Kotler Chapter 4

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Marketing for Hospitality and Tourism, Fifth Edition © 2010 Pearson Higher Education, Inc.
By Philip Kotler, John Bowen and James Makens Pearson Prentice Hall - Upper Saddle River, NJ 07458
OBJECTIVES
After reading this chapter, you should be able to:
II
Know your enemy and know

yourself, and in a hundred
battles you will never be in peril.
— SUN-TZU
55
OBJECTIVES
After reading this chapter, you should be able to:
• Explain the importance of information in gaining II
insights about the marketplace and customers.
• Explain the marketing information system concept.
• Outline the marketing research process, including defining
problem & research objectives, developing the research plan,
implementing the research plan, and interpreting and reporting
the findings.
• Explain how companies analyze and use marketing information.
5
Marketing Information's Systems and Research
Marketing Information and Customer Insights
• To create value for customers & build meaningful II
relationships with them, marketers must gain fresh,
deep insights into what customers need and want.
– such insights come from the good marketing information
• While these insights are important for building value
and relationships, they can be very difficult to obtain.
– customer needs & motives are often anything but obvious
• Marketers must effectively manage marketing
information from a wide range of sources.
– with information technologies, companies can
now generate information in great quantities
5
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
• Most marketing managers are overloaded with data II
and often overwhelmed by it, yet complain they lack
enough information of the right kind.
• They don’t need more information—they need better
information — and to make better use of information
they already have.
– a company’s marketing research & information system
must do more than just generate lots of data
• The real value of marketing research and marketing
information lies in how it is used—in the customer
insights that it provides. 5
• Many companies are now restructuring & renaming II
their marketing research and information functions.
• Customer insight groups collect customer & market
information and use the marketing information to
develop important customer insights from which the
company can create more value for its customers.
– one customer insights group states its mission simply as
“getting better at understanding our consumers and
meeting their needs.”
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The Marketing Information System
• A marketing information system (MIS) consists of II
people, equipment, and procedures to gather, sort,
analyze, evaluate, and distribute needed, timely, and
accurate information to marketing decision makers.
– it interacts with managers to assess their information needs
– it develops needed information from internal company
records, marketing intelligence activities, and the
marketing research process
– analysts process information to make it more useful
– the MIS distributes information to managers in the right
form, at the right time to help in marketing planning,
implementation, and control 5
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Figure 5-1 Marketing Information System 5

Assessing Information Needs
• A good marketing information system balances II
information managers would like to have against
that which they really need & is feasible to obtain.
• Some managers ask for whatever data they can get
without thinking carefully about cost or usefulness.
– too much information can be as harmful as too little
• Other busy managers may fail to ask for things they
need to know, or managers may not ask for some
types of information that they should have.
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Obtaining Data
• The costs of obtaining, processing, storing, and II
delivering information can add up quickly.
• The company must estimate the value of having an
item of information against the costs of obtaining it.
– value depends on how it will be used, and this judgment
is highly subjective
• Sometimes additional information contributes little
to improving a manager’s decision
– the cost may exceed the benefit
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Developing Information
• The answers to the questions in Table 5–1 will help II
managers assess their marketing information needs.
Table 5-1 Questions for Assessing Marketing Information Needs 5

Developing Information - Internal Data
• Many companies build extensive internal databases, II
of consumer & market information obtained from
data sources within the company network.
– information in the database can come from many sources
• Internal data are accessed more quickly & cheaply
than other sources, but presents some problems.
– it may be incomplete or in the wrong form for marketing
– data also age quickly; keeping the database current requires
a major effort
• Every company contains more information than any
manager can possibly know or analyze. 5
Developing Information - Internal Data
• The company brings order to its information gold II
mine, so its managers can easily make informed
decisions.
• Increasingly, companies are creating data warehouses
to house customer data in an accessible location.
– using powerful data mining techniques, they search for
meaningful patterns & communicate them to managers
• Managers can use information gathered from these
and other sources to evaluate performance and detect
problems and opportunities.
5
Developing Information - Guest History Information
• Guest information is vital to… II
– improving service
– creating effective advertising & sales promotion programs
– developing new products
– improving existing products
– developing marketing and sales plans
– development & use of an effective revenue management program
• Unfortunately, far too many hospitality firms have

only a vague idea of who their guests are.
5
Developing Information - Guest History Information
• Specific guest information needs may include any or II
all of the data shown in Table 5–2 on Page 116.
• While this list may seem overbearing and unduly
inquisitive, hospitality companies increasingly
collect and use this type of information.
– a hospitality company must be very careful not to
infringe on privacy rights of guests or to disturb them
• An amazing amount of this information is available
from internal records, which requires interfacing
with other departments, such as reservations and
accounting. 5
Developing Information - Guest Information Trends
• Information concerning guest trends is vital to II
planning and revenue/yield management, and
include the following:
– booking patterns
– cancellations
– conversion percentages (percentage of inquiries to
reservations)
– overbooking patterns
– historical trends on occupancy for prime, shoulder,
and low seasons
– yield patterns by season
5
Guest Information Management - Acquisition
• A system for obtaining guest information may II
include any or all of these techniques:
• Handwritten Journals, Card Files from Guest
Registrations and Personal Observations.
– despite an apparent 19th-century style, this
is often adequate for small enterprises
• Guest Comment Cards.
– provide useful information & insights into problem areas
• Listening to & Speaking with Guests.
– an excellent way to find out what guests think, and
management hears it firsthand 5
• Automated Systems. II
– decreasing cost & increasing capacity of automated guest
history systems will allow hotels to create close
relationships with their customers once again
• Mystery Shoppers—a $1.5-billion industry.
– companies often hire disguised or mystery shoppers to
pose as customers and report back on their experience
– A mystery shopper works best if there is a possibility
for recognition and reward for good job performance
• Company Records.
– one of the most misused sources of information
5
• Point-of-Sale Information. II
– a POS system can collect information about individual
restaurant patrons where credit cards are used
5
Marketing Intelligence
Internal & External Sources
• Marketing intelligence includes everyday data about II
developments that helps managers prepare and adjust
marketing plans and short-run tactics.
• It can be gathered by executives, front-desk staff,
service staff, purchasing agents, and sales force.
• Hotel owners and managers are essential parts of
a marketing intelligence system.
– managers should debrief contact personnel regularly
• A hospitality company must encourage suppliers,
convention and tourist bureaus, and travel agencies
to pass along important intelligence. 5
External Sources
• The three types of external marketing information & II
their sources are shown in Table 5–3 on page 163.
– macromarket information; competitive information; new
innovation and trends
• It is worthwhile to encourage gathering of this data
by treating vendors, salespeople, and potential
employees in a friendly and receptive manner.
• Members of management should be encouraged to
join community and professional organizations.
– where they are likely to obtain essential marketing
information
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Sources of Competitive Information
• Competitive intelligence is available from trade II
magazine articles, competitors’ reports, speeches, press
releases, brochures, and advertisements.
– managers should also visit competitors’ premises regularly
• Using the Internet, marketers can search competitor
names, events, or trends & see what turns up.
• Companies can subscribe online databases and
information search services.
– Dialog, DataStar, LEXIS-NEXIS, Dow Jones News Retrieval,
UMI ProQuest, and Dun & Bradstreet’s Online Access
5
Sources of Competitive Information
• Hospitality managers can subscribe to newsletters II
such as National Restaurant Association Smart Brief
and hotelmarketing.com
• Associations sometimes collect data from member
companies, compile it, and make it available to
members for a reasonable fee.
– this data can be misleading because member companies
may provide incorrect data or refuse to contribute statistics
if they have a dominant market share
5
II
See this feature on page 124 of your textbook. 5

Marketing Research
Introduction
• Casual marketing intelligence cannot answer some II
questions, and managers sometimes need to
commission formal marketing research.
• Marketing research identifies and defines marketing
opportunities & problems, monitors and evaluates
marketing actions & performance, and communicates
the findings and implications to management.
Figure 5-2 Marketing research process. 5

Marketing Research
10 Common Activities
• The ten most common activities in which marketing II
researchers engage are...
– measurement of market potentials
– market-share analysis
– determination of market characteristics
– sales analysis
– studies of business trends
– short-range forecasting
– competitive product studies
– long-range forecasting
– marketing information systems studies
– testing of existing products 5
Marketing Research
Conducting Research
• A company can conduct marketing research by II
employing its own researchers or hiring outside
researchers.
• Most large companies—more than 73%—have their
own marketing research departments.
– even companies with their own departments hire outside
firms to do fieldwork and special tasks
5
Marketing Research
Marriott
• Frank Camacho, former vice president of corporate II
marketing services for Marriott, listed Marriott’s
research priorities as follows:
– market segmentation and sizing
– concept development and product testing
– price-sensitivity assessment
– advertising and promotions assessment
– market tracking
– customer satisfaction
5
Marketing Research
Defining the Problem and Research Objectives
• Managers must work closely with researchers to II
define the problem & research objectives.
– they must know enough about marketing research
to interpret the findings carefully
• If they know little about marketing research, they
may accept the wrong information, draw wrong
conclusions, or request more data than they need.
– marketing researchers can help the manager define the
problem and use the findings correctly
• Assuming the problem is well defined, the manager
and researcher must set research objectives. 5
Marketing Research
Defining the Problem and Research Objectives
• A marketing research project can have one of three II
types of objectives:
– exploratory research, to gather preliminary information that
will help define the problem and suggest hypotheses
– descriptive research, to describe size & composition of
the market
– causal research, to test hypotheses about cause-and-effect
relationships
5
Marketing Research
The Research Plan - Specific Information Needs
• The second marketing research step is determining II
needed information & making a data collection plan.
– research objectives must be translated into specific
information needs
• To meet a manager’s information needs, researchers
can gather secondary data, primary data, or both.
– primary data consist of information collected for the
specific purpose at hand
– secondary data consist of information already in existence
somewhere, having been collected for another purpose
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Marketing Research
The Research Plan - Primary and Secondary Data
• Researchers usually start by gathering secondary II
data, usually obtained more quickly and at a lower
cost than primary data.
– a good starting point for marketing research
• When secondary sources can’t provide all the needed
information, the company must collect primary data.
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Marketing Research
The Research Plan - Primary and Secondary Data
• Data collected casually can be useless or, even II
worse, misleading.
• Designing a plan for primary data collection calls
for decisions about research approaches, contact
methods, a sampling plan, and research instruments.
Table 5-4 Planning Primary Data Collection. 5

Marketing Research
Research Approaches
• Three basic research approaches are observations, II
surveys, and experiments.
• Observational research is gathering of primary data
by observing relevant people, actions, and situations.
– this research can yield information people are normally unwilling
or unable to provide
– companies now use ethnographic research, observers who watch
& interact with consumers
– feelings, beliefs, and attitudes that motivate buying behavior
cannot be observed.
– long-run or infrequent behavior is also difficult to observe
5
Marketing Research
Research Approaches
• Survey research, best suited to gathering descriptive
information, can be structured or unstructured.
– structured surveys use formal lists of questions asked
of all respondents in the same way
– unstructured surveys let the interviewer probe respondents
and guide the interview according to their answers
– the major advantage of survey research is its flexibility
– sometimes people are can’t answer questions as they don’t
remember or never thought about what they do & why
– careful survey design can help minimize problems 5
Marketing Research
Research Approaches
• Experimental Research is designed to capture cause-and-effect
relationships by eliminating competing explanations of the
observed findings.
– the most scientifically valid research

– experiments call for subjecting matched groups of subjects to
different treatments, controlling extraneous variables, and checking
whether observed response differences are statistically significant
– if the experiment is well designed & executed, managers can have
confidence in the conclusions
5
Marketing Research
Contact Methods
• Information can be collected by three methods. II
– mail questionnaires can collect large amounts of
information at a low cost per respondent.
– telephone interviewing allows quick data gathering
– personal interviewing takes two forms: individual
(intercept) and in-depth methods
Table 5-5 Strengths and Weaknesses of the Three Contact Methods. 5

Marketing Research
Online Interviews
• Online research is estimated to make up over 35% II
of all survey-based research.
• Smart companies are using them to augment rather
than replace more traditional methods.
– a director of marketing states, “Online is not a solution in
and of itself …but it does expand our toolkit.”
• Internet surveys are quick and can be inexpensive.
– response rate can be a problem if they are not properly
designed and targeted
• Simple technology for a consumer market is critical.
– don’t expect respondents to wait for graphics to load 5
II

Marketing Research
Focus Groups
• Focus groups are usually conducted by inviting 6-10 II
people to gather with a trained moderator to talk
about a product, service, or organization.
• The moderator starts with broad questions before
moving to more specific issues.
– encouraging open and easy discussion to foster group
dynamics that will bring out true feelings and thoughts
• Focus group interviewing is becoming a major
marketing research tool for gaining customer insight.
– especially suited for use by managers of hotels and
restaurants, who have easy access to their customers
5
Marketing Research
Focus Groups
II
Active Group has a feature called Client Lounge that allows members of the organization
conducting the focus group. Managers can view the focus group live on the Internet and discuss the
event just as if they were physically present at the event. Courtesy of Active Group. Used with
permission.
5
Marketing Research
In-Depth Interviews
• In-depth surveys, another form of qualitative II
personal interviewing, can be used when it is
difficult to put together a focus group.
• Another form of qualitative personal interviewing,
individual interviews using open-ended questions.
– they allow a researcher to probe & gain insight into
consumer behavior
• Qualitative research is useful to gain insight into
definitions and concepts as well as insight into
survey results.
5
Marketing Research
Sampling Plan
• Marketing researchers usually draw conclusions II
about large consumer groups by taking a sample.
– a segment of the population selected to represent the
population as a whole
• Ideally, the sample should allow accurate estimates
of the thoughts & behaviors of the larger population.
• Designing the sample calls for four decisions.
– who will be surveyed?
– how many people should be surveyed?
– how should the sample be chosen?
– when will the survey be given? 5
Marketing Research
Research Instruments
• In collecting primary data, marketing researchers II
have a choice of primary research instruments.
– the interview (structured and unstructured), mechanical
devices, and structured models such as a test market
• Structured interviews use a questionnaire, by far the
most common survey instrument.
– because there are many ways to ask questions, the
questionnaire is very flexible
• Questionnaires should be developed and tested
carefully before being used on a large scale.
– to avoid errors in a carelessly prepared questionnaire
5
II

Marketing Research
Research Instruments - Questionnaires
• The marketing researcher must decide what questions II
to ask, what form the questions should take, and how
to word and sequence the questions.
• Questionnaires often omit questions that should be
answered and include questions that cannot, will not,
or need not be answered.
• The form of the question can influence the response.
– closed-ended questions include all possible answers, and
subjects are asked to choose among them
– open-ended questions allow respondents to answer in their
own words
5
Marketing Research
Research Instruments - Questionnaires
• The researcher should use simple, direct, unbiased II
wording and care should also be taken in the ordering
of questions.
• Table 5–7 on pages 136-137 provides an overview
of formats for closed- and open-ended questions.
• Researchers in the hospitality industry must be very
careful in developing questions and selecting the
sample not to offend respondents unwittingly.
– this problem is less pervasive with many products,
such as building tile or brass fittings
5
Marketing Research
Research Instruments - Presenting the Research Plan
• The marketing researcher should summarize the plan II
in a written proposal.
• The proposal should cover management problems
addressed, research objectives, data to be obtained,
sources of secondary information or methods for
collecting primary data.
• The proposal should include research costs and how
the results will aid management decision making.
• A written plan ensures the marketing manager and
researchers have considered all important aspects of
the research and agree on why & how it will be done. 5
Marketing Research
Implementing the Research Plan
• The plan is put into action by collecting, processing, II
and analyzing the information.
• Data collection can be done by the marketing
research staff, or by outside firms.
– data collection is generally the most expensive and most
subject to error
• The collected data must be processed and analyzed
to pull out important information and findings.
• The researcher must interpret the findings, draw
conclusions & report the conclusions to management.
– interpretation should not be left entirely to the researcher 5
Marketing Research
Interpreting and Reporting the Findings
• The researcher should avoid overwhelming managers II
with numbers, statistical techniques, and focus.
– management desires findings useful in decision making
• Findings can be interpreted in different ways, and
discussions between researchers and managers will
help point to the best interpretations.
• Interpretation is an important phase of the marketing
process, as the best research is meaningless if a
manager blindly accepts wrong interpretations
– managers may also have biased interpretations
5
II

Marketing Research
• Information gathered can often benefit from II
additional analysis to help interpret the findings.
– such as advanced statistical analysis to learn more
about the relationships within a set of data
• Such analysis allows managers to go beyond means
and standard deviations in the data.
– mathematical models might also help marketers make
better decisions
• Marketing information has no value until managers
use it to make better decisions.
5
Marketing Research
• Information must reach appropriate marketing II
managers at the right time.
– often, the information arrives too late to be useful
• Recent developments in information handling have led
to a revolution in information distribution.
– in some companies, marketing managers can use a desk
terminal to tie into the company’s information network
• Such systems allow managers to obtain needed
information directly & quickly tailor it to their needs.
• Hospitality companies will increasingly use
decentralized marketing information systems. 5
II

International Marketing Research
Introduction
• International marketing researchers often face more II
and different problems than domestic researchers
with homogeneous markets within a single country.
• Markets in many different countries often vary
dramatically in levels of economic development,
cultures and customs, and buying patterns.
– in many foreign markets, the international researcher
has a difficult time finding good secondary data
• US researchers can obtain reliable secondary data
from dozens of domestic research services.
– many countries have almost no research services at all 5
Language Differences
• Differences in cultures from country to country cause II
additional problems for international researchers.
– language is the most obvious culprit
• Translating a questionnaire to another language is
far from easy, and many points are “lost” because
idioms, phrases, and statements mean different
things in different cultures.
– a Danish executive observed, “I remember [an example
in which] ‘out of sight, out of mind’ had become
‘invisible things are insane.’ ”
5
Cultural Differences
• Buying roles & consumer decision processes vary II
from country to country, complicating research.
• Consumers attitudes vary toward marketing research,
and people in one country may be very willing to
respond; in others, nonresponse is a major problem.
– customs in some Islamic countries prohibit people from
talking with strangers
– high functional illiteracy rates in many countries make
it impossible to use a written survey for some segments
– middle-class people in developing countries often make
false claims in order to appear well off
5
Necessary Research
• Despite problems, the recent growth of international II
marketing has resulted in a rapid increase in the use
of international marketing research.
– global companies have little choice but to conduct such
research
• While costs & problems associated with international
research may be high, the costs of not doing it—in
terms of missed opportunities and mistakes—might
be even higher.
• Once recognized, many problems associated with
international research can be overcome or avoided. 5
Marketing Research in Smaller Organizations
Introduction
• Managers of small businesses often believe that II
marketing research can be done only by experts in
large companies with large research budgets.
– many marketing research techniques can be used by
smaller organizations and at little or no expense
• Secondary data collection, observation, surveys, and
experiments can be effective for small organizations.
– small business managers can obtain good marketing
information by observing what occurs around them
– managers can also conduct simple experiments and
informal surveys using small convenience samples
5
Sources of Help
• Many associations, chambers of commerce & II
government agencies provide help to small business.
– local newspapers often provide information on local
shoppers and their buying patterns
• The US Small Business Administration offers dozens
of free publications giving advice on topics ranging
from planning advertising to ordering business signs.
• Many colleges are seeking small businesses to serve
as cases for projects in marketing research classes
– sales management classes are eager to do sales blitzes
for hotels
5
Less Complex, Still Important
• Although informal research is less complex and II
costly, it must still be done carefully.
• Managers must think through the objectives of the
research, formulate questions in advance, and
recognize the biases systematically.
• Meticulously planned & implemented low-cost
research can provide reliable information for
improving marketing decision making.
5
KEY TERMS
• Causal research. Marketing research to test II

hypotheses about cause-and-effect relationships.
• Data warehouses collect data from a variety of
sources and store it in a one accessible location.
• Descriptive research. Marketing research to better
describe marketing problems, situations, or markets,
such as the market potential for a product or the
demographics and attitudes of consumers.
• Ethnographic research. Trained observers interact
with and/or observe consumers in their natural
habitat. 5
KEY TERMS
• Experimental research. The gathering of primary II

data by selecting matched groups of subjects, giving
them different treatments, controlling related factors,
and checking for differences in group responses.
• Exploratory research. Marketing research to gather
preliminary information that will help to better
define problems and suggest hypotheses.
• Internal data. Internal data consist of electronic
databases and non-electronic information and
records of consumer and market information
obtained from within the company. 5
KEY TERMS
• Marketing dashboards are like the instrument II

panel in a car or plane, visually displaying real-
time indicators to ensure proper functioning.
• Marketing information system (MIS). A structure
of people, equipment, and procedures to gather, sort,
analyze, evaluate, and distribute needed, timely, and
accurate information to marketing decision makers.
• Marketing intelligence. Everyday information
about developments in the marketing environment
that help managers to prepare and adjust marketing
plans. 5
KEY TERMS
• Marketing research. The systematic design, II

collection, analysis, and reporting of data and
findings relevant to a specific marketing situation
facing a company.
• Mystery shoppers. Hospitality companies often hire
disguised or mystery shoppers to pose as customers
and report back on their experience.
• Observational research. The gathering of primary
data by observing relevant people, actions, and
situations.
5
KEY TERMS
• Primary data. Information collected for the specific II

purpose at hand.
• Sample. (1) A segment of a population selected for
marketing research to represent the population. (2)
Offer of a trial amount of a product to consumers.
• Secondary data. Information that already exists
somewhere, having been collected for another
purpose.
• Survey research. The gathering of primary data by
asking people questions about their knowledge,
attitudes, preferences, and buying behavior. 5

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II

Know your enemy and know

Figure 5-1 Marketing Information System 5

Table 5-1 Questions for Assessing Marketing Information Needs 5

• Unfortunately, far too many hospitality firms have

See this feature on page 124 of your textbook. 5

Figure 5-2 Marketing research process. 5

Table 5-4 Planning Primary Data Collection. 5

– the most scientifically valid research

Table 5-5 Strengths and Weaknesses of the Three Contact Methods. 5

See this feature on page 131 of your textbook. 5

See this feature on page 135 of your textbook. 5

See this feature on page 139 of your textbook. 5

See this feature on page 141 of your textbook. 5

• Causal research. Marketing research to test II

• Experimental research. The gathering of primary II

• Marketing dashboards are like the instrument II

• Marketing research. The systematic design, II

• Primary data. Information collected for the specific II

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