HOSP 481 Unit 1 Exam

Business Models of Intermediaries - Indirect Distribution

Agency Model Merchant Model Opaque Model Referral

Models of guest behavior - Four external factors

Culture Sub-cultures Reference groups Social class

Possession Processing

Customers are less physically involved compared to people processing services Involvement is limited Production and consumption are separable

Overall Factors That Determine Service Location Strategy (Heizer & Render, 2012)

1. Purchasing power of customer-drawing area 2. Service and image compatibility with demographics of the customer-drawing area 3. Competition in the area 4. Quality of the competition 5. Uniqueness of the firm's and competitors' locations 6. Physical qualities of facilities and neighboring businesses 7. Operating policies of the firm 8. Quality of management

The Logic of Marketing

A clearly structured way of thinking through the issues raised by an external or internal challenge in order to reach decisions and take action Concerned with developing hospitality offerings that will better satisfy guests Involves assessing changing market environments, gaining a good understanding of consumers' wants and needs, segmenting and targeting markets positioning the company and developing appropriate offerings that both satisfy guests and achieve company objectives Affects operating hospitality decisions, such as Developing new menus and food items Advertising to attract new customers Identifying new locations Monitoring competitors' actions Etc. Etc. Etc.

What is a Service?

A deed, a performance, an effort

Rate Fences

A rate fence is a rule applied to frame a price typically aimed at targeting different market segments. A combination of fences makes up for a price bucket.

Motivation: Need Primacy

All human behavior is motivated by needs for such things as food, safety and self-esteem A need is something that a person requires to satisfy emotional or rational goals A want results when people recognize that a certain product/service will satisfy their needs Maslow's hierarchy of needs is one of the most widely references need primacy theories

Sales forecasts and marketing plans

All marketing plans involve sales forecasts Marketing plans deal with the future Refer to the upper limit of industry demand in a certain market segment over a specific period of time

Effective hospitality marketing

Bases market offerings on guest needs

Self-image

Basic human attributes Guest perceived self-image Actual or real Guest desired self-image Desired

What are the two useful comparisons that result from a detailed SWOT analysis?

Comparisons with direct competitors and with industry benchmarks

Factors Favoring Adoption of Transnational Strategies

Competition drivers Competitors from overseas; interdependence of countries Firms may be obliged to follow competitors into new markets to protect own positions elsewhere Technology drivers Advances in information technology—miniaturization/mobility of equipment, digitization of voice Cost drivers Economies of scale Lower operating costs o Government drivers Favorable trade policies, compatible technical standards, common marketing regulations

Marketing Mix

Comprises the mix of controllable marketing variables that companies offer to guests to satisfy those guests' wants and needs Totality of the company's offerings to the marketplace The basic challenge is to develop, offer and adjust unique and differentiated hospitality services and products in a superior manner Vehicle for increasing marketing efficiency and productivity, gaining market share and increasing profits Requires planning, analysis and creativity

Standardized Products with modifications

Compromise between the standardization and customization. • Executive floors at a convention hotel, different sizes portion on menu items, Wyndham for Women

Strategic planning

Concerns an organization's primary mission, objectives and affects the scope and direction of company efforts Constrain and shape other plans and provide the basic framework for hospitality marketing operations Made at the highest management levels and may not involve broad participation in the planning process Suggestions o Customize o Introduce strategic marketing changes gradually and gain the confidence and commitment of marketing personnel o Include influential personnel in strategic planning o Realistic o Expect resistance o Be as involved as possible

_____________ - the process of developing plans that prepare managers with alternatives should unexpected threats or opportunities occur

Contingency planning

Places of Service Delivery

Cost, productivity, and access to labor are key determinants to locating a service facility Locational constraints • Operational requirements Airports, Subway Vs. McDonalds Vs. Quiznos • Geographic factors Ski resorts • Need for economies of scale Ministores Creating many small service factories to maximize geographic coverage • Automated kiosks Locating in multipurpose facilities Proximity to where customers live or work • Service stations

________ - the totality of values that characterizes a society

Culture

Ethical Concerns in Pricing

Customers are vulnerable when service is hard to evaluate or they don't observe performance of work Many services have complex pricing schedules Hard to understand Difficult to calculate full costs in advance of service Unfairness and misrepresentation in price promotions Misleading advertising Hidden charges Too many rules and regulations Customers feel constrained, exploited Customers unfairly penalized when plans change

According to Maslow's hierarchy of needs theory, a meal at a restaurant meets which basic need?

Depending on the situation, it can meet any or all of (physiological, belonging, esteem)

Customized Products

Designing products to fit the specific needs of a particular target market • Chipotle restaurants • allergy sensitive rooms at the Ritz Carlton • Have it your way!

Delivering Services in Cyberspace

Developments in telecommunications and computer technology Direct Distribution • SouthWest • JetBlue Indirect Distribution • Intermediaries

Customer and service organization transact remotely (mail or electronic communications) - Single Site

Direct distribution through website

________ - the objects, conditions, or activities toward which motives are directed

Drives

Which of the following criteria can be used to determine whether a hospitality business has unique service encounters that can set it apart from the competition?

Effective differentiation

Hospitality marketing checklist

Effective hospitality marketing starts with guests and then works back ton designing the enterprise and its offerings, rather than simply offering guests what the company has or can produce readily Work back from guests to the hospitality enterprise Clearly state and communicate company values Set high service standards Remain close to guests Develop an innovative climate Value employees and empower team Focus on action, not analysis Seek organizational clarity and simplicity Maintain flexibility Be future oriented Diversity carefully Rethink the enterprise

People

Employees performing tasks well Job design Recruiting Training Motivation Customers for firm's mission Education Training

Hospitality marketing planning concerns the planned use of marketing resources to achieve established goals

Encompasses both the process of planning and implementation of the plans themselves

Mental stimulus processing

Ethical standards required when customers who depend on such services can potentially be manipulated by suppliers Physical presence of recipients not required Core content of services is information-based • Can be "inventoried"

Activity drives

Exercise, rest, environmental change

Which of the following is the primary standard against which actual marketing results should be compared

Expected or planned results

Several models of consumer behavior apply to hospitality situations. Four basic components underlie most of these models

External and internal purchase stimuli, a search process, a decision process, and the resulting outputs

Customer goes to service organization - Multiple Sites

Fast food chain Hotel chain

Guest attitudes

Favorable attitudes tend to lead to purchases, while unfavorable do not Three interrelated factors contribute to guest attitudes Cognition • Info such as that concerning hospitality institutions and their offerings Evaluation Action

Sales Phase

Featured competitive pricing, convenient locations, drive through windows, fast service, readily prepared standardized food items and uniform lodging facilities

Channel Preferences Vary among Customers

For complex and high-perceived risk services, people tend to rely on personal channels (for example, cruises) Individuals with greater confidence and knowledge about a service/channel tend to use impersonal and self-service channels (direct web etc.) Customers with social motives tend to use personal channels (for example using travel agents as opposed to the web) Convenience is also a key driver of channel choice.

Four different approaches to the formal role of marketing in organizations can be identified

Full service marketing group The strategic planning focus The small and narrow focus The selling domination

Post-purchase

Guest reactions may be total satisfaction, partial satisfaction, or dissatisfaction

Purchase outputs

Guests learn, judge future alternatives, develop expectations and make choices Guest behavior and learning Contemporary learning theory falls into two categories • Behaviorists • Cognitive Focuses on perception, thought, reason, and memory and stresses human symbolic processes Further subdivided into stimulus-responses and operant conditioning theories • Stimulus-response theory Proposes that people are conditioned by various stimuli to respond in a desired manner • Operant conditioning theory Assumes that guests act in a voluntary and goal directed manner React to environmental cues Cognitive dissonance People experience discomfort when they have logically inconsistent thoughts about an object or event

The propriety of a business's operating principles may be checked by determining whether those principles

Help meet the company's goals and objectives

Service organization comes to customer - Single Site

Home delivery

Visceral drives

Hunger, smell, taste, thirst

Core Products and Supplementary Services

In mature industries, core products often become commodities Supplementary services help to differentiate core products and create competitive advantage by: Facilitating use of core product (a service or a good) Enhancing the value and appeal of the core product

Customer goes to service organization - Single Site

Independent restaurants

House of Brands

Individual brands make up for a portfolio. Accent is not on the parent brand.

One of the three main perspectives of marketing s to see it as a logic, a clearly structured way of reaching decisions. The logic of marketing

Involves assessing changing market environments Deals with segmenting and targeting markets Affects all hospitality operating decisions

Which of the following statements is true of the provider orientation phase of marketing?

It bases business decisions on owner, manager and employee concerns

Preference models

Knowledge of guests preferences gives hospitality providers opportunities to differentiate their offerings, develop effect and appealing marketing programs, and cultivate satisfied, loyal guests Non-compensatory preference models • One or more factors are critical to the guest Value expectancy preference models • Specifies attributed and rates the properties as before

Emotional drivees

Love, fear, joy, empathy, rage, disgust

Service organization comes to customer - Multiple Sites

Mail delivery

A Hierarchy of New Service Categories

Major service innovations • New core products for previously undefined markets Major process innovations • Using new processes to deliver existing products with added benefits Product-line extensions • Additions to current product lines Process-line extensions • Alternative delivery procedures • (Remote Check-ins) Supplementary service innovations • Addition of new or improved facilitating or enhancing elements (wireless augmentation etc.) Service improvements • Modest changes in the performance of current products (better quality of ingredients etc.) Style changes • Visible changes in service design or scripts (uniforms, renovations etc.)

___________ - an estimate of the maximum possible sales for an entire industry during a time period

Market potential

Purchase

Marketing efforts aim to influence guest purchase decisions

____________ - the totality of a hospitality company's offerings to the marketplace to satisfy guests' wants and needs

Marketing mix

Maslows Hierarchy of needs

Needs at the bottom dominate those above them Physiological • Food, clothing, water, air, sex Safety • As this need is satisfied, people begin to search for belonging and love in the form of acceptance as a member of a group or organization Need for esteem becomes increasingly important as people find belonging and love Self-actualization • One must do what one is best suited for, in the best possible manner • Honorary doctorates, scientific prizes

__________ - purchase model in which the lack of critical attributes in purchase alternatives is not offset or compensated by the presence of other desirable attributes

Non-compensatory preference model

Although guest motives are difficult to identify and measure, marketing researchers use such techniques as the following to clarify them

Observation Watch for guest reactions Note the questions they ask Self-reports Ask guests why they make various purchases Focus group interviews Assemble group of guests and ask them to share comments and insights about their motives for making choices Psychological tests

Strategic Responses to Managing Customer Perceptions of Risk

Offer guarantees For products where customers worry about performance, sensory risks: Offer previews, free trials (provides experience) Advertising (helps to visualize) For products where customers perceive physical or psychological risks: Deliver automated messages about anticipated problems Websites offering FAQs and more detailed background Train staff members to be respectful and empathetic

____________ - the process of developing weekly, monthly, quarterly, and yearly plans that deal with current operations

Operational planning

Barriers to International Trade in Services

Passage of free-trade legislation is important facilitator of transnational operations Notable developments: NAFTA, Latin American economic blocs, EU Despite efforts of WTO and GATT, operating in international markets still difficult Restrictions on international airline operating rights Administrative delays Limited availability of work permits Heavy taxation Legal restrictions Lack of broadly agreed accounting standards Cultural issues

How Service Processes Affect International Market Entry

People processing services require direct contact with customers • Export service concept Acting alone or in partnership with local suppliers For example, e.g., chain restaurants, hotels, car rental firms • Import customers Inviting customers from overseas to firm's home country For example, hospitals catering to "medical tourism" • Transport customers to new locations Passenger transportation (air, sea, rail, road)

A hospitality business decides to print more attractive dinner menus with larger types that its older guests will have an easier time reading them. Which dimension of service quality has been affected?

Presentation of a tangible element that is part of the service

Maximizing Revenue from Available Capacity at a Given Time

Price customization Charge different value segments different prices for same product RM uses mathematical models to examine historical data and real-time information to determine prices

Which of the following statements about product marketing is true

Product marketing and services marketing are quite different

___________ - the process of developing plans that deal with specific projects such as creating and marketing new products

Project planning

_________________ - a phase during which the hospitality industry was focused on internal operations, activities, and procedures, and guests were expected to adjust to the hospitality offerings instead of the offerings being adjusted to the guests

Provider orientation phase

Hospitality marketing has progressed through 4 identifiable phases. Which is in the correct sequence?

Provider phase, sales phase, promotional phase, marketing phase

Value-based Pricing: Enhancing Perceptions of Gross Value

Reduce uncertainty Service guarantees Flat rate Quoting a fixed price in advance Relationship pricing Discounts for volume purchases Discounts for purchasing multiple services Low-cost leadership Convince customers not to equate price with quality Keep economic costs low to ensure profitability at low price

Families, friends and co-workers often influence individual hospitality purchase decisions. These external influences are often known as

Reference groups

____________ - groups that influence consumers through contact and aspiration

Reference groups

Customer Delight: Going Beyond Satisfaction

Research shows that delight is a function of three components: Unexpectedly high levels of performance Arousal (e.g., surprise, excitement) Positive affect (e.g., pleasure, joy, or happiness) Is it possible for customers to be delighted by very mundane services? Strategic links exist between customer satisfaction and corporate performance. Getting feedback during service delivery help to boost customer loyalty

___________ - a phase during which the hospitality industry concentrated on aggressively increasing business (paying less attention to profit than to volume) and featured such things as competitive pricing, convenient locations, and drive-through windows

Sale orientation phase

Which of the four forms of marketing organization is by far the most common in the hospitality industry

Sales dominant

Which of the following refers to the actual sales that a hospitality enterprise estimates in a specific market over a particular time period

Sales forecast

_____________ - an estimate of dollar or unit sales for a specific future time period under a proposed marketing plan or program

Sales forecast

_________ concern the actual sales that a hospitality enterprise estimates in a specific market over a particular time period

Sales forecasts

_______ - refers to the market share of a given hotel or restaurant may gain in a certain time period if it exerts a max effort

Sales potential

_____________ - the portion of the market potential that a particular business can reasonably expect to achieve

Sales potential

Customer Satisfaction Is Central to the Marketing Concept

Satisfaction defined as attitude-like judgment following a service purchase or series of service interactions Customers have expectations prior to consumption, observe service performance, compare it to expectations Satisfaction judgments are based on this comparison Positive disconfirmation if better than expected Confirmation if same as expected Negative disconfirmation if worse than expected Satisfaction reflects perceived service quality, price/quality tradeoffs, personal and situational factors Research shows links between customer satisfaction and a firm's financial performance

Evaluating a Service May Be Difficult

Search attributes help customers evaluate a product before purchase Style, color, texture, taste, sound Experience attributes cannot be evaluated before purchase—must "experience" product to know it Vacations, sporting events, medical procedures Credence attributes are product characteristics that customers find impossible to evaluate confidently even after purchase and consumption Teaching, consulting etc.

_____________ - a series of service encounters between hospitality service providers and guests

Service chain

______________ - an interpersonal exchange between a hospitality provider and a guest

Service encounter

Kinds of planning

Situation analysis • Economic, social, political and technological change o Global o National o Regional o Local • Market conditions o Room supply o Room demand o Competitive hotels o Occupancy o Rates o Market share o Guest origin o Seasonality Market segments, guest behavior • Demographics • Guest profiles • Benefits sought • Competitor's guests • Corporate guests • Conventions • Transients • Group travel • Airline staff Guest satisfaction, value/cost measures • Surveys of guests • Guest satisfaction cards • Incidence of repeat visits • Service staff perceptions • Service encounter analysis • Product cost data • Identification of high yield segments Competitive analysis Culture, resources and skills • Prevailing culture • Barriers to change • Facilities design • Level of skills • Barriers to effect service delivery Product/service evaluation Communication mix Pricing mix Distribution networks Profit center reviews • Restaurants • Beverage service • Rooms available • Other facilities

Which of the following external factors is commonly used to understand why families of the same size and income may make very different hospitality purchases

Social class

__________ - characterization of the outlook and way of life of groups in a society according to their social position

Social class

Service Encounter Analysis: The Six S's o Gather, organize, and analyze pertinent data according to the six s's

Specification • Clearly describing the what, when, where and how of the service encounters. It requires careful thought about the links between particular service encounters in the service chain Staff • Which staff members are involved in providing service? What skills do they need? What training has been provided? Etc. Space • Where will the service encounter occur? Is the space appropriately designed to facilitate the service encounter? Systems • Is the information necessary to respond effectively to guests' needs readily available? Is the appropriate technology being fully used? Support • Are the service providers given the facilities and financial and human support needed to do the job? Have employees been given the training they need? Are incentive and reward systems gears to the tasks to be performed? STYLE * • How should the service encounter be conducted, given the organizational culture?

Types of Hospitality Products

Standardized Products Consistency, economies of scale and cost benefits from standardization • QSR, Budget and economy hotels

___________- - a behaviorist theory of learning that proposes that people are conditioned by various stimuli to respond in a desired manner

Stimulus response theory

___________ - the identification of strategic issues that might well demand immediate responses and the development of plans to deal with them outside the normal planning cycle

Strategic issue planning

Which type of planning concerns a hospitality organization's primary mission and objectives and affects the scope and direction of company efforts?

Strategic planning

_____________________ - consideration of decision alternatives in light of their probable consequences over time. Distinguishing characteristics include an external orientation, a process for formulating strategies, analysis of strategic situations, and commitment to action

Strategic planning

_________ - the culture of a segment of a society such as religion, ethnic, or age segments

Subculture

Planning and Branding Service Products

Target Marketing

Managing marketing planning

Techniques and systems Provide the techniques and systems to develop credible operational marketing plans Behavioral issues These include management attitudes toward and perceptions of planning, commitment, training and participation Organizational issues Offer the necessary support and reinforcement to planning within the organization o Consistency among all the above These factors should work together to support each other

Service Delivery Innovations Facilitated by Technology

Technological Innovations Development of "smart" mobile telephones and PDAs as well as Wi-Fi high-speed Internet technology that links users to Internet from almost anywhere Voice-recognition technology Increase accessibility of services - Location aware marketing Yelp Deliver right information or interaction at right time Create and maintain up-to-date real-time information

Services Require An Expanded Marketing Mix

The 7Ps of services marketing are needed to create viable strategies for meeting customer needs profitably in a competitive marketplace.

Throughout the service chain, interactions between guests and hospitality providers are affected by

The attitudes and skills of the service provider The expectations and desires of the guest The personalities of both the providers and the guest

How can marketing planning be made more effective?

The following list describes how to avoid the most common of these dangers and how to enhance the effectiveness of the marketing planning process Avoid confusing analysis and unnecessarily sophisticated quantitative techniques Do not confuse arithmetic manipulations of last year's plans Do not base marketing plans on straight-line projections Develop good databases Develop forms, suggestions and systems Make strategic changes Develop realistic plans Do not replace implementation and action with regular desire to defer decisions

Customization

The growing demand for customization in quick-service can be attributed to consumer insistence on a "me society" and operators' intense battle for food-share.

Marketing Mix Perspectives

The overall objective is to optimize the total mix, sometimes at the expense of the individual components

There are three basic stages of activity in guest purchase behavior. In which stage are guests most concerned with learning about their options and assessing their choices?

The pre-purchase phase

What is Revenue Management?

The science of maximizing profits through market demand forecasting and the mathematical optimization of pricing and inventory Related names: Yield Management (original) Revenue Optimization Demand Management Demand Chain Management

Managers can analyze 5 dimensions of hospitality service in their search for improvements

The tangible elements involved Reliability of service Responsiveness to guests Assurance of service providers Guest empathy

Marketing's major concern is to satisfy customers at a profit, and exchange is its central concept

This underlying logic is the same for both services and products

Non-Physical Fences (Transaction Characteristics)

Time of booking or reservation Requirements for advance purchase Must pay full fare two weeks before departure Location of booking or reservation Passengers booking air tickets for an identical route in different countries are charged different prices Flexibility of ticket usage Fees/penalties for canceling or changing a reservation (up to loss of entire ticket price) Nonrefundable reservation fees Time or duration of use Early-bird special in restaurant before 6PM Must stay over on Saturday for airline, hotel Must stay at least 5 days Location of consumption Price depends on departure location, especially in international travel Prices vary by location (between cities, city center versus edges of city) Frequency or volume of consumption Member of certain loyalty tier with the firm get priority pricing, discounts, or loyalty benefits Group membership Child, student, senior citizen discounts Affiliation with certain groups (e.g., alumni) Size of customer group Group discounts based on size of group

Attitudes toward planning

Top down Devised by a centralized group and then communicated to various levels throughout eh organization for implementation Bottom up Engage operating personnel in developing plans for their units

Transition in Management Thinking

Traditional views of management have often advocated the virtues of agreements among competing firms to hold back the forces of change Mechanistic and clearly defined hierarchical lines of command and functional arrangements worked well when the same basic sets of tasks was performed over and over Today, competition is key and the search for the best global practice exemplifies the intensity of the drive Market driven hospitality enterprises are challenged by unpredictable changes that call for flexibility at all levels. These companies operated more effectively with a flatter organizational structure that facilitates a built in capacity to learn, to use a team approach, and to be open and to respond quickly to market changes

Time of Service Delivery

Traditionally, schedules were restricted - Service availability limited to daytime, 40 to 50 hours a week - Sunday historically considered as a rest day in Christian tradition, Saturday in Jewish tradition, and Friday in Muslim tradition Today - For flexible, responsive service operations: • 24/7 service—24 hours a day, 7 days a week, around the world - Some organizations still avoid 7-day operations, for example: • Atlanta-based Chick-fil-A • "Being closed on Sunday is part of our value proposition"

Customer and service organization transact remotely (mail or electronic communications) - Multiple Sites

Travel intermediaries

Modes of Internationalization

Use third parties to market/deliver service concept Licensing agents Brokers Franchising Alliance partners Minority joint ventures Control service enterprise abroad Direct investment in new business Buyout of existing business

As a general guideline, analyze the service chain to the extent that service encounters of operational and strategic significance are highlighted. To do so, four criteria may be used

Value creation • Related to the perceived importance of service encounters to actual and potential guests. Where an activity creates significant aspects of total guest value, it should be treated as a separate encounter in a service chain Factors driving costs • Includes what it costs to get the service encounter right and whether the cost is reasonable Effective differentiation Competitor innovation

_________________ - purchase model in which the attributes, of various purchase alternatives are weighted according to their relative importance

Value expectancy preference model

Marketing planning questions

Why • Identifies the planning goals: market share, profit, image, quest satisfaction, sales • Specifies the purposes of each marketing strategy and action How • Develops programs for each unit: indicates the use of marketing resources • Develops the marketing mix and allocates resources to marketing What • Establishes goals for each program and control point • Permits measures of performance in specific time periods Who • Identifies responsibilities • Specific accountable units and persons When • Plans the time sequence • Establishes time lines for all activities Where • Deals with location and distribution/networking plans • Specifies where activities will take place

The Marketing Philosophy in Operation

Working from the marketplace back to the company rather than the other way around Guest considerations become both the starting point and ending point of hospitality activities, directly driving strategies, plans, policies and decisions the actions of managers and employees are guided by or based on policies Policies are in turn rooted in the business principles they are signed to carry out Principles refer to a company's credo and might include such guidelines as offering quality service, providing good looking value, dealing fairly with guests, serving international business clientele effectively, catering to celebrity clientele, being a leader in housekeeping, etc. Principles in turn are designed to help the company meet its goals and objectives Hospitality marketing philosophy --> hospitality goals and objectives --> principles of hospitality operation --> hospitality policies --> hospitality actions

_________ - the development of plans that starts with a clean slate, taking nothing for granted and assuming everything can be changed

Zero-based planning

The delivery of hospitality service is an outcome of..

a managed service system designed to achieve desired objectives

Hospitality Marketing -

a total system designed to plan, price, promote and make available to selected markets hospitality products and services in the form of benefits and experiences that create satisfied guests and achieve organizational objectives o It sees the hospitality business as a system of activities extending well beyond the walls of the property

The marketing logic focuses on

creating and effectively delivering the right hospitality services and products when and where guests want them at priced they are willing to pay

External forces

cultures subcultures reference groups social classes

Once objectives have been set and initial choices of marketing mix components identifies, it is then important to ...

focus directly on the link between action and effect

The marketing orientation represents a...

fundamental approach, a way of life, for effective hospitality companies

Turning strategies into plans and budget - these objects may concern such areas as ...

guest satisfaction, occupancy rates, covers, market share, growth rates, business from new markets, new staff numbers, turnover, and profits o Marketing audit Corporate objectives, Mission Situation analysis • Environment • Strategy • Capability Strengths, weaknesses, opportunities and threats analysis Strategic issues identified o Choosing a strategy Options, Priorities o Building marketing plans and budgets Working assumptions Marketing objectives, Mix Estimated outcomes Functional, project plans, budgets Implementation and measurement

The goal of marketing is ...

guest satisfaction, which is the very essence of hospitality o It is also the key to growth and profits

Marketing is all about the ...

guests (both actual and potential)

Setting objectives is even more complex when...

incentive programs are tied to performance by specifying targets for a range of objectives

Services involve ...

interactions of at least two people - the provider and the receiver

lower class

life style orientation Close family relationships Chauvinistically loyal Not interest in world affairs Neighborhood orientated Immediate gratification purchasing tendencies Status symbols Products enhancing self-esteem Pseudo symbols of prosperity Readily available products

working class

life style orientation Fun oriented Parochial Unsophisticated taste Focus on possessions, not ideas purchasing tendencies Newest appliances, sporting events, hunting, boating, fishing, bowling equipment Newest and biggest items

Pricing Approaches

o A customer or demand-based approach focuses on the price ceiling: the maximum price customers are likely to pay. o A cost-based approach focuses on the price floor: the minimum price that covers all costs of producing the service. o A competition-based approach establishes the service's price in relation to the competition.

Price

o Flexibility and levels o Differentiation o Discounts o Terms

Purchase stimuli

o Info processing o Purchase stages o Drives o Motives Behavior primacy Need primacy

Marketers are challenged to create ...

realistic, credible, and practical marketing plans that can be readily implemented to achieve specified goals

Marketing involves..

sales, designing, managing, and pricing products, services and guest experiences and planning the wide array of communications that promote these offerings

o Marketing refers to a ...

total management commitment to serving guests, to a culture that stresses satisfying customers o It also includes decisions about location, facilities and operations

Contingency planning

• Approach to the question, what would we do if?

Subcultures

• May be grouped by geography, religion, ethnicity, race, age, education, nationality, occupation, or other traits • Affect guest reactions and purchase behavior

Project planning

• Refers to the development of detailed action plans that are outside of the normal scope of operations but correspond to the organization's directions and methods • Efforts must be planned in details, although they are beyond normal operations and may not be implemented at all • Project planning teams with people from various functional areas

Planning the Hospitality Service Encounter

At each stage of service chain, interactions occur between guests and hospitality providers Chain of service encounters (each service encounter must be thought through in detail) Arrival at the front entrance Greeting Luggage handling Trip to the room Entry into the room Guest perceptions of service translate into either repeat business of disappointment and perhaps bad word of mouth Service encounter shave the power to reinforce of destroy the effectiveness of hospitality marketing programs

Physical Rate Fences (Product Related)

Basic Class of travel (business/economy class) Size and furnishing of a hotel room Seat location in a theater Amenities Free breakfast at a hotel, airport pickup, etc. Free golf cart at a golf course Service level Priority wait-listing Increase in baggage allowances Dedicated service hotlines Dedicated account management team

Revenue Management

Began in the airline industry (early 80s) Seats on an aircraft divided into different products based on different restrictions $1000 Y class product: can be purchased at any time, no restrictions, fully refundable $200 Q class product: Requires 3 week advanced purchase, Saturday night stay, penalties for changing ticket after purchase Hotels began embracing (late 80s) 2001 - Integrated into channel management

_________ - a theory of human motivation that explains the behavior results from interactions with various environments

Behavior primacy

Which of the following statements about buyer behavior models is true

Buyer behavior models help managers develop solutions to marketing problems

Planning levels and tasks

By task Plans must be developed for the performance of major marketing tasks Includes are plans for the performance of the normal strategic and operating marketing activities Meeting competitive challenges can call for the development of plans, as can the intuitive to implement changes that cannot wait for the next planning cycle

Social classes

Capacity of social position to shape and determine a particular way of life for various segments of society While income pays a role, family, background, occupation, education, race ethnicity, and even one's address are important components of social class Lifestyles of upper class are more likely to emphasize grateful living, while lower class may be more oriented to acquiring material goods, working with their hands, and enjoying certain kinds of sporting activities

Using sales forecasts

Changing environments --> opportunity assessment --> sales forecast --> marketing plans

From marketing situations to actions

Changing hospitality situations --> marketing strategies --> marketing plans marketing budgets --> marketing action

_________ - a theory dealing with the discomfort that people feel when they encounter logically inconsistent thoughts about a situation and their resulting actions

Cognitive dissonance

____________ - a theory of learning that focuses on the way people perceive objects and situations and associate meaning with them; assumes that people act on their beliefs

Cognitive learning theory

People processing

Customers must: Physically enter the service factory Co-operate actively with the service operation Managers should think about process and output from customer's perspective To identify benefits created and non-financial costs: • Time, mental, physical effort

Distribution Options for Serving Customers

Customers visit service site Convenience and spread of locations and operational schedules important when customer has to be physically present Service providers go to customers Unavoidable when object of service is immovable Arguably more expensive and time-consuming for service provider Service transaction is conducted remotely Achieved with help of logistics and telecommunications

Operational Planning

Deals with short range plans for existing activities in existing markets by focusing on current guests and available facilities

__________ - a theory of human motivation that deals with the potency of various needs of motives

Hierarchy of needs

Purchase decisions

Hospitality marketers must strive to understand guest purchase reactions for two important reasons This knowledge will help design hospitality offerings that are more attuned to guest expectations It helps marketers favorably influence guest reactions toward their hospitality offerings

__________ - a total system designed to plan, price, promote and make available to selected markets hospitality products and services in the form of benefits and experiences that create satisfied guests and achieve organizational objectives

Hospitality marketing

Defining Core and Supplementary Elements of Our Service Product

How is our core product defined and what supplementary elements augment it? What product benefits create most value for customers? Is our service package differentiated from competition in meaningful ways for target customers? What are current levels of service on core product and each supplementary element? Can we charge more for higher service levels? For example: Faster response and execution Better physical amenities Easier access Higher staffing levels Superior caliber personnel Alternatively, should we cut service levels and charge less?

_______________ - the management perspective approach now being used by leading hospitality companies, which places the emphasis on guest wants and needs. This phase was brought on by a significant increase in other businesses adopting marketing approaches and hospitality markets becoming more competitive

Marketing orientation phase

The Challenge of Distribution in Large Domestic Markets

Marketing services (i.e., physical logistics) face challenges due to: Distances involved (geographic areas) Existence of multiple time zones Differences in laws and tax rates Serving multiple segments across a huge geographic area is biggest marketing challenge

Conceptual Connections

Marketing stands for a total commitment to guests

Competition-Based Pricing

Monitor competitors' pricing strategy (especially if service lacks differentiation) Who is the price leader? Typically, one firm sets the pace

Product Lines and Brands

Most service organizations offer a line of products rather than just a single product They may choose among three broad alternatives: Single brand to cover all products and services A separate, stand-alone brand for each offering Some combination of these two extremes

______ - the stimuli for human behavior; explanations for why people act as they do

Motives

motives

Motives inspire people to act

How to Determine What Supplementary Services Should Be Offered

Nature of product helps to determine: Which supplementary services must be offered Which might usefully be added to enhance value and ease of doing business with the organization Market positioning strategy helps to determine which supplementary services should be included

A typology of services

Nature of service act Tangible actions • People People processing Services directed at people's bodies Barbers Health care • Possessions Processions processing Services directed at physical possessions Refueling Disposal/recycling Intangible actions • Mental stimulus processing • Services directed at people's minds Education Advertising/PR • Information processing Services directed at intangible assets Accounting Banking

____________ - a theory of human motivation that holds that behavior is motivated by needs

Need primacy

The guest search process

Need recognition --> investigation --> evaluation of alternatives --> choice

____________ - a behaviorist theory of learning that explains that guests act in a voluntary and goal directed manner as they interest with and manipulate their environment

Operant conditioning theory

Marketing planning in action

Planning enhances efficiency and effectiveness and permits organized, coordinated marketing thrusts

Plans and budgets

Plans depend upon adequate budgets for effective implementation, and budgets

Franchising

Popular way to expand delivery of effective service concept Franchising is a fast growth strategy, when Resources are limited Long-term commitment of store managers is crucial Local knowledge is important Fast growth is necessary to pre-empt competition Study shows significant attrition rate among franchisors in the early years of a new franchise system One-third of all systems fail within first 4 years Three-fourths of all franchisors cease to exist after 12 years Disadvantages of franchising Some loss of control over delivery system and, thereby, over how customers experience actual service Effective quality control is important yet difficult Conflict between franchisees may arise especially as they gain experience Alternative: license another supplier to act on the original supplier's behalf to deliver core product - Rare in hospitality contexts

Stages of activities in guest purchase behavior

Pre-purchase Attention Interest Desire Purchase Trial Action Post-purchase Reassure Confirm

_________ - models that deal with consumer evaluations of purchase alternatives based on the purchase attributes they desire

Preference models

Mix of choices in each of the 4 primary decision areas

Product/service mix • Food • Beverage • Atmospherics • ... • Location Communications mix • Advertising • Personal selling • Merchandising • ... • Promotions Distribution mix • Travel agents • Tour operators • Airlines • ... • Consolidators Pricing • Rack prices • Discounts • Costs • ...

Which of the following refers to the development of detailed action plans that are outside of the normal scope of operations but correspond to the organization's directions and methods

Project planning

______________ - a phase during which the hospitality industry broadened the sales orientation to recognize the importance of mass marketing activities, yet still neglected the primacy of guest wants and needs

Promotional orientation phase

Four primary decision areas lie at the heart of a hospitality marketing system. These four are

The product/service mix (specification), the communications mix (promotion), the distribution mix (network partnership) and pricing

Factors Favoring Adoption of Transnational Strategies

Transnational strategy involves integration of strategy formulation and its implementation across all countries in which company elects to do business Market Drivers Common customer needs across countries Corporate customers seek to standardize and simplify suppliers used in different countries—ad agencies, logistics suppliers, Big 4 accounting firms

It answers questions such as,

What is our property actually worth? Where should we expand or contract? What new markets are emerging? Where should new units be located? Which properties should be closed? What alliances should be made with other companies? What products and services should be added? What advertising and sales strategies should be used? What pricing, promotional and merchandising strategies should be adopted?

Distribution and Restaurants

What types of traffic and dining demand could be captured in the downtown area? What do local demographics and lifestyle characteristics suggest about market demand? Who are the existing competitors and how successful are they? What dining concepts are missing from the downtown district and/or trade area?

Planning involves a logical sequence of tasks for setting marketing objectives and formulating the means to achieve them

Where are we now? Where do we want to be? How do we get there?

Four general criteria may be sued to determine whether a specific service chain has operational and strategic significance. These criteria include

Whether a service contributes significant aspects of total guest value Whether specific service encounters are unique and differentiable assets Whether competitors have found attractive ways of handling a certain service

As a general rule, service chains should be analyzed When they ...

have operation and/or strategic significance

Upper class

life style orientation Good taste Graceful living Good things in life Individual expression Interest in arts/culture purchasing tendencies Quality merchandise Expensive hobby and recreation equipment Art Books Travel

middle class

life style orientation Respectability Conformity Propriety purchasing tendencies Items in fashion Items related to self-presentation Nice clothing, neighborhood and home Items for children

o Service encounters, the interactions between guests and hospitality providers, are the ________________. At each stage of the service chain, guest expectations are ___________________.

links of service chains met, unmet or exceeded When they are unmet, management is challenged to turn negative situations around To do so, analysis of the six s's can be helpful

Promotion

o Advertising o Media types and types of ads o Promotional mix o Publicity o Internet/Web Strategy

Augmenting the Core Product

o Are supplementary services needed to facilitate use of core product or simply to add extra appeal? o Should customers be charged separately for each service element? o Or should all elements be bundled at a single price?

When the encounters comprising a service chain are identified and the analysis suggested above is completed, management can then address the following 3 issues regarding each specific service encounter and the whole service chain

o Can we reduce costs and still maintain guest values? o Can we increase guest values while keeping cost constant? o Can we reduce the investment in required resources without increasing costs or reducing guest value?

Government Policies Transforming the Service Economy

o Changes in regulations o Privatization o New rules to protect customers, employees, and the environment o New agreement on trade in services

Purchase decision

o Choosing o Preference models o Perceptions o Images o Attitudes

Opaque Model

o Consumers specify the price within specific range o Customer offer-prices are communicated to participating hotels/suppliers o Suppliers can choose to elect whether or not to accept those offers. o The hotel at which a customer will stay is only shown when the buyer purchases his or her stay. o The intermediary gets a commission for each of the reservations o For example, Priceline and Hotwire.

Product Elements

o Core service (responding to the primary need) o Quality o Supplementary services (augmentations)

Placement

o Delivery decisions: Where, When, How o Geographic locations served o Service schedules o Channel types (physical and/or electronic channels) o Customer control and convenience o Channel partners/intermediaries

Designing Fairness into Revenue Management

o Design clear, logical, and fair price schedules and fences o Use high published prices and present fences as opportunities for discounts rather than quoting lower prices and using fence as basis to impose surcharges o Communicate consumer benefits of revenue management o Use bundling to "hide" discounts o Take care of loyal customers o Use service recovery to compensate for overbooking

Process

o Design of activity flows o Steps and choices for customers o Nature of customer involvement o Role of technology, degree of automation

It is important to understand guests

o Determine their wants, needs and motives o Cornerstone of successful hospitality marketing is knowledge of guests o When guest needs are recognized and understood, hospitality managers can respond appropriately and increase the effectiveness of marketing operations

Guest drives

o Drives (needs) and motives are basic elements of guest behavior. o Drives are the objects, conditions, or activities toward which motives are directed o Drives are goals that dispose people to take some action, and as such, they energize or trigger motives

General components of consumer behavior models

o External forces o Group influences Culture, subculture, reference groups, social class o Guest buying process Purchase stimuli search process purchase decision purchase outputs

Physical Environment

o Facility design o Equipment o Signage o Employee dress o Web pages o Sounds and smells

Marketing tools to reduce customer conflicts

o Fenced pricing o Bundling o Categorizing o High published price o Well-designed customer recovery program for overbooking o Preferred availability policies o Offer lower displacement cost alternatives o Physical segregation and perceptible extra service o Set optimal capacity utilization level

Info in the marketing planning process

o Follows a progression from gathering and analyzing marketing info, to making marketing assessments, developing actual marketing plans and programs, implementing them, monitoring results and finally, making necessary adjustments o REFER TO DETAILED MARKETING PLANNING PROCESS ON PAGE 88

Perceived Risk

o Functional—unsatisfactory performance outcomes o Financial—monetary loss, unexpected extra costs o Temporal—wasted time, delays leading to problems o Physical—personal injury, damage to possessions o Psychological—fears and negative emotions o Social—how others may think and react o Sensory—unwanted impact on any of five senses

Transformation of the Service Economy

o Government Policies o Social Changes o Business Trends o Advances in IT o Globalization New markets and product categories Increase in demand for services More intense competition • Innovation in service products and delivery systems, stimulated by better technology • Customers have more choices and exercise more power • Success hinges on o Understanding customers and competitors o Viable business models o Creation of value for customers and firms

Implications of Customer Participation in Service Delivery

o Greater need for information/training to help customers to perform well, get desired results o Customers should be given a realistic service preview in advance of service delivery, so they have a clear picture of their expected role

Advances in IT

o Growth of the Internet o Greater bandwidth o Compact mobile equipment o Wireless networking o Faster, more powerful software o Digitization of text, graphics, audio, video

What should marketing planning achieve

o Help design an organization's future and indicate how it might be realized o Develop a realistic, feasible marketing plan that can be readily implemented o Provide marketers with the mindset, info, and tools to carry out their responsibilities more effectively o Guide and assist the implementation o Early warning system o Means to deal more effectively with continuously changing environments o Offset tendencies o Coordinate and harness marketing activities to achieve greater impact o Realistic budgeting o Designate marketing responsibilities o Communicate objectives, strategies, and approaches throughout the enterprise o Gain the commitment and dedication o Realize an acceptable rate of return o Develop useful info o Encourage an ongoing review system

How is marketing organized?

o In most small businesses, the owners/managers do the work of marketing o In a mid-size organization, there is typically a designated marketing manager o In a large property, there is typically an entire department Vice president of director of marketing and sales • Director of convention service & then people under them • Director of advertising and public relations & then people under them • Telemarketing director & then people under them • Director of sales & then people under them • Market research coordinator & then people under them

Information processing

o Information is the most intangible form of service output o But may be transformed into enduring forms of service output o Line between information processing and mental stimulus processing may be blurred.

Agency/Retail Model

o Intermediary acts as an agent of the hotel. Customer reservations will be directly passed to the hotel. o Hotel decides price the customer needs to pay. o The intermediary is a facilitator and is given a pre-fixed commission for each reservation made through them. o For example, Travelocity, Expedia, Booking.com

Merchant Model

o Intermediary company receives inventories as blocks of hotel rooms at wholesale rates from hotels. o Intermediary plays merchant and sets price. Difference or premium belongs to intermediary. o Travelers pay for hotel, plane ticket, and other reservations before traveling. o Intermediary then pays the service provider a predetermined wholesale rate when the traveler uses the service. o For example, Hotels.com, Expedia and Travelocity etc.

Monitoring plans

o Involved comparing actual results with planned or expected results o Expected results are the standard that specifically indicate what the plans are designed to do

The Hospitality Industry

o Is a serving business providing food and/or lodging to those traveling for business or pleasure o Spans a spectrum of travel related businesses large and small, global, national, regional and local, independent and chain, economy and world class

The Functional Perspective

o It is both an activity - something that people do - and a name for part of the organization o Explores ways of organizing to accomplish the tasks that marketing people handle o Distinguish between the everyday or operational work of marketing and the less frequent, but vital, strategic work of marketing

Guests as Assets

o Loyal guests are reflected in market share, sales and profitability o Guest reactions make items valuable or worthless

Globalization

o More companies operating on transnational basis o Increased international travel o International mergers and alliances

Marketing must be integrated with other management functions

o Operations management --> customers o Human resources management --> customers o Marketing management --> customers

Customers seek solutions to aroused needs

o People buy goods and services to meet specific needs/wants o External sources may stimulate the awareness of a need o Companies may seek opportunities by monitoring consumer attitudes and behavior

Costumer conflict can arise from

o Perceived unfairness and perceived financial risk associated with multitier pricing and selective inventory availability o Unfulfilled inventory commitment o Unfulfilled demand of regular customers o Unfulfilled price expectation of group customers o Change in nature of service

Perceptions and images

o Perceptions are subjective mental impressions of people, objects and situations o Depend upon stimuli such as design, location, and color, as well as personal factors such as moods, experiences, values, desires and needs

Primary Reasons Why Prices of Services Vary

o Perishability o Seasonality o Time Span of Consumption o Space o Location o Willingness to pay o Location

Pre-purchase

o Potential guests are seekers and users of info o Info helps them clarify their wants/needs/search for satisfying alternatives/assess their choices o Info attracts and informs guests and creates desire

In product marketing, tangible products dominate

o Product decisions are often made by managers who are remote from final customers o Often reduces or eliminates human interactions through such techniques as automation and self service

Business Trends Stimulating Transformation of the Service Economy

o Push to increase shareholder value o Emphasis on productivity and cost savings o More strategic alliances and outsourcing o Focus on quality and customer satisfaction o Growth of franchising o Marketing emphasis by nonprofits

The Marketing Orientation as a Management Philosophy

o Putting guests first in management's thinking, and then letting all else flow from that o Thinking begins with guest needs, interests, desires and expectations

Customer Or Value-Based Pricing

o Relate price to value perceived by customer o Value exchange will not take place unless customer sees positive net value in transaction o Net value = Perceived benefits to customer (gross value) minus all Perceived outlays (Money, Time, Mental/Physical effort)

Social Factors Transforming the Service Economy

o Rising consumer expectations o More people short of time o Increased desire for buying experiences versus things o Rising consumer ownership of high tech equipment o Easier access to information o Immigration o Growing but aging population

Purchase outputs

o Satisfaction o Dissatisfaction o Learning o Dissonance

Search process

o Search o Routine purchases o Non routine purchases

How Might Consumers Handle Perceived Risk?

o Seeking information from respected personal sources o Relying on a firm that has a good reputation o Looking for guarantees and warranties o Visiting service facilities or trying aspects of service before purchasing o Asking knowledgeable employees about competing services o Examining tangible cues or other physical evidence o Using the Internet to compare service offerings and search for independent reviews and ratings

Theatrical Metaphor: An Integrative Perspective

o Service dramas unfold on a "stage"—settings may change as performance unfolds o Many service dramas are tightly scripted, others improvised o Front-stage personnel are like members of a cast and have flair o Like actors, employees have roles, may wear special costumes, speak required lines, behave in specific ways o Support comes from a backstage production team o Customers are the audience—depending on type of

Hospitality Services

o Serviced is a most important factory in generating hospitality differentiation for it bestows market uniqueness, builds customer loyalty, and pays long term dividends o Top management must believe that quality service is directly related to the bottom line

Services Dominate the US Economy

o Services - 68% o Agriculture, Forestry, Mining, Fishing - 2.3% o Manufacturing and Construction - 17.3% o Government - 12.4%

Cost-based pricing

o Set prices relative to financial costs o Set prices relative to financial costs (problem: defining costs) o Activity-based costing o Pricing implications of cost analysis

Service Encounters and Service Chains

o Successful marketing of hospitality services requires careful planning and proper implementation of each service encounter in the total sequence of activities and systems that each service provider deals with o The physical features of hospitality offerings provide only the context within which services are rendered. It is largely services that differentiate the hospitality offerings of competing providers

Referral Model

o Supplier defines "call to action" meaning sets the terms of sale o Referral website advertises deal provided by supplier o No inventory changes hands o Financial arrangement is advertising‐based, transaction‐based or some combination of the two o Example: Travelzoo, TravelTicker etc.

Revenue Management Levers

o Supply and Demand o Understanding demand indicators o Consumer confidence o Pricing trends o Competitive Trends o Historical performance

Research has identified 5 common dimensions of service quality that apply to hospitality situations, as well as measurable factors pertaining to each

o The appearance or presentation of tangible elements that are part of the service o The reliability or dependability of the service o The responsiveness to guest needs o The assurance of those providing the service o The ability of those providing service to empathize with guests

Some of the following discussion points are where hospitality service gaps tend to occur

o The gap between guest expectations and management perceptions o The gap between management perceptions and the specification of service quality standards o The gap between specification of service quality and the service actually delivered o The gap between service delivered and service promised

Motivation: Behavior Primacy

o The theory holds that human behavior results from interactions with various environments o Guests change their behavior to cope with environmental shifts o According to the theory, environmental forces shaping guest reactions must be considered in order to understand and predict guest behavior

Nonmonetary Costs

o Time costs o Physical costs o Psychological (mental) costs o Sensory costs (unpleasant sights, sounds, feel, tastes & smells)

The Marketing Philosophy vs. Traditional Approaches

o Traditional Orientation Hospitality capabilities --> initiate hospitality business --> offer to the market --> guest reaction o Marketing orientation Guest wants and needs --> unmet hospitality needs --> company resources (external resources) --> potential market opportunity --> segment market niches, target markets --> hospitality marketing mix --> guest satisfaction hospitality company goals • Feedback throughout every step

Branded House

o Use of one name across all activities. o In the product world - Apple (iPod, Mac, iTunes, iPhone, etc.)

Three basic ways of thinking about contemporary hospitality marketing

o We can look at it as a philosophy or fundamental orientation of management o We can look at it as a logical approach to strategic and operational business challenges o We can look at it as a major functional area within the hospitality organization

Coping with Functions Structures

o We need to overlay the functional framework with cross-functional teams and working alliances through which strategic would can be tackled o REFER OPTIONS FOR MARKETING FUNCTION ON PG 23

Marketing Phase

• Changed focus from internal to external, became more flexible, change oriented, and responsive to markets, targeted market segments, differentiated offerings and used the logic and approached of marketing to gain competitive advantage, increase market share and enhance profits • Describes the approach now being used • Focuses on guests wants and needs • Recognized other businesses were benefiting significantly from adopting marketing approaches and techniques • Hospitality markets changed radically, becoming more competitive

Reference groups

• Families, friends, co-workers, members of clubs, social classes that serve as standards of comparison as guests develop their attitudes, values, and purchase behavior • May be primary or secondary Primary Small, intimate groups in which members interact personally an communicate face to face Secondary Larger social organizations, professional associations, interest clubs, religious groups Less personal

Provider Orientation Phase

• Looked inward, resisted change, and focused on producing standardized lodging and food services and products • Decisions based on owner/manager/employee considerations • Focused on internal operations, activities and procedures such as housekeeping, menu engineering, and front desk operations and on controlling labor, food and beverage costs • "mom and pop approach"

Zero based planning

• Nothing is assumed • Challenges all proposals

Cultures

• Refers to the totality of values that characterize a society, • These factors exert the broadest influence on guest behavior • Gender roles, age norms, standards of hygiene, dress, responses to work, leisure, play, food and beverage selections • Customs, celebrations, lifestyles, family arrangements, gift-giving

Promotional Phase

• The need for short term results led to a broadening of the sales orientation to encompass a promotional emphasis • Recognition given to advertising, public relations, direct mail and merchandising to communicate with markets, generate favorable images, and support sales activities • Still neglected the primacy of guest wants and needs

Pre-purchase stage: search, evaluation of alternatives, decision

Customers seek solutions to aroused needs Evaluating a service may be difficult Uncertainty about outcomes increases perceived risk What risk reduction strategies can service suppliers develop? Understanding customers' service expectations Components of customer expectations Making a service purchase decision

Effective hospitality marketing planning will help

Establish objectives Formulate strategies Encourage a logical and organized approach Identify market opportunities Identify differential advantage Allocate and organize marketing resources Insure coordinated, integrated programs Generate successful marketing efforts

Post encounter stage: evaluation against expectations, future intentions

Evaluation of service performance Future intentions

Four basic components

External and internal purchase stimuli The search process The decision process The resulting outputs

An effective hospitality marketing planning process should

Guide and assist the implementation of marketing strategies and programs Help prepare the organization to deal with changing environments Develop useful info for dealing with lenders, among others

o Hospitality marketing has progressed through four identifiable phases:

Provider Orientation Phase Sales Phase Promotional Phase Marketing Phase

Service encounter stage: role in high contact vs. low contact delivery

Service encounters range from high- to low-contact Understanding the servuction system Service marketing systems: high-contact and low-contact Role and script theories Theater as a metaphor for service delivery: An integrative perspective Implications for customer participation in service creation and delivery

Marketing plans specify

The results expected from marketing strategies The resources needed to implement strategies The sequence of marketing activities involved in carrying the plans out

Hospitality products and services may appeal to which of the following drives?

Visceral Activity Aesthetic

In approaching planning, hospitality marketers should as two basic questions

What is the marketing planning process expected to achieve? How can the marketing planning process become more effective?

Price buckets

A price bucket is a derived price based combination of rate fences Different price buckets based on price sensitivity to different usage times, flexibility, other factors. What prices to charge within each price bucket Rate fences deter customers willing to pay more from trading down to lower prices (minimize consumer surplus)

Service Products

A product implies a defined and consistent "bundle of output" and also ability of firm to differentiate its bundle of output from competitors' Service firms can differentiate their products in similar fashion to various "models" offered by manufacturers Providers of more intangible services also offer a "menu" of products Represent an assembly of elements that are built around the core product May include certain value-added supplementary services

Which of the following statements about service chain analysis is true

A service chain should be analyzed from the perspective of all major guest categories

Planning and Creating Services

A service product comprises all elements of service performance, both tangible and intangible, that create value for customers The service concept is represented by: A core product Accompanied by supplementary services

Sub-brands

Accent is more on the individual offerings with coverage from the parent brand. British Airways offers six distinct air travel products Four intercontinental offerings: First (deluxe service) Club World (business class) World Traveller Plus (premier economy class) World Traveller (economy class) Two intra-European offerings: Club Europe Euro-Traveller Google has Gmail, Maps, Google Earth, Picasa, Youtube, Blogger etc.

Guests attitudes perform or affect four important functions

Adjustment • Occurs when guests modify their purchasing behavior to maximize their pleasure and minimize their pain Expression of values Knowledge • Adds meaning to their experience Ego-defense • Occurs when attitudes attempt to cover up deficiencies or weaknesses Extremely difficult to change

Aesthetic drives

Ambience, design, fashion, style, color, music