CHAPTER-7 2 Marketing Strategies in Hospitality Management

Marketing Strategies in Hospitality Management

1. Balancing demand and productive capacity for quality service

2. DEMAND In Economics, represents the amount of need of certain products or goods for the consumption of individuals or markets. In the Tourism and Hospitality Industry, it is the volume of services required by clients or customers at any certain period of time In the Service Industry, it implies the quantity of services that are required from the firms.

3. capacity Refers to the ability of organizations to provide or render services among their customers. It often relies on the amount of inputs in order to produce services which can either sustain the requirements or fall short.

4. Learning objectives Understand the concept of demand; Be familiar with capacity constraints; Apply strategies on matching demand and capacity; Understand strategies for managing waiting lines when capacity and demand cannot be aligned.

5. Managing demand

6. a. Predictable cycles These refer to the periodic increase and decrease of demand levels at specific time which may transpire at different intervals; daily, weekly, monthly and yearly.

7. b. Random demand fluctuations There is no predictable cycle that could be derived. Example: weather condition, health related incidents, natural disasters, and acts or war and terrorism.

8. C. DEMAND PATTERNS BY MARKET SEGMENT A service organization that has thorough knowledge about its customers may be able to come up with a strategy in order to cater more appropriately to its customers.

9. Molding demand patterns through marketing mix elements

10. Marketing mix Product Price Place Promotion

11. 1. Use price and nonmonetary costs to manage demand The use of pricing is one of the most utilized way of balancing supply and demand. Changes in price has an immediate and direct effect on the decision-making process of customers.

12. 2. CHANGE PRODUCT ELEMENTS In order to encourage customer demand, a new service product needs to be introduced. The objective is to encourage the same set of customers, to find new other market segments, or to cater both.

13. 3. Modify place and time of delivery For services that are continuously offered at specified time and place, service organizations can capitalize to market needs by adjusting the time and place of delivery.

14. 4. Promotion and education Organizations can always use the multimedia to inform its clients about its operations, innovations, and changes through advertising, publicity, or sales promotion.

15. Strategies in modifying demand to match existing capacity

16. a. Communicate with customers Service organizations can create and maintain communication with customers to inform them of the peak periods and to sway them to use the service at other times for them to avoid crowding, delays, and long waiting time.

17. b. Modify timing and location of service delivery Organizations may choose to adjust their operation time to cater to market segments to disperse crowding. Others locate in strategic areas or offer online transactions to accommodate customers whenever and wherever they are.

18. c. Offer incentive for off-peak usage Special discounts, promo packages or freebies may be offered to customers who will use the service during off-peak periods.

19. d. Set priorities Service organizations may choose to prioritize frequent and loyal customers during peak times . Organizations may also choose to serve customers that need immediate attention or require greater considerations.

20. e. Charge full price Service organizations may opt to charge the full amount to customers during peak periods and not allow the use of discount cards or coupons.

21. Strategies in adjusting capacity to meet demand

22. 1. Increase capacity temporarily Capacities can be temporarily expanded to meet the demand. Expanding capacities need not equate to inducing new resources, but instead, employees or staff, facilities, and equipment will be programmed or required to work for longer and harder to sustain demand.

23. A. Extend People, Facilities, and Equipment Temporarily. B. Use Part-time Employees C. Cross-train Employees D. Outsource Activities E. Rent or Share Facilities and Equipment

24. 2. Adjust use of resources Also known as “chase demand” strategy, it aims to modify service resources to go after the demand curve in order to match capacity with demand pattern.

25. Schedule Downtime during Periods of Low Demand Perform Maintenance and Renovations Schedule Vacations and Employee Training Strategically Modify or Move Facilities and Equipment Encourage Customers to Perform Self-service Ask Customers to Share Create Flexible Capacity

26. Productive service capacity

27. Productive capacity Denotes resources or assets that organizations utilize to manufacture goods and to render services. For service-oriented organizations, productive capacity can be in the form of equipment, facilities, infrastructure, and labor.

28. equipment Is an important element of capacity since it is used during the process of rendering service. Are vital components in the delivery of service among organizations. It facilitate the process in order to provide the best and most immediate service to customers.

29. facilities Are resources that pertain to handling of customers and provisions to store or process goods and services. They usually pertain to the buildings, structures, or premises where customer avail of the products.

30. infrastructure Refers to public and private structures essential to deliver quality service to customers. It may include such as roadways, bridges, ports, terminals, and other public utilities.

31. labor Refers to human elements that manipulate the process and deliver the goods and services required by the customers.

32. Waiting lines and queuing systems

33. waiting Is a phenomenon that happens everywhere. Also known as queue, it may happen whenever a system to process transaction is exceeded by the number of influx of dealings.

34. Different strategies to deal with queuing issues Audit the Operational Process Institute a Reservation Process Differentiate Waiting Customers Make Waiting More Pleasurable

35. Different types of queues

36. 1. Single-line, sequential stages In this system, customers pas through several serving operations or segments, as in a buffet line.

37. 2. Parallel lines to multiple servers This applies to establishments that cater to a big number of people at any given time.

38. 3. Single line to multiple servers This is also known as a “snake”.

39. 4. Designated lines This system segregates lines for different customers based on specific categories.

40. 5. Take a number Upon entry to the establishment, customers are provided with numbers from an automated counter. The customers are given the opportunity to sit down, relax, or do something else while waiting for the number to be called.

41. 6. Waiting list Food service establishments usually use this type of queuing system where customers are requested to provide their names along with the size of their group.

42. Psychology of waiting time

43. Unoccupied Time Feels Longer than Occupied Time Preprocess Waits Feel Longer than In-process Waits Anxiety Makes Waits Seem Longer Unexplained Waits are Longer than Explained Waits

44. 5. Unfair Waits are Longer than Equitable Waits 6. The More Valuable the Service, the Longer the Customer Will Wait 7. Solo Waits Feel Longer than Group Waits 8. Physically Uncomfortable Waits Feel Longer than Comfortable Waits .