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20-02-2011, 02:43 PM







REVIEW OF LITERATURE........................................................





Marketing strategy is a method of focusing an organization's energies and resources on a course of action which can lead to increased sales and dominance of a targeted market niche. A marketing strategy combines product development, promotion, distribution, pricing, relationship management and other elements; identifies the firm's marketing goals, and explains how they will be achieved, ideally within a stated time frame. Marketing strategy determines the choice of target market segments, positioning, marketing mix, and allocation of resources. It is most effective when it is an integral component of overall firm strategy, defining how the organization will successfully engage customers, prospects, and competitors in the market arena. Corporate strategies, corporate missions, and corporate goals. As the customer constitutes the source of a company's revenue, marketing strategy is closely linked with sales. A key component of marketing strategy is often to keep marketing in line with a company's overarching mission statement..Organizations continually seek new ways to acquire, retain and increase business, since the cost of losing customers is rising. Service organizations such as hotels need to put in place competitive marketing strategies to improve their competitiveness and thus retain customers. Once demand is created, a hotel needs to manage this demand as well as its capacity to deliver. This study investigates the marketing strategies that should be implemented for starting a resort hotel, as well as managing supply and demand. Hotel managers across the board consider all competitive marketing strategies as important.

“Marketing is defined as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”
-American Marketing Association
Marketing is defined as the management process responsible for identifying anticipating and satisfying customer requirements profitability”
-The Chartered Institute Of Marketing
“Marketing is defined as satisfying needs and wants through an exchange process”
-Philip Kotler

“Marketing is not about providing products or services it is essentially about providing changing benefits to the changing needs and demands of the customer”
-P. Tai



The pre Industrial Revolution world was characterized by an agricultural cum handicraft economy. The agriculturalist, whether he produced corn or cotton, meat or butter, disposed of the surplus in his immediate neighborhood. These products were required in the neighborhood by those who were not engaged in such activities. There was no elaborate distribution system, as the needs and habits of the people and prevailing technology did not demand such a system. This represented the stage of barter in the evolution of marketing.


The change was limited to the replacement of the barter system by the money system, pricing becoming the mechanism of the exchange process.


They were many changes that took place during this stage. The industrial revolution gave birth to a new business system. It introduced new products, new systems of manufacturing, new modes of transportation and methods of communication. This stage brought about sweeping changes in the physical and economic environment.


This stage was characterized by the increasing number and size of the producing firms which generated the phenomenon of competition.


After World War two, there was a substantial increase in population. The disposable income of the average family registered an increase. New industrial concerns sprang up rapidly. A great variety of changes came about during this period which lead to the emergence of marketing.


Much of traditional marketing practice prior to the twentieth century remained hidebound by rules-of-thumb and lack of information. Information technology, especially since the mid-twentieth century, has given the marketer new channels of communication as well as enhanced means of aggregating and analyzing marketing data. Specializations have emerged (especially sales versus marketing and advertising versus retailing) and re-combined (business development) over the years.

1.2.7 Timeline of innovation
In1450s Gutenberg's metal movable type, leading eventually to mass-production of flyers and brochures came.In1730s emergence of magazines (a future vector of niche marketing)occured. In 1836 first paid advertising in a newspaper (in France)was did. In 1839 posters on private property banned in Landon In1864 earliest recorded use of the telegraph for mass unsolicited spam was introduced.In1867 earliest recorded billboard rentals was issued.In 1880s early examples of trademarks as branding came. In1905 the University of Pennsylvania offered course in "The Marketing of Products" .
In1908 Harvard Business School opened. In 1922 radio advertising commences .In1940s electronic computers developed . In 1941 first recorded use of television advertising was introduced. In1950s systematization of telemarketing started. In 1970s E-commerce was invented .In1980s relationship marketing emerged .In1980s emergence of computer-oriented spam .In1984 introduction of guerilla marketing. In 1985: desktop publishing democratizes the production of print-advertising .In 1995-2001: the Dot-com bubble temporarily re-defines the future of marketing.In1996: identification of viral marketing.












Elements of the marketing strategy are often referred to as the "Four P's":

2.1 Product

It is not a tangible object or an intangible service that is mass producer manufactured on a large scale with a specific volume of units. Intangible products are service based like the tourism industry& the hotel industry or codes-based products like cellphone load and credits. Typical examples of a mass produced tangible object are the motorcar and the disposable razor. A less obvious but ubiquitous mass produced service is computer operating system. Packaging also needs to be taken into consideration. Every product is subject to life-cycle including a growth phase followed by an eventual period of decline as the product approaches market saturation. To retain its competitiveness in the market,product differentiations required and is one of the strategies to differentiate a product from its competitors.

2.2 Price

The price is the amount a customer pays for the product. The business may increase or decrease the price of product if other stores have the same product.

2.3 Place

Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet.

2.4 Promotion

It represents all of the communications that a marketer may use in the marketplace. Promotion has four distinct elements:advertising,public relations,personal selling and ales promotion. A certain amount of crossover occurs when promotion uses the four principal elements together, which is common in film promotion. Advertising covers any communication that is paid for, from cinema commercials, radio and Internet adverts through print media and billboards. Public relations are where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminar and presentations or trade fairs and events. Word of mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays important role in word of mouth and Public Relations

Any organization, before introducing its products or services into the market; conducts a market survey. The sequence of all 'P's as above is very much important in every stage of product life cycle Introduction, Growth, Maturity and Decline.
People: All people involved with consumption of a service are important. For example workers, management, consumers etc. It also defines the market segmentation, mainly demographic segmentation. It addresses particular class of people for whom the product or service is made available.
Process: Procedure, mechanism and flow of activities by which services are used. Also the 'Procedure' how the product will reach the end user.
Physical Evidence: The marketing strategy should include effectively communicating their satisfaction to potential customers.
[www.bookfiesta4u.blogspot.com ] [Wikipedia]HTTP://Wikipedia/wiki/Promotion_(marketing)


2.2.1 Strategy

About 90% of purchasing decisions begin online (Forrester).Educated buyers now solve problems through Google searches .Marketing goals in the past: create brand awareness, target mass media, interrupt and repeat. Marketing now: create behavior change, create conversation, communicate directly .New goal: 100% engagement (not 2% conversion) .What should you publish online? Anything that saves people time and gives info that positions you as a good source. Understand what your customers need to know, and deliver it in a compelling way. What online channels does your demographic spend time in? Find out, then develop a strong presence there. Don’t make people come to you – put content where they already are online..Think like a “content DJ”: use and reuse your content in many different formats: blog posts, email, newsletters, articles, PDFs, press releases, case studies, video, and social media updates. Spend the large majority of your time trying to reach the most likely buyers instead of the entire market. “The smaller the target, the bigger the bulls eye.”.If you’re small, you can be quick & nimble. Capitalize on that..We have 3 jobs as marketers: obtain profitable customers, keep them, and expand their lifetime value. People admire complexity, but reward simplicity. Don't do something unless you’re the best in the world at it. If someone else does something better, use their services. Focus only on what you do best, and outsource everything else.

2.2.2 Planning

The 1 failure in marketing plans: no clear measures of success. You must differentiate to avoid becoming a price-driven commodity. Not a lot of hotels know where their market position is. Define and position yourself..On meta search sites, hotels should move away from price commercialization by providing product-level custom messages to differentiate their offers. To find differentiating factors, thoroughly study the service you offer and interview the people that provide it. If you spend your resources like everyone else, you’ll get results like everyone else. Breakthrough campaigns often require unusual approaches. Selling to your best guests is the best way to maximize profits. Setup systems for recognizing and rewarding these people. Identify and test the key strategies your marketing plan hinges upon. The more facts and research you can include in your plans, the better. Hard data is far more valuable than guesswork. Decide what success means to you. It’s different for everyone.

2.2.3 Website

Give visual priority to the most important elements of your site Put your offer front and center – make it extremely clear (“What do you want me to do?”) .Booking modules should be prominent and above the fold. Create guest persons to help you develop content for each target audience. People scan web pages, and probably won’t take a long time to read all the text..Include stunning visuals. People buy travel on emotion..Write page content from the mindset of the customer. Use their language..Publish guest comments, reviews, and feedback directly on your website. Leverage social proof. Everyone likes what everyone likes..First impressions make or break landing page conversion rates. Provide “next steps” for all web content. Organic traffic provides you with a low level of control, so make sure these pages appeal to everyone. With paid search & advertising campaign traffic you have a higher level of control. Create landing pages that match the ad creative for higher conversions..Use video to convey emotion or compelling visuals that are hard to show through written words. View your main website not as the final destination, but a hub to refer people elsewhere in your online network

Buy some great domain names (market is less competitive right now)Remove your intro “splash” page. Have a clean & simple web design. Use Website. Grader.com to ensure technical quality. Build easy navigation. Ensure instant brand identification. Make contact forms short & simple. Use Google Optimizer for best results. Add live chat support. Add a virtual host. Use video instead of text (where possible).Post directions to your hotel in pictures. Syndicate content as RSS. Offer in-depth destination information. Show pictures of attractions near your hotel with Panorama. Use Google maps to provide step-by-step directions to your hotel. Let visitors write and send e Cards (email postcards).Publish visitor comments. Publish videos of satisfied guests. Include positive social media rankings (ex: #1 in San Francisco on TripAdvisor).Add social bookmarking services Digg and delicious to important pages. Use Mofuse.com to make your site mobile-friendly. Use Diigo to track & share changes to competitors’ websites. Create a public Google Calendar to show upcoming events[Josiah Mackenzie ,2009)
2.2.4 Search Marketing

The top 3 results on a search results page gets 79% of the click. Result #10 only gets 3%…and appearing on page #2 and onwards means you are practically invisible. Travel queries have increased 40% in 2009 (over 2008).SEO (organic search) can give much better returns than SEM (paid inclusion). According to Yen Lee of Uptake, 86% of travel sales leads are generated by organic search listings..Don’t worry about how search engines work as much as how customers use web search. When someone types in a search query, they’re giving you the opportunity to solve their problem. The search funnel typically follows this pattern: Awareness, Interest, Consideration, Purchase. Identify keywords that are relevant to your hotel, and popular with searchers. Use research tools so you don’t get mislead..Consider targeting 2-3 word phrases that are more targeted and obtainable. Blogs can be your #1 tool for building search visibility. Organizations that blog get 97% more inbound links to their website, and 55% more website visitors according to Hubspot research .Reciprocal links less valuable than one-way, because it tells Google that you’ve arranged it, rather than earned the link through creating great content. The best incoming links are earned by merit. Create content people can’t help linking to..See SEO as a profit center, not a cost center” – Yen Lee, Uptake. You cannot have a ’set it and forget it’ approach to SEO. (http://hotelmarketingstrategies.com/hote...-for-2010/)

2.2.5 Reputation Management

Your online reputation plays a huge role in the level of success you achieve. The majority of travelers today use the internet to make travel plans, and say the reviews they read from other guests influence their buying decision. Reputation management begins by listening to what people are saying about you online. Use tools like Google Alerts, Technorati, and Radian 6 to track praise and criticism. Monitor all important terms: your hotel name, any old hotel names, your restaurants, the names of your manager and concierge. Review sites such as TripAdvisor, Yelp, and Type allow management responses, and this is a good chance to participate in the conversation. A recent survey by TripAdvisor/Market Metrix found that 85% of hotels have no guidelines on how to handle negative guest reviews published online. Develop your response policy ahead of time, and make an effort to followup with all feedback. Complaints can be an excellent opportunity to improve your hotel. If you get legitimate negative feedback, thank the reviewer for pointing it out…and explain the steps you’re taking to ensure it never happens again.TripAdvisor: The most important thing a hotel can do to improve rankings is provide a great experience for their guests. Effective online reputation management is more than just playing defense – it’s all about proactively building a positive buzz. Social media is a great way to begin doing this.(Http://hotelmarketingstrategies.com/hote...-for-2010/)

2.2.6 Social Media

The conversation about you will go on with or without you. It’s better to be involved. Serve as a concierge of the organization – “how may I help?”.Start by figuring out your social media goals. Is it education? sharing? Community?.Present your blog and social media presence as a way for people to connect with their peers, not just receive your marketing messages. Embrace a light branding approach – let your customers tell the story and build the brand. Guest sourcing” is the technique savvy hotels are using to involve their guests in the content production process. It’s the combination of user-generated content and crowd sourcing. Guest sourcing can build loyalty and raise your online visibility. Active participation in content production creates a sense of brand ownership. If you’re small, people may not be talking about your business by name….but they’re probably talking about your region and issues you care about. Monitor who writes about the topics you care about. Build relationships with them. If your online content sucks, you’re wasting your money and my time. Make something remarkable. People love to look at pictures…are you giving people lots of pictures online? Encourage your fans to take & upload their own photos. Add photos of your hotel’s design to the Hotel Design Blog. Hosting your hotel photos on Flickr increases your web presence, building awareness among potential guests. Use Creative Commons licensing on all Flickr photos to increase distribution. Introduce your staff with video interviews, and post to YouTube. Viral video is for generating buzz and awareness…but it’s not the best way to generate sales. Use Twitter search to locate people searching for solutions. Facebook marketing is all about “transitive trust” – reaching people through people. Helping your fans tell their friends. Facebook isn’t about answers. It’s friends sharing with friends. This makes Face book a poor platform for direct marketing. Facebook adds new features fairly rapidly, so take the time to educate your readers about how they can use the new tools. Encourage people to like and comment on your Face book content as much as possible to raise visibility. Get a “vanity” personalized Face book URL as soon as you can for search optimization purposes (you need 25 fans first).Employee blogging is more powerful than executive blogging. According to Edelman research, readers find them five times more credible. Get your team involved. Consider using multiple sites/blogs for each of the niche audiences you’re trying to reach. Use destination blogs to attract corporate and leisure travel planners. Especially in rural or remote areas, your biggest competition is not the hotel down the street but another location. Get your social media fans to meet up offline as much as possible. “Tweetups” are a popular way to do this. Create a social media management routine to ensure consistent participation.“You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you.” – Dale Carnegie

Listen to what people are already saying about you.Monitor your brand name with Google Alerts.Use Google Trends to find what’s hot. Start a destination blog. Start a hotel blog. Have your staff start blogs. Understand the 7 types of blog posts. Use Feed burner for RSS syndication. Offer an email alternative to RSS. Make blog posts richer with Zemanta. Encourage distribution with Share This. Build your blog community with My BlogLog. Realize that effective PR takes place in social media. Pitch travel bloggers. Focus your social media outreach on best groups. Start tweeting. Create a Facebook page. Get listed in Wiki Travel (amazing how many smaller hotels are absent).Get listed in TripAdvisor. Get listed in Yelp. Get listed in Virtual Tourist. Encourage guests to register with Yelp & Tripadvisor at check in. Ask for TripAdvisor hotel reviews when your guests check out. Ask for Yelp reviews at the end of all in-house satisfaction surveys. When a guest compliments your hotel, ask them to give you a social media review. Print a social media review request on the back of your business cards. Start a Flickr photo stream. Start a Flickr group. Start a YouTube channel. Shoot a video of your hotel, and post it to Google Video.[Josiah Mackenzie ,2009)
2.2.7 Advertising

Present a realistic picture of what people can expect at your hotel. (There is nothing worse than a disappointed guest).Test advertising messages in low-cost online channels before investing in big-budget media. Monmouth Plantation shifted focus from low rates to selling their lavish experiences using “sensory overload” and enjoyed a 30-40% increase in response rate..Test using feedback from your guests in your advertising. It’s more credible, and makes your ad stand out. Stories sell..Educational-based advertising works best in today’s environment of empowered buyers. Audit your advertising performance frequently. Ineffective advertising must be stopped immediately..OTAs offer international distribution and significant marketing budgets that can supplement hotels’ budgets when times are lean. Small & independent hotels should ride the backs of OTAs for these benefits..OTAs get first-time consumers in the door for new brands. They may book later directly & become brand loyalists. According to Expedia research, for every booking made on their site, they send the supplier two extra direct bookings.(http://hotelmarketingstrategies.com/hote...-for-2010/)

2.2.8 Email

Email may have taken a backseat role to social media hype, but it’s still a very powerful tool when used correctly. It is the cornerstone of permission-based relationship marketing. Email usually has higher psychological value than other types of online communication. Email is an effective branding tool for creating top-of-mind awareness. Email drives action and profits. Messages don’t always have to be sent to your guests and customers. Build systems to nurture partner relationships. Fairmont Hotels sends nearly half of their newsletters for other business partners..You must create your lists organically with the explicit permission of your prospects..Always provide a strong benefit for the person signing up for your list. Receiving updates (marketing messages) alone isn’t usually a very strong offer. Exclusive discounts and preferred service are more compelling. Choose a publishing frequency that works for you. Too often, and people will unsubscribe; not enough, and they will forget. If possible, ask your subscribers how often they want to hear from you. Test, test, test. Email marketing success comes through continual testing…and making changes based on what you learn. Ideas for testing email campaigns include: sending day and time, frequency, personalization, subject and contents, prices, and call to action. Segment your list as much as possible to deliver relevant messages. Kimpton Hotels built lists around affinity groups for subjects like wine, pets, and dining – and increased average revenue generated by a customer email campaign from $70,000-80,000 to $350,000-750,000.

2.2.9 Press & Media

Traditional PR assumes media editors & journalists are gatekeepers. New PR understands consumers will decide for themselves what to view. Savvy “PR 2.0″ organizations are using social media to communicate with journalists and increase their media coverage. Help A Reporter Out[HARO) is a 3 times daily email newsletter with dozens of ‘expert source’ requests from journalists. Involve your fans and customers in your PR distribution – get them to pass information along. Social Media Press Release Builder can help you create stories to share via the social web LinkedIn and Jigsaw can be used to find reporter contact info and start conversations. Media on Twitter is a more focused directory of journalists on Twitter. Web analytic more important in consumer-directed PR than traditional PR measures of success(Http://hotelmarketingstrategies.com/hote...-for-2010/)

2.2.10 Customer Service

Getting a new customer costs approximately five times what it costs to keep an existing one. Make collecting guest feedback a top priority. Make sure employees understand the value of this. Biggest operational challenge for hotels today is showing staff how company values look in action [Christoph Schmidt].Never ask a guest “Have you stayed with us before?” Build a great recognition system so you know that answer already..Collect as much information as you can about your guests. The more details you know, the higher level of service you can provide. Offer free WiFi. As Rajul points out, it makes for happier guests, and just might help you rank higher in TripAdvisor. Understand the power of consistency. This is crucial for building loyalty, and there is nothing worse than letting a customer down after they have a good experience. Use operating procedures and training to provide consistent excellence. Build loyalty through offering unique amenities, not just slashing prices [New York Times].Get inspiration from Ritz Carlton, which permits each employee to spend up to $2,000 to “move heaven and earth” to satisfy a guest – without obtaining prior permission

Listen to your guests using the web. Respond to feedback (positive and negative) in social media websites. Develop a more intelligent guest relationship system. Build an (opt-in) email list of your guests. Offer exclusive rates to your list. Reward your best guests: Send special birthday & anniversary packages. Reward your best guests: Create seasonal specials packages. Hire multilingual staff. Offer air conditioning. Print and give out (free) postcards. Reimburse checked baggage fees. Provide a SMART shopping car (like Le Bristol in Paris).Borrow ideas from customer service leaders like Nordstrom and Lexus[Josiah Mackenzie ,2009)

2.2.11 Going Global

60% of online searches are conducted in a language other than English (Forrester).Potential guests from abroad prefer information about your hotel in their own language… even if they speak English. The best translator translates into his/her native language (watch for dialects).On your website, don’t use flags to link to alternate language versions. Use text links in the top right corner. Alternatively, present a one-time landing page when someone first visits the site that says “Welcome” in different languages. Use coding to remember the guest’s preference optimize each page on your local sites for the local language. Make sure to promote local content online (social media, etc) as well as the English version.(Http://hotelmarketingstrategies.com/hote...-for-2010/)

2.2.12 Measurement & Metrics

What is measured gets improved. Metrics can (and should) determine the direction you take your internet marketing campaign. New technology requires new metrics. Create new, insightful measures of success. Metrics need to be put in context to make any sense. Raw data is useless unless it’s viewed in relation to something else. Top email marketing metrics: open rate, click through rate, and conversion rate (people taking the next step).Top website metrics: average page views per visit, average time on site, booking engine abandonment rate. Use Analytic to show which keywords are most important to your website (by time on site, bounce rate, etc).Determine which keywords produce the most conversions (sales), and build your search marketing plan around that. Always ask guests, “How did you hear about us?”.Build a statistics dashboard that shows the money. You must know which tactics are actually providing revenue.


Install (free) Google Analytic s (if you haven’t already).Understand how Analytic s can help with search optimization. Use Compete.com to understand your site traffic (& competitors).Track referral source types. Know which websites refer the highest quality traffic. Develop meaningful metrics for digital marketing. Track number of social media mentions. Track social media satisfaction percentage. Create new toll-free numbers to track different web promotions[Josiah Mackenzie ,2009)
2.2.13 Organic Search Marketing (SEO)
Focus on dominating local search. Create local keyword lists by pairing geocentric keywords (Seattle) with industry keywords (boutique hotel).Optimize for questions people ask. Make your blog search friendly. Appear in Google Maps‘ local business listings. Make sure your hotel website has the right keywords in the right place. Establish a web presence, not just a web site. Use Quarkbase to understand your web presence. Use Google Trends for websites[Josiah Mackenzie ,2009)
2.2.14 Paid Search Marketing (PPC).
Determine your objective first (ROI, growth, market research, etc).Use professional keyword research tools. Use property features as keywords. Include industry & long tail keywords. Do keyword competitive analysis to find opportunities. Experiment with different match types (broad, phrase, exact).Use negative keywords. Grab attention with your ad copy. Use Dynamic Keyword Insertion (DKI) to include search phrases. Highlight special seasonal offers & update regularly. Disqualify unlikely guests. Create many ad variations for each ad group. Split test ad copy variations. Use unique reservation landing pages. Adjust keyword bidding strategies. Use seasonality data. Try geo-targeting. Experiment with ad placements (on travel websites).Target specific demographics. Set up weekly statistics reporting[Josiah Mackenzie ,2009)
2.2.15 Technology
.Embrace new technology that improves your guest experience. Provide free internet access through WiFi and guest computers. Offer technology that complements your hotel’s heritage. Add new entertainment hubs (with iPod docking, etc).Try interactive activity planner centers. Experiment with permission-based mobile marketing. Get your hotel video posted on TVtrip

2.2.16 Miscellaneous.
Look for big advertising discounts (corporation budget cuts mean remnant sales).Try unconventional room pricing. Never reduce prices as a quick-fix remedy. Partner with local businesses for destination marketing Sell the experience, not the room

It is said that organizations in the tourism industry have been slow in adopting the principles of marketing, even though these would enable them to improve their performance and customer retention (Appiah-Adu, Fyal & Singh 2000)

For a service organization such as a hotel to acquire customers, it is important that marketing strategies be deployed to improve its own ability to compete with other hotels, gain a competitive advantage and thus retain a greater number of customers (Anderson & Vincze 2000;Chaharbaghi & Lynch 1999Hill & Jones 2002;Hitt, Ireland & Hoskisson 2001;Kurtz & Clow 1998;Ma 1999; Passemard & Kleiner 2000)

Probably the most important part of a lodging market analysis is the study of current and proposed competition. It is sometimes helpful to conduct interviews with the operators of other hotels nearby to learn about their operation and performance. An important part of your competition analysis is estimating the monthly and annual operation performance of each competitive property. Performance can be measured in terms of occupancy percent and average daily room rate.
Occupancy Percent = Number of Rooms Sold / Number of Rooms Available
Average daily room rate = Total Room Revenue / Number of Rooms Sold. In addition to occupancy and average room rates, each competitive operation should be carefully studied to determine its strengths, weaknesses and competitive position in the market area.[2003 Bill Ryan and Michael Chrisler]

2.3.1 Competitive advantage and sustainable competitive advantage

Competitive advantage can be viewed as the value an organization is able to create to differentiate itself from its competitors (Dubé & Renaghan 1999)

The value that is created by an organization is measured by the price customers are willing to pay for its particular service (Passemard & Kleiner 2000)

If customers perceive the service as producing the required benefits, they will purchase that service, and, more importantly, will continue to do so over time (Wood 2004)

Hitt et al. (2001) view competitive advantage, and sustainable competitive advantage, as more or less synonymous.

Anderson and Vincze (2000)define sustainable competitive advantage as the
ability to be successful over time. Success is based on the organization's ability to rely
on the skills and assets it owns.

According to Chaharbaghi and Lynch (1999Smile
sustainable competitive advantage meets current competitive needs without harming
the ability of the organization to meet its future needs. Sustainable competitive
advantage has three different ‘orientations’. The first is a conservation-orientation,
which is rooted in the idea that no organization has unlimited resources.
second orientation is needs-based since the economic activity of the organization is
concerned with the needs of its customers. Finally, it is future-oriented, or focused
on the long-term enhancement of resources to gain advantage.

Aaker (2001) considers that four factors are needed to create a sustainable
competitive advantage: firstly, the product strategy, the positioning strategy and
the production strategy with which the organization competes; secondly, the assets
and capabilities of the organization that form the basis for competition; thirdly, the
markets where the organization competes; and, lastly, the competition with which
the organization has to contend.

Kim and Oh (2004 ) are of the opinion that the competitive advantage of
an organization is the result of the resources that the organization has developed
internally. As with all organizations, hotels differ in terms of the resources that they
possess or have access to. The competitive advantage that a hotel possesses depends, thus, on how the hotel develops and employs its resources. A chain of hotels might, for example, gain competitive advantage through a flawless reservations system developed for the chain. Given the current business landscape, it is necessary for organizations to keep ahead of competitors by utilizing strategies of differentiation.
Differentiation is accomplished through gaining – and sustaining – competitive
advantage (Colgate 1998).

Branding seems to be the only sustainable differentiating strategy that hotels might use. A sustainable differentiating strategy requires the hotel to bond emotionally with customers and focus on building long term relationships with them. Hotels might accomplish sustainable differentiation by continually providing consistent brand messages (CAI & Robson 2004).

Mazzarol and Soutar (1999) propose that the organization can sustain its competitive advantage only if barriers to imitation are put in place. These barriers prohibit competitors from copying the organization. If competitors are unable to copyan organization, its competitive advantage may well become sustainable in the long run.

2.3.2. Positioning

Positioning is an important strategy that an organization might utilize to create, and
sustain, competitive advantage (Anderson & Vincze 2000; Belch & Belch 2004; Cravens, Lamb & Crittenden 2002; Lovelock 2001; Palmer 2001).

Once a service organization has identified its target market, the next step is to clearly position its service offering. The organization should first of all identify the basis on Competitive marketing strategies of hotels: an exploratory study which it wants to compete, and then position its services in a clear and unique way (Meek, Meek & Ensor 2001).

It is important to establish the different positioning criteria along which service
offerings can be positioned. These criteria include (Aaker & Shansby 1982, cited in
Belch & Belch 2004; Trout 1995, cited in Kotler, Brown, Adam & Armstrong
2004; Clow & Baack 2001; Wind 1982, cited in Palmer 2001)

Specific product or service attributes. A hotel promotes to business travelers the
fact, for example, that it is located in the heart of a financial center. Benefits or needs. A hotel decides to focus on specific services offered to the business segment. These services might include, for example, Internet access and document delivery. Usage occasions. A hotel positions itself to conference organizers as ideally suited for hosting conferences. User categories. A hotel positions itself as meeting the needs of business customers rather than individual customers. Positioning by competitor. A hotel positions itself as having better facilities than those of all other hotels in a particular area Positioning by product class. A hotel positions itself as a ‘conference’ hotel rather than as a ‘leisure’ hotel. Positioning by price and quality. A hotel might position its brand at the high end
of the market as a premium hotel, or at a more competitive price at the lower end
of the market. Positioning by cultural or national symbols.

2.3.3. Managing supply and demand

Klassen and Rohleder (2002) view demand management as “an attempt to shift demand”, while capacity or supply management is seen as “a response to demand”. Since services are perishable, managing demand and capacity (or supply) is critical in the hospitality industry (Kotler, Bowen & Maken 2003).

Demand and supply do not always match. The supply of services by a hotel may exceed the demand from customers in quiet times; demand from customers may exceed the ability of the hotel to supply the required services during peak times. When supply exceeds demand, a hotel is left with unused resources: rooms, restaurant seating and conference facilities, among other things. When demand
exceeds supply – and there are no rooms or restaurant seating available – the hotel may have no other option than to turn potential customers away (Kurtz & Clow 1998).

In a properly designed and managed service organization, the capacity of the facility, the supporting equipment and the service personnel should all be in balance with one another – and with demand for the services offered. Operations should be designed in such a way as to limit the chances that a bottleneck might occur in the system. This is not always attainable: demand levels fluctuate unpredictably in the hotel industry. It is also difficult to minimize bottlenecks, since the time and effort it takes to personally serve individual customers varies greatly (Adenso-Díaz, Conzález-Torre & García 2002; Klassen & Rohleder 2002; Lovelock 2001).

2.3.4. Management of customer demand

The fact that a service organization such as a hotel cannot store its services is not
problematic – but only when demand is steady and foreseeable. In reality, service
organizations such as hotels experience demand that varies significantly. This
variation can take a number of forms (Kandampully 2000; Palmer 2001):

Daily variation. The demand levels vary according to time of day: a hotel restaurant is busier during meal times than during the rest of the day. Weekly variation. A hotel located in a scenic area away from a city is busier over weekends than during the week. Seasonal variation. A resort hotel’s occupancy is higher during holidays than during out-of-season periods. Cyclical variation. The demand for hotel accommodation varies according to the economic conditions in the country or region where the hotel is located. Unpredictable variation. Demand for hotel accommodation can decrease sharply when a terrorist attack or natural disaster occurs in proximity to the hotel. In a situation of under-demand, or oversupply, the organization could seek greater diffusion into the market by proactively contacting customers – or it could reposition service offerings. It might offer different and alternative services, including complimentary and convenience services (such as meals included in room rates, or valet parking). It could increase advertising, or offer discounts or lower prices, or follow segments whose demands change according to season. It could also initiate marketing programmes targeted at particular segments, or use idle employees as ‘walking advertisements’, or market services under exchange agreements (Palmer 2001; Shemwell & Cronin 1994; Sill 1991).

2.3.5. Management of service capacity

Armistead and Clark (1994) state that capacity management aims to bring
potential output (based on available resources) in line with actual output.

Lovelock (2001) proposes several strategies to manage capacity. These involve stretching and shrinking capacity, chasing demand, as well as bringing about flexible capacity (Lovelock 2001).

In some instances, capacity may be elastic. This means, for example, that opportunities may exist to accept extra business when the organization is already busy. A hotel could stretch capacity by accommodating more than its capacity during peak demand periods. This could be done by turning a room suited for double occupancy into a room to accommodate a family.

The second strategy – chasing demand – involves altering capacity to suit changes in demand. The service organization may schedule for downtime during periods of low demand, use temporary staff instead of permanent staff, or lease or share facilities or equipment that are not being used. Alternatively, employees could be multi-skilled to perform a wider variety of tasks (Lovelock 2001).

A hotel may also decide to use the extra time to train its employees, or allow employees to practice the skills that they have acquired. The hotel could also spend the extra time D.J. Petzer, T.F.J. Steyn & P.G. Mostert

Implementing new work schedules, retrenching staff, conducting subcontracting work for other suppliers, or offering free services to charities and other such organizations (Kurtz & Clow 1998: Shemwell & Cronin 1994; Palmer 2001).

During periods of high demand, a hotel’s restaurant may, for example, offer early dinners and late suppers so as to accommodate all guests in the dining room, though at different times, during the evening. A hotel may decide to hire temporary staff and equipment, add temporary facilities, or use equipment and staff only where most urgently needed. It might also increase the number of staff, let staff work longer hours (overtime), or multi-skill staff to enable them to perform a wider variety of tasks. It could also turn away new customers and focus only on frequent guests, or, finally, outsource work to other organizations (Kurtz & Clow 1998:; Lovelock 2001; Palmer 2001; Shemwell & Cronin).

The last option available is to design capacity to be flexible (Lovelock 2001).

A hotel might build rooms with connecting doors. The hotel could, in such a scenario, configure the rooms as two separate bedrooms, or as one bedroom with a separate lounge – depending on demand. Sill (1991) is of the opinion that the objective of a flexible capacity strategy is to promptly respond to demand at different levels.


A hotel and its destination can be attractive for different reasons, and it is up to the individual hotel to bring these positives into the open through appropriate marketing strategies, and persuade the segments to turn to the own company. To compete with companies from alternate locations, qualities of the surroundings should be revealed (for example; excellent shopping, site seeing opportunities, dinning experiences, et cetera). (Plog 2004)

Advertising is one way of promoting a company. An advertisement is however the kind of promotion that always involves a cost. Outdoor advertising, print advertising, displays, direct mail and broadcast advertising are all means in which to reach out to a target audience. The difficulty is to choose the right media for the different segments. Billboards can help attracting impulse travelers, displays can have the same effect when put up in suitable locations, for example at airports, transportation terminals and trade shows. (Abbey 1989)

In2007 Outdoor advertisement was rated the second most popular promotion channel, it demonstrated a number of positive outcomes (Hotelnewsresource.com 2007).

Another way to create awareness amongst potential customers is to advertise in magazines,newspapers and directories. Magazines can be preferable instead of newspapers as the same copy often is read by more than one person and it is easier to focus on different segments. Magazines often appeal to an assured group of people, which makes it easier to attract the segments the company wants to reach out to. (Abbey 1989)

This is a good example of when knowledge about customers or potential customers comes in handy. An awareness of their habits and patterns, is helpful when choosing which marketing channels to use when targeting segments. (Tq.com.au 2008)

A large number of people look in the directories before booking a hotel, thus having a striking ad in the yellow pages can also be an effective way to reach potential customers. Direct mail is the only way to reach the targeted audience directly, whereas broadcast advertising reaches out to a wide audience. This does however not mean that it is impossible to still target the chosen segments. It can be very effective to send out repeat messages through certain carefully chosen radio stations. TV advertising can be suitable for smaller companies but it is not always a solution, as it is an expensive medium which reaches out to everyone, not only the target audience. (Abbey 1989)

Although the use of email and personal letters are often preferable as this facilitates more customized offers to certain segments (Lanz,Hotelnewsresource.com 2008).

A sales channel is a specific set of resources (people, methods, and materials) with which a manufacturer sells its products to customers. A Channel is made up of channel organizations, the business entities which do the work. Channel organizations are generally grouped into four categories: Direct, Manufacturers Representative, Distribution, and Value Added Reseller. The Direct channel is the manufacturer’s direct sales force, staffed by the manufacturer’s employees. It sells directly to some end-user customers. It also selects, sells to, and manages organizations in the other three channels. An Allstate Insurance Agent is an employee in a Direct Sales channel who sells Insurance to end-user customers. A Manufacturers Representative channel has third-party organizations that help one or more manufacturers sell their products in return for sales commissions. They may sell directly to end-user customers or to organizations in the Distribution or Value Added Reseller channels. Real estate brokers, travel agents, and mortgage brokers are Manufacturers Representative organizations that sell to end-user customers. A Distribution channel has third-party organizations (Distributors) which buy the products of many manufacturers and then resell them to their own customers. Their customers may include end-user customers, Value Added Reseller organizations, or other Distributors. Distributors include Master Distributors, Distributors, Mail Order firms, Brokers, Dealers, and Retail outlets. Supermarkets and hardware stores are examples of retail outlets that sell to end-user customers.A Value Added Reseller (VAR) channel is made up of third-party organizations that buy the manufacturer’s products, turn them into application specific solutions, and then resell the solutions to their own customer


The Direct channel is staffed by employees of the manufacturer’s Sales and Marketing organization. These people promote and sell the manufacturers products to their prospects and customers. Customers place orders with them. The manufacturer ships products to the customers who then pay the manufacturer for them. The Customers of the Direct Channel organization almost always include end-users and may also include Distributors, OEMs, and VARs. A Direct channel is often made up of one or more, overlapping sub-channels including Field Sales, Inside Sales, Telemarketing (or Telesales), Direct Mail, and captive Distributors. Field Sales people travel to the customer sites. Inside Sales and Telemarketing use the phone system to promote interest, close sales, and take orders.17 Direct Mail operations send flyers and catalogs to promote interest, and may accept orders via mail, FAX, or telephone. A captive Distributor is an organization that is owned or controlled by the manufacturer and exclusively stocks and sells the manufacturer’s products. A factory outlet store is a retail version of a captive distributor.

2.4.2 Manufacturers Representatives

The Manufacturers Representative channel is made up of third-party sales organizations who are selected and managed by the Direct Sales organization. They help to identify prospects and close orders in return for sales commissions. These organizations are variously referred to as Manufacturer’s Representatives, Sales Reps, or Reps. Each organization usually sells within a defined geographic territory: for example, New England or Southern California. Customers normally order products through the Direct Sales organization. The manufacturer fills the orders, ships to the customers, and invoices them. Customers pay the manufacturer and then the manufacturer pays sales commissions to the appropriate Manufacturers Representative organizations. A Manufacturers Representative organization typically represents the product lines of between 7 and 30 different manufacturers and sells them to a base of customers that it has developed over time. The product lines of the different manufacturers usually complement one another so that customers for one product line are prospects for the others. When a Sales Rep makes a sales call on behalf of one manufacturer, he also promotes the products of his other manufacturers.

2.4.3 Distribution

A Distribution channel can include Distributors, Dealers, and Retail outlets that purchase and stock significant quantities of a manufacturer’s products. These organizations buy products from the manufacturer, or from one another, at substantial discounts from the manufacturer’s unit list prices and resell them at whatever prices they choose. They make their money from the price markups. Distribution organizations buy and stock the products of hundreds to thousands of manufacturers, including products that directly compete with one another. Like supermarkets, they are single sources from which their customers can buy a wide range of products. They are also independent businesses that are free to sell to customers located anywhere. There are two overlapping selling processes with a Distributor, the process in which the Distributor buys from the Manufacturer and the process in which Customers buy from the Distributor. The Manufacturer’s Direct organization selects and sells to the Distributors. The Distributor manages the transactions with the customer. However, the manufacturer stimulates the Customers by directly promoting their products through such means as advertising and publicity.

2.4.4 Value Added Resellers

The Value Added Reseller channel consists of independent businesses that sell customized solutions to their own customers. They buy manufacturers’ products at discounts and use them in their solutions. Value Added Reseller channel organizations variously called System Integrators, VARs, High-tech Distributors, Value Added Dealers (VADs), and Original Equipment Manufacturers (OEMs). Some readers may suspect that I’m a synapse short to include OEMs among channel organizations. Everyone knows they’re customers, and they are. Bear with me, there is method to the madness. Systems Integrators

System Integrators use technical expertise, such as application engineering, to solve specific problems for customers in specific markets. Their customers are generally end-users, but on occasion they are OEMs. The System Integrator provides solutions that include the products of one or more manufacturers which they either purchase directly from manufacturers, or from distributors. They usually do business within a limited geographic territory. Roofing contractors, interior decorators, and plumbing contractors are examples of System Integrators in the consumer market.

2.4.5 Other Channel Resources

Manufacturers and channel organizations use consultants and successful customers to sell their products. Service organizations sell replacement parts, provide credible technical referrals about product quality and reassure some customers that they will be conveniently supported after they buy a product.


Consultants provide technical expertise which the customer employs to develop its product or solution. The Manufacturer’s Direct organization (or any other channel organization) cultivates consultants who know how to use its products to solve specific problems. The manufacturer refers consultants to appropriate customers. The customers decide which consultants to hire. The consultant designs the manufacturer’s product into the solution. The customer buys the product and pays the consultant. people are also motivated by other things, including doing the best possible job whether or not they get paid for it.


2.5.1Customer Value & Loyalty

A service is not merely about the product and service, it is more about the entire social
experience that is connected to the purchase. Knowledge about what customers’ value andhow to satisfy their needs is essential in order to offer them the right products and services.This understanding can help a company gain competitive advantage as it often leads to retention. (Oliver & Rust 1994)

Usually customers base their perceived value by evaluating price and quality. The customer basically compares the advantages that is gained over time, and put it in relation to the cost associated with the service. By providing good service to the customer the company can increase the perceived value. (Grönroos 1998)

The higher the customers level of satisfaction, the more likely it is that the customer stays loyal. However if the level is low it is more likely that they instead turn to another company next time that can offer a better experience. (Oliver& Rust 1994)

Important to have in mind is that loyalty has to do with emotions and to reach
this level the overall impression about the company must be consistent of good quality and satisfying experiences (Kincaid 2003).

Loyal customers are in most cases the most lucrative ones (Ibid.). Therefore the goal should be first to identify the most profitable segments on the market and after that develop close relationships with these segments in the hope that they will turn into loyal customers (Hughes 2003).

The most lucrative segments are usually those who travel a lot for different reasons
and those who will tell their friends about their visits, which might result in new business(Plog 2004).

It takes constant work to retain customers, as it is important to satisfy them every time
(Kincaid 2003).

Repeat business plays an important role for a company in the hotel industry,which should motivate companies to gain as many loyal customers as possible (Abbey 1989).

A company that knows how to meet with customer expectations and even exceed in doing so have a better chance in developing loyal repeat customers (Armstrong & Kotler 2004).

Extra service when not expected is usually a successful strategy, it can be little things to leave a positive impression (Eriksson & Åkerman 1999).

According to the American Marketing Association, Consumer Behavior is defined as "the dynamic interaction of affect and cognition, behavior, and environmental events by which human beings conduct the exchange aspects of their lives."
Belch and Belch define consumer behavior as “the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires”

Consumer behavior is the study of when, why, how, where and what people do or do not buy products. It blends elements from psychology, sociology, social psychology, anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.

Model of buyer behavior

In earlier times, marketers could understand consumers well through the daily experience of selling to them. But as firms and markets have grown in size, many marketing decision makers have lost direct contact with their customers and must now turn to consumer research. They spend more money than ever to study consumers, trying to learn more about consumer behaviour. Who buys? How do they buy? When do they buy? Where do they buy? Why do they buy?

The central question for marketers is; how do consumers respond to various marketing stimuli that the company might use? The company that really understands how consumers will respond to different product features, prices and advertising appeals has a great advantage over its competitors. Therefore, companies and academies have researched heavily the relationship between marketing stimuli and consumer response. Their starting point is the stimulus -response model of buyer behavior shown This shows that marketing and other stimuli enter the consumer's 'black box1 and produce certain responses. Marketers must figure out what is in the buyer's black box.2. Marketing stimuli consist of the four Ps: product, price, place and promotion. Other stimuli include significant forces and events in the buyer's environment; economic, technological, political and cultural. All these stimuli enter the buyer's black box, where they are turned into a set of observable buyer responses : product choice, brand choice, dealer choice, purchase timing and purchase amount.

The marketer wants to understand how the stimuli are changed into responses inside the consumer's black box, which has two parts. First, the buyer's characteristics influence how he or she perceives and reacts to the stimuli. Second, the buyer's decision process itself affects the buyer's behaviour.

Characteristics Affecting Consumer Behavior

Consumer purchases are influenced strongly by cultural, social, personal and psychological characteristics, as shown. For the most part, marketers cannot control such factors, but they must take them into account. We illustrate these characteristics for the ease of a hypothetical customer, Anna Flores. Anna is a married graduate who works as a brand manager in a leading consumer packaged goods company. She wants to buy a camera to take on holiday. Many characteristics in her background will affect the way she evaluates cameras and chooses a brand.

Cultural Factors
Cultural factors exert the broadest and deepest influence on consumer behavior. The marketer needs to understand the role played by the buyer's culture, subculture and social class.


Culture is the most basic cause of a person's wants and behavior. Human behavior is largely learned. Growing up in a society, a child learns basic values, perceptions, wants and behaviors from the family and other important institutions. Like most wisent people, in childhood observed and learned values about achievement and success, activity and involvement, efficiency and practicality, progress, material comfort, individualism, freedom, humanitarianism, youthfulness, and fitness and health. Sometimes we take these values for granted, but they are not cultural universals.

Marketers are always trying to spot cultural shifts in order to imagine new products that might be wanted. For example, the cultural shift towards greater concern about health and fitness has created a huge industry for exercise equipment and clothing, lower-calorie and more natural foods, and health and fitness services. This allowed Snapple to change the face of the US soft-drinks market
with its 'new age' iced teas and fruit-flavored drinks. The shift towards informality has resulted in more demand for casual clothing, simpler home furnishings and lighter entertainment. And the increased desire for leisure time has resulted in more demand for convenience products and services, such as microwave ovens, fast food and direct line financial services such as First Direct and Direct Line. Concern for the environment is influencing consumer behavior both through legislation and through demand for less wasteful goods


Each culture contains smaller subcultures or groups of people with shared value Systems based on common life experiences and situations. Subcultures include Nationalities, religions, racial groups and geographic regions. Many subcultures make up important market segments and marketers often design products and marketing programmers tailored to their needs," The huge US market of 260 million people has Hispanic (approaching 40 million) and black (over 30 million) subcultures that are bigger than most national markets. In all developed economies the graying population is growing rapidly. Marketers often h

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