Advanced Module 2

HCM 237 HOSPITALITY SALES AND MARKETING
UNIT 1 MARKETING RESEARCH AND MARKETING

INFORMATION SYSTEM
CONTENTS
1.0 Introduction
2.0 Objective
3.0 Main Content
3.1 What is Marketing Research?
3.2 Marketing Information System
3.3 The Role of Marketing Research
3.4 Market Research Terms
3.5 Market Research Process
3.5.1 Analysis of Information
3.5.2 Information Sources
3.5.3 Collecting the Information
3.5.4 Analysing the Information
3.5.5 Using the Information
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Reading
4.0INTRODUCTION
Marketing research specifies the information required to address issues.

It communicates findings and their implications. As a market researcher,
all the necessary steps must be followed to come up with thorough and
accurate information needed to make better decisions.
Many companies use market research to determine market potential, to

evaluate market share and to learn more about the people in various
markets. Some do it for long or short range sales forecasting and
competitors’ analysis.
Marketing Managers rely on market research processes to develop and

analyse new information. It is a powerful tool available to them.
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5.0OBJECTIVE
At the end of this, you should be able to:
describe the importance of marketing research and usefulness of

marketing information system.
3.0 MAIN CONTENT
3.1 What is Marketing Research?
There are many definitions for Marketing Research. Some of them are:
a) Marketing Research is an interacting, continuing future oriented

structure of people, equipment and procedures designed to
generate and process an information flow to aid management in
decision making.
b) The process or a set of procedures put in place for regular

collection, analysis and presentation of information to assist in
decision making for the company.
c) Market research can be the logical assembly of relevant facts

about the appropriate market. It is an aid to management, just as
military intelligence is an aid to the armed forces.
Marketing information helps to identify marketing opportunities and

problems. It generates, refines and evaluates marketing actions as well
as monitors marketing performance and improves understanding of
marketing as a process.
3.2 Marketing Information System
In Marketing Information System, there are four plans:
1. Internal 2. Marketing
Reports Research System
Marketing
1. Mangt.
3. Marketing 4. Analytical
Int
Intelligence Marketing
System System
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Internal Report - for what is happening

Marketing Research - what is likely to happen
Marketing Intelligence System - working out strategy
Analytical Marketing system - used for data or data system
The need for marketing intelligence is ongoing. Much of the information

acquired by marketing research in a fiscal year will serve as the basis for
developing next year’s marketing plan. The needs vary considerably by
the type and size of the hospitality company. Some international hotels
such as: Sheraton or Hilton Hotels have corporate marketing research
departments. However, individual hotels property or car rental location
may have a need for additional marketing information. In these cases,
the individual property or location is generally responsible for acquiring
these data.
Marketing research needs can be of macromarket and micromarket

information. Macro- market information includes:
Industry trends
Social-economic-political trends
Competitive information
Industry- wide customer data
Micromarket information includes:
Guest information
Product/service information
New product analysis and testing
Intermediary buyer data
Pricing studies
Key account information
Advertising/promotion effectiveness
3.3 Role of Marketing Research
The fundamental role of marketing research is to reduce the uncertainty

which can influence the outcome of marketing programme. Such
uncertainties as: - cultural life style, economic trends, marketing forces,
competitive activity or customer changes.
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It provides relevant data as far as possible as a basis for marketing

intelligence
It is used to investigate any area of marketing activity from the
analysis of sales performance to evaluating the effectiveness of
marketing.
It gives relevant, up to date information about management. It
indicates trends and takes the guesswork out of decision-making.
It helps management to establish how business is doing in terms of
market share, sales volume or other performance criteria.
It helps to investigate any area of marketing activity from the
analysis of sales performance to evaluate the effectiveness of a
marketing campaign programme and advertising.
It helps in monitoring programmes effectiveness by answering such
questions as: how many people have seen the advertisement or how
many consumers are using a product or how many customers
patronise the product more than once.
It helps to describe markets, their size, location and pattern of
development.
It helps management to select the best option.
It helps marketers to assess market share, product productivity and
sales results.
It is useful in developing new products, to identify profitable target
market and planning future marketing programmes.
It helps to keep an eye on the competition.
3.4 Market Research Terms
a) Market Research - describes ‘markets’ in terms of its size,

location and pattern of development.
b) Marketing Research - is wider in application. It is used to select
the best option out of many alternatives in solving a problem.
c) Data – collection of facts e.g. sales record in a restaurant.
d) Information - data which have been selected and sorted so that it
can be analysed for specific purposes. Information can be derived
from past experience, marketing research or both but it can be
accurate or inaccurate, reliable or unreliable, subjective or
objective.
e) Intelligence - interpretation given to the information through
analysis
f) Marketing Intelligence is used to tackle a wide range of
organisational issues.
g) Strategic long- term decisions – what market should we be in?
What growth can we anticipate?
h) Tactical short- term decisions – how to promote this product in
the market and how to improve the coverage of distribution.
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i) Ad hoc decisions - relating to one-off problems e. g. what can be

done about a new competitor and how to counter problem of
price discounting.
3.5 Market Research Process
3.5.1 Analysis of Information
Analysis of information is the most important step in market research

process. It is about identifying the problem i.e. to get the share of the
growing market and know the reaction of people. It is important if the
objectives of the market research are met. The marketing manager first
task is to decide on the type and quality of information he needs in order
to make a sound decision. Decisions can be classified as recurrent or
occasional.
Recurrent marketing problems require continuous information input.
Examples of Recurrent marketing decisions are:
Regular appraisal of salesperson’s performance

Analysis of actual accommodation, food & beverage against forecast
sales
Setting monthly target
Monitoring actual promotion expenditure against budget
Considering whether to match changes in competitors’ bar prices
Tracking of seasonal pattern in sales
Occasional hospitality marketing problems require adhoc information

inputs; the examples are:-
Whether to co-operate with the other hotels in joint promotion

Whether to sponsor a sporting event
Whether to launch a new food and beverage format
Whether to close a floor during the off- peak period
To discover the reasons for poor sales performance from a particular
sector
To see if profitable opportunities exist in franchising a fast- food
format
Information can come from past experiences. It can be accurate,

inaccurate, subjective or objective. Good information expected from
marketing researchers must be: P – Pertinent, A – Accurate, T – Timely
and U – Usable.
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3.5.2 Information Sources
Once what is needed has been decided, the next step is to locate sources
of information. It is more expedient to use information that has already
been collected (secondary data) in order to save cost than to collect new
information (primary data). Secondary information is not only cheaper
but also quicker and it involves less time to search. Interview or
fieldwork is not required such as interview or data analysis.
Secondary data can be internal or external to the organisation. However,

it is a good idea to check secondary data sources before spending time
and money on additional research. Secondary Data can be located from
internal and external sources.
Internal Sources can be from the research study of the past. These are
excellent source of secondary data because the competitors do not have
access to this.
External sources can be useful. It can be found in business publications,

data bases, private computerised bases e g LEXIS: on – line data base.
Hotels are fortunate to have abundant information from the records of
existing customers, sales or operations. The problem is that it was
produced long ago and it was probably not produced for the same
problem.
Internal Records include:
a) Customers’ records
b) The hotel
c) Reservation requests
d) Guest index
e) Guest master-file
f) Sales records are usually computerised
g) Operation records
External secondary information is available from a large number of

sources:
a) Marketing Research Firms
Many marketing research organisations conduct syndicated research

available to subscribers.
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b) Government
Industry Publications.
c) International Sources
World Tourism Organisation, International Monetary Fund, United

Nations.
d) Educational Institutions
Hotel, Catering and Institutional Management Association,

Hotel Association.
e) Other Publications
Chamber of Commerce, Institute of Marketing.
3.5.3 Collecting the Information
Having decided what information is needed and from where, the next
stage is to collect it. In secondary research, the task is simple since the
researcher often needs to use the reference library and interlibrary loan
facilities.
The task is more complex for primary research. In this section we shall
examine the collection of both types of information.
a) Source of Data
Now that the type of research to conduct has been identified, the type of
Data should be determined.
Secondary Data
Primary Data
i. Secondary Data
Data that have been previously collected for other purposes, they are
less expensive and more accessible than primary data. The
disadvantages are that they may be too old to be relevant to the current
research. They may not be as accurate and the methodology used may
not be appropriate for current study. Competitors may have access to
similar data.
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ii. Primary Data
Primary data are gathered directly from the subjects or through on- site
research for a market research programme.
Advantages
They fit exactly the research project

They are most up to date
It could be the only available data
They are unique because competitors cannot have them
Disadvantages
They are expensive

They are time- consuming
They are difficult to get
Designing Primary Data
One must determine the type of people, the places and the things to be
investigated in the research. For example, if one is to study the use of
cooker and the hypothesis is that the majority of chefs prefer gas
cookers to electric cookers. The people, the chef, the restaurants and the
hotels will be administered the questionnaire so that information can be
collected from the answers.
3.5.4 Analysing the Information
The purpose of analysis is to provide meaning; – unanalyzed data are

meaningless. There are large numbers of techniques of analysis.
Analytical technique can be classified as univariate, bivariate and

multivariate:
Univariate technique analyses data relation to a single variable such

as sales, coupon response rates, or consumer complaints.
Bivariate technique analyses data relating to two variables and look
to establish relationships such as correlation or time between them.
Such studies would include price-sales relationship and saleperson’
responses to financial incentives.
Multivariate analysis, the most complicated set of techniques, seeks
to establish relationships of a causal or correlative nature between at
least 3 variables. Marketing simulation, in which the combined
interactive effects of marketing mix affects decisions on sales
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profitability are computed electronically, are a highly developed

form of multivariate modelling.
3.5.5 Using the Information
In deciding what course of action to take, the manager must consider the
validity and reliability of the findings. He must consider a variety of
sources of validity such as:
Respondent error
Investigator error
Sampling error and selection effects
History effects
Maturity effects
Testing effects
Instrument effects
Reliability is reflected by stability in the research findings.
For instance, if a manager wants to discover the attitudes of customers

towards a new product, the attitude-measuring questionnaire must
reflect all dimensions of the attitude. It must measure the beliefs and
feelings which consumers hold about the innovation. These are
dimensions of the construct ‘attitude’ if the instrument does not measure
the entire dimension, then the result are invalid.
If the manager is assured of the reliability and validity of the findings,

he can make decisions with confidence. This after all, is the primary
purpose of marketing.
4.0 CONCLUSION
This unit has discussed marketing research; the definition and role. It
has also analysed the meaning of some relevant terms in marketing
research and marketing information. The various processes involve in
marketing research have also been discussed.
5.0 SUMMARY
It can therefore be concluded that every company needs Market

Research and Market Information System. If a company sales are
declining while expenses remain the same, resulting in decrease in
profit, the problem definition is not just decline in sales; the problem
must be well defined from its roots. Marketing Research can bring about
the solution.
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6.0 TUTOR-MARKED ASSIGNMENT
What are the advantages and disadvantages of Primary and Secondary

data?
7.0 REFERENCES/FURTHER READING
Quester P McGuiggan R, McCarthy E and Perreault W (2001) 3rd edn

‘Basic Marketing. A Managerial Perspective. Australia:
McGraw-Hill.
Fraom J. (1999). 4th edn ‘Introduction to Marketing’. UK: Thomson.
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UNIT 2 MARKET SEGMENTATION

CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 What is Market Segmentation?
3.2 Segmentation Variables
3.2.1 Purpose of Visit
3.3 Geographical Segmentation
3.4 Age and Life Cycle
3.5 Gender
3.6 Race
3.7 Income
3.8 Occupation
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
Markets consist of buyers who differ in one or more ways. They may
differ in their wants, resources, locations and buying attitudes. Because
buyers have unique needs and wants, every seller has to design a
separate marketing program for each buyer. A caterer can customize the
menu, entertainment and the setting to meet the needs of a specific
client.
Most companies are unable to offer complete segmentation due to cost.

Companies, therefore, look for broad classes of buyers who differ in
their product needs or buying responses. For example, married adults on
vacation with small children have different needs than young and single
adults.
This unit will discuss the various segments in the market and their
advantages.
2.0 OBJECTIVES
At the end of this unit, you should be able to:
explain and see the need for market segmentation

describe the process of evaluating market segments
state the methods of selecting market segments.
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3.0 MAIN CONTENT
3.1 What is Market Segmentation?
Market segmentation can be defined as the identification of a subset of

consumers so that a marketing mix can be devised specifically to satisfy
its demand. Market segmentation differs from mass marketing because
in the latter, the population is not divided into segments but treated as if
demand were homogeneous. There are two major distinctions to this
topic. The first distinction can be made between imposed, elected and
acquired market segmentation.
Imposed segmentation: occurs when a higher authority determines

that some groups of consumers should not be exposed to a given
marketing mix. Elected segmentation: occurs when following analysis
of segmentation alternatives, a marketing mix is subsequently designed.
Acquired segmentation: the marketing mix is first designed and its

market appeal subsequently analyzed. The mix must be refined to be
more cost effective.
A second distinction can be made between macro and micro-

segmentation. Macro-segmentation is used to analyze large-scale
consumer e. g. international travel pattern. Micro-segmentation, which is
enterprise specific, is the focus of the unit.
3.2 Segmentation Variables

This section examines the variables used to segment hospitality markets.
3.2.1 Purpose of Visit

This is the most common variable used to segment accommodation
markets. It can be broken down into various purposes viz:- Business,
Holiday and Group travelers.
a) Business Travellers: vary in status from low cadre to managing

directors. They may be delivering goods, visiting exhibitions or
trade fair, attending seminars or conferences. Their usage is short
term, city-oriented, frequent, less price sensitive and unseasonal.
b) Holiday Traveller: stays longer, is resort-oriented, infrequent,
price sensitive and seasonal. Other accommodation users are
extremely varied such as: family members attending a wedding,
visiting a hospital patient or belonging to common interest
groups.
c) Group Traveller: They have business, holiday or other
purposes. Hospitality marketers sell accommodation and other
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products to tour operators at discounted rates and they, in turn,

build them into packages for resale to holidaymakers.
Other group markets for hospitality products are congresses,

associations national and international, local and regional), businesses
(meetings, seminars, conferences, incentive travel, exhibitions and fairs,
families, special interest groups and clubs (athletics, culture and
hobbies) and trade unions.
3.3 Geographical Segmentation

Geographical segmentation calls for dividing the market into different
geographic units, such as nations, states, regions, countries, cities, or
neighbourhoods. Geographical area is a variable used to segment both
accommodation and food service markets. A company may decide to
operate in one or several geographic areas, paying attention to
geographic differences in customer preferences.
Today, all hospitality companies have the ability to use database

management and database mining to determine differences in consumer
purchase patterns and preferences by geography.
Some hotels may choose to initiate a program to offer regional dishes or

about offering local cuisine.
3.4 Age and Life-Cycle

Age is a more common variable in food service segmentation than
accommodation. Some hoteliers target the over 60s, offering products
augmented with social and welfare benefits such as organized singsongs
and health care. Consumer preferences change with age. Some
companies offer different products of marketing strategies to penetrate
various age and life-cycle segments. For example, MacDonalds knows
that 79% of the family decisions to eat out are influenced by children
and households. They offer happy meals that include toys aimed at
young children. The toys encourage the children. This chain also added
salads and other products to attract the health-conscious adult market.
3.5 Gender
Consumer behaviour may be related to sex. Family Life Cycle is often a

better predictor of buying behaviour than age because changes in family
structure have a great influence on purchasing power. Gender
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segmentation has long been used in marketing and also in the hospitality
industry. Hotel corporations now take women into consideration in
designing their hotel rooms. Design changes include lobby bars, fitness
facilities, hair dryers, and rooms decorated in lighter colours. Although
these changes are attractive to women, many are also attractive to men.
Hotel corporations are also subtly including more women executives in
their advertisements.
Family size correlates well with eating out. Single-parent families eat
out more often than any other family group. Larger families tend to have
less disposable income, are likely to take holiday less frequently, price
sensitive and consider holiday-plan with care.
Single women living are more likely than single males or married
couples to increase their spending on restaurants when they receive a
salary increase. Singles spend heavily on entertainment.
Heavy solid-looking foods may be perceived as ‘Masculine’ while
pretty, dainty, decoratively garnished, rounder and smaller foods as
‘feminine’. The newly-weds are targeted by caterers and honeymoon
hotels.
3.6 Race
Race is a segmentation variable which has to be used with sensitivity
because of provisions within the Race Relations Act 1976. Its prime
applications for hospitality properties located in neigbbourhood might
design a product offering and promotional plan to attract West Indian
guest visiting friends and relatives. Certain restaurants such as: Pakistani
would adapt its product mix to the neighbourhood. Others print their
menu in the local languages and advertise.
Religion is similarly applied. Restaurants might be designed to appeal to

the Islamic, Hindu or Jew.
3.7 Income
Income is closely associated with eating out behaviour. Higher-income
people eat out more often and tend to spend more per meal experience.
There is a distinction between net income and disposable income. Some
high-earners have little disposable income because of other financial
commitments. Disposable income is linked to socioeconomic class.
Widespread availability of credit has reduced the significance of income
as a major segmentation variable.
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3.8 Occupation
Occupation is used to segment market in 2 ways viz:-
Whether a person is employed or not;

The type of job, if employed.
Women in paid employment spend considerably more on eating out
than do their husband counterparts. With high disposable income,
they are likely to take holidays. Patterns of expenditure are likely to
vary according to the type of occupation a person holds.
4.0 CONCLUSION
The hospitality industry offers many examples of segmentation by

different variables.
Each customer group wants a different product; a restaurant cannot

serve all customers with equal effectiveness. In the hospitality
organisations therefore, market segmentation is a way of distinguishing
the easily accessible consumer groups from the unresponsive ones and
in order to gain an edge over its competitors, the market segments need
to be examined by identifying one or more subsets of customers within
the total market and concentrate the efforts on meeting their needs.
5.0 SUMMARY
Since the hospitality orgnisations consist of buyers who differ in their

wants, resources, locations and buying attitudes, then every operator has
to design a separate marketing program suitable to meet the needs of the
different segments.
In the next unit, we will discuss marketing strategy.

Mention 5 market segments.
Stokes, D. (1997). 2edn : ‘Marketing: A Case Study Approach’. London:

Letts.
Buttle, F. (1986). 2nd Edn ‘Hotel and Food Service Marketing’. Britain:
Holt.
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UNIT 3 MARKETING STRATEGY
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Selecting Strategic Business Unit (SBU)
3.2 Writing Marketing Objectives
3.3 Marketing Mix
3.4 The Strategic Marketing Mix
3.5 Implementation and Control
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
Marketing Strategy
This Unit discusses strategic marketing planning, writing marketing

objectives as well as strategic marketing mix.
Strategy in a business is the fundamental pattern of planned resource

deployments and environmental interactions that indicate how the
organisation will achieve its objectives. Marketing strategies are
designed as the vehicle to achieve marketing objectives. Marketing are
perceived tactics that support strategies but strategies and tactics have
little relationship to objectives.
In the hospitality organisations, strategic planning is the managerial

process of developing and maintaining an optimal fit between the
deployment of an organisation’s resources and the opportunities of its
changing environment. The business environment is the customer. It is
concerned with the selection of target market and the deployment of
marketing resources so that marketing objectives can be achieved.
2.0 OBJECTIVES
At the end of this course, you should be able to:
differentiate between strategy, policy and tactics

write marketing objectives
categorise strategic marketing mix .
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3.0 MAIN CONTENT
3.1 Selecting Strategic Business Unit (SBU)
Strategy differs from policy. Policy refers to conditions and constraints

which impinge upon decision making. Tactics are short term decisions
made when implementing strategy for marketing objectives to be
achieved within a given time frame. Strategic planning of a business is
important because it is data based. Its focus is on marketing, production
and distribution. The business condition considers the environmental
factors.
Strategic centre is usually referred to as Strategic Business Unit SBU
As business grows, the products and markets are acquired and

developed. The strategist has to decide which to support. Resources are
invariably limited, so allocations must be carefully chosen. Products or
markets likely to contribute most towards objective achievement are
better supported.
What is perceived as an SBU will alter from time to time according to

environmental change.
The hospitality marketers adopt a seven-step approach to strategic

marketing planning viz:-
Know your property profile

Know your prime prospects
Know your competitors
Establish realistic objectives
Formulate a marketing plan
Implement the plan
Evaluate the plan’s effectiveness and adjust as required.
9.2 Writing Marketing Objectives
Marketing objectives for hospitality industry are phrased in a number of

ways:
Market Growth- in the early stages of market development, operators

are often more interested in expanding the total market than competing
for share. Co-operatively operators can shares the cost of promoting the
product and educating prospective customers.
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Market Share- is defined as the proportion of demand obtained in a

product category, market or product-market cell, is widely used by
national companies.
Sale Volume- is the number of guests and sales value. Hotels report the
objectives of higher occupancy levels and higher average room rate.
Jointly, they would substantially improve sales volume and because the
company was already in profit, would enhance the bottom line.
Similarly, modest increase in turnover can have a disproportionate
beneficial effect on the net profits.
Market Penetration- is defined as the percentage of prospective
customers in the target market, who have tried the product at least once.
It is used by companies which have particular reasons for wanting to sell
to a specified group of customers.
3.3 Marketing Mix
Marketing mix is four controllable elements or variables that the

company put together to satisfy the target custormers.
A marketing mix offers some products at a price with some promotion

to tell potential customers about the products and some means by which
the products can reach the customers. Marketing mix is the instruments
or tools that marketers use to influence demand. The tools are always
the same whether it is a profit or a non- profit organisation.
These variables that make up marketing mix (otherwise called

marketing tools) are known as 4Ps:– PRODUCTS, PLACE, PRICE &
PROMOTION. The customer is the target of all marketing efforts.
a) Product: A product may have different features. It is the tangible

or intangible items the customer purchase or experience. There
are different ways to satisfy the needs of target customers through
the product. Service rendered to the customers before and after
sales can be improved upon. The package, brand name and
warranty can be changed; various advertising media can be used
such as newspaper, magazine and cable television, price discount
can be given etc.
b) Place: means location or marketing channel. This involves

product transportation, storage, processes, and keeping track of
consumers (wholesalers and distributors) with inventory
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procedures. It is not so with the intangible products. The owner

of the business must provide the revenue to keep lease payment
to a certain percentage of turnover (total sales). The product is
useless if it is not located where the target marketing can have
access to it.
c) Price: The right price must be determined. Price setting must

consider the kind of competition in the target market and the cost
of the whole marketing mix. Management must consider
customer reaction to prices. Promotional price practices such as
discounts, mark- ups and other sale term must be considered. If
the price is unacceptable to the customer, the effort in planning
and setting the price is wasted.
d) Promotion: is concerned with informing the target market and

others in the channel of distribution about the product
Promotion includes: Personal selling; Advertising; Sales promotion;

Publicity
MARKETING MIX
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3.4 The Strategic Marketing Mix
A strategic marketing-mix programme expresses exactly what activities

will take place in support of each identified product and market
subgroup on a week-by-week basis. Since brochure production,
distribution, advertising and merchandising in retail travel agencies have
different timescales, there is a considerable management art necessary in
scheduling programme of work to make the best use of the marketing
staff.
Prior to evolving the marketing mix, three preliminary decisions have to

be made:
1. Selection of target market.

2. Positioning of the product.
3. Determination of the means of market entry.
A planned strategic marketing mix should have the following features:
Enable objectives to be achieved and should therefore be budgeted

and controlled. It should have a time duration over which its effect is
to be measured.
Be product-market cell specific, although it is quite satisfactory to
produce product plans or market plans.
Be integrated, each element of the marketing mix-product, price,
promoting and place-should complement the others.
Be built upon sound principles of marketing and knowledge of
consumer behaviour.
3.5 Implementation and Control
The overall strategy must be developed into an action plan.
However, Market growth is synonymous with marketing strategy

particularly in the early stages of market development.
The two criteria of market growth and relative market share fall into one
of four categories: stars, cash cows, dogs and question-marks. The main
characteristics of each are detailed below.
Stars Need large amounts of each to maintain share

Generate large amounts of cash
Balanced cash flow
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Turns into cash cow if share is maintained when growth

slows, otherwise eventually becomes a dog
Cash Cows Strong market share, low unit costs

Profits and cash generation high
Fund investments elsewhere
Dogs Poor competitive position

Low volume, low margins, low profits
Negative cash flows
Question Cash needs are high because of market growth

Marks Cannot recover cash unless it becomes star and eventually
a cash cow, otherwise turns into dog.
The marketing strategies must specify what the company wishes to

achieve. Objectives may vary according to the prospects for the strategic
business unit (SBU) as follows:
1. Maintain marketing share of each cow in order to generate strong

positive cash flow (milking strategy).
2. Hold market share of stars in order to create the cash cows of the
future (maintenance strategy).
3. Lose market share of dogs; liquidate assets (harvest strategy).
4. Since question-marks drain resources in the longer term unless their
market share can be improved, there are two alternative strategies:
build market share to become a future star (investment strategy), or
lose share by selling off or discontinuing the product (divestment
strategy).
It should be noted that not all dogs need be unprofitable. An
independent hotelier with very little share of the total business travel
market can be very successful, provided that occupancy levels are high:
A small market share is not necessarily a handicap; it can be a
significant advantage that enables a company to compete in ways that
are unavailable to its large rivals.
4.0 CONCLUSION
This unit has discussed marketing strategy. Marketing mix was also
briefly discussed. Each of the marketing tools will be further discussed
in the subsequent units.
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5.0 SUMMARY
The next unit will be discussing Product.
6.0 TUTOR- MARKED ASSIGNMENT
What are the 7 steps a marketer needs to adopt in strategic marketing

planning?
Lesley (2000). ‘Hospitality, Retail Management. Butterworth. Oxford:

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

Prentice Hall.
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UNIT 4 PRODUCT STRATEGY
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 What is Product?
3.2 Product Strategies/Augmentation
3.3 Product Life Cycle
3.3.1 Stage 2 Introduction
3.3.2 Stage 2 Growth
3.3.3 Stage 3 Maturity
3.3.4 Stage 4 Decline
3.4 Product Decision
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
The product, which the marketer means to create and deliver, may be
different from that received by the customer.
There is distinction between the core, tangible and augmented products.

The core products are problem-solvers: hotels deliver a place to sleep or
meet whilst restaurants quell hunger or provide opportunities to
socialize.
Tangible means where the fundamental benefits are translated physically

e.g. a certain sized room equipped to a specified standard and marketed
under a given brand. A hotel could define its tangible product as a 180-ft
room with colour television, telephone and small (40ft) bathroom
costing £14 per night.
The augmented product is the complete product offering. Every hotel

offers the same core product but this is modified and enhanced in cost
effective ways to make it more attractive to its target markets.
Competition takes place largely at the augmented level.
This and more will be discussed on product strategy in this unit.
23
2.0 OBJECTIVES
describe product, product mix and product life cycle

distinguish between the core, tangible and augmented products
identify the major product decisions.
3.0 MAIN CONTENT
3.1 What is a Product?
Product is the good or service packaged to satisfy the needs of the

customers, without which there is no marketing. Product can be called a
bundle of value that meets the expectations of customers in order to suit
the needs and wants of the target market, it must include consulting,
training manuals, installation and other tangible and intangible
components. Surveys provide feedback on the extent to which the
product meets the needs and wants as well as the standards.
The hospitality product can be defined as the set of satisfaction or

dissatisfaction which a customer receives from a hospitality experience.
The satisfactions may be physiological, economic, social, or
psychological.
Physiological Satisfactions- full stomach, quenched thirst, comfortable

bed, warm and subdued environment.
Economic Satisfactions- good value for money, rapid service,

convenient location and credit facility.
Social Satisfactions- enhancement of self-esteem, status and security.

The dissatisfactions may or may not be under control of management.
Controllable- Dirty uniforms, unhelpful staff, greasy spoons, or

cramped conditions.
Uncontrollable- Road works, behaviour of other customers, or
seasonality of some menu items.
24
3.2 Product Strategies
Product development is an integral part of marketing job because it

covers almost all aspects of business operation viz:- sales, service,
research and development, package, finance and
production/manufacturing. Developing products to meet the needs and
wants of customers for the service industry is important.
In some hospitality firms, Marketing has an important role to play in the

improvement of existing products and the development of new ones.
Marketing can help to enhance revenue from product changes as

additions to the current product line. Whenever there is more to be sold
than customers are buying, profit potential is not being realized.
Revenue boosting opportunities abound for the creative operator who is
willing to offer facilities, services and events that will attract customers.
Training customer-contact employees to stimulate add-on sales also
upgrades sales.
Good attention to give total commitment to guest satisfaction can save

time, energy and efforts. It provides completely personalized and
individual service and creating the experience of intellectual surprise for
its consumers.
3.2.1 Augmented Products in the Accommodation and Food

Service Areas
Accommodation Food and Beverages

Reservation system convenience Speed of food service
Reservation system simplicity Ordering convenience
Acknowledgement of reservation Telephone
Lift attendants Advance orders
Room service Order-taking table staff
Standard of house keeping Complaints procedures
Courtesy Advance reservations
Procedures for handling Reliability of food/beverage
overbooking quality
Information services Customer advice on wines
Customer recognition Provision of special foods
Credit provision Cooking to order e.g. steaks
Baggage handling Acceptance of credit cards
Pet/child care Variations in portion
Provision for disabled Home deliveries
Group accommodation Extent of non-available menu
items
25
Discounts on club referrals, etc Fibre/calorie information

Cleaning/laundry Provision of ‘doggy—bags’
Courtesy care Function-catering facilities
3.3 Product Life Cycle
The concept of product life cycle is to describe what happens during the
market life of a product from its introduction stage to its withdrawal. It
helps management formulate the appropriate marketing strategies. The
S- shape graph has four stages viz: - INTRODUCTION, GROWTH,
MATURITY and DECLINE. Sales and profits vary between stages.
Example of products that have quick growth and rapid decline are disco,
coffee shop, sport bar etc.
Wheelen, T. and Hunger, D. 8edn (2002) ‘’Strategic Management

and Business Policy’’, New Jersey: USA P. 91
3.3.1 Stage 1- Introduction
For food service outlets, in particular, early sales may be at a very high
level, as innovators try the product. For accommodation, the sales level
generally builds up more slowly. The hotel occupancy levels are high
from the first few weeks of operation.
26
During the introductory period, most purchases are trial, as opposed to

repeat purchases. At this stage marketers stimulate word-of-mouth
promotion, advertising and publicity.
3.3.2 Stage 2 - Growth
Eventually, the cumulative effects of publicity and promotion take effect

and sales literally take off. A large proportion of consumers in the target
market become aware of the product. More customers try the product
and some early adopters make repeat purchases. Hence the product is
now benefiting from both types of purchasers.
Competitors may begin entering the market at this stage. Some

companies have a policy of always being a follower rather than
innovator. The follower often realizes a lower reward than the
innovator; he also has a much lower level of commercial risk. The
innovator introduces new products i.e. marketing research, new product
development, advertising, promotion and so forth.
3.3.3 Stage 3 - Maturity
Sales growth now starts to slow down considerably and at the

conclusion of this phase, levels off completely. What is happening is
that the last few members of the target market who have not previously
tried the product finally do make their first purchase. Sales volume,
therefore, has shifted to a greater proportion of repeat purchases which
tend to follow a fairly stable pattern.
More competitors enter the market with improvements upon the

innovators’ product. Many companies look for growth opportunities,
thus growth markets than the market can profitably sustain.
In the introductory stage, the innovator normally has the market as

competitors wait to see what will happen. When its pioneering effort
starts to reap dividends, the sales take off in the growth stage of the life
cycle and competitors enter the market. Slower competitors latch onto
the innovators product belatedly.
3.3.4 Stage 4 - Decline
Eventually, the consumers lose interest in the product either because the
product is superseded or consumer tastes change and sales decline.
Fewer people repurchase. This is usually a gradual process, thereby
providing marketers with time to liquidate their assets.
27
3.4 Product Decisions
Hospitality marketers have to make a number of product decisions:
What satisfactions can be derived through the product. This will be

reflected in both its tangible and intangible dimension e.g. quality of
beds and standard of service.
What tangible form the product should take e.g. room size amenities,
restaurant format (coffee shop, specially restaurant,) etc.
Whether to market a single item as one main restaurant or a line of
related products e g. coffee shop, gourmet restaurant etc
How to augment the product, so that it acquires the desired product
position in the customers’ mind and is differentiated from
competitors.
How to define, develop and promote the image and atmosphere
dictated by the product-positioning statement.
What style, form and standard of service to build into the product.
Whether to brand the product since most hospitality products are
branded.
4.0 CONCLUSION
In this unit, we have been able to discuss product strategy extensively.

The unit also covered product life cycle and product decision.
5.0 SUMMARY
The augmented product is the complete product offering. To have an

edge over the competitors, hospitality organisations should deal largely
at the augmented level.
What are the different stages of the product life cycle?
Quester, P. G., McGuiggan, R. and P. William (2001). ‘Basic

Marketing: A Managerial Perspective.’ Australia: McGraw Hill.
Buttle, F. (1986). 2nd Edn ‘Hotel and Food Service Marketing’. Britain:
Holt.
UNIT 5 PRICING STRATEGY
28
CONTENTS
1.0 Introduction
2.0 Objective
3.0 Main Content
3.1 Influence of Price on the Consumers
3.3 The Importance of Strategic Pricing
3.3 Constraints of Pricing Policy
3.3.1 Internal Constraints
3.3.2 External Constraints
3.4 Price and the Product Life-Cycle
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
Pricing is a function of marketing. In the hospitality organizations, the

marketing budget determines the amount of money that has to be spent
on advance bookings, reservations and purchases in order to secure
targeted sales volume and revenue.
Many hospitality plans devote little attention to pricing. This is an error

and one of the primary reasons that many hospitality companies have
removed pricing responsibility from marketing and assigning it to other
departments, such as revenue management.
If marketing managers do not remain in control of this area, they must

interface with internal pricing departments. Marketing and sales
departments will continuously be in conflict with pricing if pricing
strategies are not understood and considered in marketing and sales
plans.
In discussing pricing strategies, this unit will consider the internal and
external factors, and other general approaches to pricing in the
hospitality organisations.
2.0 OBJECTIVE
list the factors affecting price decisions.
3.0 MAIN CONTENT
29
3.1 Influence of Price on the Consumers
Price can be defined as the amount of money charged for a good or

service. Price is the sum of the values consumers exchange for the
benefits of having or using the product or service.
Price is the only marketing mix element that produces revenue. All
others represent costs. Some experts rate pricing and price competition
as the number one problem facing management. Pricing is the least
understood of the marketing variables, yet pricing is controllable in an
unregulated market. Pricing changes are often a quick fix made without
proper analysis. A pricing mistake can lead to a business failure even
when all other elements of the businesses are sound. The total product
concept is that the user must appreciate what is being offered and at
what price. This is the way the value of the offer can be judged.
Customer attitudes and the policies of competitors are important factors
3.2 The Importance of Strategic Pricing
There are links between price and the other elements in the marketing
mix. The higher the price, the greater the possibility of increasing
distributors’ margins, quantity discounts and hence distributive support.
The higher the price, the greater the possibility of increasing budgets for
advertising, publicity, sales promotion and sales people’s commissions.
Strategic pricing decisions are essential if an organization is to compete

successfully, pricing objectives and policies should guide these pricing
decisions.
Pricing objectives and strategies affect every facet of marketing and

sales. The selection of appropriate target markets and the emphasis to be
given to each depends on pricing.
The top Management in most hospitality companies realize that a 10

percent upward adjustment in rates can produce favourable profit result
in excess of cost cutting or traditional marketing and sales strategies to
increase the number of guests.
Pricing strategies are of great importance to chain restaurant and need to

be reviewed constantly. As an example, food-service quality is the
predominant influence on guest ratings for family and casual dinning
30
restaurants. Family price appeal enhances a guest’s rating for a family

restaurant chain.
3.3 Constraints of Pricing Policy
3.3.1 Internal Constraints
Pricing strategy must take sufficient account of external constraints –

for example, government economic measures, inflation, price
regulation and monopolies legislation; the reactions of distributors,
competitors, suppliers, etc which may all act as important
determinants on prices.
The life cycle concept has significant implication for the pricing of
products.
Price must be related to the requirements of the total product
portfolio and hence to overall marketing objectives.
Future trends in costs, demand and competition must be carefully
considered and policies on adapting prices to changed market
conditions must be devised.
3.3.2 External Constraints
The role of government, and supra-national organization such as the

European union, provides a significant example under this heading.
Aspects of a government’s economic management, its attitudes and
policies to prices and incomes, to monopolies and mergers and to any
price-fixing agreements deemed contrary to the public interest, all have
influences on management decision-making in this area.
3.4 Price and the Product Life-Cycle
As we have seen earlier, the price history of a product may indicate

significant changes as it moves through the stages of its life cycle. An
approach to pricing may be adopted in which the producer adds a
percentage mark-up to the sum of his own cost so as to arrive at the final
selling price of his product. This mark up needs not be rigidly fixed
throughout the life-cycle.
4.0 CONCLUSION
It is important for markets and managers to have an understanding of

price. Charging too much chases away potential customers.
Management should note that competition using a survival pricing

strategy should be monitored carefully but not necessarily emulated.
31
5.0 SUMMARY
From the foregoing, you can see that competitors with a strong
marketing program, will use their marketing skills to gain customers
rather than cut their price. A hotel with good marketing will allow a
competitor to lower prices and skim off the customers, leaving more
profitable business for them particularly if the hotel using a survival
strategy has a small market share.
What are the constraints of pricing policy?
Kotler P, Bowen J. and J. Makens 2006 4th edn ‘Marketing for

Hospitality and Tourism’. Australia: Prentice Hall.
Schiffman L and Kanuk L (2007). ‘Consumer Behaviour’. Prentice Hall:
32

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HCM 237 HOSPITALITY SALES AND MARKETING

UNIT 1 MARKETING RESEARCH AND MARKETING

Marketing research specifies the information required to address issues.

Many companies use market research to determine market potential, to

Marketing Managers rely on market research processes to develop and

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

describe the importance of marketing research and usefulness of

3.0 MAIN CONTENT

3.1 What is Marketing Research?

a) Marketing Research is an interacting, continuing future oriented

b) The process or a set of procedures put in place for regular

c) Market research can be the logical assembly of relevant facts

Marketing information helps to identify marketing opportunities and

3.2 Marketing Information System

In Marketing Information System, there are four plans:

Internal Report - for what is happening

The need for marketing intelligence is ongoing. Much of the information

Marketing research needs can be of macromarket and micromarket

Micromarket information includes:

3.3 Role of Marketing Research

The fundamental role of marketing research is to reduce the uncertainty

It provides relevant data as far as possible as a basis for marketing

3.4 Market Research Terms

a) Market Research - describes ‘markets’ in terms of its size,

i) Ad hoc decisions - relating to one-off problems e. g. what can be

3.5 Market Research Process

3.5.1 Analysis of Information

Analysis of information is the most important step in market research

Regular appraisal of salesperson’s performance

Occasional hospitality marketing problems require adhoc information

Whether to co-operate with the other hotels in joint promotion

Information can come from past experiences. It can be accurate,

3.5.2 Information Sources

Secondary data can be internal or external to the organisation. However,

External sources can be useful. It can be found in business publications,

Internal Records include:

External secondary information is available from a large number of

a) Marketing Research Firms

Many marketing research organisations conduct syndicated research

World Tourism Organisation, International Monetary Fund, United

Hotel, Catering and Institutional Management Association,

Chamber of Commerce, Institute of Marketing.

3.5.3 Collecting the Information

ii. Primary Data

They fit exactly the research project

They are expensive

Designing Primary Data

3.5.4 Analysing the Information

The purpose of analysis is to provide meaning; – unanalyzed data are

Analytical technique can be classified as univariate, bivariate and

Univariate technique analyses data relation to a single variable such

profitability are computed electronically, are a highly developed

3.5.5 Using the Information

Reliability is reflected by stability in the research findings.

For instance, if a manager wants to discover the attitudes of customers

If the manager is assured of the reliability and validity of the findings,

It can therefore be concluded that every company needs Market

6.0 TUTOR-MARKED ASSIGNMENT

What are the advantages and disadvantages of Primary and Secondary

7.0 REFERENCES/FURTHER READING