Executive summary
In this essay we concentrate on Starwood hotels, this is a world famous chain of hotels. We talk about the marketing strategies, hotel staff training of Starwood. The hospitality, leisure, travel and tourism sector continues to play an important role in the UK economy. A report published by People 1st in association with British Hospitality Industry in 2009 states that the hotel industry has enjoyed a sustained period of growth over the last 30 years and now accounts for nearly five percent of the UK’s total economic output. They suggest that along with the rest of the economy, trading will be tough in the short term due to credit crunch but in the long term the sector is still predicted to grow and remain an important contributor to the UK economy.
The sector employs in the region of two million people accounting for 1 in 14 UK jobs. The recession is forcing more employers to think about cutting costs. It is therefore more important than ever that employers have credible retention strategies to retain skilled staff and reduce unnecessary recruitment costs.
The report explains how Starwood which is global hotels and resorts group, with a highly distinct brand, functions in the United States and Canada, in Europe, in Asia Pacific and in Africa by managing and franchising more than 395 hotels with a focus on nowadays demanding business explorer. This report briefly discusses the how marketing is done in Starwood hotel and the marketing strategies which they are using. It is entrusted to modify and innovation in all main areas together with its growth strategy, operations, franchising, sales and marketing, and technology, to function with utmost effectiveness in a extremely competitive industry
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Chapter 1
Introduction
1.1 Business Profile of Starwood Hotel
Starwood Hotels & Resorts is a worldwide chain of 400 hotels, with a total of 102,000 guest rooms, in many countries. Starwood Hotels & Resorts, one of the world’s leading, full-service hotel brands, offers vibrant, modern and attractive hospitality service that is defined by its characteristic “. The first Starwood Hotel was built in Minneapolis, Minnesota in 1909, and was named after the 17th century French explorer Pierre-Esprit Starwood. The hotel was purchased by Curt Carlson (1914-1999) in 1962, and is still owned by his Carlson Companies. Starwood competes with Hilton, Doubletree, and Marriott.
The majority of Starwood Branded Hotels are located in the United States. The company’s headquarters are located in Minneapolis, Minnesota, where the first Starwood Hotel was built. This building is also headquarters to the parent company, Carlson Companies. There are 200 Starwood Hotels in the United States.
Starwood Blu, formerly Starwood SAS, is the brand name for hotels outside the United States, including those in Europe, Africa, and Asia. They are operated by Belgian hotel firm Rezidor Hotel Group under a master franchise contract with Carlson. Carlson and Scandinavian Airlines System (SAS), the Scandinavian Airline, were equity holders of the Rezidor Hotel Group, giving the company its name. Since SAS withdrawal from the collaboration, the name Starwood SAS remained until February 5, 2009, when it was replaced by Starwood Blu, which will be introduced gradually. Starwood Blu operates 158 hotels with 42 projects in development.
Definition of Marketing
The Chartered Institute of Marketing (1986) defines marketing as “The management process responsible for identifying, anticipating and satisfying customer requirements profitably.”American Marketing Association(1980) as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. [1] The term developed from the original meaning which referred literally to going to market, as in shopping, or going to a market to buy or sell goods or services. According to Gronroos (1989) says “long term customer relationships are considered as the cornerstone of marketing”.
1.2 Starwood Marketing Orientation
Marketing is an integrated communications-based process through which individuals and communities discover that existing and newly-identified needs and wants may be satisfied by the products and services of others. (Kotler and Armstrong, 2005)
The Chartered Institute of Marketing define marketing as ‘The management process responsible for identifying , anticipating and satisfying customer requirements profitably’
A business that has a marketing orientation sees the needs of customers and consumers as vital. As it develops and markets products to meet those demands, certain structural characteristics become apparent in the business.
Business Function
Activities
Identifying customer/consumer needs and wants
Marketing research
Developing products to meet customer/consumer needs and wants
Research and development
Production
Deciding on the value of the product to customers
Pricing (sales and marketing department)
Making the product available to customers at the right time and place
Distribution
Informing customers/consumers of the existence of the product and persuading them to buy it
Promotion
We should expect to see all the above activities well-established in a business that is marketing-orientated.
Starwood first finds out what customers wants are by conducting a market research and by providing what the customers’ really need and satisfying them makes them customer oriented. Starwood always focuses on their service level to be 100% and they have developed a ‘YES WE CAN’ program among their employees. This would directly attract customers and also make Starwood create a competitive advantage over its competitors. Moreover, the greater Starwood is customer orientated, the more it will be able to develop a competitive advantage based on innovation and market differentiation.
Market orientation focuses on a business culture and activities that enhance business performance, producing superior value to customers, outstanding performance for the firm and aggregately for the economy (Oudan., 2007).
Market Orientation
Market Testing
Market Research
Market Intelligence
1.3 Marketing Intelligence
Market intelligence, according to Cornish (1997), “the process of acquiring and analyzing information in order to understand the market (both existing and potential customers); to determine the current and future needs and preferences, attitudes and behaviour of the market; and to assess changes in the business environment that may affect the size and nature of the market in the future.” Starwood business always updates themselves on the economy, labour market conditions, legislative and regulatory development, social changes and technological advancement by doing an environmental scanning. They consider all these external environmental factors when it comes to taking decisions about packages, prices, and other management and marketing issues Starwood also searches for information from readily available public sources and customers while sometimes through the perfectly legal observation of competitor’s activities.
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1.4 Market Testing
A test market, in the field of business and marketing, is a geographic region or demographic group used to gauge the viability of a product or service in the mass market prior to a wide scale roll-out. Market testing is done to test multiple marketing scenarios and select the most promising for expansion. When Introducing a new product or service without first testing the market is risky. After the market research the new products /services must be tested before entering the market. Starwood one of the most recent market testing was “Express yourself” service which allows Guests to check-in online.
Many new ideas and products are successful in Starwood because their creators recognized an unmet need in the market and confirmed the capability of that concept. When launching a new product or service, the company should first conduct a small scale launch or other customer research in a test market
Chapter 2
Segmentation, Targeting & Positioning
The strategic marketing planning process flows from a mission and vision statement to the selection of target markets, and the formulation of specific marketing mix and positioning objective for each product or service the organization will offer. In its first phase, choosing the value, the strategist “proceeds to segment the market, select the appropriate market target, and develop the offer’s value positioning. The formula – segmentation, targeting, positioning (STP) – is the essence of strategic marketing.” (Kotler, 1997)
(Figure3)
2.1 Market Segmentation
Segmentation is essentially about identifying groups of buyers within a market who have needs which are distinctive in the way that they deviate from the “average “consumer. Some consumer may treat satisfaction of one particular need as a high priority, whereas to others this need may be regarded as being quite trivial. Consider the case of the new hotel market. Buyers no longer select a hotel solely on the basis of hotel’s market. Market Segmentation is the subdividing of a market into distinct and increasingly homogeneous subgroups of customers, where any subgroup can conceivably be selected as a target market to be met with a distinct marketing mix (Kotler 1994). It should precisely segment its markets on various factors and provide the customers what they want. Starwood had segmented its market by corporate (business travellers) and leisure seekers. In the near future by 2010 Starwood had announced to open a hotel in the city of Makkah. In an interview with Jean-Marc Busato, Area Vice President said “This is an important milestone for us to be present in what is considered the holiest city in Islam. This is our sixth Kingdom project which we consider one of our major growth markets.” He also added “We have acquired a good understanding of the Saudi Arabian market and besides developing our first class Starwood brand, we also see a demand for efficient, value for money accommodation for the frequent traveller in the mid market segment,”
2.2 Targeting
Targeting is a process of prioritizing target segments based on the firm’s core competencies or capabilities, and other researched factors including segmented market size, growth potential of the segmented market, competitive dynamics, etc. This method is used to Find out the target customers in focus marketing and set up target products and services for them,. In this aspect Starwood should completely symbolize the features and specialties in the hotel. In Starwood they have targeted the customers in. Starwood provides food item s and more facilities to their respectable rooms and they give special discounts for regular customers. In addition to that all the customers can enjoy almost every other facility which is in five star standards.
2.3 Positioning
Positioning means arranging a product to occupy clear, distinctive and desirable place relative to competing products in the minds of target consumers. Through using positioning successfully, brands will be able to position their product in the consumers mind. Four key elements for a successful positioning are Clarity, Consistency, Credibility and Competitiveness. In marketing, positioning has come to mean the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. It is the ‘relative competitive comparison’ their product occupies in a given market as perceived by the target market.
Chart 4: STP strategy, Hard capital (2003)
2.4 Satisfying customer needs and wants
Customers are everything to a Hotel or any business for that matter. It can be out as “a company’s bread and butter.” In the past, all was not well for Starwood hotels. As other businesses they also faced declining revenues and reputation. So to come out of this matter they implemented a market research to find out what they are doing wrong in the field. The research showed that customer wants and needs have changed over time but Starwood has stayed in the same place. A focus on franchisees and franchisee growth vs. customers and the hotel guest experience resulted in an undifferentiated, lacklustre brand and inconsistent service. Meeting the objective needs and wants of customers to drive sales is at the heart of most businesses. It is how they build business relationships, remain profitable, and how they expand into new territories.
To improve customer experience and freedom of choice they implemented such schemes as Express Yourself, Gold Points Plussm and Sleep Number Bed program. The Express yourself program is the hotel industry’s first pre-arrival, online check-in system. Guests book their reservation and can check-in online.
Radisson Hotels & Resorts is part of the gold points plus program from Carlson Hotels Worldwide that offers guests the freedom and flexibility to earn rewards more quickly than any other hotel program.
Chapter 3
3.1 Marketing Mix
The concept of the marketing mix was first given prominence by Borden in 1965. He described the marketing manager as ” a mixer of ingredients, one who is constantly engaged in fashioning creatively a mix of marketing procedures and policies in his efforts to produce a profitable enterprise” Marketing mix is a Planned mix of the controllable elements of a product’s marketing plan commonly termed as 4P’s: product, price, place, and promotion. These elements are adjusted until a right combination is found that serves the needs of the product’s customers while generating optimum income. (Jain,S.C,1990). Traditionally the marketing mix consisted of just 4 P’s, but now it has been extended and is called extended marketing mix and consists of 7P’s. The new marketing mix is more customers oriented and enables the organization to meet its marketing objectives and to satisfy the requirements of customers.
(Figure 4)
Extended marketing mix, Array marketing development
3.1.1 Product
Starwood is a world renowned chain of hotels providing excellent product under the image of hotel services. Starwood has an exceptional recognition in providing high quality service they constantly look at new ways of improving the service they provide. To improve the standards of service they provide, Starwood has introduced several new programs as mentioned in the start of the essay, such as Yes I Can! Training program and Express Yourself which allows guests to check-in online .By introducing these new strategies Starwood has already achieved favourable results.
3.1.2 Price
In any organization the price must be high enough to cover costs and make a profit but low enough to attract customers .Since most of the Starwood hotels are five star rated hotels the price factor plays a major role. Due to the price customers can change their mind to go to another hotel. In this issue what Starwood has done is they have kept their prices at a normal rate which is comparatively high, at the same time Starwood came up with their new marketing strategy. Starwood promoted new holiday packages such as “Friday is free day” and “family bed & breakfast package” with attractive prices. When annualizing Starwood’s figures it is clear that this strategy has been successful.
3.1.3 Place
Starwood’s hotels always do research before picking a place for their new hotel; because of this they have become very successful. When we take Starwood as a whole it seems like they have selected the most ideal locations for their hotels. This is thanks to the research they do and it has paid off.
3.2 Extended marketing mix
Traditionally the marketing mix consisted of just 4 Ps, with the extended marketing mix it enables the organization to meet its marketing objectives and to satisfy the requirements of customers. In addition to the traditional four Ps it is now customary to add some more Ps to the mix to give us Seven Ps. The additional Ps have been added because today marketing is far more customer oriented than ever before, and because the service sector of the economy has come to dominate economic activity in this country. These 3 extra Ps are particularly relevant to this new extended service mix.
3.2.1People
People mean the staff working for Starwood. Employees of Starwood are like a backbone of the company, they have been highly trained and Starwood offers one the industry’s best program phrased as ‘YES I CAN’
3.2.2 Process
This Refers to the systems used to assist the organization in delivering the service. When the service becomes faster automatically the efficiency of the organization gets better. Starwood is world renowned for its excellent and fast process of service. Associated with customer service are a number of processes involved in making marketing effective in an organisation Process is the way how customers are handled from first to last point of contact. So this involves Starwood policies, program, payments, bookings, quality processes for handling customer complaints, processes for identifying customer needs and requirements, processes for handling order etc.
Chapter 4
4.1 Marketing Environment
Marketing as we know it today began in the 1970’s with the birth of the marketing orientation. During the first stage of capitalism business had a production orientation Business was concerned with production, manufacturing, and efficiency issues. By the mid 1950’s a second stage emerged, the sales orientation stage. A company’s marketing environment consists of factors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers (Kotler., 2005). The marketing environment surrounds and impacts upon the organization. There are three key perspectives on the marketing environment, namely the ‘macro-environment,’ the ‘micro-environment’ and the ‘internal environment’.
Elements of Macro-environment, Organizational environment (1995)
4.2 Micro environment
This environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading. In this context, micro describes the relationship between firms and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence. This environment influences the organization directly. As in the (figure1) It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading.
4.3 Macro environment
This includes all factors that can influence and organization, but that are out of their direct control. A company does not generally influence any laws. It is continuously changing, and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market. Globalization means that there is always the threat of substitute products and new entrants. The wider environment is also ever changing, and the marketer needs to pay off for changes in culture, politics, economics and technology.
4.4 Internal environment
An organization’s internal environment is composed of the elements within the organization, including current employees, management, and especially corporate culture, which defines employee behaviour. Although some elements affect the organization as a whole, others affect only the manager. A manager’s philosophical or leadership style directly impacts employees. Traditional managers give explicit instructions to employees, while progressive managers empower employees to make many of their own decisions. Changes in philosophy and/or leadership style are under the control of the manager.
Conclusion
As seen in the above report it is clearly shown how marketing is done in Starwood chain of hotels. As mentioned above in the report Starwood is a worldwide hotels network, in this report the author briefly discusses about the factors which affects the marketing process directly and indirectly. Then we talk about how marketing has changed over the years and the new marketing strategies in place in the new world. And we also talk about the segmentation process, marketing environment and its elements. Marketing is an important element which contributes very much for the growth of Starwood. Marketing creates a benchmark to Starwood among the other hotels in the industry. The hotel industry has fierce competition at present therefore continuous developments of good packages, attractive advertisements, good and efficient customer service will help Starwood to be ahead of others. In the meantime, continuous research and development should help Starwood to satisfy its customers and retain loyalty as well.
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