strategic marketing for hotels and restaurants (c) stowe shoemaker, ph.d 1 strategic marketing for...

Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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Strategic Marketing for Hotels and Restaurants

Stowe Shoemaker, PhD

Cornell University Executive Education Faculty

University of Houston

[email protected]

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

Objectives1. 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


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Objectives

5. Discuss market positioning

6. Discuss a framework for developing a marketing plan

7. Review communication strategies


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How to Reach Goals

• Lecture

• Case studies

• Discussion

• Group 3 day project: Develop a marketing strategy for Carvel Ice Cream


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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

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#1 #2 #3 #4 #5

Creativity

Originality

Incorporates class information

This group had fun

Will build a CA

Presents measures to monitor success

TOTAL

not at all 1 2 3 4 5 6 7 does extremely well

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


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The Marketing Plan


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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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• Market share objectives—overall 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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• 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


Handout on Template for a Marketing Plan


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13


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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

Clo

thin

g

Jew

elry

Fu r

nit u

re

Hou

ses

Aut

omob

i les

Res

taur

ant m

eals

Vac

atio

n s

Hai

r cut

s

Chi

ld c

are

Tel

evis

ion

r epa

ir

Leg

al s

ervi

ces

Roo

t can

als

Aut

o re

pair

Med

ical

di a

gnos

is

Difficult to evaluateEasy to evaluate

{High in search

qualitiesHigh in experience

qualitiesHigh in credence

qualities

{{Most

GoodsMost

Services


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Tangibility Spectrum

TangibleDominant

IntangibleDominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

AdvertisingAgencies

AirlinesInvestment

ManagementConsulting

Teaching

Fast-foodOutlets

Fast-foodOutlets


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7 P of Marketing

• P

• P

• P

• P

• P

• P

• P


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Fourteen C’s 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 Creamand the 14 C’s

• Identify as many of the 14C’s in the case.

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The Evolution of Marketing

Sales

Targeted

Promotions

Frequency

Programs

Push traffic,no targeting,discounts, littlemeasurement.

Still push, discounts, somemeasurement.

“Price” driven, segmented,transactionbased.

Added value toproduct, support price, customized, strengthen brand.

Brand

Relatio

nships

Profitability

Strategic

Knowledge

Relatio

nships

Knowledge,Help support VAR inloyalty

Tactic


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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– Marketer’s 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/


http://www.clearspring.com/docs/introduction

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30


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Ultimate Travel Widget

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


32http://www.nimblefish.com/


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Awareness/Search/Evoked Set

Barriersa. Switching costsb. Perceived risksc. Lack of information

Trial (Initial Purchase)

Satisfaction

Dissatisfaction

Switch

Complain

Repeat PurchaseBrand Advocate

The Purchase Cycle

Why Switch?Need Recognition

WOM

LoyaltyCircle


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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– 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”

• Marketing– 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– What is offered for sale is

determined by the firm

• Marketing– Marketing minded firms

try to create value-satisfying 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 industry’s 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: That depends a good deal on where you want to get to.

Alice: I don’t much care

Cheshire Cat: Then it doesn’t matter which wayyou 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 large‑scale combat operations”

– “The determination of basic long‑term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals”


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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 Checklist1. Is it identifiable and clear in words and practice?

2. Does it fully exploit opportunity?

3. Is it consistent with competence and resources?

4. Is it internally consistent, synergistic?

5. 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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Competitive Advantage


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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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Competitive Advantage• 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 Harrah’s Entertainment– size– marketing efficiency– customer responsiveness


56 Value Efficiency Quality Innovation Customer

ResponsiveSize

Infrastructure

Manufacturing

R&D

Marketing

How to

create

customer loyalty; life-time value

Components of a product; GAP model

Taco Bell The components of the loyalty circle

Franchise

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 company’s destination and provides a rationale for going there.


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Strategic Vision versus Mission Statement

• Strategic vision portrays a company’s 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.”)


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Intercontinental Hotel Group

• Corporate Information/

http://www.ihgplc.com/


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Starwood Hotels and Resorts

• Company Values

http://www.starwoodhotels.com/corporate/company_values.html


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McDonalds

• Company Values

http://www.mcdonalds.com/corp/values.html


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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 Everyone’s JobThe 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 company’s 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

company’s strategy and make strategic objectives an integral part of a company’s set of performance targets.

69Objectives 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 what’s 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 effectivenessEfficiently Hilton hotels convert revenue into profit through hotel operations, processes, and procedures

• Revenue maximizationREVPAR targets

• Value propositionHow well managers create a service environment that increases repeat visits among guests and retention of key staff members

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Hilton - continuedOperational 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

strategic marketing for hotels and restaurants (c) stowe shoemaker, ph.d 1 strategic marketing for...

Documents

marketing plan slide

offensive marketing

marketing direction

future of marketing

d slide

restaurants stowe shoemaker

restaurants c stowe

d objectives