Chapter 1 Introduction Marketing for Hospitality and Tourism

Chapter 1 Introduction: Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 1

The Purpose of a Business Is to Create and Retain the Right Customer Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 2

The Four Ps Marketing Mix Place Product (Distribution) Price Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens Promotion © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 3

The Promotional Mix Advertising n Sales promotion n Packaging n Personal selling n Public relations n Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 4

Defining Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products and value with others. Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 5

Core Marketing Concepts Needs, wants, and demands Markets Exchange, transactions, and relationships Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens Products Value, satisfaction, and quality © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 6

Need, Wants, Demands • Need. A human need is a state of felt deprivation. Examples include the need for food, clothing, warmth and safety. • Wants are how people communicate their needs. A hungry person may want a hamburger, noodles, or cheese and bread. • Demands. When backed by buying power, wants become demands. Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 7

Product A product is anything that can be offered to satisfy a need or a want. Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 8

Value, Satisfaction, and Quality • Customer value is the difference between the benefits that the customer gains from owning and/or using a product and the costs of obtaining the product. • Customer satisfaction depends on a product’s perceived performance in delivering value relative to a buyer’s expectations. • Quality begins with customer needs and ends with customer satisfaction. Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 9

Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 10

Why Satisfaction May Not Lead To Customer Loyalty • Some customers never return to an area – but they can still recommend • Some customers shop for the best price differentiate your product • Some customers like to have different purchase experiences – like to stay or dine at different places Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 11

Why Managers Should Be Concerned About Customer Loyalty • Customer loyalty leads to increased profit • Customer loyalty leads to increased partnership • Lower marketing and sales costs Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 12

Exchange, Transactions, and Relationships • Exchange is the act of obtaining a desired object from someone by offering something in return. • A transaction is marketing’s unit of measurement and consists of a trade of values between two parties. • Relationship marketing builds relationships with valued customers, distributors, dealers, and suppliers by promising and consistently delivering high-quality products, good service, and fair prices. Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 13

Importance of Customer Retention n 5% increase adds 25 - 125% to bottom line Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 14

The Life Time Value of the Customer Revenue and profits by average customer over a lifetime by segment n Increase average purchase, frequency of visit, life n Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 15

Example Corporate business traveler - 4 x a year, 2 nights per visit, $200 per visit = $800 a year n Average life is 4 years n 4 yrs x $800 = $3200 lifetime value n Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 16

Markets A market is a set of actual and potential buyers who might transact with a seller. Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 17

Marketing and Sales Concepts Contrasted Starting Point Focus Factory Existing Products Means Ends Profits through Volume Selling and Promoting The Selling Concept Market Customer Needs Integrated Marketing Profits through Satisfaction The Marketing Concept Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 18

Marketing Management Philosophies Production Concept • Consumers favor products that are available and highly affordable. • Improve production and distribution. Product Concept • Consumers favor products that offer the most quality, performance, and innovative features. Selling Concept • Consumers will buy products only if the company promotes/ sells these products. Marketing Concept Societal Marketing Concept Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens • Focuses on needs/ wants of target markets & delivering satisfaction better than competitors. • Focuses on needs/ wants of target © 2002 Pearson Education, Inc. markets &Upper delivering superior value. Saddle River, NJ 07458 19

Marketing’s Future • “It (marketing) encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer’s point of view. ” • Peter Drucker • Marketing has become the job of everyone. Marketing for Hospitality and Tourism, 3 e Philip Kotler, John Bowen, James Makens © 2002 Pearson Education, Inc. Upper Saddle River, NJ 07458 20