Marketing Midterm Notes PDF

Marketing - Midterm Notes Week #2: Marketing: The 6 historical perspectives The ‘simple trade’ era (2000 CE to 1850) The ‘simple trade’ era from the Common Era through the mid 19th century - More than 2000 years ago, in ancient Rome ‘markets’ existed - Stal...

Marketing - Midterm Notes Week #2: Marketing: The 6 historical perspectives The ‘simple trade’ era (2000 CE to 1850) The ‘simple trade’ era from the Common Era through the mid 19th century - More than 2000 years ago, in ancient Rome ‘markets’ existed - Stalls and trader’ involvement - Development of money The ‘production’ era (1860 – 1910) - Mass production and distribution were the focus - Demands exceeds supplies The ‘sales’ era (1910 – 1940) - The concept of ‘marketing is launched in 1910 - The focus is on ‘moving the products out’ The ‘marketing department’ era (1940 – 1960) - From manufacturing products to satisfying customers - Customers have more buying power - Customers have more speci c demand The ‘marketing company era (1960 – 2000) - The marketing department guides the company direction - All the company’s functions are focused on customers needs The ‘relationship marketing’ era (2000 – to today) Society worldwide is going faster fi - Mobility : Mobility refers to the ability to move freely and easily, often enhanced by technology, allowing people to travel or communicate from anywhere, which impacts how guests book and experience hospitality services. - Globalization: Globalization is the process of increased interconnectedness among countries and cultures, leading to a greater exchange of goods, services, and ideas, which affects the hospitality industry by creating a diverse customer base. - Digital revolution: The digital revolution describes the shift from analog technology to digital technology, transforming how businesses operate and communicate, particularly in hospitality through online bookings, digital marketing, and social media. - Media explosion: Media explosion refers to the rapid increase in media channels and content, especially through the internet and social media, allowing hospitality brands to reach and engage with customers more effectively. - Customers wants personalization: This phrase highlights the growing expectation among customers for tailored experiences and services that cater speci cally to their preferences and needs, leading hospitality businesses to focus on customized offerings. - It is the time of Individualism: This means that people increasingly value their unique identities and personal experiences, which in uences hospitality marketing strategies to highlight individualized services and authentic experiences that resonate with guests. The ‘relationship marketing’ era is today This is a time when businesses aim to build strong, long-lasting connections with their customers rather than just making one-time sales. Focus is to establish long-term satisfying relations with customers in order to foster customer loyalty. ( the goal is to create positive experiences that keep customers happy, so they feel valued and want to return. ) Focus is to encourage repeat purchases ( By fostering good relationships, businesses encourage customers to buy from them again and again, rather than going to competitors. ) fl fi  Focus is to retain customers ( The focus is on keeping customers loyal over time, which is often more cost-effective than constantly trying to attract new customers. ) The relationship marketing era emphasizes creating a loyal customer base through positive, ongoing interactions. Marketing today facts Marketing is the most important eld of knowledge in business ( Marketing is crucial because it helps businesses understand what customers want and how to attract them. ) Primary objective is to build pro table relationships. The customer is king or queen. ( The main goal of marketing is to create strong, lasting connections with customers that lead to more sales and pro ts. In this context, customers are treated like royalty—"the king or queen.” ) All employees directly or indirectly are part of the marketing effort ( Everyone in the business, whether they work in customer service, housekeeping, or management, contributes to marketing by creating a positive experience for guests. Their efforts help the business succeed. ) De nition of marketing Marketing is the science and art of exploring, creating and delivering value to satisfy the needs of a target market at a pro t. Marketing involves understanding what customers want (exploring), developing products or services that meet those needs (creating), and providing them in a way that is valuable to customers (delivering). The goal is to focus on a speci c group of customers (target market) and meet their needs while making money for the business. fi fi fi fi fi fi  The ve core concepts of marketing 1. Customer needs, wants and demands: De nition: Needs are basic requirements (like food and shelter), wants are speci c desires (like pizza or a luxury hotel), and demands are wants backed by purchasing power. Example: A customer needs a place to stay (need), wants a comfortable hotel with a pool (want), and is willing to pay for a luxury suite at a resort (demand). 2. Market offerings- products, services and experiences: De nition: Market offerings include anything that can satisfy customer needs, including physical products (like hotel rooms), services (like room service), and experiences (like a spa day). Example: A hotel offers a room (product), a complimentary breakfast (service), and a guided tour of the local area (experience). 3. Customer value and satisfaction: De nition: Customer value is the perceived bene t received from a product or service compared to its cost, and satisfaction is how well that value meets or exceeds expectations. Example: A guest feels they received great value by booking a hotel that provides excellent service, free amenities, and a comfortable stay, leading to high satisfaction. 4. Exchange and relationship: De nition: Exchange is the act of giving something of value to receive something else in return, and relationship marketing focuses on building long-term connections with customers. Example: A guest pays for a hotel stay (exchange), and in return, the hotel provides a great experience and ongoing communication to encourage future bookings (relationship). fi fi fi fi fi fi fi  5. Markets: De nition: Markets are groups of potential customers who share similar needs or wants and are willing to exchange something of value for products or services. Example: The hospitality market includes various segments, such as business travelers, families on vacation, and couples seeking romantic getaways, each with different preferences and needs. Core concept no. 1: Needs, Wants and demands: Need: A human need is a state of felt deprivation. It is something one must have to survive Examples: The need for housing, food, clothing, warmth, safety Want: Your decision to choose what is your preference. Examples: To drink a beer versus water / To eat rice versus pasta / To request a room with a view, versus without Demand: To reject compromise and get exactly what you want. The desire to own anything. The ability and the willingness to pay for it Example : Maslow hierarchy of Needs fi  Self ful llment needs: - Self- actualization De nition: This is the highest level of needs, where individuals seek personal growth, self-improvement, and the realization of their potential. Example: A person might pursue a unique travel experience, like volunteering abroad, to ful ll their desire for personal growth and self-discovery. Psychological needs: - Esteem needs De nition: Esteem needs involve the desire for respect, recognition, and a sense of achievement. People want to feel valued and appreciated. Example: A guest may feel a sense of pride and esteem by receiving an upgrade to a suite and being treated as a valued customer at a hotel. - Belongingness and love needs De nition: This level focuses on the need for social connections, love, and a sense of belonging to a group or community. Example: Guests often choose to stay at hotels that offer social spaces or group activities, where they can connect with others and feel a sense of community. Basic Need: - Safety needs De nition: Safety needs include the desire for security, stability, and protection from physical and emotional harm. Example: A guest looks for a hotel in a safe neighborhood, with security measures in place, such as keycard access and surveillance cameras. - Physiological needs De nition: These are the most basic needs necessary for survival, such as food, water, warmth, and rest. Example: A hotel must provide clean, comfortable rooms with essentials like food service, clean water, and a safe place to sleep to meet these basic needs. Maslow's Hierarchy of Needs outlines a progression from basic survival needs to higher-level psychological and self- ful llment needs, helping to understand what motivates individuals in their personal and social lives. fi fi fi fi fi fi fi fi  About needs, want and demand Marketers cannot create needs (they pre-exist) Basic human needs, like food, water, and shelter, already exist and cannot be created by marketers. These needs are inherent to all people. Marketers can in uence want. This is done in combination with societal in uencers While needs are constant, marketers can shape what people want. This is done by highlighting products and services that ful ll those needs, often in uenced by cultural trends, advertising, and social factors. Marketers can in uence demand. This is done by making products that are: appropriate – attractive / (affordable)- / available easily Marketers can increase demand for products by ensuring they are: Appropriate: Products must meet the needs of the target audience. Attractive: Marketing strategies should make products appealing through branding and promotions. Affordable: Prices should be set to match what customers are willing to pay. Available Easily: Products should be easily accessible in stores or online. Core concept no. 2: Market Offerings Combination of tangible products, services, and experience Market offerings are the combination of tangible products (physical items), services (actions provided to customers), and experiences (the overall feelings and memories created) that a business provides to satisfy customer needs. Hotel - Hosting Hotels offer not just a place to stay but also the experience of hospitality, including amenities and services that make guests feel welcomed and cared for. Plane - Frequent yer programmes Airlines provide a service of ying passengers from one place to another, but they also enhance the experience by offering frequent yer programs that reward loyal customers with points, upgrades, and bene ts. University - Education Universities offer educational programs (the tangible product) along with services like mentorship and networking opportunities, creating a valuable learning experience for students. Big Mac - Feeding with pleasure McDonald's offers a tangible product (the Big Mac) along with the service of fast food dining and the experience of enjoying a meal, making it a pleasurable and satisfying option for customers. fi fl fl fl fl fl fl fl fi  Core concept no.3: Customer value and satisfaction Value is determined by how well a product meets a customer's needs or wants relative to its cost. It can be broken down into two main components: Product Capacity to Satisfy Needs/Wants/Demands: This refers to how well the product or service ful lls what the customer is looking for. For example, a hotel room's comfort, cleanliness, and amenities contribute to its ability to satisfy a guest's need for a pleasant stay. Cost of the Product: This is the price the customer pays for the product or service. It includes the money spent as well as any perceived sacri ces, such as time or effort. Value is: The product capacity to satisfy need /want / demand + The cost of the product = satisfaction When customers feel that the value they receive from a product (how well it meets their needs) is greater than or equal to the cost they pay for it, they are likely to be satis ed. Example: If a guest stays at a hotel that offers excellent service, comfortable beds, and good amenities (high product capacity), and they feel the price they paid was reasonable (low cost), they will likely leave feeling satis ed. Customer value ‘is the difference between the bene ts that the customer gains from owning and/or using the product and the costs of obtaining the product’. ( the difference between the bene ts a customer receives from a product or service and what they have to pay to get it. ) Example: If a guest feels the price they paid for a hotel stay is worth it because of great amenities and service, they experience high customer value. Customer satisfaction ‘depends on a product’s perceived performance in delivering value relative to a buyer’s expectation. ( Customer satisfaction happens when a product or service meets or exceeds the customer’s expectations. ) Example: If a guest expects a clean, comfortable room and friendly staff and the hotel delivers this or more, they will feel satis ed. Note: Marketers cannot create customer satisfaction, unless they create customer value ( To create customer satisfaction, marketers rst need to create customer value. Without offering good value (bene ts vs. costs), customers are unlikely to be satis ed. ) fi fi fi fi fi fi fi fi fi fi  Core concept no.4: Exchange and relationship Exchange Marketing: Exchange ‘is the act of obtaining a desired object from someone by offering something in return’ ( Exchange marketing is about two parties trading something valuable with each other, like money for a hotel room. ) There must be at least two parties ( There must be two people or groups, like a guest and a hotel. ) Each party has something of value for other party ( Each must have something the other wants, like a comfortable room for money.) Each party is capable of communicating and delivering ( They should be able to discuss and complete the exchange (e.g., booking online or at the front desk). ) Each party is free to accept/reject the exchange offer (Both can agree or refuse the exchange (e.g., the guest can decide not to stay, or the hotel can deny certain requests).) Each party believed it is appropriate to deal with the other party ( Each side believes the exchange is fair and bene cial. ) Relationship Marketing: Relationship ‘the goal is to retain customers and grow their business with the company beyond simple transactions. Marketers want to build strong relationship by consistently delivering superior customer value ( Relationship marketing goes beyond single transactions, focusing on building strong, long-term relationships with customers by continually delivering high value. ) High quality (or sustainable) ( Providing consistent, high-quality experiences for guests. ) Personalized service ( Tailoring services to make guests feel special and valued, like offering room preferences or loyalty bene ts. ) Fair pricing over a period of time ( Ensuring prices are reasonable and consistent to encourage loyalty. ) Note: Marketers cannot create relationship marketing, unless they create exchange fi fi Relationship marketing starts with an exchange but aims to keep customers returning by building trust and satisfaction. exchange marketing is about a fair trade of value, while relationship marketing focuses on creating lasting bonds with customers by continually meeting their needs and exceeding their expectations. Core concept no.5: Markets Market ‘refers to the group of consumers or organisations that is interested in the product and has the resource to purchase it. Markets triggers marketing activities such as product development, research, communication, distribution, pricing, and service Services marketing Facts: Services are everywhere i.e. travels, online banking, visit to a doctor, hairdresser, school enrolment The service sector is becoming increasingly more important Necessity to establish a difference between goods services. Differences between a good and a service A good is tangible, it is an object, a device, a thing i.e. hairbrush, lap top, shoes, clothing, food A service is intangible, it is an action, an effort, a performance, a feeling i.e. bringing and advising on a menu, concierge service, car service Important note: A product is both a service and a good Characteristics 1. Inseparability Services cannot be separated from their providers ( Services are closely tied to the people who provide them, so they can’t be separated from the staff delivering them. ) Example: In a hotel, the guest’s experience depends on the service provided by the staff at that very moment—like housekeeping or reception—and can’t be “stored” or delayed. Production, distribution, and consumption takes place simultaneously. These three functions cannot be separated Production, Distribution, and Consumption Occur Together: These happen at the same time in services. The experience is created (produced), provided (distributed), and enjoyed by the guest (consumed) all at once. 2. Intangibility Services cannot be seen, tasted, felt, heard or smelled before purchase ( Services can’t be seen, touched, or tested before purchase; guests rely on reputation, reviews, or past experiences.) Example: Guests don’t have a physical “product” to examine when booking a hotel, so they trust in descriptions and photos. 3. Variability Quality of services depends on who provides them and when, where and how. It is impossible to provide similar service every time and yet, companies must strive on consistency. ( Service quality can change based on who delivers it, where, when, and how, so achieving consistency is key. ) Example: Different receptionists may provide different experiences; one may be very friendly, while another might be less welcoming. To reduce the variability, focus can be on - Employees training - Customer satisfaction monitoring - SOP’s application ( Reducing Variability can be improved by training staff, checking guest satisfaction, and following Standard Operating Procedures (SOPs) to deliver a consistent service.) 4. Perishability Services cannot be stored for later sale or use. ( Services cannot be saved for later; they “expire” if not used at the time.) Example: An empty hotel room or unused table in a restaurant for one night cannot be saved or “sold” the next day. Note: You can store goods but service get perished immediately! Inseparability, intangibility, variability, and perishability—shape how hotels and restaurants manage customer experiences and maintain quality.  Week #3: Customer-driven’ marketing strategy de nition: Offerings, plans, or strategies motivated by customer demand or expectations. A customer-driven marketing strategy focuses on creating products, services, and experiences that are shaped by what customers want and need. A customer-driven marketing strategy means putting the customer’s desires and expectations at the center of all marketing decisions to increase satisfaction and loyalty. Key Points: 1. Understanding Customer Needs: Businesses research what customers are looking for and what they expect. 2. Creating Relevant Offerings: Products or services are then designed speci cally to meet those needs. 3. Adapting to Feedback: Companies continually listen to customer feedback and adjust their offerings to keep customers satis ed. Example: A hotel might create a special family package because many guests are asking for child-friendly activities and amenities. - The Five core concepts are related with the ‘Customer-driven’ marketing strategy Select the customers to serve ( Markets ) Marketers know that they cannot serve all customers in every way. ( Marketers can’t meet the needs of everyone, so they focus on speci c groups of people who are the best t for their products or services. ) Trying to serve all customers they may not serve any customers at all. ( Focus on the right customers, Trying to serve everyone can lead to poor service because different customers want different things. By choosing the right customers, businesses can focus on providing the best experience to those who will appreciate it most. ) Marketers must decide which customers, when and how. ( Marketers carefully choose which customers to target, when to focus on them, and how best to meet their needs for a more successful and effective business. ) selecting speci c customers allows marketers to provide better, more focused service that meets those customers' needs effectively. Select a value proposition ( Market Offerings - Products, Services and experiences ) ( Customer needs, Wants and demands ) fi fi fi fi fi fi  ( Customer Value and satisfaction ) What is a Value Proposition? value proposition is the unique bene t or experience that your business offers to customers. It’s the reason why customers should choose your products or services over others. A strong value proposition clearly communicates why a customer should choose a speci c service, highlighting the unique bene ts and solutions it provides. A value proposition is a statement that explains what makes a product or service valuable and why customers should choose it over competitors. Example: A hotel’s value proposition might be, “Affordable luxury with personalized service.” 1: ( Market Offerings - Products, Services and experiences ) ( Customer needs, Wants and demands ) Market offerings include everything you provide to meet customer needs—like hotel rooms (products), room service (service), or a relaxing vacation (experience). Your value proposition highlights how your offerings stand out. Understanding customer needs, wants, and demands is essential. Needs are basic requirements (like a safe place to sleep), wants are preferences (like a luxurious room), and demands are what customers are willing to pay for (like a room with a view). Your offering, The marketplace offerings, What the customer needs: It combines what you offer, your target market and the market place as a whole Your Offering: What products, services, and experiences are you offering? For example, a boutique hotel may offer unique decor, personalized service, and local experiences. The Marketplace Offerings: What do other hotels offer? By comparing, you can identify how your offerings stand out. What the Customer Needs: Understand what customers in your target market value most, such as comfort, convenience, or memorable experiences. Note: Why customers should choose your products? Your value proposition should make it clear why customers should choose you. For example, if you offer personalized experiences and a unique setting, customers may choose you because they value a memorable, one-of-a-kind stay. A strong value proposition combines what you offer, what customers need, and what the marketplace lacks, helping customers see why your product is the best choice for them. 2: ( Customer Value and satisfaction ) Your promise is clear, simple and unique The value proposition should be easy to understand, straightforward, and offer something different from competitors. Example: “Eco-friendly stays with luxury comforts” is a clear and unique promise that appeals to environmentally conscious guests. fi fi fi  Your promise is a solution offered to customers The value proposition is a solution that addresses a speci c need or problem that customers have. Example: “A quiet retreat to relax and recharge” provides a solution for customers looking for peace and relaxation. Difference between ‘Selling and Marketing concepts’ The Selling Concept: - Starting Point: Factory ( where products are produced. ) - Focus Existing Products ( that the business wants to sell. ) - Means Selling and promoting ( using techniques to push products to customers. ) - Ends Pro t through sales volumes ( the goal is to sell as much as possible to increase revenue. ) This concept assumes customers need to be persuaded to buy, focusing on high sales and little regard for customer needs. The Marketing Concept: - Starting Point Market ( focusing on understanding what customers want and need. ) - Focus Customer needs ( Emphasizes customer needs rather than just existing products. ) fi fi - Means Integrated Marketing ( combining various marketing efforts to satisfy customer needs. ) - Ends Profits through customer satisfaction ( where happy customers lead to repeat business and long-term profitability. ) This approach is customer-centered, aiming to fulfill customer needs for lasting loyalty and business success. The selling concept is about pushing products, while the marketing concept is about meeting customer needs to build loyalty. The marketing mix The marketing mix, often called the 4Ps, is a foundational concept in marketing that helps businesses create and deliver value to customers. A set of tools referred to as the 4Ps: - Place: Place involves how your product reaches the customer. This could mean the physical location of a hotel or restaurant, or online platforms where services are booked. It’s about making your offerings accessible and convenient for your target market. - Promotion: Promotion includes all the activities you do to communicate and promote your product. This can involve advertising, public relations, social media, and special events. The goal is to raise awareness and entice customers to choose your offerings over competitors. - Price: This is how much you charge for your product or service. Pricing strategies can vary based on competition, perceived value, and costs. Setting the right price can attract customers while also ensuring pro tability. Discounts, packages, and seasonal pricing are common tactics. - Product: This refers to what you’re offering to customers. It could be a tangible item, a service, or even an experience. This could be a hotel stay, a dining experience, or a tour package. The key is to ensure that the product meets the needs and preferences of your target audience. The 4Ps have one goal: to create and capture customer value… Together, these elements work to create and capture customer value. By carefully adjusting and aligning the 4Ps, businesses can meet consumer needs effectively while achieving their marketing goals, such as increasing sales, building brand loyalty, or expanding market reach. - The marketing mix – interrelated and variable actions and solutions to meet the consumer needs and also to achieve the company marketing goals. - The marketing mix is about nding the right balance between product, price, place, and promotion to satisfy customers and achieve business success. fi fi  How to build customers relationship 1. Customer relationship management (CRM) What is CRM? Customer Relationship Management (CRM) is a system and strategy that helps businesses manage interactions with current and potential customers. It focuses on understanding customer needs, enhancing their experiences, and fostering loyalty. Most important concept of modern marketing It deals with all aspects of acquiring, keeping, and growing customers Acquiring Customers: CRM helps identify potential customers through targeted marketing and outreach. By understanding who your ideal customers are, you can attract them more effectively. Keeping Customers: Once you have customers, CRM tools help maintain relationships through personalized communication, loyalty programs, and excellent customer service. Happy customers are more likely to return. Growing Customers: CRM enables you to understand customer preferences and behaviors, allowing for tailored offers and upselling opportunities. This helps increase customer spending and long-term value. CRM is vital for acquiring, keeping, and growing customers. By focusing on personalization, communication, feedback, loyalty, and consistent service, businesses can create strong, lasting relationships with their customers. This not only enhances customer satisfaction but also drives business success. 2. Customer value and satisfaction Understanding Customer value and satisfaction: Every customer has certain expectations based on their needs and past experiences.These expectations can include service quality, cleanliness, comfort, and overall experience. At the end you always have to deliver more than the customer expectations i.e. Ritz Carlton, Zalando, Uniqlo ( To build lasting relationships, you need to exceed those expectations. ) Examples: Ritz Carlton: Known for exceptional service, they empower staff to go above and beyond for guests, like remembering a guest’s preferences or surprising them with special treats. This creates memorable experiences that foster loyalty. Zalando : This online retailer focuses on customer convenience, offering free returns and fast shipping. They also personalize shopping experiences based on customer behavior, ensuring satisfaction and encouraging repeat business. Uniqlo: They prioritize product quality and customer service, often engaging customers with helpful staff and easy-to- navigate stores. They also provide value through innovative products at reasonable prices. Building customer relationships is about delivering exceptional value and satisfaction. By understanding and exceeding customer expectations, as demonstrated by brands like Ritz-Carlton, Zalando, and Uniqlo, businesses can foster loyalty and create long-term connections with their customers.  3, Engaging customers The digital technologies have a determining impact on: How companies connect with customers How customers connect with brands and in uence companies’ behaviour Digital technologies are vital for engaging customers. By connecting effectively and allowing customers to in uence brand behavior, businesses can build stronger relationships and enhance customer loyalty. Engaging customers through social media, personalized communication, and actively seeking feedback is key to thriving in today’s digital landscape. Creating and capturing value The full cycle 1. Understand the marketplace and customers wants and needs ( Conduct surveys, analyze trends, and observe competitors. This helps you understand your target audience and what drives their decisions.) 2. Design a customer-driven marketing strategy ( Segment your market, choose a target audience, and position your offerings to meet their speci c needs. This ensures your marketing efforts resonate with the right people. ) 3. Construct an integrated marketing program that delivers superior value. ( Use the marketing mix (Product, Price, Place, Promotion) to ensure all elements work together. For example, a hotel might offer a special package (Product) at a competitive price (Price), promoted through social media (Promotion) and accessible through a user-friendly website (Place).) 4. Build pro table relationships and create customer delight ( Provide exceptional service, engage with customers through personalized experiences, and encourage feedback. The goal is to delight customers so they become loyal advocates for your brand.) 5. Capture value from customers to create pro ts and customer equity ( Use strategies like upselling, cross-selling, and loyalty programs to maximize the lifetime value of each customer. This means not just making a sale, but ensuring customers keep coming back.) fi fl fi fi fl - Create value FOR customers and build customer relationships Focus on understanding and meeting customer needs through high-quality products and services. This involves delivering more than what they expect, like personalized service or additional perks. Engage with customers regularly, show appreciation, and encourage feedback. This builds trust and fosters loyalty. - Capture value FROM customers in return This involves generating revenue through repeat business and customer loyalty. Effective pricing strategies, promotions, and loyalty programs encourage customers to spend more and stay loyal over time.  Week #4: Marketing environment De nition The marketing environment consists of the actors and forces outside marketing that affect a company's ability to build and maintain successful relationships with its target customers.' The marketing environment consists of various actors and forces outside a company that in uence its ability to build and maintain successful relationships with target customers. By understanding both the micro and macroenvironment, businesses can better navigate challenges and seize opportunities to enhance their marketing effort Microenvironment The microenvironment is the immediate environment that affects the company's ability to serve its customers. The microenvironment - Is Internal: The microenvironment consists of factors within the company’s control. This means businesses can actively manage and in uence these elements to improve their operations and customer service. - Is partly controllable: While companies can in uence many aspects of their microenvironment, they can’t control everything completely. For example, they can choose suppliers, set prices, and design marketing strategies, but they still need to respond to changes in customer preferences or competitor actions Major internal actors: The company: Together, all departments in a hotel have an impact on the marketing department’s plans and actions. All departments within a business (e.g., front desk, housekeeping, marketing) work together and impact the overall marketing strategy. For instance, if the restaurant department has a popular new dish, marketing may promote it to attract more guests. Suppliers: ‘Suppliers are rms and individuals that provide the resources needed by the company to produce its goods. ( This includes food suppliers, linens, cleaning products, and more. ) Trends and developments affecting suppliers can, in turn, seriously affect a company’s marketing plan’. (like changes in food prices or delivery times ) fi fi fl fl fl  Marketing intermediaries: Marketing intermediaries help the company promote, sell, and distribute its goods to the nal buyer. - Wholesale tour operators ( They package travel experiences and sell them to travel agencies or directly to customers. ) - Online travel agencies (OTA) ( Websites like Expedia or Booking.com help customers book hotels and experiences.) - Public relations agencies, advertising agencies ( These help create promotional materials and manage the company’s public image.) - Financial intermediairies (bank, insurance companies) (Banks and insurance companies provide nancial support and services that enable the company to operate effectively. ) The customers: The hospitality customer markets consists of individuals, household or companies purchasing. - Leisure activities ( Individuals or families looking for vacation experiences. ) - Social gatherings ( Groups hosting events like weddings or parties. ) - Businesses conventions( Professionals attending meetings or conferences.) Publics: A public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objective. (media, employees, government, shareholder, nancial institutions, and the immediate community.) Media: In uences public perception through coverage of the business. Employees: Their satisfaction and performance can impact service quality. Government: Regulations can affect operations and marketing strategies. Financial Institutions: Provide funding and nancial services. Immediate Community: Local groups may in uence community relations and brand reputation. Competitors: - Direct competitors:: Direct competitors are businesses that offer the same or very similar products or services to the same target market. They compete for the same customers and typically operate within the same geographical area. Examples: 1. Marriott vs. Hilton: Both are large hotel chains offering similar services such as accommodations, meeting facilities, and dining options. They compete for business and leisure travelers. 2. McDonald’s vs. Burger King: Both are fast-food chains offering similar menus and dining experiences. They compete directly for customers looking for quick, affordable meals. fl fi fl fi fi fi  3. Expedia vs. Booking.com: Both online travel agencies provide similar services, allowing customers to book hotels, ights, and vacation packages. - Indirect competitors: Indirect competitors are businesses that offer different products or services that satisfy the same customer need or solve the same problem. They may not be in the same industry but can attract customers away from a company by offering alternatives. Examples: 1. Airbnb: While traditional hotels are direct competitors, Airbnb provides a different type of lodging experience (e.g., vacation rentals) that appeals to travelers seeking unique or home-like environments. 2. Ride-Sharing Services (Uber, Lyft): These services can be seen as indirect competitors to traditional car rental companies. Customers may choose to use a ride-sharing service instead of renting a car while traveling. 3. Community Centers or Public Venues: For hotels that host events, local community centers or public venues can serve as indirect competitors for hosting weddings, conferences, or other gatherings. Macroenvironment The macroenvironment describes the larger societal forces that affect all actors in the company's microenvironment. The Macroenvironment - Is External: The macroenvironment consists of factors outside the company that affect its operations and decision- making. Businesses cannot change these factors directly, but they must adapt to them. - Is Uncontrollable: Companies have little to no control over macroenvironmental factors. Instead, they must monitor these in uences and adjust their strategies accordingly. Major external forces: Demographic Forces: ‘Demographic is the statistical study of human population and its distribution’ The statistical study of human populations, including age, gender, income, and other characteristics. - The Builders (pre 1945) Often prefer traditional accommodations and may value personalized service. - The baby boomers (born between 1946–1964) This group has a signi cant in uence on travel spending and often seeks comfort and luxury in their stays. fl fl fi fl  - Generation X (born between 1965-1980) This demographic often balances work and family travel needs, valuing convenience and quality. - Millennial (born between 1981-1996) They prioritize experiences over material goods and are likely to seek unique and Instagram-worthy accommodations. - Generation Z (1997 – 2009) Tech-savvy and socially conscious, they prefer brands that align with their values, such as sustainability. - Generation Alpha (2010 – mid-2020) As future travelers, their preferences will be shaped by the in uence of technology. Economic Forces: ‘Consists of factors that affect consumer purchase power and spending patterns’. Factors that affect consumer purchasing power and spending patterns. Economic trends: - Changes in income When disposable income increases, people are more likely to spend on travel and dining out. - Global economy Economic downturns can lead to reduced travel budgets for businesses and individuals. - In ation Rising prices can make consumers more cautious about spending on luxury accommodations or ne dining. - Unemployment Higher unemployment rates may decrease overall travel and dining out as people cut back on discretionary spending. Natural Forces: Environmental factors that impact businesses and their operations. - Climate Change: Hotels may need to implement sustainable practices to attract environmentally conscious travelers. - Natural Disasters: Events like hurricanes or wild res can disrupt travel plans and affect hotel occupancy rates. Technological forces: ‘The most dramatic force shaping our destiny and particularly hospitality is technology” Technological advancements that in uence how businesses operate and interact with customers. - Interactive Customer Experience (ICE) Tools like mobile apps for booking and check-in enhance guest experiences. - Washable RFID (Radio Frequency Identi cation) chips) Used in hotel wristbands for keyless entry and payment, improving convenience for guests. - Social media Platforms like Instagram and Facebook allow hotels to market themselves and engage with customers directly. Political forces: Government policies, regulations, and political stability that can impact businesses. - Travel Restrictions: Policies on visas or travel bans can signi cantly affect tourism. fl fl fi fi fi fl fi - Health Regulations: Guidelines during health crises (like COVID-19) can dictate how hotels operate (e.g., capacity limits, sanitation protocols). Cultural Forces: Cultural environment affects society’s basic values, perceptions, preferences, and behaviour - Religious beliefs (in uencing F&B) Some travelers may seek halal food or speci c amenities aligned with their faith. - Cultural belief (in uencing architecture) Architectural styles of hotels may re ect local traditions and aesthetics to appeal to tourists. - Change of the couple structure With more diverse family dynamics (e.g., single parents, multi-generational travel), hospitality businesses need to offer varied accommodation options. The strategic SWOT tool Strength: Internal / Microenvironment Weakness: Internal / Microenvironment Opportunities:External/ Macroemvironment Threats: External/ Macroemvironment Strength - Internal - Microenvironment Positive attributes or resources within the company that provide a competitive advantage. A hotel’s excellent customer service (strength) helps it stand out in a competitive local market (microenvironment). Examples: Strong Brand Reputation: A well-known hotel chain, like Marriott, has a trusted brand that attracts loyal customers. Skilled Staff: A restaurant with highly trained chefs and excellent service staff can deliver a superior dining experience. Weakness - Internal - Microenvironment Internal factors that may hinder the company’s performance or ability to compete. A restaurant’s outdated facilities (weakness) may deter customers when competing against newer establishments nearby (microenvironment). Examples: fl fl fl fi  Limited Online Presence: A small hotel may lack a user-friendly website or strong social media engagement, making it harder to attract guests. High Operating Costs: A resort with expensive maintenance and utility costs might struggle to remain pro table. Opportunities - External - Macroenvironment External factors that the company can exploit to grow or improve its position. A trend toward health and wellness (cultural factor) presents an opportunity for hotels to offer wellness retreats or spa services. Examples: Rising Tourism Trends: An increase in eco-tourism can present new opportunities for hotels that offer sustainable practices. Partnerships: Collaborating with local businesses, like tour companies, can enhance guest experiences and drive bookings. Threats - External - Macroenvironment External challenges that could negatively impact the company. New government regulations on health and safety (political factor) may require hotels to invest in costly upgrades, impacting pro tability (macroenvironment). Examples: Economic Downturn: A recession can lead to reduced consumer spending on travel and dining. Increased Competition: New hotels opening in the area can lead to price wars and lower occupancy rates. The SWOT analysis is a valuable tool for assessing a company’s internal strengths and weaknesses, as well as external opportunities and threats. By considering both the microenvironment and macroenvironment, businesses can develop strategies that leverage their strengths, address weaknesses, capitalize on opportunities, and mitigate threats to enhance their competitive position. fi fi  The strategic PEST tool Used to expand the analysis of the Macroenvironment The PEST analysis is a strategic tool used to evaluate the Political, Economic, Social, and Technological factors in the macroenvironment that can impact a business. It helps organizations understand the larger forces at play and how they might affect their operations and strategies. Political Factors De nition: These include government policies, regulations, and political stability that can in uence a business. Examples: ◦ Regulations on Health and Safety: In the hospitality industry, new health regulations (like those seen during the COVID-19 pandemic) can affect how hotels operate and the costs associated with compliance. ◦ Travel Restrictions: Political decisions regarding travel bans or visa requirements can directly impact tourism and hotel bookings. Economic Factors De nition: These factors involve the economic environment and can in uence consumer purchasing power and spending patterns. Examples: ◦ In ation Rates: High in ation can reduce consumers’ disposable income, making them less likely to spend on travel or dining out. ◦ Economic Growth: A booming economy may lead to increased corporate travel and higher occupancy rates in hotels. Social Factors De nition: These relate to societal trends, demographics, and cultural aspects that in uence consumer behavior and preferences. Examples: ◦ Changing Consumer Preferences: An increasing preference for sustainable and eco-friendly travel options can lead hotels to adopt green practices. ◦ Demographic Trends: The rise of Millennials and Generation Z as key travelers may in uence how hotels market themselves and what amenities they offer (e.g., tech-savvy solutions). Technological Factors De nition: These involve the impact of technology on business operations, customer interactions, and market dynamics. Examples: ◦ Online Booking Systems: The widespread use of online platforms and mobile apps for booking travel has changed how customers interact with hotels. ◦ Social Media Marketing: Hotels can use social media to engage with customers, promote deals, and showcase experiences, in uencing brand perception and customer loyalty. fl fi fi fi fi fl fl fl fl fl fl  Other strategic tools to analyse the macroenvironment PESTEL + Environmental and legal PESTEL expands on the PEST analysis by adding Environmental and Legal factors. It helps businesses understand how these broader forces can impact their operations. Political: Government policies and stability. Economic: Economic trends affecting consumer spending. Social: Cultural and demographic trends. Technological: Impact of technology on the industry. Environmental: Concerns about sustainability and environmental impact. Legal: Laws and regulations that affect the business. STEER Social, cultural, technological, Ecological, and Regulatory factors Social: Cultural trends and demographics. Technological: Advances that affect business operations. Ecological: Environmental factors and sustainability. Regulatory: Laws and policies affecting the industry. STEEPV Social, Technological, Economic, Environmental, political and Value factors Social: Societal trends and demographics. Technological: Impact of technology on the industry. Economic: Economic factors affecting consumer behavior. Environmental: Concerns about sustainability. Political: Government policies and stability. Value: Core values that in uence consumer preferences. These strategic tools—PESTEL, STEER, and STEEPV—provide frameworks for analyzing the macroenvironment. Each tool focuses on different factors that can impact a business, helping organizations identify opportunities and threats while adapting their strategies effectively. fl Week #5: Customer-driven strategy (continued) Nature and purpose of segmenting and targeting Create value for targeted customers 1. Select customers to serve: - Segmentation: divide the total market into smaller segments This means dividing the overall market into smaller groups of customers who have similar needs, preferences, or characteristics. Example: A hotel might segment its market into business travelers, families, and couples looking for romantic getaways. - Targeting: Select the segment(s) to enter After identifying the segments, the business selects which group(s) to focus on. Example: A hotel might decide to target business travelers by offering special rates for corporate clients and amenities like meeting rooms. 2. Decide on a value proposition - Differentiation: differentiate the market offering to create superior customer value This involves creating a unique offering that stands out from competitors to deliver superior value to customers. Example: A hotel might differentiate itself by providing exceptional customer service, a unique theme, or exclusive amenities like a rooftop pool. - Positioning: Position the market offering in the minds of target customers This is about how the business wants its offering to be perceived in the minds of the target customers. Example: The hotel might position itself as the top choice for luxury stays by highlighting its upscale accommodations and premium services in marketing materials. Market segmentation What is Market segmentation? Dividing a market into distinct groups of buyers with different needs, characteristics, or behaviour, who might require separate products or marketing mixes’  Diverse Needs: A single product usually can’t satisfy everyone’s needs. Different customers have varying preferences, lifestyles, and purchasing behaviors. Creating Distinct Groups: By segmenting the market, businesses can identify distinct groups that require separate products or marketing strategies. Targeting Strategies: Once the market is segmented, businesses can develop speci c targeting strategies to reach each group effectively. Market segmentation is the process of dividing a broad market into smaller, more manageable groups of buyers who have different needs, characteristics, or behaviors. This helps businesses tailor their products and marketing efforts to meet the speci c preferences of each group. A single product cannot appeal to ALL customers Fact Multitude of wants, needs and demands creates multiple segmentations – targeting strategies The multitude of customer wants, needs, and demands creates the need for multiple segmentations and targeting strategies. By recognizing these differences, companies can better satisfy their customers and enhance their competitive edge. Segmentation can occur in four different ways, which do not exclude from each other: 1. Geographic - World region or country - Country region - City or metro size - Density - Climate 2. Demographic - Age - Gender - Family Size - Family life cycle - Income - Occupation - Education - Religion - Generation. - Nationality 3. Psychographic - Social Class - Lifestyle - Personality fi fi  4. Behavioral How customers buy Knowledge, Attitude, uses, or response to a product - Occasions - Bene ts - User status - Usage rate - Loyalty status - Loyalty status - Readiness stage - Attitude towards products Distinct approaches to segmentation Four alternatives of market-coverage strategies 1. Undifferentiated ( mass) marketing - This approach treats the entire market as a single segment and offers one product to all customers. - Example: A basic hotel chain might use this strategy by providing standard rooms and services that appeal to a broad audience without tailoring to speci c needs. 2. Differentiated ( segmented ) marketing - This strategy targets multiple segments of the market with different offerings tailored to each group. - Example: A hotel might offer family packages, business traveler amenities, and romantic getaway specials to cater to different customer segments 3. Concentrated ( niche ) marketing - This approach focuses on a speci c, smaller segment of the market, tailoring the product and marketing efforts to that niche. - Example: A boutique hotel that caters speci cally to eco-conscious travelers by providing sustainable accommodations and services. 4. Micro-marketing ( local or individual marketing ) - This strategy tailors products and marketing efforts to meet the needs of individual customers or very small segments. - Example: A local bed-and-breakfast that customizes its services based on individual guest preferences or a hotel that offers personalized experiences. Undifferentiated marketing Marketing plan reaches mass distribution Undifferentiated marketing, also known as mass marketing, is a strategy where a company targets the entire market with a single product or service. Instead of tailoring offerings to speci c segments, the marketing plan aims to reach as many people as possible with the same message. fi fi fi fi fi  Differentiated marketing Marketing strategy targets several market segments and design separate offers for each e.g. Accor Hotels, JW Marriot Differentiated marketing is a strategy where a company targets multiple segments of the market and creates different products or marketing messages for each segment. Concentrated marketing Responding to the most speci c demands Concentrated marketing is a strategy where a company focuses on a speci c, smaller market segment and tailors its products and marketing efforts to meet the unique needs of that segment. Micro marketing Micro marketing is a highly focused marketing strategy that tailors products and marketing efforts to meet the speci c needs of very small segments, or even individual customers. Examples Location-based micro-marketing campaigns - Prepare a speci c menu for a speci c community This approach targets customers based on their geographic location. Example: A restaurant might create a special menu that re ects the tastes of a speci c neighborhood or community, like offering local favorites or seasonal ingredients that resonate with local customers. Relation-based Micro Marketing campaigns - Set very speci c excursion for individual regular customer This approach focuses on building strong relationships with individual customers. Example: A hotel might design personalized excursions or experiences for regular guests, such as custom tours or exclusive activities that align with their interests and past visits. What is market targeting? The process of evaluating each market segmentation’s attractiveness and selecting one or more segments to enter. ( Market targeting is the process of assessing different market segments and deciding which ones a company will focus on to sell its products or services.) 1. Evaluating Segments: The company looks at each market segment identi ed during segmentation to determine its attractiveness. This can include factors like size, growth potential, competition, and alignment with the company’s goals. 2. Selecting Segments: After evaluating, the company chooses one or more segments to target. This decision is based on which segments offer the best opportunities for success. 3. Strategy Development: Once segments are chosen, the company develops speci c marketing strategies to reach those groups effectively. fi fi fi fi fl fi fi fi fi fi  Target market selection audit A target market selection audit is a process used by businesses to evaluate their chosen target markets. This ensures that the market selection aligns with the company’s goals and that there is potential for success. Are there any competitors in the similar target? - What to Evaluate: Assess the level of competition in the chosen market segment. Understand who the competitors are, what they offer, and how saturated the market is. - Why It Matters: Knowing the competition helps determine if there’s room for your business and what unique value you can provide to stand out. Is the corporate’s goal aligned with the target market? - What to Evaluate: Check if the goals of the company match the needs and preferences of the target market. For example, if the company aims to position itself as a luxury brand, the target market should consist of af uent consumers. - Why It Matters: Alignment ensures that marketing efforts are consistent with overall business objectives, leading to better strategies and outcomes. What will be the nancial returns (ROI)? - What to Evaluate: Estimate the potential nancial returns from targeting this market segment. Consider factors like projected sales, costs, and overall pro tability. - Why It Matters: Understanding the expected return on investment helps determine if the effort and resources spent on this target market will be worthwhile. Hospitality Market targeting Within the business traveller segment Eco-friendly business traveller’s - These travelers prioritize sustainability and environmental impact when choosing accommodations. - Hotels can offer eco-friendly amenities, such as renewable energy sources, green certi cations, and organic food options. Marketing can highlight sustainability efforts and carbon offset programs. Health-conscious business traveller - This group focuses on maintaining a healthy lifestyle, even while traveling for work. - Hotels can provide tness facilities, healthy meal options, and wellness programs, such as yoga classes or spa services. Promotions can emphasize health-focused amenities and services. F&B business traveller - These travelers place a high value on dining experiences during their business trips. - Hotels can showcase on-site restaurants with diverse menus, local cuisine, and gourmet dining options. Offering business meal packages or wine tastings can also attract this segment. Leisure business traveller’s - These are business travelers who often extend their trips for leisure activities. - Hotels can promote packages that combine work and leisure, such as offering discounts for extended stays or organizing local tours and experiences. Marketing can highlight nearby attractions and recreational activities. Digital nomad - This group works remotely while traveling, often seeking exible workspaces and reliable internet. - Hotels can provide co-working spaces, high-speed Wi-Fi, and long-stay discounts. Marketing can focus on the hotel’s suitability for remote work, with amenities that support a productive environment. fi fi fi fi fl fi fl  Digital nomads De nition: The term “digital nomad” describes a category of mobile professionals, who perform their work remotely from anywhere in the world, utilizing digital technologies, while “digital nomadism” refers to the lifestyle that is developed by these highly mobile location independent professionals - Digital nomads typically have jobs that allow them to work online, such as graphic designers, writers, software developers, or marketers. - They often travel frequently, living in different cities or countries for extended periods. - This lifestyle allows them to experience new cultures and environments while maintaining their careers. Criteria for successful segmentation Measurable: Size, purchasing power, pro les of segments can be measured. - You should be able to quantify and analyze the size, purchasing power, and characteristics of each segment. - Example: A hotel can measure how many business travelers are in an area and what they typically spend. Accessible: Segments can be effectively reached and served - You should be able to reach and serve the segments effectively through marketing channels. - Example: If a hotel targets eco-friendly travelers, it should have marketing strategies that appeal to that group, like eco-friendly certi cations. Substantial: Segments are large or pro table enough to serve - The segments should be large or pro table enough to justify targeting them. - Example: A hotel might decide to focus on family travelers if there are enough of them in the area to ll rooms during peak seasons. Differential: Segments must respond differently to different marketing mix elements and programs - Segments must respond differently to various marketing strategies, indicating that they have distinct needs. - Example: Business travelers may prioritize convenience and amenities like Wi-Fi, while leisure travelers might look for activities and entertainment. Actionable: Effective programs can be designed to attract and serve the segments - The company should be able to create effective marketing programs to attract and serve these segments. - Example: A hotel can design speci c packages or promotions that cater to the unique preferences of each segment, like family deals or business travel discounts. fi fi fi fi fi fi fi  Week #6: Product position De nition A product’s position is the complex set of perceptions, impressions, and feelings that consumers have for the product compared with competing products. It refers to how consumers perceive it in relation to other similar products in the market. It’s shaped by their impressions, feelings, and experiences, and helps determine a product's unique place in the minds of consumers. Example: Consider two hotel brands: Ritz-Carlton and Holiday Inn. Ritz-Carlton: This brand positions itself as a luxury hotel, emphasizing high-end service, opulent accommodations, and exclusive experiences. Consumers perceive it as a premium choice for special occasions or business trips where they want the best service. Holiday Inn: In contrast, Holiday Inn positions itself as a family-friendly, affordable option for travelers. It emphasizes comfort and convenience, appealing to families and budget-conscious travelers looking for value. Illustration How Mandarin has used his guests 'feelings and experiences to create a campaign As a marketer you have to ask yourself... What is the rst point that should enter the minds of our customers when they read of hear our name? Elegance Example: The Ritz-Carlton Customer Perception: When customers hear the name "The Ritz-Carlton," they immediately think of luxury, sophistication, and re ned service. The brand is known for its elegant decor, top-tier amenities, and exceptional guest experiences. Fashionable Example: W Hotels Customer Perception: Hearing "W Hotels" evokes a sense of trendy, modern design and style. Customers associate it with a fashionable lifestyle, chic interiors, and a vibrant nightlife scene. fi fi fi  Wellness Example: Aman Resorts Customer Perception: When customers think of "Aman Resorts," they associate it with tranquility, holistic wellness, and luxury retreats focused on health and rejuvenation. The brand is known for its serene environments and wellness programs. Professional Example: Hilton Customer Perception: The name "Hilton" brings to mind a reliable choice for business travelers. Customers often think of professional service, meeting facilities, and convenient locations suited for corporate events. Convenience Example: Holiday Inn Express Customer Perception: When customers hear "Holiday Inn Express," they think of convenience and practicality. It’s recognized as a budget-friendly option that offers essential services for travelers looking for easy access to accommodations and amenities. Product position Consumers position products with or without the help of marketers. - Product positioning is about how consumers perceive a product compared to competitors. - While marketers can in uence these perceptions through targeted strategies, consumers also develop their own views based on experiences and information available to them. - Understanding this dynamic is essential for effective marketing. Perceptual positioning maps It show consumer perceptions of their brands versus those of competing products on important buying dimensions. fl  Consumer perceptions of their brands versus those of competing products on important buying dimensions. Show consumer perceptions of their brands versus those of competing products on important buying dimensions.  Product position Facts: Marketers cannot take any chance - They plan position to ensure advantage Marketers cannot leave product positioning to chance; they must carefully plan how they want consumers to perceive their product. - They must design a coherent marketing mix To effectively position a product, marketers need to design a coherent marketing mix that supports the desired position. This mix includes the 4Ps: Product, Price, Place, and Promotion. Choosing a positioning strategy The full positioning of a brand is called the brand’s value proposition— the full mix of bene ts on which a brand is differentiated and positioned. ‘More for more’ To provide a better product/service and charge a higher price to cover the higher cost. It offers not only a superlative product/service, it gives prestige to the customer and symbolizes status and luxury lifestyle i.e., Peninsula airport pick up with a Rolls Royce. - This strategy focuses on delivering superior products or services compared to competitors. The goal is to exceed customer expectation with better quality - To cover the increased costs of providing these premium offerings, businesses charge a higher price. fi - The strategy not only provides a high-quality experience but also conveys a sense of prestige and status to customers. Owning or using these products can symbolize a luxurious lifestyle. The "More for More" positioning strategy is about providing exceptional quality and service at a higher price, thereby creating a sense of prestige and luxury for customers. This approach targets consumers who are willing to pay more for a superior experience and status. ‘More for the same’ Company position itself as the ‘upscale discounter’. It claims to offer more in terms of store atmosphere, stylish merchandise, high quality and classy image but will not charge more. i.e., Coffee in luxury hotels lobby / Manor Supermarket (in Switzerland) - Companies aim to improve the overall shopping or service experience without raising prices to give guests enhanced experiences - This strategy emphasizes high-quality products and a classy image, attracting customers who want more value without paying extra. - Appealing to value seekers by positioning themselves this way, businesses attract customers who appreciate quality and style but are also budget-conscious. The "More for the Same" positioning strategy is about providing enhanced quality and experience at the same price point as competitors. This approach appeals to consumers looking for better value and helps companies differentiate themselves in a competitive market. ‘More for less’ Offers a higher product/service quality and charges at a lower price than its competing ones. They do not seek pro t for a certain period of time Winning proposition BUT in a long run it is dif cult to sustain i.e., ‘After hours’ cocktail deals, ‘Buy one, get two complementary, membership sport club you pay for one year and pay for 6 months - This strategy provides better quality than what competitors offer while charging less. This can attract price-sensitive customers who still want good value. - Companies using this strategy may sacri ce pro t margins for a certain period to build a customer base and market share ( short - term focus ) - While this strategy can be effective in the short term, it can be dif cult to maintain over the long run. If a company continually lowers prices, it might struggle to cover costs or maintain quality. The "More for Less" strategy involves offering higher quality products or services at a lower price than competitors. Companies may not focus on immediate pro ts to attract customers. While it can be a winning proposition initially, sustaining this approach in the long term can be challenging due to potential impacts on pro tability and quality. fi fi fi fi fi fi fi  ‘Same for less’ Company provides the same product/service and charges a lower price that its competitor in order to have a price competitive advantage. The "Same for Less" strategy involves offering the same product or service as competitors but at a lower price. The goal is to attract price-sensitive customers by providing a more affordable option. - Companies using this strategy provide products or services that are essentially the same as those offered by competitors. - By charging less, the company aims to attract customers who are looking for the best deal without compromising on quality or features. - This strategy is particularly effective for attracting customers who prioritize price over brand loyalty or premium features. The "Same for Less" positioning strategy focuses on providing the same products or services as competitors but at a lower price. This approach helps companies gain a competitive edge by appealing to consumers who want quality without the higher cost. ‘Less for much less’ Company meet consumers needs who look for products that offer less and therefore cost less. These consumers settle for less and gladly give up all the extras in order to pay the extra minimum. i.e., Formule 1, Ramada Limited Inn Express, Motel 6, - Companies using this strategy provide no-frills products or services that meet the essential needs of consumers. - This strategy appeals to price-sensitive customers who are willing to accept lower quality or fewer features to save money. The "Less for Much Less" positioning strategy focuses on meeting the needs of consumers who prioritize low prices over extra features or services. This approach is ideal for budget-conscious customers willing to compromise on quality for signi cant savings. Value proposition aligned on positioning strategy A value proposition must be aligned on its positioning strategy to serve the ‘needs, wants and demands of its target market Examples of value proposition aligned on positioning strategy: fi  Choosing a differentiation strategy It can differentiate along: - Lines of product - Services - Channel - People - Image It can differentiate along: Features, performance, or style and design. Which differences to promote A difference is worth establishing to the extent that it satis es the following criteria: Important: The difference delivers a highly valued bene t to target buyers. Distinctive: Competitors do not offer the difference, or the company can offer it in a more distinctive way. Superior: The difference is superior to other ways that customers might obtain the same bene t. Communicable: The difference is communicable and visible to buyers. Preemptive: Competitors cannot easily copy the difference. Affordable: Buyers can afford to pay for the difference When promoting a difference in your product or service, it should be important, distinctive, superior, communicable, preemptive, and affordable. Meeting these criteria helps ensure that the difference provides real value to customers and sets the brand apart from competitors. fi fi fi  Week #7: Brand and branding |when in time and how 3000 -1500 BCE: To identify products and property Ancient and medieval history of branding revolved around identifying- from cattle, goods and even human slaves. Artisans from China, India, Greece and Rome engrave symbols into products to sign their work 1500s – 1800s: To show ownership In 1500 the meaning changed to refer to a mark burned to show ownership. In the US tobacco manufacturers had been exporting their crop since the early 1600’s. 1800s -1950s: To convey quality and trust Factories brand their goods and products as mark of quality to build familiarity among customers who are unaccustomed to mass production. 1950s - 1970s: To differentiate products, develop trust and earn loyalty Traditional de nition of a brand American Marketing Association (1960) de nes brand as: ’A name, term, design, symbol, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from competitors’. Companies begin to use emotional messaging to brand products to win customer 1970s – 1990s: To give the company personality Consumers become increasingly brand-conscious Important step: Major companies begin to market their brands more than their products today — To make emotional connections Companies use brand storytelling to illustrate their values, demonstrate social responsibility, empathize with customers, and form emotional connection that drive loyalty fi fi  A brand perspectives A brand is seen as a ‘promise’ to a customer. It de nes what they can expect from your product How you are different from others in the market Brand essence 1. Personality Traits: Quality, safety, heritage, cultural, freedom 2. Values: Good internal marketing Ethical approach to business i.e uncompromising level of service 3. Emotional Rewards: Pleasure, recognition, grounding, sense of belonging, social status 4. Bene ts: What the customer is getting out of it functionally i.e. comfort 5. Attributes: Features ( Products description ) Simpli ed representation Cyclical process through which the brands becomes the interface between the rm’s activities and consumer’s interpretations. Updated de nition of branding. The process involved in creating a unique name and image for a product in the consumers' mind, mainly through advertising campaigns with a consistent theme. Branding: At the root of all branding activity is the human desire to be someone of consequence, to create a personal and social identity. There is the desire to present oneself as both like other people (e.g. to belong) and unlike other people (e.g. to stand out), and to have a good reputation Two things have always been true in the history of branding: It’s not easy, and you can’t count on what worked yesterday to work tomorrow. fi fi fi fi fi - Branding in the twenty- rst century is still about taking ownership, and not just for property and products. - It’s about owning what your company values and represents - Earning customer trust and loyalty through your words, your actions, and your stories. fi