Formulating Marketing Strategy In the Food and Hospitality Industry

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In the previous chapter communication was discussed as a vital strategic element of hospitality organisations and importance was given to integrating the various promotional tools to achieve an effective focus. The main influence for communications and other management functions must be directed by long term aims and objectives developed as part of a comprehensive strategy.

The use of the word strategy has now become so widespread within the lexicon of business language that it has become almost meaningless. Strategy is often used as a type of mantra which if repeated in the right circumstances gives the impression of action but actually provides little direction for the organisation. The use of the term as a description of longer term planning is helpful but unless it provides the right guideposts it is equally ineffective. The strategic plan should provide a blue print for action which can be interpreted at any level of the organisation.

The nature of strategy is further obscured by its specialist applications, for instance, strategic marketing, strategic business planning, corporate strategy and so on. The context in which the term is used is not that important as long as clear guidelines for long term action are included. Marketing strategy must therefore provide clear indications of which markets are to be targeted and the means by which they will targeted in the long term. There is an extraordinarily wide range of definitions of strategy and marketing strategy ranging in depth and detail but providing little in the way of clarification for implementation. The following description of what marketing strategy does emphasises the dynamic aspect of the process and the importance of strategy as an action based discipline:

‘Marketing strategy is the process by which the organization translates its business objective and business strategy into market activity.[1]’

The acceptance of this explanation of marketing strategy does have significant implications for the organisation. During the past decade many hospitality organisations especially in the United Kingdom and Europe have grasped the terminology and professed their conversion to the cause of marketing. As a demonstration of their commitment they point to the companies enhanced sales force, their expenditure on advertising and social skills training programmes. Marketing strategy is however, based on a careful analysis of the market place and depends upon the use of appropriate marketing information. This necessitates a marketing information system which should provide management with continuous and timely information. The use of detailed market analysis enables the company to be proactive and dynamic compared to those hospitality companies that traditionally depend upon their financial management and accounting systems and as a result tend to be reactive.

Whilst strategic planning in the hospitality industry has evolved considerably in recent years there is still a tendency for the process to be the preserve of senior management. Implementation at intermediate levels of the organisation is often restricted, with middle managers unsure about the longer term objectives of the organisation or the means of achieving them. This approach will need to change as hospitality organisations become more proactive at the unit and departmental level in order to maintain their market position in the face of greater competitive and economic pressure.

Marketing Planning and Marketing Strategy

These two terms are often used interchangeably, the distinction between them is obscure and probably of little significance to the practitioner. Marketing plans should be prepared for the long term (3-4 years) with clear guidelines for action. They should also be prepared within the context of the companies overall mission and corporate strategy. If there is a difference between marketing planning and marketing strategy it will be in the scale of the proposition. The marketing plan will contain the tactical details for implementation, dealing with specific marketing activity, promotions, distribution, selling and so on. Marketing strategy will provide the overall analysis of the organisation and its environment with a means of achieving its overall objectives. The strategic plan may therefore be regarded as a substantial preface to the marketing plan, if indeed any distinction has to be made at all.

The strategic planning process

The flow chart described below indicates the approximate relationships between the various stages of developing marketing strategy.

Hospitality organisations face diverse markets and competitive pressures and it is not therefore possible to develop a prescriptive approach to the process. Strategy in the hospitality industry will be concerned with two substantial indicators in the economy, the level of business activity and the amount of disposable income for leisure purposes. The larger organisations are concerned with these issues in an international context either as direct traders in overseas markets or as the recipients of tourist expenditure in their own country. Multi unit international organisations are confronted with a more difficult task in the development of an overall long term strategy. Individual units or units in a particular region may have to deal with local issues that impact upon overall company strategy.

For instance an international hotel company wishing to develop the short stay business market as a feature of company policy may be seriously affected by a down turn in business in a region of the world due to political and social instability. If the area is allowed too much autonomy to respond to local conditions the overall image of the company may be adversely affected worldwide. If central control is not relaxed then the units in that area may become financially unsound. The standardisation of service to an agreed level is also a major problem for hospitality operators attempting to develop an company marketing strategy. The interaction between customer and staff member is such an important feature of the hospitality product that it must be part of the planning process and yet implementing and controlling this important aspect of the business represents one of the greatest challenges to hospitality managers.

The Marketing Information System

Central to the development of marketing strategy is the continuous flow of information from the market place, specialist agencies (for instance advertising agencies), internal administration and management departments. In large organisations this would take the form of regular, usually monthly returns from the unit to regional head office where the data is analysed and used in the decision making process. Diagram two describes the components of a marketing information system and the interrelationships between them.

Piercy [2] describes the characteristics of a marketing information system thus:

1 It stores and integrates information on marketing issues from many sources.

2 It provides for the dissemination of such information to users

3 It supports marketing management decision making in both planning and control.

4 It is likely to be computerized

5 It is not simply a new name for market research

Accounting system – Many hospitality operations depend almost exclusively upon their accounting department to provide marketing data as a derivative of the financial control mechanisms. This approach is understandable given the large investment in manpower and equipment plus the legal penalties for not keeping adequate records. Developing specific marketing reports is often seen as an additional expense usually without an immediate payback. The nature of hospitality operations however means that they are in an almost unique position to derive rapid feedback regarding key internal indicators. For instance, Average spend per user group, marginal marketing costs per user group, and many other ratios which can be included in a trend analysis (amount last year, previous year and so on) providing vital data for the strategic planner.

Control and administration – The records kept on customers and staff can provide essential information providing the basis for an extensive guest database. Guest histories can be evolved into an effective means of market segmentation by combining tha data obtained from other internal and external sources. For instance key information such as name, address, length of stay, company details, frequency of visit, can be supplemented with information on the breakdown of expenditure, costs of services provided, services used and attitudinal data from surveys. Over a longer period of time indices can be established for reponsiveness to advertising and other promotional effort, and market groups correlated with other criteria such as exposure to certain media or consumption of other products. The development and management of such a system is expensive but can provide an important competitive lead in an increasingly saturated market place.

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