MARKETING FOR HOSPITALITY AND

TOURISM

CHAPTER 1
HOSPITALITY AND TOURISM MARKETING
CDE
YOUR PASSPORT TO SUCCESS
Marketing in a Global Economy
• Today’s successful companies are strongly
customer focused and heavily committed to
marketing.
• Successful hospitality companies know that if
they take care of their customers, market share &
profits will follow.
• You will want to make sure that you deliver
customer satisfaction at a profit.
• This is the simplest definition of marketing.
WHAT IS HOSPITALITY AND
TOURISM MARKETING?
Definition of Marketing
• Many people think of marketing only as selling
and advertising, which is really only a tip of the
marketing iceberg.
– today, marketing must be understood in a sense
of satisfying customer needs
• If the marketer understands customer needs;
develops products that provide superior customer
value; and prices, distributes, and promotes them
effectively, these products will be sought after by
the customer.
The Marketing Mix
• Advertising and sales are components of the
promotional element of the marketing mix.
– other elements include product, price, and distribution,
research, information systems, and planning
• The Four-P framework calls for marketing to decide:
– Product: the product and its characteristics
– Price: set the price
– Place: decide how to distribute the product
– Promotion: choose methods for promoting the product
Products Serving Needs
• If marketers do a good job of identifying
consumer needs, developing a good product,
and pricing, distributing, and promoting it
effectively, the result will be attractive
products and satisfied customers.
Effective Marketing
• The marketing mix must be just that—a mix of
ingredients to create an effective
product/service package for the target market.
• The only way selling and promoting will be
effective is if we first define customer targets
and needs and then prepare an easily
accessible and available value package.
Importance of Marketing
• The hospitality industry is one of the world’s
major industries & in the US, the second
largest employer.
• In response to growing competitive pressures,
hotel chains are relying more on the marketing
director.
THE MARKETING PROCESS
A Five-Step Model

Understand the Design a Construct an

marketplace customer- integrated
marketing
and customer driven program that
needs and marketing delivers superior
wants  strategy  value 

Capture value Build profitable

from customers relationships
to create profits and create
and customer customer
equity  delight 
UNDERSTANDING THE
MARKETPLACE & CUSTOMER NEEDS
Core Marketing Concept
Needs,
wants and
 demands

Tangible
product,
Markets  services &
experiences 

Exchange & Value &

relationships Satisfaction
 
Customer Needs, Wants and Demands

• The most basic concept underlying marketing

is that of human needs. A human need is a
state of felt deprivation
• The second basic concept to marketing is that
of human wants, the form human needs take
as they are shaped by culture and individual
personality.
Customer Needs, Wants and Demands

• People have almost unlimited wants, but

limited resources, and so choose products that
produce the most satisfaction for their money.
– when backed by buying power, wants become
demands
–
Tangible Products, Services, and
Experiences
• Managers of resorts realize their guests
will be leaving with memories of their
stay, and try to create experiences that
will generate pleasant ones.
• 
Customer Value and Satisfaction
• Customer value is the difference between
benefits the customer gains from owning
and/or using a product, and the costs of
obtaining the product.
• Costs can be monetary or nonmonetary & a
very big nonmonetary costs for hospitality
customers is time.
Customer Value and Satisfaction
• Customer expectations are based on past
buying experiences, the opinions of friends,
and market information.
• Marketers must set the right level of
expectations.
– if they set expectations too low, they may satisfy
those who buy but fail to attract new customers
– too high and buyers will be disappointed
–
Exchanges and Relationships
• Exchange is the act of obtaining a desired object from
someone by offering something in return.
• Marketing consists of actions taken to build and
maintain desirable exchange relationships with target
markets.
• Beyond attracting new customers and creating
transactions, the goal is to retain customers and grow
their business with the company.
• The concept of transactions leads to the concept
of a market.
• 
Markets
• A market is a set of actual and potential
buyers of a product.
• Marketing means managing markets to
bring about profitable customer
relationships.
• 
DESIGNING CUSTOMER-DRIVEN
MARKETING STRATEGY
Selecting Customers to Serve
• Marketing management can be defined as the art
and science of choosing target markets and building
profitable relationships with them.
• To design a winning marketing strategy two
important questions require answers:
– What customers will we serve?
(what is our target market)?
– How can we serve these customers best?
(what’s our value proposition)?
• The company wants to select only customers that
it can serve well and profitably.
Choosing a Value Proposition
• A company’s value proposition is the set of
benefits or values it promises to deliver to
consumers to satisfy their needs.
– such propositions differentiate one brand from
another
Marketing Management Orientation

• There are five alternative concepts under

which organizations design and carry out their
marketing strategies:
– production, product, selling, marketing, &societal
marketing concepts
The Production Concept
• One of the oldest philosophies guiding sellers,
the production concept holds that consumers
will favor products that are available & highly
affordable.
– therefore management should focus on production
and distribution efficiency
The Product Concept
• The product concept, like the production
concept, has an inward focus.
• This concept holds that consumers will favor
products which offer the most in quality,
performance, and innovative features.
• Focusing only on the products
can lead to marketing myopia.
The Selling Concept

• The selling concept holds consumers will not

buy enough products unless the organization
undertakes a large selling and promotion effort.
• The concept exists within the hospitality
industry, with overcapacity being a major
contributing factor.
– when owners & top management face overcapacity,
the tendency is to sell, sell, sell
Causes of Overcapacity
• Pride in having the most capacity and false belief
economies of scale will occur as size increases.
• Economic incentives by governments to build a larger
tourism/hospitality infrastructure to create economic
growth.
– tax laws encourage overbuilding because of tax write-offs
• Poor/nonexistent forecasting & planning by owners,
consultants, financial organizations, governments.
– failure to merge revenue & sales/marketing management
• A myth that the travel industry faces almost unlimited
future demand.
The Marketing Concept
• The marketing concept is a recent philosophy
and is being rapidly adopted in the hospitality
industry.
• It holds that achieving organizational goals
depends on determining needs & wants of
target markets and delivering the desired
satisfaction more effectively and efficiently
than competitors.
The Concepts Contrasted
The Societal Marketing Concept
• The newest concept, societal marketing, holds
that the organization should…
– determine the needs, wants & interests of target
markets
– deliver desired satisfactions more effectively and
efficiently than competitors
– in a way that maintains or improves the consumer’s
and society’s well-being
–
PREPARING AN INTEGRATED
MARKETING PLAN
Preparing an Integrated Marketing Plan

• The marketer develops an integrated

marketing program that will actually deliver
the intended
value to target customers.
Preparing an Integrated Marketing Plan
• To deliver its value proposition, the firm must first
create a need-satisfying market offering: Product
• It must decide how much it will charge for the offer:
Price, and how it will make the offer available to target
consumers: Place.
• Finally, it must communicate with customers about the
offer & persuade them of its merits: Promotion.
• The firm must these into a comprehensive, integrated
marketing program that communicates and delivers the
intended value to chosen customers.
• 
BUILDING PROFITABLE
CUSTOMER RELATIONSHIPS
Value-Building Tools - Financial Benefits

• The first relies primarily on adding financial

benefits to the customer relationship.
– airlines offer frequent-flyer programs
– hotels give room upgrades to their frequent guests
– restaurants have frequent-diner programs
Value-Building Tools - Social Benefits
• The second approach is to add social as well as
financial benefits, turning customers into
clients.
– company personnel work to learn individual
customers’ needs and wants
– products and services are individualized &
personalized
Value-Building Tools- Structural Ties

• The third approach is to add structural ties to

the financial and social benefits.
• Structural changes are difficult to implement,
but they are harder for competitors to match.
– they create a competitive advantage until they are
matched
Selective Customer Relationships
• A company should develop relationships
selectively, determining which customers are
worth cultivating.
– because you meet their needs more effectively than
others
– customers who are high on profitability and frequency
deserve management attention.
– those high on profitability but low on frequency can
sometimes be developed in higher frequency customers
–
CUSTOMER RELATIONSHIP
MANAGEMENT
Selective Customer Relationships
• Customer relationship management (CRM) may be
the most important concept of modern marketing.
• It involves managing detailed information about
individual customers, carefully managing customer
“touchpoints” in order to maximize loyalty.
• A customer touch point is any occasion a customer
encounters the brand & product, in actual experience,
personal/mass communication or casual observation
– for a hotel this includes reservations, check-in & out,
frequent-stay programs, room service, business services,
amenities, restaurants, and bars.
The Changing Nature of Customer
Relationships
• Companies are building more direct and
lasting relationships with carefully selected
customers.
– many companies use profitability analysis to weed
out unprofitable customers and target winning ones
• CRM has allowed companies to serve chosen
customers in a deeper, more lasting way.
• 
CAPTURING VALUE FROM
CUSTOMERS
Customer Loyalty and Retention
• The final step in the marketing process
involves capturing value in return, in the form
of current and future sales, market share, and
profits.
• Good CRM creates delighted customers, who
remain loyal and talk favorably to others about
the company.
Customer Loyalty and Retention
• Benefits of customer loyalty come from
continued patronage, reduced marketing costs,
decreased price sensitivity, and partnership
activities.
• Reduced marketing costs are the result of
requiring fewer marketing dollars to maintain
a customer than to create one.
– and the creation of new customers through the
positive word-of-mouth of loyal customers.
Customer Loyalty and Retention
• Lifetime value is the stream of profits a
customer will create in the life of a business
relationship
Growing Share of Customer
• Good CRM can help marketers increase their
share of customer—the share they get of the
customer’s purchasing in their product
categories.
– banks want to increase “share of wallet”
– restaurants want to get more “share of stomach”
– airlines want greater “share of travel”
• Loyal customers have higher propensity to
frequently purchase a wider variety of a
company’s products.
Building Customer Equity
• Customer equity is the discounted lifetime
values of all the company’s current and
potential customers
• Customer equity may be a better measure of a
firm’s performance than current sales or
market share.
– where sales & market share reflect the past,
customer equity suggests the future
–