Hrtm 305 Chapter 1

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Encompasses merging, integrating, and controlling supervision of all a company's or organization's efforts that have a bearing on sales.

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Marketing

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The goods and services that are bundled together and offered to customers: Example--automobile and warranty

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Product

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Any physical that can be touched like a computer, automobile, etc.

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Tangible Product

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Product that can't be touched---like an insurance policy

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Intangible Product

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Bundle of goods and services offered by an organization.

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Product-Service Mix

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Intangible product that is sold or purchased in the marketplace

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Service

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Process of exchanging goods and services rather than money. Generally done business to business

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Barter

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1. The hospitality market is 90% services related.
2.Individuals consume the service and don't have a tangible product in exchange for their money.
3. Example: airline seats, hotel stays, meals, tours
4. The 1% goods is related to products purchased to remember the event (souveniers)

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Service Industry

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Based on the premise that firms determine customer wants and needs, and then design products and services that meet those wants and needs, while also meeting the goals of the firm

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Marketing Concept*

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First layer surrounding your target market--4 P's: Price, Product, Place, and Promotion (organizations can control these variables)

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Marketing Mix

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People---refers to how your level of service and expertise and skills of the people who work for you can be used to set you apart from your competitors

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5th P of Marketing

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Basis on which the firm's products and services compete with the offerings of other firm's in the competitive environment. Firms will manipulate the marketing mix variables (4 p's) to formulate strategies for their product or service.

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Marketing Program

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The environments that influence the marketing process-state of the economy, trends in society, competitive pressures, political and legal developments, and advances in technology---these can affect the performance of a product or service. (No control whatsoever)

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External Environment

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Involves marketing planning, execution, and evaluation.

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Marketing Management Cycle

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Used to collect information about consumers and markets

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Marketing Research Process

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The structure of people, equipment, and procedures used to gather, analyze, and distribute information used by an organization to make a decision.

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Marketing Information System (MIS)

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1. Consumer-oriented philosophy that focuses all available resources on satisfying the needs and wants of the consumer, thereby resulting in profits.
2. Under this philosophy, the product-service mix is designed in direct response to unsatisfied consumer needs.
3.Managers face 3 daily challenges: needs of consumers, expenses, and generate ROI for owners

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The Marketing Concept

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4. If management places consumers as top priority, the firms products and services will meet their expectations thereby almost guaranteeing return customers ensuring long-term sales and profits.
5.Word of Mouth: spoken communication that portrays either positive or negative data.
6. For good experiences, people will tell 4-5 people on average.
7. For bad experiences, people will tell 15 people on average.
8.Selling: focuses mainly on the firm's desire to sell products, and to a lesser extent on the needs of the potential buyer.
9. Marketing focuses on the needs of the consumer, ultimately benefiting the seller as well.

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The Marketing Concept continued

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1. Price: refers to the value placed by a firm on its products/services (easiest to manipulate).
2. Place: refers to the manner in which the products and services are being delivered to the consumer--the marketing of services includes the decision regarding customer involvement in the production process. (Hardest to manipulate).
3.Promotion: basic elements such as advertising, personal selling, promotion, and PR
4.Product: unique combination of goods and services offered to the consumer.

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The Marketing Mix

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From an accounting standpoint, Product and Promotion would directly affect the COST section of an income statement. Why?

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You're paying for them.

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Combination of all products and services offered by the operation, including both tangible and intangible--guest rooms, amenities.

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Product-Service Mix--Hospitality Marketing Mix

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Includes those elements that the marketing manager uses to increase the tangibility of the product service mix as perceived by the consumer--physical location, atmosphere, staff. Includes traditional marketing mix elements of Price and Promotion

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Presentation Mix--Hospitality Marketing Mix

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Involves all communication between the organization and consumers--advertising, research, feedback. Includes traditional marketing mix elements of advertising and promotion

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Communication Mix--Hospitality Marketing Mix

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Actual price charged and consumers perception of value---discounts, packages.

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Pricing Mix--Hospitality Marketing Mix

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Includes all distribution channels available between the firm and the target market--the internet and e-commerce has changed the hospitality industry dramatically.

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Distribution Mix--Hospitality Marketing Mix

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1. Environmental Scanning: formal mechanism within a firm, or merely the result of salespeople and managers consciously monitoring changes in the environment.
2. Since firms have no control over the external environment, this mechanism allows them to monitor and make changes if necessary. They can take advantage of marketing opportunities while anticipating any threats to their business.

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The Marketing Environment (Environmental Scanning)

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Consumers have the ability to purchase products and services.

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Purchasing Power--(Economic Environment)

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Measure of the relative level of prices for consumer goods in the economy.

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Consumer Price Index (CPI)---Economic Environment

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Income the remains for spending after required deductions such as taxes

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Disposable Income --Economic Environment

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Income that is available for spending after deducting taxes and necessary expenses such as housing, food and clothes.

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Discretionary Income--Economic Environment

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1.Independently owned properties have declined resulting in concentration of power among large hospitality chains. These chains have become large, multinational firms.
2. Increase in discretionary income has resulted in an increase in percentage of household food budget spent outside the home--Hospitality receives approx. 50% of all consumers expenditures for food.

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Economic Trends affecting Hospitality Industry--Part One

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3. Fluctuations in Occupancy based on economy: Following recession in early 90's occupancy and profits rose because of economic rebound. After 2001 (9/11 attacks and dot com bubble burst), occupancy fell again. 2005-2008: rebound in economy (excellent profits). Current: recession. (Our industry follows economy)
4. Variations in consumer purchasing power have led the industry to offer products and services at different price levels. Many brands have multiple chains ranging from luxury to economy, each has a specific target market.

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Economic Trends affecting Hospitality Industry--Part 2

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Characteristics that describe population such as age, income, education, occupation, family size, marital status, and gender

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Demographics

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1. Proportions of 2 income families and the impact that the increased discretionary income and time pressures have on their lodging, dining, and travel behaviors. Families often take shorter vacations to fit busy lifestyles and they are quality conscious and focus on brand names.
2. Older Americans and their purchasing power are increasing. Seniors are very impt market segment b/c they are living longer. They also have specific travel needs.
3. Dietary Habits Bi-Polar Obesity is at an all time high while many Americans are also health conscious. Trend is towards healthier, natural foods. By law, many food service organizations must display calorie content on menu.

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Social Trends affecting Hospitality Industry

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1. Competitive Structure: Combination of buyers and sellers in the marketplace.
2. Monopoly: Competitive structure in an industry with only one seller and many buyers
3. Perfect: Many buyers and sellers of products that are exactly same.
4. Oligiopoly: Few buyers/sellers
5.Monopolistic competition: many buyers/sellers with different products/services.
6. Price elasticity of demand: % change in demand for a product resulting from a % change in price.

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The Competitive Environment

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1. Product Form: Companies provide similar products/services at similar price levels (McDonalds vs. BK ---Delta vs. AA)
2. Product Category: Companies make same class of products (McDonalds vs. all fast food).
3. General Competition: Same basic services that fulfill same basic needs (McDonalds vs. all restaurants---(Delta vs. car/rail)
4. Budget competition: exists among all companies that compete for consumers disposable income.

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4 levels of competition

Inelastic: Demand same
Elastic: Demand changes