Marketing Strategy of Pebgetgket Manor - Assignment Example

Introduction The Pengethley Manor Country Hotel (Manor), Hereforshire, is a privately owned country hotel with 25 bedrooms, golf and spa facilities and 15 acres of parkland. It has a hidden-away location which is ideal for a perfect leisure holiday but has not been promoted in the right manner. Facilities are lacking and the staff needs to be trained. While the Hotel has the necessary resources, these have not been utilized to its fullest potential. It has natural surroundings; it uses only local produce for its cuisines and hold attraction for the domestic tourists. Based on the TOWS matrix in Section A, the strengths and oppurtunities would be exploited to develop an effective marketing strategy. By utilizing the natural surroundings and the parkland, Manor can promote eco-tourism. Short breaks have become popular in the UK and domestic tourism is on the rise. Hence Manor can promote short spa breaks thereby penetrating into the leisure segment that is being created in the UK. Competitors should not be viewed as a threat but Manor can overcome competition by offering authentic English country experience which very few can. Even the weaknesses can be turned into oppurtunities by refurbishing and renovating the property. This would enable them to meet the customer needs. Most importantly, they need to adopt innovative marketing strategies in line with the oppurtunities and technologies available today. They need to recreate a positive brand image through an interactive online presence. Strategies – evaluation Hotels today need a strategic direction in the face of competition and changing customer demands. Strategies have to be determined by events that are beyond the company’s control. Decision making gets complex when a firm wants to increase market share amidst competition. To arrive at a strategic decision, any firm must assess its strategic position. This requires evaluation of past performances, assessing the strengths and weaknesses, reputation for quality products and all of these require strategic planning (Lackman, Saban & Lanasa, 2000). Strategic marketing planning can be done either at the strategic level or the tactical level. At the strategic level it is visionary and typically long-term while at the tactical level it is generally for short-term covering perhaps a period of one year. Consequently its promotions and campaign are focused as well. Strategic level marketing typically follows the Porter’s theory of competitive advantage or evaluates the strategy and direction based on the Ansoff’s Matrix. Both these theories in today’s scenario are redundant especially for small country hotels for reasons discussed below. Product life cycles have become shorter while strategic marketing has a long-term vision. According to the Tourism Area Life Cycle (TALC) a destination goes through five different stages - exploration, involvement, development, consolidation, stagnation, and decline and/or rejuvenation (Brooker & Burgess, 2008). Any destination may initially enjoy popularity but gradually dips. Manor is in the stage where it requires rejuvenation as it has been in existence for 20 years without any long-term planning. Under the circumstances, the property needs immediate sales for which tactical marketing is the solution. Besides, Porter’s theory of competitive advantage suggests cost leadership, product differentiation and focus. Cost leadership suggests gaining competitive advantage by having the lowest costs and cost structure in the industry (Akan, Allen, Helms & Spralls, 2006). Cost leadership in this industry does not project the right brand image and may also lead to compromise in service. Consumers in this industry are looking for reputed brands that provide them with a feeling of trust and reassurance (Holverson & Revaz, 2006). Hotels will not be able to attract and retain sophisticated consumers if they compete on price (Starkov & Price, 2007a). Focus should be on niche products and niche destination, on different demographic groups and specific customer values. A focused strategy must have innovation as its core philosophy. Ansoff’s matrix also suggests alternative growth strategies through product development and better product offer for the same customers or diversification involving new products for new market. The strategic objective is to increase the market share of existing products through promotional strategies. However, Manor does not have any listed loyal customers as it has not focused on creating a database. It cannot restructure the mature market by driving out customers. This is not a destination where they can increase usage by existing customers because the choice is limited. They can however develop new market through new distribution channels and approach new geographical markets. They can even have differential pricing for different segments for instance for those only interested in spa they could over a package of two nights at a special rate. For those interested in harmony with nature the package could differ. These require tactical marketing strategy. The key success criteria for tactical marketing strategy are suitability, acceptability and feasibility. Choice of strategy should be grounded in the assets, competencies and resources of the organization. Strategic level marketing in not suitable for marketing of Manor because of the circumstances that prevail in the industry. The larger hotels of the world are consolidating and benefiting from economies of scale. They are acquiring the latest technology and investing in building brands which has exerted pressure on the small and medium-sized independent hotels (Holverson & Revaz, 2006). This requires a quick response from smaller hotels like Manor and enhances the suitability of tactical marketing strategy. Technology has become the main source of competitive advantage for small and medium-sized hotels and increasing the use of information technology has become a prerequisite for forming strategic alliances (Buhalis & Main, 1998). It has also become important to have innovative distribution channels and have communication with consumers and partners. Technology has so far been under utilized by the small and medium hotel organizations (SMHO). The stakeholder theory states that for a firm to be viable the need of the stakeholders have to be satisfied. Owners/managers are the stakeholders in SMHO and they need to utilize IT to facilitate their strategic functions. They tend to lack in expertise and they fear that they would lose control if they used technology. Employees are keen to accept technology as it relieves them of repetitive jobs. The other stakeholders are the consumers’ who are keen to get value for money from the service provider. Consumer expectations should be the reasons that Manor should enforce the use of IT and accept it as part of the development process. Feasibility- Manor has the necessary resources to deliver the strategy. It requires competencies and recently the European Union has offered funding to develop systems to increase the utilization of IT by the SMHO (Buhalis & Main, 1998). Channels of distribution are already evolving towards disintermediation in the industry and this makes it crucial to have direct communication between the suppliers and also the customers. Hence tactical marketing strategy is what Manor needs to adopt and the marketing communication mix for this strategy would be discussed in the next section. Implementation of tactical marketing Tactical marketing strategy has to be implemented with the right application of the 7Ps of marketing and the marketing communication mix. To derive the benefit there has to be an integration of the marketing mix. The 7Ps of the marketing mix should be well integrated and consistent with the promotion decisions. Product: Manor should focus on Spa and eco-tourism. Manor has all the fundamental conditions for promoting eco-tourism – the attractions are nature-based, the interactions among tourists and attractions can be educational in nature and the products must be managed in a way that guarantees ecological, socio-cultural and economic sustainability (Franch, Martini, Buffa & Parisi, 2008). To develop a niche market they must also develop responsible tourism because there is a segment that demands a socially responsible approach. They require the minimum negative environmental and economic impact. The tourists enjoy meaningful experiences with the local communities. This way the hotel gains the confidence of the local people as well as the guests. Price: They should offer differential pricing depending upon the season, the product and the length of the stay. Place: Huge area of natural surroundings, close to big cities and easy access to transport but customers prefer branded hotels in cities. People: The target customers are the families for short-breaks, women for spa, overseas customers. Process: Selling and communicating through innovative channels. This is necessary as the consumers are unaware or just aware of the product and this awareness has to be converted to knowledge. Manor should strive to be a market nicher instead of being the market leader or the market follower. They should target niche segments not target by others and apply niche marketing. The needs of a small segment of consumers differ from the general users of the product and thus the need for a niche or specialty brand arises (Jarvis & Goodman, 2005). Such brands have a low market share and a smaller customer base. Promotion: Use of the internet and online tools like search engines, blogs and viral marketing. The internet can be exploited for advertising, public relations, direct marketing and even sponsorship. In addition, to attract the domestic tourists, small advertisements can be placed in lifestyle magazines. Advertisements are expensive and hence focus would be on utilizing the information technology and the internet for various promotions. Physical environment: has to be comfortable and pleasing. Internet as the physical environment is informal and intimate and easy to communicate with communities. Importance of integrated marketing communications mix Marketing communication mix has undergone changes with the development of the internet. Integrated marketing communications requires management and control of all communication. The brand positioning, personality and messages have to be delivered synergistically across every element of communication (Holm, 2006). This requires a strategic analysis, choice, implementation and control of all the element of marketing mix and having a tactical approach to marketing communications. Alliances and vertical marketing Strategic alliances are an effective marketing tool. Marketing system can be either vertical or horizontal in nature. Small hotels benefit from vertical marketing strategy as it helps them to identify and sell through different distribution channels. In vertical marketing the distribution channels are coordinated and the wholesaler and retailers are coordinated (Morrison, 1994). Being an independent family business with limited development and limited marketing, manor should opt for soft branding. Focus on brand awareness is important but it is not just having a name that matters but the image that the name conveys to the consumers (Rotfeld, 2008). Soft branding helps in marketing and distribution without losing the independence. This would enable them to sell via the GDS (Global Distribution System) and the internet. Belonging to a soft branding consortium allows reinforcing their product positioning and credibility especially for small and unique hotels and enhances the brand image (Holverson & Revaz, 2006). Thus alliances work as effective distribution channels but today consumers want complete price transparency. Online marketing – advertising media, distribution channel, direct marketing and interactive marketing Strategic choice Tactical marketing strategy requires direct contacts with the customers, building a customer database and developing a customer-oriented service system (Grönroos, 1996). Technology helps the firm to communicate to the customer that he or she is known, which is not possible through traditional advertising channels. Traditional marketing had incomplete information about customers but information technology has made the hotels to build a database which helps the hotels in segmentation, tailoring marketing activities and supporting service activities. Formulation of specific plans Websites have to be well designed and should be easy to navigate so that hotels find it an inexpensive platform for marketing and advertising (Zafiropoulos, Vrana & Paschaloudis, 2006). Content or the information features and services should include the solutions and strategies and should be user friendly. They should offer reservation facilities and value added services to attract the customers to the market place. However, it has become important to go beyond the keyword search marketing (PPC) and the hotel website should be positioned at all “points of contact” such as email marketing, strategic linking, email and online sponsorships, CGM initiatives and other Internet exposure enhancing initiatives (Starkov & Price, 2007). For collection of data Internet provides access to information by allowing direct communication via online interviews and online focus groups or via online communities. Internet as a tool provides access to secondary data; it is an instrument to collect primary data through online questionnaires (Poria & Oppewal, 2003). Companies are gradually moving towards digital content, e-newsletter, branded entertainment, viral or word-of-mouth (WOM) programs and a strong focus on in-store programs (Vollmer and Precourt, 2008: 49). Digital tools allow market segmentation and help the marketer to manage ad campaigns. Direct marketing and interactive marketing This provides the hotel with long-term competitive advantages while reducing dependence on intermediaries, discounters and traditional channels that are expensive (Starkov & Price, 2007). Website re-design and search engine marketing should be engaged in. User content is made available to other users and this is known as Consumer-Generated Media (CGM) or User-Generated Media or Social Media. This technology allows consumers to derive the content and the relevancy and importance of sites like MySpace, YouTube and travel space sites like TripAdvisor, Yahoo Travel Planner, Igoyougo, HotelChatter (Starkov & Price, 2006). Manor should accept these CGM initiatives as the most comprehensive direct marketing strategy through the internet along with search marketing, website re-design and optimization and email marketing. Blogs are a form of CGM initiatives and through blogs Manor would be able to generate a lot of feedback and also use the space for advertising. TripAdvisor and IgoUgo offered total transparency through actual experiences, which unnerved the hotel suppliers and to combat these, the hotels started posting their own glorifying comments. This prompted TripAdvisor to transform itself into a complete travel experience aggregator (Bray, 2006). While consumers share their experience and comments, the hotel understands consumer needs and expectations and hence an exploding channel of distribution as consumer is convinced of transparency. Social media sites like FaceBook are better tools, allow far wider reach and provide easier access to information in everyday language (Young, 2007). Through photos people get the impression of the location and the scenic surroundings as photo-sharing has become very popular and Flicker is one of the most popular photo-sharing sites (Rubel, 2007). People can geotag (definition) their photos which show where the photos were taken. Wikimapia is a Wikipedia-like service on top of a Google Map that allows everyone to label every single place on earth. This allows the tourist to understand the location much better than the website of the hotel. Social networking and Forming communities The traditional marketing communication mix suggested that it is not enough to receive a feedback from the customer. It is equally essential to understand the customer. Today this too has changed with the social networking sites. Customers can now post, read and aggregate blogs and this has created a dramatic shift in the power of opinion. The social networking sites are an extremely valuable way to gain exposure and credibility in markets that have been difficult to penetrate (Blizzard, 2008). Tagging sites like Deli.cio.us and social networking sites like MySpace have demonstrated phenomenal growth and market value. Seeing the popularity of MySpace in the travel sector, search engines like Yahoo! has also entered into this. As soon as a query is entered for a hotel in Yahoo, shortcuts appear on the screen luring the customers to different pages. The consumer gets immediate access to user reviews, maps, stored trips as well as rates all of which simplify the process of planning and buying (Bray, 2006). Amongst the various platforms, Weblogs produce immediate results as it aids link-sharing (Ireland, 2004). Through the help of generic search terms incorporated into the referral links and making it creative has a profound effect. People judge an offer based on who has linked them and also give importance to the words used. Viral marketing Brooker and Burgess (2008) focus on customer relationship marketing where the intention is to attract the trendy visitors who can spread the word through what is known as Word-Of-Mouth (WOM) publicity. Viral marketing is a form of WOM. The intended purpose of viral marketing is WOM marketing when they describe what they have encountered in FaceBook or YouTube. Consumers post videos on YouTube and then agents are employed who spread the buzz about the new product through their own social network (SD, 2008). Online sponsorships Manor can sponsor online newsletters which serve to encourage, entice, and convert lookers into bookers (Starkov & Price, 2007). Sponsorship is another term for PR or advertising and it increases brand awareness, corporate image and most importantly, it is difficult for competitors to imitate. It is cost effective and encourages integrated activity. Sponsoring local sports would help attract the attention of the domestic tourists. Monitoring and control procedures The new media and advertising environment requires skills, insight and creative and analytic power. Marketing poses a challenge because nobody yet knows how to make decisions and attain consistent success. The initial skill is required to attract the attention of the target audience. The product has to be unique and exciting for viral marketing to be effective. Technology has enabled monitoring and influencing the online presence of the hotel through tools like Chatter Guard. A study by PhocusWright indicates that small group travel such as weddings, family reunions will be dominated by web based sourcing and booking of hotel rooms in blocks (Verret, 2008). Manor is ideal for such occasions and should focus on this strategy. Google Alerts also send email every time the hotel has been referred in any online blog or review. There are different channels like PPC (pay-per-click), SEO (search engine optimization), banner-ads, and bulk mails. Analytics helps to manage and study these channels. It is possible to obtain a detailed report on where the traffic came from, how much translated into sales, the cost per sale, and the value per visitor (Ramos and Cota, 2009: 25). Because of this, analytics is being used as a business tool to manage channels based on the business goals. However negative word also spreads equally fast and hence blogs need to be monitored. Even if there is a negative feedback, Manor must respond to it rather than allow it to spread further. Watts and Peretti (2007) contend that it is not enough to design the messages; it is equally important to identify who will spread these messages. This is because for every high-profile successful viral product there are many that fail also. Conclusion Manor is in the rejuvenating stage and they need to revolutionize their marketing strategy. Tactical marketing strategy has to be applied which includes integrating the marketing communication mix in the context of internet and online activities. All of the channels such as advertising, public relations, sponsorships, direct marketing and interactive marketing can be done through the effective use of technology. My adding new products like eco-tourism and spa, Manor can create a niche market for itself by targeting the niche consumers through niche marketing efforts. They have to think beyond search engine marketing or even soft branding and focus on new techniques like CGM or blogs and tagging, viral marketing and online sponsorships. Manor should start its own blog about how it offers differentiation. It can have its own consumer’s blog where the guests exchange ideas and experiences of the place. It would help to understand customer expectations and serve the customers better. References Akan O. Allen R. S. Helms M. M. & Spralls, S. A. (2007). 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