Business and Consumer Markets in the Hospitality Industry - Literature review Example

Business and Consumer Markets in Hospitality Industry Name Institution Date Business and Consumer Markets in Hospitality Industry Introduction Changes in economic variables have greater impacts on the hospitality businesses. According to Lewis (2012) when the economy is declining, causing a fall in the level of discretionary expenditure, hospitality industry suffers. Management and owners of International businesses in the hospitality industry are affected by local and international economic variables. Managers of hospitality hotels offering accommodation convention facilities and restaurant, café and bar outlets need to consider their markets. In order to successful realize sales and making appropriate marketing decision, managers need to ensure that they understand the difference that exists between business and consumer markets and their client behaviors. This enables them to enhance their relationships with their customers and communicate the business aims to line managers. Analysis The survival of any business is dependent on consumers’ decisions and behaviors. This results into the need for marketing practices. According to Kotler (2001), consumer satisfaction depends on the expectations of a particular consumer and if the actual service meets the expectations. Since businesses exist for the purpose of meeting these needs, managers must understand their consumers’ needs and expectations. In order to meet them enhance their relationships. Customers choose, buy, utilize and dispose commodities (products and services) to satisfy their needs in different ways depending on whether it is in the business or consumer market.. Business markets draw demand from consumer markets (Morris et.al, 2001). Demand in business markets is as a result of demand of individual and group consumers in consumer markets and therefore business markets lack independence. However, a demand in the consumer market can create many more demands. This knowledge helps the manager an international hotel to strategize and determine the targets. The demand for catering services by a business or institution is as a result of individual demand of its staff. Catering service in a business is likely to create more demand if satisfaction is met. Decisions and choices in consumer markets affect demand in the business markets. All customers conduct choices based on both mental and physical actions. According to Widing et al. (2003), they assess the suitability, refer to advertisements and appraise their experiences with the product. Customers then consult sellers in stores and marketers and purchase the products. Whether groups or individuals, understanding the behavior of customers’ process is important as it helps managers in decision making. Hotel managers should ensure that that appropriate information is available to consumers when they search for it in consumer markets. Decisions made by organizations are more complex than those made by individual. Institutions specialize on customer roles and have a formal process of buying procedures. Businesses emphasize on accountability I buying decisions and complex hierarchal authorities and responsibilities (Brennan et.al, 2010, p. 10). Factors like official receipts and stamps must be part of the hotel quality management strategies to help the business customers in accountability. On the other hand, individual or household customers display more simplicity in buying. Bigger organizations have delegated duties and appointed individuals for posts like the buyer post who deals with purchases on behalf of the organization. Other roles in the buying centers include analyzers, payers and influencer. Buying decisions in business markets involve a number of decision makers as restricted by the organizational structure. However, decisions in consumer markets are likely to be influenced by family and friends but only paid for by the one individual. This enables the manager in strategizing and creation of information in the two markets. The hotel will save the costs of acquiring customers by embracing customer orientation (Minghetti, 2003). When the management identifies the needs and expectations in consumer market, and meet them, they solve part of the needs in the business market. Factors like personal worth, institutional factors, psychogenic and biogenic affect the individual perceptions and determine their needs and wants. If well catered for, a part of problems in business markets are solved. Marketing in the business markets require shorter and direct distribution channels (Dwyer & Tanner, 2006). Negotiations between the client and service provider is more personal in these markets compared to consumers markets which involve longer distribution channels. The international hotel offering accommodation, convention facilities and restaurant, café and bar outlets need to develop more distribution channels for their hotel services in their consumer markets. This includes opening more branches and expanding the channels of advertising. Competition in business markets is of a higher risk to the international hotels than in the consumer markets (Widing et al. 2003). Where consumers think that their satisfaction is not being met by their providers in terms of service and product quality, they search for other alternatives. Business customers decide to practice in house servicing. They start producing their own instead of buying from the hotels. Buyers in consumer markets also respond to dissatisfaction through the Do-It-Yourself movement and create competition. Competition created in business markets is more adverse compared to that in consumer markets since a single business buyer meets demand for number of individual buyers. Consumers who also decide to meet their own needs affect the business demands. The manager should understand the roles that business customers play in marketing its services. Business markets serve as buyers and payers of hotel services and products. According to Hutt & Speh (2001) businesses are the leading marketers. Consumer markets serve the role of user, buyers and payers too. This helps the hotel manager in setting marketing strategies depending on the targets. Push marketing enable the manager, through the marketing team to convince the business buyer who in turn convinces the final users about the hotel services and products through discounts and customer incentives. Pull marketing strategies enable the hotel marketing department to reach the final user and convince them to buy through advertisements and promotions. Market values for business markets and consumer markets differ. Business market users tend to base on the performance value and social value when comparing their universal and personal satisfaction of needs and wants respectively. Businesses are majorly concerned with maintaining a high profile, reputation and image. They will tend to compare the services and products to social norms and their perceptions of quality. Consumer market users may also rely on emotional value of a product apart from their image and quality. A business that hires conference rooms for meeting with its partners or hotel rooms for its sponsors would prefer a place that reflects the quality of the business. Values set by the international hotel management need to be hierarchical in business sector starting from universal values to group specific values and narrow down to individual values. These values need to be reviewed periodically to identify any changes and adjust marketing strategies for effectiveness. Buying behavior of organizations differ with that of households (Gitman & McDaniel, 2009). Businesses specialize their customer roles through business centers and also staff roles within the organization. Households on the other hand act as a single capitalist who performs all the customer roles depending on family cycle and type of family. They acquire information, analyze that information and come up with the decision which the output. Business customers have formalities as required in the organization’s governing documents. Buying processes and procedures are formalized through documentation and signing by the appointed authorities such as department heads. This formalization does not apply in individual buying procedures as customers buy for their own immediate consumption. Business buying behavior includes accountability of the involved party in decisions. Roles and authority are specified, and therefore transactions carried out on behalf of the business are accounted for by the person in charge. There is formality in evaluation and provision o feedback from every operation (Widing et al. 2003). Individual buyers are accountable to themselves and therefore no need for accountability procedures. They buy with the household money for consumption by the household and no official assignment is involved. Decisions on whether to buy or make is made basing on capabilities of the organization and options are weighed. There is complexity in the operations in business buying behavior. Specific rules and regulations govern the operations and strategy formulation of business buying behavior. For example organizations sending their staff on official trips have set rules in terms of employee travel allowance, accommodation and meals. Complexity differs from one organization to another. Complexity in consumer buying behavior is not a factor. Households play both the consumer roles, as the user, buyer and payer. They can adjust their buying procedures depending on their needs. The future of business buying behaviour is based on transaction and relational orientation. Businesses want to maintain current suppliers and enhance their relationships where both of them benefit (Widing et al. 2003). They also intend to globalize an shift from their boundaries. This is advantageous for the international companies since this means expansion of the market. Households on the other hand are changing in orientation. Separation of families, divorces and adoptions is limiting growth in households but at the same time increasing the number of households. Businesses are giving suppliers like international the hotel a chance to partner with them and advance their cultural and regional boundaries. The best way for a manager to ensure that the size of market the hotel serves expands is by satisfying the needs of their customers. The organization should seek to understand its market segments and their needs. James Chung as the manager of the international company should communicate to the hotels’ managers through a quality statement and implementation of training programs (Singhal & Singhal, 2008). The managers need to be informed on markets in order to compel the whole organization towards the same goal. Conclusion Business markets and consumer markets differ in terms of complexity, decision making and market behaviors. International hotels serve beyond national boundaries and need to study both markets. Accountability and formalization of business market operations increase the complexity of business markets while households lack such complexity. The changing trends of the markets affect operations of international hotels positively and negatively. Diversification of the business sector will increase profitability and expansion of the hospitality industry while economic downturn results to reduce expenditure in the industry and thus losses. References Widing, R, Sheth, JN, Pulendran, S, Mittal, B & Newman, BI (2003). Customer Behaviour: Consumer Behaviour and Beyond. Thomson, Melbourne. Lewis, J. (2012). Uncontrollable variables that afeect the hospitality industry. Retrieved http://smallbusiness.chron.com/uncontrollable-variables-affect-hospitality-industry-38795.html Kotler, P. (2001) A Framework for Marketing Management, Prentice-Hall. Dwyer, F. Robert, Tanner, John F. (2006) Business Marketing: Connecting Strategy, Relationships, and Learning, 3rd Edition, McGraw-Hill/Irwin Morris, Michael H., Pitt, Leyland F., and Honeycutt, Earl Dwight (2001) Business-to-Business Marketing: A Strategic Approach, Sage Publications Inc. Minghetti, V(2003). Building customer value in the hospitality industry: towards the definition of a customer-centric information system. International Center of Studies on the Tourist Economy. Brennan, R., Canning, L., & McDowell, R. (2010). Business-to-business marketing. London: SAGE. Hutt, Michael D., Speh, Thomas W. (2004) Business Marketing Management: A Strategic View of Industrial and Organizational Markets, 8th Edition, Thomson/South-Western Gitman, L. J., & McDaniel, C. D. (2009). The future of business: The essentials. Mason, OH: South-Western Cenage Learning. Singhal, D & Singhal, K.R (2008). Implementing ISO 9001:2008 Quality Management System A Reference Guide. PHI Learning Pvt. Ltd Read More