Higher National Diploma in HOSPITALITY MANAGEMENT

Unit Title: Marketing in Hospitality Assignment Title: Assignment 1

Student Name & Number Unit Lecturer: Group: Issue Date: Draft Submission: Final Submission:

Executive summary:
The UK hospitality industry is highly competitive where consumers have the opportunity to from a range of outlets during buying process. The UK hospitality is consistently expanding to attract new and retain customers. It is very important for any hospitality organization to communicate to its current and existing potential customers let them know about the organizations new promotions and offers, consequently an organization should have an unique marketing strategy that could potentially set them apart from their competitors, which can be based on its pricing, products/ services or promotional activities. In this report it is intended to investigate the key component of marketing in UK hospitality industry. This report starts by defining the terms Marketing from different angles, it also discusses macro & micro environmental influences in hospitality marketing, hospitality marketing mix, market segment etc. Further this report analyzes the marketing strategies followed by EAT. a leading sandwich shop in the UK. Key words: Need, want& demand, product marketing vs services marketing, marketing mix, consumer purchasing behaviour. SOWT & PESTLE analysis.

Table of content: Table of Contents

Higher National Diploma in .........................................................................................................................................1 HOSPITALITY MANAGEMENT ..................................................................................................................................1 2.2 SWOT: ...........................................................................................................................................................11 EAT SWOT analysis 2013 ............................................................................................................................11

1.1 Introduction:
Hospitality marketing is different than other types of industry as it deals with not only tangible products, a bed in a hotel or foods in the restaurant, but also deals with the intangible aspects of hospitality, like serving foods. The success of any hospitality organization mostly depends on the proper efforts on the marketing which promotes both products and services to fulfil the demands of the consumers at the same time. The integration of three main aspects of hospitality marketing can help an organization to be unique from their competitors are, Service Marketing, which includes, understanding the core concept of marketing and the difference between services and product marketing. Marketing Plan, which includes Macro and Micro environment of the hospitality marketing. Marketing mix & Electronic Marketing, which include, marketing activities done by internet and database, Hoffman, K. & Bateson, J. (1997)

1.2 Marketing concept:

Different philosophers defined marketing in different ways. Earlier Marketing used to be defined based on the mutual transaction, according to Kotler, (2010), Marketing is the meeting peoples needs and wants through mutual exchange of products and services using monetary system. Kotler originally suggested that this process of exchanges know as transaction marketing. Earlier definition of marketing had been criticized and evolved relationship marketing as transactional focus helps to generate sales only. Further, Chartered institute of marketing, 1976 and American institute of marketing association, 2007, proposed that Marketing is a management process aimed at delivering customer satisfaction. However, Pines & Gilmore,(1999) claims that, only satisfying customer is no longer enough in competitive business environment, companies compete by creating memorable experience to wow customers to generate positive words of mouth to build repeated and recommended business. And memorable experience comes when every demands of customers becomes fulfilled, Bowie and Buttle, (2011). A memorable experience of a product or services of an organization comes from four levels i.e. basic, expected, desirable, to ultimately the unanticipated, Albrecht, (1992). See figure 1.1

Memorable Desirable Expected Basic

Figure 1.1 The hierarchy of customer value

Analyzing above all the philosophies and definition of marketing it is worthy to say the management of demands of the market is the central purpose of promoting marketing theory and practice and this theory of marketing comes from Kotler(1999), where he stated that, Marketings central purpose is demand management, and marketers need to manage the level, timing and the composition of demand. This definition of marketing is more sui table compared to others because it explains what marketers do and when they do it in certain times, Bowie and Buttle, (2011). Another important point of marketing concept is good marketers focus on creating value to customers and satisfying their need better than their competitors instead of generating profit also the involvement of all employees from all levels of the organization need to be integrated to fulfil their customers interests. It is also important that inappropriate process of marketing will not bring anything good for the organization, Kotler, P., Bowen, J. & Makens, J. (2006). Figure 1.2 summarizes this concept.

Figure 1.2 Marketing concept

Integrated marketing

Profitability

customers needs & wants

Source: google image

1.3 Needs, Wants and Demand:

Needs, Wants and Demand are closely related to each others. According to Kotler, (2008), Need is a state of deprivation of same basic things i.e. food, clothing and shelter. And Wants are specific satisfiers of needs. Human needs are infinite and Demands are wants for specific products that are backed by an ability and willingness to buy them. For example, education is human needs but willing to study in Cambridge is want and when this want often are fulfilled than it becomes Demand.

1.4 Product marketing vs service marketing:

Marketing process is all about satisfying customers demands and these demands can be both product (objective, devices, or things) and/ or services (action, performances, or experiences). Earlier marketers used to focus on marketing physical products only but now because of high interest on services, selling service has been an potential marketing sector. For instance, in Australia, Norway, Canada, France, Japan and United Kingdom, 60% of total GDP comes from services sectors. And in Hong Kong it is around 85%, Hoffman, K. & Bateson, J. (1997). Most of the hospitality organization provides both services and products, for example food is tangible and dinning out for the customer is an experience/performance. To run an organization successfully it is very important to have different marketing approach to market a product or service as four unique characteristics of services keeps it apart from products. (see figure 1.3). Table 1 explains how service marketing are different from product marketing.

Figure 1.3 characteristic of service

Itangibility

Inseparability

Variabilty

Perish ability

Source: Hoffman, K. & Bateson, J. (1997).

Table 1 characteristic of Hospitality Marketing Service characteristic Meaning Example

Intangibility Not perceivable purchase before It is not possible for customer to judge their meals before they taste the food and experience the services. Other customer may be part Other customers can be of the services. influenced by the presence of loud customers in a restaurant. Quality of services of a same Quality of services provided hospitality organization may by EAT. in Liverpole may vary for different time, vary from Oxford location & provider

Inseparability

Variability

Perish ability

Services are not long Unsold room of a hotel lasting or short lasting, it can not be saved for can not be stocked for tomorrow. future sells or uses

1.5 Customer satisfaction and retention:

Though the customer satisfaction and retention are very close to each other but still they are not interlinked. Customer satisfaction is the scale of how well an organizations products or services, support and communication are able to meet the customers expectations, organization or on the other hand, customer retention is how well a customer stays with the organization or a specific product or services, Bowie & Buttle, (2011). The state of retention comes from satisfied customers but in organization it is also found that a satisfied customer but not retained yet because that particular customer is looking for something new or better one in future though he/she is satisfied now, on the other hand a dissatisfied can be retained because of long term contract or the supply of goods or services are less than the demand in the market, Bowie & Buttle, (2011). Analyzing the customers behavioural process it is seen that, it costs five times or more to attract a new customer than retaining existing customers, Bowie & Buttle, (2011, p- 354) that is why marketers always struggle to retain customer than attracting new one.

2.1 Environmental influences on the UK hospitality marketing:

To understand the changes in the business environment, marketers need to focus on the internal and external factors that influence the business environment .in this report, EAT, a sandwich chain shop is taken to analyze these factors.

EAT.
THE REAL FOOD COMPANY Type Founded Founders Headquarters Revenue Owner Private 1996 Nail & Faith MacArthur London, UK (2009) 68m Nail & Faith MacArthur 45% Penta Capital 45% Management 10 % EAT 2008 LTD eat.co.uk

Parent Website

Source: eat.co.uk

Figure 1.4 EAT Outlet

Having a vision of number one sandwich chain in the UK EAT has developed their marketing strategies analyzing Macro & Micro environment of the hospitality industry in the UK. According to Kotler, (1998), PESTLE is useful strategic tool to understand market growth or decline, business position, potential and direction for operation. See figure 1.4

Figure 1.5 PESTL Analysis

Political/legal factors:
Genetically Modified (GM) food has became an issue for the fast food industry in the UK since April 2004 as new rule came into enforce regarding GM levelling food. It is customers right to know if any ingredient is used which are genetically modified, (legislation.gov.uk). as people now -a-days more health conscious, scientist argument on it may have adverse affect on food industry in the UK. And EAT. is no exception. However, environmental secretary claims that the crops are safe to human body, Poulter,(2013). An increased regulation on fast food market already affected the market and may affect in the future as well. For instance, GST ( Goods & Service Tax) which is responsible for the in the change of price of fast food products in recent years while other foods remained unchanged,(www.gov.uk) therefore, sandwich outlets like EAT emphasising on proving extraordinary service so that consumers feel a great difference eating between home and fast food shop.

Economical factors:
Purchasing power of people has a great impact on any kind of business specially in al hospitality industry because low earning people hardly go to fine dining rather they choose fast food or sandwich shop. EAT as a sandwich restaurant hardly face bad economical influence as the price of their product are in range of in compared to fine dining, other restaurant and other sandwich, fast food shop. The present economical condition of the UK is much more better than last couple of years. According to the national statistics, number of unemployment dropped by 63,000 to 2.33 million in the three months to junuary- a rate of 7.2% while 1.17 million people were signing on for jobseekers allowance last month, a fall of 34,000. In addition to this, the GDP growth increased by 2.7% which was reckoned 1.8% and earning power increased by 1.4% and the number of unemployment of fell by 8.2% in London . ( ref, news paper ) analyzing all this data it is reckoned by analyst that uk hospitality industry aging getting boomed after the recession happened in 2009, Evening standard, (2014) A slide increase on gas may have impact on pricing of product but in compared to others good news it shouldnt influence the costumer purchasing behaviour.

Technological factors: Touch screen technology has a great impact on restaurant, fast food & sandwich shop marketing (Cole, 2008). The technology is called interactive ordering system. This system allows customers to order food&drinks without the servers. Restaurants like, Inamo and The Chin Chin Laboratorists and their nitrogen ice cream, (inamo-

restaurant.com). about 46% of adult of the uk have a likelihood of using this system at the restaurant.

Social/ cultural factors:

People are now more health conscious than before, due to this trend in the life-style of uk people now sandwich shop like EAT. emphasizing on gluten free food and providing nutrition information of their food items on print. In addition to this, understanding the customer culture of muslim region, they sell HALAL meat in their burgers. For the increase of global warming issue, many industry tends to consider the Go Green trend, and hospitality industry are not out of this, in hospitality industry everyday tons of foods being waste which has a bad impact on environment, considering this bad impact EAT donate their unsold food to the charity.

Environmental factors:

2.2 SWOT:

EAT SWOT analysis 2013 Strengths

1. A range of subs customization 2. Largest sandwich shop chain in the UK by the number of outlets 3. Unique Marketing and promotional strategies 4. Choice of healthier meals 5. Nation -wide brand recognization 6. Salads for gluten-free diet. 7. Halal meat for muslim community 8. Sandwich and salad are made every day in the kitchen which indicate the freshness of foods. 9. Great interior design of the outlets 10. Affordable price with high quality product and services.

Weaknesses
1. High employee turnover 2. Services are not consistent from one store to another store 3. Limited seating in most stores 4. No franchises 5. No night shift services. 6. It is hard to retain customers

Opportunities
1. Opportunity to reach in other EU markets. 2. Can start franchising. 3. Covering whole UK and then starting global business. 4. Starting to sell burgers 5. Develop customer services model focusing target market and expanding target market 1. 2. 3. 4. 5. 6. 7. 8. 9.

Threats
Overseas business. Economic rescission. Health & safety legislation. Global warming Trends toward low calorie consumption life-style. Local fast food shop. Food contamination. Competition. Health concern about meat and poultry.

3.1 Consumer Decision-Making Process:

Consumer buying behaviour is the process of consumers during the time of buying any product or services. According to Kotler,(1999), Consumer behaviour include mental activity, emotional and physical that people use during selection, purchase, use and dispose of products and services that satisfy their needs and desires. This report will talk about cosomer decision process in details based on the EATs customers.

3.2 Product and services provided by the EAT: As a sandwich based shop, EAT has over 20 diiferent sandwiches, of them most famous are, Turkey&canberry(less than 5%fat), smoked scottish salmon and soft cheese, simple Ham amd Pickle, Little Skipjacj Tuna Mayo&Cucumber(new), Little Turkey&Cranbeffy(new), BBQ Pulled Pork Brioche Bun, Chadder&Pickle(vegetarian), simple free range Egg Mayonnaise& crees(vegeterian) etc. EAT also has range of Toast, Baguettes, Wraps and range of Desserts, Drinks, Breakfast and their special featured are their Hot Pots, Soups, Pies and range Salads, organic milk etc.And within London EAT has free deliveries services, (eat.co.uk).

Figure 1.4 consumer buying process

Sourse: google image

 Problem or Need recognization: The first stage of buying process is problem or need recognization. Need is a stage of deprevation, Kotler,(2008). So need is feeling desire of getting something, for example, if people get hungry, they eat food to resolve this need. There are many reasons people consider EAT to buy their foods and services i.e. like others EAT doesnt buy a mass produced sandwiches, soup or salad, every foods provided by EAT are made same day they sell and unsold food goes to charity which means they emphasis on ensuring quality and freashness of food more than others. And people get range of sandwich, salads, desserts, vageterian, drinks like range of coffes and cold drinks in a same place with a affordable price, and experience a warm hospitality by staffs. in addition to this, the ambiance of every EAT caf pushes customers to feel diffrence compared to others sandwich shops and of their home, (eat.co.uk). Information search: Collecting data/information is the second stage of buying process. In this stage people collect information to meet their needs or to solve problems. For any hospitality industry it is very important to let their customer to know about them from a range of sources and understanding this importance EAT created so many sources to get information about them i.e. EAT has a a great website to to about them, besides people may know about EATs food and services quality from tripadvisor, twiter, facebook pages, instagram, and from other promotions like, newspapers, and roadside electronic advertisement. In addition to this, EAT has so many branches where people can visit and information from a member of staff, and from positive mouth words of people. And has leveling of nutrition on the back of the food packet from where people get more information about the food,(eat.co.uk). Evaluating alternatives: At this stage, getting information customer evaluate different option to buy which product or services to buy comparing with competitors, it is difficult to understand how cistomer evalute but it likely that buyer will evaluate in terms of different aspects of products or services like, price, quality, taste of food, comfort etc. Purchase decision: All the marketing endevour results at this stage, getting information & evaluting different alternatives customers deceide to buy a product or services to meet their needs. The factors influence the customers to buy EAT. products are, Range of products at the sameplace Located in great locations. Afordable piece with high quality products. Leveling on the back of product regarding nutrition etc, (eat.co.uk).

 Post purchase behaviour: It is the last stage of buyiung process, consumer asses the purchased products/services based on competitors, preceptions, quality etc. and deciede to be retained. Organizations struggle to retain customer as it cost five times more to attract a new customer than retaining a existing customer and a dissatisfied customer tells 11 other people about the bad side of product.services, Bowie & Buttle, (2011, p- 354). The reasons why customers adhered with EAT are mostly because of it high quality products and warm service, people can have free delivery and order can be done by online. An interview taken from a customer EAT at st. paulse branch and asked why he come to EAT often, he said, I love the coffee you make and the ambiance of the shop, most importantly, when it is busy, no staff never told me to leave the seat because there is queue at the door its great customer service, he added.

4.1 Market segmentation:

Market sagment is the strategy of dividing people in distinct group and hospitality organizations sagment market to understand the market behaviour to chose their target market, Lovelock and Wirtz,(2011). See figure 1.5 and table 2 explain market sagmentation done by EAT cafe.

Figure 1.4: market segmentation diagram

Table 2 Eat Matket sagmentation strategy Product/Service Name Sagmentation

Range of Sandwiches, Hot pots, Drinks(Hot&Soft), and Breakfast. Soups, Pies, Salads, Desserts,

Special free delivery, comfotable dinning to eat at the shop, online order etc. Geographic Sagmentation: In geographical sagmentation, customers are sagmented into geographical units such as nation, region, country etc, Pickton and Broderick,( 2005: 376).Geographical sagmentation of EAT market are, Country: United Kingdom Region: England, Walse, Scotland. Cities: London, Edingbourgh, Birmingham, Manchester, Kent etc.

Demographical: In demographic sagmentation, customers are divided into demographic values i.e. age, gender, income, race, nationality,occupation, religion etc. demographic sagmentation of EAT are, Kotler and Keller, (2009: 257). Age: All age of people, specially 17-35 Income: Arround 16k - 25k or more per year. Occupation: Students, Business persons, Professionals. Gender: Male, Female Social class: Every class but mostly middle&high middle class Behavioural: In this sagmentation, customers are divided based on their attitude toward, use of, or response to the products, Kotler and Keller, (2009: 263). Professionals and students often have their breakfast at EAT shop. The shop is always busy which indicate how often people buy EATs products.

4.2 EAT Product Cosumption:

EAT is one of the best player in the sandwich shop market in the UK who are attracting customer almost all the time of a day year round, therefore, there is no special occasion for for EAT to focus to boom the sales figure, everyday people eating breakfast, snaks in the launch time. It gets so busy specialy in the launch time, (eat.co.uk)

4.3 Targeting Strategy:

In the sagmentation process, second stage is targeting market to sell product or service. Target market is a set of buyers who share common needs or characteristic that the company company decied to serve, Kotler and Keller, (2009). There are four targeting strategies such as o o o o Undeferentiated or mass marketing, (One ofer covers whole market) Defferentiated or sagmented marketing, (Different offers for different target market) Concentrated or niche marketing, (Focuses one small or large perticular group) Micromarketing, (Developing strategy focusing specific location or individuals )

Figure1.5 Market Targeting

Source: Google image

4.5 Targeting strategy should used by EAT:

Among the above targeting strategies EAT should use the Diiferentiated marketing strategy. Differentiated marketing is targeting many market providing special offers for each sagment, ( Armstrong and Kotler, (2005:2002-2004). EAT should use this strategy as their mission is to be number one sandwich shop in the uk and further expand their business in the other EU countries. This strategy allows the organization to cover more customers having stronger possition within every sagment. The differentiated marketing costs huge amount of money as it makes marketing plan for each sagment but the recent EAT revenue, which was 2.7 million in 2012,( The Sunday Times, 20012) indicates that it is high time for EAT to focus on differentiated marketing to reach their mission.

4.6Positioning strategy should used by EAT:

The final stage of sagmentation is positioning. Once organization sagmented the target market, it needs to take a possition in which way the organization offer its products or services. positioning is the act of desigining the companys offer and image so that it offers a distinct and valued place in the target customers mind. (learningmarketing.com) The most popular positioning options are as follows, o High quality claming high price ( Premium Brand) o High quality with low price ( Popular Brand) o Low quality and low price ( Economic Brand) o Medium price with medium quality, (learningmarketing.com). The positioning strategy should be used by the EAT. to reach their destination is High quality and low pricing positioning. To have a mass acceptance it is important to set the price within peoples reach providing a great quality. In addition, as the target market is professionals, businessperson and student they often have their brakfast and snaks outside and if the price is to high competitors will try to pick them easily. The price of EAT products will be talking below.

5.1 Hospitality Marketing mix:

Traditionaly marketing mix consists of Product, Price, Place and Promotion, also called 4 Ps. Initially 4 Ps were developed for marketing only tangible products but as in hospitality industry deals with both tangible and intangible, for this reason additional 4 Ps, People, Packaging, Programming and Partnership included. (See figure 1.6). after dealing with initial 4 Ps marketers need to know how to promote, what programme to offer to the customers and who to make partners for generating profit. Further marketers need to consider people(employees&customers) who are involved in delivering and receiving products or services.

People Promotion
MARKETING MIX

Price
Partnership

Product
Programming & Packaging

Packagin g

5.2 Eats Products & Prices:

Eat has range of Cold, soft and hot drinks i.e. Milk: Whole milk 1.50 Skimmed milk 1.5 Soya milk 7 Hot Drinks: Cappuccino 8 Chai Latte 00 Espresso 5 Cold drinks: Chocolate chiller 8 Mango power breakfast smoothie 9 Strawberry & banana Energies etc 7 Hot & Soft Drinks Within ranges of sandwiches and Wraps, few special one are, Sandwiches: Chicken and bacon Little skipjack Tuna Mayo & cucumber Smoked chicken, tomato & Pesto bloomer Wraps: Little Mexican chicken wrap Peking Duck Vegetarian: Houmous & Falafel Little Houmous & Falafel Wrap

Figure 1.6 Sandwiches and Wraps

5.2 Places to buy EATs product:

EAT has 110 branches shop across the whole UK, such as in Lonodon, Birmingham, manchester, scotland etc and of them around 80 branches located in London, Every EATs shop is located in busy area of London and other part of UK, people can buy EATs product from EAT shop and a custmore can eat food at the shop or can take away. Besides, customers can buy EAT products via online as well, (eat.co.uk).

5.3 Promotional activities performed by EAT:

EAT has a very successful series of marketing and advertising campaings to let their customer know the recent promotion/offers. EAT mostly use msaa media & electronic media to advertise their products, such as Bill board on the road/underground, newspapers, magazine et facebook, twiter, google+,instagam, likend in etc. in addition, EAT always focus on eye-cating packeging to attract the customers. As electronic marketing EAT use their own website, database regular contact with customers via email etc. EAT has range of offers shch as, free delivery, 5% student discount at few london branches, Voucher etc, (eat.co.uk).

6.1 Pricing strategies and policies followed by EAT:

There are different types of methods found to price a product such as Penetration pricing Skimming pricing Product mix pricing Psychological pricing Premium pricing Optional pricing etc, Value pricing Geographical pricing, (hospitalityinfocenter.co.uk). Penetrattion pricing: In this pricing strategy organization try to maximize the sales by seting a low price, when the marketr is captured firm increase the price, (hospitalityinfocenter.co.uk) For instance hotel Premier Inn and Travolodge use this strategy. Skimming Pricing: Setting a high price initialy, organization less the price to attract new customers, (hospitalityinfocenter.co.uk). Unique brand like Apple uses this strategy, launching a new product they make maximum profit and slowly less the price to wide the market.

Product mix pricing: Pricing different products at different price rate within the same product range is called product mix pricing, (learningmarketing.net.) Usually coffe & sandwiches shop use this strategy. There are main two types of Pricing Policies such as Competition Pricing: seting up price incomparison with the competitiors, usually organization set the price low, same and hifher in compared to competitors. Cost plus Pricing: The aim of this pricing policy is to just meet up the total production cost and add a profit margin to come to their final pricing decision. For instance-a sandwich cost to the company 1, and 0.50(cost)+1(expected profit) = 2.50 selling price, (learningmarleting.org).

6.2 The pricing policy used by EAT and pricing policy they should use:
The pricing policy EAT follow is cost plus pricing policy. Cost plus is a good start to develop a pricing strategy but it should not be stopped here because pricing should reflect the value of products or services to the customers. EAT should think about what their comprtitors (Pret a manager, star bucks) doing in the market and look for more alternatives. Again, lowering price too much has a bad on the quality of the product/services and make the strategy complicated, for instance, if I price a chicken and bacon sandwich 2.99 thinking Pret a manager has it 3.10, latter Pret might lower the price because Prets production cost might be lower as well, it is like copying game which lead a bad impact on the quality of products. Cosidering above circumstences, I think the best pricing policy EAT should take is a great combination of both strategies considering their comprtitors behaiour.

Recommendation & conclusion:

EAT is a renowned food chain for its fresh nutrious foods and warm services. However, to fulfill their mission of being global it should use the most effective methods of advertising through mass media, they should be more active on facebook, twiter, google+, instagram etc. The company has unique quality products unlike others food chains because they are concious on environment and foods are healthier than competitors. And they should focus on above discussed weakness & threats as well. Company do benchmarking but applying Blue ocean strategy in marketing could help more effectively to get public acceptance. Blue ocean strategy is more concentration on product innovation and between the needs and cost of the firms, (blueoceanstrategy.com). if these are accomplished, surely there is a great success in near future.

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Internet: http://www.eat.co.uk http://www.almostzara.com/2011/09/high-tech-dining/ http://www.inamo-restaurant.com/ http://corporatebusinessplan.com/swot-analysis/swot-analysis-example-a-hoagie-of-anexample/ http://en.wikipedia.org/wiki/Eat(restaurant)