Marketing Objectives In Tourism And Hospitality

Marketing Objectives In Tourism And Hospitality This report represents a detailed analysis of current business and marketing strategy of Hilton Hotels Resorts a global hotels and resorts company with more than 540 locations in 78 countries (A Room for You, 2012, online). The parent company, Hilton International comprises a range of famous brands such as Waldorf Astoria Hotels Resorts, Conrad Hotels Resorts, Doubletree, Embassy Suites Hotels, Hilton Garden Inn, Hampton Inn, Homewood Suites by Hilton, Home2 Suites by Hilton, and Hilton Grand Vacations (Our Brands, 2012, online) The reasons for the choice of Hilton Hotels Resorts amongst many other brands in particular include a high level of brand awareness, and availability of vast amount of information about the brand. The report starts with a situational analysis of Hilton Hotels Resorts, including its current position within travel and tourism industry in the UK, analysis of companys main stakeholders and their interests, PESTLE analysis conducted for Hilton Hotels Resorts and description of marketing issues faced by the company. This is followed by a marketing report that comprises description of Hilton Hotels Resorts services, and analysis of the companys pricing, promotion and distribution strategy. Moreover, this report comprises a market research plan for Hilton Hotels Resorts that explains actions involved in each stage in the research process in order to achieve the research objective. The report is completed by discussions about importance of sustainability and corporate social responsibility for Hilton Hotels Resorts and an assessment of the companys policies in these two important areas of business practice. 1. Situational analysis 1.1 Position of Hilton Hotels Resorts within Travel and Tourism Industry in the UK Travel and tourism industry in the UK represents one of the key sectors in the national economy and according the research conducted by Oxford Economics travel and tourisms total contribution to GDP in the UK was GBP 101 billion in 2011 or 6.7% of total GDP (The World Travel Tourism Council, 2012, online) Figure 1 represents the structure of the UK tourism industry, and within this structure Hilton belongs to accommodation category. Moreover, the UK is the second biggest market for Hilton Hotels Resorts after the US (Barnett, 2011), and thus the UK market represents a point of focus for Hilton strategic level management. Figure structure of the UK tourism industry (field work) 1.2 Hilton Hotels Main Stakeholders and Their Interests Stakeholders of companys including Hilton Hotels Resorts can be divided into two categories: internal and external. Internal stakeholders represent parties that belong to Hilton such as shareholders and employees. The primary interests of shareholders are profit maximisation, whereas employee interests include gaining a wide range of tangible and intangible compensation from their employment. External stakeholders, on the other hand, are parties that do not belong to Hilton; nevertheless they have interest in the business from various perspectives. The following figure illustrates a range of Hilton external stakeholders and their interests: External stakeholder Interests Communities The nature of impact of business activity to the community Customers Purchasing products and services in lower prices Government Business employment relations, corporate taxation, compliance with laws, rules and regulations etc. Suppliers Long-term partnership in mutually beneficial terms Media Corporate performance, corporate conflicts, employee relations etc. Table External stakeholders and their interests 1.3 Hilton Hotels PESTLE Analysis PESTLE abbreviation is interpreted as political, economic, social, technological, legal, and environmental factors impacting businesses, and PESTLE is an important framework for assessing external factor impacting business practices. 1.3.1 Political Factors Political stability is the key to the success of any industries and it is applicable to hotel industry as well and it needs to cope with political situations everywhere in the world. The political approaches can influence the number visitors, both, tourists and business travellers visits to a nation (Jones, 2002). It may a concern for many people those who are visiting Northern Ireland because of the ongoing very delicate political situation. Moreover, Hiltons performance is directly affected by consumer protection and employment laws in UK, as well as, the nature of competitive regulation, and risks of military invasion in the country. 1.3.2 Economic Factors National macroeconomic situation and factors and events impacting the situation are major factors affecting Hilton Hotels Resorts business in the UK. For example, during the Olympic times in the UK most of the hotels were occupied and booked fully for the whole period. However, the situation was completely different once the Olympic Games were over. Additional economic factors that affect Hilton may include the extent of expected and real economic growth in the UK, national taxation policies, and seasonality and weather problems. 1.3.3 Social Factors The Hilton brand is very well known amongst international visitors and the UK is one of the popular destinations for the tourists and shopping lovers. A wide range of social factors impacting Hilton Hotels Resorts include emerging trends in consumer lifestyle, consumer demographic variables, the impact of role models in consumer decision making, and growth rate of population. For example, increasing numbers of young consumers from emerging economies like China and India visiting the UK for various purposes can be specified as an important social factor that impacts the UK hotel industry. 1.3.4 Technological Factors An overall development of technological infrastructure related to catering industry might have great impact on Hilton performance. Matters associated with the use of energy and their costs and the potential for innovation within the industry can be classified as important technological factors (Sandhusen, 2008). Furthermore, hotel bookings have become very sophisticated than ever before. Anyone can book a hotel room in a simple step with the help of internet. Increasing number of social media such as Facebook, tweeter and websites like trip advisor help both the customers and the hotels. 1.3.5 Legal Factors Legal factors are also important source of external impact on Hilton performance and they include any changes in the UK jurisdiction that affect the catering industry in direct and indirect ways. Additionally, there are many visa restriction rules are there in many countries such as the USA, the EU countries, Australia etc. for the international visitors and these countries are plays important role in the travel and tourism industry. 1.3.6 Environmental Factors The hospitality and catering industry often becomes a point of criticism for polluting the environment particularly in most of tourist attractions such as historical places, beaches, forest areas, hills etc (Foskett and Paskins, 2011). A range of activities related to tourism not only creates pollution, but also disturbs animals and related environment. Moreover, hotels and related businesses are contributing a considerable amount of carbon emissions with negative implications to the issues of global warming. Accordingly, businesses like Hilton are facing tight regulations to operate their business in the UK. These regulations are inevitably increasing the levels of operational costs for the company. Additionally, the UK being a part of the European Union (EU), Hilton performance is also impacted by relevant jurisdictions introduced by the EU. 1.4 Marketing Issues Faced by Hilton Hotels Currently, Hilton is faced with a range of substantial marketing issues in the UK threatening its long-term growth prospects. Increasing level of multiculturalism in the UK can be specified as a major marketing challenge Hilton has to deal with. Specifically, due to the increasing level of competition in the marketplace the level of cultural diversity in the UK is rapidly increasing. Accordingly, Hilton is left with a complex task of formulating and implementing a marketing strategy that needs to address cultural diversity amongst its customers. Additional marketing challenges faced by Hilton Hotels can be specified as increasing level of guest sophistication, and difficulties associated with market segmentation due to overlaps in Hilton International brands. In other words, Hilton International consists of Waldorf Astoria Hotels Resorts, Hilton Hotels Resorts, Conrad Hotels Resorts, Doubletree, Embassy Suites Hotels, Hilton Garden Inn, Hampton Inn, Homewood Suites by Hilton, Home2 Suites by Hilton, and Hilton Grand Vacations (Our Brands, 2012, online), and there is a little difference amongst these brands in terms of their market positioning. This fact creates marketing challenges for Hilton Hotels Resorts in terms of differentiating this particular brand from other brands within Hilton International portfolio. 2. Marketing Report 2.1 Segmentation, Targeting and Positioning Strategies used by Hilton Hotels The process of market segmentation involves dividing the market into segments or groups based on the characteristics from the specific market. In this way the most attractive or suitable segment based on the services and products can be targeted very effectively and efficiently. Generally the market can be divided into four different groups, and they are geographic, demographic, psychographic and benefit oriented (OGuinn, et al., 2011). 2.1.1 Geographic Segmentation. Geographic segmentation involves targeting specific consumer groups according to their geographic locations in national and international levels. Hiltons geographic segmentation strategy mainly focuses on the local preferences and the location. For instance, Hilton open hotels in London for attracting mainly business people and the services mainly focus on business travellers. 2.1.2 Demographic segmentation A set of variables used in demographic market segmentation include gender, life-cycle stage, age, income, social class, and lifestyle. From this perspective, Hilton target customer segment represent middle and senior aged professionals with high level of income belonging to upper social class. Moreover, Hilton Hotels Resorts mainly target individuals that pursue luxury lifestyle, and accordingly, the company charges premium prices for its products and services perceived to be of a relevant quality. 2.1.3 Psychographic Segmentation Psychographic segmentation goes beyond demographics as it examines how a person thinks, feels and behaves, using personality, lifestyle and values as segmenting variables (Cant et al., 2009, p.118). The nature of psychographic segmentation used by Hilton involves targeting ambitious individuals who would like to express their perceived high status and achievement by staying in five star rooms offered by the hotel at premium prices. 2.1.4 Benefits Segmentation Benefits segmentation involves implementing market segmentation on the basis of benefits customers aim to obtain using products and/or services offered by the company. Accordingly, perceived or real benefits offered by Hilton to potential and existing customers include sense of achievement, a high status in society, and luxury. 2.2 Description of Hilton Hotels Products and Services In order to capture every opportunity in the market, Hilton operates hotels and other related services in accommodation, gambling and entertainment areas. Few areas are entirely new for Hilton Group, including a gambling business. Hilton Hotels Resorts offers mainly accommodation services through its hotels, resorts, apartment hotels etc. Most of the revenue is generated through selling hotel rooms to customers. There are also a range of other services and products that contribute to the level of revenue stream such as restaurants, bars, smaller shops, spa, laundry services, travel desk, business centre, banquet halls etc. Among these products and services the core one is rooms divisions which brings most of the revenues. Generally, products are divided into three levels: core, facilitating and supporting products. Core products can be explained as a basic form of a product. To put it simply core products are the main reasons for customers purchasing from a business. For Hilton Hotels Resorts core product is hotel rooms that customers stay in for a specific period of time. Peripheral services can be explained as additional products and services above the core product that businesses offer to get competitive edge in the marketplace. Facilitating products involve services that assist consumers in consumption of core products. Hilton offers a set of popular facilitating products such as customer services, bars and restaurants, and online reservation facilities. Supporting products include additional products and services that are offered in order to obtain competitive advantage for the business by increasing the value of core products and services. A range of supporting products offered by Hilton Hotels include 24/7 room service, free newspapers and magazines for business travellers, concierge services etc. (Reid and Bojanic, 2010). Augmented product is benefit offer made by businesses that consist of core product and peripheral services. Augmented products offered by Hilton Hotels Resorts include membership discounts, luxurious room and exterior designs, high class restaurants and relaxed hotel atmosphere. 2.3 Hilton Hotels Pricing Strategies Pricing strategies used by businesses are divided into four broad categories within the framework of Pricing Strategy Matrix: economy, penetration, skimming and premium pricing strategies. Economy pricing strategy involves selling products of basic features and characteristics to consumers with low budgets. Penetration pricing strategy, on the other hand, involves offering high quality products and services in low prices than the competition in order to increase market share. Skimming, as a pricing strategy is opposite to penetration in a way that products and services are offered in a higher price levels than the competition. The main rationale for the choice of skimming pricing strategy may include the desire to associate products or services with exclusiveness and a high quality. Figure Pricing strategy matrix Source: www.marketingteacher.com Premium pricing strategy involves charging high level prices for products and services that are perceived to have excellent quality and additional characteristics and features. From the classifications provided above the type of pricing strategy adopted by Hilton Hotels Resorts can be specified as premium. Hilton only offers five star and four star rooms and the company is able to charge its customers at premium levels because beyond the core product, Hilton also sells a set of intangible benefits such as sense of achievement, high status and luxury. 2.4 Hilton Hotels Promotion Strategy Hilton Hotels Resorts employ promotion strategy that utilises various components of promotion mix. Generally, major elements of promotion mix include advertising, public relations, personal selling, and sales promotion. 2.4.1 Advertising Advertising is a paid, mediated form of communication from an identifiable source, designed to persuade the receiver to take some action now or in the future (Klever, 2009, p.25). New advertisement slogan of Hilton Hotels Resorts Stay Hilton. Go Everywhere is aimed to communicate the marketing message of the hotel being a large global brand and maintaining a high level of quality in all of its hotels. This marketing message is communicated through a set of specific elements of advertising promotional strategy such as advertisements in newspapers and magazines popular with senior level management professionals such as Forbes, Fortune, The Economist, and Financial Times. Moreover, the communication of Hilton Hotels Resorts marketing message is also facilitated through broadcast advertisements in selected television channels. 2.4.2 Public Relations Officially, The Chartered Institute of Public Relations (CIPD) defines public relations as planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its publics (CIPD, 2012, online). In simple terms, public relations can be explained as a one way communication between the company and the public. Hilton Hotels Resorts public relations are maintained through communication with a range of parties such as customers, employees, and other private and public organisations. Specific methods of public relations used by Hilton Hotels Resorts include issuing online and offline press releases in a regular manner, and communicating through newsletters with organisational stakeholders. Moreover, the company website serves as an effective platform for Hilton Hotels Resorts for engaging in public relations. 2.4.3 Personal Selling Personal selling involves company sales representatives contacting potential customers through various channels with the aims of making a sale. The advantages of personal selling include the possibility to attract customer attention, application of interpersonal skills in order to mage the sale, and the potentials for forming and maintaining long-term customer relationships. At the same time, personal selling promotion mix has some disadvantages such as being overly expensive to conduct and reaching fewer numbers of perspective customers in a given period of time compared to other elements of marketing promotion mix. Promotion strategy used by Hilton Hotels Resorts does not involve personal selling due to the nature of the business. 2.4.4 Sales Promotion Sales promotion relates to attempts by a business to persuade potential customers to purchase products or services through introducing various incentives (Evans et al., 2004). Sales promotion is popular in hotel industry, and accordingly this specific element of promotion mix is used by Hilton Hotels Resorts in an intensive manner. Hilton Hotels Resorts engage in sales promotion through HHonors points based rewards program and discount vouchers available on official company website. Moreover, Hilton Hotels Resorts offer a wide range of deals on their website in order to increase the level of their revenues. Hilton Hotels Resorts gains practical advantages from using sales promotion in the forms of increasing the level of revenues and achieving utilisation of their rooms at a greater extend. However, it is important to note that by introducing aggressive sales promotions Hilton Hotels Resorts may be risking compromising brand value in a way that sales promotion and the possibility to use the brand services in cheaper prices might be compromising the level of exclusiveness of the brand. Furthermore, sales promotions only offer short-term advantages and thus this element of marketing promotion mix is best used only in an occasional manner. 2.5 Hilton Hotels Resorts Distribution Strategy The ultimate aim of the distribution strategy for a hotel firm can be specified as making available the products and services to consumers where, when and how they prefer them (Reid Bojanic, 2010). Hilton Hotels Resorts distribution strategy heavily relies on information technology and internet in various formats. Firstly, the official website of the company serves as an effective platform for service distribution as it is supplied with a wide range of features and capabilities providing practical assistance to customers such as booking a room, planning events and weddings, scheduling meetings and booking airport pick-ups. Moreover, the distribution of Hilton Hotels Resorts products and services is also facilitated through mobile convenient applications made available for IPhone and Android platforms. Social media is adopted as another effective instrument by Hilton Hotels Resorts in distribution of its products and services. For example, the official page of the company in leading social networking website, Facebook has been liked by more than 405,300 people who receive latest news about the company and special offer announcements through the website. The main reason behind the selection of internet platform as the base of Hilton Hotels Resorts distribution strategy relates to a wide range of conveniences associated with internet. Specifically, internet presents Hilton Hotels Resorts customers with the possibilities of purchasing products and services in advance on the go and within a timeframe of a few seconds. 2.6 Usage of Three Ps of Extended Marketing Mix by Hilton Hotels Resorts Traditional four Ps of marketing mix discussed above have been specified as product, price, promotion, and place, and additional three Ps of extended marketing mix have been adopted as process, physical evidence and people. 2.6.1 Process The process element of marketing mix is approached by Hilton Hotels Resorts according to its selected business strategy. Specifically, the company aims to maintain the process of service provision in a premium levels in a luxurious manner. Generally most of the hotels are running 24/7 their businesses unlike banks or schools. It is because the accommodation services need to be provided around the year and 24 hours in a day. In order to remain competitive the marketing process used by the hotel is very important. According to Rutherford (2007) the marketing process of a hotel should begin from deciding what to be and what to offer to whom. Creating awareness and stimulating the demand among the consumers are the key marketing process can help to achieve the competitive advantage. 2.6.2 Physical evidence Physical evidence can be explained as tangibility of Hilton Hotels Resorts services and physical outcome that is generated from consumption of the service. Specifically, physical evidence for Hilton Hotels Resorts includes luxurious interior and exterior design, attitude of hotel workforce towards customers and service provision, and inclusion of tangible goods within the service. 2.6.3 People There are various people groups that play a vital role for the success of Hilton Hotels Resorts. Broadly, people that have direct implications on Hilton Hotels Resorts performance can be divided into three categories: customers, employees and suppliers. Customers represent an important group of people for Hilton Hotels Resorts for obvious reasons. Generally hotel firms target a wide range of customers from leisure to business travellers, people those are want to eat outside etc. One of the big challenges to the hospitality marketing is satisfying the different mind-set customers. Over a period these customers needs and wants will also be changed (Bowie Buttle, 2011). Employees are classified as another group of people that can have tremendous impact on service outcome, and consequently on the level of profitability of Hilton Hotels Resorts through their performances. Moreover, Hilton Hotels Resorts rely on a wide range of suppliers and the performance of people employed by suppliers also might have indirect implications on the performance of the company. 3. Market Research It is critically important for Hilton to be conducting researches in a regular basis in order to identify the level of customer satisfaction and identify specific aspects of the service customers are particularly happy or unhappy with. The market research plan proposed for Hilton Hotels Resorts consists of the following stages: defining the problem, selecting appropriate methodology, data collection, data analysis, data presentation. 3.1 Defining the Problem Marketing research starts with a problem definition. Alternatively, this stage can be marked with formulation of research objectives. Failure to define the problem in an appropriate manner or formulate market research objective can result in the waste of time and financial resources invested in the project. The main objective of the market research plan proposed for Hilton Hotels Resorts can be specified as follows: Identifying the level of Hilton Hotels Resorts customer satisfaction and detecting specific aspects of the service customers are particularly happy or unhappy with Achievement of this marketing research objective can contribute to long-term growth of Hilton Hotels Resorts in a way that according to the findings of the marketing plan specific aspects of the service contributing to the level of customer satisfaction can be further strengthened, and equally, aspects of the service causing customer dissatisfaction can be eliminated. 3.2 Selecting Appropriate Methodology Once the problem has been clearly identified, appropriate methods need to be selected for the purposes of data collection. The methods of data collection can be divided into two categories: qualitative and quantitative. Qualitative methods use non-numerical elements such as sounds, emotions, feelings, words and others, whereas quantitative methods involve the use of numbers and calculations in various formats. Comparison dimension Qualitative research Quantitative research Types of questions Probing Non-probing Sample size Small Large Information per respondent Much Varies Administration Interviewers with special skills are required Fewer special skills required for interviewers Type of analysis Subjective, interpretive Statistical, summarisation Hardware required Tape recorders, projection devices, video, pictures, discussion guides Questionnaires, computers, printouts Ease of replication Difficult Easy Table A Comparison of a qualitative and quantitative research Source: Wiid and Diggens (2009) The most popular data collection techniques that can be used in market research include questionnaires, interviews, observation and focus groups. Table 2 illustrates a brief description of popular data collection methods Technique Description Observation Monitoring behaviours of sample group members or observing event by humans or non-humans Focus groups Organising group discussions with sample group members with the participation of a moderator addressing research questions in direct and indirect ways Projective techniques Collecting data through appealing to motives, urges, emotions or feelings of sample group members in indirect ways Survey methods Questionnaire Formulating a set of questions to be answered by sample group members in an individual manner Interviews Verbal questioning of sample group members in one-to-one basis in order to extract needed information Table Description of popular data collection methods Source: Knight and Ruddock (2009) 3.3 Data Collection The process of data collection through questionnaires is not a simple task as it may seem and there are important aspects of data collection process that need to be addressed. Firstly, ethical considerations of market research need to be addressed in this stage in a way that participation in the survey should not be made compulsory amongst Hilton customers and their personal and contact details should not be collected. Moreover, data collection and analysis needs to comply with Data Protection Act (1998). Sampling represents another important aspect of data collection from members of population. Popular sampling techniques that can be used in market research include cluster, systematic, theoretical, convenience, quota, purposive and snowball sampling methods. A critical assessment of advantages and disadvantages of sampling techniques listed above finds quota sampling as the most suitable to be utilised in the proposed market research. Utilisation of quota sampling method in an appropriate manner necessitates introduction of certain requirements for individual population members to be included in the survey (Serakan and Bougie, 2009). Accordingly, taking into account the nature of marketing plan objective the requirement introduced to individual population members can be specified as an experience of using Hilton Hotels Resorts products and services. In other words, only individuals that have used products and services of Hilton Hotels Resorts need to be asked to complete the questionnaire. This task can be appropriately implemented by offering Hilton visitors in selected hotels from various parts of the UK to participate in the survey. In order to generate adequate amount of responses questionnaire questions, answers need to be obtained from at least 1000 respondents. Moreover, Hilton Hotels Resorts market research questionnaire needs to include both, close-ended and open-ended questions. Closed-ended questions are needed to generate data about consumer demographic variables and assessment of specific aspects of service, whereas open-ended questions need to be included in order to reflect customer suggestions about potentials for improvement and to capture additional relevant issues not included in questionnaire. 3.4 Data Analysis Data analysis, as an important stage in market research involves critical analysis and interpretation of questionnaire findings. Data analysis for Hilton Hotels Resorts market research involves the application of quantitative and qualitative methods. The application of quantitative methods is needed for answers given to closed-ended questions. Specifically, percentages associated with the selection of each alternative answers to questions need to be calculated and critically analysed. The application of qualitative methods, on the other hand, is needed to analyse answers provided for open-ended questions. Qualitative data analysis in market research involves detecting common patterns within information given by questionnaire respondents and analysing these patterns from a critical viewpoint. An important point to be addressed during data collection and data analysis stages of Hotels Resorts market research relates to validity and reliability issues. In order to address these issues correctly researchers need to remain objective at all stages of research process in general, and during data analysis stage in particular. 3.5 Data Presentation The main purpose in this last stage of the marketing research is to present findings of data analysis in such a format that it can be understood by