326 Chapter 14 / Marketing at the Unit Level a regular basis. Settling on an appropriate definition of local for a particular operation is important; however, the focus of the following section is on what to do about the local markets. Why Is Local Marketing in Foodservice Growing? Perhaps the most important reason for the growing emphasis on local marketing is that the local market is where the customers are. As mentioned in Chapter 10, a quick-service restaurant (QSR) may draw customers from a radius of 1 to 11⁄2 miles. Casual dining concepts usually have a trading area of approximately 3 to 5 miles, and fine dining establishments often draw patrons from a radius of 20 miles or more (Reich 1997). Competition is another reason for foodservices’ growing interest in local marketing. The competitive conditions in the foodservice market have changed both qualitatively and quantitatively. Foodservice organizations used to face independent operations, with unsophisticated marketing programs, as typical competitors. Today, well-established regional and national restaurant firms, with deep pockets and large advertising budgets, dot the landscape. The number of restaurant units in most markets has also increased dramatically in the past 25 years. Therefore, the North American foodservice market is saturated, experiencing intense competition. The way the restaurant industry looks to consumers has also changed after a half century of growth by chain restaurants and limited-service concepts. In the 1960s, standardized chain restaurants were welcomed as they pushed aside many less-thandesirable operations with varying standards of cleanliness, service, and quality. Standardization was new, and consumers were glad to see it as a safe haven, especially when traveling. Today, standardization is the rule and the trick is, increasingly, to deliver standardized quality, with national or regional brand recognition, and a local flavor. Local marketing is needed to deal with local competition because economic and social conditions vary widely from city to city and even between the various neighborhoods in a city. Different strategies are needed in an upscale suburb, a declining neighborhood, and an expressway location. In each of these and many other location types, customer needs and wants are different. The competitive environment in each of these locations is likely to be different as well. Moreover, various locations have different time-of-day and day-of-week peaks and valleys, therefore lending themselves to different marketing techniques. A final reason for using local-area marketing relates to firm size and the degree of market penetration a firm has achieved. Independents and small chains cannot compete in the conventional advertising media against larger and better-financed national chains. Even large chains may sometimes have too few operations located in a market to afford traditional media advertising; there are simply not enough units to absorb the cost of using the media, particularly television. In these circumstances, local marketing is a viable opportunity.
Local Marketing in Foodservice 327 Many corporations, such as the IHOP, have realized the importance of local marketing. (Photo courtesy of IHOP Corp.) Local Marketing Issues for Chain Restaurants Although local marketing is gaining increasing use, not all multiunit organizations emphasize local marketing, because local store marketing presents challenges that some chains may not want to deal with. Their reasoning is summarized in the following paragraphs. Budget Priorities. At the headquarters level, the view is often that setting aside a portion of the marketing budget for local marketing is inefficient, because national brand marketing benefitsevery unit, whereas local spending helps only one or a few units. Organizational Issues. At a headquarters marketing department, extensive market research can be conducted to help design the marketing program, with various scenarios simulated and tested. This effort increases the likelihood of having successful marketing programs to enhance corporate profitability. The budget available for local marketing is generally not large enough to justify extensive study or to hire marketing
328 Chapter 14 / Marketing at the Unit Level specialists to develop and implement marketing activities. Therefore, local marketing decisions are usually made by operations people who lack the necessary training, background, and skills for formal market research. In addition, they are pressed for time and thus unlikely to favor time-consuming, formalized market studies. Many companies also have a concern that any time spent on local marketing is time away from unit operations, inasmuch as marketing is done by unit managers. Another organization issue involves supervision of local marketing programs by headquarters marketing staff. Because each local marketing environment is different, unit-level marketing efforts place a tremendous demand on the time of corporate staff. As a result, central-office marketing people tend to avoid involvement in local marketing decisions. One way of addressing the problem of time pressures on headquarters marketing staff is to establish an intermediate supervisory marketing position. The person in this position, whose primary responsibility is to assist unit managers in the district in conducting marketing programs, reports to the corporate director of marketing but has an office in the field at the area or district level. Organizing Field Marketing. Essential elements in a successful local marketing program include resources, standardization of decisions to increase control and reduce corporate executive time commitments, and provision of expert marketing support to operations people who are making decisions outside their main area of expertise. Resources needed for local marketing include not only a local marketing budget, but also local marketing manuals and a planner’s guide, including camera-ready copy for ads and other suggested campaign material. A further important resource is a standardized financial planning formula, which indicates to the operators the break-even point for any promotion. Knowing the level of incremental sales required to pay for the costs of a promotion, operators can make a reasonable estimate of whether the proposed local promotion will be profitable or not. For example, at one company, the rule of thumb is an increase in sales by $X, where $X cost of promotion 35%. Therefore, if the program costs $100, the incremental sales required to carry it are $286 ($100 35%). Headquarters can also develop standardized deals that are proven in test markets. All that is required, then, for a store manger to implement one of these “approved deals” is an estimate of the incremental volume and approval by the area manager. Some companies provide local marketing specialists in the headquarters marketing department to act as expert advisors to area and store managers. They also respond to specific problems encountered by various store managers. Whereas some companies have full-time staff to work on local marketing, others hire a marketing firm to assist in developing chainwide local marketing policies and work with store managers and area supervisors in implementing the programs. Establishing a Local Marketing Program From a unit manager’s perspective, the first step in developing a local marketing program is to define its objectives. The manager, then, should identify the unit’s customers and competitors to assess the local market. Finally, the operation’s en-
Local Marketing in Foodservice 329 This ad is prepared at the corporate level to achieve the high-quality visual presentation that food advertising requires. Blanks are provided for each unit to imprint its store location and the exact offer based on local market conditions. (Photo courtesy of Pizza Hut.) tire marketing mix needs to be evaluated in the context of local market conditions. Objectives. Local marketing programs should have concrete goals—for instance, to increase traffic or check averages. Objectives should be stated in specific terms, such as “To increase morning snack sales by 10 percent next month” or “To increase early dinner sales by 50 customers per week over the previous month.”
330 Chapter 14 / Marketing at the Unit Level • • • • • • • • • • • • FIGURE 14.4 Defining trading area on a map. Customers. The restaurant’s trading area can be specified either in miles or in travel time. A useful technique to visualize the trading area is to drive, in prime mealtime traffic, 20 minutes in each direction from the restaurant and mark the end of each trip on a local map. When the points are connected, the probable limits of the unit’s local market have been defined. Figure 14.4 illustrates this technique. Once the boundaries have been determined, the manager needs to know who the people are who live and work in the area. Census data give a great deal of information on the demographics of the census tracts that make up the trading area. Scouting the area by driving through it during the day helps in estimating the size and characteristics of the working population. Driving through the area also helps in locating concentrations of customers, such as people who live in apartments or senior citizen housing centers and people who work in offices or industrial complexes. These and other destinations, such as schools and colleges, recreation centers, shopping malls, and churches, should also be marked on the market map. Estimates of the relative size of these centers can be verified by a visit or a few phone calls. Conversations with
Local Marketing in Foodservice 331 employees, customers who live in the area, and suppliers can complement the gathering of marketing intelligence. Competition. Just as in any other competitive analysis, direct and indirect competition should be identified and marked on the map. Classifying competitors as direct or indirect involves a judgment of the marketplace. For example, all QSRs are usually viewed as direct competitors of each other. Their indirect competitors are family and casual restaurants. However, in a particular market, some operations in another category may be viewed as direct competitors because of a special condition, such as location. For instance, a family restaurant and a QSR located next door to each other may see each other as being directly competitive. Once direct competitors are identified, their strengths and weaknesses should be assessed in the local context. It is also important to keep tabs on what competitors are doing on a continuing basis. One way to gain valuable information while boosting staff morale is to offer to pay the cost of a “shopping visit” to competitive operations by staff members, with the visit to be followed by a report to management. This technique has the added advantage of making the unit’s staff more aware of the competitive pressures. Marketing Mix. Modifying products to meet local demand creates both potential risks and rewards. Adding a local item to a chain operation’s menu may add local appeal, but may also run the risk of confusing the public. Still, when an item is identified as a “local favorite,” even a company with a tightly focused concept can benefit from efforts to accommodate local preferences. An interesting approach to this dilemma of whether to localize product is demonstrated by the buffet offered in many KFC units. Although only 30 products are offered at any one time, operators may choose from more than 300 items approved for the buffet. Therefore, locally popular items may be included in what is still a standard product, the buffet. The general price level for a menu is usually established on a chainwide basis; however, “specials” and “limited-time offers” may be promoted locally to meet the immediate competition or special local conditions. Early-bird specials are widely used, offering reduced prices to increase sales in the slow mid- to late-afternoon period. Early-bird programs are usually successful in markets with a significant number of seniors or others attracted to the special time or reduced prices. Another popular price promotion is to establish a “coffee club” to build volume in an off-peak period. Club members, by purchasing a personal mug, can use it between mealtimes to receive coffee at a discount without other purchases or at no cost when food is purchased. Local Marketing Communication Methods Although product and pricing are important local marketing variables, the most prominent element in local marketing is communication, accomplished through merchandising, advertising, sales promotion, personal selling, and community relations.
332 Chapter 14 / Marketing at the Unit Level The numbers indicate the order of eye movements, given that no special graphics are used. Center Line Center Line Focal point of a single-sheet menu Focal Point Focal Point Focal point of a folded menu opening from the center Focal point of a folded menu opening from the right 2 5 1 3 7 4 6 Focal Point FIGURE 14.5 Menu focal points and reader’s eye movements. Source: Adapted from J. D. Ninemeier, Planning and Control for Food and Beverage Operations, 4th ed. (Lansing, MI: Educational Institute of the American Hotel & Motel Association, 1998). Copyright 1998 Educational Institute of the American Hotel & Motel Association. Merchandising. The classic examples of merchandising in foodservice are wine display and dessert carts, but merchandising extends beyond these obvious representations. Actually, in a restaurant, menu merchandising is the most potent promotion tool. It is an advertising medium presented to all guests dining in the operation. However, guests usually do not “read” the menu; instead, they scan it quickly without paying attention to most content areas. Thus, page positioning can be important. Figure 14.5 displays the focal points of various menu formats and guests’ usual eye movements. Signature menu items or items with the highest profit margin should be placed in a focal point area to draw diners’ attention. The second most profitable menu item group should be placed in the spot to which the guests’ eyes move next. The same
Local Marketing in Foodservice 333 logic applies to the areas labeled 3, 4, 5, and so forth. Other menu merchandising ideas are discussed in Case Study 14.1. CASE STUDY 14.1 Menu Merchandising A menu is a restaurant’s best merchandising material, even though the average diner spends less than three minutes reviewing a menu. To help hurried guests choose items with a high profit margin, menu planners must use techniques that highlight the more profitable items. Page positioning, discussed in the text, is one way to draw people’s attention. More profitable items should be placed at the focal points of a menu. Special effects, such as boxing and shading, can generally increase the sales of featured items by 15 to 20 percent. Asymmetrical descriptors, such as “Special” and “New,” printed to the side of certain menu items, can also draw attention. Placement of a signature icon, or the restaurant logo, is another way to alert diners of a particular option. The placement of an item in a group can also affect its visibility. For example, customers tend to order the first item in any categorical listing most often, followed by the last item in the category. Therefore, the most profitable item in a category Soups & Salads My Mom's Minestrone One incredible bowl of soup with sourdough bread & butter $4.95 ALL YOU CAN EAT Bottomless bowl of Minestrone PLUS a Pete's garden salad $5.50 Each day we offer a SPECIAL SOUP. Your server will know all about it. SPINACH SALAD Leaf spinach mixed with balsamic vinaigrette topped with bacon, mushrooms, sliced egg, tomato wedges, pine nuts & grated parmesan $5.50 CLASSIC COBB Avocado, chicken, bacon, crumbled bleu cheese, diced tomatoes & sliced egg, on a bed of crisp romaine & iceberg lettuce $5.95
334 Chapter 14 / Marketing at the Unit Level should be listed as the first item in that group on the menu, and the second most profitable item should be listed as the last item in the group. Items that have to be on the menu because of customer demand, but carry a low profit margin, should be “buried” in the middle of the menu listing. Menu description is another area that deserves thought. Words and phrases that stimulate the senses should be incorporated into menu descriptions to help sell items with emotional appeal. Special food preparation methods, ingredient selection procedures, food origins, or special growing conditions may also be depicted to build the character of the items. A medley of . . . Toss lightly with . . . . Tender pieces of . . . Freshly baked . . . Generous serving of . . . . Mouth-watering . . . . Lively blend of . . . . . . grilled to perfection . . . mounded with fresh . . . Fresh Florida redfish . . . . . . . melt in your mouth . . . . . . organically home-grown . . . Pan seared to a golden brown . . . In addition to merchandising through the menu, there are many great opportunities for merchandising within the restaurant. Efforts to “upsell” and to direct attention to high-profit-margin selections contribute to improved sales volume and profit. Figure 14.6 shows the restaurant as a promotional medium. It summarizes some of the major merchandising zones for selling to in-house guests. Besides guests, employees should also be targets for merchandising as part of the internal marketing effort. A brief preshift meeting of employees who are in contact with guests can be a powerful merchandising technique, ensuring that they are familiar with the day’s menu and specials, and reminded of proper service procedures. Such meetings also are great opportunities to restate the goals and methods of suggestive selling programs. Other internal merchandising tools include an employee suggestion box, incentives, and communication media such as a newsletter and a bulletin board in the employee break room. Many national chains, including contract foodservice companies, develop turnkey merchandising programs that have all the details worked out for the unit managers. For instance, special events can be used in this type of promotion. Special event kits are developed and distributed, which include recipes, promotional ideas, templates for printing flyers, other printed media, training manuals, and supporting merchandise. Examples of special events are Mardi Gras, St. Patrick’s Day, and parties with a “Seventies” motif.
Local Marketing in Foodservice 335 Merchandising at this fine dining restaurant includes a point-of-purchase display of wine in the dining room. Advertising. Local advertising can be used to support local promotion, publicize local sponsorship, and reach key local target audiences such as college students, senior citizens, and tourists. Direct mail, usually including coupons, is a common local medium and especially helpful in response to a new competitor’s opening or an established competitor’s aggressive sales drive. Local image advertising, emphasizing the unit’s local identity, may also be useful. Low-cost media for such promotion include bulletin boards in community centers and supermarkets, bus benches, buses and subways, and local cable television. Much of a chain restaurant’s local advertising may be accomplished through an advertising co-op made up of all operators in the area. This type of advertising is usually an areawide effort that receives considerable assistance from the district or headquarters office. Sales Promotion. Local sales promotion can help an operation respond to local competitive conditions. When all competitors in a market issue coupons, a unit in that market should probably use coupons as well, whatever the chain’s national strategy
336 Chapter 14 / Marketing at the Unit Level All Restaurants Table-Service Restaurants Quick-Service Restaurants Lobby Zone Welcome mat Clothes hangers Displays Host preselling Brochures Sampling Wall posters Pay Phone Zone Signs and posters Memo pads Tabletop Zone Table tents Place mats Menu clip-ons Wine list Napkins Comment cards Property Line Zone Restaurant marquee Sign on the building Awnings Banners Posters Outdoor menu Outdoor dining area Children’s playground Bathroom Zonea Audio Posters Special event calendar Cleaning schedule Office Zone On-hold message Answering machine Delivery and CarryOut Zone Car signage Bulk order pads Take-out menus Magnets Bounce-back coupons Parking Lot Zone Cleanliness Landscaping Directional signs Ease of access Dining Room Zone Menu Specials board Matches Posters Displays Wine cart Dessert tray Sampling Gift certificates Bounce-back coupons Bar Zone Point-of-purchase displays Drama drinks Bar menu Drinks coasters Specials board Upselling Entertainment Car Valet Zone First greeting Vacuum car Wash windshield Thank-you card Front Counter Zone Menu board Register toppers Counter cards Wall posters Premiums Condiment stand Bag stuffers Bounce-back coupons Drive-Thru Zone Menu boards a Forty percent of customers go to the bathroom before ordering dessert. FIGURE 14.6 Merchandising zones and merchandising media in restaurants. Source: T. Feltenstein, “The Newest Wave in Neighborhood Marketing,” Presentation at the Marketing War College, Palm Beach, Florida 1995. is. Promotion also offers unique opportunities to polish a local image by partnering with successful local enterprises—a technique called joint promotions or crosspromotion. This tactic pairs two complementary businesses. For example, a movie theater and a dinner house restaurant may promote each other by distributing each other’s coupons. In return for their effort, each establishment gains access to a somewhat different stream of customers. When a locally well-known partner is chosen, there is the added advantage of being associated with that firm, a kind of indirect endorsement. Careful advance planning is important to ensure that each party has potential to gain a significant advantage from the partnership, both groups are fully
Property-Level Marketing in Lodging 337 This four-story, glass-and-stainless-steel wine tower houses 10,000 bottles of wine. Located in the center of a restaurant, it takes merchandising to new heights. (Photo courtesy of Aureole.)
338 Chapter 14 / Marketing at the Unit Level committed to the project, and costs and other efforts are shared equitably. Examples of such alliances at the corporate level are discussed in Case Study 9.2. Personal Selling. Restaurants cannot afford the cost of personal selling to reach individual guests, but calling on organizations with large numbers of members makes good sense. For example, large plants or office complexes may be willing to distribute coupons with paychecks, offering an additional fringe benefit to their staff at no cost to themselves. Nearby churches may also have organizations, such as a seniors’ club, that may be willing to accept and distribute coupons to their members. To make the necessary contact to launch such a program, a personal call by the operation’s manager is essential. The manager should first identify major institutions that have large numbers of potential customers. The initial contact could be made by phone or a letter introducing the organization. The company’s interest and involvement in its neighborhood activities should be emphasized to create a positive impression. Then a meeting should be set up to conduct a formal sales call. As indicated in Chapter 13, preparation for a sales presentation is of crucial importance. Community Relations. One way to build a local identity is for unit personnel, especially the unit manager, to be involved in local activities in order to establish good community relations. The manager’s membership in a service club, local Chamber of Commerce, or convention and visitors bureau, as well as involvement in local charities, gives the unit desirable visibility. These types of involvement also provide the manager with opportunities for networking, which can be a significant source of business. Although such activities have little or no dollar cost, a manager’s time away from the unit is a significant cost because of the competitive pressure for excellence in operations. The value of being a local notable is difficult to measure, but being a good local citizen is not without real benefits for the business. Some activities enhance an organization’s image and, at the same time, increase its sales volume. Among the most popular and effective activities are team sponsorships. In some cases, the restaurant provides team uniforms bearing the restaurant’s name. The understanding is that the team’s meals and other functions will occur in the restaurant. A typical arrangement is for the restaurant to give a discount for all team meals and to credit the same amount to the uniform fund. A related approach involves community clubs, churches, and other organizations. To support a fundraising project, the restaurant contributes a set percentage of the sales of any group function to the charitable group’s treasury, or pays a set percentage on receipts turned in by an organization’s members. Efforts of this kind tie the contribution to the sales volume generated by the organization. A highly effective local promotion is a joint effort with a local radio station, called a remote. The station broadcasts from the restaurant, often in conjunction with a drive for a local charity. Both the radio station and the restaurant gain from supporting a local initiative. The broadcast often brings significant traffic to the restaurant, resulting not only in increased sales but also in new customers. In most cases, however,
Property-Level Marketing in Lodging 339 Team sponsorship builds local identity. Team meals can also be a source of revenue. (Photo courtesy of Pizza Hut.) the restaurant is required to purchase a certain amount of advertising from the radio station. Property-Level Marketing in Lodging Property-level marketing activities have long been a tradition in lodging, but until recently they have been largely limited to personal selling. Today, three elements of the mix—product, price, and promotion—are vital components in a hotel’s local marketing program. Although place, in the sense of location, is unchangeable once a property has been built, it does determine who the target markets are. The techniques discussed in the previous section on foodservice local marketing can also be applied to hotel restaurants. In fact, hotels with restaurants have an ideal opportunity for gaining local referrals for lodging business. Successful, well-promoted restaurants and bars are perhaps the only means to attract local people into hotels on a regular basis. The discussion in this section, however, deals primarily with the marketing of rooms and group functions.
340 Chapter 14 / Marketing at the Unit Level Product In most hotels, the physical facilities already exist, but the product for sale—predominately the guests’ experience—can be designed and redesigned by the joint efforts of marketing and operations personnel. For example, packaging the property with nearby attractions, such as theme parks, shopping centers, theaters, and other cultural institutions, defines the experience offered to leisure travelers. Partnering with these attractions makes sense, too, because joint marketing ventures make marketing dollars go further. The way a property is positioned, or which customers it should target and which competitors it should compete with, shapes the product as well. For example, many chain hotels have two or three properties in one city, with similar numbers of rooms and facilities. One is usually located near the airport and positioned at a convenient location. The other properties may be positioned as part of a downtown business center or an urban resort. Although there is some competition among them, only one property would target airline crews, one would go after the sports business, and one would position itself as a business conference hotel. Price Rate-setting is almost entirely a property-level decision. Rack rates, or the list prices, are generally set by the property’s management team and used as a base in setting other rates, such as corporate, weekend, and tour group rates. In some chains, however, rate setting is done with the advice and approval of headquarters. Special rates are sometimes negotiated at the chain level with very large buyers, such as airlines and travel wholesalers; however, most discount rates vary from property to property and the degree of discount is set by the unit managers. Property-level managers generally make the decisions on which rates are offered to which groups. Yield management decisions, as discussed in Chapter 11, on when to open and close special rate categories are also made at the property level, based on frequent assessments of probable demand for specific periods. Some headquarters monitor the practices of individual properties in real time, based on on-line supply-and-demand information. Such monitoring, however, is basically done for advisory purposes. Promotion: Marketing Communication For a property to succeed, it is crucial to offer the right product to the right customers and to price the product competitively and profitably. Once the product and price are determined, the offer must be communicated to the customers. Product offering and pricing are usually the concern of the general manager and the operations management team. The sales function is often an important, but additional, duty of the managers in smaller properties. In larger hotels, a staff of one or more salespeople carries out this work. Advertising. Database marketing is increasingly used to transform advertising into “narrowcasting” rather than broadcasting. That is, advertising is used to communi-
Property-Level Marketing in Lodging 341 cate with a hotel’s regular guests as well as with people like them. Database marketing can be especially powerful in crafting individualized advertising, such as direct mail and telemarketing. Advertising an individual property in the mass media is more common among resort hotels and upscale properties. It is also usually limited to media in major feeder markets and in the local market to support special promotional events. Internet homepages are likely to be designed at the headquarters level. However, individual properties can “localize” their Web sites with local information on attractions, special services, and a welcome message from the unit manager. Personal Selling. As indicated in Chapter 13, personal selling is an expensive medium and must generate significant revenue to offset its cost. Therefore, sales calls target sources of multiple room-nights or meeting and banquet business, rather than individual reservations. The target of a sales call is often not the guests but the individuals making the buying decisions, such as secretaries, office travel managers, and travel agents. Local sources of multiple room bookings include local social clubs; fraternal, religious, and ethnic organizations; government agencies; tour operators and motorcoach companies; convention and meeting planners; airlines; educational institutions; and sports teams. Therefore, sales managers’ involvement in community and professional activities can help generate potential leads and prospects. Sales Promotion. Advertising often has long-term goals, such as making a property better known and enhancing its image. Sales promotions may strengthen the property’s image through partnering with a successful company or an entertainment or cultural institution, but their major purpose is to stimulate immediate sales during a specific time period. Weekend packages are a common promotion aimed at raising a hotel’s sales during a soft part of the week. In addition to possibly establishing a prestigious association, partnering, in which cost sharing is part of the arrangement, can also stretch the property’s marketing budget further. Lodging properties also present great opportunities for merchandising: in-room minibars; table tents, restaurant menus, and room service menus in guest rooms; displays in lobbies and elevators; and gift shops selling hotel merchandise. Public Relations and Publicity. Although the general public in the local market is an important target, there are many publics to which a property can direct its PR efforts. Travel agents, local corporate accounts, customers in distant cities, and trade and professional association executives are all publics to a property. A hotel’s own employees also constitute a critical public. General media publicity about the property as well as targeted media, such as an in-house employee newsletter, are all important PR and publicity tools for an internal marketing program. A basic tool in publicity is the press kit. A press kit may be prepared for special occasions, such as a hotel’s grand opening or a special promotional event, because specialized promotions may be of interest to the news media. It is also helpful to have a general kit describing the property and its features so that a request from the media can be met immediately and comprehensively. A press kit should include a general
342 Chapter 14 / Marketing at the Unit Level description of the hotel; a “fact sheet” giving critical data, such as size, capacity, and history; pictures of the main features; and copies of recent press releases. An important aspect of PR is community involvement. Executives and other employees are encouraged to be active in local organizations to heighten the visibility of the hotel among local residents and other publics. These activities may be the focus of new releases, when appropriate. Similarly, employee achievements, awards, and sometimes even hobbies, offer potential for news stories. Case Study 14.2 tells a success story of an independent country inn. CASE STUDY 14.2 Marketing via Books of Historical Fiction Farmington Inn, a quintessential New England inn, is nestled in the heart of one of Connecticut’s oldest towns, Farmington. This beautiful and charming country inn is decorated with fresh flowers, antiques, and original local artwork. The Inn is situated among the Farmington River Valley region’s many recreational activities and shopping opportunities. The uniqueness of this country inn, however, lies in the way the director of sales and marketing, Richard Bremkamp, promotes the property. Bremkamp first wrote The Farmington Lady, a work of fiction based on historical facts and lore, to introduce guests to the Inn and to the community. The story incorporates sights in the city and at the Inn, as a little girl repeatedly encounters a ghost at various historical locations in the area. A copy of the book, which takes about 30 to 40 minutes to read, is placed on the pillow in each guest room so that the guests can read about the local attractions and their history. The guests can take the book with them when they leave. As a result, The Farmington Lady has been reprinted several times for a total run of 10,000 copies. It has become a wonderful marketing tool. In fact, the Inn has received requests for copies of the book from all over the world. Because of the popularity of this book, The Spirit of Simsbury was written for a sister property and Julia’s Journey was also written for the Farmington Inn. Julia’s Journey was intended to complement The Farmington Lady and to encourage repeat business among those who enjoyed the first book. All of these books are part fiction, part fact, and part history. They have generated tremendous publicity for the Inn. This is a perfect example of connecting a hospitality operation with its host community. The public relations and publicity created have not only helped the Inn to project its image as a good community member, but have also enhanced its business and profitability. Sources: L. Dube, C. A. Enz, L. M. Renaghan, and J. A. Siguaw, American Lodging Excellence: The Key to Best Practices in the U.S. Lodging Industry. (New York: American Express and the American Hotel Foundation, 1999); The Farmington Inn. (2001). Farmington Inn home page (on-line). Web site: http:// www.farmingtoninn.com
Summary 343 Summary Local area marketing is action oriented with a hands-on approach. More often than not, local marketing is done by unit managers. The design of any local marketing effort should be based on the characteristics of the customers, the competition, and the operation itself. Database marketing can improve local targeting efforts; loyalty marketing provides regular customers with rewards and recognition for repeat patronage and tries to make it costly for them to switch to other operations. Local area marketing in foodservice is growing in importance for many reasons. First, many patrons come from nearby areas, and competition has become more intense because there is less growth in the market. Changing consumer tastes also encourage national brands to focus on a local identity. Moreover, different local markets have widely varied conditions. Finally, many restaurants cannot afford to compete in the major media, such as television, but can afford a local marketing program. Some chain restaurants question the value of local marketing because it takes resources away from national brand advertising and because local efforts are usually not backed by extensive market research. The role of a company’s headquarters in local marketing is to provide financial resources and expertise and to develop standardized programs and procedures. Products can be adapted to the local market in foodservice through the development of local specialties. Lodging companies use local partnerships and positioning to adapt their products to local conditions. Prices in foodservice largely follow the pattern of the chain, but specials and limited-time offers can be used to meet local competition. In lodging, pricing is a property-level function that includes setting rack rates and making yield management decisions. Local restaurant advertising often involves advertising co-ops, but some advertising is also done by individual units. For both restaurants and hotels, sales promotions at the local level can involve partners. Menu merchandising is a powerful tool for restaurants, and many other merchandising zones and media are available. Personal selling, usually done by unit managers, can be used by restaurants to reach concentrations of customers. Lodging firms use personal selling to reach accounts that book multiple room-nights. Public relations and community involvement, although not free, are cost-effective ways of establishing local identity for both restaurants and hotels. Key Words and Concepts Neighborhood marketing Marketing strategy triangle Hospitality marketing cycle Database marketing Loyalty marketing Soft benefit Incremental sales Merchandising Menu merchandising Merchandising zones Internal merchandising Turnkey merchandising programs Joint-promotions/cross-promotion Community relations Remote
344 Chapter 14 / Marketing at the Unit Level Resources on the Internet AdPlex. http://www.adplex.com/ RUF Strategic Solutions. http://www.ruf.com/core.htm Tom Feltenstein’s Neighborhood Marketing Institute. http://[email protected]/html/asktom.htm# You Are Where You Live! http://www.dellvader.claritas. com/YAWYL/Default.wjsp Discussion Questions 1. What forces are driving the increasing interest in local marketing in foodservice? 2. What problems does local marketing present for some chain organizations? 3. What resources are vital to the success of a local marketing program? 4. What are the local marketing communication methods commonly used in foodservice? 5. What are the possible merchandising zones for a restaurant? 6. What are a hotel property’s key responsibilities with regard to pricing? 7. What are the sources of leads for a hotel property? References Feltenstein, T. (2001). Tom Feltenstein’s NeighborhoodMarketing Institute (on-line). Web site: http://[email protected]/ html/asktom.htm# Reich, A. Z. (1997). Marketing management for the hospitality industry: A strategic approach. New York: John Wiley & Sons. Note: The authors acknowledge their indebtedness to Tom Feltenstein and the Neighborhood Marketing Institute whose frame of analysis is reflected throughout this chapter.
Index Acceptable distance, in location decision, 232 Accessibility, in a site decision, 238, 240 Accor, 180 ACORN, 79 Action-oriented consumers, 75 Action plan, 165–166 Activities, interests, and opinions (AIO), 74 Adams, Carol, 73 ADI (Area of dominant influence), 69, 282 Advertising, 9, 24 area of dominant influence (ADI), 69, 282 awareness/recall, 105 brochures, 283 budget, 291 comparative, 280 copy testing, 102–104 defined, 268 direct mail, 283, 288–289, 290, 335 due bills, 283, 289–290 electronic media, 69, 282, 283, 285–286 franchise, 210 goals and objectives of, 274–276 humor in, 280 image, 274–275, 335 local, 335, 340–341 media, 281–291 message, 278–280 outdoor media, 283 planning, 276–281 print media, 283 scheduling patterns, 290–291 specialty items, 288 spokespersons, 281 target audience, 276–278 Advertising agencies, 291–292 Age-based markets: characteristics of, 45–47 cohort effects in, 69–70 consumer interests of, 55, 56 and demand patterns, 250 Agents, 204 AIDA (awareness, interest, desire, and action), 272, 273 AIO (activities, interests, and opinions), 74 Airline crews, in organizational market, 85, 87 Airlines: coporate alliances of, 220–221 frequent-flyer programs of, 116, 117, 325 low-cost focus strategy of, 136–137 and travel agents, 212 Ajzen, I., 58 Alliances, intercompany, 219–221 Allshouse, J. E., 42 Alternatives, evaluation of, 60–61 American Airlines, 116 American Hotel and Motel Red Book, 98 American Marketing Association, 4 Andrew, W. P., 240 Approach, in a sales call, 310 ARAMARK, 189 Area of dominant influence (ADI), 69, 282 Aspiration group, 54 Assurance, as service measure, 25 Atmospherics, 174, 176 Attitude, consumer, 58 Attitude tracking study, 105–106 Au Bon Pain, 83, 85, 218 Audience segments, 276–277 Average daily rate (ADR), 94 345
346 Index Awareness, consumer, 104–105, 272 Awareness, interest, desire, and action (AIDA), 272, 273 B&I foodservice, 89 Baby boomer generation, 45, 46, 55, 69 Bad costs, 29 Baraban, R. S., 176 Barlow, R. G., 116 Behavior segmentation, 75–76 Benefit segmentation, 75 Bennett, P. D., 156, 182, 272, 280, 282, 296 Berry, L. L., 25 Best Western, 188, 209, 226 Bigness, J., 182 Billboards, 287 Bivek, Arun, 290 Blumenthal, I., 217 Blumenthal, K., 182 Bob’s Big Boy, 281 Bodett, Tom, 278, 281 BOGO (Buy one, get one free), 297 Bonoma, T. V., 124 Boston Consulting Group model, of portfolio analysis, 129–130 Bottom-up approach, 127–128, 166 Bounce-back coupons, 297 Bower, J. L., 124 Brand bundling, 188–189, 190 Branding: advantages of, 179–180, 181, 190 equity, 180–182 in institutional foodservice, 189–190 new brand development, 186–187 and product life cycle, 192 tactics, 190 types of, 182–186, 188–189 Brand loyalty, 277 Break-even analysis, 254 Break-even point (BEP), 254 Bremkamp, Richard, 342 Bretl, Daniel, 100–101 Brochures, advertising, 283, 288 Bronco business, 130 Budget: advertising, 291 bottom-up approach to, 166 local marketing, 327–328 top-down approach to, 165–166 zero-based, 291 Burger King, 182, 218 advertising of, 278 charities of, 304–305 frequency program of, 118 market share of, 51 new products of, 197 Buses, advertising on, 287–288 Business Council for Sustainable Development, 50 Business and industry (B&I) foodservice, 88, 89 Business meetings market, 85–86, 161–162, 166 Business portfolio, 129 Business and professional organizations, 86 Business travelers: and marketing plan, 163–164 market research on, 100–102 and market segmentation, 82–83, 85 women, 47–48, 70–71 Buying behavior. See Consumer behavior Buying center, 81–82, 87 Buying process. See Purchase decision Buy one, get one free (BOGO), 297 Buzzell, R. D., 25 California Cafe´, CafE Club, 118 Cannibalization, 197–198, 226 Capacity utilization, 21 Capital, 251 Carlson Hotels Worldwide: brands of, 184–185 diversification strategy of, 141–142 mission statement of, 133–134 Carlson Leisure Group, 220 Cash cows, and portfolio analysis, 130 Casinos, physical environment of, 175 Category credibility, 182 CD-ROMs, 285 Celebrity visits, 304 Cendant Corporation, 186, 209 brands of, 181–182 corporate alliances of, 220 management structure of, 126 Census data: information sources on, 97 and market segmentation, 68–69, 79
Index 347 Census studies, 109 Central reservation service (CRS), 206 Chamber of Commerce, as information source, 97–98 Chang, Y. S., 27, 29, 30, 33 Change, resistance to, 12 Channels of distribution, 21, 22, 203– 205 lodging, 208–215 Charitable donations, corporate, 304–305 Children’s market, 52, 56 Choice Hotels, 72–73, 209, 220 Churchill, G. A., Jr., 106 Clarion Hotel, 185 Closing the sale, 312–314 Club Hotel, 83, 85 Clustering approach to location, 226–227 ClusterPLUS 2000, 79 Cluster sampling, 110 Clutter, advertising, 278, 280 Cobranding, 184–185, 190, 228–229 Cognitive dissonance, 61 Cohort effects, 69–70 Cold calls, 309 Collateral materials, advertising, 288 College foodservice, 7–8 brands in, 8, 189–190 segmentation, 89–90 venues, 218 Colocation, 184–185, 228–229 Comfort Inn, 185 Communication mix, 268 Communications, marketing. See Promotion Communications system, 23, 24 Communications technology, 48–50 Communities in Schools, Inc., 305 Community relations, 338, 342 Comparative advertising, 280 Competition: in concentrated/fragmented industry, 50– 51 direct and indirect competitors, 143, 155– 156 intelligence about, 96 and market saturation, 326 and price, 251 and sales presentation, 312, 314 See also Competitive analysis Competitive advantage, 125, 134, 251 Competitive analysis: defined, 156 in local marketing, 320–322, 331 in a location decision, 233, 235, 239, 240 in a marketing plan, 155–156, 157– 158 in strategic planning, 142, 143 Complaints, customer, 29–30, 32–33, 312 Complex decision making, 61 Computer technology: applications of, 49–50 and Internet reservations, 207–208 in location analysis, 234–236 point of sales (POS) systems, 48–49, 95 Concentrated industry, 50–51 Concept innovation, 196 Concept as product, 176–179 Conflict resolution, 12–13 Consolidated metropolitan statistical area (CMSA), 68 Consumer behavior: and brand loyalty, 182 and market segmentation, 75–76 and personal situations, 51, 55, 56 psychological influences on, 51, 55–58 societal influences on, 51–54 See also Marketing research; Purchase decision Consumer benefit approach, 310 Consumer demand, 182 Consumer preference, 182 Consumer recognition, 180–181, 182 Consumer Reports and Eating-Out Share Trends (CREST), 98–99 Contests, sales promotion, 301 Contingency fund, 165 Contingency plan, 306 Continuity, in advertising schedules, 290– 291 Contract foodservice. See Institutional foodservice Contribution margin (CM), 252–253 Contribution margin (CM) pricing, 253 Convenience sampling, 110 Cooperatives, purchasing, 210 Copy testing, 102–104 Core benefit, 170 Corporate analysis, 13
348 Index Corporations: alliances/partnerships of, 219–221 charitable donations of, 304–305 culture of, 37 decision-making hierarchy in, 126–127 meeting facilities market, 85–86, 161– 162, 166 strategic planning of, 127–144 See also Business travelers; specific names Correctional facilities, foodservice in, 90 Cosenza, R. M., 13 Cost-based pricing, 252, 256–257 Cost control, 11, 29–30 Cost leadership strategy, 134–135 Cost per thousand (CPM), 281 Cost-volume-profit analysis, 254 Cothran, Mike, 72–73 Country Inns & Suites, 184 Coupons, 297, 298, 335 Courtyard by Marriott, 100–102, 135, 172, 180, 196, 242 Credibility, in sales presentation, 311 Crisis management, 306 Crosby, P., 30 Cross-marketing, 220 Cross-promotion, 336, 338 C.U.C. International, 220 Culligan, P. E., 211 Cultural values, 43–45, 52, 71 Cunningham, M. W., 59 Customer base, 99–100, 154–155 Customer(s): analysis of, 142–143, 154–155, 319–320, 330–331 and brand loyalty, 277 competitors’, 322 complaints, 29–30, 32–33, 312 database on. See Database marketing (DBM) –employee interaction, 10, 19, 34–35, 307 expectations, 26, 61 feedback, 30, 32–33 first-time, 2 negative word of mouth, 29–30 profile, 104–105, 117 repeat patronage, 2, 6, 10, 35, 105, 273, 325 satisfaction, 10, 20, 61 testimonials, 311 and waiting lines, 33–34 See also Consumer behavior; Marketing research; Market segmentation; Purchase decision Darden Restaurants, 248 Data analysis, 112 Database marketing (DBM): advantages of, 325, 340–341 customer-information tracking, 115–116, 323 defined, 115, 323 and frequency programs, 116–119, 323, 325 and geo-demographic databases, 79–80, 117 implementation of, 120 Data collection, 110–111 Davidow, W. H., 37 Davis, S. M., 37 Days Inn, 181, 185 Decor and design: and concept, 178 manipulation of, 174–175 Delivery services, third-party, 218–219 Demand: as determinant of price, 250, 257 forecasting, 261 primary, 271 selective, 271–272 Demand analysis, 239, 240 Demand-based pricing, 253–254, 260–261 Demand management, 21, 33–34 Demand patterns, 21, 22 Demographic characteristics: and consumer behavior, 51–52 and demand, 250 ethnic group, 52, 71, 278 information sources for, 97 of local market, 319 in location decision, 231–232, 234 in market analysis, 154 and market segmentation, 69–74, 79–80 trends in, 45–48 Depth interviews, 108 Determinants of price, 250–251 Dev, C. S., 59 Differentiation strategy, 135
Index 349 Direct competitors, 143, 155–156 Direct mail advertising, 283, 288–289, 290, 335 Discounting: community relations, 338 in foodservice, 297–299, 338 in lodging, 258–260 Disney theme parks, waiting lines at, 33, 34 Disney World, 36, 52 Distance, acceptable, 232 Distribution: categories of, 203 channels of, 21, 22, 203–205, 208–215 defined, 202 in foodservice, 215–219 intensity of, 202–203 intercompany agreements, 219–221 in lodging, 205–215 in marketing mix, 202 See also Reservation systems Diversification strategy, 141–142 Dog business, 130 Domino’s Pizza, 140, 216 DoubleTree, Club Hotel by, 83, 85 Driving time, in a location decision, 232 Dube, L., 212, 342 Due bills, 283, 289–290 Dunkin’ Donuts, 140 Early-bird specials, 331 Eco-efficiency, 50 Ecology, 8–9, 50 Econo Lodge, 72 Economic environment, 42–43, 251, 319 Electronic media, 69, 282, 285–286 Embassy Suites, 31 Empathy, as service measure, 25 Employee(s): back-of-the house, 23–24 and crisis management, 306 entry-level, 36–37 –guest interaction, 10, 19, 34–35, 307 and internal marketing, 13, 34–37 in marketing plan, 165 and operations-marketing relations, 10– 11, 323 in price-setting process, 254 as product, 19–20, 22 recruitment and retention, 36–37 in service culture, 37 shortage of, 251 See also Training Encroachment, 216–217 Energy conservation, 8–9 Environment, marketing. See Macro environment; Micro environment Environment, physical. See Location; Physical environment Environmental issues in marketing, 8–9, 50 Environmental Protection Agency (EPA), ‘‘Green Lights’’ program of, 8–9 Environmental scanning, 94 Environmental Systems Research Institute (ESRI), 235–236 Enz, C. A., 342 Ernst, D., 221 Ethnic groups, 52, 71, 278 Ethnic restaurants, 45 Evaluation: of alternatives, 60–61 location, 231–242 postpurchase, 61–62 Exclusive distribution, 202 Executive summary of marketing plan, 152– 153 Expectations, customers’, 26, 61 Experiment, 102, 103 External analysis, 142, 154–156 Facilitating services, 170–171 Fairfield Inns, 179, 180 Fam (familiarization) trips, 214–215, 301 Family: composition, 48 purchase decisions in, 51–52 size, 71 Family brands, 185, 190 Family restaurants, 43, 232, 255 Farmington Inn, Connecticut, 342 Farmington Lady, The (Bremkamp), 342 Feasibility study, 239–242 Federal Reserve Bulletin, 97 Feedback, customer, 29–30, 32–33 Feltenstein, T., 318, 336 Field experiment, 102–103, 108–109 First impressions, 173 First-time customers, 2 Flack, Greg, 45
350 Index Flighting advertising schedule, 291 Focus groups, 108 Focus strategy, 135–137, 138 Follow-up calls, 314 Food courts, brand bundling in, 188–189 Food production strategy, 177 Foodservice: advertising expenditure of, 276 branding, 182–184, 186 competitive conditions in, 326 competitor analysis of, 321 concepts, 177–178 corporate alliances of, 220 and customer base, 99–100, 320 delivery services of, 218–219 and demand management, 33–34 franchising, 215–217 frequency programs of, 116, 118–119 intercept marketing of, 215, 217–218 local marketing in, 325–339 location decision of, 231–236 location strategy of, 217–218, 227, 236– 239 market development strategy of, 139– 141 marketing research of, 113–116 new products of, 194–197 physical environment of, 173–176 pricing methods of, 252–256 pricing objectives of, 248–249 sales promotion of, 296, 297–299 site decision of, 236–239 Web sites, 285 See also Institutional foodservice; Menu; specific names Forecasting demand, 261 Four Ps, 5 Four Seasons, 36, 135, 179 Fragmented industry, 50–51 Franchise systems, 21, 51 advantages of, 204–205 and brand equity, 180–181 decor packages in, 174–175 encroachment problem of, 216–217 foodservice, 215–217 lodging, 209–212 market development strategy of, 139 product development of, 196–197, 215– 216 French, T. D., 221 Frequency marketing, 116, 118–119, 172, 323, 325 Frequency and reach, media, 281–282, 284– 285 Frequent-flyer programs, 116, 117, 325 Full-service concept, 178–179 Functional approach to marketing organization, 13 Functional marketing, 126 Functional strategies, 143–144 Funnel locations, 229 Gale, B. T., 25 Games, promotional, 299 Gender differences, 70–71 General Electric model of portfolio analysis, 129, 131–132 Generation X-ers, 45, 46 Generation Y-ers, 45, 46–47 Generic strategies, 134–137 cost leadership, 134–135 differentiation, 135 focus, 135–137, 138 Geo-demographic segmentation, 79–81, 99 Geographic information system (GIS), 234– 235 Geographic segmentation: census, 68–69 geo-demographic, 79–81 media coverage, 69 political, 68 postal zones, 69, 235 Global distribution system (GDS), 21, 207 Goals and objectives: advertising, 274–276 local marketing, 329 marketing department, 11, 12 marketing plan, 164–165, 166 pricing, 246–249 promotion, 269–274 Good costs, 29 Goods component of hospitality product, 2, 251 Goodwill, and brand equity, 180 Government agencies: as information source, 97 as organizational market, 87
Index 351 Government policies, 48 Grand strategies, 137–142 diversification, 141–142 market development, 137–138, 139–141 market penetration, 137 product development, 137 Gravity model of location analysis, 233 Gro¨nroos, C., 18, 25, 35, 36, 170 Gross rating points (GRPs), 281, 282 Group markets, 85–87 Group tours, 86 Growth-share matrix, 129–130 GRPs (gross rating points), 281, 282 Guarantee program, 30–32 Gummesson, E., 2 Habitual decision making, 62 Hallowell, R., 247 Hampton Inn, 31, 179, 185 Hardee’s, 140 Harrah’s Hotels and Casinos, 215 Hart, C., 182 Hart, C.W.L., 31 Health care foodservice, 19, 88, 90 Hesket, J., 182 HFS, Inc., 186, 220 Hilton Hotels, 179, 209 corporate alliances of, 220 mission statement of, 128 and travel agents, 213 Historic Hotels of America, 215 Holiday Inn: and branding, 179, 180–181, 185 concept innovation of, 196 diversification strategy of, 141 location strategy of, 226 Homewood Suites, 31 Hospital foodservice, 7 Hospitality industry: management functions in, 11 mass market, 20 organizational structure in, 9–10 Hospitality marketing cycle, 34–35, 323 Host locations, 217, 227–228 Hotels. See Lodging Hotel sales representatives, 215, 308–309 Hotel and Travel Index, 98 Household income, 42, 71, 72 Howard Johnson, 179, 181 Hubbart formula, 256–257 Hyatt Hotels, 44, 73, 182, 213 Image advertising, 274–275, 335 Importance-performance analysis, 161–162 Incentive houses, 86–87, 215 Income segmentation, 71, 72 Incremental cost, 260 Incremental sales, 328 Indirect competitors, 143, 155 Individual brands, 186, 188, 190 Information sources. See Database marketing (DBM); Marketing intelligence Informed judgment, in feasibility study, 242 Ingredient branding, 182, 190 Inn at Essex, Vermont, 287–288 Institutional foodservice: and branding, 189–190 marketing applications, 7–8 market segments, 87–90 points of distribution (PODs), 218 zero profit goal of, 8 Intangibility of service product, 19, 22, 190 Intensive distribution, 202 Intercept marketing, 215, 217–218 Inter-Continental Hotels and Resorts, 305 Interest rates, 42–43, 251 Internal analysis, 127, 142, 156–163 Internal marketing, 13 Internal merchandising, 334 Internet: advertising, 283, 285 reservations through, 207–208 Web sites, 285, 341 Interpersonal dimension of quality, 25 Interview: depth, 108 telephone, 109 Introduction approach, 310 Italianni’s, 142, 177, 184 Jain, S. C., 125, 126 Joint promotions, 336, 338 Joint ventures, 219–221 Julia’s Journey (Bremkamp), 342 Kasavana, M. L., 263 Key informant survey, 107–108
352 Index KFC: and branding, 179, 184, 186 franchise locations of, 216 local marketing of, 331 market development of, 140 new products of, 195 Khan, S., 47 Kiosks, 217 Knights Inn, 73 Kramer, L., 216 Labor. See Employee(s); Training Laboratory experiment, 102, 103 Labovitz, G. H., 27, 29, 30, 33 La Quinta Inns, 135, 226 LeBoeuf, M., 29, 30 Leisure facilities: foodservice in, 88, 90 in packages, 340 Lewis, R. C., 137 Lexington Services, 215 Li, L., 71 Life cycle: product, 191–194, 269–270 stages of, 45, 46–47, 55, 56 Lifestyle characteristics. See Psychographic characteristics Limited-service concept, 179, 180 Line extension, 185 Literature search, 107 Little Caesars, 216, 280 Local marketing: and community relations, 338 competitor analysis in, 320–322, 331 customer analysis in, 319–320, 330–331 customer database in, 319, 323–325 in foodservice, 325–339 implementation of, 328–331 in lodging, 339–342 and organizational structure, 327–328 promotion in, 331–339 unit manager role in, 318 Location: clustering approach to, 226–227 colocation, 182–185, 228–229 freestanding, 227 funnel, 229 host, 217–218, 227–228 magnet, 230–231 site, 236–240, 242 Location decision: hotel, 239–242 restaurant, 231–239 Lodging: basic services, 170–171 brands, 180–182, 185–188 chains, 209 competitive position of, 51, 321 concepts, 178–179 corporate alliances of, 220 database marketing of, 120 demand patterns in, 21 distribution policy of, 205–206 franchising, 209–212 local marketing of, 319, 321 location decision of, 239–241 marketing plan of, 154–166 marketing research of, 100–102 and market segmentation, 72–73 and organizational markets, 82–87, 161– 162, 166 pricing methods of, 256–263, 340 pricing objectives of, 247–248 property-level marketing of, 339–342 reservation system of, 206–208 supply and demand, 257 supporting services of, 172 and travel agents, 204, 205–207, 212– 215 See also specific names Long John Silver’s, 50, 298 Lovelock, C. H., 11, 18, 22, 23, 33, 143, 174 Loyal customers, 277 Loyalty marketing, 116, 325 See also Database marketing Lydecker, T., 70 McCleary, K. W., 71 Macdonald, J., 94 McDonald’s, 76, 127, 151 advertising of, 52, 271, 274–275, 278, 281 and branding, 179, 182, 192, 193 charitable work of, 303 colocations of, 228–229 cost leadership strategy of, 134–135 ecological programs of, 8–9, 50 frequency program of, 119
Index 353 market development of, 140 market share of, 51 new products of, 194, 196, 216 McKinsey and Company, 221 Macro environment, 42–50 demographic, 45–48, 250, 319 economic, 42–43, 251, 319 political, 48 social and cultural, 43–45 technological, 48–50 Magazine advertising, 283, 286 Magnet locations, 230–231 Mail surveys, 109 Main, B., 254, 255 Maister, D. H., 33 Malcolm Baldridge National Quality Award, 27 Management contracts, 209 Management functions, 11 Management structure, 126–127 Market analysis, 154 local, 319–323 Market approach to organization, 14 Market area analysis, 239, 240 Market development, 137–138, 139–141, 193–194 Market entry threshold, 282, 284 Marketing: approaches to, 2–4, 5 cross-marketing, 220 defined, 4–5, 6 environments. See Macro environment; Micro environment Four Ps of, 5 frequency, 116, 118–119, 172 functional, 126 hospitality vs consumer goods, 226 intercept, 215, 217–218 internal, 13, 34–35 local. See Local marketing orientation, 3–4, 5 as social force, 6–8 and social issues, 8–9 strategic, 124–126 target, 66–67 Marketing communication. See Promotion Marketing department: employee training in, 13 goals of, 11, 12 and local marketing, 327–328 in multiunit companies, 10–11 operations department relations, 11–13, 323 in organizational structure, 10 organization of, 13–14 regional, 14 responsibilities of, 9–10 Marketing information systems (MIS), 96 Marketing intelligence: competitor information, 96 environmental scanning, 94 internal sources of, 94–95 marketing information systems (MIS), 96 See also Marketing research Marketing mix, 5, 170, 194, 202, 268 Marketing plan: budget in, 165–166 competitive analysis, 155–156, 157–158 contents of, 152–153 customer base analysis, 154–155 executive summary, 152–153 goals and objectives of, 164–165 importance of, 150–152 market analysis, 154 market segment analysis, 156, 159, 163– 164 mission statement, 153–154 Marketing research, 10, 156, 291 copy testing, 102–104 on customer base, 99–100 data analysis and interpretation, 112 field experiments, 108–109 importance of, 113–115 and local marketing, 327–328 and new brand development, 186–187 preliminary, 106–108 primary, 99 product, 100–102 report, 113 secondary, 96–98 surveys, 107–112 syndicated studies, 98–99 tracking studies, 104–106 and yield managment system, 261, 262 See also Database marketing (DBM); Marketing intelligence Marketing strategy triangle, 125, 319 Market penetration, 137, 234–235 Market segment, 66 Market segment analysis, 156, 159
354 Index Market segmentation: advantages of, 67 behavior, 75–76 benefit, 75 and branding, 179–180 combined approaches to, 76–81 criteria for, 66 demographic, 69–74 geo-demographic (neighborhood), 79–81 geographic, 68–69 and local marketing, 319 and marketing plan, 156, 159, 163–164 matrix, 77, 79 organizational, 81–90 psychographic (lifestyle), 74–75 and target marketing, 66–67 See also Purchase decision Market share analysis, 156, 159 Marriott, Bill, 281 Marriott Hotels: advertising of, 281 and branding, 180, 185–186 chain hotels, 209 in corporate alliance, 220 Courtyard by Marriott, 100–102, 135, 172, 180, 196, 242 differentiation strategy of, 135 employee training of, 36 frequency program of, 117 full-service concept of, 179 marketing research of, 100–102, 262 and market segmentation, 132 market share of, 51 supporting services of, 172 and travel agents, 213–214 yield management system of, 262–263 Marshall, A., 55 Mass market, 20 Master franchise, 216 Matthews, B. P., 104 Mature market, 193 Mayflower Hotel, Plymouth, Michigan, 6–7 Media: and crisis management, 306 publicity in, 302–303, 304, 341–342 remote broadcasts, 338–339 Media advertising: ‘‘cutting through clutter,’’ 278, 280 electronic, 69, 282, 285–286 outdoor, 283 print, 283, 285–286 Mehta, A., 58, 104 Membership system, franchise, 209–210 Menu: and concept, 177, 178 cost considerations in, 256 local items in, 331 merchandising, 332–334 and product life cycle, 193 and social/cultural trends, 44 target market for, 73 in test markets, 108–109 Merchandisers, modular upright, 217 Merchandising, 301, 332–334, 337, 341 Merchandising zones, 334, 336 Merchant firms, 203–204 Metropolitan statistical area (MSA), 68, 234 Micro environment, 42, 50–62 competition, 50–51 consumer behavior, 51–62 MicroVision 50, 79–80 Miller, J., 55 Mission statement: company, 128–129, 144, 153–154 strategic business unit (SBU), 133–134 Misunderstanding, and service quality, 26 Modular upright merchandisers, 217 Moister, D. H., 33 Mortimer, K., 104 Motel 6, 59, 135, 180, 278, 281 Mrs. Fields’ Cookies, 95 Multiple branding, 185, 190 National Association of College and University Food Service (NACUFS), 189–190 National Reading Incentive Program, 305 National Restaurant Association (NRA), 60, 98 Neighborhood marketing, 318 See also Local marketing Neighborhood segmentation, 79–81, 99 Neuborne, E., 47 New products: cannibalization hazard with, 197–198 defined, 195–196 development, 137, 186–187, 196–197, 215–216
Index 355 functions of, 194–195 penetration pricing of, 253–254 Newspaper advertising, 283, 285–286 Nonprobability sampling, 110 Nonprofit operations: pricing in, 249 zero profit goal of, 8 Normann, R., 18 Objectives. See Goals and objectives Observation method, 109 O’Connor, P., 278 Ohmae, K., 125 Olive Garden, The, 73, 218 1-10-100 Rule, 30 Operating system, 23, 177 Operation awareness, 104–105 Operations department: employee training in, 13 goals of, 11, 12 marketing department relations, 11–13, 323 service activities under, 10–11 Organizational conflict, 11–13 Organizational customers: business travelers, 82–83, 85 of contract foodservice, 87–90 market segments, 82–87 purchase decision of, 81–82, 87 Organizational structure: corporate hierarchy, 126–127 in hospitality industry, 9–10 of marketing department, 13–14 Outdoor media, 283, 287–288 Overlapping service systems, 22–23 Overpromising, 26, 61 Packages: price, 86–87, 215, 263–264 as promotional tool, 301, 340, 341 Palmer House, Chicago, 116 Papa John’s, 280 Parasuraman, A., 25 Partnerships, intercompany, 219–221 Part-time marketers, 2, 35 Paul, R. N., 197 Pearce, J. A. II, 50, 51, 52, 124, 132 Penetration pricing, 253–254 PepsiCo, 126 Percentage of sales, 291 Perception, consumer, 55, 57–58 Performance, and service quality, 26 Performance risk, in purchase decision, 60 Perishability of service product, 21, 22, 33 Personality, consumer, 58 Personal selling, 268, 308, 319, 338, 341 Personal situations, and consumer behavior, 51, 55 Personnel. See Employee(s); Training Physical barriers, in location decision, 232 Physical environment: atmospherics, 174, 176 decor/design manipulation, 174–175 exterior, 173 and social values, 43–44 supporting cues, 175–176 See also Location Physical presence, 205 Pizza Hut: and branding, 179, 186 charities of, 305 corporate alliances of, 220 intercept marketing of, 218 new products of, 195 Place/places, 5, 202, 226 Planning. See Marketing plan; Strategic planning Plummer, J. T., 74 PODs (points of distribution), 215, 217–218 Point-of-sales (POS) systems, 48–49, 95 Points of distribution (PODs), 215, 217–218, 227–228 Political environment, 48 Political subdivisions, as target market, 68 Population characteristics. See Demographic characteristics Porter, M. E., 134, 135 Portfolio analysis, 129–132 Positioning, 142–143, 340 Positioning statement, 143 POS (point-of-sales) systems, 48–49, 95 Postal zones, 69, 235 Postpurchase evaluation, 61 Powers, T. F., 36, 51 Preliminary research, 106–108 Premiums, 299 Presentation, sales, 311–312 Press kit, 304, 341–342
356 Index Press release, 302, 304 Prewitt, M., 51 Price: changes, 256 discounting, 258–260 elastic and inelastic, 250 points, 255 range, 255–256, 257, 258 sensitivity, 250 and value, 246 wars, 135 Pricing: break-even analysis in, 254 competitive analysis in, 156 and concept, 178, 178–179 contribution margin (CM), 253 cost-based, 252, 256–257 demand-based, 253–254, 260–261 determinants of, 250–251, 257 final price selection, 254–256 fixed fee, 89 in foodservice, 252–256 in lodging, 256–263 in marketing mix, 5 objectives of, 246–249 packages, 263–264 as property-level decision, 340 during recession, 43 value concept of, 43, 247, 248 yield management, 260–263, 340 Primary demand, 271 Primary metropolitan statistical area (PMSA), 68 Primary reference groups, 54 Primary research, 99 Principle-oriented consumers, 74 Print media, 283, 285–286 PRIZM, 80 Probability sampling, 109–110 Product: compatibility of, 12 components of, 2 concept as, 176–179 human element as, 19–20, 22 intangibility, 19, 190 life cycle, 191–194, 269–270 in marketing mix, 5, 170, 194 in mature market, 193–194 orientation, 2–3, 5, 14 perishability, 21, 33 physical environment as, 173–176 sampling, 301–302 See also Branding; New products; Service Product development, 137, 186–187, 196– 197 Product research, 100–102 Profitability: and pricing objectives, 247–248, 249 and service quality, 37, 38 Promotion: forms of, 5, 268 joint, 336, 338 local, 331–339, 340–342 in marketing mix, 5, 268 objectives of, 269–274 See also Advertising; Publicity; Public relations; Sales promotion Promus Hotel Corporation, 31–32 Proprietary brands, 189 Prospect, qualified, 308–309 Prospecting, 308–310, 315 Psychographic (lifestyle) characteristics: and consumer behavior, 55, 56 in location decision, 232 and market segmentation, 74–75 Psychology: and consumer behavior, 51, 55, 57–58 environmental, 175, 176 Publicity: attention-getting, 302–303 cost-effectiveness of, 306 and crisis management, 306 defined, 268, 302 hazards of, 303–304 local, 341–342 tools of, 304 Public relations (PR): and charitable donations, 304–305 and community involvement, 338, 342 cost-effectiveness of, 306 and crisis management, 306 defined, 268, 302 tools of, 304 Purchase decision: alternative evaluation in, 60–61 and communication strategies, 270, 271 complex and habitual, 61–62 and information search, 59–60
Index 357 of organizational customers, 81–82, 87 postpurchase evaluation in, 61 problem awareness in, 58–59 See also Consumer behavior; Market segmentation Putnam, J. J., 42 Qualified prospect, 308–309 Qualitative research, 108 Quality: defined, 25 gaps in, 26 interpersonal/technical dimensions of, 25 measurement of, 25–26 and profitability, 37, 38 Quality control: and corporate culture, 37 cost of, 29–30 customer feedback in, 30, 32–33 in franchise systems, 210 guarantee program, 30–32 human element in, 19–20, 323 Total quality management (TQM) program, 27–29 and zero-defect goal, 26–29, 30 Quality Courts, 226 Question marks, 130 Questionnaire, survey, 109, 110–111 Queuing and demand management, 33–34 Quota sampling, 110 Radio: advertising, 283, 284–285 remote broadcasts, 338–339 Radisson Hotels: and cobranding, 184–185 in partnerships, 219 and travel agents, 213, 214 Ramada Inn, 181 Random sampling, 110 Rasinsky, R., 212 Reach and frequency, media, 281–282, 284– 285 Recycling, 9, 50 Red Lobster, 173, 256 Reference groups, 54 Regional marketing departments, 14 Reich, A. Z., 37, 38, 160, 232 Relationship marketing, 116 Relevant range, 250 Reliability, as service measure, 25, 26 Remote broadcasts, 338–339 Renaghan, L. M., 212, 342 Repeat patronage, 2, 6, 10, 35, 105, 273, 325 Repositioning, 142 Representation of lodgings, 205–206 Research. See Marketing research; Marketing intelligence; Database marketing (DBM) Research instrument, 110–111 Research process, 106–113 Reservation systems: corporate alliances in, 220 data analysis from, 94–95, 120, 261, 262 and demand management, 21, 34 franchise, 210, 212 global distribution system (GDS), 21, 207 and hotel reps, 215 and Internet, 207–208 lodgings, 206–208 as supporting service, 172 and travel agents, 204, 206–207, 212– 215, 214 and yield management training, 261–262 Residence Inn, 180 Responsiveness, as service measure, 25 Restaurants. See Foodservice Restaurants and Institutions, 98 Restaurants USA, 99 Retailers, 204 Revenue management, 260–263 Revenue maximization goal of marketing, 11 Rewards, customer, 116, 117, 325 Rice, G. D., 4 Risk, in purchase decision, 59–60 Ritchie, K., 46 Ritz-Carlton Hotels: advertising of, 279 employee training of, 37 full-service concept of, 179 and market segmentation, 78 quality control of, 27–29 Robinson, R., 36 Robinson, R. B., Jr., 50, 51, 52, 124, 132 Rodeway Inn, 72 Round Table Pizza, market research of, 114– 115 Ruggless, R., 195
358 Index Sales: call, 309–310 closing, 312–314 competitive analysis of, 156 and economic conditions, 42–43 follow-up calls, 314 incremental, 328 information sources on, 95 leads, 308 local calls, 338 orientation, 3, 5, 12 percentage of, 291 personal selling, 268, 308, 319, 338, 341 presentation, 311–312 and pricing objectives, 247 prospects, 308–309 See also Sales promotion Sales blitz, 309 Sales mix, 254 Sales promotion, 9 advantages of, 296 defined, 268, 296 employee–guest interaction as, 34–35, 307 evaluation of, 296 hazards of, 296–297 local, 335–336, 338, 341 merchandising, 301, 332–334, 337, 341 and travel agents, 213–215 types of, 297–302, 315, 341 See also Sales Sales representatives: franchise, 210 lodging, 215, 308–309 Sampling, promotional, 301–302 Sampling, survey, 109–110 SAS Hotels, 219 Sasser, W. E., 182 SBU (strategic business unit), 126, 127, 130, 131–132, 133 Schlesinger, L. A., 247 Schlotzky’s Deli, 194–195 Schmidgall, R. S., 240 Schmitt, B., 174 School foodservice, 7, 88, 90 Schulz, C., 212 Secondary reference groups, 54 Secondary research, 97–98 Segmentation. See Market segmentation Segmentation matrix, 77, 79 Selective demand, 271–272 Selective distribution, 202 Selective retention stage of perception, 57– 58 Self-concept, consumer, 58 Self-liquidating promotions, 299 Self-service, 20 Senior citizen market, 45–46, 55, 56, 72– 73, 331 Service: characteristics of, 18–22 core benefits, 170 defined, 18 facilitating services, 170–171 as hospitality product, 2 and management functions, 11 new forms of, 196 supporting services, 172–173 variation in, 19–20 See also Quality; Quality control Service culture, 35, 37 Service delivery system, 23, 174 Service marketing system: communications, 23, 24 delivery, 23 operating, 23–24 overview, 22–23 Service offering, 170–173 Sheraton Hotels, 179, 280 Shostack, G. L., 22, 173 Siguaw, J. A., 342 Silverman, Henry, 181 Simonson, A., 174 Site decision, 231, 236–240, 242 Skimming, 253 Sleep Inns, 72 SMERF markets, 87 Smith Travel Research, 241 Smoke-free environment, 43–44, 174 Social barriers, in location decision, 232 Social risk, in purchase decision, 59 Society: influence on consumer behavior, 51–54 values and beliefs in, 8–9, 43–45 Socioeconomic status, and consumer behavior, 52 Soft benefit, 325 Southwest Airlines, 36, 136–137
Index 359 Spirit of Simsbury, The (Bremkamp), 342 Spokespersons, advertising, 281 Squeeze effect, 43 SRI International, 74 Staff. See Employee(s); Training Stage, Brian, 214 Standardized service, 19–20 Star Alliance, 220 Statistical Abstract of the United States, 97 Statler, Ellsworth, 226 Status-oriented consumers, 74–75 Steelcase, 83, 85 Stewart, D. W., 276 Stouffer’s, 179 Strategic business unit (SBU), 126, 127, 130, 131–132, 133 Strategic management structure, 126–127 Strategic marketing: defined, 124–125 vs functional marketing, 125–126 Strategic planning: bottom-up/top-down approach, 127–128 company mission statement, 128–129 functional strategies, 143–144 portfolio analysis, 129–132 positioning, 142–143 SBU mission statement, 133–134 in small firms, 144–145 SWOT analysis, 132–133 See also Generic strategies; Grand strategies Strategic three Cs, 125 Strengths and weaknesses analysis. See SWOT analysis Sub-brand, 182 Subcultures, 52 Subway, 140 Supply, as determinant of price, 250–251, 257 Supporting cues, 175–176 Supporting services, 172–173 Survey research, 109 Sustainable competitive advantage, 134 Sweepstakes, 300, 301 Switch companies, 207 Switchers, consumer, 277 SWOT analysis: in marketing plan, 154, 156–163 in strategic planning, 127, 132–133 Syndicated studies, 98–99 Taco Bell, 51, 126, 218 advertising of, 281 and branding, 184, 186 market segment of, 70 pricing strategy of, 194, 247, 248 Tangible service measures, 25, 26 Tansik, D. A., 37 Target audience, 276–278, 296 Target market, 4–5, 66, 67 Target marketing, 66–67 Taylor, S. L., 13 Teasley, R. W., 36 Technical dimension of quality, 25 Technological applications, 48–50 Technomic, Inc., 99 Teen market, 56 Telephone interviews/surveys, 109 Television advertising, 69, 282, 283, 284 Testimonials, customer, 311 Test marketing, 108–109 T.G.I. Friday’s, 119, 141–142, 177 and branding, 182, 184, 185 Theme restaurants, 43 Thomas, Dave, 281 Thompson, J. S., 232, 233 Time-based usage occasion, 76 Time horizons, marketing vs operations, 11– 12 Time line, in action plan, 165 Tim Hortons, 184 Timing, of advertising campaign, 290 Top-down approach, 127, 165 Total quality management (TQM) program, 27–29 Towers, 217 Tracking study, 104–106 Trade area, 68 Trade-outs, 289–290 Trade shows, 86 Trading area, 231 Traffic patterns: in a location analysis, 232 in a site analysis, 237, 239–240 Training: cross-training, 13 in a franchise system, 211 and internal marketing, 37 in yield management technique, 261– 262
360 Index Travel: and gender, 47–48, 70–71 organizational segments, 82–83, 85, 86, 87 packages, 86–87, 215, 263–264 See also Business travelers; Lodging Travel agents, 204, 205–207, 212–215, 301 Travel wholesalers, 212 Trial order, 314 Trial purchase study, 105 Tricon Global Restaurants, 186 Turkel, S., 212 Turnkey merchandising programs, 334 Ugly costs, 29 Umbrella brand, 182, 190 Unique selling proposition (USP), 278 United Airlines, 220–221 United Nationals Children’s Fund (UNICEF), 305 Unit-level marketing. See Local marketing Usage occasion, 75, 76, 105 User frequency, 75, 76 User status, 75, 76 USP (unique selling proposition), 278 Uttal, B., 37 Value, and price, 246 Value meals, 43, 194 Values and Lifestyle System (VLS), 74–75 Venues, 217–218, 227 Visibility, in a site decision, 237–238, 240 Wagonlit, 220 Waiting lines, 33–34 Wall Street Journal, 181 Waters, J., 195 Weaver, P., 71 Web sites, 285, 341 Webster, F. E., Jr., 81 Welfare to Work Partnership, 304–305 Wendy’s: advertising of, 280, 281 and cobranding, 184 differentiation strategy of, 140 location strategy of, 227 market development of, 135 market segment of, 70 new products of, 195, 196 Wholesalers, travel, 212 Wind, Y., 81 Wine tasting, as promotional tool, 301 Wingate Inn, 181, 186–187 Women: business travelers, 47–48 as target market, 70–71 Working women, 47–48 Wyndham Hotel, women travelers program of, 47–48 Yield management, 260–263, 340 Zeithma, V. A., 25 Zero-based budgeting, 291 Zero-defect standard of quality, 27, 30