Core Concepts of Marking: Hospitality Report

Marketing is a process by which people obtain what they want and need through creating products and exchanging them with others. Marketing involves analysis, planning, implementation, and control of programs developed to result in the voluntary exchange of values with the target consumers to meet the organization’s objectives (Kotler & Armstrong, 2007). Marketing is based on responding to the needs and desires of the target population. Marketing is about using effective pricing, appealing communication, and efficient distribution to inform and motivate the markets.

Consumer need (human need) is the state of deprivation of some basic satisfaction. For example, a hungry person needs food. According to the hierarchy of needs developed by Maslow, human needs can be categorized as follows: physiological (rest, sleep, water, air, food), safety (stability and protection), love and belonging (friends, children, sense of community), and esteem (respect of others and confidence) (Kotler & Armstrong, 2007). Wants and demands are specific satisfiers that help to achieve the needs. From a marketing perspective, demands are wants for specific products or services backed up by a person’s buying power.

Product and services markets differ by the type of satisfaction they deliver to customers. Product markets offer tangible things to consumers (soap, cars, etc.). Services markets offer intangible things aimed at increasing consumer satisfaction (hairdressing, tourism, etc.). Consumer value equals benefits divided by costs (Kotler & Armstrong, 2007). A positive value is created when the benefits are greater than costs. Benefits can be functional or emotional, while costs can be monetary, time, energy, and psychic. Consumer satisfaction is tracked using complaints and suggestions, surveys, lost consumer analysis, and other tools for measuring customer satisfaction.

Efficiency is a measure of benefits derived from using a product or service. Efficiency is aimed at improving the overall satisfaction (reduced time, for example). Effectiveness is very similar to efficiency, however, is related to emotional benefits rather than measurable ones. Consumers seek both efficiency and effectiveness from buying products or using services. The marketing activities are aimed at delivering the message about the product/service efficiency as well as effectiveness.

Profitability is one of the core marketing concepts used to describe the monetary gains of the company as the result of marketing operations. Profitability is calculated using the following formula: Sales (funds gained from actual sales) minus Costs (fixed and variable). The growth of consumerism is related to the increased demand for products and services without an increase in customers’ needs. The growth of consumerism is used to describe the increased consumption of products in developed countries as the United States (Bearden, Ingram & LaForge, 2003). People of developed countries have strong buying power (disposable income is high) and once all of their basic needs are satisfied, they start to buy products and services they do not need. Their buying decision is shaped by marketing strategies.

There are two types of marketing: strategic and tactical. Strategic marketing is about the message of the commercial: what is said, how it is said, and who said it. It is about the content targeting a specific group of people. Tactical marketing deals with the execution of a marketing plan (lead generation, media choice, application of marketing tools, and follow-up system implementation). Tactical marketing is about the choice of the medium. Strategic marketing is about identifying the needs of customers. The following reasons for growth are considered by the companies (Bearden, Ingram & LaForge, 2003): the increasing demand for specific services or products and the ability of the company to offer these products and services (competitive advantage).

In addition, marketing is a part of business philosophy. Marketing philosophy can be divided into the following categories: production, sales, department, concept, and societal (Bearden, Ingram & LaForge, 2003). Production philosophy is product-oriented – good products sell themselves. Sales philosophy is supply-oriented – if there is a surplus of products, there is a need to find new consumers. Department philosophy is price-oriented – increasing the price of the product and attaching new value to it. Concept philosophy is buyer-oriented – identification of buyers’ needs and developing long-term marketing objectives. Societal philosophy is market-oriented – continuous enhancement of overall well-being of society.

Relationship marketing is about building relationships among diverse business and governmental organizations. It is based on the assumption that a well-developed marketing plan cannot be carried out by the company alone but relationship marketing strategies should be applied. For example, the marketing strategies should target key representatives of media, the decision-makers, clients, and the general public. Communication and a personalized approach are the key elements of successful relationship marketing.

The emphasis on marketing is changing continuously. Marketing strategies are dependent upon supply and demand. If there is a shortage of supply, the marketing strategy will change to attract customers to product or service substitutes. If demand is increasing, the marketing strategy will change to stress low price, high quality, or differentiation strategy. Marketing strategy cannot be fixed because of the changing needs and wants of customers. The purpose of marketing is to build consumer loyalty and motivate potential customers to buy the product or use the service.

Consumer Markets in Hospitality Industry

Hospitality is one of the industry sectors in which customers play a central role. The hospitality industry provides services and consumer choice shapes the type and quality of services being provided. For example, the five levels of hotels were introduced to meet the financial interest of all social levels. Hospitality, as a customer-oriented business is based on the following marketing principles (Abbey, 1996): identification of target markets (selecting those customers to whom the service is to be delivered), market research (collecting information on current and potential needs of the target population), service development (developing service that meets needs and wants of customers as well as attracts customers to use the service), marketing mix (price, promotion, and service delivery), and market monitoring (activities aimed at retaining customers, for example through offering discounts to returning customers).

There are several ways to gain customer loyalty and establish positive customer culture. The most effective one is continuous training of personnel. In addition, staff has to be empowered to serve the needs and wants of customers. The rule that the customer is always right is working the best to establish loyalty to service (Abbey, 1996). Service should be personalized and the special needs and unique wants of customers should be taken into account. Conflicts should be peacefully resolved and aimed at ensuring customer satisfaction. Finally, the customers should be asked for feedback and recommendation. The hospitality industry is dependent on word-of-mouth influence. It means that if one customer was not satisfied with the level of service in a specific hotel, none of his family members, friends, and neighbors will use the same hotel’s services.

Buyer behavior depends on the stimuli-response model. Marketing stimuli include marketing mix (service, price, place, and promotion), economic, political, technological, and social factors. Buyer responses include service choice and brand loyalty (Abbey, 1996). Thus, marketing activities are aimed at producing certain responses. For example, the marketing campaigns of a hotel are aimed at inviting more customers to use hotel services. The response of the potential customer depends on psychological (motivation, for example), personal (lifestyle), social (family), and cultural (social class) factors. These factors are taken into account while developing a marketing strategy for every specific service.

Customer orientation related to internal cooperation is considered to be cost-saving and effective, while external orientation is believed to be of higher risk for the companies. The cost orientation does not bring the same benefits as customer-oriented services. Custom orientation is correlated with the external cooperation and the marketing philosophy of the company and is especially evident in the hospitality industry. Failure to establish customer orientation within the hospitality industry leads to the subsequent failure of service.

Competitor orientation plays a significant role in the hospital industry as well. Competitor orientation, as an element of marketing strategy, is about assessing the long-term and short-term weaknesses and strengths of existing and potential competitors. While competitor orientation is of less importance for small business units, companies operating in the hospitality industry have to include competitor orientation into their marketing efforts. Brand loyalty to specific services is very low in hospitality services, therefore, continuous marketing efforts should be done to attract and retain customers.

The buyer decision-making process in the hospitality industry consists of five steps: need recognition and awareness of the problem, information search, evaluation of alternatives, usage of service, and post-purchase evaluation (Pizam, 2005). This process fosters the marketing manager to consider the buying process as a complex decision rather than paying attention only to the purchase decision. For example, a person staying in a hotel recognizes the need (relaxation), locates available information, considers alternatives (several hotels), responds to a stimulus (advertising of a specific hotel), and makes a decision to purchase service. Post-purchase evaluation is of minor importance in the hospitality industry because the customers rarely have concerns about the services they have used.

Value chain, as applied in the hospitality industry, relates to the analysis of the marketing activities and competitive strengths of the specific business. Value chain activities are divided into primary (creating and delivering service) and secondary (increasing efficiency or effectiveness of the service). Primary activities include logistics, operations (input/output), sales (informing the customers about the service), and servicing (maintaining loyalty after the service has been delivered). Steps of value chain analysis include (Pizam, 2005): breaking down the market into key activities, assessing the potential of value-adding (differentiation, for example), and determining the strategies to sustain competitive advantages. Satisfaction refers to the value attributed by customers to a specific service.

The success of marketing activities in the hospitality industry depends on building long-term relationships with customers. Hospitality services are highly differentiated both in price and quality. Therefore, marketing activities should be focused on retaining loyal customers as well as stimulating potential customers to choose the specific service. The failure to build long-term relationships means the company failed to meet the customers’ needs.

References

1. Abbey, J 1996, Hospitality sales and marketing, 2^nd edn, Educational Institute of the American Hotel & Motel Association Press.
2. Bearden, W, Ingram, NT & LaForge, RW 2003, Marketing: Principles and Perspectives, 4^th edn, McGraw-Hill/Irwin Press.
3. Kotler, P & Armstrong, G 2007, Principles of Marketing, 12^th edn, Prentice Hall.
4. Pizam, A 2005, International Encyclopedia of Hospitality Management, Butterworth-Heinemann Publishing.