Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice.

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Computer in the future may weigh no more than 1.5 tons. - Popular Mechanics, 1949- Foreword: Direct and Online Marketing: Building Customer Relationship

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Define direct marketing and discuss its benefits to customer sand companies. Identify and discuss the major forms of direct marketing. Explain how companies have responded to the Internet and other powerful new technologies with online marketing strategies. Discuss how companies go about conducting online marketing to profitably deliver more customer value. Understand how databases can be used to develop direct marketing campaigns. After reading this chapter, you should be able to: OBJECTIVES

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Wiley Eiya, tribal chief of the Huli tribe in Papua New Guinea (PNG), is online as he presents his Web site on a laptop screen at the International Tourism Fair in Berlin. The Internet allows places such as PNG, with a low tourism budget, access to tourists around the world. While the government has not made a major effort to promote tourism in PNG, individual tour operators can have a presence on the Internet. Tourists all over the world are discovering remote destinations through the Internet. Papua New Guinea Direct & Online Marketing: Customer Relationships tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Papua New Guinea is a remote island off coast of Australia with a population of a little over 5 million. –most living in rural villages With over 860 distinct tribal languages, PNG is home to more than a fourth of the world’s languages. Settled ten thousand years ago, its early residents credited as being the first farmers on earth. Europeans did not come to the country until the 1930s, and tribes of the highlands had little contact with the outside world until the mid-20th century. Papua New Guinea Direct & Online Marketing: Customer Relationships tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Rich culture is only one of many tourist attractions, as PNG is rapidly becoming known for diving that rivals the diving at the Great Barrier Reef. Other activities are white-water rafting in mountain streams and coastal and river cruising offer tourists the comfort of modern ships. –it also has many unique species of birds & mammals Though potential for tourism in PNG is great, the government continues to focus on other industries. Tourism potential is largely untapped, with only about 20,000 tourists yearly. Papua New Guinea Direct & Online Marketing: Customer Relationships tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 While the Internet provides PNG great opportunity to build its tourism, growth still has to be managed. A country such as Papua New Guinea must make sure it has the infrastructure to support tourism. –and policies in place to create sustainable tourism activities that don’t destroy its culture & natural beauty The Internet can be a two-edged sword, bringing more tourists, but forcing the destination to ensure it is able to support the tourists when they arrive. Papua New Guinea Direct & Online Marketing: Customer Relationships tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Many of the marketing & promotion tools examined in previous chapters were developed in the context of mass marketing. –targeting broad markets with standardized messages and offers distributed through intermediaries Many companies are adopting direct marketing as a primary marketing approach. Direct marketing consists of direct connections with carefully targeted individual consumers to obtain an immediate response and cultivate lasting customer relationships. Introduction Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Direct marketers communicate directly with customers, often on a one-to-one, interactive basis. –they tailor marketing offers & communications to narrowly defined segments or even individual buyers Airlines, hotels, and others are building strong customer relationships through award programs, using customer database to match offers more carefully to individual customers. They are approaching a stage where offers are sent only to those customers and prospects most able, willing, and ready to buy the product. Description Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Beyond brand and relationship building, direct marketers usually seek a direct, immediate, and measurable consumer response. In 2006 US companies spent $166.5 billion on direct marketing, for an estimated $1.94 trillion in sales, making it the fastest growing form of marketing. The DMA estimates direct marketing sales will grow 6.3% annually through 2011, compared with a projected 4.8% annual growth for total US sales. Growth and Benefits Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Direct marketing is becoming more web-oriented, and Internet marketing now accounts for about 18% of direct marketing-driven sales. Whether employed as a complete business model or as a supplement to a broader integrated marketing mix, direct marketing brings many benefits to both buyers and sellers. Growth and Benefits Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 For customers, direct marketing is convenient, easy, and private & direct marketers never close. –travelers can book airline flights & reserve hotel rooms on web sites at any time of the day or night –managers can learn about products & services without tying up time with salespeople Unrestrained by physical boundaries, marketers can offer an almost unlimited selection to consumers almost anywhere in the world, and information about companies, products & competitors. Benefits to Customers Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Companies use direct marketing to access guests and gain information that will develop systems & products to better serve their guests. Direct marketing is interactive & immediate & buyers interact with sellers by phone or on the web. –to create the configuration of information, products, or services they desire & then order them on the spot Direct marketing gives consumers a great measure of control, as they decide which catalogs they will browse and which web sites they will visit. Benefits to Customers Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Direct marketing is a powerful tool for building customer relationships. Using database marketing, marketers can target small groups or individual consumers & promote their offers through personalized communications. Because of the one-to-one nature, companies can learn more about customer needs & tailor products and services to specific tastes. –customers can ask questions & volunteer feedback Direct marketing offers sellers a low-cost, efficient, speedy alternative for reaching their markets. Benefits to Sellers Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Direct marketing has grown rapidly in business-to- business marketing, partly in response to ever- increasing costs of marketing via the sales force. It permits privacy because the marketer’s offer & strategy are not visible to competitors. In periods of low demand, companies can use direct marketing to target known customers and produce quick results. Another benefit of direct marketing is measurability. –a manager can track response to a particular campaign and usually determine the revenue that it produced Benefits to Sellers Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Direct-marketing efforts are measured three ways: –the number of inquiries generated –ratio of conversions or purchases realized from inquiries generated –communication impact Direct marketing can also offer greater flexibility. –allowing marketers to make ongoing adjustments to prices & programs, or make immediate, timely offers Direct marketing is compatible & often works best when used with other elements of the promotional mix in a multiple-stage campaign. Benefits to Sellers Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Direct marketing gives sellers access to buyers that they could not reach through other channels. Internet marketing is a truly global medium that allows buyers & sellers to click from one country to another in seconds. Online direct marketing is an equalizer that independent restaurants, inns, and hotels have against the brands, giving small marketers ready access to global markets. Benefits to Sellers Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Effective direct marketing begins with a good customer database, a relationship-building tool. –data about individual customers or prospects, including geographic, demographic, psychographic & behavioral In consumer marketing, the database might contain demographics, psychographics & buying behavior. In business-to-business marketing, it might contain products & services the customer has bought; key contacts, past volumes & prices and much more. –some of these databases are huge, like Harrah’s Entertainment 30 terabytes of customer information Introduction Customer Databases and Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 See this feature on page 473 of your textbook. tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Companies use their databases to locate good potential customers & generate sales leads. –they can mine their databases to learn about customers in detail & fine-tune market offerings –they can target communications to the special preferences & behaviors of segments or individuals A database management problem in the hospitality industry is that a company may have a number of databases that do not talk to each other and/or are not relational. Description Customer Databases and Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 A hotel could have sales department, reservations, accounting, and front-desk databases. –if they not integrated, it is very costly to develop a complete profile of each customer Consolidation in the hotel industry has created a need for companies to build a centralized data warehouse for all their brands, for the purpose of data mining. –which stores data the company receives in a central repository –once stored, companies use the relational database to look at relationships in the data Data Mining Customer Databases and Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Data mining is the exploration & analysis of a database by automatic or semiautomatic means to discover patterns or rules. Data mining can predict which customers are most likely to respond to an offer, to segment a market, and identify a company’s most loyal customers. It is not limited to relationships a marketing manager may think exists; it explores all relationships with a variety of techniques, a major benefit. Data mining has increased the effectiveness and efficiency of direct marketing in the industry. Data Mining Customer Databases and Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 To be useful the data stored in a database must be accurate, so it is important that everyone using the database understand the importance of accurate data. A clean database starts with accurate entry, and to be effective, duplicate files have to be combined & addresses must be accurate. Employee training to ensure the database is clean is a critical, ongoing part of an effective system. A well-managed database should lead to sales and customer-relationship gains more than covering cost. Maintenance Customer Databases and Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Finally, you should answer the question: –“If you were a customer, why would you want to be in our database?” Answering this tells you if your database has a strategic focus or used mainly for tactical purposes. –most marketers use their database tactically, one of the most frequent uses being direct marketing Direct marketing campaigns often target recent customers, inviting returns or offering incentives. –as well as encouraging loyal customers to come during soft periods Use Customer Databases and Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 While there is nothing wrong with this use, and it often produces worthwhile results, much of the power of database marketing will be untapped. The database is also used for service recovery, and companies who use a database to provide the guest with a better experience are gaining a major benefit. –companies need to provide benefits to customers for being in their database Use Customer Databases and Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Direct marketing is an important tool in customer relationship management (CRM) programs. Airlines, hotels, travel agents, restaurants, and rental car companies operate in very competitive markets, and the major way to grow market share is to steal it from the competition. Managers recognize that spending to develop loyalty among current customers can be more effective than spending to attract new guests, which costs four to seven times as much. Introduction Direct Marketing Builds Relationships tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Relationship marketing is creating, maintaining, and enhancing strong relationships with customers. –the concept has expanded to include relationships with all stakeholders who can help the company serve its customers Description Direct Marketing Builds Relationships tab Table 16-2 Relationship Marketing compared to Traditional Marketing.

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Relationship marketing has a long-term orientation, to deliver long-term value to customers, and measure of success in long-term customer satisfaction. It requires that all departments work together to serve the customer, and involves building relationships at many levels, resulting in high customer loyalty. –economic, social, technical, legal Description Direct Marketing Builds Relationships tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 –Basic - selling the product with no follow-up –Reactive - the company sells the product & encourages the customer to call with questions or problems –Accountable - the company’s rep phones the customer after the booking to check-up & answer questions –Proactive - the rep or others in the company phone the customer from time to time with suggestions about improvements that have been made or creative suggestions for future events –Partnership - the company works continuously with the customer and others to discover ways to deliver better value Five Levels of Customer Relationships Direct Marketing Builds Relationships tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 –The first relies primarily on adding financial benefits to the customer relationship –The second approach is to add social, as well as financial benefits –The third is to add structural ties, as well as financial and social benefits Three Customer Value-Binding Approaches Direct Marketing Builds Relationships tab A company can adopt any of three customer value-binding approaches use to develop stronger customer bonding and satisfaction: Building relationships with customers by creating value is part of relationship marketing.

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Traditional forms of direct marketing in hospitality are direct-mail, telephone, and kiosk marketing. Direct-mail marketing - involves sending an offer, announcement, reminder, or other item to a person at a particular address. By far the largest direct marketing medium, the DMA reports direct mail (catalog & noncatalog) drives over a third of all US direct marketing sales. E-mail and other new forms deliver direct mail at incredible speeds compared to the post office’s “snail mail” pace. Direct Mail Traditional Forms of Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Telephone Marketing - involves using the phone to sell directly to consumers and business customers. –now accounting for 22% of direct marketing sales Marketers use outbound telephone marketing to sell directly to consumers & businesses. Inbound toll-free numbers to receive orders from television and print ads, direct mail, or catalogs. The use of toll-free numbers has taken off in recent years, and to accommodate this growth, additional toll-free area codes, such as 888, 877 & 866, have been added. Tele-Marketing Traditional Forms of Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 The explosion in unsolicited outbound telephone marketing annoyed many consumers, and in 2003, U.S. lawmakers responded with a National Do-Not- Call Registry, managed by the Federal Trade Commission (FTC). Consumers responded enthusiastically & have to date, registered more than 132 million numbers at www.donotcall.gov or by calling 888-382-1222. www.donotcall.gov –businesses that break do-not-call laws can be fined up to $11,000 per violation Tele-Marketing Traditional Forms of Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Many companies are placing information and ordering machines—called kiosks—in stores, airports, and other locations. –from self-service hotel & airline check-in devices to in-store ordering of merchandise not in sold the store Business marketers also use kiosks. –Dow Plastics places kiosks at trade shows to collect sales leads & provide information on its 700 products Kiosk Marketing Traditional Forms of Direct Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 E-mail - customer databases contain a field for an e-mail address. Databases can generate mailing addresses; they can also create e-mailing lists. Given its targeting effectiveness and low costs, e- mail can be an outstanding marketing investment. According to a recent study, return on e-mail marketing investment is $52 for every dollar spent. –compared with direct mail at $15 per dollar spent E-mail is a quick, good way to sell excess inventory. –Holland America Lines sent out 250,000 e-mails one May to try to fill up its spring and summer cruises E-Mail Digital Direct Marketing Technologies tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 E-mail marketers walk a fine line between adding value for consumers & being intrusive. The explosion of spam—unsolicited, unwanted commercial e-mail messages that clog our inboxes— has produced consumer irritation and frustration. –according to one research company, spam now accounts for 88% of all e-mail sent A recent study found that the average consumer received four thousand spam messages a year. –more & more e-mail goes unopened & gaining permission to send someone e-mail is becoming more important E-Mail - Spam Digital Direct Marketing Technologies tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Greeting should be personalized & other persons being sent the same message should not be listed. Identify the the company sending the e-mail. –if an outside supplier is used, it is important that the organization sponsoring the e-mail has its name listed before the supplier Subject needs to be relevant to the reader. E-mails need to be short, with no more than 65 characters per line, to avoid formatting problems. Text format is preferred, because some browsers cannot accept enhanced HTML messages. E-Mail - Effectiveness Checklist Digital Direct Marketing Technologies tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 More than 230 million Americans now subscribe to wireless services, so many marketers view mobile phones as the next big direct marketing medium. A growing number of consumers are using their cell phones as a “third screen” for messaging, web surfing, watching downloaded videos, and e-mail. Some companies are customizing 10-second video ads that are edging their way onto mobile phones. Wireless gadgets are always-on, ever-present, and users can respond instantly to offers. –the mobile phone is very personal and always with you Mobile Phone Marketing Digital Direct Marketing Technologies tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Companies must use mobile marketing responsibly or risk angering already ad-weary consumers. –most people are initially skeptical about cell phone ads They often change their minds if the ads deliver value, useful information, entertaining content, or discounted prices and coupons. A recent study found that 42% percent of cell phone users are open to mobile advertising, if it’s relevant. –used properly, mobile marketing can greatly enrich the buyer’s experience Mobile Phone Marketing - Responsibility Digital Direct Marketing Technologies tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Podcasting and vodcasting are the latest on-the-go, on-demand technologies. –podcast derives from Apple’s now-everywhere iPod Consumers can download audio (podcasts) or video files (vodcasts) to an iPod or other handheld device & play them whenever, wherever they wish. They can search for podcast topics through sites like iTunes or podcast networks such as PodTrac, Podbridge, or PodShow. –sitcom episodes, current sports features, National Public Radio shows, latest music videos, or commercials & more Podcasts and Vodcasts Digital Direct Marketing Technologies tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Interactive TV (ITV) lets viewers interact with television programming and advertising using their remote controls. –in the past, ITV has been slow to catch on Satellite broadcasting systems such as DirecTV, Echostar, and Time Warner are now offering ITV. –it appears poised to take off as a direct marketing medium As with other forms, marketers must target their direct marketing offers carefully, bringing real value to customers rather unwanted intrusions. Interactive TV Digital Direct Marketing Technologies tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Much of the world’s business today happens over digital networks connecting people & companies, with a dramatic impact on buyers and the marketers who serve them. The web has fundamentally changed customer notions of convenience, speed, price, product information, and service. –it has given marketers a whole new way to create value for customers and build relationships with them US 2008 Internet household penetration reached 69% –almost 500 million worldwide now have Internet access The Internet Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Shows are the four major online marketing domains –B2C (business to consumer); B2B (business to business) –C2C (consumer to consumer); C2B (consumer to business) Domains Online Marketing tab Figure 16-1 Online domains.

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 The popular press has paid the most attention to business-to-consumer (B2C) online marketing— selling goods and services online to final consumers. Online consumer buying continues to grow at a healthy rate, as 65% of US online users now use the Internet to shop. –consumers can buy almost anything online—clothing, kitchen gadgets, airline tickets, computers and cars In 2007, U.S. consumers generated an estimated $259 billion in online retail sales, up 18% from the previous year. Business to Consumer (B2C) Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 B2B marketers use B2B Web sites, e-mail, online product catalogs & trading networks, to reach new business clients, serve current ones more effectively, and obtain buying efficiencies & better prices. Major B2B marketers offer product information, customer purchasing, and support services online. –restaurants use their sites to sell gift cards & take reservations Table 16–4 on page 486 show three basic principles of online marketing which apply to both B2C and B2B online marketing. Business to Business (B2B) Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 The Internet provides a means by which consumers can buy or exchange goods or information directly with one another. In other cases, it interchanges of information via forums appealing to specific special-interest groups. –organized for commercial or noncommercial purposes Currently about 15 million active Web logs, or blogs, online journals which can be about anything, are read by 57 million people. –such numbers give blogs substantial influence Consumer to Consumer (C2C) Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Consumers are finding it easier to communicate with companies by Internet, and most companies now invite prospects and customers to send in suggestions and questions via company web sites. Beyond this, consumers can search out sellers, learn about offers, make purchases & give feedback. –consumers can even drive transactions with business Using Priceline.com, would-be buyers can bid for airline tickets, hotel rooms, rental cars, cruises, and vacation packages, leaving the sellers to decide whether to accept their offers. Consumer to Business (C2B) Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 All companies need to consider moving online, and can conduct online marketing in several ways: –creating a Web site; using e-mail –placing ads and promotions online –setting up or participating in online social networks For most companies, the first step in conducting online marketing is to create a Web site. Setting Up an Online Marketing Presence Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Web sites vary greatly in purpose & content, and Marketers must design an attractive site and find ways to get consumers to visit the site, stay around, and come back often. The most basic type is a corporate (or brand) site, designed to build customer goodwill, collect feedback, and supplement other sales channels. They typically offer a rich variety of information & features in an effort to answer customer questions, build closer customer relationships, and generate excitement about the company or brand. Creating a Web Site Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Other companies create a marketing site to engage consumers in an interaction that will move them closer to a purchase or other marketing outcome. –Expedia, Priceline, and Sheraton are examples To attract visitors, companies aggressively promote their Web sites in line print & broadcast advertising, and through ads & links on other sites. –users are quick to abandon a site that doesn’t measure up Companies must constantly update their sites to stay current & useful, and provide enough excitement to get consumers to stick around, and come back again. Creating a Web Site Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 –Context: site layout and design –Content: text, pictures, sound, and video on the site –Community: ways the site enables user-to-user communication –Customization: the site’s ability to tailor itself to users or to allow users to personalize the site –Communication: ways the site enables site-to-user, user- to-site, or two-way communication –Connection: degree to which the site is links to other sites –Commerce: capabilities to enable commercial transactions Creating a Web Site - The Seven Cs of Design Online Marketing tab To attract new visitors & encourage revisits, online marketers should pay attention to:

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 To keep customers coming back to the site, companies need to embrace yet another “C”: –constant change Ultimately, web sites must be useful, because when surfing & shopping, most people prefer substance over style and function over flash. Effective Web sites contain deep, useful information, interactive tools to help buyers find & evaluate products, links to other related sites, changing promotional offers & entertaining features lending relevant excitement. Creating a Web Site Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Major forms of online advertising include display ads, search-related ads, and online classifieds. Online display ads might appear anywhere on a user’s screen, with the most common form being banners, found at the top, bottom, left, right, or even center of a web page. –interstitials are display ads appearing between screen changes on a web site, while a new screen is loading Visit marketwatch.com and you’ll probably see a ten-second ad for Visa, Verizon, Dell, or another sponsor before the home page loads.marketwatch.com Placing Ads and Promotions Online Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Pop-ups are online ads that appear suddenly in a new window in front of the window being viewed. –these can multiply out of control, a major annoyance Internet services & web browser providers have developed applications to block most pop-ups, so many advertisers have now developed pop-unders. –new windows that evade pop-up blockers by appearing behind the page you’re viewing As broadband access increases, many companies are developing rich media display ads, which use animation, video, sound, and interactivity. Placing Ads and Promotions Online Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Another hot growth area is search-related ads (or contextual advertising), in which text-based ads and links appear alongside search engine results on sites such as Google and Yahoo! –advertisers buy search terms from the search site and pay only if consumers click through to their site Search-related ads account for some 42% of all online advertising expenditures. –more than any other category of online advertising Online marketers also use viral marketing, the Internet version of word-of-mouth marketing. Placing Ads and Promotions Online Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 The popularity of the Internet has resulted in a rash of online social networks or web communities. –over 100 million people visit a social network daily These days, it seems, almost everyone is buddying up on MySpace or Facebook, tuning into the hottest videos at YouTube, or even living a surprisingly real fantasy life as an avatar on Second Life. Participating successfully in existing online social networks presents challenges, as online social networks are new & results are hard to measure. Creating or Participating in Online Social Networks Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 The company’s goal is to make the brand a part of consumers’ conversations and their lives. –web communities are largely user controlled & marketers can’t simply muscle into online interactions Rather than intruding, marketers must learn to become a valued part of the online experience. –they need to earn the right to be there Listening to the conversation customers are having about your operation can provide valuable information—and free marketing intelligence! Creating or Participating in Online Social Networks Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Ardent apostles envision a time when Internet and online marketing will replace magazines, news papers, and even stores as sources for information and buying –most marketers hold a more realistic view Online marketing is successful for some companies, and creates a good business model for retailers such as Travelocity and Orbitz. For most companies, online marketing will remain just one important approach that works alongside others in a fully integrated marketing mix. Promises and Challenges of Online Marketing Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Most e-marketers have become skilled at collecting and analyzing detailed consumer information, and can easily track site visitors. Many consumers who participate in web activities provide extensive personal information, which may leave them open to information abuse if companies make unauthorized use of the information. Online privacy is perhaps the #1 e-commerce concern, and many consumers and policy makers worry that marketers have stepped over the line and are violating consumers’ right to privacy. Legal and Ethical Issues Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 In response to such online privacy and security concerns, the federal government is considering legislative actions to regulate how Web operators obtain and use consumer information. Many companies have responded to consumer privacy & security concerns with actions of their own, and have conducted voluntary audits of their privacy and security policies. It is important to protect the privacy and rights of consumers, as trust is one of the most important assets of a manager and a company. Legal and Ethical Issues Online Marketing tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Banners. Banner-shaped ads found at the top, bottom, left, right, or center of a Web page. Business to business (B2B) online marketing. Using B2B trading networks, auction sites, spot exchanges, online product catalogs, barter sites, and other online resources to reach new customers, serve current customers more effectively, and obtain buying effectiveness and better prices. Business to consumer (B2C) online marketing. The online selling of goods and services to final consumers. KEY TERMS tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Consumer to business (C2B) online marketing. Online and exchanges in which consumers search out sellers, learn about offers, initiate purchases, sometimes even driving transaction terms. Consumer to consumer (C2C) online marketing. Online exchanges of goods and information between final consumers. Corporate (or brand) Web site. Web sites that seek to build customer goodwill and to supplement other sales channels rather than to sell the company’s product directly. KEY TERMS tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Customer database. An organized collection of comprehensive data about individual customers or prospects, including geographic, demographic, psychographic, and behavioral data. Data warehouse. A central repository of an organization’s customer information. Direct mail marketing. Direct marketing through single mailings that include letters, ads, samples, foldouts, and other“salespeople with wings” sent to prospects on mailing lists. KEY TERMS tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Direct marketing. Direct communications with carefully targeted individual consumers to obtain an immediate response and cultivate lasting customer relationships. E commerce. The general term for a buying and selling process that is supported by electronic means, primarily the Intranet. Integrated direct marketing (IDM). Direct marketing campaigns that use many vehicles and multiple stages to improve response rates and profits. KEY TERMS tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Internet. The vast and burgeoning global web of computer networks with no central management or ownership. Interstitials. Online display ads that appear between screen changes on a Web site, especially while a new screen is loading. Marketing Web site. Web sites designed to engage consumers in an interaction that will move them closer to a purchase or other marketing outcome. KEY TERMS tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Online advertising. Advertising that appears while consumers are surfing the Web, including display ads, search related ads, online classifieds & other forms. Online marketing. Company efforts to market products and services and build customer relationships over the Internet. Pop-unders. New windows that evade popup blockers by appearing behind the page being viewed. KEY TERMS tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Pop-ups. Online ads that appear suddenly in a new window in front of the window being viewed. Search related ads (or contextual advertising). Text based ads and links that appear alongside search engine results on sites such as Google and Yahoo! Telephone marketing. Using the telephone to sell directly to customers. KEY TERMS tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Viral marketing. The Internet version of word of mouth marketing — Web sites, videos, email messages, or other marketing events that are so infectious that customers will want to pass them along to friends. KEY TERMS tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Sign up for a frequency club for hospitality or travel organization. (If you cannot find one, you can go to the book’s Internet site and sign up online.) –what information did they request from you? –did the information seem useful? Is there information they should have asked for that they did not? Did they ask you if it was all right if they sent you information? –see if you receive any response back from the company after signing up EXPERIENTIAL EXERCISES Try This ! tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 Support for this exercise can be found on the Web site for Marketing for Hospitality and Tourism, www.prenhall.com/kotler www.prenhall.com/kotler INTERNET EXERCISES Try This ! Go to two Web sites for the same type of hospitality or tourism organization. – go to two restaurants, two destination marketing organizations, etc. Evaluate the Web sites according to the “ 7 Cs ” of effective Web site design. tab

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 16 END CHAPTER END

Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice.

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Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice.

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Presentation on theme: "Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice."— Presentation transcript:

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