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6-
POLITICAL ENVIRONMENT
The political environment is made up of laws, government agencies,
and pressure groups that influence and limit the activities of various
organizations and individuals in society. There are some current
political trends that affect the marketing management:
a) Increased Legislation and Regulation Affecting Business
b) International Legislation
c) Government Intervention in Natural Resource Management
d) Growth of Public-Interest Groups
e) Increased Emphasis on Ethics and Socially Responsible Actions
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7- CULTURAL ENVIRONMENT
The cultural environment includes institutions and other forces that
affect society’s basic values, perceptions, preferences, and
behaviors. The following cultural characteristics can affect
marketing decision making.
People in any society hold certain persisting core beliefs and values.
Core beliefs and values are passed are on from parents to children
and are reinforced by schools, churches, business, and
governments. Secondary beliefs and values, however, are more
open to change.
Believing in marriage is a core belief; believing that people should
get married early is a secondary belief. Marketers have some
chance of changing secondary values, but little chance of changing
core values.
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RESPONDING TO THE MARKETING ENVIRONMENT
Many companies view the marketing environment as an
“uncontrollable” element to which they must adapt. They
passively accept the marketing environment and do not
try to change it. Other companies take an environmental
management perspective. Rather than simply watching
and reacting, these firms take aggressive action to affect
the publics and forces in their marketing environment.
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Chapter 4
CONSUMER MARKETS & CONSUMER BUYING
BEHAVIOR
• Buying behavior is never simple. It is affected by many
different factors and understanding it is the essential task of
marketing management. The basic beliefs about consumer
behavior can be summarized into five premises:
• Consumer behavior is purposeful and goal oriented.
• The consumer has free choice.
• Consumer behavior is a process.
• Consumer behavior can be influenced.
• There is a need for consumer education.
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• Today’s marketplace has become very competitive. In
addition, during recent years the hospitality and travel
industries have undergone globalization. The result is a
fiercely competitive international market with companies
fighting for their share of consumers.
• The central question is: How do consumers respond to the
various marketing stimuli that a company might use. The
company that really understands how consumers will respond
to different product features, prices and advertising appeals
has a great advantage over its competitors. Researchers from
companies have heavily studied the relationship between
marketing stimuli and consumer response.
• The figure below shows the model of buyer behavior. In the
figure, marketing and other stimuli enter the consumer’s
black box and produce certain responses.
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Model of Buyer Behavior
Marketing
Stimuli
Product
Price
Place
Promotion
Other
Stimuli
Economic
Technological
Political
Cultural
Buyer’s black box
Buyer
Buyer
characteristics decision
process
CONSUMER MARKETS & CONSUMER
BUYING BEHAVIOR
Buyer’s Responses
Product choice
Brand choice
Dealer choice
Purchase timing
Purchase amount
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Factors influencing behavior
Cultural
Social
Personal
Psychological
Culture
Reference
groups
Age and lifecycle
Stage
Perception
Subculture
Family
Roles and
status
Buyer
Occupation
Learning
Economic
circumstances
Social class
Motivation
Beliefs and
attitudes
Life-style
Personaltiy and
self-concept
CONSUMER MARKETS & CONSUMER
BUYING BEHAVIOR
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• Cultural Factors
Cultural factors exert the broadest and deepest influence on
consumer behavior.
• Culture
Culture is the most basic determinant of a person’s wants and
behavior. It comprises the basic values, perceptions, wants, and
behaviors that a person learns continuously in a society. Culture
is an integral part of the hospitality and travel business.
For companies operating in many countries, understanding and
serving the needs of can be very difficult. Although consumers in
different countries may have some things in common, their
values, attitudes, and behaviors often vary dramatically. Failing
to understand such differences in customs and behaviors from
one country to another can spell disaster for a company’s
international products and programs. Marketers must decide on
the degree to which they will adapt their products and
marketing programs to meet the unique needs of consumers in
various markets.
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• Social Class
Social classes are relatively permanent and ordered divisions
in a society whose members share similar values, interests
and behaviors. Social scientists have identified the seven
American social classes: upper uppers (less than 1%), lower
uppers (2%), upper middles (12%), middle (32%), working
(38%), upper lowers (9%),and lower lowers (7%).
Marketers interested in social class because people within a
given class tend to exhibit similar behavior, including buying
behavior.
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• Social Factors
Consumer behavior is also influenced by social factors, including
the consumers’ groups, family, social roles, and status.
• Groups
An individual’s attitudes and behavior are influenced by many
small groups. Those to which the person belongs that have a
direct influence are called membership groups. Primary groups
are those with whom there is regular but informal interaction
such as family, friends, neighbors and co-workers. Secondary
groups are more formal and less regular interaction; they include
religious groups, Professional associations, and trade unions.
• Reference groups influence consumers in at least three ways:
1-They expose the person new behaviors and lifestyles.
2-They influence the person’s attitudes and self-concept
3-They create pressures to conform that may affect the person’s
product
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• Family
Family members have a strong influence on buyer behavior.
The family remains the most important consumer buying
organization in the society.
• Roles and Status
A person belongs to many groups; family, clubs and
organizations. An individual’s position in each group can be
defined in terms of role and status. A role consists of the
activities that a person is expected to perform according to
the persons around him or her. Each role carries a status
reflecting the general esteem given to it by society. People
often choose products that show their status in the society
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• Personal Factors
A buyer’s decisions are also influenced by personal
characteristics such as age and life-cycle stage, occupation,
economic situation, lifestyle, personality and self-concept.
• Age and Life-Cycle Stage
The types of goods and services people buy change during
their lifetimes. Preferences for leisure activities, travel
destinations, food and entertainment are often age related.
Successful marketing to various age segments may require
specialized and targeted strategies.
Buying behavior is also shaped by the family life-cycle stages.
Marketers often define their target markets in life-cycle terms
and develop appropriate products and marketing plan.
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• Occupation
A person’s occupation affects the goods and services bought.
Marketers try to identify occupational groups that have
above-average interest in their product.
• Economic Situation
A person’s economic situation greatly affects product choice
and the decision to purchase a particular product. Marketers
need to watch trends in personal income, savings, and
interest rates. If economic indicators point to a recession, they
can redesign, reposition, and reprice their
products.Conversely, periods of economic prosperity create
opportunities.
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• Lifestyle
People coming from the same subculture, social class and
occupation may have quite different lifestyles. A lifestyle is a
person’s pattern of living as expressed in his or her activities,
interests, and opinions.
• Personality and Self-Concept
Each person’s personality influences his or her buying
behavior. Personality means distinguishing psychological
characteristics that lead to relatively consistent and enduring
responses to the environment.Personality can be useful in
analyzing consumer behavior for some product and brand
choices.
There is another concept related to personality:a person’s
self-concept (also called self-image). Each person has a
complex mental self-picture and his or her behavior tends to
be consistent with that self-image.
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• Psychological Factors
A person’s buying behavior is also influenced by four major
psychological factors:
•
•
•
•
motivation,
perception,
learning
beliefs and attitudes.
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• Motivation
• A person has many needs . A need becomes a motive when it is
aroused to a sufficient level of intensity.Creating a tension state
causes the person to act to release the tension. Two of the most
popular theories of human motivation are the theories of
Abraham Maslow and Herzberg’s theory
• Maslow’s Theory Of Motivation: Human needs are arranged in a
hierarchy from the most pressing to the least pressing. These
are physiological needs,safety needs,social needs, esteem needs
and self-actualization needs. A person tries to satisfy the most
important need first and then the others subsequently.
• Herzberg’s Theory: He developed a two-factor theory that
distinguishes dissatisfiers (factors that cause dissatisfaction) and
satisfiers (factors that cause satisfaction).The absence of
dissatisfiers is not enough, satisfiers must be actively present to
motivate a purchase.
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• Perception
Two people with the same motivation in the same situation may
act quite differently based on how they perceive conditions.
People can emerge with different perceptions of the same object
because of three perceptual processes:
-Selective Attention: Since a person cannot possibly attend
to all stimuli, most stimuli will be screened out-a process called
selective attention. It means marketers have to work hard to
attract consumer’s notice. The real challenge is to explain which
stimuli people will notice.
-Selective Distortion: It is the tendency to twist information
into personal meanings and interpret information in a way that
will fit our preconceptions.
-Selective Retention: People will tend to retain information
that supports their attitudes and beliefs.
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• Learning
Learning describes changes in an individual’s behavior arising
from experience.
Most people behavior is learned.
Learning theorists say that learning occurs through the
interplay of drives, stimuli, cues, responses, and
reinforcement.
When consumers experience a product, they learn about it.
Hotels should help guests to learn about the quality of their
facilities and services.
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Beliefs and Attitudes
Through acting and learning, people acquire beliefs and
attitudes, which in turn influence their buying behavior.
A belief is a descriptive thought that a person holds about
something. Marketers are interested in beliefs that people
have about specific products and services. Beliefs reinforce
product and brand images. Unfounded consumer beliefs deter
purchases.
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Beliefs and Attitudes
An attitude describes a person’s relatively consistent
evaluations, feelings, and tendencies. Toward an object or an
idea. Attitudes put people into a frame of mind for liking and
disliking things and moving toward or away from them.
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THE BUYER DECISION PROCESS
• The buyer decision process consists of five
stages
Need
recognition
Information
Search
Evaluation
of
alternatives
Purchase
decision
Postpurchase
behavior
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• Need Recognition
The buying process starts when the buyer recognizes a
problem or need. The buyer senses a difference between his
or her actual state and a desired state. The need can be
triggered by internal stimuli. From previous experience, the
person has learned how to cope with this need and is
motivated toward objects that he or she knows will satisfy it.
At this stage, marketers must determine the factors and
situation that trigger consumer problem recognition. They
should research consumers to find out what kinds of needs or
problems led them to purchase an item.
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• Information Search
If the consumer’s drive is strong and a satisfying product is near at hand,
the consumer is likely to buy it at that moment. If not, the consumer
may simply store the need in memory and search for relevant
information. The consumer can obtain information from several
sources. These include:
• Personal sources :family friends, neighbors, acquaintances
• Commercial sources: advertising, salespeople, dealers,
packaging, displays
• Public sources: restaurant reviews, editorial in the travel section,
consumer-rating organizations
With hospitality and travel products, personal and public sources of
information are more important than advertisement. This is because a
customer cannot try out an intangible product before they try it.
Responses from personal sources have more impact than advertising
because they are perceived to be more credible.
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• Evaluation of Alternatives
There is no simple and single evaluation process used by all consumers
or even by one consumer in all buying situations. Certain basic
concepts will help explain consumer evaluation processes.
-Each consumer sees a product as a bundle of product attributes. The
most attention is paid to attributes connected with their needs.
-The consumer attaches different degrees of importance to each
attribute according to his or her unique needs and wants.
-The consumer is likely to develop a set of beliefs about where each
brand stands on each attribute. The set of beliefs held about a
particular brand is known as the brand image.
-The consumer is assumed to have a utility function for each attribute.
A utility function shows how the consumer expects total product
satisfaction to vary with different levels of different attributes.
-Fifth, the consumer arrives at attitudes toward the different brands
through some evaluation procedure.
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• Purchase Decision
In the evaluation stage, the consumer ranks brands in the choice
set and forms purchase intentions. Generally, the consumer will
buy the most preferred brand, but two factors can come
between the purchase decision.
Attitudes of others represent the first. The more intense the
other person’s attitude and the closer that person is to the
decision maker, the more influence the other person will have.
Purchase intention is also influenced by unexpected situations.
The consumer forms an intention based on factors such as
expected family income, expected price and expected benefits
from the product. When the consumer is about to act,
unexpected situations may arise to change the purchase
intention.
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• Post purchase Behavior
• The marketer’s job does not end when the consumer buys a
product. Following a purchase, the consumer will be satisfied or
dissatisfied and will engage in post purchase actions of
significant interest to the marketer. Post purchase satisfaction
depends on the relationship between consumer expectations
and perceived product performance.
• If the product matches expectations, the consumer will be
satisfied. If it falls short, the consumer will experience
dissatisfaction. The larger the gap between expectations and
performance, the greater the consumer’s dissatisfaction. This
suggests that sellers must faithfully represent the product’s
performance so that buyers are satisfied.
• Almost all major purchases result in cognitive dissonance or
discomfort caused by postpurchase conflict. Thus consumers feel
some postpurchase dissonance with many purchases.Marketers
can take steps to reduce consumer postpurchase dissatisfaction
and help consumers to feel good about their purchases.
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80
Chapter 5
What is a product?
Anything that can be offered to a market for
attention, acquisition, use or consumption
that might satisfy a want or need. It includes:
Physical objects
Services
Places
Organizations
Ideas
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Product Levels
Core product: The most basic level it answers the
question of ‘What the buyer is really buying’.
Facilitating products: Services or goods that must be
present for the guest to use the core product.
Supporting products: Extra products offered to add
value to the core product and to help differentiate it
from the competition.
Augmented product: Includes accessibility,
atmosphere, customer interaction with the service
organization, customer participation, and customers’
interaction with each other.
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83
CORE PRODUCT
All steak houses should learn:
Don’t sell the steak, sell the sizzle…
Marketers must uncover the core benefit to
the curtomer of every product and sell these
benefits, rather than merely selling features.
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Facilitating products
Services or goods that must be present for
the guest to use the core product.
85
Supporting products:
Extra products offered to add value to the
core product and to help differentiate it from
the competition.
In a hotel, business center or a full service
health spa are supporting products that may
help to draw customers to the hotel.
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!!!
The core product
provides a focus for the business; it is the reason
for being.
Facilitating products
are those that are essential for providing the core
product to the target market.
Supporting products
can help position a product.
The augmented service offering
combines what is offered with how it is delivered.
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Augmented Product Issues
Accessibility: Location and working hours of operation.
Atmosphere, the physical environment: Critical element in services,
it can be the reason for choosing the establishment. Appreciated
through the senses (visual, aural, olfactory and tactile).
Customer interaction with the service delivery system:
Three stages: (1) joining; (2) consumption; (3) detachment.
Customer interaction with other customers: Hospitality
organizations must manage the interaction of customers to
ensure that some customers do not negatively affect the
experience of others.
Customer coproduction: Involving the guest in service delivery can
increase capacity, improve customer satisfaction, and reduce
costs.
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Brand Decisions
A brand is a name, term, sign, symbol, design or a
combination of these elements intended to identify the goods
or services of a seller and differentiate them from those of
competitors.
Conditions that support branding:
1. The product is easy to identify by brand or trademark.
2. The product is perceived as the best value for the price.
3. Quality and standards are easy to maintain.
4. The demand for the product class is large enough to support a
regional, national, or international chain.
5. There are economies of scale.
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The Product Is Easy to Identify by Brand or Trademark
Desirable Characteristics of Brand Name:
• It should suggest something about the product’s
benefits and qualities.
• It should be easy to pronounce, recognize and
remember.
• It should be distinctive.
• The name should translate easily to foreign
languages for the companies seeking future
expansion.
• It should be capable of registration and legal
protection
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The Product Is Perceived as the Best Value for
the Price
A brand name derives its value from consumer
perceptions.
Brands attract consumers by developing a
perception of good quality and value.
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Quality and Standards Are Easy to Maintain
• To be successful, a large multi-unit brand must
develop systemwide standards to meet the
expectations of the customer.
• If the brand is successful in developing an
image of quality, customers will expect quality
in all outlets carrying the same brand name.
• Consistency and standardization are critical
factors.
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There Are Economies of Scale
• Branding costs money, to justify expenditures
for administration and advertising the brand
should provide economies of scale.
• Management information systems,
reservation systems, national purchasing
contracts and common architectural designs
are ways in which brands can provide
economies of scale.
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SORU 1: Resimdekilerden hangisinin size hediye
edilmesini dilerdiniz? Neden?
(Bayanlar sadece 1 veya 2 erkekler sadece 3 veya 4)
SORU 2: Sizin için önemli bir karşı cinse
resimdekilerden hangisini hediye etmeyi
dilerdiniz? Neden?
(Bayanlar sadece 3 veya 4 erkekler sadece 1 veya 2)
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95
Chapter 6
Pricing Products: Pricing Considerations, Approaches and Strategy
BUSINESS PERSPECTIVE:
Price is the amount of money charged for a good or a service.
CUSTOMER PERSPECTIVE:
Price is the sum of values consumers exchange for the benefits
of having or using the product or service.
Price is the only marketing mix element that produces revenue.
96
Factors to Consider When Setting Prices
Internal Factors Influencing Pricing Decisions
a) Marketing Objectives
•
•
•
•
•
Survival:
Current profit maximization:
Market-share leadership:
Product-quality leadership:
Other Objectives:
b) Marketing Mix Strategy
c) Costs
d) Organizational Considerations
97
Factors to Consider When Setting Prices
External Factors Influencing Pricing Decisions
a)
Market and demand
b)
Cross Selling and Upselling
c)
Pricing in different markets
d)
Consumer Perceptions of Price and Value
e)
Analyzing the Price-Demand Relationship
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Factors to Consider When Setting Prices
Internal Factors Influencing Pricing Decisions
a) Marketing Objectives
i) Survival: It is used when the economy slumps or recession is going
on. A manufacturing firm can reduce production to match
demand and a hotel can cut rates to create the best cash flow.
ii) Current profit maximization: Companies may choose the price that
will produce the maximum current profit, cash flow or return-on
investment, seeking financial outcomes rather than long-run
performance.
iii) Market-share leadership: When companies believe that a company
with the largest market share will eventually enjoy low costs and
high long run profit, they will set low opening rates and strive to
be the market-share leader.
iv) Product-quality leadership: Hotels like the Ritz-carlton chain charge
a high-price for their high-cost products to capture the luxury
market.
v) Other Objectives: Stabilize market, create excitement for new
product, draw more attention.
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• Internal Factors Influencing Pricing Decisions
b) Marketing Mix Strategy
Price must be coordinated with product design, distribution, and
promotion decision to form a consistent and effective marketing
program.
c) Costs
i) Fixed Costs: Costs that do not vary with production or sales level
ii) Variable Costs: Costs that vary directly with the level of
production.
d) Organizational Considerations: Management must decide who
within the organization should set prices . In small companies, this
will be the top management; in large companies, pricing is
typically handled by a corporate department or by a regional or
unit manager under guidelines established by corporate
management.
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External Factors Affecting Pricing Decisions
a)
Market and demand
Although costs set the lower limits of prices, the market and
demand set the upper limit. Both consumer and channel buyers
(e.g. Tour operator) balance the product’s price against the
benefits it provides. Thus before setting prices, a marketer must
understand the relationship between price and demand for a
product.
b)
Cross Selling and Upselling
Cross selling: Company’s other products are sold to the guest.
Upselling: Occurs through training of sales and reservation
employees to offer continuously a higher-priced product that
will better meet the customer’s needs, rather than settling for
the lowest price.
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External Factors Affecting Pricing Decisions
c) Pricing in different markets:
1) Pure Competition: The market consists of many buyers and
sellers trading in a uniform commodity.
2) Monopolistic Competition: The market consists of many buyers
and sellers who trade over a range of prices rather than a single
market price (e.g. restaurants).
3) Oligopolistic Competition: The market consists of a few sellers
who are highly sensitive to each other’s pricing and marketing
strategies (e.e. airline companies).
4) Pure Monopoly: The market consists of one seller; it could be a
government monopoly, a private regulated monopoly, or a
private non-regulated monopoly.
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External Factors Affecting Pricing Decisions
d) Consumer Perceptions of Price and Value:
It is the consumer who decides whether a product’s price is
right. The price must be buyer oriented . The price decision
requires a creative awareness of the target market and
recognition of the buyers’ motivations.
e) Analyzing the Price-Demand Relationship
Demand and price are inversely related; the higher the price
the lower the demand. Most demand curves slope downward
in either a straight or a curved line. The prestige goods
demand curve sometimes slopes upward.
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104
• External Factors Affecting Pricing Decisions
f) Price Elasticity of Demand
If demand hardly varies with a small change in price , we say
that the demand is inelastic, if demand changes greatly, we
say that demand is elastic.
Buyers are less price sensitive when the product is unique or
when it is high in quality, prestige or exclusiveness.
Consumers are also less price sensitive when substitute
products are hard to find.
If demand is elastic, sellers will generally consider lowering
their prices to produce more total revenue.
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External Factors Affecting Pricing Decisions
• Factors Affecting Price Sensitivity
Unique Value Effect: Creating the perception that your offering is
different from those of your competitors avoids price competition.
Substitute Awareness Effect: Lack of the awareness of the existence
of alternatives reduces price sensitivity.
Business Expenditure Effect: When someone else pays the bill, the
customer is less price sensitive.
End Benefit Effect: Consumers are more price sensitive when the
price of the product accounts for a large share of the total cost of
the end benefit.
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External Factors Affecting Pricing Decisions
g) Competitors’ Prices and Offers
When a company is aware of its competitors’ price and offers,
it can use this information as a starting point for deciding its
own pricing.
h) Other External Elements
Other factors include inflation, boom or recession, interest
rates, government purchasing , birth of new technology.
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General Pricing Approaches
1)
Cost-based pricing: Cost-plus pricing: a standard markup is
added to the cost of the product.
2)
Break-even analysis and target profit pricing: Price is set to
break-even on the costs of making and marketing a product
or to make a desired profit
3)
Value-based pricing: Companies based their prices on the
product’s perceived value. Perceived value pricing uses the
buyers’ perceptions of value, not the seller’s cost, as the key
to pricing.
4)
Competition-based pricing: Competition-based price is
based on the establishment of price largely against those of
competitors, with less attention paid to costs or demand.
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Pricing Strategies (New Products)
1)
Prestige Pricing: Hotels or restaurants seeking to position
themselves as luxurious and elegant will enter the market with
a high price that will support it.
2)
Market-Skimming Pricing: Price skimming is setting a high price
when the market is price insensitive. It is common in industries
with high research and development costs.
3)
Market-Penetration Pricing: Companies set a low initial price to
penetrate the market quickly and deeply, attracting many
buyers and winning a large market share.
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• Pricing Strategies (Existing-Products)
1) Product-Bundle Pricing: Sellers using product-bundle pricing
combine several of their products and offer the bundle at a
reduced price. Price bundling reduces price competition by
making it hard to figure price components.
2)
Price Adjustment Strategies: Volume discounts, discounts
based on time of purchase, discriminatory pricing, yield
management
3)
Last-Minute Pricing: Provides an outlet for unsold inventory, it
is not a substitute for effective marketing and a well-devised
pricing strategy.
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Psychological Pricing: Psychological aspects such as prestige,
reference prices, round figures and ignoring end figures are
used in pricing. Also reference should be considered.
Promotional Pricing: Hotels temporarily price some of their
products below list price or below cost for special occasions.
Value pricing: means offering a price below competitors on a
permanent basis. This is risky if a company does not have the
ability to cut costs significantly. It is usually most appropriate
for companies able to increase long-run market share through
low prices.
Price sensitivity measurement: utilizes a target consumer
survey with four questions from which the aggregate results
are graphed to give an idea of consumer price sensitivity.
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CHAPTER 7
Distribution Channels
A distribution channel is a set of independent organizations
involved in the process of making a product or service available
to the consumer or business user.
Distribution systems can be viewed as the company’s circulatory
system.
112
Dağıtım sistemi,
insan vücudundaki
dolaşım sistemiyle eşleştirilirse,
işletmenin diğer fonksiyonları
vücudun hangi bileşenleriyle
ilişkilendirilebilir?
113
A well managed distribution system can make the
difference between a market-share leader and a
company struggling for survival. CRS and own sales
force is not enough so companies must develop
increasingly complex distribution networks.
The use of intermediaries depends on their greater
efficiency in marketing the goods available to target
markets. Through their contacts, experience,
specialization and scale of operation, intermediaries
normally offer more than a firm can on its own.
114
115
1.
2.
3.
4.
5.
6.
7.
8.
Distribution Channel Functions
A distribution channel moves goods from producers to
consumers. It overcomes the major time, place and possession
gaps that separate goods and services from those who would
use them.
Information: Gathering and distributing marketing research and
intelligence information about the marketing environment.
Promotion: Developing and spreading persuasive
communications about an offer.
Contact: Finding and communicating with prospective buyers.
Matching: Shaping and fitting the offer to the buyers’ needs.
Negotiation: Agreeing on price and other terms of the offers
that ownership or possession can be transferred.
Physical distribution: Transporting and storing goods
Financing: Acquiring and using funds to cover the cost of
channel work.
Risk taking: Assuming financial risks, such as the inability to sell
inventory at full margin.
116
Marketing Intermediaries
Marketing intermediaries available to the hospitality
industry and travel include travel agents , tour
operators, tour wholesalers, specialists, hotel sales
representatives, incentive travel agents, government
tourism associations, consortia and reservation systems
and electronic distribution systems.
Internet: The internet is an effective marketing tool for
hospitality and travel companies. Companies can use
pictures, both still and moving, to display their product.
Customers can make reservations and pay for products
directly from the Internet.
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• Franchising: is a method of doing business by which a franchisee
is granted the right to engage in offering , selling or distributing
goods or services under a marketing format that is designed by
the franchisor. The franchisor permits the franchisee to use its
trademark, name, and advertising.
The Advantages of the franchise to the franchisee are:
• Recognition of brand
• Less chance of a business failure
• National advertising, premade advertisements, ad marketing
plans.
• Faster business growth
• Helps with site selection
• Architectural plans
• Operational systems, software, and manual to support the
systems.
• National contracts with suppliers
• Product development
• Consulting
118
• Helps with financing
The Disadvantages of purchasing a franchise are:
• Fees and royalties are required
• It limits the products sold and the recipes used
• The franchisee is often required to be open a minimum number
of hours and offer certain products.
• A poorly operated company can affect the reputation of the
entire chain.
• The franchisor’s performance affects the profitability of
franchisees.
• Some franchisees may not benefit from national advertising as
much as other franchisees-often a source of conflict.
119
•
•
•
•
•
•
•
•
The advantages of franchising for the franchisor are:
Receives a percentage of gross sales
Expands brand
Support for national advertising campaign
Negotiating support for national contracts with
suppliers.
The disadvantages of a franchise for a franchisor
There are limits on other options of expanding
distribution.
Franchisees must be monitored to ensure product
consistency.
There is limited ability to require franchisees to change
operations.
Franchisees want and need to have an active roll in
decision making.
120
For the tourism product;
post purchase stage also refers to pre consumption stage.
Than comes; time of consumption and post consumption
stages.
This is one of the unique qualities of tourism product and
research.
121
TOURISM MARKETING
• Two main industries that comprise the activities of tourism
are the hospitality and travel industries.
• Successful hospitality marketing is highly dependent on the
entire travel industry.
• Few industries are so highly interdependent as the travel and
hospitality industries. This interdepence will increase in
complexity.
• The travel industry will require marketing professionals who
understand the ‘Big Picture’ and who can respond to changing
customer needs through creative strategies.
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