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Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
1
Strategic Marketing for Hotels and Restaurants
Stowe Shoemaker, PhD
Cornell University Executive Education Faculty
University of Houston
Strategic Marketing GM Program (c) Stowe Shoemaker, Ph.D
Objectives1. Introduce Strategic Marketing System Model – the
Framework for the class
2. Review definition of marketing and discuss the future of marketing
3. Review the buyer purchase model
4. Discuss how to calculate the life time value of the customer and the value of WOM and why this is important
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Objectives
5. Discuss market positioning
6. Discuss a framework for developing a marketing plan
7. Review communication strategies
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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How to Reach Goals
• Lecture
• Case studies
• Discussion
• Group 3 day project: Develop a marketing strategy for Carvel Ice Cream
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Carvel Ice Cream
• Case to be presented the last day of class• Award for best group presentation: Cornell
Marketing Strategy Contest• Participants will vote:
– Incorporates class material (negates 5 forces model, SWOT, presents measures to show success, etc.)
– Originality– Likelihood of success
6
#1 #2 #3 #4 #5
Creativity
Originality
Incorporates class information
This group had fun
Will build a CA
Presents measures to monitor success
TOTAL
not at all 1 2 3 4 5 6 7 does extremely well
Strategic Marketing GM Program (c) Stowe Shoemaker, Ph.D
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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The Marketing Plan
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Some Possible Marketing Plan Objectives
• Changes in marketing direction (defined by competitive set or business mix or both)
• Defensive or offensive marketing moves• New opportunities (new market segments)• Other specific product line objectives (e.g.,
increase food, beverage, spa or other revenues)
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Some Possible Marketing Plan Objectives
• Market share objectives—overall and by market segment, such as geographic, demographic, psychographic, group, FIT, package, etc.
• Pricing objectives (defined as an indexed value against other properties in the competitive set)
• Sales and promotion objectives
11
Some Possible Marketing Plan Objectives
• Advertising objectives (in terms of awareness and/or intention)
• Channel, distribution and intermediary objectives, such as the percentage of business from travel agents
• Research objectives
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
Handout on Template for a Marketing Plan
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Review Basics of Marketing
15
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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The Concept of Marketing
• Definition of Marketing:– identifying evolving consumer preferences, then
capitalizing on them through the creation, promotion and delivery of products and services that satisfy the corresponding demand. This is done by solving the right customers’ problems, giving them what they want or need at the time and place of their choosing, and at the price they are willing to pay.
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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4 P of Marketing
• P
• P
• P
• P
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Services versus Goods
• Differences between goods versus services:– Heterogeneity– Simultaneous production and consumption– Perishability
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Types of Products/Services
• Search qualities
• Experience qualities
• Credence qualities
20
Continuum of Evaluation for Different Types of Products
Clo
thin
g
Jew
elry
Fu r
nit u
re
Hou
ses
Aut
omob
i les
Res
taur
ant m
eals
Vac
atio
n s
Hai
r cut
s
Chi
ld c
are
Tel
evis
ion
r epa
ir
Leg
al s
ervi
ces
Roo
t can
als
Aut
o re
pair
Med
ical
di a
gnos
is
Difficult to evaluateEasy to evaluate
{High in search
qualitiesHigh in experience
qualitiesHigh in credence
qualities
{{Most
GoodsMost
Services
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Tangibility Spectrum
TangibleDominant
IntangibleDominant
SaltSoft Drinks
DetergentsAutomobiles
Cosmetics
AdvertisingAgencies
AirlinesInvestment
ManagementConsulting
Teaching
Fast-foodOutlets
Fast-foodOutlets
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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7 P of Marketing
• P
• P
• P
• P
• P
• P
• P
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Fourteen C’s of Marketing• Customer• Categories of offerings• Capabilities of firm• Cost, profitability and
value• Control of process• Collaboration within
firm
• Customization• Communications• Customer measurement• Customer care• Chain of relationships• Capacity management• Competitors• Cost to the customer
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Carvel Ice Creamand the 14 C’s
• Identify as many of the 14C’s in the case.
25
The Evolution of Marketing
Sales
Targeted
Promotions
Frequency
Programs
Push traffic,no targeting,discounts, littlemeasurement.
Still push, discounts, somemeasurement.
“Price” driven, segmented,transactionbased.
Added value toproduct, support price, customized, strengthen brand.
Brand
Relatio
nships
Profitability
Strategic
Knowledge
Relatio
nships
Knowledge,Help support VAR inloyalty
Tactic
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Interactive Marketing
• Refers to any activity that uses the Internet to advertise and sell goods and services to consumers, business, or nonprofit organizations and government– Marketer’s Toolkit by Harvard Business School
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Contextual Marketing
• Give the customer what she wants and make it useful and accessible so she can take action when it matters to her
• Widget: widgets are basically little websites that display directly on the Dashboard, rather than in a web browser.
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Examples of Contextual Marketing: Widgets
• Movable mini-applications used by consumers to craft custom experiences
• http://www.clearspring.com/docs/introduction
• http://www.kickapps.com/platform/
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Ultimate Travel Widget
Ultimate Travel Widget Travel Widgets presents the "Ultimate Travel Widget". Now you can book your Hotels, Air, Cruises, Hotel and Air Packages all in one widget. No more clutter of 3 or 4 widgets to fill up your Dashboard. The Ultimate Travel widget utilizes World Choice Travel, a Travelocity company, so you can book with confidence. Air fares are compared with 28 sites. Hotels from over 20,000 locations and every cruise line can be searched for reservations. The 4 tab interfaces allows you to toggle quickly from section to section. World wide travel and many currencies supported. Download the Ultimate Travel Widgets today and start traveling right from your dashboard.
http://www.jadewatertravel.com/Ultimate_Travel.zip
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
32http://www.nimblefish.com/
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Awareness/Search/Evoked Set
Barriersa. Switching costsb. Perceived risksc. Lack of information
Trial (Initial Purchase)
Satisfaction
Dissatisfaction
Switch
Complain
Repeat PurchaseBrand Advocate
The Purchase Cycle
Why Switch?Need Recognition
WOM
LoyaltyCircle
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Marketing Myopia
• Management defines an industry, or a product, or a cluster of know-how so narrowly as to guarantee its premature senescence.
• Examples: railroads, should be transportation; oil business, should be defined as ?; buggy whip manufacturer should be defined as? Hotel business defined as ?
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Sales versus Marketing
• Selling– Focuses on the needs of
seller;
– Preoccupied with need to convert the product to cash
– “you get rid of it, we will worry about the profits”
• Marketing– Focuses on the needs of
the buyer;– Satisfying the needs of
the customers by means of the product and the whole cluster of things associated with creating, delivering, and finally consuming it.
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Sales versus Marketing
• Selling– What is offered for sale is
determined by the firm
• Marketing– Marketing minded firms
try to create value-satisfying goods and services that consumers want to buy
– What is offered for sale is determined by the buyer
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Reasons for Marketing Myopia
1. The belief that growth is assured by an expanding and more affluent population
2. The belief that there is no competitive substitute for the industry’s major product
3. Too much faith in mass production and in the advantages of rapidly declining unit costs as output rises
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Reasons for Marketing Myopia
4. Too much faith in mass production and in the advantages of rapidly declining unit costs as output rises
5. Preoccupation with a product that lends itself to carefully controlled scientific experimentation, improvement, and manufacturing cost reduction.
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Reasons Examined by Looking at Three Industries
• Petroleum
• Automobiles
• Electronics
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Overview of Strategy and Competitive Advantage
43
“Alice: Will you tell me please, which way I ought to go from here?
Cheshire Cat: That depends a good deal on where you want to get to.
Alice: I don’t much care
Cheshire Cat: Then it doesn’t matter which wayyou go.”
Lewis Carroll, Alice in Wonderland
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategy– “The science and art of military command as
applied to overall planning and conduct of large‑scale combat operations”
– “The determination of basic long‑term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals”
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategy versus Tactics
• Objective: Increase revenues by being perceived as hotel of choice
• Strategy: Provide greater value
• Tactic: Always have their reservation and room ready; call them by name; make sure they receive their wake-up call; focus on dimensions of service quality
46
Levels of Strategic Planning
• Corporate-level strategy – Focus on long-term viability
• Business-level strategy– Focus on overall theme of the company and its
position• Functional-level strategy
– Focus on improving day-to-day operations
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategy Checklist1. Is it identifiable and clear in words and practice?
2. Does it fully exploit opportunity?
3. Is it consistent with competence and resources?
4. Is it internally consistent, synergistic?
5. Is it a feasible risk in economic and personal terms?
6. Is it appropriate to personal values and aspirations?
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategy Checklist
7. Does it provide stimulus to organizational effort and commitment?
8. Are there indications of responsiveness of the market?
9. Is it based on reality to the customer?
10.Is it workable?
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Why Strategic Plans Fail
• Inadequate preparation of line managers
• Poorly defined business units
• Vague goals
• Inadequate databases for action planning
• Substandard linking of strategy with other control systems
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Competitive Advantage
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Definition
• Something that a firm has or does that allows the firm to earn higher than average profits, capture higher than average market share, and create a non level playing field;
• Gained by offering consumers something that they value that is currently not being given to them
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Competitive Advantage• Distinctive competencies that lead to CA:
– Management knowledge – Culture– Location– Access to resources– Exceptional employees– Special patents– Access to capital– Brand name
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Value Chain• Primary Activities that enable creation of the project
– Manufacturing– Marketing
• Secondary Activities that enable primary activities to take place– Infrastructure – R&D– Materials Management– Human Resources
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Building Blocks of CA
• Efficiency
• Quality
• Innovation
• Customer Responsiveness
• Size
• Value
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Building Blocks Not Independent
• Very often a firm focuses on two or three at the same time.
• For instance, consider Harrah’s Entertainment– size– marketing efficiency– customer responsiveness
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
56 Value Efficiency Quality Innovation Customer
ResponsiveSize
Infrastructure
Manufacturing
R&D
Marketing
How to
create
customer loyalty; life-time value
Components of a product; GAP model
Taco Bell The components of the loyalty circle
Franchise
Materials
Management
Human
Resources
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Mission Statements
• articulates its main philosophical values
• according to Peter Drucker, mission-statement development is the time to ask:
• who are our markets (customers)
• what is the value to customer (value of product)
• what will our business be
• what should our business be
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Vision Statements
• A road map showing the route a company intends to take in developing and strengthening its business. It paints a picture of a company’s destination and provides a rationale for going there.
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategic Vision versus Mission Statement
• Strategic vision portrays a company’s future business scope (“where are we going”)
• Mission statement typically describes its present business scope and purpose (“who are we, what do we do, and why we are here.”)
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Intercontinental Hotel Group
• Corporate Information/
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Starwood Hotels and Resorts
• Company Values
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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McDonalds
• Company Values
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Measuring Success of Strategy
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Five Principles of the Strategy-Focused Organization
1. Mobilize Change through Executive Leadership
2. Translate the strategy into operational terms
Use language that everyone understands
3. Align the Organization to the Strategy
Scorecard cascades the strategy to all parts of the organization and align resources needed to accomplish the strategy
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Five Principles of the Strategy-Focused Organization
4. Motivate to Make Strategy Everyone’s JobThe reward and recognition system is used to align individual behavior with performance objectives called for by the strategy
5. Govern to Make Strategy a Continual Process Strategy execution is linked to the budget and a reporting system based on scoreboard measures is used to provide feedback on strategic performance
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Balanced Scorecard• Stems from the recognition that exclusive
reliance on financial performance measures induce company managers to take actions that make the company’s near-term financial performance look good and to neglect the lead indicators.
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Balanced Scorecard• The solution: measure the performance of a
company’s strategy and make strategic objectives an integral part of a company’s set of performance targets.
69Objectives to Measure Strategy
Financial Objectives Strategic Objectives
An x % increase in annual revenue
Winning a x % of market share
Annual increases in after-tax profits of x percent
Achieving lower costs
Annual increases in earnings per share of x percent
Overtake keep competitors on product performance or quality or customer service
Profit margins of x percent Achieve technological leadership
An x percent of return on investment
Strengthen the firms brand name
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Hilton – Only the Customer Can:
• Tell us what’s working and can choose us over other hotels.
• Answer the tough questions: – Are we doing things right? – Are we doing the right things? – Are we doing the right things right?”
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Hilton - continued
• Huckestein defined two broad, new strategies
1. Pursue an aggressive growth plan to ensure that “a Hilton was always nearby”
2. Install a new performance management system to help standardize processes and deliver consistent quality across every Hilton property
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Hilton – Value Drivers
• Operational effectivenessEfficiently Hilton hotels convert revenue into profit through hotel operations, processes, and procedures
• Revenue maximizationREVPAR targets
• Value propositionHow well managers create a service environment that increases repeat visits among guests and retention of key staff members
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Hilton - continuedOperational Effectiveness EBITDA
Revenue Maximization RevPAR; RevPAR Index
Value Proposition Overall guest satisfaction scores; overall guest loyalty score; overall staff satisfaction score; average quality score through mystery shopping
Brand Management Score on compliance with brand standards from on-site inspections
Learning and growth of staff Orientation training, skills training, diversity plan performance
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Exercise
• Develop mission statement for CIC• Develop vision statement for CIC?• How do employees know about the vision and
mission?• How are employee/corporate rewards tied to
these statements?• How do you know if you are meeting the
mission and vision statements?
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Need to Understand Environment as Part of Strategic Planning Process
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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SWOT
• Strengths– Internal to the organization– Things the firm is good at
• Weaknesses– Internal to the organization– Things the firm is not good it
Strategic Marketing for Hotels and Restaurants (c) Stowe Shoemaker, Ph.D
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SWOT
• Opportunities– External to the firm– Examine the different environments
• Threats– External to the firm– Examine the different environments