Multi-Segment Model and Buyers Perspective Analysis of a Hotel Accommodation - Assignment Example

MULTI-SEMENT MODEL AND BUYER”S PERSPECTIVE ANALYSIS OF A HOTEL ACCOMODATION EXECUTIVE SUMMARY This paper discusses the use of multi segment model and buyers’ perspective analysis for a hotel accommodation. We have chosen Marco Polo hotel chain in Asia-pacific region as our case study. It is one of the leading hotels in the region associated with excellent quality of services. We analyzed its hotel accommodation based on the buyer’s perspective in a services industry. Services is distinguished by its intangible nature and lack of physicality. It can only be experienced by the buyer and there is no separateness between buyer and seller of services during the services encounter. In the first Quadrant, that is the product quadrant, factors such as accessibility, visibility , distinctiveness or uniqueness of services were explored and it was seen tht the Marco Polo hotels score sufficiently high on these points. All their hotels are quite well known and the bran is equated with luxury as well as comfort and a certain standard of services. Moreover, all the hotels of this chain are situated at the central points and close to well known tourists or public places. Moving on the second quadrant that is the product delivery – we looked at the booking and sales services plus the types of accommodation available at the hotel. Marco polo hotel have quite a large number of rooms available which vary according to size and requirement. They have separate rooms and accommodation for people on holidays and people on business travel. The Hotel management takes special care to ensure that visitors and guests get services according to their requirements. Similarly, in the third quadrant as well, we discuss the auxiliary services such as the room service or the porter service etc. provided by the hotel and Marco Polo again comes out on top on this front as well. Their services are up to the expectations and they try their best to service each and every guest to the best of their ability. All requests are taken into consideration and best possible solution provided for any problem. In the additional marketing segment, we find that the hotel is offering services such as baby sitting or crèche services, limousine services , a beauty salon, health and fitness center etc, to its guests. The hotel can probably offer these additional services on discounted prices to their guests and this will definitely make the hotel more popular and will ensure that guests are able to make use of these services. The hotels can also include sight seeing services for half day or full day through private taxis or shuttle buses. This will again help its guests to plan their sight seeing quite comfortably and they need not search or inquire for sight seeing tours from other areas. They can provide discounted prices to their guests and give them one more reason to choose Marco Polo hotel. . INTRODUCTION Hotels and accommodation sector is a part of a big hospitality industry – that is the services industry. Globally, tourism has become one of the most important industries with international arrivals expected to reach 1.6 billion by year 2020 and the expenditure on tourism is expected to hit US$ 2 trillion mark. (WTO 1998) The tour and travel industry or the hospitality industry includes tour operators, airlines, car rental agencies, and hotels and accommodation, online and offline travel agencies and other companies etc. Based on the information by World Travel & Tourism Council (WTTC ) this industry is very interestingly poised and ready for the phenomenal growth in the coming years. The increased interest in tourism has been fuelled by many factors such as growth in world economy and people are now spending their growing incomes on leisure and travel. Moreover, the airline prices are dropping due to competition and hotels are vying with each other to offer maximum discounts and sops to customers to boost their revenues. Another important factor has been the rapid changes in technology especially the onset of internet revolution. The world wide web has changed the way people traditionally looked and bought goods and services and the travel industry has also been irrevocable changed by this phenomena. But the ever demanding and changing customer preferences have brought the hotel industry under pressure. With many small hotels coming up as niche or mass market operators, the competition has increased tremendously and thus the hotels and accommodation agencies are trying hard to differentiate themselves and their services by finding innovative ways to retain their competitive advantage. The margins have shrunk and customers are unwilling to be loyal to one hotel chain or agency and go for the best deal being offered. Thus to do business, companies must find ways to maximize their revenues and simultaneously reduce costs and keep the quality of the services high. Thus innovation has become the keyword in hotel services. There is a lot of literature on service innovations and quality focusing on conceptualization and case studies on innovation activities in service industries. (Boden and Miles, 2000; Gallouj and Weinstein, 1997; Howells, 2001; Metcalfe and Miles, 2000). Moreover, many studies have tried to differentiate services from the usual manufacturing industry. The main reason has been the intangible nature of the services, the thin line of distinction between production and consumption, non –storability and lack of ownership by the consumer after the service is over. But researchers have differentiated between different types of services such as traditional services (domestic work, including servants), goods-related services (transport, hotels, banking) and welfare related services (health care, education, etc.) (Krantz, 1994). Similarly, Hill (1988) discussed differences in tangible goods and intangible goods (such as originals created by authors, composers etc.) and services (where there is a direct interaction between a producer and a consumer). As is the case with other manufacturing industries, the services industry also strives for maximum profit and revenues. And thus all the business strategies that are used for manufacturing sector are also used in services sector. The competition here is tougher as there is no tangible product to show that one company is different from other. Moreover, the consumer preference is more important in this industry and therefore, considering buyer behavior or perspective is not only important but also critical for the survival. Although business strategies are mostly industry specific, many researchers have given us generalized strategies which can be used across industries such as Porter’s (1985) generic strategy typology. According to him, an organization maximizes its performance by being cost effective producer or by having a differentiated line of services from other competitors. In this study, we are focusing on examining competitive strategies from the perspective of the consumer and therefore, we need to look at the consumer level attributes of marketing. There are many important factors that buyers use when making a purchase decision but it has been seen that lifestyle factor contributes the maximum. It actually includes everything from what a buyer thinks, acts or actually lives and includes the products one buys, how one uses them, how one thinks about them and how one feels about them. Thus lifestyle of a buyer basically determines his choice of past and future decisions. (Gonzalez & Bello, 2002; Hawkins, Best & Coney, 2004). Rather than the price and quality of the service, the feelings and emotions are more important in the consumer purchase decisions. Thus marketers and companies have now started focusing on researching the buyer’s behaviors and factors affecting them in detail so as to be able to influence their purchase decisions. The basis of this research is that as the marketers will gain knowledge about their customers, they will be able to communicate much more effectively with them. (Kaynak and Kara, 1996) And all these studies generally have more or less the same conclusion that the success of marketing strategies depends on the ability of the organizations to understand the buyers and slot them into different groups or segments each of which requires a different marketing mix. And here a concept called market segmentation comes into play. MARKET SEGMENTATION Market segmentation is thus a very useful tool used by the marketing managers to understand and seek ways to reach out and expand their organizations consumer base. It is basically used to divide the market into submarkets, and brand services and products based on their segment specific attributes. A market segment is a small sub set of a market which consists of buyers or consumers having similar tastes, preferences, language, demography or lifestyle etc. and who usually display a similar need and a similar purchasing behavior. Thus by segmenting markets into smaller subsets, the marketing managers group together people with the same set of needs and buyer behavior and treat them a s a single entity for marketing purposes. Their main objective is to analyze markets to find niche market with unfulfilled need or specific opportunities so as to be able to gain a competitive advantage by targeting that specific group or segment by satisfying its unfulfilled need. This is therefore done by identifying one or more segment of users who are similar in nature and target them by developing unique marketing mix to influence them and their purchase decisions.   The markets are in general segmented based four major attributes. These are: 1. Geographical – Segmenting people on the basis of their geographical characteristics such as the place where they live 2. Demographic – Categorizing the population into various segments based on their demographic characteristics such as age, sex or race. 3. Lifestyle or Psychographic -- Dividing people on the basis of their lifestyle, attitudes and way of life. 4. Behavior – Differentiating people based on their typical behaviors such as first time users, or repeat purchasers etc. Thus the market segmentation methodology helps the marketers to divide the heterogeneous market into homogenous submarkets and develop a specific marketing mix for each market segment so as to satisfy each of their needs. These smaller identified segments are thus the target markets for each organization and an organization may choose to develop products for each or for some of these target segments. There are three main approaches for dealing with these target markets (Machado, 1996) which are: 1. Mass marketing, 2. Multi-segment marketing and 3. Concentrated or niche marketing.  Mass marketing is what is known as the undifferentiated approach or the total market approach. In this type of marketing, the marketers do not differentiate the market according to any variable or into any specific segment. There is a single marketing mix for the complete market and it is based on the assumption that all consumers have similar needs for a specific kind of product. The typical marketing mix consist of a single pricing strategy for a product with little or no variation which is distributed to the entire market and the promotions are aimed at everybody. This approach was probably useful when there were monopolistic companies. In concentrated or niche marketing the organization focuses its entire energy on one or two small market segments or niches. This is used by organizations who wish to specialize in one particular subfield and is particularly useful for small companies that have scarce resources. Multi-segment strategy refers to a marketing approach which acknowledges the differences in user behaviors and purchasing patterns and tries to bring out different products for different market segments. Thus each market segment has its own marketing mix based on the specific characteristics of that segment. This approach combines the best attributes of undifferentiated or mass marketing and concentrated marketing. This has been becoming immensely popular in recent times due to its various advantages such as managing excess production capacity, ability to have the same market coverage as mass marketing, much more consumer oriented pricing strategy and definitely reduced risk as the organization does not rely only on one market. But the complexity of production processes increases manifold with an increased requirement of administration including multiple promotional campaigns and managing different distribution and advertising strategies for each segment. We will be using this multi segmentation strategy to evaluate one of the major hotel chains in Asia – the Marco Polo Hotels. MARCO POLO HOTELS Marco Polo Hotels has an established presence in the Asia-Pacific region with about eleven hotels that are strategically located across the region. With a very rapidly growing economy, the region is demanding world class hotels which combine western innovation and comforts with warmth and efficiency of asian hospitality. They have an excellent record in providing quality services and their management expertise is quite outstanding. All its hotels are well located and have a distinctive flavor based on the destination it serves. They have eight hotels in China out of which three are in Hongkong, two in Philippines and one in Vietnam. They are planning to develop five to seven more new hotels over the next several years at places such as Sydney, Jakarta, Manila, Tokyo, Seoul and Bangkok. This will ensure their presence in the whole asia-pacific region. They are one of the leading upscale hotel groups in Asia-pacific region. We will be looking specifically at the Marco Polo – Hongkong Hotel. Located in the Harbour City, Kowloon, Hong Kong. Buyer’s Perspective: Product (Quadrant 1) Entity Hotel Accommodation and service standards of Marco Polo – Hongkong hotel in Harbour City, Knowloon. Marketer Activity Following factors are important for marketer to promote its product. 1. Accessibility – The hotel should be easily accessible from airport, train or bus stations and local transport such as taxis etc, should be easily available to the buyer. 2. Known brand or well publicized – the local cab or taxi operators should be familiar with the hotel and thus should be able to ferry buyers easily to the place. The hotel should be well known. 3. Service - High service standards should be maintained along with all the necessary requirements for the international tourists. 4. Distinctive – They should reflect the traditional asian hospitality and warmth – something which makes them different from other chains. 5. Credibility – Marco polo brand is an established brand and thus the customers expect a certain quality of service from them irrespective of the location. Thus the services should be of high quality with the distinct local flavor. 6. A specific target market – Marco Polo is an up market brand and is not associated with low cost services. They maintain a very high quality and are well liked by domestic as well as international visitors. 7. Well advertised through the Marco Polo Hotels' international sales offices. Global Distribution System (GDS), travel agent consortia, and Internet via advertisements and brochures. Buyer’s Activity 1. A plan to travel to Hongkong. 2. Research different sources such as travel agents, internet or sales offices of hotels to know regarding the prices and options available for accommodation. 3. Make a decision to stay in Marco Polo hotel. Interaction The buyer and hotel staff interact when the buyer decided to obtain information regarding different product types and their prices in the hotel accommodation. The process starts with the buyer making a plan to go to Hong Kong and thus looks for the suitable accommodation in a hotel in Knowloon. Based on this, he searches different sources to get the relevant information regarding the accommodation. This could be internet, travel agents or Hong Kong’s local tourism offices. The Marco polo group realizes that the customers will look at different options before making a decision and hence have a well defined strategy to meet this challenge. They have segmented their target market into Corporate, Leisure, and MICE (meetings, incentives, conferences, exhibitions) segments based on the buyer profile and need. Similarly based on geographical dimensions, they have segments for local, national, and international travelers. The pricing is variable with different types of segments. The room reservations can be made directly with the hotel through their website (internet), industry recognized Global Distribution System (GDS) or their very own centralized reservations system They have international offices at most of the important locations in the Asia – pacific region and the sales people use effective marketing programs for individual travelers and corporate houses to boost sales. They also recognize the word of mouth recommendations made by earlier customers and thus provide and maintain high quality services. A customer's previous experience with the brand provides potential new buyers with the confidence to select the Marco Polo hotel over other hotels. Moreover, Marco Polo hotels are well located near to the major landmarks. The Hong Kong hotel is very near to the world-famous Star Ferry, Kowloon Park, the Hong Kong Museum of Art, the Space Museum, and the Hong Kong Cultural Centre. And is part of the Hong Kong's largest shopping complex with over 700 restaurants and shops. It takes only fifteen minutes from star ferry to reach the Hong Kong Convention and Exhibition Centre.(Marco Polo, nd) Buyer’s Perspective: Product Delivery (Quadrant 2) Entity Booking for the room, Credit card details, Buyer details, his travel plans, Hotel lobby service, Keys to the room, Room service, Any other extra help required by the buyer, and Account settlement Marketer Activity Pre Service: Receive buyer’s phone call for booking request. Get buyer’s details and his plans and requirement. Advise buyer regarding the facilities and types of rooms available and their pricing structure. Show rooms to the buyer on request so that they could make a choice. And allocate room to the buyer and take his luggage to the room. Explain the types of services available to the customer. During Appointment / Service: Provide keys to the buyer. Provide information on various services such as laundry, telephone, room service etc. Help the customer with any other request. Post Service: Check and confirm details Generate account details Receive Payment and Issue receipt All bags are loaded in vehicle Buyer’s Activity Pre Service: Call hotel for room reservation Ask for particular rooms or enquire about available rooms and their prices. Provide personal and travel details. Make reservation. Advise reception of arrival. Take a look at available rooms and make a final decision. Take the keys and go to the room. During Appointment / Service Confirm details to the hotel reception. Provide details of travel plans and stay planned at the hotel. Take the room keys and advise staff of any problems, or requirements. Ask for specific services as and when required. Post Service: Provide details to the front desk and authorize payments and settle the account. Interaction Pre Service Buyer contacts the hotel reception via phone or internet for enquiry and booking. Buyer requests for information on various services and rooms availability on specific dates. Buyer and hotel interact personally when he comes for the visit. During Appointment Service Buyer arrives at the hotel. Buyer provides and confirms details of booking. Buyer checks the room and takes it. Any other service or help required is requested to the hotel reception or room service. Post Service Confirms personal and room details. Authorizes payments. Thus in the product delivery quadrant, the buyer looks at the various rooms that are available and makes a decision. Marco Polo Hong Kong Hotel has in total 664 guest rooms and suites with many of the rooms offering exquisite views of Victoria Harbor or hotel's swimming pool, Roof Garden or the Kowloon Peninsula. All the rooms have subtle and muted colors and carefully positioned lighting which offer serene environment from the outside hustle and bustle. There are separate rooms for non smokers as well. The types of rooms available are : 1. Guest Rooms with average room size of 450 square feet / 42 square meters with all the basic modern facilities. All rooms have broadband Internet access. 2. Harbor View Rooms with an average room size of 450 square feet / 42 square meters and an additional data port for Internet access. 3. Suites having an average size of 590 square feet / 55 square meters facing the Roof Garden. The rooms have separate lounge, private bathroom with separate shower, telephone extension in the bathroom, individual dressing room, interconnecting rooms for two-bedroom suites, facsimile machine, fax / modem line. 4. Harbor View Suite is the largest suite of Marco Polo Hong Kong Hotel. It is located on the 10th floor and provides a breathtaking view of Victoria Harbor. The suite has a total floor space of over 1500 square feet / 140 square meters, and comprises of a living and dining room areas, a master bedroom, fully equipped kitchen with direct access to the corridor, allowing for unassuming service, and inter connected room if a two-room suite is preferred. 5. The Continental Club is located on two dedicated floors and is most suited for traveling executives. The rooms and suites are decorated in classic European style, reminiscent of old Hong Kong, and additional services and facilities include such as personalized check-in, complimentary daily American breakfast, private smoke-free lounge and boardroom facilities, complimentary coffee and tea throughout the day, complimentary happy hour cocktails and hors d'oeuvres in the evening, round-the-clock butler service, personal safe in every room, welcome tea and fruit, and shoeshine service. It can accommodate up to 500 guests and provides a perfect setting for corporate meetings and events. The menu has a lot of variety with dishes suiting variable palates. It offers a choice of seven restaurants and lounges with cuisines from America, Shanghai, and Japan as well as international buffets and Chiu Chow cuisine. Buyer’s Perspective: Auxiliary Service Entity Hotel Reception Waiting lounge Porter service Room service Marketer Activity Courteous and helpful reception staff. Welcome drink or tea/coffee in the waiting lounge Newspapers/magazines should be available along with TV. Helpful and efficient porters Separate playrooms for children. Staff should be well behaved and courteous as well as in neat and clean uniforms displaying an efficient service environment. A quick room service or housekeeping service with special requirements for families with kids. All the customer facilities should be in order in rooms such as clean toilets, soaps, shampoos etc. Buyers Activity Announce his arrival and wait in the lounge. Take advantage of TV and magazines. Take the drink/tea/coffee as required. Use the facilities as available in the room. Request for room service as and when required. Request for any other help as and when required. Interaction Interactions between the reception and buyer after arrival. Interaction between porter and buyer on moving the luggage. Interaction between the room service and the buyer. As is seen from above, the third quadrant focuses on the general behavior and attitude of hotel staff during providing the services to the customer. The Marco polo Hong Kong staff is very well mannered and polite and quite helpful. They are particularly helpful to old and needy guest and families with kids. Special arrangements are done for such guests on request and they are also informed of what they can request for in advance and the options available such as wheelchair, doctor on call, emergency services or separate child crèches and baby sitting services. Buyer’s Perspective; Additional Marketing Entity Use of crèches and baby sitting services for kids. Marketer Activity Brochures and information provided by the hotel reception on arrival on the baby sitting and crèche services to the guest having kids. Buyers Activity Request for the specific services such as baby sitting or crèche services for the kids. Interaction Interaction on arrival when information is provided. Interaction when the specialized service is requested. Thus guest can request for additional services as and when required by them. Marco Polo hotel offers such service to its guest so that there stay is as comfortable as possible. CONCLUSION As is clear from the analysis above, the Marco Polo hotel provides good services to its guest and have a specialized service option for different segments of customers. They are able to accommodate different customer needs and their response time is pretty good and thus ensure customer satisfaction by personalizing and individualizing the services. (Bhattacharya and Rahman, 2004) Moreover, the hotel uses a very good strategy of trying to project complex services in a simplified forms and use physical cues to help customers assess the good quality of their services.(Rafiq and Ahmad, 1995) And as Dagger and Lawly (2003) suggested customer’s perception of quality of service is influenced by the actions and behavior of contact personnel. Thus the hotel staff of Marco Polo hotel exhibit flawless behavior to win over their customers. The repeat purchase and loyalty of the customer is won over by a combination of factors including confidence in the quality of service. (White, 2003) Research shows that the Marco Polo brand has significant recognition in both the international and domestic markets and is associated with top class quality service. References Bhattacharyya, S.K., Rahman, Z. (2004), "Capturing the customer's voice, the centerpiece of strategy making: a case study in banking", European Business Review, Vol.16, No. 2, pp 128-38 Boden, M. and I. Miles (2000) (eds.), Service and the Knowledge-Based Economy, Continuum Publishers, London. Dagger, T., and Lawley, M. "Service Quality", Chapter 4, In Services Marketing (2003) edited by J.R. McColl-Kennedy, John Wiley, Brisbane. Gallouj, F. (2002), Innovation in the service economy: the new wealth of nations, Edward Elgar Publishing, Cheltenham. Gallouj, F. and O. 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