HCM 237 HOSPITALITY SALES AND MARKETING

UNIT 1 PLACE/LOCATION

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Location Differentiation
3.2 Choosing a Location
3.2.1 Marketing Strategy and Target Market
3.2.2 Regional Analysis
3.3.3 Area within that Region
3.2.4 Individual Sites
3.3 Place Reaching the Target Market
3.3.1 Accessibility
3.3.2 Speed of Traffic
3.3.3 Desirability of the Surrounding
3.3.4 Recommended Profiles
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION
Place, otherwise known as location is concerned with all the decisions
involved in getting the right product to the target market. A product is
useless if it is not available when and where the customer wants it. A
product reaches customers through a channel of distribution.

Place can provide a strong competitive advantage. For example, hotels

facing central park in a city or motels located right off a freeway exit
can enjoy a competitive advantage in percentage of occupancy over
hotels a block away.

Hospitality organisations should look for benefits created by their

location, keeping in mind that this advantage is subject to change.
Factors such as a new highway bypass or criminal activity in a

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neighbourhood can quickly turn an advantage into a problem. This unit

discusses the importance of location and choosing the best location for
the hospitality business.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

explain the location differentiation

deduce that the target market is an important factor in hospitality
location.

3.0 MAIN CONTENT

3.1 Location Differentiation

The three secrets of successful business are ‘location, location and

location’. Location is one of the most important aspects of distribution
for hospitality organizations. For business, which customers come to
them, the business must be conveniently located. A good location for a
hotel will be different from that of a motel or a fast food restaurant.
Restaurant sites tend to be evaluated on the ability of the local area to
provide business. Hotel sites are evaluated for the attractiveness of their
location to persons coming to that destination. In both cases, location
depends on the company’s marketing strategy. Each organisation has its
own set of location evaluation characteristics.

3.2 Choosing a Location

There are four steps in choosing a location.

3.2.1 Marketing Strategy and Target Market

There must be an understanding of the marketing strategy and target

market of the company. For motels that cater for the travellers and other
mid-class hotel guests arriving primarily by automobile, location is
typically along free-ways outside major metropolitan areas. The location
decisions, like other marketing decisions, cannot be separated from the
marketing strategy.
3.2.2 Regional Analysis

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This involves the selection of geographic market area. There must be

sufficient and stable demand to support the hotels or restaurants.

3.2.3 An Area within That Region

Once the geographic region has been chosen, the next step is to select an
area within that region. The demographic and psychographic
characteristics of the area will be looked into while competition and
growth potential are evaluated.

3.2.4 Individual Sites

A hotel can enter a saturated market to gain presence in that city.

Competition is not always a negative factor. Restaurants often tend to be
clustered, creating a restaurant row. This can be beneficial. Customers
going to one restaurant are exposed to a selection of others.

3.3 Place Reaching the Target Market

3.3.1 Accessibility

Accessibility is part of location. Is the site easily accessible by traffic

going in different directions? Is the site visible to allow drivers to turn?

3.3.2 Speed of Traffic

The slower the traffic is, the longer the visibility. Restaurant sites at
intersections with a stoplight have the benefit of exposure to waiting
drivers.

3.3.3 Desirability of the Surroundings

Is the area attractive? If the site is in a shopping center, is the center well
maintained? Are the size, drainage, sewage and utilities adequate?

3.3.4 Recommended Profile

The profile of preferred site of a fast food restaurant:

Free-standing location in a shopping center

Free-standing corner location (with a signal light at the intersection).
Inside light with 125 foot minimum frontage
Enclosed shopping mall
Population of 12,000 or more in a one-mile radius
Easy access of traffic to location

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Heavy vehicular/pedestrian traffic

Home values and family income levels are average or above.
Close to offices and other demand generators.
A parcel size of 30,000 to 50,000 square feet.
No less than two or three miles from other existing company
locations.

4.0 CONCLUSION

Location is a key attribute for a hotel or restaurant. The location must

not only be favourable at the present time, but also must continue to be
good throughout the life of the business.

5.0 SUMMARY

Managers must consider the concept of place-making the right and good
service available in the right quantities and at the right location when
customers want them. The next unit will discuss promotion.

6.0 TUTOR-MARKED ASSIGNMENT

Give five recommended profile of a restaurant.

7.0 REFERENCES/FURTHER READING

Kotler P., Bowen J. and J. Makens (2006). ‘Marketing for Hospitality

and Tourism.’ Australia: Prentice Hall.

Stokes, D. (1997). Marketing: A Case Study Approach. London: Letts.

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UNIT 2 PROMOTION

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 The Importance of Promotion
3.2 The Promotion Mix
3.3 Factors Affecting Promotion
3.3.1 Advertising
3.3.2 Selling
3.3.3 Sales Promotion
3.3.4 Direct Mail
3.3.5 Sponsorship
3.3.6 Merchandising
3.3.7 Public Relations (PR)
3.3.8 Publicity
3.4 Budgeting for Promotion
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

Promotion is the last of the four Ps that we have examined in Unit 10 of

this programme. This unit presents an overview of the role of promotion
in marketing. It starts by defining the promotion mix as the set of tools
used for demand manipulation. It also defines each of the major types of
tool. Promotion is used to solve communication problems, so this unit
presents a framework for their analysis which categorise them into three
types: cognitive, affective and action.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

describe the importance and application of promotion mix

explain the main functions of promotion.

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3.0 MAIN CONTENT

3.1 The Importance of Promotion

Consumers have difficulty in distinguishing between alternatives on

the basis of their physical appearance; this is particularly true of
service products.
Products are not well differentiated
A new product is being launched and the target market has not had
previous purchasing experience.
There are a large number of people having influence on the buying
decision as in some corporate purchases.
There is a strong need for consumer education; food service business
faces this problem.

3.2 The Promotion Mix

The promotion mix is the set of communicating tools which a marketing

manager can use in his attempt to influence demand. It includes:

Advertising
Selling
Sales promotion
Direct mail
Sponsorship
Merchandising
Public relations
Publicity

Each of these will be defined and distinguished.

3.3 Factors Affecting Promotion

Promotion varies in its role and form depending upon whether buying
behaviour displays cognitive learning or dissonance reduction (high
involvement) or variety seeking or inertia (low involvement).

The main role of promotion in the cognitive learning model is to convey

persuasive information so that a buying intention is formed. Message

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Main Content is important; it should stress differentiating benefit and

take into account the audience’s predispositions.
In the dissonance reduction model, promotion is largely used to provide
post-purchased information which reassures the audience.

The low involvement consumer is not an active information seeker

because the product is less important. Consequently, message Main
Content is less significant and brand choice is more prone to the
influence of temporary incentives.

The consequence of involvement for promotional strategy is that the

more involved the consumer, the more he is likely to repurchase the
product despite the promotional efforts of competitors. Therefore, the
goal of promotion should be to shift consumers from low to high
involvement.

The applications of the main promotional tools given differing

involvements are discussed below:

3.3.1 Advertising

Advertising should build awareness and familiarity with low

involvement products, using symbolically meaningful and easily
recognized Main Content. Repetition is important. For high-involvement
products carefully structured, persuasive information should be
conveyed. Long copy is more effective for this type of product.

3.3.2 Selling

Selling has a major contribution to make in promoting high involvement

products. Sales persons can provide feedback to difficult inquiries.
Message Main Content can be modified to suit audiences.

3.3.3 Sales Promotion

Sales promotion is more productive with low-involvement products.

Continuous promotions can create repeat purchase, thus reducing
variety-seeking. Consumers may be more attracted to the promotion
than the product. More involved audiences are more resistant to sales
promotion and less likely to switch brands.

3.3.4 Direct Mail

Direct mail is both high and low involvement markets; it has an

informational role in high-involvement markets. Already involved
audiences are more likely to read print material, thus long copy can be

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used. In low-involvement markets, direct mail can be used to deliver

promotional incentives such as coupons or competition entry forms.
3.3.5 Sponsorship

Sponsorship’s main role is to build awareness. Generally the only

information conveyed through sponsorship is the company (or brand)
name which makes it more suitable for low-involvement products.

3.3.6 Merchandising

Merchandising is more important for low-involvement products. Simple

exposure to a product display or print material may stimulate purchase.
As pre-purchase evaluation does not occur with low-involvement
products, purchase behaviour can be motivated at the point of sale.

3.3.7 Public relations (PR)

Because of the diversity of activities classified as PR, it has applications

in both high- and low-involvement sectors. An example of a high-
involvement application is a familiarization visit organized by an
hotelier for tour operators. A low involvement application would be a
reminder by a lift attendant that the restaurant is on the top floor of the
hotel.

3.3.8 Publicity

A major problem with publicity is that it is non-purposive. Unlike

advertising, where messages can be devised to achieve specific
promotional objectives, most publicity has to be newsworthy in its own
right. PR is used for both high- and low involvement products.

National newspapers may carry the story of a hotel’s success in winning

the contract to house a big political conference. Conference purchase is
high involvement. The story and the hotel’s name will be of interest to
conference organizers. A local radio station broadcasting live from a
garden fete will attract visitors indirectly to the catering concessions.

3.4 Budgeting for Promotion

It is important to know how much to spend on promotion and how to

divide such a budget with the various promotional tools. Most
promotional activities have to be paid for, although some of them are
free. The free ones are: word of mouth, publicity and some forms of
merchandising. Organisations take the advantage as they are used
constantly. However, it is important for companies to budget for their
promotional mix.

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3.5 Tactics for Achieving Promotional Objectives

Link the product to some involving issue (.e.g. fast food to

nutritional values).
Link the product to some involving personal situation (e.g. promote a
town centre coffee shop in the morning before shoppers leave home).
Link the product to involving advertising. A value-expressive
advertisement expresses consumers’ central beliefs and values.
Change the importance of product benefits; this is more difficult to
achieve because it involves changing consumer need priorities and
educational process.

4.0 CONCLUSION
The ultimate goal of promotion is to obtain a level of demand favourable
for the promoter while promotional mix are the tools a marketer uses in
his attempt to shift demand. The three types of communication
problems; cognitive, variety seeking or inertia (low involvement) and
promotional budget were also discussed.

5.0 SUMMARY

This unit has discussed promotional strategy, promotional tools and how
to achieve the promotional objectives. In the next unit, we shall be
discussing how to build customer loyalty.

6.0 TUTOR-MARKED ASSIGNMENT

Mention the various promotional tools.

7.0 REFERENCES/FURTHER READING

Schiffman L and Kanuk L (2007). ‘Consumer Behaviour’., USA:

Prentice Hall

Quester, P. G., McGuiggan, R. and P. William (2001). ‘Basic

Marketing: A Managerial Perspective., Australia: McGraw Hill.

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UNIT 3 PEOPLE AND IMPORTANCE OF HUMAN

RESOURCES MANAGEMENT

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Organisational Chart Adopting Service Culture
3.2 Developing a Marketing Approach to Human Resources
Management
3.2.1 Creating Jobs that Attract Good People
3.2.2 Teamwork
3.2.3 Orientation and Continuous Training
3.3 Employee Involvement in Uniform Selection
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

Successful service companies focus their attention on both their

employees and customers. They understand the service-profit chain
which links service organisation profits with employee and customer
satisfaction. This chain consists of five links:

Health Service profits and growth: Superior service firm performance

Satisfied and loyal customers: Satisfied customers who remain loyal,
repeat purchases and refer other customers.

Greater service value: More effective and efficient customer value

creation and service delivery.

Satisfied and productive service employees: More satisfied loyal and

hard-working employees.

Internal service quality: Superior employee selection and training, a

high-quality work environment and strong support for those dealing
with customers.

These and more will be discussed in this unit for your understanding of
the topic.

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2.0 OBJECTIVES

At the end of this unit, you should be able to:

describe the importance of employees to the hospitality industry

explain the need to adopt service culture in order to achieve correct
marketing strategy.

3.0 MAIN CONTENT

3.1 Organisational Chart adopting Service Culture

When a company has a service culture, the organisational chart is turned

upside down. The customers are at the top and corporate management is
at the bottom structure. In this type of organisation, everyone is working
to serve the customer.
In a conventional organisational structure, the mistake of an employee is
kept from the supervisor. They know that if the supervisor finds out
about a mistake, they may be reprimanded. Hotel should cultivate a
service culture. The supervisor must not be afraid to communicate the
department’s mistake to other departments. In this case, everyone works
to serve the guests. When you have a conventional organisational
structure, everyone works to please the boss.

3.2 Developing a Marketing Approach to Human Resources

Management

3.2.1 Creating Jobs that Attract Good People

Managers must use the principles of marketing to attract and retain

employees. They must research and develop an understanding of the
employees’ needs, just as they do for the customers. Not all employees
are the same, some seek to supplement their incomes; others are looking
for work that will be their sole source of income. Marketers can use
marketing research techniques to segment the employee market,
choosing the best segments for the organisation and developing a
marketing mix to attract them. The marketing mix for employees is the
job, pay, benefits, location, transportation, parking, hours and intangible
rewards, such as prestige and perceived advancement opportunities. Just
as customers look for different attributes when they purchase a product,

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employees look for benefits. The following factors in addition to salary

and benefits may likely attract a potential job seeker to hospitality job:
Chance for promotion and growth
Work that keeps him interested
A chance for increasing responsibilities
Good working conditions
Sense of belonging
Full appreciation of work done.
Job security
Good training program
Personal loyalty to worker by company.
Good salary
Nice people to work with
Good fringe benefits.
Access to superior
Geographic location
Reasonable hours
Sympathetic help with personal problems

3.2.2 Teamwork

Employees must learn to be team players. Employees who are not

customer oriented often pass the responsibility for serving to others. In
companies that practice internal marketing, if one employee makes an
error, other employees try to cover it before the guest notices. In these
organizations, guests do not have to understand the hotel’s organisation
and business to ensure that their needs are met. The front desk handles
most requests, relaying the guest’s desire to the appropriate department.
In restaurants that have used internal marketing to create a service
culture, staff cover for each other. Employees who see that a guest needs
something will serve the guest, even though it may not be their table.

Organisations that lack teamwork create an uncomfortable environment

for the guest. The first employee to receive a guest’s request or
complaint owns it. The employee is responsible for making sure that
guests receive what they need by following up with the other
departments involved and then contacting the guest to make sure that
everything was satisfactory. Customers should not have to redirect their
request for service to another employee.

Hiring procedures need to identify those employees who are team

players. Older employees should show willingness to support other
employees. Some managers believed that the elderly might not be
willing to cooperate or accept direction from the much younger
supervisor. The company’s history, current businesses, its mission

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statement and vision are important for employees to know. They must
be encouraged to feel proud of their employer. Desire to contribute to
the company’s success must be instilled in them.

3.2.3 Orientation and Continuous Training

Orientation is to assure the new employee that he or she has made the
right decision and to build a strong sense of belonging for the team and
the industry. It assures the employers that the company provides the
support that they require to be successful. It is also a time to share the
values of the hotel and to introduce the facilities of the hotel.

The hotel must be committed to providing consistent basic training in all

the departments as well as continuous training. Training is for everyone
and must be planned, systematic and comprehensive. The success of
training must be measurable.

3.3 Employee involvement in Uniform Selection

The selection of uniform is often left to designers and managers with no

input from the worker. Uniforms are important because employee dress
contributes greatly to the guest’s encounter with customer contact
employees. Uniforms also become part of the atmospherics of a
hospitality operation. They have the atmospheres of a hospitality
operation; they have the ability to create stylish and colourful
impressions of the property. They distinguish employees from the
general public, making employees accessible and easily identified. In
cases where uniforms are lacking, guests may become frustrated because
they have difficulty identifying employees when they need help.
Uniforms have the ability to create attitudes about an employee’s job.
Employees feel and behave differently once they put on uniform.

Uniforms should be functional and accepted by the employees.

Management often looks for uniforms that represent the property, acting
as a marketing tool and enhancing the image of the organisation.

4.0 CONCLUSION

In order to achieve profits and organisational goals, the employees who

take care of the customers must be given a sense of belonging.

5.0 SUMMARY

The concept of the service-profit chain is that the hospitality

organisations must satisfy three groups; customers, employees and
stakeholders. All of the groups are important but first employees must

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be satisfied. If employees love their jobs and feel a sense of pride in the
company, they will serve customers well. Satisfied customers will return
frequently to the hotel.

6.0 TUTOR-MARKED ASSIGNMENT

List at least 10 factors that can attract a potential job seeker to a hotel.

7.0 REFERENCES/FURTHER READING

Kotler P., Bowen J. and J. Makens 2006 4th edn ‘Marketing for
Hospitality and Tourism’. Australia: Prentice Hall.

Quester, P. G., McGuiggan, R. and P. William (2001). ‘Basic

Marketing: A Managerial Perspective’. Australia: McGraw Hill.

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UNIT 4 BUILDING CUSTOMERS LOYALTY

CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Customer Value
3.2 Customer Satisfaction
3.3 Customer Loyalty
3.4 Cost of lost Customers
3.5 Customer Retention
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

Today, many companies face the toughest competition in decades and

things will only get worse in years to come. In earlier units we have
discussed this and how to succeed in today’s competitive marketplace.
Hospitality organisations will have to adopt a marketing philosophy. In
this unit, we will spell out in more detail how companies can go about
winning customers and outperforming competitors.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

define customer value and customer satisfaction

distinguish the difference between customer satisfaction and
customer loyalty
deduce the importance and benefits of quality.

3.0 MAIN CONTENT

3.1 Customer Value

In order to succeed and survive, hospitality organisations need a new

philosophy. To win in today’s marketplace, the service industry must be
customer centred. They must deliver superior value to their target
customers.. They must not just build the product but must become adept
in building customers. They must be skillful in market engineering, not
just product engineering.

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Too many companies think that obtaining customers is the job of the
marketing or sales department. It must be realized that marketing
cannot do this job alone. Although it plays a leading role, marketing can
be only a partner in attracting and keeping customers. The best
marketing department cannot successfully sell poorly made products
that fail to meet consumers’ needs. The marketing department can be
effective only in companies in which all departments and employees
have teamed up to form a competitively superior customer value
delivery system.

Customers are not just focusing on price but also want a higher quality
product and service. It is expedient to study and act on customers’ needs
and one important aspect of service is speed.

3.2 Customer’s Satisfaction

Consumers form judgements about the value of marketing offers and

make their buying decisions based on these judgements. Customer’s
satisfaction with a purchase depends on the product’s performance
relative to a buyer’s expectations. If the product’s performance falls
short of expectations, the customer is not satisfied. If performance
exceeds expectations, the customer is highly satisfied or delighted.

Although a customer-centered organisation seeks to deliver high

customer satisfaction relative to competitors, it does not attempt to
maximize customer’s satisfaction. An organisation can always increase
customer’s satisfaction by lowering profits. In addition to customers, the
organisation has many stakeholders, including employees, suppliers, and
stackholders. Spending more to increase customer’s satisfaction is to
generate customer’s value profitably. Ultimately, the company must
deliver a high level of customer’s satisfaction while delivering at least
acceptable level of satisfaction to other stakeholders. This requires a
very delicate balance.

Today’s winning companies track their customers’ expectations,

perceived company’s performance and customer satisfaction. Customer
satisfaction measures are meaningful only in a competitive context.

For organisations that are customer-centered such as hospitality

industry, customer satisfaction is both a goal and a major factor in the
company success, as highly satisfied customers produce several benefits
for the company. They are less price sensitive and they remain
customers for a longer period. They buy additional products over time as
the company introduces related products or improvements and they talk
favourably to others about the company and its products.

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3.3 Customer Loyalty

Customer’s satisfaction is a requisite for loyalty. The customer

expectations must be met or exceeded in order to build loyalty.
However, there are several reasons why satisfied customers may not
become loyal customers. First, some customers do not return to an area
on a regular basis. Some customers may be satisfied with each hotel or
restaurant, but they keep changing to gain a new experience. Some
guests are price sensitive and will shop for the best deal. Even though
they were satisfied with the last hotel, they will try out another hotel
because of the deal they were offered. Customers expect to be satisfied
with their purchase, if not, they would not have made the purchase. To
develop loyal customers, managers must have extremely satisfied
customers.

The clear difference between satisfaction and loyalty is that a loyal

customer is more valuable than satisfied customers. A satisfied customer
who does not return and does not spread positive word-of-mouth adds
no value to the company. On the other hand, a loyal customer who
returns and spreads positive word-of-mouth has added good value to the
hotel. Management must identify loyal customers and create more
customer-delivered value than competing for customers.

3.4 Cost of Lost Customers

The company needs to figure out how much it would cost to reduce the
defection rate. If the cost is less than the lost profits, the company
should spend that amount to reduce customer defections. Outstanding
organisations go all out to retain their customers. Competition is
increasing and the costs of attracting new customers are rising. In the
hospitality industry, it might cost-five times as much to attract new
customer as to keep a current customer happy. Offensive marketing
costs more than defensive marketing, because it takes a great deal of
effort and spending to coax satisfied customers away from competitors.

3.5 Customer Retention

High quality builds loyalty and creates positive word of mouth. It is an

important factor in the purchase decision. It determines customer’s
satisfaction, which affects repeat business and word of mouth. Studies

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have shown that it costs four to six times as much to create a customer
as it does to maintain an existing one.
A satisfied customer will also spread a recommendation by word of
mouth. On average, one satisfied guest will tell five others, while a
dissatisfied guest will tell ten or more people. In order to balance
positive word of mouth with negative word of mouth, two or more
customers must leave feeling good about the service for every person
who feels the quality of service is poor. The hotel that is striving to build
an excellent reputation must do much better.

4.0 CONCLUSION

Hospitality organisations today face stiff competition while customer

demands are increasing. Things will continue to get worse in years to
come. Therefore the need to satisfy customer cannot be over-
emphasised. A satisfied customer will come back and spread
recommendation by word of mouth.

5.0 SUMMARY

The answer to customer loyalty and repeat performance lies in doing a

better job of meeting and satisfying customer’s needs. The benefit of
service quality is customer retention.

This unit has been discussing the importance of satisfying the customer
particularly in the face of competition. The15th unit which is the last
unit will talk about electronic marketing. The use of electronic in
communication in the hospitality industry is important for recognition
and efficiency.

6.0 TUTOR-MARKED ASSIGNMENT

Why is customer retention important?

7.0 REFERENCES/FURTHER READING

Schiffman L. and Kanuk L. (2007). ‘Consumer Behaviour’. USA:

Prentice Hall.

Quester, P. G., McGuiggan, R. and P. William (2001). ‘Basic

Marketing: A Managerial Perspective’. Australia: McGraw Hill.

Kotler P., Bowen J. and J. Makens (2006). ‘Marketing for Hospitality

and Tourism’4th edn. Australia: Prentice Hall.

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UNIT 5 GROWTH IN THE HOSPITALITY BUSINESS

THROUGH ELECTRONIC MARKETING

CONTENTS

1.0 Introduction
2.0 Objective
3.0 Main Content
3.1 Customization
3.2 E-Businesses E-Commerce and E-Marketing in the New
Digital Age
3.3 Benefits to buyers
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading

1.0 INTRODUCTION

With the creation of the World Wide Web and web Browsers in the
1990s, the internet was transformed from a mere communication tool
into a revolutionary technology. By early 2002, Internet penetration had
reached 66 percent. Today, there are billions internet users worldwide,
with almost half having access to the Internet at home.

The internet represents an untapped opportunity for many companies

including the hospitality industry. lt is in a way useful as a sales outlet
and it provides a medium for communication between the company and
its customers. In the light of competition, hotels and restaurants must
adopt internet technology and avoid the risk of being left behind. This
unit discusses the relevance of internet in hospitality industry
communication.

2.0 OBJECTIVE

At the end of this unit, you should be able to:

describe the importance of electronic marketing for effective

communication in the hospitality industry.

3.0 MAIN CONTENT

3.1 Customization

The internet-based economy or the New Economy revolves around

information businesses. Information has the advantages of being easy to

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differentiate, customize, personalize and send at incredible speeds over

networks. Companies have grown skilled in gathering information about
individual customers, the competitors and business partners such as:
(suppliers, distributors, wholesalers and growers). In turn, they have
become more adept at individualizing their product and services,
messages and media.

Many hospitality and travel companies have developed a competitive

advantage by understanding their customers on an individual level and
developing marketing offers that fit their wants. They can offer these
customers special benefits through loyalty programs. The information
on these customers can be made readily available throughout the
company through the internet. Thus, if a guest asked for a feather pillow
hotel last week, the housekeeper in that hotel will know about it and
feather pillow will be on the guest’s bed in a branch of the hotel in
another town when he arrives the following week. The system will also
be in the guest information file, so the front desk clerk will know this
arrangement has been on when the guest checks into the hotel. A
restaurant will know that a guest comes in about once every four weeks
based on their guest information file. Their loyalty program could offer
the guest a coupon for a free appetizer, with an expiration date of three
weeks on the coupon. The restaurant’s database has determined that the
customer will be back soon and provide him with an item that will not
reduce his overall check. The customer gains recognition and the benefit
of a free product at one of their favourite restaurants. Information has
allowed the restaurant to electronically create an offer in real time based
on the guest’s profile. Having access to customise the marketing mix to
individual customers can create a competitive advantage.

3.2 E-Businesses E-Commerce and E-Marketing in the New

Digital Age

E-Business involves the use of electronic platforms –intranets, extranets

and the internet to conduct a company’s business. The internet and other
technologies now help companies carry on their business faster and
more accurately. E-commerce is more specific than e-business. E-
business includes all electronics-based information exchanges within or
between companies and customers and over a wider range of time and
space. Many companies have set up web sites to inform about and
promote their products and services. They have created intranets to help
employees communicate with each other and access information found
in the company’s computers. They have set up extranets with their major

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suppliers and distributors to assist information exchange, orders,

transactions and payments.

In contracts, e-commerce involves buying and selling processes

supported by electronic means, primarily the internet. E-markets are
Market-spaces rather than physical marketplace. Sellers use e-markets to
offer their products and services online. Buyers use them to search for
information, identify what they want and place orders using credit or
other means of electronic payment.

E-commerce includes e-marketing and e-purchasing (e-procurement). E-

marketing is the marketing side of e-commerce. It consists of company
efforts to communicate, promote and sell products and services over the
internet. Some international hotel such as: Hilton, Marriott, Radisson
and Starwood conduct e-marketing at their web sites. The e-marketing is
the buying side of e-commerce. It consists of companies purchasing
goods, services and information from online supplier.

In business-to-business buying, e-marketers and e-purchasers come

together in huge e-commerce networks. E-commerce and the internet
bring many benefits to both buyers and sellers. Some of these major
benefits are discussed in 3.3 below.

3.3 Benefits to Buyers

Internet buying benefits both final buyers and business buyers in many
ways. It is convenient; customers don’t have to battle traffic, find
parking spaces, and trek through stores and aisles to find and examine
products. They can do comparative shopping by browsing through mail
catalogues or surfing web sites. Direct marketers never close their doors.
Buying is easy and private. Customers encounter fewer buying hassles
and don’t have to face sales people or open themselves up to persuasion
and emotional pitches. Business buyers can learn about and buy
products and services without waiting for salespeople.

The internet often provides buyers with greater product access and
selection. For example, the traveler going to one country can compare
hotels through pictures and virtual tours while sitting in their living
rooms.
Beyond a broader selection of sellers and products, e-commerce
channels also give buyers access to a wealth of comparative
information, information about companies, product and competitors.

The company’s web page must be appealing, relevant and current if it is

to attract repeat visits. Companies should consider using state-of-the-
graphics. The sites can be developed to provide valuable helps such as

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providing product expertise and a personal connoisseur to recommend

choice wines, holiday inns, book rooms over the internet and tell where
the restaurants are located.

The internet must be easily accessible and quick in responding to

customers’ calls. Customers may have high and rising expectations
about how quickly and adequately they should receive answers to
questions and complaints sent in by phone or e-mail. The internet user
must be able to communicate directly with the company on-line. People
like to communicate automatically. The computer can be programmed to
book reservations, select and confirm room reservations and other
information to the customer or prospective customers. However, when
the users have questions that the computer cannot answer or they have a
problem they would like to discuss, they should be given a phone
number to call and an automatic e-mail option.

When designing a web site, one must not forget the customers and the
importance of communicating with them in the method they desire.

4.0 CONCLUSION

Every hospitality organisation should endeavour to build and actively

manage a customer database. Internet service permits a company’s
targeting to be super efficient. The hospitality industry should therefore
take the advantage of the internet. It will improve the efficiency in the
areas of research, provide information, run discussion forum, provide
training, carry on lone buying and selling (i.e. e-commerce) to mention
but a few.

5.0 SUMMARY

In this unit, which is the last in this course, the importance and
application of computer and internet to the hospitality industry have
been discussed.

To survive and thrive in this century, managers will need to integrate a

new trend to management via the web. There is need to construct
relationships with suppliers and customers, to create value for them and
make money and in the process, revolutionizing marketing. Some
strategists envision a day when all buying and selling will involve direct
electronic connection between companies and their customers. This new
consumer thinking will affect every business inclusive of the speed,
price, product information and service.

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6.0 TUTOR-MARKED ASSIGNMENT

List the new age digital you would recommend for a 5- star hotel

7.0 REFERENCES/FURTHER READING

Kotler P., Bowen J. and J. Makens (2006). ‘Marketing for

Hospitality and Tourism 4th edn’. Australia: Prentice Hall

Quester, P. G., McGuiggan, R. and P. William (2001). ‘Basic

Marketing: A Managerial Perspective’. Australia: McGraw Hill.

Stokes, D. (1997). Marketing: A Case Study Approach, 2 edn. London:

Letts.

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