Stakeholder marketing - June 2014

Stakeholder Marketing

The marketing mix and the key stakeholder groups of

Montagu Place Hotel

To: Marketing Manager

From: Marketing Assistant

Date: May 24 2014

CIM number: 38425209

Submission date: May 30 2014

Stakeholder Marketing 38425209

5

Table of Contents

Task 1 – Audit…………………………………………………………………………………………………………………….. 06

Level of influence and impact…………………………………………………………………………………………………. 06

Montagu Place’s relationship with the three stakeholder groups with the most influence and impact…. 07

Montagu Place stakeholder marketing mix……………………………………………………………………………….. 08

Task 2 – Presentation…………………………………………………………………………………………………………… 10

A brief outline of the concept of stakeholder groups………………………………………………………………….. 11

Explanation of two methods of categorising/assessing an organisation’s stakeholders and

evaluation of how these methods enable organisations to identify their potential influence……………… 14

Evaluation of Montagu Place’s current relationship with each of its three most important

stakeholder groups……………………………………………………………………………………………………………….. 17

Task 3 – Report……………………………………………………………………………………………………………………. 20

Introduction and explanation of the main mission/values of MP employees……………………………………. 20

Recommendations for changes to the marketing mix…………………………………………………………………. 21

Evaluation of the impact on the relationship between MP and its employees…………………………………..22

Challenges faced in gaining organisational support and funding…………………………………………………… 23

References…………………………………………………………………………………………………………………………. 24

Company background………………………………………………………………………………………………………….. 26


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TASK ONE – AUDIT

The following audit identifies the most relevant stakeholder groups for Montagu Place Hotel (other than

customers). The audit is broken down into 3 main sections, each of them analysing different aspects of the

relevance these groups have against the Hotel. The content of each section is schematised using tables and

a short introduction that comes before.

Level of influence and impact

The chart below is designed to show how each stakeholder group influences MP and, also, it investigates

how and from where each group gains its power/interest towards the Organisation.

The columns “power” and “interest” are intended the same way as Mendelow (Mendelow, 1985) did when

creating his power/interest matrix (slightly adapted, with the introduction of “medium-low” and “medium-

high” grade): in this case the aim is just highlighting whether the interest of the stakeholder group in

influencing specifically the Organisation is high or low and whether it has the power to do so. Further

considerations that result from this will follow in other sections of the audit.

The column “influence exerted and impact on MP” gives an idea about the nature of the power held by each

group (according with the classification given by French and Raven – French and Raven, 1958) and it

indicates how actually the influence and impact is performed on the day-to-day activities of MP.

Table 1

Stakeholder Influence exerted and impact on MP

Managers

Hig

h P

ow

er

Hig

h I

nte

rest

MP has two managers in house (general manager and deputy general manager). Both are

very interested in all the processes carried out and responsible for the final outcome provided

by the Hotel. Their high influence derives from their legitimate power, their deep

understanding of the Company and the knowledge they have about the relative business

sector.

Managers have a decisive impact on decisions concerning planning, organisation and control.

Employees

Hig

h P

ow

er

Hig

h I

nte

rest

This group consists of the front desk team (5 members) and the housekeeping team (5

members). Both are considered process stakeholders, as they influence the procedures that

contribute to the final outcome. Being part of a small team and working closely to the

management, MP employees are not just tied to the company by a contract, but they have a

big interest in participating and contributing to the success of the Hotel. Their power is

considered to be high because of their decisive contribution to the final service outcome.

They are empowered by the management and tend to cover a managerial position

themselves (especially the front desk team members) whenever they remain alone in

representing the Company while handling guests in house.

Suppliers

Me

diu

m-L

ow

Po

we

r

Hig

h I

nte

rest

Among all the suppliers of MP, 3 of them are considered to have a strong impact on MP: a

Thai restaurant called 2Point that provides meals, Molton Brown (a really well-known luxury

bath and body products producer) and BitBuzz (internet service provider). All of them

contribute in adding the value to the guests and have a mutual interest with MP. Supplying

their product, they establish a proper partnership with the Hotel, that may well represent a

win-win situation if both parties work well. These suppliers participate not only in the creation

of value but also in the efficiency, effectiveness and image of MP.

Although they benefit from a considerable resource power (MP appreciates the fine quality

and convenience of 2Point and BitBuzz) and from a referent power (the reputation and brand

of Molton Brown are recognised widely), their power and influence are medium-low as MP

may be able to find a replacement whenever not satisfied anymore. From time to time,

replacing a supplier is even considered necessary in order to renew the offer.

Competitors

Me

diu

m-H

igh

Po

we

r

Me

diu

m-L

ow

Inte

rest

Competition in the neighbourhood is fierce, but the power exerted by other hotels on MP is

not particularly high. MP checks competitor’s rates and promotions weekly but, being a small

hotel and focusing on differentiation, it is not severely influenced by them. At the same way,

competitors have little interest in using their power unless they get seriously affected.

Regulatory

bodies

Hig

h P

ow

er

Lo

w

Inte

rest

These are process stakeholders. Their primary need is making sure that activities carried out

at MP comply with the law. They exert a legitimate and coercive power on MP, since they set

regulations (Health and Safety law for example). However, the impact on MP marketing

decisions is not heavy and the influence is quite low as well.


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Pressure

groups/media

Hig

h P

ow

er

Lo

w

Inte

rest

This stakeholder group comprehends players like, for instance, TripAdvisor, that heavily

impacts on MP thanks to its referent power. These communities have the power to condition

the Hotel activities (although they are not particularly interested in influencing them) and the

only concern of MP is to keep them satisfied.

Distributors

Hig

h P

ow

er

Me

diu

m-L

ow

In

tere

st The OTA (online travel agencies) such as booking.com, expedia etc, are outcomes

stakeholders, as they are influenced by the MP marketing decisions. They all sell rooms online

on behalf of Montagu Place and they get commissions (10%-15%) for doing so. They account

for the 32% of the reservations that MP get over a specific period of time. The impact on MP

is then massive: they benefit from that kind of power called “resource power”, since they have

the possibility to increase dramatically MP market penetration all over the world. Thus they

set the commissions and there is no chance for MP to negotiate them.

The nature of the stake is broad: they do not just have a contractual relationship with MP but

they also participate in giving value to the guest (offering, for instance, assistance after the

booking).

Although they have a high impact on MP, their influence on the marketing activities of the

Organisation is limited at setting the commission rates: ultimately, MP decides how to

manage reservations.

Their interest in MP is medium-low as, working everywhere in the world, they just do a tiny

volume of business with each hotel.

MP’s relationship with the three stakeholder groups with the most influence and impact

The three groups selected are employees, suppliers and distributors. These stakeholders are indeed

strongly committed and involved in the process of creating and delivering value, co-operating with the

Hotel and retaining guests.

Meaningful relationships are not improvised: they are based on a series of “relationship drivers” that happen

over time (the concept of time is represented by the relationship life cycle between two stakeholders) and

contribute to build loyalty.

Obviously, there must be pre-conditions in order to establish a contact between the parties: first of all there

has to be a series of activities that are shared and, consequently, both parties need to invest

resources/efforts to develop interactions. It is therefore evident that relationships imply commitment as

well: “relationship marketing involves creating bonds with members in different markets through

exchanging value, where the quality of what is exchanged and the service that delivers it conform to –or

even exceed- what has been promised” (Martin et al, 2002:154).

For each stakeholder group, the table below shows: the kind of relationship approach that MP and the

group have toward each other (column 1 – Hogg, 2012); the stage at which each stakeholder is in the

relationship life cycle with MP (column 2 – it is used as reference the model of Dwyer – Dwyer, 1987); the

level of commitment/frequency/intensity with which MP interact with each group and a descriptive

explanation of how relationship drivers are faced between MP and the three stakeholder groups (column 3 –

Hogg, 2012).

Table 2

Stakeholder 1. Relationship

Approach

2. Relationship life cycle

stage

3 Relationship level and key relationship Drivers

Employees Internal customer rela-

tionship – The

employees are conside-

red customers them-

selves: doing so, MP

ensures that value is

transmitted effectively to

the guests and that an

internal supply chain is

efficiently working to

allow beneficial exchan-

ges and relationships.

Commitment - This is

the case where both

parties are seriously

committed and wish to

continue the relation-

ship trying to make it

even better and seeking

actively the satisfaction

of needs and wants of

the other party.

Partnership - The relationship between MP and its

employees is the strongest in terms of elements such as

trust, commitment and mutuality. The Organisation

believes in its employees’ willingness to develop a co-

operative behaviour and the employees perceive the

possibility to build with MP their career.

MP commitment toward its employees is shown by the

motivation given on a daily basis; in exchange, employees

invest their resources not just seeking professional

development but also engaging the Organisation’s values.

Suppliers Network – Rather than

by mere contractual

Expansion – In this phase

the two sides get more

Proactive - The “proactive” relationship between MP and

its suppliers has been built up thanks to a series of positive


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obligations, these

typically long-term

relationships are based

on collaboration, trust

and mutual advantage.

and more benefits

because of their growing

interdependence.

Boundaries are tight and

there is willingness to

develop an even closer

relationship.

critical incidents that helped the creation of a loyal and

satisfying collaboration. Another important driver of this

relationship is the willingness to share information,

communication of its own needs and collaboration in

order to gain benefits from the relationship.

Distributors E-relationship – These

relationships are

supported almost

exclusively by informa-

tion and communication

technology. Although,

once in a while

representatives and GM

meet in person.

Exploration – This is a

stage where the terms of

the relationship have still

to be established

completely. Each party

uses their power to

negotiate conditions and

expectations and

commitment are yet to

be evaluated.

Accountable - These relationships are still kept on a level

where the involvement has margin of growth. Technology

plays a really important role and, initially, relationships

were established to maximise the profit and enlarge the

market of both sides. Slowly, MP and its distributors

became aware that a stronger and co-ordinated

collaboration might contribute in the creation of value for

their common customers/guests.

MP stakeholder marketing mix

The Organisation’s marketing mix aims to meet the needs of stakeholder in order to create competitive

advantage and additional value. The concept of relationship marketing applied to customers is used for

stakeholders as well, and the different interests and drivers of each group are taken in consideration. Below,

referring to the 7Ps, is shown how, for each group, the elements of the mix are used to meet MP’s

stakeholder expectations (with particular attention to CSR and ethical issues).

Table 3

Mix Employees Suppliers Distributors

Pro

du

ct Since the employees are seen as

“internal customers” and they actually

feel being part of the Organisation, the

primary need to be satisfied is involving

them in the management activities. MP

shares information with its employees,

explains strategies, empowers them in

order to receive contributions, sets and

shows objectives that have to be met

every quarter.

MP grants to its employees flexible

working conditions (especially to

members of families with young

children at home). MP encourages and

helps its employees to make

professional experiences abroad in

other Hotels controlled by the Group.

MP buys products from its suppliers and

re-sells them in a luxury venue. The Hotel

complies with product safety regulations

(this aspect is really important when

serving food delivered by the Thai

restaurant for example) and respects

thoroughly the guidelines of its suppliers.

MP gives suggestions and asks its

suppliers for opinions in order to develop

new products or simply have them better

customised according with the

characteristics of the Hotel.

MP tends to be loyal to its suppliers and

offer long-term relationships.

MP gives its distributors the possibility to

increase their business. Distributors sell

rooms on behalf of MP and gets

commissions for doing so. MP provides

high standards of reliability since all the

bookings received from the distributors

are honoured and guaranteed.

Distributors may be allowed to sell

additional service that MP provides, such

as breakfast (commissionable as well).

The smaller intermediaries use the

image of MP as something to show in

their product portfolio: MP gives all the

information needed and assistance to

these distributors and co-operates with

them to ensure a fair and attentive

customer service.

Pri

ce Employees are asked to work in shifts,

even during the week ends, bank

holidays and even for more than 5 days

in a row. Being a small team, each

employee may perform a task that

normally they are not expected to

cover: the housekeeping team may be

helped by the front desk team in

providing breakfasts, the front desk

team may be helped by the managers

to cover the reception, the managers

may seek help from the receptionists to

carry out some paperwork. This helps in

reinforcing the commitment of every

member.

Suppliers are expected to deliver their

products/services effectively and in time.

Some of the products/services provided

by MP to its guests are showing the

suppliers name (BitBuzz for internet

connection, Molton Brown for toiletries

products, Kimbo for coffe): in this case

the suppliers share with MP some

additional responsibilities deriving from

their corporate images and their

reputation. Beside the quality of the

products/services (that have to meet

specific standards), the ethical

behaviours of the suppliers are analysed

and considered by MP and its guests.

Online travel agencies sell on line MP

products. The prices shown in OTA’s

websites do not have to be deceptive. All

additional charges, taxes and extras have

to be clearly stated by the distributors to

the final consumer. Distributors do not

have any decisional power in rates

setting. MP competes with its

distributors as they get commissions for

selling rooms. MP could decide to make

promotions and offer directly discounts

to its guest; distributors are not able to

do so and, in this case, they may be

subjected to price discrimination.


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Pla

ce Interactions between employees and

MP happen mainly at the Hotel. As well

as managers have their office, other

employees have their designated places

to work. Reception is well equipped and

comfortable to stay in for many hours.

Changing rooms and other facilities

such as public toilets, laundry room and

a local gym are part of the work

environment and benefits schemes.

MP makes sure that the access to the

premises for deliveries is accessible and

safe. Possibly, a member of the staff of

MP is ready to assist the supplier upon

the delivery, signing delivery notes and

checking the goods quickly so as to

speed up procedures and do not waste

suppliers’ time. In the same way,

suppliers set up a corporate extranet for

MP to facilitate the procedure of placing

orders.

The software used by MP to manage

reservations is linked live to the systems

used by the distributors so as everything

is taking place on line. Confirmations of

reservations made by distributors come

through email. Other physical travel

agencies all around the world have the

possibility to check rates on MP website,

calling directly the Hotel or enquiring via

email.

Pro

mo

tio

n Rewards and bonuses are given when

meeting the objectives set (room

revenue and food & beverage sales).

Feedbacks are continuously provided

and performances measured. Appraisals

are carried out at least twice a year to

check improvements and give

instructions. Staff meetings are

regularly organised. A company

magazine is published and distributed

to the staff each quarter: information is

about performances of the company

and the staff, rewards and activities

organised to support the community.

MP communicates with its suppliers

through email and phone but, often,

there are chances to have a direct

contact with the suppliers when the

goods are delivered. Sometimes MP

promotes its suppliers’ services even if

that does not result in any form of profit.

The recommendations are perceived by

the guests as a sign of trust and

reliability.

MP is often being offered promotions

and discounts to try new products or

simply if a bigger quantity of goods (or a

more intensive usage of services) are

asked.

Communication between MP and its

distributors is mainly based on the use of

internet. However, once in a while a

representative of each distributor meets

the GM of MP in person.

All the features and characteristics of the

Hotel have to be communicated to the

distributors complying with standard of

truth. Flaws or lack in infrastructure

services (no lift facility; rooms placed in

the basement) should not be omitted.

Ph

ysi

cal e

vid

en

ce Employees are provided with elegant

uniforms and badges. MP requires its

employees to show a neat appearance

and guarantees them in return

gorgeous locations for meetings and

staff parties, whilst e-learning platforms

for trainings are accessible and look

encouraging to use.

Suppliers’ products are well presented

and well integrated in the ambience of

the Hotel (for instance, guests are given

a well designed BitBuzz voucher showing

an internet password; Louis Latour wines

are poured in sleek labelled glasses). MP

asks its suppliers to be well presentable

too: mini cab drivers have to look

professional and reassuring.

Pictures provided by MP to its

distributors do not have to be misleading

and have to correspond to what is

offered to the guest. Online travel

agencies need to receive updates and

images in excellent conditions as they

need to advertise them and sell them to

their own customers.

Pe

op

le MP makes sure that its employees are

motivated and that agree on the

Organisation’s mission and values. One

of the values is “community”: MP is

strongly committed in helping the local

community and asks its employees to

participate. Some of the employees are

asked to take part to popular charity

events in London, donate part of their

tips and commission to a designated

charity and come up with spontaneous

ideas to support people in need.

The suppliers are chosen considering

their fair trade ethos. MP expects its

suppliers to work complying with UK

regulations and going beyond them. MP

tends to refuse collaborations with

companies that have poor wages and

poor working conditions for their

employees. MP also prefers to

collaborate with suppliers that care

about environmental issues and use safe

materials.

Each distributor (depending on its

business size) seeks a different approach

with the Hotel. MP have a representative

who deals with big intermediaries (such

us booking.com, expedia, laterooms),

whilst smaller distributors (such as

hoteltonight) operate just in London and

may require assistance more often and,

sometimes, a customised interaction. In

the latter case MP is capable to give

assistance, training and indications to its

smaller distributors.

Pro

cess

All the employees receive health &

safety, first aid trainings and other

ongoing trainings. Employees have the

possibility to sign up for optional

courses that involve different aspects of

the hospitality activities carried out in a

hotel. Whenever possible, employees

are constantly supervised, advised and

helped during their shifts.

MP ensures that its suppliers have all the

information they need and get orders

clearly and with sufficient time.

Performances are analysed and guest’s

preferences are communicated to the

suppliers in order to customise as much

as possible new products and be more

efficient.

Suppliers get paid by invoices or directly

in cash upon delivery.

Distributors’ customers will be future

guests at MP. Between the purchase in

the OTA’s websites and the arrival at the

Hotel, the customer may need assistance

and may contact either the distributor or

directly the Hotel. MP guarantees

assistance not only to the guest but also

to the distributors in order to sort out

any possible issue or need the

customer/guest may have.


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TASK 2 – PRESENTATION

NATURE AND INFLUENCE OF

STAKEHOLDER GROUPS

Task two: Presentation

Table of contents

Slide 1: A brief outline of the concept of stakeholder group – 1/3



Slide 4: Assessing an organisation’s stakeholders: reasons and methods chosen

Slide 5: Assessing an organisation’s stakeholders. The Mendelow’s power/interes matrix – 1/2

Slide 6: Assessing an organisation’s stakeholders. The Mendelow’s power/interes matrix – 2/2

Slide 7: Assessing an organisation’s stakeholders. The Egan’s participant stakeholder framework – 1/2

Slide 8: Assessing an organisation’s stakeholders. The Egan’s participant stakeholder framework – 2/2

Slide 9: Montagu Place relationship with its Employees

Slide 10: Montagu Place relationship with its Suppliers

Slide 11: Montagu Place relationship with its Distributors


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A brief outline of the concept of stakeholder groups – 1/3

� Company as an open system

� Actors in the marketing environment

� Many definitions of stakeholdersFreeman: “any group or individual who can affect or be affected

by the achievement of an organisation’s objectives”.

� The nature of the stakeBourne: “by definition, a stakeholder has a stake in the activity. This stake may be:

- an interest

- rights (legal or moral)

- ownership

- contribution in the form of knowledge or support”.

Slide1

In order to analyse the concept of stakeholders groups, it is important to

understand that a company interacts with other forces/elements in its

environment. An organisation is hence considered an open system that

establishes relationships and exchange feedbacks with other parties.

All these actors are part of the firm’s marketing environment, considered to

be complex and dynamic. Besides the internal organisation, the other two

dimensions that form the broader marketing environment are the

microenvironment (with actors that influence directly the company) and the

macro-environment (with elements that shape opportunities and pose

threats to the company). Forces within the company’s marketing

environment affect its ability to build and maintain successful relationships

with target customers (Kotler and Armstrong, 2014).

The above highlights the importance of knowing and dealing efficiently with

all these actors, which are called stakeholders. They are people or groups

“with the power to respond to, negotiate with, and change the strategic

future of the organisation” (Eden and Ackerman, 1998).

Stakeholders have interests towards the organisation that basically regard

what the company is doing, what resources the company has and what the

company should achieve (Hogg, 2012).

A concise definition of stakeholder is given by Freeman (Freeman, 1984:46):

“any group or individual who can affect or be affected by the achievement of

an organisation’s objectives”.


12


� Categories of stakeholders:- Internal

- Connected

- External

� Stakeholders contributions:- Information/knowledge

- Emotionality

- Experience

- Credibility/trust

- Image/reputation (Sachs, Edwin and Isab)

Slide 2

There are three categories of stakeholders: internal, connected and external

stakeholders; as seen before, all of them refer to different sub environments.

However, although this is a useful classification, a precise stakeholder (such

as employees for example) may be part of another category and have also, at

the same time, different interests.

The internal stakeholders are members of the organisation. The key groups

here are managers and employees.

The connected stakeholders are strongly concerned about the business

activity of the organisation and exert their influence in the firm’s

microenvironment; these are distributors, shareholders, customers, suppliers,

retailers.

The external stakeholders are not directly connected to the organisation but

do still have interests and can have influence on it. Society, pressure groups,

regulatory bodies, government, press/media, professional bodies, local

communities are external stakeholders.

Stakeholders set constraints but can also give contributions of the following

nature to the company: information/knowledge, emotionality, experience,

credibility/trust, image/reputation (Sachs et al, 2009).


13


� Organisations and their stakeholders: a mutual

exchange of benefit and responsibilities.

- Needs

- Power

- Influence

- Impact

Slide 3

Starting from the assumption that even the stakeholders contribute to the

creation of competitive advantage and value, it is clear how each group plays

an important role in the decision undertaken by the company. Each group has

different interests in influencing the marketing decisions because, each of them,

has specific needs and wants. However, not every stakeholder group has the

power to do so and not all of them, even having the potential power, can

heavily impact on the organisation. From here, the need for a company to

manage and analyse the relationships with its stakeholders.

Researches demonstrated that organisations tend to be more successful if they

include the benefit and risk potentials of their strategic stakeholders in their

value-creating processes (Sachs et al, 2009).


14

Assessing an organisation’s stakeholders:reasons and methods chosen

� Why? Prioritize stakeholders needs and adopt

appropriate relationships.

� Assessing stakeholders in three main steps:- Developing a list of stakeholders

- Identifying their mutuality with the organisation’s work

- documenting each stakeholder’s direction of influence and relationship to the organisation (Bourne)

� Two methods chosen:- Mendelow’s power/interest matrix

- Egan’s participant stakeholders framework

Slide 4

Assessing an organisation’s stakeholders is useful to prioritize their needs and

adopt appropriate stakeholders relationships. Bourne (Bourne, 2009)

summarises the process of identifying/assessing stakeholders in three main

steps: developing a list of stakeholders; identifying their mutuality with the

organisation’s work; documenting each stakeholder’s direction of influence and

relationship to the organisation.

Many models have been proposed within the academic literature by different

authors. In this case, it has been taken as reference the Mendelow’s

power/interest matrix and the Egan’s participant stakeholder framework. Both

of them help to recognize the level of power and interest exerted on the

organisation and, hence, the influence held by each stakeholder group.


15

Assessing an organisation’s stakeholders.The Mendelow’s power/interest matrix – 1/2

(Mendelow 1985)

Slide 5

Mendelow (Mendelow, 1985) designed a matrix that shows the level of interest

that each group has in the operations of the organisation and the level of power

that the same group is able to exert on the organisation to have its interests

achieved. Each group is plotted accordingly into the matrix and can be then

categorised by different types of relationship that the organisation should

maintain with each group. In fact, the combination of these two factors (power

and interest) gives four main relationship approaches that can help determine

not only the kind of relationship that has to be established with each group, but

also the influence that each stakeholder has on the organisation.

Assessing an organisation’s stakeholders.The Mendelow’s power/interest matrix – 2/2

• High influence

• Medium influence

• Medium influence

• Low influence

Slide 6

The potential influence on the organisation of each stakeholder group is related


16

to the position occupied in the matrix by that same stakeholder. A stakeholder

plotted in the “minimal effort” quadrant has a low influence on the

organisation’s decision, whilst, at the contrary, a stakeholder with high power

and interest (key player) is likely to have a huge influence on the organisation.

Assessing an organisation’s stakeholdersThe Egan’s participant stakeholder framework – 1/2

9 categories that vary according to the participation on the organisation’s activities.

Each stakeholder group is managed differently.

What are their sources of influence?

Slide 7

Egan (Egan, 1994) created a categorization that enables an organisation to

understand how to manage each stakeholder group according to their

participation on the organisation’s activities and depending on the capacity to

act as an agent of change for the organisation. Egan identifies 9 categories that

represent a continuum: at one extremity are the stakeholders capable to

support entirely the change agent, whilst at the other end are the stakeholders

that are still affected by the organisation agenda but are powerless and are not

able to influence decisions. As well as the Mendelow’s matrix, this

categorisation highlights the fact that each stakeholder group should be

managed differently.


17

Assessing an organisation’s stakeholdersThe Egan’s participant stakeholder framework – 2/2

Sources of influence

� Nature of power (French and Raven)

- Legitimate power

- Expert power

- Resource power

- Referent power

- Coercive power

� Nature of stake (Hogg)

- Market or contractual relationships

- Participation and contribution

- Direct authority (managers, regulatory bodies); other direct or indirect form of influence.

Slide 8

The position held by each stakeholder and its consequent influence is

determined by the nature of the power and the nature of the stake they have.

Each stakeholder can hold different kinds of power deriving from their status or

role in the society, business sector or regulation system. They can decide how

exercise their influence considering the nature of the stake they hold.

Montagu Place relationship with its Employees

Slide 9

Hogg (Hogg, 2012) distinguishes several relationship levels in a continuum that

implies low levels of frequency/intensity/mutuality in one side (basic

relationship) and high levels of those in the other side (partnership). The

relationship between MP and its employees is a partnership, exactly because

they work closely together and strive to enhance customer value. Therefore,


18

MP develops a relationship approach with its employees defined (Hogg, 2012)

internal customer relationship; the employees are treated like customers: their

needs are met in order to create an efficient internal supply chain that works to

improve customer value. Even the stage along the relationship life cycle of MP

and its employees is at its peak.

Montagu Place relationship with its Suppliers

Slide 10

The level of the relationship between MP and its suppliers is proactive; at this

level, the two parties are loyal to each other and both of them contact each

other in a regular basis for a wide range of purposes. In fact, the relationship

approach between them is considered to be a network, where the

“relationships are held together by collaboration, communication, trust and

mutual advantage” (Hogg, 2012). This relationship is expanding: the parties

know each other quite well and are prepared to commit more and become

increasingly interdependent.


19

Montagu Place relationship with its Distributors

Slide 11

The level of the relationship between MP and its distributors is defined as

“accountable”: at this level, MP and the distributors make sure that the

exchange went well and there were no problems. However, rarely they work

together to improve customer satisfaction and to refine the quality of their

relationship. A part from a few of them, for MP the relationship life cycle with

its distributors is in an early stage (exploration): here, terms and conditions are

already set up, but other negotiations can still be carried on. This relationship is

mainly based on information and communication technology; all the

interactions happen through digital platforms, email, telephone and meetings

are organised just sporadically.


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TASK 3 - REPORT

How MP can start building a better relationship with its employees.

SUMMARY

This report analyses and evaluates the changes that MP should operate to establish a better relationship

with its employees. Moving from the employees’ mission and their ethical values, it is suggested how the

MP current marketing mix should be adapted to meet the employees’ needs and facilitate/support their

commitment to corporate social responsibility and towards ethical issues.

Each change identified is assessed in order to check whether any adverse effect may affect MP guests and,

on the contrary, whether the impact of these changes could give MP any competitive advantage.

This report identifies also what challenges are faced when suggesting and operating these alterations to the

Organisation’s marketing mix.

INTRODUCTION AND EXPLANATION OF THE MAIN MISSION/VALUES OF MP EMPLOYEES

Why employees are considered the most important stakeholder group for MP? There are at least two

reasons, identified below:

• The employees of MP bring a crucial contribution to the final service outcome and, being

empowered by the management, they feel a strong desire to participate and contribute to the

success of the Hotel (Table 1 of the audit). The relationship between them and MP is based on

elements such as trust, commitment and mutuality; they are considered by the Company customers

themselves, with special needs and wants (Table 2 and 3 of the audit).

• Employees, in the hospitality sector, are seen as the most important factor in creating and adding

value: it has been said that “employees are responsible in reinforce the brand and bring attributes to

the job” (Jones, 1986:201) and “the most important element of the hospitality product is the

manner of service and not the tangible product such as an hotel room” (Lewis, 1989:30). The

relationship approach held by MP towards its employees (internal customer relationship, as shown

in Table 2) is the key of success in the hospitality field: the fact that employees are considered

internal customers means that “if they are satisfied with their job, they in turn will be able to satisfy

the external customer” (Haemoon, 2008:476).

The reasons above explain why a better relationship between MP and its employees result in a better

relationship between MP and its guests. This statement is supported also by the idea that, within the

tourism service, “value is considered a very important component of the consumer decision-making process

and has been recognised in the literature as one of the most determinants of purchase intentions and repeat

purchase behaviour” (Tsiotsou and Goldsmith, 2012:147).

In order to start building a better relationship with its employees, it is necessary for MP to recognise their

mission/values and any interest they have in corporate social responsibility. They are listed below:

• MP’s employees, being part of a small group, want to be involved in the management activities or,

at least, they want to be fully aware of them.

• They want to enhance their career and develop skills. They strive to provide an excellent service and

feel completely committed to MP objectives; at the same time though, they seek to use MP as a

launch pad for further future experiences in the same business field.

• They embrace entirely their Organisation’s mission: welcoming the guests in a world of great

hospitality at terrific value. They need to get professional satisfaction and economic rewards.


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• Employees want MP to communicate honestly and fairly with its customers, so as the staff will have

to handle less complaints and will do their job with ease. “Violation of marketing ethics occurs when

products or services are described dishonestly or with a high level of exaggeration of the expected

outcomes for the buyer” (P. Kotler, cited in Wayne, 2010:280).

• Employees want to work in a safe, clean and equipped work environment.

• Employees want to be motivated.

• MP’s employees seek to integrate themselves in the local community and feel part of it. They want

their Organisation to participate to charity events, to support charities and organise social activities.

RECOMMENDATIONS FOR CHANGES TO THE MARKETING MIX

Considering the above and what has been already done for the employees in terms of marketing mix (Table

3 of the audit), following are suggestions that enable MP to respond more extensively to its employees’

needs. All the changes suggested take into account the necessity to have no adverse effect on MP guests.

• Product: Every Monday, a member of the staff doing the early shift (8am-4pm) should be given an

extra hour (paid regularly) and should carry out the weekly competitors report. Each member of the

front desk staff should be able to make at least a weekly competitors report within three months.

This is to respond to the employees’ need to be more involved in the management activities.

Appraisals will be organised once every three months to check employees’ knowledge improvement

and willingness to carry on/stop learning.

• Price: Two more days of paid holiday should be added each year for each employee. Rather than

responding to a specific need, these actions aim to sustain the sacrifice that the employees are

supposed to pay in terms of working hours, shifts, week-ends and bank holidays at work.

• Place: Considering the need to work in a safe work environment, the number of accidents has to be

reduced by at least 50% in the next 6 months. It has to be ensured the work environment is safe and

all the equipment used is checked and maintained regularly.

Each employee should have the possibility to spend one complimentary night sleep at MP every

three months. This is to increase the knowledge of the product sold and fulfil their need for

embracing their Organisation’s mission, providing excellent service.

• Promotion: Rewards (a £10 voucher should be issued each time an employee’s name is quoted in a

positive review in TripAdvisor).

A bonus scheme was already set up (Table 3 of the audit). An email showing the achievements

obtained and the targets to be achieved should be designed and sent every month to each member

of the staff. This is to make the employees more aware about their ongoing performances.

• Physical evidence: Information about absence of lift and 4 rooms located in the lower ground floor

should be put immediately in MP website and all the Online Travel Agencies websites. Doing so, the

number of complaints regarding the lack of lift and rooms located in the lower ground floor has to

decrease by 30% in the next six months. This action responds to the employees’ needs to show/offer

their guests what had been actually sold to them before the arrival at the Hotel.

• People: One team building activity should be organised every quarter.

A charity committee should be created within the end of next month; a charity should be chosen

and supported by MP and each employee will be encouraged to take part either to a charity event

(run for example) or to volunteer with local charities.

• Process: Online trainings about discrimination at work and food waste should be set up. These

should be completed by each employee within two months. Interpersonal interactions are part of

the processes at work and involve not just employees and customers, but also, equally, employees

among themselves. Likewise, providing meals, food waste represents another sensible issue to

effectively deal with during the day to day activities at the Hotel.


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EVALUATION OF THE IMPACT ON THE RELATIONSHIP BETWEEN MP AND ITS EMPLOYEES

For each element of the mix, following is an evaluation of the impact that the changes recommended above

will have on the relationship between MP and its employees. It is also assessed their potential to give MP

any possible competitive advantage.

• Product: The actions suggested above are intended to enlarge employees satisfaction, engagement

and involvement. “Satisfaction has been defined as a pleasurable or positive emotional state

resulting from the appraisal of one’s job; satisfaction is all about what the organisation does for

employees to make them feel good about being there” (Macey, 2009:40). Besides meeting its

employees’ needs, MP is also able to get a competitive advantage, as engaged employees give

more than what they have to offer. Making them more engaged, MP can expect its workforce to be

more productive, to invest more psychic energy in their job and provide a better service to the

guests.

• Price: By giving two more days of paid holiday a year, MP improves the relationship with its

employees creating a pleasant work environment. Haemoon (Haemoon, 2008:480) states that two

theoretical constructs such as organisational culture and climate “are fundamental to any successful

hospitality and tourism operations as they shape the employee’s performance and perceptions”.

Even in this case, MP can benefit from having a happier and more motivated workforce, being then

able to provide a better service.

• Place: The changes proposed respond to the employees’ need of avoid unpleasantness, working in a

safe place and of embrace their Organisation’s mission. The impact of these ethical and responsible

changes will result in an improved sense of mutuality between MP and its employees.

Allowing the employees to spend a few nights at MP, will give them a better knowledge of the

product they sell and will give them confidence in welcoming their guests and explaining them the

facilities offered by MP. Therefore, the competitive advantage for MP is that guests enquiring

directly for a booking will be well informed and will be more likely to proceed with the reservations.

• Promotion: These actions aim to reinforce the willingness (of MP and employees) to develop a co-

operative behaviour between them. Being treated as internal customers, the employees are

rewarded for their loyalty and it will be more likely to reach high levels of employee retention.

These changes may well lead to competitive advantage: MP can use the rewards to foster a service

culture and, retaining its own employees, MP can save on the cost of recruiting new workforce and

training it. Furthermore, “long-term employees are often able to form personal relationships with

customers, through repeated contact. This interpersonal contact, and the building of trust, may be

a factor in customer loyalty” (Hogg, 2012:242).

• Physical evidence: The transparency of MP represents a key driver for the relationship with its

employees. This is because employees represent the “face” of the Hotel and they want MP to be

honest so as to establish a relationship based on trust with their guests. Guests, informed in

advance, will not be disappointed for the absence of lift or for being allocated in a room in the lower

ground floor. That will reduce the number of complaints and improve the quality of the feedbacks

and the word-of-mouth.

• People: These activities aim to strengthen boundaries among colleagues and between employees

and the community. Consequently, even the relationship between MP and its employees will be

reinforced. A stronger sense of loyalty will be felt by each member of the staff towards MP. Again, a

happier and more involved staff will result in a better service provided by MP.

• Process: Providing online trainings will allow PM to reinforce its relationship with its employees, by

increasing their self responsibility. Employees have the chance to develop their personal skills and

competences, while MP reaps the benefits of a more competent workforce. Sloan (Sloan et al,

2009:123) explains how and why trainings (in this case specifically about environmental

sustainability) should be offered: “environmental trainings should be regularly conducted, be

enjoyable as well as involve and motivate staff in order to achieve best results. Once environmental


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data on special projects is available, targets for staff should be set in special training sessions and

feedback should be given thereon”.

CHALLENGES FACED IN GAINING ORGANISATIONAL SUPPORT AND FUNDING

Some of the recommendations proposed may cause inconveniences in terms of organisational support and

funding. Some others will not. Referring to all the changes above, here is a table that identifies all the

challenges that may be faced by MP.

Changes Organisational support Funding

Product A training session has to be organised for all the members

of the front desk. Firstly, they have to be explained how to

make the report, then they can start working on it.

52 additional working hours per year will have to be paid

(one hour a week). This will result in a cost of £429 per

year.

Price Lack of staff has to be avoided as each employee will be in

vacation for 2 additional days per year.

160 additional working hours per year will have to be paid

(each of the 10 employees will have additional 16 holiday

hours a year). The cost is £1.320 per year.

Place High levels of compliance with Health and Safety

regulations have to be expected. Everything has to comply

with health and safety regulation so as to minimise any

harm to members of the staff and public.

5 rooms every 3 months will be decommissioned to allow

each member of the front desk (5 employees) to sleep

over the Hotel. Sunday may be the preferred night as

generally the occupancy is lower than week days.

No major issues in terms of funding should be faced to

comply with health and safety regulation.

Challenges may arise for decommissioning 5 rooms every

3 months. Employees’ stays at the Hotel have to be

planned in advance and this may cause loss of revenue.

However, this represents an element of uncertainty, since

no one will ever know if the room decommissioned would

have been sold to a paying guest.

Promotion Employees may be too pushy in inviting the guests to

leave a review and quote their names in TA (this is against

TA regulation and against professionalism).

An average of 5 vouchers (worth £10 each one) are

expected to be given each month. This makes a total of 60

vouchers for a cost of £600 a year.

Physical

evidence

This ethical practice will be likely hampered by the

Company as it may prevent some potential customers to

make reservations.

Potential loss of revenue due to missed reservations.

People MP has to find someone to cover the front desk and

kitchen while the team building activities are carried out.

Being part of a group of hotels located in London,

someone can be easily called.

A member of the staff at MP has to be designated to be

part of the committee. A meeting has to be organised with

members of other hotels and information about charities

and activities in London has to be gathered.

A budget of £15 per person is necessary for each team

building activity. Every quarter the expenses are then

£150. The cost per year is £600.

Guests will be asked for donations to contribute for

charitable collections; however, MP will pay the fees for

charity activities and events. The budget expected to

cover all the expenses is £500 per year.

Process Approved trainings providers will have to be contacted to

get quotations and set up the online platform for MP

employees. Each employee will have to receive log-in

details.

Access to online training platforms implies a cost of £350

for each course. Total cost for both courses: £700.


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References

Bourne, L., 2009. Stakeholder relationship management: a maturity model for organisational

implementation. Burlington: Ashgate

Dwyer, F.R., 1987. Developing buyer-seller relationships in Journal of Marketing No 62

Eden, C. and Ackermann, F., 1998. Making strategy, the journey of strategic management. London: SAGE

Egan, G., 1984. Working the shadow side: A guide to positive behind-the-scenes management. SF: Jossey-

Bass

Freeman, R.E., 1984. Strategic management: a stakeholder approach. Boston: Pitman.

French, J. and Raven, B., 1958. The bases of social power in Studies in social power. Cited in Hobb, 2012.

Haemoon, O., 2008. Handbook of hospitality marketing management. Oxford: Butterworth-Heinemann

Hogg, B., 2012. Stakeholder marketing. London: BPP

Jones, P., 1986. Internal marketing. International Journal Hospitality Management, 5

Kotler, P., Armstrong, G., 2014. Principles of marketing. 15th ed. London: Pearson.

Lewis, R.C., Hospitality marketing: the internal approach. Cornel Hotel and Restaurant Administration

Quarterly

Macey, W.H., 2009. Employee engagement: tools for analysis, practice and competitive advantage. Malden:

Wiley

Martin, C., Payne, A. and Ballantyne, D., 2002. Relationship marketing: creating stakeholder value. Rev. ed.

Oxford: Butterworth-Heinemann

Mendelow, A., 1985. Stakeholder analysis for strategic planning and implementation. New York: Van

Nostrand Reinhold.

Sachs, S., Ruhli, E. and Kern, I., 2009. Sustainable success with stakeholders. New York: Palgrare

MacMillan

Sloan, P., Legrand, W. and Chen, J.S., 2009. Sustainability in the hospitality industry. Amsterdam – London:

Butterworth-Heinemann / Elsevier


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Tsiotsu, R.H. and Goldsmith, R.E., 2012. Strategic marketing in tourism services. Bingley: Emerald

Wayne, V., 2010. The A-Z of corporate social responsibility. Chichester: Wiley


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COMPANY BACKGROUND

Montagu Place Hotel is a 4 star Hotel situated in central London, Marylebone. MP was established 8 years

ago, when an existing hotel was taken over and refurbished completely.

MP has 16 rooms, divided into 3 categories: Comfy Standard rooms, Fancy Executive rooms and Swanky

Deluxe rooms. Like any other boutique hotel, MP offers luxury facilities and its décor and ambience are

recognised as stylish and intimate.

The management structure inside the Hotel is simple: the General Manager refers to the Head Office and is

the ultimate responsible person for the managerial activities of planning and controlling the business. The

Deputy General Manager is the connecting point between the management and the two teams that follow

the day-to-day activities at MP: the front desk team (5 members) and the housekeeping team (5 members).

MP is a home away from home for all its guests. All the objectives derive from its mission: “welcoming our

guests in a world of great hospitality at terrific value”. Operations are carried out responding to a company

philosophy that considers 5 main values: customer service, communication, working together, team

development and community.

Tight relationships tend to be established not just between the Hotel and its guests but also within the staff

and with all the connected stakeholders. MP provides that kind of “never say no” service: the guest is

acknowledged since before they enter the main door and looked after personally throughout their stay.

Among other facilities, MP provides breakfast prepared in house and meals from a local Thai restaurant.

MP in the year from 1 April 2013 to 31 March 20141 made a profit of £215K on turnover of £900K. The main

sources of revenue are: room sold (£845K); food and beverage (£50K, where it is considered also the

meeting room hire); other (£5K). During the same period of time, MP registered a level of occupancy of

90.54%; the net average room rate is £157.30 and the net revenue per room available is £142.42. A total of

8121 sleepers stayed at MP in the year.

Competition in the neighbourhood is fierce: in 0.5 mile radius are located many luxury hotels in the same

price range and new ones are being established. Among the others, MP competes also with Hilton.

Sources of reservations are: online travel agencies, travel agencies that use the GDS (global distribution

system); direct channels such as the website, social networks, telephone, email, walk-in; organisations

located in London that negotiate corporate rates for their employers with MP. Other pressure

groups/opinion leaders/dedicated press (as for example Trip Advisor) may guarantee a direct contact with

the Hotel.

Through the OTA (online travel agencies) comes the 32.09% of the reservations; the GDS brings the 5.52%

of the total of the bookings; through direct channels MP gets 39.12% of those and, finally, organisations

based in London account for the 23.27% of the rooms sold.2

3 major profiles of guests can be identified: there are the ones staying for business purposes, travellers in

holidays and guest visiting London for pleasure (weekenders). There is also a tiny segment represented by

family visitors who have relatives or friends in the neighbourhood.

The business segment accounts for about the 45% of the total of the guest staying over the year; the rest

consists of travellers being in London for holidays, pleasure or visiting.3

Each segment is really different from one another in terms of wants and needs and each group interacts

with PM in a different way.

1 Internal data (profit and loss account): the last two months are based on forecast and projections.

2 Internal data (booking source report – period between 1 April 2013 and 19 March 2014).

3 This is an estimate obtained by adding the percentage of guests having a corporate rate and the percentage of solo travellers

(generally staying for business purposes).

Stakeholder marketing - June 2014

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