Hilton Hotel
Hilton Hotel
Hilton Hotel
LITERATURE REVIEW
There are several scholarly definitions of relationship marketing and (Shani and
Chalasani, 1992) define it as a combined effort to maintain, identify and build up a
linkage with separate customers and to continue to fortify the linkage for the
common benefit of both sides, via interactive, one to one and value added contacts
over a stretched out period of time. While (Gronroos,1990) described relationship
marketing to be the establishing , maintaining, enhancing and commercializing of
customer relationship so that the distinct purpose of the parties concerned are met
which is done by a common exchange and fulfilment of agreements. This definition
tries to encompass both the relational and transactional qualities of marketing.
These two descriptions differ somehow but they both signify that relationship
marketing centres on the individual customer and seller relationship and states that
they both benefit. Plus the nature of the relationship is longitudinal. Moreover, they
both indicate that the core of relationship marketing is on
On the other hand (Morgan and Hunt,1994), argue that relationship marketing
represents all marketing activates destined towards launching, improving and
preserving successful relational give and take or exchange. Taking into record that
relational exchanges and transactional exchanges differ. From this definition
relationship marketing is marketing plus Morgan and Hunt have as a result re
described marketing and extended a paradigm shift.
It is key for organisations to assess customer relationship stages (Figure 1.0) in
order to evaluate the need for investment to make these customers move up the
relationship ladder (Dwyer, Shurr and Oh, 1987, Kotler and Dubois, 2000) and turn
out to be more profitable, or better implicit for cross-selling and offer them with
personalized services establishing higher bond and switching cost.
Suspects Prospects First-time Repeat Client Advocate Member Partner
Customers Customers
--------------- Traditional Marketing---- --------------------------- Relationship
Marketing---------------------Figure 1.0.The relationship ladder: (Egan, 2001: p.59)
However, marketing relationship is a give and take relationship parallel to intimate
relationship (Clark 1984; Clark and Mills 1979; Kollock, Blumstein and Schwartz
1994). Each party involved in an exchange relationship provide value measurable to
those received.
experiences regarding the level of return that they are accepting. Secondly,
customer loyalty could be influenced by what is obtainable from other schemes and
thirdly behaviour could be affected by other customers, social norms and the media.
They continue to debate that the loyalty card that they examined did not pay its
customers rightfully, as it was providing lower incentive values on products probably
to be saved for. O'Malley (1998) expatiates on the level to which many schemes
have established customers who have come to anticipate an incentive as part of the
regular shopping experience and assign a low value on rewards or incentives.
Over the years Hilton has created brands; today they have about ten brands in over
78 countries in the world. In 2009 Hilton was formerly known as Hilton Hotel
Corporations but changed its name and Logo to Hilton World then moved their
headquarters in Beverly Hills to Mc Virginia. (Hilton Worldwide, 2012).
Hilton HHonors:
Marketing is grown from a centre point on the single transaction to developing or
becoming increasingly apprehensive with the growth and support of equally
satisfying long term relationships with customers. The success story of charity
organizations, Tesco, banks, Hotels and others exploiting loyalty schemes is driving
companies to take careful note. The most productive relationship marketing
campaign makes room for viable benefits and promotes long term relationship with
customers which are difficult to replicate (Gilbert, 1996).
However, looking at the value proposition of the Hilton organisation, they try to
establish loyalty among their customers by striving to delight them and expecting
their changing aspiration while making sure that team members, who are important
contributors to attaining this objective, are satisfied as well (Huckestein and Duboff,
1999). From this proposition it is obvious that the essential elements of product
leadership and customer relationship must be attained. For the Hilton organisation
the value and importance of the customer relationship has been elevated via its
Hilton HHonors Loyalty programme.
Citibank in the U.S, Platinum Visa card in the UK, Credit card in Germany, Visa card
from Sunitomo Mitsui card co. Ltd in Japan etc.
However this co branded cards allows customers earn bonus points from everyday
purchases like groceries, gas, eating out etc. Customers can claim or redeem these
points for flights, free hotel nights or merchandise. (Hilton HHonors, 2012).
In further light, According to (McCleary and Weaver, 1991) they claim that Hotel and
restaurant loyalty program were inspired by the success of airlines that give
customers benefit for repeat purchase. However, these Programs look to improve
the customer's membership in an exclusive club with rewards from this membership
such as gifts, free hotel accommodations etc. For the organisation or company the
main aim is to compliment customers for their patronage and make it obvious that
the company is very much interested in establishing and sustaining long term
relationship with them.
Analysis: Involves the analysis of established customer data with the aim of
segmenting the customers by grouping those with the same behavioural pattern.
This is then used to create several product offerings via direct marketing. Hilton
does target the most valuable prospects for catalogue mailing and customizes the
catalogues to several groups.
Customer Selection: having established and analyzed the customer database
information, the next step is to deliberate on which Customer group to target with
marketing programs. The customers with most preferred segment (Highest
purchasing rate) would be chosen first for retention programs followed by other
segments. However Hilton applies this before embarking on marketing programs to
encourage retention and customer acquisition. This is evident in their four
membership levels.
Customer Targeting: There are several ways of targeting customers after selection;
they involve direct marketing techniques including telemarketing, direct mail and
direct sales. This enables a company interact with customers rather than talk at
them via television or radio. Hilton mainly invests time and money into telemarketing
(Customer service) and direct mails in order to reach a desired audience. However
today they seek permission from customers before sending mails.
Relationship programs: these are techniques for executing Customer relationship
marketing, the aim of this is to provide a higher level of satisfaction to customers
than competing firms do. More over research has proven that there is a clear-cut
positive relationship between profits and customer satisfaction (Winer, 2001).
Mangers need to weight satisfaction levels by delivering performance ahead of
customer expectation. Loyalty programs include frequency/Loyalty programs,
Rewards programs, Customer service and Community Building. Hilton has taken the
frequency/Loyalty program and Customer service as its Relationship Method which
has worked to improve profitability. The Hilton HHonors as stated above provides
rewards for repeat purchase.
Privacy Issues: This extends through the CRM Model (Figure 1.1), Hilton uses
database to provide service customers request and as a global brand they share this
database with other Hilton worldwide brands to ensure same level of service. Hilton
makes sure that personal information are handled according to the law. Usernames
and passwords are however created for customer's personal use.
Metrics: This is the traditional ways managers employ in measuring the success of
their product and service. Market Metrix uses Loyalty program effectiveness. It
identifies the percentage of customers who affirm that their loyalty membership was
the primary reason for picking the hotel. Market Metrix,( 2012) identified that Hilton
hotel in 2009 had 34.6%, 2010 had 35.8% and in 2011 had 39.2% showing an
increase in profitability.
DRAW BACKS
There are potential draw back in loyalty schemes, they are expensive, difficult to
correct mistakes as the company may be seen by customers as taking away.
Benefits; however there is the question whether the scheme actually works to
escalate loyalty or spending behaviour plus it is also kind of difficult to have
competitive advantage. (Winer, 2001)
RECOMMENDATIONS
These Loyalty schemes can be successful by elevating customers switching cost
and building entry barriers. For the Hotel industry it has become a competitive
necessity to create loyalty programs so incentives could also be encouraged for
repeat visits to websites even though this has not been greatly successful.
CONCLUSION
This paper has reviewed some past literature on loyalty schemes along with some
scepticism from a few scholars. The idea of the loyalty scheme is growing and
becoming more refined each day. Hilton Hotel has created brand web through their
loyalty scheme which has be expatiated above (Hilton HHonors) plus they have an
E-presence. From the consumer relationship, those that the hotel refers to as most
valued customers have considerably escalated their spending at the hotel. This
increased or escalated spending is no doubt as a result of the customers envisioning
an escalated value in their relationship with the hotel.