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Chapter 1

Introduction: Marketing
for Hospitality and
Tourism

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 1


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
The Purpose of a
Business Is to Create
and Retain the Right
Customer

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 2


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
The Four Ps

Marketing
Mix

Place
Product (Distribution)

Price Promotion

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 3


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
The Promotional Mix

■ Advertising
■ Sales promotion
■ Packaging
■ Personal selling
■ Public relations

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 4


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Defining Marketing
Marketing is a societal process by
which individuals and groups obtain
what they need and want through
creating, offering, and exchanging
products and value with others.

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 5


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Core Marketing Concepts

Needs, wants,
and demands

Markets Products

Exchange, Value,
transactions, satisfaction,
and relationships and quality

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 6


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Need, Wants, Demands
• Need. A human need is a state of felt
deprivation. Examples include the need for
food, clothing, warmth and safety.
• Wants. Wants are how people communicate
their needs. A hungry person may want a
hamburger, noodles, or cheese and bread.
• Demands. When backed by buying power,
wants become demands.

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 7


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Product

A product is anything that can be offered to satisfy a


need or a want.

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 8


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Value, Satisfaction, and
Quality
• Customer value is the difference between the
benefits that the customer gains from owning
and/or using a product and the costs of
obtaining the product.
• Customer satisfaction depends on a product’s
perceived performance in delivering value
relative to a buyer’s expectations.
• Quality begins with customer needs and ends
with customer satisfaction.

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 9


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Satisfaction and Customer Behavior

70 63 65
60
50
Percent

40 Definitely Recommend
30
30 25 Definitely Return

20
8 10
10
0
1 2 3
1 = Very Satisfied, 7=Very Dissatisfied
* Even though 3 is still a "positive"
score on the above 7 point scale, few
customers giving that rating will return

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 10


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Why Satisfaction May Not Lead
To Customer Loyalty
• Some customers never return to an area – but they can
still recommend
• Some customers shop for the best price - differentiate
your product
• Some customers like to have different purchase
experiences – like to stay or dine at different places

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 11


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Why Managers Should Be Concerned
About Customer Loyalty

• Customer loyalty leads to increased


profit

• Customer loyalty leads to increased


partnership

• Lower marketing and sales costs

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 12


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Exchange, Transactions, and
Relationships
• Exchange is the act of obtaining a desired object
from someone by offering something in return.
• A transaction is marketing’s unit of measurement
and consists of a trade of values between two
parties.
• Relationship marketing builds relationships with
valued customers, distributors, dealers, and
suppliers by promising and consistently delivering
high-quality products, good service, and fair
prices.

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 13


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Importance of Customer
Retention
■5% increase adds 25 - 125% to bottom
line

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 14


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
The Life Time Value of the
Customer

■ Revenue and profits by average customer


over a lifetime by segment
■ Increase average purchase, frequency of
visit, life

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 15


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Example
■ Corporate business traveler - 4x a year,
2 nights per visit, $200 per visit = $800
a year
■ Average life is 4 years
■ 4 yrs x $800 = $3200 lifetime value

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Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Markets

AAmarket
market isis aaset
set of
of actual
actualand
and potential
potentialbuyers
buyers
who
whomightmight transact
transact with
with aaseller.
seller.

Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 17


Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Marketing and Sales Concepts
Contrasted
Starting
Focus Means Ends
Point
Selling Profits
Existing
Factory and through
Products Promoting Volume

The
The Selling
Selling Concept
Concept

Profits
Customer Integrated
Market through
Needs Marketing
Satisfaction

The
The Marketing
Marketing Concept
Concept
Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 18
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
Marketing Management
Philosophies
Production Concept •Consumers favor products that are
available and highly affordable.
•Improve production and distribution.

•Consumers favor products that offer


Product Concept the most quality, performance, and
innovative features.

Selling Concept •Consumers will buy products only if


the company promotes/ sells these
products.
Marketing Concept •Focuses on needs/ wants of target
markets & delivering satisfaction
better than competitors.
Societal Marketing Concept
Marketing for Hospitality and Tourism, 3e
•Focuses on©2002
needs/ wants of target 19
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Philip Kotler, John Bowen, James Makens markets & delivering
Upper Saddle River,superior
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Marketing’s Future
• “It (marketing) encompasses the entire
business. It is the whole business seen
from the point of view of the final result,
that is, from the customer’s point of
view.”
• Peter Drucker
• Marketing has become the job of
everyone.
Marketing for Hospitality and Tourism, 3e ©2002 Pearson Education, Inc. 20
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458