Tourism and Hospitality Marketing Handout PDF

HOLY CROSS OF DAVAO COLLEGE Sta. Ana Avenue, Cor De Guzman Street., Davao City Tel. No. 221-9071 to 79 loc. 177 College of Hospitality and Tourism Management Education BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT TOURISM AND HOSPIT...

HOLY CROSS OF DAVAO COLLEGE Sta. Ana Avenue, Cor De Guzman Street., Davao City Tel. No. 221-9071 to 79 loc. 177 College of Hospitality and Tourism Management Education BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT TOURISM AND HOSPITALITY MARKETING HANDOUT Offering Number : Course Code : THC 9 Time Schedule : Topic Coverage : SEMI-FINAL Teacher : JULLY GIL N. BARIQUIT, MBA  LESSON 1: Designing and Managing Products and Brands OBJECTIVES: 1. Define the term product, including the core, facilitating, supporting, and augmented product. 2. Explain how accessibility, atmosphere, customer interaction with the service delivery system, customer interaction with other customers, and customer coproduction are all critical elements to keep in mind when designing a product. 3. Understand branding and the conditions that support branding. 4. Discuss branding strategies and decisions companies make in building and managing their brands. 5. Explain the new-product development process. 6. Understand how the product life cycle can be applied to the hospitality industry. What is a product? A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. It includes physical objects, services, places, organizations, and ideas. What is a service? A service: is any activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything. Examples: banking services, hotels, airline tickets, home repairs, education, tourism, etc. Products, Services, and Experiences Market Offering – Products are key to the basis of building profitable customer relationships. o Pure Tangible Good –Pure good without any accompanying products. o Pure Services – Pure service without any goods. Companies differentiate product offerings with creating and managing customer experiences with brands/company. o Customers buy what offers do for them. LEVELS OF PRODUCTS Hospitality Managers look at their products and services on four levels: 1. Core product. Answers the question of what the buyer is really buying. Every product is a package of problem-solving services. 2. Facilitating Products Facilitating products are services or goods that must be present for the guest to use the core product. 3. Supporting Products Supporting products are extra products offered to add value to the core product and help differentiate it from the competition 4. Augmented product These include accessibility (geographic location and hours of operation), atmosphere (visual, aural, olfactory, and tactile dimensions), customer interaction with the service organization (joining, consumption, and detachment), customer participation, and customers’ interactions with one another. 1. Accessibility. This refers to how accessible the product is in terms of location and hours of operation. 2. Atmosphere. Atmosphere is a critical element in services. It is appreciated through the senses. Sensory terms provide descriptions for the atmosphere as a particular set of surroundings. The main sensory channels for atmosphere are sight, sound, scent, and touch. 3. Customer interactions with the service system. Managers must think about how the customers use the product in the three phases of involvement: joining, consumption, and detachment. ✓ Joining stage. The product lifecycle stage when the customer makes the initial inquiry contact. ✓ Consumption phase. Takes place when the customer consumes the service. ✓ Detachment phase. When the customer is through using the product and departs. 4. Customer interactions with other customers. Customers become part of the product you are offering. 5. Coproduction. Involving the guest in service delivery can increase capacity, improve customer satisfaction, and reduce costs. BRANDING STRATEGY A brand is a name, term, sign, symbol, design, or a combination of these elements that is intended to identify the goods or services of a seller and differentiate them from competitors. Branding is the process of endowing products and services with the power of a brand. It’s all about creating differences between products. This process must be carefully developed and managed. BRAND EQUITY Brand equity is the added value endowed on products and services. It may be reflected in the way consumers think, feel, and act with respect to the brand, as well as in the prices, market share, and profitability the brand commands for the firm. It’s a measure of the brand’s ability to capture consumer preference and loyalty. BRAND POSITIONING They can position brands at any of three levels. At the lowest level, they can position the brand on product attributes. A brand can be better positioned by associating its name with a desirable benefit. The strongest brands go beyond attribute or benefit positioning. They are positioned on strong beliefs and values. The brand promise is the marketer’s vision of what the brand must be and do for consumers. The brand promise must be simple and honest. BRAND NAME SELECTION Desirable qualities for a brand name include the following: (1) It should suggest something about the product’s benefits and qualities. (2) It should be easy to pronounce, recognize, and remember (3) The brand name should be distinctive: (4) It should be extendable: (5) The name should translate easily into foreign languages.  (6) It should be capable of registration and legal protection Individual Brand Names Hospitality companies may choose to brand different products by different names. Corporate Umbrella (Family) or Sub-branding Hospitality companies may use their corporate brand as an umbrella brand across their entire range of products. Corporate-image associations of innovativeness, expertise, and trustworthiness have been shown to directly influence consumer evaluations. LEVERAGING BRANDS Co-branding, or dual branding, can take advantage of the complementary strengths of two brands. For example, the Tim Hortons coffee chain is establishing co-branded Tim Hortons-Cold Stone Creamery shops. Same company or retail co-branding in which two retail establishments use the same location to optimize space and profits. Ingredient branding is a special case of co-branding. Ingredient brands can provide differentiation and important signals of quality. BRAND PORTFOLIOS A brand can only be stretched so far, and all the segments the firm would like to target may not view the same brand equally or favorably. Marketers often need multiple brands in order to pursue these multiple segments. Some other reasons for introducing multiple brands in a category include: 1. attracting consumers seeking variety who may otherwise have switched to another brand; 2. increasing internal competition within the firm; 3. yielding economies of scale in advertising, sales, merchandising, and physical distribution. The brand portfolio is the set of all brands and brand-particular category or market segment. MANAGING BRANDS Companies must manage their brands carefully. ✓ First, the brand’s positioning must be continuously communicated to consumers. ✓ The company should carry on internal brand building to help employees understand and be enthusiastic about the brand promise. ✓ Finally, companies need to periodically audit their brands’ strengths and weaknesses. THE NEW PRODUCT DEVELOPMENT IDEA GENERATION New-product development starts with idea generation—the systematic search for new- product ideas. A company typically generates hundreds of ideas, even thousands, to find a few good ones. Major sources of new-product ideas include internal sources and external sources such as customers, competitors, and distributors and supplier. Awareness of External Environment All members of the hospitality industry are highly dependent on the external environment. Recession, inflation, economic growth, terrorists, an aging population, and other external factors all directly affect this industry. As an example, hotel security is of foremost importance, particularly to single women and other segments. Internal Sources Using internal sources, the company can find new ideas through formal R&D. External Idea Sources Companies can also obtain good new-product ideas from any of a number of external sources. For example, distributors and suppliers can contribute ideas. Crowdsourcing More broadly, many companies are now developing crowdsourcing or open- innovation new-product idea programs. IDEA SCREENING The purpose of idea generation is to create a large number of ideas. The purpose of screening is to spot good ideas and drop poor ones as quickly as possible. Product development costs rise greatly in later stages, so the company wants to proceed only with ideas that will turn into profitable products. CONCEPT DEVELOP AND TESTING A product idea envisions a possible product that company managers might offer to the market. A product concept is a detailed version of the idea stated in meaningful consumer terms. A product image is the way that consumers picture an actual or potential product. MARKETING STRATEGY The next step is marketing strategy development: designing an initial marketing strategy for introducing the product into the market. The marketing strategy statement consists of three parts. ✓ The first part describes the target market, the planned product positioning, and the sales, market share, and profit goals for the first few years. ✓ The second part of the marketing strategy statement outlines the product’s planned price, distribution, and marketing budget for the first year. ✓ The third part of the marketing strategy statement describes the planned long- run sales, profit goals, and marketing mix strategy. BUSINESS ANALYSIS Once management decides on the product concept and marketing strategy, it can evaluate the business attractiveness of the proposal. Business analysis involves a review of the sales, costs, and profit projections to determine whether they satisfy the company’s objectives. If they do, the product can move to the product development stage. PRODUCT DEVELOPMENT If the product concept passes the business test, it moves into product development and into a prototype. Up to now it existed only as a word description, a drawing, or mockup. The company develops one or more physical versions of the product concept. TEST MARKETING If the product passes functional and consumer tests, the next step are market testing in which the product and marketing program are introduced into realistic market settings. Market testing allows the marketer to gain experience in marketing the product, to find potential problems, and to learn where more information is needed before the company goes to the great expense of full introduction. Market testing evaluates the product and the entire marketing program in real market situations. The product and its positioning strategy, advertising, distribution, pricing, branding, packaging, and budget levels are evaluated during market testing. Market testing results can be used to make better sales and profit forecasts. COMMERCIALIZATION Market testing gives management the information it needs to make a final decision about whether to launch a new product. If the company goes ahead with commercialization, it will face high costs. It may have to spend several million dollars for advertising and sales promotion alone in the first year. When? The first decision is whether it is the right time to introduce the new product. Where? The company must decide whether to launch the new product in a single location, a region, several regions, the national market, or the international market To Whom? Within the rollout markets, the company must target its promotion to the best prospect groups. Management should have determined profiles of prime prospects during earlier market testing. It must now fine-tune its market identification, looking for early adopters, heavy users, and opinion leaders. How? The company must develop an action plan for introducing the new product into the selected markets and spend the marketing budget on the marketing mix. PRODUCT DEVELOPMENT THROUGH ACQUISITION Large companies such as McDonald’s sometimes buy a small restaurant chain such as Chipotle rather than develop their own new concepts. Another technique is to purchase distressed chains. The mismanagement of a chain and resulting poor performance can drive the market value of the chain down. These chains become attractive targets for companies that believe they can turn them around. PRODUCT LIFE CYCLE STRATEGIES 1. PRODUCT DEVELOPMENT begins when the company finds and develops a new- product idea. During product development, sales are zero and the company’s investment costs add up. 2. INTRODUCTION is a period of slow sales growth as the product is being introduced into the market. Profits are nonexistent at this stage because of the heavy expenses of product introduction. 3. GROWTH is a period of rapid market acceptance and increasing profits. 4. MATURITY is a period of slowdown in sales growth because the product has achieved acceptance by most of its potential buyers. Although sales are still high, profits level off or decline because of increased marketing outlays to defend the product against competition. 5. DECLINE is the period when sales fall off quickly and profits drop. Product Deletion The most products will become obsolete and have to be replaced. Thus, understanding the product deletion process is just as important as understanding product development. Phase-out. The ideal method of removing an unpopular or unprofitable product; it enables a product to be removed in an orderly fashion. Run-out. Removing a product after existing stock has been depleted; used when sales for an item are low and costs exceed revenues, such as the case of a restaurant serving a crabmeat cocktail with sales of only one or two items per week. Drop. The action taken toward a product that may cause harm or customer dissatisfaction. REFERENCES: Authorized adaptation from the United States edition, entitled Marketing for Hospitality and Tourism, 7th edition, ISBN 978-0- 13-415192-2, by Philip Kotler, John T. Bowen, James C. Makens, and Seyhmus Baloglu, published by Pearson Education © 2017.