Marketing Mix- Price and the Hong Kong Hotel Market Essay

994 Words Feb 20th, 2012 4 Pages
Price, which is one of the most important elements of the marketing mix, can be difficult to get right. Pricing too high, or low, can negatively impact on customer satisfaction and revenue. Adopting a pricing strategy is necessary to achieve desired sales objectives (Chan & Wong 2005).

Research indicates that whilst a price reducing strategy, which is commonly used in response to strong competition, may see short term gains, rarely does it attract and retain new customers (Chan & Wong 2005). In Hong Kong many hotels have reduced their room rates to remain competitive, however the above implies that hoteliers would do better to understand how their services and facilities influence customer satisfaction rather than simply reducing
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According to Heung (2006, P.309) ‘the disconfirmation paradigm is generally accepted as the construct that best explains customer satisfaction’. The theory consists of customer expectations, service perceptions and satisfaction/dissatisfaction. Based on this theory, when service expectations are lower than expected customers will be dissatisfied, however if performance surpasses expectations customers will be satisfied and customers whose expectations are consistent with service delivered are usually neutral.

A further study which aimed to identify the differences in Mainland Chinese travellers and other foreign individual travellers to Hong Kong found that there were differences in importance ratings of hotel selection criteria from Mainland Chinese tourists in comparison to other foreign tourists (Tsai, Yeung & Yim, 2011). The results indicated that Mainland Chinese travellers were generally more demanding than other foreign travellers despite the fact that the budgets they allocate for accommodation are smaller than those of their foreign counterparts (Tsai, Yeung & Yim, 2011).

In light of the fact that Mainland Chinese visitors are not prepared to spend a lot of money on accommodation and do spend considerably less on hotel accommodations than their foreign

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