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BHM UOU 3 YR - FRONT OFFICE MARKETING

Unit 1 Front Office Marketing

Introduction to Marketing:

Marketing is the study and management of the exchange process. According to the
American Marketing association, Marketing as 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.

The British Institute of Marketing defines marketing as the management process for
identifying, anticipating and satisfying customers requirements profitability.

The real Marketing is always customer oriented. The Purpose of a business is to create and
maintain satisfied, profitable customers. Customer are attracted and retained when their
needs are met. Not only do they return to the same hotel and restaurant, but they also talk
favourably to others about their satisfaction. Customer satisfaction leading to profit is the
central goal of hospitality marketing.

Role of Front Office in Hotel Marketing:

The front office is often seen as an information source and a request centre for guests and
hotel employees. As the market conditions have changed, the nature and importance of the
functions performed by the front office have also changed from being an order taking
department to an order generating or sales department.

The front office must take every effort to keep the information on room availability and guest
history current and accurate. The sales and marketing executive needs info on availability to
know what rooms to sell in future to design marketing strategies for off season. They need
an info n guest types/ origin to develop marketing strategy and target key guest segments.

Core Concepts of Marketing:

1. Need : It is a positive, motivational factor that compels action for


its satisfaction. It includes basic physical needs ,social needs, and
esteem needs. An unfulfilled need is a driving force that stimulates
the person to pursue and achieve it.
2. Want: Want may be understood as the way one expresses or
communicates his need.
3. Demand: Demand is a want that is backed by the ability and
willingness to pay for the product.
4. Product: A product is a good or service that is the end-result of a
process and serves as a need or want satisfier. It is usually a bundle
of tangible and intangible attributes that a seller offers to a buyer
for purchase.
BHM UOU 3 YR - FRONT OFFICE MARKETING

5. Value: Value is the extent to which a good or service is perceived by


its customer to meet his needs or wants, and when it is expressed
in terms of money, it is known as price
6. Satisfaction: Satisfaction is an expression of a customers approval
that a products performance meets his expectations.
7. Quality: Quality is the totality of features and characteristics of a
product or service that bear on its ability to meet customers needs.

Marketing Management Philosphies:

Product
Concept

Social
Production
Marketing
Concept
Concept

Marketing
Selling Concept
Concept

The marketing Concepts is the philosophy that urges organization to focus on their
customers needs. Analyzing their needs and making such decisions that satisfy those needs
in a better way than competitors.

The Production Concept: This concept is the oldest of the concepts in business. It
holds that consumers will prefer products that are widely available and
inexpensive. Managers focusing on this concept concentrate on achieving high production
efficiency, low costs, and mass distribution. They assume that consumers are primarily
interested in product availability and low prices. This orientation makes sense in developing
countries, where consumers are more interested in obtaining the product than in its features.
BHM UOU 3 YR - FRONT OFFICE MARKETING

The Product Concept: This orientation holds that consumers will favor those products
that offer the most quality, performance, or innovative features. Managers focusing on this
concept concentrate on making superior products and improving them over time. They
assume that buyers admire well-made products and can appraise quality and
performance. However, these managers are sometimes caught up in a love affair with their
product and do not realize what the market needs. Management might commit the better-
mousetrap fallacy, believing that a better mousetrap will lead people to beat a path to its
door.

The Sales Concept: This is another common business orientation. It holds that
consumers and businesses, if left alone, will ordinarily not buy enough of the selling
companys products. The organization must, therefore, undertake an aggressive selling and
promotion effort. This concept assumes that consumers typically sho9w buyi8ng inertia or
resistance and must be coaxed into buying. It also assumes that the company has a whole
battery of effective selling and promotional tools to stimulate more buying. Most firms
practice the selling concept when they have overcapacity. Their aim is to sell what they
make rather than make what the market wants.

The Marketing Concept: This is a business philosophy that challenges the above three
business orientations. Its central tenets crystallized in the 1950s. It holds that the key to
achieving its organizational goals (goals of the selling company) consists of the company
being more effective than competitors in creating, delivering, and communicating customer
value to its selected target customers. The marketing concept rests on four pillars: target
market, customer needs, integrated marketing and profitability.

Difference Between Sales concept and marketing Concept:

1. The Sales Concept focuses on the needs of the seller. The Marketing Concept focuses
on the needs of the buyer.

2. The Sales Concept is preoccupied with the sellers need to convert his/her product
into cash. The Marketing Concept is preoccupied with the idea of satisfying the needs of the
customer by means of the product as a solution to the customers problem (needs).

3. The Marketing Concept represents the major change in todays company orientation
that provides the foundation to achieve competitive advantage. This philosophy is the
foundation of consultative selling.

4. The Marketing Concept has evolved into a fifth and more refined company
orientation: The Societal Marketing Concept. This concept is more theoretical and will
undoubtedly influence future forms of marketing and selling approaches.

Social Marketing Concept: This concept holds that the organizations task is to
determine the needs, wants, and interests of target markets and to deliver the desired
satisfactions more effectively and efficiently than competitors (this is the original Marketing
Concept). Additionally, it holds that this all must be done in a way that preserves or
enhances the consumers and the societys well-being.
BHM UOU 3 YR - FRONT OFFICE MARKETING

Market Mix:
Marketing mix is a planned mix of the controllable elements of a products
marketing plan, commonly known as 4 Ps: product, price, place, and
promotion.

The basic marketing mix is the blending of these four inputs which form the
core of the marketing system.

Apart from these, service marketing relies upon extra three Ps: people,
process, and physical evidence.

These elements are adjusted until a right combination is found that serves the
needs of the products customers while generating optimum income.

Product/ Service: A product is a good or service that most closely meets the
requirements of a particular market or segment and yields enough profit to justify
its continued existence.

1. It possesses utility for the end user.


2. The product or service mix is always considered first, as without it the
industry has nothing to distribute, promote, or price.
3. The hospitality industry offers products like guest rooms, banquet halls,
food and beverages; and services like valet parking, housekeeping, butler,
express check-in and check-out services, etc

Place/ Distribution Mix: In marketing mix, place is the location of the market
and means of distribution used in reaching it.

It refers to the accessibility of products to the end users.

The distribution of consumer goods is achieved by shipping the products to


the consumer, done through retail stores and local kirana shops.

In the case of hospitality products, the consumer has to travel to a hotel to


receive the benefits of the products and services that are offered by the hotel.

The distribution channels of hospitality products may be direct (having their


own sales team) or indirect (through travel agent, tour operators, intersell
agencies, Internet, global distribution systems, etc.)

Promtion Mix: Promotion is the advancement of a product, idea, or point of


view through publicity and/or advertising.

A promotion mix includes all the means through which hotels communicate
with their prospective guests.
BHM UOU 3 YR - FRONT OFFICE MARKETING

It consists of methods like advertisements in print and electronic media, sales


promotions, personal selling, publicity, public relations, fam-tours, and
exhibitions.

Price Mix: Price is the market value, or agreed exchange value, that will purchase
a definite quantity, weight, or other measure of a good or service.

Pricing is very important in the marketing mix.

Hotels, especially large properties, often develop variable-rate policies to meet


the needs of different market segments and charge different prices from
different buyers of the same product, depending upon the competitive
situation and the bargaining position of the buyer.

People: Any person coming in contact with the end-users can have a significant
impact on overall satisfaction.

People are particularly important because, in the consumers eye, they are
inseparable from the total service.

Hence, they must be appropriately trained and well motivated to achieve the
organizations objectives.

A well-trained and tactful hotel employee can mask the shortcomings of the
hotel by providing excellent services to guests.

Process: A process comprises the steps involved in getting the product or service
from the time of demand to the time of delivery.

The steps (identification, registration) that a guest with confirmed reservation


has to go through at the front desk to get the room keys are the process for
becoming a resident guest in a hotel.

The process should not be very time consuming, otherwise it will adversely
affect guest satisfaction.

Physical evidence: Unlike a product, a service cannot be experienced before it


is delivered, which makes it intangible.

It is often vital to offer potential customers a physical equivalent of what a


service would be like.

The physical items that a customer will see must reflect the image that the
service is trying to project.

This will determine the customers decision regarding the favoring and
selection of a service.
BHM UOU 3 YR - FRONT OFFICE MARKETING

The brochures containing photographs, descriptions of the types of rooms


with the facilities offered in each room type also act as physical evidence.

Identification Of Markets:

A market segment is an identifiable group of individuals, families, organizations or firms,


sharing one or more characteristics or needs in an otherwise homogeneous market. Market
segments generally respond in a predictable manner to a marketing or promotion offer.
Market segmentation is the process of defining and sub dividing a large homogeneous
market into clearly identifiable segments having similar needs, wants, or demands,
characteristics. Its objective is to design a marketing mix that precisely matches the
expectations of customers in the targeted segment. Segmentation is a consumer oriented
marketing strategy. Market segmentation gives formal recognition to the fact that wants and
desires of consumers are diverse and we can formulate a specific market offering to a specific
category or segment of the market, so that the supply will have the best correlation with
demand.

The hospitality market has two broad market segments: group market segment and transient
market segment.

Market

Group Market Transient Market

Corporate,
Tour Operators, Meeting/ Business Traveller,
conferences/ seminars,
Leisure Traveller
Exposition, Incentive Travel,
Extended stay travel

Group Market Segment: the group market segment constitutes the segments that provide
high volume and bulk business to hotels.

Corporate Market: The corporate market provides bulk business to hotels as executives of
business houses regularly visit different cities on official work. A contractual agreement is
generally made between business houses and hotels to attract business from the corporate
sector.

Tour Operators: Tour operators generally purchase rooms in bulk at highly discounted prices
because they provide a high volume of business to hotels. They prepare tour packages for
their clients.
BHM UOU 3 YR - FRONT OFFICE MARKETING

Meetings/ Conferences / Seminars: These are one of the major markets for the hotel
industry. They provide bulk business to hotels and are generally organized by corporate
sectors, institutions, and other organizations. There requirement is hotels with well
appointed meeting halls and board rooms, conference centre.

Expositions: Trade Shows and exhibitions bring together individuals and organizations
associated with a common business or activity for the purpose of reviewing, demonstrating,
marketing, and selling materials and products related to their common interest.

Incentive Travel: Incentive travel is travel which is given to employees as a reward for
outstanding performance. Hotels can capture this market by approaching companies that
offer incentive travel to their employees.

Extended stay market: In todays climate of downsizing, outsourcing and mobility, a lot of
businessmen are often away from their homes for extended durations of time and require
more than a hotel room.

Transient Market segments: The Transient market segments provide comparatively low
number of room sales as compared to the group market. This segment includes business and
leisure travellers. They travel in smaller numbers and stay for shorter durations than group
travellers. These segments provide less volume of business to the hotel and may be charged
than the other segments that provide larger volume of business.

Marketing Plan:
It consists of 5 steps:

1.Conduct a Marketing Audit/Survey: Property Analysis and Competitor Analysis.

2.Selecting Profitable Target Markets: Market segmentation.

3.Positioning the property: The process of designing a propertys market position.

4.Establishing Objectives and action Plan.: Establishing goals for each market segment.

5.Monitoring and Evaluating the market Plan.: Review the market plan and take corrective
action.

Marketing Strategy:

1. Single Segment strategy: Also Known as Concentrated Strategy. A


one market segment is served with one marketing mix.
2. Selective Specialization: Also Known as Differentiated Strategy.
Different marketing mixes are offered to different segments.
3. Product specialization: The firm specializes in a particular product
and offers the same to different market segmentation.
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4. Market Specialization: The hotel or firm specializes in serving a


particular market segment and offers that segment an array of
different products.
5. Full Market Coverage: The firm attempts to serve the entire
market.

Strategy formulation for various market segments:

Strategy is a game plan for achieving previously stated goal. Every hotel develops strategy for
achieving its goals, consisting of marketing strategy and compatible technology strategy and
sourcing strategy. Strategy can be divided into several forms, in accordance with customers
of market demand like:

Discounted Selling strategy: At here, hotel mainly targeted to those guests who are very
mindful towards the money like middle class working people. In discounted selling, the
rooms are sold at lower than the rack rate. The discounted rate is usually given to to regular
guests, travel agent, tour operator, groups, airlines, etc. This rate is normally prevailing
during the off season.

Package Plan strategy: Here, Hotel target to family guests/ leisure guests who prefer to
visit their family for rest and recreational purpose. Resort hotels mainly working for this
market segment and offer product and services in packages at a discounted price to retain
present guests and to attract potential guests. the package would cost considerably less than
each item paid for separately.

Group selling strategy: Nowadays, almost every hotel adopts this strategy because it
attracts bulk business as well as generates huge profit. Group selling includes- selling no. Of
room to travel agents and tour operator at discounted rates or lower than rack Rate.

Business Facility strategy: this strategy is implementing by almost every business or


commercial hotel. They targeted towards the business people who visit for some business
purpose like to attend meeting, conference, convention, etc. Commercial hotel segment is
expensive than other segments because it provide luxury accommodation with multiple in
room business facility like- internet, FAX, computer and so on.

TELEMARKETING- Tools and Techniques:

Telemarketing is the practice of calling established or potential customers and getting them
to buy a product or service. Federal regulations dictate when people can be called. In the
same way telemarketers employ rapid dial phone systems and computers, survey companies
BHM UOU 3 YR - FRONT OFFICE MARKETING

use the same technology to contact respondents to conduct telephonic surveys for the
purpose of gathering information for clients.

Several hotels telemarketing tools and techniques are mentioned below with short detail:

GDS (Global distribution system): It is a reservation system network which provides global
hotels and their reservation information in relation to various hotel properties. It is
established to connect the various hotel reservation information, distribution of airline
tickets, automobile rentals and other services required by the travellers.

Most CRS (affiliate and non affiliate) connect with one of the GDS is owned by an airline or
consortium of airlines. Galileo and sabre are examples of such system.

CRS (Central reservation system): It provides the guest with an avenue to locate a hotel
of choice in a certain location. It is a computerised system to manage and process the various
reservation requests from travel agents, tour operators and other sources of reservation.

It is an interactive electronic data storage and retrieval system that allows on line users (TA)
to gain access through terminals in their offices to supplier computer systems.

These systems also commonly extend to accounting and other back office tasks.

Once access is gained, enquires regarding service availability can be made along with
reservations. In addition, such system provides destination information and allows tasks
such as the writing of airline tickets to be completed electronically.

Instant Reservation System(IR): It is also a kind of CRS which is based on the principle of
WAN and usually operated by the IROs.

The instant reservation system is usually offered by the large group of hotels for the hotel of
their own chain or franchisee like Taj group of hotels, Oberoi group of Hotels, etc.

It was first introduced in year 1960 by the Holiday Inn group of hotels. It usually confirms
and reserves the room up to a certain no. which is decided by the hotel management on
Quota basis.