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Internet Marketing Planning Project:

Esconder Mountain Lodge, Gold Coast, Australia Mahesh Ponnam

Internet Marketing Internet Marketing Planning Project: Esconder Mountain Lodge, Gold Coast, Australia 1. Introduction

The following marketing planning project is offered using e-marketing strategies for the Esconder Mountain Lodge (Esconder), located in Gold Coast, Australia. This report is

conducted by Marketing Consultants, Ltd., who have been contracted by the present owner of Esconder, who are considering selling the property if they cannot raise revenues. The format of this report begins with a situation analysis, including a SWOT analysis of the sector. Next is an e-marketing planning section, followed by three key objectives. An e-marketing strategy section follows, with considerations of the marketing mix given the virtual nature of the approach. A budget for the key objectives is offered based on a $3000/annum allotment. Finally, a section on benchmarking and measurement of objectives is offered to show how this marketing approach could be evaluated as to optimal efficacy. The Esonder is currently limited in terms of room occupancy based on its size and suite offerings; thus a component of this plan that is recommended for the guesthouse includes suggestions for infrastructure improvement and service expansion into a niche market for the five star lodging sector. 2. Situation Analysis 2.1 Internal Environment 2.1.1 Tangible Resources

2.1.1.1 Financial The Esconder as of 2003 operated most sought after tourist guesthouse in the Gold Coast. With 3 lavishly appointed guestrooms, the Esconder offers a high-end and exclusive catered lodging experience for wealthy clientele. Lodging rates for the suites run from $289 AUD to $300 AUD per night (Oz Bed and Breakfast, 2012). This is in contrast to the average occupancy

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rate for lodging in Gold Coast of $161 AUD per night (Gold Coast Australia, 2012)Based on average occupancy rates for the region at approximately 80% or 292 occupied nights per year, this gives the guesthouse an expected annual revenue of between $84,388 AUD and $87,600 AUD (Schlesinger, 2011). 2.1.1.2 Organizational The Esconder organization is built on a philosophy to offer high end luxury accommodations to wealthy clientele who prefer privacy and personal service over high occupancy alternatives. The organizational structure of Esconder is built on the concept of the team structure model; as such the concept of the team can define the entire operation (Hu, Horng, & Sun, 2007). Esconder has two full time employee-owners, two part time employees, and one contracted service. 2.1.1.3 Physical Location The Esconder is located in Gold Coast, Australia and is situated on a cliff top adjacent to Tamborine Mountain. The land size of the property is approximately 11 acres

(Esconder.com.au, 2012). The guesthouse is a private villa, offering three full accommodation suites with a private balcony to enjoy the panoramic views, a bar, and a restaurant style kitchen. The guesthouse is a 25 minute drive to the hotspot Surfers Paradise in Gold Coast, allowing for proximity to nightlife and entertainment should guests wish to indulge in the tourist attractions. The distance to the hotspots of the Gold Coast may be desired by some guests, yet also may be perceived as a hindrance for those guests that also wish to experience the nightlife without having to drive to it. In the ultimate business strategy, this may be a consideration of point for the Esconder to consider in establishing a transportation service as part of the overall sales plan.

Internet Marketing 2.1.1.4 Technological

Esconder embraces modern technology. The guesthouse utilizes a high-end security system to protect guests and assets, the latest merchant account devices, pin pad machines, and solar heating for its swimming pool (Esconder.com.au, 2012). The amenities also include highspeed internet, a solar/gas sauna, and a high-end entertainment area for movies and gaming (Esconder.com.au, 2012). The guesthouse thus allows the discriminating traveler to experience the modern comforts of civilization in a luxurious and private setting with high-end amenities. 2.1.2 Intangible Resources

2.1.2.1 Aesthetics The physical location of the guesthouse villa offers breathtaking views of the Gold Coast and nearby mountains. This can attract guests who are willing to pay more for the views and scenery, while enjoying privacy with personal catering outside of the main tourist lodging centers and hubs. The grounds are meticulously kept and maintained with greenery and flowers. Private yet spacious balconies provide seclusion and serenity to the guests. 2.1.2.2 Human Resources Employees are considered stakeholders in the company. There are two principal owners who also operate the Esconder with one being a professional five star rated chef. The chefoperator caters and serves the meals with the aid of the other operator-manager; there are also locally-hired staff including a part-time bartender, a contracted groundskeeper on demand, and a part-time maid. They are well-trained and versed in enhancing the experience of the high-end clientele. The idea of the employee is that it is part of the culture, and as such has a buy-in that is not part of competitors strategies.

Internet Marketing 2.1.2.3 Innovation

Esconder is committed to sustainability, which is reflected in their move to use green methods of obtaining energy via solar solutions. They also have a Sustainable Declaration document available upon demand (Esconder.com.au, 2012). They offer organic foods both vegetarian and non-vegetarian, and provide organic hygiene products in the suites such as soaps, toothpaste, and shampoo. 2.1.2.4 Reputation One of the strongest elements of Esconder is its reputation as being committed to sustainability and offering luxury accommodations and services to clientele. Esconder is also committed to increasing their market presence as a sustainable steward in the hospitality industry. This is strong factor showing the organization as responsible to the environment and to other stakeholders. The long-term profits from this approach connote a competitive advantage over hospitality industry alternatives offered by competitors (Porter & Kramer, 2006). This has rewards in the consumer chain as far as how consumers perceive the guesthouse, and the benefit conferred upon the consumer from spending their money at a responsible and sustainable lodging facility (Lee & Park, 2009). 2.1.3 Porters Five Forces Analysis The Micro Environment

This section of the report refers to the industry-specific, micro-related issues that may impact business operations of the five star accommodation sector in Gold Coast. The Porters Five Forces model utilizes elements of industrial organization economics to determine if an organizations operations are attractive or unattractive. The model is essentially one utilizing economics, where the five forces are employed to show if business operations drive down

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profitability (unattractive), or drive up profitability (attractive). The following diagram details this analysis tool:

2.1.3.1 Threat of New Entrants The current state of the five star market in Gold Coast is open for prospective hotel development. The potential for expanding this market is medium to high. The economic development profile of Gold Coast demonstrates that tourism is a valuable commodity, and the Tourism Queensland council is vigorously promoting tourism and related marketing for the region. New entrants in the market may pose a significant threat given the open prospect of development (Gold Coast City Council, 2012). 2.1.3.2 Rivalry Rivalry is expected to be significant, as major international five star hotel competitors are Marriott, Sofitel, Hilton, Quay West (www.tq.com.au, 2012). Given the population dynamics and visitor statistics on overnight stays, as well as reasons for overnight stays, the competition for high-end luxury hotel users is likely to be high (www.tq.com.au/fms, 2011).

Internet Marketing 2.1.3.3 Bargaining Power of Suppliers

Related hotel industry suppliers in the Gold Coast region likely do not hold a significant bottleneck on supplying the hotel industry. Gold Coast is located on a major waterway and port, and attracts international businesses. However, given the specific codes of five star hotels, it may be somewhat significant that the supply of qualified labor may need to be recruited from international markets as well (Benton, 2010). The need for multilingual staff, talented chefs and managers, and leadership in the executive chain all require a high-quality talent pool. This may be a limiting factor, yet developers of five star hotels are also well-versed in the requirements of the industry, so the overall impact of the bargaining power of labor and human talent suppliers may be medium to low (Burke & Ng, 2006). 2.1.3.4 Bargaining Power of Buyers The modern hotel patron has multiple choices; they are educated, informed, and seeking value. The threat to profit is high in this regard. Keeping the potential hotel consumer as a customer means offering them something they cannot get elsewhere; this is a challenge in an emergent market with potential human capital supplier power, and rivalry from international five star hotel corporations (Porter & Kramer, Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility, 2006). The factors of hotel perception, hotel price, and convenience give the consumers power; therefore the consumer not only has substitute choices of accommodation establishments, but also options in the degree of hotel services and amenities they believe will confer benefit to them for choosing (Johnston, 2008). 2.1.3.5 Threat of Substitutes The threat of substitutes in this market is regarded as high. The overall number of accommodation establishments in Gold Coast is ~153, including hotels, motels, service

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apartments, B&B, and other smaller venues (www.tq.com.au/fms, 2011). The number of five star hotels is under 10 (www.tq.com.au, 2012). Therefore, the modern hotel user may be lured through creative marketing or perceptions of internal value to choose something other than a five star hotel, when price is not the driving factor. For purposes of analyzing the potential success for five star hotel development, developers and market executives must look beyond the price factor to attract visitors to the five star establishment. 2.1.3.6 Key Forces Based on the preceding factors, the key forces in this industry are rivalry from existing competitors, and threat of substitutes; the bargaining power of suppliers (human capital) is also notable though not a high threat level. 2.2 External Environment

2.2.3 Political and Legal As previously noted, the accommodation sector is part of the larger economic engine of the tourism industry. Gold Coast is an attractive area to do business in; the political and legal framework of the regional government and related tourism development authorities is flexible toward business development. Additionally, for the prospective international developer, the World Bank has ranked Australia as 15th in terms of ease of doing business out of a field of 183 economies. This ease of doing business ranking refers to the flexibility of the regulatory environment in starting and operating a business (IFC of the World Bank, 2012). 2.2.4 Economic The regulatory environment of the country as a whole dictates the regional level approaches to business; however, Gold Coast as a port and a tourist hub has been supported in economic development efforts by the regional government. This extends to the economic

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climate; the country of Australia is considered a high-income country (IFC of the World Bank, 2012). Specific elements of the regulatory environment that are attractive to developing a business include the ease of starting up, ease of getting credit, strong frameworks for contract enforcement, and relative ease for closing a business (IFC of the World Bank, 2012). 2.2.5 Socio-cultural Gold Coast is a desirable tourist destination, and an important regional and international economic hub. Businesses are attracted to conducting operations in Gold Coast due to the favorable economic climate and relative wealth of the population as a first world economy. Business travelers are an important clientele to consider in the development of a five star hotel market strategy, as the typical business traveler may not be in the market for a high quality, and thus potentially expensive, accommodations. However it would be in the best interest of

developers to consider this market niche as a potential source of significant patronage when designing the marketing strategy (Jonnson & Devonish, 2009). Gold Coast is also a highly desired destination for European tourists, primarily Britains and other northern Europeans (Gold Coast City Council, 2012). This would be the primary foreign group served by a five star hotel; while competition for this patronage is already rather high with rivalry from the international hotel chains being a major source of competition, a marketing strategy that focused on the tourist sector with rewards and benefits to the tourist could lure patrons away from established business (Uggla & Filipsson, 2009). The social and cultural climate of Gold Coast offers a nightl (Wotif.com, 2012)ife, fine dining, coastal getaways, and high end shopping for the tourist; a five star hotel would benefit from incorporating collaborative partnerships with related service industries to garner tourist income.

Internet Marketing 2.2.6 Technological

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The globalization of business has allowed for a transport chain involving multiple suppliers from around the world. Also the factor of technology as regards communications is a major factor in how the business grows (O'Brien & Marakas, 2009). The element of

communications technology should be a major consideration for the development and operation of a five star hotel in Gold Coast. It is likely that existing competition is running their operations on older systems, using less than optimal technology solutions. The potential for creating a cutting edge operations framework with minimal waste and maximum efficiency is high given the newest technological applications that could be utilized by the hotel industry (O'Brien & Marakas, 2009). Examples include establishing a Windows server communication network between departments for effective departmental communication and international communication, as well as installing a mobile web-based application system for managing guest services; the potential for creating value for the hotel patron is significant through using the latest communications technology and should be strongly considered in this venture (Uggla & Filipsson, 2009). 2.2.7 Global As noted, Gold Coast is a desirable tourist destination, enjoys a thriving economy, and is supported in tourism development by state and local government. Business travelers and

recreational travelers alike frequent the city and surrounding area. With modern travel and communication, it is easier to book travel than ever before (O'Brien & Marakas, 2009). The atmosphere for engaging in global business is favorable; a clever marketing strategy driving traffic to a web portal for five star booking, including a complete value-added menu of choices would deliver a significant market edge to the five star hotel developer (Lu & Shiu, 2009).

Internet Marketing 2.3 Competitors

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The major competitors in hotel and lodging industry for the five star niche include Hilton International, Sofitel, Hyatt, Palazzo Versaci, Club Watermark, Scenic Rim View Cottages, Jupiter Hotel and Casino, and Crown Plaza (Wotif.com, 2012). 2.4 SWOT Analysis Figure 1: SWOT Analysis Helpful to achieving the objective Strengths Robust Information Technology tools High-end small operations cater to wealthy Sustainable Stewardship Amazing location and views Five star rating Exclusive room accomodations High end entertainment lounge Solar heated pool and spa Opportunities Utilize social networking to build brand awareness Build out of new suites Hiring of more staff Offering more amenities Increase web presence with robust website Attracting capital investors Embark into sustainable ecotourism can draw likeminded clientele Harmful to achieving the objective Weaknesses Small number of suites (3) Limited staff may decrease quality of service Lack of amenities offered by larger chain hotels such as spa services and larger menus Potential for security and privacy breaches of clients data and self Potential for low cash flow months may impact operating capital

Internal origin (attributes of the system)

(Witcher, 2009).

External origin (attributes of the environment)

Threats Online privacy is an issue for guests Getting into competition with larger competitors may impact market base Distance from city center may mean a lack of sufficient talented human capital Potential investors may be drawn to larger and more central establishments Cost of implementing environmentally friendly services may have initial high costs with long-term payoff

Internet Marketing 3. E-Marketing Strategic Planning

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E-marketing is also known as internet marketing; this is a form of direct to consumer advertising using internet information technology. This can include such tools as using email, social networks, internet advertising directly on site, and other methods. E-marketing has the advantage of reaching a diverse set of consumers in a global marketplace in addition to being less-costly to develop and implement than other forms of advertising like direct mail, billboards, television media, print ads, and radio media (Trainer, Rapp, Beitelspacher, & Schillawaert, 2011) 3.1 Segmentation and Target Market It is recommended that Esconder substantially use e-marketing via social networks to drive users to a new Esconder website. This will be done primarily through accessing users on Facebook. The Facebook community is estimated to be at 800 million active users, with a 50% log-on rate each day; each user has an average of 130 friends (www.facebook.com, 2012). Users interact with over 900 million facebook object elements, such as groups, games, and community pages (www.facebook.com, 2012). There are over 70 available languages on Facebook, and 75% of Facebook users live outside of the United States (www.facebook.com, 2012). As of 2010, the number of Facebook users between the ages of 13 and 17 is 10.6 million; this is almost a doubling of this user group alone from 2009 to 2010 (www.istrategylabs.com, 2010). There is a fairly even distribution between the number of males and females in this age group who use Facebook, at 43% and 54%, respectively, with 3% being unknown as to gender (www.istrategylabs.com, 2010). Thus, the target size is arrived at via a formula taking into account a 50% daily log-on rate for this age group: Formula: .5(10,000,000) = 5,000,000 Size of Target Audience.

Internet Marketing 3.2 Differentiation

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The five star accommodation market in Gold Coast is fairly undifferentiated, with the only major differentiation being between the larger resorts and the upscale guesthouses like the Esconder. Thus, there is a significant potential for market differentiation if Esconder can create a new market niche. Recommendations include expanding the number of suites available, and offering amenities often found at larger resorts but not guesthouses, such as massage, spa services, dry cleaning, room service, and transportation services. It is also recommended to create a truly unique offering at Esconder that is not found in any other similar rated accommodation. It is also recommended that the Esconder rebrand itself under a new name reflective of a new business strategy. This will be done through designing and offering a complete health and wellness program focused on detoxification and nutrition with spa services, offered through contracted professionals on site. This will help in the delivery of services with minimal capital outlay by the organization, as contractors will be paid on a fee-based service. 3.3 Positioning Strategies The positioning of the Esconder will be what drives all sales and marketing efforts deriving from it (Jonnson & Devonish, 2009). Thus, the positioning of the guesthouse is focused on the target market of clientele that are willing to spend the funds on luxury accommodations and services, with a focus on improving health and wellness through a selective service of detoxification and nutrition services. The positioning statement is thus:

The Esconder will strive to know our guest needs through active listening to guest requirements and desires. Our staff will respond in a courteous and professional fashion. The guesthouse will be designed to deliver our services and products to meet those needs of the guest. We will aim to

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exceed expectations through exponential satisfaction value of our guest from the beginning of their stay to their departure. 4. Objectives 4.1 E-Marketing Objective #1 4.1.1 To increase room occupancy from 77% to 90%

4.1.1.1 Timeline From 12 months to 2 years, benchmark at 2 years. 4.2 E-Marketing Objective #2 4.2.1 To establish website and have maximum website hits.

4.2.1.1 Timeline Website will be designed and launched with 3 months; hits will be analyzed using an analytic search engine, benchmark by 12 Months from launch will be a 70% increase in web visits from initial website rollout. 4.3 E-Marketing Objective #3 4.3.1 To use Facebook and similar social networking to drive visitors to the website. 4.3.1.1 Timeline A guesthouse business page will be established on Facebook within 3 months; backlinks from the site can be tracked with an analytic engine. Benchmarking for success every three months. 5. Product This is the hook of the marketing campaign; the perceived product is added value of hotel experience by the guest through niche-market offerings by Esconder. The crucial pieces of the

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strategy are to put a value on an intangible product, develop the infrastructure to deliver the services and product, and connect the message with potential clients through Facebook and other types of web traffic back to a new website complete with booking reservations capabilities. 6. Price In this marketing campaign, the price is not exclusively monetary. The current price point that the Esconder charges are consistent with industry rates for a five star lodging experience. Thus, the challenge will be for Esconder to continue to offer the price range of between $270 and $350 per night occupancy while expanding the scope of the business. Getting capital investors may be a good financial strategy, yet boosting room occupancy in the near term can also be accomplished using e-marketing strategies. 7. Place and Promotion These two elements are combined as they go closely together; one cannot exist without the other. The place is online, using a Facebook business page and in establishing a cutting-edge website to increase brand awareness and bring in sales. This is an online environment strategy geared toward social networking and driving traffic to the website to accomplish the e-marketing objectives. Inherent in Facebook is the element of promotion; Esconder can establish a business page with real-time updates on specials, notices, weather conditions, and local events 8. Communication and Relationship Management By establishing a website, the Esconder is joining the network in which the wellconnected client will be web-surfing to book their next vacation experience. The modern client wants a good price for a great product, with all the comforts of a well-appointed hotel. The website can be used to establish an email relationship with clientele and visitors to the site, offering an opportunity for the guesthouse to establish an e-marketing list. Furthermore,

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interested visitors to the site can email the Esconder directly from the website with inquiries. Great customer service may be delivered in real time with minimal delays, connecting a potential guest from the United States to the office of the Esconder in Gold Coast, Australia. This offers the company a competitive advantage through being able to immediately sway the choice of the consumer using technology. Similarly, having a Facebook presence is another mechanism of real-time marketing, offering the Esconder the chance to influence the buying preferences of potential vacationers by establishing an immediate and direct connection to the consumer, regardless of their geographic location. 9. Budget The budget for this e-marketing plan is $3000/annually, with a maximum implementation period of 2 years. Thus, in total this represents an e-marketing budget of $6000 AUD to meet the marketing objectives. This is a very small budget considering the scope of the intended plan. However, this is achievable. Facebook is free to users. Thus, the cost of information technology involved in this emarketing plan is limited only by accessibility issues on the user end; however, as many public libraries offer free internet to guests, there is a negligible cost associated with developing, launching, monitoring, and closing this plan in terms of user-accessibility issues. The average cost of establishing a Facebook business page is free; yet if the business wishes to advertise on FB then there are costs associated with that; however, it costs nothing to set up (www.facebook.com, 2012). This is a recurring cost and may be evaluated at the one year mark to determine efficacy in driving traffic back to the Esconder website.

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The cost of website development, including server space with 10 email accounts with unlimited storage is broken down as follows: Website Development: Server Space: rates). Maintenance: This price varies, but if the Esconder manages their website directly then there will be no contractor costs. The idea for this e-marketing plan is that it can be run by as little as one person, or as many as is needed for the overall scope of the plan. One person is enough to strategize, launch, monitor, and close this plan. This e-marketing campaign is best conducted within a 12 month to 2 year timeframe, so as to generate interest, create brand awareness, establish a satisfied clientele, and develop a niche presence in the five star lodging market in Gold Coast. As the Esconder is currently owner-operated and small in terms of lodging accommodations, the budgeted amount and chosen strategies make sense; there is minimal capital outlay, and with very little training the owners can take over managing the Facebook page and website once they are developed. Thus the total costs associated with developing and implementing this e-marketing plan range from $5000 to $6000 AUD; the variation is due to unknowns which may be encountered, including paying for technical assistance in setting up and managing the website and Facebook page. This is an attractive strategy for the Esconder to consider even if the owners decide not to expand their infrastructure and service offerings. However, the plan would work best and generate the most revenue in conjunction with brand awareness building and differentiation into a niche market offering. $4500 $200 for two years with secure domain name (based on GoDaddy

Internet Marketing 10. Evaluation Plan Benchmarking and Measurement of E-Marketing Plan

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The plan for evaluation is a survey questionnaire given to guests and website visitors. Since the product being marketed is added-value in the vacation experience as perceived by the guest or desired by the potential guest, the best way to measure the success of the e-marketing objectives is to see how well (or not) the consumer base is rating their user experience. Items measured will be psychological well-being, physical factors, and overall satisfaction with the guesthouse and services offered by the Esconder. This type of e-marketing campaign can be run two to three times per year, and hence represents an excellent opportunity for researching changing trends in tourism, consumer tastes and preferences, health and wellness needs of consumers, nutrition, and price points measured across time periods and with similar and/or changing cohorts. This type of evaluation plan thus allows for a discrete, one-study evaluation; however, it is generalizable to other time periods and cohorts, and even conditions. Therefore in a macro-sense, this evaluation plan has the potential to be long-term, going beyond the maximum 2 year benchmarking plan for this e-marketing plan. This type of evaluation plan also offers for immediate feedback to the owners and staff at Esconder, so that guest services may be tailored to meet consumer trends in real time. 11. Conclusion This e-marketing plan was designed to bring the Esconder into the information age in order to expand its client base, create brand awareness, and generate revenue. With a limited budget the most likely strategies to use includes a low-cost option of establishing a Facebook business page for direct-to-consumer communication and relationship management, and to develop and launch a new website that Facebook traffic could be driven back to. The Esconder may benefit from expanding its current infrastructure to include more suites and more services.

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Differentiation may be accomplished through establishing a niche presence in the five star market that includes a menu of services for health and wellness spa packages, including detoxification and nutrition advice.

Internet Marketing References

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Internet Marketing Trainer, K., Rapp, A., Beitelspacher, L., & Schillawaert, N. (2011). Integrating information

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