Marketing Strategies in the Service Industry: of Taj Hotels - Case Study Example

Executive Summary The report presents an analysis of the way in which Taj Hotels – Mumbai (India) applies Service Marketing theories to create a positive advantage in comparison to its competitors. The analysis of the 7P’s help to find out areas which has helped Taj earns a brand name and based on it areas which the company needs to work upon. The findings based on 7P’s of marketing are as Taj has been able to recognize its potential target market efficiently and it comprises of leisure, business and luxury segment. The product strategy highlights that Taj has services in varied areas like rooms, different cuisine of food, spa and so on. The pricing strategy highlights premium pricing based on the brand created by it. The promotion strategy highlights the use of culture and heritage. The distribution strategy highlights efficient location and delivery of services. The people strategy highlight importance laid to employees and customers. The recommendations based on the above findings shows that Taj needs to improve their people process by providing regular training and feedback to their employees. On the promotion part they need to improve their association with different events. On the price mechanism they need to device an off peak pricing method so that the occupancy rate is high. On the product part they need to develop rooms eyeing the economy section as they have a huge customer base. Working on these areas will help Taj improve its services and create it as a bigger brand. Contents 1. Introduction 3 1.1 Objective of the study 3 1.2 Hotel industry- Taj 3 2. Marketing Strategies using 7 P’s 4 2.1 Target Market 4 2.2 Product strategy 5 2.3 Price Strategy 6 2.4 Distribution strategy 6 2.5 Promotion strategy 7 2.6 People Strategy 8 2.7 Process 10 2.8 Physical evidence 11 3. Recommendations 12 3.1 People Improvement 12 3.2 Product Improvement 13 3.3 Promotion Improvement 13 3.4 Price Improvement 14 4. Conclusion 15 5. References 16 1. Introduction The ever growing hotel industry and the increase in the size of population have made the tourism industry grow. On the backdrop of it the hotel industry has witnessed a boom and is trying to reap maximum benefits out of it. The report tries to present the manner in which Taj hotels-India has been able to use the marketing strategies in the service industry and reap maximum benefit. 1.1 Objective of the study To identify the target market for Taj Hotel To identify the 7P’s of Taj in the service sector and the impact it is having on the delivery of services To identify the areas which Taj needs to work upon to improve its service and create a bigger brand name 1.2 Hotel industry- Taj The hotel industry in India has been growing at an impeccable rate. With the growth in tourism and the desire of tourist to have better avenues to stay have given rise to various hotels that provide services which are of high standards. With the rise in foreign tourist and the ever increasing demand for hotels has given many to look for an opportunity in this area. Taj hotels have been one who has used this to their advantage. Taj Hotels has been performing in the hotel industry since ages. Taj-Mumbai is known for its culture and heritage and the services rendered by them are world class. Taj has been able to develop a niche market and has ensured that they look after the whims and desires of the customer. Taj also had the benefit of the booming tourism industry. The fact that Taj has been able to use the marketing strategies in a proper way has given them leverage. 2. Marketing Strategies using 7 P’s The 7P’s of marketing helps to understand the marketing strategy that the tourism sector offers in India. The analysis of this will help to understand the strategy that will help them to be successful. 2.1 Target Market Taj Hotel has a very good target base. It is eyeing every sector. It is as Luxury Segment: Taj has hotels in this segment. “These are people who are willing to pay higher charges for the services they have used because they want lavish accommodation, restaurants, bars, health care amenities”. (Williams, 2008) Leisure Segments: Taj has done extremely well here. “These are people who want to spend time in leisure activities and prefer something new and are the youth which has been handled well by Taj hotels”. (Williams, 2008) Business Segment: This is the most profitable of the lot. Taj has “many hotels which target business professionals and they pay heavily for the services”. (Williams, 2008) This is a major revenue generator. Thus we see Taj targeting every market. This has helped them have a high brand value. 2.2 Product strategy The hotel industry is divided into luxury, business leisure and economy class depending on the income level in India. This has made the provider differentiate their product. It is a seen phenomenon that “India has service providers differentiating them on the basis of product offered”. (Justin, 2008) The service plays a huge role but “the socio-cultural factor affects the number of people visiting the hotels”. (Justin, 2008) Thus, India has a mix of services and providers differentiate themselves on some basis. Taj offers a variety of products. This has made its value rise as consumers get variety. Taj has “luxury full service hotels which provides tour and have resorts at most tourist places”. (Company website) Taj also offers its customers “spa which is differentiated from the others on the quality and the service provided”. (Company website) It has a brand Taj which is making it have many takers. This hotels have all “modern amenities and service and cleanliness has been given high priority”. (Company website) Taj hotels have ensured that customer gets everything. They have taken care of every requirement. This has helped the company as they have been able to give variety. By offering variety Taj has been able to lure customer. They have taken the onus and also provided them with varied services. With Spa, gym, food, lodging and other amenities have helped. This has helped them meet international standards. 2.3 Price Strategy The hotel industry is India has multiple price mechanism working according to the living standard. The hotel industry in India offers “a mix of different pricing giving the service provider to tap the market in different cities as per the living standard”. (Justin, 2008) By providing such a variation it also ensures that India offers different service provider to choose their competencies. Taj has priced its product in such a manner that it eyes the target audience in and delivers them proper services. This helps the company to earn extra. Taj hotels have also been able to do it. It has been able “to generate more than its competitors which is reflected in the margins” (White, 2007) A study conducted shows that “brands create an halo affect around the product as consumer have a perception that the product is better compared to its competitor in terms of quality, price and usage” (Lance, Katrin & Chiranjeev, 1995) This has enabled Taj to get high value. This is because of service. It is helping build good reputation. The pricing strategy thus confronts with the promotion strategy and the services provided by them. 2.4 Distribution strategy The hotel industry to ensure proper distribution needs to ensure that the product and service is delivered to the customer at the door step. For this in the hotel industry the customer has to be present at the place. It is important that the manner in which the services are rendered makes the customer feel a part of the organisation. The type of distribution to be used in the hotel industry is direct selling. The sales person has to come in contact with the customer to ensure satisfactory delivery of services. A special thing to note here is that the services are consumed at the same time. It is not possible to store it. Taj has been able to use the place strategy at its advantage. It has ensured that the sales person deliver the services properly. It is merely for the services rendered by Taj that it has been able to earn a brand image. The hotel has ensured that they look ino the fact that direct marketing is available. Taj based on this has been able to deliver what the customer wants. With different facilities like gym, spa, variety in food and others have ensured that Taj is able to deliver what the customer wants at the point of service. 2.6 Promotion strategy The hotel industry in India provides an integrated marketing communication to make the customer aware of the services and ensure that they remain loyal. The hotel industry offers “advertising on television, radio, billboards, newspaper, hoardings, and public relations, personal selling, direct mail and internet”. (Justin, 2008) The technological advancement has allowed companies to use the marketing communication according to their requirements. Thus, India presents a wide avenue to choose to sell the services and also have loyalty programs to retain customers. Taj has been able to promote its product in such a manner that it has given them widespread recognition. This helped to attach customer to its product. Taj has been promoting it on the basis of “the culture heritage and good service through proper hospitality which has helped them build a market in India and abroad”. They know the customers wants. This is helping Taj work on those. The culture is also helping them. The hotel has ensured that it continues. Where ever Taj has its presence they have reflected it. This is helping them to integrate people. The group has also been created “due to standards and values that Taj has”. It has been consistent in those. Thus loyalty has grown. Customers prefer it. Thus, Taj has been able to use it well. 2.5 People Strategy People in the hotel industry comprises of employees, customer and the company itself. Companies need to ensure that all this are under control so that proper management is possible. The buyer behaviour in India “plays a huge role due to the socio-cultural influence so companies need to ensure that segmentation and targeting is sound”. (Kalyani & Babu, 2006) This makes it important that hotel industry identifies it properly. The services offered should also be good to retain those. The hotel industry in India also ensures that the “employees are well trained and versed according to the culture and also given continuous motivation talks to keep their high spirits”. (Kalyani & Babu, 2006) This makes it possible for the service provider to ensure that they are able to provide continuous service without disruptions. Taj has been able to put in place a strategy which suits its target audience. This has given rise to consumer preference. It is seen that customers prefer Taj. A rating by 5500 customers on a random show the following Figure 1 Ratings from consumer Source: Trip Advisor It is seen that 83% recommend Taj. This is due to the fact of service. Even the other products added to it. This shows that consumer prefer Taj. People perceive it superior. This has made Taj a destination preferred by people. It will ensure smooth flow of funds. When we look at the reasons for such a preference shows what customer value as important. It is seen below Figure 2 Customer Preference Chart Source: Travel Guide We see that consumer prefer service. This is very high on the consumer preference. Value or price is low. Thus we see that “consumers are willing to pay an extra sum for the services they get and this is because they perceive the value as high”. Thus, customer preference enhances value. The other techniques are provided in the appendix. The above brand value has been achieved because Taj has been able to market well. This will help to understand how this value was achieved. 2.6 Process Service sector needs to realize the importance of process in the delivery of quality service. The hotel industry needs to ensure that a system is in place which helps to answer the queries of the customer. Also have a process where the customer is contacted regularly and feedbacks from them are taken for improvements. Further, in the hotel industry it is important that the customer is regularly updated about new additions and they are able to track those. Also, with integration of technology has provided the hotel industry to ensure that customers are able to check the availability of rooms and other services using those. Taj has been successful in it and has ensured that any changes in the process are accounted for. They have integrated the web and ensured that the queries are solved online. A back up team works on tirelessly to handle queries and also provide regular updates. On the backdrop of the recent changes Taj has ensured that customers know about the availability of rooms through the use of internet. This has provided quick service and ensured that the process for the delivery of services is rendered without any hiccups. 2.8 Physical evidence Services can’t be seen but only realized by those who have been a part of it so the hotel industry in India ensures that the services offered are as per the cultural requirements. For example, “it is seen that a Jain is offered Jain food so that his satisfaction level is high”. (Chawla, 2003) The provider so ensure that “services offered are differentiated by offering something else from the others so that satisfaction is high”. (Chawla, 2003) Thus the hotels have a lot of offer and based on the different culture and places the provider mould their services like in Maharashtra it is seen that the crew knows the local language so that conversation is easy. This helps to provide good service. Taj has been able to use it their maximum advantage as they ensure that the service they provide are world class. This is on the backdrop that customers are willing to pay extra for the same. It highlights the fact that customer have a preference for the hotel and those who have been a part of it are in a better position to speak about the quality of service offered by Taj. 3. Recommendations The following recommendations based on different areas according to the 7P’s of marketing will help Taj to improve its services and will make them earn more customers. 3.1 People Improvement Taj hotels have been concentrating more on the customers as is a perquisite in a service industry. Taj needs to realize the importance people associate with the hotel. They need to work on certain areas to ensure that the delivery of services is better and customers are able to fetch maximum reward for the same price. The following areas will help them improve the services They need to ensure regular training and feedback for their employees so that they can improve the areas which will help them to render proper services. This will help Taj to ensure that services are proper. Taj needs to have loyalty programs for their frequent visitors. This will help the customer feel part of the hotel and associate with it. Taj needs to work on the value customer get as customer feel that its low and improving it will help Taj to be able to deliver even better services. 3.2 Product Improvement Taj needs to take steps to improve the product it provides to the customer. Being in a hotel industry it is imperative that Taj improves its product quality to match international standards. The following are certain areas which when improved will help Taj provide better services Taj needs to have regular update about the product by bringing the necessary changes in the quality of room, different food offered, changes in facilities and so on. Taj needs to look at introduction of room for the economy segment considering the huge population base India has. This will allow them to tap the market in a proper way. 3.3 Promotion Improvement It is important that Taj promotes about its hotel in a manner that will enable them to earn maximum customers. The following are certain areas which will help Taj Taj needs to ensure that they continue with the same mantra of providing culture and heritage and not moving away from the successful mantra adopted by them. Taj needs to have a system in place where it is able to gauge the impact advertisements and different medium to promote their services are providing them. Taj needs to provide sponsorship and help different NGO’s in a manner that it helps them earn popularity with the audience and also make people more aware about the hotel. 3.4 Price Improvement Pricing in a service industry holds prime importance as it is very difficult to distinguish between similar services. Taj needs to work on the following areas which will help them provide better services to its customers. Taj needs to have a rate for the economy segment of customer considering the huge base they have in India Taj needs to have a mechanism in place where they offer concessional rates for group booking; special booking and occasions which will also help them earn popularity like some events. Taj needs to have a system like off peak pricing and ensure that in the off seasons when the occupancy rate is low rooms and services are provided at a concessional rate. Taj thus, needs to improve on the above areas which will help them have a better customer base and will help them improve the services being rendered by them. 4. Conclusion Taj Hotels thus have been successful and working on areas which will help them improve their services will make the hotel earn more popularity. Taj needs to ensure that they devise a mechanism to ensure that rooms are not empty and the quality of services improves. Also the fact that Taj needs to realize the importance of the economy class especially in India and have rooms specially designed for them. This will ensure better performance. The fact that the tourism industry is growing and more foreign tourist are pouring it is imperative that Taj continues to bring the necessary changes in the manner in which it renders the services so that it is able to meet the needs and desires of the customers and they get a proper return for the money paid. 5. References Company website, 2010, retrieved from on August 22, 2010 Chawla A, 2003, “Marketing Management for Hotel Industry in India”, Workshop on Marketing of Educational Institute, Programme and Services Justin A, 2008, “Hotel Industry”, Service Sector Management, Business Week Kalyani V & Babu P, 2006, “Strategies for developing sustainable hotels brands in Indian market”, Sri Krishna School of Management Lance K, Katrin H & Chiranjeev S, 1995, “Brand equity: the halo effect”, European Journal of Marketing Trip advisor, 2010, retrieved from on August 22, 2010 Travel guide, 2010, retrieved from < brandvalueoftaj/p-hotel-394904-taj_palace_hotel-i.htm> on August 22, 2010 White P, 2007, “The Indians Hotel Company Limited”, Business World, Mumbai Williams V, 2008, “Indian Hotels Company: Taj Hotels”, India Read More