Hospitality Marketing, Sales and Advertizing Day 7 7 - mix.pdf · 2 S&M 7 Prof. Dr. P. Zamaros 2014...
Transcript of Hospitality Marketing, Sales and Advertizing Day 7 7 - mix.pdf · 2 S&M 7 Prof. Dr. P. Zamaros 2014...
S&M 7 Prof. Dr. P. Zamaros 2014 1
Hospitality Marketing, Sales and Advertizing
Day 7
2 S&M 7 Prof. Dr. P. Zamaros 2014
DAY 7
15. Behavioral base 1 – choice of product & service
Purpose: account for the various hospitality products
16. Behavioral base 2 – distribution channel
Purpose: account ways hospitality products are offered
17. Behavioral base 3 – points of sale
Purpose: detail hospitality outlets as points-of-sale
18. Behavioral base 4 – product price
Purpose: discuss prices and price-setting methods
A fist distinction:
• Products refer to anything that can be offered to a market for
attention, acquisition, use or consumption. Their key
characteristic is ownership.
• Services refer to a set of activities which do not result on
ownership
The mix products/services form a total product or an offer.
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15. Behavioral base 1 – choice of product & service
A) Principles
S&M 7 Prof. Dr. P. Zamaros 2014
In addition to the offer there are product benefits, that is, the
perceived added value, or the surplus that guests get from the
acquisition, use and consumption of the product.
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15. Behavioral base 1 – choice of product & service
A) Principles
S&M 7 Prof. Dr. P. Zamaros 2014
Total product decisions
represent the most
important ingredient of
the marketing mix as
they have the most
direct and long lasting
influence on the degree
of success which a
hotelier enjoys.
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15. Behavioral base 1 – choice of product & service
B) Decisions
S&M 7 Prof. Dr. P. Zamaros 2014
Decisions about
products/services should
not be made in isolation:
products which may have
considerable market
potential may fail because
of poor promotional,
pricing and distribution
decisions
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15. Behavioral base 1 – choice of product & service
B) Decisions
S&M 7 Prof. Dr. P. Zamaros 2014
Product life-cycle derives
from the idea that most
products tend to follow a
particular pattern over
time in terms of sales and
profits a product has four
distinct stages:
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15. Behavioral base 1 – choice of product & service
C) Life-cycle
Phase 1: Introduction
• Producers have an organized production
• Producers promote the product
• Consumers are made aware of the product’s existence,
• Consumers are convinced that this is a worthwhile purchase
Marketing implications:
• Sales growth is relatively slow
• No profits at this stage, and heavy launch costs can often mean a
large financial deficit.
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15. Behavioral base 1 – choice of product & service
C) Life-cycle
Phase 2: Growth
• Consumer slow acceptance
Marketing implications
• Escalating sales
• Word-of-mouth and
advertising begin to take
effect
• Small profits are made.
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15. Behavioral base 1 – choice of product & service
C) Life-cycle
Phase 3: Maturity
• Market begins to become saturated
• Few new buyers are attracted to the product
Marketing implications
• Growth of sales begins to slow
• High proportion of repeat sales
• Possible presence of competitors
• Profits having peaked, begin to decline.
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15. Behavioral base 1 – choice of product & service
C) Life-cycle
Phase 4: Decline
• Consumers have begun to become bored with
the product and are attracted by newer ones
Marketing implications
• Sales begin to fall
• Profit margins are depressed even further
• Creation of new or improved products
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15. Behavioral base 1 – choice of product & service
C) Life-cycle
Product life-cycle implications:
• Even the most successful product has a finite life.
• Intensifying competition shortens product life-cycles.
• Rapid technological change shortens product life-cycles.
• Different marketing and sales strategies are appropriate
to each stage.
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15. Behavioral base 1 – choice of product & service
C) Life-cycle
• Quality – performance level and consistency
• Features – functionality and purpose
• Style and design – appearance
• Brand – symbolic importance
• Package – producing containers
• Label – attaching tags
Marketing implications:
• Product differentiation
• Brand equity (value)
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15. Behavioral base 1 – choice of product & service
D) Product mix
S&M 7 Prof. Dr. P. Zamaros 2014
Using the key attributes to compose a
product mix in terms of:
Product width: number of different
product lines
Example: starters, main dishes etc.
Product depth: number of versions in
the line
Example: starters: salads, soups, cold
dishes etc. 14
15. Behavioral base 1 – choice of product & service
D) Product mix
S&M 7 Prof. Dr. P. Zamaros 2014
Distribution is a downstream channel (as opposed to upstream which is
the supply chain). It refers to intermediary paths through which products
get to consumers.
For hoteliers, however, distribution is different: since the guest comes to
the hotel or restaurant there is no distribution of the hospitality product.
What gets distributed is the offer. Thus distribution in the hospitality
industry is a marketing activity (as opposed to other industries where it
is a transportation/logistics concern that can be, at times, separate
from marketing)
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16. Behavioral base 2 – distribution channel
A) Definition
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16. Behavioral base 2 – distribution channel
B) Process
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16. Behavioral base 2 – distribution channel
B) Process
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16. Behavioral base 2 – distribution channel
B) Process
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16. Behavioral base 2 – distribution channel
B) Process
The role of distribution intermediaries is to transform the assortment
of products and services into assortments wanted by consumers.
This is the channel added value. Such intermediaries perform the
following functions:
• Information: gathering information about consumer desires
• Promotion: spreading persuasive communications about offers
• Contact: finding prospective consumers
• Matching: fitting the offer to buyer desires and budget
• Negotiation: reaching to agreements
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16. Behavioral base 2 – distribution channel
C) Intermediaries
The relationship consumer-
producer without
intermediaries is a direct
channel; with
intermediaries, indirect,
hence the number of
channel levels as to the
number of intermediaries
which determines the
channel length.
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16. Behavioral base 2 – distribution channel
C) Intermediaries
Multichannel or hybrid channels involve a number of marketing
channels to reach different consumer segments.
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16. Behavioral base 2 – distribution channel
C) Intermediaries
Instead of traditional marketing
channels which are linear in terms
of their relationship – based on
demand and supply mechanisms,
the vertical marketing systems
(VMS) are holistic as the actors
act in a unified manner.
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16. Behavioral base 2 – distribution channel
D) Synergies
VMS can be:
• Corporate: integrating activities under a single ownership –
example Giant Food Stores integrating ice-cube processing,
bottling, bakery …
• Contractual: contracting out some activities, notably through
franchise – example: Burger King
• Administered: coordination of successive stages but there is no
single ownership – example: Kraft Foods
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16. Behavioral base 2 – distribution channel
D) Synergies
Horizontal marketing systems (HMS) are formed when two or more
enterprises join forces to follow a business opportunity – example:
Migros and Shell; MacDonald’s and Sinopec.
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16. Behavioral base 2 – distribution channel
D) Synergies
Channel design decisions involve:
• Analyzing consumer needs
• Setting channel objectives
• Identifying major alternatives
• Evaluating major alternatives
• Getting to know channel members
• Identifying channel motivating techniques
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16. Behavioral base 2 – distribution channel
E) Building channels
Channel management is
facilitated by the use of
software:
• Internet distribution
systems (IDS) –
Pegasus network
• Central booking
systems – Galileo,
Amadeus, Worldspan
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16. Behavioral base 2 – distribution channel
E) Building channels
Place refers to the physical space where products and services are
made available to consumers after distribution.
Points of sale are the particular places where commodities are made
available for purchase – hence hotel POS
Points of sale are closed environments wherein relationship
marketing/selling can develop whereby hoteliers seek to build long-
lasting relationships with their guests.
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17. Behavioral base 3 – points of sale
A) Definitions
In relationship marketing/selling the following point of sale factors
influence consumer perception of the hotel
Environmental
• Furnishings
• Colors
• Layout
• Noise
• Smells
• Ambiance
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17. Behavioral base 3 – points of sale
B) Aspects
Facilities
• Equipments
• Tools
• Uniforms
• Paperwork
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17. Behavioral base 3 – points of sale
B) Aspects
Symbolic
• Labels
• Tickets
• Logos
• Packaging
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17. Behavioral base 3 – points of sale
B) Aspects
Software
Various systems operate as
property management system
interfaces that allows to settle
checks directly to guest folios and
thus tracking guest charges.
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17. Behavioral base 3 – points of sale
B) Aspects
Points of sale are also places where unique selling points (USP)
or unique sales propositions can be made.
USP is a feature or benefit that separates the hotel’s offer from its
competitors.
This includes a lower price, a smaller version of the product,
offering extra functions, or offering a standard product in a range
of colors or designs.
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17. Behavioral base 3 – points of sale
B) Aspects
Hospitality firms can adopt either a sales/selling orientation that puts
emphasis on seller needs, or a marketing orientation that puts
emphasis on guest needs.
Therefore, marketing and sales
are different yet related activities.
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17. Behavioral base 3 – points of sale
C) Sales
Types of sales
• Inside order-takers
e.g. service
• Delivery salespeople
e.g. suppliers
• Outside order-takers
e.g. supplier
representatives
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17. Behavioral base 3 – points of sale
C) Sales
Sales-force tasks
Primary: concluding a sale successfully
Secondary:
• Prospecting
• Maintaining guest records
• Self-management
• Handling complaints
• Providing services
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17. Behavioral base 3 – points of sale
C) Sales
Conditions for effective sales:
• Know own products, services and benefits
• Look at own products & services from the guest’s point of
view
• Know what the competitors offer and how they are different
from own products
• Have ready-made ways to present own products & services
• Set sales targets and objectives
• Assess the balance of power in sales negotiations
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17. Behavioral base 3 – points of sale
C) Sales
The sales/selling process generally involves:
• Opening: getting the relationship with the guest going
• Identifying needs : understanding what the guest needs
• Presenting/demonstrating: showing the guest what products and
services best respond to guest needs
• Giving guaranties/reassurances: making claims of quality
• Dealing with objections
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17. Behavioral base 3 – points of sale
C) Sales
• Negotiating
• Closing the sale
• Following up
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17. Behavioral base 3 – points of sale
C) Sales
Success factors for Sales Lead Management
The following suggestions can help organizations close more deals in
the same market, with a similar product and a similar value
proposition:
• Sales-force has instant access to online guest information,
industry data and socioeconomic data.
• Effective collaborations between sales-force and marketing .
• Clear definition of what constitutes a prospect.
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17. Behavioral base 3 – points of sale
C) Sales
Success factors for Sales Lead Management (cont.)
• Segment customer base since focused attention yields better
results.
• Lead nurturing campaigns by educating prospects through
Webinars, invitations to regional events, invitations to social
media groups on Facebook or LinkedIn, invitations to follow your
company on Twitter, and guest comments.
• Track prospects' footprints on own website, offer live chat, and
follow up immediately.
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17. Behavioral base 3 – points of sale
C) Sales
Success factors for Sales Lead Management (cont.)
• Share best sales practices across the organization.
• Leverage information to boost sales performance by knowing the
important ratios between qualified leads and closed sales.
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17. Behavioral base 3 – points of sale
C) Sales
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1. Cost-plus pricing : adding a markup to min P
2. Break-even pricing: establishing the price and quantity at
which the business can break even i.e. where TC = TR
S&M 7 Prof. Dr. P. Zamaros 2014
18. Behavioral base 4 – product price
A) Approaches
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3. Value-based pricing : according to consumer perceptions
of pricing
4. Competition-based pricing - benchmarking : according to
the prices of competitors
S&M 7 Prof. Dr. P. Zamaros 2014
18. Behavioral base 4 – product price
A) Approaches
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Pricing strategies refer to the set
of prices a hospitality enterprise
sets on an array of products –
pricing structure. These include:
New-product pricing
• Market-skimming: offering products with high mark-up when
competition cannot follow immediately
• Market-penetration: offering low prices to attract consumers
S&M 7 Prof. Dr. P. Zamaros 2014
18. Behavioral base 4 – product price
B) Strategies
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Product mix pricing
• Product line: offering a variety of products at different prices
• Optional-product: pricing accessories
• Captive-product – two-part pricing: fixed price + variable price
according to services
• By-product: pricing secondary products
S&M 7 Prof. Dr. P. Zamaros 2014
18. Behavioral base 4 – product price
B) Strategies
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Price-adjustments
• Seasonal
• Geographical
• International
• Discounts : as per price or quantity
• Segmented : according to market segments
S&M 7 Prof. Dr. P. Zamaros 2014
18. Behavioral base 4 – product price
B) Strategies
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Price-adjustments (cont.)
• Psychological : according to consumer perceptions: rule of 3
where guest chooses middle price because of extremeness
aversion: min P below which the guest will not pay and max P
above which the guest will not pay
• Promotional : to push sales
S&M 7 Prof. Dr. P. Zamaros 2014
18. Behavioral base 4 – product price
B) Strategies
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Principle 1
Disperse the price over a range of products i.e. low, middle,
high range
The number of articles in the middle price range should be
equal to more than the low range + high range; thus
• Popular restaurants: lower price range has more items than
higher range
• Luxury restaurants: lower price range has less items than
high price range S&M 7 Prof. Dr. P. Zamaros 2014
18. Behavioral base 4 – product price
C) Principles
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Principle 2
The difference between
the lowest and highest
price in one range should
not exceed 2.5 times
With large ranges use
multipliers (e.g. 3.2 for
wine)
S&M 7 Prof. Dr. P. Zamaros 2014
18. Behavioral base 4 – product price
A) Approaches
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Principle 3
The offer and demand (quality-price) ratio = 1
Average price asked / average price sold = 1
Average price asked = R / Q sold
Average price sold = Sales price / number of items
Note: average price sold = ASP (fnb), ARR (rd)
S&M 7 Prof. Dr. P. Zamaros 2014
18. Behavioral base 4 – product price
A) Approaches
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Principle 4
Anticipate guest needs
Promotional efforts should
favor the items in the middle
of each range.
S&M 7 Prof. Dr. P. Zamaros 2014
18. Behavioral base 4 – product price
A) Approaches
Example:
To use the pricing principles to analyze the following offer
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item Low range Middle range High range
A 0.90 2.10 3.00
B 1.10 2.30 3.35
C 1.25 2.60 3.65
D 1.85 3.80
E 3.95
S&M 7 Prof. Dr. P. Zamaros 2014
18. Behavioral base 4 – product price
A) Approaches
Example (cont.)
Principle 1: price dispersion is poor since there are 3 items
only in the middle range
Principle 2: difference between 0.90 and 3.95 = 4.38 is too
high
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18. Behavioral base 4 – product price
A) Approaches
Example (cont.)
Principle 3:
Average offer price: 29.75 / 12 = 2.48
To respect the ratio = 1, the average asking price must be
around 2.00; but since there are only a few items in the middle
range, the revenue might be low i.e. the average asking price
might be < 2.00; then the ratio = 1 is not respected.
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18. Behavioral base 4 – product price
A) Approaches