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Strategic Marketing for Hotels and Restaurants

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1 Strategic Marketing for Hotels and Restaurants
Stowe Shoemaker, PhD Cornell University Executive Education Faculty University of Houston Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

2 Strategic Marketing GM Program (c) Stowe Shoemaker, Ph.D
Objectives Introduce Strategic Marketing System Model – the Framework for the class Review definition of marketing and discuss the future of marketing Review the buyer purchase model Discuss how to calculate the life time value of the customer and the value of WOM and why this is important Strategic Marketing GM Program (c) Stowe Shoemaker, Ph.D

3 Objectives Discuss market positioning
Discuss a framework for developing a marketing plan Review communication strategies Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

4 How to Reach Goals Lecture Case studies Discussion
Group 3 day project: Develop a marketing strategy for Carvel Ice Cream Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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

6 not at all 1 2 3 4 5 6 7 does extremely well
#1 #2 #3 #4 #5 Creativity Originality Incorporates class information This group had fun Will build a CA Presents measures to monitor success TOTAL

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

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

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

10 Some Possible Marketing Plan Objectives
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 Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

11 Some Possible Marketing Plan Objectives
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 Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

12 Handout on Template for a Marketing Plan
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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

14 Review Basics of Marketing
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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

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

17 4 P of Marketing P Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

18 Services versus Goods Differences between goods versus services:
Heterogeneity Simultaneous production and consumption Perishability Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

19 Types of Products/Services
Search qualities Experience qualities Credence qualities Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

20 Continuum of Evaluation for Different Types of Products
Clothing Jewelry Furniture Houses Automobiles Restaurant meals Vacations Haircuts Child care Television repair Legal services Root canals Auto repair Medical diagnosis Most Goods Most Services Easy to evaluate Difficult to evaluate { { { High in search qualities High in experience qualities High in credence qualities

21 Tangibility Spectrum             Intangible Dominant
Salt Soft Drinks Detergents Automobiles Cosmetics Fast-food Outlets Intangible Dominant Tangible Dominant Fast-food Outlets Advertising Agencies Airlines Investment Management Consulting Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D Teaching

22 7 P of Marketing P Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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

24 Carvel Ice Cream and the 14 C’s
Identify as many of the 14C’s in the case. Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

25 The Evolution of Marketing
Knowledge Relationships Profitability Relationships Brand Frequency Programs Targeted Promotions Sales Strategic Tactic Push traffic, no targeting, discounts, little measurement. Still push, discounts, some measurement. “Price” driven, segmented, transaction based. Added value to product, support price, customized, strengthen brand. Knowledge, Help support VAR in loyalty Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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

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

28 Examples of Contextual Marketing: Widgets
Movable mini-applications used by consumers to craft custom experiences Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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

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

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

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

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

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

35 Barriers The Purchase Cycle Brand Repeat Purchase Advocate
WOM Brand Advocate Repeat Purchase Satisfaction Loyalty Circle Trial (Initial Purchase) Dissatisfaction Barriers Switching costs Perceived risks Lack of information Complain Why Switch? pricing inconvenience core service failure service encounter failure response to service failure competition ethical problems involuntary switching (customer moved) Need Recognition Switch Awareness/ Search/Evoked Set Why Switch? Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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

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

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

39 Reasons for Marketing Myopia
The belief that growth is assured by an expanding and more affluent population The belief that there is no competitive substitute for the industry’s major product Too much faith in mass production and in the advantages of rapidly declining unit costs as output rises Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

40 Reasons for Marketing Myopia
Too much faith in mass production and in the advantages of rapidly declining unit costs as output rises Preoccupation with a product that lends itself to carefully controlled scientific experimentation, improvement, and manufacturing cost reduction. Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

41 Reasons Examined by Looking at Three Industries
Petroleum Automobiles Electronics Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

42 Overview of Strategy and Competitive Advantage
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

43 Lewis Carroll, Alice in Wonderland
“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 way you go.” Lewis Carroll, Alice in Wonderland

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

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

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

47 Strategy Checklist Is it identifiable and clear in words and practice?
Does it fully exploit opportunity? Is it consistent with competence and resources? Is it internally consistent, synergistic? Is it a feasible risk in economic and personal terms? Is it appropriate to personal values and aspirations? Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

48 Strategy Checklist Does it provide stimulus to organizational effort and commitment? Are there indications of responsiveness of the market? Is it based on reality to the customer? Is it workable? Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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

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

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

52 Competitive Advantage
Distinctive competencies that lead to CA: Management knowledge Culture Location Access to resources Exceptional employees Special patents Access to capital Brand name Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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

54 Building Blocks of CA Efficiency Quality Innovation
Customer Responsiveness Size Value Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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

56 customer loyalty; life-time value Components of a product; GAP model
Efficiency Quality Innovation Customer Responsive Size 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 Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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

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

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

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

61 Intercontinental Hotel Group
Corporate Information/ Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

62 Starwood Hotels and Resorts
Company Values Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

63 McDonalds Company Values
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

64 Measuring Success of Strategy
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

65 Five Principles of the Strategy-Focused Organization
Mobilize Change through Executive Leadership Translate the strategy into operational terms Use language that everyone understands Align the Organization to the Strategy Scorecard cascades the strategy to all parts of the organization and align resources needed to accomplish the strategy Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

66 Five Principles of the Strategy-Focused Organization
Motivate to Make Strategy Everyone’s Job The reward and recognition system is used to align individual behavior with performance objectives called for by the strategy 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 Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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

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

69 Objectives 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

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

71 Hilton - continued Huckestein defined two broad, new strategies
Pursue an aggressive growth plan to ensure that “a Hilton was always nearby” Install a new performance management system to help standardize processes and deliver consistent quality across every Hilton property Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

72 Hilton – Value Drivers Operational effectiveness Revenue maximization
Efficiently Hilton hotels convert revenue into profit through hotel operations, processes, and procedures Revenue maximization REVPAR targets Value proposition How well managers create a service environment that increases repeat visits among guests and retention of key staff members Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

73 Hilton - continued Operational 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

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

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

76 Need to Understand Environment as Part of Strategic Planning Process
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

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

78 SWOT Strengths Weaknesses Internal to the organization
Things the firm is good at Weaknesses Things the firm is not good it Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D

79 SWOT Opportunities Threats External to the firm
Examine the different environments Threats Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D


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