Marketing Hotels Rest Part 1-1-79

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Strategic Marketing for Hotels and

Restaurants
Stowe Shoemaker, PhD
Cornell University Executive Education Faculty
University of Houston
sshoemaker@uh.edu
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
Objectives
1. Introduce Strategic Marketing System Model the
Framework for the class
2. Review definition of marketing and discuss the future
of marketing
3. Review the buyer purchase model
4. Discuss how to calculate the life time value of the
customer and the value of WOM and why this is
important
Strategic Marketing GM Program (c) Stowe Shoemaker, Ph.D
Objectives
5. Discuss market positioning
6. Discuss a framework for developing a
marketing plan
7. Review communication strategies
How to Reach Goals
Lecture
Case studies
Discussion
Group 3 day project: Develop a marketing
strategy for Carvel Ice Cream
Carvel Ice Cream

Case to be presented the last day of class
Award for best group presentation: Cornell
Marketing Strategy Contest
Participants will vote:
Incorporates class material (negates 5 forces model,
SWOT, presents measures to show success, etc.)
Originality
Likelihood of success
not at all
#1
Creativity
Originality
Incorporates class
information
This group had fun
Will build a CA
Presents measures to
monitor success
TOTAL
1 2 3 4 5 6 7
#2
#3
does extremely well

#4
#5
Strategic Marketing GM Program (c) Stowe Shoemaker, Ph.D
The Marketing Plan
Some Possible Marketing Plan

Objectives
Changes in marketing direction (defined by
competitive set or business mix or both)
Defensive or offensive marketing moves
New opportunities (new market segments)
Other specific product line objectives (e.g.,
increase food, beverage, spa or other revenues)
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Objectives
Market share objectivesoverall and by market
segment, such as geographic, demographic,
psychographic, group, FIT, package, etc.
Pricing objectives (defined as an indexed value
against other properties in the competitive set)
Sales and promotion objectives
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Objectives
Advertising objectives (in terms of awareness
and/or intention)
Channel, distribution and intermediary
objectives, such as the percentage of business
from travel agents
Research objectives
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Handout on Template for a

Marketing Plan
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Review Basics of Marketing
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The Concept of Marketing

Definition of Marketing:
identifying evolving consumer preferences, then
capitalizing on them through the creation,
promotion and delivery of products and services
that satisfy the corresponding demand. This is done
by solving the right customers problems, giving
them what they want or need at the time and place
of their choosing, and at the price they are willing
to pay.
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4 P of Marketing
P
P
P
P
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Services versus Goods

Differences between goods versus services:
Heterogeneity
Simultaneous production and consumption
Perishability
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Types of Products/Services
Search qualities
Experience qualities
Credence qualities
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Continuum of Evaluation for

Different Types of Products
Most
Services
Most
Goods
Easy to evaluate
High in search
qualities
High in experience
qualities
Medical diagnosis
Auto repair
Root canals
Legal services
Television repair
Child care
Haircuts
Vacations
Restaurant meals
Automobiles
Houses
Furniture
Jewelry
Clothing
Difficult to evaluate
High in credence
qualities
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Tangibility Spectrum
Salt
Soft Drinks
Detergents
Automobiles
Cosmetics
Fast-food
Outlets
Intangible
Dominant
Tangible
Dominant
Fast-food
Outlets
Advertising
Agencies Airlines
Investment
Management
Consulting
Teaching
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7 P of Marketing
P
P
P
P
P
P
P
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Fourteen Cs of Marketing
Customer
Categories of offerings
Capabilities of firm
Cost, profitability and
value
Control of process
Collaboration within
firm
Customization
Communications
Customer measurement
Customer care
Chain of relationships
Capacity management
Competitors
Cost to the customer
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Carvel Ice Cream

and the 14 Cs
Identify as many of the 14Cs in the case.
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The Evolution of Marketing

Profitability
d
Targete
ons
Promoti
Sales
cy
n
e
u
Freq rams
Prog
ge s
d
le hip
w
o ons
n
K l at i
Re
d ips
n
a h
Br ions
t
a
l
Re
Strategic
Tactic
Push traffic,
no targeting,
discounts, little
measurement.
Still push,
discounts,
some
measurement.
Price driven,
segmented,
transaction
based.
Added value to
product, support
price, customized,
strengthen brand.
Knowledge,
Help support
VAR in
loyalty
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Interactive Marketing
Refers to any activity that uses the Internet to
advertise and sell goods and services to
consumers, business, or nonprofit organizations
and government
Marketers Toolkit by Harvard Business School
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Contextual Marketing
Give the customer what she wants and make it
useful and accessible so she can take action
when it matters to her
Widget: widgets are basically little websites that
display directly on the Dashboard, rather than in
a web browser.
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Examples of Contextual Marketing:

Widgets
Movable mini-applications used by consumers to
craft custom experiences
http://www.clearspring.com/docs/introduction
http://www.kickapps.com/platform/
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Ultimate Travel Widget
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Ultimate Travel Widget Travel Widgets presents the "Ultimate Travel

Widget". Now you can book your Hotels, Air, Cruises, Hotel and Air
Packages all in one widget. No more clutter of 3 or 4 widgets to fill up
your Dashboard. The Ultimate Travel widget utilizes World Choice Travel,
a Travelocity company, so you can book with confidence. Air fares are
compared with 28 sites. Hotels from over 20,000 locations and every
cruise line can be searched for reservations. The 4 tab interfaces allows
you to toggle quickly from section to section. World wide travel and many
currencies supported. Download the Ultimate Travel Widgets today and
start traveling right from your dashboard.
http://www.jadewatertravel.com/Ultimate_Travel.zip
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http://www.nimblefish.com/
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The Purchase Cycle

Brand
Advocate
WOM
Repeat Purchase
Loyalty
Circle
Satisfaction
Trial (Initial Purchase)

Dissatisfaction
Barriers
a.
b.
c.
Switching costs
Perceived risks
Lack of information
Need
Recognition
Awareness/
Search/Evoked Set
Complain
Switch
Why Switch?
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Marketing Myopia
Management defines an industry, or a product,
or a cluster of know-how so narrowly as to
guarantee its premature senescence.
Examples: railroads, should be transportation;
oil business, should be defined as ?; buggy
whip manufacturer should be defined as? Hotel
business defined as ?
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Sales versus Marketing

Selling
Marketing
Focuses on the needs of

seller;
Preoccupied with need to
convert the product to
cash
you get rid of it, we will
worry about the profits
Focuses on the needs of

the buyer;
Satisfying the needs of
the customers by means
of the product and the
whole cluster of things
associated with creating,
delivering, and finally
consuming it.
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Sales versus Marketing

Selling
Marketing
What is offered for sale is

determined by the firm
Marketing minded firms

try to create valuesatisfying goods and
services that consumers
want to buy
What is offered for sale is
determined by the buyer
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Reasons for Marketing Myopia

1. The belief that growth is assured by an
expanding and more affluent population
2. The belief that there is no competitive
substitute for the industrys major product
3. Too much faith in mass production and in the
advantages of rapidly declining unit costs as
output rises
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Reasons for Marketing Myopia

4. Too much faith in mass production and in the
advantages of rapidly declining unit costs as
output rises
5. Preoccupation with a product that lends itself
to carefully controlled scientific
experimentation, improvement, and
manufacturing cost reduction.
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Reasons Examined by Looking at

Three Industries
Petroleum
Automobiles
Electronics
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Overview of Strategy and

Competitive Advantage
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Alice:
Will you tell me please, which way I

ought to go from here?
Cheshire Cat:
Alice:
That depends a good deal on

where you want to get to.
I dont much care
Cheshire Cat:
Then it doesnt matter which way

you go.
Lewis Carroll, Alice in Wonderland
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Strategy
The science and art of military command as
applied to overall planning and conduct of
largescale combat operations
The determination of basic longterm goals and
objectives of an enterprise and the adoption of
courses of action and the allocation of resources
necessary for carrying out these goals
45
Strategy versus Tactics

Objective:
Increase revenues by being
perceived as hotel of choice
Strategy:
Provide greater value
Tactic:
Always have their reservation
and room ready; call them by name; make
sure they receive their wake-up call; focus on
dimensions of service quality
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Levels of Strategic Planning

Corporate-level strategy
Focus on long-term viability
Business-level strategy
Focus on overall theme of the company and its
position
Functional-level strategy
Focus on improving day-to-day operations
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Strategy Checklist
1.
2.
3.
4.
5.
Is it identifiable and clear in words and practice?

Does it fully exploit opportunity?
Is it consistent with competence and resources?
Is it internally consistent, synergistic?
Is it a feasible risk in economic and personal
terms?
6. Is it appropriate to personal values and
aspirations?
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Strategy Checklist
7. Does it provide stimulus to organizational
effort and commitment?
8. Are there indications of responsiveness of the
market?
9. Is it based on reality to the customer?
10.Is it workable?
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Why Strategic Plans Fail
Inadequate preparation of line managers

Poorly defined business units
Vague goals
Inadequate databases for action planning
Substandard linking of strategy with other
control systems
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Definition
Something that a firm has or does that allows
the firm to earn higher than average profits,
capture higher than average market share, and
create a non level playing field;
Gained by offering consumers something that
they value that is currently not being given to
them
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Distinctive competencies that lead to CA:
Management knowledge
Culture
Location
Access to resources
Exceptional employees
Special patents
Access to capital
Brand name
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Value Chain
Primary Activities that enable creation of the project
Manufacturing
Marketing
Secondary Activities that enable primary activities to take
place
Infrastructure
R&D
Materials Management
Human Resources
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Building Blocks of CA
Efficiency
Quality
Innovation
Customer Responsiveness
Size
Value
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Building Blocks Not Independent

Very often a firm focuses on two or three at the
same time.
For instance, consider Harrahs Entertainment
size
marketing efficiency
customer responsiveness
Value
Efficiency
Quality
Innovation
Customer
Responsive
Size
Taco Bell
The
components of
the loyalty
circle
Franchise
Infrastructure
Manufacturing
R&D
Marketing
customer
Components
How to loyalty; life-time of a product;
value
GAP model
create
Materials
Management
Human
Resources
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Mission Statements
articulates its main philosophical values
according to Peter Drucker, mission-statement
development is the time to ask:
who are our markets (customers)

what is the value to customer (value of product)
what will our business be
what should our business be
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Vision Statements
A road map showing the route a company
intends to take in developing and strengthening
its business. It paints a picture of a companys
destination and provides a rationale for going
there.
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Strategic Vision versus Mission

Statement
Strategic vision portrays a companys future
business scope (where are we going)
Mission statement typically describes its present
business scope and purpose (who are we, what
do we do, and why we are here.)
61
Intercontinental Hotel Group

Corporate Information/
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Starwood Hotels and Resorts

Company Values
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McDonalds
Company Values
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Measuring Success of Strategy
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Five Principles of the Strategy-Focused

Organization
1. Mobilize Change through Executive Leadership
2. Translate the strategy into operational terms
Use language that everyone understands
3. Align the Organization to the Strategy
Scorecard cascades the strategy to all parts of the
organization and align resources needed to
accomplish the strategy
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Five Principles of the Strategy-Focused

Organization
4. Motivate to Make Strategy Everyones Job
The reward and recognition system is used to align
individual behavior with performance objectives called for
by the strategy
5. Govern to Make Strategy a Continual Process

Strategy execution is linked to the budget and a reporting
system based on scoreboard measures is used to provide
feedback on strategic performance
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Balanced Scorecard
Stems from the recognition that exclusive
reliance on financial performance measures
induce company managers to take actions that
make the companys near-term financial
performance look good and to neglect the lead
indicators.
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Balanced Scorecard
The solution: measure the performance of a
companys strategy and make strategic
objectives an integral part of a companys set of
performance targets.
Objectives to Measure Strategy

Financial Objectives
Strategic Objectives
An x % increase in annual
revenue
Winning a x % of market share
Annual increases in after-tax

profits of x percent
Achieving lower costs
Annual increases in earnings per

share of x percent
Overtake keep competitors on

product performance or quality
or customer service
Profit margins of x percent
Achieve technological leadership
An x percent of return on
investment
Strengthen the firms brand name
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Hilton Only the Customer Can:

Tell us whats working and can choose us over
other hotels.
Answer the tough questions:
Are we doing things right?
Are we doing the right things?
Are we doing the right things right?
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Hilton - continued
Huckestein defined two broad, new strategies

1. Pursue an aggressive growth plan to ensure
that a Hilton was always nearby
2. Install a new performance management
system to help standardize processes and
deliver consistent quality across every Hilton
property
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Hilton Value Drivers

Operational effectiveness
Efficiently Hilton hotels convert revenue into profit through
hotel operations, processes, and procedures
Revenue maximization
REVPAR targets
Value proposition
How well managers create a service environment that
increases repeat visits among guests and retention of key
staff members
Hilton - continued
Operational Effectiveness
EBITDA
Revenue Maximization
RevPAR; RevPAR Index
Value Proposition
Overall guest satisfaction scores;

overall guest loyalty score;
overall staff satisfaction score;
average quality score through
mystery shopping
Brand Management
Score on compliance with brand

standards from on-site
inspections
Learning and growth of staff
Orientation training, skills

training, diversity plan
performance
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Exercise
Develop mission statement for CIC
Develop vision statement for CIC?
How do employees know about the vision and
mission?
How are employee/corporate rewards tied to
these statements?
How do you know if you are meeting the
mission and vision statements?
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Need to Understand Environment as Part of

Strategic Planning Process
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SWOT
Strengths
Internal to the organization
Things the firm is good at
Weaknesses
Internal to the organization
Things the firm is not good it
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SWOT
Opportunities
External to the firm
Examine the different environments
Threats
External to the firm
Examine the different environments

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1

Strategic Marketing for Hotels and

Strategic Marketing GM Program (c) Stowe Shoemaker, Ph.D

How to Reach Goals

Carvel Ice Cream

does extremely well

Strategic Marketing GM Program (c) Stowe Shoemaker, Ph.D

The Marketing Plan

Some Possible Marketing Plan

Some Possible Marketing Plan

Some Possible Marketing Plan

Handout on Template for a

Review Basics of Marketing

The Concept of Marketing

Services versus Goods

Continuum of Evaluation for

Carvel Ice Cream

The Evolution of Marketing

Examples of Contextual Marketing:

Ultimate Travel Widget

Ultimate Travel Widget Travel Widgets presents the "Ultimate Travel

The Purchase Cycle

Trial (Initial Purchase)

Sales versus Marketing

Focuses on the needs of

Focuses on the needs of

Sales versus Marketing

What is offered for sale is

Marketing minded firms

Reasons for Marketing Myopia

Reasons for Marketing Myopia

Reasons Examined by Looking at

Overview of Strategy and

Will you tell me please, which way I

That depends a good deal on

I dont much care

Then it doesnt matter which way

Strategy versus Tactics

Levels of Strategic Planning

Is it identifiable and clear in words and practice?

Why Strategic Plans Fail

Inadequate preparation of line managers

Building Blocks Not Independent

who are our markets (customers)

Strategic Vision versus Mission

Intercontinental Hotel Group

Starwood Hotels and Resorts

Measuring Success of Strategy

Five Principles of the Strategy-Focused

Five Principles of the Strategy-Focused

5. Govern to Make Strategy a Continual Process

Objectives to Measure Strategy

Winning a x % of market share

Annual increases in after-tax

Achieving lower costs

Annual increases in earnings per

Overtake keep competitors on

Profit margins of x percent

Achieve technological leadership

Strengthen the firms brand name

Hilton Only the Customer Can:

Huckestein defined two broad, new strategies

Hilton Value Drivers