Chapter One

Introduction to Marketing for Hospitality

The AMA managerial definition:
Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of
ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.”
Kotler’s social definition:
“Marketing is a societal process by which individuals and groups obtain what they need and want through
creating, offering, and freely exchanging products and services of value with others.”
Core concepts of marketing
Needs, wants and demands
Products
Value, satisfaction and quality
Exchange, transaction and relationships Markets
Markets
1. Need, Want and Demand Needs
Need
The most basic concepts
Is the state of felt deprivation
Includes food, clothing, shelter...
Wants
Is how human communicate needs
Describe in terms of objects that satisfy needs
 Demand
Limited resources => unlimited wants Wants/desire + ability to buy
Demands : are wants for specific products backed by an ability to pay.

Needs describe basic human requirements such as food, air, water, clothing, shelter, recreation, education,
and entertainment.
Needs become wants when they are directed to specific objects that might satisfy the need. (Fast food)
The form of human needs take as they are shaped by culture and individual personality.
Wants are how people communicate their needs.

2. Product
A product is anything that can be offered to satisfy a need or want
Is not limited to physical products only

3. Value, Satisfaction and Quality Value:

Values is the difference between the benefits that the customer gains from owning and/or using a product

and the costs of obtaining the product.

Value= benefit
costs
= functional benefits + emotional benefits
monetary costs+ time costs + energy costs+ psychic costs
 Satisfaction: depends on the product’s perceived performance in delivering value relative to a buyers

expectation.

If expectation is = performance => satisfaction If expectation is > performance => dissatisfaction

If expectation is < performance => delight Which level is considered as best? Why?

Quality:
 has a direct impact on product/service performance
• Freedom from defect.
• The totality feature and characteristics of a product /service that bear on its ability to satisfy
customer needs.
• Begins with customer needs and ends with customer satisfaction.
• Fitness for purpose.

Narrowest definition… “ freedom from defects”

American society… defines quality as the totality feature and characteristics of a product /service that bear on
its ability to satisfy customer needs.
TQM… Quality begins with customer needs and ends with customer satisfaction
4. Exchange, Transaction and Relationships Exchange:
Exchange
• Is the act of obtaining a desired object from someone by offering something in return.
• Occurs when people want to satisfy needs and wants through exchange.
Five conditions must be satisfied for exchange to occur.
There are at least two parties
Each party with thing of value
Each party is capable of communication/delivery
Each party is free to accept and reject exchange
Each party believes it is appropriate to deal with the other party

Transaction:
 involves at least two things of value, agreed-upon conditions, a time of agreement, and a place of agreement
 Is marketing’s unit of measurement.
 A transaction consists of a trade of values between two parties.
Consists of
two things of value,
conditions that are agreed to,
a time of agreement and
place of agreement.
Relationship Marketing:

-Involves creating, maintaining and enhancing strong relationships with customers and other

stakeholders
-aims to build long-term mutually satisfying relations with key parties, which ultimately results in

marketing network between the company and its supporting stakeholders.

Market
-A market is a set of actual and potential buyers who may transact with a seller.
-It is the place where the buyers and sellers meet.

Marketer and Prospect

A marketer is someone seeking a response (attention, a purchase, a vote, a donation) from another
party called prospect.

A supply chain stretches from raw materials to components to final products that are carried to final
buyers.
Each company captures only a certain percentage of the total value generated by the supply chain.

4CS marketing mix

-product - price
-promotion – place

Traditional Organization Chart

Top Management
Middle Management
Front-line people
Customers

Marketing Management Philosophies

1. Production concept
2. Product concepts
3. Selling concept
4. Marketing concept
5. Societal marketing concept
1. Manufacturing or production concept
- Consumers will favor products that are available and highly affordable.
-Therefore management should focus on production and distribution efficiency.
Problem with this concept:
Management may become so focused on manufacturing systems that they forget the
customers.
2. Product Concept
-Consumers prefer existing products and product forms, and the job of management is to
develop good versions of these products.
-This concepts misses the point that consumers are trying to satisfy needs and might turn to entirely
different products
3. Selling concept
 Consumers will not buy enough of the organization’s products unless the organization undertakes a large
selling and promotion effort.
Objectives: to get every possible sale, not to worry about satisfaction.
Disadvantage: Does not establish long term customer relationship

4. The marketing concept

-Achieving organizational goals depends on determining the needs and wants of target markets, and delivering
the desired satisfaction more effectively and efficiently than competitors.
-Outside-in perspectives, makes different from selling concept.
5. Societal marketing concept

 New philosophy
 Organization should determine the needs, wants and interests of target markets and deliver the desired
satisfactions more efficiently and effectively than competitors in a way that maintains or improves the
consumers’ and societies’ wellbeing.
 Social and ethical consideration in their marketing practice

 Service characterstics of Tourism and Hospitality Marketing

“Managers do not control the quality of the product when the product is a service… the quality of the
service is a precarious state-it is in the hand of the service workers who produce and deliver it.”
Karl Albrecht

Service culture
-Is a system of values and beliefs in an organization that reinforces the idea that providing the
customer with quality service is the principal concern of the business.

-The service culture focuses on serving and satisfying the customer.

-Mostly, it has to start with top management and flow down.

Characteristics of services
1.Intangibility
-cannot exactly be seen, heard or smelled before they are purchased.
-Customers who purchase a service may go away empty-handed but they do not go
away empty-headed… they have memories that can be shared with
others”-Robert Lewis
2.Inseparability
-Both the service provider and the customer must be present for the transaction to occur.
-Customer-contact employees are part of the product.
-The greater the interaction between the customer contact employee and the visitor, the more pleasurable the
service will be.
3. Variability
-Services quality depends on who provides them and when and where they are provided.
There are several causes for service variability:
 Services are produced and consumed simultaneously, which limits quality control.
 Fluctuating demand makes it difficult to deliver consistent products during periods of peak demand.
 It depends on the service provider’s skill/experience.
 Time/length of service/tiredness.
 Lack of communication and heterogeneity of guest

4. Perishability
 The inability to store, resell, return, save or transport a service is one of the main differences between goods
and services.
 If service providers are to maximize the revenue,they must manage capacity and demand because they can’t
carry forward unsold inventory.
 Last minute Vs Early minute discount

 Generic characteristics distinguishing services from goods

Goods
1. Are manufactured.
2. Made in premises not normally open to customers (separable)
3. Goods are delivered to places where customers live.
4. Purchase conveys ownership and right to use at own convenience.
5. Goods possess tangible form at the point of sale and can be inspected prior to sale.
6. Stocks of product can be created and held for future sale

Services
1. Are performed
2. Performed on the producers’ premises, often with full customer participation (inseparable).
3. Customers travel to places where the services are delivered.
4. Purchase confers temporary right of access at a prearranged place and time.
5. Services are intangible at the point of sale; often can’t be inspected.
6. Perishable; stocks of product cannot be held.

Note: these characteristics are those that apply generally to most services and goods.

Chapter Two
Consumer Buying Behavior and Process
knowing
“To be a bullfighter, you must first learn to be a bull.”Anonymous

Consumer Behavior
-Refers to those acts of individuals directly involved in obtaining and using
goods and services, including the decision processes that precede and determine these acts.
-Understanding consumers “customers” is never Behavior and simple.
-Customers may say one thing and do another
-They may not be in touch with their deeper Motivations.

 Factors Influencing Consumer Behavior

1. Cultural factors
Cultural factors exert the broadest and deepest influence on consumers’ behavior.
A. Culture
Culture is the most basic determinant of a person’s want and behavior. It comprises the basic values,
perceptions, wants, and behaviors that a person learns consistently in a society.
B. Social class
-Social classes are relatively permanent and ordered divisions in a society whose members share similar
values, interests, and behaviors.
-Such social class is indicated by income, education, occupation, wealth and other variables.

2. Social Factors
A. Groups- an individual’s attitudes and behavior are influenced by many small groups.
 Membership groups- are those to which the person belongs that have a direct
influence. Friends, neighbors, and coworkers- specifically those with whom there is
regular but informal interaction.
 Reference Groups- serve as direct (face-to-face) or indirect points of comparison or reference in
the forming of a person’s attitudes and behavior.
-Opinion leaders are people within a reference group, who, because of special skills,
knowledge, personality, or other characteristics, exert influences over others.
 Aspiration groups- groups to which does not belong but would like to.
B. Family: has a strong influence on buyer behavior.
C. Roles & Statuses: a person belongs to many groups: family, clubs, and organizations.
-An individual’s position in each group can be defined in terms of role and status
-A role consists of the expected to activities according that a person is to the
perform around him/her. persons

-Each role carries a status reflecting the esteem given to it by society. People often products
which show their status in society.

3. Personal factors

i. Age and life cycle stage

ii. Occupation
iii. Economic situations
iv. Life style- is a person’s pattern of living as expressed in his or her activities, interests, and opinions.
People coming from the same subculture, social class and occupation may have quite different
lifestyles.
v. Personality and self-concept: By personality, we mean distinguishing psychological characteristics
that lead to relatively consistent and enduring responses to the environment. A person’s self-concept
(self-image) is a mental self-picture. Our behavior tends to be consistent with that behavior
4. Psychological Factors
-Motivation
-Learning: Change in individual’s behavior arising from experience.
-Perception: is the process by which an individual selects, organizes and interprets information to create a
meaningful picture of the world.
-Beliefs & Attitudes: A belief is a descriptive thought that a person holds about something.

 Types of Buying Behavior-:

There are four types of buying behavior
1) Complex buying
- high involvement and significant differences between brands.
-This type of behavior is encountered when consumers are buying an expensive, infrequently bought
product.
-They are highly involved in the purchase process and consumers’ research
before committing to invest. Imagine buying a house or a car; these are an example of a
complex buying behavior.

2. Variety-seeking buying behavior- low involvement and significant difference between

brands. In this situation, a consumer purchases a different product not because they weren’t satisfied
with the previous one, but because they seek variety. Like when you are trying out new shower gel scents.
3. Dissonance-reducing buying behavior
- high involvement and few differences between brands.
-The consumer is highly involved in the purchase process but has difficulties determining the
differences between brands.
- ‘Dissonance’ can occur when the consumer worries that they will regret their choice. Imagine you are
buying a lawnmower. You will choose one based on price and convenience, but after the purchase you will
seek confirmation that you’ve made the right choice.

4. Habitual buying behavior-

- low involvement and few differences between brands.
-Habitual purchases are characterized by the fact that the consumer has very little involvement in the
product or brand category.
Imagine grocery shopping: you go to the store and buy your preferred type of bread. You are exhibiting a
habitual pattern, not strong brand loyalty.

 Consumer Buying Process

Consumer buying process passes through 5 stages

i. Need/problem recognition
ii. Information search
iii. Evaluation of alternatives
iv. Purchase decision
v. Post purchase behavior

 Market Segmentation, Targeting, and Positioning

Market segment: a group of customers who share a similar set of wants.
Market segmentation: the act of dividing a market into distinct groups of customers who
might require separate products and/or marketing mixes.

Market segmentation recognizes that people differ in their tastes, needs, attitudes, lifestyles, family size
and composition...

Why segmentation?
Because
 Buyers are too numerous
 Buyers are widely scattered, and
 Buyers are varied in their needs and buying practices.

 Segmentation passes through the following Three stages.

1. Mass Marketing: Seller mass produces, mass distributes, and mass promotes.
2. Product- Variety Marketing: The seller produces two or more products that have different
features, styles, quality, sizes, and so on.
3. Target marketing: The seller identifies market segments, selects one or more, and develops
products and marketing mixes tailored to each selected segment.
 Bases for Segmenting Consumer Markets
A. Geographic Segmentation: Such as Nation/country, State/region, City/metro size, Density,
Climate, etc.
B. Demographic Segmentation: Such as age, race, gender, income education, family size,
family life cycle, occupation, religion, nationality. Demographic variables are popular bases
and easier to measure.
C. Psychographic segmentation: dividing buyer in to different groups based on lifestyle (e.g. social
class) and interests.
D. Behavioral Segmentation: dividing buyers in to groups based on their actions and behaviors or
response to a product. Occasions, Usage rate, Buyer-readiness, and Attitude.
E. Hybrid |Geoclustering/multi-attribute/ Segmentation- Multi-attribute segmentation via geo-
clustering combines multiple variables to identify smaller, better-defined target groups

 Requirements for Effective Segmentation

 Measurability: The degree to which the segment’s size, purchasing power, profiles of
segments can be measured.
 Substantiality: The degree to which segments are large or profitable enough to serve as
markets.
 Accessibility: the degree to which segments can be effectively reached and served.
 Actionably: the degree to which effective programs can be designed for attracting and serving
markets.
 Market Targeting
- Market segmentation reveals the firm’s market opportunities. The firm now has
to evaluate the various segments and decide how many and which one to target.

 Evaluating Market Segments

When evaluating different market segments, a firm must look at three factors.
 Segment size and growth- favor right size and growth.
 Segment structural atractiveness. A company must examine major structural factors which
affect long-run segment attractiveness (such as competitors, high bargaining power of buyers with
respect to sellers, etc.)
 Company objectives and resources: the company must consider its own resources and
objectives in relation to a market segment.

Selecting Market Segments

 After evaluating each segment, the company decides which and how many segments to
serve and selects the most attractive segment/segments to serve as targets for marketing
strategies to achieve desired objectives.

Market-Coverage Alternatives
 Undifferentiated Marketing: firm ignores market segmentation differences and goes
after the entire market with one market offer. One marketing mix to all markets
 Differentiated Marketing: The firm targets several market segments and design separate
offers for each.
Marketing mix A Segment A
Marketing mix B Segment B

 Concentrated Marketing: is especially appealing to companies with limited resources

Instead of going for a small share of a large market, the firm pursues a large share of small
markets.

Segment A
One marketing mix- Segment B
Segment C

 Choosing a Market-Coverage Strategy

Companies need to consider several factors in choosing a market coverage strategy.
 Company resources- when the company’s resources are limited,concentrated marketing makes the
most sense.
 Degree of product homogeneity: undifferentiated marketing is more suited for homogenous
products.
Products that vary in design, such as restaurants and hotels, are more suited to differentiated or
concentrated marketing.
 Market homogeneity: if buyers have the same tastes, buy products in the same amount,
and react the same way to marketing efforts, undifferentiated marketing is appropriate.
 Competitors’ strategy: when competitors use segmentation, undifferentiated marketing can be
suicidal/ dangerous.
Conversely, when competitors use undifferentiated marketing, a firm can get advantage by using
differentiated/concentrated marketing.

 Market Positioning
 In marketing, positioning has come to mean the process by which marketers try to create
an image or identity in the minds of their target market for its product, brand, or organization.
 Poisoning is not what you do to a product.
 Positioning is what you do to the mind of the prospect.
 That is, you position the product in the mind of the prospect.

 Positioning Strategies
1. Specific product attributes
2. Against an existing competitor

Four basic types of positions

i. The Best Position
ii. The Against Position
iii. The Niche Position
iv. The New Category

 Three positioning errors

  Under positioning- failing ever to position a company at all.
 Over positioning- giving buyers a too-narrow picture of the company.
 Confused positioning-leaving buyers with confused image of a company.

USP (Unique Selling Proposition)

 Is the one aspect of your product that makes you different from all other products.
 When you identify your USP, make sure it’s something that really matters to potential customers.
 There’s no point in being the best in industry for something they don’t care about.

Tourism Resources
 The potential & actual material and nonmaterial reserves of the area important to visit/ experience.
 Tourism Products:-
 The sum of both tangible and intangible materials as well as experiences found in the destination that
provide psychological satisfaction to tourists.
 Focuses on the facilities and services designed to meet the needs of the tourist.
The sum of attractions, transportation, accommodation & entertainment which result in customer
satisfaction

MAJOR CHARACTERISTICS OF TOURISM PRODUCTS

1. Intangible:-
-No transfer of ownership of goods is involved in tourism.
2. Psychological:-
-A large component of tourism product is the satisfaction the consumer derives from its use.
3. Highly Perishable:-
  A travel agent or tour operator who sells a tourism product cannot store it.
4. Composite Product:-
-The tourist product cannot be provided by a single enterprise, it rather includes : the airline, a
hotels, restaurants, travel agents, etc.
5. Unstable Demand:-
-Tourism demand is influenced by seasonal, economic political and others such factors.
6. Fixed supply in the short run:-
o product cannot be brought to the consumer; the consumer must go to the product
7. Absence of ownership:-
 A service can be bought for consumption but ownership remains with the provider of the service.
 E.g. Hotel rooms, Airline tickets, etc. can be used but not owned. So, a dance can be enjoyed by
viewing it, but the dancer cannot be owned.
8. Heterogeneous:- customers have different demands.
9. Risky:-
E.g. a beach holiday might be disappointing due to heavy rain

 Management strategies for Services Business

 Services managers can do several things to increase services effectiveness in the face of intrinsic
services characteristics.
 They understand the service profit chain, which links service firm profits with employees and
customer satisfaction.
The chain consists five Links
1. Healthy service profits and growth- superior service firm performance.
2. Satisfied and loyal customers- satisfied customers who remain loyal, repeat purchase, and refer other
customer.
3. Greater Service Value- more effective and efficient customer value creation and service delivery.
4. Satisfied and productive service employees- more satisfied, loyal and hard working employees.

5. Internal service quality- superior employee selection and training, high quality work environment
and strong support for those dealing with customers.

 Internal marketing- the service firm must effectively train and motivate its customer-
contact employees and all the supporting service people to work as a team to provide
customer satisfaction.
 Interactive marketing- perceived service quality depends heavily on the quality of
buyer- seller interaction during the service encounter.

Service companies face the task of three major marketing areas

1. Managing Differentiation- because of price competition, service firms need to develop
differentiated offer, delivery and image to outsmart rival firms.
2. Managing quality- deliver consistently higher quality than its competitors.
3. Tangibilizing the product- promotional materials, employee appearance, and service
firms physical environment all keep tangibilizing the service.

Additional 3Ps
 The traditional 4Ps marketing approach work well for goods, but additional elements
require attention in service business.
  (Rooms,Bitner), suggested 3 additional 3Ps for service marketing: people, physical
evidence and process.
People- for most services are prepared by people, the selection, training and
motivation of employees make huge difference in customer satisfaction.
Physical evidence- a hotel will develop a look and style of dealing with customers that
realize its intended customer value proposition whether its cleanliness, speed or some
other benefit.
 Process- the production process and organization system is also one
element of customer satisfaction.

CHAPTER- THREE
Consumer Markets and Consumers Buying Behaviors
Analyzing Consumer Markets and Buyer Behavior

Consumer Behavior (Engel, Kollat, & Blackwell): Those acts of individuals directly
involved in obtaining and using goods and services, including the decision processes that
precede and determine these acts.
Consumer Behavior Models
 Consumer Processing Models (CPM): Consumer behavior is rational, highly cognitive,
systematic, and reasoned.
 Hedonic, Experiential Models (HEM): consumer behavior is driven by fun, fantasies, and
feelings.

Culture
 Exert the broadest and deepest influence on consumers behavior.
 Culture is the most basic determinant of a person’s want and behavior.
It comprises the basic values, perceptions, wants, and behaviors that a person learns
consistently in a society
 Culture is an integral part of the hospitality and travel business.
 It determines what we eat, how we travel, where we travel, and where we stay.
 Culture is dynamic, adapting to environment.
Social classes
 Social classes are relatively permanent and ordered divisions in a society whose members
share similar values, interests, and behaviors.
 Social scientists have identified the seven social classes: upper uppers(1%), lower
upper(2%), upper middle(12%), middle(32%), working(38%), upper lowers((%), lower
lower(7%).
Characteristics of Major Social Classes
1. Upper The social elite who live on inherited wealth. They give large
Uppers sums to charity, run the debutante balls, maintain more than one
(less than 1%) home, and send their children to the finest schools. They are a
market for jewelry, antiques, homes, and vacations. They often
buy and dress conservatively. Although small as a group, they
serve as a reference group to the extent that their consumption
decisions are imitated by the other social classes.

2. Lower Persons, usually from the middle class, who have earned high
Uppers income or wealth through exceptional ability in the professions
(about 2%) or business. They tend to be active in social and civic affairs and
to buy the symbols of status for themselves and their children.
They include the nouveau riche, whose pattern of conspicuous
consumption is designed to impress those below them.

 Consumer behavior is also influenced by social factors including the consumers’ groups,
family,social roles, and status.

Groups- an individual’s attitudes and behavior are influenced by many small groups.
 Those to which the person belongs that have a direct influence are called membership
group.

 They include primary groups, such as family, friends, coworkers and so on.
 Reference group- has face to face interaction
 Aspirational groups- those which do not belong but would like to.
 Family- has a strong influence on buyer behavior.
 Role and status – an individual’s position in each group can be defined in terms
of role and status.
 Self-Concept
Personality &

Age and life cycle stage - the type of goods and services people buy change
during their lifetime.
 Preference for leisure activities, travel destinations, food and
entertainment are often age related
See text for complete table
Occupation – a person’s occupation affects the goods and services bought.
Economic situations – a person’s economic situation greatly affects product choice and
decision to purchase a particular product.
Life style- is a person’s pattern of living as expressed in his or her activities, interests,
and opinions.

Motivation
Influencing Buyer
Behavior
 5

Self-
actualization
(self-development
and realization)

Influencing
Buyer Behavior
Perception
 A motivated person is ready to act.
 How that person acts is influenced by his or her perception.
 Why do people have different perception of the same situation? This is
because of three perceptual processes.
Selective attention
 Selective attention means that marketers have to work hard to attract
customers’ notice.
 People are more likely notice stimuli that relate current need.
 People are more likely to notice stimuli that they anticipate.
 People are more likely to notice stimuli whose deviations are large in
relation to the normal size of the stimuli.
Selective Distortion
 Even noticed stimuli do not always come across in the way the sender
intended.
 SD- is the tendency to twist information in a way that will fit our
preconceptions
Selective Retention
 People will forget much that they learn but will tend to retain information
that supports their attitudes and beliefs.
 Because of this we are likely to remember good points mentioned about
competing products
learning
 Change in individual’s behavior arising from experience.
 Most human behavior is learned.
Belief and attitude
 A belief is a descriptive thought that a person holds about something.
 An attitude describes a persons relatively consistent evaluations, feelings,
and tendencies toward an object or an idea.
 Low
 Involvement

Postpurchase
behavior



Purchase
intention
Postpurchase
Behavior