Marketing Strategy In The Hotel Industry

Project and Seminar Material for Marketing

Abstract

The purpose of this study was to establish the relationship between marketing strategies and performance of hotels in Abuja. Specifically, the aim was to determine the effect of market penetration strategy, evaluate the influence of diversification strategy, establish the influence of market development strategy and determine the effect of product development on performance of large hotels. The population comprised of all the large hotels in Abuja registered and licensed by the Tourism Regulatory Authority. Only five and four star hotels based in Abuja were studied. This made a total of 30 hotels. Descriptive, correlation and regression analysis were used and results presented in tables and figures. The findings obtained revealed that the most adopted penetration strategy was penetration pricing on services, the most adopted marketing strategy was making hotel brand visible to the niche market, most adopted product development strategy was existence of promotion strategies while diversification adopted to the largest extent was maintaining of strong customer relationship. On the relationship that existed between the study variables, product development strategies, market development strategies and penetration strategies had a positive relationship implying that the marketing strategies application positively influenced performance of hotels. Multiple regression analysis obtained a positive coefficient of correlation implying that product development strategies, diversification strategies, market development strategies and penetration strategies had a positive effect on organization performance. The study concluded that marketing strategies positively affects performance of large hotels in Abuja. Product development strategies, diversification strategies, market development strategies and penetration strategies were concluded to be strategies adopted by the hotels and improved hotel performance. The study also established that the marketing strategies have a significant positive relation with the performance of the large hotels.The study recommends that the implementation process of these marketing strategies should be given top priority during the strategy formulation process to enhance performance of hotels.

Chapter One

1.1 Introduction

The Hotel Industry is primarily a service industry providing a wide range of services ranging from the provision of accommodation, food and beverage to the provision of entertainment, sport and other leisure facilities, to travelers and tourists.

The Hotel Industry comprises of three industries which are:

Companies involved in constructing, developing and owing hotel buildings.
Companies involved in managing hotels.
Franchising companies which develop Hotel chains without being involved in either owing hotel building or managing hotels

From the customer’s prospective, A Hotel is said to be an institution of Commercial

Hospitality, which offers its facilities and services for sale either individually or in various combinations.

The services and facilities offered for sale by the hotel includes; the Hotel location, facilities for use by the customers, Services provided through the available facilities, the Hotel image and prices of products and services offered for sale.

The main aim of marketing in the Hotel Industry is to increase sales revenue, achieved by identifying and satisfying customer’s needs and wants which may range from personal, social and societal wants.

For effective marketing in the Hotel industry, certain marketing strategies need to be developed, considering relevant and comprehensive information from within and outside the business, which should be checked regularly and updated when necessary.

Marketing objectives must also be set and they must be precise and quantified to show the life span for which they are to be achieved. They should be attainable, realistic and should moderate the business, serving as its basis for planning and decision making.

These objectives should depend on the needs and wants of its prospective and potential customers. Marketing strategies to be followed are:

Confirming Corporate Objectives
Writing Marketing Objectives
Selecting Strategic Business Units
Constructing a Strategic Marketing Mix.
Implementing, Controlling and Organising Marketing Strategy.

1.2 Objectives of the Study

This project work is written to;

Enable hotels satisfy their potential and prospective customer wants
Help hotels achieve their business targets and objectives to the maximum.
Help hotels increase revenue generated from sales through identifying and satisfying customer wants.
Ensure effective marketing strategy is developed and followed in hotels.

1.3 Definition of Terms

Marketing Strategy is defined as the way business is positioned in the market place .It is the way business is perceived by the customers.

Marketing according to Philip kotler the noted American marketing scholar, is defined as a social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.

The British institute of marketing, defined marketing as the management process responsible for identifying, anticipating and satisfying customer requirements profitably.

Marketing can also be defined as a set of tools which allow a company to achieve its aims.

A Hotel according to the proprietor’s act 1956 is defined as an establishment offering food, drink and if so required sleeping accommodation, without any special contract to any traveler presenting him self, who appears willing and able to pay a reasonable sum for the services and facilities provided and who is in a fit state to be received.

1.4 Marketing Concept and Orientation

Marketing Concept

Marketing is more than a set of skills and techniques used in the process of delivering mutual satisfaction .It is a way of doing business.

Marketing is able to provide three types of satisfaction, which are:

Personal satisfaction
Social satisfaction
Societal satisfaction

Personal satisfaction:

Is the gratification experienced from the consumption or ownership of a product.

Social satisfaction:

Occurs when the consumers immediate circle of acquaintances approve of the purchase. For instance, if a child tells his parent after a trip to a restaurant that he enjoyed it.

Societal satisfaction:

Occurs when the society as a whole approves of the purchase and consumption of the product.

Marketing Concept consists of 3 interdependent statements which are:

The consumer or customer should be the focal point for decision making.
Decisions made by the company should produce profitable sales.
Customer’s needs and wants should be recognized, organised and integrated to ensure they are met.

Marketing Orientation

Marketing orientation is the term used to describe the way of doing business characterized by those companies who have adopted the marketing concept. Some other orientation undertaken by companies includes:

Production orientation
Sales orientation

Production orientation:

Such companies approach business by concentrating on making quality products known to have sold well. Improvements are made on the production techniques and systems but little notice is taken of market changes and trends. This becomes a big problem later on as consumer needs is not static and therefore not met.

Sales orientation:

in such companies, goods or services are produced with huge effort out into selling and promoting them. Profits are made through sales volume, but this can only bring short term success. If the product does not meet customer expectations or is of poor quality, then their will be no repeat business by the customers.

In companies that have adopted the marketing concept, customer needs are identified and products and services produced to fit them. Products are delivered to consumers in the right place through the right channels at a price that suits them, gaining profit through customer satisfaction.

Chapter Five

Summary, Conclusion and Recommendations

5.1 Introduction

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.

5.3 Conclusions

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.

5.4 Recommendations

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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