Marketing for Hospitality and Tourism
Seventh Edition
CHAPTER
8
Customer-Driven
Marketing Strategy:
Creating Value for
Target Customers
Marketing for Hospitality
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Learning Objectives
1. Define the major steps in designing a
customer-driven marketing strategy:
market segmentation, targeting, and
positioning.
2. List and distinguish among the
requirements for effective
segmentation: measurability,
accessibility, substantiality, and
actionability.
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Learning Objectives (cont.)
3. Explain how companies identify
attractive market segments and
choose a market-targeting strategy.
4. Illustrate the concept of positioning for
competitive advantage by offering
specific examples.
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Target Marketing
Market
Segmentation
Market
Targeting
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Market
Positioning
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Market Segmentation
Geographic
Demographic
Psychographic
Behavioral
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Demographic Segmentation
Age and LifeCycle Stage
Gender
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Income
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Behavioral Segmentation
Occasion
Benefits Sought
User Status
Usage Rate
Loyalty Status
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Requirements for Effective
Segmentation
Measurability
Effective
Segmentation
Substantiality
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Accessibility
Actionability
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Evaluating Market Segments
Size & Growth
Company
Objectives &
Resources
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Structural
Attractiveness
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Selecting Market Segments
Concentrated
Undifferentiated
Marketing
Strategies
Differentiated
Micromarketing
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Positioning Strategy
Identifying
Competitive
Advantages
Selecting
Competitive
Advantages
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Effectively
Communicate
Chosen
Position
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Differentiating Competitive
Advantages
Management
Orientations
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Positioning Errors
Underpositioning
Confused
Positioning
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OverPositioning
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Which Differences?
Important
Distinctive
Superior
Communicable
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Which Differences? (cont.)
Preemptive
Affordable
Profitable
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Figure 8–3 Positioning map of service level versus price.
Source: Lovelock, Christopher H; Wirtz, Jochen, Services Marketing: People, Technology, Strategy, 7th Ed.,
©2011, p. 74. Reprinted and Electronically reproduced by permission of Pearson Education, Inc., New York, NY.
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Key Terms
• Behavioral segmentation
– Dividing a market into groups based on
consumers' knowledge, attitude, use, or
response to a product
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Key Terms (cont.)
• Competitive advantage
– An advantage over competitors gained
by offering consumers greater value
either through lower prices or by
providing more benefits that justify
higher prices
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Key Terms (cont.)
• Competitors' strategies
– When competitors use segmentation,
undifferentiated marketing can be
suicidal. Conversely, when competitors
use undifferentiated marketing, a firm
can gain an advantage by using
differentiated or concentrated
marketing.
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Key Terms (cont.)
• Confused positioning
– Leaving buyers with a confused image
of a company
• Degree of product homogeneity
– Undifferentiated marketing is more
suited for homogeneous products.
Products that can vary in design, such
as restaurants and hotels, are more
suited to differentiation or
concentration.
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Key Terms (cont.)
• Demographic segmentation
– Dividing the market into groups based
on demographic variables such as age,
gender, family size, family life cycle,
income, occupation, education, religion,
race, and nationality
• Gender segmentation
– Dividing a market on the basis of
gender
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Key Terms (cont.)
• Geographic segmentation
– Dividing a market into different
geographic units such as nations,
states, regions, counties, cities, or
neighborhoods
• Income segmentation
– Dividing a market into different income
groups
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Key Terms (cont.)
• Local marketing
– Tailoring brands and promotions to the
needs and wants of local customer
groups-cities, neighborhoods, and
specific restaurant/hotel/store locations
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Key Terms (cont.)
• Market homogeneity
– If buyers have the same tastes, buy a
product in the same amounts, and react
the same way to marketing efforts,
undifferentiated marketing is
appropriate.
• Market positioning
– Formulating competitive positioning for
a product and a detailed marketing mix
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Key Terms (cont.)
• Market segmentation
– Dividing a market into direct groups of
buyers who might require separate
products or marketing mixes
• Market targeting
– Evaluating each market segment's
attractiveness and selecting one or
more segments to enter
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Marketing for Hospitality and Tourism
Seventh Edition
CHAPTER
9
Designing and
Managing Products
and Brands:
Building Customer
Value
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Learning Objectives
1. Define the term product, including the
core, facilitating, supporting, and
augmented product.
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Learning Objectives (cont.)
2. Explain how accessibility, atmosphere,
customer interaction with the service
delivery system, customer interaction
with other customers, and customer
coproduction are all critical elements
to keep in mind when designing a
product.
3. Understand branding and the
conditions that support branding.
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Learning Objectives (cont.)
4. Discuss branding strategies and
decisions companies make in building
and managing their brands.
5. Explain the new-product development
process.
6. Understand how the product life cycle
can be applied to the hospitality
industry.
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What is a Product?
• A product is anything that can be
offered to a market for attention,
acquisition, use, or consumption that
might satisfy a want or need.
• It includes physical objects, services,
places, organizations, and ideas.
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Product Levels
Core Products
Facilitating
Products
Supporting
Products
Augmented
Products
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Augmented Product
Accessibility
Customer
Participation
Augmented
Product
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Atmosphere
Customer
Interaction
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Atmosphere's Effect on
Purchase Behavior
AttentionCreating
Medium
EffectCreating
Medium
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MessageCreating
Medium
MoodCreating
Medium
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Customer Interaction with the
Service Delivery System
Joining
Consumption
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Detachment
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Elements of Branding Strategy
Brand Equity
Brand
Positioning
Brand Name
Selection
Leveraging
Brands
Brand
Portfolios
Managing
Brands
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Brand Positioning
Beliefs and Values
Benefits
Attributes
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The New-Product Development
Idea
Generation
Idea
Screening
Business
Analysis
Product
Development
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Concept
Development
and Testing
Test
Marketing
Marketing
Strategy
Commercialization
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Idea Generation
External
Environment
External
Sources
Idea
Generation
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Internal
Sources
Crowdsourcing
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Commercialization
Commercialization
Decisions
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Figure 9–3
Sales and profits over the product's line from inception to demise.
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Product Deletion
Phase-Out
Drop It
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Run-Out
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Key Terms
• Augmented products
– Additional consumer services and
benefits built around the core and actual
products
• Aural
– The dimension of atmosphere relating to
volume and pitch
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Key Terms (cont.)
• Brand
– A name, term, sign, symbol, design, or
a combination of these elements that is
intended to identify the goods or
services of a seller and differentiate
them from competitors
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Key Terms (cont.)
• Brand equity
– The added value endowed on products
and services. It may be reflected in the
way consumers think, feel, and act with
respect to the brand, as well as in the
prices, market share, and profitability
the brand commands for the firm.
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Key Terms (cont.)
• Branding
– The process of endowing products and
services with the power of a brand. It's
all about creating differences between
products.
• Brand promise
– The marketer's vision of what the brand
must be and do for consumers
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Key Terms (cont.)
• Consumption phase
– Takes place when the customer
consumes the service.
• Core product
– Answers the question of what the buyer
is really buying. Every product is a
package of problem-solving services.
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Key Terms (cont.)
• Crowdsourcing
– An open-innovation new-product idea
program
• Decline
– The period when sales fall off quickly
and profits drop
• Detachment phase
– When the customer is through using the
product and departs.
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Key Terms (cont.)
• Drop
– The action taken toward a product that
may cause harm or customer
dissatisfaction
• Facilitating products
– Those services or goods that must be
present for the guest to use the core
product
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Key Terms (cont.)
• Growth
– The product life-cycle stage when a new
product's sales start climbing quickly
• Introduction
– The product life-cycle stage when a new
product is first distributed and made
available for purchase
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Key Terms (cont.)
• Joining stage
– The product life-cycle stage when the
customer makes the initial inquiry
contact
• Maturity
– The stage in a product life cycle when
sales growth slows or levels off
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Key Terms (cont.)
• Olfactory
– The dimension of atmosphere relating to
scent and freshness
• Phase-out
– The ideal method of removing an
unpopular or unprofitable product; it
enables a product to be removed in an
orderly fashion.
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Key Terms (cont.)
• Product concept
– A detailed version of a product idea
stated in meaningful consumer terms
• Product development
– Developing the product concept into a
physical product to ensure that the
product idea can be turned into a
workable product
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Key Terms (cont.)
• Product idea
– Envisioning a possible product that
company managers might offer to the
market
• Product image
– The way that consumers picture an
actual or potential product
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Key Terms (cont.)
• Run-out
– Removing a product after existing stock
has been depleted; used when sales for
an item are low and costs exceed
revenues, such as the case of a
restaurant serving a crabmeat cocktail
with sales of only one or two items per
week.
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Key Terms (cont.)
• Supporting products
– Extra products offered to add value to
the core product and to help to
differentiate it from the competition
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Key Terms (cont.)
• Tactile
– The dimension of atmosphere relating to
softness, smoothness, and temperature
• Visual
– The dimension of atmosphere relating to
color, brightness, size, and shape
Marketing for Hospitality
ICD-10-CM/PCS
Coding: A
and
Map
Tourism,
to Success
7e
Lorraine
Kotler, Bowen,
M. Papazian-Boyce
Makens, Baloglu
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