hotel management the extended marketing mix 1. the extended marketing mix
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HOTEL MANAGEMENT
THE EXTENDED MARKETING MIX
1
The Extended Marketing Mix
Marketing Mix - People
People refers to your customer service staff and the attitude and appearance that is reflective of your organization, or perceived by your customer.
You cannot have strong corporate image without good people; good people that listen to your customers, and good people that communicate those comments, concerns, and needs to your entire organization.
Your people can determine whetheryour customer will return.
Marketing Mix - People
How to develop PEOPLE into a competitive advantage?Recruitment and selection – choose the right people
for the right job (with good attitude)Training – product knowledge, customer service skills
and the processesDevelopment – prepare employees to take on greater
roles and responsibilities in futureCompensation – do not underpay in terms
of salaries and benefits.
Marketing Mix - People How to develop PEOPLE into a competitive advantage?
Treatment– treat employees well with dignity and respect
Working environment - provide a safe and comfortable working environment, foster teamwork and cooperation
Empowerment – allow employees the power to make decisions that enables them to serve customers better, make employees accountable for their actions
Marketing Mix - Process Procedure, mechanism and flow of activities by which
services are used. Also the 'Procedure' how the product / service will
reach the end user. Always focus on simplifying the process for your
prospective customers. All processes can be represented by the
Value Chain.
Marketing Mix - Process
How to make PROCESS a competitive advantage?Simplify – make processes simple for customers to
understand and performConvenient – make processes convenient for
customers from their perspective (not the hotel or employees)
Reduce waiting time – do not let guests wait too long for the service
Marketing Mix – Physical Evidence
The elements of 'marketing mix' which customers
can actually see or experience when they use a
service. Contribute to the perceived quality of the service
Marketing Mix – Physical Evidence
Include the following elements:Furniture and furnishing of the rooms and all public
areasFaçade and appearance of hotel building itselfBrochures, paperwork and stationery Lighting and ambience Signage Temperature and noise Appearance of staff Web pages Appearance of advertisements
Marketing Mix – Physical Evidence
Physical Evidence must go in line with the positioning of the hotel.
A luxury hotel MUST appear luxurious! A budget hotel however does not need to
look cheap! Physical evidence must make the customer
perceive the hotel offers value and comfort.
Marketing Mix – Pricing
Three C of PricingCompetitionCostsCustomers’ Comfort Zone
Competition is a dominant factor – Hotel cannot price itself out of the market / The prices must not differ too much from other hotels of similar standards
Marketing Mix – Pricing
Pricing based on Costs1. Determine the operating costs of the hotel2. Classify into fixed costs and variable costs
- fixed costs
– do not change in relation of volume / level of activity- examples: rent, salaries, depreciation, insurance- variable costs
– increase in relation to volume / level of activity- examples: consumable stores, water and electricity
Marketing Mix – Pricing
Pricing based on Costs3. Determine the targeted profits and occupancy level4. Calculate the targeted pricing using the formula:
Fixed Cost + Targeted Profit
Contribution per room night
Where Contribution = Selling Price less Variable Costs
Marketing Mix – Pricing
Pricing based on Costs3. Determine the targeted profits and occupancy level4. Calculate the targeted pricing using the formula:
Fixed Cost + Targeted Profit
Contribution per room night
Where Contribution = Selling Price less Variable Costs
Example : Cost Plus Pricing
A hotelier runs a 50 room budget hotel.
The average room rate is $25 per room night
Budgeted monthly costs are as follows:
Depreciation $2,000
Fixed utilities $1,000
Salaries $17,000
Repairs and maintenance $1,000
Stationery and Printing $1,000
Advertising $3,000
Consumable materials and variable utilities $5 per room night.
Example: Cost Plus Pricing
Calculate the breakeven in room nights and sales.
If the hotelier expects at least 60% occupancy rate, what should he do?
Other Pricing Strategies
Hit or Miss record occupancy rate at each pricing level analyze the collected information periodically to determine which level was
most profitable set rate at the most profitable
Other Pricing Strategies
Percentage increase list rates charged in the previous year adjust for inflation and payroll increase
Pied Piper set rates according to what other hotels in
the area are asking for comparable accommodation