Merged Document

Chapter 1
HOSPITALITY MARKETING
Compiled by: Ms. Madhuri.
Chapter 1
Hospitality Marketing
After completion of the chapter, the student shall be
able to understand:
Hospitality industry and its sectors
Marketing definition.
The need of the customer (consumer).
Concepts of Marketing.
1.1 Introduction to Hospitality Industry

The hospitality field, by definition, is a service
industry.
Its task is to create shareholder wealth by servicing
and satisfying guests.
Industry segments include, among others: hotels,
restaurants, private clubs, managedfood service,
event planning, tourism related businesses, and travel
providers.
More often than not, the product purchased is either
intangible or the perceived quality of the product
purchased is impacted by the service method in
which it was received.
Hospitality is:
Derived from the Latin word hospitare meaning to
receive as a guest
Hospitality is act of kindness in welcoming and
looking after the basic needs of guests or strangers,
mainly in relation to food, drink and accommodation.
Hospitality is the relationship process between a
guest and a host.
Hospitality reception and entertainment of guests,
visitors, or strangers with liberality and goodwill.
The Hospitality Industry include the companies or

organizations which provide food and/or drink and/or
accommodation to people who are away from home.
The hospitality industry is complex. It covers a

wide range of jobs, locations, activities, and
economic brackets.
There are four sectors of the hospitality industry:

Food and Beverage, Lodging, Recreation, and Tavel
and Tourism.
1.2 Marketing
As one can see, the picture clearly shows, the magnet

(a product) attracts the metal objects( customers).
More simplified the right product attracting the
consumers.
1.3 Definitions of Marketing
Marketing is the social process by which individuals

and organizations obtain what they need and want
through creating and exchanging value with others.
This definition is based upon a basic marketing exchange process and recognizes the importance
of value to the customer.
The process by which companies create value for

customers and build strong customer relationships in
order to capture value from customers in return.
Kotler & Armstrong (2010)
The authors, Kotler & Armstrong developed their original definition to recognize the importance
of the long term relationship with the customer. This according to them is achieved by
relationship marketing and Customer Relationship Management (CRM).
Marketing is the management process for identifying,

anticipating and satisfying customer requirements
profitably.
The Chartered Institute of Marketing(CIM) 2012.
The CIM definition looks not only at identifying customer needs, but also satisfying
them(short term) and anticipating them in future (long term retention). The definition
also states importance of a process of marketing, with marketing objectives and
outcomes. CIM is recognized as being one of the most influential marketing bodies in
the world. It is the professional body for marketing in the United Kingdom.
Marketing is a professional activity directed at

identifying and satisfying needs and wants of a
buying public resulting in exchange process.
An important part of the marketing definition is, customers NEED. The moment a human
being feels a need, she/he is motivated to satisfy it.
Market
A market is , the set of actual and potential buyers of

a product or services.
1.4 Customer Orientation

Customer orientation is of ultimate importance to
deliver value added products.
There are four basic stages of customer orientation:
a. Develop.
b. Manufacture.
c. Market.
d. Deliver.
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1.4.a Develop
Development has to be done keeping customer needs

into mind.
Products should be customer oriented.
The development cycle time should be minimal.
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1.4.b Manufacture
As per the product, the manufacturing should be such

that it gives the best products to the customer.
Quality should not be compromised.
Manufacturing cycle time should be reduced.
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1.4.c Market
Identifying and targeting the right customer.

Processing the demand as early as possible.
Customization of the products for the market.
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1.4.d Deliver
Deliver to the target customer

Reduce delivery time
Value for money products
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1.5 Core Concept of Marketing

The marketing concept means the key to achieving
organizational goals consists of being more effective
than competitors in integrating marketing activities
toward determining and satisfying the needs and
wants of target markets. Which is basically delivering
the product that is better than the competitor and as
per the requirement of the customer.
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1.5 Core Concept of Marketing

It includes 7 vital steps that are to be taken into
consideration:
1. Need/Want/Demand
2. Products Goods/Services/Place
3. Value/Cost/Satisfaction
4. Exchange/Transaction
5. Relationship/Networking
6. Market
7. Marketers/Prospects
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1.5.1 Need /Want /Demand

Need: It is state of deprivation
of some basic satisfaction.E.g.
food, clothing, safety, shelter.
Want: Desire for specific
satisfier of need. e.g. Indians
want paneer tikka/tandoori
chicken. Americans want
hamburger/French fries.
Demand: Want for a specific product backed up by
ability and willingness to buy. e.g. Transportation.
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1.5.2 Products
Product is anything that can satisfy need/ want.

1. Physical Good.
2. Service.
3. Idea.
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1.5.3 Value/Cost/Satisfaction
Decision for purchase made based on
value/cost satisfaction delivered by product/offering.
Product fulfills/Satisfies Need/Want.
Value is products capacity to satisfy
needs/wants as per consumers
perception or estimation.
Each product would have a cost/price
elements attached to it. E.g.Travel
from city A to city B.
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1.5.3 Value/Cost/Satisfaction
Need to reach B (from A)
Method/ Products- Rail/ air/ road
or train/ plane.
Satisfaction Estimated in terms of time
lead & travel comfort.
VALUE- Products capacity to satisfy.
COST- Price of each product.
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1.5.4 a. Exchange
The act/ process of obtaining a desired product from
someone by offering something in return. For
exchange potential to exist, the following conditions
must be fulfilled.
There must be at least two parties.
Each party has something of
value for other party.
Each party is capable of communication & delivery
Each party is free to accept/reject the exchange offer.
Each party believes it is appropriate to deal with the
other party.
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1.5.4 b. Transaction
TRANSACTION: Event that happens at the end of

an exchange. Exchange is a process towards an
agreement. When agreement is reached, we say a
transaction has taken place.
a) Barter transaction.
b) Monetary Transaction.
At least two things of value.
Condition agreed upon.
Time of agreement.
Place of agreement.
May have legal system for compliance.
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1.5.4 b. Transaction
Proof of transaction is BILL/ INVOICE.
TRANSFER: It is one way. Hence, differ from
Transaction.
NEGOTIATION: Process of trying to arrive at
mutually agreeable terms.
Negotiation may lead to:
Transaction.
Decision not to Transact.
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1.5.5 Relationship/Networking
Relationship marketing: - Its a pattern of building
long term satisfying
relationship with customers,
suppliers, distributors in order
to retain their long term performances and business.
Achieved through promise and
delivery of high quality good
Service, Fair pricing,
over a period of time.
Outcome of Relationship Marketing is a
MARKETING NETWORK.
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1.5.6 Market
A market consists of all potential customers sharing
particular need/want who may be willing and able to
engage in exchange to satisfy need/want.
Types of Markets:
1. Resource Market,
2. Manufacturing Market,
3. Intermediary Market,
4. Consumer Market,
5. Government market.
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1.5.7 Marketers/Prospects
Working with markets to actualize potential

exchanges for the purpose of satisfying needs and
wants.
One party seeks the exchange more actively, called as

Marketer, and the other party is called Prospect.
Prospect is someone whom marketer identifies as

potentially willing and able to engage in exchange.
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1.5.7 Marketers/Prospects
Marketer may be seller or buyer.
Most of time, marketer is seller.
A marketer is a company serving a market in the face

of competition.
Marketing Management takes place when at least one

party to a potential exchange thinks about the means
of achieving desired responses from other parties.
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1.6 Pillars of
Marketing Management
Marketing management is the analysis, Planning,

Implementation and Control of programs designed to
Create, Build and Maintain beneficial exchanges with
target buyers for the purpose of achieving
organizational objectives. (Managing the marketing
activities in a planned manner).
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1.6.1 The Production Concept

The philosophy that consumers will favor products
that are available, that management should therefore
focus on improving production and distribution
efficiency.
The production orientation is
based on conditions of mass
production and limited
consumer choice. This leads
to an inward-looking focus
as management strives to control costs, improve
quality and efficiency, and increase volume.
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1.6.1 The Production Concept

E.g. 1: The McDonalds managements main focus is
on achieving operational efficiency by improving
their food supply chain and training staff to service
the high demand.
E.g. 2: Holiday Inn used to provide
managers with mega-size standard
operational manuals detailing the
rules and procedures for every aspect of the hotel
operation, but such a bureaucratic approach can end
up stifling innovation, making hospitality managers
focus on the systems and paperwork instead of on
customer care.
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1.6.2 The Product Concept
The idea that consumers favor products that offer the

most quality, performance and features, and that the
organization should therefore devote its energy into
making continuous product improvements; a detailed
version of the new product idea.
The product or service orientation is not linked to

any specific economic era or to specific market
conditions.
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Companies adopting a product orientation believe
that their customers can only be satisfied with a
particular type of product.
E.g. Hospitality companies with a product orientation
include the famous restaurants with celebrity chefs,
who serve what they think customers should eat
regardless of what the customers actually want!
Chefs like this may lose touch with the question of
whether customers actually want to buy the product;
they become overly focused on the product.
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The product management focus is again inward

looking. Whilst a company can prosper with a
product orientation, changes in consumer tastes and
fashion can quickly undermine a product-led
company.
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1.6.3 The Selling Concept
The selling concept determines that consumers will

not buy enough of the organization's products unless
the organization undertakes a large scale selling and
promotion effort.
Companies adopt the selling

orientation when their products are competing in
markets where supply exceeds demand, and
growth is low or declining.
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1.6.3 The Selling Concept
A sales orientation is endemic in the

hospitality industry, as many
marketing programs are really
only sales promotions aimed at
filling bedrooms, bars and restaurants regardless of
customers needs and wants. Whilst selling is a vital
element of hospitality marketing, sales strategies
should be integrated into the marketing plan and be
consistent with a marketing orientation.
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1.6.4 The Marketing Concept
Achieving organizational goals depends on

determining the needs and wants of its target market
and The marketing orientation is considered by some
authors to be the same as the
marketing concept. It is an
alternative strategy to the
selling orientation, to cope with
similar economic conditions
(i.e. surplus capacity leading to a
fiercely competitive environment).
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Companies adopting the marketing orientation

recognize that customers have considerable choice in
the marketplace. Companies aiming to maintain longterm profitability need to understand and serve
customers better than their competitors.
37

To achieve superior business performance companies
therefore need to identify what customer needs and
wants are, and to satisfy them better than
competitors.
This means that companies need to carry out
marketing research and to
develop an integrated
approach to marketing, to
ensure that all marketing
activities are coordinated
and help to deliver customer satisfaction.
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The advantage of a marketing orientation is that the
business focus is on developing long-term
relationships with customers, and avoids price
competition.
The adoption of a marketing orientation suggests that
companies are seeking longer term profits, as
opposed to increasing profits in the short term at the
expense of longer-term customer satisfaction.
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1.6.5 The
The idea that the organization should determine the

needs, wants and interests of target markets and
deliver the desired satisfaction more effectively and
efficiently than competitors in a way that maintains
or improves the consumers and society's well being.
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1.6.5 The
The societal marketing orientation was a response to
these criticisms, and recognizes that commercial
organizations have a wider responsibility than simply
looking after customers and staff.
A societal marketing orientation suggests that
companies should become proactive in the
community, adopting a good neighbor policy in
their companys best interest.
A number of hospitality organizations have genuinely
adopted societal marketing.
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1.7 An Introduction to
Consumers have to make buying choices based on
their own resources or buying power. Consumers will
often buy the best bundle of benefits provided by a
product, for the price that can be afforded. The
combined purchase decisions of all the
individuals buying a product
(or service) is described as
market demand.
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Market demand is normally measured using two
criteria:
1. The number of units sold, which
is a reflection of the number of
people buying the product or
service; This is called the volume.
2. How much people have paid for
the product; This is called the value.
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In hospitality markets, luxury, mid-market and

budget market segments represent different bundles
of benefits sought by different groups of customers.
Market supply can also be measured, and this is

called the industry capacity. In the hotel market, the
number of hotels and bedrooms in an area is called
the market capacity.
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In the hospitality industry, market supply is often

categorized under the same headings as market
demand segments; so the luxury, mid-market and
budget classifications are used to
describe the different types of
operations serving those market
segments.
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Other ways of categorizing hospitality market supply

include:
1. Tourist board, motoring, or other, organization

ratings for hotels and restaurants (e.g. star rating
classification)
2. Purpose of travel (leisure or business)
3. Niche markets (youth action adventure holidays,
conferences or gourmet food).
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Market demand in hospitality can be broadly

described under four key headings:
1. Business travel demand includes all those journeys

business people make to meet customers and
suppliers, and attend conferences, exhibitions and
seminars. Business travel does not
include the daily journeys
people make when commuting
to work.
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2. Leisure travel demand includes journeys where
people travel away from home for amusement,
entertainment or relaxation for example, holidays,
weekend breaks, or same-day visits.
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3. Domestic travel demand includes all the travel
generated within a country by people living in that
country For example, the domestic demand for
business travel in India is all business journeys taken
in India by people
living in India.
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4. International travel demand includes all the
journeys generated to a country from people living in
other countries. France is one of the most popular
tourist destinations, and attracts international visitors
from all over the world.
Some types of travel do not fit easily

into these broad categories. People
often combine business and holidays
in the same trip.
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THANK YOU !!
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Chapter 2
ELEMENTS OF SERVICE MARKETING
Compiled by: Ms. Madhuri
Chapter 1
able to understand:
To define service marketing.
To understand the elements of marketing from the
point of view of service industry.
To know the importance of 7 Ps.
To understand the terms related to service marketing.
2.1 Definition of Service Marketing
A product is tangible (i.e. material) since you can

touch it or own it. A service tends to be an experience
that is consumed at the point where it is purchased
and cannot be owned since it quickly perishes. A
person could go to a caf one day and enjoy excellent
service, and then return the next day and have a poor
experience. Marketers talk about the nature of a
service as being inseparable, intangible, perishable,
homogenous and variable.
2.1.1 Inseparable
Inseparable - from the point where it is consumed,

and from the provider of the service. For example,
you cannot take a live theatre performance home to
consume it (a DVD of the same performance would
be a product, not a service). The consumer is actually
involved in the production process that they are
buying at the same time as it is being produced, for
example an eye test or a makeover.
2.1.1 Inseparable
One benefit would be that if you are unhappy with

your makeover you can tell the beautician and that
instant feedback means that the service quality is
improved. You can't do that with a product. Another
attribute is that services have to be close to the
person consuming them i.e. goods can be made in a
central factory location which has the benefits of
mass production. This localization means that
consumption is inseparable from production.
2.1.2 Intangible
Intangible - cannot have a real, physical presence as

does a product. For example, motor insurance may
have a certificate, but the financial service itself
cannot be touched i.e. it is intangible. This makes it
tricky to evaluate the quality of service prior to
consuming it since there are fewer attributes of
quality in comparison to a product. One way is to
consider quality in terms of search, experience and
credence.
2.1.3 Perishable
Perishable - in that once it has occurred it cannot be
repeated in exactly the same way.
E.g. Once a flight has taken off you cannot sell that
seat again, hence the airline makes no profit on that
seat. Therefore the airline has no choice but to price
at peak when it sells a seat at busy times in order to
make a profit. That's why restaurants offer vouchers
to compensate for quieter times, and it is the same for
railway tickets and matinees in Broadway during the
middle of the week.
2.1.4 Variable
Variability- since the human involvement in service
provision means that no two services will be
completely identical, they are variable.
E.g. With the greatly standardized McDonalds
experience, there are slight changes in service, often
through no fault of the business itself. Sometimes
Saturday lunchtime will be extremely busy, on other
days you may have to wait to go via the drive
through. So services tend to vary from one user
experience to another.
2.1.5 Homogenous
Homogeneity is where services are largely the same

(the opposite of variability explained above).
We considered McDonald's above which is a largely

homogeneous service, so now let's look at KFC and
Pizza Hut. Both of these businesses provide a
homogeneous service experience where ever you are,
Consumers expect the same level of service and
would not anticipate any huge deviation in their
experience.
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2.1.5 Homogenous
Your regular hairdresser will deliver a style whereas

a hairdresser in the next town could potentially style
your hair differently. Therefore standardization is
largely embodied by the large global brands which
produce services.
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2.2 Hospitality Products
The
drinks that are sold in bars, mini-bars in rooms,

restaurants, soda fountains, etc.
The recreation facilities like tennis courts, water
sports, jogging tracks, television in rooms, etc.
The health and fitness facilities like gymnasiums,
massage parlors, yoga and aerobic rooms.
12

The
beauty facilities like salons for men and women.

The shopping facilities like the shopping arcade,
malls and emporiums.
The entertainment facilities like water courses,
childrens parks, barbeque pits, banquet halls, night
clubs, supper theatre, etc.
13

Products
in the hospitality are those

physical tangible items which are offered
for sale.
The products in the hospitality business
under this definition are:
The hotel itself that is distinguished from
others by size, price, location and
appearance.
14

The
guest rooms that are on offer such as single

rooms, double rooms and suites.
The restaurants such as coffee shops, specialty
restaurants, cafes, etc.
The food that is sold in restaurants, room service,
banquets, outdoor catering, delicatessens, bake shops
and patisseries.
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Type of Hotels
We shall look at the hotel property as a product.
All hospitality marketers must be thoroughly familiar
with the types of hotel they promote and the clientele
they serve.
With the evolution of hotel and its proliferation
around the world it is impossible to categorize them
under one term.
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Type of Hotels
Here is a list of hotels usually used in the tourism
circuit, each with a specific purpose and clientele:
Airport Hotel
Bed & Breakfast Hotel
Boutique Hotel
Budget Hotel
Business Hotel
Casino Hotel
Conference Hotel
Conventional Hotel
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Type of Hotels
Destination Hotel
Deluxe
Hotel
Downtown Hotel
Family Hotel
Group Hotel
Inns
Motel
Residential Hotel
Resort
Suburban Hotel
Suite Hotel
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2.3 Range of Services provided by Hotels &

Restaurants
Services are provided by people who then assume an

importance in the service industry. It is often said that
the people make the difference between hotels and
restaurants. It is their quality and warmth of service
that makes the cutting edge.
19

Restaurants
Services are provided by people who then assume an

importance in the service industry. It is often said that
the people make the difference between hotels and
restaurants. It is their quality and warmth of service
that makes the cutting edge.
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Restaurants
The Services provided in the hotel industry are:
Front Office Services:
a.
b.
c.
d.
e.
The basic services provided by the front office are:

Selling rooms
Reserving rooms for guests before their arrival
Registering guests into the hotel
Assigning rooms
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Restaurants
Front Office Services:
f. Coordinating with other
services
g. Controlling guest room
keys
h. Providing in-house and external information to
guests
i. Maintaining accurate room status information
j. Maintain guest accounts and settle their bills
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Restaurants
a.
b.
c.
d.
e.
Uniformed Services:
The basic services provided by the front office are:
Selling rooms
Reserving rooms for guests before their arrival
Registering guests into the hotel
Assigning rooms
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Restaurants
Uniformed Services
Coordinating with other services

g. Controlling guest room keys
h. Providing in-house and external information to
guests
i. Maintaining accurate room status information
j. Maintain guest accounts and settle their bills
f.
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Restaurants
Housekeeping Services:
This department is
responsible for the
cleanliness, maintenance
and the aesthetic standards
of the hotel. Housekeeping provides laundered staff
uniforms, room and restaurant linen and fresh and
dried flower arrangements. This service is
important to the guest because it keeps their rooms
clean to high standards of sanitation and hygiene.
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Restaurants
Food & Beverage Services:

Room Service
Room Service is a food
service operation. It provides
food and beverage to guest
rooms. The room service is located in the kitchen and
has order their food and beverage orders directly
from their rooms to the room service order-taker who
passes on the order to the service team. The service
team coordinates with the kitchen or the bar for the
preparation of the item.
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Restaurants
Restaurant Service
Restaurant service is available through a choice of
dining opportunities explained earlier. The restaurant
provides meals and drinks by a waiting staff that is
qualified and artful in their profession.
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Restaurants
Bar Service
Restaurant service is available through a choice of
dining opportunities explained earlier. The restaurant
provides meals and drinks by a waiting staff that is
qualified and artful in their profession.
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Restaurants
Kitchen Service
Kitchens in large hotels
have independent sections
to deal with various aspects
of food preparation due to the sheer volume of
activity, smaller kitchens would club sections or have
multi-skilled cooks to carry out several roles.
Kitchen personnel coordinate with restaurants, room
service and banquets for the supply of food orders.
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Restaurants
Laundry
Service
Event Service
These are provided by the banquet department to
conduct any kind of event within the Hotel Premises.
Health Club & Recreational Services
The health club is a specialist that has an
independent and qualified charge over gymnasium
for the guests. The recreation can be an independent
activity based on the no. of options available, like
Tennis Court, Squash court or outdoor sports
activities.
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Restaurants
Beauty
Service
The beauty salon provides hair dressing and beauty
care services.
Guest Relations
Guest relation executive ensures that all guests
especially the V.I.P.s are kept comfortable during
their stay.
Concierge Services
Concierge provides personalized services and
information to guests in large hotels during their stay
and offers messaging services.
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2.4 Elements of Service Marketing

The elements of a services marketing mix are
sometimes called the seven Ps: the four Ps of the
marketing mix, plus three Ps of services:
people/participants, physical evidence, and process
(of service assembly).
The Marketing Mix is a good way to determine the
strategic position of a product or service in the
marketplace. This is not a new concept, according to
Wikipedia the origin of the Marketing Mix was in the
late 1940s and was presented to the AMA (American
Marketing Association) in the 1950s.
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Product, Place, Promotion, & Price
Due to the nature of services, the implications of

product, place, promotion and price are different than
in the traditional marketing mix.
33
The Services Marketing Mix

Extending the 4Ps
The services marketing mix is an extension of the
4Ps framework. The essential elements of product,
promotion, price and place remain but three
additional elements - people, physical evidence and
process are included to the 7Ps mix.
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The need for the extension is due to the high degree

of direct contact between service providers and its
customers, the highly visible nature of the service
process, and the simultaneity of the production and
consumption. Although it is possible to discuss
people, physical evidence and process within the 4P
framework (for example, people can be considered
part of the product offering), this extension allows
for a more thorough analysis of the marketing
elements necessary for successful services marketing
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2.4.1 Product
In the case of services, the Product" is intangible,

heterogeneous and perishable. Moreover, its
production and consumption are inseparable. Hence,
there is scope for customizing the offering as per
customer requirements, and the actual customer
encounter therefore assumes particular significance.
However, too much customization
would compromise the standard
delivery of the service and adversely
affect its quality. Therefore, particular
care has to be taken in designing the
service offering.
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2.4.2 Pricing
Pricing of services is tougher than pricing of goods.

While the latter can be priced easily by taking into
account the raw material costs, in the case of services
there are attendant costs-such as labor and overhead
costs-that also need to be factored in.
A restaurant not only has to charge for the cost of the
food served but also has to calculate a price for the
ambience provided.
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2.4.3 Place
Since service delivery is concurrent with its
production and cannot be stored or transported, the
location of the service product assumes importance.
Service providers have to give special thought as to
where the service is provided.
A fine dining restaurant is better located in a busy,
upscale market as opposed to the outskirts of a city.
A holiday resort is better situated in the countryside
away from the rush and noise of a city.
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2.4.4 Promotion
Since a service offering can be easily replicated,

promotion becomes crucial in differentiating a
service offering in the mind of the consumer. Service
providers offering identical services such as airlines
or banks and insurance companies invest heavily in
advertising their services. This is crucial in attracting
customers in a segment where the services providers
have nearly identical offerings.
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2.4.4 Promotion
The additional Ps have been added because today

marketing is far more customer oriented than ever
before, and because the service sector of the
economy has come to dominate economic activity in
this country. These 3 extra Ps are particularly
relevant to this new extended service mix.
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2.4.5 People
People are a defining factor in a service delivery
process, since a service is inseparable from the
person providing it. A restaurant is known as much
for its food as for the service provided by its staff.
The same is true of banks and department stores.
Consequently, customer service training for staff has
become a top priority for many organizations today.
Customer service lies at the heart of modern service
industries.
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2.4.5 People
Customers are likely to be loyal to organizations that
serve them well - from the way in which a telephone
query is handled, to direct face-to-face interactions.
Although the 'have a nice day' approach is a bit
corny, it is certainly better than a couldn't care less
approach to customer relations. Call center staff and
customer interfacing personnel are the front line
troops of any organization and therefore need to be
thoroughly familiar with good customer relation's
practice.
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2.4.6 Process
The process of service delivery is crucial since it
ensures that the same standard of service is
repeatedly delivered to the customers.
Most companies have a service blue print which
provides the details of the service delivery process,
often going down to even defining the service script
and the greeting phrases to be used by the service
staff. - associated with customer service are a
number of processes involved in making marketing
effective in an organization
e.g. processes for handling customer complaints,
processes for identifying customer needs and
requirements, processes for handling order etc.
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2.4.7 Physical Evidence

Since services are intangible in nature, most service
providers strive to incorporate certain tangible
elements into their offering to enhance customer
experience.
Many hair salons have well designed waiting areas,
often with magazines and plush sofas for patrons to
read and relax while they await their turn.
Similarly, restaurants invest heavily in their interior
design and decorations to offer a tangible and unique
experience to their guests.
44
2.5 Elements of Hotel Marketing
In the highly specialized world of hotel marketing

there are certain points that must be taken into
account by any hotelier intending to check his
marketing efforts.
45
2.5.1 Popularity
The popularity of the hotel is how much search there
is for your hotel.
Its a simple factor and can be measured through
basic tools like Google Analytics or other site
analytics tools.
The searches for your brand are the most qualified
leads you can get and the most important long term
strategy is to increase those searches.
Other tools are: Social media, advertising on search
engines and much more.
46
2.5.2 Rates & Availability

It goes without saying that your rates and availability
are the number one factor that will get you bookings.
Ensure you have named the correct competition to
compare to its not necessarily the hotels near you.
There are hotels we manage that only compare their
rates to hotels which are better located than them,
because their service, decor quality and reviews are
so much better than any hotel in their surroundings
theyre also much more expensive than those hotels.
By comparing to the right competition theyve
increased their average price dramatically.
47
2.5.3 Brand Protection

No matter the popularity of your hotel you need to
protect your brand.
Remember these are your most valuable visitors.
Find out how many third parties are advertising on
your name and make sure you are always before
them.
Additionally, there are ways you can limit others to
advertise on your name and you should demand your
marketing department/agency to take action on these.
48
2.5.4 Design
There are two extremes in design and one middle
ground.
The first extreme is going totally creative and
making the most amazing website. While this is
tempting and great for ones ego, it isnt necessarily
the most efficient.
Then theres the other extreme which is doing a site
thats only there to generate bookings and doesnt
help the hotels image.
The middle-ground is always the hardest it requires
extremely good knowledge of the elements that make
a website sell while having a keen eye for design.
49
2.6 Terms
Intangible: Incorporeal property that is saleable

though not material, such as bank deposits, stocks,
bonds, and promissory notes.
Heterogeneous: Diverse in kind or nature;

composed of diverse parts.
Noise: Data that is not being used to transmit a

signal, but is simply produced as an unwanted byproduct of other activities
50
2.6 Terms
Marketing Mix: A business tool used in marketing
products; often crucial when determining a product
or brand's unique selling point. Often synonymous
with the four Ps: price, product, promotion, and
place.
Internal Marketing: Marketing by a service firm to
train effectively and motivate its customer contact
employees and all the supporting service people to
work as a team to provide customer satisfaction.
51
2.6 Terms
Physical Evidence: Tangible clues such as

promotional material, employees of the firm and the
physical environment of the firm. It is used by a
service firm to make its product more tangible to
customers.
52
2.6 Terms
Revenue Management: A pricing method using
price as a means of matching demand with capacity.
Service Inseparability: A major characteristics of
services; they are produced and consumed at the
same time and cannot be separated from their
providers, whether the providers are people or
machines.
Service Intangibility: A major characteristics of
services; they cannot be seen, tasted, felt, heard or
smelled before they are bought.
53
2.6 Terms
Service Perishability: A major characteristics of

services; they cannot be stored for later use.
Service profit chain: A model that shows the

relationships between employee satisfaction,
customer satisfaction, customer retention, value
creation and profitability.
54
2.6 Terms
Service Variability: A major characteristics of

services; their quality may vary greatly depending on
who provides them and when, where and how they
are provided.
The service culture: The service culture focus on

serving and satisfying the customer. The service
culture has to start with top management and flow
down.
55
THANK YOU !!
56
Chapter 3
ENVIRONMENTAL INFLUENCES ON
HOSPITALITY ORGANIZATION
Compiled by - Ms. Madhuri
Chapter 3
Environmental Influences on Hospitality
Organization
able to understand:
To define the term Environment, and understand its
importance.
To segregate the environment into external (Macro)
& internal (Micro).
To study the impact of environmental factors on the
hotel industry.
3.1 Introduction
Since marketing is an outward-looking business
philosophy, marketers in hospitality companies need
to understand and adapt to changes in the business
environment.
Marketing opportunities offers both opportunities and
threats. Successful companies know the vital
importance of constantly watching and adapting to
the changing environment.
3.2 Why Environmental Analysis?
Environmental analysis will help understand what is

happening both inside and outside the organization
and to increase the probability that the
organizational strategies that will be developed will
appropriately reflect the organizational environment.
Purpose of General Environmental Analysis:

Organizations are affected by conditions in the
environment.
Managers need to be aware of these conditions
in order to:
Take advantage of opportunities that can lead to
higher profits.
Reduce the impact of threats that can harm the
organizations future.
Gathering Information for External

Environmental Analysis:
Managers need information in order to know and
develop an understanding about what is happening in
the external environment

Three approaches to information gathering:
Scanning: general surveillance of environmental
changes; looking for early signals of changes.
Monitoring: close attention to specific
developments that could affect the organization.
Competitive Intelligence: following actions of
competitors.
Sources of Environmental Data

Internal sources may also be a good source of data
on customer needs, attitudes, and behavior. The
organization's own records are the best source of
data on current objectives, performance, and
available resources.
The sheer volume of available information on the
economy, our population, and business activities is
the major strength of most government data
sources.

The articles and research reports that are available
in periodicals and books provide a gamut of
information about many organizations, industries,
and nations.
Commercial sources are almost always relevant to
a specific issue because they deal with the actual
behaviors of customers in the marketplace.
The best approach to secondary data collection is
one that blends data and information from a variety
of sources.
3.3 The Macro-Environment
The macro-environment includes political, economic,

socio-cultural, technological and environmental
forces, and is therefore known as the PESTE
environment. Hospitality companies have limited, if
any, control over PESTE influences; but major
changes in any one PESTE factor can significantly
impact on the business.
10
3.3 The Macro-Environment
PESTE factors are constantly changing. These

changes affect consumers, drive market demand, and
influence the competitive environment.
11
3.3.1 Political
The political direction of a country determines how

consumers and commercial organizations can act.
The political philosophy of government can either
stimulate or stifle economic, social and technological
development. While the USA fosters an open
economy, encouraging tourism and creating a
positive climate for hospitality businesses, Burma
restricts international access and inhibits the
development of tourism and hospitality businesses.
Political and governmental decisions are constantly
changing the environment in which we live and work
and the impact on hospitality marketing activity in a
variety of ways.
12
3.3.1 Political
Examples include:
Planning regulations (permission for building
hotel, restaurant and leisure extensions or
developing new properties), which alter the
industry capacity.
Licensing laws, which regulate the opening times of
licensed premises.
13
3.3.1 Political
Local, regional or national government taxes,
which impact on prices (Value Added Tax and
General Sales Tax rates, and excise duty on
alcoholic drinks) and therefore influence the
demand for hospitality products.
Regulation of marketing communications
(different European countries have different
regulations concerning advertising, direct mail and
the use of databases for marketing purposes).
14
3.3.1 Political
Monopolies and Restrictive Practices Act to protect
companies from unfair competition.
Consumer Protection Act to protect consumers
from unfair business practice.
15
3.3.1 Political
Laws pertaining to the physical safety of the

workers, in order to protect employees from
occupational hazards.
Laws related to environmental issues to manage
issues of concern such as noise pollution, waste
disposal, smoke, recycling material, etc.
Labour laws to protect workers, rights concerning
minimum wages, grievance handling, working
hours, annual leaves, etc., with legislation.
Marketers are also influenced by the government
agencies which give licenses and permits.
16
3.3.2 Economic
The economic environment includes all those

activities that influence the wealth and income of the
population. Examples of economic influences are:
The state of the economy
The structure of employment and the level of
unemployment.
The rate of inflation.
17
3.3.2 Economic
The exchange rate. These factors combine to
influence business confidence, consumers
disposable income and consumer confidence,
which play a significant role in changing demand
for hospitality markets. When business and
consumer confidence is high, hospitality markets
thrive; when business and consumer confidence is
low, hospitality markets decline and firms are
prone to failure. A key economic factor is the
business cycle, which influences demand.
Hospitality firms need to respond to the stages in
the business cycle.
18
3.3.2 Economic
o When business and consumer confidence is high,
hospitality markets thrive; when business and
consumer confidence is low, hospitality markets
decline and firms are prone to failure.
o A key economic factor is the business cycle, which
influences demand.
oHospitality firms need to respond to the stages in
the business cycle.
19
3.3.2 Economic
Whilst hospitality businesses all trade at the same

stage of the business cycle, firms will respond
differently according to their financial and
marketing strengths, and their leadership. The
stages of the hospitality business cycle are:
20
3.3.2 Economic
Growth.
Occupancy and room rates increase in
response to growing demand, there is a strong
positive cash flow (which means that capital is
available for further investment), property values
increase, and hoteliers have high business
confidence.
21
3.3.2 Economic
Peak.
Occupancy and room rates remain
strong, and funds are still available for
investment; however, growth tends to slow.
22
3.3.2 Economic
Decline
Occupancy begins to decrease. If the decrease is

gradual, room rates are increased in line with inflation.
Investors sense the higher risk in declining occupancy
and seek increased returns before agreeing to invest in
hotel businesses, property values begin to fall, the rate
of decline becomes more rapid as occupancy falls.
price competition becomes more intense and achieved
room rates fall, and the rate of decline can become
faster as the industry moves towards recession.
23
3.3.2 Economic
Trough.
There is a large imbalance of supply and

demand during a recession; low occupancy, low room
rates and a slump in property values means that
highly geared (over-borrowed) companies are put
into receivership. There is a bottoming out period as
demand gradually stabilizes and then slowly begins to
increase.
Resurgence.
There is a gradual resurgence, and the
cycle starts all over again.
24
3.3.3 Socio-Culture
The socio-cultural environment influences

consumers purchase and consumption behavior. A
countrys socio-cultural environment is a complex
mix of its geography, climate, history, religion, and
ethnic make-up. Indeed, cultural differences between
countries provide hospitality marketers with some of
the greatest challenges when developing global
brands.
25
3.3.3 Socio-Culture
The social environment is also influenced by:

Ethics in Business People want to be sure that
they are not being cheated.
The decision- maker at Home It is found that
children influence a lot of buying decisions
nowadays resulting in advertisements aimed at
them. The fast food industry especially targets
children with the offers of free gifts (masks,
sachets, crayons, animated videos, etc.).
Convenience Shopping Busy people like working
mothers want services such as home delivery, take
away food, fast-food, etc.
26
3.3.3 Socio-Culture
Growth in Ethnic Minorities This increases
demand for varied and special food.
Food habits of Target markets Restrictions such
as no beef for Hindus, No pork for Muslims, some
people being vegetarian, some people being allergic
to garlic, peanuts ,etc. also affect the sale of food.
Greater Environmental Consciousness This has
generated demands for recycling, preserving,
nature, etc.
Health The health conscious public now wants
diet food and salad bars in the menu. They also
want non-smoking guest rooms and dining areas.
27
3.3.4 Demographic Changes
Demography is the study of human population in

terms of age, gender, density, location, race,
occupation, etc. Demographic changes also make a
significant impact on market demand in hospitality.
28
Examples include the following:

The increase in the number of older people living in
Western countries is changing the demand
characteristics for holidays.
The increase in the number of single people
(caused by people marrying later, and more people
getting divorced) is changing the demand
characteristics for eating out.
A moneyed middle class that is willing to buy
aspirational things like foreign holidays, club
memberships, and designer clothes.
The rise of young earners with good purchasing
power.
29
The shift of rural people to cities, and some highly

qualified people shifting back to villages.
Single women who prefer to live alone because of
their success at their profession.
Families where both the partners are working is
increasing day by day. Double income leads to
more money to be spent on luxury items and
holidays.
30
3.3.5 Technological
The technological environment in hospitality is

closely associated with innovation and developments
in information communications technology (ICT).
The rapid development of ICT in the late 1990s and
during the current decade has had a major influence
on the industry.
31
3.3.5 Technological
Improvements in the technological environment

include:
The growing sophistication of computerized
reservation services.
The development of global distribution networks.
Increasing consumer and commercial use of the
Internet.
Improvements in kitchen equipment, which has
changed food production techniques.
The development of in-hotel computerized systems,
which has improved in-room comfort and security
for guests.
32
3.3.5 Technological
Technologies like Mechanization of work methods,
Food technology - production of organic
vegetables, frozen food, and meat and dairy
alternatives have helped the hotel industry and
minimized labour work.
Future innovations, rather today we already hear
about underwater hotels, desalination of sea water,
and booking in space hotels have commenced.
33
3.3.6 Environmental
Environmental factors have become more important

in all parts of the world as people recognize the
impact tourists have on the planet. In particular, mass
tourism has become much more controversial.
Tourism:
Encourages new hotel and leisure developments.
Impinges on natural habitats.
Uses up scarce resources.
Generates air and noise pollution.
34
3.3.6 Environmental
Tourism:
Creates waste disposal problems.
Although the concept of sustainable tourism is
much publicized, and green pressure groups lobby
government and hospitality companies to improve
the industrys environmental policies, the hotel and
restaurant industry does not have a good reputation
in this area.
35
3.4 The Micro-Environment

The micro-environment includes internal company
factors (customers, employees, suppliers and
intermediaries) and external factors (the direct
competitors operating in the same locations, and the
various publics with which a company interacts).
Unlike the PESTE framework for the macroenvironment, there is no recognized formula or
mnemonic to describe the micro-environment.
Hospitality companies have more influence over the
micro-environment than over the macro-environment.
36
3.4.1 Customers
Hospitality companies typically target a broad mix of
customers, including business and leisure hotel
residents, non-resident diners and drinkers.
Managing the customer mix to ensure that all the
different types of customers are satisfied or delighted
is one of the major roles for marketing.
Over time customers can change their needs and
wants, so companies have to monitor and respond to
these changes.
37
3.4.1 Customers
Some of the customer concerns are:

Their lifestyle and habits.
Recognition of status and self-esteem.
Value for their money.
Close proximity of the hotel property.
Customer friendly services.
38
3.4.1 Customers
The hospitality company needs to study five types of
general customer markets closely. Consumer markets
consist of individuals and household that purchase
hospitality services for leisure activities, medical
needs and gatherings such as re-unions, weddings or
funerals.
Business markets buy hospitality services to facilitate
their business. This can be individual rooms for
travelers representing the company or for group
meetings the company or organization may conduct
or produce.
39
3.4.1 Customers
Government markets are made up of government
agencies that, like business, purchase hospitality
services for individual travelers and meetings.
Finally, international markets consist of those buyers
in other countries, including consumers, business,
resellers and governments. Each market type has
special characteristics that call for careful study by
the seller.
40
3.4.2 Employees
For most hospitality organizations, the local labor

market is a key resource.
The availability and quality of skilled employees who

have been educated and can be easily trained is an
important factor in delivering a quality service.
Because employees interact with customers, they can

have a major influence on the level of customer
satisfaction.
41
3.4.3 Suppliers
The hospitality companys performance is dependent
upon its suppliers.
Although marketers are not directly involved in
operational purchase decisions, marketing should
have an input into setting quality standards and
specifications.
The hospitality marketer will certainly be responsible
for handling relationships with external marketing
communication and marketing research agencies.
Trends and developments affecting suppliers can, inturn, seriously affect a companys marketing plan
42
3.4.3 Suppliers
Ex., - Suppose that a restaurant manager decides to

run a live lobster special for the weekend. The
seafood supplier is called, who promises to supply
200 lobsters for the weekend promotion. Friday
morning the supplier calls and reports that lobsters
were shorted on the shipment from the shores, and
they will not be delivered until Saturday morning.
The manager must now find and alternative source or
disappoint guests who have reservations for Friday
Night.
43
3.4.4 Intermediaries
Intermediaries are those companies who advise,
influence and make bookings for customers.
They include travel agents, tour operators, conference
placement agencies and incentive agencies.
Intermediaries are important links in the distribution
channel from the customer to the hospitality outlets.
44
For e.g. a wholesaler creates leisure packages that
include air transportation, ground transportation and
hotel accommodation. These packages are promoted
through newspaper advertisings and travel agents.
Through volume purchasing, the wholesaler receives
reduced prices, which enable the wholesaler to pay
the travel agent a commission for selling the product,
give customer a good price and produce a profit.
In choosing wholesalers, hotels must select
reputable firms that will deliver the promised product
to the customer and pay the hotel for their services.
45
Disintermediation:
The internet has created both disintermediation
and pricing transparency. Disintermediation is the
elimination of intermediaries.
Hotels have created their own internet
reservation systems, making them less dependent on
the travel agents and other intermediaries. Small
hotels can now distribute their products world-wide
over the internet.
46
3.4.5 Competitors
The competitive environment includes different kinds

of competitors:
Direct competitors these are businesses offering a
similar product or service, which is aimed at the
same customer group. Direct competitors operate in
the same geographic location and in the same (or
adjacent) product category.
47
3.4.5 Competitors
For hotels, a three-star provincial business hotel
could have a local competitor set including all
three-star hotels, and possibly some two- and fourstar hotels, within a 10-mile radius or 15 minutes
travel time. Watching, knowing and anticipating
what your competitors are doing is a vital part of
knowing your market.
Competitors offering substitute products these
are offers that potential consumers can choose
instead of a hospitality product and which satisfies
the same need (e.g. Staying at home and cooking a
meal instead of going out to a restaurant).
48
3.4.6 Public
The location of a hospitality premises and the

size/scale of the company will determine the
character of the organizations (also called publics)
with which the organization interacts.
49
3.4.6 Public
This public will include:

Local government authorities (who enforce health
and safety, hygiene and planning regulations).
Other businesses and people who live in the
neighborhood (some of whom may also be
customers).
Community, educational, religious, social and
voluntary institutions.
Leisure, sporting and tourism attractions.
The local media.
50
3.4.6 Public
We identify seven types of public:

Financial public influence the companys ability to
obtain funds. Banks, investment houses and
stockholders are the major financial public.
Media public carry news, features and editorial
opinions. They include newspapers, magazines,
radio and television stations.
Government public. Management must take
government developments into account. Marketers
must often consult the companys lawyers on issues
of product safety, truth in advertising and other
matters.
51
3.4.6 Public
Citizen-action public - A companys marketing
decisions may be questioned by consumer
organizations, environmental groups, minority
groups and others. Its public relations department
can help it stay in touch with consumer and citizen
groups.
Local public include neighborhood residents and
community organizations. Large companies usually
appoint a community relations officer to deal with
the community, attend meetings, answer questions
and contribute to worthwhile causes.
52
3.4.6 Public
General public - The publics image of the
company affects its buying.
Inter public - This includes workers, managers,
volunteers and the board of directors. Large
companies use newsletters and other means to
inform and motivate their internal public. When
employees feel good about their company, this
positive attitude spills over to external public.
53
3.5 Special Characteristics of Service Marketing

A company can prepare marketing plans for the
major public as well as the customer market,
e.g. In order to create goodwill or favorable word
of mouth, casino resorts in Las Vegas address how
they are making efforts to conserve water when
they announce plans for a new resort. They know
the local residents and local government will be
concerned about this issue.
54
3.5.1 Seasonality & Demand Fluctuation

Seasonality refers to the fluctuations and demand in
any given period. In hospitality operations,
seasonality can occur at:
Different seasons of the year,
Different months of the year,
Different times of the week,
Different times of the day.
The demand for business accommodation is highest
during the middle of the week outside the peak
holiday periods of Easter, summer and
Christmas/New Year.
55
3.5.1 Seasonality & Demand Fluctuation

Country hotels can have a poor midweek winter
business but achieve high occupancies at the
weekends, when city hotels can be quiet.
Restaurants can be full with customers on a busy
Saturday night and empty on a Monday evening.
The under-utilization or over-utilization of capacity
creates operational difficulties. Sudden unexpected
increases in customers can lead to production
problems, unacceptable waiting times and
dissatisfied customers.
56
3.5.2 Intangibility
Services are described as intangible products,
meaning that they cannot be experienced - heard,
seen, smelt, tasted or touched prior to being
purchased.
Unlike shopping for a personal stereo or buying a
motorcar, hospitality consumers cannot really
examine competing hotel, restaurant or leisure
products without entering into a purchase contract
and buying the product.
57
3.5.2 Intangibility
For example, they cannot stay overnight in a hotel
and test out the rooms without being expected to
pay first. Marketing intangibles create difficulties
for the service provider.
Customers often sense a higher level of risk, and
also find it difficult to assess quality. Customers
need to be provided with information to help them
to choose an appropriate hospitality outlet to satisfy
their particular needs and wants.
58
3.5.2 Intangibility
The challenge for marketers is how to provide such
information in a way that will encourage customers
to choose their offer without raising customer
expectations too high, and then failing to deliver
customer satisfaction.
The role of marketing communications in designing
effective promotional material to generate
appropriate bookings is crucial.
59
3.5.3 Perishability
Everyone working in hospitality knows that you

cannot sell last nights bedroom tonight.
Hotels and restaurants have a fixed number of
rooms and seats available each day or night.
Unlike manufactured products, which can be stored
in warehouses, services cannot be stored; this
feature of service industries is called perishability.
The difficulty of hospitality companies is how to
manage the capacity in fluctuating demand pattern.
Hospitality managers recognize that managing the
inventory is a critical issue in optimizing customer
satisfaction, sales and profitability.
60
3.5.3 Perishability
The key marketing principle is to ensure that the
price at peak demand times is set to deliver the
maximum return to the company, provided it is
compatible with customer satisfaction.
In low season periods, the aim is to generate
additional sales by developing attractive
promotions.
Managing the booking process to ensure that the
business achieves this balance is essential.
61
3.5.4 Inseparability
Customers have to be present to consume the

hospitality product. The simultaneous production
and consumption of services means that hospitality
employees are an important part of the hospitality
product. Equally, customers themselves play a
significant part in the hospitality product by
enhancing or spoiling the atmosphere for other
customers. These factors mean that customer
interaction with hospitality staff and other
hospitality guests provides a variety of
opportunities to influence customer satisfaction
positively or negatively.
62
3.5.4 Inseparability
Ways to manage the problems of inseparability
include:
Ensuring that customer segments are compatible.
Ensuring that the operations system is suitable for
the projected market demand.
Adopting appropriate booking policies.
Organizing effective queuing systems
Training staff effectively.
63
3.5.5 Variability
Partly as a result of inseparability, hospitality
operations suffer from considerable fluctuations in
the standards of delivery of the service. This is
called variability, and is influenced by human
factors.
Services comprise a high element of interaction
between customers and staff; indeed, every service
performance is a unique event.
Human interaction cannot be standardized, and
consequently it is impossible for service companies
to deliver a totally non-variable experience.
64
3.5.5 Variability
The difficulties arising out of variability are
considerable:
Imagine that the same customers order the same
meal, which is cooked by the same chef and served
by the same staff, in the same restaurant, at the
same time of the week. The resulting meal
experience can be very different from one
week(possibly perfect) to the next (possibly
disastrous)!
65
3.5.5 Variability
Companies respond to this problem of variability
by trying to standardize their operations and
training their staff to perform according to the
companys standard operating procedures ( SOPs)
but with varying degrees of success.
66
3.5.6 Independence
Tourists make a variety of travel purchase decisions
in one trip, and their overall satisfaction with a visit
is based upon a complex set of evaluations of
different elements including the travel
arrangements, accommodation, attractions and
facilities of a destination. The choice of hospitality
products is only one element on which the
consumer needs to decide.
Hotel accommodation sales in particular are
influenced by the consumers choice of other
tourism products. First and foremost is the tourists
choice of destination.
67
3.5.6 Independence
The generation of demand for some hospitality

operations is directly connected to the demand for
complementary tourism products i.e. the demand
is interdependent.
The response to interdependency is that individual
businesses, regardless of the tourism sector they
operate in, their size or ownership, have to
cooperate in the promotion of their destination.
Destination marketing organizations work closely
together with local government and tourism
authorities to promote demand for tourism in their
own particular area.
68
3.5.7 Supply Exceeds Demand

The hospitality industry is frequently described as a
fragmented industry with low barriers to entry.
Indeed, many of todays great brands (Hilton,
Marriott, and McDonalds) were originally small
companies developed by visionary entrepreneurs.
Although regulations obviously vary in different
countries, government planners have generally
welcomed the development of sustainable tourism.
When supply exceeds demand the competitive
environment becomes more intense, and price
competition can affect all firms profitability.
69
3.5.8 High Fixed Costs

The cost structure of hospitality firms influences
marketing activity. Hospitality businesses are
capital, labor and energy intensive.
Typical hospitality firms have high property costs
and also employ large numbers of staff, many of
whom are fulltime, permanent employees.
These costs do not change; they are fixed
regardless of the number of customers using the
premises. During periods of low demand, high
fixed costs erode the profitability of the business.
70
3.5.8 High Fixed Costs

Companies need to generate sales to help make a
contribution towards the fixed costs.
The marketing response to seasonality and high
fixed costs is to design attractively priced
promotions to stimulate sales in the low season.
71
3.6 Responding to the Market Environment

Many companies view the marketing environment
as an "uncontrollable" element to which they must
adapt. They passively accept the marketing
environment and do not try to change it. They
analyze environmental forces as that will help the
company avoid the threats and take advantage of
the opportunities that the environment provides.
Other companies take an environmental
management perspective.
72

Some firms take aggressive action to affect the
public and forces in their marketing environment.
Lobbyists are hired to influence legislation
affecting their industries and to stage media events
to gain favorable press coverage.
They run advertorials to shape public opinion.
They press lawsuits and file complaints with
regulators to keep competitors in line. They form
contractual agreements to control their distribution
channels better.
73

Marketing Management cannot always affect
environmental forces; in many cases, it must settle
for simply watching and reacting to the
environment.
e.g. A company would have little success trying to
influence geographic population shifts, the
economic environment, or major cultural values.
But whenever possible, smart marketing managers
take a proactive rather than a reactive approach to
the public and forces in their marketing
environment.
74
3.7 Environmental Scanning

The following steps are involved:
1. Determine the environmental areas that need to
be monitored.
2. Determine how the information will be collected,
including information frequency and who will be
responsible.
3. Implement the data collection plan.
4. Analyze the data and use them in the market
planning process. Part of the analysis is weighing
the importance of the trends so the organization can
keep the trends in proper perspective.
75
3.8 Using Information about the Marketing

Environment
It is never sufficient simply to collect data about the
environment. Information must be reliable, timely
and used in decision making. As marketing
personnel, we are to make some intuitive leaps
because of the creative aspects of our characters.
Nevertheless, we need enough information to make
reasonable decisions, enough good data so that we
can let our judgments move beyond the obvious,
traditional interpretations we have learned as
professionals.
76
3.8 Using Information about the Marketing

Environment
Researchers must put less emphasis on data and
more on the interpretations of those data. They
must work towards turning data into useful
information.
Collecting data for its own value is like collecting

stamps. It is a nice hobby but it does not deliver the
mail.
77
THANK YOU !!
78
Chapter 4
UNDERSTANDING GUESTS
Compiled by Ms. Madhuri
Chapter 4
Understanding Guests
able to understand:
Understand the core concepts of hospitality
consumer, and organizational guests, behavior.
Discuss the role of guest expectations.
Identify the factors that influence the hospitality
consumer buyer decision-making process.
Chapter 4
Understanding Guests
Explain the principles of segmenting demand in
hospitality markets.
Describe hospitality segmentation variables.
Evaluate the characteristics of hospitality target
markets.
4.1 Introduction
Today's market place has become very competitive
with thousands of hotels and restaurants.
In addition, during recent years the hospitality and
travel industries have undergone globalization.
4.1 Introduction
The result is a fiercely competitive international
market with companies fighting for their share of
consumers.
To win this battle, they invest in research that will
reveal what guests want to buy, which locations they
prefer, which amenities are important to them, how
they buy and why they buy.
4.1 Introduction
India is surely not lagging behind. The Marketing
Directors are banking on the terminology, Atithi
Devo Bhava and understanding the deeper meaning
of the word and most of all implementing it.
In order to introduce this fact in a different light, the
chapter has been as Understanding Guests and not
consumer Behaviour.
4.1.1. Understanding Guests

Guest versus Guests. A guest implies an ongoing
relationship. We show hospitality when we greet our
guests we want them to come back, we treat them
special and make them feel welcome.
A lot of people that work in this business look at the
people who come into the restaurant as guests; a onetime transaction.
The really successful people look at it as a
relationship an ongoing relationship. Make
marketing decisions based on this relationship. All of
the money in the restaurant business is based on
ongoing repeat transactions.

If one person has a WOW experience at your
restaurant they will tell five other people and at least
one of those will turn into a loyal guest as well.
When you look at your business in the long-term, a
comfort area for your guests, you make different
decisions about your business and your marketing.

You make decisions based on the desire to get more
loyal guests to come in because they are going to be
spending more money in your restaurant over their
lifetime.
The thought process about how you view your guests
and how you treat them and the decisions that you
make based on that has to be a long-term view of
ongoing transactions.

Since youre in the marketing business you realize
the importance of direct marketing and focus on it.
What are the things that are important in the direct
marketing and what do you need to focus on in terms
of your marketing?
What is the definition?
What do you need to be thinking about?
10
4.1.2. Knowing v/s Understanding Your Guests

There's a difference between knowing who your
guests are and understanding your guests.
You need to do both.
Knowing your guests: Information typically collected
by a business - means you know who they are
demographically, what content they're reading, and
so on.
Understanding guests helps businesses deliver an
online product with meaningful and compelling value
propositions that meet not only their current needs
but also their evolving and future needs.
11
4.1.3. Understanding
Guest Expectations
An important concept for marketers is guests

expectation. Guests have expectations of hospitality
encounters, which marketers must meet if guests are
to be satisfied.
12
Guest Expectations
Guests beliefs: Guests form beliefs about what a

hospitality experience will be like. Guests beliefs are
formed by a combination of different influences,
including culture, reference groups, word-of-mouth,
previous experience, marketing communication, and
individual personal characteristics.
13
Guest Expectations
There have been a number of attempts to understand
and classify expectations. One of those schemes
suggests that there are four different types of
expectation:
1. The ideal level what can be.
2. The predicted level what will be.
3. The minimum tolerable what must be.
4. The deserved level what should be.
(This is the level that guests think is appropriate given
what they have invested in finding and buying the
product).
14
4.2. Influences on
Guest Behavior
The amount of disposable income consumers have, to
spend varies according to environmental conditions.
When countries are at peace, economies are growing
and there are many employment opportunities,
consumers are more optimistic about the future.
These factors create the conditions where consumers
can enjoy real increases in disposable income and
Consumer confidence grows higher, and they are
likely to spend more on hospitality products.
15
4.2. Influences on
Guest Behavior
Influences on individual consumer buyer behavior
can be categorized under three broad headings:
Socio-cultural influences,
Individual differences,
Contextual circumstances.
16
4.2.1. Cultural Characteristics

Affecting Consumer Behavior
Consumer purchases are strongly influenced by
cultural, social, personal and psychological
characteristics. These factors cannot be controlled by
the marketer, but they must be taken into account.
Cultural factors exert the broadest and deepest
influence on consumer behavior. We examine the role
played by buyer's culture, subculture and social class.
Culture is the most determinant of a person's wants
and behavior. It comprises the basic values,
perceptions, wants and behaviors that a person learns
continuously in society.
17
4.2.1. Cultural Characteristics

Affecting Consumer Behavior
There are several other factors under the Cultural
Characteristics which are stated below:
1. Subculture,
2. Consumer Behavior across International Cultures,
3. Social Class,
4. Social Factors,
5. Groups & Online
Social Networks,
6. Family,
7. Roles & Status,
8. Online Social Networks.
18
4.2.2. Personal Factors
1.
2.
3.
4.
5.
A buyer's decisions are also influenced by personal

characteristics such as:
Age & Life-Cycle Stage,
Occupation,
Economic Situation,
Lifestyle,
Personal & Self Concept.
19
4.2.3. Psychological Factors
A person's buying choices are also influenced by four

major psychological factors which are stated as
follows:
Motivation,
2. Perception,
3. Learning,
4. Beliefs & Attitudes.
1.
20
4.3. The Buyers

Decision-Making Process
1.
2.
3.
4.
5.
If marketers are to influence customer demand,

they need to understand how customers make
buying decisions. A consumer buys a product only
after knowing the product, uses, price, shelf life,
etc. The buyer decision process consists of five
stages stated below:
Need Recognition,
Information Search,
Evaluation of Alternatives,
Purchase Decision,
Post-purchase Behavior.
21
4.4. Practical Approaches

The Practical Approaches are listed below:
1) 4.4.1. Listening to build a great business.
a. You want to listen to your guests and they want to
be heard.
b. The Rise of Social Feedback.
c. Social Media is Changing Guest Behavior.
d. Stand in your guests shoes.
e. Staple yourself to a guests order.
f. Field diverse guests teams.
g. Learn together with guests.
h. Lean forward and anticipate.
22
4.4. Practical Approaches

The Practical Approaches are listed below:
2) 4.4.2. Understanding Guests.
a. Guests need to feel heard and understood.
b. Guests need to feel a sense of belonging and
contributing.
c. Guests need to have stability and control.
d. Guests need to experience variety and
significance.
e. Guests need to experience growth, opportunity
and development.
23
Ch.1 An Introduction to Hospitality Industry

1.1 Introduction to Hospitality Industry
The hospitality field, by definition, is a service industry, derived from the Latin word hospitare meaning
to receive as a guest. Its task isto create shareholder wealth by servicing and satisfying guests.
Industrysegments include, among others: hotels, restaurants, private clubs, managedfood service, event
planning, tourism related businesses, and travelproviders. More often than not, the product purchased is
either intangibleor the perceived quality of the product purchased is impacted by the servicemethod in
which it was received.
Hospitality is the act of kindness in welcoming and looking after the basic needs of guests or strangers,
mainly in relation to food, drink and accommodation.
1.2 Marketing:
Today marketing isnt simple business function; Its a philosophy, a way of thinking, and a way of
structuring your business and your mind. Marketing is much more than a new ad campaign. The task of
marketing is never to fool the customer or endanger the companys image. Marketings task is to provide
real value to targeted customers, motivate purchase, and fulfill consumer needs.
1.3 Definition of Marketing

Here are some definitions by renowned authors in the field of Marketing
Marketing is the social process by which individuals and organizations obtain what they need
and want through creating and exchanging value with others.
This definition is based upon a basic marketing exchange process and recognizes the importance
of value to the customer.
Theprocess by which companies create value for customers and build strong customer
relationships in order to capture value from customers in return.
Kotler & Armstrong ( 2010)
Defining the term MARKET : A market is , the set of actual and potential buyers of a product or
services.
1.4 Customer Orientation:

Customer orientation is of ultimate importance to deliver value added products. There are four
basic stages of customer orientation a) Develop - has to be done keeping customer needs into mind.
b) Manufacture - As per the product, the manufacturing should be such that it gives the best
products to the customer in the given time.
c) Market - Identifying and targeting the right customer, customizing the product.
d) Deliver - Deliver to the target customer, making the distribution easy.
1.5 Core concept of Marketing:

The marketing concept holds that the key to achieving organizational goals consists of being more
effective than competitors in integrating marketing activities toward determining and satisfying the needs
and wants of target markets. Meaning delivering the product that is better than the competitor and as per
the requirement of the customer.
1.6 Pillars of Marketing Management:

Marketing management is the analysis, planning, implementation and control of
programmes designed to create, build and maintain beneficial exchanges with target buyers for the
purpose of achieving organizational objectives. (Managing the marketing activities in a planned manner).
1.6.1 The Production Concept:The philosophy that consumers will favour products that are available,
that management should therefore focus on improving production and distribution efficiency.The
production orientation is based on conditions of mass production and limited consumer choice. This leads
to an inward-looking focus as management strives to control costs, improve quality and efficiency, and
increase volume.
1.6.2 The Product Concept:The idea that consumers favour products that offer the most quality,
performance and features, and that the organization should therefore devote its energy into making
continuous product improvements; a detailed version of the new product idea.
Companies adopting a product orientation believe that their customers can only be satisfied with a
particular type of product. Management concentrates on developing better versions of the existing
product, but fails to recognize that customers could be satisfied better by different types of products.
1.6.3 The Selling Concept:The selling concept determines that consumers will not buy enough of the
organisations products unless the organization undertakes a large scale selling and promotion
effort.Companies adopt the selling orientation when their products are competing in markets where
supply exceeds demand, and growth is low or declining.
1.6.4TheMarketing Concept:Achieving organizational goals depends on determining the needs and

wants of its target market and the marketing orientation is considered by some authors to be the same as
the marketing concept. It is an alternative strategy to the selling orientation, to cope with similar
economic conditions (i.e. surplus capacity leading to a fiercely competitive environment).
1.6.5 The Societal Marketing Concept: The idea that the organization should determine the needs,
wants and interests of target markets and deliver the desired satisfaction more effectively and efficiently
than competitors in a way that maintains or improves the consumers and society's well-being.A societal
marketing orientation suggests that companies should become proactive in the community, adopting a
good neighbor policy in their companys best interest. Anumber of hospitality organizations have
genuinely adopted a societal marketing
1.7 An introduction to Hospitality Marketing

In the hotel industry, marketing and sales are often thought to be the same, and no wonder: The sales
department is one of the most visible in the hotel. Sales managers provide prospective clients with tours
and entertain them in the hotels food and beverage outlets. Thus the sales function is highly visible,
whereas most of the non-promotional areas of the marketing functions take place behind closed doors. In
the restaurant industry, many people confuse marketing with advertising and sales promotion.
Ch. 2 ELEMENTS OF SERVICE MARKETING

2.1 Definition of Service Marketing:
A product is tangible (i.e. material) since you can touch it or own it. A service tends to be an experience
that is consumed at the point where it is purchased and cannot be owned since it quickly perishes. And so,
service marketing can be defined as the art and science of finding, retaining, and growing profitable
customers/ consumers. Marketers talk about the nature of a service as being inseparable, intangible,
perishable, homogenous and variable.
2.1.1 Inseparable: Inseparable- from the point where it is consumed, and from the provider of the
service. Service inseparability also means that customers are part of the product. In most hospitality
services, both the service provider and the customer must be present for the transaction to occur.
2.1.2 Intangible: Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled
before they are purchased.
2.1.3 Perishable: A major characteristic of services; they cannot be stored for later use.
2.1.4 Variable: Services are highly variable. Their quality depends on who provides them and when and
where they are provided.
2.1.5 Homogeneous: Homogeneity is where services are largely the same (the opposite of variability
above). Standardization is largely embodied by the large global brands which produce services.
2.2 Hospitality products

Products in the hospitality are those physical tangible items which are offered for sale.
The products in the hospitality business under this definition are:The hotel,the guest rooms, the
restaurants and the food served in them, the drinks that are sold in bars, mini-bars in rooms, the recreation
facilities like tennis courts, water sports, jogging tracks, television in rooms, etc., the health and fitness
facilities like gymnasiums, massage parlors, yoga and aerobic rooms, the beauty facilities like salons for
men and women, the shopping facilities like the shopping arcade, malls and emporiums, the entertainment
facilities like water courses, childrens parks, barbeque pits, banquet halls, night clubs, supper theatre, etc.
2.3 Range of services provided by hotels and restaurants

Services are provided by people who then assume an importance in the service industry. It is often said
that the people make the difference between hotels and restaurants. It is their quality and warmth of
service that makes the cutting edge.
Front office services
Uniformed services
Housekeeping services
Food & Beverage services: This includes - Room service, Restaurant service, The Bar
service&Kitchen services.
Laundry services
Event services
Health club & Recreational services - Beauty services
Guest relation
Concierge services
2.4 Elements of Service Marketing:

A selection of servicesdeveloped to offercustomers a choice within a particular range. The elements of a
services marketing mix are sometimes called the seven Ps: the four Ps of the marketing mix, plus three Ps
of services: people / participants, physical evidence, and process ( of service assembly).
2.4.1 Product - In the case of services, the "product" is intangible, heterogeneous and perishable.
Moreover, its production and consumption are inseparable.
2.4.2 Pricing Due to costs such as raw material cost, labor cost, overhead costs, Pricing of services is
tougher than pricing of goods.
2.4.3 Place - Service providers have to give special thought as to where the service is provided.
2.4.4 Promotion - Promotion is crucial in attracting customers in a segment where the services
providers have nearly identical offerings.
2.4.5 People - People are a defining factor in a service delivery process, since a service is inseparable
from the person providing it.Staff requires appropriate interpersonal skills, aptitude, and service
knowledge in order to deliver a quality service.
2.4.6 Process - The process of service delivery is crucial since it ensures that the same standard of
service is repeatedly delivered to the customers.
2.4.7 Physical Evidence - Since services are intangible in nature, most service providers strive to
incorporate certain tangible elements into their offering to enhance customer experience. Restaurants
invest heavily in their interior design and decorations to offer a tangible and unique experience to their
guests.
2.5Elements of hotel marketing ( A practical perspective):
2.5.1 Popularity - The popularity of the hotel is how much search there is for your hotel. Its a simple
factor and can be measured through basic tools like Google Analytics or other site analytics tools. The
searches for your brand are the most qualified leads you can get and the most important long term strategy
is to increase those searches.
2.5.2 Rates / Availability - It goes without saying that your rates and availability are the number one
factor that will get you bookings (or not). In fact per Googles research (Travel Hotel Consumers of Nov
2010) 34% of the people who booked, chose a specific site as per the choice.
2.5.3Brand Protection. - No matter the popularity of your hotel (small or large) you need to protect
your brand. Remember these are your most valuable visitors. Find out how many third parties are
advertising on your name and make sure you are always before them. Additionally, there are ways you
can limit others to advertise on your name and you should demand your marketing department/agency to
take action on these.
2.5.4Design.The design of the website can be extremely creative and different from the rest of the hotel
sites or a simple one only to generate more bookings withou
Ch. 3 Environmental Influences on Hospitality Organisation

3.1 Introduction:
The authors have divided marketing environment into macro environment and macro environment.
The micro environment consists of factors within and close to the company that affect its ability to serve
its customers, the company itself, marketing channel firms, customer markets and a broad range of
publics. The macro environment consists of the larger societal forces that affect the entire micro
environment, that is, demographic, economic, political, natural, technical, competitor and cultural forces.
Both macro- and micro-environmental factors influence the marketing of a hospitality business.
Purpose of General Environmental Analysis
Organizations are affected by conditions in the environment.
Managers need to be aware of these conditions in order to
Take advantage of opportunities that can lead to higher profits.
3.3 The macro-environment:

The macro-environment includes political, economic, socio-cultural, technological and environmental
forces, and is therefore known as the PESTE environment. In addition to this, demographic, competitor,
and cultural forces also make the managers think before designing any marketing strategy.
3.3.1 Political: Examples include:Planning regulations, Licensing laws, Local, regional or national
government taxes, Regulation of marketing communications, Monopolies and Restrictive
Practices Act, consumer Protection Act, Labour laws. Laws related to environmental issues
3.3.2 Economic: The economic environment includes all those activities that influence the wealth and
income of the population. Examples of economic influences are: the state of the economy, the
structure of employment and the level of unemployment, the rate of inflation, the exchange rate.
3.3.3 Socio-cultural: The socio-cultural environment influences consumers purchase and

consumptionbehavior. Acountrys socio-cultural environment is a complex mix of its geography,climate,
history, religion, and ethnic make-up.
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3.3.4 Demographic changes (changes in the make-up of a population): Demography is the

study of human population in terms of age, gender,density, location, race, occupation, etc. Demographic
changes also make a significantimpact on market demand in hospitality.
3.3.5 Technological: The technological environment in hospitality is closely associated with

innovationand developments in information communications technology (ICT). The current rate of
technological change is fast, and new developments are constantlyaltering the technological environment.
3.3.6Environmental: Environmental factors have become more important in all parts of the world
aspeople recognize the impact tourists have on the planet. In particular, mass tourismhas become much
more controversial.
3.4 The micro-environment:

The micro-environment includes internal company factors: customers, employees, suppliers and
intermediaries.
3.4.1Customers: Hospitality companies typically target a broad mix of customers, including

businessand leisure hotel residents, non-resident diners and drinkers. Managing the customermix to
ensure that all the different types of customers are satisfied ordelighted is one of the major roles for
marketing.
3.4.2Employees: For most hospitality organizations, the local labor market is a key resource.
Theavailability and quality of skilled employees who have been educated and can beeasily trained is an
important factor in delivering a quality service. Because employeesinteract with customers, they can have
a major influence on the level of customersatisfaction.
3.4.3Suppliers: The hospitality companys performance is dependent upon its suppliers. Suppliers are
firms and individuals that provide the resources need by the company to produce its goods and services.
Trends and developments affecting suppliers can, in-turn, seriously affect a companys marketing plan.
3.4.4Intermediaries: Intermediaries are those companies who advise, influence and make bookingsfor
customers. Some of the intermediaries Marketing Intermediaries, Disintermediation, Financial
intermediaries.
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3.4.5Competitors: The competitive environment includes different kinds of competitors:Direct

competitors, Competitors offering substitute products, indirect competition.
3.4.6Publics:The location of a hospitality premises and the size/scale of the company willdetermine the
character of the organizations (also called publics) with which theorganization interacts. These publics
will include: Local government authorities, other businesses and people who live in the neighborhood
(some of whom may also be customers), Community, educational, religious, social and voluntary
institutions, leisure, sporting and tourism attractions, local media.
3.5 Special characteristics ofservices marketing

The special characteristics faced by services marketers (including of course hospitalitymarketers) are
seasonality, intangibility, perishability, inseparability, variability,interdependence, supply exceeding
demand, and high fixed costs. You can usethe mnemonic SIPIVISH to remember the characteristics.
3.5.1 Seasonality and demand fluctuation: Seasonality refers to the fluctuations and demand in
any given period. In hospitalityoperations, seasonality can occur at:Different seasons of the year,
different months of the year, different times of the week, and different times of the day.
3.5.2 Intangibility: Services are described as intangible products, meaning that they cannot be
experienced - heard, seen, smelt, tasted or touched prior to being purchased.
3.5.3 Perishability: Unlike manufactured products, which can be stored in warehouses, services cannot
be stored; this feature of service industries is called perishability. The difficulty for hospitality
companies is how to manage their capacity (the inventory) with a fluctuating demand pattern.
3.5.4 Inseparability: Customers have to be present to consume the hospitality product and the
simultaneousproduction and consumption of services means that hospitality employees are an important
part of the hospitality product.
3.5.5 Variability: Partly as a result of inseparability, hospitality operations suffer from considerable
fluctuations in the standards of delivery of the service. This is called variability, and is influenced by
human factors.
3.5.6 Interdependence: Hotel accommodation sales are influenced by the consumers choice of other
tourism products. Like, the tourists choice of destination, the ease and accessibility of transport to and
3|Page
from the area, the image of the destination, the price, and word of mouth comments. The generation of
demand for some hospitality operations is directly connected to the demand for complementary tourism
products i.e. the demand is interdependent.
3.5.7 Supply exceeds demand: The hospitality industry is frequently described as a fragmented
industry with low barriers to entry. Despite record numbers of people traveling for business and leisure
purposes, the growth in hospitality capacity has not always been matched by a sufficient growth in
demand. When supply exceeds demand the competitive environment becomes more intense, and price
competition can affect all firms profitability.
3.5.8 High fixed costs: The cost structure of hospitality firms influences marketing activity. Hospitality
businesses are capital, labor and energy intensive.The marketing response to seasonality and high fixed
costs is to design attractively priced promotions to stimulate sales in the low season.

Marketing Management cannot always affect environmental forces; in many cases, it must settle for
simply watching and reacting to the environment. e.g. a company would have little success trying to
influence geographic population shifts, the economic environment, or major cultural values. But
whenever possible, smart marketing managers take a proactive rather than a reactive approach to the
public and forces in their marketing environment.
3.7 Environmental Scanning

It is done by, determining the environmental areas that need to be monitored, determine
how the information will be collected, including information frequency and who will be
responsible, implement the data collection plan, analyze the data and use them in the
market planning process.
3.8 Using Information about the Marketing Environment
It is never sufficient simply to collect data about the environment. Information must be reliable, timely
and used in decision making. As marketing personnel, we are to make some intuitive leaps because of the
creative aspects of our characters. Nevertheless, we need enough information to make reasonable
decisions, enough good data so that we can let our judgments move beyond the obvious, traditional
interpretations we have learned as professionals. Researchers must put less emphasis on data and more on
the interpretations of those data. They must work towards turning data into useful information. Collecting
data for its own value is like collecting stamps. It is a nice hobby but it does not deliver the mail.
4|Page
5|Page
Ch. 4 Understanding Guests
4.1 Introduction:
Today's market place has become very competitive with thousands of hotels and restaurants. In addition,
during recent years the hospitality and travel industries have undergone globalization. Hotel companies
headquartered in nations as diverse as Germany, U.S. and Hong Kong compete aggressively in markets
such as Singapore and Japan. The result is a fiercely competitive international market with companies
fighting for their share of consumers. To win this battle, they invest in research that will reveal what
guests want to buy, which locations they prefer, which amenities are important to them, how they buy and
why they buy.
4.1.1 Understanding Guests: Customers versus Guests. A guest implies an ongoing relationship. In
hotels, we show hospitality when we greet our guests we want them to come back, we treat them special
and make them feel welcome.
When you look at your business in the long-term, a comfort area for your guests, you make different
decisions about your business and your marketing. You make decisions based on the desire to get more
loyal guests to come in because they are going to be spending more money in your hotel over their
lifetime.
4.1.2 Knowing vs. Understanding Your Guests: Knowing your guests -- information typically
collected by a business -- means you know who they are demographically, what content they're
reading, and so on. Most companies do a good job on this front.
When it comes to understanding guests, however, many companies come up short. Understanding guests
helps businesses deliver a product with meaningful and compelling value propositions that meet not only
their current needs but also their evolving and future needs.
4.1.3 Understanding guests expectations: An important concept for marketers is guests

expectation. Guests have expectations of hospitality encounters, which marketers must meet if guests are
to be satisfied.
4.2 Influences on consumer (Guest) buyer behavior:
1|Page
The company that really understands how consumers will respond to different product features,
prices and advertising appeals has a great advantage over its competitors. As a result, researchers
from companies and universities are constantly studying the relationship between marketing
stimuli and consumer response. Their starting point is the model of buyer behavior.
4.2.1 Cultural characteristics affecting consumer behavior: Culture is the most basic
determinant of a persons wants and behavior. It comprises the basic values, perceptions, wants
and behaviours that a person learns continuously in a society. Subculture, social class, social
factors, internet networking, family, roles and status, are all the characteristics falling under
cultural factors affecting buyer behavior.
4.2.2Personal factors: A buyer's decisions are also influenced by personal characteristics such as age,
life-cycle stage, occupation, economic situation, lifestyle, personality and self-concept.
4.2.3 Psychological factors: A person's buying choices are also influenced by four major
psychological factors Motivation, perception, learning, beliefs & attitudes.
4.3 The Buyer decision-making process:

If marketers are to influence customer demand, they need to understand how customers
make buying decisions. A consumer buys a product only after knowing the product, uses,
price, shelf life, etc. The buyer decision process consists of five stages:
1. NEED RECOGNITION:
The buying process starts when buyer recognizes a problem or need. Marketers must determine the
factors and stimulations that trigger consumer problem recognition. They should to find out what kinds of
needs or problems led them to purchase an item, what brought these needs about and how they led
consumers to choose this particular product.
2. INFORMATION SEARCH:
By gathering information, consumers increase their awareness and knowledge of available choices and
product features. A company must design its marketing mix to make prospects aware of and
knowledgeable about the features and benefits of its products or brands. If it fails to do this, it has lost its
2|Page
opportunity to sell the customer. A company must also gather information about competitors and plan a
differentiated appeal.
Marketers should carefully identify consumers' sources of information and the importance of each source.
Consumers should be asked how they first heard about the brand, what information they received and the
importance they place on different information sources. This information is helpful in preparing effective
communication.
3. EVALUATION OF ALTERNATIVES
We have seen how the consumer uses information to arrive at a set of final brand choices. But how does
the consumer choose among the alternatives? How does the consumer mentally sort and process
information to arrive at brand choices? Unfortunately there is no simple and single evaluation process
used by all consumers or even by one consumer in all buying situations. There are several evaluation
processes. The consumer arrives at attitudes toward the different brands through some evaluation
procedure. One or more of several evaluation procedures are used, depending on the consumer and the
buying decision.
4. PURCHASE DECISION
In the evaluation stage, the consumer ranks brands in the choice set and forms purchase intentions.
Generally, the consumer buys the most preferred brand, but two factors can come between the purchase
intention and purchase decision which are Attitude of others & Unexpected situational factors.
Purchase intention is influenced by unexpected situations.
5. POSTPURCHASE BEHAVIOR
The marketer's job does not end when the customer buys a product. Following a purchase, the consumer
will be satisfied or dissatisfied and will engage in post-purchase actions of significant interest to the
marketer. What determines post-purchase satisfaction or dissatisfaction with a purchase? The answer lies
in the relationship between consumer expectations and perceived product performance. If the product
matches expectations, the consumer will be satisfied. If it falls short, the consumer will face
dissatisfaction.
Understanding the consumers' needs and buying process is the foundation of successful marketing. By
understanding how buyers proceed through problem recognition, information search, evaluation of
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alternatives, the purchase decision and post purchase behavior, marketers can acquire many clues as to
how better meet buyer needs. By understanding the various participants in the buying process and major
influences on buying behavior, marketers can develop a more effective marketing program.
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Chapter 1

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1.1 Introduction to Hospitality Industry

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The Hospitality Industry include the companies or

The hospitality industry is complex. It covers a

There are four sectors of the hospitality industry:

As one can see, the picture clearly shows, the magnet

1.3 Definitions of Marketing

Marketing is the social process by which individuals

The process by which companies create value for

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Marketing is the management process for identifying,

Marketing is a professional activity directed at

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A market is , the set of actual and potential buyers of

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1.4 Customer Orientation

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Development has to be done keeping customer needs

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As per the product, the manufacturing should be such

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Identifying and targeting the right customer.

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Deliver to the target customer

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1.5 Core Concept of Marketing

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1.5 Core Concept of Marketing

1.5.1 Need /Want /Demand

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Product is anything that can satisfy need/ want.

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TRANSACTION: Event that happens at the end of

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Working with markets to actualize potential

One party seeks the exchange more actively, called as

Prospect is someone whom marketer identifies as

A marketer is a company serving a market in the face

Marketing Management takes place when at least one

Marketing management is the analysis, Planning,

1.6.1 The Production Concept

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1.6.1 The Production Concept

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1.6.2 The Product Concept

The idea that consumers favor products that offer the

The product or service orientation is not linked to

1.6.2 The Product Concept

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1.6.2 The Product Concept

The product management focus is again inward

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1.6.3 The Selling Concept

The selling concept determines that consumers will

Companies adopt the selling

1.6.3 The Selling Concept