MODULE 1

Introduction to Tourism & Hospitality

What Is Tourism?
Definition of Tourism
 There are a number of ways tourism can be defined, and for this reason,
the United Nations World Tourism Organization (UNWTO) embarked on a
project from 2005 to 2007 to create a common glossary of terms for tourism.
It defines tourism as follows:
 Tourism is a social, cultural and economic phenomenon which entails the
movement of people to countries or places outside their usual environment
for personal or business/professional purposes. These people are called
visitors (which may be either tourists or excursionists; residents or non-
residents) and tourism has to do with their activities, some of which imply
tourism expenditure (United Nations World Tourism Organization, 2008).
 Using this definition, we can see that tourism is the movement of people for
a number of purposes (whether business or pleasure).
 Definition of Tourist
Building on the definition of tourism, a commonly accepted description of
a tourist is “someone who travels at least 80 km from his or her home for at least
24 hours, for business or leisure or other reasons”.

 The United Nations World Tourism Organization (1995) helps us break down
this definition further by stating tourists can be:
 Domestic (residents of a given country travelling only within that country)
 Inbound (non-residents travelling in a given country)
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  Outbound (residents of one country travelling in another country)
Top 10 Different Types of Tourism in India

1. Cruise Tourism

2. Adventure Tourism

3. Medical Tourism

4. Wellness Tourism

5. Golf Tourism

6. Polo Tourism

7. Eco Tourism

8. Film Tourism

9. Sustainable Tourism

Sustainable Tourism include approval and classification of hotels to the expected

standards for different classes of tourists. This system will rate hotels from one
star to five star and Heritage and Classic etc.

10. Meetings Incentives Conferences Exhibitions (MICE)

Conventions and Conferences are the segment of the tourism industry. IIn order
to promote India more effectively as a convention destination for travel industry,
Ministry of Tourism set up the India Convention Promotion Bureau.

Introduction to the hospitality industry

 The hospitality industry can probably be termed as one of pioneering
commercial undertakings of this world. It is part of the larger business
initiative- the tourism industry.

 This industry supplies a gamut of services ranging from travel

arrangements, accommodation facilities, food & beverages to leisure
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 activities; i.e. all requirements of the modern day traveller, who could be
travelling for business, pleasure, vacation, adventure, religious purpose or
medical treatment.

 The term „Hospitality‟ means the cheerful welcoming of people, who may
be known or may be strangers.

 It is the relationship between a guest and host.

 The hospitality industry is a service industry.

 the hospitality business is based on the culture of serving guests with

warmth and care so that they feel comfortable and secure.

 They have also stated that hospitality is the fundamental need for travelers,
pilgrims, wanderers, tourists etc. because it gives them a strong feel of
home away from home.

Skills and Characteristics you Need to Work in the Hospitality

 Service businesses have unique characteristics that should be explored and
understood when developing a marketing plan and competitive strategy.
 The four key characteristics of service businesses are:
Intangibility, Inseparability, Perishability, and Variability.
 Commitment. In the hospitality industry, your main task is to be committed
to ensuring customer satisfaction. ...
 Interpersonal Skills. ...
 Problem-solving. ...
 Teamwork. ...
 Organised. ...
 Flexibility. ...
 Ways to Improve Your Hospitality Skills.
Intangibility

Can’t be seen, tasted, felt, heard, or smelled before purchase.

Inseparability

Can’t be separated from service providers.

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 Variability

Quality depends on who provides them and when, where and how

Perishability

Can’t be stored for later sale or use.

Hospitality and tourism marketing environment –

Concept
 The marketing concept is a business philosophy that defines marketing as a
process intended to find, satisfy, and retain customers while the business
makes a profit.
 The tourism and hospitality sector involve a combination of tangible and
intangible products

Hospitality and tourism marketing environment

 The environment depends on business for its wants and needs
while the businesses also depend on the environment for
resources such as labour, capitals and raw materials.
 There is therefore this mutual relationship between the two and one
can hardly survive without the other. This therefore calls for all
business to be alert of changes in the environment. The business
environment is however changing and complex and at times business
has little or no control over most of the variables.
The three components of the marketing environment are:

1) The micro – environment - all internal variables which management has

control over e.g. the business mission and the marketing objectives.

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2) The market environment - Those forces from without the business, which
cannot be controlled by marketing management. These include customers,
competitors, intermediaries and suppliers. They usually are peculiar to a specific
industry.

3) The macro-environment - external forces which individual business cannot

influence. Factors include the economic, political, technological and socio –
cultural.

The Hospitality and Travel Marketing System

Planning & Research

1. Where are we now?

Analysis & Strategy

2. Where would we like to be?

Implementation

3. How do we get there?

Control

4. How do we make sure we get there?

Evaluation

5. How do we know if we got there?

The PRICE of Marketing

 Planning
 Research
 Implementation
 Control
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  Evaluation

Eight P’s of hospitality marketing;

 Product: the range of product and service mix offered to customers

 Place: how the product will be made available to consumers in the market,
selection of distribution channels, and partners

 Promotion: specific combination of marketing techniques (advertising,

personal sales, public relations, etc.)

 Pricing: part of a comprehensive revenue management and pricing plan

 People: developing human resources plans and strategies to support

positive interactions between hosts and guests

 Programming: customer-oriented activities (special events, festivals, or

special activities) designed to increase customer spending or length of stay,
or to add to the appeal of packages

 Partnership: also known as cooperative marketing, increasing the reach and

impact of marketing efforts

 Physical evidence: ways in which businesses can demonstrate their

marketing claims and customers can document their experience such as
stories, reviews, blog posts, or in-location signage and components

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Hospitality and tourism customers

Customer expectations
Satisfied customers are looking for a memorable experience and an energetic
service, where it matters the most. Businesses need to be aware that it’s
becoming ever more popular for guests to leave a review of their experience on a
number of feedback sites, whether their experience was a good or bad one.
Hospitality outlets need to me mindful of this as bad feedback can be extremely
damaging.
Deliver on your promise
Any business needs to keep customers and clients happy, but in the hospitality
industry it’s so important to keep guests engaged in order for repeat business and
for referral purposes. For the customer to return all you need to do is deliver

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what was promised, if you can exceed expectation where possible this is always a
good tool to help gain referrals.
Be realistic
Remember to be realistic, don’t big your business up if it’s not 5 star, don’t say
that it is, as this only sets expectations for the customer, and excites them only to
disappointed when they find out it’s more of a three star standard.
Customer loyalty
Remember happy customers are loyal customers, go the extra mile if needs be,
provide additional items where possible, this always tends to impress. Just
remember, customers are the most important part of the business without them
what would you have – focus on them at all times – and they will be happy.
Feedback is important
If a customer is unfortunate enough to have a bad experience, for any reason, you
need to make sure it’s made easy and clear for them to tell you about it. At the
same time be understanding and allow them to get it off their chest to you, so
they’re not inclined to tell someone else. Try hard to fix the problem –
communication is key – and remember keep calm and try to resolve the situation
so the customer ultimately goes away happy.
 Respond to people without being chased by them (as easy as putting a date
in your diary and placing a phone call; takes maybe five minutes)

 Keep colleagues informed about what’s happening on a project (such as

copying them on an e-mail, simple yet mightily effective)

 Arrive on time for meetings (so others don’t waste time waiting for you)

 Never complain within earshot of customers. It gives them the impression

your company isn’t well run, shaking their confidence in you.

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  Never complain to customers about other employees, however justified.
Who wants to do business with a company whose people don’t get along
with each other?

 Build bridges between departments. This can be done through cross

training, team events and out-of-hours social events as well as day-to-day
niceties.

The Three ‘C’s of Classic Customer Care

Control
The ability to affect the outcome of a situation or event in a way that brings the
‘correct’ results
When people feel out of control or impotent they tend to micro-manage the few
areas where control remains, becoming picky and awkward over the most trivial
of things.

An airline passenger who is not in control of when the aircraft takes off and is not
flying the vessel can become quite pedantic about something minor,

such as the stowage space above their seat. If other passengers’ bags are already
installed there, much grumbling and spreading of belongings to ‘own’ a bit of the
environment can ensue! The problem isn’t the lack of room, it’s the lack of
control.

Choice
Perceived flexibility, variety or room for maneuver.

People can become bewildered with too much choice but most baulk against
being ‘told what to do.’

It is not the breadth of choice; rather it is the power that comes with the act of
being able to choose that feels good.

Contribution
Ability to add input for a common purpose or to suggest solutions.

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 MODULE 2

6 SKILLS AND CHARACTERISTICS YOU NEED TO WORK IN THE HOSPITALITY

INDUSTRY
1. Commitment
2. Interpersonal Skills
3. Problem-solving
4.Teamwork
5. Organised
6. Flexibility
Strategic Management in Hospitality

 The hospitality industry encompasses all businesses related to optional and

recreational services provided to customers for their leisure.
 This means that not only does it include accommodations, such as hotels,
motels, and bed and breakfasts,
 but it also includes businesses, like entertainment, events, transportation,
and cruise lines. Basically
 if it's a want rather than a need and is paid for with disposable income for
pleasure, it's part of the hospitality industry.
 Because there's strong competition in the hospitality industry, strategic
management in the hospitality industry, or creating effective plans and
processes to have a successful hospitality business, is critical to company
success.

Four Key Strategies

 According to Robert A. Rauch, there are four key strategies that hospitality
business owners and managers need to focus on in their operations.
 These four strategies include building the brand/franchise, increasing
customer value, achieving operational excellence, and being a good
corporate citizen. I
 If you own a hospitality business; these strategies can help you have an
edge over your competitors.

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 Consumer markets and buying behaviour

Consumer

Individual and household who buy goods and services for personal consumption.

Consumer market

 consists of individuals who buy a definite good or service

 Consumer refers to individual and household who buys goods and services
for personal consumption.
 All final consumers combine to make up consumer market.
 Therefore, consumer market consists of individuals who buy a definite good
or service.
 The Malaysian consumer market contains more than 27 million people who
consume several millions of Ringgits worth of goods and services annually.
 Consumers in a country vary significantly in terms of age, level of
education, fashion and taste.
 These consumers buy large volume of goods and services and it is very
difficult to find a product that has been accepted collectively in the entire
population.
 Small percentage of households may not consume some existing products
available; therefore not everyone in the population would be a potential
consumer to those products.
 The allocation of consumers according to various market sectors differs in
both time and space.
 Markets undergo and reflect the influence of opinion the privilege, fashion,
tastes, and societal characteristics.
 However, markets also vary from place to place according to different
societal

What is Consumer Buying Behavior?

Definition of Buying Behavior:

Buying Behavior is the decision processes and acts of people involved in buying
and using products.

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Need to understand:

 why consumers make the purchases that they make?

 what factors influence consumer purchases?
 the changing factors in our society.

Stages of the Consumer Buying Process

Six Stages to the Consumer Buying Decision Process (For complex decisions).
Actual purchasing is only one stage of the process. Not all decision processes lead
to a purchase. All consumer decisions do not always include all 6 stages,
determined by the degree of complexity...discussed next.

The 6 stages are:

1. Problem Recognition(awareness of need)--difference between the desired

state and the actual condition. Deficit in assortment of products. Hunger--
Food. Hunger stimulates your need to eat.
Can be stimulated by the marketer through product information--did not
know you were deficient? I.E., see a commercial for a new pair of shoes,
stimulates your recognition that you need a new pair of shoes.
2. Information search--
o Internal search, memory.
o External search if you need more information. Friends and relatives
(word of mouth). Marketer dominated sources; comparison
shopping; public sources etc.

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 A successful information search leaves a buyer with possible alternatives,
the evoked set.

Hungry, want to go out and eat, evoked set is

o chinese food
o indian food
o burger king
o klondike kates etc
3. Evaluation of Alternatives--need to establish criteria for evaluation,
features the buyer wants or does not want. Rank/weight alternatives or
resume search. May decide that you want to eat something spicy, indian
gets highest rank etc.
If not satisfied with your choice then return to the search phase. Can you
think of another restaurant? Look in the yellow pages etc. Information from
different sources may be treated differently. Marketers try to influence by
"framing" alternatives.
4. Purchase decision--Choose buying alternative, includes product, package,
store, method of purchase etc.
5. Purchase--May differ from decision, time lapse between 4 & 5, product
availability.
6. Post-Purchase Evaluation--outcome: Satisfaction or
Dissatisfaction. Cognitive Dissonance, have you made the right decision.
This can be reduced by warranties, after sales communication etc.
After eating an indian meal, may think that really you wanted a chinese
meal instead.

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 Characteristics Affecting Consumer Behavior
Cultural
Social
Personal
Psychological

Organizational Buyers.
 A large portion of the market for goods and services is attributable
to organizational, as opposed to individual, buyers.
 In general, organizational buyers, who make buying decisions for
their companies for a living, tend to be somewhat more sophisticated
than ordinary consumers.

Steps in the Business Buying Process

1. Recognizing the need
2. Developing product specifications
3. Soliciting bids from potential suppliers
4. Making the purchase decision
5. Issuing the contract
6. Inspecting delivered goods for quality
7. Evaluating vendor performance
GROUP MARKETING (REFERENCE GROUP)
 A reference group includes individuals or groups that influence
our opinions, beliefs, attitudes and behaviors.
 They often serve as our role models and inspiration. Marketers
view reference groups as important because they influence

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 how consumers interpret information and make purchasing
decisions.

D E ST IN A T I O N MA R K E T IN G
 Over the last few years, travellers have discovered the places they were
going to visit, book hotels and transportation, plan trips and share their
emotions and memories with friends online.
 The main answer to the question ‘what destination marketing is for?’ – is to
stay competitive.
 The primary challenge is to make your consumers interested in your
location before they arrive using social media marketing and search engine
optimisation. For this:
 Show the privileges of your country (region, city, town etc)
 Create and share the story about the destination you promote
 Care about customer experience (CX) – be sure your website is attractive,
convenient, and fast-loading.
 Create Google Posts via Google My Business profile about the best
sightseeing, magnificent places, or traditional holidays. These will appear in
the top search results with images enhancing your overall SEO for free.
 However, depending on the purpose and destination, you should use
different online tools.
 For instance, to promote a country it is better to concentrate on contextual
ads, search engine ads and social media (within your targeted region, i.e.
the region you would like to target).
 To promote a town or a city, pay attention to testimonials services (as
most likely, your potential customers would like to check references
concerning accommodation facilities, activities, and your location
accessibility).

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 And the most useful tool to promote a region will be search engine ads and
social media (pay attention to cultural and natural attractions, region
peculiarities and features).

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Destination marketing challenges today

One of the key destination marketing challenges goes back to convincing

governments and stakeholders that tourism promotion should be viewed as an
investment in a destination’s economic growth and community well-being, versus
an expense line item for “tourism promotion.”

Conference and event marketing,

 MARKETING, MEETINGS an event or series of meetings at which a company's

employees who are involved in selling its products are told about new
products and services and discuss ways in which they can be sold effectively:
Four hundred people attended the annual sales conference in Paris.
 Conference types include: Academic conference, in science and academic, a
formal event where researchers present results, workshops, and other
activities.
 Convention (meeting), meeting of a, usually large, group of individuals
and/or companies in a certain field.
EVENT MARKETING
 Event marketing describes the process of developing a themed exhibit,
display, or presentation to promote a product, service, cause, or organization
leveraging in-person engagement.
 Events can occur online or offline, and can be participated in, hosted, or
sponsored.

Market segmentation
is the process of dividing market of potential customers into groups, or
segments, based on different characteristics?
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  Types of Market Segmentation.
 Demographic segmentation.
 Behavioral segmentation.
 Psychographic segmentation.
 Geographic segmentation.

Targeting and positioning in Hospitality industry

Preparation of Marketing Plan

 Determine Why a Customer Would Come to You. ...
 Identify Your Target Customers. ...
 Identify the Competitors That Target Your Customers. ...
 Draft Your Brand Positioning Statement. ...
 Situation Analysis. ...
 Target Audience. ...
 Marketing Goals. ...
 Strategies and Tactics.
What are the steps in preparing the marketing plan?

 Step 1: Know Your Business. ...

 Step 2: Determine Target Market. ...
 Step 3: Analyze Competitors. ...
 Step 4: Set Goals. ...
 Step 5: Outline Strategies. ...
 Step 6: Set a Budget. ...
 Step 7: Get to Work!

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 MODULE 3
The hospitality management products
are nothing but the hotel software productswhich is used by the hoteliers
for the operations such as front office, housekeeping, Call Monitoring
Module, F&B Costing, Accounts, AR/AP, MIS&Budgeting, Asset Tracking,
Golf, Gulf, SPA, HR, Payroll, Banquet, Task Management

 Banquet Supplies
 Beverage Dispensers
 Buffett Serving Pieces
 Buffet Signage
 Buffet Warming Carts
 Carving Stations
 Catering & Buffet Storage
 Chafers, Fuel & Accessories
 China & Glassware
 Chocolate Fountains
 Coffee & Tea Service

Development of new products in hospitality industry

 Business Strategy Development or Review · New-Service Strategy
Development ·
 Idea Generation Screen ideas against new service strategy ·
 Concept Development and Evaluation
 Test concept with customers and employees ·
 Business Analysis Test for profitability and feasibility ·
 Service Development and Testing Conduct service prototype test ·
 Market testing Test Service and other marketing-mix elements ·
 Commercialization ·

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  Postproduction Evaluation

SERVICE CONCEPT DEVELOPMENT ·

Idea generation for the core product ·

Core product screening, rough process ·

Concept testing (internal) ·

Concept development

SERVICE PROCESS DEVELOPMENT ·

Module creation and development ·

Service blueprinting ·

Prototype testing (internal) ·

Business analysis ·

Formal product blueprinting

MARKET TESTING ·

Product testing (external) ·

Financial evaluation

COMMERCIALISATION ·

Formal product offering (presentation of the product)

POSTINTRODUCTION EVALUATION

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Designing and managing product

A product is anything that can be offered to a market for attention, acquisition, use
or consumption that might satisfy a want or need • Includes physical objects,
services, places, organizations, and ideas

Product Design is the bridge between Product Management and Product

Development. ...

While Product Management is focused on the market and the customers' business
needs and Development is focused on the customers' technology needs, Product
Design is focused on the customers' end-user needs

Concepts

Analysis

 Accept Situation: Here, the designers decide on committing to the project and
finding a solution to the problem. They pool their resources into figuring out
how to solve the task most efficiently.
 Analyze: In this stage, everyone in the team begins research. They gather
general and specific materials which will help to figure out how their problem
might be solved. This can range from statistics, questionnaires, and articles,
among many other sources.

Concept

 Define: This is where the key issue of the matter is defined. The conditions of
the problem become objectives, and restraints on the situation become the
parameters within which the new design must be constructed.

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Synthesis

 Ideate: The designers here brainstorm different ideas, solutions for their
design problem. The ideal brainstorming session does not involve any bias or
judgment, but instead builds on original ideas.
 Select: By now, the designers have narrowed down their ideas to a select few,
which can be guaranteed successes and from there they can outline their plan
to make the product.
 Implement: This is where the prototypes are built, the plan outlined in the
previous step is realized and the product starts to become an actual object.
 Evaluate: In the last stage, the product is tested, and from there,
improvements are made. Although this is the last stage, it does not mean that
the process is over. The finished prototype may not work as well as hoped so
new ideas need to be brainstormed.
Product Lifecycle Stages

1) Product development begins when the company finds and develops a new
product idea.

2) Introduction is a period of slow sales growth as the product is being introduced

into the market. Profits are nonexistent at this stage.

3) Growth stage is a period of rapid market acceptance and increasing profits.

4) Maturity stage is a period of slowdown in sales growth because the product has
achieved acceptance by most of its potential buyers

5) Decline stage is the period when sales fall off quickly and profits drop.

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Internal Marketing I. Internal Marketing

1) The hospitality industry is unique in that employees are part of the product.

2) Marketers must develop techniques and procedures to ensure that employees

are able and willing to deliver quality service.

3) Internal Marketing is marketing aimed internally at the firm’s employees.

4) Employee satisfaction and customer satisfaction are correlated.

II. The Internal Marketing Process

1) Establishment of a service culture

A) service culture is an organizational cultural that supports customer service

through policies, procedures, reward systems, and actions.

b) An organizational culture is a pattern of shared values and beliefs that gives

members of an organization meaning, providing them with the rules for behavior
in the organization.

c) Turning the organizational chart upside down. Service organizations should

create an organization that supports those employees who serve the customers.

2) Development of a marketing approach to human resource management

a) Create positions that attract good employees.

b) Use a hiring process that identifies and results in hiring service-oriented

employees.

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c) Provide initial employee training designed to share the company's vision with the
employee and supply the employee with product knowledge.

d) Provide continuous employee training programs.

e) Uniforms can affect an employee's attitude. Employees should be involved in the

selection of uniforms.

f) Employees must be able to maintain a positive attitude, managing emotional

labor helps maintain a good attitude.

Marketing Information to Employees

1) Often, the most effective way of communicating with customers is through

customer-contact employees.

2) Employees should hear about promotions and new products from management,
not from advertisements meant for external customers

3) Management at all levels must understand that employees are watching them
for cues about expected behavior.

4) Hospitality organizations should use printed publications as part of their internal

communication.

5) Hotels can use technology and training to provide employees with product
knowledge.

6) Employees should receive information on new products and product changes

marketing campaigns and changes in the service delivery process.

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Marketing-mix strategy

b) Marketing-mix strategy.

Price must be coordinated with product design, distribution, and promotion

decision to form a consistent and effective marketing program.

c) Costs

i) Fixed costs: costs that do not vary with production or sales level.

ii) Variable costs: costs that vary directly with the level of production.

d) Organizational considerations. Management must decide who within the

organization should set prices. In small companies, this will be top management; in
large companies, pricing is typically handled by a corporate department or by a
regional or unit manager under guidelines established by corporate management

2) External factors

a) Nature of the market and demand

i) Cross selling. The company’s other products are sold to the guest.

ii) Upselling. This occurs through training of sales and reservation employees to
offer continuously a higher-priced product that will better meet the customer's
needs, rather than settling for the lowest price.

Building Customer Loyalty Through Quality To win in today’s marketplace,

companies must be customer centered: they must deliver superior value to their
target customers.

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 I. Consumers buy from the firm that they believe offers the highest
customer delivered value, the difference between total customer
value and total customer cost.
1) The customer derives value from the core products, the service
delivery system, and the company’s image.
2) The costs to the customer include money, time, energy, and
physic costs.
3) Customer satisfaction with a purchase depends on the product's
performance relative to a buyer's expectations
4) Customer loyalty, on the other hand, measures how likely a
customer is to return, and their willingness to perform partner
shipping activities for the organization.

 With an internal marketing strategy, employees are treated as

“internal customers” who must be convinced of a company's vision. In

other words, internal marketing is based on the idea that customers’
attitudes toward a company are based on their entire experience with that
company, and not just their experience with the company’s products.

 Interactive marketing is a strategy that uses two-way

communication channels to allow consumers to connect with a company

directly. Although this exchange can take place in person, in the last
decade it has increasingly taken place almost exclusively online through
email, social media, and blogs.
Example: Interactive marketing works by collecting and analyzing the behaviour of
visitors to your website. This can take many forms, but one of the most common

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is search engine marketing. Essentially this means that when a customer types a
question or query into a search engine, the advertisements they are shown are
directly based on this query. For example, if someone types “good winter boots”
into Google, chances are they’ll be shown advertisements on various pages based
on these search terms. In a nutshell, this intuitive form of marketing connects
products, services and customers.

The benefits of using interactive marketing

Increased sales

Lower costs than traditional marketing efforts

Customer satisfaction

Influencer marketing

(also influence marketing) is a form of marketing in which focus is placed on

influential people rather than the target market as a whole. It identifies the
individuals that have influence over potential customers, and orients marketing
activities around these influencers.

Influencer content may be framed as testimonial advertising where they play the
role of a potential buyer themselves, or they may be third parties.

These third parties exist either in the supply chain (retailers, manufacturers, etc.)
or may be so-called value-added influencers (such as journalists, academics,
industry analysts, professional advisers, and so on.

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MODULE 4

Pricing

Price determination and managerial objectives Price has two broad functions.

 Firstly, all managers must know that prices raise revenue for the firm.

 Secondly, price rations out the available production amongst consumers on

the basis of their ability and willingness to pay.

 Thus in a competitive market economy price is determined by the forces of

demand and supply. Pricing is driven by managerial objectives.

 The precise objectives pursued by the management will ultimately

determine the price strategy that is adopted.

Factors that affect price strategies

Marketing managers must take the following factors into account that affect
price strategies:

• Product quality. The quality of the product really determines the price
value relationship. It is logical that that product that offers greater utility and
fills the consumer needs more effectively than a competitive product can
command a higher price.

• Product distinctiveness. A standard or staple product with no distinctive

features offers little or no opportunity for price control. But, a novel and
different product may be able to command higher prices. For instance, the
Lost City as an attractive novelty, combined with excellent services and

Extent of the competition. A product that is comparable to that of

competitors' must be priced taking the prices of competitors into
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consideration. To some extent the product's price determines its position in
the market.

• Method of distribution. The price of the product must include adequate

margins for tour operators, travel agents or the company's own sales force.

• Character of the market. The type and possible numbers must be

considered. If there is a limited number of consumers, then the price must
be high enough to compensate for a limited market. But, one must also
consider consumer ability and propensity to buy.

• Cost of the product and service. The price must be higher than cost over
the long run or the business will not survive. Both cost and market conditions
should serve as guides to pricing.

• Cost of distribution. Distribution costs must also be included in the pricing

equation. They are much more difficult to estimate than other costs.

• Margin of profit desired. The profit margin build into the product's price
must be higher than the returns realised on more conventional investments
in order to compensate for the risk involved in the enterprise.

• Seasonality. Most tourism products are affected by seasonality because of

school-year and holiday patterns. Consequently, the seasonal aspects must
be considered when developing prices.

• Special promotion prices. It is often a good strategy to offer introduction

prices and special one-time price offers to introduce the product to
consumers. However, these must be carefully planned so that they achieve
the purpose and do not become a regular price.

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 • Psychological considerations. Throughout the economy psychological
pricing is applied, usually in the form of prices that are set in odd amounts
such as 99c, R19,95 or R29,99. Generally consumers respond well to odd
pricing, and there seems something particularly magical about prices that
ends in a nine.

Generic pricing strategies

There are four strategies:

1) Marginal cost pricing involves the setting of prices, and therefore determines
the amount produced, according to the marginal costs of production. It is normally
associated with a profit maximising objective. 2) Incremental pricing deals with the
relationship between larger changes in revenues and costs associated with the
managerial decisions. To use an incremental analysis properly requires a wide-
ranging examination of the total effect of any decision rather than simply the effect
at the margin.

3) Break-even pricing requires that the price of the product is set so that the total
revenue earned equals the total costs of production.

4) Mark-up pricing is similar to break-even pricing, except that a desired rate of

profit is build into the price. Hence this is also sometimes referred to as cost-plus
pricing, full-cost pricing or target-profit pricing.

5) Premium pricing

It is a type of pricing which involves establishing a price higher than your

competitors to achieve a premium positioning. You can use this kind of pricing
when your product or service presents some unique features or core advantages,

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or when the company has a unique competitive advantage compared to its rivals.
For example, Audi and Mercedes are premium brands of cars because they are far
above the rest in their product design as well as in their marketing communications.

6) Penetration pricing

It is a commonly used pricing method amongst the various types of pricing is

designed to capture market share by entering the market with a low price as
compared to the competition. The penetration pricing strategy is used in order to
attract more customers and to make the customer switch from current brands
existing in the market. The main target group is price sensitive customers. Once a
market share is captured, the prices are increased by the company.

7) Economy pricing

This type of pricing takes a very low cost approach. Just the bare minimum to keep
prices low and attract a specific segment of the market that is highly price sensitive.
Examples of companies focusing on this type of pricing include Walmart, Lidl and
Aldi.

8) Skimming price

Skimming is a type of pricing used by companies that have a significant competitive

advantage and which can gain maximum revenue advantage before other
competitors begin offering similar products or substitutes. It can be the case for
innovative electronics entering the marketing before the products are copied by
close competitors or Chinese manufacturers.

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9) Psychological pricing

It is a type of pricing which can be translated into a small incentive that can make
a huge impact psychologically on customers. Customers are more willing to buy the
necessary products at $4,99 than products costing $5. The difference in price is
actually completely irrelevant. However, it makes a great difference in the mind of
the customers. This strategy can frequently be seen in the supermarkets and small
shops.

10) Captive product pricing

It is a type of pricing which focuses on captive products accompanying the core

products. For example, the ink for a printer is a captive product where the core
product is the printer. When employing this strategy companies usually put a
higher price on the captive products resulting in increased revenue margins, than
on the core product.

Distribution in Hospitality & Tourism Industry

 A distribution channel - set of independent organizations involved in the

process of making a product or service available to the consumer or
business user
 Used to move the customer towards the product or the product to the
customer
 Organic development of an industry

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Distribution also describes

 Locations for hotel brand distribution

 Franchising
 Ownership
 Management contracts
 The sales staff and system
 Group sales or volume accounts
 Reservations and transient sales
 National sales offices
 Representation firms, consortia

Distribution Channel Functions

 Information: consumer behavior “search stage”

 Promotion: messaging
 Negotiation: price and other terms
 (how is this done online?
 Physical distribution: think e-tickets?
 Prospecting: finding, communicating, and tracking prospective buyers

Direct versus Indirect Channels

 Direct Channels
 Employed sales staff
 National sales staff
 Brand.com

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  Voice/CRS/Mobile
 Indirect – Intermediaries
 Why use them?
 Why so many of them?

Push vs. Pull strategies

 Pushing the product “down” through the distribution channel TO the

customer
 Incentives to travel agents and intermediaries
 Pulling the customer “up” through the distribution to the channel
 Traditional media/private sales/CRM

E-Commerce & E-Marketing

E-commerce involves buying and selling processes supported by electronic

means, primarily the Internet

 E-marketing is company efforts to communicate about, promote, and sell

products and other services over the Intranet; also web or Internet
Marketing
 Not easy to separate but different issues

Major Issues/Challenges

 Costs have risen as has competition

 Global differences in systems
 Technology also flattening this
 System hard to change and complex to manage
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  Historical controls of GDS, OTA (GDS-Global Distribution System)
 OTA- Online Travel Agency
 Diversity of travel “parts” makes all of the distribution points part of the
experience and if an intermediary fail, so does the experience

Participants

Suppliers

Intermediaries

Consumers

Distribution Path

Suppliers

(airlines, hotels, tour operators, cruise lines, car rental companies)

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Direct Distribution Indirect Distribution

Intermediaries
(travel agencies)

Consumers
(the public)

The flow of travel products (airline ride, cruise and motor home or RV rental) goes
from the supplier to the consumer in two main ways, direct and indirect.

A direct distribution path exists when the supplier sells directly to the public. For
example, you can call the airline directly to purchase a ticket or even go to their
website to buy a ticket. You can call a hotel directly or go to their website to make
a reservation. In this direct path, no one else is involved in the transaction except
suppliers and consumers.

In the indirect distribution path, the supplier sell to the public through
intermediaries. This path is sometimes used when guidance is needed by the
consumer. Cruise lines and tour operators prefer to sell through travel agencies
because counseling is often required and can take a great deal of time and they
typically don’t keep a large reservations staff.

Consumers often like to buy complex travel from travel agencies who are more
likely to be impartial and can provide guidance and counseling.

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Travel agents meaning

A travel agency is a private retailer or public service that provides travel and
tourism related services to the public on behalf of suppliers such as activities,
airlines, car rentals, cruise lines, hotels, railways, travel insurance, and package
tours.

Types of agencies

There are three different types of agencies in the UK: multiples, miniples, and
independent agencies.

Multiples comprises a number of national chains, often owned by international

conglomerates, like Thomson Holidays, now a subsidiary of TUI Group, the German
multinational. It is now common for the large mass market tour companies to
purchase a controlling interest in a chain of travel agencies, in order to control the
distribution of their product. (This is an example of vertical integration.) The
smaller chains are often based in particular regions or districts

A 'miniple' travel agent is a company with a small. number of branches, often in a

particular geographical. area. They pride themselves on being able to give.
independent advice on holiday choices and a personal.

By definition (as well as by contract), the home-based travel agent who funnels
bookings through a host agency is an independent contractor, which means that
he or she has a great degree of freedom as far as determining how and with whom
to do business. By law, an independent contractor is not an employee.

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 TOUR OPERATOR & AGENCY

The main difference is that a tour operator is responsible for operating and
providing your vacation through the contracting, booking and packaging together
of the various components of your tour such as your hotel, transportation, meals,
guides, optional tours and sometimes flight.

What are the functions of travel agency?

Typical duties include:

 promoting and marketing the business.

 dealing with customer queries and complaints.

 providing advice about visas or passports.

 recruiting, training and supervising staff.

 managing budgets.

 maintaining statistical and financial records.

 planning.

 selling holidays and insurance.

Tour wholesalers
Tour wholesalers operate in a very similar way to wholesalers in other industries.
However, instead of supplying tangible products they supply touring options
including travel, accommodation, and tours. A tour wholesaler supplies to retail
travel agents, they DO NOT sell directly to consumers

An individual or company that sells tour packages and tour product to travel agents. Tour
wholesalers usually receive a 20% discount from accommodations, transportation companies
and attractions and pass on a 10 to 15% discount to the retail agent.

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 MODULE 5

COMMUNICATION & PROMOTION IN HOSPITALITY & TOURISM INDUSTRY

 Effective communication is important in any workplace but some believe it

is the most important quality in a hotel manager
 Communicating, in a meaningful way is not necessarily a natural skill.
 It is important that managers and staff are trained
to communicate effective

Marketing at the Hotel or Unit Level

 A marketing plan at the hotel or unit level involves such elements as a
mission statement, objectives and strategies, a market analysis, a budget
and advertising plan, a summary work plan by market segment, and a
quarterly chronological plan.
 This plan focuses on the specific market segments that the individual hotel
targets.
 For example, a downtown urban hotel might focus its marketing efforts on
business or convention travelers with the occasional tourist promotion to
bring in weekend transient guests.
 A resort, on the other hand, would target leisure travelers with high
incomes.
Hospitality Promotions and Package Deals
 Hospitality marketers must become skilled at putting together promotional
packages and communicating them effectively to the target markets the
packages were designed to attract.
 Typical uses of hospitality promotions are to make headway into a new
target market, to increase market share and to bolster occupancy during
low-demand periods.

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  Package deals are sometimes used to attract group business or to balance
types of business within a hotel.
 For example, a hotel that caters primarily to business travelers might create
a weekend spa package that encourages business travelers to arrive early
or to stay over the weekend after a conference or meeting.
Strategies for Success

Companies in the hospitality industry use various methods to develop and maintain
an effective marketing plan. The following are some of the general strategies that
marketers use for brand success.

Research
 Customers choose hotels and other hospitality services for a variety of
reasons. From location to facilities and perks, companies have to be sure that
they’re providing what buyers are looking for.

 The role of marketers is to identify what factors make customers choose a

particular hospitality service, and this requires extensive research.

 By speaking to current and former guests, monitoring customer reviews on

websites, reviewing industry data and more, marketing professionals learn
what makes a hospitality service stand out, as well as how it can be
improved.

Awareness
 If potential customers don’t know about a service, they can’t purchase it.
That’s where brand awareness comes in.

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  Marketers make sure information on hotels, resorts and restaurants is easy
to find and up-to-date.

 They can do this by buying ad space on relevant travel sites, creating an

engaging website and collaborating with other, noncompeting hospitality
services in the same market.

Promotion
 Another smart strategy for attracting customers is to run promotions during
certain times of the year, usually when business is slower.

 Introducing incentives and offering incentives are just some of the ways that
marketing professionals achieve this.

 Have you purchased a Groupon for a spa weekend? That’s promotion at

work.

Relationships
 To ensure high levels of repeat business, good customer relationships are
vital. Not only do repeat customers usually promote a service through word-
of-mouth and social media, but they also create a stable revenue base.

 One way to build relationships is through customer loyalty programs, which

reward customers who regularly use a particular hospitality service.

Communication and promotion policy

There are four basic types of promotion: 1) Advertising 2)
Sales Promotion 3) Personal Selling 4) Publicity.

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 The Promotion Mix
A company’s total promotion mix—also called its marketing communications
mix—consists of the specific blend of advertising, public relations, personal
selling, sales promotion, and direct-marketing tools that the company uses
to communicate customer value and build customer relationships
persuasively
 Advertising Any paid form of non personal presentation and promotion of
ideas, goods, or services by an identified sponsor
 Sales promotion Short-term incentives to encourage the purchase or sale of
a product or service
 Personal selling Personal presentation by the firm’s sales force for the
purpose of making sales and building customer relationships
 Public relations Building good relations with the company’s various publics
by obtaining favorable publicity, building up a good corporate image, and
handling or heading off unfavorable rumors, stories, and events
 Direct marketing Direct connections with carefully targeted individual
consumers to both obtain an immediate response and cultivate lasting
customer relationships—the use of direct mail, the telephone, direct-
response television, , the Internet, and other tools to communicate directly
with specific consumer
 Publicity
 Publicity (from French publicité, from public ‘public’) is the movement
of information to the general public from the media.

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  The subjects of publicity includes people (for example, politicians and
performing artists), goods and services, organizations, and works of
art or entertainment.

Promotion Mix Strategies

Push versus Pull Strategy

The promotional mix is heavily affected by whether a company chooses a push or

pull strategy

 Push strategy involves “pushing” the product through distribution channels

to final consumers
 A push strategy provides an incentive for channel members to promote the
product to their customers or push the product through the distribution
channels
 Using a pull strategy, a company directs its marketing activities (primarily
advertising and consumer promotion) toward final consumers to induce
them to buy the product.
 Thus, under a pull strategy, consumer demand “pulls” the product through
the channels

Buyer Readiness State

Promotional tools vary in their effects at different stages of buyer readiness

Advertising, along with public relations, plays a major role in the awareness and
knowledge stages

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Product Life-Cycle Stage The effects of different promotion tools also vary with
stages of the product life cycle

Major Decisions in Advertising

Marketing management must make five important decisions in developing

an advertising program

Setting the Objectives

 The first step in developing an advertising program is to set advertising

objectives, which should be based on information about the target market,
positioning, and marketing mix
 Advertising objectives can be classified by their aim: to inform, persuade, or
remind Setting the Advertising Budget
 After determining advertising objectives, a company can establish

an advertising budget for each product

 The role of advertising is to affect demand for a product

 The company wants to spend the amount needed to achieve the sales goal

Developing Advertising Strategy

 Advertising Strategy consists of two major elements: creating advertising

messages and selecting advertising media

Creating the Advertising Message

 No matter how big the budget, advertising can succeed only if

advertisements gain attention and communicate well

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  Good advertising messages are especially important in today's costly and
cluttered advertising environment
Choosing Among Major Media Steps
 The major steps in media selection are (1) deciding on reach, frequency, and
impact; (2) choosing among major media types; (3) selecting specific media
vehicles; and (4) deciding on media timing

Viral marketing

is any marketing technique that induces websites or users to pass on a

marketing message to other sites or users, creating a potentially exponential
growth in the message's visibility and effect.

Types of viral marketing techniques

 There are three criteria for basic viral marketing; the messenger, the
message and the environment.

 All three must be effectively executed in order for a viral message to be

successful.

 Some techniques for effective marketing include targeting the appropriate

audience and channels, creating videos, offering a valuable service or
product for free, creating an emotional appeal, social outreach and enabling
easy sharing and downloading.

Who uses it

 Viral marketing can be effective as a stand-alone tool or as part of a larger

marketing campaign. It can be used by both large and small companies, but

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 can be especially attractive to smaller business, as it can be more cost-
effective than traditional marketing efforts.

 Viral marketing has been used by energy drink companies, movies and even
political campaigns to generate marketing buzz.

Advantages of viral marketing

 Low cost. What characterizes viral campaigns is that the users do a significant
part of the work for us, which drastically cuts down the costs of dispersion: it
becomes unnecessary to buy advertising or space on the media.

 Potential of great reach. A viral video on the Internet has the ability to reach
a huge international audience without us having to invest money or make any
extra effort. Due to this, a small company or even a private individual can go
extremely far.

 It is not invasive. In viral marketing, the decision to participate and share

always comes from the user, and so it never comes across as invasive. Like
this, the perception of the brand and the interaction are significantly better,
compared to more classical forms of advertising.

 It helps build up your brand. If we really hit the bull’s-eye in terms of

creativity, we are creating content so incredible that users themselves decide
to share it and, hence create a personal connection with your brand. It is
without a doubt an extremely powerful tool when it comes to branding and
awareness.

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 Building customer loyalty in Hospitality industry
 Building customer loyalty in the hotel industry is one of the most
important steps for a hotel’s success.
 Travelers in today’s times are spoilt for choice – the options are many
and the competition is fierce for hotel owners.
 As you look out for new customers, it’s vital to retain your existing
guests.
 If you can have a large percentage of guests who are loyal customers
and repeat visitors, it acts as a firm revenue foundation.
 The result will be immensely profitable for every hotel owner.

Make the Right First Impressions

 There’s a reason why ‘First Impressions Always Last’.

 Have a new guest at your hotel property? Communicate to convert them

into a loyalty card member.

 Offer a value to the loyalty program, something that is of use to the guest
visiting your hotel. Keep track of your guests’ preferences and
requirements.

 The check-in process sets the tone for your hotel, so make it a smooth
process for new guests.

 Your hotel’s staff must go the extra mile to find out what guests want, must
offer an impeccable service and communicate online (even post the check-
out process) for an enhanced customer loyalty management.

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Add the Personal Touch
 This is the age of using data right, and storing guest information in your hotel
management software will help you provide a personalized service to new
and existing guests.

 For e.g.: Knowing about a guest’s most-preferred suite at the time of booking
is the kind of personal touch guests look out for.

 Use the latest technologies to store and use guest information.

 This will help you find innovative ways to encourage guests to book your
hotel property for the next visit.

 Offer Incentives
 Build up on great incentives to make new guests turn into loyal visitors.

 Think beyond complimentary breakfast – what is it that will be of importance

for the guest?

 A family on a leisure trip can be offered a complimentary trip to nearby local

attractions.

 A business traveler may prefer flexible check-in timings.

 You can even announce offers on direct bookings for new guests so that they
have an incentive to book your hotel property on the next trip.

Create Useful Hotel Loyalty Programs

 Hotel loyalty cards are an important part of customer loyalty programs.

 A report by Deloitte mentions 18% of guests become active loyalty card

members based on the benefits it offers.

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  Find out what customers want and reward repeat visits accordingly.

 New guests to your hotel must know the long-term value of the loyalty
program.

 Once you succeed with the sign-up of a new customer for your loyalty
program, let this act as your firm foundation to build upon the trust for
long-term customer loyalty initiatives with your guests.

Prioritize Guest Experience

 The guest experience begins even before the check-in process.

 Maintain your strategies and update your hotel staff to prioritize guest
experience above everything else.

 Connect with your guests online once the booking is in place. Send out
relevant messages through emails – mention about local events, popular
hangouts, and details that will be of interest to your guest.

 Ask questions during their stay. “Is your room comfortable?

 Do you require assistance?” Questions such as these will establish trust.

Guests will know your brand cares to see if guests are genuinely comfortable.

 Connect with each guest personally to address their requirements.

Use Technology to your Advantage

 Technology can offer many strategies for hoteliers.

 Right from offering a smooth booking process online to including innovative

ways to engage guests will create a favorable impression of your hotel brand.

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  Self check-in, keyless entries, mobile apps that allow guests to put forth their
requests, energy-saving devices, and more will project your brand as a
sophisticated hotel property – one that is attentive to what a guest wants
and is in step with the latest technologies for the hotel industry.

Exceed Customer’s Expectations

 Every guest has a different set of expectations.

 Your focus should be on exceeding expectations. Does a guest have a

specific request not mentioned in your hotel amenities?

 You can either refuse politely or reply positively to attempt to fulfill the
request after a discussion with your team. Is there an irate guest at your
hotel property?

 Ensure your hotel manager stays in constant touch till the matter is
resolved.

 A simple follow-up email post a guest’s stay that thanks them for their visit
with exciting offers can also create a good level of engagement.

 A guest’s stay should be memorable and hoteliers need to go the extra mile
to exceed customer expectations.

Seek Immediate Feedback

 Why do negative reviews appear online?

 Guests who are displeased with their stay may not always be vocal at the
time of the stay. Seek continuous feedback.

 Do not wait for a customer to have an issue or make a complaint.

 Is your guest happy with the room service?

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 Is the menu tailored according to his/her needs? Find information, ask the
right questions and stay connected.

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