CHAPTER IV

HOSPITALITY AND TOURISM MARKETING MX

Learning Objectives:
1. Define Marketing mix and its role in the hospitality and tourism industry.
2. Define the 7p’s and its role in the hospitality and tourism industry

Definition of Marketing Mix

The Marketing Mix principles are used by business as tools to support them in pursuing their objectives. The
Marketing Mix principles are controllable variables which must be carefully managed and must meet the needs
of the defined target group. The Marketing Mix is a term used to describe the combination of tactics used by a
business to achieve its objectives by marketing its products or services effectively to target group.
Marketing mix is an essential part of business which needs to make sure that they are marketing
 The right product to
 The right person to
 The right price in
 The right place and at
 The right time
Seven P’s of Services Marketing
The 4p’s of Marketing Mix which represents Product, place, price, and promotion has been most widely employed
as a model for product marketing. It illustrates the company preparing an offer mix of the product and price, with
an integrated promotion mix to reach the target customers through the selected distribution channels. The 4p’s
of marketing have been the key areas where marketing managers allocate scarce corporate resources to achieve
the business objectives. Services have unique characteristics-intangibility, heterogeneity, inseparability, and
perishability.

Product

Place Price

The
Marketing
Mix
Physicald
Promotion
Evidence

Process People

7’P’s of Marketing
Product Mix
What is Product?
A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might
satisfy a want or need.
The basic hospitality product is a combination of goods, services, and environment.
1. Goods. Goods refer to the tangible items provided by a hospitality marketer to its customers. Goods can
be items such as beds, food, room, furnishings, air con, and all the physical things that are available in a
hotel. To add tangibility to the services, many marketers try to add price as an element since the customer
perceives price as a tangible element.
2. Services. Services comprises all the non-physical and intangible attributes that management can and
should control. Employees paly a major role with variables like friendliness, speed of service, attitude,
 professionalism and so on. Though the management can and should control, everything depends on the
systems that are set up by the management.
3. Environment. Environment is an element of product which may or may not be physical or tangible in
nature and consists of those items where the management has some control, but not direct or easy.
These are the feelings that the customer is looking for in a product. For example, sprinkler in a room is a
physical and tangible, but what is getting marketed here is the feeling of security for the customer.
Environment includes calm atmosphere, comfort, ambiance, architecture, color etc.
Product Levels

A. Core product. Refers to the fundamental benefit that the customer/guest receives form a hospitality
service.
B. Facilitating products. These are services or goods that must be present for the guest to use the core
product.
C. Supporting products. These are extra products offered to add value to the core product and to help
differentiate it from the competition.
D. Augmented products. These include accessibility (geographic location and hours of operation),
atmosphere (visual, aural, olfactory, and tactile dimensions), customer interaction with the service
organization, customer participation, and customers’ interaction with one another.
1. Accessibility
2. Atmosphere
3. Customer interactions with the service system
4. Customer interactions with other customers
5. Coproduction
Product Strategies
When an organization introduces a product into a market, they must ask themselves a number of questions.
1. Who is the product aimed at?
2. What benefit will they expect?
3. How do they plan to position the product within the market?
4. What differential advantages will the product offer over their competitors?
Branding Strategy
Brand is a name, term, sign, symbol, design, or a combination of these elements that is intended to identify the
goods or services of a seller and differentiate them from those of competitors.
Building strong brands. Brands are powerful assets that must be carefully developed and managed.
 1. Brand Equity. It is the added value endowed on products and services. It may be reflected in the way
consumers think, fee, and act with respect to the brand, as well as in the prices, market share, and
profitability the brand commands for the firm.
2. Brand positioning. Companies can position brands at any three levels. At the lowest level, they can
position the brand on product attributes. A brand can be better positioned by associating its name with a
desirable benefit. The strongest brands go beyond attribute or benefit positioning. They are positioned
on strong beliefs and values.
3. Brand name selection. A good name can add greatly to a product’s success. However, finding the best
brand name is a difficult task. It begins with a careful review of the product and its benefits, the target
market, and proposed marketing strategies.
4. Leveraging brands. Companies can leverage an existing brand by employing co-branding and
ingredients branding.
5. Brand Portfolios. The brand portfolio is the set of all brands and brand-particular category or market
segment. Marketers often need multiple brands to pursue these multiple segments.
6. Managing Brands. Companies must manage their brands carefully. First, the brands positioning must
be continuously communicated to consumers. The company should carry on internal brand building to
help employees to understand and be enthusiastic about the brand promise. Finally, companies need to
periodically audit their brands strengths and weaknesses.

Product Life-Cycle Stages

A company’s positioning and differentiation strategy must change as product, market, and competitors change
over the product life cycle. To say that a product has a life cycle is to assert four things:

 Product have a limited life.

 Product sales pass through distinct stages, each posing different challenges, opportunities, and problems
to the seller.
 Profits rise and fall at different stages of the product life cycle.
 Products require different marketing, financial, manufacturing, purchasing, and human resources
strategies in each life-cycle stage.

1. Introduction. It is period of slow sales growth as the product is being introduced into the market. Profits
are nonexistent at this stage.
2. Growth. It is a period of rapid market acceptance and increasing profits.
3. Maturity. It is a period of slowdown in sales growth because the product has achieved acceptance by
most of its potential buyers.
4. Decline. It is the period when sales fall off quickly and profit drop.

PRODUCT LIFE CYCLE

Stages of Characteristics
PLC Sales Profits Customers Costs Competitors
Introduction Low Negative Innovators High Cost per Few
customer
Growth Rapid Rising Rising Early Adopters Average Cost Growing
per Customer number
Maturity Peak High Middle Majority Low Cost per Stable number
customer
Decline Declining Declining Slackers Low Cost per Declining
customer number
Stages of PLC Marketing Strategies
Product Price Distribution Advertising Sales
Promotion
 Introduction Offers a basic Use cost-plus Build selective Build product Use heavy
product distribution awareness sales
among early promotion to
adopters and entice trial
dealers
Growth Offer product Price to Build intensive Build Reduce to take
extensions, penetrate distribution awareness advantage of
service, market and interest in heavy
warranty the mass consumer
market demand
Maturity Diversity Price to match Build more Stress brand Increase to
brands and or beat intensive difference & encourage
models competitors distribution benefits brand
switching
Decline Phase out Cut price Go selective; Reduce to Reduce to
weak items phase out level needed minimum level
unprofitable to retain
outlets hardcore loyal
customers
Stages of PLC Marketing Objectives
Introduction Create product awareness and trial
Growth Maximize market share
Maturity Maximize market share while defending market share
Decline Reduce expenditure and benefit the brand

Characteristics of Product Life Cycle

Price Mix
Simply defined, price is the amount of money charged for a good or service. More broadly, price is the sum of
the values consumers exchange for the benefits of having or using the product or service. Pricing is key in the
hospitality industry. issues such as seasonality and regional variations affect the price that is charged for what
is effect is the same product. Moreover, the marketplace is heavily competitive and nowadays trading happens
on a global crisis.
Setting the right price and comparing this price with the competitors is crucial, as it will affect the demand for the
product.
Hospitality Pricing Objectives
Considering the characteristic features of hospitality services such as intangibility, perishability, heterogeneity,
etc. the hospitality marketer must keep the following objectives in mind, while fixing the price for hospitality
products and services. The following are some hospitality pricing objectives (Lazer and Layton):

Increase market
Realize a specific Appeal to new Give guests Gain competive
share by a certain
profit level market segments superior value advantage
percent

Convince guests to
Increase sales of Meet competitor's Generate guest
try new/additional
specific items prices loyalty
items

Factors Influencing the Pricing Decisions of Services

1. Internal Factors. The internal factors are controllable in nature.
 A. Organizational Policies. As price decision is an outcome of production and marketing, the pricing
takes at the top level and the lower level of an organization.
B. Service Differentiation. To differentiate own services from that of the competitor, the service
provider must price the services differently.
C. Marketing Mix. The price of a product or service varies depending upon whether the product or
service idea is new or an established one, whether the service provider is an agent or a sub-agent,
or the main provider and the various pricing objectives.
D. Service Costs.
a.Fixed costs. Costs that do not vary with production or sales level.
b.Variable Costs. Costs that vary directly with the level of production.
2. External Factors. External in nature.
A. Demand. Markets must be segmented effectively according to
a. Different Groups of Users. To obtain maximum value from each segment of users, different
prices can be charged for offering the same service. Depending on the user’s demand for the
product or service like heavy user, medium user, on low user the pricing variations are made.
b. Different Points of Consumptions. Based on the point of production and consumption, service
organizations charge different prices at different service location. Depending on the place
where the consumption takes place, the prices are to be varied.
c. Different time of production. Owing to the perishability characteristic of the services, they are
priced discriminatorily, depending upon the time at which they are offered. For example, hotels
follow a different price package during the monsoon or rainy season as compared to the peak
season of the year (March – May).
B. Competition. Competition plays a significant role in pricing due to similarity in the services offered
and the satisfaction enjoyed by a customer. Except the products and services provided by the hotelier
are unique in nature, the marketer cannot price the products and services higher than the competitor.
C. Governmental Control. Government policy regulations affect the pricing decisions of various
services. For example, changes in the tax, sales, etc. imposed by the government, from time to time,
affect the pricing decisions of a hotel or restaurant business.
General Pricing Approaches
1. Cost-based pricing. Cost-plus pricing: a standard markup is added to the cost of the product.
2. Break-even analysis and target profit pricing. Price is set to break even on the costs of making and
marketing a product, or to make desired profit.
3. Value-based pricing. Companies base their prices on the products’ perceived value. Perceived-value
pricing uses the buyer’s perceptions of value, not the seller’s costs, as the key to pricing.
4. Competition-based pricing. Competition-based price is based on the establishment of price largely
against those of competitors, with less attention paid to costs or demand.
Pricing Strategies
1. New product pricing strategies. Pricing strategies usually change as a product passes through its life
cycle. The introductory stage is especially challenging.
A. Prestige Pricing. Hotels or restaurants seeking to position themselves as luxurious and elegant enter
the market with a high price that supports this position.
B. Market-skimming pricing. Price skimming is setting a high price when the market is price
insensitive. The objective is to skim profits off the market, layer by layer.
C. Market-penetration pricing. Companies set a low initial price to penetrate the market quickly and
deeply, attracting many buyers and winning a large market share.
D. Product-bundle pricing. In this method of pricing, several products are combined to offer the bundle
at a reduced price. Most used by cruise lines.
2. Existing-product pricing strategies. The strategies just described are used primarily when introducing
a new product. Nevertheless, they can also be useful with existing products. The following strategies are
ones that can be used with existing products.
 A. Price-adjustment strategies. Companies usually adjust their basic prices to account for various
customers differences and changing situations.
a. Volume discounts. Hotels have special rates to attract customers who are likely to purchase
a large quantity of hotel rooms, either for a single period or throughout the year.
b. Discounts based on time of purchase. A seasonal discount is a price reduction to buyers
who purchase services out of season when the demand is lower. Seasonal discounts allow
the hotel to keep demand steady during the year.
c. Discriminatory pricing. Segmentation of the market and pricing differences based on price
elasticity characteristics of the segments. In discriminatory pricing, the company sells a
product or service at two or more prices, although the differences in price is not based on
differences in costs. It maximizes the amount that each customer pays.
3. Revenue Management. A yield-management system is used to maximize a hotel’s yield or contribution
margin.
4. Psychological pricing. Psychological aspects such as prestige, reference prices, round figures, and
ignoring end figures are used in pricing.
5. Promotional pricing. Hotels temporarily price their products below list price, and sometimes even below
cost, for special occasions, such as introduction or festivities.
6. Value pricing. Value pricing means offering a price below competitors permanently, which differs form
promotional pricing, in which price may be temporarily lowered during a special promotion.
Hotel and Restaurant Pricing
Hotels follow comparatively high rack rate, high standard prices, consequently, offers a significant discount for
its customers. Some hotels follow negotiated rates, corporate rates for business houses and government rates
for government guests, which are significantly lower than the rack rates, based on a guaranteed number of room
nights during a specific period. Some hotels choose to fix a high room rate and keep low price for food and
beverages.
To attract customers, many restaurants follow penetration pricing policy to gain access to new markets by
offering reduced prices, specials, coupons etc.
The following are some factors which a customer looks at while willing to pay for a restaurant product/service:
 The uniqueness of the menu
 The quality of food and service
 The reputation of the chef
 The image ambiance, etc.
Some Pricing Tactics in Hotels
Pricing strategies and programs are long term in nature, whereas pricing tactics are initiated to address changing
circumstances in a short period. The following are some popular tactics of pricing:

Discounts (club Package Meeting

Holiday Special Event
membes, senior Promotions Competitor's
promotions Pricing
citizens etc) (travel, dinner) prices

Common Errors in Pricing in Hospitality

1. Basic prices on costs while neglecting marketplace forces
2. Increasing prices as costs rise, without considering other marketing factors and alternatives
3. Making pricing decisions slowly, rather than an integrated part of the whole marketing mix
4. Treating pricing as a financial rather than marketing decision
5. Neglecting to relate price to guests’ perceptions of value
6. Basing prices on management intuition and judgement
7. Over estimating consumer reactions to company offerings
8. Unrealistic assessing of acceptable consumer options regarding alternative offerings.
Promotion Mix
Promotion is a tool of communication used to inform the target market customers about goods and services to
help facilitate the exchange process. It is concerned with informing, educating, persuading, and reminding
customers.
Objectives of Promotion
1. Build awareness. Initial promotional efforts must focus on establishing an identity as new products and
new companies are often unknown to a market. In this situation the marketer must focus promotion to
effectively reach customers and tell the market who they ae and what they have to offer.
2. Create Interest. The second challenge a marketer faces is to move a customer from awareness of a
product to make a purchase. The focus on creating messages that convince customers, that a need to
exists is one fundamental of marketing. The promotional activities are targeted at basic human
characteristics such as emotions, fears, and humor.
3. Provide Information. In the purchase process, customers look for various kinds of information regarding
the product or service. In the case of a new product or service promotion where there are few competitors,
the information is simply intended to explain what the product is and may not mention anything about the
competition.
4. Stimulate Demand. The right kind of promotion is essential to drive a customer to make a purchase.
Another objective of promotion is to encourage the customer to try those products that he has not
previously purchased.
5. Reinforce the Brand. Once a purchase is made, a marketer can use promotion to help build a strong
relationship that can lead to the purchaser becoming a loyal customer.
Steps in Promotional Campaign/Promotion Process
1. Define the Need. The first step in promotion of any product or service is to identify the need for
promotion, considering the objectives of promotion. The need for promotion should be clearly defined.
2. Define the Target Market. Before launching the promotional campaign, the marketer should be aware
whether the customers are first-time users, heavy users, or non-users? What are the benefits they are
looking at? What are their demographic and psychographic characteristics? The marketer should have
a clear idea about what he is going to promote.
3. Analyze the Competition. While launching a promotional activity it is important to analyze the strategies
adopted by the competitors in their promotion.
4. Choose the tool of Promotion. There may be different ways to promote a product or service to the
target market. The best way to promote a product or service could be through an offer or an additional
service, a package price, a future incentive etc.
5. Allocate the Resources. The next step is to allocate the resources such as human resources, financial
resources etc. in the execution of promotional activity.
6. Communicate Your Promotions. Communication is the key to success of any promotion and
marketing. Every step should be taken to communicate various aspects such as price, quality, procedure,
place, date, time, and all other necessary details.
7. Communicate it to your Employees. It is easy to plan and make a good product promotion. The
intension of the top management in relation to product promotion should be made to known to all the
employees as well.
8. Know the BEP for Sales and Profit. The knowledge about the Break Even Point of sales and profit to
be achieved should be identified so that all efforts of promotion will be successful.
9. Time the Promotional Tool. The next step is to decide when the promotional activities are to be
undertaken. Timing plays an important role in the success of promotion. For example, Prime time
advertisements in TV.
10. Execute the Promotion. The actual execution of promotional activities is the next step.
11. Evaluate the Promotion. The last step is to evaluate the outcome activities in relation to the sales and
profit made after promotion. Promotional campaign needs to be evaluated in the end to see the
effectiveness of the promotion. The marketer may ask questions like did the promotion meet its
 objectives? What are the benefits, gains, and losses? Will it work again? If it did not work, why didn’t?
will there be a lasting effect, or was it a one-shot deal?

Setting the Promotion Mix

All communication between the hotel and target market that increases the tangibility of the product/service should
persuade consumers to purchase.
1. Advertising. Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by
an identified sponsor.
2. Sales Promotion. Short-term incentives to encourage the purchase or sale of a product or service.
3. Personal Selling. Personal presentation by the firm’s sales force for the purpose of making sales and
building customer relationships.
4. Public relations. Building good relations with the company’s various publics by obtaining favorable
publicly, building up a good corporate image, and handling or heading off unfavorable rumors, stories,
and events.
5. Direct and digital marketing. Engaging directly with carefully targeted individual consumers and
customers communities to both obtain an immediate response and build lasting customer relationships.
Advertising
Kotler define advertising as any paid, impersonal method of promoting goods or services by an identified
organization or individual.

 Impersonal
ADVERTISING  Reach many Buyers
 Repeat Message many
times
Objectives of Advertising
1. To promote the product or services to the target market.
2. To remind the target market about the availability of the product or services.
3. To support the customers by giving information about the products or services in their purchase
decisions.
4. To compete with the other marketers
5. To persuade the customers.
Types of Advertising
1. Above the line advertising. This is the type of message of advertisements that are placed in TV, radio,
newspaper, cinema
2. Below the line advertising. This type of advertisement is done
through direct mail, sponsorship, and sales promotion.

The Five M’s of Advertising

According to Kotler in developing a program, marketing managers must
always start by identifying the target market and the buyer’s motives.
Then they can make the five major decisions in developing an
advertising known as the five M’s.
 Mission: what are the advertising objectives?
 Money: how much can be spent?
 Message: what message can be sent?
 Media: what media should be used?
 Measurement: how should the results be evaluated?
Advantages of Advertising
Low Cost Per Contact. Since the advertisement is done on a mass scale, the cost of reaching the individual
customer will be cheaper than other means of marketing communications.
Ability to Reach Potential Visitors Where Sales Staff Cannot. In some case it is difficult to reach potential
customers individually by the sales staff.
Great Scope for Creative Versatility and Dramatization of Messages. As advertisements are mass
appealing, there is lot of advantage in providing messages of advertisements in a more versatile, creative, and
dramatized manner to enthuse the potential customers.
Ability to Create Images that Sales Staff Cannot. Sometimes the sales staff falls short in creating images in
the minds of the customer, the advertisements provide additional information to complement the sales personnel.
Non-Threatening Nature of Non-Personal Presentation. Since the advertisements are impersonal in nature,
they are not intimidating like the personal selling or sales promotion forms of marketing communication.
Prestige and Impression of Mass-Media Advertising. Advertisements in the mass media like newspaper, TV
and other mass communication channels provide greater element of prestige and impression to the organizations
image in front of the target market.
Disadvantages of Advertising
Inability to Close Sales. In the case of personal selling, the sales staff is able to guide and persuade the
customer to buy the product or service, whereas in the case of advertisement it is difficult to close the sales as
it is impersonal in nature.
Advertising Clutter. In many cases advertisements ends up creating confusion in the minds of the customers,
due to over-crowding of information about the products and services.
Ability for Visitor to Ignore Advertising Messages. The attention value of an advertisement is less when
compared to other forms of marketing communication. Many times, customers do not pay adequate attention to
advertisements messages, unless they are significant to them.

Personal Selling
Personal selling refers to oral communication with potential buyers of a product, with the intention of making a
sale. Personal selling may initially focus on developing a relationship with the potential buyer but will always
ultimately end with an attempt to “close the sale”.

 Personal Interaction
PERSONAL SELLING  Relationship building
 Most expensive promotional
tool
Importance of Personal Selling
Personal selling has a very significant role in the marketing of a product or service. Personal is the tool of
promotion which builds a personal relationship between the marketer and the customer. Through personal
selling, a marketer can keep the customers interests to his heart and thereby helps to build a long-term
relationship. As compared to any other form of promotional tools, personal selling allows the marketer to have
personal interaction with the customers.
Personal Selling Process
Personal Selling involves a selling process that is summarized in the following five-stage personal selling
process:
1. Prospecting and Qualifying
2. Making the First Contact
3. The Sales Call
4. Objection Handling
5. Closing the sale
Details about personal will further discuss in the next chapter.
Sales Promotion
Sales Promotion describes promotional methods using special short-term techniques to persuade members of
a target market to respond or undertake certain activity. As a reward marketer offer something of value to those
responding generally in the form of lower cost of ownership for a purchased product
or the inclusion of additional value-added material. In case of services, sales
promotion techniques ae of different kinds. For example, a hotel or restaurant may
charge less for more frequent guests when it launches a new item in the menu or
a service, or it may charge a lesser amount for the first few days or months.

 Wide assortment of tools like coupons,

contests, discounts, etc.
SALES  Attracts attention and provide information
PROMOTION  Creates a stronger and quicker response
 Rewards
Role of Sales Promotions  Efforts short-listed

To Increase Customer To Combat To Introduce New

Awareness Competition Products and Services

To Stimulate Demand in Non-peak

Periods

To Encourage current Customers to Purchase More

Major Sales Promotion Tools/Techniques

1. Push Techniques.
A. Point-of-Sale Display. Point of purchase displays are specially designed materials intended for
placements in retail stores. These displays allow products to be prominently presented, often in high
traffic areas, thereby increasing the probability of the product standing out.
B. Cooperative Advertising. In addition to offering promotional support in the form of physical displays,
marketers can attract channel members interest by offering financial assistance in the form of
advertising money. These funds are often directed towards the retailers, who then include the
company’s products in their advertising.
C. Advertising Materials. Among the most widely used method of sales promotion is the promotional
product; products labeled with the brand or company name that serve as reminders of the actual
product.
Starbucks used their logo in every merchandise that they
released.
2. Pull Techniques. The following are some of the examples of pull techniques:
 sampling

premiums

coupons

contests
Pull Techniques Advantage Disadvantage
Sampling  Gets consumers to try the  Can be expensive if done
product for too long
 Represents real value to  Food needs to be fresh;
the consumer may be unattractive
 May produce referrals,  May replace paying
word of mouth customers
Coupons  Tangible inducement  Possible fraud
 Limited time for discount  Redemption rates are not
 Can focus on specific easily predicted
objectives
 Can calculate the
maximum cost in advance
Contest  Consumers are involved in  May be difficult to judge;
the process because of select winners
skill/talent test  Rules may be too lengthy
 Creates interest in the or complicated and turn off
product customers
 May induce trial; could be
required to participate
Premiums  Consumers like to get  Storing and handling the
things for free or at a good premium
price  Employee theft
 Positive word-of-mouth if  Must match or exceed
unique quality image of firm
 Forecasting demand for
premiums is difficult

Factors in Setting Promotion Mix – Push and Pull Strategies

1. Pull Strategy. Strategy that calls for spending a lot on advertising and consumer promotion to build up
(pull) consumer demand.
2. Push Strategy. Strategy that calls for using sales force and trade promotions to push the product through
channels.
3. Buyer readiness state. Promotional tools vary in their effects at different stages of buyer readiness.
4. Product life-cycle stage. The effects of different promotion tools also vary with stages of the product life
cycle.
Public Relations
Public relations involve the cultivation of favorable relations for organizations and products with its target public,
using a variety of communications channels and tools. It involves developing positive relationships with the
organizations, media, and the public. The art of good public relations is not only to obtain favorable publicity
within the media, but it is also involves being able to handle successfully negative attention.

Government

Employees Shareholders

Your
Media Competitors
Organization

Suppliers Customers

General Public

This figure shows the relationship between an organization and its various public relations
Public Relations in a Hotel
The establishment of good public relations in the hotel and catering industry is of immense benefit to the industry,
for it is directly involved with the public. As a general principle, all the public are potential or existing customers
or employees. Public relations is a deliberate planned sustained effort to establish and maintain mutual
understanding between an organization and its public.

Public Relation is concerned with:

1. Building awareness and a favorable image for a company or client with stories and articles found in
relevant media outlets.
2. Closely monitoring numerous media channels for public comment about a company and its products.
3. Managing crisis that threaten the company or product image
4. Building goodwill among an organization target market through community, humanitarians, and special
programs and events.
Methods of Public Relations
1. The Press
2. Television
3. Exhibitions and Trade Fairs
4. House styles for company identification
5. Facility visits to promote goodwill
6. Through employees

Publicity
Publicity is unpaid for exposure, which is derived by getting coverage as a news or editorial item. The choice of
the newspaper, vlogger, magazine, and journal should be correct and trustworthy.
Advantages and Disadvantages of Public Relations and Publicity
Advantage Disadvantage
 PR is often considered a highly credible form Uses many of the same channels as
of promotion. Implied endorsements. advertising, such as newspapers, magazines,
radio, TV, and the Internet.
A well-structured PR campaign can result in It has the potential to produce the opposite if
the target market being exposed to more the news media feels there is little value in
detailed information than they receive with running a story pitched by the marketer.
other forms of promotion.
Relatively low cost when compared to other There is always a chance that a well devised
promotional efforts news event or release will get “bumped” from
planned media coverage because of a more
critical breaking news story such as war,
severe weather, or serious crime.
Prestige and impressiveness of mass-media The impact of traditional news outlets is
coverage fading forcing relations professionals to
scramble to find new ways to reach their
target markets.
Added excitement and dramatization

Sponsorship
Sponsorship is about providing money to an event; in turn the product or company is acknowledged for doing
so. Sponsorship is where an organization pays to be associated with an event, cause, or image.
Resorts World Manila was one of the Platinum Sponsor in the 2019 Southeast Asian Games
Viral Marketing
Viral Marketing occurs when consumers pass on recommend your product/company to others. This could be via
word of mouth and social media. Common examples are product endorsers who use YouTube, Instagram, or
Facebook.
David Guison, one of the sought-after endorsers in the Metro

Promotion Summary Table

Place Mix
Place refers to the point of interaction between the product and the potential customers. It is also known as
channel, distribution, or intermediary. It is the mechanism through which goods and services moved from the
manufacturer or service provider to the user.
Place Strategies
It refers to how an organization will distribute the product or service they are offering, to the end user. The
organization must distribute the product to the user at the right place and at the right time.

Decision Variables in Planning the Distribution Strategy of Services

The most important decisive element in distribution strategy, relates to the issue of location of the services, to
attract the maximum number of consumers.
The first decision Variable in planning the distribution strategy relates to the location of service.
 1. How Important is the Location of the Service to the Consumers? Will an inconvenient location lead to
purchase being postponed or being taken over by a computer?
2. Is the service, technology-based or People-based? How flexible is the service? Can the equipment and
people be moved to another location without any loss or quality?
3. How Important are Complementary Services to the Location Decision? Can the number of clienteles be
increased by locating services where complementary products o services already exist?
The Second Decision Variable in the distribution strategy is whether to sell directly to the customers or
through intermediaries. In case of services, which are inseparable from the performer, direct sale is the only
possible way to reach the consumer. In case of other such as hotels, airlines, property, may operate through
middlemen.

Channels of Distribution
Indirect Distribution Direct Distribution

Manufacturer Manufacturer

Wholesaler

Retailer
Consumer
Consumer The figure shows the Two types of Channel of Distribution Methods

Place Mix/Distribution Mix

Place Mix/Distribution Mix are all channels available between the hotel and the target market that increase the
probability of getting the customer to the product.
Distribution Mix it is the combination of direct and indirect distribution channels that a hospitality organization
uses to make customers aware of to reserve and to deliver its services.
Two main components distribution mix are:
 Direct Distribution the organization total responsibility for promoting, reserving, and providing services to
customers.
 Indirect Distribution it includes the responsibility for promoting, reserving, and providing services to
customers that are given to one or more other hospitality organizations.

For effectiveness of the distribution mix, the following options are available:
a. Own a property and run it
b. Manage a property
c. Franchise
d. Use channel intermediaries such as travel agents, tour operators, incentives houses, airlines, and
Reservation Networks
Factors Influencing Selection of a Distribution Channel
1. Market Segment – the distributor must be familiar with the target consumer and segment
2. Changes during the product lifecycle – different channels can be exploited at different points in the PLC
3. Producer-Distributor Fit- is there a match between their policies, strategies, image, and yours? Look for
synergy
4. Qualification assessment – establishes the experience and track record of your intermediary.
5. How much training and support will the distributor require?
Franchising in Services
Franchising is an agreement by an owner to allow the use of a name or business format by another business for
the purpose of selling the product or service.
Franchising is the granting of rights to another person or institution to exploit a trade name, trademark or product
in return for a lump-sum payment or royalty. Major international restaurant chains like McDonald’s, Pizza Hut,
Dominos, Dairy Queen etc have franchised their names to local restaurant operators in different countries.
International Hotel chains such as Holiday Inn, Sheraton, Intercontinental, have expanded worldwide using this
franchising strategy. Franchising is also used to increase sales or enhance image by associating with a well-
known international event or personality (Sanrio characters such as Hello Kitty or Snoopy and Marvel
superheroes).

Characteristics of Franchising
1. Ownership by one person of a name, an idea, a secret process or a specialized piece of equipment and
the goodwill associated with it.
2. The grant of a license by that person to another permitting the exploitation of such name, idea process
or equipment and the goodwill associated with it.
3. The inclusion in the license agreement of regulations relating to the operation of business, in the conduct
of which the licensee exploits his rights.
4. The payment by the licensee of a royalty or some other consideration for the rights that are obtained.

Advantage and Disadvantages of Franchising

Franchisee Advantages Disadvantages
Established product Additional Fees
Technical Assistance Loss of Control
Quality standards Difficult to terminate
Less operating capital Shared performance
Opportunities for growth
Cooperative advertising

Franchisor Advantages Disadvantages

Rapid expansion Loss of control
Diversified risk Reduced profits
Cost economies Legal issues
Cooperative advertising Recruitment

Types of Hospitality Distribution Network

1. Consortium. A group of independently owned and operated hospitality properties that agree to form a
loose coalition to distribute and market their offerings.
2. Management Contract. An agreement in which one company agrees to operate a hospitality property
for a fee, which may be based on gross sales with performance-related bonuses.
3. Direct Channel. A communication medium involving direct contact between the hospitality provider and
the guest. The aim of direct marketing is to create one to one relationship with the organizations target
market.
4. Indirect Channel. A communication medium between hospitality provides and guests involving
intermediaries, such as travel agencies, reservation networks, consortia, affiliated and sales
representatives.
Intermediaries
Independent business concerns that operate as links between suppliers and guests, render services that add
value to the guest.
The Major Travel Trade Intermediaries
1. Retail Travel Agents
2. Tour Wholesalers and Operators.
3. Corporate Travel Managers and Agencies
4. Incentive Travel Planners
5. Convention Meeting Planners
Roles of Retail Travel Agents
 Expanding the distribution network for suppliers, carriers, and other intermediaries
 Retailing the services of suppliers, carriers, and other intermediaries at locations convenient for travelers
 Providing specialized, knowledgeable advice to travelers on destinations, prices, facilities, schedules,
and services
Tour Operators
Organizations that plan, and market travel packages at both wholesale and retail level, and often purchase
accommodation and hospitality services in bulk in the most cost-effective manner.
Role of Tour Wholesaler and Operators
 Expanding the distribution network for suppliers, carriers, and other intermediaries
 Assembling vacation packages by bringing together an array of destinations and the services of suppliers
and carriers at all-inclusive prices
 Operating and guiding group tours
Role of Corporate Travel Managers and Agencies
 Expanding the distribution network for suppliers, carriers, and other intermediaries at locations
convenient for travelers
 Coordinating corporate travel arrangements to maximize the efficiency of corporations’ travel
expenditures.
Role of Incentive Travel Planners
 Expanding the distribution network for suppliers, carriers, and other intermediaries at locations
convenient for travelers.
 Tailor-making incentive travel trips for corporations and others

Role of Convention/Meeting Planners

 Expanding the distribution network for suppliers, carriers, and other intermediaries at locations
convenient for travelers
 Organizing and coordinating conventions, conferences, and meetings for associations, corporations, and
other organizations.

People Mix
People refer to all people directly or indirectly involved in the consumption of a service like employees or other
consumers
Employees as an Element of People Mix
People employed in the organization will determine the quality of service the customers receive. Happy, skilled,
and motivated staff make happy and satisfied customers. People constitute an important dimension in the
management of services in their role both as performers of services and as customers. People as performers of
services are important because “a customers sees a company through its employees. The employees represent
the first line contact with the customers. The firm must recognize that each employee is a salesman for the
company’s service”.
Internal Marketing
Internal Marketing is a concept that applies in the industry where the internal product (job) is sold to the internal
customer (employee). If the employees are motivated and service minded, they will be able to deliver customer-
oriented services.
Importance of Internal Marketing
1. Employees must have a customer service attitude in product marketing, a customer can verify the product
and make the purchase, whereas in the case of service marketing, the attitude of the service provider
and the contract personnel matters a lot. If the employee who is interacting with the customer does not
have a service attitude, it is difficult to gain the confidence of the customer in the service.
2. Employees must understand your product if the contract person must convince the customer about the
product or service which he is going to deliver, he should have proper knowledge about the product or
service and its features.
3. Employees must be enthused about your product and your company. Motivation is the key factor in
performance of any employee. It is the duty of the management to create enthusiasm about the product
or service and must develop loyalty towards the company which he is serving.
4. There must be good communication between employees and management. Each and every aspect of
the product or service must be communicated properly between the employees and management.
5. Employees must be able to identify and solve customer problems. The contract personnel should be a
shrewd person, so that he can identify the problems of a customer even without him pronouncing it and
find necessary for the same.
Objectives of Internal Marketing
1. To ensure that employees are Motivated for customer-oriented and service-minded performance.
2. To retain good employees
3. To increase customer satisfaction
4. To increase profitability
Internal Marketing Process
1. Establishment of a service culture
A. A service culture is an organizational culture that supports customer service through policies,
procedures, reward systems, and actions.
B. An organizational culture is a pattern of shared values and beliefs that gives members on an
organization meaning, providing them with the rules for behavior in the organization.
C. Turning the organizational chart upside down. Service organizations should create an organization
that supports those employees who serve the customers.
D. Empower and train employees to handle non-routine transactions.

2. Development of marketing approach to human resources management

A. Create positions that attract good employees.
B. Use a hiring process that identifies and results in hiring service-oriented employees.
C. Use hiring procedures that identify those employees who are team players.
D. Provide initial employee training designed to share the company’s vision with the employee and
supply the employees with product knowledge.
E. Provide continuous employee training programs
F. Make sure employees maintain a positive attitude. Managing emotional labor helps maintain a good
attitude.
G. Reward and recognize customer service and satisfaction.

3. Dissemination of marketing information to employees

 A. Often, the most effective way of communicating with customers is through customer contact
employees.
B. Employees should hear about promotions and new products from management, not from
advertisements meant for external customers.
C. Management at all levels must understand that employees are watching them for cues about
expected behavior.
D. Hospitality organizations should use printed publications as part of their internal communication.
E. Hotels can use technology and training to provide employees with product knowledge.
F. Employees should receive information on new products and product changes, marketing campaigns,
and changes in the service delivery process.
4. Implementation of a reward and recognition program.
A. Employees must know how they are performing in their job. Communication must be designed to give
them feedback on their performance.
B. An internal marketing program includes service standards and methods of measuring how well the
organization is meeting these standards.
C. Reward systems are based on meeting cost objectives and achieving sales objectives.
Customer as an Element of People Mix
Customers are important because they are a source of influencing other customers. As a marketing manager,
the first task should be to ensure complete satisfaction of existing customers.
Customer Service
Many products, services and experiences are supported by customer service teams. The disposition and attitude
of such people is vitally important to a company. The way in which a complaint is handled makes the difference
between retaining or losing a customer service can be face-to-face, over the telephone or over the internet.
People tend to buy form people that they like, and so effective customer service is vital. Customer service can
add value by offering customers technical support and expertise and advice.
Relationship Marketing
Relationship marketing involves using methods and tactics to develop long term relationship with customers to
retain them. An organization must exceed customer satisfaction to retain them and develop a healthy relationship
with their customers.
Traditional transactional marketing involved the organization focusing all its marketing efforts on attracting the
customer for one-off sales. However, customers who are loyal end up spending more in the long-term, so it
makes sense to keep existing customers happy.
Significance of Relationship Marketing
Relationship Marketing is defined as marketing to protect customer base. Its function is to attract, maintain, and
enhance customer relationships. Relationship Marketing is most applicable when:
1. There is an ongoing and periodic desire for service by the customer
2. The service customer controls the selection of the service supplier
3. There are alternative supplier choices
4. Customer loyalty is weak, and switching is common and easy
5. Word-of-mouth is an especially potent form of communication about a product
Customer Satisfaction
Customer satisfaction with a purchase depends on the product’s performance, relative to a buyer’s expectations.
If performance exceeds or meets expectation, the customer is highly satisfied or delighted.
Methods of Monitoring Customer Satisfaction
An organization must continue to satisfy customers. It is very difficult to keep 100% of your customers satisfied
all the time, one reason is because needs and wants of your customers change. Hence, we must monitor
continuously what is happening in our customer environment.
 Focus groups
 Mystery shoppers
  Customer complaints
 Suggestion boxes
 Online surveys
Process Mix
Process refers to the systems used to assist the organization in delivering the service.
In terms of the marketing mix, process can have many different meanings. However, in a service-based industry
such as hospitality, it should be viewed as the process that the customer must go through to either purchase or
use the product. This includes things such as the booking and check-in procedures. At all times, the focus should
be retained on the customer and it should be ensured that the processes in place are as easy and enjoyable as
possible for them.
Process is another element of the extended marketing mix. There are various perceptions of the concept of
process within the business and marketing literature. Some see processes to achieve an outcome, for example,
to achieve a 30 percent market share a company implements a planning process.
Going on a cruise- from the moment that you arrive at the dockside, you are greeted; your luggage is taken to your room. You have two
weeks of services from restaurants and evening entertainment to casinos and shopping. Finally, you arrive at your destination, and your
baggage is delivered to you. This is a highly focused marketing process.

At each stage of the process, markets:

 Deliver value through all elements of the marketing mix. Process, physical evidence, and people enhance
services.
 Feedback can be taken, and the mix can be altered.
 Customers are retained, and other serves or products are extended and marketed to them.
 The process itself can be tailored to the needs of different individuals, experiencing a similar service at
the same time.

Factors to be Considered While Designing the Service Process

1. Customer Participation in the Process. (for example, self-service restaurant)
2. Location of Service Delivery. The process can be carried out at the service provider’s premises or at the
customer’s home.
3. The service itself. The service itself is dependent upon its process. Usually the case with intangible
services such as legal representation is people based or equipment based
such as vending machines or dry cleaning.
4. High Contact low contact service. The level of contact depends upon the type
of service received. The level of contact will be in between the customer and
service provider in case of automatic cash dispensaries.
5. Degree of Standardization. The degree to which the services are delivered in
a very standard format or whether some customizations is catered for. The
extent to which the services can be altered from the standard to meet the
needs of different consumers or users may be termed as divergence.
6. Complexity of the Service. This is measured by the number of steps or
activities, which contribute toward the service delivery.
Developing a Service Quality Program
The following are some of the measures that can be adapted to provide a quality service to the customers.
1. Supply strong leadership
2. Integrate marketing throughout the organization
3. Understand the customer
4. Understand the business
5. Apply operational fundamentals
6. Leverage the freedom factor
 7. Use appropriate technology
8. Practice good human resource management
9. Set standards, measure performance, and establish incentives
10. Feed back the results to the employees
Value Chain Analysis
The value chain is a systematic approach to examining the development of competitive advantage. The chain
consists of a series of activities that create and build value. The activities within the organization add value to
the service and products that the organization produces, and all these activities should be run at optimum level
if the organization is to gain any real competitive advantage.
Primary Activities
Operations. This is the process by which materials and goods are converted into the final or finished product.
Value is added to the product at this stage as it moves through the production line. This is where goods are
manufactured or assembled. Individual operations could include room service in a hotel.
Outbound Logistics. Manufacturing goods is an internal process. Once the products have bee manufactured,
they have to be distributed to distribution centers, wholesalers, retailers, or customers. Out bound logistics is the
process in which the finished goods are sent along the supply chain to wholesalers, retailers, or the final
consumer.
Marketing and Sales. Identifying the correct target market and selling the goods to them is the next step.
Marketing must make sure that the product is targeted towards the correct customer group.
Service. Manufacturing a good product or its effective marketing alone does not make it successful business
process. After the product/service has been sold, it is significant to adopt adequate support services.

Value Chain Analysis -Hospitality Products and Services

Value chain analysis is concerned about considering the selection of hospitality products in terms of its
competence to enhance competitive positions. Value chain analysis focuses on where value is created within
the hospitality business and provides a way of thinking about competitors and the search for competitive
advantage.

A hotel can maintain competitive advantage by doing the following activities:

 Effective differentiation
 Strong relative cost position
A hotel can achieve differentiation by maintaining
 A preferred location
 A talented service staffs
 Information systems
 Creativity and persistence in selling hotels services, and
 Reliable quality of services offered.
As compared to the manufacturing organization’s value chain, the service organization has its own value chain
system, which shown in the following figure.
Value Chain Analysis in a Hotel
There are two type of activities, namely, primary activities and support activities. In case of hospitality service,
the primary activities are as follows:
 Reception Queue management, baggage handling, room allocation, car parking, room choice,
upgradation options, guest mix management.
 Service Provision Executive house options, room service, housekeeping flexibility, business centre, in-
room facilities, retailing outlets in hotels.
 Check-out Express systems, baggage handling, car return, Taxi, Coach, Airport, train links
 Sales/Marketing Personal Selling, Group Sales, Public Relations, Advertising-Media, Agency, Website
The above activities are directly concerned with marketing and delivery of hospitality products with value
addition.
The following are the support activities back up the primary activities:
 Ensuring Security
 Establishing and managing the flows of information, people, and resources, contributing innovative
products, systems, technologies
 Establishing and maintaining strategic alliances with tourism and hospitality networks
 Providing overall strategic and operational management. Ability to attract, retain talented staff, training
and development, incentives/rewards systems, team building, location, market positioning, culture,
organizational design, business planning.
Physical Evidence Mix
1. Physical Evidence refers to whatever the customers can see before purchasing. This can include the
physical environment, packaging, supporting collateral and anything else that helps in presentation.
2. Relates to things like brochures and websites
3. All physical, tangible, and controllable aspects of a service organization (example, exterior appearance
and interior décor of a restaurant)
4. The environment in which the service is delivered along with the physical or tangible commodities and
where the firm and the customer interact
5. The material part of a service
There are many examples of physical evidence, including some of the following:
 Web pages Brochures Furnishings Signage

Uniforms The building

The ambience, mood, or physical presentation of the environment

 Smart/Shabby?
 Trendy/Retro/Modern/Old fashioned?
 Light/Dark/Bright/Subdued?
 Romantic/Chic/Loud?
 Clean/Dirty/Unkempt/Neat?
 Music?
 Smell?
Physical evidence is an important ingredient of the service mix because consumers will make perceptions based
on their sight of the service provision, which will have impact on the organizations’ perceptual plan of the service.
Some organizations depend heavily upon physical evidence as a means of marketing communications, for
example tourism attractions and resorts (e.g. Disney World)

The table shows the Physical Evidences of a Fast Food Restaurant

Corporate Image
As the “image” implies, the Corporate Image is a picture, an impression of a corporation. It is the corporations’
reflection of its behavior, its appearance, and its corporate personality. The corporate image is not formed by the
corporation, it is formed by how the corporation is perceived by the public which may or may not be how the
corporation wants to be seen. Corporate Image is the image which the organizations present to the world at
large, regarding their service quality, value for money, guarantees, luxury décor etc. to its consumer by sending
messages, information and signals related to the organization’s objectives.
Corporate Identity
Corporate identity goes beyond the corporate image. It builds a distinctive and recognizable physical identity for
the organization. It gives tangible identity through corporate image, by linking the values, benefits, and qualities
through organizations image, which is identifiable through physical attributes such as brand names, logos, staff
uniforms, house-styles, and consistent standards.
Corporate Identity is not just a logo or a name of a company. Through these are the most visible signs of its
components, corporate identity is what makes a company special and unique. It is reflected in everything from
the quality of the products and services, marketing strategies, communication media, and working environment.
The main objective of corporate identity is to achieve a favorable image among the company’s prospects and
customers. When a corporation is favorably regarded, it is likely to result in loyalty. The closer the corporate
image is to the corporate identity; the closer the public’s perception of a company defines itself, making for
superior corporate communication.
Types of Hospitality Physical Evidence
1. Peripheral Evidence. Peripheral evidence is that physical evidence that can be possessed and taken
away by the customer. E.g. writing pad, pen, drinks, chocolates, toiletries, magazines etc
2. Essential Evidence. Physical evidence is that physical evidence that cannot be possessed by the
customer or passed to the customer. E.g. building, décor, leisure center items, etc.
Hospitality Presentation Mix
The hospitality Presentation mix is the way we present the core product or what the customer is really buying. It
increases the tangibility of the product mix in the perception of the target market, at the right place and time.

The six elements of the Presentation Mix

1. Physical Plant. Physical plant represents everything physical and quickly noticeable to the senses in the
hospitality property. E.g. atrium lobbies, elegant chandeliers, marble floors, luxurious bathrooms etc.
2. Location. Location is significant, but a slightly overrated variable in hospitality marketing. Though salient,
it has limited use. The most important use of location in marketing is obviously in its initial selection
relevant to target markets and competition.
3. Atmospherics. Atmospherics is one of the element s of the bundle of benefits the hospitality customers
buys. It is often the atmospheric that reflects all those intangibles benefits that are sought such as comfort,
good feeling, excitement, serenity, contentment, romance etc.
4. Employees. The quality of the hospitality services can be judged from the employees of a hospitality
organization. Customers arriving at the front door of an establishment are no longer looking at the
architectural design, what they see is the employees who greet them, the doorman, valet, bellboy, front
desk staff etc.
5. Customers. Unlike other businesses, the hospitality business is more concerned about the kind of
customers the organization is catering to. Hospitality marketers need to be concerned about who their
customers are, because customers help to define the character of the organization.
6. Price. Most of the customer in the hospitality market are concerned and sensitive about the price they
are charged. Prices are the most visible and the most flexible part of the presentation mix. Flexibility
means, prices are not regulated, the prices can be changed at any time. Visibility means that the use of
price to influence the customer is rapid. This flexibility and visibility provide management with a very
versatile and useful sales tool.
EXERCISES
1. What is Marketing Mix?
2. What is meant by Product/Service in marketing?
3. What is price in marketing?
4. What is promotion marketing?
5. What is place marketing?
6. What is meant by people in marketing?
7. What is process in marketing?

ACTIVITY
1. Using a product from the hospitality industry illustrate with suitable example the following: Core products,
Facilitating products, Supporting products, and Augmented product.
2. One way of increasing revenue is up-selling. Illustrate with suitable examples form the hospitality industry,
when up-selling can result in a more satisfied guest.
3. Find two current advertisements that you think are particularly effective and tow more that you feel are
ineffective.
a. Describe specifically why you think the better ads are effective, and why the ineffective ads fall
short.
b. How would you improve the less effective ads? If you feel that they are too poor to be improved,
write a trough draft of an alternate ad for each.