The Travel And Tourism Industry Marketing Essay

Published Date: 23 Mar 2015

Executive summary

This report is about Millennium & Copthorne Hotel PLC (MCH) .The situation analysis is based on the business performance, PESTEL analysis and the Porter five forces analysis to identify the problem of the organisation. Following that, a survey interview is conducted to identify the expectation from the customer perception. Marketing development is important to a travel and tourism company. Therefore, marketers should have sufficient knowledge of marketing strategy in order to adopt suitable market strategies to improve sales. Segmentation, targeting, and positioning are the three stages process in the marketing development. Segmentation is referred to segmenting the market and developing market segment profile. Targeting is referred to developing measure of market segment attractiveness and selecting the market segment for the business development. Positioning is referred to developing market targeted segment and acquiring marketing mix strategy for each market segment. The analysis of the market segmentation is based on geographical segmentation, demographic segmentation, psychographic segmentation, and behavioural segmentation. MCH offers a high standard of facilities such as internet facilities, restaurant facilities, transportation facilities, and advance technology facilities, etc. MCH also provides supporting to customers. Customer service gives information needed by customers.MCH's services can differentiate with other competitors in the market. MCH promotes its products and services through internet portal. The hotel also acquires marketing communication tool such as advertising to promote its products and services. Another type of promotion strategy is to give sponsorship. MCH's management trains staff in order to provide quality services and products to customers. There is the feedback columme from the internet portal to provide opportunities for customers to provide their views towards its services and products offering to them. Corporate social responsibility is becoming more and more important in the business environment. The main aim of sustainability and corporate social responsibility is to get the support from stakeholders in order to gain profits. MCH sustainability and corporate social responsibility is focusing on customers, investors, employees, and suppliers. Customers should be able to get the benefits from the services providing to them.

Table of Contents Page No

Executive summary ii

Table of Contents Page No iii

List of figures iii

1. Introduction 1

2. Situation analysis 1

2.1 The background of MCH in the travel and tourism industry 1

2.2 Stakeholders' interests in MCH 4

2.3 PESTLE analysis 5

2.4 The main marketing issue of MCH 6

3. Marketing strategy of MCH 7

3.1 Segmentation, targeting, and positioning 7

3.2 Products and services of MCH 8

3.3 Pricing strategy 9

3.4 Promotion strategy 9

3.5 People, physical evidence, and people strategies 9

3.6 Market research 10

3.6.1 Research ethics 12

4 Sustainability and corporate social responsibility 13

5. Conclusion 14

References 16

List of figures

Figure 1: Porter five forces, Source: Porter (1985) 2

Figure 2: Market capitalisation and share prices, Yahoo. Finance (2012) 3

Figure 3: The relationship of stakeholders and marketing analysis, Haugh (2003) 4

Figure 4: PESTEL analysis 5

Figure 5: Market segmentation, targeting, and positioning, Kotler (2003) 7

1. Introduction

Sales are important to a business. Therefore, marketing and sales management takes the responsibilities to increase sales. In the competitive global market mechanism, the rivalry among competitors is very strong. To be successful in the tourism and hospitality industry, marketing objectives should be aligned with corporate objectives (Kotler, 2003). A marketing mix strategy should be able to obtain unique selling point. However, a company acquires a marketing mix strategy should be effective. Millennium & Copthorne Hotel PLC (MCH) is an international hotel which has owned approximately 108 hotels in the worldwide. The company is a listed company in the UK stock market which has full time employees about 10,912 people. It is worthwhile to look at its marketing development through four areas which are the situation analysis, marketing report, market research, and its sustainability and corporate social responsibility.

2. Situation analysis

A situation analysis is important for marketers to conduct marketing report and market research. It is normally based on the assessments of environment scan such as the analyses of internal environment issues, micro-environment issues, and external-environment issues to identify significant issues in order to acquire an effective marketing mix strategy (Kotler, 1991).

2.1 The background of MCH in the travel and tourism industry

MCH is a well known hotel which is listed in the London stock exchange. The hotel has an approximately 180 subsidiary hotels in the worldwide. Currently, the hotel has approximately 10,912 employees to bring services in the industry. The financial report as at 31 December 2008 showed that the total sales were £703 million and the net profits were £64 million. The following year financial report showed the sales falling to £654 million but the net income showed £70 million (Yahoo.Finance, 2012). As claimed before, the sales and marketing management is important to help generating more revenue. However, it seems the department fails to generate more sales. As a service company, it is important to look at service quality elements to help the marketing development to increase sales.

In terms of the analysis of the hotel industry, the Porter five forces model (Porter, 1985) is adopted on how MCH fit in within the structure of the travel and tourism industry (see figure 1). In the travel and tourism industry, services are important to gain customer satisfaction. A high level of service quality can reduce the threat of new entrant into the industry. The threat of new entrants is at the medium level. This is because big hotels such as MCH have already established in the travel and tourism industry. They have large customer databases. They also can play price war to reduce prices which cannot be afforded by a new hotel. MCH has its strong brand identity that already creates brand recognition in the market.

The threat of substitute products in the travel and tourism industry is low to medium. The substitute products of hotel are such as B&B hotel, family house, and motel, etc. However, most of hotels offer full services to customers including bar, restaurant, swimming pool, spa, retail shops, and room services, etc. It is more comfortable to stay in well known hotels due to safety and security issues. MCH has offered full services to customers including internet and other advance technology such as e-booking and e-payment settlement to fulfil customer's expectation.

Figure 1: Porter five forces, Source: Porter (1985)

Brand image is important in the service industry (Gronroos, 1994). Well known hotels have their own strong brand image in the markets. Therefore, the competitive rivalry within the travel and tourism industry is high. These hotels have their own marketing mix strategy to attract customers. MCH faces strong competition in the travel and tourism industry. In terms of market capitalisation, MCH is far behind of its competitors such as Shangri-La Asia Limited, EIH Ltd, and the Indian Hotels Company Limited (Figure 2). In addition, MCH share prices are falling in the market but it is still the highest among the selected competitors. The price/equity ratio is the highest among selected competitors (Yahoo. Finance, 2012).

Top Lodging Companies by Market Cap

Company

Symbol

Price

Change

Market Cap

P/E

InterContinental Hotels Group PLC

IHG.L

1,683.52

0.44%

4.57bn

812.90

Millennium & Copthorne Hotels PLC

MLC.L

468.50

0.34%

1.52bn

1,159.65

Shangri-La Asia Limited

S07.SI

15.08

0.00%

47.23bn

137.09

EIH Ltd.

EIH.BO

71.70

0.14%

40.98bn

33.03

EIH Ltd.

EIHOTEL.NS

71.60

0.77%

N/A

N/A

The Indian Hotels Company Limited

INDHOTELS.BO

60.55

0.49%

48.94bn

Figure 2: Market capitalisation and share prices, Yahoo. Finance (2012)

If there are too many companies to sell same products and services, it is more likely a perfect market competition (Griffiths and Wall, 2005). A company selects a pricing strategy which may not be effective unless the product can be differentiate from other products in the market. As the travel and tourism is a growing sector, services from many hotel can be differentiate from one to another. Therefore, the bargaining power from suppliers is medium to high. High quality services allow well known hotels maintaining price permium in the market. Large hotels are always to put their prices at certain levels. MCH is a well established hotel. Its management provides high quality products and services to customers. Therfore, the business has bargaining power in the market.

In economic theory, the pricing equilibrium is dependent on the demand and supply in the market. When the demand is higher than the supplier, the prices of products and services offering in the market is higher (Ison and Wall, 2007). In the travel and tourism industry, there are still fewer large hotels offering same products and services. However, there are large numbers of demands from hotels. Brand image is important for businesses (Bauer, Sauer, and Exler, 2008). Therefore, the bargaining power from buyers is low to medium. MCH is a well established hotel which has its brand image in the travel and tourism industry. People who tend to stay in the luxury hotel are willing to pay more for the services.

2.2 Stakeholders' interests in MCH

Stakeholders are important in the hotel industry. Therefore, hotel businesses should involve different. Haugh (2003) conducted an analysis of pharmaceutical industry. The analysis showed that the context of a situation analysis should involves different types of stakeholders in order to gain benefits to the business. This theory can be used in the travel and tourism industry in order to gain benefits. Therefore, the marketing development of MCH should involve suitable types of stakeholders and should build a good relationship with them. There are certain types of stakeholders more powerful than others. However, the management of MCH should not let them taking over the power (figure 3). But, implementing markting anaysis, matketing report and market research should be able to create benefits to stakeholders in order to get their support (Jenkins, 1998).

Situation analysis

PESTEL

Porter five forces

Stakeholders

Type

Relationship

Power

Event

Issue types

Figure 3: The relationship of stakeholders and marketing analysis, Haugh (2003)

Different types of stakeholders have different motives (Gamble and Kelly, 2001). As long as they get benefits from the marketing development, they will support the business of MCH. Government is a part of stakeholders of MCH. The motive of government is to increase numbers of employment and receive taxations from MCH. Suppliers have their own motives. Suppliers want to increase their profits through the business relationships. Suppliers intend to build supply chain developments with customers in order to increase cost efficiency than can increase profits (Saad and Patel, 2006). Supply chain development involves people to help marketing development. As claimed by Hawker et al (2004), consumer purchasing behaviour drives the development of supply chain network. The company wants to gain the support from internal and external stakeholders in order to increase sales and profits. This will increase sahreholders' wealth. Employees want to fulfil their satisfaction. They want rewards or compensation from their company. As claimed by Maslow and Lowery (1998), the basis needs of emplyees should be fulfiled in order to motivate them. Therefore, an effective reward system is needed to attract them to gain their performances (Lawler, 2000). Consumers have their motive towards the business activities. Consumers tend to get cheap and value for money goods and services from the hotel in order to earn their loyalty.

2.3 PESTLE analysis

PESTLE analysis is normally adopted by marketing managers to analyse external environment issues. PESTLE analysis is referred to political, economical, socio-cultural, technology, legal, and environmental issues.

Figure 4: PESTEL analysis

Source: http://uk.images.search.yahoo.com/images

Political issues are important in the travel and tourism industry. A country's politic is stable which can increase business performance. A country has a level of corruptions can reduce business performance due to less people coming to visit the country because of the safety issues. In addition, changing politician leader can affect businesses in the travel and tourism industry. In the UK, the politic is stable and is less corruption. There is a high level of safety and security facilities that can attract more tourists to this country.

Economic issues affect businesses in the travel and tourism industry. In the current economic recession, businesses in the travel and tourism industry are struggling to get more tourists. Many hotels have to reduce their prices to attract more tourists. When the economy is booming, businesses in the travel and tourism industry make more sales. In addition, inflation rate and foreign exchange can influence MCH's business in the travel and tourism business.

Socio-cultural issues can be important. In Britain, the society is rich of historical heritage that can attract more tourists. This can increase more businesses for MCH. Furthermore, MCH is a well know company which has brand image to tourist. The facilities of hotel with advance technology can attract more customers.

Technology issues can influence businesses in the travel and tourism industry. MCH has acquired advance technology in its business development. For instance, MCH offers e-booking and internet payment to customers. MCH also has internet facility to customers.

Legal issues can be important to the travel and tourism industry. In the UK, all companies are under the Company Act 1985 which has been replaced under the Company Act 2006. All listed companies should have their corporate governance policy. Hotels are also encouraged to achieve ISO9000 and ISO9001.

More and more service companies are concerned about ethical issues. Governments enhance green environmental issues. Large companies tend to establish their corporate social responsibility policy to get the supports from customers. MCH has its corporate social responsibility policy.

2.4 The main marketing issue of MCH

Marketing development is aimed to gain sales and to attract more customers. As claimed in the section 2.1, the sales of MCH declined in the last financial year. Therefore, it is important for the management of MCH to identify an effective marketing mix strategy to enhance sales. Obviously, reducing sales is meant reducing customers to stay in the hotel. The management of MCH should acquire a suitable marketing communication mix strategy to increase brand awareness and brand image to attract more customers.

3. Marketing strategy of MCH

Marketing development is important to a travel and tourism company. Therefore, marketers should have sufficient knowledge of marketing strategy in order to adopt suitable market strategies to improve sales. Marketing strategies consist of 7Ps which are product, promotion, price, place, people, physical evidence, and process (Kotler and Keller, 2006). However, it is important to analyse segmentation, targeting, and positioning strategies of MCH.

3.1 Segmentation, targeting, and positioning

Segmentation, targeting, and positioning are the three stages process in the marketing development. Segmentation is referred to segmenting the market and developing market segment profile. Targeting is referred to developing measure of market segment attractiveness and selecting the market segment for the business development. Positioning is referred to developing market targeted segment and acquiring marketing mix strategy for each market segment (Lambin, 1997).

Figure 5: Market segmentation, targeting, and positioning, Kotler (2003)

Effective segmentations should be measurable, accesible, substantial, differentiable and actionable (Kotler, and Keller, 2006). There are four types of segmenting consumer market which are: (i) geographical segmentation; (ii) demographic segmentation; (iii) psychographic segmentation; and (iv) behavioural segmentation. MCH's geographical segmentation focuses on word region, cities and tourist destinations. For demographic segmentation, MCH focuses on families, businessmen, middle age people, and both males and females. MCH's behavioral segmentation is based on loyalty status, user rates, and user status. For psychographic segmentation, MCH focuses on business class, and middle-high income earners. MCH targeting market certainly focuses on customers who need products and services both tourists and businessmen. The travel and tourist industry is a growing sector. It is believe that MCH targeting market is based on middle age people who frequently go for holiday. Therefore, the management MCH targeting more than one segment. MCH is well known brand. Therefore, the management imposes higher prices to targted customers.

Positioning is the extension of targeting (Kotler, and Keller, 2006). MCH offers high quality products and services to its customers. MCH is customer intimate hotel which offers the specific needs of customers in order to gain their satisfaction. It is also a technologically excellent hotel by offering high-technology facilities to customers. It is believed that MCH acquires product, price, place, promotion, people, physical evidence, and process strategies to attract customers.

3.2 Products and services of MCH

The business nature of MCH is offering services to hotel guests in order to gain their satisfaction. The core service of the hotel is to make hotel guest comfortable staying in the hotel with high level of service quality. The internet portal allows hotel guests to book their room. Front desk staff provide check in and check out service. Room service staff ensure the cleaniness of the hotel room. Waiters and waitresses offer excellent services to customers. MCH offers a high standard of facilities such as internet facilities, restaurant facilities, transportation facilities, and advance technology facilities, etc. MCH also provides supporting to customers. Customer service gives information needed by customers. Hotel provides information of tourist places. The hotel also provides services that are extrat needed by customers. The augmented product is based on variety services and a wide range of foods and products. In order to increase products and services, MCH acquires supply chain development and value chain development to help the marketing development in order to increase customer satisfaction and loyalty.

3.3 Pricing strategy

Pricing strategy is important in the marketing development. Value for money of products and services can gain customer satisfaction and can increase customer loyalty (Kotler, 2003). MCH acquires different pricing strategies. The management offers discounted prices of hotel rooms to customers in order to attract more customers.

MCH is a well known international hotel. Therefore, the hotel has brand identity. A strong brand identity can increase brand awareness (Dibb et al., 1997) to hotel guests. Therefore, the services can differentiate with other competitors in the market. This allows the management of MCH to impose a high price compared with motel and B&B.

3.4 Promotion strategy

Promotion is another type of marketing strategy. An effective promotion strategy can gain sales (Kotler and Keller, 2006). MCH promotes its products and services through internet portal. The hotel also acquires marketing communication tool such as advertising to promote its products and services. Another type of promotion strategy is to give sponsorship. MCH was part of the sponsors for the mega event, London Olympic 2012. These promotion mix strategy is indicated on the financial report and the corporate social responsibility of the hotel. Some information can be obtained from the press release.

3.5 People, physical evidence, and people strategies

People are the parties direct and indirectly linked to the consumption of services. This involves knowledge of employees, management and other consumers who can provide added value on the products and services (Kotler and Keller, 2006). MCH's management trains staff in order to provide quality services and products to customers. There is the feedback columme from the internet portal to provide opportunities for customers to provide their views towards its services and products offering to them.

Physical evidence strategy is referred to the ability and environment that services are delivered. Physical evidence strategy can be both tangible and intangible services. Tangible goods help to perform and communicate the services offering to customers. Intangible experiences can increase customer satisfaction (Kotler and Keller, 2006). MCH certainly acquire physical evidence strategy to increase its brand identity. Hotel facilities and quality services from staff increase the reputation of the hotel. The hotel has its own restaurants and bars that have provided more choices for customers. Staff helpfulness and good host-guest relationship increase that customers experienced can increase customer satisfaction.

Process strategy is important for an organisation. Process strategy is based on the issues of procedures, mechanisms, and flow of activities in an organisation that intend to attract customers (Kotler and Keller, 2006). Therefore, customer management processes are important in an organisation. MCH acquires a set of hotel proceduces in order to acquire an effective value chain development to help the marketing development. The value chain is from receiving guest through check in, room services, customer check out, and transportation, etc.

3.6 Market research

A situation analysis can identify the problem of the organisation. However, it is difficult to identify what are factors that cause customers' disatisfaction. Therefore, it is important for marketers to conduct market research in order to find out the solution. A market plan is needed to outline the stages of the market research process.

A marketer should start from the situation analysis to identify the problem of the current marketing development. After identifying the problem, the marketer should be able to set the aim and objective of the market research. The aim and objective must be achievable and not too ambitious.

The following stage is to identify the philosophy of research. There are some philosophy commonly used by the marketers to build their research framework such as positivism, interpretivism and paragmatism paradigm (Saunders et al., 2009). Positivism paradigm is based on numbers derived into meanings. Interpretivism paradigm is opposite to positivism paradigm. Interprevitism paradigm is based on knowledge of human experiences on the particular phenomenon. Therefore, the information is people answers into words. Pragmatism paradigm is a combine of both positivism and interpretivism paradigm to collect data (Collis and Hussey, 2009). However, the suggestion for MCH case should be based on pragmatism paradigm for the market research in order to collect more evidence to support the findings.

The next stage is to identify the research approach. There are two types of research approaches commonly used by researchers which are inductive research approach and deductive research approach. An inductive research approach is based on a qualitative research method to collect data (Veal, 2006). An deductive research approach is based on a quantitative research method to obtain information. This marketing plan should be based on both inductive and deduction research to collect the data.

After identifying the issues of research approach, the following stage is to acquire a suitable research strategy to collect the information. There are few types of research strategy that can be used in the market research. They are survey strategy, experiment strategy, and case study strategy (Yin, 2003). However, this market research should be based on a survey strategy to collect data. The survey strategy should acquire both qualitative and quantitative data. Qualitative data should be based on survey interviews to obtain people opinions. Quantative data are based on the qualitative data to conduct another analysis so called the correlation analysis to identify the correlation among selected variables.

The following next is to acquire research method. There are two types of research methods that are commonly used by marketers for their research. They are qualitative method and quantitative method. As claimed above, the research is based on pragmatism paradigm to develop the market research framework. Therefore, both qualitative and quantitative methods should be used for the market research.

The next stage is to identify the method and technique to collect the data. First, the management of MCH should identify the targeted group for the survey interviews. Because of the service problem, it is not possible to get the opinions from managers. The management should identify the problem is came from customers. The survey interview should be based on customer group. The reason to acquire the customer group is because they are the core issues to justify the service offering to them. They know their expectation from MCH.

The sampling is important to obtain more accurate answers (Gill and Johnson, 2002). The management should acquire a sufficient size for the sample to conduct the survey interview. The sample should involve both genders, males and females. They should be in the different categories of ages. The reason is that they give different opinions of their expectations.

The design of questionnaires is important. The marketer should make sure that quesionnaires are designed that can be understood by the respondents. Therefore, before conducting the survey interviews, a pilot study should be undertaken in order to collect more accurate answers (Cooper and Schindler, 2008). The survey questionnaires should be based on why, how, which, and what questions. The main reason of this type of questionnaires is to give more rooms to respondents to express their knowledge and expectations.

The data collection technique should be based on face to face interview. The reason is that face to face interview can directly collect the information from respondents. However, during the interviews, marketers should create more relaxing environment to calm respondents in order to get more accurate answers. All the data from the survey interview should be recorded. The data will be interpreted into word according to the express of respondents.

The data of survey interview are used for another type of analysis. This analysis is based on the statistical analysis. The statistical analysis is carried out to identify how relevant of the answers from the survey interviews. Therefore, the factors of services are carried out to conduct the correlation analysis. The anaysis is based on the numbers from -1 to +1. A negative number is represented a negative relationship within the variables. This means that they are not related to each other. A positive number means that there is a positive relationship within the variables.

The descriptive analysis is carried out to identify the level of risk to acquire the factors to improve services in order to attract more customers. If a variable has a high level of derivation towards the Mean, the management of MCH should decide whether they want to overcome the risk in order to improve services.

3.6.1 Research ethics

The research should acquire research ecthical issues in order stakeholders can support the marketing development of MCH. The market research should consider several contitions. Marketers should not force any interviewers to participate the market research. Interviewers allow to withdraw the participation anytime if they not feel comfortable. All data must be confidential and keeping in a save place. Marketers should explain to interviewes how long they want to keep the data. The information to interviewers must be transparent.

4 Sustainability and corporate social responsibility

Corporate social responsibility is becoming more and more important in the business environment. The main aim of sustainability and corporate social responsibility is to get the support from stakeholders in order to gain profits (Frederick, 2008). Corporate social responsibility should be able to benefits to stakeholders (Henderson, 2007). Sustainability and corporate social responsibility is important for MCH. MCH sustainability and corporate social responsibility is focusing on customers, investors, employees, and suppliers. Customers should be able to get the benefits from the services providing to them. Investors will be benefit from the implementation of sustainability and corporate social responsibility policy. This means that the managers should be able to increase stakeholders' wealth through the implementation of sustainability and corporate social responsibility. The motives of employees are to get benefits through both financial rewards and non financial rewards in order to motivate. Therefore, the management MCH should have an effective reward system in order employees can be motivated (Millennium & Copthorne Hotels , 2012).

MCH treats staff with respect andd consideration. Suppliers are important to the business of MCH. The management also understands the important of the profitable, taxpayer company and the group that delivery good long term returns. The hotel has also established the Board of Director and has reviewed the activities regularly that referred to as responsible hospitality. The corporate social responsibility is published in the annual report (Millennium & Copthorne Hotels , 2012).

However, there are most should be done in the sustainabilitya and socially responsible. The sales for the last financial is falling. This assumes that the hotel should have more to be done to increase customer supports.

5. Conclusion

This report is about Millennium & Copthorne Hotel PLC (MCH). Millennium & Copthorne Hotel PLC (MCH) is an international hotel which has owned approximately 108 hotels in the worldwide. In the marketing development, a situation analysis is important for marketers to conduct marketing report and market research. It is normally based on the assessments of environment scan such as the analyses of internal environment issues, micro-environment issues, and external-environment issues. The situation analysis is based on the business performance, PESTEL analysis and the Porter five forces analysis to identify the problem of the organisation. The management of MCH should acquire a suitable marketing communication mix strategy to increase brand awareness and brand image to attract more customers. Marketing development is important to a travel and tourism company. Therefore, marketers should have sufficient knowledge of marketing strategy in order to adopt suitable market strategies to improve sales. Segmentation, targeting, and positioning are the three stages process in the marketing development. Segmentation is referred to segmenting the market and developing market segment profile. Targeting is referred to developing measure of market segment attractiveness and selecting the market segment for the business development. Positioning is referred to developing market targeted segment and acquiring marketing mix strategy for each market segment. The analysis of the market segmentation is based on geographical segmentation, demographic segmentation, psychographic segmentation, and behavioural segmentation. MCH offers a high standard of facilities such as internet facilities, restaurant facilities, transportation facilities, and advance technology facilities, etc. MCH also provides supporting to customers. Customer service gives information needed by customers.MCH's services can differentiate with other competitors in the market. This allows the management of MCH to impose a high price compared with motel and B&B. MCH promotes its products and services through internet portal. The hotel also acquires marketing communication tool such as advertising to promote its products and services. Another type of promotion strategy is to give sponsorship. MCH was part of the sponsors for the mega event, London Olympic 2012. MCH's management trains staff in order to provide quality services and products to customers. There is the feedback columme from the internet portal to provide opportunities for customers to provide their views towards its services and products offering to them. To collect accurate answers, MCH should acquire a survey interview to collect the information in order to improve the current service quality. Corporate social responsibility is becoming more and more important in the business environment. The main aim of sustainability and corporate social responsibility is to get the support from stakeholders in order to gain profits. MCH sustainability and corporate social responsibility is focusing on customers, investors, employees, and suppliers. Customers should be able to get the benefits from the services providing to them.