1. The Collins School of Hospitality Management 1 MARKETING PLANNING

2. The Collins School of Hospitality Management 2 Outline Marketing The 4 P’s The 7 P’s Promotion strategy People strategy Physical evidence strategy Process strategy

3. The Collins School of Hospitality Management 3 Marketing Organizations use marketing to develop and sell their products and services. Most firms have a marketing department that carries out the functions of marketing. How to market products and services. The main emphasis is on the marketing mix which is the specific combination of interrelated and interdependent marketing activities that an organization does to achieve its objectives. When we think of the marketing mix we often think of the four P’s. These are sometimes called the controllable variables because they can be manipulated by marketers.

4. The Collins School of Hospitality Management 4 The 4P’s Product Developing objectives and policies for product additions, modifications and deletions. Deciding on what core product and supplementary services to offer. Resolving issues such as what design, branding and positioning to use. Price Developing objectives and pricing policies to be used for product groups in market segments. Place Developing objectives and policies for channels of distribution, Resolving location issues. Promotion Developing objectives and policies for communication with customers. Resolving issues concerning advertising, publicity, personal selling, sales promotion, public relations and direct marketing Source: Adapted from McDonald (1999)

5. The Collins School of Hospitality Management 5 The 7P’s However the 4Ps have been much debated and extended to include other elements. We shall follow Cowell's (1984) approach which is to consider services to have seven elements in the marketing mix (i.e. 7Ps). –Product –Price –Place –Promotion –People –Physical evidence –Process

6. The Collins School of Hospitality Management 6 The Additional P’s People Developing objectives and policies in relation to behavior, attitudes, and interpersonal selling skills in service delivery. Physical evidence Developing objectives and policies for the physical environment, facilitating goods and other tangible clues. Process Developing objectives and policies for the processes, mechanisms and routines used to create and deliver service. Source: Adapted from McDonald (1999) & Cowell (1993)

7. The Collins School of Hospitality Management 7 Marketing Mix Remember that by adapting the marketing mix elements, you can develop a marketing program that achieves your objectives. The marketing mix elements will often alter as a product-market changes, and a business continues to look for ways to be successful. Here we will look at promotion, people, physical evidence and process.

8. The Collins School of Hospitality Management 8 Topic 1 : Promotion Strategy Examine the communications process and describe the two parties that are involved, the sender (usually the business) and the audience (the customers). 6 promotional tools that restaurants can use in a promotion strategy: advertising, publicity, direct marketing communications, sales promotion, personal selling and public relations, Topic 2: People Strategy Employees of service businesses The service encounter and the role of internal marketing. Customers and their 3 roles: as producers of services, as users of services, and as an influence on other customers.

9. The Collins School of Hospitality Management 9 Topic 3: Physical Evidence Strategy We look at how a “servicescape” includes the physical environment and the atmosphere of an organization. 3 ways that buyer behavior is affected by the look and feel of the environment and image a business creates. Topic 4: Process Strategy We examine what a service process is and at why managers need to think about complexity and divergence in service processes.

10. The Collins School of Hospitality Management 10 Who is your Customer? University related Business Pleasure Tourist Age group Income … Track reservations & walk-ins. Share information (by email) with other Groups. See where you are up or down.

11. The Collins School of Hospitality Management 11 4. Promotion Strategy As Cravens et al (2000) forcefully tell us: "Marketing communications are essential to marketing strategy. Without … it, sales would not be transacted, prospective buyers may not ever become aware of, let alone sufficiently interested to search out and buy, the goods and services that we have to offer them." (Cravens et al. 2000 p227)

12. The Collins School of Hospitality Management 12 The Communication Process The objective of communication is to get a response from the audience. In marketing this usually means getting customers to try, and then repurchase the brand (to become adopters): Regulars Marketing communications can also be used to build customer loyalty.

13. The Collins School of Hospitality Management 13 Promotional Tools Your challenge is determining who is the target audience, deciding what needs to be communicated and formulating the mixture of tools that will best suit these objectives. You then have to plan a promotional strategy and budget each component before launching their campaign

14. The Collins School of Hospitality Management 14 Advertising Defined as any non-personal form of communication through a designated paid medium with an identifiable sponsor. Media included but limited to television and radio broadcasting, newspaper and magazine, transits, outdoors and others. Most advertisements aim to persuade customers that the product or service will meet their needs and offer them value.

15. The Collins School of Hospitality Management 15 Timing in Relation to Advertising Continuous - this is useful if the product-market is growing and the business is trying to attract new buyers. It is also often used when advertising frequently purchased products. Concentrated - for example just advertising at a certain time of the year.

16. The Collins School of Hospitality Management 16 Timing in Relation to Advertising Flighting - running advertisements from time to time. In between having none. This is done when the budget is small and for infrequently purchased products. Pulsing - using periods of low-cost advertising reinforced with occasional bursts of expensive advertising. This is typical for strong, mature brands. Seasonality - in response to the seasonality of the product and its selling cycle, advertising activities and budget have to be adjusted accordingly to maximize the yield and return.

17. The Collins School of Hospitality Management 17 Publicity Publicity is free advertising. A business may have to do something to attract attention, but they do not pay for the media exposure they receive. It can be very beneficial (and cost effective) and has the benefit of enhanced credibility because it does not appear to be advertising. Publicity can be negative as well as positive. It is also less controllable than other aspects of marketing communication.

18. The Collins School of Hospitality Management 18 Public Relations Public relations are activities that the business undertakes to communicate to the public which are not paid for directly. –The public can include customers, the trade, shareholders, government bodies, local communities and employees. According to Doyle (1994) the major public relations activities are: 1.achieving positive coverage in the media; 2.creating and reinforcing the corporate image, sponsoring special events; 3.lobbying politicians and officials; and 4.advising management about key public issues.

19. The Collins School of Hospitality Management 19 Public Relations Large businesses find public relations a useful marketing tool, and one that is cheaper and more effective than advertising. Public relations can create product awareness and interest. It can influence specific target market segments and enhance corporate image. It can be useful when dealing with crises (such as food contamination scares).

20. The Collins School of Hospitality Management 20 Direct Marketing Communications Direct mail and telesales are examples of direct marketing communications. They are sometimes called direct marketing or direct response marketing. Direct mail (brochures, letters and catalogues) is usually received through the post, whereas telesales are received via the telephone. More recently fax and e-mail have been used to send direct communications. Will you do any of these?

21. The Collins School of Hospitality Management 21 Direct Communications vs. Advertising It usually targets named individual customers, rather than operating indirectly through a mass medium (like newspapers or television). It normally aims at an immediate response, rather than an increase in awareness of positive feelings about a brand. Customers buy direct rather than through an intermediary (a salesperson or agent).

22. The Collins School of Hospitality Management 22 Database Direct communications rely on a good database of customers that should be targeted. Some companies buy databases from research agencies. With technology advances it is becoming increasingly common for businesses to build their own from their records of the activities of existing customers. For a business it is relatively low cost and efforts can be precisely targeted. It may also allow for some degree of customization.

23. The Collins School of Hospitality Management 23 Sales Promotion Sales promotions give customers an economic incentive to buy. These incentives are often in the form of price reductions, free goods or the chance to win prizes.

24. The Collins School of Hospitality Management 24 3 Types of Sales Promotions Consumer promotions - price reductions, coupons, vouchers, competitions, free goods, premium offers, trade-in offers, stamps, guarantees, events and displays. Trade promotions - dealer loaders, loyalty bonuses, sale or return, range bonuses, credit, delayed invoicing, new product offers, competitions, trade-in offers, free services, training and reciprocal buying. Sales force promotions - bonuses, commissions, coupons, free gifts, competitions, vouchers, free services, points and money equivalents. Doyle (1994)

25. The Collins School of Hospitality Management 25 Sales Promotions Sales promotions can be targeted quite carefully and can be used flexibly. They can be used to manipulate or shift demand, to encourage greater volume or frequency of purchasing, to add value to a product or service offering and to reward customer loyalty. Sales promotions are popular with businesses but are usually used to support other promotional tools. Sales promotion campaigns may have a limited life-span, and not be re-used. The development costs must therefore be carefully assessed.

26. The Collins School of Hospitality Management 26 Coupons and Discount Cards McDonalds - coupon campaign in May 2000 offering 85 food combinations for $16. Watsons Wine Cellar - coupon offer in May 2000 with $3 discount on selected wines with purchases over $30. Tony Romas - ongoing lucky draw promotions and other privileges to diners such as a appetizer coupon and a $5 cash coupon. Koublai's group - privilege card offering 25% discount for cash at lunchtime and 15% at dinner. Credit card purchases discounts of 20% and 10% respectively.

27. The Collins School of Hospitality Management 27 Your Thoughts Think about your own use of coupons and discount cards. Do they tempt you to try new places/new products? Do they encourage your loyalty?

28. The Collins School of Hospitality Management 28 What About: RKR-Club-Card for a price allowing the customer to eat for free with another guest for a specified time period. Cards for Concierges and/or other hotel/tourism personnel who assist guests in making restaurant reservations. Take away menus. Sales Blitzes using Cal Poly Students...

29. The Collins School of Hospitality Management 29 Personal Selling Personal selling deals with customers on a direct or face-to-face basis. Personal selling allows two-way communication between buyers and sellers. The business can investigate the needs of the buyer. It generally has more flexibility in adjusting its offer and can alter the way its products/services are presented to meet those needs. Relationship Marketing vs. Hard sell.

30. The Collins School of Hospitality Management 30 5. People Strategy Employees are service personnel. Service encounter and the role of internal marketing. Customers have three roles: 1.Producers of services, 2.Users of services, 3.Influence on other customers.

31. The Collins School of Hospitality Management 31 People Employees Customers contact Essential in production and delivery of services. Increasingly seen as part of the differentiation by which companies try to create added value and gain competitive advantage. Customers Customer-customer interactions occur. Customer's perceptions of the quality of a service product may be influenced by other customers (the behavior of other diners in a restaurant). The customer- customer relationship can be very difficult to manage.

32. The Collins School of Hospitality Management 32 Service Personnel In the foodservice industry we are aware of the importance of good service personnel and how they 'sell' the products/services as much as formal sales staff do. Service personnel are trained to do their job efficiently and effectively - they are usually also trained to have a strong customer orientation. This in turn reflects the image of your restaurant.

33. The Collins School of Hospitality Management 33 Internal Marketing The success of marketing a service is tied closely to the selection, training, motivation and management of people. "an important activity in, contributing to the people element of the marketing mix and in developing a customer-focused organization." (Payne 1993 p167 )

34. The Collins School of Hospitality Management 34 Customers as an Influence on other Customers Cowell (1984) comments that this is an area that is often overlooked by marketing professionals. He notices that particularly during group services the interaction between customers may be significant in affecting their perceptions of product/service quality. At present the nature of these interactions is only implicitly recognized by marketing professionals.

35. The Collins School of Hospitality Management 35 Define People Strategy A people strategy is deciding how staff behavior, attitudes and interpersonal skills are to be directed to sustain the positioning of the business. This may involve consideration of customer behavior.

36. The Collins School of Hospitality Management 36 Consider when developing a People Strategy Recognize whether the service business has high- or low-contact service encounters Understand the value of internal marketing and work w/ HR Have clear view about how the service element of the product contributes to a sustainable competitive advantage.

37. The Collins School of Hospitality Management 37 6. Physical Evidence Strategy A physical evidence strategy is used to shape the image of a business and its services. There are things that managers can control that have a direct impact on customer perceptions. Physical evidence relates to buildings, furnishings, layout, color and lighting. It also includes the goods associated with the service like tickets and brochures.

38. The Collins School of Hospitality Management 38 Physical Evidence The physical environment includes the furnishings, color, layout and noise level. The facilitating goods are things that enable the service to be provided - for example, the chinaware used in your grill rooms. Other tangible clues are the 'packaging' of take-away food.

39. The Collins School of Hospitality Management 39 Servicescape Lovelock and Wright (1999) use the term servicescape to mean the “Impressions created by the design of the physical environment where service is delivered”. They suggest that servicescapes can create positive or negative impressions and that care should be taken to design appropriate environments.

40. The Collins School of Hospitality Management 40 Restaurant Pétrus

41. The Collins School of Hospitality Management 41 Affecting Buyer's Behavior Lovelock and Wright (1999) suggest that physical evidence and atmosphere affect buyer's behavior in three ways. 1. Attention grabbing - to make the business stand out from competing businesses and to attract customers from target segments. 2. Message creation - to use symbolic clues to communicate with the intended audience about the distinctive nature and quality of the service experience. 3. Effect creation - using colors, textures, sounds, scents, and spatial design to create or heighten an appetite for certain goods, services or experiences.

42. The Collins School of Hospitality Management 42 7. Process Strategy A process strategy is all about the linkages between marketing management and operations management. A process strategy looks at the processes, mechanisms and routines used to create and deliver service.

43. The Collins School of Hospitality Management 43 Improve Service Quality To improve service quality it is necessary to design or redesign processes – it is not enough purely to focus on service skills.

44. The Collins School of Hospitality Management 44 Conclusion The marketing mix is not fixed - it can and should be changed periodically. Some elements (such as pricing strategy) may be quite flexible, others (such as the physical evidence strategy) may be more costly and difficult to adjust. There is a great deal of inter-dependence among the marketing mix elements - changing one element (such as the product) will effect all the other elements in the marketing program.

45. The Collins School of Hospitality Management 45 Where to go from here: Do A SWOT analysis of the RKR Understand corporate strategy & business purpose Research & analyze environmental opportunities & internal strengths Develop competitive strategy Undertake market segmentation, targeting & positioning Develop marketing strategy Plan marketing program & prepare budget Organize marketing department, implement & control marketing effort Evaluate effectiveness of the marketing strategy & competitive strategy

46. The Collins School of Hospitality Management 46 References and Resources Baker M J (1994) The Marketing Book 3rd edit. Butterworth Heinemann Christopher M. Payne A, and Ballantyne D (1991) Relationship Marketing Butterworth Heinemann Cowell D (1984) The Marketing of Services. Butterworth- Heinemann Ltd. Cravens D W (2000) Strategic Marketing 6th edit. Irwin McGraw- Hill Cravens D W, Merrilees B and Walker R H (2000) Strategic Marketing Management for the Pacific Region. The McGraw- Hill Companies, Inc. Doyle P (1994) Marketing: Management & Strategy Prentice Hall Drucker P (1974) Management: Tasks, Responsibilities, Practices New York, Harper and Row Fifield P and Gilligan C (1998) Strategic Marketing Management 1998-99 - CIM Workbook Butterworth Heinemann Payne A (1993) The Essence of Services Marketing Prentice Hall