sha502: conducting effective hospitality marketing …...together to introduce you to various...

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SHA502: Conducting Effective Hospitality Marketing Research


This course includes

Two self-check quizzes

Multiple discussions; you must participate in two

Two Ask the Expert interactives

One final action plan assignment

One video transcript file

Completing all of the coursework should take about five to seven hours.

What You'll Learn

Conduct an environmental analysis in order to develop an effective marketing strategy for an organization in the

hospitality industry

Use a SWOT analysis to analyze marketing data and guide strategic planning

Identify a target market for a product or service

Use a positioning map to determine a strategic position with respect to specific criteria

Market research is the cornerstone of the marketing process. It helps companies identify customers and marketplace

demand and reveals how a company's products or services are received by customers. Anticipating and tracking customer

behavior is vital to the success of any marketing initiative.

This course introduces the reasoning and methodology behind effective market research. Learn best practices in data

collection and market segmentation, and gain a thorough understanding of market analysis and strategic positioning.

Explore the stages of the buying process and examine factors that influence consumer buying patterns. You'll also identify

potential conflicts between a consumer's perception of a product or service and the way a marketer may position it.

Learn what to sell, to whom and how to promote those products and services with market research. For many in the

https://s3.amazonaws.com/ecornell/content/SHA/SHA502/SHA502_transcripts.pdf


hospitality profession, business begins and ends with thorough, effective market research. This course, produced in

partnership with the , consists of various activities and resources that have been putCornell School of Hotel Administration

together to introduce you to various approaches to conducting effective market research in the hospitality industry,

identifying target markets, and positioning your product in a manner appropriate to those markets. The material includes

both theoretical frameworks and practical advice.

Click Play to Listen

Judy Siguaw Dean, College of Human Ecology, East Carolina University

is Dean of the College of Human Ecology at East Carolina University.Judy A. Siguaw

Previously, she was a Professor of Marketing in the School of Hotel Administration at

Cornell University and was the founding Dean of Cornell-Nanyang Institute of Hospitality

Management. She also held the J. Thomas Clark Chair in Entrepreneurship and Personal

Enterprise. Dr. Siguaw earned her doctorate in 1991 from Louisiana Tech University. She

has published over 50 journal articles including those appearing in the Journal of

Marketing Research, Journal of Marketing, Journal of International Business Studies,

Journal of Strategic Marketing, Industrial Management, Journal of Business Ethics,

Journal of Travel Research and the Cornell Hotel and Restaurant Administration

Quarterly. She is co-author of Hospitality Sales: Selling Smarter, American Lodging

Excellence: The Key To Best Practices in The U.S. Lodging Industry, Exploring Best

Practices in the Hospitality Industry in Asia, and Introducing LISREL.

Start Your Course

http://www.hotelschool.cornell.edu/


Module Introduction: Conducting Market Research

The business landscape changes rapidly, what is true for a business today might not be true tomorrow. Market research is

the way for businesses to anticipate and plan for coming changes before they impact their bottom line. Market research is

one of the best ways to find out how your service is being received by customers, and understanding customers is key to

guiding your business to success. But what methods of marketing research are there? What are the best methods of data

collection to use to meet your particular business needs? How do you analyze a market?

Beginning with the definition of the marketing research process, in this module you find the methods and tools to approach

numerous issues. You then move onto learning the stages of the buying process and the other factors influencing

consumer buying decisions, including the important SWOT method of analysis.

After completing this module, you should be able to:

Define marketing research

Explain the need for marketing research

Discuss the six steps in the marketing research process

Discuss elements of consumer behavior relevant to the hospitality industry

Discuss the six stages of the buying decision process as it applies to the hospitality industry

Discuss factors influencing consumer buying decisions in the hospitality industry

Define the term psychographics

Define the term segmentation and its purpose as it applies to the hospitality industry

Discuss the basic criteria for segmentation

Discuss the advantages and limitations of market segmentation

Define environmental scanning

Discuss the seven interrelated environmental forces that organizations must contend with

Define the term competitive advantage

Define the term SWOT Analysis

Evaluate opportunities for SWOT

Explain what is meant by breakthrough opportunities


Activity: Marketing Research Process Case Study

In this activity you take on the role of a consultant working for a market research firm. Your firm has been hired by a small,

elegant, high-priced hotel in San Francisco. The general manager has some worries about how the hotel's business has

developed in the last few years. Launch the activity below to watch and listen as she explains her concerns to you. You

then answer a number of questions to help define the scope and goals of the study.


Read: What is Marketing Research?

In the hospitality industry, customer needs vary widely from the general to the specific. Marketing research is a process

that helps organizations separate the vital high-priority needs from the trivial low-priority needs. High-priority needs are

those that contribute most to value perception, customer satisfaction, and ultimately, profitability.

Marketing research also helps organizations identify and define marketing opportunities and problems; generate, refine,

and evaluate marketing actions; monitor marketing performance; and improve their understanding of marketing as a

process.

Marketing Research fulfills three primary roles:

: gathering and presenting statements of factDescriptive

: explaining dataDiagnostic

: attempting to estimate the results of a planned marketing decisionPredictive

An illustrated presentation appears below. Use this resource to build your understanding of the marketing research

process. Consider the following question as you review this resource:

How would you implement the six steps of the research process to identify ways to improve customer satisfaction in

your organization?


Read: Methods of Data Collection

Once you've developed a sampling plan for your marketing research, it's time to collect the data. Learn about the various

methods for collecting that data in this resource.


Read: How Do I Capture and Store the Results of My Research?

All organizations need information about environmental forces and potential markets to aid in decision-making. A great

deal of information, from both internal and external sources, is available to management. The challenge is in managing the

information so it can be used effectively.

A Marketing Information System (or Marketing Intelligence System) (MkIS) is defined by the American Marketing

Association as a set of procedures and methods for the regular, planned collection, analysis and presentation of

information for use in marketing decisions. The MkIS involves the continuous collection and analysis of marketing

information into a central database. It may comprise information from internal reports (property management-system

reports, reservation data, guest history, etc.) and environmental scanning, such as competitor intelligence.

MkIS system:

Supports marketing personnel

Can provide a fast and more complete information flow for management decision-making

Allows a wide variety of data to be collected and used

Enables management to continually monitor products, markets, and sales in detail

Improves customer knowledge and market responsiveness

Benefits small and medium-sized firms as well as large firms

Components of a MkIS include:

Data bank - raw data (e.g. historical sales data, secondary data)

Statistical bank - programmes to carry-out sales forecasts, spending projections

A model bank - marketing models (e.g. Boston Matrix)

Display unit - Visual display unit and keyboard

Database Marketing

Database marketing is the creation of a large computerized file of customers' and potential customers' profiles and

purchase patterns. Databases are built through customer lists, coupon redemption records, guest registration, customer

clubs, and intermediary information.

Database marketing:


Identifies the most and least profitable customers or markets

Pinpoints segments or products needing special marketing support

Enables managers to evaluate opportunities for offering new products and services

Increases revenue through repackaging and repricing for various segments.

Relationship Marketing

Database marketing allows for relationship marketing. Relationship marketing is a means for attracting, developing, and

retaining customer relationships to build strong customer loyalty. The relationship will be based on the buyer's trust and

satisfaction with the seller.

Relationship marketing can be practiced at three levels:

Financial

Includes pricing incentives such as frequent-flier programs

Involves low customization

Financial and social

Adds social bonds such as staying in touch with prospective and current customers

Involves a medium level of customization

Financial, social, and structural

Adds valued-added services that are not available from other firms

Requires a high level of customization.


Read: Clothing-Optional Cruises

To research consumer behavior and investigate their needs is a process of collecting data and analyzing it. At a deeper

level, it is the conscious process of taking a step back and trying to look at your organization as a customer experiencing

your services. But not all customers are the same. In the following pages you investigate the myriad of different ways to

approach and segment your customers. To begin your study of researching consumer behavior you will examine the

following case study. This case study shows that if solid marketing research discovers an underserved segment of

customers, or a whole new segment, it can be very profitable for companies that orient themselves to serve these

customers.

The exceptional success of any business usually has fundamental causes. Among these fundamental causes, the practice

of analyzing future trends and then modeling business to serve them can be especially profitable in the hospitality

industry.

One recent trend has been the growth of clothing-optional travel, and the multitude of businesses that have come to serve

this lucrative niche market is significant. The most successful part of this niche has been in the clothing-optional cruise

market.

When looking at the list of successful clothing-optional travel organizations below, consider what factors might have been

examined and what data might have been uncovered to support the viability of such an offering in the first place. What

lessons can be learned from this niche market success that can be applied to your own business situation?

Bare Necessities, an Austin-based travel agency, has compiled a record of selling out more than two dozen

consecutive charter cruises since 1992.

The American Association for Nude Recreation (AANR) has 50,000 members in 244 clubs spread across the US

and Canada.

Travel au Natural in Florida specializes in cruises aboard sailing vessels in the Caribbean for male-female couples

only.

No pockets Yacht charters allow groups to rent one of a small fleet of 50-70 foot private yachts.

Castaways travel offers 33 different package options for the naturist traveler, from Hawaii bed-and-breakfasts to

international tours.

Shangri-La Ranch, a nudist campground located outside of Phoenix, is dramatically increasing the number of drive

up RV spaces on its property.


As you approach the upcoming discussion, consider these ideas:

How might the process of researching consumer behavior and future trends lead one to the idea of offering

clothing-optional cruises?

How might a market researcher have identified clothing-optional cruises as a viable business opportunity?

What factors might have been examined and what data might have been uncovered to support the viability of such

an offering?


Read: The Six Stages of the Buying Process

Click the topics below to learn more about the six stages of the buying process.


Read: Factors Influencing the Buying Process

Successfully creating a buying opportunity requires a clear understanding of the customer and their motivating factors. Not

every element listed here will play a part in every buying decision, but a combination of them determines the result of the

buying process.


Read: More about Social/Interpersonal and Psychological Factors InfluencingBuying Behavior

You learned from Factors Influencing the Buying Process that individual buying decisions are affected by the social forces

around us. These factors can include cultural influences, reference groups, family and household, class influences, and

social networks. Click the topics below to learn more about the influences that can affect buying behavior.


Watch: Types of Hospitality Consumers

There are two main categories of hospitality consumers, the business traveler and the leisure traveler, but neither

category is really homogeneous. Instead each main category is comprised of many stratifications. Among business

travelers, there may be senior executives, middle managers, and front-line employees, such as salespeople. Among

leisure travelers there is a further division into pleasure travelers, those taking advantage of package deals, mature

travelers, international travelers, and free independent travelers. These categories can overlap, and different categories

require different marketing strategies to serve them effectively.


Read: Market Segmentation

Market segmentation is a process that clusters together people with similar needs into a market segment. Market

segmentation enables the marketer to tailor marketing mixes to meet the needs of one or more specific segments.

Segmentation involves dissecting the universe of potential customers in order to focus on those with the greatest

probability of purchasing.

Marketing segmentation is consistent with the marketing concept because the organization identifies the needs of

the customers within the segment and then designs a marketing mix to satisfy them.

Basic Criteria for Segmentation

Identifiable and measurable

Similarity in customer needs

Segment has unmet needs

Size of the segment - Segment must be big enough to justify the additional cost of a separate marketing mix;

otherwise, the segment should be grouped with another segment

The potential for growth

Accessibility of segments - Able to reach the targeted group to the exclusion of other segments.

Advantages

There are several clear advantages to market segmentation.

It can create more revenues than a mass marketing strategy by addressing consumers' different needs. The

Marriott Resort in Bangkok shifted from targeting 16 customer segments to just four segments and improved

revenues. It provides better organizational focus because the firm is no longer trying to be all things to all

customers.

It promotes new ideas centered on the customer segment. The Pierre Hotel in New York City developed a


segmentation strategy targeting the fashion and entertainment industry and tripled its Gross Operating Profit

(GOP).

It helps to develop an effective marketing mix - product, price, promotions, and place geared to a particular set of

customers.

It helps guide the allocation of marketing resources to different products.

Limitations of Market Segmentation

Because market segmentation leads to product segmentation, production costs are higher because it costs more to

produce different models for each segment rather than producing mass quantities of the same model. However, the

large hospitality management companies, such as Marriott and Starwood, have been successful in creating many

different hospitality products for numerous customer segments.

The marketing expenses are higher due to increased inventory, advertising, and administrative costs.

Leisure vs. Business

A company can segment the market in many different ways, but the first division is normally between Business and

Leisure consumers:

Leisure consumers are buying for their own personal and household use.

Business users are usually buying products or services for their organizations.

The five bases or key criteria for segmenting the consumer market - geographic, demographic, psychographic,

product-related, and operational are beyond the scope of this course. They will be discussed in detail in the course Market

.Planning In The Hospitality Industry


Ask The Expert: Implementing Market Segmentation Strategies

Mark Sherwin

General Manager

Ritz-Carlton, Tysons Corner

Why is market segmentation important?

Market segmentation allows you to:

Differentiate your markets

Focus your sales and marketing efforts

Optimize your return on your marketing dollars

The best segmentation strategy matches the right product with the right customer at the right price point.

Click play

to listen

How should you choose the criteria that are important for successful market segmentation?

Focusing on the individual needs of a customer means understanding what is important to that customer

segment.

Understand the value proposition of your product and service. Is it based on:

Individual psychographics?

Geographical demographics?

Median income or other criteria?

Capitalize on items that provide greatest return on investment.

Click play

to listen


How do you decide which segment should be selected?

Your product might pre-select your segment.

Focus on where your history of success has brought the greatest return on investment.

Focus on the segment that gives you the greatest return on investment, and from that investment,

which sub-segments will bring you the greatest yield.

Click play

to listen

How should you use segment-of-one marketing?

It allows you to tailor your message to specific groups or individuals.

It allows you to tailor your message and product to specific needs.

It allows you to customize all aspects of your communication.

Click play

to listen

About the Expert

Mark Sherwin is General Manager for The Ritz-Carlton, Tysons Corner. Mr. Sherwin comes from the corporate

headquarters of The Ritz-Carlton Hotel Company, where he has served as regional vice president of sales and marketing

for the Northeast and Midwest region. Prior to joining Ritz-Carlton, Mr. Sherwin was Area General Manager for the

Midtown Atlanta Suites from 1994 - 1996, and Southeast Regional Manager for Residence Inn from 1990 - 1994.

Mr. Sherwin is a 1980 graduate of Cornell University's School of Hotel Administration, and received an MBA in 1994 from

the Georgia State University School of Business. He has been a guest lecturer for the School of Hotel Administration at

Cornell since 1998.


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Read: Three Examples of Word-of-Mouth Strategies

Your social environment frequently provides information about products to you

through word-of-mouth. In conversations with family, friends, and acquaintances,

you share opinions about companies, services, and experiences with purchases.

Companies sometimes use word-of-mouth strategies as well as conventional

marketing to get their message to potential customers. On the Internet, these

word-of-mouth strategies are known as viral marketing. Viral marketing is a

strategy that encourages individuals to forward a message to others. If such a

campaign catches on, the message could be sent to thousands or millions of

people. Recall the success of the campaign.Queensland Best Job in the World

In his article, "The Six Simple Principles of Viral Marketing," published on in February 2005, Dr.Web Marketing Today

Ralph F. Wilson notes that a successful viral marketing campaign will contain the following elements:

Gives away products or services - Nothing attracts attention like "FREE."

Provides for effortless transfer to others - Keep the marketing message short and simple so that it can be readily

transmitted to others without degradation.

Scales easily from small to very large - Be prepared to rapidly add mailservers as the virus spreads.

Exploits common motivations and behaviors - Provide a motivation for individuals to forward your message to

others.

Utilizes existing communication networks - Position your message into existing communications between people.

Takes advantage of others' resources - Create an inventive message that will be picked up on others websites,

blogs, podcasts, news articles, etc.

Remember, though, that no word-of-mouth campaign is guaranteed to be successful. The public will decide!

Try to brainstorm and write down three examples of effective word-of-mouth strategies you have seen. For each strategy

you have seen, also note:

The situation in which you heard it

What market segment you believe was being targeted

Why you believe it was effective

Think about your answers carefully, because you will be using the results of your brainstorm in the discussion forum.

http://www.prlog.org/10517496-tourism-queenslands-best-job-in-the-world-wins-best-worldwide-pr-campaign-of-the-year-at-hsmai.html

http://www.wilsonweb.com/wmt5/viral-principles.htm


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Activity: Opening a Boutique Hotel

Environmental scanning is the process by which companies collect information on the environment and analyze it. The

purpose of this process is to provide a base of objective information, to identify emerging trends, and to help the company

compete by identifying potential opportunities. Environmental scanning also helps a company to shield itself from threats,

and to change emerging threats into opportunities. The environmental scanning process has the following seven goals:

Keep a tab on broad trends appearing in the environment

Determine the relevance of an environmental trend

Study the impact of an environmental trend on a product/market

Forecast the direction of an environmental trend into the future

Analyze the momentum of the product/market business in the face of the environmental trend

Study the new opportunities that an environmental trend appears to provide

Relate the outcome of an environmental trend to corporate strategy

(Source: Jain, Subhash C. (2000), Marketing Planning & Strategy, 6th Edition. Cincinnati, OH: South-Western College

Publishing.)

A residential property centrally located in a fictional college town is being sold at auction. One of the bidders has

expressed an interest in converting the property (an old house) into a boutique hotel. They have hired you to determine

the environmental feasibility of this business idea.

In the first part of the simulation, you will classify individual data and statistics according to the factor in the environmental

analysis to which it applies. In the second part you will then be presented with a series of seven screens. Each screen

corresponds with one of the seven factors to be considered in an environmental analysis. These screens will display the

aggregated data and statistics from the choices you have made. Then you will make a final judgment regarding the overall

viability of the proposed project.

Consider the following questions during your analysis of this case study:

What was the outcome of your research in the case study?

Is the boutique hotel a good idea for the Centerville area? Why or why not?


Activity: Factors Involved in an Environmental Analysis

What you will see in this presentation looks like an experiment in a chemistry lab. The business venture being tested is

represented by a culture in a petri dish. The seven interrelated environmental forces are represented by seven labeled test

tubes. When you click on each of the test tubes a bit of the idea is added to the solution, the test tube shakes a bit, and

pop-up text will describe to you the nature of the particular analysissociocultural, demographic, economic, technological,

political & legal, competitive, and ecologicaland the type of information it is likely to produce. These results are siphoned

off into a receptacle labeled competitive advantage.

This metaphor accurately describes how the various factors of an Environmental Analysis all work together. The balance

of how each of these factors works together is different for each business situation, but combinations of these elements

are always present.


Read: Conducting an Environmental Analysis

Initial market research may give rise to an idea for a new business venture, such as the one tested in the earlier case

study. The environmental analysis is designed to test the viability of the business venture. Click the areas of research

below to learn more about the questions to ask in an environmental analysis.

When traveling in unfamiliar terrain, having the right map in hand makes reaching your destination much more likely. For a

business, conducting a marketing environmental analysis of the current landscape is constructing the map of where it is.

This map will then help it navigate toward business goals.

UPDATE magazine: http://www.hospitalityupgrade.com/

American Demographics (now part of ): Advertising Age http://adage.com/

U.S. Census: http://www.census.gov

Yahoo travel: http://travel.yahoo.com/

http://www.hospitalityupgrade.com/

http://adage.com/

http://www.census.gov/

http://travel.yahoo.com/


Activity: InterContinental Hotel SWOT Analysis

A SWOT analysis is the process of listing as many items as possible that impact a business, and categorizing them in

terms of these divisions:

trengthsS

eaknessesW

pportunitiesO

hreatsT

Strengths and weaknesses are measures of internal factors, whereas opportunities and threats usually are external items

outside of a company's direct control. Carrying out an analysis using the SWOT method helps you to focus on areas

where your business is strong, and also helps you to identify future areas of concern. Environmental scanning, as

previously defined, helps to identify external opportunities and threats, and fits into the SWOT framework well. A SWOT

analysis is simple in principle, yet it helps to define and isolate key issues, as well as to promote clear strategic planning. It

is a tried and true method to approach business analysis.

In this activity you will be presented with a set of fictional data related to the earlier InterContinental Hotel (ICH) case

study. You will then conduct a SWOT analysis of the data, identifying three or four strengths, weaknesses, opportunities,

and threats, and placing them in the appropriate quadrant on an online SWOT chart. You will be able to drag-and-drop

items to where you think they should belong. To print the results of your work, right-click the presentation and select

"print". This printout will be useful as you share the results of this exercise in the discussion. Alternatively you may want to

open both the presentation window and the discussion window at the same time, to do so.click here


Ask The Expert: Using the SWOT Model to Analyze Data

Listen as Professor Siguaw describes one of the best uses for the SWOT model.

Judy Siguaw, DBA

Dean, College of Human Ecology

East Carolina University

How does SWOT fit into the overall marketing process?

SWOT stands for:

Strengths

Weaknesses

Opportunities

Threats

A SWOT analysis is really a decision making tool.

SWOT provides a clear framework for critical decisions.

Click play to

listen

What do I do with it?

Use a SWOT analysis to:

Isolate critical issues

Facilitate developing your marketing strategy

SWOT list items should be as concise as possible.

Click play to

listen


A SWOT analysis will identify strengths and weaknesses such as:

Distinctive competencies

Financial resources

Cost advantages/competitive advantages

Management effectiveness/innovation/strategic direction

Profitability/strategic track record

Market image and operational skills

Use the environmental analysis to:

Understand customer needs

Find additional customer groups and services

Analyze market growth

Analyze competitors

Identify trends that threaten your product

Identify possible new competitors

Identify customer base weaknesses, changing tastes, and/or demographic shifts

What are some examples of typical strengths and weaknesses in the hospitality industry?

Typical strengths in the hospitality industry include:

Low-cost, high-efficiency operating skill

Leadership in product and service innovation

Efficiency in customer service

Personal relationships with customers

Effectiveness in sales promotion

Convenient, desirable location

Typical weaknesses in the hospitality industry include:

Inadequate understanding of target market

Ambiguous service policies

Lack of quantitative goals

Poor product design

Lack of product/brand awareness

Laggard in technology integration

Click play to

listen

How do I evaluate the results?

Sources of marketing opportunity include:

Unmet customer needs

Click play to

listen


Competitive weaknesses

Environmental threats

Recognize that potential threats can become opportunities and vice versa. Threats come in three

forms:

Misread customer needs

Competitor products

Environmental changes

The SWOT analysis is a subjective process, yet:

It can effectively guide future strategies

A SWOT analysis is a snapshot in time that must be routinely reassessed

The SWOT process helps a flexible organization to continuously adapt


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Read: Grosvenor House Sample SWOT Analysis

It is an important skill to be able to perform a substantive SWOT analysis, and evaluate the opportunities and liabilities that

become clear. Here are some key points to consider when working on a SWOT analysis.

Sources of Marketing Opportunity - Three sources of marketing opportunity are unmet customer needs, competitive

weaknesses, and other environmental threats. These opportunities are revealed in a rigorous environmental

analysis.

Threats can result in opportunities. For example, the increasing proportion of working women was a threat to Avon

because they were less likely to be at home to receive the Avon saleslady. Avon turned threat to opportunity by

encouraging its salespeople to sell at the office.

Just as a threat can be turned into an opportunity, the reverse is also true. Threats can come in three forms:

the firm misreads customer needs;

competitors introduce a similar or new product; and

the firm fails to foresee environmental changes that render a product entry obsolete.

Criteria for evaluating opportunities should include both quantitative and qualitative components (e.g., consumer

feeling [affect] and potential profitability).

The following is an example of a well done SWOT analysis:

STRENGTHS

Location

Traditional British product

Unrivaled range of facilities

Informal approach/wider appeal

Nico at Ninety

Great rooms

Established reputation

Profitability and price

Competitiveness

WEAKNESSES

Inconsistent accommodation,

product

Lack of client/management

technology

Size

Lack of exclusive awareness and

brand recognition

Condition of remaining room

inventory is a negative

OPPORTUNITIES (INTERNAL)

Newly refurbished Georgetown Room

will provide additional selling

opportunities.

Rejuvenated North American Sales

Force under new leadership will feed

more business into North American

Exclusive Hotels.

THREATS (EXTERNAL)

Europe and Japan depressed

UK perceived as expensive

destination

Increased presence of major

international brand names

Cost control of travel expenses by

major corporations


Combining of Sales and Catering

Departments to provide cross-selling

and combined sales opportunities.

New catering menus, with all of food

and beverage operation under the

direction of Jean-Louis Palladin.

Newly collective direction for North

American Exclusive properties will

provide for cross-selling and

combined sales efforts.

Stable sales and catering staff in

place for new year.

Good group backlog in place for next

year.

New lead generating position will

provide additional business.

Excellent reputation of Chef Palladin

will provide ongoing media and

publicity and revenue opportunities.

The World Cup Soccer event in late

June and July will have very positive

impact on slow period.

OPPORTUNITES (EXTERNAL)

UK and USA economic recovery

Emerging markets of South America

and Asia

Purchasing power of mega

consortia

IMF/World Bank meeting not taking

place this year

Renovation of Ritz Carlton will

affect corporate and group

business

Competition continues to

aggressively cut rates both for

corporate and group business

The convention and Visitor's

Bureau continues not to focus on

the smaller meetings that would be

suitable for this hotel

Convention Center is underbuilt


Module Introduction: Target Markets and Strategic Positioning

This module is designed to give you the tools to identify and define target markets, and to give you examples of how to

work with that information to reach business goals. To understand these tools, you will work with a case study helping a

boutique hotel owner analyze data from his local market. Once you clearly understand target markets, you will begin to

work with the concept of strategic positioning. Strategic positioning allows clever managers/marketers to distinguish their

business from the competition, and to create promotions and initiatives that respond to the needs of target markets. One

way to further define elements of strategic positioning is to create a positioning map for your business. A positioning map

is a survey tool marketers use to identify potential conflicts between consumers perception of a product or service and the

way the marketers want to position that product or service.

After completing this module, you will be able to:

Define the term .target market

Describe and implement strategies for selecting a target market.

Define .strategic positioning

List the objectives of a positioning strategy.

Use a positioning map to determine a strategic position with respect to specific criteria.


Activity: Select a Target Market

Before a marketing strategy can be implemented, the marketer must identify, evaluate, and select a target market.

A is a group of people or institutions, but it also requires:market

Wants or needs that can be satisfied by particular product categories

Buying power, which is analyzed through distribution of income and expenditure patterns

Willingness to spend, which is determined by studying the market's buying behavior

A is a fairly homogeneous or similar group of customers to whom a company wishes to appeal. A firm maytarget market

have one or many target markets.

The target market is important because it addresses the question of whose needs will be met by the product. The needs

are different, depending upon the customer in question, and the value delivered to the customer is therefore different as

well. Organizing target markets allows customers with similar needs to be grouped together and served better by your

organization.

Selecting a target market involves analyzing market opportunities that are compatible with the organization's goals and

image.

A residential property is being converted into a boutique hotel. The owner of this hotel conducted a thorough

environmental analysis, which produced quite a bit of data about the area where the hotel is located. After looking through

the collected data, you will assist the owner by suggesting which target markets to pursue from a detailed list of choices.

When you have made your choices and selected the target market(s) best suited for the boutique hotel, print your results,

since they will be used for the next discussion. To do so, right-click the presentation and select "print".


Read: Strategies for Selecting Target Markets

Strategy Description Advantages Disadvantages

Market Aggregation or

Undifferentiated Targeting

Strategy based on the

assumption that the

market has a common

need and thus requires

a single marketing mix.

The world is one big

market segment.

Marketing and product

costs are low.

Customer needs may

not be specifically

addressed. Leaves

room for competitors

with more specialized

products.

Single Target Market,

Concentrated Targeting, or

Niche Marketing

Segmenting the market

and picking one of the

homogenous

segments as the firm's

only target market.

Allows focus on needs

of one segment, so

small firms can be very

competitive with larger

firms.

May limit the growth of

the organization.

Multiple Target Market or

Multi-Segment Targeting

Segmenting the market

and choosing two or

more segments, each

of which is treated as a

separate target market

needing a different

marketing mix.

Offers potentially

greater sales volume,

higher profits, larger

market share, and

economies of scale in

marketing and

manufacturing.

Cannibalization may

occur. May increase

production and

promotion costs. Often

too many market

segments may be

selected creating

inefficiencies in the

organization and

confusion in the minds

of the consumers.

Generally speaking, a

maximum of 4-6

segments should be

targeted.

Combined Target Market

or Counter-segmentation

Combining two or more

sub-markets into one

larger target market.

Reduces marketing

costs. May enhance

profitability and

economics of scale.

May not address the

specific needs of the

target market as well

as a single target


market strategy would;

thus, leaves opening

for competitors.


Read: Positioning Maps

After identifying a target market or markets, marketing professionals must determine a strategic position. Strategic

is the realistic appraisal and communication to the key markets of how a hotel wants to be perceived in thepositioning

market. A marketer uses a positioning strategy to distinguish the firm's good or service from the competition and to create

promotions that communicate the desired position. Proper positioning will result in maximum profitability in the medium

and long term. Product positioning must be based on satisfying consumers' needs. A company must produce the

marketing mix that will satisfy a target market's needs and communicate the benefits of the product to the target market.

Pitfalls of not developing a positioning strategy:

The firm is forced into a position of competing directly with stronger competition

The firm's position is unclear, so it lacks true identity

The firm has no position in customers' minds, so it lacks top-of-mind awareness

Positioning maps are tools that enable hospitality firms to develop differentiation and positioning strategies for their

products. By using a positioning map, marketers can visually represent the competitive structure of their markets, as

perceived by their customers. Moreover, this tool allows marketers to identify potential conflicts between consumers'

perception of the specific product attributes and the way the marketers are trying to position those attributes. Data for a

positioning map may be derived from customer perceptions of existing products and new concepts along various

attributes; customer preferences for products; and other data yielded by customer responses toward products, including

market share.

Positioning analysis can use either perceptual mapping or preference mapping techniques. Perceptual mapping helps the

hospitality organization visualize how customers view their product(s) relative to competitive products. Preference

mapping plots customers' ideal points, those data points which represent the location of the real or hypothetical product

that has the strongest appeal to customers. These points are overlaid on a map which illustrates the locations of

competitive products.

According to Decision Pro, Inc. (2007) positioning analysis also assists hospitality organizations in answering such

questions as:

Which target segments are the most attractive?

How should new products be positioned in relation to existing products?

How do current customers view the brand?

What product is closest to the target market's ideal points?

Which brands do customers perceive to be close competitors?

What product attributes account for customer-perceived differences among products?

How would altering a product's attributes change the product's market share?


Read: Steps to Determine a Strategic Position

Click the links below to learn more about determining a strategic position.


Click Play to Listen

Judy Siguaw Dean of the College of Human Ecology

East Carolina University

Listen: Thank You and Farewell

Hello. This is Judy Siguaw again. Congratulations on completing the second course in the marketing certificate series,

Conducting Effective Hospitality Marketing Research. I hope you've enjoyed the course and now have a much better

understanding of marketing research and strategic positioning. If you're interested in learning more about marketing in the

hospitality industry, consider signing up for the third course in the series: The Hospitality Marketing Mix: Product and Price.

This course covers the product life cycle, new product development, how fast innovative products are adopted, and how to

measure service quality. I hope you join us in this next intellectual pursuit.


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Supplemental Reading List

The provides focused whitepapers and reports based on cutting-edge researchCenter for Hospitality Research

http://www.hotelschool.cornell.edu/research/chr/

sha502: conducting effective hospitality marketing …...together to introduce you to various...

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