HOTEL MANAGEMENT

THE EXTENDED MARKETING MIX

1

The Extended Marketing Mix

Marketing Mix - People

People refers to your customer service staff and the attitude and appearance that is reflective of your organization, or perceived by your customer.

You cannot have strong corporate image without good people; good people that listen to your customers, and good people that communicate those comments, concerns, and needs to your entire organization.

Your people can determine whetheryour customer will return.

Marketing Mix - People

How to develop PEOPLE into a competitive advantage?Recruitment and selection – choose the right people

for the right job (with good attitude)Training – product knowledge, customer service skills

and the processesDevelopment – prepare employees to take on greater

roles and responsibilities in futureCompensation – do not underpay in terms

of salaries and benefits.

Marketing Mix - People How to develop PEOPLE into a competitive advantage?

Treatment– treat employees well with dignity and respect

Working environment - provide a safe and comfortable working environment, foster teamwork and cooperation

Empowerment – allow employees the power to make decisions that enables them to serve customers better, make employees accountable for their actions

Marketing Mix - Process Procedure, mechanism and flow of activities by which

services are used. Also the 'Procedure' how the product / service will

reach the end user. Always focus on simplifying the process for your

prospective customers. All processes can be represented by the

Value Chain.

Marketing Mix - Process

How to make PROCESS a competitive advantage?Simplify – make processes simple for customers to

understand and performConvenient – make processes convenient for

customers from their perspective (not the hotel or employees)

Reduce waiting time – do not let guests wait too long for the service

Marketing Mix – Physical Evidence

The elements of 'marketing mix' which customers

can actually see or experience when they use a

service. Contribute to the perceived quality of the service

Marketing Mix – Physical Evidence

Include the following elements:Furniture and furnishing of the rooms and all public

areasFaçade and appearance of hotel building itselfBrochures, paperwork and stationery Lighting and ambience Signage Temperature and noise Appearance of staff Web pages Appearance of advertisements

Marketing Mix – Physical Evidence

Physical Evidence must go in line with the positioning of the hotel.

A luxury hotel MUST appear luxurious! A budget hotel however does not need to

look cheap! Physical evidence must make the customer

perceive the hotel offers value and comfort.

Marketing Mix – Pricing

Three C of PricingCompetitionCostsCustomers’ Comfort Zone

Competition is a dominant factor – Hotel cannot price itself out of the market / The prices must not differ too much from other hotels of similar standards

Marketing Mix – Pricing

Pricing based on Costs1. Determine the operating costs of the hotel2. Classify into fixed costs and variable costs

- fixed costs

– do not change in relation of volume / level of activity- examples: rent, salaries, depreciation, insurance- variable costs

– increase in relation to volume / level of activity- examples: consumable stores, water and electricity

Marketing Mix – Pricing

Pricing based on Costs3. Determine the targeted profits and occupancy level4. Calculate the targeted pricing using the formula:

Fixed Cost + Targeted Profit

Contribution per room night

Where Contribution = Selling Price less Variable Costs

Marketing Mix – Pricing

Pricing based on Costs3. Determine the targeted profits and occupancy level4. Calculate the targeted pricing using the formula:

Fixed Cost + Targeted Profit

Contribution per room night

Where Contribution = Selling Price less Variable Costs

Example : Cost Plus Pricing

A hotelier runs a 50 room budget hotel.

The average room rate is $25 per room night

Budgeted monthly costs are as follows:

Depreciation $2,000

Fixed utilities $1,000

Salaries $17,000

Repairs and maintenance $1,000

Stationery and Printing $1,000

Advertising $3,000

Consumable materials and variable utilities $5 per room night.

Example: Cost Plus Pricing

Calculate the breakeven in room nights and sales.

If the hotelier expects at least 60% occupancy rate, what should he do?

Other Pricing Strategies

Hit or Miss record occupancy rate at each pricing level analyze the collected information periodically to determine which level was

most profitable set rate at the most profitable

Other Pricing Strategies

Percentage increase list rates charged in the previous year adjust for inflation and payroll increase

Pied Piper set rates according to what other hotels in

the area are asking for comparable accommodation