Industry segmentation in the hotel sector
When targeting distinct consumer groups, businesses employ a variety of segmentation criteria. These segmentation bases include, first, psychographic segmentation, which is typically based on psychological characteristics and involves merging the actions, opinions, interests, and values of consumers into the final product's positioning (Charles 2002). Second, geographical segmentation is the positioning of a product based on its geographic location. Thirdly, segmentation is based on consumer behavior by analyzing criteria such as user status, purchasing propensity, desired advantages, brand loyalty, and usage rates. Lastly, segmentation can be demographic, and in this situation, product positioning is accomplished by taking age, gender, family size, income, and nationality into account when determining the final product mix. The Marriot Hotel is one hotel that illustrates the significance of segmentation in the hotel sector.
The Marriot Hotel was founded in Virginia, United States, in 1927 (O'Brien, 1995). The hotel currently has over 2500 locations spread over 60 countries and employs over 15,000 people worldwide. Marriott's packages include full service and accommodations, select service and accommodations, and extended long stays and resorts. In addition, the Marriot Hotel has both upscale and budget-friendly business wings. Thus, due to the diversity of its offerings, the hotel can successfully use both the price skimming strategy and the price penetration strategy to stable and optimize its revenue streams while taking advantage of the market. Marriott's senior management recognizes the significance of product and service distinction and the role that such a process plays in achieving its organizational objectives, thereby making segmentation a reality.
Hotel markets are segmented based on the complexity of the service industry and the amount of features contained in a particular customer's product bundle or service. Psychographic techniques of segmentation are common because many individuals, especially the wealthy, use value as a justification for their purchases. As a result, they will frequently purchase an expensive service or product because they believe the price is a direct mechanism that can be used to describe the quality of the product (Kotler 1999).
Figure 1 depicts the buyer purchase and consumption process as described by Philip Kotler in 1999.
Typically, a consumer's purchasing behavior is prompted by a need that serves as a motivator for the purchase, and as a result, a consumer always has needs that he or she want to satisfy at the conclusion of the shopping and consumption process. Abraham Maslow, a motivational guru, says that the two highest levels of motivation entail satisfying ego and self-esteem requirements. Marriott hotel Customers who purchase their premium products and services, such as ExecuStay and Resort services, which often target high-spending clients, are high-status members of society who are driven by self-esteem and ego demands (Kotler 1999). Some of these folks may be high-earning citizens and celebrities who utilize these services and packages to set themselves apart and appear unique in society. Therefore, consumers who consume these highly differentiated products that the Marriot hotel offers derive greater utility or satisfaction by obtaining a sense of pride and psychological satisfaction that is typically associated with the fact that their purchases directly reflect their social status.
The executive rooms and apartments of Marriott, such as those in Dubai creek, are elegantly appointed with a touch of traditional Arabic design and top-tier hotel services that are tailored to the individual tastes and preferences of specific consumers. The hotels are also equipped with flat-screen televisions, air conditioning, individual climate control, feathered pillows, business amenities, and entertainment systems, not to mention their proximity to a golf club and the finest yacht clubs, thereby enhancing the holiday and business experiences of high-end consumers.
A wealthy businessman may prefer to retain a luxurious and elegant lifestyle while also enjoying conducting business and producing money. The management of Marriot guarantees that this is possible, and the client may be required to pay up to $545. Alternatively, couples who wish to spend their vacation time at Marriot may opt to purchase the romance option packages that include additional features such as a menu full of strawberries, chocolate, champagne, and amenities such as dim romantic lighting, which can cost up to $795, in order to have a complete customer experience, and thus pay a premium (Lugosi 2009).
On the other side, the hotel offers cheaper options in some of its global locations. Due to the hotel's brand, giving these lower hotel facilities allows it to attract the low-end market and keep a huge customer base. As with high-end consumers, low-end consumers may operate with a desire to save money, and as is typical consumer behavior, such individuals expect to pay less for more; therefore, hotel management must find a way to make this wish a reality for these individuals in order to ensure their satisfaction at the conclusion of their stay. Prior to purchasing a service or good, low-end consumers undergo the same purchase and decision-making process as high-end consumers.
A cheap room at the Budapest Marriott hotel may be had for as little as $75, and the room itself is considered to be fairly decent, clean, and well-designed. In addition, the rooms are equipped with a quality air conditioning system, pillows, and large, extremely comfortable beds. In contrast to high-end consumers, the majority of low-end consumers always seek convenience and have mostly basic demands. As a result, their primary objective is to save money by selecting the most economically sensible option.
Describe the value chain of a hotel chain in general terms.
A value chain is a methodical analysis of a company's specific activities that can provide a competitive advantage; it conceptualizes the company as a chain of value-adding activities (Lugosi 2009). Without these value chains, the business activities that enable the delivery of goods and services within an organization would be paralyzed and brought to a halt, so paralyzing the firm.
Figure 2 depicts a graphical representation of the value chain, as depicted by Porter (1999).
The value chain of a hotel may involve activities such as research and development, product and service design, real product and service production, sales and marketing, distribution, and customer service. These operations within a hotel value chain may be upward or downward and contribute to the effective delivery of products and services, so assisting the organization in achieving its primary objective. Therefore, when the leadership or management of a hotel develops strategy and plans to guide these activities, it is more likely that synergistic benefits will result from coordinating these activities more effectively, allowing the hotel to produce products and services efficiently and thereby satisfy consumers.
Consequently, operations that occur inside the value chain of an industry may move forward or backward before their primary goals and objectives are accomplished. In the event that a seafood restaurant gets fresh shrimp from its distributor, but the shrimp arrive spoiled, the distributor would be required to call his supplier and place a new order on behalf of his client. In a similar manner, the marketing department can engage with consumers to determine their desires, and then relay that information to management in the hopes of inciting a change that would allow them to satisfy their consumers' demands.
Choose two product or service characteristics that, in your opinion, have the biggest effect on attracting customers.
Product qualities are characteristics or features that are typically thought to appeal to customers (Kotler 1999). A product or brand may have characteristics such as price, dependability, safety, exclusivity, opulence, and occasionally its location of origin. Sometimes, product qualities are determined by the perspective of a seller or producer, who uses them to give his or her items an identity and perception that influences purchase decisions and customer experience. Attributes of products are difficult to quantify; consequently, they may be categorized using a five- or seven-point Likert Scale that seeks to gauge the attribute's magnitude using descriptors such as good or terrible. Therefore, many buyers may end up acquiring a product not because of its unique characteristics, but rather because of the attributes that are immediately associated with or connected with a product.
The fact that product features can be utilized in the advertising and promotion of items simplifies the process of establishing a product's identity through promotion activities. Consider Marriott ExecuStay as an example; the branding of this product makes it abundantly clear that it is intended for individuals who consider themselves to be executives. As a result, the customer chooses to purchase this brand because they believe it to be unique and a direct reflection of their image. However, the price of such a product is likely to be expensive, as buyers will perceive that it is intended for executives or those who consider themselves to be executives. Thus, a product feature enables hotels such as Marriott to effectively segment their audiences and cater to various niches.
Therefore, the high-end consumer market is attracted to the prestige that is a product and service attribute of Marriot's high-end hotel services. The level of complexity and sophistication that Marriot hotels incorporate into its high-end product packages, such as the romance package and the business executives packages for high-end consumers, appeals to self-esteem/ego demands that are typically viewed as a prestige package (Stem 2006). High-end consumers of Marriott products and services are extremely proud of themselves when they spend a great deal of money on products and services that are exclusive to a select few. This trait of prestige, class, and originality provides these folks with the satisfaction they seek. As a result, Marriott guarantees that its employees is adequately trained in providing high-quality service throughout the hotel industry's value chain.
Low-end consumers, on the other hand, like Marriot-branded products and are aware of the unassailable reputation and brand value that Marriott has established over the years. As a result, when people pay less to spend time at Marriott facilities, they receive better value for their money and have a greater sense of trust and trustworthiness in the company's product packages.
Value for money is a product attribute; consequently, qualities and benefits should not be confused. The consumer easily obtains the product attribute value for money due to the Marriot hotel chain's objective to provide high-quality services regardless of the consumer category to which they belong. Brand qualities or product attributes are significant because they frequently influence consumers' perceptions of a product and may go on to affect the nature of the purchase made. Low-end buyers would have felt cheated and unacknowledged by the corporation if these characteristics were not available (Kotler 1999).
What alternatives exist for managing and executing the value activities and acquiring the resources and skills required to execute the activities?
The activities inside a value chain must be carried out properly, and hotels typically implement techniques that allow business leaders and hotel management to select the optimal solutions for optimizing the use of available resources. Hotels and other commercial organizations often have a single objective, which is to maximize revenue and decrease expenses; hence, every endeavor within the business will highlight this (Charles 2002). Consequently, when altering these activities and selecting the next-best alternatives, it is crucial for a company to guarantee that the resulting modifications will not harm the hotel's true aims and objectives. It is important to recognize the significance of the client and the specific features that have always attracted customers to Marriott, whether status or price.
Marriot takes a methodical approach to resolving business difficulties, particularly customer service; its customer service efforts are typically oriented on providing the finest answers to its customers. Effective customer service efforts are facilitated by policies such as the one-ring policy, which requires customer service agents to answer the phone immediately upon ringing. In the hotel industry, customer service is a delicate matter that, if mishandled, can lead to inefficiency and loss of potential clients.
Before a consumer can enjoy the real service that he has paid for, there are multiple channels and a large number of individuals involved in ensuring that these services reach their destination on time and with a high degree of efficiency. There may be multiple methods to accomplish this, particularly in operations management; consequently, operational managers must select the important path to optimize resource use and maximize efficiency. When operations management within the industry's value chain is improperly planned, it becomes very difficult for the hotel to achieve operational efficiency. As a result, inefficiencies can result in unhappiness among stakeholders, including workers and customers, who are the hotel's business fulcrum (Kotler 1999). For instance, if Marriott decides to abruptly switch raw material suppliers without undergoing inspection and testing, the end product, which consumers ultimately consume, may be badly impacted. Alternatively, if the hotel chooses an effective supplier, it will be easier for them to enhance their service offering.
In the hotel sector, the development of value is of utmost importance; without value creation, there would be no satisfaction, and without satisfaction, institutions within the hotel industry will inevitably perish. If customer care services are enhanced, the consumer experience will undoubtedly improve, making it simpler and easier for customers to feel valued. Because hotel departments are not autonomous, they must collaborate to ensure that service delivery is highly effective and meets the needs of the target market. In the end, criteria such as cost, quality, flexibility and imitability, efficiency, and timeliness must be taken into consideration.