Day 2 Marketing in Practice
Transcript of Day 2 Marketing in Practice
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MARKETING IN PRACTICE
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Marketing in Practice: LearningOutcomes
At the end of this module, you will
Have a good understanding of themain concepts addressed within the
module. Be able to apply these concepts in
the hotel context.
Be aware of both the strengths andlimitations of different approaches tomarketing in practice in the hotelindustry.
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TODAYS LEARNING
MARKETING INTRODUCTION,DEFINITIONS AND EXAMPLES
MARKETING RESEARCH BASICS
MARKET SEGMENTATION/TARGETINGAND POSITIONING
UNDERSTANDING YOUR MARKET- SWOTANALYSIS, PEST ANALYSIS
TRENDS AND UNCERTAINTIES
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MARKETING INTRODUCTION,DEFINITIONS AND EXAMPLES
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A social definition of marketing
Aprocess in all societies by which
individuals and groups obtain whatthey need and want throughcreating, offering and freelyexchanging products and services of
value with others.
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A management definition
It is the process of planning andexecuting the conception, pricing,
promotion and distribution of ideas,goods and services to createexchanges that satisfy individual andorganizational goals.
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EXERCISE: Marketing Hotels
Look at both the social and
management definitions ofmarketing.
From your experience, which is morelike what you do to market your hotelor department?
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Marketing Concept
The marketing conceptis the
philosophy that hotel firms shouldanalyze the needs of their customersand then make decisions to satisfythose needs, better than thecompetition.
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Marketing
Is applicable to hotel and restaurantbusinesses whether they are big andsmall.
Involves the planning andimplementation of most everything anhotel does to facilitate an exchange
between itself and its guests.
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Marketing
Is a continuous and dynamic strategicdecision-making process.
Is a strategic process that matches thehotels strengths and resources to
potential opportunities that existwithin the marketing environment.
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Marketing as a Business Philosophy
Four orientations or business philosophies:
1. Product Orientationa focus on makingproducts widely available, affordable,and require little selling effort
Investment in hotel inventory without
reference to demand
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Marketing as a Business Philosophy 2
2.Sales Orientation- promotes thebusiness philosophy of selling what
we make Filling hotel rooms at whatever price
we can get judging performance onoccupancy rates rather than revenue
or REVPAR Focus on volume rather than quality
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Marketing as a Business Philosophy 3
3. Market Orientationinvolves
Customer focus
Coordinated marketing effort
Long-term success Knowing your guests and understanding
their needs
Taking a long-term view of occupancy,
revenue and profit Using effective guest and yield
management systems
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Marketingas a Business Philosophy 4
4. Relationship Marketing Orientation-creates and sustain mutually satisfyinglong-term relationships with not only itsguests but with other key stakeholderssuch as employees, suppliers, distributors,retailers and the community
Focus on repeat customers and customerloyalty
Retaining price and brand integrityUse of internal marketing with staff
Using socially responsible businesspractices
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Are marketing and sales the samething?
ABSOLUTELY NOT!!
Marketing is selling + + + - a lot more!!
If you are good at sales you will not necessarilybe good at marketing
Marketing does involve sales but also includesresearch, product and service planning,promotion, distribution and pricing
Famous guru Ted Levitt of Harvard says thatselling focuses on the needs of the seller(fillingrooms, meeting targets) while marketingfocuses on the needs of the buyer(satisfaction)
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Marketing and Selling
SALES MARKETING
1. Emphasis is on theneeds of the hotel
1. Emphasis is on theneeds of the guest
2. The company builds thehotel and then decideshow best to sell rooms tothe customer
2. The company finds outwhat the guest wants andthen works out how tomeet those needs
3. Management is roomsales volume focused 3. Management is profitoriented
4. Planning is short-termand focused on todaysproducts and markets
4. Planning is long-termand focuses on newproducts, tomorrowsmarkets and future growth
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EXERCISE: What market orientation?
A resort within the Beautiful HotelsPortfolio is faced with the aftermath of aterrorist outrage close to the property.The Executive Team meet and come upwith a number of responses to thecrisis.
What would you say each of themrepresent in terms of the 4 marketingphilosophies?
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1. Cut prices by 50% in order to retainoccupancy and market share
2. Offer all repeat visitors an automatic up-
grade and complimentary champagnedinner for two
3. Invest in the training of all staff with theWere all marketeers programme
4. Cut staff and services drastically toreduce costs in the short-term
5. Sign up with a European low-cost carrier tooffer value-for-money all inclusive packages
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Do normal marketing rules applyto hotels?
Argument that services, includinghotels, need a different approach tomarketing
Most marketing theory and ideas comefrom the marketing of products, thingswe can hold in our hands and buy inshops
We can clearly see that most hotels
(maybe not bottom of the range budgetproperties) are a lot more than the sumof their physical assets beds, TVs,showers, restaurant tables etc.
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Difference between physicalgoods and services
Physical goods ServicesTangible Intangible
Homogeneous Heterogeneous
Production and distribution
are separate fromconsumption
Production, distribution and
consumption aresimultaneous processes
A thing An activity or process
Core value processed infactory
Core value produced in thebuyer-seller interaction
Customers do not participatein the production process
Customers participate inproduction
Can be kept in stock Cannot be kept in stock orinventoried
Transfer of ownership No transfer of ownership
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Characteristics of Services
Intangibility
Inseparability
Perishability
Variability
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EXERCISE: Hotel marketing inpractice
In groups of 3 or 4, select THREE of the
hotel service characteristics andidentify some of the their
consequences for the marketing ofa) a beach resort hotel
b) an airport hotel
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Hotel Service Characteristics
Hotel services cannot be inventoried
Hotel services are time dependent
Hotel services are place dependent
Consumers are always involved in theproduction process
Hotel services cannot be qualitycontrolled at the factory gate
There is a direct human role in hotelservice mediation
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MARKETING RESEARCH BASICS
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What is Market Research?
Simply a matter of finding out as muchas you can before committing yourselfto an irretrievable step
When you do not have answers throughyour own analysis of the environment
within which your hotel operates
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What to find out?
What does the customer need?
Who is the target audience and howmuch can you find out about them?
What is the competition? Are there any gaps in the market?
Would your hotel and its services beable to fill that gap?
Would your hotel and its services beacceptable in the market?
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Market Research and the HotelManager
You dont really need to know HOW toundertake market research
BUT
It is important to understand themethods because
You may be responsible forcommissioning market research
You need to know what you are buying You do need to read market research
reports and interpret them and theirlimitations!
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The Components of MarketResearch
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Secondary Research
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EXERCISE: What do I know aboutmy hotel?
List all the formal INTERNAL sources ofinformation you have available to you
about your hotel or your company
Share the lists with your neighbour andconsider why your lists are
a) very similar, or
b) have some clear differences
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Internal Sources
Company accounts
Internal reports and analysis
Stock analysis
Daily performance data (financial,occupancy, REVPAR) by market segment
Guest loyalty cards
Repeat visitation data
Guest spending data
Can you think of other sources?
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External Sources
Government statistics
Statistics from international agencies
- UNWTO Hotel trade publications
Commercial data and reports(generally expensive)
Other hotel firms research Research documents publications,
journals, etc.
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Sampling Methods
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Sampling Methods
Random Samplesequal chance of
anyone being picked
May select those not in the targetgroup indiscriminate
Sample sizes may need to be largeto be representative
Can be very expensive
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Sampling Methods 2
Stratified or Segment Random Sampling
Samples on the basis of arepresentative strata or segment
Still random but more focussed
May give more relevant information
May be more cost effective
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Sampling Methods 3
Quota Sampling
Again by segment Not randomly selected
Specific number on each segment areinterviewed, etc.
May not be fully representative Cheaper method
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Sampling Methods 4
Cluster Sampling Primarily based on geographical areas
or clusters that can be seen as being
representative of the wholepopulation Multi-Stage Sampling Sample selected from multi-stage
sub-groups Snowball Sampling Samples developed from contacts
of existing customers word ofmouth type approach!
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Primary Research
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Primary Research
First hand information
Expensive to collect, analyse and evaluateespecially in the international marketswithin which many hotels operate use oftourist board studies rather than hotel-specific research
Can be highly focussed and relevant
Care needs to be taken with the approachand methodology to ensure accuracy
Types of question closed limitedinformation gained; open usefulinformation but difficult to analyse
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Primary Research 2
Quantitative and QualitativeInformation
Quantitativebased on numbers (56%of British holiday makers prefer all-inclusive vacations) but does not alwaystell you why, when, how
Qualitativemore detail can tell youwhy, when and how!
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Purpose
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Advantages of Market Research
Helps focus attention on objectives
Aids forecasting, planning andstrategic development
May help to reduce risk of newproduct development
Communicates image, vision, etc.
May identify new training needs
(heath food trends, languages)
Globalisation makes marketinformation valuable
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Disadvantages of Market Research
Information only as good as themethodology used
Can be inaccurate or unreliable
Results may not be what the businesswants to hear!
May stifle creativity, initiative and gut
feeling Always a problem that we may never
know enough to be sure!
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MARKET SEGMENTATION,TARGETING AND POSITIONING
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STP a three stage process
Segmentingdividing up the market intodifferent groups
Targetingselecting a segment to target
Positioning developing a marketing
strategy which positions the product inrelation to rivals in order to appeal tomarket segments
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What is Market Segmentation?
The breaking down or building up of
potential buyers into groups called
Market Segments
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EXERCISE: Segmenting yourmarket
Thinking about the market that usesyour hotel is segmented
How many major segments can youthink of?
What criteriadid you use to segmentthem in your mind?
Are there other criteria that you couldhave used
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Segmenting your Market
Wide variety of criteria that you couldhave used:
Age
Gender
Nationality (probably the most commonin hotels)
Purpose of visit (business, leisure andleisure interests)
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Benefits of Market Segmentation
1. Identifies opportunities for newproduct development
2. Helps design marketing programmesmost effective for reachinghomogenous groups of buyers
3. Improves allocation of marketingresources
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Market Segmentation Variables
Market
Segmentation
Variables
GeographicalPsychographic
Demographic Behavioural
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Fundamental Buyer Related Questions
Who are they?
What do they want to buy?
How do they want to buy?
When do they want to buy?
Where do they want to buy?
Why do they want to buy?
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Geographic
Subdividing markets into segmentsbased on location, the regions,countries, cities and towns wherepeople live.
The reason for this is simply thatpeople from the same location havealmost the same desire for product andits usage.
Geographic characteristics are alsomeasurable and accessible.
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Geographic Segmentation
Region:by continent, country, state, oreven neighbourhood
Size of metropolitan area:segmented
according to size of population Population density:often classified as
urban, suburban, or rural
Climate:according to weather patterns
common to certain geographic regions
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Demographic
The demographic are basically identifiablecharacteristics of individual's becausepeople with different backgroundgenerally have different purchase
requirements. Demographics are the most common basis
for segmenting consumer markets.
They are frequently used because they areoften strongly related to demand andrelatively easy to measure.
The demographic may be viewed single orcombination.
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Demographic Segmentation
Age
Gender
Family size
Family lifecycle
Generation:
baby-boomers,
generation X etc
Income
Occupation
Education
Ethnicity
Nationality
Religion
Social class
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Psychographic Segmentation
Groups customers according to theirlifestyle
Activities Interests
Opinions
Attitudes
Values
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Behavioural Segmentation
Is based on actual customer behaviortoward products
Benefits sought Usage rate
Brand loyalty
User status: potential, first-time,
regular, etc. Readiness to buy
Occasions: holidays and events thatstimulate purchases
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Each Market Segment should be
Measurable
Differentiable
Accessible
Substantial
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Criteria for Segmentation
Relatively homogenous group
Distinctive and identifiable
Accessible capable of being reached
Actionable
Measurable
Sufficiently large to be profitable
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Market Targeting
The process of evaluating each marketsegments attractiveness and selectingone or more segments to enter.
Develop measures of segmentattractiveness.
Identify which and how manysegments should be targeted.
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Why engage in segmentation?
To develop different strategies fordifferent parts of the market
To tailor marketing mix to meet the needsof distinct groups
To increase sales and profits by servingparticular segments
To identify marketing opportunities
To dominate niche segments
To reflect differences in customer tastes To prioritise on those segments most
likely to provide a higher return
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Target Market StrategySpecifying segments to pursue
Differentiated Marketing
The organizationpursues several
different market
segments
simultaneously e.g.
Ritz Carlton
Organization
Market
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Concentrated Marketing
The organization focuses
on a single marketsegment
Organization
Market
Target Market StrategySpecifying segments to pursue
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Undifferentiated
Marketing
The organization ignoresegments and treat all
groups the same
Organization
Market
Target Market StrategySpecifying segments to pursue
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Benefits of targeting
Focus resources on the most profitablesegments
Provides a focus for analysing competitors
Enables the organisation find a strategicfit between its marketing strategy and itslongterm objectives
Provides better understanding of a limitedmarket
Improved communication between sellerand buyer
Enables the business to focus attention on
segments it understands
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Market Positioning
The development of an offer withineach segment that is most likely toappeal to a targeted group
Arranging for a product to occupy aclear, distinctive and desirable placerelative to competing products in themind of target consumers
A products position is the place theproduct occupies relative tocompetitors in consumers minds
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The process of positioning
Understand consumer perceptions
Positioning products in the minds of
consumers Develop positioning for each market
segment
Design appropriate mix tocommunicate positioning
To remain competitive a business
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To remain competitive a businessmust
Separatethe market into appropriatesegments with a focus on those likely
to deliver the best returns Targetappropriate segments
Positionthe product in the minds ofpotential customers
Be prepared to repositionthe product
UNDERSTANDING YOUR MARKET
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UNDERSTANDING YOUR MARKET-SWOT ANALYSIS, PEST ANALYSIS
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SWOT Analysis
SWOT analysis is a tool for auditing anorganization and its environment
It is the first stage of planning andhelps marketers to focus on key issues
Is a simple framework for generatingstrategic alternatives from a situationanalysis
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It concentrates on the issues thatpotentially have the most impact
Is useful when a very limited amountof time is available to address acomplex strategic situation, as is oftenthe case in the hotel industry
A word of caution, SWOT analysis canbe very subjective
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SWOT Analysis
Looking at your hotel in terms of its
Strengths (internal).to build on Weaknesses (internal).to cover
Opportunities (external).to capture
Threats (external).to defend against
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SWOT Analysis
Opportunities
Strengths
Threats
WeaknessesInternal
(controllable)
External
(uncontrollable)
Source
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SWOT Analysis Example
Opportunities
A developing marketsuch as Internet
StrengthsLocation
Threats
A new competitorin your home market
WeaknessesLack of marketing
experience
Internal
(controllable)
External
(uncontrollable)
Source
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Internal Analysis
Company culture
Company image
Organizational
structureKey staff
Skills profile of staff
Languages profile of
staff
Access to natural
resources
Position on the
experience curve
Operational efficiency
Operational capacityBrand awareness
Market share
Financial resources
Exclusive contracts
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External Analysis
Customers
Competitors
Market trends
Suppliers
Travel intermediaries
(travel agents, tour
operators)Partners
Natural
Social changes
New technology
Economic
environment
Political and
regulatoryenvironment
Simple rules for successful SWOT
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Simple rules for successful SWOT
analysis
Be realistic about the strengths andweaknesses of your organization whenconducting SWOT analysis
SWOT analysis should distinguish between
where your organization is today, and whereit could be in the future
SWOT should always be specific. Avoid greyareas
Always apply SWOT in relation to your
competition i.e. better than or worse thanyour competition
Keep your SWOT short and simple. Avoidcomplexity and over analysis
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Once key issues have been identified
with your SWOT analysis, they feed
into marketing objectives.SWOT can be used in conjunction withother tools for audit and analysis, suchas PESTanalysis
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PEST Analysis
Organizations operates in micro andmacro environment which arechanging time to time.
Formulation of right strategies alwaysneeds scanning of internal andexternal environment to determine thelevel of impact of each factor on
organization business. PEST is the best technique for scanning
of macro level environment.
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Political/Legal
Monopolies legislation
Environmental protection laws
Taxation policy
Employment laws
Government policy
Legislation Others?
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Economic Factors
All businesses are affected by national and
global economic factors.
Inflation
Employment
Disposable income
Business cycles Energy availability and cost
Others?
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Example
The global credit crunch originating in theUSA contributed towards the credit crunchin the UK in 2007/08.
An economy undergoing recession willhave high unemployment, low spendingpower and low stakeholder confidence.
A booming or growing economy will
have low unemployment, high spendingpower and high stakeholder confidence.
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Sociocultural Factors
These forces shape who we are as people,the way we behave and ultimately whatwe purchase.
Demographics Distribution of income
Social mobility
Lifestyle changes
Consumerism
Levels of education
Others?
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Example
Within the UK peoples attitudes are changing
towards their diet and health.
As a result the UK is seeing an increase in the
number of people joining fitness clubs and a
massive growth for the demand of organic
food. Products such as Wii Fit attempt to deal
with societys concern, about childrens lack
of exercise.
Organizations must be able to offer products andservices that aim to complement and benefit peopleslifestyle and behaviour.
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Technological
Technology has created a society which
expects instant results.
New discoveries and innovations Speed of technology transfer
Rates of obsolescence
Internet
Information technology Others?
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PEST analysis is particularly important
within a hotel industry that is very
vulnerable to external influences on itsoperating and marketingenvironments.
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TRENDS AND UNCERTAINTIES
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Changing Customer Profile
Changing demographics in major sourcemarkets (Europe is getting older!)
Shifting consumption patterns (shorterand more?)
Intensifying competition (destinations,hotel companies)
Growing segmentation Dwindling differentiation (technology
equalisation across brands)
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Changing Customer Profile
Diminishing brand loyalty (price,location driving forces)
Increasing value orientation Escalating concern for the environment
Continuing consolidation between majorcompanies
Increasing influence of the Internet oninformation and distribution
Making sense of the future: an
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Making sense of the future: anessential tool for marketing
1. The general economic development:
continued economic growth andglobalisation or,
economic recession and nationalism
2. The development of certain consumertrends
frugal/ thrifty or,
escapism
Two uncertain but very important drivers for thetourism sector has been identified
Crossing Drivers of Change
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Frugal
Consumers willdevelop a more frugaland spiritual approach
to consumption. Thepersonal
responsibilityconcerning for
example health,environment, climateand fair trade is taken
very serious. Savingbefore spendingbecomes more
important.
Economic recession and nationalism
A recession will influence the society forthe next 10-12 years. It will result in
increased nationalism and regionalismwhere regions and nations turn their back
to global cooperation concentrating on
their own lack of resources.
Economic growth and globalisation
The ongoing economic crisis is just
a minor and short economic slowdown. With such a positive
economic development increasedglobalisation will follow.
Escapism
Consumption istypically driven by thefaster, better, bigger
ideology. Climateproblems for example
are not seen as apersonal
responsibility. Theescapists are
concerned abouthealth and the fairnessof the world but tendto escape via wellnessand traditional luxury.
The Four Scenarios
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The Four Scenarios
Economic recession and
nationalism
Continued economic growth and
globalisation
Scenario 1
The Marco
Polo
Scenario
Scenario 2
The Sunny
Beach
Scenario
Frugal
Scenario 3
The Body
Shop
Scenario
Scenario 4
The
Asceticism
Scenario
Escapism
Characteristics of the four visions
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in terms of future tourism
Economic recession and nationalism
Continued economic growth and globalisation
Escapism Puritanism
The Marco Polo Scenario
High individualisationSome specialisation possibilitiesPolarisation of the marketHigh growth in inbound tourismWellness and traditional luxury
The Body Shop Scenario
High individualisation
Many specialisation possibilitiesSegmentation of the marketHealthy lifestyle and holidays
Goodness: volunteering, fair trade,organic food, etc.
The Sunny Beach Scenario
Mass produce, economies of
scaleHighly price driven marketConformityComfort but no luxuryRegionalisation of travelling
The Ascetism Scenario
Basic living simple holidaying
Close-to-home tourismExperiences: healthy, sustainableand cheapFood: vegetarian, organic, local
produce, simple
EXERCISE Wh t d th i
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EXERCISE: What do the scenariosmean for us?
Consider what each of the scenarios
could mean for
a) your hotel
b) the tourism and hotel industry inEgypt
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THE END