The Impact Of Marketing Management Function In Hospitality Industry
This research was designed to investigate the function of marketing Strategies in hospitality business as a channel or means to deliver satisfaction to customers. This was as a result of inferior quality of goods and services rendered to customers which had led to lost of market share to many organizations in the hospitability industry. The board objective was to explore reasons why the downward trend of market share in the industry and to make recommendations as to revive the sector. Primary and secondary data were obtained from relevant sources and chi-square test statistics was used to test the formulated Hypotheses.
Among the findings were that poor quality services resulted in lost of customers, lack, of desired satisfaction and lack of maintenance culture on the existing equipment. The following recommendations were made; training of staff, strategic maintenance culture and provision of modern facilities to keep consumer comfortable would yield the desired satisfaction and would result in repeat purchase from customers.
1.1 Background of the Study
All organizations, hotels included require marketing strategies to thrive and remain competitive in their industries. Considering the dynamic nature of the hospitality industry, various hotels ought to change their marketing strategies quite often to cope with the changing needs in the market and also remain ahead of competition (Kotler 2000). To attain a sustainable competitive edge, an organization needs to identify its main strength and position itself in such a manner that is above competition in that segment (Johnson & Scholes, 2002). So as to create a distinct competitive advantage over rivals, a firm must select right combination of target markets and marketing mix. Hotels continually seek new ways to acquire, retain and increase business, because the cost of losing customers is rising. Service is an important factor in retaining clients. The role of service is more important than ever, and is expected to become even more critical with time (Choi & Chu, 2001). Hotels that have the ability to attract, satisfy and thus retain customers are more likely to survive than hotels that do not do so. Successful customer retention allows the hotel to build relationships with its customers
It is very difficult for a business organization to survive and remain competitive in a dynamic market without injecting various marketing strategies to its operations. In this study, Ansoff growth matrix Model and marketing mix strategies shall illustrate the effect of marketing to performance of hotel business organizations. Performance of hotels in Nigeria has been seen to deteriorate in the past few years as evidenced by a number having to even close down (Najib, et al, 2016). This raises much concern because tourism contributes largely to Nigeria economy and if the hotels hosting these tourists do not perform well as expected, the tourism contribution to GDP ultimately gets affected. Particularly, the recent experienced insecurities in Nigeria have geared the performance of the hotels to the worst. Though measures to improve the security in the hotels have been put in place e.g. hotels like Intercontinental and Kempiski have sniffer dogs at security check points, the tourist levels still remain low. This is attributed greatly to uncertain situations that had been created by the insecurities, leading to travel advisories being put across last year 2015 that led to travel cancellation of most of the tourists from other countries. Hence managers have been necessitated to come up with new strategies to ensure thriving of their hotels.
Marketing strategy is a reaction that takes place between the external environment forces and internal forces making the organization to determine its position in the target market, (Hult, & Olson, 2011). Marketing strategies in a business acts as key to the business growth and to the customers satisfaction in terms of achievement made by the organization. The environmental forces which affect the business in attaining its needs require to be detected in advance and handled well to enable the business to meet its vision and mission. Strategies of organizations enable evaluation of the long and short term goals thus making it possible to achieve the objectives in specified period. A Business or firm should have a unique strategy for effective competitiveness, growth and profitability of the business.
Performance is the actual output or results of an organization as measured against its intended outputs (or goals and objectives). Organizational performance is the final achievement of an organization which is measured either in financial and non-financial indicators, and contains a number of parameters, such as the existence of certain targets are achieved, has a period of time in achieving the targets and the realization of efficiency and effectiveness (Gibson et al., 2010). Company performance can also be used to view how an enterprise is doing in terms of level of profit, market share and product quality in relation to other organizations in the same industry.
According to Richard et al. (2009) organizational performance encompasses three specific areas of firm outcomes which are financial performance (profits, return on assets, return on investment, etc.), product market performance (sales, market share, etc.), and shareholder return (total shareholder return, economic value added, etc.).
Performance is tracked and measured from various angles such as financial performance (shareholder return), customer experience, social responsibility (corporate citizenship, community outreach), employee stewardship, Performance improvement, Organizational engineering etc. Performance is a complex concept that has been explored in numerous studies. For example, Ford and Schellenberg, (1982), in the early research of business performance, there was considerable disagreement about how it should be conceptualized. Understanding the internal and external factors and how they affect a firm’s operations is central to effective performance management. A firm’s internal environment has been described in terms of structure, strategy, culture, resources, and the roles and responsibilities of individuals, as well as processes and systems (Brignall & Ballantine, 1996). The external environment in which an organization operates on the other hand is often referred to its market or industry. For many firms, it is the external environment that causes the greatest challenges as it is always unpredictable and uncontrollable and, even for the most successful managers, can impact negatively on business performance. To measure business performance, it is important to understand that the results are the outcomes of the drivers and how they are managed. In the early studies of performance, results were mostly defined and measured by the firm’s financial outcomes (Harris & Mongiello, 2001).
1.2 Research Problem
Businesses do not exist in vacuum and it is no doubt that they are being constantly subjected to forces of change in the environment that constitutes economic, competitive, technological, social cultural and political environment. All organizations regardless of their size are environment dependent hence as the external environment changes, organizations find themselves in unfamiliar environment and have to respond by integrating changes and internalizing the ability to adapt to their new environment for survival and growth (Gathiri 2012). However, organizations should struggle for continuous growth while keeping the aim of increasing or simply maintaining their sales and profit levels to ensure their survival (Claver et al 2006).
Service Sector forms substantial contribution to Nigerian GDP; about 53.3% as per 2013 Global finance report. Hospitality sector where hotels fall forms a significant portion of this contribution. In the past couple of years we have affirmed a significant drop in performance of this sector. There are a number of reasons behind this mainly; Weak marketing strategies adopted by different hotel chains and high level of insecurity in the country majorly caused by terror attacks. Hotels in Nigeria operate in a dynamic business environment characterized by intense
Competition for resources and market share hence have become more challenging to manage and sustain their growth rate. Kamau (2008) stated that the Nigeria tourism sector which hotels in Nigeria depend on has been facing numerous challenges which have posed a threat to their survival and growth. These challenges include competition for resources, skilled labour and market share, socio-cultural changes, technological changes, economic challenges, changes in Customers’ expectation and preferences and insecurity due to terrorism an issue that has become major in recent years. The dynamism of this environment calls for appropriate growth strategies that will enhance good performance.
Related studies have been done on marketing strategies and the performance of organizations. To begin with, internationally, various researchers have conducted on the role of strategy in competing successfully with other hotels such as Enz (2011). McCarthy (2000) in a study on strategies of hotels in USA argued on the achievement and growth of organization using Ansoff’s growth strategy. Irish Hotel Industry established that year in year out sales growth increased revenue as part of a growth strategy (Flanagan 2005). Other researchers locally, Magunga (2010) in his study on the effects of marketing strategies on performance of Insurance Industries in Nigeria. He further argues that the major contributors to the sector performance are the marketing strategies adopted by insurance companies. Similarly, Ayele (2012) and Richard (2013) also conducted studies on strategies adopted to gain competitive advantage. They established differentiation and market development strategies to be used more.
In the past couple of years we have seen a drastic drop in tourists’ presence in Nigeria especially at the coast where hotel business forms a significant driver of economy. This has resulted to poor performance because these hotels mainly rely on both local and international tourists as their main clientele. Though various studies have been conducted in the sector, the available theory is not sufficient enough in explaining the impact the marketing strategies have on the performance of the organizations. This study will aim to shed more light into this and aim to answer the research question; what is the relationship between marketing strategies and performance of the large hotels in Nigeria?
1.3 Research Objective
The objective of the study will be to establish the relationship between marketing strategies and performance of large hotels in Abuja.
Specific objectives to be examined are as follows;
- To determine the effect of market penetration strategy on performance of Large hotels in Nigeria
- To determine the influence of diversification strategy on performance of large hotels in Nigeria
- To determine the influence of market development strategy on performance of large hotels in Nigeria
- To determine the effect of product development on performance of large hotels in Nigeria
1.4 Hypothesis of the study
- There is no significant effect of market penetration strategy on performance of Large hotels in Nigeria
- There is no significant effect of diversification strategy on performance of large hotels in Nigeria
- There is no significant effect of of market development strategy on performance of large hotels in Nigeria
- There is no significant effect of product development on performance of large hotels in Nigeria
1.5 Significance of the Study
The study shall enable the researchers and academicians have a well-versed knowledge on the, strategies to adopt to counter the changes in the external business environment and how turbulent the environment can get. This therefore shall contribute to the existing body of knowledge in the area of growth strategies and form basis for further research on growth strategies and performance of hotels in Nigeria. Besides that, the findings can be a point of reference in the future.
The study will be of value to the policy makers in both hospitality industry and government while planning and formulating policies that will encourage investment in the hotel industry which will significantly contribute to the Nigerian economy. It will enable the hotel keepers and caterers to formulate policies that will govern the hospitality industry as per changes in the external business environment they operate in.
Practitioners in the industry shall have a better understanding of the external business environment that hotels operate in thus enabling them to come up with better competitive strategies that will make them have an influence in the industry and consequently improve on their performance. It will further help them understand the rules and regulations to implement for the industry to be relevant and contribute to growth of the economy.
1.6 Scope / Limitation of the Study
The study will try to establish the relationship between marketing strategies and performance of large hotels in Nigeria. It will cover all the large hotels in Abuja, the federal capital territory. A sample of 30 five and four star hotels will be be used for the study.
The study is limited by time, finance and availability of data to the researcher.
1.7 Definition of Terms
An establishment providing accommodation, meals, and other services for travellers and tourists.
The accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed. In a contract, performance is deemed to be the fulfillment of an obligation, in a manner that releases the performer from all liabilities under the contract.
Marketing is profitably using the results of studying short term and long term needs of those who can pay for a one-time, or in most cases, a steady flow of service or product placement.
Strategy is a general plan to achieve one or more long-term or overall goals under conditions of uncertainty
Marketing strategy is a reaction that takes place between the external environment forces and internal forces making the organization to determine its position in the target market, (Hult, & Olson, 2011).
Summary, Conclusion and Recommendations
This chapter contains summary of the study, conclusion and recommendation for policy makers and areas for further research. Data analysis and summary and conclusions were made in line to the study objective which was to determine relationship between marketing strategies and performance of large hotels in in Abuja.
5.2 Summary of the Findings
The study sought to determine the various marketing strategies put in place by the hotels in enhancing their financial performance. The population of this study comprised all the large hotels in Abuja. The study focused on the 30 five and four star hotels based in Abuja. The findings obtained revealed that the most adopted penetration strategy was penetration pricing on services with a mean of 4.1, while the least adopted was direct marketing on services and products and internet marketing practices each with a mean of 3.3. The most adopted marketing strategy was making hotel brand visible to the niche market with a mean of 4.0, and the least being practicing market segmentation based on social class of the customers with a mean of 3.3. The most adopted product development strategy was existence of promotion strategies with a mean of 3.6, while the least was the hotel advertises its products through various media with a mean of 3. While the diversification adopted to the largest extent was maintaining of strong customer relationship with a mean of 4.2, the least diversification adopted was specialization in unique services with a mean of 3.2. Thus implying that though most strategies had large extents of adoptions, some still required improvements in their adoption.
On the relationship that existed between the study variables, product development strategies had a Pearson correlation of 0.334, and a p-value of 0.096, diversification strategies has a Pearson correlation of -0.305, and a p-value of 0.129, market development strategies had a Pearson correlation of 0.910, and a p-value of 0, and penetration strategies had a Pearson correlation of 0.796, and a p-value of 0. This thus implied that all the variables except the diversification strategies had a positive impact on the performance of large hotels.
On the overall effect of the dependent variable on the independent variable, R obtained was 0.918 and R square value 0.844. This implied that marketing strategies had positive relationship with organization performance. Marketing strategies explained 84.4% of the variation seen in the performance of large hotels in Abuja is explained by the variables in the study mainly; product development strategies, diversification strategies, market development strategies and penetration strategies. This further meant that only 15.6% of the variation seen in performance of large hotels in Abuja is explained by other variables which are not in the model. The results further indicated that overall, the model was highly significant. This is because the p-value obtained of 0.000 is less than both 0.01 and 0.05. Thus implying that at 5% level of significance, at least one of the variables included in the model is useful in predicting the performance of large hotels in Abuja.
The model coefficients obtained by the study indicated that product development strategies had a coefficient of 0.126, diversification strategies had a coefficient of 0.025, market development strategies 0.787, and penetration strategies 0.175. The positive coefficients obtained indicated that all the variables had a positive effect on the performance of the hotels. Thus increased measures on these strategies would result in improved financial performance of the hotels.
Based on the study findings, the study makes a number of conclusions. The study aimed to establish the marketing strategies put in place by the large hotel in Abuja. The study concludes that adoption of product development strategies, diversification strategies, market development strategies and penetration strategies improve hotel performance. The study also concludes that most adopted penetration strategy is penetration pricing on services, the most adopted marketing strategy was making hotel brand visible to the niche market, product development strategy was existence of promotion strategies while the diversification adopted to the largest extent was maintaining of strong customer relationship. This is an indication that most of the strategies have large extents of adoption. This may be due to the impact the strategies have on both the effectiveness and efficiency of the operations.
The study also established that the marketing strategies have a significant positive relation with the performance of the large hotels. The study thus concludes that variation seen in the performance of large hotels in Abuja is explained by marketing strategies which include product development strategies, diversification strategies, market development strategies and penetration strategies. Hence proper strategies alignment and formulations will result in improved performance of the large hotels. This is because strategic marketing is the driver of organizational positioning in a dynamic environment, and that it helps to enhance the development of new product/service for existing markets.
From the findings, several recommendations are made. To begin with, the performance of the organization may be determined greatly by the type of marketing strategies employed. The study thus recommends that the implementation process of these marketing strategies should be given top priority during the strategy formulation process. Particularly, adequate time and resources should be allocated in ensuring that the strategies are implemented successfully.
Further, the marketing strategies adoption should be supported by an understanding of the hotel industry structure, the needs of target customer segments, positional advantages being sought, and trends in the environment. This will consequently improve on the firm’s market revenue, share and profitability. Additionally, the organizations should focus more on the practices that are likely to accrue more benefits. This should therefore go a long way in not only boosting but also improving the organization performance at large.
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